MDA Space Ltd.

Please review the cautionary language in today's press release and public filings regarding various factors, assumptions, and risks that could cause actual results to differ. In addition, during this call, we will refer to certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, these measures do not have any standardized meaning under IFRS, and our approach in calculating these measures may differ from that of other issuers and therefore may not be directly comparable. Please see the company's quarterly report and other public filings for more information about these measures, including reconciliations to the nearest IFRS measures. And with that, it's my pleasure to turn the call over to Mike.

Thank you, Shireen. Good morning, everyone, and thank you to those joining us today to discuss our second quarter 2024 financial results. Q2 was a strong quarter for MDA Space from both an execution perspective and a momentum perspective that we are seeing in our end markets. The team delivered solid performance as we continue to convert our backlog, execute on our customer commitments, and grow our book of business. Our Q2 revenues totaled $242 million of 23% year over year, and our backlog stood at a record $4.6 billion at quarter end, up 318% versus Q2 2023. Adjusted EBITDA in the quarter was $49 million, up 21% versus last year, and adjusted EBITDA margin was a solid 20%. Operating cash flow was strong at $149 million, and we ended the quarter with a healthy balance sheet as our leverage ratio declined sequentially. Given the strong year-to-date performance, we are updating our full-year 2024 financial outlook. We are raising our guidance for revenue and narrowing our guidance for adjusted EBITDA and CAPEX. Additionally, given favorable operating cash flow dynamics, we also expect to be free cash flow positive in 2024, one year ahead of our plan. That's the first time I got to say that out loud. That's kind of funny. I'm going to say that again. We also expect to be free cash flow positive in 2024, one year ahead of plan. That's fun to say. In terms of business activity, we secured a number of contract awards in the quarter, with notable ones including a $1 billion contract from the Canadian Space Agency, or CSA, for the next phases of the Canadarm3 program that will see MDA Space finalizing the design and carrying out the construction of the robotic system and the ground control segment. We also received a $250 million contract extension from the CSA to continue supporting robotic operations on the International Space Station until its planned retirement in 2030. None of this, of course, would be possible without the hard work and dedication of the entire MDA Space team who I'd like to thank and acknowledge. In early July, we shared that Vito Colmoni, CFO of MDA Space, has departed the company to pursue another career opportunity. I'd like to extend my sincere thanks to Vito for his contributions over the past three years. The entire MDA Space team and the board wish him well. I'd also like to welcome Janet McEachern, our VP Finance and Interim CFO, who will be replacing Vito until we announce a permanent replacement. As Vice President Finance, leading our corporate finance functions at MDA Space, Janet has a deep understanding of our business, and I look forward to working with her as we search for a permanent CFO. The search process is well underway, and I am pleased with the caliber of candidates we are speaking with and confident that we can bring in the right individual for the role. I'll now give you a view of the industry, an update on our three MDA space business areas, and then I'll pass it over to Janet for a deep dive on the financials. As we have seen in previous quarters, the broader space market continues to expand, mature, and gain momentum. There are a few items worth highlighting. Starting in Canada, the Department of National Defense announced in late May the establishment of the Canadian Commercial Integration Cell, a new space operations information sharing structure and framework that enables secure discussions and data sharing between the Canadian Armed Forces and industry partners that operate satellites, with MDA Space and Telesat being the first two members. We commend the Government of Canada for taking this important step to facilitate real-time collaboration between government and the commercial space industry at a speed and level that the emerging space domain demands. This follows on the heels of an announcement in April that the Canadian government is establishing a National Space Council, which will take a whole-of-government approach to support space exploration, space utilization, technology development, research and security. The new Space Council will be comprised of more than 20 federal government departments and agencies. It is designed to enable greater coherence and collaboration to address issues that span commercial, civil and space domains. We look forward to engaging with the National Space Council and exploring new ways for the Canadian commercial space sector to meet the full spectrum of growing government needs for space services, infrastructure and data. Globally, we continue to see increased interest in space exploration. with Armenia, Peru, Lithuania, and Slovakia being the latest countries to sign on to NASA's Artemis Accords, signaling their commitment to safe, long-term, and ethical space exploration. The latest entries bring the group size to 43 nations, as we continue to see interest from many non-traditional spacefaring nations which are now building their own national space programs, a development that bodes well for the broader space market. Now I'll turn to our three business areas. In satellite systems, we are seeing good momentum in this market with our teams working to advance multiple requests for communication satellite solutions and a growing number of constellation projects. We are also seeing good activity levels from customers and our opportunity funnel remains strong. On the operational front, our teams were busy in Q2 advancing work on a number of programs. On the Telesat Lightspeed program, we continue to make good progress on ramp-up activities in the quarter, including progressing early design work and system requirements analysis. We've also finalized the selection and onboarding of most of the suppliers for this program, with approximately 75% of the suppliers under contract as of the end of June, and that number being closer to about 90% today, setting the stage for work volumes to accelerate in the second half of 2024, consistent with our full-year plan. We are also making good progress on the engineering and program procurement activities for the new non-geostationary orbit, or NGSO, satellite constellation we announced in Q4 2023 with an unnamed customer. We were awarded a $180 million authorization to proceed contract, which has since been expanded to close to $300 million over the past week. The full constellation, valued at a minimum of $750 million, is expected to include a minimum of 36 MDA software-defined digital satellites, our MDA Aurora product. The definitive contract for the full constellation, for which MDA will be the prime contractor, is expected this year. We also continue to advance work on the GlobalSTAR program. In Q2, the team progressed flight hardware production and flat-sat testing of the satellite bus and payload systems. Additionally, Following the completion of the Satellite Critical Design Review in 2023, the team is currently progressing towards a Spacecraft Integration Readiness Review to take place this quarter. As you know, MBA Space is the satellite prime contractor to enhance GlobalSTAR's LEO constellation through the addition of 17 satellites, which support SOS features and direct-to-device communication on certain Apple products. Moving to our geo-intelligence business, customer demand for our Earth observation offerings remains robust, and we are seeing increased recognition of the role that commercial Earth observation satellites can play to provide near real-time data and analytics to governments and private enterprise. In Q2, we received a contract from the National Research Council of Canada to support the development, construction, and integration of radio telescope technology for the Square Kilometre Array Observatory, an international space exploration and astronomy project that seeks to further our understanding of the formation and evolution of the universe. MDA Space will develop the project's correlator beamformer, a powerful data processing engine that will collect and process large volume of cosmic signals received by the telescopes, giving scientists rapid access to vast quantities of new data and insight about the universe. We also continue to advance work on MDA Chorus, our next generation Earth observation constellation. Our team is currently advancing the flight model unit and subsystem level work for the platform, payload and bus avionics, as well as building the ground segment subsystems and detailing constellation operations plans and processes. We also recently unveiled a new Vessel Detection Onboard Processing, or VDOP, demonstration system to be added to CORUS. The new VDOP direct satellite to ship service offers defense and intelligence organizations rapid access to the data and insights they need to support critical and time sensitive maritime defense and security missions including counter piracy narcotics smuggling illegal fishing and human trafficking in terms of other notable programs work on the canadian surface combatant program or cse one of our long-term government programs is progressing in line with our expectations The team continues to meet our technical milestones and complete capability testing as required. Moving to our robotics and space operations business, we continue to see good traction and activity levels on both government and commercial fronts. On the government side, we continue to progress the design work of Phase B of the Canadarm3 contract, which we were awarded in early 2022. and that will see us completing the preliminary design of Canadarm3's robotic system to be used aboard the NASA-led Lunar Gateway. In Q2, the team completed the initial set of preliminary design review milestones, with PDR full completion expected in Q3. As I noted in my previous remarks, in Q2 we also announced that MDA Space has been awarded a $1 billion contract from the CSA for the next phases of the Canadarm3 program. which includes funding for Phase C, the final design phase, and Phase D, the phase for construction, assembly, integration and test of the full robotic system, as well as the ground segment for command and control. MDA Space will support commissioning of the Canadarm3 robotic system once in orbit from our new Mission Control Facility at our Global Headquarters and Space Robotics Centre of Excellence in Brampton, Ontario. The contract will also include planning and personnel training in preparation for on-orbit mission operations. We expect work volume on Phase C to ramp up over the balance of 2024. In Q2, we also received a $250 million contract extension from the Canadian Space Agency to provide ongoing recurring engineering support to the International Space Station robotics, which includes Canadarm2 as part of Canada's commitment to support the ISS from 2025 until its planned retirement in 2030. As part of the contract, MDA Space will now fulfill robotics flight controller duties to support mission operations on the ISS. MDA Space has been working alongside the Canadian Space Agency and its international partners since 2001. On the commercial side, we continue to explore opportunities to incorporate our robotic technology on applications to support space exploration and mobility. During the quarter, we announced that MDA Space has joined Starlab Space LLC, a global joint venture between Voyager Space, Airbus, and Mitsubishi Corporation as a strategic partner and equity owner in Starlab Space. Starlab is designing, building, and will operate the Starlab Commercial Space Station. MDA Space joins the Starlab team to provide the full range of external robotics, robotic interfaces, and robotic mission operations to the station. including our recently launched full suite of scalable and modular robotic solutions, MDA SkyMaker, which can be tailored to support a diverse range of missions. This partnership serves as another validation of the capability and value that MDA SkyMaker offers to the emerging commercial space exploration and infrastructure market. Shifting to operations of the business, we continue our hiring efforts to support the anticipated revenue ramp-up. Approximately 900 new hires have been brought on over the last 12 months. With more than 3,000 highly skilled MDA space staff today, we have the people and the talent to help propel our growth and give us the scale to execute on the market opportunities we see emerging. I am also pleased to share that in Q2, we ratified a number of collective bargaining agreements associated with our operations in Brampton, as well as members of CSN associated with our operations in Quebec. We're pleased to have these new collective agreements now in place to support our growth in the years ahead. To recap, we are pleased with our performance this quarter. With momentum building across our operations, our team is energized and we remain laser focused on our priorities. A strong focus on execution, converting opportunities in our pipeline to backlog, and expanding our leadership in core markets while maintaining strong profitability and a healthy balance sheet to help us fund our growth initiatives. With that, I'll hand it over to Janet to walk us through the detailed financials.

Thank you, Mike, and good morning, everyone. For my update, I will walk you through our Q2 financial results and provide more color on our 2024 outlook. Overall, Q2 was a strong quarter for MDA space. and we are pleased with how the team is executing. In the quarter, we saw solid revenue growth and profitability and record backlog at quarter end, which all bode well for our performance in 2024. Total revenues for the second quarter were 242 million. This represents a 46 million or 23.5% increase over the same period last year. The year-over-year increase is driven by higher work volumes across our three business areas. with strong contributions in quarter from the robotics and space operations and satellite systems businesses. By business area, revenue in satellite systems of 108.8 million in the second quarter of 2024 were 19.4 million or 21.7% higher compared to the same quarter in 2023. The strong showing was driven by higher contributions from new programs, including Telesat Lightspeed and Q2 2024. In robotics and space operations, we saw solid year-over-year growth with revenues of 78.3 million in the latest quarter, representing 19.6 million or 33.4% increase versus Q2 of last year. The growth is largely attributable to high volume of work performed on the Canada ARM3 program. Revenues in our geo-intelligence business of 54.9 million in the latest quarter, represents an increase of 7 million or 14.6% year over year, reflecting higher work volume on the CSC program. Moving to gross profit. As a reminder, gross profit represents our revenues, less cost of revenue, which includes materials, labor, subcontractor costs, allocated overhead, shred credits, and depreciation. For Q2 2024, gross profit was 66.2 million, representing a 4.9 million or 8% increase over the same period last year, driven by higher work volumes in the current quarter. Gross margin in the latest quarter was 27.4%, which is in line with our expectations and compares to 31.3% for the same period in 2023. The year-over-year change in gross margin is driven by evolving program mix and higher depreciation expense as new assets come into service. Q2 operating expenses of $44.1 million were slightly above last year's metric of $42 million, primarily reflecting an expansion of our SG&A function as work volumes grow. Adjusted EBITDA in the latest quarter was $48.7 million compared to $40.4 million in Q2 2023, representing an increase of $8.3 million or 20.5% year-over-year driven by higher volume of work and steady operating expenses. Adjusted EBITDA margin of 20.1% in Q2 2024 is consistent with the company's full-year margin guidance of 19-20% and compares to adjusted EBITDA margin of 20.6% reported in the second quarter of 2023. Our adjusted net income in Q2 2024 was $23.4 million, compared to $21.9 million reported in the same period in Q2 2023. The year-over-year increase of $1.5 million, or 6.8%, was driven by higher operating income in the latest quarter. Moving to backlog, we ended the quarter with $4.6 billion in backlog, representing an increase of 318% year-over-year. The growth in backlog is driven by new order bookings, including the $1 billion award for phases CD of the Canada Arm 3 program announced in Q2 2024, and $2.4 billion Telesat Lightspeed Leo Constellation award announced in Q3 2023, partially offset by continuing of our backlog into revenue. Moving to CapEx. we remain focused on making the right investments in the business to support our strategic growth initiatives. In Q2 2024, we spent $38.9 million on capital expenditures compared to $45.7 million last year as we continue to invest in Chorus and other growth initiatives. Growth CapEx in the latest quarter was $32.8 million, which compares to $43.7 million in Q2 2023. During the quarter, we made an $11.7 million payment related to the acquisition of SatixFi Space Systems UK Limited, the digital payload division of SatixFi Communication Limited, which closed in Q4 2023. We also made a $9.2 million payment related to the company's equity investment in Starlab Space LLC. Cash from operations during the quarter generated $149 million compared to cash generation of $38.9 million in Q2 2023. The year-over-year increase was driven by positive working capital contributions primarily related to the Telesat Lightspeed program. We generated free cash flow of $110 million in the latest quarter compared to negative $6.8 million in Q2 2023. Free cash flow after adjusting outgrowth CapEx investments was positive $142.9 million in Q2 2024 compared to $36.9 million reported in the same period last year. We expect to see positive working capital contributions throughout Q3 and Q4 of this year as we continue to ramp up activity on the Telesat Lightspeed program. Moving to our balance sheet. We ended the quarter with a strong financial position and net debt of $352.3 million, available liquidity of $293.5 million, and net debt to trailing 12 months, adjusted EBITDA ratio of 2.0 times. During the latest quarter, we made a $70 million repayment to our revolving credit facility, which is consistent with our plan to leverage the flexibility provided by that facility. In summary, this was a solid quarter and our business continues to perform in line with our expectations. We are encouraged and energized by the positive momentum we are seeing across our businesses. Let me now turn to our outlook. As Mike noted, we are updating our financial outlook and are well positioned to capitalize on strong customer demand and robust market activity. For fiscal 2024, we are raising our full-year revenue guidance to $1.02 to $1.06 billion from $950 million to $1.05 billion previously, representing robust year-over-year growth of approximately 30% at the midpoint of guidance compared to 2023 levels. We continue to expect revenue growth to accelerate in the second half of 2024 as we ramp up work volumes on a number of programs. We are narrowing our 2024 adjusted EBITDA guidance to $200 million to $210 million from $190 to $210 million previously, representing approximately 19% to 20% adjusted EBITDA margin. We are narrowing our 2024 capital expenditures range to $200 to $220 million from $210 to $230 million previously, comprising primarily of growth investments to support chorus and the previously outlined growth initiatives across our three business areas. Additionally, as a result of favorable working capital contributions related primarily to the Telesat Lightspeed program, we now expect to generate free cash flow and continue to deleverage our balance sheet in 2024. Turning to Q3 2024, we expect revenues to be $270 to $280 million as we continue to execute on our backlog. With strong operational performance and a record backlog, we are well positioned for 2024 and beyond and look forward to delivering another successful year. Mike, with that, I'll turn it back to you.