MDA Space Ltd.

Good morning, ladies and gentlemen, and welcome to MDA Space Limited Conference Call and Webcast. This call is being recorded on August 7, 2025 at 8.30 a.m. Eastern Time. Following the presentation, we will conduct a question and answer session. Instructions will be provided at the time for you to queue up for questions. For those viewers listening via Webcast, please note that the company will be using a presentation. Webcast viewers can advance the slides by using the arrows seen in the presentation window. If anyone has difficulties hearing the conference, please press star followed by zero for operator assistance at any time. I'd now like to turn the call over to Shireen Zahawi, Head of Investor Relations at MDA Space.

Thank you, operator. Good morning and welcome to MDA Space Second Quarter 2025 Earnings Call. Mike Greenlee, our CEO, and Dionne Lavois, our COFOL, will lead today's call and share some prepared remarks before taking your questions. A couple of housekeeping items before we begin. Today's call is accessible via Webcast on our Investor Relations website. All our disclosures, including the press release, MDNA, and financial statements are available from our Investor Relations website and from CDAR Plus. I would also like to remind you that today's call will include estimates and other forward-looking information which may differ from actual results. 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, and

thank

you to those joining us today to discuss our second quarter, 2025, financial results. At the half-year mark, the MDA space team continues to execute well, delivering solid second quarter results with strong growth in our revenue and profitability as we convert our backlog and meet our customer commitments. Our Q2 revenues totaled $373 million, up 54% year over year. Adjusted EBITDA was $76 million, up 57% year over year, and adjusted EBITDA margin was a solid 20.4%. Operating cash flow was healthy at $53 million, and we ended the quarter with a net catch position of $417 million. Our backlog of $4.6 billion at quarter end provides us with good revenue visibility for 2025 and beyond. With the addition of the recently announced ECHOStar contract award, our backlog rose to over $6 billion. Q2 and the subsequent period was a busy one for MDA space. As I just referenced, last week we announced the selection by ECHOStar to be the prime contractor on ECHOStar's new -to-device LEO constellation, the world's first 3GPP 5G compliant non-terrestrial network using LEO satellites. The initial $1.8 billion contract will see us design, manufacture, and test over 100 MDA Aurora -to-device satellites. With contract options that if exercised will increase the network size to over 200 satellites, and approximately $3.5 billion in contract value. With this contract, ECHOStar becomes the anchor customer for the 3GPP standards, 5G standards based compliant MDA Aurora -to-device satellite product, further solidifying MDA space's leadership in the non-terrestrial network market. This is our fourth LEO constellation contract award in just over three years, cementing our market leadership position and accelerating our strategy as we shift to high volume, standards based satellite product manufacturing. Moving to Q2, during the quarter we entered into a definitive agreement to acquire SatX 5 Communications, a transaction that we completed in early July, and that will further enhance our -to-end satellite systems offering as demand for next generation digital satellite communications continues to accelerate. Once again, I want to take this opportunity to welcome our new colleagues from SatX 5 to MDA space as you join us on developing the next generation of digital satellite technology. In Q2, we were pleased to finalize an agreement with the Canadian Space Agency to reopen the David Florida Laboratory under MDA space management, maintaining this critical space and satellite integration and testing facility for use by the broader space ecosystem in Canada. The agreement enables MDA space to ensure and expand our spacecraft testing capacity, while also providing a national test site for all Canadian industry and academia that requires space-based testing facilities at market prices. We are proud to play a leadership role as a national space champion for our industry. Throughout the quarter, our teams have continued to execute on our existing programs, including major programs like the Telesat Lightspeed, as well as both low-Earth orbit constellations for GlobalSTAR. We also continue to execute on the development of our Canadarm3 robotic program and MDA Chorus, our next generation Earth observation constellation. As always, our strong performance in the quarter would not have been possible without the extremely hard work and dedication of the entire MDA space team, who I'd like to thank and acknowledge. With a solid operational performance here to date, we are updating our previous 2025 full-year financial outlook, which we provided with our Q1 2025 earnings release. We remain confident and now expect full-year revenues to be $1.57 to $1.63 billion, representing -over-year growth of approximately 48% at the midpoint of guidance. We are updating our full-year adjusted EBITDA range to $305 to $320 million, representing -over-year growth of approximately 45% at the midpoint of guidance, and approximately 19 to 20% adjusted EBITDA margin. We reaffirm our expectations that capital expenditures will be $210 to $240 million in 2025, as we invest in our growth initiatives. We continue to expect full-year free cashflow to be neutral to positive in 2025. As we look to the balance of 2025, the team is energized by the solid momentum we are seeing in our end markets. MDA space has the right products, technology, and services portfolio to fully capitalize on the opportunities ahead of us. I'll now give you an update on our three business areas, and then pass it over to Guillaume for a deep dive on the financials. In satellite systems, we continue to see 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 or pipeline remains strong. In Q2, our teams were busy advancing work on a number of programs. On the Telesat Lightspeed program, our teams are currently working on the program's detailed engineering and manufacturing preparation phase, including the critical design review, which is taking place later this year. With all critical subsystem suppliers under contract, the stage is set for work volumes to accelerate this year, consistent with our program plans. The team is also progressing work on the GlobalStar next generation LEO constellation, where MDA space was selected as the prime contractor to manufacture more than 50 MDA Aurora software-defined digital satellites. The team is making good progress on the engineering, development, and program procurement activities for the program, and is transitioned towards the critical design review taking place later this year. Our satellite systems team also achieved an industry first recently, by demonstrating digital beamforming and steering multiple beams with KA-Band direct radiating array using direct sampling. These are among the key features of the MDA Aurora KA-Band DRA, and their successful validation marks a significant breakthrough in satellite communication systems that support broadband connectivity and 5G networks. It also marks a key milestone in the development of the digital payload technology for the MDA Aurora software-defined product line for next generation satellite constellations. We also continue to work, advance work on the initial GlobalStar program, where MDA space is the prime contractor to enhance GlobalStar's LEO constellation through the addition of 17 satellites, which support SOS features and -to-device communication on certain Apple products. In Q2, the team progressed flight hardware production. The team continues to advance satellite integration work with nine spacecraft currently on the shop floor in our Montreal facility. We are also making significant progress on our facility expansion in Montreal, which will add 185,000 square feet to our existing satellite production facility. With the building shell complete, we continue to progress construction on the interior elements of the facility, and the building is now connected to the power grid. Once complete, it will be the world's largest high-volume manufacturing facility in its satellite class with capacity to deliver two MDA Aurora digital satellites per day. The production line remains on track to be operational in Q4 2025. And finally, workers commenced on integrating SADxFi communications operations and technology portfolio into the satellite system segment of MDA space, following the acquisition close in early July. Early integration initiatives are progressing well. Moving to our robotics and space operations business, we continue to see good traction and activity levels on both the government and commercial fronts. In Q2, we continue to ramp up work volumes on phase C of the Canadarm3 program, which we were awarded together with phase D in 2024. Phase C will see us completing the final design before we move on to phase D, which will see the construction, system assembly, integration and test of the full robotic systems, as well as a ground segment for command and control. MDA space will support commissioning of Canadarm3 robotic system once in orbit from our new mission control facility at our global headquarters and space robotic center of excellence in Brampton, Ontario. I also wanted to briefly comment on the NASA budget development south of the border. We were pleased to see funding restored for a number of NASA programs, including the Gateway program in the recently passed One Big Beautiful Bill Act, signed by the Trump administration in early July. This comes on the heels of earlier recommendations unveiled by the White House in May regarding NASA spending levels for the 2026 fiscal year, which contemplated ending the Gateway program, the lunar space station that is part of the Artemis program and for which the Canadian Space Agency is contributing the Canadarm3 robotic system. As a reminder, our contract for Canadarm3 is with the Canadian Space Agency and the government of Canada and not NASA. And there has been no change to any MDA space contract as a result of these US budget developments back and forth, again, now with it being fully funded. Additionally, NASA has signaled its commitment to work with its Artemis partners, which include the CSA, on expanding opportunities for meaningful collaboration to the moon and Mars. The agency is also committed to commercialization efforts in space, including replacing the International Space Station with private commercial stations when the ISS is deorbited in 2030. The Canadarm3 contract serves multiple purposes, including both space agency and commercial opportunities. NASA's increasing commercial orientation bodes well for MDA space. We continue to advance opportunities to incorporate our robotic technology on multiple near-term opportunities, including lunar mobility programs, on orbit operations, including commercial space stations and ongoing space exploration opportunities. And subsequent to quarter end, we announced that an MDA space led team was selected by the Canadian Space Agency to conduct an early phase study for Canada's proposed lunar utility vehicle. Recall that in 2023, CSA announced $1.2 billion in funding for a Canadian utility rover that would be contributed to the Artemis program and would support human exploration on the lunar surface. This initial phase study is a critical first step in defining the lunar utility vehicle mission concept and technology development plan. As part of this effort, the team will integrate MDA SkyMaker, our full suite of scalable and modular space robotics derived from Canadarm3 technology, paving the way for scalable autonomous mobility solutions on the lunar surface. 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 government and private enterprise. Notable awards in Q2 include the $60 million in next phase contracts for the delivery and integration of two critical sensor systems for the River Class Destroyer program, previously known as the Canadian Surface Combatant. The $60 million is also in the Canadian Surface Combatant program or CSC. The contracts are for the delivery and integration of sensor systems for the first three ships that improve situational awareness and protect the ships against laser and optical guided threats. Our geo-intelligence team also secured a contract extension with Fisheries and Oceans Canada to provide critical data and continuous maritime satellite surveillance data and analytic services for dark vessel detection, utilizing MDA Space's Maritime Insights platform. As part of the contract renewal, Fisheries and Oceans Canada has also amended its contract with MDA Space to enable future utilization of data and services from MDA Chorus once it's operational. And subsequent to quarter end, we were awarded two contracts to equip the Royal Canadian Navy's Halifax Class ships with up to six new uncrewed aircraft systems, or UAS. Part of the intelligence, surveillance, target acquisition and reconnaissance uncrewed aircraft systems, known as I-Star UAS project, these new systems will significantly enhance the Royal Canadian Navy's ability to detect and monitor potential maritime threats, both at home and abroad. We also continue to advance work on MDA Chorus and are excited to deliver the Constellation's enhanced functionality to our current and future customers. Our spacecraft electrical integration and testing activities continued, and we have all spacecraft units on hand. Solid progress was made in building and testing the synthetic aperture radar antenna panels, and we're building up the latest of four panels in parallel with electrical and radio frequency characterization and test activities of the second and third panels. On the ground segment side, the MDA Space team continues to track to development and release plans. We've also progressed facilities for a new mission control center from where MDA Chorus will be operated. Shifting to operations, we continued our hiring efforts to support the growth we see in our business. Now, with more than 3,800 highly skilled MDA staff, today we have the people and talent to help propel our growth and give us the scale to execute on the market opportunities we see emerging. I also wanted to provide an update on the imposed UF tariffs and counter tariffs announced by the Canadian government. As we noted on our last earnings call in May, we see the situation is manageable for MDA Space. As demonstrated by the EcoStar contract, U.S. customers continue to look to MDA Space for our differentiated solutions. Our teams continue to access mitigation strategies, including compliance with USMCA, and our analysis for some of our more complex products that we export, including finished satellites, suggest that these products are USMCA compliant. We'll be monitoring this situation closely as it remains dynamic and we'll update you as necessary. To recap, we are pleased with our performance this quarter and the momentum we are seeing in our end markets. Our team is energized and we remain laser focused on our priorities, a strong focus on execution, converting opportunities in our funnel, and expanding our leadership in core markets while maintaining strong profitability and a healthy balance sheet to help fund our growth initiatives. With that, I'll hand it over to Guillaume to walk us through the detailed financials.

Thank you, Mike, and good morning, everyone. For my update, I will walk you to our Q2 financial results and provide more details on our 2025 financial outlook. Overall, Q2 results were strong with solid growth in revenue and profitability. This combined with a healthy balance sheet and backlog is positioning as well for the remainder of 2025 and beyond. Total revenues for the second quarter were 373 million. This represents 131 million or 54% increase over the same period last year. The year over year increase is driven by higher volumes of work performed primarily within our satellite systems business. My business area, revenues and satellite systems of 233 million in the second quarter of 2025 were 124 million or 114% increase compared to the same quarter in 2024. The strong performance was driven by the ramp up of the Telesat light speed and the GlobalStar Next Generation LEO constellation programs. In robotics and space operations, revenues of 88 million in the quarter represented a 10 million or 12% increase versus Q2 of last year driven by the continued ramp of the phase C of the Canada ARM3 program. As Mike noted in his remarks, there have been no changes to the Canada ARM3 program as a result of the recent budget deliberations in the US, and we continue to engage closely with the CSA on this program and to focus on its execution. Revenues in our geo-intelligence business of 53 million in the latest quarter were down 2 million or 4% year over year due to the timing of programs. This was in line with our expectations for the geo-intelligence business this quarter. Moving to gross profit. For Q2 2025, gross profit was 95 million, representing a 29 million or 43% increase over the same period last year, driven by higher volumes of work performed in our satellite systems and robotics and space operations businesses. Gross margin in Q2 was 25.4%, which is in line with our expectations and compares to .4% for the same period in 2024. The year over year change in gross margin is driven by evolving program mix. Adjusted EBITDA in the latest quarter was 76 million compared to 49 million in Q2 of 2024, representing an increase of 28 million or 57% year over year driven again by higher work volumes as we continue to execute on our backlog. Adjusted EBITDA margin was .4% in Q2, consistent with the company's full year margin guidance of 19 to 20% and compares to adjusted EBITDA margin of .1% reported in the second quarter of 2024. Adjusted net income for Q2 was 48 million compared to 23 million in the same period in 2024. The year over year increase of 25 million or 106% is largely due to higher operating income in Q2 2025. Moving to our backlog, we ended the quarter with 4.6 billion in backlog, which is consistent with the levels we recorded in Q2 2024 and up 4% year to date. Last 12 months booked to bill stood at one time our revenue and our current backlog level provides us with high visibility for 2025 and beyond. Note that the Q2 backlog does not include the recently awarded 1.8 billion EchoStar contract. This contract will be added to our backlog in Q3 of 2025. On a pro forma basis, including the EchoStar award, this expands our backlog to over 6 billion, representing a very robust level of backlog as the MDA space team continues to convert opportunities in our pipeline. Moving to CapEx, we remain focused on making the right investments in the business to support our strategic growth plan. In Q2 2025, we spent 37 million on capital expenditures net of government grants compared to 34 million last year as we continued to progress our development of chorus and the expansion of our Montreal satellite manufacturing facility. Note that the CapEx figure in Q2 2025 is net of 33 million primarily related to the investissement Quebec IQ forgivable loan recoveries, which were recorded in the second quarter in line with our planning. Cash from operation during the quarter generated 53 million compared to a cash generation of 145 million in Q2 2024. The year over year change was primarily due to working capital fluctuations. Pre-cash flow was 16 million in the latest quarter and compared to 110 million for the same period in 2024. With the year over year change attributed to the previously noted working capital fluctuations which are normal and aligned to our expectations. Moving to our balance sheet. We ended the quarter with cash of 666 million inclusive of the consideration held in trust related to the SatX5 communications acquisition which was completed post quarter end. Available liquidity of 443 million under our revolving credit facility and total liquidity of 1.1 billion. As a result of our strong cash position year to date we continue to expect our net debt to last 12 months adjusted EBITDA leverage ratio to be below one time adjusted EBITDA when accounting for the SatX5 communications acquisition which closed on July 2nd, 2025 and is not currently reflected in our Q2 financials. In summary, this was a strong quarter and the MDA space team continues to execute well. And I also wanna thank the team for their outstanding dedication, passion and hard work. Let me now turn to our full year outlook. As Mike noted, we are updating the previous 2025 outlook provided in Q1 2025 earnings release and we are well positioned to capitalize on strong customer demand and robust market activity given our diverse improvement technology and product offerings. For fiscal 25, we now expect full year revenues to be between 1.57 and 1.63 billion compared to 1.5 to 1.65 billion previously. Representing a year over year growth of approximately 48% at the midpoint of guidance. We have updated our full year adjusted EBITDA range to be between 305 and 320 million compared to 290 to 320 million previously. Representing a year over year growth of approximately 45% at the midpoint of the guidance and approximately 19 to 20% adjusted EBITDA margin. We reaffirm capital expenditures to be between 210 and 240 million in 2025 to support the previously outlined growth initiatives across our business areas. And we still expect full year free cashflow to be neutral to positive in 2025. Finally, for Q3 2025, we expect revenues to be between 385 and 450 million as we continue to execute on our backlog. Please note that the financial outlook provided does not factor any potential impact from the tariffs announced this year. As Mike noted in his remarks, our current assessment is that our potential tariff exposure, if any, is manageable. We will continue to monitor the situation and may elect to update our financial outlook if deemed necessary. With a solid backlog and LT opportunity pipeline, we remain focused on discipline execution and leveraging our capabilities and technology to grow profitably in line with our long-term strategic plan. Mike, with that, I'll turn it over back to you. Thank you, Guillaume.

With that operator, we will open it up for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. We will be taking one question and one follow-up per participant. Please feel free to rejoin the queue if you have any additional questions. Your first question comes from the lines of Conor Gupta from Scotiabank. Please go ahead.

Thanks, and good morning, everyone. So I wanted to ask you about the production curve, Mike. Between the three digital satellite constellation contracts you have, I think you have about 350 satellites also that you need to produce over the next four years, maybe. How do you expect the production curve to shape over the next four years? I mean, like how many satellites are you expecting to start producing this year, next year as you ramp up capacity in Montreal?

Yeah, so I think with the expansion of the Montreal facility, as we keep mentioning, as we enter into 2026, we'll be capable of production rate up to two satellites a day. So of course that's 200 workdays a year, so that's 400 satellites a year. In 2026, we don't expect you anywhere near that. We'll have a much slower ramp up of this new facility to work out all the kinks in it. And then as we go through the year, we'll be producing a few dozen satellites. In 2027, we start to get into the couple hundred satellites and more level of production, but still not using the full capacity of 400 satellites. And then of course more in 2028. With each of our contracts that we announced and certainly all of the opportunities in our pipeline, this is a key point of discussion that we always have. Anytime you meet a new customer, you review the technical capabilities of the product and confirm interest in that MDA Aurora satellite. And then quickly the conversation moves to what do our production rates look like and where are their demands going to fit in? So this is a constant source of discussion that we're always working through. And so far, of course, we're nowhere near getting ourselves into any kind of capacity limitations. If you think about the next five years, the 400 satellites here, that's 2000 satellites over the next five years. And as you've indicated, we've only got orders for 300 plus. So we'll continue to manage this. We do have the capability if we needed to. We do talk to people about this, that we could add another set of production equipment and move to three satellites a day if we ever had to for a peak capacity moment. That's a very manageable CapEx investments someday in the future if we needed to do it. But no need to consider that at the moment. That's just there sitting in the sidelines if we ever need to

pull out that cart. Okay, so it sounds like 27 or 28, probably 28 maybe is sort of your peak production here based on the backlog. Yeah, right now

it'll continue to build. We always talk to with our customers, right? We get these initial orders to initiate these constellations and then customers will wanna talk about expansion orders to be able to get more satellites for their constellations. In this EchoStar announcement, we've talked about that we've got this first $1.8 billion to get going with these first 100 plus MD-Auroro satellites. And then with options to add more than 100 more to bring the full order up to 3.5 billion and to deliver over 200 satellites to them. So as these optional pieces and expansion orders come in, there'll be all kinds of activities that happen as we go through the next two or three years that will continue to use up the capacity in the satellites. I think we'll build up to solid production rates for sure in 2027 and 2028.

Thanks for the color. Just to follow up maybe for Guillaume on the free cash side. So working capital obviously swung in Q2, which is kind of normal, I guess, as you said. With respect to both working cap and cap packs, how do you envision this back half of the year kind of shaping up here as these contracts roll in? The EchoStar, for example, right? Obviously it comes with maybe some advances for working cap purposes, et cetera. And then you still have, I think, chorus cap packs continuing through the end of this year, maybe or maybe early next year, right?

Thanks. Thank you, Conor. So chorus, we're tracking to our plan. It's part of our guidance in terms of capex. So that's tracking. We don't expect any spending really related to capex in 2026 for chorus. This is really the final year. In terms of how the rest of the year will unfold for free cashflow and capex. Look, we reiterated our guidance. I'd rather not start guiding on a quarterly basis for these things, but we have a bit of a head start, I will say, at the end of Q2 for free cashflow. We're around 220 million. And so with that, we're confident that we can still deliver neutral to a positive year this year in terms of free cashflow.

Okay, appreciate it. Your next question is from the line of Ken Herbert from RBC Capital Markets.

Please go ahead.

Yeah, hi, good morning. Mike Gilman, Shireen, congratulations on the recent contract.

Thanks, Ken. Thanks.

Hey, Mike, and Gil, maybe just on that, can you talk a little bit further now that you've got the contract in place? How we should expect the cashflow and the revenues associated with EchoStar to maybe flow in the back half of this year and in 26 and 27? Because I can appreciate there will be some timing discrepancies between those two aspects of the contract.

Yeah, so maybe I'll take that one,

Ken. For 2025, the impact is not really material on both revenue and cash. I mean, we just secured the contract. And also this was all sort of planned into our ranges. So no impact to 2025 outside of our current guidance. And then we expect the contract to ramp. Obviously in 2026. And with the bulk of the execution being done aligned to Mike's remarks around production ramp up and all that in 2027 and 2028. And we expect to complete the contract in 2029. In terms of cash, yes, we will be receiving and are receiving advances related to the initial award. So that's obviously helping us to obviously deliver our free cashflow guidance. And the contract is structured in a way where on a cumulative basis, we cover our costs, we cover our overhead, we cover our fees. And at the end of the day, it's a positive free cashflow curve. We also always cover for any termination liabilities that we could have if the contract for whatever reason would be canceled. So the cashflow curve on this contract is quite standard for us. And again, no major impact on 2025 and

the ramp up will really start in 2026.

That's helpful, thank you. And as we think about the margin performance so far this year and into the back half of the year, is there anything in particular as we see maybe some more positive movement on the adjusted EBITDA margins in the back half? Anything in particular you'd call out which could be behind some potential increases in the second half margins, either from a programmatic standpoint or maybe from a cost standpoint as you're now further down the cost curve somewhat on the new facility?

Really, Ken, we did reaffirm our guidance to be between 19 and 20%. Obviously, we had a very strong quarter at .4% this quarter. I just wanna note here that there was a bit of a positive impact due to the IQ, forgivable loan that we basically, for which we have completed the initial claim and that has impacted primarily our capex, but there was a bit of a revenue and margin retroactive adjustment. So that bumped up a little bit our EBITDA margin. So I would say that if you exclude the impact of this IQ, forgivable loan, we were pretty much at the midpoint of our range. So no change to our expectations for Q3 and

Q4 and for the full year. Great, thanks, Gail. Thank you, Ken. Your next question is from

the line of Stephen Mickelson from BMO Capital Markets. Please go ahead.

Hey, thanks for taking my call. So clearly the Canadian government is looking to spend more on defense. You're already involved in some of the key areas like service combatant and future radar stat investment, but to the extent that you can comment, what other types of opportunities might materialize as a result of this higher defense spent?

Yeah, I think that it is true. The Canadian government has made public announcements and commitments to increase in defense spend. They wanna do that at an accelerated pace. There are announcements and commitments to spending increased levels of money this year and then the next years. So they're definitely doing that. There's a lot of increased activity in Ottawa these days in that regard. If you look at the historical defense plans that have been published over the last several years in terms of the Department of National Defense strategies, they've included satellites for earth observation, for space observation and for space-based communication. So I would expect those areas to continue to be focus areas for them and that as they accelerate and wanna do things faster and or expand and do more, that it would be in those areas. The space domain gives great advantages to military operations on earth in terms of earth observation. Canada has a large country with three maritime plug posts including the Arctic and an increased role in Arctic security greatly benefits from space-based earth observation. With the increased congestion in space and increased countries and activities in satellite and space operations, the need for really strong military space domain awareness or observation of all the satellites and what they're up to is an important area of military operations and will continue to be so for Canada. And then space-based communications, especially in the Arctic, as Canada continues to increase its role in Arctic security and sovereignty will be increasingly important. So we would expect to see activity in those areas as defense continues to advance their plans. All right,

thanks for that color. Now I know that the EU and US sovereign satellite opportunities have dominated the press coverage over the last half a year or so, but to the extent that you can, are you seeing any other opportunities in any other regions? Are there any that are particularly rich in terms of a pipeline for you guys or potential pipeline?

Certainly I agree with you that United States and Europe continues to be important areas of government-based pipeline growth, especially in the defense and security related areas. We've mentioned in our sort of target areas for mergers and acquisitions, M&A activity, that looking at MDA space presence in the future, capacity and geographic presence in Europe or in the United States, to be able to access those pipelines and expand our pipelines continues to be an important area of focus. We do today deliver into those things on most of the US Department of Defense or all of the US Department of Defense satellite providers that are working on their SDA, Low Earth Orbit Constellations. We provide them satellite subsystems for their satellite manufacturing from our merchant supplier portion of our business and satellite systems out of Montreal. So that continues to be strong business for us as we then figure out how to get more present and open up these pipelines further for us. There is opportunity for us in other parts of the world, yes. So I don't really wanna comment exactly on which countries and things, but there are three additional regions come to mind that are engaging with us through their local space companies that are looking for support, especially in satellite communication satellites. And then as the MDA chorus team continues to work around the world on its letters of intent leading towards future contracts, that's a very robust area of activity at the moment with a number of new regions of the world being interested in signing up for a chorus data services, data products and services as we move forward into the future. So really good activity in both the Earth observation and space-based communications front internationally.

All right, very

good. Thanks for taking my questions. Thank you. Your next question is from the line of David McFadden from

Cormark Securities. Please go ahead.

Morning,

David. Oh, great. Hi, good morning. Couple of questions. So just on EchoStar, if we just pretend hypothetically that they have a problem with the FCC on their spectrum and stuff, do you think that there's any risk that they get to the contract with EchoStar with you?

You certainly have, EchoStar is working through issues with the FCC and they've been doing that for a while and continue to do so. We get somewhat regular updates on that activity. Those were all considerations in the awarding of that contract. I think that the fact that we all signed this contract and it was awarded, they were comfortable that those issues are not gonna get in the way of contract execution since we're all now moving out in the contract. There's always some very, very small chance that something could go wrong. That can always happen in any regulatory process in any of the areas of our business. But right now it's feeling comfortable

that they'll get that solved and worked through.

Okay. So just on chorus, when do you expect those two satellites to be launched and when do you expect to start to generate revenue on chorus?

Yeah, we're still holding to the mid-26 launch and in our window, in all of our planning, there would be a commissioning period that would occur through that last piece, the last quarter of, last half or quarter of the year in 2026 and to bring everything into service. And so there might be a little bit of things generated there but really it's in 2027 that we would expect things to really kick in. A number of customers, we've seen slight increases in radar SAT-2 levels of business, which is great for a satellite that's been operating for a number of years. Customers have a lot of confidence in chorus and therefore are really relying on radar SAT-2 and sort of some of this, we see some optics here and there in people's interest in radar SAT-2 on their way to chorus. And so that's really good to see. So we're already seeing some small increases in revenues in some customers as we head towards that chorus activity,

call it 18 months from now.

Okay, so I mean, that's what I read about the satellite aperture radar, or sorry, synthetic aperture radar market shows that it's a pretty robust, strong market. Are you seeing that?

Yeah, it's a pretty strong market. Synthetic aperture radar is an earth observation sensor of interest, especially to defense and intelligence agencies around the world. And there is an increasing level of defense and intelligence activity around the world. And so because synthetic aperture radar is an active sensor, it's sending a radar ping down to the earth surface and receiving the bounce back from that ping. It means that it's not like an optical sensor. It's not affected by day or night. It's not affected by weather. So it can see during the day, it can see at night, it can see through clouds, it can see through weather. So it's a very effective sensor, especially for defense and security operations and intelligence operations. So that's strong in general. The synthetic aperture radar market typically includes a couple of bands of behavior. So a lot of the companies and activities that you see in the news these days are using X-band satellites. So an X-band satellite is a very narrow band synthetic aperture radar, and it's for more sort of zoomed in, higher resolution imaging. When it takes a scan of the earth surface, it might be taking a 15, one five kilometer scan image at a time. Another area is the C-band satellites, which is a very broad area surveillance satellite and very effective for doing large scans, which is for us, our C-band satellites are 500 to 700 kilometer wide bands when we scan the earth surface. And so Radarsat 2 is a C-band satellite, the main core satellite is a C-band satellite. So in that niche, which is really useful for a number of things, especially maritime domain awareness, but also increasingly, other activities, we're seeing like really strong interest in that. And then with our chorus constellation being a C-band satellite paired with an X-band satellite that trails it about an hour and a half behind it in its orbital path, so that we can detect things in the broad area swath and then zoom in with the X-band, over the next hour as we go past it again, that's a unique called tipping and queuing capability, which is a unique commercial service, that this commercial service doesn't exist in the SAR business right now. And so that's getting strong interest as well, again, from especially the defense and intelligence community, because of its effectiveness of doing a broad scan, picking something up, zooming in on it right away, and then really understand what's going on. So yeah, we're seeing strong demand for

synthetic aperture radar imagery as we move forward.

So, okay. And then just lastly, when do you expect to finish the revenue recognition on the first Global Star Order?

Oh, so we're almost done,

David. There's minimal revenue recognition remaining on that contract. We're really at the final stage as Mike described, like the spacecraft are on the floor and we're just doing final assembly integration and testing. So we're almost completed on the revenue recognition. The first eight

and the next nine, we'll get them right

after that. Okay, so say Q3, would be wind it up, I guess.

It'll be a little bit in Q4, because we've got to get the- Yeah, just a little, but I mean, it's very minimal.

Okay, so say for 2025, you're wrapped up. Yeah, yeah, say that. Any other- Okay, all right, that's it for me,

thanks. Thanks a lot.

Thanks, David.

Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star followed by the number one on your touchstone phone. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your next question comes from the line of Benoit Poirier from the Jardin's Capital Markets. Please go ahead.

Thank you very much. Good morning, Mike. Good morning, Guillaume. Could you maybe, Mike, provide additional context on the announcement that MDA is set to prime SkyFi with ESA in the UK? Can this be tied into other European constellation opportunities like UTELSAT or Iris2, especially as the UK is now invested?

Yeah, the big thing with SkyFi is it continues to advance our 5G capabilities. And we've been able to pick up some European space agency funding through this project to be able to do 5G onboard processor demonstrations. So that's really good for us. It helps bring additional funding to advancing the technologies in our roadmaps. We've been investing our own R&D in our 5G processors. As you've seen from the EchoStar contract, we're now going to be delivering 3GPP, 5G compliant satellites at scale now into the market. And so this is like a parallel really ESA project that helps advance and demonstrates those technologies in Europe. Whether or not those technologies would ever click into, you had asked the question, any of the European programs, we'll see certainly getting some European space agency support through our MDA UK business area. For that helps position more of our work in Europe, but we'll just have to wait and see based on industrial strategies in government procurement, how MDA space shows up in the European region, whether or not all these things can click together to create a bigger opportunity for us in Europe. But right now for today, it's a great program to have. It really helps the European teams accelerate the demonstration of our 5G technologies. And it helps us as a company bring more resources to the completion of those 5G technologies.

Okay, SpaceX, Mike has announced that they will begin launching their third generation satellites in the first half of 2026. Any thoughts on how the beamforming stacks up to MDA's Aurora? And do you get a sense that given geopolitics, it will be tough for some Canadian telcos to deal with SpaceX, especially once tele-satellite speed Leo satellites becomes operational in 2026?

Yeah, I think I don't have anything specific to say about SpaceX's technical capabilities. I know that competitively, we have strong capabilities and our customers are in a strong place with our satellites and their technical characteristics combined with the capabilities of our customers that operates and have the spectrum to operate their low earth orbit constellations. I think that people have a strong position in the marketplace and so I think that that's great. I think that there will be multiple direct to device space networks that are commercially developed around the world in this conversation. We just mentioned SpaceX having that ambition and EchoStar having that ambition. There certainly will be others. There are opportunities, for example, for a Canadian company to do that. That's out there in the mix. In addition to other players in other parts of the world. So I think we're gonna see over the next several years all kinds of new collaboration. I think we'll see collaboration between space network operators to see what kind of global services they can bring. I see we'll see new combinations of collaboration between space network operators and terrestrial mobile phone operators. Especially now with this new 5G satellite that we're putting into the market. That's super important that it's a 5G standard compliant satellite. It means that a satellite can be on a terrestrial cell phone network on earth and then just basically like roam or slide into space based services in a 5G compatible network from space and then back to a terrestrial network and do seamless transitions. And so the collaboration opportunities between space based network operators and earth based mobile phone operators are now gonna be greatly increased. And so I think we'll see all kinds of new collaborations and combinations of capability around the world moving forward.

Very interesting. And just a quick one for Guillaume. Guidance for free cash flow is unchanged despite the very strong first half and the recent contract announced with EcoStar. What are the key elements we should consider in terms of offset for the second half Guillaume?

Yeah, well Benoit, it's like, we have a lot of contracts right now that we're dealing with. So obviously for the back half of 2025, EcoStar will be a positive to the working capital. That's quite typical as we are receiving initial award advances. With that said, for some other contracts, there's a little bit of working capital consumption and that's just normal. It's part of our business. And we feel good about our guidance. We're managing the business prudently. We're happy to see that we have a good ad start to the year. And now we're gonna focus on executing our plan for Q3 and Q4.

Okay, thanks

very much for the time. Thank you. Thank you, Benoit. Thank

you. There are no further questions at this time. I'd like to turn the call over to Mike Greenlee for closing comments. Sir, please go ahead.

Okay, well, thanks everyone for your time this morning. We definitely look forward to updating you on our progress during our next earnings call in November. Have a

great day and we'll talk again the next time. Thanks.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.