MDA Space Ltd.

Good morning, ladies and gentlemen, and welcome to MDA Space Limited conference call and webcast. This call is being recorded on November 14, 2025 at 8.30 a.m. Eastern Time. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that 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 conference over to Shireen Zuhawi, Head of Investor Relations at MDA Space. Please go ahead.

Thank you, Operator. Good morning and welcome to MDA Space third quarter 2025 earnings call. Mike Greenlee, our CEO, and Guillaume Lebois, our CFO, 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, MD&A, and financial statements are available from our investor relations website and from CDAR+. 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 their 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 for joining us today to discuss our third quarter 2025 financial results. In Q3, the MDA space team delivered another quarter of strong financial performance with double digit growth in both revenue and profitability. Our revenues totaled $410 million, up 45% year-over-year. Adjusted EBITDA was $83 million, up 49% year-over-year. And adjusted EBITDA margin was a solid 20.2%. Operating cash flow was healthy at $33 million. And we ended the quarter with a strong balance sheet. Our backlog of $4.4 billion at quarter end provides revenue visibility for 2025 and 2026 and beyond. Q3 and the subsequent period was a busy one for MDA Space. In early July, we closed the previously announced acquisition of Satix 5 Communications, a leader in next-generation satellite communication solutions based on in-house design chipsets. Satix 5's operations and full technology portfolio is now part of the satellite systems business area of MDA Space, and integration activities are well underway. As you know, during the quarter, we also announced our selection by EcoStar to be the prime contractor on a new low Earth orbit directed device satellite constellation valued at approximately US $1.3 billion, whereby MDA Space was tasked with the design, manufacture, and testing over 100 software-defined MDA Aurora directed device satellites. EcoStar subsequently terminated the contract for convenience in September 2025, As per our contract, MDA Space is entitled to and expect to be compensated for all related termination costs and fees and is in discussions to finalize that contract termination agreement. While we are disappointed with the EcoStar development, as we have said previously, it is unrelated to MDA Space performance and our products and services. These remain in high demand. In events and forums around the world this fall, we continue to be encouraged by the high level of customer interest we are seeing in our space technology, which is uniquely positioned to serve the emerging and evolving needs of the space market. We are also pleased and honored to be named the 2025 Global Satellite Business of the Year by NovaSpace and presented with the award, which celebrates excellence in satellite business at the World Annual World Space Business Week in Paris this past September. I want to take this opportunity to congratulate and thank our MDA space team for their commitment, expertise, and award-winning industry leadership. Subsequent to quarter-end, we announced a $10 million equity investment in Maritime Launch Services, a Canadian-owned commercial space company that is developing Spaceport Nova Scotia, Canada's first commercial orbital launch complex. The investment will help accelerate the Space Force's readiness for orbital launch operations providing reliable domestic launch capability for commercial, civil government, and defense clients in Canada. We are also reaffirming our previous 2025 full-year outlook, which we provided with our Q2 2025 earnings release, with full-year revenues expected to be between $1.57 and $1.63 billion, representing year-over-year growth of approximately 48%. at the midpoint of guidance, and full year adjusted EBITDA expected to be between $305 and $320 million, representing year-over-year growth of approximately 45% at midpoint of guidance. We look forward to delivering another year of solid financial performance in 2025. I want to take a moment to speak to what we see as an increasing market opportunity for MDA space related to the growing focus on defense investment. as NATO countries rapidly move to reinvest to build capabilities and infrastructure. With the space domain increasingly recognized as a critical domain for defense and security, we believe MDA Space is well positioned for this opportunity to extend our mission capabilities and support the strategic sovereignty and security requirements of Canada and its partners and allies. We're in the early days of a new and what is projected to be a prolonged investment cycle. We are noticing a change in pace and intensity of defense space conversations and are actively engaged in these discussions. I'll now give you an update on our three business areas and then pass it 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 from multiple markets and geographies. We are also seeing good activity levels from customers, and our opportunity funnel remains strong. In Q3, our teams were busy advancing work on our 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 this year. The team is also advancing work on the Global Star 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 procurement activities for the program and is progressing work related to the critical designer view milestone. In July, our satellite systems team also achieved an industry first by demonstrating digital beamforming and steering multiple beams with KA band direct radiating arrays using direct sampling. These are among the key features of the MDA Aurora KA-BAN DRA, and the demonstration marks a key milestone in the development of the digital payload technology for the MDA Aurora software-defined product line. We also continue to 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 direct-to-device communication on certain Apple products. In Q3, the team progressed flight hardware production. The team continues to advance final satellite integration and test work with nine spacecraft currently on the shop floor in our Montreal facility. Due to delays resulting from a number of factors, including the supply chain, the delivery of these satellites is now expected in early 2026. We are currently in discussions with Global Star to address any potential liquidated damages that might result from this delay. It's important to note that our contracts with our supply chain are structured in a manner that embeds liquidated damage clauses as well. So we have recourse in the event of supplier delays. We're also making solid progress on our facility expansion in Montreal, Quebec, which will add 185,000 square feet to our existing satellite production facility. A portion of the office space is now complete and a number of engineers have moved in with great excitement. And we continue to finalize interior elements of the production facility, which remains on track to be completed this year. 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. Finally, in late October, 21 low-Earth orbit satellites for the Space Development Agency's Tranche 1 transport layer were successfully launched from California's Vandenberg Space Force Base, and MDA Space was part of this mission. We provided all KA band and L band antennas, as well as motor control electronics for the satellites. The SDA's Tranche 1 transport layer, a mesh network of 126 satellites, will deliver resilient, low-latency connectivity to support military operations in the United States. Our technology plays a key role in enabling secure and reliable communication across the constellation. Congratulations to everyone involved in making this achievement possible. 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 Q3, we continued to ramp up work volumes on Phase C of the Canadarm3 program, which we were awarded together with Phase D in 2024. During the quarter, our teams were busy actively building and testing engineering models of the system elements. 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 tests of the full robotic system, as well as a ground segment for command and control. We also announced in July 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, or LUV. 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 first critical step in defining the LUV 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 Canadarm 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 offering remains robust, and we are seeing increased recognition of the role the commercial Earth observation satellites can play to provide near real-time data and analytics to governments, and private enterprise. Notable awards in Q3 include two contracts to equip the Royal Canadian Navy's Halifax-class ships and up to six new uncrewed aircraft systems. Part of the Intelligence, Surveillance, Target Acquisition and Reconnaissance Uncrewed Aircraft System, known as ISTAR UAS Project, these new systems will significantly enhance the Navy's ability to detect and monitor potential maritime threats, both at home and abroad. The award includes an acquisition contract valued at approximately $39 million for the initial procurement of two uncrewed aircraft systems with options to procure four additional systems. And an in-service support contract estimated at $27 million over an initial five-year period to sustain operations with opportunities for extension beyond the initial period. We were also selected to deliver enhanced space situation awareness to the Department of National Defense. The standing offer awarded to MDA Space in partnership with Canadian-based Thoth Group underscores the growing importance of space domain awareness in safeguarding Canada's critical space assets amid a rapidly evolving and increasingly congested orbital environment. Building on MDA Space's proven legacy as a space domain mission partner and leveraging Thoth Group's initiative earth fence radar capability The new service integrates high-fidelity sensor data with secure cloud-based infrastructure optimized for tracking and assessing satellite and space objects in the geosynchronous belt approximately 36,000 kilometers above the Earth's surface. We also continue to advance work on MDA Chorus. Our spacecraft electrical integration and testing activities continue, and we have all spacecraft units on hand. Solid progress was made in building and testing the SAR antenna panels, and we're building up the last of four panels in parallel with electrical and RF characterization and test activities of the second and third panels. On the ground segment side, the MDA space team continues to track the development and release plans. Construction works also continues for a new mission control center from where MDA chorus will be operated. And while we are overall pleased with the performance of our supply chain, we have encountered some delays with certain units, which are impacting the program timeline. As a result of those delays, we are now targeting the launch window for MDA Chorus in late 2026. We are looking forward to deliver the Constellation's enhanced functionality to our current and future customers with many active discussions of the future opportunities in our pipelines. I also want to provide an update with respect to a proposed class action claim that MDA Space was served subsequent to quarter end. The allegations are related to the announcement and subsequent cancellation of the EcoStar Constellation contract that was announced by MDA Space in the third quarter of 2025 and the sales by certain insiders of shares after the announcement of contract and before its termination. MDA Space believes the claims are without merit and intends to vigorously defend itself. With that, I'll hand it over to Guillaume to walk us through the financial details.

Thank you, Mike, and good morning, everyone. For my update, I will walk you through our Q3 financial results and provide more details on our 2025 financial outlook. Overall, Q3 results were solid with growth in revenue and profitability and a strong balance sheet and backlog, providing us good revenue visibility for the remainder of 2025, 2026, and beyond. Total revenues for the third quarter were $410 million. This represents a $127 million or 45% increase over the same period last year. The year-over-year increase is driven by higher volumes of work performed in our satellite systems and robotics and space operations businesses. By business area, revenues in satellite systems 284 million in the third quarter, where 116 million, or 69% higher compared to the same period in 2024. The growth was driven by the ramp up of the Telesat Lightspeed Program and the Global Star Next Generation LEO Constellation Program. In robotics and space operations, revenue of 78 million in the latest quarter represented a 12 million or 18% increase versus Q3 of last year, driven by the continued ramp of phase C of the Canadarm3 program. Revenues in our geo-intelligence business of 48 million in the latest quarter were in line with our expectations and the levels reported in that business segment last year. Moving to gross profit. For Q3, gross profit was 108 million, representing a 32 million or 43% increase over the same period last year, again driven by higher volumes of work. Gross margin in the latest quarter was 26.4% and compares to 26.8% for the same period in 2024. Adjusted EBITDA in the latest quarter was $83 million compared to $56 million in Q3 2024, representing an increase of $27 million, or 49%, year-over-year, again driven by higher work volumes, as we continue to execute on our backlog. Adjusted EBITDA margin was 20.2% in the latest quarter, consistent with the company's full-year margin guidance of 19% to 20%. and compares to adjusted EBITDA margin of 19.7% reported in the third quarter of 2024. Adjusted net income for Q3 was $46 million compared to $35 million in the same period last year. The year-over-year increase of $11 million or 33% is primarily driven by higher operating income after adjusting for the amortization of intangibles Expenses incurred in Q3 2025 and attributable to the Satix 5 communication transaction, which we've closed on July 2nd of 2025. Moving to our backlog, we ended the quarter with $4.4 billion in backlog, a decrease of $185 million, or 4%, compared with the backlog as of September 30th, 2024, driven by continued conversion of our backlog into revenue. Last 12 months, book-to-bill ratio stood at 0.9 times at quarter end, and our current backlog provides us with high revenue visibility for the remainder of 2025, 2026, and beyond that. Moving to CapEx, we remain focused on making investments in the business to support our strategic growth initiatives. In Q3, we spent $70 million on capital expenditures compared to $53 million last year as we continue to progress our development of Chorus, where most of the investment has been incurred, and other growth initiatives, such as the expansion of our Montreal satellite manufacturing facility. Cash from operations during the quarter generated $33 million compared to a cash generation of $259 million in Q3 2024. the year-over-year change was primarily due to working capital fluctuations. Free cash flow was negative 37 million in the quarter and compares to 205 million for the same period in 2024, with the year-over-year change attributed to previously noted working capital fluctuations. Excluding growth capex, free cash flow was 26 million in the latest quarter and compares to $253 million for the same period last year. Moving to our balance sheet, we ended the quarter with cash of $196 million, available liquidity of $404 million under our revolving credit facility, and total liquidity of $600 million. Our net debt to last 12 months adjusted EBITDA ratio stood at 0.3 times at quarter end. The slight uptick in leverage is due to the completion of the previously announced Sadex 5 Communication Limited acquisition, which closed again on July 2nd of 2025. Recall that the company used cash on end and borrowings from our revolving credit facility to pay for the transaction. In summary, this was a strong quarter, and I'd like to thank our teams for their dedication and efforts to make this happen. Let me now turn to our full-year outlook. As Mike noted, we are reaffirming the previous 2025 outlook provided in our Q225 earnings release. For fiscal 25, we continue to expect full-year revenue to be between $1.57 and $1.63 billion, representing year-over-year growth of approximately 48% at the midpoint of guidance. We continue to expect full-year adjusted EBITDA to be between 305 and 320 million, representing year-over-year growth of approximately 45% at the midpoint of guidance, and approximately 19 to 20% adjusted EBITDA margin. We reaffirm capital expenditures to be between 210 and 240 million, comprising of growth investments to support the previously outlined growth initiatives across our business areas. Lastly, we expect full-year free cash flow to be neutral to positive in 2025. Note that the financial outlook provided does not factor any potential impact from tariffs. We continue to expect our potential exposure, if any, to be manageable. We are monitoring the situation and may elect to update our financial outlook if deemed necessary. With our $4.4 billion backlog, combined with a robust $20 billion opportunity pipeline, we are confident in delivering continued growth while remaining focused on disciplined execution and profitability. Mike, with that, I'll turn it over back to you.

Thank you, Guillaume. With that, operator, we will open it to questions.

Thank you, sir. Ladies and gentlemen, if you do have any questions at this time, please press star followed by 1 on your touch-tone phone. You will then hear a prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by 2. And if you're using a speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press star 1 now should you have a question. First, we will hear from Benoit Poirier at Desjardins Capital Markets.

Yes, good morning, Mike and Guillaume. Maybe first question, could you comment about your latest updates with GlobalStar and also how a potential sale will impact your contract? So if ultimately GlobalStar decided to sell itself, what, if any, protections do you have in place? I know this is out of your control, but if you could provide any color, that would be great.

Thanks. As you would appreciate, as a matter of company policy, we can't really comment on rumors or speculation concerning another company or what people are talking about it. For us with Global Star, we're actively involved in executing on our two contracts. We are making good progress on those two contracts, as we've indicated. On our original contract, we have nine satellites being completed and getting ready to be shipped out in early 2026, ready for launch. And in our second larger contract, we continue to execute well on those satellites moving forward. These satellites are important to GlobalStar for their constellations, and we are actively engaged in getting them delivered.

Okay, that's great. And in terms of outlook, obviously you're very encouraged with all the discussion you have, but could you maybe quantify your bidding pipeline and talk also about how it has evolved versus last quarter? And I would be curious to see where do you see the greatest opportunities among them?

Sure. The company pipeline remains at around $20 billion over the next five years of specific opportunities that we are speaking with people about in the markets. Of that 20 billion, approximately 13 billion of it would be in the satellite systems business area, primarily in the area of constellations for both broadband satellites and or direct-to-device satellites. After that, there'd be solid opportunities in geo-intelligence, specifically around, the larger opportunities would be around satellite systems for government programs for Earth and space observation, and then a solid pipeline in robotics, for robotics and rover systems for both government and commercial programs.

Okay. And you mentioned some delays related to Global Star and Corus. So what could be, Mike, the potential outcomes for MDA in terms of liquidated damages? And could you be maybe more specific about what's causing the delays? And is it the same supplier? And do you see an opportunity to do some vertical integrations?

Yeah, in GlobalStar and Quorus, I indicated in each case there was some delays and in each case due to activities and suppliers. They're different suppliers, different topics, just different people having challenges that we've worked with them to work through. In each case, you know, we've worked through them and have solutions now for the, you know, to move forward, but they did cause some delays. In the case of Global Star, to answer your question about liquidated damages, it is normal. All of our firm fixed price contracts have liquidated damages clauses. And so it's been disclosed by Global Star and by ourselves that, you know, those clauses do exist. And as a result of the deliveries now being late due to the supplier issues, that, you know, it's eligible to talk about liquidated damages clauses. And these are in discussion. It is normal for us to have back-to-back discussions liquidated damages clauses with our suppliers so that if they're late that we can impose liquidated damages on them. So all of this is a discussion point. The focus is absolutely just getting the satellites finished by getting them out in early 2026 and getting them to launch. And so that is all well underway and everyone's entire focus across all the teams involved in that project. In chorus, that supplier delay had occurred, different supplier, again resolved. And so now we're completing the assembly of the units on that satellite and getting it ready out for test. And so the implications are what we stated is that we shifted our target launch date to the end of 2026. And we continue to progress on that basis.

Okay, and last one for me, just for Guillaume, in terms of capital allocation, given the recent drop in share price, how does it impact your capital allocation strategy? Do you still see some attractive M&A opportunities out there, or do you see an opportunity for buyback? Yeah, thanks.

Yeah, thank you, Benoit, and good morning to you. We obviously always look at capital allocations, I'm not going to comment too much on the share price movement other than saying that, yeah, we are where we are right now. It's not just MDA. The whole sector is down. Our strategy regarding M&A hasn't changed, really. We're focused in two areas. One of which is if there are opportunities for us to continue to strategically pursue supply chain opportunities, you know, we'll do that. We did that this year with SatixFi. And the other area of focus for us is to consider expanding in new regions, primarily targeting Europe and the U.S. And obviously, We always think about what type of financing we would need for such potential acquisitions, but I'll leave it at that for the moment, Benoit.

Thank you very much, James.

Thank you.

Next question will be from Conor Gupta at Scotiabank. Please go ahead.

Thanks, operator. Good morning. I wanted to ask you, Mike, you mentioned in the opening remarks about space defense. I think you're attending and maybe presenting at a conference next week in Ottawa. What kind of space defense opportunities are we talking about here? Is it all constellation related, just geo, maybe robotics? It's all across, so anything specific you're focusing on in the near term?

Sure. From an MDA space capabilities perspective, space defense provides a number of opportunities. One of the areas would be in defense communication networks. You would have heard in my remarks that we do provide key technologies into the communication satellites in the United States for their Department of Defense communication satellites. We have opportunities in multiple countries to provide satellites and satellite technologies for military communication networks. A second area would be in earth observation. We own and operate Radarsat-2. We're, as we just discussed, heading towards the launch, of course. Our provision of synthetic aperture radar-based imagery to defense and intelligence customers around the world is obviously a strong defense asset to provide Earth observation for military surveillance operations. Another area is space observation, whereby it was announced in my remarks that we just recently picked up a new contract in partnership with TAAS in Canada to provide space observation to track the activities of satellites in orbit, which is tracking what people are up to and who's moving around and who's going where in orbit with their satellites, which is an important defense related activity. There are a number of opportunities in Canada and around the world for us to provide space observation technologies, both from the Earth and from orbit, which means from satellites, to be able to contribute to space domain awareness or space observation pictures. Once you observe activity in space, sometimes you want to do something about it from a military operations perspective, which is starting to open up a market in the counter space domain. I call it the counter space domain. You would have seen announcements in some countries recently talking about guard satellites, for example. These are defense departments putting up satellites that can sense what other satellites are doing, that can maneuver to protect satellites and keep other satellites away from them, and or go and inspect or investigate other satellites from a military perspective. Our really strong experiences in satellite design and operation, in proximity operations from our 40 years of robotics activity, we have a very strong background in proximity operations. and our experience in robotics, all of these capabilities put us in a strong position to be able to offer counter space or guard satellite solutions for the market. And militaries around the world are increasingly looking for those as the space domain becomes more congested. So that's the long story. The short story is there's opportunities in all three business areas.

That's great to hear that. Thanks for that. And If I can follow up, your recent equity investment in maritime launch, what's the idea there? I mean, are you guys looking to eventually become more vertically integrated, like with obviously SatExPy now on the supply side and now the launch maybe? Or is it just a runoff to support Canada's missions?

Yeah, it's a bit of a longer-term strategic view. Certainly, the words that you just used, which is to support the Canadian space ecosystem, is an important element of this. MDA Space, as the largest space company in Canada, has a number of roles. In addition to delivering a good business, we also have a leadership or championship role that we have in the country to be able to help make everything work in the space ecosystem. One of those areas, as countries get more interested in sovereignty, being able to just take care of themselves as a country. One of the key areas from the space domain for both civil and military purposes is to have domestic launch capability. Canada is moving towards this. Maritime launch has been advancing this over the last few years. So our small investment gives us a position with the company. It gives us certain investor rights, such as board positions and the like. so that we can be involved in helping to shepherd the advancement of that capability in the country. Over time, we'll continue to monitor that participation. It could result in increased investments in the future or not, but it certainly allows us to leverage our size, scope, and leadership and different skill sets to the maritime launch capability to ensure that Canada advances an effective domestic launch capability through the spaceport Nova Scotia.

Got it. Thanks. And last one for me before I turn over. Maybe, Guillaume, you can answer this. Looking at the working capital swing, I think it's pretty normal these swings are happening. Anything out of the ordinary you could point out in Q3? And I'm specifically also looking at the contract liability item. I think it went up. Some is obviously driven by StaticSpy acquisition because you've tucked them in, but it seems without StaticSpy, you also got some increase in liability there. Is it driven by the new contracts or is it driven by the existing contract like StaticSpy Global Star?

Yes. Good morning, Conor. So first of all, the fluctuation in Q3 is totally normal. We've been saying all along that from one quarter to the other, we will be seeing working capital fluctuations. So we had a bit of a reversal this quarter. Overall, our free cash flow performance year to date is quite strong. But yeah, we maintain our outlook of neutral to positive for this year. You know, we are always being conservative on the cash planning. We're happy with you know, the progress with our programs and overall, you know, with our cash management. And from a contract liability, this is just like us progressing the work. And, you know, you can see that the balance sheet fluctuations associated with that, but there was nothing outside of the ordinary for this quarter, Connor.

Okay, that's great. Thanks so much for the answer. Thank you. Thank you.

Next question will be from Stanos Motiplous at BMO Capital Markets. Please go ahead.

Hi, good morning. Mike, with respect to the pipeline for satellite systems, how would you characterize the mix between government relative to commercial opportunities and how that's evolved? Is it a good split or is it heavily weighted towards one versus the other? And then on commercial, are we talking mostly about incumbent operators looking for satellites? Are we talking about maybe corporate entities who... are new to the satellite industry but want to buy infrastructure? Is it startups, all of the above? Just any color on the nature of the customers there would be helpful. Thanks.

Sure. Yes, satellite opportunities are mainly commercial. There are some government opportunities, but they are mainly commercial, to answer your first question. On commercial opportunities, they are varied. They include experienced satellite operators, for sure. Maybe the majority would be experienced satellite operators around the world. There are some that are pulling together new investments to be able to produce space-based networks as a business opportunity. And then there are some that would be corporations looking to have networks. But the majority would be established, financed space network operators.

Okay. And with respect to your digital table of technology, how important is that becoming as a differentiator? Like obviously you've talked in the past about your customers needing some education maybe in terms of the benefits, but are your advantages there now becoming more recognized or are most of the RFPs still looking for analog satellites?

I think that people are increasingly appreciating the opportunity that digital satellites offer. I think that, in my remarks, I mentioned our demonstration capability that we now have in our facility in Montreal to be able to demonstrate dynamic beamforming. This is very important for customers to be able to come in and actually see dynamic beamforming in operation, so to have those technologies advanced to the demonstration level is extremely important for those customers to be able to not only mathematically realize the benefits of a digital satellite, but to visually see and experience that technology in operation. I think that that is really important. I think that our completion of our expanded satellite production facility, high volume production facility, As I mentioned, with engineers now moving into their spaces in an exciting development and us now finishing the manufacturing environment as we complete 2025, puts us in a position where we not only have this digital technology, we can demonstrate this digital technology, but we're entering into a production mode where we can do it at scale and at pace. And so the space-based network market is competitive. There's a lot of activity in this sector, especially in the direct-to-device element of the sector. And so the race to revenue is important. And so our ability to be able to have shorter, high-volume delivery times of an advanced, demonstratable digital technology is definitely a differentiating element of competitive conversations.

Great, I'll pass the line, thanks.

Thank you. Next question will be from Doug Taylor at Canaccord Genuity.

Please go ahead.

Yeah, thank you. Good morning. Mike, I want to ask another question on the directed handset market. You referenced a very dynamic situation right now with some of the participants. I think investors are grappling with what the end state of that market looks like with all these vertically integrated participants moving pretty quickly to consolidate spectrum. Can you talk about how you see that end state evolving here from where you sit in your conversations as a supplier into that market?

Yeah, I think I agree with your characterization of it as being dynamic. It's certainly a busy time. There have been some moves by players. Obviously, the SpaceX acquisition of Echo Star Spectrum was a sudden development that suddenly occurred and is causing people to adjust. I think that there are a number of parties in the market that are really running, like I say, the race to revenue, really working hard and fast to get their direct-to-device network projects moving forward. And that's an important thing. As a supplier of satellite technology into those markets, There are definitely in our pipeline a number of opportunities for us to provide our MDA Aurora digital satellite into folks that want to build and operate directly device networks. And, you know, those conversations continue. I think that, you know, sometimes in the pipeline, as people look at their plans and competitor plans and how to collaborate with each other and stuff. It is resulting in some dynamic conversations to be able to ensure that folks that do want to collaborate can collaborate in the market space in the future. And that's kind of interesting to be able to work through with people. But it's a dynamic, busy time. That's for sure.

But the opportunities are there.

Okay, and a lot of focus on that direct-to-handsite application of the LEO network. Maybe I can flip to talking about some of the other parts of that communications satellite market, being the broadband and satellite-based backhaul applications, more that light-speed type model. How have the pipelines on that side progressed and that market evolved in response to all this?

Yeah, it's solid. It's definitely solid. There are strong commercial opportunities there to have lightspeed-like relationships with folks around the world. And so we're actively engaged in those types of conversations in our pipeline. There are government opportunities there. One of the geopolitical shifts over the last year in 2025 has been the interest in countries to have increased sovereignty, you know, defense sovereignty, security sovereignty, economic sovereignty, which can include at times in some countries' minds, the importance of having domestic communications capability and or domestic earth observation capability for their country. And so, you know, these are, as folks are looking at increased government spend to increase sovereignty and security of their nations, communication systems and observation systems are key elements of those sovereignty-type postures. And so both in the commercial sector and the telesatellite companies around the world, in addition to the government sector, there's an increased interest in space-based communication networks.

And so, you know, last question for me with everything that you've just said, and I think you've previously talked about the potential for, you know, another LEO satellite constellation award. within the next year or 12-month time frame, even after the Echostar situation. Is that still the case? Are there programs out there with that kind of immediacy in the pipeline?

Certainly, the order page is always up to the customer in terms of when they want to move out and place an order. I always look at and talk about the maturity of bids. Bids get more and more mature and more and more specific when you're interacting with customers. And so, yes, there are a number of opportunities out there that are at a maturity level where people could choose to move over the next year. And so that remains a possibility for sure. And I should emphasize it's a possibility, but it's not a necessity. The backlog that Guillaume speaks to in the company of over $4 billion is extremely strong. It's a good position to be in. It's really important in our focus to execute well on that backlog. But, you know, to have, you know, the current size of our company, basically a three-year backlog of signed contracts in hand that we're executing on, we're in a good spot. It means that, you know, over the next couple of years, we definitely have to get more orders. We have a lot of opportunities to do so. Some of them could come in the next year for sure. But no panic there. But there is a lot of opportunity that we're working as we move forward within that pipeline.

Thank you. I'll pass the line. Yes.

Next question will be from David McAdgen at Cormark Securities. Please go ahead.

Oh, great. Yeah, a couple of questions. Can you give us an update on what's happening with that Artemis contract, you know, the $4 billion U.S. contract for the vehicle, the lunar vehicle? What's happening there? Because I thought it would be awarded this year.

The original plans, that project is called the Lunar Terrain Vehicle System, or LTBS. We are on one of the teams for the Lunar Terrain Vehicle System, which is the lunar outpost team. And really good progress on that team's evolution of its rover solution and in its bid to NASA. It was NASA's intent to announce a winner to that. I believe there's been some delays in that due to the government shutdown in the United States. So there's only certain things that you can do during a government shutdown mindset. As it looks like that's getting cleaned up right now. So as that gets cleaned up, hopefully they can, you know, complete their assessment and announcement process.

Okay, but would you expect... they would announce that contract award in 2025, or now it's more 2026?

We still think there's a chance of talking about it in 2025. We don't, obviously, control the pace of the U.S. government making announcements, but our indications are that there's still a chance that the winner could be discussed publicly in 2025. If not, obviously, it would drift into 2026, but we're still hopeful that something could be said this year.

Okay. And then, what if Canada's I haven't heard anything about this for quite some time.

Yeah, so Canada announced, what was that, about a year or more ago, that they intended to, you know, that they, you know, put some money aside to do a couple of things, which was to, you know, add some additional radar satellite capability into the Radarsat Constellation mission to ensure its resiliency moving forward, in addition to looking at, you know, radar-based or Earth observation-based services moving forward into the future. and doing some studies on the next generation, the next generation synthetic aperture radar or radar based earth observation capability for the country. There are activities in all three of those areas going on within government and back and forth asking industry for inputs in those areas. And so they do, they all continue to progress. I don't have a focused estimate of like when those things would come out. in public or whatever, but there's definitely solid progression of those things in the inside government and in the government industry kind of Q&A information exchange activities.

Okay. And then maybe, you know, if I can ask a couple questions on your pipeline. So within the satellite opportunity pipeline, are you in discussions with Apple Global Star to expand the number of satellites on the second conservation?

Right now, our focus with Global Star is execution on our current work. And so that's our absolute focus right now is to make sure that we get those satellites built and moving forward into orbit.

Okay. And at the 13 billion pipeline that you said on the satellite side, how much of that would be, say, direct-to-device versus broadband?

I don't have an exact percentage number, but I'm just thinking through in my head in real time here, you know, It might be 50-50, 60-40 kind of thing, but there's a legitimate handful of each of those things in the pipeline.

Okay. And then just lastly, you talked about defense and how defense spending is going up around the world. We all know that. Is defense a material part of the pipeline right now, and is it growing?

I would say it has the potential to grow in the pipeline. We do have some significant opportunities for sure in our pipeline related to defense, but that is an area where, you know, that's why I made remarks about it in my comments, because you can feel the number of conversations increasing in the defense sector. And so, you know, that is likely to result in, you know, further and new opportunities in the pipeline going forward. So I do expect They're based on, you know, we don't put things in the pipeline until we can talk about a program with a budget that we think is going to move and then we put it in the pipeline. We will have all kinds of conversations, obviously, with people about the potential to do things before they become a specific opportunity that's got parameters around it. And so in the defense sector, you can certainly feel the intensity of the conversations increasing, the number of questions people are asking are increasing. And so I think that there will be the opportunity to add more defense to our pipeline as we go forward in the future.

Okay.

All right. Thank you.

Thanks, David.

Next question will be from Ken Herbert at RBC Capital Markets.

Please go ahead.

Yeah, hi, good morning, Mike and Guillaume and Shereen. Hey, maybe, Guillaume, can you level set us on what you expect, how much of the third quarter revenues were from Echo Star and what you expect sort of the full year run rate to be on that? And should all of maybe those negotiations be cleaned up or would there be any sort of final recognition of Echo Star revenues or reimbursements into 26th?

Thank you for the question, Ken. So we have not recognized a lot of revenue, obviously, for Echo Star. You know, it was very small in Q3, and now we're, you know, working with them to, you know, have a contract termination agreement. So I won't speculate on the timing of that, and that's why, We left our guidance basically intact, you know, because that's one thing that's in flux right now, but very minimal revenue associated to that contract in Q3, Ken.

Okay. Thank you. And you've obviously seen some, you know, you call out supply chain challenges in both Chorus and on GlobalStar. Are you seeing any incremental risk on the supply chain with Lightspeed? And I guess, do the challenges or delays with slight delays with GlobalStar and Chorus, do those represent maybe any opportunity to pull Lightspeed to the left a bit?

I don't think there'd be an opportunity. I don't think that would represent something to pull Lightspeed to the left. I also don't see any... unique, whatever the word you said was, incremental supply chain risk. I'm just thinking through the elements of Lightspeed at the moment. So I think that's an issue. That's not an issue that I would be thinking about at the moment. The Lightspeed project, like I mentioned, continues well through its critical design review process. And you would have heard from their CEO recently on their earnings call.

Just finally on that, Mike, any update on timing as to when the options on either of the existing contracts could potentially, when's a realistic timeframe to expect those could be exercised if they are going to be?

Yeah, I don't really have any specifics on that. All those customers, the customers with options are constantly looking at their businesses and their business activities and the health and size and capacity of their networks to meet the demand that they want to load up on their network. and you know they'll make their they'll make their calls there so i don't um i don't have any specific guidance um in terms of when we would expect those things they're they remain valid they remain active as opportunities for us but no specific uh time estimates great thanks mike thanks guillaume thanks ken thanks ken once again a reminder to please press star one should you have any questions

Next, we will hear from Christine Lee Wag at Morgan Stanley. Please go ahead.

Hi, good morning. This is Justin on for Christine. Thanks for taking the questions. Mike, just on the $13 billion satellite systems pipeline, I know you've mentioned in the past that the opportunities can span anywhere from $1 million to over $2 billion. Is there any way to put a finer point on that? Maybe how many discrete opportunities are in that pipeline that are valued? you know, around a billion or more potentially? Thanks.

Yeah, I don't have a specific number in my head, but there's certainly a number. I would say the range of those would be sort of, you know, 250 million to, you know, two and a half billion plus, like in terms of the range of sizes depends on the size of constellations that people want to talk about and what orbit they're in. I think that there are definitely a number of them. I think the question was how many are over a billion. I don't have a specific number, but there are definitely more than a handful.

Okay, great. And then just a quick one. Guillaume, the free cash flow guidance looks like it would imply significant free cash flow burn in 4Q if you get close to that neutral guide, and that would be on lighter implied capex. So just curious what you're expecting from working capital to end the year and If you could probably call on the drivers, that would be helpful. Thanks.

Hey, good morning, Justin. So, look, we haven't changed our guidance. I think overall, when I take a step back here, we're looking at significant growth year on year on the top line. I mean, at the midpoint, it's going to be 48% adjusted EBITDA, 45% growth. And yeah, we continue to invest in our business. So far from a CapEx standpoint, we've been sort of spending at the rate we were expecting. And we have a good position on the free cash flow year to date, slight consumption in Q3 related to working capital. And so we decided to keep our neutral to positive guidance. I think we're in a good position. And I think that you know, we always plan conservatively. We could see some working capital consumption in the fourth quarter. But again, back to Conor's question, I mean, this is normal as part of our business. And for the time being, we remain focused on, you know, getting our milestones completed and then invoicing our customer, getting the cash in the door, and then obviously managing our outflows. And as I mentioned, We're very pleased so far with how we've been able to manage our working capital throughout this year. So I'll leave it at that. But for now, there's no concerns on the working capital from my perspective for the fourth quarter.

Okay, perfect. Thank you both. Thank you.

At this time, Mr. Greenlee, we have no further questions registered. Please proceed.

Okay, well, thank you. Thanks for that, operator, and thank you, everyone, for your time this morning. We look forward to updating everyone on our progress at our next earnings call. Have a great day.

Thank you, sir. Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for attending, and at this time, we do ask that you please disconnect your lines. Have a good weekend.