MDA Space Ltd.

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Good morning and welcome to MDSP's conference call and webcast. This call is being recorded on May 7th, 2026 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 participating via webcast, Please note that the company has included a presentation that will follow along with today's discussion. If anyone experiences other difficulties during the conference, please press star followed by zero for operator assistance at any time. I'd now like to turn the call over to Jim Floros, Vice President of Investments at MDSB. Please go ahead.

Thank you, Aubrey. Good morning, and welcome to the MDA Space First Quarter 2026 Earnings Call. Mike Greenlee, our CEO, and Guillaume Lebois, our CFO, will lead today's call by sharing some prepared remarks before taking your questions. Before we begin, I would like to remind you that 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 on our Investor Relations website, as well as CDER Plus and EDGAR. 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, Jim. Good morning.

Thank you to those joining us today to discuss our first quarter 2026 financial results. Our first quarter results reflect a strong start to the year, supported by disciplined execution and continued operational momentum. The MBA space team delivered quarterly year-over-year revenue growth of 32%, while also delivering solid adjusted EBITDA margin of 19.5%. Our Q1 performance reinforces our confidence in delivering the fiscal year 2026 guidance that we issued in March of this year. Our ability to consistently generate profitable growth allows us to continue investing in our future and was a key factor in MBA space achieving another significant milestone in the quarter as our stock began trading on the New York Stock Exchange, further strengthening our profile within the global investment community. The highly successful initial public offering bolstered our financial position, providing more flexibility to pursue our growth strategies. We also continue to build strong momentum in the business, and in particular, with defense opportunities, as evidenced by recent commercial successes. In the quarter, we announced that we had been selected as an approved supplier by the U.S. Missile Defense Agency, receiving an IDIQ contract related to the SHIELD program. We established an MOU with Hanwha Systems to explore opportunities to collaborate in the development of Korea's sovereign low-Earth orbit defense constellation. We launched 49 North, a dedicated defense organization exclusively focused on delivering secure, multi-domain C4ISR and mission-critical capabilities for Canada's national defense priorities outside the space domain. And we announced that we were contracted by Canada's Defense Investment Agency to deliver three ground-based optical observatories to the Department of National Defense as part of the Surveillance of Space 2 Domain Awareness Program. This is noteworthy as it is another contract to be awarded by the DIA, an agency established to speed up and modernize Canada's defence procurement and integral to Canada's first defence industrial strategy. More recently, we were able to highlight that we've been selected by Airbus for a repeat order of over 1,300 replacement antennas for the OneWeb Low Earth Orbit Constellation Extension. This repeat order is meaningful as it follows an initial order given to MDA Space in 2016 to supply antennas to the second largest constellation in low Earth orbit, underscoring our ability to win repeat orders with existing customers and the ability of MDA Space to support the full satellite constellation lifecycle from initiation to expansion to replacement. In Maritime Launch Services, where we have board representation and have seconded a member of the MDA Space senior leadership team as the VP of Operations for MLS as part of our equity investment, announced a $200 million agreement with the Department of National Defence for a dedicated launch pad at Spaceport Nova Scotia, providing MLS with a 10-year anchor tenant. This is a significant milestone towards establishing sovereign launch capability in Canada and reinforces Canada's commitment to having a launch site as part of the NATO launch network. Operationally, our teams continue to execute on a number of fronts, Within satellite systems, we previously communicated that we completed the critical design review of the Global Star Next Generation LEO constellation, and the team continued to build on that success through the achievement of a couple more important milestones. We have started to receive production-ready Prime 2 space-grade chips from our chip department, one of the key differentiating technologies behind MDA Aurora broadband and direct-to-device satellites. These ASIC chips are the most integrated digital beamforming chips on the market for space-based antenna arrays and introduce a number of benefits for satellite operators. This significant milestone demonstrates our ability to integrate newly acquired companies like SatecSpy, unlocking value. In addition, the Satellite Systems team successfully delivered the first set of satellites under our initial 17 satellite constellation contract with GlobalStar. This marks a defining moment in MDA space history. and validates our evolution of a satellite prime contractor. Our geo-intelligence team continues to make strides towards preparing MVA Chorus for its expected launch window in late 2026. In the quarter, the team successfully completed spacecraft thermal vacuum testing and shipped the spacecraft back to our integration and test facility, while in parallel readying the integration of the synthetic aperture radar antenna. And our Robotics and Space Operations team achieved a remarkable 25-year milestone with Canadarm2. For over two decades now, Canadarm2 has operated on the International Space Station, helping build and maintain the ISS, capturing and berthing visiting spacecrafts, carrying astronauts through some of the most spectacular spacewalks. We are extremely proud of this heritage as Canadarm2 continues to operate and perform critical tasks on the ISS. As the MDA Space team remains focused on executing program deliverables, we also remain confident in our future as the strategic importance of space continues to intensify. Our $40 billion pipeline is significant and includes $10 billion in opportunities with either government customers that have down-selected MDA Space or follow-on opportunities with existing customers. It also includes meaningful opportunities over the next five years across each of our three business areas and is well distributed between government and defense and commercial opportunities. Our satellite systems business represents the largest share of opportunities, underpinned by a significant market opportunity with 40,000 to 50,000 communication satellites expected to be launched between 2025 and 2034 in the market. While a portion of this market will be defined by vertically integrated satellite operators or regions that are not acceptable, China and Russia, for example, We estimate our addressable market to be between 20% and 30%, providing significant opportunity for continued growth. 5% of this addressable market has progressed into active customer pursuits with elevated bidding activity, translating into $30 billion of cumulative opportunities over the next five years for our satellite systems business, nicely distributed between commercial and government opportunities, as well as Canada, the United States, and the rest of the world geographically. We remain confident in our ability to win in this market, given technological leadership through our digital capabilities, high-volume manufacturing capacity that will soon be fully operational, and a mix of space mission heritage with new space agility. We continue to expect a healthy market for our robotics and space operations business, as robotics and on-orbit infrastructure is fundamental to the expanding Earth-to-moon economy and as space exploration becomes interplanetary. Over the next decade, The number of space exploration missions is expected to increase by 185% to 855 missions as countries pursue crewed lunar and Martian missions and other deep space exploration. This is driving an opportunity pipeline of over $3 billion for our robotics and space operations business within applications such as surface infrastructure and mobility, space exploration and commercial space stations, and in-orbit servicing and logistics. Leveraging our technical leadership as a world leader in space-based robotics to develop products such as MDA SkyMaker, our commercial robotics suite derived from Canadarm technology, further supported by lifecycle operations services and mission control centers, we are strongly positioned to capitalize in this market. The recent changes to the Artemis mission are part of a renewed focus on accelerating a return to the lunar surface and driving increased momentum for our robotics capabilities. We continue discussions with the Canadian Space Agency on redefining the Canadarm3 robotic systems that will be required to support this new and exciting phase of moon exploration. The dual-use capabilities of MDA Space were on full display at the recently held National Space Symposium in Colorado, where we launched MDA Midnight, a space control platform for defense agencies to defend and protect the space domain. This new platform is equipped with a suite of hosted payloads to detect, identify, counter, and deter threats to critical space assets and orbits in the increasingly contested domain. Leveraging the advanced robotics and proximity operations of MDA SkyMaker with the modular bus of MDA Aurora enables our team to rapidly configure, build, and deploy this product to address emerging customer requirements. Within geointelligence, defense and intelligence contracts, and advanced Earth observation products, are critical drivers behind the expansion of data and services solutions. As demand for Earth observation data grows, analytics services are becoming increasingly important for synthesizing data and producing actionable insights to support decision-making. This is expected to drive growth in data and services for synthetic aperture radar and optical applications from almost $6 billion in 2025 to $8 billion in 2033. The additional capacity and enhanced capabilities that will be made available through MDA-CORUS, including higher resolution data collection and near real-time prosecuting, will position us well to grow within this market. In fact, we are seeing early success with nine customer contracts that have already been finalized for CORUS, along with 32 letters of interest from customers across Asia Pacific, Latin America, Europe, North America, and the Middle East. We also expect to benefit from opportunities for secure multi-domain C4ISR systems and integration opportunities within 49 North, driven by increasing demand for sovereign defense capability across land, air, maritime, and joint domains. Combining observation and C4ISR opportunities, our geo-intelligence business has established a robust pipeline exceeding $7 billion. In summary, we are well positioned to capitalize on expanding addressable markets and leverage multiple growth drivers to continue delivering profitable growth.

With that, I'll hand it over to Guillaume to talk about the financials.

Thank you, Mike, and good morning, everyone. For my update, I will walk you through our Q1 2026 financial results. Q1 was another successful quarter and a solid start to fiscal 2026 for MBA space as we continue to execute on our backlog. delivering strong growth in both revenue and profitability. Total revenues for the first quarter were $464 million, representing an increase of $113 million, or 32%, over the same period last year. The year-over-year increase was driven by strong performance within all three of our business areas. Revenues in satellite systems of $313 million in the first quarter of 2026 where 91 million or 41% higher compared to the same quarter in 2025. The strong showing was driven by the increased volume of work on the Telesat Lightspeed and Global Star Next Generation LEO constellation programs. As Mike highlighted earlier, our team has delivered the initial batch of ASIC chips for the Telesat Lightspeed program, and the team in Montreal continues to integrate various stages of the production line. For the Global Star Next Generation Leo program, the team has passed the critical design review stage and continues to work on assembly and integration activities on the first satellites. In robotics and space operations, revenues of $92 million in the first quarter represented a $14 million or 18% increase over Q1 2025, driven by higher volume of work on the Canadarm3 program as the team continues to work on building and testing engineering models for the flight design. Revenues in our geo-intelligence business were $59 million in the first quarter, representing an increase of $8 million or 15% year-over-year due to higher volume of work on various programs, including the I-STAR program for the Royal Canadian Navy. Comparing total revenue To Q4 2025, we saw a sequential decline of 7%, primarily driven by timing of revenue recognition on our programs within our satellite systems business. Overall, our first quarter revenue was in line with our expectations. Moving to gross profit. For Q1 2026, gross profit was 115 million, representing a 36 million or 45% increase over the same period last year. Gross profit in the first quarter was 24.8%, which was up from 22.7% for the same period in 2025. Adjusted EBITDA in the quarter was $91 million compared to $69 million in Q1 2025, representing an increase of 32%. This was driven by higher work volumes as we continue to convert our backlog. Adjusted EBITDA margin of 19.5% in Q1 26 was in line with adjusted EBITDA margin for the same period last year. Adjusted net income in the quarter was 51 million compared to 38 million in Q1 2025. The year-over-year increase of 12 million or 32% was primarily driven by higher operating income. Adjusted diluted earnings per share of 38 cents in Q1 26 was up 27% versus Q1 2025 because of the higher adjusted net income, which was partially offset by higher average diluted shares outstanding due to the recent equity issuance related to the US IPO we completed in March. Moving to backlog, we ended the quarter with a solid backlog of 3.7 billion. representing a small decline of 300 million compared to December 31st, 2025. This was driven by continued execution of our backlog into revenue and a lower volume of orders in the quarter, which came in as expected. With our 40 billion opportunity pipeline, which includes 10 billion of down-selected opportunities with government customers for follow-on opportunities with existing customers, further supported by a growing addressable market. As Mike detailed earlier, we are confident in our ability to book new orders in the future and to continue to fuel revenue growth. Moving to CapEx. In Q1 2026, we spent $88 million on capital expenditures, up from $62 million in the same period last year, driven by investments to add high volume production capacity at our Montreal facility. This level of capex is higher relative to the recent quarterly trend as a result of new equipment being installed in Montreal. However, this is progressing ahead of schedule, which is very positive. With a run rate that is expected to decline as we progress through 2026, we are positioned to meet our full year guidance of 225 to 275 million. Cash from operations during the quarter generated $61 million compared to $267 million in Q1 2025. The year-over-year decrease was primarily driven by lower working capital contributions in the latest quarter as planned. Lower cash from operations combined with higher CapEx drove negative free cash flow of $28 million in Q1 of 2026, which compares to positive free cash flow of $205 million in the same period last year. Moving to our balance sheet, we ended the quarter in a strong financial position with cash on end of $544 million, driven primarily by our highly successful US IPO. An overwhelmingly positive response resulted in a significantly oversubscribed offering, allowing us to raise gross proceeds of $341 million USD. Along with available liquidity of $699 million under our credit facility, we ended the quarter with total available liquidity of $1.2 billion, putting us in a strong position to continue to invest in our growth initiatives. Now turning to our 2026 outlook, we are extremely pleased with the strong start to the year and the momentum that we see across our business And that provides us with the confidence to reiterate our full year guidance for 2026. For the full year, we continue to expect revenues to be between 1.7 and 1.9 billion, representing a year-over-year growth of approximately 10% at the midpoint of our guidance. Adjusted EBITDA to be between 320 and 370 million. representing a year-over-year growth of approximately 7% at the midpoint of guidance and adjusted EBITDA margin of 18 to 20%. As I previously stated, we also continue to expect capital expenditures to be between $225 and $275 million in 2026 to support another year of investments related to expanding production at our Montreal facility, as well as investments to support space, to support space-grade chip development and commercial growth initiatives. Lastly, we reaffirm our expectation for full-year free cash flow to be neutral to negative, driven by normal program working capital fluctuations, combined with the capex required to support future growth. In summary, this was a strong start to fiscal 2026, and we continue to be encouraged by the positive momentum we are seeing across our businesses. The MDA Space team continues to deliver strong financial results, and I want to recognize the hard work, dedication, and passion from all our employees across the business. With that, operator, we are ready 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 1 on your touchtone phone and then 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 2. If you are using a speakerphone, please lift the handset before pressing any keys.

One moment please for our first question. Our first question comes from Justin Liang of Morgan Stanley.

Please go ahead.

Yeah, hi, good morning. Thanks for taking my question. Mike, I wanted to ask one on directed device. You've been out talking about a sort of neutral host model for MDA. I was hoping you could talk a little bit more about the traction you're seeing for this sort of offering and if there's any way to sort of size the opportunity there.

Yeah, I don't think there'd be a size in the opportunity yet. Right now, it's a series of discussions that we've been pulled into looking at the neutral host model and the technical achievability of it, which we're very positive about. The basic notion here is the ability to have a space-based network that works directly with mobile network operators and or cell phone tower service providers around the world. to be able to have a space-based network extension that can operate using the MNO's existing spectrum, to be able to fill in holes in their coverage areas and or extend their coverage areas, without them having to relinquish control of the customer, without the customer having to roam off of the mobile phone network onto a space-based network and then back onto their network again, giving up customer information and the like that can happen when you're rolling onto a space network. So folks are interested in this for sure and talking to us actively about that around the world. So these are active conversations while we also continue to develop and demonstrate the technical solutions that would enable it for customers at their request. It's very active and a positive encouragement.

Got it. And then maybe just as a follow-up, you know, it sounds like from at least what Amazon put out after it announced the Global Star acquisition that it intends to move forward with your Constellation build-out, but it seems like they also have kind of grander visions for a bigger D2D Constellation. Curious if that might also be addressable to you and if any of that is in your $40 billion pipeline. And then maybe just more generally, how are you thinking about prospects with Amazon after this Global Star purchase? Thanks.

Yeah, so it's early days, obviously, with the Amazon announcement to purchase Global Star. We've seen a couple of things there, like one is the expected close of that acquisition. wouldn't be till a year from now, early 2027. So as a result, Global Star continues to execute on its business and Amazon continues to go through all of its procedures to be able to work through the close of the acquisition itself. As a result of that, you don't immediately engage in conversations with someone that's buying a company. You have to wait a while until they actually own it. And so it's been nice to see that no change to our current business, and that was as expected, that we need to get our work done, get our Thunder satellites delivered. We've recently announced that we conducted the first shipment of the first 17 satellites. and are completing the next shipment of those while we continue to get our Global Star Next Generation constellation completed. And so we will remain focused on that. Everyone wants us to. It's extremely important. So that's great. And then I'm sure that as we start getting these constellations launched and the like, then we can start talking about how are things going to work going forward into the future, and we'll see if any opportunities emerge there. Certainly, we have the skill sets and the capabilities and the technology roadmaps to be able to contribute, but we haven't had an opportunity to have those conversations yet.

Okay, thanks. I'll jump back in the queue. Okay.

Our next question comes from Tanis Misopoulos of BMO Capital Markets. Please go ahead.

Maybe just starting off on the full year guide, if I take the strong Q1 results and annualize them, I would end up above the midpoint of your guidance range. So, in terms of maintaining rather than raising your guide, is that just conservatism on your part, or are there considerations you have to think about as you go through the year?

Hey, good morning, Thanos. You know, really, we're sticking to our guidance, like 1.7 to 1.9 billion. The midpoint is 1.8. We delivered a strong quarter in Q1, 464 million. We were very happy with that. But we expect consistent execution throughout the year, right? This is not a year of ramp up, really, for us. It's really a year of execution on Talasat, on the Global Star, NextGen. Leo program on Canada Arm 3. So, you know, you can expect sort of consistent, you know, quarterly delivery and it's going to vary a little bit. It's not going to be, you know, always $460 million, could be a bit lower in some quarters, but overall, You know, $1.8 billion at the midpoint is a good way to think about our business. And, you know, we need a bit of wiggle room to, yeah, just like be able to deal with execution. And so, 1.7 to 1.9 remains the best estimate right now for us.

Great. And then, Mike, on Canada Arm 3, any further cover you can provide on the discussions you're having with your customer fell into lunar gateway cancellation and how the program might evolve, and then maybe just the timing of when we might see some decisions or announcements in terms of contract modifications there?

Yeah, the key thing for us is that, you know, full steam ahead on Canadarm3. The project team continues to execute as planned towards final designs of, you know, space-based robotics. There are a series of conversations that are occurring in parallel about the opportunity to potentially pivot that capability towards the lunar surface and the lunar program. And so that's just ongoing activity. I can't really predict when those activities might be completed, but they need to happen soon. So to ensure that the full steam ahead posture on the program is driving towards the right outcome and the most desirable outcomes. So that's good. We get to do both at the moment. Based on where we are in the design process, we have a lot of work to do. And so everyone agrees we just need to keep getting our work done while in parallel a small group of executives and agencies continue to talk about, you know, how can we be the most valuable on the lunar surface. So all those things continue at the moment with positive intent.

Great. I'll pass the line. Thanks, Mike.

Our next question comes from Greg Conrad of Jefferies.

Please go ahead.

Hi, guys. This is Egan McDermott on for Greg. Thank you for taking our question. Maybe on backlog, it's come down a little bit on some burn-off, but you've maintained the $40 billion pipeline. Is there an expected turning point given some of your near-term pursuits? And how are you thinking about book to bill for the year given that pipeline?

Yeah, I think we'll definitely obviously keep working the pipeline. There's a number of opportunities that are at a quoting level of maturity that as we go through the remainder of the year, customers would be in a position to make contracting decisions. In some cases, there's government customers out there that have to get through government processes. In other cases, there's industrial commercial customers that need to get through their business planning and organization activities before they're going to be ready to move out. But there's definitely solid, mature quotes that are there that can be turned into contracts. So we'll keep working that. We expect to be able to book, obviously, more business throughout the year. We always try to strive to have at least a one-to-one book-to-bill ratio. We'll see how it plays out as we go through the year, but there's opportunity for that. But we'll continue to work these things. You don't always control your customers' behavior, but we are certainly doing everything possible to support their decision-making and have a lot of strong opportunities. And a lot of new things come along as well. So it's been exciting in terms of, you know, not official additions to the pipeline yet, but some really exciting new conversations that have come up with people dropping by and wanting to talk about future business. So it's been really good.

Okay, well, cool, and maybe just as a follow-up on that, given the Airbus announcement, curious how you guys are thinking about the satellite component opportunity within the pipeline today and just the magnitude of full satellite systems versus components in relation to the satellite system segment going forward.

Yeah, over the last five or six years, we've certainly emerged as we've really grown and expanded We've maintained during all of that growth, we've maintained a strong, what we call our merchant supplier business, where we're selling satellite components and subsystems to other satellite manufacturers or for our role on a team of multiple companies that are going to put together a solution. So that's definitely been steady and solid. With us now, you know, we have a lot of expansion in the full satellite level, but with the high volume manufacturing, it means that You know, we're able to both on the on the bus or platform side of satellites and the digital payload or the, you know, the digital guts of the satellite. You know, that's all coming into high volume production. So it also means that from a subsystem perspective, you know, if someone just wanted to use our bus or someone just wanted to use our digital payload or a component of it, we're in a strong position to be able to supply that and supply it at speed and good value. because of the high volume that comes from the full satellite production. And so there are a number of opportunities out there that have potential for us to either team with others to be able to take on a certain program or capability and or just supply folks subsystems to be able to support their efforts. So that remains a strong part of the business and it's good business for us. and it really helps us keep the volumes up as well.

Great. Thank you.

Yep.

We will now have Ken Herbert from RBC Capital Markets. Please go ahead.

Yeah. Hi. Good morning, Mike and Guillaume. Maybe, Mike, yeah, I just wanted to maybe start on MDA Midnight. Can you talk about initial customer reception there and maybe how we think about sort of the launch of that and when we could expect some more announcements around customers and potential opportunity there.

Yeah, it's a key moment, this MDA midnight announcement. The market in general, as defense continues to be a recognized and important factor of the activities in space, we've sort of transitioned where things that were sort of historically talked about, you know, behind closed doors are, you know, increasingly being recognized as important more out in public. And that's, you know, our leadership really, which we've demonstrated here by announcing a product into the market to do space control is a key part of this transition or emergence of the true defense opportunity. So certainly there's a number of companies, a recent market study, I've identified 13 countries that are talking about space control or space control guard satellites is another word that's often used for their country. And so there's definitely an emerging market there. For us to come out in public and say, you know, we've spent some time, we've got a product, we're going to build this and fly it. and that we're out there seeking any discussions people want to have on two fronts. One would be defense customers in terms of their interest in acquiring this capability. And then the others would be in payload providers. So folks that are building sensors or electronic warfare capability and the like, that could be placed on a space control spacecraft. So let it be known that we have a product here and that customers are going to want different variants of it. And so we're really open for discussions on what can we do. As a result of those announcements that we made in April, there's been great pickup in conversations. So the important thing from a pipeline building perspective, was to lead commercial industry first, indicate clearly we have a product, say that loud and proud to the world, and then start engaging in conversations with both the two groups I mentioned, the defense customer and the potential payload partners. And both of those areas have been steady and picked up since the announcement, so we're strongly encouraged. In terms of when that might convert into, like, Additional order or things like that, we'll see. That'll take some time because we're in government procurement here. In this conversation, we're trying to sell protective spacecraft to militaries. And so certainly governments are more interested in sovereign capability and taking care of themselves. They're interested in doing defense procurement faster around the world, but still government procurement. So we'll be working through this over the next year or two and see what we can sign up.

That's great. Thanks, Mike. And if I could, you've obviously pulled out now the new chips arriving onto the Lightspeed line or the Aurora line. Can you just maybe level set us on where you stand with progress there on Aurora, but I guess more importantly, any change or any update in terms of the assumptions around sort of where you are on the learning curve from a cost standpoint and sort of the financial implications with this progress or major milestone? on either Lightspeed or obviously the Aurora program more broadly?

Yeah, I think it's really exciting that we've now got chips in production and deliveries are occurring and we're able to really move forward with these digital satellite assemblies, which is excellent. I don't think that... The other good thing I just want to mention on that whole chip thing is that as teams have completed their designs and are in production now of you know, this first version of technology that we've had following our Satix 5 acquisition. It frees up the team to also look at the roadmaps for like version two and version three with, you know, consistently enhanced levels of capability moving forward into the future. So this was another extremely important strategic aspect of that acquisition that we get our hands on this technology. We'd be able to control our roadmaps for both the chips and then therefore the digital satellite itself. It's the overall satellite roadmap. James Forrest, Norcal PTACS, and be able to ensure that production can scale with the size of our pipeline and so all those things are working out extremely well and. James Forrest, Norcal PTACS, And and we're excited about that in terms of moving into production more on these digital satellites and what does that what are we seeing about cost. James Forrest, Norcal PTACS, we're not anywhere near the volumes yet that would allow us to have that learning so we've always said that's a. a 2027 thing is to say okay what are we seeing in terms of cost is there is there scaling benefits here can we see the opportunities for margin expansion that'll be at the end of 27. it's during 27 we'll build a couple hundred satellites at least and uh that would really give us the chance to to say okay we can really we can really see what we can do here great thanks mike okay

Our next question will be coming from David McFetchin of ATV, Cormac Securities. Please go ahead.

Great. Excuse me. I was wondering if you guys could give us an update on the ESCAPE program and when we might hear some news on that for you.

Yeah, so ESCAPE is the acronym that's used for what we announced in November of 2025, which was a strategic agreement with the Department of National Defense and with Telesat. With that strategic agreement and doing this under the new Defense Investment Agency, it allows the teams to move much quicker than historical, but you still have to go through the same sort of large, largely the same governance process within government. And so, but it allows us to work really closely with the Department of National Defense, you know, to work through the process. And so you start off with, you know, working through the various options that you have there to be able to do a program like that uh get down to recommended options and then need to go and get those approved so that you can then get really moving forward on the the option that you know you're going to implement so so that work is uh has progressed amazingly fast amazingly well it's been it's been excellent um through the fall and the winter um and uh yeah as we go through 26 we would expect to uh you know, have those decisions made and approved and allow us to move on to the next phases of that, which would hopefully allow us to then, of course, talk out loud about where we're going with that. But the The program is solid. It's been budgeted as a $5 billion plus size program historically and talked about that publicly. We're in there working our way on it and getting it through its approval processes to formally move into the next phase or the next step, which we would expect to happen in 2026.

So do you expect that you might have some news, I'll say, within the coming months? That's what TELUSAT has said, that there should be news on this program in the coming months. I was just wondering what the timing might be for you.

Yeah, no, like we're all in the same mix. Yeah, it just depends on how you speak. You can say in the coming months or in 26. That's the same thing to me. But, yeah, it is something that's coming up as we go through the next two quarters here for sure.

And then just one additional one, if I may. So if the government wants NOSACOM and X and UHF, clearly you have to put up new satellites, new constellation. Who do you think would own this new constellation if it goes up?

I don't know. That's all part of the options and stuff. Historically, if you look at historically, governments have owned and operated their military satellites, but there is increasing opportunities commercially that governments are starting to leverage. And so, you know, both of these types of options are available. And obviously, on the KA band side, you've got Lightspeed there as a strong service in Canada. You just asked about the other frequencies where satellites would have to be built. And, you know, historically, the Department of National Defense would only operate that kind of a capability.

Okay. All right. Thank you.

Yep. Our next question comes from Seth Siffman of JPMorgan. Please go ahead.

Hey. Thanks very much, and good morning. I wanted to ask about the geo business. And we've seen some nice growth there over the past two quarters. Would you think about where we are now at this as kind of a run rate level for the business? And then as I think out about the chorus launch, how do we think about the potential for further growth in that business beyond this year and the potential margin implications of that?

I think that it's been nice to see that business kind of being steady or even having some small single digit growth. It's been nice to see RadarSat 2 sales just very, very slightly, but increasing. You know, you've got a satellite that's been up there operational for 15 years and you've got increasing sales on it. That's awesome. And that's because course is coming. So customers know they can build a relationship with us and have continuity well into the future and expanded services. well into the future as Chorus gets launched and operational. So with the positivity that we've seen around Chorus, I mentioned in my remarks that we've got, you know, 41 different conversations that are going on right now and nine of them signed contracts, the remainder as letters of intent that as we approach launch and get past launch, we'll then convert into signed services contracts. And so that's all very, very exciting. So with that and the expanded services that will come from higher capability satellites and the tipping and queuing relationship between a broad area surveillance satellite and a zoomed in follower, that's going to be it's an exciting new like world first commercial service in this area. And so people are excited about that. And we would expect to get, you know, we need to use a bunch of 27 to you know get this all up and operational and working but then as we go through 27 and people get experience with these new capabilities um within their signed contract frameworks then we would expect to start to see uh expert start to see growth as we go through the latter half of 27 and into 28. um we should see some we should see some pick up there um it's our intent as well um you know we do a lot of work looking at our analytics capability exploring the opportunities for artificial intelligence to be used in doing analytics going forward into the future, in addition to our relationships with other sensor providers and other analytics companies. And so looking at partnerships globally in terms of how can we make the most out of this capability. So there's a number of opportunity vectors that we're going to have to be able to expand our leadership position there in geointelligence.

Excellent. And then I guess anything to note or anything you'd say about the M&A environment and the opportunities that are out there now?

Yeah, it's a solid M&A opportunity environment. There are opportunities around the world. There's definitely books to be reviewed that are in play around the world and We engage in that always to see what's what. Towards our goals, we've always had the same two M&A goals. One would be opportunities for smaller things typically that would add to vertical integration that would allow us to, just like we did with Satix 5, have more control over our roadmaps and or influence over our ability to scale. And so we will continue to always track those types of things. And then geographic opportunities in Europe or the United States, that could allow us to become more present in those markets. And so we continue on that same pattern, and there are definitely things to talk about. So that's good.

Okay, excellent. Thank you. Yep.

Our next question comes from Greg McDonald of Stifel. Please go ahead.

Yes, thanks. Good morning, guys. Thanks. Mike, I wanted to ask a follow-on question on MDA Midnight. And I'm thinking of it this way. You have a lot of expertise in robotics, obviously. Can you talk a little bit about the technical expertise in that product in terms of what I'm really trying to get at is how difficult or easy is it for a competitor to replicate this product? Where do you stand kind of globally when it comes to this product?

Yeah, I think if you look at a, you know, I guess, space control type of a capability, there's a few things that are there. You need a solid platform that's got good maneuverability. In addition to you want to pay attention to the kind of, you know, protection of that platform to make sure that it can, you know, be slightly protected, be a bit jam-proof, that type of thing. And so, you know, we've got capability there. Then you need to have good sensor capabilities to be able to sense and monitor and track other assets in space, other activity in space. We have a strong sensor capability there. Then you need the ability from a kind of electronic warfare perspective to actively or passively or actively, you know, deter objects. another spacecraft and then, if necessary, you know, get involved in proximity operations where you're, you know, getting very close to or engaging with another spacecraft. And so, those categories of capability exist in the market. So, people can definitely and people are, you know, obviously assembling, you know, guard spacecraft and space control spacecraft around the world. In terms of some of our unique capability, One of the things that's unique about us starts from our high-volume production of MDA Aurora. And so a number of folks will say, like, I'm going to build a space-controlled spacecraft, and they'll kind of work their way on it and build one. Our ability to grab an Aurora bus, do some mods in terms of maneuverability and protection to that Aurora bus, but grab an Aurora bus off a high-volume assembly line, um and then convert that into a space control spacecraft um is unique around the world others don't have that high volume base and so um for military capability there's a that that creates a fair amount of interest um in terms of our high volume production satellites and getting into a phase now with mda sky maker of having standard robotics so that's that that aspect of it is attractive to folks in the market then in terms of um RPO, rendezvous and proximity operations, the level of experience that we have over the decades of being involved in this is extremely high. And so we've got really good solutions there. And then, of course, in robotics itself, our robotics and space operations team has like literally within our team millions of hours of experience, you know, developing the procedures for and supporting the grabbing of things in space. And so outside of NASA, we would be the most experienced company in the world in this area. And so that's another really strong capability in our favor. Another part of space control is also being able to provide the military with the ability to maneuver, which can involve refueling. And we've We've been working on refueling for decades. As far back as 2007, we flew our first demonstration of fluid transfer between two satellites back in 2007 on a mission with NASA. We have had tens of millions of dollars of of funded research and development on refueling and refueling interfaces of prepared and unprepared satellites. And so there's some strong capabilities that we have there from high volume production, rendezvous and proximity operations, refueling capabilities, and robotics and maneuver capabilities, including the operation of those robotics in orbit, that will be able to provide us with a distinct advantage in this market.

Great. That bus integration was going to be my second question. Thanks for that. The second question I have for you is, is this just for military customers? Or one might assume that mega constellations might be looking to protect their satellites as well. Do you see an opportunity in the commercial side?

Yeah, we haven't had that yet. You're right. It's a logical thing people can think about. It is a dual-use technology set, though, as well. You know, if you have a vehicle that can sense other vehicles and approach them and interact with them and do things, you know, there is a civilian market for on-orbit servicing that exists. There's also a thing we call ISAM, which is for in-orbit, you know, service assembly and manufacturing. So, you know, there's definitely a commercial value in this configuration. We're taking it to market as a product targeted at the military and NVA Midnight as a space control platform, but it is a dual-use technology set. and it definitely has application. As commercial infrastructure activities continue to expand in orbit, this capability will have a commercial application as well.

And last, Mike, anything in the pipeline for midnight yet?

I would say not really. There's activities that we're driving. We always had, I think, at least one opportunity in there, But yeah, so there's maybe at least one or two, but I was thinking more, is there like new stuff that suddenly come in since the announcement of it in April? And I would say, I don't think we've added anything since April, but we've had one or two there previously.

Yeah. Very helpful. Thank you.

Yep.

We will now have Edison Yeh from Digibank. Please go ahead.

Hey, good morning. Thanks for squeezing us in. I want to ask you about a broader topic that has, I think, become very hot in the industry, space data centers. And I'm curious, what do you think about kind of viability? And also, let's assume for a second that it is viable. What kind of role you would play in that ecosystem?

Yeah, I think that we're definitely seeing an increased focus in just, if we don't want to just say the word data center yet, but if we say space compute, So the ability to have, you know, increased levels of computing power in orbit to be able to do things, that's definitely an increasing theme in the market. For us, now that we're vertically integrated down to the chip level, we've got, we're developing and including our own onboard processors on satellites. You know, we're, you know, everything's becoming more digital. There's more levels of processing. Our roadmaps are including increasing levels of processing at the edge, we would call it, so out there on the satellite. And that's going to be applicable to all areas of our business in terms of having increasing levels of processing for Earth observation satellites in the future, for communication satellites and network traffic management in the future, and for intelligent robotics that we were just talking about that can do servicing and other activities in orbit. And so this notion of more on-board compute and more intelligent AI-based on-board compute, for sure that's going to increase. There are folks that engage with us and we talk to people about having on-board computing that can support Earth observation, communication and other networks in space. So that instead of just transmitting things to the ground like you do today, and having ground-based processing environments that you could do more processing in orbit and then just send the answer down to the ground. And so that's an increasing trend and is causing increasing opportunities for us to look at delivering more powerful computers in orbit to support people. So those conversations are ongoing. When you say data centers, I imagine that's like there's pictures in the media and stuff like that, these football field size objects that are like big computing parks in orbit of some kind. I have not had enough experience to really get through the viability of all of that yet. So some of the rationale that people say it makes sense to have those may or may not really make sense. Um, but, and then some of the technical challenges, I don't think have been fully solved. Even some of the largest proponents of a space-based data center say they're, they think that that's a possible idea, but they're not quite sure, you know, if that can all be done. So, so there's a lot to work out there going forward. Um, if it ever catches, um, you know, we would have the opportunity to contribute certainly any of any space infrastructure like that, that's large and has to be assembled our, our conversations about. on orbit servicing and assembly and the application of robotics, that's gonna be a strong play there in terms of our ability to work remotely in orbit and assemble and maintain any piece of large infrastructure, whatever it is, whether it's a data center or a power station or what have you, we would have opportunities to be engaged in that. And then in terms of the actual data centers themselves, those satellite structures, and processing. I think we have to see how that goes to be able to answer that question in terms of like, you know, if people find architectures that are going to work, then, you know, what do those look like? We'll just hold judgment on that for the moment until it matures a bit more.

Understood. I appreciate the call. A follow-up question on just some of the activity you're seeing in Asia, in APAC. Obviously, you have the, you announced the Hanwha MOU. And I think just this week there was some news about Reliance wanting to build, you know, Big Leo. Any sense on like maybe timing when we could get some awards coming out of Asia, just more generally speaking, and kind of the magnitude of those awards?

Yeah, I think they, you know, certainly over the next couple of years that's possible. And some things could move quicker than others in those markets. In some cases, there are opportunities to just, you know, support some smaller scale things with key satellite technology to help some folks out. In other cases, as you've indicated, like, you know, you use some examples there, but there are others in terms of like, you know, larger constellation projects in the market. And so there you get into the, you know, the multi-billion dollar size opportunities that are, you know, larger constellations. Certainly as you go around the world, The notion of sovereign capability is one of the single largest driving factors in the current market and the current pipeline evolutions of the last six months and certainly the next couple of years moving forward. The number of nations that want to have or want to consider potentially their own constellations for Earth observation or communication and generally want to see, you know, to what extent can I just take care of myself in space and not rely on, you know, deals with other nations. That's such an increasing theme that it's definitely causing a number of new conversations around the world. And so, and they grow like every month or two right now, there's like new ones that are coming out. And so, you know, that's going to create solid opportunity. In all parts of the world, but including the region that you're talking about over the next couple of years. And then it really just depends on, you know, in a number of cases, you know, government linked procurement and how fast people can actually move to get it in place.

Great. Thank you. Okay.

Thanks.

Our next question comes from Connor Gapta of Scotiabank. Let's go ahead.

Thanks, Eric. Good morning, everyone. You're just following up on the C3, the Canada 3 program. I mean, Artemis has been, you know, relatively stable, I would say, regardless of what's been questioned about NASA's budget over the last couple of years. And obviously, every time the news on the NASA or the Artemis came out, I mean, obviously, investors have reacted to that. So I'm just curious, you know, like, what are you hearing about Artemis going forward? I mean, I understand your contract is with the Korean Space Agency, not with NASA directly. But at the end of the day, if Artemis has any implications from NASA budgets, that might feed into your Canada Arm-3 program as well, potentially. So any thoughts into how sustainable you think the Canada Arm-3 program is, regardless of the news that we hear every day? And what's the opportunity remaining there?

Yeah, there's a couple of things in what you're saying. So in the first one, in the Artemis program, it remains an extremely... high focus and high priority activity. I think I saw the NASA administrator, Jared, announce two new countries in the last quarter joined the Artemis Accords. So new countries are still coming in to the Artemis Accords to be part of the group of people that want to work together to live and work on the moon. And so that focus continues to dramatically increase. And the United States public focus to want to get to the moon and start living and working there in a bit of a timing race against, you know, a China-led consortium is an important driver in all this. And so there's like a sort of no holding back focus on getting to the moon. And where you've seen NASA trim budgets in other places, you know, it's been or, you know, take, you know, stop doing certain things. It's been to massively increase their focus on living and working on the moon. So, I think it's very clear that that's a dominant focus in this game. And so in addition to the notion that was stated by Administrator Isaacman in his ignition event that occurred in March, the focus on speed, the focus on don't polish a rock, don't make some perfect space object here. I think his phrase was that a 70% solution delivered quickly is good enough at this phase. It's important to get up there and get working and get experience and has announced a rapid pace of multiple missions to get to and land on the moon and get going and try things out. So that's a tremendous opportunity that comes from that for other nations to contribute technologies and solutions to that and to be a part of that through the Artemis Accords. Then you come to Canadarm3. So then Canadian Space Agency, therefore, is going to want to have technologies and capabilities that are part of that return to the moon. Canada has always been a leader in space collaboration since the beginning. As the third country into space with satellites after the United States and the USSR, Canada is going to want to lean into that. And so to make sure that they're a part of it. So, you know, we see strong opportunity for Canadarm3 technology and the commercial derivatives of that, which is the MDA SkyMaker line. that MDA Space takes to market commercially on the moon for the lunar surface. And then again, in other commercial applications for space stations and debris removal and assembly and manufacturing, a number of the things we talked about today in other orbits, such as low Earth orbit. So we're very positive about the opportunity here. The good thing for us is with full steam ahead, keep the project team working on Canadarm3 and keep getting its work done while we do a little bit of activity to reconfigure the final outcomes in terms of what are the exact applications that we're going to tailor this for as we complete the project. So it's a good moment. We just got to work through a couple of things.

That is very reassuring. Thanks, Mike. And if I can follow up, on the backlog comments you made early on in the call, it seems like you're having some new discussions and you've talked about some exciting opportunities in those discussions. Any concrete examples, even if it's early stage, you know, what kind of exciting opportunities are these? Are these out of your core or within the core and they are more like ancillary or more sort of, you know, tangential to what you do? So any examples? Thanks.

Yeah, I think the bigger exciting things are going to be like new conversations around low Earth orbit constellations, around the application of the MBA Aurora and high volume manufacturing to these opportunities. I think that it's just great to see that the number of those that's increasing people want to talk about continues to grow, which is great. And so we will fully engage in all of those. and in conversations. Well, certainly with ones that we think have a chance of success, we do a bit of screening in our pipeline, but it's positive right now. There's a lot of bidding activity. The bid activity is very intense, and we will continue to be fully engaged in that and make announcements of contracts when they come.

Thanks, and all the best with that. Okay, thanks.

Thank you. Please be advised that we are at the end of our conference time, and this is all the time we have for questions today. I would now like to turn the call back over to Mike for his closing remarks. Please go ahead.

Okay, thanks a lot. Well, thanks for your time, everyone, this morning. It sounds like we had to cut it off there because of time. Maybe there were some questions that didn't get asked. Sorry about that. It's excellent, though, that the amount of folks tracking us and wanting to talk to us and ask questions of us is increasing. We really appreciate that, and we'll always take more there. We look forward to updating you on our progress and our next earning call in August, of course. We will keep at it here and come back with the latest news of the day in the next quarter. Thanks again.

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