MDA Space Ltd MDALF

RBC

[retiredcf]

Stepped out of this stock for awhile but like these results so back in. GLTA

March 23, 2023

MDA Ltd.
Strong 4Q22 supports confidence in 2023 outlook

TSX: MDA | CAD 6.98 | Outperform | Price Target CAD 12.00

Sentiment: Positive

MDA reported 4Q22 revenues of $186M (up 61%) and adjusted EBITDA of $40M (21.4% margin). The 4Q22 results were ahead of our and consensus estimates, led by strong growth in the Satellite Systems segment (up 157%) and the Robotics and Space Ops segment (up 60%). The 4Q22 adj. EPS was $0.07 compared to our estimate of $0.01. For the full year 2022, the company grew revenues by ~35%, with adjusted EBITDA margins of 22%, excluding certain items. FCF for 2022 was a use of ($123M), reflecting significant investments in growth capex. Gross margins in the quarter were 31.6%, reflecting some increased investments, as the company hired just under 900 people in 2022. Operating margins were 10.2% reflecting higher SG&A costs.

The company provided a 2023 outlook that brackets our estimates. For revenues, the company is guiding to $750M-$800M, with adjusted EBITDA of $145M-$150M. The guidance implies ~20% sales growth at the mid-point, and 19%-20% adjusted EBITDA margins, which is consistent with the company's long-term outlook. While the 2023 outlook does reflect some conservatism, we believe it provides a solid footing for investor confidence heading into the year, with the 4Q22 results ideally continuing the positive narrative shift on the stock. The 2023 guidance is for capex of $220M-$240M.

The company ended 2022 with a total backlog of just under $1.4B. This is a slight decline from the peak of over $1.5B in 1H22, but the book-to-bill over 2022 was 1.8x. The key drivers of the 2022 backlog growth were the Globalstar LEO constellation award (~$415M), and the Phase B of Canadarm3 contract ($269M). The company ended the period with net debt of just over $200M, implying a 1.3x leverage ratio.

Conference call today at 8:30am ET. We expect investors to focus on the key moving pieces and confidence in the 2023 outlook, the CHORUS program and investment profile, the outlook for incremental opportunities, the status of the Telesat Lightspeed program, and the FCF and investment outlook and implied capital requirements. We believe the 4Q22 results should contribute to continued stock strength (up 9% YTD) and the company has ideally de-risked much of the 2022 outlook after the series of downward revisions in 2021-2022.

[autofocus111]

TSAT reports earnings March 29.

[brain1926]

I think ...soon this comapny will be taken over by xxxxx someone is holdig the SP down....   By Jayson MacLean  Published on February 23, 2023   Last Updated on February 23, 2023  Filed under:   All posts, Analysts, Space Stock:   mda MDA is one to watch, this portfolio manager says Thanks