MDA Ltd.
Strong 1Q23, with revenues up 57%, adj. EBITDA margin of 24.2%
TSX: MDA | CAD 6.78 | Outperform | Price Target CAD 12.00
Sentiment: Positive
MDA posted a strong start to 2023, with 1Q23 revenues of $202M (up 57%) and adj. EBITDA of ~$49M (a 24.2% margin).
Consensus estimates in the quarter were for revenues of $179M with an EBITDA margin of 21.1%. Gross margins in the quarter were 33.3%, also just ahead of consensus and our estimate. In terms of segment, the Satellite Systems posted growth of over 136%, led by strength in the Globalstar program, which was awarded in 1Q22. The Robotics & Space Operations revenues were up 48% (led by the Canadarm3 program), and revenues grew 5% in the Geointelligence segment.
Adj. EBITDA was up 77% over 1Q22, when excluding the 1Q22 $16.8M ITC income. The company called out strong execution on its core programs, which supported the higher gross margin. The company ended 1Q23 with a total backlog of $1.2B, with bookings in the quarter of $56.1M. The company ended the quarter with a leverage ratio of 1.2x, and the company generated ~ $16M in FCF in the quarter.
The company has reaffirmed its full year 2023 guidance. Moreover, it has guided to 2Q23 growth of ~25%, which implies upside to our estimates. The company is hosting a conference call today at 8:30 am ET. We expect the results to be a positive catalyst for the stock. We expect the investor focus to be on the near-term outlook for the key franchise programs, the full year bookings expectations, and then the longer-term capital requirements, the CHORUS program, and the opportunity for new business wins.