管理層發言
Good morning, and welcome to the MDA Space Conference Call and Webcast. This call is being recorded on August 7, 2026, at 8:30 a.m. Eastern Time. For those participating via webcast, please note that the company has included a presentation that will follow along with today's discussion. I'd like to now turn the call over to Jim Floros, Vice President of Investor Relations at MDA Space.
Thank you, Melissa. Good morning, and welcome to the MDA Space Second Quarter 2026 Earnings Call. Mike Greenley, our CEO; and Guillaume Lavoie, 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 also available on our Investor Relations website in addition to SEDAR+ 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 presentation and press release as well as our other public filings regarding various factors, assumptions and risks that could cause actual results to differ from those expressed here today. In addition, we may refer to certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they 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 most recent quarterly report and other public filings for more information, including reconciliations to the nearest IFRS measures. With that, I will turn it over to Mike.
Thank you, Jim. Good morning, everyone, and thank you for joining us to discuss our Q2 results and also to get an update on the MDA Space we are building for the future as a result of recent business activity. I'm going to present a broader range of comments than normal today, starting with an update on Q2 and the year, followed by a discussion of organic growth, then M&A-based growth. And I'm going to branch out into some comments on new capabilities and development and the future strategic posture of the company that is driving this recent activity. Guillaume will then take you through the quarterly financial results in more detail. To begin, let's start with the quarter and the headline numbers. Revenue in the quarter was up 34% year-over-year, leading to adjusted EBITDA of $96 million and adjusted EBITDA margin of 19.3%. This brings first half revenue to $963 million, up 33% year-over-year, leading to adjusted EBITDA of $187 million year-to-date, representing adjusted EBITDA margin of 19.4%. The strong first half reflects broad-based growth across the three business areas and provides confidence in our 2026 outlook. This meet-or-beat performance year-to-date has resulted in us now raising the midpoint of both our full year revenue and adjusted EBITDA expectations to $1.85 billion and $350 million, respectively, with the midpoint of our revenue guide inferring that we expect to continue our track record of delivering double-digit organic revenue growth. This continued business execution performance reflects organic growth across the entire business, including some areas that the casual observer cannot see. Most importantly, Q2 reflects continued momentum building in our order book and our proven ability to convert opportunities within our $40 billion pipeline, leading to a second quarter book-to-bill ratio of 1.6x. Several of these orders relate to government or defense work spanning multiple continents and to customers who have either expanded their initial order or issued follow-on contracts. This week, post quarter close, Telesat expanded our scope of work on the Lightspeed LEO constellation to add 27 MDA AURORA satellites on top of the previously announced 198 satellites to be manufactured, bringing the total fully funded constellation to 225 satellites. As a result, the total value of our contract for this program has increased by $474 million, which includes these new satellites, the addition of the previously announced military Ka-band capabilities and long lead items. The Canadian Space Agency awarded us a follow-on contract valued at over $600 million to supply an advanced synthetic aperture radar satellite that will operate as a fourth satellite within the existing RADARSAT constellation mission. In addition to the space segment, the scope of work includes launch, ground control enhancements and security and data management systems. This contract builds on our successful delivery of the original RADARSAT constellation mission that MDA Space designed, manufactured and launched in 2019. The Telesat and Canadian Space Agency orders are an important demonstration of the dynamics of the satellite constellation market. Initial orders to establish a constellation such as the RADARSAT constellation mission or Lightspeed are routinely followed by constellation expansion orders to increase capacity and eventually satellite replacement orders to ensure continuity of service into the future. Establishing sustained customer relationships on these constellations demonstrates the recurring life-cycle nature of satellite orders with these constellation customers. In addition, this quarter, Mitsubishi Electric in Japan contracted MDA Space to design and manufacture the digital payload antennas and other subsystems for the Japan Ministry of Defense's next-generation defense communication satellite program in geostationary orbit. MDA Space U.K. will deliver the advanced anti-jamming digital beam-forming payload that can be dynamically reconfigured in orbit, while our team in Montreal will manufacture and test the advanced antenna solutions. This multinational delivery across two MDA Space sites demonstrates our diverse set of international capabilities. This order is also an important demonstration of the expansion of the MDA Space digital communications payloads to geosynchronous orbit satellites and not just LEO constellations. We were also selected by BAE Systems to support the U.S. Space Systems Command MEO EPOCH 2 Constellation, a key element of the U.S. multi-orbit missile warning and tracking architecture with critical payload technologies. MDA Space will design and build antennas and antenna control electronics for medium Earth orbit resilient missile warning and tracking satellites. This award is a continuation of previous work by MDA Space on the Space Systems Command's EPOCH 1 constellation as well as on the Space Development Agency's low Earth orbit Proliferated Warfighter Space Architecture Tranche 0, 1, and 2 Transport and Tracking Layers for multiple prime contractors. The U.S. Air Force renewed its long-term contract for 49North's global procedure designer services through a new Indefinite Delivery/Indefinite Quantity agreement, which provides a ceiling value of up to $43 million through June 2031. This contract supports global military operations and extends a more than 25-year relationship between 49North and the U.S. Department of Defense. And we received a pre-authorization to proceed contract from OHB in Germany to deliver critical lunar landing sensors for the European Space Agency's Argonaut Mission. This contract allows MDA Space to begin engineering activities and procure long lead items from our U.K. base of operations to support Europe's flagship moon mission ahead of the anticipated full contract. The lunar landing sensor order is a reminder of the extent of MDA Space activity that is now occurring in support of the return to the Moon and the creation of sustained habitats on other planets. MDA Space is now engaged in multiple lunar landing programs, in rover development programs for lunar transportation and logistics and in lunar communication network design and development to support teams living and working there. And this week, our robotics and space operations team received formal confirmation from the Canadian Space Agency that plans are advancing to repurpose current Canadarm3 investments to support the next phase of lunar exploration as part of the Artemis program to support a wide range of complex lunar operations. As the global effort to live and work on the Moon builds momentum, MDA Space is in a strong position to expand our involvement in this endeavor. To enable this steady organic growth, we also continue building the operational foundation to support our growth strategy. Recently, in Montreal, we inaugurated our new high-volume satellite manufacturing facility, one of the world's most advanced in its class, doubling our manufacturing floor space. This facility was built in under two years and expands MDA Space capability to meet growing global demand for advanced satellite constellations. It represents a significant step in our evolution as a world-leading digital satellite systems provider and a big milestone for our team. With MDA CHORUS, our next-generation Earth observation constellation, full integration of the main C-band spacecraft has been completed, and the smaller X-band satellite successfully completed its pre-ship review. We have also completed launch mission analysis with SpaceX and are now entering environmental and vibration testing phases. In addition, we are getting ready to open the doors to our new control facility in Quebec. Work is progressing well as we continue to track for launch later this year. Within 49North, we completed a significant refresh of our global procedure designer product and established an operationally proven expert software tool for instrument flight procedure design and sustainment updated to align with the latest regulatory criteria and data standards. In addition to the strong organic growth across MDA Space, we are increasing momentum in our acquisition-based growth in accordance with our strategy. About a year ago, we closed the SatixFy acquisition in accordance with our strategy to vertically integrate where it makes sense to ensure our differentiated capability road maps, and that acquisition continues to deliver and prove the business case that was behind it. This past quarter, we turned our attention to geographic expansion of the company and expansion of our geointelligence capabilities. In June, we agreed to acquire Blue Canyon Technologies, or BCT, a spacecraft and satellite component manufacturer based in Colorado. BCT is a proven supplier to blue-chip U.S. defense primes with 18 years of flight heritage, over 85 spacecraft launched and more than 3,500 products on orbit. BCT is a profitable, growing business with 75% of their revenue attributable to defense applications and is expected to add approximately $5 billion to our opportunity pipeline once the transaction closes, estimated for Q4 2026. Bringing together our complementary product portfolios expands our total addressable market through greater participation in the space economy. While BCT is a strong company on its own merits, we expect the combination of MDA Space and BCT to unlock meaningful synergies for our product lines. The facility security clearance that BCT maintains from the Defense Counterintelligence and Security Agency provides a direct pathway to classified U.S. government programs and increases access to a $50 billion U.S. defense space budget for MDA Space technologies. In addition, BCT's industry-leading guidance, navigation and control technology provides high precision, high pointing accuracy and low-jitter platforms and components, supporting vertical integration opportunities within product lines such as MDA AURORA and MDA MIDNIGHT. Earlier this month, we announced a second transaction where we entered into an agreement to acquire a majority interest in CLS, providing a unique opportunity to create a vertically integrated global space-based geointelligence leader. CLS serves more than 14,000 customers across approximately 150 countries through 41 sites in 19 countries, including a 24-hour-a-day, seven-day-a-week global monitoring command center in Toulouse, France. It delivers advanced Earth observation monitoring and forecasting services through AI-driven multisource data analytics and insights, supported by over 250 proprietary algorithms and models as well as data from more than 400 satellites. CLS serves five distinct client ecosystems: environmental monitoring, energy and infrastructure, fisheries monitoring, maritime security and mobility. The scale of operations is significant. CLS processes 30 million maritime positions daily, monitors 100% of global maritime traffic, tracks 100,000 connected mobile assets, has tracked 400,000 land and marine animals over the last 40 years and more. CLS directly integrates proprietary sensors with over 60% of their revenue tied to those in-field devices working in combination with space-based data. This underlying data set and access to it underpins the value that CLS provides its customers. CLS AI and machine learning models leverage this data to produce intelligence and insights that a new market entrant simply cannot replicate easily as this takes decades to build. Combining our GeoIntelligence business with CLS' profitable cash-generating business doubles our recurring revenue base and creates significant strategic benefits. Once this transaction closes, targeted for Q4 2026 to Q1 2027 time frame, CLS' global direct sales network of over 100 people immediately becomes a distribution channel for MDA CHORUS, accelerating revenue generation just as we prepare to launch. Combining MDA Space upstream satellites and near real-time data services with CLS downstream analytics delivers vertical integration benefits and establishes an MDA Space strategic presence in Europe, along with maintaining CLS' long-standing partnership with France's National Space Agency, CNES, which is expected to open doors into the European space ecosystem for other MDA Space business areas. I'd now like to comment on two aspects of the emerging growth of MDA Space beyond straightforward organic and M&A-based growth activities. The first is the emergence of new business models in response to market demand. We've already made moves to respond to the global surge in defense spending in response to sovereignty and security programs. This has resulted in our creation of 49North, our non-space defense subsidiary in Canada, which is now in its first year of execution and is steadily building its pipeline of opportunity for the future while executing on historical backlog in this area. This has also resulted in our launch of MDA MIDNIGHT in April this year at the National Space Symposium, introducing this new product line of spacecraft to protect and defend satellites and constellations as part of nations' sovereignty programs. Interest in this product since launch continues to build. MDA MIDNIGHT has the potential to be delivered as a spacecraft for operation by international customers, but also as a service with MDA leveraging our decades of experience in rendezvous and proximity operations on orbit and our newly constructed mission control centers in Toronto to deliver on-orbit protection and security as a service for countries and companies interested in this capability. A second area of evolving business models is in the area of AI-based analytics. Today, MDA Space conducts a range of AI-based R&D in our GeoIntelligence business to rapidly analyze geospatial data to create information products for customers. However, with the acquisition of the CLS business, our GeoIntelligence business will now have a much broader offering of AI-based information products and platforms to offer the world across a much broader range of application verticals. With more than 15 years of archives of the Earth observation imagery from RADARSAT-2 and significant archives at CLS, combined with CLS' ten years of machine learning and AI-based delivery of over 7,000 information products to 14,000 customers in over 150 countries, MDA Space will be at a new level of AI-based data analysis and delivery to commercial and government customers worldwide as we enter 2027. Lastly, this past quarter, there has been increasing dialogue in the space sector about MDA Space moves to secure spectrum and potentially own and operate a satellite communication network. Many of you may have seen publicly disclosed information about an MDA Space filing for spectrum with Canada in support of an initiative we call SPACERAN. This is a collaborative initiative led by MDA Space, but involving a consortium of Canadian partners to leverage our MDA AURORA satellite now entering high-volume production to establish a sovereign, direct-to-device and Internet of Things space network for Canada with the ability to partner and deliver capability worldwide. Investors should not assume this will represent a large investment for MDA Space as it is expected to be funded through partnerships with other very capable parties. However, SPACERAN is a strong business opportunity for the company, adding a new line of business to our offering, extending our business models in the future. As we execute our business and work with partners and customers around the world, our development activities are creating new capabilities that will become more prevalent as we continue to expand as a global business. One of these areas is on-orbit compute. Following the acquisition of SatixFy, MDA Space now designs and produces our own line of space-grade chips. These in turn lead to the development of digital satellite capability, including our own onboard processor or compute capability. In addition, we are in discussions with multiple parties about the development and launch of on-orbit compute satellites for various processing tasks in orbit. The first MDA Space capability in this area will be on our MDA CHORUS constellation to be launched this year, which includes a vessel detection onboard processor, a new development that will enable us to pilot onboard processing of radar data on the actual satellite for the first time. All of these development activities will result in increasing discussion of on-orbit compute and on-orbit compute satellite platforms as an MDA Space development area and a topic within our pipeline and future orders. On-orbit compute will then provide a platform for on-orbit AI applications, whereby my previous comments on leveraging AI to create information products will have the opportunity to move to the edge in the future and be a key capability on the in-orbit platforms we develop and deliver. Lastly, we are now in our second full year of formal research and development of AI applications for our enterprise operations. MDA Space now has a Corporate Senior Director of AI and AI champions are being established within each of our business areas. These teams are working on a series of proof-of-concept initiatives on enterprise AI applications and leading the rollout of operational capability as it becomes mature. MDA Space now has an operational on-premises generative AI platform that we have logically named Chat MDA that is now available to all 4,000 employees across the company to provide rapid support to business operations. We are now using well-managed deployments of AI tools and software development to enhance productivity. Our AI teams are leading the company through a series of pilot projects to evaluate a range of additional AI use cases in a number of areas that will systematically be rolled out once operational. These new business models and new areas of capability under development are a natural evolution of our business into the strongest growing areas of the global markets we serve, leveraging the trends in the growth of space, the growth of sovereign defense spend and the growth of AI-based digital capabilities. As a result of my remarks today, I hope that you can gain an appreciation for the strategic direction of MDA Space as we advance to the future and can understand the differentiated posture that we have as a company compared to our space peers. MDA Space is a financially strong industrial company that specializes in space. We have a strong balance sheet, strong financial statements, persistent growth, steady profits, sustained cash generation and disciplined targeted investment. Guillaume will provide commentary on this financial discipline in a few minutes. MDA Space is emerging into a global full spectrum space company that is engaged in a growing market along multiple growth vectors, and we are positioned to fully benefit from global growth trends in space, defense, sovereignty and AI-based digital capabilities. At the same time, our business is increasing in the recurring nature of our revenues, further stabilizing financial performance and fueling investments in our continued growth. As the investment community models our future, we have been clearly communicating the pro forma impact of recent wins and recent acquisitions once they close. While our guidance for the year is targeted at $1.85 billion in revenue at the midpoint, our pro forma company, including these recent transactions, would be $2.5 billion in 2026. As we roll that business into 2027, we expect to see another year of around 50% growth compared to our 2026 close, along with more than one-third of our revenue being recurring, a strong backlog, a strong pipeline and a strong balance sheet for the future. I will now pass it over to Guillaume to walk through the financial results in detail.
Thank you, Mike, and good morning, everyone. Before I take you through our Q2 financial results, I want to start by providing some details on our acquisition financing strategy. Together, the two acquisitions represent a cost of approximately $2 billion, including transaction and other fees. We have structured the financing as a deliberate blend of equity and debt in order to maintain our conservative capital structure. We completed a bought deal equity offering of 23 million common shares, which was upsized from 20 million shares on the strength of investor demand, raising $1.15 billion in gross proceeds. We subsequently raised an additional $600 million through the issuance of senior unsecured notes. This issue was well received by the market and was increased above the initial indicated size. We expect the balance to be funded through a combination of existing cash and a term loan facility. We were very pleased with the success of these capital raises as the robust market demand for both equity and debt investors reflects strong endorsement of our acquisition strategy and of MDA Space in general. This mix of financing is expected to result in a leverage ratio within our targeted range of 1.5x to 2.5x net debt to last 12 months adjusted EBITDA upon closing of both acquisitions. I will now turn to the financials. Total revenue for the second quarter was $499 million, an increase of 34% year-over-year, driven by strong performance within all three of our business areas. Satellite Systems contributed $336 million, up 44%, driven primarily by increased volume of work on the Telesat Lightspeed program as the team continues to make progress towards completing all engineering models and the initial set of Pathfinder satellites. Robotics and space operations contributed $100 million, up 13%, driven by the increased volume of work on the Canadarm3 program as the team continues to advance work while working with the Canadian Space Agency to pivot robotics delivery to the lunar surface. GeoIntelligence contributed $63 million, up 20% on higher volumes across new programs, including the ISTAR program for the Royal Canadian Navy. Gross profit in Q2 was $126 million, an increase of 33% over the same period last year, while gross margin of 25.3% in the quarter was in line with Q2 of last year. Adjusted EBITDA in the quarter was $96 million, up 26% year-over-year as profit from higher volume of work was partially offset by planned investments in R&D and SG&A to support growth objectives and scaling of the business. This translated into adjusted EBITDA margin of 19.3%, which was in line with our full year guidance. Adjusted net income of $52 million increased 13% year-over-year as higher profit was partially offset by a higher income tax rate in the quarter. This led to adjusted diluted earnings per share of $0.36 in Q2, unchanged year-over-year as higher adjusted net income was offset by an increase in average diluted shares outstanding as a result of the equity issuance completed earlier in March. Turning to the backlog. We ended with a very solid backlog of $4 billion, an increase of approximately $300 million compared to the first quarter of 2026. This increase was driven by net order bookings that exceeded $800 million in Q2, resulting in a solid book-to-bill ratio of 1.6x. As Mike touched on earlier, we are very pleased with the momentum that we see building in our order bookings. After a strong Q2, we recently announced that Telesat has expanded our scope of work on the Lightspeed LEO constellation to add 27 additional MDA AURORA satellites. This adds approximately $400 million more to our backlog, which on a pro forma basis would have increased our Q2 backlog to $4.4 billion. Our $4.4 billion pro forma backlog provides revenue visibility beyond 2026 and demonstrates the scale we have compared to other players in the sector. In addition, our $40 billion opportunity pipeline, including $10 billion in down-selected follow-on opportunities, provides confidence that we have a line of sight to future order intake and backlog growth. Shifting to CapEx. We spent $145 million in the first half of the year on capital expenditures compared to $98 million in the first half of last year. While this is a significant year-over-year increase, we continue to expect our CapEx to fall within the stated range of $225 million to $275 million for the full year as spending on some of our larger projects moderates in the second half of this year. Operating cash flow for the first half of the year was negative $33 million compared to positive $320 million in the first half of 2025. The year-over-year decline was mainly due to normal and expected program working capital fluctuations on major contracts. Lower cash from operations, combined with higher CapEx, drove free cash flow to negative $178 million in the first half of 2026 compared to positive $222 million in the same period last year. We ended the quarter in a strong financial position with a net cash position of $153 million at the end of Q2 compared to a net debt position of $120 million as of December 31, 2025. Total available liquidity as of Q2 stood at $1.1 billion, consisting of almost $400 million in cash and available liquidity under our credit facility of approximately $700 million. As I touched on earlier, after the conclusion of the quarter, we successfully raised an additional $1.75 billion in gross proceeds to secure the financing needed to support the closing of the BCT and CLS acquisitions. Moving to our outlook. We are updating our full year 2026 guidance on the strength of our first half execution. For the full year, we're now expecting revenue in the range of $1.8 billion to $1.9 billion compared to $1.7 billion to $1.9 billion previously. At the midpoint, this implies year-over-year revenue growth of approximately 13% compared to 10% previously. We now expect adjusted EBITDA in the range of $330 million to $370 million compared to $320 million to $370 million previously. At the midpoint, this implies a year-over-year growth of approximately 8% compared to 7% previously. We have made no changes to the remaining items in our guidance as we continue to expect adjusted EBITDA margins of 18% to 20%, capital expenditures between $225 million and $275 million and free cash flow to be neutral to negative, driven by normal program working capital fluctuations, combined with the CapEx required to support our future growth. I would like to point out that our 2026 guidance excludes contributions from the Blue Canyon Technologies and CLS acquisitions as both remain subject to receipt of regulatory approvals and transaction closing. Before we open the call for Q&A, I wanted to provide a look into MDA Space on a combined pro forma basis with both BCT and CLS. Taking the midpoint of our updated 2026 guidance, MDA Space stand-alone revenue is approximately $1.85 billion. BCT would add approximately $225 million and CLS would add approximately $465 million. As Mike pointed out earlier, this would bring the combined entity to $2.5 billion in revenue on a pro forma basis for 2026. Further, since both BCT and CLS are established profitable businesses, we expect to be able to maintain our overall adjusted EBITDA margin within the 18% to 20% guidance range. Our ability to find strong acquisition targets that align with our financial profile is demonstrating the discipline of our capital allocation strategy. As a result, and as I mentioned earlier, we expect to be able to stay within our conservative leverage target ratio of 1.5x to 2.5x net debt to last 12 months adjusted EBITDA upon closing of both transactions. We are even more excited about the opportunities ahead as both Blue Canyon Technologies and CLS expand our market reach, increase our geographic customer access and create cross-selling opportunities across a broader portfolio. We are building a stronger, more diversified MDA Space. With that, operator, we are now ready for questions.
分析師問答
Your first question comes from Edison with Deutsche Bank. We expect to be able to stay within our conservative leverage target ratio of 1.5x to 2.5x net debt to last 12 months adjusted EBITDA upon closing of both transactions. We are even more excited about the opportunities ahead as both Blue Canyon Technologies and CLS expand our market reach, increase our geographic customer access, and create cross-selling opportunities across a broader portfolio. We are building a stronger, more diversified MDA Space. With that, operator, we are now ready for questions.
First, a strategic one. You obviously laid out a much deeper, broader roadmap, much more ambitious. I'm wondering if there's any thoughts about kind of consolidating both the manufacturing part, obviously, of satcom and also the operating part. And I ask in the context, you did talk about SPACERAN, D2D. Does it make sense to kind of combine those aspects of the model?
Right now, I think it's important for Satellite Systems to remain the satellite technology manufacturer that it is. We provide satellite components and subsystems to satellite manufacturers around the world. We provide satellites to satellite network operators, whether that's Earth observation or communications around the world. And that's an important interface to the rest of the business. If we get into things like SPACERAN and there's a communications space network and operations, that is a different business, different business model. And I think that would be its own, focused activity primarily on sovereign Canadian activities in collaboration with others internationally. As we move forward on those initiatives over time, we would probably want to keep those two activities separate.
Understood. You talked a lot about AI. And I'm wondering in that context — you clearly have a lot of data, especially with CLS, but as we've all seen with AI, compute is a very important element. How do you think about the compute aspect of rolling out and enhancing your AI capabilities?
Yes. So we've been increasing our on-premises facilities. We've been increasing our GPUs over the last couple of years as we've been developing increasing capability. In terms of the level of compute that we would need to be able to do things like leveraging archival geospatial resources to develop algorithms that will allow us to detect and analyze geospatial data in real time, more accurately and to be able to produce AI-based reports for customers more quickly and with more data fusion, we will have access to that compute. CLS comes with a strong compute capability in its command center. They have over 900 servers in their command center today. So I think we'll be able to proceed well with that capability.
Your next question comes from Greg with Stifel.
And again, also, Mike, thanks for the rundown on the roadmap. That's really helpful for us. I think about what the company has done in the last year, but really, we've seen evidence in the last quarter, two acquisitions. We've gotten better indicators from the ESCP-P program, and there's more to come from the medium Earth orbit opportunity there. This company has clearly built itself up to be a global prime, which could be a strategy that you're taking ahead of demand. It could be in response to existing demand that you're seeing. It's probably a bit of both. But if you could talk a little bit, please, about what you're seeing in existing demand; for example, we've seen a firming up of the HALO initiative. Telesat's talked a lot about contracts from Japan, Italy, Germany, U.S., you yourself have gotten new contracts from Japan and Germany recently. This all feels to me like there's more coordination going on in the last year with the NATO Plus countries. You see this stuff behind the wall that we don't. Can you talk a little bit without getting into specifics or things that you can't tell us, can you talk a little bit about that, kind of what's happening with NATO Plus, the coordination and how you're seeing that as new opportunities for yourself?
Yes. I think that our strategic opportunities globally are following the geopolitics that we would all monitor every day, whereby there is a trend for countries to prioritize sovereignty, security and stronger infrastructure to drive economic prosperity. All countries are working on that at the same time. The United States is doing that and is publicly talking about taking care of itself a bit more while increasing spending on defense and space. The acquisition of BCT in a properly mitigated structure in the United States puts us in a strong position to have a secure arm of the company participating in that activity. Outside the United States, in other countries like Canada and other nations, we see the same pattern. Governments are standing up, increasing their defense spending and seeking to increase security, sovereignty and economic prosperity. We're benefiting from that in Canada from programs like ESCP-P in terms of government defense spend. You've mentioned correctly that there's still more to come on ESCP-P and other programs as part of defense industrial strategies that guide countries to build with domestic firms in the space domain. Internationally, we're feeling a pull into Europe and other nations where our world-leading technology leadership—such as digital satellites, synthetic aperture radar, space-based robotic and infrastructure operations—has strong appeal. These skill sets in a long-established space company are very well developed, and the investment we've made in the last five years in our technologies and facilities have put us in a competitive position. That is attracting partnerships with other countries and will cause us to have increased presence in other nations, as we're seeing with CLS establishing more of our presence in Europe. From a coordination aspect, you have seen public dialogue around middle power dialogues and countries taking care of themselves while also collaborating more with each other. We see that activity as nations identify areas of relative strength, where they will lead, and areas where they will partner. Canada, for example, is in a very strong position from a space perspective given its long history and industrial base, and we can leverage that in partnerships to deliver technology and receive other benefits from our partners. That's the dynamic we're observing now.
Really helpful. Just a quick follow-on, Mike. In terms of timing, is this a situation where you're going to see in the next 12 months more contract opportunities from inside the U.S. or outside the U.S. when it comes to military satellites? Or does it take longer? I'm just trying to figure out kind of what's happening in the planning process or how fast some of these countries are willing to act.
If you take a country like the United States, it always has a very active pipeline of opportunity. We expect to close the BCT acquisition in 2026. We'll take time in early 2027 to integrate and to make the BCT team familiar with the full capabilities of MDA Space to allow them to participate in the U.S. government pipeline. The pace of pickup will depend on when the U.S. government procures, but it's an active environment. Conservatively, I'd say we'll need 2027 to let the new team learn about the combined capabilities and build a strong pipeline of opportunities that they would then start to bid on and pursue as we finish 2027 and head into 2028. There could be immediate opportunities, but in any government procurement environment it tends to be a build process.
Your next question comes from Seth with JPMorgan.
I have one clarification and one question. On the clarification, I think when you talked about the continuing 50% growth next year, that's off of the reported number.
Off the $1.85 billion. Yes, I understand. If we close this year at the midpoint that we're guiding to $1.85 billion and then you roll in the impact of closing all these acquisitions, then yes, that's what's going to happen.
Right, right. So that's like low double-digit pro forma. Okay. Excellent. And then another question: you didn't talk much about launch. We read about SpaceX potentially shifting focus from Falcon to Starship. When you think about launch and access to space over time, do you see Starship becoming a key vehicle for MDA to access space, or do you expect other vehicles to be important? How are you thinking about that move away from Falcon?
I think Starship will be a very strong capability as it comes to full operational capability. We already have road maps for the MDA AURORA product that include configurations targeted at Starship as the launch platform. So our designs are already integrating that thinking. Around the rest of the world, access to launch will adapt as SpaceX manages its business; some customers will target Starship and others will require different rocket systems. In addition, many countries are pursuing sovereign launch capability as part of their broader sovereignty strategies. Canada is no different: we've seen Maritime Launch Systems progress on its spaceport, and MDA Space has a minority position in that spaceport and remains actively involved. Over the next year or two, I expect to see more activity from countries leaning into medium-lift launch to ensure they have access to launch, so a diversified mix of launch vehicles will continue to be important.
Your next question comes from Benoit with Desjardins.
Mike, just on SPACERAN, your filing describes the initial service in 2029 with the potential requirement for about 170 satellites. Would it be fair to say that it's a $3 billion-plus revenue opportunity? And would it be part of your current bidding pipeline? And what about the next steps for SPACERAN?
I wouldn't want to comment on forecasted revenue potential. These networks are strong opportunities, but SPACERAN is not in our opportunity pipeline. When we talk about our $40 billion pipeline, or the additional pipeline from acquisitions, SPACERAN is separate. The Canadian government is conducting consultations regarding spectrum and spectrum allocation, and we're actively responding to those consultations. In parallel, we continue to advance the constellation design and are in discussions with potential anchor customers both in Canada and internationally. A team is working on this every day and will continue to advance the program.
That's a great update. And just in terms of a follow-up related to Canadarm3 following yesterday's announcement, can you walk us through what happens to the existing Phase C and D? And what can we expect the new scope to be defined?
Right now, we've said that with this transition following the recent announcement, the Canadarm3 program continues full steam ahead. The teams continue to work on their designs and development, but the end use of those designs and developments is what is going through adjustment at the moment. We appreciate Canada's announcement supporting this pivot toward focusing on the lunar surface, and we'll now work through the contract adjustments and definitization to reflect that change. The teams continue to work within the same high-level financial scope and timeline frameworks that you're used to modeling.
Your next question comes from Ken with RBC Capital Markets.
This is Steve Strackhouse on for Ken. Maybe just the first question in terms of the second half implied revenue growth. If I'm doing the math at the midpoint, I think it's about 2% give or take, which I would assume implies some slowdown in the Satellite Systems business. Can you walk us through whether you are running into capacity constraints or just why growth steps down from first half to second half?
I'm just going to say we don't have any capacity issues in MDA Space.
No, Steve, I was about to say the same. We had a very strong first half and are executing as planned, so there are absolutely no capacity issues. The second point is we've raised the midpoint of our guidance; we're now looking at 13% growth year-on-year versus 10% previously. What's happening is that because we are executing so well, we've recognized a lot of revenue on, for example, the Globalstar next-generation LEO constellation from suppliers delivering components and subsystems. That is expected to slow down a little in the second half as we transition to the assembly, integration and testing phase for that program. That's one example. We don't expect anything significant beyond that; it's just a normal shift in the pace of program execution. Finally, we would not want anyone to assume the second half is the run rate for 2027. As Mike noted, we expect organic growth next year, along with acquisitions, so we expect to see more solid growth in 2027 as other programs start ramping up.
That's really helpful color. As a quick follow-up — you didn't talk much about CHORUS. Certainly with the CLS acquisition, CHORUS becomes quite a bit more focused. Can you level-set us on CHORUS: expected timeline for launch and where we are?
We remain on track with CHORUS, targeted for launch this year. One satellite has completed its pre-shipment review, and the larger satellite is well advanced in final testing; it's currently undergoing some final vibration testing. Ground systems are prepared to operate the satellite. We're in a good position over the next few months to finalize and target launch before the end of the year.
Your next question comes from Justin with Morgan Stanley.
If I take the comments around '27 being 50% higher than this year, it looks like it would imply just shy of 10% growth year-over-year off the 2026 pro forma levels. Do we have that right? If so, what would drive the deceleration next year given all the momentum you're talking about on new awards? And maybe since you threw out the 50% mark, could you give a flavor roughly for underlying MDA growth next year?
We normally provide formal guidance in Q1 of the year and will continue that pattern. My comment about 50% was to indicate a minimum bar and to show that with organic and acquisition activity we intend to continue significant growth. Formal guidance and forecasts for next year will be updated and reviewed with the Board in Q4 and presented in the new year. I don't have any expectation of a declining rate of growth in MDA.
That's helpful. And one on the recent Telesat expansion: can you talk about timing of revenue recognition there and any impact this year? And looking further out, you've been tapped to prime the UHF and X-band portion of ESCP-P. I know there may not be much you can share, but can you give a rough sense of the opportunity for MDA on that portion and timing?
Yes. We've been working with Telesat on the military Ka-band implementation into the constellation and they contracted us for some long-lead items already. For 2026, the change is not super material, but we will gradually ramp up in 2026. For 2027, that change becomes a bigger increase in our revenue contribution — you can think of an increase in excess of $150 million — and then similar contributions in 2028, with finalization in 2029. So it does contribute meaningfully to growth in 2027 and 2028. Regarding ESCP-P, it's a separate work stream and timing of awards will depend on government timelines, but it's expected to be a very large program and will provide more updates as it progresses.
Yes. It's been encouraging to see rapid progress. We've moved from signing a strategic agreement with the government last November through the initial phases to now seeing portions of programs progress and be contracted within a relatively short period. We will continue to work under the strategic agreement framework with the government as we advance prime responsibilities for the UHF and X-band portions of the constellation and the MEO components. There are definitions and approvals required, but we've seen positive outcomes in the collaboration to date.
Your next question comes from Konark with Scotiabank.
Maybe first, in terms of your growth opportunities, do you think MDA is pivoting in a big way to defense and sovereign from commercial? If you are, is it because demand is growing faster there or because competition is getting tougher in commercial?
No. We remain very balanced between commercial and government. While we have seen a notable increase in defense and sovereign activity recently — which is driven by global trends — the commercial market remains strong. When we spoke about the $40 billion pipeline, much of that included defense and sovereign opportunities, but commercial opportunities are still a significant part of our pipeline. Commercial initiatives such as space stations, commercial activities on the Moon and commercial communications remain active and important to our business.
If I can follow up: there's a lot of discussion about launch capacity constraints. Given the number of spacecraft planned, do you think constrained launch capacity is impeding your ability to convert pipeline opportunities into contracts?
We have not seen that yet. I have not been in conversations where customers are adjusting their timelines because of access to launch. Customers plan timelines based on their business models, anchor customers, access to financing and other factors, but not currently on launch constraints. I expect launch capacity to improve over time, and launch discussions remain an active part of customer planning.
Ladies and gentlemen, that is all the time we have for today. Any remaining individuals with questions, please reach out to the MDA Space IR team. I will turn the call back over to Mike Greenley.
Thanks, everyone. Thanks for the conversation. A lot of information exchanged today. I hope that is helpful. We're certainly very pleased with the level of progress that we're making with the business, and we look forward to meeting again in this mode next quarter. Thanks a lot. Have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.