MDA Space Stock

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. [Operator Instructions] For those participating via webcast, please note that the company has included a presentation that will follow along with today's discussion. [Operator Instructions]

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 3 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 CSA orders are an important demonstration of the dynamics of the satellite constellation market. Initial orders to establish a constellation such as 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 2 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 War.

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 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 in 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 2 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 with the smaller X-band satellite successfully completing 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 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 spacecrafts 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 transition 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, 7-day a week global monitoring command center in Toulouse, France. It delivers advanced Earth observation monitoring and forecast services through -- and forecast -- 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 5 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 infield 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 '26 to Q1 '27 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 establishing an MDA Space strategic presence in Europe, along with maintaining CLS' long-standing partnership with France's National Space Agency, CNES, is expected to open doors into the European space ecosystem for other MDA Space business areas.

I'd now like to comment on 2 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 nation's sovereignty programs. Interest in this product post 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' 10 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 1/3 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 2 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 3 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 CSA 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 pipeline opportunity -- opportunity pipeline, including $10 billion and down selected our 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 as 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 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, BCT and CLS expand our market reach, increases 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.

[Operator Instructions] Your first question comes from Edison with Deutsche Bank.

First, a strategic one. You obviously laid out a much deeper, broader road map, 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 like a communication space network and operations, that is a different business, different business model. And I think that, that would be on its own focused on sovereign Canadian activities in collaboration with others internationally. And so as we initiate these -- as we move out on those things over the next future, we would probably want to keep those 2 activities separate.

Understood. You talked a lot about AI. And I'm wondering in that context that you spoke about, you clearly have a lot of data, especially with CLS, but as we've all seen with AI, compute is a very important element. So how does one think about -- how do you think about the compute aspect of kind of rolling out and enhancing your AI capabilities?

Yes. So we've been increasing our on-premise 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 what we were just talking about, 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'll have an -- we'll be able to have access to that, like in terms of like where we're going, we won't be excessive. 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 okay with that.

Your next question comes from Greg with Stifel.

And again, also, Mike, thanks for the rundown on the road map. 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, 2 acquisitions.

We've gotten better indicators from the ESCAPE (sic) [ 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, right, which is -- 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, i.e., 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, 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 be more sovereign, more secure, more independent, stronger [ infrastructure ] to drive economic prosperity in any one nation.

All countries are working on that at the same time. The United States is doing that, and they're publicly talking about pulling back a bit and not worrying about being necessarily the support to the entire globe, but take care themselves a little bit more. They're certainly increasing their spending on defense and space. The acquisition of BCT in a proper secure FOCI mitigated structure in the United States puts us in a strong position now to have a strong arm of the company participating in that activity.

Outside the United States, though, in other countries like Canada and other nations, we have that same pattern. Folks are standing up, increasing their defense spending. They want to increase security, sovereignty and economic prosperity. We're benefiting from that in Canada, as you mentioned, from programs like ESCP-P in terms of government defense spend. And you mentioned correctly that there's still lots to come on ESCP-P and then other programs in the future as part of all those programs with a defense industrial strategy that guides Canada to build with Canadian firms in the space domain. And so there's long legs on that part of the opportunity pipeline.

Internationally, though, as other countries are doing that, we're feeling a pull. So we're feeling a pull into Europe and other nations, whereby in positions where we have like world-leading technology leadership, such as digital satellites synthetic aperture radar, space-based robotic and infrastructure operations. These skill sets in a 57-, 58-year-old space company are very well established and the over $1 billion of investments we've made in the last 5 years in our technologies and facilities have put us in a position where we're competitively very strong.

And so we're being pulled into these other nations. That's going to cause increased partnerships with other countries. It will cause us to have more capability present in other nations like we're seeing with the CLS and that's starting to get -- starting the process of getting set up in Europe a bit more. But we will definitely be responding to growing pipeline opportunities in other nations. And because those nations want to have some form of economic prosperity in their nations, they'll be increasing partnerships or increasing little pieces of MDA Space showing up in more places.

From a coordination aspect, that is true. You've seen the public dialogue around the middle power dialogue in terms of, yes, people taking care of themselves, but also looking to collaborate more with each other. We definitely see that as an activity as well as nations try to identify what areas are they stronger at, and therefore want to lead at, and then what areas do they want to just get from each other.

So you saw Canada do that and buying $100 billion worth of submarines from Germany. And that contract had in exchange the expectation of $100 billion back to work to Canada. Areas where Canada is really strong would be in things like what we do in space. And so we would look to be able to leverage that in those nations. So that activity is in multiple countries where you're looking for the kind of like where the relative strength is going to be.

I think that Canada is in a very strong position from a space perspective in that back and forth with other nations because as the third country into space after the United States and USSR, we're sitting here with a 60-year history and a strong industrial base. And we have companies like us and like Telesat that can then do this level of interaction and engagement with the other nations and deliver like really, really quality goods in exchange for things that the Canada is going to want from others. That's kind of the dynamic that's going on right now.

Really helpful. Just a quick follow-on, Mike. In terms of timing, like is this a situation where you're going to see in the next 12 months, more contract opportunities from outside the -- or inside the U.S. or outside the U.S. when it comes to MILSAT? 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.

Yes. Like I think -- well, if you take a country like the United States, it always has a very active pipeline of opportunity. I think for us, we're going to close this BCT acquisition in 2026. We'll take a bit of time in early '27 to get all those folks familiar with the full capabilities of the MDA Space that they now have available to them to be able to take into that U.S. government pipeline. And then the pace of pickup on those will be dependent on really when the U.S. government procures.

But that's a very active environment. I think if I was being conservative, I'd say that we need '27 to let them continue what they're doing and learn about us and build up a strong pipeline of opportunities that they would then start to bid on and get after as we finish '27 head into '28. It could trip over something that's an immediate lift. But I think in any government procurement environment, it tends to be a bit of a build.

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 plus, plus, plus -- then yes, that's what's going to happen.

Right, right. So that's like low double digit pro forma. Okay. Excellent. And then on the -- another question, I guess, just on the one capability that you didn't talk about was launch. Kind of, we read potentially about SpaceX kind of moving back from -- stepping back from Falcon as they focus increasingly on Starship. When you think about launch and kind of your access to space over time, kind of, how do you think about -- do you see Starship becoming a key vehicle for MDA to access space or other vehicles? And how are you thinking about that move away from Falcon?

Sure. I think Starship is going to be obviously a very, very strong capability as it comes to full operational capability. We already in our road maps for the MDA AURORA product, for example, design configurations that are targeted at Starship as the launch platform. So our road maps already integrate all of that thinking.

In the rest of world, access to launch as SpaceX manages their business. Certainly, we have a few trends for those that aren't configuring their technologies for Starship launch, they'll want different rocket systems to launch. In addition, countries are -- as part of the whole sovereignty play that I talked about before, countries are looking for independence in their ability to design space systems, build space systems and launch space systems so that they have sovereignty in space.

Canada is no different in that regard. You've seen Maritime Launch Systems obtain contracts -- well, announced that it's moving out, obtain contracts from the Department of National Defense, obtained contracts from Isar in Germany, and it is aggressively carrying forward in its spaceport in Canada. MDA Space has a minority position in that spaceport, and we remain actively involved in supporting and helping it advance in its future. And so that's going to be a thing.

So as we -- I think we'll see over the next year or 2, we'll see more activity from countries, including Canada, really leaning into like medium lift launch so that folks can have access to rocket systems and spaceports in different parts of the world. But Canada remains one of those places that is publicly making moves to increase independent capability there as well.

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. So 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?

Yes. So I wouldn't want to comment on forecast and revenue potential there. These networks are certainly strong opportunities. There's no doubt about that. It is not in our pipeline. So when we talk about our $40 billion pipeline or $5 billion more coming into our pipeline from the close of Blue Canyon Technologies, those types of things. anything from a SPACERAN is not in that pipeline. That's a separate business development activity that we're involved in with others on top of them.

In terms of next step, the Canadian government is going through a series of consultations regarding spectrum and spectrum allocation to various players. We're actively involved in responding to those conversations. And so -- to consultations, I mean. And so we'll go through that process. While in parallel, we continue to advance the design of that constellation and are in communications with potential anchor customers for that constellation, both in Canada and around the world. So that -- there's a team of people that work on that every day, and they'll continue with their work.

That's a great update. And just in terms of follow-up related to Canadarm3 following yesterday's announcement, can you walk us through the -- what happens to the existing Phase C and D? And what can we expect the new scope to be defined?

Yes. So right now, we've always said that with this transition following the ignition event announcements that the Canadarm3 program continues full steam ahead. So it does continue to full steam ahead. The teams continue to work on their designs and development. But the end use of those designs and developments is the thing that's going through the adjustment at the moment.

It was great to see, and we really appreciate Canada is announcing their support for this, what we call the pivot but focusing on the lunar surface, and we're going to work through that now in terms of like contractually what that looks like to make sure that all that gets definitized properly as we go forward into the future. But the teams continue working within the same sort of high-level financial scope and time line 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. Can you maybe just walk us through, are you guys running into capacity issues or not even issues, but just capacity constraints currently in terms of kind of working through that contract? Can you just kind of talk us through the kind of the step down from first half to second half in terms of the growth?

I'm just going to say we don't have any capacity issues in the MDA Space. Go ahead, Guillaume.

No, I was just about to say the same, Steve. So look, first of all, we had a very strong first half, and that demonstrates that we're executing as per our plan. So absolutely no capacity issues of any kind. The second thing is we've raised the midpoint of our guidance. We're now looking at 13% growth year-on-year versus 10%. So that's positive.

What's happening really is because we are executing so well, we've now recognized a lot of revenue on, let's say, the Globalstar next-generation LEO constellation coming from just suppliers delivering and basically delivering components, subsystems, and that's expected to slow down a little bit in the second half as we will now transition gradually to the assembly integration and testing phase for that program. That's just one example. And so we don't expect anything super significant, but perhaps a bit of a slowdown just because of the pace of our program execution being on track. And so that's all normal.

The last thing is obviously, we would not want anybody to expect that the second half would be the run rate for 2027. As Mike stated, we see some organic growth next year on top of, obviously, all the acquisitions that we will be closing. And so from our perspective, with the bookings that we just did in Q2 with our strong backlog, some other programs are going to gradually start ramping up, and hence, we're going to see some solid organic growth next year as well.

That's really helpful color. And apologies for the word capacity. I might have just tried to rephrase that a little bit better just in terms of kind of the...

It's okay, I just want to make sure.

No worries.

As a quick follow-up, one thing that you guys maybe didn't talk about was CHROUS. Certainly, with the CLS acquisition, and CHROUS becomes quite a bit more focused. Can you just kind of level set us on CHROUS, expected time line for launch and just kind of where we are with that?

Yes. We remain on track with CHORUS. We've said that we'll hit that -- it's targeted for launch this year. It is. I have made like a few remarks there when I was talking, whereby the 1 satellite has done its preshipment review. The larger satellite is a long way through all of its final testing. It's just doing some final vibration testing and stuff at the moment. And the ground systems to be able to operate the satellite are in a position where they have everything they need to be able to launch.

And so yes, so we're in a good spot for that as we go through the next few months, that will get all tightened up, and then we're targeting 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 '26 pro forma levels. Do we have that right? And if so, what would drive the deceleration next year given all the momentum we're talking about on new awards? And then maybe since you threw out the 50% mark, maybe you could just give us a flavor roughly for underlying MDA growth next year?

Yes. I think that we normally give all of our guidance and stuff in Q1 of the year, and we'll continue with that pattern in terms of formal guidance.

All I was saying as a minimum bar in terms of like just continued expectations of the company that in the combination of organic growth and M&A-based growth, we continue to make significant strides in advancing the size and global scale of the business. So I was just making that comment to be able to indicate that we're making organic and acquisition-based moves to really continue the pace of growth in a strong way.

As we go through Q4, all of our forecasting and next year models and 5-year models are all updated, reviewed with our Board of Directors, and then we come out with our guidance in the new year. So that's when that will occur. I don't have any expectation of a declining rate of growth in MDA.

Okay. Great. That's helpful. And then maybe just one on the recent Telesat expansion. Can you just talk a little bit about sort of the timing of revenue recognition there? And how much -- if there's any impact even this year? And then looking out further, I know you've been tapped to prime the UHF and X-band portion of ESCP-P. I know there might be not a ton you can talk about at this point, but can we just sort of maybe ring-fence the opportunity for MDA on that portion and rough sense of timing there, too?

Sure. Do you want to take that, Guillaume?

Yes, of course. So Justin, so yes, I mean, we've been working with Telesat on the military Ka-band implementation into the constellation. They contracted us for some long lead time items already. And so for 2026, the change is not super material, but we're going to gradually start ramping up in 2026.

For 2027, then, yes, that's a big increase in terms of our revenue, that's going to contribute to the organic growth next year. You can think of an increase in excess of $150 million. And then it's largely the same for 2028, and then we'll finalize everything in 2029. So it does contribute to the growth profile for 2027 and for 2028 in quite a sizable way.

Okay. Great. And just to be clear, that's just the Telesat expansion that you announced, but the other portion of ESCP-P still to come.

Of course. Yes. So the ESCP-P program will be at least larger than what Telesat has announced this week. The timing of the awards will depend on how fast the government can move. But that will provide more updates as we go, but that's entirely a different work stream for us, and it will be a very large contract.

Yes. It's really good, actually. It's hard to predict exactly the timing. I know you guys will all be looking for that. But it will be complements to Canada here in terms of moving forward with the increase in defense spend having the defense industrial strategy and using it, establishing the Defense Investment Agency and moving forward in new methods of procurement such as these strategic agreements.

So the fact that we've gone from signing a strategic agreement with the government last November through the initial phases of a defense contract with in the old systems would have taken multiple years. And we're sitting here in less than a year, having moved through initial phases and then seeing a portion of the contract of the program, the Ka-band portion now being contracted, it's excellent.

And so we will continue to work in this strategic agreement framework with MDA Space beginning the prime on the UHF and X-band portions of the constellation to be able to have the MEO constellation portions developed and made operational. And then we will -- so we'll continue with that work. It's got to go through all the necessary definitions and approvals to be able to get there. But it's been excellent seeing us all work together in a new way with very positive outcomes as we move forward into the future.

Your next question comes from Konark with Scotiabank.

Maybe the first one, in terms of your growth opportunities, do you think MDA is pivoting in a big way to defense and sovereign from commercial? And if you are, is it because that's where demand is growing faster or because competition is getting a lot tougher in commercial?

No. We still are very balanced in commercial and government. I think that in our remarks today, just because of the little burst that we've just had, it's -- and the questions around the overall market and trends globally, the sovereign conversation is driving a lot of that dialogue. But commercial is -- remains strong.

Space remains an affordable place to access and do business. And there -- our pipeline, when we talked 1.5 years ago about having a $20 billion pipeline, and then we came around this year and said we had a $40 billion pipeline. A bunch of that growth was through defense and sovereign activity, but it also included commercial growth.

And there's still a very strong commercial component in all of our conversations all the time. We still have strong commercial space networks, strong -- the commercial space station opportunities are still out there. Commercial activities on the Moon is still out there. And so there's still a really strong commercial activity.

And if I can follow up, I think, there's a lot of discussion these days about capacity constraints in launching orbital spacecraft. And I don't know what the future holds, but obviously, Canada is doing something on that front, and we are seeing some activity around the globe as well.

But the number of spacecraft that are contemplated to be launched in the future and U.S. expediting some of the approval processes, et cetera. Do you think the capacity constrained launch is coming in the way of your discussions with customers in converting those pipeline opportunities into contracts?

We have not seen that yet, no. No. Like I've not been in a conversation where someone said we're adjusting our time lines, blah, blah, blah based on launch. That is not occurring, no.

Okay. So it's a pretty active discussion still and the expectation is that the launch capacity will improve over time.

Yes, I believe so. Yes. And people are in their various conversations around launch, yes. So any time that customers are talking about their time lines and things, it's always just in relation to their business models, their anchor customers, their access to financing, all the normal business things. I have not been in any conversations where people are adjusting time lines based on access to launch.

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, 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.

Welcome to the MDA Space management presentation regarding our acquisition of CLS. My name is Jim Floros, and I'm the Vice President of Investor Relations at MDA Space. With me are Mike Greenley, our Chief Executive Officer; and Guillaume Lavoie, our Chief Financial Officer. Before we begin, I would ask you to please review the disclaimer and cautionary language included in this presentation as well as public filings regarding various factors, assumptions and risks that could cause actual results to differ from those expressed in this presentation.

In addition, we may 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 most recent quarterly report and other public filings for more information about these measures, including reconciliations to the nearest IFRS measures. With that, I will turn it over to Mike.

Thank you, Jim. I am pleased to announce that MDA Space has entered into a firm offer to acquire Collecte Localisation Satellites, known as CLS, a global leader in AI-driven earth observation data analytics. Under the terms of the transaction, MDA will acquire 70% of CLS, while CNES, France's National Space Agency, will continue to hold a minority interest with a 30% stake at closing. The net consideration paid by MDA Space for this majority interest is EUR 567 million, subject to customary adjustments, and is based on an enterprise value of EUR 1 billion and an equity value of EUR 810 million.

We are excited to continue working with CNES as a long-term strategic partner and to maintain this important sovereign relationship as a key customer to CLS. The transaction is 100% cash-based and is supported by a fully committed bank financing. However, we expect to optimize our capital structure to ensure we maintain a strong balance sheet. Following the closing of this transaction as well as the previously announced Blue Canyon Technologies transaction, our leverage ratio is expected to remain within our stated target range of 1.5 to 2.5x net debt to last 12 months adjusted EBITDA. We expect this transaction to close late 2026 or early 2027, subject to the completion of customary French procedures, the execution of definitive transaction documents, required regulatory approvals and customary closing conditions.

Let me give you a high-level view of what MDA Space and CLS look like together and why the combination is greater than the sum of the parts. MDA Space is currently focused largely on upstream operations. We are known for some of the world's most capable earth observation assets. We built and operate the RADARSAT constellation mission. We built, own and operate RADARSAT-2, and we will significantly expand our capabilities when we launch our next-generation MDA

CHORUS satellite constellation expected later this year. We collect, process and disseminate satellite data at scale, supported by multi-sensor earth observation ground systems and satellite operations capabilities, including space domain awareness. CLS, on the other hand, is currently focused on downstream operations.

It takes data from multiple sources, including satellites, and translate this into monitoring, forecasting and decision support services delivered by data scientists, AI experts and proprietary algorithms. It does this 365 days a year, 24 hours a day, 7 days a week, supporting customers across the world. As a result of this acquisition, we are creating a vertically integrated AI-driven advanced data analytics platform for earth observation that through broad-ranging sales and distribution in approximately 150 countries will put actionable insight into the hands of more than 14,000 customers worldwide. The strategic rationale behind this transaction is to combine upstream and downstream services to deliver value that neither company could replicate on its own with an unmatched global scale.

Let me touch on what makes CLS so distinctive as a business. CLS has been operating for 40 years, employing 1,200 people worldwide, serving customers through their 24/7 Global Monitoring Command Center in Toulouse, France, and an analytics platform underpinned by 250 proprietary algorithms and models. CLS serves 5 distinct client ecosystems: environmental monitoring, energy and infrastructure monitoring and forecasting, fisheries monitoring, maritime security, which includes some defense and mobility, giving the combined business exposure to a generally diversified end market. And the scale of what CLS does every day is remarkable. They process 30 million maritime positions daily. They monitor 100% of global maritime traffic through CLS solutions.

They've equipped more than 24,000 fishing vessels with monitoring beacons to track their position and catch reports. They continuously monitor 100,000 connected mobile assets. They process 200,000 radar and optical images annually. And over the past 40 years, CLS has tracked 400,000 animals through wildlife monitoring. CLS or CNES will maintain a minority interest. I want to take a moment to provide a little bit of background on who they are. CNES is France's National Space Agency and is internationally connected with 115 cooperation agreements across 44 countries and active partnerships with NASA, ESA, CSA, Israel and agencies across Asia and the Middle East. CNES is also CLS' founding shareholder dating back to 1986, resulting in a 40-year institutional relationship that will continue through this transaction.

We are excited to be able to continue this relationship as CNES is also an important customer and their 30% minority interest demonstrates that they expect to remain an engaged long-term institutional partner in the combined business. As one of the largest national contributors to the European Space Agency's budget, CNES helped shape the strategic direction of European space policy. Its mandate under France's national space strategy is directly aligned with some of our own growth priorities, advancing earth observation technologies and expanding international exports and is expected to open doors into the European space ecosystem. Now let me pass it over to Guillaume to touch on some of the financial aspects of this transaction.

Thank you, Mike. CLS financial profile is also a compelling feature of this business. Revenue of [ EUR 203 million 2025 ] translates into average annual growth rate of 14% since 2023. The quality of this revenue is equally important as it is driven by a loyal, highly diversified customer base with the majority of revenue coming from recurring services and multiyear service contracts. CLS top 20 clients have maintained their relationship for an average of 18 years and annual retention across the top 100 customers is extremely high at 99%. These metrics demonstrate how CLS has been able to establish enduring partnerships built through a long history of delivering value-added services and not transactional relationships.

What drives our excitement about bringing CLS into the fold is the idea of what becomes possible when these 2 businesses operate together. This is where the real value of the combination lies. MDA Space brings operational satellite capabilities through RADARSAT-2 and the upcoming launch of MDA CHORUS, ground station infrastructure and deep established relationships with the Canadian government. CLS brings global AI-driven geo intelligence analytics, monitoring and connectivity solutions that integrate direct proprietary sensors and real-time data delivery and a global footprint serving over 14,000 customers across approximately 150 countries. On a combined basis, the benefits are significant. CLS global direct sales network immediately becomes a global sales distribution channel for MDA CHORUS and is expected to accelerate revenue generation just as we prepare to launch this highly strategic asset.

Our upstream capabilities are expected to strengthen CLS' analytics platform, improving the quality of the intelligence CLS delivers to its customers, cross-selling opportunities open across both customer base and increased vertical integration from satellite sensors to analytics to customer insights creates a more competitive and differentiated business than either stand-alone company. I will cover a high-level view of the acquisition cost and financing. As this is the second acquisition we have announced in the past few weeks, I want to provide a high-level view of acquisition costs and financing for the recently announced acquisition of Blue Canyon Technologies alongside CLS.

The 2 acquisitions combined represent a total cost of approximately CAD 2 billion, including transaction fee and other fees. We have fully committed bank financing to cover both transactions. However, we expect to optimize our capital structure through a combination of equity, debt and bank facilities to maintain a strong balance sheet and achieve our stated target leverage ratio of 1.5 to 2.5x net debt to last 12 months adjusted EBITDA. And now I will turn it back to Mike for closing remarks.

Okay. Thanks, Guillaume. So we end up here with a globally vertically integrated Geointelligence leader. In summary, this transaction establishes MDA Space as a global AI-driven geo intelligence services company. It provides global scale with over 14,000 customers across approximately 150 countries and a commercial presence on 5 continents. It drives vertical integration by combining our upstream satellite and ground station capabilities with CLS' downstream analytics, connectivity and decision support platforms. It accelerates the commercial uptake of MDA CHORUS through CLS' established global sales network of over 100 direct sales personnel.

It opens a strategic partnership with CNES, one of the world's leading space agencies, creating a platform for collaboration on earth observation technologies and international exports. and it delivers durable revenue, doubling our current recurring revenue stream within the business. Ultimately, this is a transformative acquisition for our Geointelligence business. We are confident it is the right transaction at the right time as we look forward to updating you on our progress. Thanks very much.

Good morning, and welcome to the MDA Space Investor Conference Call and Webcast regarding its acquisition of Blue Canyon Technologies. Following the prepared remarks, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. For those participating via webcast, the company has included a presentation that will follow along with today's discussion.

Please note that today's call is being recorded and will be available for replay on MDA Space Investor Relations website. [Operator Instructions]

I will now turn the call over to Jim Floros, Vice President of Investor Relations at MDA Space. Please go ahead.

Thank you, Joelle, and good morning, everyone. Welcome to the MDA Space conference call and webcast to discuss our acquisition of Blue Canyon Technologies.

With me today on the call are Mike Greenley, our CEO; and Guillaume Lavoie, our CFO. Mike will open with the strategic rationale for the transaction, and Guillaume will outline some of the financial details, after which we will open the line for questions.

I would 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, accompanying presentation 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 most recent quarterly report and other public filings for more information about these measures, including reconciliations to the nearest IFRS measures. In addition, certain market and industry data referenced on today's call is based on management's knowledge of the industry and good faith estimates. While we believe these sources to be reliable, we cannot guarantee their accuracy or completeness and participants are cautioned not to place undue weight on such estimates.

With that, I'll turn it over to Mike.

Thank you, Jim. Good morning, everyone. As a global space economy is being reshaped in real time, we continue an intense focus on accelerating our position as a global space leader. We have previously communicated the significant opportunities for MDA Space to grow organically as well as our desire to grow inorganically if the right opportunity presented itself.

We are excited to announce today the acquisition of Blue Canyon Technologies, BCT, from the RTX Corporation for a purchase price and enterprise value of USD 620 million in an all-cash transaction. The transaction is expected to close in the fourth quarter of 2026, subject to regulatory approvals. This acquisition marks a significant milestone for MDA Space. Let me explain why and why we believe the timing is right.

The World Economic Forum projects the global space economy will reach $1.8 trillion by 2035, growing at roughly 11% annually compared to 2025. Bringing BCT into the fold allows us to further penetrate this growing economy in a number of ways, increasing the value of our total addressable market. Global government defense spending in space reached approximately $74 billion in 2025, a significant number that is rising. Funding for the U.S. base force budget for fiscal 2027 alone is proposed to increase to $55 billion, a nearly 80% increase compared to fiscal 2026.

Governments are not treating space as a discretionary investment they are treating it as a national priority. Historically, we have served the U.S. defense customers as a merchant supplier. However, BCT advances this dynamic as it provides us with an established U.S. presence, proven program delivery to U.S. defense customers and a pathway to pursue classified work and compete for prime contracts in our own right. This is a strategic foothold in the world's most important defense market.

Blue Canyon Technologies is a high-quality spacecraft and merchant supplier for the growing space economy. Based in Lafayette, Colorado and Denver, a hub for the U.S.-based industry BCT has built a best-in-class technical workforce with more than 400 employees across 2 manufacturing facilities totaling 140,000 square feet. BCT has demonstrated technical differentiation in a couple of different areas of focus. First, they have built industry-leading guidance navigation and control capabilities with high precision, high point inaccuracy and low jitter platforms that deliver exceptional space gap control.

And second, they have developed a modular architecture through a standard suite of configurable mission proven spacecraft platforms with a range of modular subsystems and components that enable seamless integration for bespoke mission needs. In addition, BCT's flight credentials are exceptional. The company has launched more than 85 spacecraft and has more than 3,500 products on orbit with 125-plus years of cumulative space cross time on orbit and 2,700 plus years of subsystems and component time on Orbit. That covers 18 years of flight heritage that cannot be replicated quickly.

BCT's customer base reflects technical standing and flight heritage as the company serves a blue-chip diversified mix of U.S. defense, intelligence, commercial and scientific customers across a broad range of missions. BCT also maintains a facility security clearance from the Defense Counterintelligence and Security Agency. That clearance is a strategic asset as it provides a pathway for MDA space to pursue classified U.S. work that we cannot currently access.

BCT is an established profitable business with demonstrated revenue growth, spanning 2 main lines of business, spacecraft and subsystems and components, with 75% of the revenue attributable to defense applications. The growth BCT has experienced in the past 2 years is expected to continue into the future as it is supported by a strong opportunity pipeline of USD 3.5 billion. This pipeline is incremental to MDA Space, supported by increasing requirements for space defense as well as growing demand for defense satellite platforms.

I will now turn it over to Guillaume to walk through how BCT's financial profile aligns with that of MDA Space.

Thank you, Mike, and good morning, everyone. Let me cover some financial details to help guide what the combined entity might look like on a pro forma basis for 2026. As Mike stated, we are acquiring BCT from RTX Corporation for a purchase price and enterprise value of USD 620 million in an all-cash transaction. The transaction is fully committed and financed at signing through senior secured debt and is expected to result in 2026 on a pro forma basis to a leverage within our stated target range of 1.5 to 2.5x net debt to last 12 months adjusted EBITDA.

As part of our ongoing capital allocation framework, we will evaluate opportunities to optimize our capital structure over time, subject to market conditions and broader capital deployment priorities. BCT has experienced strong growth over the past few years and expect 2026 revenue to be approximately USD 160 million. At the midpoint of MDA Space guidance, this would increase 2026 revenue by more than 10%. And with adjusted EBITDA margins for BCT aligned with our 2026 outlook of 18% to 20%, this transaction would be accretive to our adjusted EBITDA in 2026.

BCT's 2026 capital expenditure requirements would represent a minimal increase to our overall spending profile on a pro forma basis. And more importantly, BCT is expected to be free cash flow positive. As we expect this transaction to close by the end of 2026, I want to highlight that we expect that BCT will be accretive to adjusted EBITDA and adjusted EPS in 2027, the first year of the combined business. There are additional potential synergies, including leveraging BCT's portfolio to benefit MDA Aurora, MDA Midnight and mission operations for MDA cores.

Such synergies have not been included in the above financial profile increasing our confidence that this transaction will be highly accretive to MDA Space and our shareholders.

In summary, combining MDA Space with Blue Canyon Technologies accelerate our position as a global space leader. BCT's complementary technologies and capabilities expands our total addressable market in the fast-growing space economy, adding USD 3.5 billion to our total MDA Space pipeline, which represents an increase of approximately 12%.

The ability to leverage key talent and manufacturing facilities in the U.S. space and aerospace up BCT also positions MDA Space to further expand our opportunity set within the substantial U.S. defense market as we expect to unlock opportunities to pursue classified work in the U.S., something we cannot access before. In addition to new avenues to sell MDA Space platforms, both as a system supplier and as a prime contractor.

Lastly, BCT is an excellent fit for MDA Space and meets our long-stated goal of acquiring a high-quality asset within the United States.

With that, operator, we are ready for questions.

[Operator Instructions]

Your first question comes from Konark Gupta with Scotia Bank.

Maybe just first question. The BCT business seems to have a lot of exposure to the spacecraft. So that expands into that market for you guys quite substantially. Are you retaining their management or how are you planning to tackle that spacecraft business?

Yes, that's the intention. We need a solid footprint in the United States. These guys are a solid company. They're run well by a team that knows their business. They have good customer relations and good relations with business-to-business relationships with the other space members of the space community in the United States. And so we would just continue operating and then look for expansion opportunities in the future.

As I mentioned and Guillaume was mentioning, in terms of facilitating their technology road maps and development into the U.S. market. And in terms of enhancing the offering that we have in the U.S. by having MDA Aurora, MDA midnight and the like, being available through that business into the U.S. government market.

Okay. And with respect to capacity, you guys have recently expanded your Montreal facility quite heavily, and you have about 140,000, I guess, square feet of space, right, in Colorado now. How do you synergize between those 3 facilities for manufacturing these components?

BCT's capability and facilities in the United States is for them to delever the business into the U.S. market. That is a very full and productive and efficient operation that they have in Colorado and the Denver Boulder area. And so that's being used to deliver into the U.S. market. The Montreal facility provides us with a high-volume production environment for our MDA Aurora product and the foundation for our MDA Midnight product and we will be using that to be able to sell worldwide. When we build satellites in Montreal, we sell them commercially around the world into our largely commercial pipeline with some defense around the world. But in this case, we'll be able to deliver full satellites in the United States built from Colorado into the U.S. market.

Okay. And last one for me. From a synergy standpoint, is there any room for exploring synergies on the supplier side, your supply chain and DCT supply chain?

Well, yes, BCT actually is a candidate member of our current supply chain. So it will provide an opportunity for some additional vertical integration in our MDA Aurora product. So that's going to be an interesting synergy to explore for us as we go forward into the future. And in addition, yes, there would be synergies in our supply chain and their supply chain in some areas, yes.

Your next question comes from Aravinda Galappatthige with Canaccord Genuity.

Congrats on the acquisition. Two from me. One, just to give us a sense of the momentum in the business. Can you sort of develop a little bit on the top line trajectory over the last couple of years? as well as perhaps the signings trajectory? And then secondly, are you able to disclose the backlog in the business at this point? Or is that not something you're prepared to do right now?

In terms of the growth pattern, like they've had steady growth over the last couple of years and forecasted continual growth. So we're doing an acquisition in the middle of a growth trajectory, which is excellent. And I think that will be further enhanced as we've indicated, by enhancing the offering that is going to be available through that business to the United States government market. And so we would certainly anticipate that BCT is able, Blue Canyon Technologies is able to fully enhance and participate in the growth trajectory that MDA Space is already on. I don't have a backlog number available. So I think we'll leave that for a future date when we close and start talking about all the financials.

Next question comes from Benoit Poirier with Desjardins Capital Markets.

Congratulations for the announcement this morning. Yes. And just maybe to start, could you talk a little bit about how this opportunity arises for you guys?

How it arose to us. The owners of BCT were running a process, and we got engaged in that process. And we ended up being the leading candidate in the acquisition process.

Okay. Okay. That's great. And maybe could you walk us through the approval process, given the defense like right now? The closing is expected in Q4, but what are kind of the milestone that needs to be met in order to close the transaction?

Yes. Just as we said, like subject to normal government regulatory approval. So the typical government approvals that would be required to acquire a business in the United States. There's like 2 or 3 approvals that are required during that period of time.

Your next question comes from David McFadgen with ATB Cormark.

So a couple of questions. Sorry, I got $160 million, is that Canadian or U.S. dollars, you just cut out when you said that.

That's U.S., David.

Okay. So Raytheon, I imagine Raytheon is a U.S.-based company, right, like U.S. headquartered U.S. management, board and so on, right?

Yes. Correct.

Okay. So if a Canadian company is going to buy this, you need to set up like a sort of a hands-off special board, right, to maintain independence going up to the U.S. government market, correct?

Yes, there's 2 levels to that, but it's called a [ Foci ] mitigated structure, foreign noncontrolled interest. [ Foci ] mitigated structure in the United States. It's a standard process that we will have to follow, yes.

Okay. So do you expect any negative impact from the business, given that it will now be owned and controlled by a Canadian company?

No, I wouldn't think so. The U.S. is certainly very public in seeking foreign investment in the United States, especially investments that are going to enhance and increase advanced manufacturing in the country. So we would be following the lead that the U.S. government is set that they would like to see.

So we would be participating in that. So we would -- in sort of general conversations that we would have had with the U.S. government over recent months and years, not related to this particular transaction, but just in general, certainly, there seems to be favorability based on our decades-long relationship collaborating in the United States with both NASA and all the U.S. defense primes, like we're well known. Our technologies are proven. And so it seems to seem to be a welcome idea that we would show up a little bit, become more present in the market.

Okay. And just on the EBITDA margin, can we assume it's like 20% or maybe slightly higher, Guillaume?

Well, David, we just commented on that. Like it's really aligned to our MDA Space margin, and we're going to keep the range as is at 18% to 20%. You can pick your spot, but that's very, very positive from our standpoint, right? Like at the end of the day, there's a lot of space companies out there that are not profitable. And I think that us acquiring a company that is profitable and that is not dilutive to our EBITDA margins. really a fantastic thing. And I think that's really what we should focus on.

Okay. And so when you look at BCT, what capabilities do they give you that you don't have right now? Or is it really just access to the U.S. government market is what they give you?

The leading capability is we have a proven 18-year-old proven space technology deliver to the United States. So it's the market access. We've been clear the last 2 to 3 years that in M&A, we will always look for 2 things. One would be vertical integration opportunities to be able to pull key technologies into our supply chain -- from our supply chain into the business to increase control over our pipelines. And the second would be for geographic distribution, primarily in the United States or Europe. And so this definitely fits that pattern. It gives us the geographic distribution into the United States. While at the same time, they're very culturally similar to MDA Space in terms of legit world-leading technologies in the area that they operate in.

And so I mentioned that in some of my remarks, especially their guidance navigation and control and vehicle stabilization technologies. Like they're very, very high-quality provider of technologies into spacecraft management and control. As a result of that, they have participated as a regular member of our supply chain or potential supply chain in terms of quoting us for various components and elements into the MDA Aurora product, for example, and the opportunity for MDA Midnight into the future.

So this serves kind of 2 purposes for us. The primary purpose is the geographic access. But there is a small secondary impact as well, which would be some elements of vertical integration opportunity with some of the technologies that they provide and our legitimate world leaders at that we don't produce, we buy. So there is some vertical integration opportunity for us as well.

Okay. So they do supply some components to the Aurora satellite now.

So David, like Mike said, the we've considered them to participate in our supply chain. I think there are some active bids right now. And like Mike said, like it's another opportunity for us here in terms of continuing to have a little bit more vertical integration. But I wouldn't say it's material at this stage. So I think it's more an opportunity for the future. But given everything that Mike has said, I mean, they're likely a perfect fit for us to support the MDA Aurora platform in the future.

And MDA as well especially with the precision stuff yes.

Your next question comes from [indiscernible] with BMO Capital Markets.

Congrats on the acquisition. Mike, with respect to the pipeline that you articulated is coming with the business, can you provide some color? Is that very weighted towards defense -- is that more weighted to prime opportunities versus merchant supplier. Just any color on the characterization of that pipeline would be helpful.

Yes. Most of their pipeline is defense. As we noted, about 75% of their revenue is defense. And so like most of their pipeline is defense to U.S. primes and/or to some select government opportunities. Most of the opportunities in their pipeline would be merchant supplier for technologies or space crop platform opportunities, introducing our full satellite solutions into their business as we enter 2027, we'll provide significant opportunities for further pipeline enhancement.

And to what extent would you see an opportunity to take their technology like the breadth of satellite bus capability, which is different than what you have with Aurora and bringing that to some of your international customers and opportunities.

That may be the case from time to time. Their core base is in a satellite class is smaller than the ones that we work in. So -- we work in the MDA Aurora would be a larger satellite, larger platform, and there are typically smaller. And so this does now provide us internationally with the access to a smaller satellite technology solutions should we see opportunities to use it while we introduce a larger satellite solution to their capabilities in the United States.

And finally, just on CapEx not being meaningful. Is that just a function of they already have a good base of well-established capacity? Is that a some runway associated with it? Or what's the dynamic there?

I think that's correct. Like I mean, they do have a CapEx like any advanced manufacturing business, but compared to our overall guidance of $260 million in 2026. At the midpoint, it's not a big increase. So we'll see what comes next, right? Like Mike said, we'll have some opportunity there to grow the top line and generate revenue synergies that might come with some CapEx investments that would be required. But take ownership of that business, it doesn't have a significant CapEx requirement.

Your next question comes from Adam Jameson with Jefferies.

Yes. Maybe just to follow on the last question a little bit on the pipeline opportunity. I mean outlined this business growing at a low double-digit kind of CAGR over the last number of years. How do you -- how are you thinking about the growth profile of this business over the next 3 to 5 years given the pipeline that you see in front of you?

Yes. I think that it's certainly consistent with -- I view it as consistent with MDA Space's growth profile. The opportunities in the U.S. government market are large and expanding, as I indicated. Us having a world-leading digital communication satellites capability with us acquiring SatixFy last year and being vertically integrated down to the chip level now on digital satellites proven with the product, the ability to take that out to a full digital communication satellite, able to use those digital technologies in other types of satellites, such as earth or space observation or space control like an MDA midnight we have a strong offering that is highly relevant to the U.S. government market.

And so as BCT is able to represent that into the United States government market and be able to produce and support that in addition to their own very strong range of high-quality products. I would expect solid continued growth at we call MDA Space typical growth rates. It will take a little while to take a little while to like settle all that in. It's not going to be instant, but everyone has to get used to what they're talking about, of course, and be able to bring that conversation to the expanded customer community, but I definitely expect it to catch.

And if you think about the customer base and program base today, is there any specific programs or customers where you're a merchant supplier that are over 10% of over 10% of the BCT revenue base?

I'm not sure the numbers in terms of like percent by customers. The deal team would know that, but they're not on the call right now. The -- it's a diversified customer base, though, like they do supply to a number of parties across the market. Again, very -- it all feels very similar to MDA Space, like our Satellite Systems business 5 years ago was largely a merchant supplier business that was selling high-quality satellite components to the satellite manufacturers all around the world. And then over the last 5 years, we've introduced the full satellite products into that business for low earth orbit and then seen the massive expansion that we've seen in our business. This provides us the opportunity to repeat that process. And so we're very used to having those merchant supplier relationships, providing technologies to other businesses, a broad range of other businesses, maintaining those relationships while we expand full satellite solution opportunities with governments and other space networking customers.

Great. And then just a quick clarification on the approval process. Is this going to require CFIUS review in the U.S. to close?

I would expect so, yes.

Your next question comes from Erin Kyle with CIBC.

Congratulations on the acquisition. I was wondering if you could just elaborate on why the asset was available or why RTX was divesting it? Is there any program losses or anything that we should be aware of? Or what contributed to the process for them?

Yes. I think we don't have tons of insights into RTX decision cycle. It seemed like it was just an asset that they wanted to be able to put out on the market. It's a very strong asset, strong business. represents a solid return compared to what they paid for it. And so yes, it was just -- they had made that decision. We wouldn't have insights into their core thinking.

Okay. Maybe just a follow on to that. Is there any cargo complexity from RTX or transaction services agreements that we should be aware of?

Cargo complexity is excellent and straightforward. RTX acquired Blue Canyon -- they kept it as a stand-alone business. it received some corporate support, obviously, in terms of integration and things into the RTX business because you've got to integrate financials and that kind of thing to be able to make that work. But -- it's a surprisingly great stand-alone situation for us to be able to pick up and continue on. There will need to be a small transitionary services agreement, but it is not very complex at all.

Great. And then last one for me. Just how does this impact your appetite for M&A on a go-forward basis? Would you look to as you consider vertical integration and geographic expansion have been historically what you've said. This expands into the U.S. on a go-forward basis, would you look to target the U.S. on further expansion? Or if you're looking geographically, would you flow back to Europe. How should we think about that?

Yes. We've been looking at the United States and Europe over last significant period of time. And so we do have like a strong short list of candidates in both of those regions in the 2 categories of acquisition that we mentioned. So that activity will continue for sure. And then as we move forward into the future with this business in the United States, and we look to have a strong MDA Space presence in the U.S. other things could appear that would fit the MDA Space offering that could click together to make a stronger MDA Space in the United States. That's -- we will certainly be open to that as we go forward into the future. But we do have other -- we do have an active corporate development team, and they're looking at a number of things in the United States and Europe.

[Operator Instructions] Your next question comes from Konark Gupta with Scotiabank.

Just wondering, BCD, as you said, is focused on smaller satellites in different forms of spacecraft I don't think you guys really had a lot of competition with them in the past. But what would be their competitive landscape like today?

Yes, they would definitely have like competitors in that market. I think from the emergent supplier part of their business in terms of their key technologies, they really are like a differentiated high-quality satellite component leader. We're really pleased with that. Like I say, it really fits well our ethos and mindset. So they will compete for those various elements. But when the customer wants really high-performance, high-quality stuff, they're going to win. And so we're -- we see them as being very competitive in their marketplace, very efficient organization as well. And so I think that they -- like I say, they're very, very similar mindset to us.

So I think that in the satellite classes where they deliver today, they compete well. And I think that if we enhance their capability to deliver some of the other MDA space product offering into their market, they'll be able to continue to compete well.

Okay. And just one last one. Just the growth profile. If you look at the last 3 years for BCT, they have probably grown at 2% annually on average. Is that 12% sustainable for the next many years to come based on the pipeline that you see with them and other opportunities you mentioned? And second, which part of the business do you expect them to drive that growth?

I think that the -- them by themselves, like with their current offering, can definitely maintain steady growth in their business with their pipeline. But when we introduce the MDA offering with them through them in the United States market, you start to get into full satellite deals will be a potential.

Larger satellite deals will be a potential. And so you're going to be having a growing pipeline with larger opportunities. And so I would expect them to be able to maintain solid growth. But after a period of time and getting used to our offering and the customer base understanding what we can do, I would expect to see a pickup in the growth capability because you'll be selling a larger, higher-quality objects into the market.

Your next question comes from Greg MacDonald with Stifel.

Congrats again on the deal. A couple of things, Mike. The press release says that the purchase price could be subject to price adjustments. There's nothing major there, right? It's like -- is there an earnout or anything on this, anything that we should know about?

No, there's nothing we are there at all. I don' know what we that mean like price adjustments.

Yes. No, it would be normal aligned to market for deals like that. And frankly, we have a bunch of lawyers supporting all of our disclosures. So we just prefer to be cautious here. But at the end of the day, it's a USD 620 million deal.

No fancy terms.

Got it. Denver is a good market to be in. As you pointed out, that Space Central -- what about key person risk. Part of the benefit of deals like this is that you get people that are quite plugged in with the U.S. defense departments. Is there a strategy around that? Has anything been done yet? Like can you talk about that a bit?

Yes. That's part of our integration plans that we will have, like we will want to work with the team on retention and keeping people around, yes. In addition, it is, like I mentioned, a pretty stand-alone business. And so these folks we've grown up and expanded this business. They operate it, and they will continue to operate it in our interactions with the business, we feel there's a very strong fit. We are aligned in how we think there's an immediate connection between the leadership team and our leadership team that was experienced during the due diligence process. And so we're optimistic that the team will be excited about that. If you look at, for example, LinkedIn this morning as this was posted, the first several posting comments on our notification of this were from BCT senior leadership being excited about the whole thing.

So we're very pleased to see that and thank them for that, and we really appreciate their enthusiasm.

That's great. It sounds like it. And then last quick one for me, Mike. If you wanted to sell larger satellites through the U.S. division, would it take major investment in that manufacturing process? Help us understand like is the major retooling to do if you wanted to change the profile of product coming out of there?

Yes, I wouldn't call it a major retooling. I think we might have to add some space and some equipment to do that depending on the level of success. But if we had that level of success, we would be more than willing to make the investments. The really beautiful thing about us right now is with the investments we've made over the last 5 years, spending several years developing our analysis of what it takes to do high-volume manufacturing, what it takes to build a standard satellite product like an MDA Aurora or the basis for an MDA Midnight at a pace of 2 satellites a day. and then constructing our expansion, now setting up that tooling and seeing all those plans coming to life. We've got an established process and plan for how to build satellites.

And so getting additional space in another country and setting up a copy of our sort of assembly line and process and training people on that so that they can make the most out of it is a relatively straightforward process. It's work, but it's not complicated to work. It's like we know what to do. We know how to do it. We've got to go set it up somewhere else. And so as we look to expand our capacity to deliver into the United States government market and the European government market, we've got a ready established technology set, already established assembly process and the ability to replicate that in other places as necessary.

Thats all the time we have left. I'll turn the call back to Jim for closing remarks.

Thank you, everybody, for joining the call today and for all your questions. We'll keep you updated over the coming weeks, and we wish you a great day.

Thanks, folks.

Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Good morning, and welcome to MDA Space conference call and webcast. This call is being recorded on May 7, 2026, at 8:30 a.m. Eastern Time. [Operator Instructions]

I'd now like to turn the call over to Jim Floros, Vice President of Investor Relations at MDA Space. Please go ahead.

Thank you, Aubrey. Good morning, and welcome to the MDA Space first 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 available on our Investor Relations website as well as 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 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, and 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 MDA 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 MDA 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 have 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 Honeywell Systems to explore opportunities to collaborate in the development of Korea's sovereign low Earth orbit defense constellation. We launched 49North, 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 3 ground-based optical observatories to the Department of National Defense as part of the Surveillance of Space II 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 defense procurement, an integral to Canada's first defense 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 life cycle 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 Defense 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 Globalstar 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 introduced a number of benefits for satellite operators. This significant milestone demonstrates our ability to integrate newly acquired companies like SatixFy, 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 Geointelligence team continues to make strides towards preparing MDA 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 & Space Operations team achieved a remarkable 25-year milestone with Canadarm2. For over 2 decades now, Canadarm2 has operated on the International Space Station, helping build and maintain the ISS, capturing and berthing visiting spacecraft, carrying astronauts for 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 downselected MDA Space or follow-on opportunities with existing customers. It also includes meaningful opportunities over the next 5 years across each of our 3 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 5 years for our Satellite Systems business, nicely distributed between commercial and government opportunities as well as Canada, 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 & Space Operations business as robotics and on-orbit infrastructure is fundamental to the expanding Earth to Moon economy and the 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 crude lunar and martian missions and other deep space exploration.

This is driving an opportunity pipeline of over $3 billion for our Robotics & 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 life cycle operation 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 operation 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 CHORUS, including higher resolution data collection and near real-time cross-queuing will position us well to grow within this market. In fact, we are seeing early success with 9 customer contracts that have already been finalized for CHORUS, 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 49North, driven by increasing demand for sovereign defense capability across land, air, maritime and joint domains. Combining observation and C4ISR opportunities, our Geointelligence 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 MDA 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 3 of our business areas.

Revenues in Satellite Systems of $313 million in the first quarter of 2026 were $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 Globalstar 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 Globalstar 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 & 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 Geointelligence 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 iStar 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 $0.38 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 U.S. 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 31, 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 downselected opportunities with government customers or 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 million 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 hand of $544 million, driven primarily by our highly successful U.S. IPO. An overwhelmingly positive response resulted in a significantly oversubscribed offering, allowing us to raise gross proceeds of USD 341 million. 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 billion 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 million 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 million 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-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.

[Operator Instructions] Our first question comes from Justin Lang of Morgan Stanley.

Mike, I wanted to ask one on direct-to-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?

Yes, 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 cellphone 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 using -- 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 on to their network again, giving up customer information and the like that can happen when you roam on to 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 kind of conversations, while we also continue to develop and demonstrate the technical solutions that would enable it for customers at their request. So it's very active and a positive encouragement.

Got it. And then maybe just as a follow-up. It sounds like from at least what Amazon put out after it announced the Globalstar 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 Globalstar purchase?

Yes. So it's early days, obviously, with the Amazon announcement to purchase Globalstar. We've seen a couple of things there. Like one is the expected close of that acquisition wouldn't be until a year from now, early 2027. So as a result, Globalstar 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.

So 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 Globalstar 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 our things is going to work going forward into the future. And we'll see if any opportunities emerge there. Certainly, we have the skillsets and the capabilities and the technology road maps to be able to contribute. But we haven't had an opportunity to have those conversations yet.

Our next question comes from Thanos Moschopoulos of BMO Capital Markets.

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 conservatism on your part? Or are there other considerations you have to think about as we go through the year?

Thanos, really, we're sticking to our guidance like $1.7 billion to $1.9 billion. The midpoint is $1.8 billion. We delivered a strong quarter in Q1, $464 million. We're 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 Telesat, on the Globalstar next-gen legal program on Canadarm3.

So you can expect sort of consistent quarterly delivery. And it's going to vary a little bit. It's not going to be always $460 million, could be a bit lower in some quarters. But overall, $1.8 billion at the midpoint is a good way to think about our business. And we need a bit of wiggle room to -- yes, just like be able to deal with execution. And so $1.7 billion to $1.9 billion remains the best estimate right now for us.

Great. And then, Mike, on Canadarm3, any further color you can provide on the discussions you're having with your customer following the Lunar Gateway cancellation and how the program has evolved? And then maybe just the timing of when you might see some decisions or announcements in terms of contract modifications there?

Yes. The key thing for us is that full steam ahead on Canadarm3. The project team continues to execute as planned towards final designs of 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 that might -- 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. And 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 how can we be the most value on the lunar surface. So all those things continue at the moment with positive intent.

Our next question comes from Greg Conrad of Jefferies.

This is Eegan McDermott on for Greg. 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?

Yes. 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 could be turned into contracts. So we'll keep working that.

We expect to be able to book -- obviously, book more business throughout the year. And we always try to strive to have at least a 1:1 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 opportunity. And a lot of new things come along as well. So it's been exciting in terms of 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. 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 Systems segment going forward?

Yes. Over the last 5 or 6 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, we have a lot of expansion in the full satellite level. But with the high-volume manufacturing, it means that we're able to both on the bus or platform side of satellites and the digital payload or the digital guts of the satellite, that's all coming into high-volume production.

So it also means that from a subsystem perspective, 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.

We will now have Ken Herbert from RBC Capital Markets.

Maybe, Mike, yes, 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?

Yes. It's been 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 sort of transitioned where things that were sort of historically talked about behind closed doors are increasingly being recognized as important more out in public. And that's 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 has 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, 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 2 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, 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 pick up 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 2 groups I mentioned, the defense customer and the potential payload partners. And both of those areas have been steady and have 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 will take some time because it's -- we're in government procurement here. In this conversation, we're trying to sell -- protect the 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 2 and see what we can sign up.

That's great. And if I could, just you've obviously called out now the new chips arriving under 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 the sort of the financial implications with this progress or major milestone on either Lightspeed or obviously the Aurora program more broadly?

Yes. 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 -- sorry, the other good thing I just want to mention on that whole chip thing is that as teams have completed their designs and they're in production now of this first version of technology that we've had following our SatixFy acquisition. It frees up the team to also look at the road maps for like version 2 and version 3 with 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'll be able to control our road maps for both the chips and then therefore, the digital satellite itself. It's the overall satellite road map 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 we're excited about that.

In terms of moving into production more on these digital satellites and what is that? What are we seeing about cost? We're not anywhere near the volumes yet. That would allow us to have that learning. So we've always said that's a 2027 thing is to say, okay, what are we seeing in terms of costs? Is there scaling benefits here? Can we see the opportunities for margin expansion? That will be at the end of '27. During '27, we'll build a couple of hundred satellites at least. And that will really give us the chance to say, okay, we can really see what we can do here.

Our next question will be coming from David McFadgen of ATB Cormark Securities.

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.

Yes. 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. And so 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 largely the same governance process within government.

And so -- but it allows us to work really closely with the Department of National Defense to work through the process. And so you start off with working through the various options that you have there to be able to do a program like that, 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 option that you know you're going to implement. So that work has progressed amazingly fast, amazingly well. It's been excellent through the fall and the winter.

And yes, as we go through '26, we would expect to 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, to talk out loud about where we're going with that. But 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 away on it and get it through its approval processes to formally move into the next phase or the next step, which we would expect to happen in '26.

So do you expect that you might have some news, I'll say, within the coming months, that's what Telesat 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.

Yes. No, like we're all in the same mix. Yes, 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 yes, it is something that's coming up as we go through the next 2 quarters here for sure.

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

I don't know. Like 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 it can -- both of these types of options are available.

And obviously, on the Ka-band side, you got Lightspeed there as a strong service in Canada. You just asked about the other frequencies where satellites would have to be built. And historically, the Department of National Defense would own and operate that kind of a capability.

Our next question comes from Seth Seifman of JPMorgan.

I wanted to ask about the Geo business. And we've seen some nice growth there over the past 2 quarters. Would you think about where we are now as kind of a run rate level for the business? And then as I think 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'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 CHORUS 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 41 different conversations that are going on right now and 9 of them signed contracts. The remainder as letters of intent that as we approach launch and get past launch, will then convert into signed services contracts.

And so that's all very, very exciting. And 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 -- we need to use a bunch of '27 to get this all up and operational and working. But then as we go through '27 and people get experience with these new capabilities within their signed contract frameworks. Then, we would expect to start to see growth as we go through the latter half of '27 and into '28. We should see some pick up there.

It's our intent as well. 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?

Yes. 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 2 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 SatixFy, have more control over our road maps and/or influence over our ability to scale. And so we'll 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.

Our next question comes from Greg MacDonald of Stifel.

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? And 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?

Yes. I think if you look at, 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 protection on that platform to make sure that it can be slightly protected, be a bit jam proof, that type of thing. And so 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 deter another spacecraft. And then if necessary, get involved in proximity operations where you're 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 obviously assembling 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 may say like I'm going to build a space control spacecraft and they'll kind of work away on it and build one. Our ability to grab an AURORA bus do some mods in terms of maneuverability and protection of that AURORA bus. But grabbing AURORA bus off a high-volume assembly line and then convert that into a space control spacecraft is unique around the world. Others don't have that high-volume base.

And so for military capability, that creates a fair amount of interest in terms of our high-volume production satellites and getting into a phase now with MDA SKYMAKER of having standard robotics. So that aspect of it is attractive to folks in the market.

Then in terms of 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 & Space Operations team has literally within our team, millions of hours of experience 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 been working on refueling for decades. As far back as 2007, we flew our first demonstration of fluid transfer between 2 satellites back in 2007 on a mission with NASA. And so we have had tens of millions of dollars 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 and 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. The second question I have for you is, is this just for military customers? Or one might assume that that mega constellations might be looking to protect their satellites as well? Do you see an opportunity in the commercial side?

Yes. We haven't had that yet. Like you're right, it's a logical thing people could think about. It is a dual-use technology set, though as well. Like so if you have a vehicle that can sense other vehicles and approach them and interact with them and do things. There is a civilian market for on-orbit servicing that exists. There's also a thing we call ISAM, which is for in-orbit service assembly and manufacturing.

So there's definitely a commercial value in this configuration. We're taking it to market as a product targeted at the military and MDA 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. It will have a -- this capability will have a commercial application as well.

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

I wouldn't say -- I would say not really. Like there's activities that we're driving. We always had, I think, at least one opportunity in there. But yes, so there's maybe at least 1 or 2. But I was thinking more is there like new stuff that suddenly come in since the announcement in April. And I would say I don't think we've added anything since April, but we've had 1 or 2 there previously.

We will now have Edison Yu from Deutsche Bank.

I wanted 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?

Yes. 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 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. Everything is becoming more digital. There's more levels of processing. Our road maps 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 onboard compute and more intelligent AI-based onboard compute, for sure, that's going to increase. There are folks that engage with us. And we talk to people about having onboard 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, like that -- I imagine that's like there's pictures in the media and stuff like that, the 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. But -- and then some of the technical challenges, I don't think have been fully solved, even some of the largest proponents of space-based data centers say they think that, that's a possible idea, but they're not quite sure if that can all be done.

So there's a lot to work out there going forward. If it ever catches, we would have the opportunity to contribute. Certainly, any space infrastructure like that, that's large and has to be assembled. Our conversations about on-orbit servicing and assembly and the application of robotics, that's going to 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 if people find architectures that are going to work, then 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 color. A follow-up question on just some of the activity you're seeing in Asia and APAC. Obviously, you have the -- you announced the Hanwha MOU. And I think this week, there was some news about Reliance on to build 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?

Yes. I think 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 support some smaller scale things with key satellite technology to help some folks out. In other cases, as you've indicated, like you used some examples there, but there are others in terms of like larger constellation projects in the market. And so there, you get into the multibillion-dollar size opportunities that are 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 over the last 6 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 to what extent can I just take care of myself in space and not rely on 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 they grow like every month or 2 right now, there's like new ones that are coming out. And so 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, in a number of cases, government-linked procurement and how fast people can actually move to get it in place.

Our next question comes from Konark Gupta of Scotiabank.

Maybe just following up on the C3, the Canadarm3 program. I mean, Artemis has been 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, the Artemis came out, I mean, obviously, investors have reacted to that.

So I'm just curious like what are you hearing about Artemis going forward? I mean I understand your contract is with Canadian 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 Canadarm3 program as well potentially. So any thoughts into how sustainable you think the Canadarm3 program is regardless of the news that we hear every day and what's the opportunity remaining there?

Yes, there's a couple of things in what you're saying. So in the first one on the Artemis program, it remains an extremely high focus and high priority activity. I think I saw the NASA administrator, Jared, announced 2 new countries in the last quarter, joining 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 in 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 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, it's been or take -- 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, so the focus on don't polish a rock, don't make some perfect space objects 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 in the 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 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 we're full steam ahead, keep the project team working on Canadarm3 and keep getting this 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. 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 talked about some exciting opportunities in those discussions. Any concrete examples, even if it's early stage, 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 tangential to what you do? So any examples?

Yes. I think the bigger exciting things are going to be like new conversations around low earth orbit constellations, around the application of the MDA AURORA and high-volume manufacturing to these opportunities. I think that it's just great to see like the number of those that's increasing. People want to talk about is -- continues to grow, which is great.

And so we will fully engage in all of those and in conversations. Well, certainly the 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. Bid activity is very intense. And we will continue to be fully engaged in that and make announcements of contracts when they come.

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 in our next earnings 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.

Good morning, and welcome to the MDA Space Ltd. Conference Call and Webcast. This call is being recorded on March 4, 2026, at 8:30 a.m. Eastern Time. [Operator Instructions] For those participating via webcast, please note that the company has included a presentation. Webcast participants can advance the slides by using the arrow seen in the presentation window. [Operator Instructions]

I would now like to turn the call over to Jim Floros, Vice President of Investor Relations at MDA Space. Please go ahead.

Thank you, Kel. Good morning, and welcome to MDA Space's Fourth Quarter and Full Year 2025 Earnings Call. Mike Greenley, our CEO; and Guillaume Lavoie, our CFO, will lead today's call and share some prepared remarks before taking your questions.

A couple of housekeeping items before we begin. Today's call is accessible via webcast on our Investor Relations website. All our disclosures, including the press release, MD&A and financial statements are available from our Investor Relations website as well as SEDAR+. 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, and thank you to those joining us today to discuss our fourth quarter and full year 2025 financial results.

Before we get into our update, I want to start by acknowledging and thanking the MDA Space team for delivering another exceptional year of performance, our best yet since the IPO. The level of growth we achieved this past year would not have been possible without your hard work, innovation and total mission focus. Our talented teams around the world are the reason we continue to be a trusted mission partner and leader in the expanding space and defense industry.

In 2025, we delivered record results for both revenue and adjusted EBITDA. We grew revenues to $1.6 billion, an increase of more than 50% year-over-year and expanded our adjusted EBITDA to $324 million, up almost 50% versus last year. In addition, we maintained solid adjusted EBITDA margin of approximately 20% for the full year 2025. Our financial performance enables us to continue investing in our business as we deployed $242 million in capital expenditure to support our growth initiatives while also generating positive free cash flow of $165 million.

Taking a step back, 2025 built on MDA Space's track record of consistently delivering growth over the long term. Since 2020, our backlog has grown 7x to $4 billion, underpinning a revenue growth CAGR of 32% over the past 5 years, exceeding our stated goal of 20% to 30%. Importantly, this growth has been profitable with demonstrated adjusted EBITDA margin of 20% yet again in 2025.

A key driver of this profitable growth relates to the investments we've made to develop industry-leading products and capabilities. We have been deliberate in our focus on R&D as a differentiator for MDA Space. We were ranked 32nd within Canada's top 100 corporate R&D spenders this year. This is the third year in a row where MDA Space has been included in this ranking. In addition, MDA Space ranks within the top 20 Canadian companies when it comes to overall size of our portfolio of patent families and within the top 10 Canadian companies when it comes to the annual patent filings in Canada over the last 5 years.

We leverage our R&D investments to deliver value to our customers globally, and we combine this with disciplined operational execution to convert top line growth into profitable cash-generating operations, resulting in a robust balance sheet and a conservative leverage profile. This provides us with flexibility to continue investing in our business to capitalize on growth in our industry as evidenced by the investments we are making in developing commercial and dual-use products and services, expanding our manufacturing capacity and increasing our vertical integration such as the acquisition of SatixFy.

Looking ahead, I'm pleased to introduce our 2026 financial outlook. Our backlog of $4 billion at the end of 2025 provides us with strong revenue visibility. And for the full year, we expect revenues to be $1.7 billion to $1.9 billion, representing year-over-year growth of approximately 10% at the midpoint. We expect full year adjusted EBITDA to be $320 million to $370 million, representing year-over-year growth of approximately 7% at the midpoint, with adjusted EBITDA margin of 18% to 20%, in line with our original IPO guidance. We expect capital expenditures to be $225 million to $275 million to continue to support our growth initiatives. And lastly, we expect free cash flow to be neutral to negative for the full year due to normal working capital fluctuation on our existing programs and continued investments in growth CapEx.

As we think beyond 2026, the team is energized by the strong momentum and positive trends we are seeing in our end markets, and MDA Space has the right technology portfolio to capitalize on the opportunities ahead of us. We continue to expect to deliver significant revenue growth on average over the next several years. All over the world, governments, defense agencies and corporations are finding new and valuable ways of using the capabilities of space with the benefits of space-based and dual-use solutions expected to grow significantly in the coming years.

The space economy is estimated to have grown to USD 626 billion last year, according to Novaspace's Space Economy report and is forecasted to surpass $1.8 trillion by 2035 according to the World Economic Forum projections. A tenfold reduction in launch costs over the past 10 years, combined with more powerful satellite technologies supported a record 329 launch attempts in 2025 and 98% of those were successful. Demand for space-enabled global connectivity is expected to result in more than 43,000 satellites to be launched over a decade starting in 2025. Renewed interest in space exploration is expected to increase the number of missions by 185% over the next decade to 855 with a significant emphasis on establishing a sustained presence on the moon.

And space is increasingly emerging as a mission-critical and essential military domain, complementing the traditional fields of air, land and sea. Over the past year, we have observed defense spending on space by the world's leading powers surge to unprecedented levels as space has become critical to safeguarding national interest in evolving geopolitical environment. In particular, the U.S. dedicated $175 billion to its Golden Dome space defense architecture, Germany pledged EUR 35 billion for next-generation satellite and space situational awareness capabilities. And here at home, Canada confirmed that space will be a core element of its current 2% of GDP NATO defense spending commitment with plans to increase this budget to 5% of GDP by fiscal year '35, '36.

At 5% of GDP, this would translate to approximately $155 billion in annual spend for Canada, an increase of $90 billion compared to fiscal year '25, '26. And we expected a meaningful amount to be allocated to defense-related programs for which MDA Space is well positioned to deliver given our long-standing heritage of being a trusted contractor for both space and defense opportunities with the Canadian government for decades.

And recently, we have demonstrated that MDA Space is in a strong position to participate in defense opportunities through recent announcements such as the strategic partnership with the Government of Canada's Department of National Defense and Telesat to develop and deliver military satellite communication capabilities in the Arctic, a $5 billion-plus program of record.

In addition, we were awarded a contract on behalf of the Canadian Space Agency to procure long lead parts for the RADARSAT constellation mission replenishment satellite, part of government's $1 billion RADARSAT+ initiative. We have also been selected as an approved supplier by the U.S. Missile Defense Agency, receiving an IDIQ contract related to the SHIELD program and established an MOU with Hanwha Systems to explore opportunities to collaborate on the development of South Korea's sovereign K-LEO defense constellation.

Supplementing this will be opportunities to participate as a key supplier of satellite subsystems similar to contracts we were previously awarded to support U.S. Space Development Agency missions. Beyond space, we are also in a strong position to be Canada's national defense champion. Leveraging our deep mission experience and complex defense capability that has supported Canadian and allied operations for decades, we recently launched 49North, a dedicated defense organization exclusively focused on delivering secure multi-domain C5ISR and mission-critical capabilities for Canada's national defense priorities outside the space domain.

This launch reflects increasing demand for sovereign defense capability across land, air, maritime and joint domains. By bringing together proven defense and mission-critical systems expertise under a dedicated organization, we enhance focus, accountability and disciplined program execution. 49North will be focused on building a strong pipeline in non-space defense, actively partnering with domestic and global industry and investing in the capabilities required to support Canada's national defense priorities.

All this activity bodes well for the continued growth of MDA Space as we are pleased to announce today that as a result of our annual pipeline review and strong market and customer demand, our pipeline contains $40 billion in cumulative opportunities over the next 5 years. Within this pipeline, $10 billion includes either opportunities with government customers that have downselected MDA Space or follow-on opportunities with existing customers. For opportunities where we have been downselected, this means we are now part of a narrow list of candidates who have moved on to the next stage with the contract award process.

In addition, our pipeline is well distributed between government and defense and commercial opportunities. The geographic distribution is balanced between significant opportunities here at home in Canada and the United States with growing opportunities within Europe and other parts of the world, including Southeast Asia. This pipeline should allow us to continue to diversify our customer base and international footprint and combined with our backlog provides us with confidence to continue to drive profitable and stable revenue growth for years to come.

I'll now spend a few minutes on each of our business areas. In Satellite Systems, we continue to see good momentum in the market with our teams working to advance multiple requests for communication satellite solutions and a growing number of constellation projects, both for commercial and government applications. We are also seeing strong activity levels from customers and our opportunity pipeline remains robust.

Over the past year, our Satellite Systems business delivered year-over-year growth of 85%, a remarkable achievement. On Telesat the Lightspeed program, we continue preparations for the program's engineering and manufacturing development and continue to make progress on completing the final critical design review. We expect to begin delivering a small number of satellites in 2026 with deliveries ramping up in 2027. The team continues to work on the Globalstar next-generation LEO constellation. We achieved a significant milestone with completion of the critical design review. Work is being carried out through development activities on life testing of equipment and procurement activities are advancing with equipment deliveries taking place.

We have also begun assembly and integration activities of the first satellites. We also continue to advance work on the initial Globalstar program, where MDA Space is the prime contractor to enhance Globalstar's LEO constellation through the addition of 17 satellites, which support SOS features and direct-to-device communication on certain Apple products.

In Q4, the team continued to progress flight hardware production and advanced satellite integration and test work with 15 satellites currently on the shop floor in our facility with 8 satellites successfully completing functional acceptance testing. After experiencing some delays last year, we are tracking towards the revised time line established in Q4 for deliveries this year.

We are also making great progress with our Montreal facility expansion, which will add 185,000 square feet to our existing satellite production facility. The manufacturing and engineering group that will support the new production lines have moved into new office space, and the new facility now contains printed circuit board production lines and is capable of producing flight hardware. Once complete, this facility will be one of the world's largest high-volume manufacturing facilities in its satellite class. Finally, we have entered into a termination agreement with EchoStar following the cancellation of the contract they awarded us last year, and we are turning our focus to the other opportunities we are pursuing within our pipeline.

Moving to our Robotics & Space Operations business. We continue to see good traction and activity levels on both the government and commercial fronts. As the world leader in on-orbit space robotic operations and decades of experience in building and maintaining the current international space station, we continue to engage with commercial LEO destination companies to provide inputs to their design concepts for SKYMAKER robotics compatibility. MDA SKYMAKER is our commercial suite of robotics products specifically designed to be configured to suit a variety of mission applications, including space station assembly and servicing.

While the International Space Station is currently slated to be retired by 2030, NASA is supporting the development of commercially owned and operated space stations in low earth orbit, which the agency, along with other customers can purchase services and stimulate the growth of commercial activities in microgravity. We expect NASA to release the procurement call for the next phase of CLD development in the coming months, and we look forward to continuing to support the CLD candidates in their system development and bids to NASA.

This past December, we successfully demonstrated our autonomous lunar logistics capabilities through a prototype vehicle developed for the CSA's lunar utility rover. Using the CSA's analog train in Saint-Hubert, Quebec, the demonstration showed our capability to autonomously transport large cargo elements from a landing site to a habitat, robotically manipulate smaller payloads and have multiple autonomous vehicles coordinate motion and work together on tasks. These are key logistics capabilities pivotal to humanity's return to the moon, and we are proving that we can deliver.

Lastly, our team continued to make progress on executing Phase C of the Canadarm3 program while ramping down on Phase B activities, conducting closeout activities throughout Q4. The team is focused on building and testing engineering models of the system elements while working towards critical design review.

Moving to our Geointelligence business. In Q4, we were pleased to have been awarded a $45 million authorization to proceed contract by the Canadian Space Agency for critical long lead parts that are required to build a replenishment satellite for the RADARSAT constellation mission as part of the government's $1 billion RADARSAT+ initiative. Alongside this ATP contract, the CSA also announced its intention to further contract MDA Space to build, test and launch this replenishment satellite. In addition, we were selected to deliver a concept study to support the development of RADARSAT+ next-generation mission to eventually succeed the current RADARSAT constellation mission.

In Q4, the team also continued to progress work on CHORUS. Our spacecraft electrical integration and testing activities progressed well through the end of the year and made solid progress in testing the full SAR antenna, which was well characterized on our near field test range. We started to validate some of our flight control procedures related to the ground segment and construction work continued for the new mission control center, and we continue to track to our launch window in late 2026.

Before I hand it to Guillaume, I want to mention that Alison Alfers has resigned from the Board of Directors due to unexpected family circumstances effective March 3, 2026. Ms. Alfers has been a valued member of the Board since 2022, supporting MDA Space during this exceptional period of growth. We are grateful for her contributions and extend our sincere thanks and best wishes to her and her family.

With that, I'll hand it over to Guillaume.

Thank you, Mike, and good morning, everyone. Overall, both Q4 and full year 2025 delivered record results with solid growth in revenue and profitability, combined with strong free cash flow generation and a solid backlog to end the year, positioning us well for 2026 and beyond. Total revenues for the fourth quarter were a record $499 million. This represents $153 million or 44% increase over the same period last year. The year-over-year increase is driven by higher revenues from our Satellite Systems business, including the impact of the EchoStar termination agreement.

On a full year basis, total revenues were also a record, coming in at $1.63 billion, an increase of 51% over 2024. The year-over-year increase in revenues was primarily driven by higher volumes of work performed, again, primarily in our Satellite Systems business. By business area, revenues in Satellite Systems of $371 million in the fourth quarter of 2025 were $137 million or 58% higher compared to the same quarter in 2024. The strong showing was driven by the increase in volume of work on the Telesat Lightspeed program, the Globalstar next-generation LEO constellation program and the impact of the closure of the EchoStar agreement.

On a full year basis, revenues for Satellite Systems increased to $1.1 billion, which represents an increase of more than $500 million or 85%, which is remarkable from the same period in 2024. And then again, this was driven by volume of work on the Telesat Lightspeed and the Globalstar next-generation LEO constellation programs.

In Robotics & Space Operations, revenue of $66 million in the latest quarter were in line with the levels seen in Q4 2024 and in line also with our expectations for this quarter due to timing of revenue recognition on nonlabor costs. For the full year 2025, revenues were $309 million, translating into a year-over-year increase of $29 million or 11%. This increase is primarily driven by the higher volume of work performed on the Canadarm3 program as volume of work on Phase C activity increased throughout the year.

Revenues in our Geointelligence business of $62 million in the latest quarter represents an increase of $15 million or 31% year-over-year due to volume of work on programs. For the full year 2025, revenues for Geointelligence were $214 million, representing a $12 million or 6% increase compared to 2024.

Moving to gross profit. For Q4 2025, gross profit was $127 million, representing a $45 million or 55% increase over the same period last year. Gross margin in the latest quarter was 25.5% and compares to 23.6% for the same period in 2024. For the year, gross profit was $410 million, representing $128 million or 45% increase over 2024. Gross margin for the year was 25.1%, which compares to gross margin of 26.1% in 2024. The year-over-year change in gross margin is driven by evolving program mix.

Adjusted EBITDA in the quarter was a record $96 million compared to $71 million in Q4 2024, driven by higher volumes of work as we continue to convert our backlog. Adjusted EBITDA margin was 19.3% in Q4 and the slight decline in margins compared to Q4 of last year is attributable to our evolving program mix. On a full year basis, adjusted EBITDA was also a record, coming in at $324 million, up from 2024 levels of $217 million, representing $107 million or 49% year-over-year increase. Adjusted EBITDA margin of 19.8% for the full year 2025 compares to 20.1% for 2024 and is driven by, again, an evolving program mix.

Adjusted net income in the quarter was $59 million compared with $35 million in Q4 2024 and the year-over-year increase of $23 million or 67% was primarily driven by higher operating income. Full year adjusted net income of $190 million was up 71% year-over-year, also largely driven by higher operating income. And finally, adjusted diluted earnings per share of $0.45 in Q4 and $1.46 for the year were up 61% and 66%, respectively, versus the same period last year.

Moving to our backlog. We ended the quarter with a solid $4 billion backlog, which is slightly below December 31, 2024, driven by continued conversion of our backlog into revenue. This is normal and is to be expected due to the order level in 2025, which will vary from 1 year to the other. We continue to expect that MDA Space will be a growing company, supported by our pipeline containing $40 billion in cumulative opportunities over the next 5 years. As mentioned by Mike, within this pipeline, $10 billion includes either opportunities with government customers that have downselected MDA Space or follow-on opportunities with existing customers.

Moving to CapEx. We remain focused on making the right investments in the business to support our strategic growth initiatives. In Q4 2025, we spent $70 million on capital expenditures, up $61 million from last year. We continue to be on track with setting up production lines to ramp up high-volume satellite production, and we have virtually completed our investment in MDA CHORUS. In addition, we have started to capitalize work related to our space-grade chip following the acquisition of SatixFy.

On a full year basis, our capital expenditure was $242 million compared to $198 million in 2024. We demonstrated once again this year that we can execute our investment plan to deliver sustainable and profitable growth in the future. Cash from operations during the quarter generated $51 million compared to $376 million in Q4 2024. The year-over-year decrease is primarily driven by normal program-related working capital fluctuations in the quarter. Free cash flow was slightly negative at minus $20 million in the quarter versus positive $315 million in the prior year.

For the full year, cash from operations generated $407 million compared to a cash generation of $813 million in 2024. The year-over-year decrease in operating cash flow, again was driven by normal program-related working capital fluctuations, including higher advanced payments received in 2024. Free cash flow was a healthy $165 million in 2025, in line with our guidance of neutral to positive free cash flow for the full year and compares to prior year free cash flow of $615 million.

Moving to our balance sheet. We ended the quarter with a strong financial position with net cash of $152 million, available liquidity of $669 million under our credit facility and a total available liquidity of $821 million. Our net debt to trailing 12-month adjusted EBITDA ratio was a healthy 0.4x. In the quarter, we strategically evolved our capital structure through the issuance of $250 million in senior unsecured notes due 2030 and with an amendment of our senior revolving credit facility of $700 million, extending the maturity to 2030 and also allowing for a $150 million accordion feature. Our strong balance sheet position provides flexibility and liquidity, allowing us to deploy capital on the right strategic opportunities to support our strong growth profile.

In summary, this was a strong quarter to wrap up fiscal 2025, and we continue to be encouraged by the positive momentum we are seeing across our businesses. I also want to take the time here to recognize the work, dedication and passion of the MDA Space team. Without each employee's contribution, these outstanding results would not have been possible.

Now let me turn to our 2026 outlook. As Mike noted, we are introducing our 2026 financial outlook, and we are well positioned to capitalize on strong customer demand and robust market activity, given our diverse and proven technology, including our product offerings. For the full year, we expect revenues to be between $1.7 billion to $1.9 billion, representing a year-over-year growth of approximately 10% at the midpoint of the guidance. This is off the back of extraordinary growth in 2025. When comparing the revenue growth between 2020 and the midpoint of our guidance for 2026. This represents a CAGR of close to 30%, which approaches the high end of our stated goal of 20% to 30% CAGR for the business.

We expect full year adjusted EBITDA to be between $320 million and $370 million, representing a year-over-year growth of approximately 7% at the midpoint of the guidance and adjusted EBITDA margin of 18% to 20%. The adjusted EBITDA range is to provide flexibility for us to strategically scale up the business for future growth, particularly in R&D and in SG&A and aligns with our historical goal since the IPO and continues to represent very solid profitability.

We expect capital expenditures to be between $225 million and $275 million in 2026 to support another year of investments related to expanding production at our Montreal facility, investments in chip development and investments to support commercial growth initiatives. Although we continue to invest in our future, our capital intensity as a percentage of revenues is reducing from an average of over 20% between 2021 and 2024 to now less than 15% in 2025 and 2026 at the midpoint of our guidance.

Finally, we expect 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. With this outlook, MDA Space is positioned to once again deliver a strong year of profitable growth with the vast majority of revenue for 2026 contained within our solid backlog. Looking beyond 2026, we are excited about the opportunities ahead, supported by our $40 billion pipeline. On our mission to grow the business, the team is focused on executing customer commitments and leveraging our capabilities and technology to win new business pursuits while remaining disciplined in delivering sustainable profitable growth.

With that, operator, we are ready for questions.

[Operator Instructions] And your first question comes from Doug Taylor from Canaccord Genuity.

Congrats on a great close to 2025 and the outlook for '26. You've given more color to the pipeline, $40 billion. It's a staggering number and a big expansion from the last number you provided. Is it fair to characterize the expansion here as being more defense and intelligence related versus commercial communications? Would you provide some further color as to where you're seeing the most growth and opportunity?

Yes, for sure, we can do that. This is like our annual update to pipeline. We're going to try to make sure that we gave the numbers last year and carried it through the year, and we're up -- we've scrubbed all the numbers at the start of every year and updated the pipeline expectations. So that's what we're doing here now. The growth in terms of the size of the pipeline has certainly been based on opportunities we collected through the year. There are a number of them, yes, that are defense and intelligence related, defense related, both in the space sector in addition to the non-space sector with the announcement of 49North and the focus there. The 49North also creates opportunities for us to, through 49North, take on some new non-space things. And so yes, both domestically and internationally, the defense side has some of the chunkier growth in the pipeline.

Would you quantify just because you mentioned the 49North pipeline as being material within the context of this larger number?

I don't know what the materiality number would be, but there's -- it's early days with 49North, but with the initiation of it as we started the year, it has immediately picked up some media opportunities as a defense prime in Canada.

Okay. And then I'll just ask one more question on the pipeline as it relates to your guidance here, and you get this question every year at this time. So I guess what I'm asking here is the degree of coverage of the guidance you're providing for '26 that you're taking out of backlog. And I guess, I assume it's relatively high. And the flip side of that question was the amount of pipeline conversion that is baked into that guidance versus supporting '27 and beyond.

Yes. Like certainly, '26 is, as I said, is a year of very high visibility on revenue from backlog. So we're executing a lot of backlog as we go through '26. We do expect some orders in the guidance that's been given. The pipeline is a 5-year pipeline. So it's from now through the next 5 years of specific named opportunities that we are pursuing. The pace at which those can come in is often based on customer activity. And some of that customer activity is in areas that are newly emergent such as the Canadian government's new defense industrial strategy, the creation of the new Defense Investment Agency. So we have a lot of new policy and new processes around an expanding defense budget, which assures opportunities in the pipeline, which are great, but there's a little less insight in terms of exactly how fast those things can move.

And so we are definitely seeing procurements moving faster, especially strategic procurements in the sovereign defense capability areas identified in the Canadian defense industrial strategy. And so that's really great to see. But in terms of exactly how those will play out, we have to be a little bit cautious until we actually see some more examples of how these things are going to flow through the modified procurement processes. So they're there. Things can happen, both government and commercially as we go through the year, but the pace of those will be based on outside forces.

Your next question comes from Justin Lang from Morgan Stanley.

Mike, you're quite bullish towards the end of the last year that we could see potentially another sizable commercial constellation order announced here in '26. Just curious if you're still hopeful that we could see a large order like that this year? Any color there would be great.

Yes, it's still possible for sure. Like I say, that's all based on commercial customer activity as well and when and how they decide to move out on different opportunities. So we're still actively engaged, actively quoting people in the pipeline on the commercial side of things. So there's absolutely potential that, that could happen, but we'll wait and see how it rolls. But we still are behaving in a way that we are feeding customer with inputs to assure that they're comfortable to move forward.

Okay. Great. And then maybe just on the CapEx guide for the year. If we could just maybe put a finer point on where the investment is going in terms of what exactly is left to build out in Montreal and how much you'll be spending on this chip development effort? And then should we think about CapEx sort of stepping down materially from here into '27? Or is it more of a smoother downward glide path from here?

Thank you, Justin. I'll take that one. So really, the focus this year will be on the Lightspeed and Globalstar production line equipment. That's really the focus for us. We also have to continue to invest in office space and things like parking. I mean, we've been growing a lot. Our factory there in Montreal is virtually completed, like the building is completed, but we need a bit more investments to make sure that everybody can come to work comfortably. The facility has been expanding quite a bit.

In terms of chip development, for sure, now we started to capitalize the work that we're doing there. It's intangible assets for the most part. And that's important within the midpoint of $250 million, but it's ramping up essentially in 2026. And finally, we have some commercial sort of opportunities where we see that we need to invest a little bit ahead of getting the business. And so those are really the areas of focus for us.

I think if we look beyond 2026, I feel like we're going to still have a good year of spending in 2027. Too early to say if it will be lower than the midpoint we're guiding to this year in 2026. But beyond that, and when looking at the business for the future, I feel like a number of $150 million to $200 million would be a reasonable long-term number to assume now. We've been indicating in the past a bit lower than that. But really, the big driver here is that now we have chip capabilities. And so we're going to have to continue to invest on that front, but that's obviously strategic, and it has a lot of value for us.

And your next question comes from Konark Gupta from Scotiabank.

Just on the pipeline, maybe the $40 billion, obviously, it's an outstanding -- have you like figured out what's the incremental? You said defense obviously driving some of that. But in terms of segments, I'm thinking, is it more on the satellite side that you're seeing these incremental opportunities making satellites? Or is it more from the services side, whether it's geo intelligence or something else?

I would say more on the -- certainly, there's really solid expansion on the satellite side, definitely in two types of satellites, in communication satellites and earth observation satellites. So there's definitely solid growth in contracting for and delivering satellites. There is some new capability offering type stuff in space that is being introduced as the space market continues to expand that can affect robotics and space operations. So that's really been good to see. And so those are the main driver areas. And then like I mentioned before, a little bit of a bump there in the non-space defense with the creation of 49North and the ability to take on defense prime contracts in an improved way.

Okay. And on the $10 billion like BD pipeline seems like it's maybe up the pipe, the opportunities because you've been shortlisted by the governments and you're expecting some follow-ons. In terms of time line, then do you see -- like government orders can be lumpy, obviously, but do you expect some of these $10 billion worth of opportunities might be converting into contracts this year and next year? Or these are more sort of back-end loaded?

No, I would think a lot of the shorter list ones would have -- there's a number of them that would have a chance within that bucket over the next 24 months. Like I said, the -- some of that is government related and therefore, it is going to be linked with the behavior of government under new defense procurement initiatives. But they're not all in some other government ones are just normal procurement processes. So there's some that could come this year and then definitely some that could come next year.

And last one for me before I turn over. In terms of RFPs, I mean, your business has grown a lot. Your opportunity pipeline is expanding. Are you expecting to fill a lot of RFPs this year? Like can you provide some context historically, like how many RFPs typically you fill in a year?

I don't have that number in my head. That's a new good one for me to get in my head, how many bids do we write a year. So I'll have to go and work on that. But it's steady. Let me just say that. For sure, our new business teams are very active. Constantly responding to requests for quotations and request for proposals. So RFQs and RFPs in the system, it is a constant activity. So we will definitely be responding to a number of those as we go through the year for sure.

Your next question comes from Ken Herbert from RBC Capital Markets.

Maybe, Guillaume, I wanted to see on the adjusted EBITDA guide for the year, a bit of a wider range than we would typically see, and I can appreciate some of your comments around the higher R&D spend. But can you give any more detail on maybe some of the puts and takes between the upper end or the lower end of the adjusted EBITDA outlook and maybe any more specifics on the areas of focus for R&D and other investments.

Yes. Thank you, Ken. So at the end of the day, we wanted to give ourselves some wiggle room here. And depending on the timing of the investments that we're contemplating to support our strategic growth, we will see potentially an impact on the EBITDA margin. Again, we've maintained a range of 18% to 20%. So we're going to be strategic about those investments. And it's going to also be sort of part of how we see the timing of revenue recognition. If top line comes in very strong, then we might invest a little bit more. And in an alternative scenario, then we might be a bit more prudent with our different investments.

But at the end of the day, I think what's to be sort of highlighted here is that we're coming off a very strong year of growth again. We're now guiding to be a $1.8 billion company, and we were a $400 million company not so long ago. And so Mike and I were thinking about that a lot because we've been investing in our facilities and all of that, but we need to maintain our technological leadership. So that's why we feel like we have some investments to do in R&D.

And also, we need to scale the rest of the business, rather if it's us working on making sure we're using AI or making sure that we have enhanced capabilities within finance, legal, HR and IT. And so I think we'll manage it prudently, but -- and we will always do that. We're very disciplined, as you know. But we felt like we needed the proper wiggle room to execute and deliver another good year here in 2026.

Great. Guill, I appreciate all the detail. And then maybe, Mike, we think about your defense exposure today as maybe mid-teens of the business. If you're successful on some of these pipeline opportunities as you've leaned into this opportunity on the defense and national security side, what could defense broadly represent maybe of the revenue mix exiting '26 or into 2027? I mean, can you maybe just frame that opportunity for us?

Yes. I think exiting '26, I wouldn't expect a big sudden change. I think '27, yes, if some things start to get contracted in these various forms of pipeline as we go through '26, then in '27, we could start to see some additional revenue lift from the defense side and then certainly in 2028. So these -- a number of these programs tend to be larger, and so they'll take time and then they'll have to ramp up. But the relative contribution in terms of your mid-teen estimate and how that might change, of course, will be dependent on what else has happened on the commercial side as well, which is still a significant part of the pipeline. And so -- but the defense portion will go up as we go through the next 24 months. That's our expectation.

And your next question comes from Russell Stanley from Beacon Company.

Congrats on the quarter. Maybe a follow-up on that last question around your revenue mix expectations. How should we think about the gross margins kind of on a midterm basis? I think people might generally assume that defense-related work must come at lower margins. Is that -- are you seeing that? Or do you expect that? Or are you more or less kind of expecting gross margins to be unchanged relative to the work you see on the commercial front?

Maybe I take that one, Russ, and give you some insights here. So 2026, 18% to 20%. We're very confident about that range for the business. We don't expect that to change in the near term. So I would expect that we could continue to deliver within that range for 2027. And then what's going to happen is two things. First, as we increase our production in Montreal, we might see some margin opportunities in terms of margin expansion in the future.

Now with that said, when we look at defense contracts, they do typically come with lower EBITDA margin. It's too early to tell like what will our mix be. Today, it's about 70% commercial, 30% government and defense. And so we'll see how that evolves. But one thing to keep in mind is that we are seeing very, very large opportunities coming for us, given everything that we've been saying this morning. And so at the end of the day, if we would be in a position in a number of years where we would see a lot of big defense opportunity coming to us, we might see a bit of compression on the EBITDA margin. But at the end of the day, we don't take margin to the bank, right?

And from my perspective, this would be still very good for our business because we would increase our earnings per share and absolute EBITDA number. But that's all the color that I guess we can give at this stage, and we'll continue to provide updates as things evolve over the next few years here.

That's great color. And maybe my follow-up just around the backlog and given the pipeline and the huge growth you've seen there, this is a bit of a hood problem question, but how do you think about managing the backlog as a multiple of revenue, balancing wanting to keep the backlog as healthy as possible while managing delivery time lines and expectations for customers with a $40 million pipeline at some point, that might be a nice problem to have, but I'd love to hear how you're thinking about it right now.

Yes, I'll start. Maybe Mike can -- yes, sorry, Mike and I were not in the same location today. He's in Europe, and we're here in Toronto. So that's a great question, Russ. Like from our perspective, like we have a really good thing going on for us here because we've invested in a brand-new center of excellence right here in Brampton, Ontario. So we can take on a lot more work. And as I commented earlier, we're now very close to having a world-class high-volume satellite manufacturing facility in Montreal that can deliver up to 400 satellites per year. And so I mean, we've made all those investments, and now we're basically ready to convert more opportunities from our pipeline into our backlog and then continue to execute and generate revenue growth.

Now we are obviously targeting a book-to-bill ratio above 1 compared to our revenue every year. This year, we were a bit below that. But if you look at the past 2 years, then we were above. So it's just going to be a matter of timing here. In our business, it takes a bit of time to convert pipeline opportunities into orders. But I think we're very well positioned here from an infrastructure and footprint standpoint to take on a lot more business. Maybe, Mike, if you want to add anything?

No, I think that's great.

And your next question comes from David McFadgen from ATF Cormark (sic) [ ATB Cormark ].

A couple of questions. Maybe I'll ask one on the pipeline as well. So we've seen it double since Q3, and you now disclosed that $10 billion of the $40 billion is for follow-on orders or defense or I guess, a combination of both. Can you confirm that Apple Globalstar follow-on order would be in that $10 billion pipeline?

We're not going to -- no, we don't talk about specific opportunities in our pipeline. But the -- the other thing is that it hasn't been like a -- it's been a jump over the next year. Like we're trying to make sure we update the pipeline annually and make sure that we give as part of guidance for the year, we give an update on pipeline. So we'll carry this pipeline number as we go through the year. We're not going to talk on a quarter-by-quarter basis about adjustments to the pipeline. Our order development and order cycle is such that we shouldn't be thinking about quarterly stuff. We should be thinking about annually stuff. So we'll be working this pipeline as we go through this year and give an update to it at the same time next year. And so there hasn't been like some huge swing just in the 3-month period. It's been building as we've been going through '25 and with all the changes that have occurred in the market and our changes to our position that have contributed to that. So -- but I don't want to comment on specific opportunities like that.

Okay. Do you know when NASA is going to announce this -- the award for this like over USD 4 billion RMS contract for the manned lunar train utility vehicle, it's just been over a year now delayed.

Yes. It's been like -- people have been looking for that to be announced every month for many months. And so I think that it probably got slowed down as in the fall, which would be expectation was there as the new NASA administrator Jared Isaacman, came into his job and everybody has to confirm what all the priorities are. So I think that probably slowed down a little bit. And then you will have seen like a strong burst in the last little while about ensuring the return to the lunar surface and ensuring in the sort of mini space race that's going on here, maybe it's not too much of a mini space race, the space race that's going on here between the United States and China to be able to get humans back on the moon and start having habitats there and all that kind of stuff, there's a significant focus on that.

So I think that probably in the architecture of their programs and which sequence of things need to be decided and announced in what order has probably been reshuffled a bit as the new administrator has come into his job. But in the background, people continually expect that as being one of the programs that could be announced at any time kind of a thing because the -- it's been -- we agree that the community has been waiting for a while for that announcement.

Okay. And then just on Lightspeed, can you confirm that the critical design review is complete and you started construction of those satellites?

The critical design review, I think there's a few actions that are still being worked like the -- the critical design review process absolutely was conducted. And then there's a few odds and sods of things that people are following up on that always happens in the CVRs. In terms of being able -- talking about moving forward with the construction of satellites, certainly, that's all progressing because we owe a couple of satellites this year into Telesat. So we're leaning into that.

Okay. And then was the EchoStar payment, was that anything material in the quarter?

So maybe I'll take that one, David. So that contract termination process with EchoStar is now completed. We've received payments for all termination amounts that we were entitled to receive under the terms of the original contract. And the terms of that agreement with EchoStar, the termination agreement are confidential. And we are precluded from sharing details of the agreement, including the dollar amount that we were compensated for. But this is behind us. We're moving forward. We have a strong pipeline, and we're glad that this was completed in the fourth quarter.

And your next question comes from Thanos Moschopoulos from BMO Capital Markets.

With respect to Telesat and Globalstar, can you remind us when the first deliveries happen? Is that kind of Q3 time frame? Or when would that be?

Globalstar from that first contract for 17 satellites, there will be deliveries through the first half of the year. And then with Telesat with Lightspeed, there'll be some deliveries near the end of the year.

Okay. And then for the second Globalstar contract, would there also be deliveries towards the end of the year?

I think I have to check on that in terms of the latest status for that in terms of whether it's late in the year or early in the next, but I'd have to check on that. There's lots of moving parts still on that program.

I think that's a good way to put it, Mike. We're very advanced with that contract. We started the construction. As Mike said, we have completed the CDR. And so it's just a matter of working with the customer here. We've always said that we would have some ramp-ups mostly in 2026 with a more significant year of production and delivery in 2027. But as Mike said, there's a lot of moving parts with the second contract here. So we expect that we'll start delivering either at the end of 2026 or in 2027.

Great. And then, Mike, with respect to 49North, what would be some of the, I guess, more meaningful areas of opportunity that you call out? Clearly, you have a broad range of capabilities. You're already getting a lot of non-space work with the service combatants. But what would be some of the near-term or larger opportunities or buckets within non-space that you would hope for within the defense sector in Canada?

Yes. In terms of areas where we've got a really strong history of past performance, one of the key areas would be on autonomous systems. We're a leader with the Canadian forces in the delivery and/or operation of autonomous air systems like drones for the military. And so that's an area of strength for us.

Another area of strength would be in sensors. You mentioned the Canadian Surface Combatant, we're the River-class destroyer, where we're responsible for the integration of the electronic warfare suite and the sensors around that. And so these are -- those are example areas where we're historically strong. The -- we have strengths in things like submarine command training, for example, that will be a hot topic as we move forward into the future as Canada goes and buys new submarines. We're responsible for that today.

So -- and then the -- there's some -- there'll be some large programs coming forward in integrated command control communications with sensors and the like, where we have strong secure systems integration expertise that can lead programs in that area. That will apply to a number of different programs that could come along.

And your next question comes from Greg MacDonald from Stifel.

Mike, I know you don't want to talk about specifics on the pipeline, but the Golden Dome, I think most of us would consider a different risk profile than some of your other opportunities. Can you say -- are you willing to say whether there's anything in the Golden dome inside the pipeline?

I think there could be opportunities related to that. Like you would have seen us get a -- we announced an IDIQ contract signature there with the SHIELD program with the U.S. Missile Defense Agency, which is really an opportunity to be able to be sort of inside the tent and able to bid on things. And so that creates some opportunity. And then some of the opportunities for Canada that are related to Arctic Defense, whether that's Arctic Defense Communication or Arctic Defense Surveillance, those types of programs that are Canadian programs would be eligible to be part of Golden Dome scope. And so I think that I have to honestly say that those things could absolutely be related to Golden Dome scope, but they would be Canadian programs.

In the U.S., on the U.S. side of things, we would continue to have conversations with folks that could benefit from our space capabilities as they continue to advance their solutions for Golden Dome on the U.S. side. You would have seen us in the last number of years be providing satellite technology to all the satellite primes in the SDA LEO constellations. And so we've got a strong history of performance there delivering into U.S. primes when their programs ramp up.

Great. That's helpful. And then second quick question on 49North. To what extent -- you talked a lot about hardware. We know that Canada does and you do sensors well, systems integrations well. When you talk about systems integration, should we assume that includes software and in particular, kind of the command and control integration stuff and the AI prediction stuff? Or is that beyond the scope of what you guys are looking at?

No, it could definitely include those types of things. We're strong in systems integration. That can include hardware and software integration to deliver a system for sure. And we have past performances of that in the 49North team. So we have strong capability there. So yes, that can definitely be part of that. In terms of AI, that's going to depend on the systems. These days, when you have sensors that are delivering data into an integrated system that you then need to determine what the current situation is and evaluate alternative courses of action from that information you're receiving. Of course, our artificial intelligence-related system elements can be logically part of that. And we see that on all of our programs, including our space programs these days. As you look at the road maps for the evolution of these technologies, AI has more and more of an opportunity all the time. And so that can definitely come up as part of a systems integration solution.

And your next question comes from Michael Kypreos from Desjardins Securities.

I'll be quick here. Just any updates on capital allocation and how the M&A pipeline is these days?

The pipeline is good. So I was just going to say from a pipeline perspective, the pipeline is good. So we keep an eye on all the same areas we ever talked about M&A. We talk about vertical integration. We talk about geographic expansion to open up bigger pipelines for ourselves around the world. Those types of thought processes absolutely continue, and we continue to look at and focus on targets, but I'll let Guillaume talk to capital allocation.

Thank you, Mike. Michael, so yes, I mean, focus for us is to continue to look for targets so we can expand geographically. And then obviously, the second priority is to execute our growth organic plan. And again, you saw the guidance this morning for this year. We're going to spend at the midpoint, $250 million into CapEx. And so those are really the 2 priorities, potentially doing some acquisitions and then focus on delivering on our investments that we need to support our growth. We're not thinking of introducing any dividends at this point or share buybacks or things like that. We're very focused on continuing to grow the company.

And there are no further questions at this time. Mr. Mike Greenley, you may proceed with the call.

Okay. Well, thanks, everybody. I appreciate all the questions and the discussion, and we will get back at it and look forward to talking to you again in the next quarter. Thanks a lot.

This does conclude your conference call for today. Thank you very much for your participation. You may now disconnect. Have a great day.

Good morning, ladies and gentlemen, and welcome to MDA Space Limited Conference Call and Webcast. This call is being recorded on November 14, 2025, at 8:30 a.m. Eastern Time. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. [Operator Instructions]

I'd now like to turn the conference over to Shereen Zahawi, Head of Investor Relations at MDA Space. Please go ahead.

Thank you, operator. Good morning, and welcome to MDA Space Third Quarter 2025 Earnings Call. Mike Greenley, our CEO; and Guillaume Lavoie, our CFO, will lead today's call and share some prepared remarks before taking your questions.

A couple of housekeeping items before we begin. Today's call is accessible via webcast on our Investor Relations website. All our disclosures, including the press release, MD&A and financial statements are available from our Investor Relations website and from SEDAR+. I would also like to remind you that today's call will include estimates and other forward-looking information, which may differ from actual results. Please review the cautionary language in today's press release and public filings regarding various factors, assumptions and risks that could cause actual results to differ.

In addition, during this call, we will refer to certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, these measures do not have any standardized meaning under IFRS, and our approach in calculating these measures may differ from that of other issuers and therefore, may not be directly comparable. Please see the company's quarterly report and other public filings for more information about these measures, including reconciliations to their nearest IFRS measures.

And with that, it's my pleasure to turn the call over to Mike.

Thank you, Shereen. Good morning, everyone, and thank you for joining us today to discuss our third quarter 2025 financial results. In Q3, the MDA Space team delivered another quarter of strong financial performance with double-digit growth in both revenue and profitability. Our revenues totaled $410 million, up 45% year-over-year. Adjusted EBITDA was $83 million, up 49% year-over-year, and adjusted EBITDA margin was a solid 20.2%. Operating cash flow was healthy at $33 million, and we ended the quarter with a strong balance sheet. Our backlog of $4.4 billion at quarter end provides revenue visibility for 2025 and 2026 and beyond.

Q3 and the subsequent period was a busy one for MDA Space. In early July, we closed the previously announced acquisition of SatixFy Communications, a leader in next-generation satellite communication solutions based on in-house design chipsets. SatixFy's operations and full technology portfolio is now part of the Satellite Systems business area of MDA Space and integration activities are well underway. As you know, during the quarter, we also announced our selection by EchoStar to be the prime contractor on a new low Earth orbit direct-to-device satellite constellation valued at approximately USD 1.3 billion, whereby MDA Space was tasked with the design, manufacture and testing over 100 software-defined MDA AURORA direct-to-device satellites.

EchoStar subsequently terminated the contract for convenience in September 2025. As per our contract, MDA Space is entitled to and expect to be compensated for all related termination costs and fees and is in discussions to finalize that contract termination agreement. While we are disappointed with the EchoStar development, as we have said previously, it is unrelated to MDA Space performance and our products and services. These remain in high demand. In events and forums around the world this fall, we continue to be encouraged by the high level of customer interest we are seeing in our space technology, which is uniquely positioned to serve the emerging and evolving needs of the space market.

We are also pleased and honored to be named the 2025 Global Satellite Business of the Year by Novaspace and presented with the award, which celebrates excellence in satellite business at the annual -- at the annual World Space Business Week in Paris this past September. I want to take this opportunity to congratulate and thank our MDA Space team for their commitment, expertise and award-winning industry leadership.

Subsequent to quarter end, we announced a $10 million equity investment in Maritime Launch Services, a Canadian-owned commercial space company that is developing Spaceport in Nova Scotia, Canada's first commercial orbital launch complex. The investment will help accelerate the Spaceport's readiness for orbital launch operations, providing reliable domestic launch capability for commercial, civil government and defense clients in Canada.

We are also reaffirming our previous 2025 full year outlook, which we provided with our Q2 2025 earnings release with full year revenues expected to be between $1.57 billion and $1.63 billion representing year-over-year growth of approximately 48% at the midpoint of guidance and full year adjusted EBITDA expected to be between $305 million and $320 million, representing year-over-year growth of approximately 45% at midpoint of guidance. We look forward to delivering another year of solid financial performance in 2025.

I want to take a moment to speak to what we see as an increasing market opportunity for MDA Space related to the growing focus on defense investment as NATO countries rapidly move to reinvest to build capabilities and infrastructure. With the space domain increasingly recognized as a critical domain for defense and security, we believe MDA Space is well positioned for this opportunity to extend our mission capabilities and support the strategic sovereignty and security requirements of Canada and its partners and allies. We are in the early days of a new and what is projected to be a prolonged investment cycle. We are noticing a change in pace and intensity of defense space conversations and are actively engaged in these discussions.

I'll now give you an update on our 3 business areas and then pass it to Guillaume for a deep dive on the financials. In Satellite Systems, we continue to see good momentum in this market with our teams working to advance multiple requests for communication satellite solutions and a growing number of constellation projects from multiple markets and geographies. We are also seeing good activity levels from customers and our opportunity funnel remains strong. In Q3, our teams were busy advancing work on our programs. On the Telesat Lightspeed program, our teams are currently working on the program's detailed engineering and manufacturing preparation phase, including the critical design review, which is taking place this year.

The team is also advancing work on the Globalstar next-generation LEO constellation, where MDA Space was selected as the prime contractor to manufacture more than 50 MDA AURORA software-defined digital satellites. The team is making good progress on the engineering, development and procurement activities for the program and is progressing work related to the critical design review milestone. In July, our Satellite Systems team also achieved an industry first by demonstrating digital beam forming and steering multiple beams with Ka-band direct radiating arrays using direct sampling. These are among the key features of the MDA AURORA Ka-band DRA and the demonstration marks a key milestone in the development of the digital payload technology for the MDA AURORA software-defined product line.

We also continue to advance work on the initial Globalstar program, where MDA Space is the prime contractor to enhance Globalstar's LEO constellation through the addition of 17 satellites, which support SOS features and direct-to-device communication on certain Apple products. In Q3, the team progressed flight hardware production. The team continues to advance final satellite integration and test work with 9 spacecraft currently on the shop floor in our Montreal facility. Due to delays resulting from a number of factors, including the supply chain, the delivery of these satellites is now expected in early 2026. We are currently in discussions with Globalstar to address any potential liquidated damages that might result from this delay.

It's important to note that our contracts with our supply chain are structured in a manner that embeds liquidated damage clauses as well. So we have recourse in the event of supplier delays. We're also making solid progress on our facility expansion in Montreal, Quebec, which will add 185,000 square feet to our existing satellite production facility. A portion of the office space is now complete and a number of engineers have moved in with great excitement. And we continue to finalize interior elements of the production facility, which remains on track to be completed this year. Once complete, it will be the world's largest high-volume manufacturing facility in its satellite class with capacity to deliver 2 MDA AURORA digital satellites per day.

Finally, in late October, 21 low Earth orbit satellites for the Space Development Agency's Tranche 1 Transport Layer were successfully launched from California's Vandenberg Space Force Base and MDA Space was part of this mission. We provided all Ka-band and L-band antennas as well as motor control electronics for the satellites. The SDA's Tranche 1 Transport Layer, a mesh network of 126 satellites will deliver resilient, low-latency connectivity to support military operations in the United States. Our technology plays a key role in enabling secure and reliable communication across the constellation. Congratulations to everyone involved in making this achievement possible.

Moving to our Robotics & Space Operations business. We continue to see good traction and activity levels on both the government and commercial fronts. In Q3, we continued to ramp up work volumes on Phase C of the Canadarm3 program, which we were awarded together with Phase D in 2024. During the quarter, our teams were busy actively building and testing engineering models of the system elements. Phase C will see us completing the final design before we move on to Phase D, which will see the construction, system assembly, integration and test of the full robotic system as well as a ground segment for command and control.

We also announced in July that an MDA Space-led team was selected by the Canadian Space Agency to conduct an early phase study for Canada's proposed Lunar Utility Vehicle or LUV. Recall that the 2023 CSA -- recall that in 2023, CSA announced $1.2 billion in funding for a Canadian utility rover that would be contributed to the Artemis program and would support human exploration on the lunar surface. This initial phase study is a first critical step in defining the LUV mission concept and technology development plan. As part of this effort, the team will integrate MDA SKYMAKER, our full suite of scalable and modular space robotics derived from Canadarm technology, paving the way for scalable autonomous mobility solutions on the lunar surface.

Moving to our Geointelligence business. Customer demand for our Earth observation offering remains robust, and we are seeing increased recognition of the role that commercial Earth observation satellites can play to provide near real-time data and analytics to governments and private enterprise. Notable awards in Q3 include 2 contracts to equip the Royal Canadian Navy's Halifax-class ships and up to 6 new Uncrewed Aircraft Systems. Part of the Intelligence, Surveillance, Target Acquisition and Reconnaissance Uncrewed Aircraft System, known as ISTAR UAS project, these new systems will significantly enhance the Navy's ability to detect and monitor potential maritime threats, both at home and abroad.

The award includes an acquisition contract valued at approximately $39 million for the initial procurement of 2 uncrewed aircraft systems with options to procure 4 additional systems and an in-service support contract estimated at $27 million over an initial 5-year period to sustain operations with opportunities for extension beyond the initial period. We were also selected to deliver enhanced space situation awareness to the Department of National Defense. The standing offer awarded to MDA Space in partnership with Canadian-based Thoth Group underscores the growing importance of space domain awareness in safeguarding Canada's critical space assets amid a rapidly evolving and increasingly congested orbital environment. Building on MDA Space's proven legacy as a space domain mission partner and leveraging Thoth Group's initiative Earthfence radar capability, the new service integrates high-fidelity sensor data with secure cloud-based infrastructure optimized for tracking and assessing satellite and space objects in the geosynchronous belt, approximately 36,000 kilometers above the Earth surface.

We also continue to advance work on MDA CHORUS. Our spacecraft electrical integration and testing activities continued, and we have all spacecraft units on hand. Solid progress was made in building and testing the SAR antenna panels, and we're building up the last of 4 panels in parallel with electrical and RF characterization and test activities of the second and third panels. On the ground segment side, the MDA Space team continues to track to development and release plans. Construction works also continues for a new mission control center from where MDA CHORUS will be operated.

And while we are overall pleased with the performance of our supply chain, we have encountered some delays with certain units, which are impacting the program time line. As a result of those delays, we are now targeting a launch window for MDA CHORUS in late 2026. We are looking forward to deliver the constellation's enhanced functionality to our current and future customers with many active discussions of the future opportunities in our pipeline.

I also want to provide an update with respect to a proposed class action claim that MDA Space was served subsequent to quarter end. The allegations are related to the announcement and subsequent cancellation of the EchoStar constellation contract that was announced by MDA Space in the third quarter of 2025 and the sales by certain insiders of shares after the announcement of contract and before its termination. MDA Space believes the claims are without merit and intends to vigorously defend itself.

With that, I'll hand it over to Guillaume to walk us through the financial details.

Thank you, Mike, and good morning, everyone. For my update, I will walk you through our Q3 financial results and provide more details on our 2025 financial outlook. Overall, Q3 results were solid with growth in revenue and profitability and a strong balance sheet and backlog, providing us good revenue visibility for the remainder of 2025, 2026 and beyond. Total revenues for the third quarter were $410 million. This represents a $127 million or 45% increase over the same period last year. The year-over-year increase is driven by higher volumes of work performed in our Satellite Systems and Robotics & Space Operations businesses.

By business area, revenues in Satellite Systems of $284 million in the third quarter were $116 million or 69% higher compared to the same period in 2024. The growth was driven by the ramp-up of the Telesat Lightspeed program and the Globalstar next-generation LEO constellation program. In Robotics & Space Operations, revenue of $78 million in the latest quarter represented a $12 million or 18% increase versus Q3 of last year, driven by the continued ramp of Phase C of the Canadarm3 program. Revenues in our Geointelligence business of $48 million in the latest quarter were in line with our expectations and the levels reported in that business segment last year.

Moving to gross profit. For Q3, gross profit was $108 million, representing a $32 million or 43% increase over the same period last year, again driven by higher volumes of work. Gross margin in the latest quarter was 26.4% and compares to 26.8% for the same period in 2024. Adjusted EBITDA in the latest quarter was $83 million compared to $56 million in Q3 2024, representing an increase of $27 million or 49% year-over-year, again, driven by higher work volumes as we continue to execute on our backlog.

Adjusted EBITDA margin was 20.2% in the latest quarter, consistent with the company's full year margin guidance of 19% to 20% and compares to adjusted EBITDA margin of 19.7% reported in the third quarter of 2024. Adjusted net income for Q3 was $46 million compared to $35 million in the same period last year. The year-over-year increase of $11 million or 33% is primarily driven by higher operating income after adjusting for the amortization of intangibles expenses incurred in Q3 2025 and attributable to the SatixFy Communications transaction, which we've closed on July 2, 2025.

Moving to our backlog. We ended the quarter with $4.4 billion in backlog, a decrease of $185 million or 4% compared with the backlog as of September 30, 2024, driven by continued conversion of our backlog into revenue. Last 12-month book-to-bill ratio stood at 0.9x at quarter end and our current backlog provides us with high revenue visibility for the remainder of 2025, 2026 and beyond that.

Moving to CapEx. We remain focused on making investments in the business to support our strategic growth initiatives. In Q3, we spent $70 million on capital expenditures compared to $53 million last year as we continue to progress our development of CHORUS, where most of the investment has been incurred. And other growth initiatives such as the expansion of our Montreal satellite manufacturing facility.

Cash from operations during the quarter generated $33 million compared to a cash generation of $259 million in Q3 2024. The year-over-year change was primarily due to working capital fluctuations. Free cash flow was negative $37 million in the quarter, and compares to $205 million for the same period in 2024, with the year-over-year change attributed to the previously noted working capital fluctuations. Excluding growth CapEx, free cash flow was $26 million in the latest quarter and compares to $253 million for the same period last year.

Moving to our balance sheet. We ended the quarter with cash of $196 million, available liquidity of $404 million under our revolving credit facility and total liquidity of $600 million. Our net debt to last 12 month adjusted EBITDA ratio stood at 0.3x at quarter end. The slight uptick in leverage is due to the completion of the previously announced SatixFy Communications Ltd. acquisition, which closed again on July 2, 2025. Recall that the company used cash on hand and borrowings from our revolving credit facility to pay for the transaction. In summer, this was a strong quarter, and I'd like to thank our teams for their dedication and efforts to make this happen.

Let me now turn to our full year outlook. As Mike noted, we are reaffirming the previous 2025 outlook provided in our Q2 '25 earnings release. For fiscal '25, we continue to expect full year revenue to be between $1.57 billion and $1.63 billion, representing year-over-year growth of approximately 48% at the midpoint of guidance. We continue to expect full year adjusted EBITDA to be between $305 million and $320 million representing year-over-year growth of approximately 45% at the midpoint of guidance and approximately 19% to 20% adjusted EBITDA margin. We reaffirm capital expenditures to be between $210 million and $240 million, comprising of growth investments to support the previously outlined growth initiatives across our business areas.

Lastly, we expect full year free cash flow to be neutral to positive in 2025. Note that the financial outlook provided does not factor any potential impact from tariffs. We continue to expect our potential exposure, if any, to be manageable. We are monitoring the situation and may elect to update our financial outlook if deemed necessary. With our $4.4 billion backlog, combined with a robust $20 billion opportunity pipeline, we are confident in delivering continued growth while remaining focused on disciplined execution and profitability.

Mike, with that, I'll turn it over back to you.

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

[Operator Instructions] First, we will hear from Benoit Poirier at Desjardins Capital Markets.

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

Thanks. As you would appreciate, as a matter of company policy, we can't really comment on rumors or speculation concerning another company or what people are talking about it. For us, with Globalstar, we're actively involved in executing on our 2 contracts. We are making good progress on those 2 contracts as we've indicated. On our original contract, we have 9 satellites being completed and getting ready to be shipped out in early 2026, ready for launch. And in our second larger contract, we continue to execute well on those satellites moving forward. These satellites are important to Globalstar for their constellations, and we are actively engaged in getting them delivered.

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

Sure. The company pipeline remains at around $20 billion over the next 5 years of specific opportunities that we are speaking with people about in the markets. Of that $20 billion, approximately $13 billion of it would be in the Satellite Systems business area, primarily in the area of constellations for both broadband satellites and/or direct-to-device satellites. After that, there'd be solid opportunities in Geointelligence, specifically around -- the larger opportunities would be around satellite systems for government programs, for Earth and space observation. And then a solid pipeline in robotics for robotics and rover systems for both government and commercial programs.

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

Yes. In Globalstar and CHORUS, I indicated in each case, there was some delays and in each case due to activities in suppliers. They are different suppliers, different topics. Just different people having challenges that we've worked with them to work through. In each case, we've worked through them and have solutions now for the -- to move forward, but they did cause some delays. In the case of Globalstar, to answer your question about liquidated damages, it is normal. All of our firm fixed price contracts have liquidated damages clauses. And so it's been disclosed by Globalstar and by ourselves that those clauses do exist.

And as a result of the deliveries now being late due to the supplier issues, that it's eligible to talk about liquidated damages clauses. And these are in discussion. It is normal for us to have back-to-back liquidated damages clauses with our suppliers so that if they are late, then we can impose liquidated damages on them. So all of this is a discussion point. The focus is absolutely just getting the satellites finished by getting them out in early 2026 and getting them to launch. And so that is all well underway and everyone's entire focus across all the teams involved in that project.

In CHORUS, that supplier delay had occurred, a different supplier, again, resolved. And so now we're completing the assembly of the units on that satellite and getting it ready out for test. And so the implications are what we stated is that we shifted our target launch date to the end of 2026, and we continue to progress on that basis.

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

Yes. Thank you, Benoit. We obviously always look at capital allocation. I'm not going to comment too much on the share price movement other than saying that, yes, we are where we are right now. It's not just MDA. The whole sector is down. Our strategy regarding M&A hasn't changed really. We're focused in 2 areas.

One of which is, if there are opportunities for us to continue to strategically pursue supply chain opportunities, we'll do that. We did that this year with SatixFy. And the other area of focus for us is to consider expanding in new regions, primarily targeting Europe and the U.S. And obviously, we always think about what type of financing we would need for such potential acquisitions, but I'll leave it at that for the moment, Benoit.

Next question will be from Konark Gupta at Scotiabank.

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

Sure. From an MDA Space capabilities perspective, space defense provides a number of opportunities. One of the areas would be in defense communication networks. You would have heard in my remarks that we do provide key technologies into the communication satellites in the United States for their Department of Defense communication satellites. We have opportunities in multiple countries to provide satellites and satellite technologies for military communication networks.

A second area would be in Earth observation. We own and operate RADARSAT-2 where, as we just discussed, heading towards the launch of CHORUS. Our provision of synthetic aperture radar-based imagery to defense and intelligence customers around the world is obviously a strong defense asset to provide Earth observation for military surveillance operations.

Another area is space observation, whereby it was announced in my remarks that we just recently picked up a new contract in partnership with [ Thoth Group ] in Canada to provide space observation to track the activities of satellites in orbit, which is tracking what people are up to and who's moving around and who's going where in orbit with their satellites, which is an important defense-related activity. There are a number of opportunities in Canada and around the world for us to provide space observation technologies, both from the Earth and from orbit, which means from satellites to be able to contribute to space domain awareness or space observation pictures.

Once you observe activity in space, sometimes you want to do something about it from a military operations perspective, which is starting to open up a market in the counter space domain. I call it the counter space domain. You would have seen announcements in some countries recently talking about guard satellites, for example. These are defense departments putting up satellites that can sense what other satellites are doing that can maneuver to protect satellites and keep other satellites away from them and/or go and inspect or investigate other satellites from a military perspective.

Our really strong experiences in satellite design and operation and proximity operations from our 40 years of robotics activity. We have a very strong background in proximity operations and our experience in robotics. All of these capabilities put us in a strong position to be able to offer counter space or guard satellite solutions for the market. And militaries around the world are increasingly looking for those as the space domain becomes more congested. So that's the long story. The short story is there's opportunities in all 3 business areas.

That's great. Great to hear that. And if I can follow up, your recent equity investment in Maritime Launch, what's the idea there? I mean, are you guys looking to eventually become more vertically integrated like with obviously SatixFy now on the supply side and now the launch maybe? Or is it just a one-off to support Canada's missions?

Yes, it's a bit of a longer-term strategic view. Certainly, the words that you just used, which is to support the Canadian space ecosystem is an important element of this. MDA Space, as the largest space company in Canada has a number of roles in addition to delivering a good business. We also have a leadership or championship role that we have in the country to be able to help make everything work in the space ecosystem.

One of those areas, as countries get more interested in sovereignty, being able to just take care of themselves as a country. One of the key areas from the space domain for both civil and military purposes is to have domestic launch capability. Canada is moving towards this. Maritime Launch has been advancing this over the last few years. So our small investment gives us a position with the company. It gives us certain investor rights such as Board positions and the like, so that we can be involved in helping to shepherd the advancement of that capability in the country.

Over time, we'll continue to monitor that participation, could result in increased investments in the future or not. But it certainly allows us to leverage our size, scope and leadership and different skill sets to the Maritime Launch capability to ensure that Canada advances an effective domestic launch capability through the Spaceport, Nova Scotia.

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

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

Next question will be from Thanos Moschopoulos at BMO Capital Markets.

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

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

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

I think that people are increasingly appreciating the opportunity that digital satellites offer. I think that in my remarks, I mentioned our demonstration capability that we now have in our facility in Montreal to be able to demonstrate dynamic beam forming. This is very important for customers to be able to come in and actually see dynamic beam forming in operation. So to have those technologies advance to the demonstration level is extremely important for those customers to be able to not only mathematically realize the benefits of a digital satellite, but to visually see and experience that technology in operation.

I think that, that is really important. I think that our completion of our expanded satellite production facility, high-volume production facility, as I mentioned, with engineers now moving into their spaces, in an exciting development and thus now finishing the manufacturing environment as we complete 2025 puts us in a position where we not only have this digital technology, we can demonstrate this digital technology, but we're entering into a production mode where we can do it at scale and at pace.

And so the space-based network market is competitive. There's a lot of activity in this sector, especially in the direct-to-device element of the sector. And so the race to revenue is important. And so our ability to be able to have shorter high-volume delivery times of an advanced demonstratable digital technology is definitely a differentiating element of competitive conversations.

Next question will be from Doug Taylor at Canaccord Genuity.

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

Yes. I think it's -- I agree with your characterization of it as being dynamic. It's certainly a busy time. There have been some moves by players. Obviously, the SpaceX acquisition of EchoStar spectrum has been -- was a sudden development that suddenly occurred and is causing people to adjust. I think that there are a number of parties in the market that are really running, like I say, the race to revenue, really working hard and fast to get their direct-to-device network projects moving forward. And that's an important thing.

As a supplier of satellite technology into those markets, there are definitely in our pipeline, a number of opportunities for us to provide our MDA AURORA digital satellite into folks that want to build and operate direct-to-device networks. And those conversations continue. I think that sometimes in the pipeline, as people look at their plans and competitor plans and how to collaborate with each other and stuff, it is resulting in some dynamic conversations to be able to ensure that folks that do want to collaborate can collaborate in the market space in the future, and that's kind of interesting to be able to work through with people. But it's a dynamic busy time. That's for sure. But the opportunities are there.

Okay. And a lot of focus on that direct-to-handset application of the LEO network. And maybe I can flip to talking about some of the other parts of that communications satellite market being the broadband and satellite-based backhaul applications, more of that Lightspeed type model. How the pipeline on that side progress and that market evolved in response to all this?

Yes, it's solid. It's definitely solid. There are strong commercial opportunities there to have Lightspeed like relationships with folks around the world. And so we're actively engaged in those types of conversations in our pipeline. There are government opportunities there. One of the geopolitical shifts over the last year in 2025 has been the interest in countries to have increased sovereignty, defense sovereignty, security, sovereignty, economic sovereignty, which can include at times in some countries' minds, the importance of having domestic communications capability and/or domestic Earth observation capability for their country.

And so these are -- as folks are looking at increased government spend to increase sovereignty and security of their nations, communication systems and observation systems are key elements, of those sovereignty type postures. And so both in the commercial sector and the Telesat Light companies around the world, in addition to the government sector, there's an increased interest in space-based communication networks.

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

Yes. Certainly, the order pace is always up to the customer in terms of when they want to move out and place an order. I always look at and talk about the maturity of bids. Bids get more and more mature and more and more specific when you're interacting with customers. And so yes, there are a number of opportunities out there that are at a maturity level where people could choose to move over the next year. And so we -- that remains a possibility for sure.

And I should emphasize it's a possibility, but it's not a necessity. The backlog that Guillaume speaks to in the company of over $4 billion is extremely strong. It's a good position to be in. It's really important in our focus to execute well on that backlog. But to have the current size of our company, basically a 3-year backlog of signed contracts in hand that we're executing on, we're in a good spot. It means that over the next couple of years, we definitely have to get more orders and have a lot of opportunities to do so. Some of them could come in the next year for sure. But no panic there, but there is a lot of opportunity that we're working as we move forward within that pipeline.

Next question will be from David McFadgen at Cormark Securities.

Yes, a couple of questions. Can you give us an update on what's happening with that Artemis contract, the USD 4 billion contract for the vehicle, the Lunar vehicle? What's happening there? I thought that to be awarded this year?

The original plan -- that project is called the Lunar Terrain Vehicle System (sic) [ Lunar Terrain Vehicle Services ] or LTVS. We are on one of the teams for the Lunar Terrain Vehicle System (sic) [ Lunar Terrain Vehicle Services ] and -- which is the Lunar Outpost team and really good progress on that team's evolution of its rover solution and in its bid to NASA. It was NASA's intent to announce a winner to that.

I believe there's been some delays in that due to the government shutdown in the United States. So there's only certain things that you can do during a government shutdown in the mindset. As -- it looks like that's getting cleaned up right now. So as that gets cleaned up, hopefully, they can complete their assessment and announcement process.

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

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

Okay. And then what about the Canada's plans for the RADARSAT Constellation Mission replacement? I haven't heard anything about this for quite some time. [indiscernible] on that?

Yes. So Canada announced, what was that, about a year or more ago, that they intended to -- that they put some money aside to do a couple of things, which was to add some additional radar satellite capability into the RADARSAT Constellation Mission to ensure its resiliency moving forward in addition to looking at radar-based or Earth observation-based services moving forward into the future, and doing some studies on the next-generation synthetic aperture radar or radar-based Earth observation capability for the country.

There are activities in all 3 of those areas going on within government and back and forth asking industry for inputs in those areas. And so they do -- they all continue to progress. I don't have a focused estimate of like when those things would come out in public or whatever. But there's definitely solid progression of those things in the -- inside government and in the government to industry kind of Q&A information exchange activities.

Okay. And then maybe if I can ask a couple of questions on your pipeline. So within the satellite opportunity pipeline, is there -- are you in discussions with Apple, Globalstar to expand the number of satellites on the second constellation?

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

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

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

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

I would say it has the potential to grow in the pipeline. We do have some significant opportunities for sure in our pipeline related to defense, but that is an area where it's -- and that's why I made remarks about it in my comments because you can feel the number of conversations increasing in the defense sector. And so that is likely to result in further and new opportunities in the pipeline going forward.

So I do expect that based on -- we don't put things in the pipeline until we can talk about a program with a budget that we think is going to move and then we put it in the pipeline. We will have all kinds of conversations, obviously, with people about the potential to do things before they become a specific opportunity that's got parameters around it. And so in the defense sector, you can certainly feel the intensity of the conversation is increasing. The number of questions people are asking are increasing. And so I think that there will be the opportunity to add more defense to our pipeline as we go forward in the future.

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

Maybe Guillaume, can you level set us on what you expect -- how much of the third quarter revenues were from EchoStar and what you expect sort of the full year run rate to be on that? And should all of maybe those negotiations be cleaned up? Or would there be any sort of final recognition of EchoStar revenues or reimbursements into '26?

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

Okay. And you've obviously seen some -- you called out supply chain challenges in both CHORUS and on Globalstar. Are you seeing any incremental risk on the supply chain with Lightspeed? And I guess, do the challenges or delays with -- site delays with Globalstar and CHORUS, do those represent maybe any opportunity to pull Lightspeed to the left a bit?

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

Just finally on that, Mike, any update on timing as to when the options on either of the existing contracts could potentially when we -- when is a realistic time frame to expect those could be exercised if they are going to be?

Yes, I don't really have any specifics on that. The -- all those customers, the customers with options are constantly looking at their businesses and their business activities and the health and size and capacity of their networks to meet the demand that they want to load up on their network, and they'll make their calls there. So I don't -- Yes, I don't have any specific guidance in terms of when we would expect those things. They remain valid. They remain active as opportunities for us, but no specific time estimates.

[Operator Instructions] Next, we will hear from Kristine Liwag at Morgan Stanley.

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

Yes, I don't have a specific number in my head, but there's certainly the number. I would say the range of those would be sort of $250 million to $2.5 billion plus, like in terms of the range of sizes, it depends on the size of constellations that people want to talk about and what orbit they're in. I think that there are definitely a number of them. I think your question was how many are over $1 billion. I don't have a specific number, but there are definitely more than a handful.

Okay. Great. And then just a quick one. Guillaume, the free cash flow guidance looks like it would imply significant free cash flow burn in 4Q if you get close to that neutral guide, and that would be on lighter implied CapEx. So just curious what you're expecting from working capital to end the year? And if you can provide any color on the drivers there would be helpful.

Justin, so look, we haven't changed our guidance. I think overall, when I take a step back here, we're looking at significant growth year-on-year on the top line. I mean, at the midpoint, it's going to be 48% adjusted EBITDA, 45% growth. And yes, we continue to invest in our business. So far from a CapEx standpoint, we've been sort of spending at the rate we were expecting. And we have a good position on the free cash flow year-to-date, slight consumption in Q3 related to working capital. And so we decided to keep our neutral to positive guidance. I think we're in a good position. And I think that we always plan conservatively.

We could see some working capital consumption in the fourth quarter. But again, back to Konark's question, I mean, this is normal as part of our business. And for the time being, we remain focused on getting our milestones completed and then invoicing our customer, getting the cash in the door and then obviously managing our outflows. And as I mentioned earlier, we're very pleased so far with how we've been able to manage our working capital throughout this year. So I'll leave it at that. But for now, there's no concerns on the working capital from my perspective for the fourth quarter.

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

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

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

Good morning, ladies and gentlemen. Welcome to MDA Space Conference Call and Webcast. This call is being recorded on September 8, 2025, at 9:00 a.m. Eastern Time. [Operator Instructions] I'd now like to turn the call over to Shereen Zahawi, Head of Investor Relations at MDA Space.

Thank you, operator. Good morning, and thank you for joining our call and webcast. Today, we will discuss our recent announcement regarding the EchoStar contract update. Joining me on the call this morning is Mike Greenley, our CEO; Guillaume Lavoie, our CFO; and Luigi Pozzebon, our VP of Satellite Systems. Mike will share some prepared remarks before taking your questions.

I would like to remind you that today's call will include forward-looking statements, 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. We undertake no obligation to update or revise any of these statements, except as expressly required by applicable law.

In addition, during this call, we may 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 latest quarterly report and other public filings for more information about these measures, including reconciliations to the nearest IFRS measures. And with that, I'd like to turn the call over to Mike.

Thank you, Shereen. Good morning, everyone, and thank you for joining us on a short notice. Earlier today, we announced that MDA Space has received a termination for convenience notification from EchoStar Corporation related to the satellite constellation contract that we had announced on August 1, 2025. Under the terms of that contract, MDA Space was selected by EchoStar as the prime contractor for a nonterrestrial network, low earth orbit, direct-to-device satellite constellation, responsible for the design, manufacturing and testing over 100 software-defined MDA-Aurora direct-to-device satellites valued at approximately CAD 1.8 billion.

The contract termination is the result of a sudden change to EchoStar's business strategy and their plan in the wake of spectrum allocation discussions with the Federal Communications Commission, or FCC, in the United States, whereby EchoStar has agreed to sell its AWS-4 and H-Block spectrum to SpaceX. This arbitrary and unexpected development is completely unrelated to MDA Space performance and our products and services.

While we are disappointed with this outcome, it is our practice to structure our contracts in a manner that ensures we are protected in the event of any unforeseen circumstances and our EchoStar contract is no different. MDA Space will be compensated for all related termination costs and fees as per the contract. We are also -- that's just it. Notwithstanding this development, our business fundamentals are as strong today as they were back in July with a backlog of $4.6 billion at the end of Q2 2025, not including the EchoStar contract, providing revenue visibility for 2025 and several years into the future. We are also reiterating our 2025 financial outlook and guidance, which we provided with our Q2 2025 earnings release on August 7.

With a differentiated technology portfolio, including a world-leading digital satellite offering for communication satellites, robust opportunity pipeline that today stands at $20 billion, of which $13 billion relates to satellite constellations and a solid balance sheet, we have a strong and growing business. We continue to pursue a strong digital satellite constellation pipeline for both broadband data and direct-to-device communication satellites with commercial and government customers worldwide.

Our priorities have not changed: a laser focus on execution, converting opportunities in our funnel and expanding our leadership in core markets while maintaining strong profitability and free cash flow generation to create value for all stakeholders. We remain very enthusiastic about the opportunities for MDA Space and our customers moving forward.

With that, operator, we will open it up for any questions.

[Operator Instructions]

Your first question comes from Konark Gupta with Scotiabank.

Maybe I just want to kind of start off with the contract terms. Mike, you mentioned, I mean, obviously, every contract has its own terms and they could be unique. For this one, I think you guys have flagged. Before that obviously, EchoStar has had some challenges and issues in the past with FCC and all that. So you have taken some commensurate sort of measures in the contract writing.

Can you help us understand in terms of the magnitude of the compensation we are talking here and the timing? I mean, is it like insignificant amount? Or is it a significant amount given some of the numbers they have disclosed for the asset sales they have done, they are significant billions of dollars, right? So is compensation kind of adequate to that?

Yes. So for us, the termination fees -- costs and fees that will be compensated for will certainly be covering off all of our related costs and any of the liabilities that we have obligated in the execution of the contract to date. So we will be in a solid financial position. We will not take any hit from this as a result. The -- yes, that's really it.

In terms of the timing for that, we'll work through that in due course. This is obviously a very sudden development that's kind of like come up very quickly here. And so we'll work through that over the next quick period of time to be able to bring quick resolution to that. So certainly, this fiscal year, I would expect something to be resolved. That would be my expectation anyway. And then yes, for us, like we've said, for the remainder of this year, we just continue to hold guidance and continue to execute on our plan.

Okay. And if I can follow up, how do you compare and contrast -- this contract to the existing contracts you have in the backlog? I mean you have a pretty solid backlog at $4.6 billion, right? But you do have obviously some concentration there, right, with the likes of the Telesat, the Globalstar, Canadarm3, et cetera, right? And again, like obviously, every contract is different, every customer is different. But how do you compare sort of the risk profile of the existing backlog you have versus what you had on EchoStar?

Sure. The existing backlog would have a much -- well, certainly a much lower risk profile. This was not a super high risk profile. This is a very unexpected event. You can imagine like EchoStar in this scenario right now has like completely changed their business plan. They were about to embark and had contracted with us to build and operate as space-based network. They have suddenly decided not to do so and instead are selling their communication spectrum rights to operate such a network to SpaceX so that SpaceX can operate a network. This is like obviously very sudden and drastic change to the entire trajectory of EchoStar's business. And so that's a highly, highly unusual situation.

The existing backlog is well into execution and is -- just well into execution, obviously, with Telesat. We're coming up on CDR with Canadarm. It's a government of Canada contract coming up on CDR with Globalstar's first constellation. We're in the process of delivering satellites with Globalstar's second constellation. We're coming up on CDR. All of these projects are deep into execution, and we'll continue to do so.

Your next question comes from Thanos Moschopoulos with BMO Capital Markets.

Can you comment on whether this will have an impact on your near-term OpEx or CapEx plans? Do we see some related restructuring stemming from this?

No, no change to our current plans at all. No, we continue with our current spending. We continue with the completion of our expanded satellite manufacturing facility so that we can be in high-volume production in 2026. All the rest of our conversations in our pipeline continue to rely on the need for that capacity. So we just continue on our current plans.

And Mike, just to clarify a point, I hear you that your other customers are well underway in executing the contracts. Just to clarify, would your contracts typically have termination for convenience clauses whereby the customer can walk away if they pay you for any remaining obligations and costs? Or was there something unique about how the EchoStar contract was structured in that regard?

No, termination for a convenience clause is a normal clause in a contract, both commercial contracts or government contracts. And then it's typical in contract negotiations that you would negotiate and establish what would be the process for a termination for convenience and what would be the financial framework that would be used for that. So that's all very normal.

In the case of the EchoStar contract, it was mentioned in an earlier question that they were obviously coming out of some challenging financial times. And so we put extra effort into ensuring our protection in that contract, which is why we're comfortable that we will be properly compensated in the termination for convenience.

Your next question comes from David McFadgen with Cormark Securities.

So a couple of questions. So Mike, given you said this is obviously a drastic change in their business plan. I have to ask the question, was -- did the FCC force strongly persuade EchoStar to sell the spectrum and they were going to lose it. So that's why they did this deal?

It would only be speculation on my part. We were not in those conversations, obviously. Those are between EchoStar and the FCC. But certainly, even in EchoStar's press release, they've noted and indicated that this change in business direction has resulted from their discussions with the FCC regarding their spectrum. And so that's all we know. And everything else would be speculation on the exact nature of that conversation.

Okay. So then the other question would be do you know much about the next-gen satellite that Starlink is going to deploy for the direct-to-device constellation and how it would stack up versus your current satellite technology?

No, no, we don't. And I don't have any specific insights into that. In reading the joint press release from EchoStar and SpaceX this morning, I noted that they talked about the development of a next-generation satellite. So I'm not sure where they stand in that regard.

Okay. Okay. And then when you announced the EchoStar deal, you talked about receiving some upfront payments to finance future spending and just to keep you on side with your working capital. Do you get to keep those payments? Or do you have to return any of those?

The calculations for termination for convenience is -- would be based on a certain amount. And then that amount paid to us would include any monies that we've already received plus additional monies that were owed to compensate us according to that framework.

Okay. So in terms of the compensation, is it just to make you whole? Or do you actually make a margin on it?

It's really just to compensate us for all of our costs and fees in the project. So by saying fees, there would be a bit of margin on that work. But anyway, yes.

Okay. And then -- I'm sure investors will wonder now given this. If this deal wasn't forced by the FCC, other people might wonder, could other people follow EchoStar's lead and also buy Starlink's direct-to-device constellation on a wholesale basis as well? I mean, what would you say to that?

Yes. Right now, I think that there are a number of people around the world that have direct-to-device business plans. Starlink obviously has a direct-to-device business plan, and they were challenged in their ability to have access to space spectrum, and now they've been able to acquire EchoStar's space spectrum as that enables their particular business plan. The other people in our pipeline, they have their spectrum and their business plans, and they're continuing the dialogue with us.

So I think that just like we see with mobile phone networks around the world, there will be multiple mobile phone networks today, and there will be multiple space networks that are direct-to-device that will emerge in the future. And we'll continue to talk to all the folks in our pipeline to be able to make those come to reality.

Your next question comes from Doug Taylor with Canaccord Genuity.

So with the results you -- or this announcement, you reconfirmed your guidance for this year. It was, I think, my understanding that there was some revenue, but relatively small related to this in your guidance. So is it fair to assume the impact would just be moving potentially within that guidance range? And then just to think about the impact for next year, I know you don't have guidance for next year, but just to put this into context as we adjust our models, you had expected mostly design phase work related to this next year, potentially in the several hundred million dollar range. I just wanted to make sure we're on the same page with respect to that this morning.

Yes. So I think that you're right. Like this year, we're just maintaining guidance, and we're maintaining the range that we gave on August -- in early August in our earnings call there. Obviously, we have puts and takes happening on all kinds of projects, hundreds of projects across the company. So we've quickly done an assessment of what the status of everything is, including the small amount of revenue for this year that was going to be from EchoStar, and we're very comfortable that we're still within that same range. So the guidance doesn't change.

For next year and the year after that and part of the year after that, we're certainly -- we have a very, very strong backlog that is driving the continued execution of our business moving forward. And what we talk about, which is sort of 20% to 30% CAGRs over 5 years, continues to stand in our minds. With that backlog and the growth that it will drive, we continue to move forward with the business, like I said, just as -- just as we talked about it in July, we talk about it the same way in September and as we move forward into the future.

We had expected a couple of hundred million, I think, of revenue activity related to EchoStar design work, like you've mentioned, as part of the business plan next year. As we get closer to next year and start talking about that plan, we'll see what things look like. We continue to work on all of our projects, including -- yes, all of our projects and the profiles on those projects, and we continue to talk to lots of folks in our pipeline. And so we'll see what the world looks like as we enter into the new year. But a large majority of next year is driven by already contracted backlog.

I appreciate all that color. And then so one follow-up question based on your discussion about the active pipeline of additional opportunities you have in satellite systems. You obviously said there was a constellation you thought could be awarded. This year, presumably, that was EchoStar. I mean, I guess my question is, to what extent your pipeline of opportunities within this space could yield other awards in the near term? And do you have opportunities that would have overlapped with the production profile that EchoStar was on and maybe you might change your approach as a result of this development today?

No, I think that the pace in the pipeline is, of course, always based on customer maturity. When we said that we expected to get a constellation in the next 12 months or we saw a high probability of getting the constellation in the next 12 months, certainly, EchoStar was one of those opportunities. And -- but there are others. And so I would still say right now that we would expect to see a constellation in the next 12 months, like I would still say that.

And so the production profile of each customer obviously depends on when the order comes in and what their pace of production is that they want to see. With the completion of our -- expansion of our factory this year as we head into 2026 with increased capacity, we have a fair amount of flexibility in terms of our ability to respond to whatever demand the customers would like to throw our way. And so we'll be able to take on whatever -- any new constellation opportunity would bring.

Your next question comes from Ken Herbert with RBC.

I'm just curious, I know you've just obviously started work on this, but is there anything beyond just the financial compensation you can take from the short time you've worked on this either technologically or from a supply chain perspective or operationally that can get applied down the road to other potential opportunities?

Yes, there's a number of things. I don't know if you'll recall, but like the announcement of this opportunity, we talked a fair bit about the 5G compliant version of the Aurora digital satellite for EchoStar. And so the -- a lot of work went into the competition and winning the award from EchoStar, which included maturing all of those designs, and they would have been the anchor customer for that 5G variant.

As a result, being in the market in our pipeline with a 3G PP, 5G compliant satellite that can talk directly to any 5G compatible device on earth is a tremendous advancement in our MDA-Aurora digital satellite product. And so the efforts that have gone into this, we were doing anyway, but EchoStar was the anchor customer. And of course, rushing towards a customer that was on a path to get to market quickly always helps accelerate these things. And so it definitely did help accelerate those things in this case.

But as a result, we're ready to go with a mature 5G design, 5G product in the market. And so that is already in conversations with a number of folks in the pipeline, but it does kind of give us an edge in a number of those conversations.

And I just wanted to follow up on one of the things you just mentioned. Obviously, since you assigned EchoStar, obviously, now the termination. But what did that do to other potential customer conversations you could have had over the last month or 2? I'm just curious with that work and with the EchoStar work, were you seeing maybe other opportunities getting pulled to the left? How do we think about now just to follow up on some of the further prior questions on chunkier contract opportunities here in the next 6 to 12 months?

Yes. Obviously, we're going to see how people behave. But the behavior coming into this has been a bit of a race. So there's the direct-to-device market, the time to revenue in that market, getting the networks up operational, getting your piece of the worldwide direct-to-cell phone opportunity, developing partnerships and relationships with mobile phone companies, that still remains a high pace, pretty competitive environment for the space network operators.

I think that the announcement of EchoStar back at the start of August was like caused a bit of a giddy up kind of a feeling in the market. People wanted to get moving quicker. I personally would expect that if now SpaceX has that spectrum and they're going to get on with building that same network that EchoStar was going to build, it even, at least equally, if not further adds to the giddy up feeling for those in the market, which is that we better get going here because things are moving. That's the sense that we get.

Your next question comes from Michael Kypreos with Desjardins Capital Markets.

Just curious, do you believe that Starlink going ahead with their own D2C constellation and product could impact the global star constellation in any way in terms of competition? Like do you believe it could invigor them to be more aggressive and order more satellites or kind of have the opposite effect?

Yes, it remains to be seen there what happens. There's certainly going to be -- like I said, there's always going to be a number of networks in the market. And we've already seen like Globalstar's primary customer is Apple, but we've also already seen Apple want to make sure that iPhones are available in other space networks as well that only makes sense. It's just like terrestrial networks. Apple is going to want to make sure that iPhones work everywhere on everybody's networks because that's going to be super important to them.

And so -- but they are still going to want the Globalstar network to be a strong thing, I would assume, because a lot is going into this. And so yes, I would expect that there'll be just multiple networks and that folks will want to make sure that their mobile devices work on multiple networks, just like we see in the terrestrial mobile phone business.

I appreciate the color. And maybe just a quick follow-up. Do you expect any type of maybe geopolitical response from the Canadian government or maybe Telesat being used in any way as a response to this or it's still early days given the whole situation?

Yes. So Telesat is a broadband data network. So it's more like Internet services in its network. It's not a direct-to-device play. So it's not really kind of part of this dynamic. I think that maybe from Canada, but probably more like just globally. Like we've already seen in 2025, a fair amount of geopolitical activity of countries and corporations in countries outside the United States wanting to stand up a bit taller and work on and improve their high tech, their defense, their security, their sovereignty in their country to be a little bit more independent for both commercial and military activity.

That is -- we've seen that same effect in space-based communications for sure, as nations and regions and corporations outside the United States wanted to make sure that they could take care of themselves a little bit more. And so this type of development may affect that overall -- that sentiment is already in play, but this might add a little bit more fuel to that fire.

[Operator Instructions]

Your next question comes from Konark Gupta with Scotiabank.

Just a quick follow-up, Mike. As you head to the World Space Business Week next week, I think that's in Paris, can you help us understand like with this -- with the onset of this change in the contract with EchoStar, like how do you want to approach sort of the conversations at the upcoming conferences -- industry conferences?

Yes. The only real change to World Satellite Business Week next week would be that we would have been doing normally some collaborative work with EchoStar that suddenly will not make sense to do. The rest of our meetings, though, are all with new customers in our pipeline, people that want to talk about our products and services and how we can help them with their space-based networks and activities. We will have the same slate of customers having the same conversation that we've always had about MDA Space-Aurora Satellites, direct-to-device -- 5G compatible direct-to-device capability and what we can do for them and what kinds of schedules they would like to try to meet as they get their networks operational.

So I'm expecting a typical World Satellite Business Week. And then, of course, we'll be a member of a number of panels and presentations throughout the week. We regularly get called on these days to be thought leaders as it relates to modern day space networks. And we've got a full slate of activities in terms of both meetings and presentations that we'll be making in Paris.

Your next question comes from David McFadgen with Cormark Securities.

Yes. I just wanted to ask a question just about the appointment of a new Managing Director for MDA Space U.K. Just looking at resume, given you worked at Thales and Airbus and so on, do you think that makes you more European, your MDA Space business for potential European awards?

The MDA Space Business is -- in the U.K. is in a strong spot. We've got about 4 sites in the U.K. right now. We have increasing interactions with the U.K. government for sure. With the acquisition of SatixFy as we become a bit more vertically integrated there in the digital technology aspect, the United Kingdom government has put a fair amount of investment into SatixFy at the start of growing it up. And so we've got a strong talent pool there in the U.K. around the digital satellite product elements.

And so we'd expect that we definitely -- that will continue. And with Andrew as the new Managing Director, certainly, his background in space-based communications, and as you've mentioned, all of those companies around Europe gives us a strong set of relationships heading out into the future.

In terms of if the U.K. would be perceived as more European, I think that's more of a geopolitical issue. As we look at, again, this trend that we've talked about, about different parts of the world wanting to stand up and be a little bit more independent, we see that in Europe for sure. We see an increase in Canada interacting with Europe. The Canadian Space Agency is part of the European Space Agency. There's some strong links there. Canada has signed up to the European Defense collaboration. So that activity continues to be strong.

Of course, the U.K. has that historically pre and post Brexit. There's still strong relationships there. So I think both Canada and the United Kingdom would be looking for opportunities to have Canadian space capability being included in European opportunities as all these things continue in the future, just as we continue to look for opportunities for our technologies in the United States as well. But Europe is certainly a busy place right now, and the U.K. piece of business gives us another strong tool in those discussions with Andrew and the leadership, as you mentioned.

Your next question comes from Justin Lang with Morgan Stanley.

Mike, you mentioned expectations for another constellation announcement within the next 12 months or so. So just to clarify, would you expect that to be a direct-to-device constellation? And then of the $13 billion pipeline you mentioned, is there any way to get a sense of what portion of that is specifically direct-to-device related?

Yes, it could be direct-to-device or it could be broadband. I think that both are active in the pipeline. We talked about $13 billion of constellation opportunities. That is largely split between broadband networks or direct-to-device networks. And so we're certainly actively quoting those things, both of those types of networks in the market. And so either of them could come to the forefront depending on customers' ambitions.

There are no further questions at this time. I will now turn the call over to Mike for closing remarks.

Okay. Thanks for your time this morning. Sorry for pulling a quick one there. Obviously, there's some events unfolding really quickly here, and we had to make sure that people had the best chance possible at understanding the situation. We appreciate the time and the questions. And obviously, as per normal, if people have any follow-up calls or needs, please get a hold of our Investor Relations team, and we will do our best to make sure that everybody is connected and informed as we continue to move forward. Thanks a lot, and we'll -- barring any other meetings, we'll talk again at the November earnings call. Talk to you later. Bye.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.