Good morning, ladies and gentlemen. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the MDA Q3 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, you simply press star then the number one on your telephone keypad. If you would like to withdraw your question, you'll press star two. I would now like to turn the call over to Amy MacLeod, Vice President of Corporate Communications. Please go ahead.
Thank you, Michelle. Good morning and welcome to MDA's Q3 2021 investor call. Mike Greenley, our Chief Executive Officer, and Vito Culmone, our Chief Financial Officer, will lead today's call and share some prepared remarks before taking your questions. The Q3 earnings release and financial information referenced on this call are accessible on the investor page of our website, as well as in the interim financial statements and the MD&A for Q3 filed today on SEDAR. Before we begin, 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 and our other 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 others. Please see the company's quarterly report and our other public filings for more information about these measures, including reconciliations to the nearest IFRS measures. I will now turn the call over to Mike.
Thank you, Amy, and good morning, and thanks to those for joining us today to discuss our Q3 2021 financial results. I'm pleased to report that in the third quarter, MDA delivered another strong performance, highlighted by a 30% increase in backlog over Q2, double-digit revenue expansion on a year-over-year basis, and solid adjusted EBITDA. In addition, as we head towards the end of the year, we are pleased with the ongoing progress of next-phase contract negotiations, program definition and development, and risk reduction activities on all three of our flagship programs. Since the end of Q3, we have seen some shifts on the timing of flagship contract awards, including the Lightspeed program delay announced by Telesat last week, driven by global supply chain issues. I want to be very transparent about that. As you know, MDA is not a 13-week quarterly cadence type of business.
It is not at all uncommon for complex multi-year technology development programs like ours to move around in time. We see these shifts as measurable in months or quarters, definitely not in years. They do not affect the total value of the contracts, and investors can be assured that nothing has gone away. Timing shifts do have an impact on our near-term revenue profile, and Vito will fill us in on that math in a moment. Having said that, with solid financials, operational momentum in Q3, and growing backlog heading into 2022, we remain bullish about our ability to deliver long-term growth. As always, before we get into our more detailed quarterly update, I'd like to start with a bit about what we saw happening in the broader space market in the quarter and what it means to our ability to create long-term value for MDA shareholders.
Q3 was a historic quarter for human spaceflight and record space infrastructure investment. With all of us watching in July, Virgin Galactic and Blue Origin both took passengers to the edge of space for several minutes, including their respective founders, Richard Branson and Jeff Bezos, breaking four world records in the process. In September, SpaceX took the next big step by sending four tourists to an orbit higher than the International Space Station, where they stayed for three days. During that period, there were a record 14 people in orbit between the ISS, the Chinese station, and SpaceX's Inspiration4 mission. Since then, legendary Canadian and intergalactic space icon Captain James T. Kirk became the oldest person to fly in space at the age of 90. Achievements in human spaceflight are more than entertainment.
They also showcase the pace of commercial innovation and investment that are driving the rapidly growing space economy. Looking at it by the numbers, investment in space continues to rise and infrastructure companies have already hit a new annual record, driven in part by investments in all types of firms, with $10 billion invested year to date, more than 6% more than the full year of 2020. As a world-leading mission maker for commercial space ventures, MDA benefits from broad-based industry expansion and record levels of investment in space infrastructure. Those investments fund our customers' programs and drive demand, growth, and downstream opportunity for MDA. With all of these as concrete indicators of market growth and opportunity, both on the commercial and in the government and space agency sectors, we are extremely positive about our ability to create long-term value for MDA shareholders.
Turning to the execution of our flagship programs, as I mentioned, we continue to make significant progress on next-phase contract negotiations, program definition and development, and risk reduction activities on all three of these multi-year, multi-phase programs. On Canadarm3, as we discussed on our Q2 call, MDA was awarded a CAD 35 million contract in Q3 for the design of the robotic interfaces, a key foundational component of the Canadarm3, which will be installed on the International Lunar Gateway. In August, we also completed our planning for the next phase of the Canadarm3 main robotic system with the Canadian Space Agency. On Lightspeed, MDA continued to advance development activities under our existing Telesat Lightspeed contract.
Notwithstanding the supply chain delay announced last week that I mentioned, in the third quarter, Telesat announced a series of significant funding announcements, including a CAD 1.4 billion investment from the Government of Canada, substantially advancing the program. Telesat has now confirmed that they expect to complete their own IPO in the coming week and close their export credit financing in the near term. On the Canadian Surface Combatant program, work on the requirements analysis phase continued to advance, and the team is now putting final touches on a number of electronic warfare suite sensor contracts. We look forward to updating the market further as the next phases of all three of the flagship program contracts are finalized.
Turning to our three business areas, in Q3, our satellite systems team completed a major production milestone with the build of serial number 500 of the OneWeb gateway LEO constellation program and serial number 1,000 of the Ku cluster antennas. This is a significant production achievement for MDA, surpassing our internal previous records of 486 Iridium NEXT Ka-band antennas set in 2017. We are on track to complete production on OneWeb in March 2022, with total deliveries of around 650 gateway antennas and 1,300 Ku clusters. Congrats and thanks to the entire satellite systems team. With OneWeb, MDA entered Industry 4.0, expanding our high-volume production capacity with extensive usage of collaborative robots and automation on the production line. Our ability to scale and execute these high-volume production runs is giving us real credibility for future participation on LEO constellation programs.
All that experience will also benefit the Lightspeed program, which will move the needle on our production record even further. With the market for LEO broadband mega constellations continuing to expand, our timing couldn't be better. As a leading provider of satellite subsystems with a proven track record on constellations, MDA is ideally placed to capitalize on near-term opportunity in the rapidly growing satellite systems market. We are equally well-positioned in our Geointelligence business, where we are seeing significant new capital investments across the value chain, which is enabling deployment of new types of sensors, the build-out of constellations, infrastructure updates for ground stations as a service operators, and the development of new analytics and exploitation tools. In the third quarter, we released the first details of our next industry-leading Earth observation mission.
Leveraging legendary RADARSAT heritage, the new system will include a large C-band synthetic aperture radar satellite operating in a mid-inclination orbit. Capable of covering a 700 km swath in a single pass, the new system will provide the broadest area coverage on the market, changing how, when, and what can be seen. In September, we also hosted our inaugural MDA Earth Insight customer conference. During two live global broadcasts held over two days, more than 100 customers across the globe heard firsthand about our latest Earth observation investments, innovations, programs, and product developments. The growth and maturation of this sector continues to help unlock new use cases and speed the adoption of Earth observation-based insight into new verticals. In our robotics and space operation business, in the third quarter, we announced a series of new contracts reflecting rapid global market growth driven by near-term space exploration missions.
MDA has been awarded the full contract from MELCO, which is Mitsubishi Electric Corporation in Japan, to provide a laser rangefinder altimeter for the Japanese mission to the moons of Mars. MDA has signed an agreement with Intuitive Machines to provide lunar landing sensors to support its upcoming lunar missions. As a result, MDA landing sensors will support the CLPS landing US mission to the moon scheduled for early 2022. MDA landing sensors will also support the mining mission to the south pole of the moon in late 2022. MDA continues to benefit from a heightened level of global activity in space exploration and increased activity on various lunar programs. These programs are often kicked off with a Phase A or study contracts that are awarded to one or two suppliers as a precursor to a full request for proposal.
Since mid-year, MDA has been selected to participate in three such contracts. A study contract with the European Space Agency named Moonlight, announced in April, that is investigating the infrastructure required for communication and navigation services for future exploration missions to the lunar surface. The second study, announced by the U.K. Space Agency in October, involving an active debris removal mission to capture and deorbit two client satellites. Our partner, Astroscale, is leading that study program, which they call COSMIC, an acronym for Cleaning Outer Space Mission through Innovative Capture. As we announced this week, MDA has been awarded a contract by the Canadian Space Agency to undertake a Phase A initial design study for a lunar rover mission to the moon.
The rover will conduct its mission at the south pole of the moon, providing the opportunity to explore resources in the permanently shadowed regions, including lunar volatiles and water ice, as well as thermal and radiation safety analysis for future human lunar landings. MDA is leading a superb, largely Canadian team of subject matter experts, scientists, and academic experts. These types of Phase A contracts are the front edge of the wedge that drives our next-generation opportunity pipeline and help keep us at the forefront of the new commercial space race. Operationally, we continue to take strategic steps to structure the business to scale and maximize our growth opportunities. Investing to attract and recruit top talent to drive our future growth continues to be a strategic priority. Since the beginning of the year, we have hired more than 600 new employees.
With respect to COVID-19, in September, we started to return to the office in volume in a hybrid model. Throughout the pandemic, MDA has kept pace with public health policy and guidance, adjusting and aligning our work-related health and safety policies when needed. Federal regulations in Canada now require government suppliers and contractors to confirm vaccination status for their employees working at government facilities. To stay ahead of the curve and ensure a responsible and safe work environment for all our employees wherever they work, in October, we introduced a mandatory vaccination policy that requires all MDA employees to be fully vaccinated against COVID-19 by November 30th. I am incredibly proud of the team's response.
Time and time again, MDA employees have risen to the challenge to keep themselves healthy and to contribute to the health and safety of others in our company and our communities. Bringing things to a close, last winter, as we talked about our financial thesis for the IPO, we identified a few key strategies that we believe would drive our long-term growth, including executing on our flagships, expanding our market leadership in Geointelligence, maximizing our robotics and space mission participation, and deepening our constellation market share, developing digital solutions for the satellite communications industry. In less than a year, we have made significant strides in all of these strategic pillars. We are executing on all of our flagship programs, and our backlog is building. We are steadily advancing SARnext while investing in new Geointelligence products.
We are bidding, as we just discussed, and winning new programs for lunar and other space exploration missions, and we have modernized our satellite production processes, introduced state-of-the-art digital capability, and are investing in new facilities to further increase capacity, which has helped open the door to a meaningful new growth market opportunity. The company is fully focused on these priorities, and we are seeing the results. We feel better than ever about our timing and our opportunity to capitalize on the rapidly emerging new space economy. Finally, I wanna take a moment to acknowledge a major milestone. 40 years ago today, on November twelfth, nineteen eighty-one, Canadarm was launched into space aboard Space Shuttle Columbia.
As the first robotic arm to go to space ever, it became an immense source of pride for the country and for those in our predecessor company that built it. Designed to function flawlessly in space with the dexterity of a human arm, Canadarm wrapped up three decades of successful operations in 2011. Canadarm is inexorably linked to MDA's success, past, present, and future, and I just wanted to take a moment on this special anniversary to salute all those who worked on or with Canadarm and who set the bar so high for the world of space robotics. With that, I'll hand it over to Vito to walk us through the detailed financials.
Thank you, Mike. Wow, that's pretty cool. Good morning, everyone. We're delighted to be with you this morning to talk about our third quarter results and the future outlook for MDA. Just a quick reminder that Q3 is the first quarter where we have clean quarter comparatives to the prior year, and that's of course because the company commenced operations through the sale from Maxar to Northern Private Capital on April 8, 2020. On a year-to-date basis, however, the interim condensed consolidated financial statements, other than the balance sheet, continue to include comparative information for the period from April 8, 2020 to September 30, 2020. We have continued to provide constructed year-to-date carve-out results, and all our commentary is for the full comparative period. Let's now delve into our Q3 results. Overall, as Mike has indicated, we're pleased with our Q3 financial results.
First off, the backlog as of September 30, 2021 was CAD 829 million, an increase of CAD 266 million compared to year-end 2020 levels, reflecting incremental awards across our business. Our 2022 revenue outlook that I will talk to you about in a few minutes reflects continued robust build of the backlog through the remainder of calendar year 2021 and into 2022. Total revenue for the three-month period ended September 30, 2021 was CAD 111.3 million. This represents a 13% increase over prior year levels, and on a year-to-date basis, total revenue is CAD 361.4 million, an increase of 16% for the same period in 2020.
Revenues in our Geointelligence business decreased from CAD 45.6 million for the three months ended September 30, 2020 to CAD 40.7 million for the three months ended September 30, 2021, and increased slightly from CAD 136.9 million for the nine months ended September 30, 2020 to CAD 137.9 million for the nine months ended September 30, 2021. Year-to-date sales of satellite imagery and analytics services remained relatively constant year-over-year, and the Q3 revenue decrease is driven by a temporary decrease in activity on certain service contracts, a one-time event that was halted for maintenance in Q3 2021. In robotics and space operations, revenue was CAD 33.1 million, which is a 6% increase over prior year Q3.
On a year-to-date basis, robotics and space operations revenue is CAD 103 million, showing growth of 15% compared to the same quarter prior year. A large proportion of this growth in revenue continues to be the increase in activity of the Canadarm3 program. Satellite systems revenue continues to see strong growth once again on both the quarter and the year-to-date. In Q3, satellite systems generated revenue of CAD 37.5 million, which is an impressive 74% increase over Q3 2020. We see similarly impressive results on a year-to-date basis where satellite systems grew year-to-date over 2020, 42% with revenue of CAD 120.5 million.
This growth in satellite systems is attributed to higher volumes stemming from new program awards, the restart of the OneWeb program in the first half of 2021, and improved program performance over the same period in 2020. Although the revenue growth over prior year is strong across the business, I wanted to take a minute to talk about the slight dip in revenue we experienced in Q3 versus Q2 of this year. Our Q3 revenue of CAD 111.3 million was down from CAD 126.7 million in Q2. The decline in quarter-over-quarter revenue is substantially timing-related and not unusual in our business. The lumpiness in revenue can be expected given the nature of our contracts and the timing of spend on programs using percentage of completion revenue recognition.
While our labor profile on programs remains relatively constant, big-ticket spend on material and subcontractors can drive higher revenue in one period compared to another. This is what we saw in Q3 versus Q2 of this year. Moving on to gross margin results. As a reminder, gross profit represents our revenue less cost of revenue, which includes materials, labor, overhead, SR&ED credits, and depreciation. For Q3, our gross profit was CAD 39.4 million versus CAD 30.5 million in Q3 of 2020. For the quarter, this translated into a gross profit percentage of 35% versus 31% in prior year. The year-to-date results for gross profit are CAD 122.4 million, with a 34% gross profit versus CAD 88.7 million in Q3 of 2020 and a 28% gross profit.
Both the quarter and year-to-date improvements over prior year are due to increased volume and improved program performance over 2020. That makes for three strong quarters thus far in 2021 in terms of GP %. Although Q4 is likely to show a slight drop due to the impact of seasonality in our business over the holiday shutdown, we're very pleased with our operational performance. Operating expenses. Q3 operating expenses were CAD 38.8 million, compared to CAD 32.5 million in Q3 of 2020. On a year-to-date basis, our operating expenses are CAD 105.9 million, compared to CAD 81.1 million for the three-month comparative period.
This increase is primarily due to the additional quarter of amortization of intangible assets resulting from the April 20 acquisition of MDA by NPC, and increased share-based compensation expenses following the introduction of a new stock option plan with commencement of grants awarded in Q4 of 2020. Another contributor to the growth in Q3 and year-to-date is an increase in our R&D expense due to heightened activity on our SARnext program. Adjusted EBITDA in the quarter was CAD 31.8 million. This is CAD 3.3 million lower than Q3 2020. This reduction is reflective of an increase in R&D spend due to SARnext and lower Canada Emergency Wage Subsidy income on a year-over-year basis, offset substantially by stronger gross profit. In the current year, we recorded nine...
In the current quarter, excuse me, we recorded CAD 9.1 million in CEWS as compared to CAD 11.1 million in the same quarter previous year. On a year-to-date basis, our adjusted EBITDA was CAD 110.3 million, up from 2020 levels of CAD 96.7 million. Adjusted EBITDA as a percentage of revenue year-to-date was 31%, which is flat compared to year-to-date 2020. Excluding the impact of CEWS altogether on a year-to-date basis, we continue to see a meaningful increase in our EBITDA margin. Year-to-date 2021 EBITDA margin is 24% over the 20% year-to-date 2020, which is reflective of the strong improvement in our operating results.
In terms of capital spend, Q3 capital spend aggregated to CAD 28.3 million and reflects the continued expected ramp-up of our CapEx investments, supporting our key strategic growth initiatives, including our SARnext program, which is our next generation commercial EO satellite and Telesat Lightspeed, the Telesat LEO Constellation program. We expect our level of capital spend to increase as we continue to advance these important growth initiatives. We ended the quarter with minimal net debt of CAD 62 million and CAD 424 million of available liquidity. In closing, we continue to be pleased with our first nine months of financial results, and we continue to see strong results across our key metrics and are continuing to be focused on successful execution of base and growth programs. Let me now turn to our financial outlook and growth strategies.
We're executing, as Mike has said, on specific growth strategies and leveraging our competitive strengths to capitalize on the fastest-growing areas of the space economy. To maximize our growth opportunities, we're investing in R&D, manufacturing, product development, and in scaling our business. Our strategic initiatives include investing to develop our next industry-leading EO mission that will provide the broadest synthetic aperture radar area coverage on the market with cloud-enabled ground infrastructure to provide best-in-class download times. We're expanding our high volume capacity by investing in new satellite manufacturing facilities and modernizing existing facilities with state-of-the-art digital capability. We're investing to maintain our global leadership in robotics design and development by leveraging next-generation advanced technologies, including artificial intelligence and augmented reality. Lastly, investing to attract and recruit top talent to drive our future growth, including hiring more than 600 new employees since the beginning of the year.
A significant portion of this expected growth is underpinned by the existing contract awards of our flagship programs, with Telesat Lightspeed, Canadarm3, and the Canadian Surface Combatant programs already under initial contracts. In Q3, we made and are continuing to make significant progress on next phase contract negotiations, product definition, and risk reduction activities. While initial contract awards for our flagship programs provide high visibility into MDA's long-term future growth pipeline, shifts in the timing of contract awards on complex multi-year task-based technology development programs are not uncommon, as Mike has said. We continually monitor backlog and contract award timing. We assess their impact on our financial projections.
Timing shifts, including a Lightspeed program delay announced on November 5, 2021, in conjunction with Telesat's most recent financial results, citing, of course, global supply chain disruptions, do not affect the lifetime value of our flagship programs, estimated cumulatively to be CAD 3.5 billion. However, they can impact MDA's near-term 2022 calendar year flagship revenue profile. That impact is mitigated by the diverse nature of MDA revenue, which is well-balanced between flagship and non-flagship programs. In addition, we are well-positioned to capitalize on near-term new opportunity in the rapidly growing satellite systems market. With all of this, we have narrowed our 2022 revenue target, and we now expect it to be in the CAD 750 million-CAD 800 million range, representing robust year-over-year growth of approximately 50%-60%.
Correspondingly, our 2022 Adjusted EBITDA target is now in the CAD 140 million-CAD 160 million range. It's an exciting time for all of us at MDA, all 2,200 of us, as we embark on this steep growth trajectory and longer-term value creation journey for us, our employees and our shareholders. Mike, with that, I'll hand it back to you.
Okay, thank you. Well, we've provided a lot of information, so I think we'll, with that, open it up to questions. Operator?
Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. If you would like to ask a question, please press the star followed by the one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the two. One moment, please, for your first question. Your first question comes from Doug Taylor of Canaccord Genuity. Please go ahead.
Yeah, thank you. Good morning, Mike and Vito.
Good morning, Doug.
You mentioned in your preamble there that you believe the Lightspeed delays will be measured in months and quarters and not years, which I thought was interesting. I'm curious, has Thales communicated anything about the remedies, you know, related to the chip shortage to be able to alleviate that issue that gives you some visibility on what the delays will be limited to?
Right now, like, the teams are all engaged in the planning process for that. Everyone's doing their reassessment based on the concerns that Thales had identified. Our expectations of sort of the pace and length of any delays are based on the project schedules for, you know, rebaselining the plan and moving forward. That's what we're basing that information on.
Okay. I'm just curious if they've, you know, gone out and started purchasing anything or they've found some workaround with respect to the actual, you know, components that are in shortage, or if you're kind of subject to the semi market as a whole right now, as many people seem to be.
They're in the thick of reworking that all at the moment.
Okay. You know, obviously any company that deals with hardware, this chip shortage is becoming, you know, a subject of conversation. Has that impacted anything outside of the light speed ramp for MDA in any of the other programs or parts of your business?
Certainly there's global supply chain stuff all over the place, as everyone talks about these days. We haven't had a negative impact on any of our other programs thus far. Program planning for other programs are taking into consideration sort of the new normal in terms of delays. We're finding ourselves buying like long lead items with a bit longer leads, for example, and including the planning for these delays into the programs themselves. We've not experienced significant hiccups in other programs because it's been planned in.
brings me to another question about the working capital investment in the quarter. You know, is some of that investment related to, as you just said, buying some longer lead time items and building your inventory to help with this issue? Should we expect a reversal in terms of working capital in the coming quarters?
Yeah, Doug, it's Vito here. Thank you for the question. Working capital is something clearly we keep a close eye on, and you're absolutely right, it did pop in in Q3. A large component of the cash flow factor actually was our SUUs. So there was a receivable at the end of the quarter, substantially which we've received post Q3. But you're absolutely right. We're working obviously with our clients and our customers in all aspects of that, and we do expect a comprehensive bounce back in Q4 with respect to working capital and don't see it as a major issue at this point in time for sure.
Okay. Last question for me. I mean, you had, I think you said at some point you expected, I think, CAD 350 million in revenue in 2022 from the flagship programs next year. You know, is it fair to say that your updated revenue, you know, now includes about CAD 275 million, and so the entire difference in the guidance is related to, you know, the Lightspeed or the flagship programs, as opposed to, you know, any other, you know, machinations with respect to other programs and projects?
For folks like us with the kind of portfolio we have, we can have shifts across a number of programs. Certainly at the moment, we see a number of short-term slips in the flagships, among others, but primarily driven by the Lightspeed announcement of last Friday. That's the overall picture.
All right. Thank you. I'll pass the line.
Thank you, Doug.
Your next question comes from Thanos Moschopoulos of BMO Capital Markets. Please go ahead.
Hi, good morning. You alluded to a one-time event in the Geointelligence segment, which impacted revenue in the quarter. Could you provide some more color on that?
Go ahead, Dave.
Sorry, can you just repeat the question?
The one-time event.
Yeah, sorry. You alluded to a one-time event in Geointelligence, which impacted revenue in the quarter. I appreciate it was one-time in nature, but if you could provide some more color on that.
Yeah, Thanos, this, you know, we don't give specifics on a program, but this, it's back up and running in Q4, and it's part of our GO business. Nothing more specific on that. We just wanted to highlight that really it was a one-time shortfall event in the quarter related to a maintenance of a particular service we provide for a very important customer.
Okay. On Telesat Lightspeed, I appreciate there's some moving parts here, but just given that maybe there's some ongoing uncertainty in the timing, how would you characterize your approach to building that forecast for 2022? Just trying to gauge whether, you know, there could be risk of further slippage. How conservative have you taken to that program at this point?
Right now, like, our forecasts are based on obviously being very tightly engaged in the program. We have good lines of insight into all the major players, engagements with Telesat, with Thales as the prime, engagement with funding agencies that Telesat will be speaking with. We use our own information pulled from all those people in terms of everyone's expectations for schedule. Then, you know, we take a bit of a conservative approach in terms of giving ourselves a bit of buffer around expectations in our planning.
Thanos, we'll shy away from giving specifics as to obviously on the three flagships, what our timing for, you know, reflects or what our forecast reflects from a timing perspective. You know, we're confident obviously in the numbers that we've put forward here. There is sensitivity to those, both to the plus and to the minus with respect to the timing of it. As Mike alluded to, you know, a high degree of confidence in the number as we put it forth at this point in time based on.
Based on everybody's plans and expectations.
Yeah.
Yeah.
Okay. Finally, just in terms of your CapEx outlook, is that still kind of, are you holding to the same plan for 2022 as previously discussed, or has there been any change in timing with respect to how you're thinking about CapEx next year?
Yeah, you know, at this point, Thanos, we'll probably come back at Q4 and give the market some guidance as to our capital. We're gonna lean in, continue to lean in for all the reasons we've described. We'll be very, very methodical and measured, obviously, as we look at our capacity and our debt availability and whatnot. No material change from what we described and put forth in the discussions to date, as reflected in the IPO material.
Okay, great. I'll pass the line. Thank you.
Thank you.
Your next question comes from David Strauss of Barclays. Please go ahead.
Thanks. Good morning. Vito, CEWS, how much longer is that gonna run? How much more do you expect there?
We're pretty well done. The program ended in October.
Okay. I guess following up on the Lightspeed question. It looked like, you know, based on the IPO materials, you had been assuming like CAD 80 million-CAD 90 million in revenue from that in 2022. Is it fair to assume that you're expecting very little in the way of revenue associated with Lightspeed next year?
We have revenue for Lightspeed in there. There's a bunch of puts and takes that occur in the program. I don't wanna disclose the actual number for competitive reasons, but yeah, we're still assuming activity on Lightspeed next year.
Okay. I guess a follow-up on the CapEx question. In terms of SARnext, are you, Vito, you think you're holding pretty close to the profile in terms of CapEx for that that you've previously outlined?
Yeah, we are. Yeah, David, I mean, it's early days. Obviously, it's an incredibly important initiative for us. We'll look at a lot of alternatives as we move forward. Obviously, as I said, when it comes to balance sheet, you know, we're very blessed. We've got a business that generates a significant amount of cash from operations. We expect that number to increase over the years to come. No material change to report in our SARnext outlook at this point.
Okay. Last one for me. In terms of cash balance, what do you think you need to have on hand in terms of cash, Vito, to run the business quarter to quarter?
Well, you know, we ended the quarter with $88 million, and we have a revolver. It's less about perhaps the cash on hand and just the availability and the liquidity available to us. As you heard me report, we've got over $400 million of liquidity at this point in time. We're, you know, I think the broader question you might be asking there is how do we think about leverage and those sorts of things. You know, we've talked about that in the past. two to three is sort of we're well below that at this point. We'll be really measured as we move forward and not a short-term consideration for us at all at this point in time.
All right. Thanks very much, guys.
Thanks, David.
Thank you.
Your next question comes from Paul Steep of Scotia Capital. Please go ahead.
Morning, Paul. Maybe.
Mr. Steep, your line has been opened. Please present your question.
Sorry about that, guys. On flagships, just can you talk to timing on, where we should think about in terms of the next steps for the major programs and what-
Yeah, recognizing not all the announcements will be out there for us to watch, but what we should be watching for maybe over the next 12 months in terms of the next steps and metrics.
Yeah, the biggest thing for us to track is just the backlog building as we go through the next period of time. The biggest activities on the flagships is, they're all, you know, we work on the current phase of work, but we're very busy, processing, you know, the next round of, orders for the next larger phases of those. The biggest thing to track is just overall backlog build as we go through the next period of time. Some of those will have announcements, some of them won't, depending on, you know, what we're allowed to say when. Watching that backlog number is a key indicator.
Maybe within satellite systems, Mike, can you talk to what the split is right now between LEO and GEO, just broadly, and then maybe your outlook for. We've seen lots of news around the LEO constellations continuing to happen, but how we think about awards in that area that might help, you know, continue to build into backlog.
Yeah. These days, I think we have a solid mix of LEO and GEO at the moment, with certainly the pipeline, as we would have talked about during the IPO process, in terms of dollar volume, you know, highly biased towards LEO constellations moving forward into the future. We've always maintained that there's a GEO base there that we're successfully a part of, and we ebb and flow with the GEO market, in terms of maintaining our sort of market share for the GEO satellite subsystems. Our pipeline that we talked about during the IPO process for LEO constellations continues to remain strong. It's maturing very well. So a number of the opportunities are getting more and more mature.
As we go through, you know, the next period of time, we would expect to see increased success in the LEO constellation market. You'll hear us talking about that more as we go through the future for sure.
Just maybe finally, not that it's, I think, top of mind, but I noticed it was removed and maybe it's just the lawyers getting excited or wanting to cut down your page count in your MD&A this morning. There was a removal of commentary relating to M&A. Is there any change in your thoughts around M&A? Maybe more tempered on that front, just near term as you work on what's in hand.
No, there was nothing I'm aware of in terms of some big conscious decision to mess around with M&A language. Like any business, we'll consider M&A where it makes sense moving forward, in terms of where it can be advantageous to us. That's just, you know, our normal posture. There's been no change to that posture.
Yeah. No read through there, Paul.
Great. I think that's it for me. Thanks, guys.
Okay. Thank you.
Your next question comes from Kristine Liwag of Morgan Stanley. Please go ahead.
Hi, this is Justin on for Kristine this morning.
Hey there.
I was wondering if you could provide a little more color on hiring efforts. Do you plan to maintain the same cadence through the end of the year into 2022? Are you seeing any recent issues related to either labor supply or wage inflation that might lead you to think differently about hiring plans?
We don't think that differently about hiring plans. We need to hire for sure. We have a very good talent recruitment team that are doing an excellent job working with our hiring managers across the business. We hired about 350 last year. We've hired over 600 this year. We continue to do so at pace. That's certainly a pan-Canadian activity, but also a global activity, as we look for talent that you know are interested in joining MDA as we go through this next period of growth. It's competitive for sure. Lots of people are going through hiring challenges in the markets these days, and we're hiring for a top end of talent in the engineering and technical sectors primarily.
We're hiring for all functions, but certainly in the large majority is the technical stuff for the program growth that we're seeing and the business activity that we're seeing. That's going well. It's attractive to people to work at MDA. It is an exciting time for the company with a lot of growth, people wanna be a part of it. We're pleased with that. We do have to maintain, you know, ourselves as a desirable place to work, and we have to maintain ourselves as a competitive compensator in the market. In terms of being able to maintain fair compensation and a very exciting work activities with a very solid purpose within the space sector, these things combine well in terms of our ability to attract top talent.
That will continue. In terms of the pace, it's based on, you know, the pace of programs and initiatives. We will be definitely hiring and continue to be hiring throughout 2022. We've done a lot in 2021, as I've said, which sets us up for the next phase of growth. There will be some, but it'll be in pockets, based on specific program needs as we round out specific talent areas, inside the larger programs as they progress through their next phases.
Great. On the existing workforce, you mentioned you have a vaccine deadline coming up. Do you anticipate any potential disruptions there? If so, what are the mitigation plans, if any?
Yeah, we don't expect any major disruptions there at all. Everything's moving ahead really well in that regard.
Great. Thanks.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one now. Mr. Greenley, there are no further questions from the phone lines, sir. I'll turn the conference back to you.
Okay. Thanks very much, everyone, for a great conversation. It's nice to finish the quarter and we'll talk to you again the next time. Thanks a lot.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.