Good afternoon. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the MTA Q1 twenty twenty one Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Mr. Greenlee, you may begin your conference.
Great. Thanks very much, operator. Hello, everyone. Welcome to the first earnings call of the new MDA. It's our pleasure to be here and to start this journey with you as a newly publicly traded company.
We're pleased to announce our first set of quarterly results as a new publicly traded company. With our IPO behind us, we are well capitalized to fund our strategic growth initiatives and we see an increasing pipeline of business opportunities ahead. Our focus continues to be on successful program execution, including the three flagship programs, which we've discussed through our IPO, which will underpin our growth over the next number of years. MBA is off to a strong start in 2021, as you'll hear from Vito when he reviews our financial performance. You'll see that 2021 should be a steady year with consistent financial performance as we execute on a business that is returning to more traditional levels.
As we execute on our business throughout the year, we will be hiring significantly to build up our execution teams for our flagship programs. This execution will be enhanced by a growing backlog throughout the year that will result in a unique step function increase to our business levels as we transition from 2021 into 2022. You will see us track this pattern through the year, steady business execution, constant hiring, building backlog followed by a significant step up in business activity level in 2022. The first quarter of the year has started this pattern of steady execution combined with backlog growth. During the quarter, the company was awarded a number of new orders, a number of which I'll quickly highlight.
First, we were awarded an initial contract for the flagship Canadian Surface Combatant Program valued at more than $60,000,000 to provide the laser warning and countermeasure system that will protect the World Canadian Navy warships against laser and optical threats. This starts our production orders on this key flagship program. In addition, in the past quarter, it was announced that MDA was selected for a major role with Telesat on their Lightspeed program for LEO constellation communications satellite constellation. Our role is to provide critical digital satellite technology subsystems for that program. MDA will provide the Direct Radiating Array, a revolutionary phased array electronically steered multi beam antenna that will provide unlimited coverage flexibility and agility through advanced beamforming technology.
In addition, we're engaging in negotiations for full satellite production for spacecraft assembly integration and test. MDA was also awarded a three year contract under the dark vessel detection program this quarter to use satellite technology to detect vessels engaged in illegal, unreported and unregulated fishing when they turned off key ship identification sensors. Our advanced analytics, multi sensor data fusion platform and expertise in maritime domain awareness will support the international community to combat the challenges faced in our oceans and environments through illegal fishing. In addition, we were very pleased to be awarded a contract by the Canadian Space Agency this past quarter to provide satellite flight operations and data management services for CSA's Earth Observation and Space Situational Awareness satellite missions. The total estimated contract value is contract price is valued at more than $30,000,000 and covers a three year period with an option to renew the contract for up to two additional years.
Q1 has seen our satellite systems business return to typical revenue levels with new orders from Airbus for subsystems on their OneSat digital satellite platform. This is an important program for MDA as it will provide significant heritage for new technologies and cement our position as a key provider of equipment for next generation reconfigurable satellites. On OneWeb, MDA revised its production contract and returned to full volume production activities in Q1. OneWeb's first generation constellation will consist of six forty eight low Earth orbit satellites and will deliver high speed, low latency global connectivity with MDA continuing as a key supplier to that program. And finally, I'd like to highlight a string of awards in recent months to provide sensors to support flight to the lunar surface over the next several years.
The company now has contracts to provide sensor solutions for five lunar missions and expects more to come as we progress through 2021. So overall, an exciting quarter with these new developments new developments combined with solid execution as we grow our backlog and deliver on solid financial results. I'd like to pass it over to Vito Carmoni, our CFO, to review that financial performance associated with all these developments.
Thank you, Mike, and good evening, everyone. It's an absolute pleasure to be here with you today to walk through our Q1 results. I wanted to start off with a few administrative matters. As you may have noticed, the Q1 interim financial statements other than the balance sheet for the three months ended 03/31/2021, do not provide comparative information. And the reason for this is straightforward.
The company only commenced active operations on 04/08/2020, the date of the acquisition from Maxar. However, we thought it was important to give you as much context to our Q1 results as possible and accordingly in the MD and A, you will find constructed Q1 twenty twenty MDA carve out results. And as we move beyond Q1 and into Q2, the financial statements themselves will display the prior year comparatives. Second matter, you might notice a few tweaks to the P and L presentation. The most meaningful one being the standalone reporting of the amortization of the acquisition related intangible assets in operating expenses.
These expenses were previously included in cost of revenue. Our team's overriding objective when arriving at financial statements presentation is a set of statements that best convey to the reader our underlying business, while of course complying with all necessary accounting standards, and we feel these changes are in service of that. Let's get into the Q1 results. Overall, as Mike has noted, we're quite pleased with how Q1 has unfolded. Total revenue for the three month period ended 03/31/2021 was 123,400,000 This is up $20,200,000 or 19.6% over the same three month period ended Q1 twenty twenty.
Geo intelligence revenue was $49,000,000 4 point 7 million dollars or 10.6% ahead of Q1 twenty twenty, primarily due to an increase in sales of satellite imagery and analytics services. Robotics and space operations revenue was $34,300,000 in Q1 twenty twenty one, '8 point '2 million dollars or 31.4% ahead of Q1 twenty twenty. This was primarily due to the ramp up of work performed on the new Canadarm3 program and an increase in activity across a number of other programs. Last but not least, satellite systems revenue in Q1 twenty twenty one was $40,100,000 This is 7,200,000 or 21.9% ahead of Q1 twenty twenty. And this increase was primarily due to the growth in work performed on newly awarded contracts in the back half of twenty twenty.
Gross profit reflects our revenue less our cost of revenue. And gross profit for the three months ended 03/31/2021 was $38,400,000 compared to $23,200,000 for the same period last year. A significant portion of the increase was due to increased volume in satellite imagery and analytics services sales and increased activity on awarded programs across all three businesses as already noted. Gross profit percentage for the three months ended 03/31/2021 was 31.1% compared to 22.5% for the same period last year. We're pleased with this level of GP percentage and the increase reflects increased volume and higher margin data sales and improved cost performance on programs.
Turning to operating expenses. Operating expenses for Q1 twenty twenty one were $33,600,000 compared to $17,000,000 for Q1 twenty twenty. And the increase was almost exclusively driven by non cash expenses increases in both the amortization of intangible assets of $13,600,000 and share based compensation of $2,600,000,000 and both these items resulted, of course, from the 04/20/2020 acquisition of MDA by Northern Private Capital. Adjusted EBITDA for Q1 twenty twenty one was $39,100,000 compared to $17,100,000 attributed primarily to the increase in gross profit of $15,200,000 combined with the inclusion of Canada emergency wage subsidy income received in the quarter of $10,100,000 Adjusted EBITDA as a percentage of revenue for Q1 was 31.7% versus 16.6% for the prior year. Excluding the impact of the Canadian emergency wage subsidy in Q1 this year, the adjusted EBITDA as a percentage of revenue remains a healthy 23.5%.
In terms of cash flow in Q1, a couple items to call out. Our capital expenditures in Q1 aggregated to a modest $10,000,000 and consistent with our IPO messaging via our capital expenditures will ramp up significantly meaningfully in the coming quarters with 2021 focus on SAR NEXT, our next generation commercial EO satellite mission providing aperture radar based imagery analytics and information services and Telesat Lightspeed, the Telesat LEO constellation program. Second item on cash. Our cash from operations in Q1 was essentially nil and it reflected a larger than normal increase in working capital. This was largely attributable to a reduction in year end provisions and an increase in accounts receivable related to the increased revenue in higher than normal collections in the prior quarter that would be Q4 of twenty twenty.
We do not expect the balance of year working capital requirements excuse me, we do expect the balance of year working capital requirements to settle into a more normative range and our early Q2 activity supports that. On 04/07/2021, MDA completed its initial public offering, pursuant to which MDA issued 28,571,500 common shares at a price of $14 per common share for total gross proceeds of approximately $400,000,000 Following the closing of the offering on 04/14/2021, the overallotment option grants to the underwriters under the offering to purchase up to an additional 4,285,725 common shares at a price of $14 per common share was exercised in full, generating additional gross proceeds for the company of approximately $60,000,000 Post IPO and the exercise of the overall allotment option and giving consideration to the share consolidation, the resulting outstanding common shares are approximately 119,000,000. The company intends to use the net proceeds of their offering to repay a substantial amount of its outstanding indebtedness in Q2 and fund a portion of our ongoing growth initiatives that require capital investments. In summary, we are executing on specific growth strategies and leveraging our competitive strengths to capitalize on the fastest growing areas of the space economy.
As we articulated in our prospectus, we believe an opportunity exists to grow our revenues from approximately $411,000,000 in fiscal twenty twenty to between $800,000,000 and $900,000,000 in fiscal twenty twenty two. And further, grow our adjusted EBITDA from approximately $127,000,000 in fiscal twenty twenty to between $160,000,000 and $180,000,000 in fiscal twenty twenty two. Our backlog at the end of Q1 stood at $684,000,000 an increase of $122,000,000 from the end of twenty twenty. We expect the backlog to continue to build as we move through 2021. A significant portion of this expected growth is underpinned by the recent award of our flagship programs that Mike walked you through.
Mike, before I hand the call back to you, I just wanted to give a shout out to all the amazing folks who work here at MDA. In my short time here, I've been so impressed with their commitment, the customer centric passion and above all their amazing talents. Combination of our incredibly talented people and our proprietary technologies positions us very well to execute what is before us here in the next couple of years and further step into the evolving broader and deeper strategic growth opportunities. Mike, back to
you. Thanks very much, Vito. That's a solid overview of a solid quarter. It's been a great adventure working with everybody in the community as we've brought MDA out into the public markets. We've really enjoyed that process and all the interactions.
As you can see, it's been a solid steady quarter. Not much new information for those who are involved in the IPO process, but important for us to make sure that we did the call. We provided everybody with an update and we continue the excellent dialogue that we started throughout the process that we've been on the last several months. Operator, we can turn it over to you to be able to manage the phones for any questions that people might have.
Thank you. First question comes from Thanos Moskopoulos at BMO Capital Markets. Please go ahead.
Hi, good afternoon. Congrats on the IPO and on a solid first quarter. I appreciate you don't provide quarterly guidance, but as we think about the remainder of the year, any quarterly nuances we should think of heading into Q2? Should we think about revenue that got at a similar level or anything you'd call out just quarterly dynamic?
Yes. No, Thanos, I think, first of all, it's great to hear your voice. And as you heard Mike articulate, 2022 is really about building the backlogs into 2021 is really about building the backlog orders into 2022. We expect steady performance, but with strong gross profit percentages, consistent with what we reported here in Q1. With respect to the revenue profile, the big step up is into 2022 as we've articulated it.
Okay. And I realize it hasn't been that long since the Roadshow IPO, but in that brief period of time, how would you characterize your progress in the flagship programs? Is that exactly as expected or any variation there in terms of initial expectations?
Yes, it's Mike. I would say that's absolutely as expected. All the teams continue to make progress on those programs and we continue to build momentum on each one.
Okay. And Maxar recently called out an industry wide issue related to a shortage of behind wall components. Is that something that might affect your business or is that not something that will impact you?
It could affect our business in terms of like the overall satellite programs that are relying on those components. But in terms of us having our orders and delivering into them, that does not get in the way of our systems and subsystems and what we're delivering. So right now, we're not impacted by that in any material way.
Great. And last one for me. How should we think about the wage subsidy dynamic for the upcoming quarter?
Yes, I know we're digesting obviously the latest update from the government in that respect. There are some provisions going forward with respect to potential clawback going forward as you look at executive compensation in 2021 versus 2019. So we'll continue to make the claims and obviously continue to digest that there's not a lot of information on how to interpret some of that at this point in time. So TBD on that going forward.
All right. Great. Thanks guys. Congrats again on that point. Thank you.
Thanks a lot.
Thank you. The next question comes from Kristine Liwag at Morgan Stanley. Please go ahead.
Hey, good afternoon guys and congratulations on your IPO.
Thanks, Kristine. Thanks, Kristine.
Mike, to clarify, the orders that you mentioned from TeleSat LightSpeed, is this the same contract you were expecting or was there an expansion of your expected work scope?
This is the same contract we were expecting. As we go through the flagship programs, there will be like a series like we've been selected for them all, received our whole initial orders, we're under work and then we'll keep getting incremental orders as we round out the order book around those programs. So it's just a continuation of that process.
Great. And can you quantify the five sensors to the lunar missions that you highlighted in your prepared remarks? How big are these programs?
In combination, they're in millions of dollars. I don't want to be able to quote individual sensor orders for competitive reasons. It's a super competitive market area right now.
Great. And maybe like one modeling question. Vito, how should we think about share based compensation beyond this year? Should we think about it to be in a similar amount of about $5,000,000 when we get to twenty two million dollars or $23,000,000
I think your Q1 share based comp, which is over $3,000,000 clearly reflects a little bit of a catch up. And I think your range as you go into the out years, Christine, you should be seeing share based compensation come down off of our 2021 levels. Probably premature for me to give you guidance around an absolute number, but directionally what you're describing is what we would expect for sure.
Great. Thank you.
You're very welcome.
Thank you. Next question comes from Doug Taylor at Canaccord. Please go ahead.
Yes. Thanks. Good evening. I I think you confirmed the $350,000,000 you expect from flagship programs anticipated next year towards that $800,000,000 to $900,000,000 bogey that you've laid out. I wonder if
you could help us think about what out
of those flagship programs you might expect this year, however small or large, so that we might think about the growth in your business outside of those programs and track that over the coming year?
Yes. I'm just trying to think about it. In terms of like sort of where we're at, at the moment, like I'm trying not to be too specific on revenue by program as it relates to the flagships. Like they're performing at a steady level with inside that revenue level that we're seeing right now, which we expect to hold steady as we go through the year.
Yes. And Doug, I'll jump on that one a little bit too. When it comes to our 2021 revenue, the three flagship programs will contribute a de minimis amount to that revenue. So I think when you really step into 2022 is when you see the flagship from a revenue perspective. Clearly, as we build the order book here into the other years and as our backlog builds, flagship program will be contributing significantly to the composition of that.
But as far as our 2021 revenue, I'll use the word de minimis, but that's basically our core existing business.
Okay. I ask only because you mentioned that you had done some work in the Canadarm3 program, which contributed to the strong robotics in the quarter, I believe.
Yes. NC3 would be the largest one of the three flagships contributing into our 2021 revenue, but again, still fairly small percentage of
our overall revenue compared to the rest.
Okay. Thank you for clarifying that. Congrats on your first quarter and I'll pass the line.
Okay. Thank you. Thank you, Doug.
Thank you. Next question comes from Paul Steepe at Scotia Capital. Please go ahead.
Congrats on the IPO. And I guess the first question would be for Mike. Mike, can you maybe talk about the Airbus product, the project that you talked about in the MD and A on Page nine, you talked about the OneSat digital satellite platform doing a long term supply agreement there. Maybe give us context around that as much as you can?
We provide like a number of components into that satellite. Some of those are mechanical components, some of those are antenna related. And so we have like two or three different products that are in that arrangement. So that as that new line of reconfigurable satellites moves out, then we are, as you would say, designed into that satellite in the long term supply agreement so that we can participate on a regular basis.
Great. And then Vito, maybe just talk to, I guess, three impacts, I'll wrap it in one to be mindful of people's time. How we should think about FX with the Canadian dollar rocketing up here, the impact to top line and bottom line in Q2 and Q3? Anything we should think about around lockdowns? Obviously, it would mainly, I guess, affect Brampton given the current circumstance.
And then the final one, maybe broader than where Thanos went, any impact you guys are seeing from supply chain with component shortages? Thanks, guys.
Thank you. You want to take Yes. Lockdown. And supply chain? Yes.
So from a lockdown perspective and a supply chain perspective, we're doing well. We continue we have operated with essential operations in Montreal selling manufacturing, Brampton robotics, rover related manufacturing throughout the entire COVID period. We've implemented really strong safety measures within the facility. We continue to track all aspects around COVID really well. We've implemented antigen based rapid screening.
Remember, everyone on-site is available to be able to screen for COVID twice a week, and we continue to do that while encouraging the population to get vaccinated as the opportunity to do so increases throughout the community. So we continue to operate well even in the hotspots like Brampton like you mentioned. From a supply chain perspective, when COVID first started a year ago, there was a normal clumsiness as everyone tried to figure out how to adjust their work practices. But in the current performance environment, we don't have any COVID specific supply chain challenges. People have worked the king's side of that.
The space community in general, I find, has been able to work through the COVID period very well.
And Paul, in respect to your foreign exchange question, you would have seen that at least as it relates to Q1, there was just under a $3,000,000 loss recognized in our operating expenses and all of that is essentially unrealized. As we move forward here into the back half of the year, you're absolutely right. Our U. S. Dollar cash inflows do exceed our U.
S. Dollar projected cash outflows. So to the extent that there is some continued strengthening in the Canadian dollar, there's potential headwind there. But overall, we feel pretty good with where we're sitting right now. We do have, I'll say, a modest hedging program in place.
We're reviewing that to ensure that we feel comfortable with where we're standing. But nothing I would say overly material from a financial statement perspective to call out at this point.
Okay. Thank you.
You're very welcome.
Thank you. We have no further questions at this time. I'll now turn it back over for closing comments.
Okay. Thanks very much. From my perspective, it's just been great to be able to continue to engage the community post IPO and be able to report on a steady quarter as we go through the year. Neil? No, that's great.
Thank you, Mike. And we're really excited to
be here and everything we've seen on the ground since IPO just gives us even further confidence not only in the growth aspects, but also the capabilities of the team. So very excited. We'll catch you on the Q2 call. Thank you very much.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and we ask that you please disconnect your lines. Enjoy the rest of your evening.