MacDonald, Dettwiler and Associates Ltd. today released the Company’s financial results for the third
quarter of 2002.
Results From Operations
Third quarter 2002 revenues increased 19% to $147.9 million. This
compares to revenues of $124.2 million for the third quarter of 2001.
Information Systems contributed $82.6 million of these revenues compared to
$81.4 million for the third quarter last year. Information Products revenues
increased 53% to $65.3 million, compared with the third quarter a year ago.
Net earnings for the quarter increased 33% to $9.5 million ($0.25 per
common share diluted), compared to net earnings for the 2001 third quarter of
$7.2 million ($0.19 per common share diluted).
Revenues increased 17% for the nine months ended September 30, 2002 to
$416.0 million. Information Systems contributed $235.5 million of these
revenues compared to $227.9 million for the nine months ended September 30,
2001. Information Products had revenues of $180.5 million, compared to $128.5
million for the nine months ended September 30, 2001.
Diluted earnings per common share increased 30% to $0.70 for the nine
months ended September 30, 2002 from $0.54 for the nine months ended September
30, 2001. Net earnings increased to $26.7 million for the nine month period
from $19.9 million for 2001.
The income tax rate in the current quarter increased to 40.1% from the
income tax rate experienced in the third quarter of 2001 of 39.4%. These
income tax rates used for preparation of the financial statements include both
current, or cash taxes, and future income taxes. The cash tax rate is
significantly lower than the overall income tax rate, and has remained steady
for the first nine months of 2002 at 34.6%.
Earnings before income taxes, amortization of goodwill and fixed assets,
and interest expense (“EBITDA”) increased 31% to $22.7 million for the
quarter, from $17.3 million for the 2001 quarter. EBITDA as a percentage of
revenues increased from 13.9% for the three months ended September 30, 2001 to
15.4% of revenues for the three months ended September 30, 2002. For the nine
months ended September 30, 2002, EBITDA increased 32% to $64.8 million, from
$49.2 million for the prior period. EBITDA as a percentage of revenues
increased from 13.8% for the nine months ended September 30, 2001 to 15.6% of
revenues for the nine months ended September 30, 2002.
As at September 30, 2002 the Company had backlog of $480 million,
including option backlog of approximately $116 million.
Cash Flow Activities
As at September 30, 2002, total assets employed were $519 million.
After tax operating cash flows for the third quarter, net of capital
expenditures, increased 22% to $10.4 million from $8.5 million in the third
quarter of 2001. Excess cash was used to reduce the syndicated credit facility
by $10.7 million to $109.7 million, and to finance capital expenditures of
$5.8 million.
Liquidity ratios continue to be significantly better than that required
by the Company’s banks. MDA’s total net debt to EBITDA ratio was 1.2:1,
compared to a ceiling of 3.5:1. Further, our EBITDA to interest ratio was
15.5:1, compared to a covenant of 3.5:1.
Unused bank facilities amount to $147 million, allowing the Company
considerable flexibility to pursue growth plans.
Operational Highlights
MDA provides essential information from anywhere in the world for
decision making in the workplace, through two principal groups – Information
Systems, and Information Products.
The Information Systems Group provides mission critical information
systems that help organizations achieve their prime operational objectives.
During the third quarter of 2002:
MDA was awarded $9 million in additional funding from the Canadian Space
Agency for continued support of the Mobile Servicing System, Canada’s
contribution to the International Space Station. The additional funding
provides for ongoing engineering support by MDA to keep the Mobile Base
Station and the Canadarm2 operational on-orbit.
MDA signed a Mars Mission Definition Contract with the Canadian Space
Agency to jointly determine Canada’s contribution to European and American
missions to Mars. As part of the Canadian contribution, the Company could
provide much smaller, lighter robotic technology that will provide
considerable spin-off benefits to robotic applications on Earth.
MDA has signed an Agreement in Principle with RapidEye AG of Munich,
Germany to supply and launch a constellation of Earth observation satellites,
and provide the ground-related infrastructure. RapidEye will offer vegetation
information to insurance and food companies, farmers and government. Financing
approvals are proceeding well.
The RADARSAT-2 program continues to unfold. Manufacturing, assembly and
testing activity of all major subsystems is now underway. Concurrently, we’re
planning the integration and test work for the system that will be carried out
at the Canadian Space Agency’s testing facility in Ottawa.
MDA Information Systems was awarded two Earth observation systems
contracts by the Canadian government this quarter. The first is to build a
planning and scheduling system for satellite data acquisition and reception,
including new capability to support RADARSAT-2. The second contract is to
build the system that controls the government’s Data Acquisition Facilities in
Saskatchewan and Quebec.
As part of the National Land Information Service in the UK, MDA
Information Systems has commenced work on a $2.4 million contract to help the
Local Authority in Slough, England modernize the processing of property
information requests. MDA will provide a turnkey system, as well as manage the
process of converting paper records to a digital database for the new system.
This contract represents a breakthrough in that the unique contracting model
can be used as a template with other Local Authorities, and other similar bids
are already underway.
MDA Information Systems was recently awarded a $4 million contract to
develop and deliver a Ground Processing Facility for Defence Research and
Development-Ottawa. The facility is part of an on-going research and
development program in airborne surveillance radar.
And the Company was awarded Phase 1 of a multi-phase contract by the
Canadian Department of National Defence to upgrade the Navy Combat Operations
Trainer (NCOT) to prepare sailors for the new Victoria Class submarines. NCOT
Phase 1 is valued at $3 million (CDN). This follows the awarding of a $1
million contract to MDA to upgrade NCOT for a new version of Command software
in Canada’s Halifax class ships earlier this quarter.
In general, activity in Information Systems has increased significantly
over the past six weeks, with several bids and contract negotiations underway.
The Information Products Group aims to provide everything there is to
know about a parcel of land. During the third quarter of 2002, our Geographic
Information Products Group booked a steady flow of business:
The Danish Meteorological Institute signed a $1.4 million contract with
MDA for the processing and delivery of RADARSAT-1 and ENVISAT data. By pairing
the data from both satellites, up-to-date ice charts are generated for ships
navigating the ice-infested Greenland Sea.
Local governments in the U.S. Pacific Northwest agreed to buy over $2
million of MDA’s land information products this quarter. It will be used for a
number of purposes, from emergency preparedness to regional planning. Also,
the U.S. Department of Agriculture awarded MDA a $500,000 contract to monitor
crop growth in Minnesota. This information will be used to ensure compliance
by farmers with federal regulations, and to support the USDA’s long range
planning efforts.
MDA was awarded over $3 million in contracts to collect forest inventory
information for use by a number of British Columbia forest companies to
support Annual Allowable Cut calculations. It will become part of the “Green
Certification” of B.C. wood products required for offshore sales.
Finally, the big win in Geographic Information Products was over $9.3
million in contracts to produce geospatial information products from satellite
imagery for defense and defense-related agencies in the United States and
Europe.
Our Legal and Assets Information Products continued to sell very well.
In British Columbia, the provincial government recently decided to
initiate mandatory electronic filing of Corporate Registrations and Annual
Reports by B.C. companies. As a result, electronic Corporate Registry filings
through BC OnLine have reached a run rate of $4 million, from a standing start
at the beginning of the year.
In the United States, federal mortgage lender ‘Freddie Mac’ signed a new
3-year distribution agreement with MDA’s DataQuick to continue selling its
Automated Valuation Model called “Home Value Explorer”. DataQuick’s extensive
national coverage provides a unique platform for distribution of this
collateral valuation tool to financial institutions and real estate companies.
LandMDA continued at a steady pace in Florida, rising to an average of
1,750 transactions per week, up from 1,000 per week last quarter. Six more
California counties have just been rolled out, joining the four counties that
went online earlier this year. Another county is in the process of coming
online. With eleven California counties representing 75% of the population
available to LandMDA customers, we now have critical mass and the full selling
process can begin in California.
In the UK, the National Land Information Service project continues to
show steady progress. The NLIS Hub is now processing over 2,800 search sets on
average per week, up from 2,000 per week at last report. Progress on
Differential Pricing is ongoing, as more Local Authorities sign on to the
program. So far, 74 Local Authorities have agreed to the Differential Pricing
package.
Our NLIS Channel, TransAction Online, continues to grow in transactions
as a result of increasing adoption by the legal community. Legal Case
Management software firms such as Mountain Software now provide their
customers with direct access to TransAction Online with a single click of
their computer mouse.
MDA Third Quarter 2002 CONSOLIDATED FINANCIAL STATEMENTS available at:
http://www.mda.ca/corporate/mda_q3_2002.pdf
