Post-shuttle Robotics Business Clouds Otherwise Bright Outlook for Canada’s MDA
PARIS — MDA Corp. of Canada on Oct. 27 said its fledgling business of providing unmanned aerial vehicle surveillance (UAV) services to military forces is approaching $100 million in annual revenue from contracts in Afghanistan and is likely to expand into the commercial sector.
Presenting its financial results, Richmond, British Columbia-based MDA said its space hardware and services businesses are showing strong growth across the board, except for one area: space robotics.
With the coming retirement of the U.S. space shuttle and its Canadarm, MDA’s space robotics business, one of the company’s signature product lines, will drop unless it lands a customer for its proposed satellite in-orbit servicing project.
In a conference call with investors, MDA Chief Executive Daniel E. Friedmann said the satellite servicing venture has cleared hurdles related to ensuring the mission, which would refuel spent satellites in orbit to extend their lives.
Friedmann said he has participated in discussions with prospective commercial customers that are the in-orbit servicing venture’s primary target. Military customers also have shown interest, he said. But none has agreed to commit to the project at a level needed for MDA to invest in developing a vehicle that would service several satellites in a single orbital mission.
Friedmann made no mention of any civil government interest. Luc Brule, director of technology management at the Canadian Space Agency, nonetheless on Oct. 21 told a meeting in Brussels, Belgium, of governments interested in space exploration that the Canadian government is supportive of the project, which has numerous exploration-related applications.
“It has turned out to be more complicated than I thought, that’s for sure,” Friedmann said of the satellite servicing business model. “But at the moment we’re still working this pretty hard.”
Without a satellite servicing contract or some other new work, MDA’s space robotics business will have to shrink in 2011 once Canadian economic stimulus funds run out, despite the expected extension of the international space station’s operations to 2020, Friedmann said. MDA developed robotic hardware in use aboard the space station.
New work in robotic mine safety, nuclear plant inspection and other spinoff activities will not compensate for the shuttle’s retirement, now expected in mid-2011.
“The mainstay of the division is to develop new technology for space,” Friedmann said. “And at the moment, Canada has not come up with anything there. Without the government taking some leadership in robotics, we’ve got a problem. We’re going to shrink there next year, and we’re going to have some layoffs.”
MDA reported that just about every other space-related business in its Information Systems division is operating at full speed. The company is expanding in satellite communications, where it expects its revenue to double in the coming year on the strength of Russian, Ukrainian and other contracts.
MDA’s business selling surveillance products — UAV services, imagery from its Radarsat-2 satellite and ground stations — is also growing. Canadian and Australian forces in Afghanistan are booking more hours of the MDA service than initially planned, and the U.S. military and intelligence services are ordering more Radarsat-2 satellite data.
The U.S. Army has contracted with MDA to provide a small, tactical mobile ground station that would take down imagery from Radarsat-2 and from optical imaging satellites owned byof Longmont, Colo., in what Friedmann said could be the first of multiple terminal orders.
MDA’s geospatial division reported 64 million Canadian dollars ($62 million) in revenue for the first nine months of 2010, up 10 percent from the same period a year earlier. The division’s gross profit was up 21 percent, to 23 million Canadian dollars.
The oil spill in the Gulf of Mexico has given MDA the chance to show prospective customers how fast it can task Radarsat-2, and then capture and produce usable imagery on a regular basis, Friedmann said, adding: “I think we’re going to be able to turn that into a recurring business.”
MDA is building electronics payloads and other gear for two Russian telecommunications satellites and a Russian meteorological satellite. The company is also prime contractor for a Ukrainian telecommunications satellite as part of a $254.6 million contract that includes the satellite’s launch and insurance.
The satellite is intended for an orbital slot at 38.2 degrees east, a region in which several satellite operators have pending applications for spacecraft. Several others, includingof Paris, Russian Satellite Communications Co. of Moscow, Paksat of Pakistan, Hellas Sat of Greece and of Luxembourg, already have satellites in operation within two degrees of the Ukrainian slot.
Ukraine has been seeking for months to obtain frequency rights for its satellite, to carry 16 Ku-band and four Ka-band transponders. But the effort is not yet complete and may slow some of MDA’s work on the satellite, Friedmann said.
MDA reported that for the first nine months of 2010, revenue in its Information Systems division was up 25.7 percent, to 416.3 million Canadian dollars. The division’s EBITDA, or earnings before interest, taxes, depreciation and amortization, was 23.5 percent of revenue.