MDA Space Ltd. (MDA) Earnings Call Transcript & Summary

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?