MDA Space Ltd. ($MDA)

Good morning, and welcome to MDA Space conference call and webcast. This call is being recorded on May 7, 2026, at 8:30 a.m. Eastern Time. [Operator Instructions] I'd now like to turn the call over to Jim Floros, Vice President of Investor Relations at MDA Space. Please go ahead.

Thank you, Aubrey. Good morning, and welcome to the MDA Space first 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 available on our Investor Relations website as well as 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 press release and 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 other issuers and therefore, may not be directly comparable. Please see the company's quarterly report and other public filings for more information about these measures, including reconciliations to the nearest IFRS measures. And with that, it's my pleasure to turn the call over to Mike.

Thank you, Jim. Good morning, and thank you to those joining us today to discuss our first quarter 2026 financial results. Our first quarter results reflect a strong start to the year, supported by disciplined execution and continued operational momentum. The MDA Space team delivered quarterly year-over-year revenue growth of 32%, while also delivering solid adjusted EBITDA margin of 19.5%. Our Q1 performance reinforces our confidence in delivering the fiscal year 2026 guidance that we issued in March of this year. Our ability to consistently generate profitable growth allows us to continue investing in our future and was a key factor in MDA Space achieving another significant milestone in the quarter as our stock began trading on the New York Stock Exchange, further strengthening our profile within the global investment community. The highly successful initial public offering bolstered our financial position, providing more flexibility to pursue our growth strategies. We also continue to build strong momentum in the business and in particular, with defense opportunities as evidenced by recent commercial successes. In the quarter, we announced that we have been selected as an approved supplier by the U.S. Missile Defense Agency, receiving an IDIQ contract related to the Shield program. We established an MOU with Honeywell Systems to explore opportunities to collaborate in the development of Korea's sovereign low Earth orbit defense constellation. We launched 49North, a dedicated defense organization exclusively focused on delivering secure multi-domain C4ISR and mission-critical capabilities for Canada's national defense priorities outside the space domain. And we announced that we were contracted by Canada's Defense Investment Agency to deliver 3 ground-based optical observatories to the Department of National Defense as part of the Surveillance of Space II domain awareness program. This is noteworthy as it is another contract to be awarded by the DIA, an agency established to speed up and modernize Canada's defense procurement, an integral to Canada's first defense industrial strategy. More recently, we were able to highlight that we've been selected by Airbus for a repeat order of over 1,300 replacement antennas for the OneWeb low Earth orbit constellation extension. This repeat order is meaningful as it follows an initial order given to MDA Space in 2016 to supply antennas to the second largest constellation in low Earth orbit, underscoring our ability to win repeat orders with existing customers and the ability of MDA Space to support the full satellite constellation life cycle from initiation to expansion to replacement. In Maritime Launch Services, where we have Board representation and have seconded a member of the MDA Space senior leadership team as the VP of Operations for MLS as part of our equity investment, announced a $200 million agreement with the Department of National Defense for a dedicated launch pad at Spaceport Nova Scotia, providing MLS with a 10-year anchor tenant. This is a significant milestone towards establishing sovereign launch capability in Canada and reinforces Canada's commitment to having a launch site as part of the NATO launch network. Operationally, our teams continue to execute on a number of fronts. Within Satellite Systems, we previously communicated that we completed the critical design review of the Globalstar next-generation LEO constellation. And the team continued to build on that success through the achievement of a couple more important milestones. We have started to receive production-ready Prime 2 space-grade chips from our chip department, one of the key differentiating technologies behind MDA AURORA broadband and direct-to-device satellites. These ASIC chips are the most integrated digital beamforming chips on the market for space-based antenna arrays and introduced a number of benefits for satellite operators. This significant milestone demonstrates our ability to integrate newly acquired companies like SatixFy, unlocking value. In addition, the Satellite Systems team successfully delivered the first set of satellites under our initial 17 satellite constellation contract with Globalstar. This marks a defining moment in MDA Space history and validates our evolution of a satellite prime contractor. Our Geointelligence team continues to make strides towards preparing MDA CHORUS for its expected launch window in late 2026. In the quarter, the team successfully completed spacecraft thermal vacuum testing and shipped the spacecraft back to our integration and test facility, while in parallel readying the integration of the synthetic aperture radar antenna. And our Robotics & Space Operations team achieved a remarkable 25-year milestone with Canadarm2. For over 2 decades now, Canadarm2 has operated on the International Space Station, helping build and maintain the ISS, capturing and berthing visiting spacecraft, carrying astronauts for some of the most spectacular spacewalks. We are extremely proud of this heritage as Canadarm2 continues to operate and perform critical tasks on the ISS. As the MDA Space team remains focused on executing program deliverables, we also remain confident in our future as the strategic importance of space continues to intensify. Our $40 billion pipeline is significant and includes $10 billion in opportunities with either government customers that have downselected MDA Space or follow-on opportunities with existing customers. It also includes meaningful opportunities over the next 5 years across each of our 3 business areas and is well distributed between government and defense and commercial opportunities. Our Satellite Systems business represents the largest share of opportunities, underpinned by a significant market opportunity with 40,000 to 50,000 communication satellites expected to be launched between 2025 and 2034 in the market. While a portion of this market will be defined by vertically integrated satellite operators or regions that are not acceptable, China and Russia, for example. We estimate our addressable market to be between 20% and 30%, providing significant opportunity for continued growth. 5% of this addressable market has progressed into active customer pursuits with elevated bidding activity translating into $30 billion of cumulative opportunities over the next 5 years for our Satellite Systems business, nicely distributed between commercial and government opportunities as well as Canada, United States and the rest of the world geographically. We remain confident in our ability to win in this market, given technological leadership through our digital capabilities, high-volume manufacturing capacity that will soon be fully operational and a mix of space mission heritage with new space agility. We continue to expect a healthy market for our Robotics & Space Operations business as robotics and on-orbit infrastructure is fundamental to the expanding Earth to Moon economy and the space exploration becomes interplanetary. Over the next decade, the number of space exploration missions is expected to increase by 185% to 855 missions as countries pursue crude lunar and martian missions and other deep space exploration. This is driving an opportunity pipeline of over $3 billion for our Robotics & Space Operations business within applications such as surface infrastructure and mobility, space exploration and commercial space stations and in-orbit servicing and logistics. Leveraging our technical leadership as a world leader in space-based robotics to develop products such as MDA SKYMAKER, our commercial robotics suite derived from Canadarm technology, further supported by life cycle operation services and mission control centers, we are strongly positioned to capitalize in this market. The recent changes to the Artemis mission are part of a renewed focus on accelerating a return to the lunar surface and driving increased momentum for our robotics capabilities. We continue discussions with the Canadian Space Agency on redefining the Canadarm3 robotic systems that will be required to support this new and exciting phase of moon exploration. The dual-use capabilities of MDA Space were on full display at the recently held National Space Symposium in Colorado, where we launched MDA MIDNIGHT, a space control platform for defense agencies to defend and protect the space domain. This new platform is equipped with a suite of hosted payloads to detect, identify, counter and deter threats to critical space assets and orbits in the increasingly contested domain. Leveraging the advanced robotics and proximity operations of MDA SKYMAKER with the modular bus of MDA AURORA enables our team to rapidly configure, build and deploy this product to address emerging customer requirements. Within Geointelligence, defense and intelligence contracts and advanced earth operation observation products are critical drivers behind the expansion of data and services solutions. As demand for earth observation data grows, analytics services are becoming increasingly important for synthesizing data and producing actionable insights to support decision-making. This is expected to drive growth in data and services for synthetic aperture radar and optical applications from almost $6 billion in 2025 to $8 billion in 2033. The additional capacity and enhanced capabilities that will be made available through MDA CHORUS, including higher resolution data collection and near real-time cross-queuing will position us well to grow within this market. In fact, we are seeing early success with 9 customer contracts that have already been finalized for CHORUS, along with 32 letters of interest from customers across Asia Pacific, Latin America, Europe, North America and the Middle East. We also expect to benefit from opportunities for secure multi-domain C4ISR systems and integration opportunities within 49North, driven by increasing demand for sovereign defense capability across land, air, maritime and joint domains. Combining observation and C4ISR opportunities, our Geointelligence business has established a robust pipeline exceeding $7 billion. In summary, we are well positioned to capitalize on expanding addressable markets and leverage multiple growth drivers to continue delivering profitable growth. With that, I'll hand it over to Guillaume to talk about the financials.

Thank you, Mike, and good morning, everyone. For my update, I will walk you through our Q1 2026 financial results. Q1 was another successful quarter and a solid start to fiscal 2026 for MDA Space as we continue to execute on our backlog, delivering strong growth in both revenue and profitability. Total revenues for the first quarter were $464 million, representing an increase of $113 million or 32% over the same period last year. The year-over-year increase was driven by strong performance within all 3 of our business areas. Revenues in Satellite Systems of $313 million in the first quarter of 2026 were $91 million or 41% higher compared to the same quarter in 2025. The strong showing was driven by the increased volume of work on the Telesat Lightspeed and Globalstar next-generation LEO constellation programs. As Mike highlighted earlier, our team has delivered the initial batch of ASIC chips for the Telesat Lightspeed program. And the team in Montreal continues to integrate various stages of the production line. For the Globalstar next-generation LEO program, the team has passed the critical design review stage and continues to work on assembly and integration activities on the first satellites. In Robotics & Space Operations, revenues of $92 million in the first quarter represented a $14 million or 18% increase over Q1 2025, driven by higher volume of work on the Canadarm3 program as the team continues to work on building and testing engineering models for the flight design. Revenues in our Geointelligence business were $59 million in the first quarter, representing an increase of $8 million or 15% year-over-year due to higher volume of work on various programs, including the iStar program for the Royal Canadian Navy. Comparing total revenue to Q4 2025, we saw a sequential decline of 7%, primarily driven by timing of revenue recognition on our programs within our Satellite Systems business. Overall, our first quarter revenue was in line with our expectations. Moving to gross profit. For Q1 2026, gross profit was $115 million, representing a $36 million or 45% increase over the same period last year. Gross profit in the first quarter was 24.8%, which was up from 22.7% for the same period in 2025. Adjusted EBITDA in the quarter was $91 million compared to $69 million in Q1 2025, representing an increase of 32%. This was driven by higher work volumes as we continue to convert our backlog. Adjusted EBITDA margin of 19.5% in Q1 '26 was in line with adjusted EBITDA margin for the same period last year. Adjusted net income in the quarter was $51 million compared to $38 million in Q1 2025. The year-over-year increase of $12 million or 32% was primarily driven by higher operating income. Adjusted diluted earnings per share of $0.38 in Q1 '26 was up 27% versus Q1 2025 because of the higher adjusted net income, which was partially offset by higher average diluted shares outstanding due to the recent equity issuance related to the U.S. IPO we completed in March. Moving to backlog. We ended the quarter with a solid backlog of $3.7 billion, representing a small decline of $300 million compared to December 31, 2025. This was driven by continued execution of our backlog into revenue and a lower volume of orders in the quarter, which came in as expected. With our $40 billion opportunity pipeline, which includes $10 billion of downselected opportunities with government customers or follow-on opportunities with existing customers, further supported by a growing addressable market, as Mike detailed earlier. We are confident in our ability to book new orders in the future and to continue to fuel revenue growth. Moving to CapEx. In Q1 2026, we spent $88 million on capital expenditures, up from $62 million in the same period last year, driven by investments to add high-volume production capacity at our Montreal facility. This level of CapEx is higher relative to the recent quarterly trend as a result of new equipment being installed in Montreal. However, this is progressing ahead of schedule, which is very positive. With a run rate that is expected to decline as we progress through 2026, we are positioned to meet our full year guidance of $225 million to $275 million. Cash from operations during the quarter generated $61 million compared to $267 million in Q1 2025. The year-over-year decrease was primarily driven by lower working capital contributions in the latest quarter as planned. Lower cash from operations, combined with higher CapEx drove negative free cash flow of $28 million in Q1 of 2026, which compares to positive free cash flow of $205 million in the same period last year. Moving to our balance sheet. We ended the quarter in a strong financial position with cash on hand of $544 million, driven primarily by our highly successful U.S. IPO. An overwhelmingly positive response resulted in a significantly oversubscribed offering, allowing us to raise gross proceeds of USD 341 million. Along with available liquidity of $699 million under our credit facility, we ended the quarter with total available liquidity of $1.2 billion, putting us in a strong position to continue to invest in our growth initiatives. Now turning to our 2026 outlook. We are extremely pleased with the strong start to the year and the momentum that we see across our business. And that provides us with the confidence to reiterate our full year guidance for 2026. For the full year, we continue to expect revenues to be between $1.7 billion and $1.9 billion, representing a year-over-year growth of approximately 10% at the midpoint of our guidance. Adjusted EBITDA to be between $320 million and $370 million, representing a year-over-year growth of approximately 7% at the midpoint of guidance and adjusted EBITDA margin of 18% to 20%. As I previously stated, we also continue to expect capital expenditures to be between $225 million and $275 million in 2026 to support another year of investments related to expanding production at our Montreal facility as well as investments to support space-grade chip development and commercial growth initiatives. Lastly, we reaffirm our expectation for full year free cash flow to be neutral to negative, driven by normal program working capital fluctuations, combined with the CapEx required to support future growth. In summary, this was a strong start to fiscal 2026. And we continue to be encouraged by the positive momentum we are seeing across our businesses. The MDA Space team continues to deliver strong financial results. And I want to recognize the hard work, dedication and passion from all our employees across the business. With that, operator, we are ready for questions.

[Operator Instructions] Our first question comes from Justin Lang of Morgan Stanley.

Mike, I wanted to ask one on direct-to-device. You've been out talking about a sort of neutral host model for MDA. I was hoping you could talk a little bit more about the traction you're seeing for this sort of offering and if there's any way to sort of size the opportunity there?

Yes, I don't think there'd be a size in the opportunity yet. Right now, it's a series of discussions that we've been pulled into looking at the neutral host model and the technical achievability of it, which we're very positive about. The basic notion here is the ability to have a space-based network that works directly with mobile network operators and/or cellphone tower service providers around the world to be able to have a space-based network extension. That can operate using the MNO's existing spectrum to be able to fill in holes in their coverage areas and/or extend their coverage areas using -- without them having to relinquish control of the customer, without the customer having to roam off of the mobile phone network onto a space-based network. And then back on to their network again, giving up customer information and the like that can happen when you roam on to a space network. So folks are interested in this for sure and talking to us actively about that around the world. So these are active kind of conversations, while we also continue to develop and demonstrate the technical solutions that would enable it for customers at their request. So it's very active and a positive encouragement.

Got it. And then maybe just as a follow-up. It sounds like from at least what Amazon put out after it announced the Globalstar acquisition that it intends to move forward with your constellation build-out. But it seems like they also have kind of grander visions for a bigger D2D constellation. Curious if that might also be addressable to you and if any of that is in your $40 billion pipeline? And then maybe just more generally, how are you thinking about prospects with Amazon after this Globalstar purchase?

Yes. So it's early days, obviously, with the Amazon announcement to purchase Globalstar. We've seen a couple of things there. Like one is the expected close of that acquisition wouldn't be until a year from now, early 2027. So as a result, Globalstar continues to execute on its business and Amazon continues to go through all of its procedures to be able to work through the close of the acquisition itself. So as a result of that, you don't immediately engage in conversations with someone that's buying a company. You have to wait a while until they actually own it. And so it's been nice to see that no change to our current business. And that was as expected that we need to get our work done, get our Thunder satellites delivered. We've recently announced that we conducted the first shipment of the first 17 satellites and are completing the next shipment of those, while we continue to get our Globalstar next-generation constellation completed. And so we will remain focused on that. Everyone wants us to. It's extremely important. So that's great. And then I'm sure that as we start getting these constellations launched and the like, then we can start talking about how our things is going to work going forward into the future. And we'll see if any opportunities emerge there. Certainly, we have the skillsets and the capabilities and the technology road maps to be able to contribute. But we haven't had an opportunity to have those conversations yet.

Our next question comes from Thanos Moschopoulos of BMO Capital Markets.

Maybe just starting off on the full year guide. If I take the strong Q1 results and annualize them, I would end up above the midpoint of your guidance range. So in terms of maintaining rather than raising your guide. Is that conservatism on your part? Or are there other considerations you have to think about as we go through the year?

Thanos, really, we're sticking to our guidance like $1.7 billion to $1.9 billion. The midpoint is $1.8 billion. We delivered a strong quarter in Q1, $464 million. We're very happy with that. But we expect consistent execution throughout the year, right? This is not a year of ramp-up really for us. It's really a year of execution on Telesat, on the Globalstar next-gen legal program on Canadarm3. So you can expect sort of consistent quarterly delivery. And it's going to vary a little bit. It's not going to be always $460 million, could be a bit lower in some quarters. But overall, $1.8 billion at the midpoint is a good way to think about our business. And we need a bit of wiggle room to -- yes, just like be able to deal with execution. And so $1.7 billion to $1.9 billion remains the best estimate right now for us.

Great. And then, Mike, on Canadarm3, any further color you can provide on the discussions you're having with your customer following the Lunar Gateway cancellation and how the program has evolved? And then maybe just the timing of when you might see some decisions or announcements in terms of contract modifications there?

Yes. The key thing for us is that full steam ahead on Canadarm3. The project team continues to execute as planned towards final designs of space-based robotics. There are a series of conversations that are occurring in parallel about the opportunity to potentially pivot that capability towards the LUNAR surface and the LUNAR program. And so that's just ongoing activity. I can't really predict when that might -- those activities might be completed, but they need to happen soon. So to ensure that the full steam ahead posture on the program is driving towards the right outcome and the most desirable outcomes. And so that's good. We get to do both at the moment. Based on where we are in the design process, we have a lot of work to do. And so everyone agrees. We just need to keep getting our work done while in parallel, a small group of executives and agencies continue to talk about how can we be the most value on the lunar surface. So all those things continue at the moment with positive intent.

Our next question comes from Greg Conrad of Jefferies.

This is Eegan McDermott on for Greg. Maybe on backlog, it's come down a little bit on some burn off, but you've maintained the $40 billion pipeline. Is there an expected turning point given some of your near-term pursuits? And how are you thinking about book-to-bill for the year given that pipeline?

Yes. I think we'll definitely obviously keep working the pipeline. There's a number of opportunities that are at a quoting level of maturity that as we go through the remainder of the year, customers would be in a position to make contracting decisions. In some cases, there's government customers out there that have to get through government processes. In other cases, there's industrial commercial customers that need to get through their business planning and organization activities before they're going to be ready to move out. But there's definitely solid mature quotes that are there that could be turned into contracts. So we'll keep working that. We expect to be able to book -- obviously, book more business throughout the year. And we always try to strive to have at least a 1:1 book-to-bill ratio. We'll see how it plays out as we go through the year, but there's opportunity for that. But we'll continue to work these things. You don't always control your customers' behavior. But we are certainly doing everything possible to support their decision-making and have a lot of strong opportunity. And a lot of new things come along as well. So it's been exciting in terms of not official additions to the pipeline yet, but some really exciting new conversations that have come up with people dropping by and wanting to talk about future business. So it's been really good.

Okay. Cool. And maybe just as a follow-up on that. Given the Airbus announcement, curious how you guys are thinking about the satellite component opportunity within the pipeline today and just the magnitude of full satellite systems versus components in relation to the Satellite Systems segment going forward?

Yes. Over the last 5 or 6 years, we've certainly emerged as we've really grown and expanded. We've maintained during all of that growth. We've maintained a strong, what we call our merchant supplier business where we're selling satellite components and subsystems to other satellite manufacturers or for our role on a team of multiple companies that are going to put together a solution. So that's definitely been steady and solid. With us now, we have a lot of expansion in the full satellite level. But with the high-volume manufacturing, it means that we're able to both on the bus or platform side of satellites and the digital payload or the digital guts of the satellite, that's all coming into high-volume production. So it also means that from a subsystem perspective, if someone just wanted to use our bus or someone just wanted to use our digital payload or a component of it. We're in a strong position to be able to supply that and supply it at speed and good value because of the high volume that comes from the full satellite production. And so there are a number of opportunities out there that have potential for us to either team with others to be able to take on a certain program or capability and/or just supply folks subsystems to be able to support their efforts. So that remains a strong part of the business. And it's good business for us. And it really helps us keep the volumes up as well.

We will now have Ken Herbert from RBC Capital Markets.

Maybe, Mike, yes, I just wanted to maybe start on MDA MIDNIGHT. Can you talk about initial customer reception there and maybe how we think about sort of the launch of that and when we could expect some more announcements around customers and potential opportunity there?

Yes. It's been a key moment, this MDA MIDNIGHT announcement. The market in general, as defense continues to be a recognized and important factor of the activities in space, we sort of transitioned where things that were sort of historically talked about behind closed doors are increasingly being recognized as important more out in public. And that's our leadership really, which we've demonstrated here by announcing a product into the market to do space control is a key part of this transition or emergence of the true defense opportunity. So certainly, there's a number of companies. A recent market study has identified 13 countries that are talking about space control or space control guard satellites is another word that's often used for their country. And so there's definitely an emerging market there. For us to come out in public and say, we've spent some time. We've got a product. We're going to build this and fly it. And that we're out there seeking any discussions people want to have on 2 fronts. One would be defense customers in terms of their interest in acquiring this capability. And then the others would be in payload providers. So folks that are building sensors, electronic warfare capability and the like that could be placed on a space control spacecraft. So let it be known that we have a product here and that customers are going to want different variants of it. And so we're really open for discussions on what can we do. As a result of those announcements that we made in April, there's been great pick up in conversations. So the important thing from a pipeline building perspective was to lead commercial industry first, indicate clearly we have a product say that loud and proud to the world and then start engaging in conversations with both -- the 2 groups I mentioned, the defense customer and the potential payload partners. And both of those areas have been steady and have picked up since the announcement. So we're strongly encouraged. In terms of when that might convert into like additional order or things like that, we'll see. That will take some time because it's -- we're in government procurement here. In this conversation, we're trying to sell -- protect the spacecraft to militaries. And so certainly, governments are more interested in sovereign capability and taking care of themselves. They're interested in doing defense procurement faster around the world, but still government procurement. So we'll be working through this over the next year or 2 and see what we can sign up.

That's great. And if I could, just you've obviously called out now the new chips arriving under the Lightspeed line or the AURORA line. Can you just maybe level set us on where you stand with progress there on AURORA. But I guess, more importantly, any change or any update in terms of the assumptions around sort of where you are on the learning curve from a cost standpoint and the sort of the financial implications with this progress or major milestone on either Lightspeed or obviously the Aurora program more broadly?

Yes. I think it's really exciting that we've now got chips in production and deliveries are occurring. And we're able to really move forward with these digital satellite assemblies, which is excellent. I don't think that -- the other good -- sorry, the other good thing I just want to mention on that whole chip thing is that as teams have completed their designs and they're in production now of this first version of technology that we've had following our SatixFy acquisition. It frees up the team to also look at the road maps for like version 2 and version 3 with consistently enhanced levels of capability moving forward into the future. So this was another extremely important strategic aspect of that acquisition that we get our hands on this technology. We'll be able to control our road maps for both the chips and then therefore, the digital satellite itself. It's the overall satellite road map and be able to ensure that production can scale with the size of our pipeline. And so all those things are working out extremely well and we're excited about that. In terms of moving into production more on these digital satellites and what is that? What are we seeing about cost? We're not anywhere near the volumes yet. That would allow us to have that learning. So we've always said that's a 2027 thing is to say, okay, what are we seeing in terms of costs? Is there scaling benefits here? Can we see the opportunities for margin expansion? That will be at the end of '27. During '27, we'll build a couple of hundred satellites at least. And that will really give us the chance to say, okay, we can really see what we can do here.

Our next question will be coming from David McFadgen of ATB Cormark Securities.

I was wondering if you guys could give us an update on the ESCAPE program and when we might hear some news on that for you.

Yes. So ESCAPE is the acronym that's used for what we announced in November of 2025, which was a strategic agreement with the Department of National Defense and with Telesat. And so with that strategic agreement and doing this under the new Defense Investment Agency, it allows the teams to move much quicker than historical. But you still have to go through the same sort of largely the same governance process within government. And so -- but it allows us to work really closely with the Department of National Defense to work through the process. And so you start off with working through the various options that you have there to be able to do a program like that, get down to recommended options and then need to go and get those approved. So that you can then get really moving forward on the option that you know you're going to implement. So that work has progressed amazingly fast, amazingly well. It's been excellent through the fall and the winter. And yes, as we go through '26, we would expect to have those decisions made and approved and allow us to move on to the next phases of that, which would hopefully allow us to then, of course, to talk out loud about where we're going with that. But the program is solid. It's been budgeted as a $5 billion-plus size program historically and talked about that publicly. We're in there working away on it and get it through its approval processes to formally move into the next phase or the next step, which we would expect to happen in '26.

So do you expect that you might have some news, I'll say, within the coming months, that's what Telesat has said that there should be news on this program in the coming months. I was just wondering what the timing might be for you.

Yes. No, like we're all in the same mix. Yes, it just depends on how you speak. You can say in the coming months or in '26, that's the same thing to me. But yes, it is something that's coming up as we go through the next 2 quarters here for sure.

And then just one additional one, if I may. So if the government wants SATCOM and S and UHF, clearly have put up new satellites, new constellation. Who do you think would own this new constellation if it goes up?

I don't know. Like that's all part of the options and stuff. Historically, if you look at historically, governments have owned and operated their military satellites. But there is increasing opportunities commercially that governments are starting to leverage. And so it can -- both of these types of options are available. And obviously, on the Ka-band side, you got Lightspeed there as a strong service in Canada. You just asked about the other frequencies where satellites would have to be built. And historically, the Department of National Defense would own and operate that kind of a capability.

Our next question comes from Seth Seifman of JPMorgan.

I wanted to ask about the Geo business. And we've seen some nice growth there over the past 2 quarters. Would you think about where we are now as kind of a run rate level for the business? And then as I think about the CHORUS launch, how do we think about the potential for further growth in that business beyond this year and the potential margin implications of that?

I think that it's been nice to see that business kind of being steady or even having some small single-digit growth. It's been nice to see RADARSAT-2 sales just very, very slightly, but increasing. You've got a satellite that's been up there operational for 15 years and you've got increasing sales on it. That's awesome. And that's because CHORUS is coming. So customers know they can build a relationship with us and have continuity well into the future and expanded services well into the future as CHORUS gets launched and operational. So with the positivity that we've seen around CHORUS, I mentioned in my remarks that we've got 41 different conversations that are going on right now and 9 of them signed contracts. The remainder as letters of intent that as we approach launch and get past launch, will then convert into signed services contracts. And so that's all very, very exciting. And so with that and the expanded services that will come from higher capability satellites and the tipping and queuing relationship between a broad area surveillance satellite and a zoomed-in follower. That's going to be -- it's an exciting new like world-first commercial service in this area. And so people are excited about that. And we would expect to get -- we need to use a bunch of '27 to get this all up and operational and working. But then as we go through '27 and people get experience with these new capabilities within their signed contract frameworks. Then, we would expect to start to see growth as we go through the latter half of '27 and into '28. We should see some pick up there. It's our intent as well. We do a lot of work looking at our analytics capability, exploring the opportunities for artificial intelligence to be used in doing analytics going forward into the future in addition to our relationships with other sensor providers and other analytics companies. And so looking at partnerships globally in terms of how can we make the most out of this capability. So there's a number of opportunity vectors that we're going to have to be able to expand our leadership position there in Geointelligence.

Excellent. And then I guess, anything to note or anything you'd say about the M&A environment and the opportunities that are out there now?

Yes. It's a solid M&A opportunity environment. There are opportunities around the world. There's definitely books to be reviewed that are in play around the world. And we engage in that always to see what's what towards our goals. We've always had the same 2 M&A goals. One would be opportunities for smaller things typically that would add to vertical integration that would allow us to, just like we did with SatixFy, have more control over our road maps and/or influence over our ability to scale. And so we'll continue to always track those types of things. And then geographic opportunities in Europe or the United States that could allow us to become more present in those markets. And so we continue on that same pattern. And there are definitely things to talk about. So that's good.

Our next question comes from Greg MacDonald of Stifel.

Mike, I wanted to ask a follow-on question on MDA MIDNIGHT. And I'm thinking of it this way. You have a lot of expertise in robotics, obviously. Can you talk a little bit about the technical expertise in that product? And in terms of what I'm really trying to get at is how difficult or easy is it for a competitor to replicate this product? Where do you stand kind of globally when it comes to this product?

Yes. I think if you look at, I guess, space control type of a capability, there's a few things that are there. You need a solid platform that's got good maneuverability in addition to you want to pay attention to the kind of protection on that platform to make sure that it can be slightly protected, be a bit jam proof, that type of thing. And so we've got capability there. Then you need to have good sensor capabilities to be able to sense and monitor and track other assets in space, other activity in space. We have a strong sensor capability there. Then, you need the ability from a kind of electronic warfare perspective to actively or passively or actively deter another spacecraft. And then if necessary, get involved in proximity operations where you're getting very close to or engaging with another spacecraft. And so those categories of capability exist in the market. So people can definitely and people are obviously assembling guard spacecraft and space control spacecraft around the world. In terms of some of our unique capability, one of the things that's unique about us starts from our high-volume production of MDA AURORA. And so a number of folks will may say like I'm going to build a space control spacecraft and they'll kind of work away on it and build one. Our ability to grab an AURORA bus do some mods in terms of maneuverability and protection of that AURORA bus. But grabbing AURORA bus off a high-volume assembly line and then convert that into a space control spacecraft is unique around the world. Others don't have that high-volume base. And so for military capability, that creates a fair amount of interest in terms of our high-volume production satellites and getting into a phase now with MDA SKYMAKER of having standard robotics. So that aspect of it is attractive to folks in the market. Then in terms of RPO, rendezvous and proximity operations, the level of experience that we have over the decades of being involved in this is extremely high. And so we've got really good solutions there. And then, of course, in robotics itself, our Robotics & Space Operations team has literally within our team, millions of hours of experience developing the procedures for and supporting the grabbing of things in space. And so outside of NASA, we would be the most experienced company in the world in this area. And so that's another really strong capability in our favor. Another part of space control is also being able to provide the military with the ability to maneuver, which can involve refueling. And we've been working on refueling for decades. As far back as 2007, we flew our first demonstration of fluid transfer between 2 satellites back in 2007 on a mission with NASA. And so we have had tens of millions of dollars of funded research and development on refueling and refueling interfaces of prepared and unprepared satellites. And so there's some strong capabilities that we have there from high-volume production, rendezvous and proximity operations, refueling capabilities and robotics and maneuver capabilities, including the operation of those robotics and orbit. That will be able to provide us with a distinct advantage in this market.

Great. That bus integration was going to be my second question. The second question I have for you is, is this just for military customers? Or one might assume that that mega constellations might be looking to protect their satellites as well? Do you see an opportunity in the commercial side?

Yes. We haven't had that yet. Like you're right, it's a logical thing people could think about. It is a dual-use technology set, though as well. Like so if you have a vehicle that can sense other vehicles and approach them and interact with them and do things. There is a civilian market for on-orbit servicing that exists. There's also a thing we call ISAM, which is for in-orbit service assembly and manufacturing. So there's definitely a commercial value in this configuration. We're taking it to market as a product targeted at the military and MDA MIDNIGHT as a space control platform. But it is a dual-use technology set and it definitely has application. As commercial infrastructure activities continue to expand in orbit. It will have a -- this capability will have a commercial application as well.

And last, Mike, anything in the pipeline for MIDNIGHT yet?

I wouldn't say -- I would say not really. Like there's activities that we're driving. We always had, I think, at least one opportunity in there. But yes, so there's maybe at least 1 or 2. But I was thinking more is there like new stuff that suddenly come in since the announcement in April. And I would say I don't think we've added anything since April, but we've had 1 or 2 there previously.

We will now have Edison Yu from Deutsche Bank.

I wanted to ask you about a broader topic that has, I think, become very hot in the industry, space data centers. And I'm curious what do you think about kind of viability? And also, let's assume for a second that it is viable. What kind of role you would play in that ecosystem?

Yes. I think that we're definitely seeing an increased focus in just -- if we don't want to just say the word data center yet. But if we say space compute, so the ability to have increased levels of computing power in orbit to be able to do things, that's definitely an increasing theme in the market. For us, now that we're vertically integrated down to the chip level, we've got -- we're developing and including our own onboard processors on satellites. Everything is becoming more digital. There's more levels of processing. Our road maps are including increasing levels of processing at the edge, we would call it, so out there on the satellite. And that's going to be applicable to all areas of our business in terms of having increasing levels of processing for earth observation satellites in the future, for communication satellites and network traffic management in the future and for intelligent robotics that we were just talking about that can do servicing and other activities in orbit. And so this notion of more onboard compute and more intelligent AI-based onboard compute, for sure, that's going to increase. There are folks that engage with us. And we talk to people about having onboard computing that can support earth observation, communication and other networks in space. So that instead of just transmitting things to the ground like you do today and having ground-based processing environments that you could do more processing in orbit and then just send the answer down to the ground. And so that's an increasing trend and is causing increasing opportunities for us to look at delivering more powerful computers in orbit to support people. So those conversations are ongoing. When you say data centers, like that -- I imagine that's like there's pictures in the media and stuff like that, the football field size objects that are like big computing parks in orbit of some kind. I have not had enough experience to really get through the viability of all of that yet. So some of the rationale that people say it makes sense to have those may or may not really make sense. But -- and then some of the technical challenges, I don't think have been fully solved, even some of the largest proponents of space-based data centers say they think that, that's a possible idea, but they're not quite sure if that can all be done. So there's a lot to work out there going forward. If it ever catches, we would have the opportunity to contribute. Certainly, any space infrastructure like that, that's large and has to be assembled. Our conversations about on-orbit servicing and assembly and the application of robotics, that's going to be a strong play there in terms of our ability to work remotely in orbit and assemble and maintain any piece of large infrastructure, whatever it is, whether it's a data center or a power station or what have you. We would have opportunities to be engaged in that. And then in terms of the actual data centers themselves, those satellite structures and processing. I think we have to see how that goes to be able to answer that question in terms of like if people find architectures that are going to work, then what do those look like. We'll just hold judgment on that for the moment until it matures a bit more.

Understood. I appreciate the color. A follow-up question on just some of the activity you're seeing in Asia and APAC. Obviously, you have the -- you announced the Hanwha MOU. And I think this week, there was some news about Reliance on to build big LEO. Any sense on like maybe timing when we could get some awards coming out of Asia, just more generally speaking and kind of the magnitude of those awards?

Yes. I think certainly, over the next couple of years, that's possible. And some things could move quicker than others in those markets. In some cases, there are opportunities to just support some smaller scale things with key satellite technology to help some folks out. In other cases, as you've indicated, like you used some examples there, but there are others in terms of like larger constellation projects in the market. And so there, you get into the multibillion-dollar size opportunities that are larger constellations. Certainly, as you go around the world, the notion of sovereign capability is one of the single largest driving factors in the current market and the current pipeline evolutions over the last 6 months and certainly the next couple of years moving forward. The number of nations that want to have or want to consider potentially their own constellations for earth observation or communication and generally want to see to what extent can I just take care of myself in space and not rely on deals with other nations. That's such an increasing theme that it's definitely causing a number of new conversations around the world. And so they grow like every month or 2 right now, there's like new ones that are coming out. And so that's going to create solid opportunity in all parts of the world, but including the region that you're talking about over the next couple of years. And then it really just depends on, in a number of cases, government-linked procurement and how fast people can actually move to get it in place.

Our next question comes from Konark Gupta of Scotiabank.

Maybe just following up on the C3, the Canadarm3 program. I mean, Artemis has been relatively stable, I would say, regardless of what's been questioned about NASA's budget over the last couple of years. And obviously, every time the news on the NASA, the Artemis came out, I mean, obviously, investors have reacted to that. So I'm just curious like what are you hearing about Artemis going forward? I mean I understand your contract is with Canadian Space Agency, not with NASA directly. But at the end of the day, if Artemis has any implications from NASA budgets, that might feed into your Canadarm3 program as well potentially. So any thoughts into how sustainable you think the Canadarm3 program is regardless of the news that we hear every day and what's the opportunity remaining there?

Yes, there's a couple of things in what you're saying. So in the first one on the Artemis program, it remains an extremely high focus and high priority activity. I think I saw the NASA administrator, Jared, announced 2 new countries in the last quarter, joining the Artemis Accords. So new countries are still coming in to the Artemis Accords to be part of the group of people that want to work together to live and work on the moon. And so that focus continues to dramatically increase in the United States public focus to want to get to the moon and start living and working there. In a bit of a timing race against a China-led consortium is an important driver in all this. And so there's like a sort of no holding back focus on getting to the moon. And where you've seen NASA trim budgets in other places, it's been or take -- stop doing certain things. It's been to massively increase their focus on living and working on the moon. So I think it's very clear that, that's a dominant focus in this game. And so in addition to the notion that was stated by administrator Isaacman in his ignition event that occurred in March. The focus on speed, so the focus on don't polish a rock, don't make some perfect space objects here. I think his phrase was that a 70% solution delivered quickly is good enough at this phase. It's important to get up there and get working and get experience and has announced a rapid pace of multiple missions to get to and land on the moon and get going and try things out. So that's a tremendous opportunity that comes from that for other nations to contribute technologies and solutions to that and to be a part of that through the Artemis Accords. Then you come to Canadarm3. So then Canadian Space Agency, therefore, is going to want to have technologies and capabilities that are part of that return to the moon. Canada has always been a leader in space collaboration since the beginning as the third country in the space with satellites after the United States and the USSR. Canada is going to want to lean into that. And so to make sure that they're a part of it. So we see strong opportunity for Canadarm3 technology. And the commercial derivatives of that, which is the MDA SKYMAKER line that MDA Space takes to market commercially on the moon for the lunar surface. And then again, in other commercial applications for space stations and debris removal and assembly and manufacturing. A number of the things we talked about today in other orbits such as low earth orbit. So we're very positive about the opportunity here. The good thing for us is we're full steam ahead, keep the project team working on Canadarm3 and keep getting this work done. While we do a little bit of activity to reconfigure the final outcomes in terms of what are the exact applications that we're going to tailor this for as we complete the project. So it's a good moment. We just got to work through a couple of things.

That is very reassuring. And if I can follow-up on the backlog comments you made early on in the call, it seems like you're having some new discussions and you talked about some exciting opportunities in those discussions. Any concrete examples, even if it's early stage, what kind of exciting opportunities are these? Are these out of your core or within the core and they are more like ancillary or more sort of tangential to what you do? So any examples?

Yes. I think the bigger exciting things are going to be like new conversations around low earth orbit constellations, around the application of the MDA AURORA and high-volume manufacturing to these opportunities. I think that it's just great to see like the number of those that's increasing. People want to talk about is -- continues to grow, which is great. And so we will fully engage in all of those and in conversations. Well, certainly the ones that we think have a chance of success. We do a bit of screening in our pipeline, but it's positive right now. There's a lot of bidding activity. Bid activity is very intense. And we will continue to be fully engaged in that and make announcements of contracts when they come.

Please be advised that we are at the end of our conference time. And this is all the time we have for questions today. I would now like to turn the call back over to Mike for his closing remarks. Please go ahead.

Okay. Thanks a lot. Well, thanks for your time, everyone, this morning. It sounds like we had to cut it off there because of time. Maybe there were some questions that didn't get asked. Sorry about that. It's excellent, though that the amount of folks tracking us and wanting to talk to us and ask questions of us is increasing. We really appreciate that. And we'll always take more there. We look forward to updating you on our progress in our next earnings call in August, of course. We will keep at it here and come back with the latest news of the day in the next quarter. Thanks again.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.