Posted: Wednesday, October 23, 2002
MacDonald, Dettwiler and Associates Ltd. today released the Company's financial results for the third quarter of 2002.
Results From Operations
Third quarter 2002 revenues increased 19% to $147.9 million. This compares to revenues of $124.2 million for the third quarter of 2001. Information Systems contributed $82.6 million of these revenues compared to $81.4 million for the third quarter last year. Information Products revenues increased 53% to $65.3 million, compared with the third quarter a year ago.
Net earnings for the quarter increased 33% to $9.5 million ($0.25 per common share diluted), compared to net earnings for the 2001 third quarter of $7.2 million ($0.19 per common share diluted).
Revenues increased 17% for the nine months ended September 30, 2002 to $416.0 million. Information Systems contributed $235.5 million of these revenues compared to $227.9 million for the nine months ended September 30, 2001. Information Products had revenues of $180.5 million, compared to $128.5 million for the nine months ended September 30, 2001.
Diluted earnings per common share increased 30% to $0.70 for the nine months ended September 30, 2002 from $0.54 for the nine months ended September 30, 2001. Net earnings increased to $26.7 million for the nine month period from $19.9 million for 2001.
The income tax rate in the current quarter increased to 40.1% from the income tax rate experienced in the third quarter of 2001 of 39.4%. These income tax rates used for preparation of the financial statements include both current, or cash taxes, and future income taxes. The cash tax rate is significantly lower than the overall income tax rate, and has remained steady for the first nine months of 2002 at 34.6%.
Earnings before income taxes, amortization of goodwill and fixed assets, and interest expense ("EBITDA") increased 31% to $22.7 million for the quarter, from $17.3 million for the 2001 quarter. EBITDA as a percentage of revenues increased from 13.9% for the three months ended September 30, 2001 to 15.4% of revenues for the three months ended September 30, 2002. For the nine months ended September 30, 2002, EBITDA increased 32% to $64.8 million, from $49.2 million for the prior period. EBITDA as a percentage of revenues increased from 13.8% for the nine months ended September 30, 2001 to 15.6% of revenues for the nine months ended September 30, 2002.
As at September 30, 2002 the Company had backlog of $480 million, including option backlog of approximately $116 million.
Cash Flow Activities
As at September 30, 2002, total assets employed were $519 million.
After tax operating cash flows for the third quarter, net of capital expenditures, increased 22% to $10.4 million from $8.5 million in the third quarter of 2001. Excess cash was used to reduce the syndicated credit facility by $10.7 million to $109.7 million, and to finance capital expenditures of $5.8 million.
Liquidity ratios continue to be significantly better than that required by the Company's banks. MDA's total net debt to EBITDA ratio was 1.2:1, compared to a ceiling of 3.5:1. Further, our EBITDA to interest ratio was 15.5:1, compared to a covenant of 3.5:1.
Unused bank facilities amount to $147 million, allowing the Company considerable flexibility to pursue growth plans.
MDA provides essential information from anywhere in the world for decision making in the workplace, through two principal groups - Information Systems, and Information Products.
The Information Systems Group provides mission critical information systems that help organizations achieve their prime operational objectives. During the third quarter of 2002:
MDA was awarded $9 million in additional funding from the Canadian Space Agency for continued support of the Mobile Servicing System, Canada's contribution to the International Space Station. The additional funding provides for ongoing engineering support by MDA to keep the Mobile Base Station and the Canadarm2 operational on-orbit.
MDA signed a Mars Mission Definition Contract with the Canadian Space Agency to jointly determine Canada's contribution to European and American missions to Mars. As part of the Canadian contribution, the Company could provide much smaller, lighter robotic technology that will provide considerable spin-off benefits to robotic applications on Earth.
MDA has signed an Agreement in Principle with RapidEye AG of Munich, Germany to supply and launch a constellation of Earth observation satellites, and provide the ground-related infrastructure. RapidEye will offer vegetation information to insurance and food companies, farmers and government. Financing approvals are proceeding well.
The RADARSAT-2 program continues to unfold. Manufacturing, assembly and testing activity of all major subsystems is now underway. Concurrently, we're planning the integration and test work for the system that will be carried out at the Canadian Space Agency's testing facility in Ottawa.
MDA Information Systems was awarded two Earth observation systems contracts by the Canadian government this quarter. The first is to build a planning and scheduling system for satellite data acquisition and reception, including new capability to support RADARSAT-2. The second contract is to build the system that controls the government's Data Acquisition Facilities in Saskatchewan and Quebec.
As part of the National Land Information Service in the UK, MDA Information Systems has commenced work on a $2.4 million contract to help the Local Authority in Slough, England modernize the processing of property information requests. MDA will provide a turnkey system, as well as manage the process of converting paper records to a digital database for the new system. This contract represents a breakthrough in that the unique contracting model can be used as a template with other Local Authorities, and other similar bids are already underway.
MDA Information Systems was recently awarded a $4 million contract to develop and deliver a Ground Processing Facility for Defence Research and Development-Ottawa. The facility is part of an on-going research and development program in airborne surveillance radar.
And the Company was awarded Phase 1 of a multi-phase contract by the Canadian Department of National Defence to upgrade the Navy Combat Operations Trainer (NCOT) to prepare sailors for the new Victoria Class submarines. NCOT Phase 1 is valued at $3 million (CDN). This follows the awarding of a $1 million contract to MDA to upgrade NCOT for a new version of Command software in Canada's Halifax class ships earlier this quarter.
In general, activity in Information Systems has increased significantly over the past six weeks, with several bids and contract negotiations underway.
The Information Products Group aims to provide everything there is to know about a parcel of land. During the third quarter of 2002, our Geographic Information Products Group booked a steady flow of business:
The Danish Meteorological Institute signed a $1.4 million contract with MDA for the processing and delivery of RADARSAT-1 and ENVISAT data. By pairing the data from both satellites, up-to-date ice charts are generated for ships navigating the ice-infested Greenland Sea.
Local governments in the U.S. Pacific Northwest agreed to buy over $2 million of MDA's land information products this quarter. It will be used for a number of purposes, from emergency preparedness to regional planning. Also, the U.S. Department of Agriculture awarded MDA a $500,000 contract to monitor crop growth in Minnesota. This information will be used to ensure compliance by farmers with federal regulations, and to support the USDA's long range planning efforts.
MDA was awarded over $3 million in contracts to collect forest inventory information for use by a number of British Columbia forest companies to support Annual Allowable Cut calculations. It will become part of the "Green Certification" of B.C. wood products required for offshore sales.
Finally, the big win in Geographic Information Products was over $9.3 million in contracts to produce geospatial information products from satellite imagery for defense and defense-related agencies in the United States and Europe.
Our Legal and Assets Information Products continued to sell very well.
In British Columbia, the provincial government recently decided to initiate mandatory electronic filing of Corporate Registrations and Annual Reports by B.C. companies. As a result, electronic Corporate Registry filings through BC OnLine have reached a run rate of $4 million, from a standing start at the beginning of the year.
In the United States, federal mortgage lender 'Freddie Mac' signed a new 3-year distribution agreement with MDA's DataQuick to continue selling its Automated Valuation Model called "Home Value Explorer". DataQuick's extensive national coverage provides a unique platform for distribution of this collateral valuation tool to financial institutions and real estate companies.
LandMDA continued at a steady pace in Florida, rising to an average of 1,750 transactions per week, up from 1,000 per week last quarter. Six more California counties have just been rolled out, joining the four counties that went online earlier this year. Another county is in the process of coming online. With eleven California counties representing 75% of the population available to LandMDA customers, we now have critical mass and the full selling process can begin in California.
In the UK, the National Land Information Service project continues to show steady progress. The NLIS Hub is now processing over 2,800 search sets on average per week, up from 2,000 per week at last report. Progress on Differential Pricing is ongoing, as more Local Authorities sign on to the program. So far, 74 Local Authorities have agreed to the Differential Pricing package.
Our NLIS Channel, TransAction Online, continues to grow in transactions as a result of increasing adoption by the legal community. Legal Case Management software firms such as Mountain Software now provide their customers with direct access to TransAction Online with a single click of their computer mouse.
MDA Third Quarter 2002 CONSOLIDATED FINANCIAL STATEMENTS available at: http://www.mda.ca/corporate/mda_q3_2002.pdf
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