Q3 2022 MDA Ltd Earnings Call
[music].
Good morning, ladies and gentlemen, and welcome to M. D. H Q2 week 2022 conference call and webcast. This call is being recorded on November 11, 2022 at 830, a M eastern time.
Following the presentation, we will conduct a question and answer session instructions will be provided at that time for you to queue up for questions. If anyone has difficulties hearing the conference. Please press star followed by zero for operator assistance at any time and I would like to turn the call over to shrink Zahawi senior director of Investor Relations at <unk>.
Please go ahead.
Thank you operator, good morning, and welcome to M. D. As Q3 2022 earnings call, Mike really our CEO and beat up the money, our CFO will lead todays call and share some prepared remarks before taking your questions.
Before we begin I would 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 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 <unk> financial measures.
Although we believe these measures provide useful supplemental information about our financial performance.
Sure. It did not have any standardized meaning under ifr and our approach in calculating these measures may differ from that of other issuers and therefore may not be directly comparable.
We see the Companys quarterly report and other pipe public.
Public filings for more information about these measures, including reconciliations to the nearest ISR is measured.
And with that it's my pleasure to turn the call over to Mike.
Thank you Sharon.
Good morning, and thank you to those joining us today to discuss our third quarter 2022 financial results.
Before I get into the business results I'd, just like to take a minute to recognize it today as remembrance day.
Then to remember that we live freely and have the opportunity to be able to discuss our business activity because of the sacrifices of those who have served and those who are serving to protect our freedoms.
Sure and MBA. This was another quarter of strong performance and execution by our team and I'd like to thank our employees for their dedication and commitment to delivering for our customers as we approach the end of a meaningful growth year at MDA.
We remain laser focused on executing our growth strategies across our end markets and we were pleased to announce a number of new wins this quarter, including contract awards to support your workspace systems and Airbus One web satellites by providing ku bands gerbil antennas for U S. Government programs. We also secured our second commercial sale to axiom space of robotics.
<unk> derived from Canada, and three the new generation of robotic technologies, we're developing for Nasa's Artemis program.
These awards demonstrate the momentum in our business and our ability to gain traction with new customers and in new markets by leveraging our innovative technologies.
Our backlog at quarter end stood at $1 4 billion a healthy level for the company.
We continue to see a significant growth pipeline across our businesses.
The majority of our programs are ramping up in line with our expectations and the teams execution has been strong and steady.
Today, we are reaffirming our full year 2022 revenue guidance of $630 million to $650 million and raising our adjusted EBIT guidance to $130 million to $135 million.
The $120 million to $130 million previously.
We see revenues growing by approximately 30% to 35% year over year in 2022.
And expect adjusted EBIT margins to remain at the previously communicated range of 19% to 20%.
Both very healthy metrics for MDA.
We're also narrowing our capital expenditure range to a 180 $295 million from the previous $180 million to $220 million range as we continue to invest in initiatives to drive to drive future growth.
From a strategy perspective, we remain focused on executing on the priorities we've outlined for our three business areas to capitalize on the growth opportunities, we see in our end markets.
And satellite systems, we're investing in new technologies and capabilities to accelerate our transition from analog to digital payloads and building up our high volume satellite manufacturing capability to strengthen our position as more lower orbit or Leo constellations opportunities coming to market.
Our Global Star Award, where MTA was selected as a prime contractor for 17, Leo satellites to support satellite direct to handset functionality.
And work to support the U S space Development Agency Leo constellations showcase our strategy in action.
And robotics is based operations, we are leveraging our global leadership in space Robotics innovation and long history of success with Canada to win follow on space Agency work and engage with a full slate of new and exciting commercial opportunities as they emerge to provide both proven technology solutions and on orbit operational services.
As I mentioned, our recent awards from axiom space, which is one of a number of commercial players constructing a commercial space station is an important win as we start to commercialize the kid on three robotic technology.
And in our intelligence business, we continued to see robust demand for our Earth observation data analytics and are advancing work on Mda's next generation Earth observation constellation chorus, which we which will provide even greater imaging capabilities and actionable insights for our customers.
I will now quickly step through the financial highlights for the quarter give you a view on the industry and update on MTA three business areas and then pass it to veto for a deep dive on the financials.
For the third quarter MBA delivered revenues of $172 million.
About 55% year over year.
Our backlog at quarter end stood at $1 4 billion up 70% year over year, driven by sizable awards in the first half of the year.
Adjusted EBITDA was $38 8 million, representing a solid EBIT margin of 22, 6%.
We ended the quarter with a healthy balance sheet, which gives us the financial flexibility to run the business and invest in our growth initiatives.
This was another strong quarter for MDA and directly attributable to the dedication of our team, which has done a tremendous job of supporting our customers and capitalizing on new business opportunities.
Next I'd like to update you on developments within the broader space market and the opportunity we see for MDA as we look ahead.
Despite the macro challenges we are seeing globally activity in the space sector remained robust in Q3.
Taking our customary tour around the world a few items worth highlighting include.
Increased adoption of satellite constellations and mobile communications during the quarter, we saw a number of mobile network operators and cell phone manufacturers announced partnerships with satellite operators and a push to enable messaging and emergency Sos functionality and geographic area is not typically reachable by traditional cell signals.
September Globalstar globalstar disclose it it will be utilizing this network, including the recently announced enhancement to get 17 additional Leo satellites to the MTA is working on to support new satellite enabled services for certain of apples products.
We also saw similar announcements from T mobile and Starlink, which are working to add coverage for T mobile customers across the U S.
And in October AT&T confirmed that it is working with Asps space mobile that utilized a ladder satellite network to provide coverage in hard to reach areas of the U S.
The increased interest you satellite to sell offerings is an exciting development for the industry and has the potential to enhance connectivity for customers in remote areas around the globe.
Across the pond, we saw the UK space agency take steps with its space strategy, including its commitments to deliver capabilities to track objects in space and reduce debris.
This fall the agency awarded contracts to two UK based companies Astro scale and clear space to design emissions to remove existing pieces of space debris from lower orbit.
The two selected companies are working with a consortium of industry partners, including MDA, UK, which is supporting both missions.
And so to the border we saw the Federal Communications Commission adopt a new rule that will shorten the time for satellite operators to de orbit low Earth orbit satellites from 25 years to five years.
The rule is intended to address growing debris and Leo and replaces a longstanding guideline that called for de orbiting satellites up to 25 years. After the end of their mission.
Developments highlight work underway to safeguard space activities.
It make them more sustainable as our reliance on speech technology increases.
In terms of space infrastructure spacecraft launch activity continue to unfold at a record pace in Q3 of this year a total of 808 spacecraft launched globally more than triple the number we saw in Q3 2021 with 91% of those spacecraft operated by commercial players and the majority comprised of.
<unk> satellites.
From January to September of this year, a total of 2000 and spacecraft was launched representing a 30% increase over the same period in 2021 and surpassing the total number of spacecraft washed in the full year 2021.
The higher activity levels are driven primarily by growth in the commercial loan with orbit or Leo constellation market.
On the space exploration of Brian Saudi Arabia, with the latest country to sign on to Nasa's Artemis reports signaling their national commitment to safe long term, an ethical space exploration.
The latest entry brings the group size to 21 nations.
The accord, which was unveiled in October 2022, Allied nations on a common set of principles for space exploration has doubled in size over the last two years with interest from many non traditional space very nations, which are now building their own national space programs.
All of this activity bodes well for MTA, and our future opportunity funnel, which we would characterize as very healthy.
Yeah.
Now I'll spend a few minutes and turn to our three business areas.
Satellite systems, our opportunity funnel remains strong and we continue to see good activity levels. Our teams are advancing multiple requests for communication satellite solutions for a growing number of constellation projects, particularly in the lowest orbit segment of the market.
This quarter, we announced two awards from U S based customers to support space security and communication satellites in line with our strategy of growing our presence south of the border.
Our contract with York Space Systems will see MDA design and build <unk> antennas for satellites to be produced by York.
The Airbus one web satellites contract involves the design and build a <unk> antennas, which will be integrated into the portfolio of Aero commercial small satellites manufactured by Airbus One web.
The antennas will be built assembled and tested at MDA state of the art high volume satellite production facility in Montreal.
The team also continues to make good progress ramping up on the Globalstar program and advancing the design work, we announced a $415 million award from Globalstar in Q1 of 2022, where MDA was selected as the prime contractor to enhance global stars Leo constellation.
We view this as an important award for MDA, reflecting our strategy to expand our offerings move up the value chain and provide.
Advanced payload capabilities and systems engineering, as well as high volume manufacturing.
Moving to our Geo intelligence business customer demand from our Earth observation offerings remains robust and we are seeing an increased recognition of the role that commercial Earth observation satellites can play to provide near real time data and analytics to governments and private enterprise.
We continue to advance work on our next generation Earth observation constellation chorus, which will include C band and <unk> band SAR satellites and are actively engaged in preliminary discussions with customers interested in acquiring core data and analytics.
Work on the Canadian surface Combatant program, where CSC one of our long term government programs continues to progress in line with the cadence we saw in the previous quarter.
The next significant milestone as the preliminary design review for the vessels, which begins to.
Finalize the overall configuration of the ship. This is expected to be completed by the end of the year.
Our teams are working closely with the customer to advanced work ahead of the preliminary design reviews MBA is responsible for the design and integration of the electronic warfare system for the ships, which compromises a suite of sensors, including laser warning and electronic system technologies used to detect aerial threat to help protect dominion women of the Royal Canadian Navy.
Moving to our robotics in space operations business, we are seeing good traction and activity levels on both the government and commercial fronts.
On the government side, we continue to ramp up work on phase B of the Canadarm III contract, which MDA was awarded in Q1 that will see us completing the preliminary design, Canada nursery robotic systems to be used aboard the NASA led lunar gateway.
Following some subcontractor onboarding delays in Q2 program activity is ramping up in line with our expectations and the team is making good progress in bringing on subcontractors and working towards the system design review milestone expected in the first half of 2023.
During the quarter, we also announced our second commercial sale of space Robotics technology derived from Canada arm three to axiom space MDA is delivering 62 payload interface pairs for axiom spaces axiom station.
The interfaces will provide mechanical electrical and data connections for payloads that are externally mounted on axiom station to perform activities, including scientific research Earth observation communications and a host of other applications.
The axiom station, which is now under construction will initially be attached to the international space station and subsequently separate from the ISS.
<unk> partners decommission and at the end of the decade.
This is another exciting development for MDA that reinforces and emerging shift in the commercial landscape for robotics, that's more nongovernment entities look to establish a foothold in hub and lowest orbit for a variety of activities, including aerospace manufacturing human space flight missions to Leo and deep space exploration.
Shifting to operations to support the anticipated revenue ramp up we added more than 700, new hires in the first nine months of 2022.
This is in addition to the 670 people hired in 2021.
We're also keeping a close eye on our supply chain for potential business disruptions and so far these have been manageable.
We continue to deploy a number of proactive measures that have served US well. These include designing around designing around known shortages finding alternatives that are more readily available ordering materials as early as possible and building up inventory for some components for.
For new programs, we are ensuring that our supply chain organization has full visibility early in the process to ensure orders are placed promptly and monitor it constantly to mitigate delay risks.
To recap we are pleased with our performance this quarter with momentum building across our operations. Our team is energized and we remain laser focused on our priorities strong focus on execution converting opportunities in our funnel and expanding our leadership in core markets, while maintaining strong profitability and a healthy balance sheet to help.
This fund our growth initiatives.
With that I'll hand, it over to Vito to walk us through the detailed financials.
Thank you, Mike and good morning, everyone.
For my update I'll walk through our Q3 2022 financial results and provide.
More color on our public company.
Overall Q3 was a strong quarter for NDA and we're pleased with how the team has executed in the quarter. We saw strong revenue growth with revenues up 55% year over year slightly ahead of our guidance for the quarter.
Adjusted EBITDA margin of 22, 6% exceeded our 19% to 20% guidance range and backlog at the end of the quarter stood at a healthy one 4 billion.
Total revenues for the third quarter were $172 million. This represents a $61 million or 55% increase over the same period last year the.
The year over year increase was driven by higher revenues across our businesses with strong contributions from our satellite systems and robotics in space operations businesses.
Business area revenues in our Geo intelligence business up $45 5 million represent an increase of $4 8 million or 12% compared to Q3 2022, driven by higher volumes in our <unk> business and modest ramp up on the CSC program.
In robotics in space operations, we saw healthy year over year growth with revenues of $54 6 million in the latest quarter, representing 21, 5 billion or 65% increase versus Q3 of last year.
Growth is largely attributable to higher volume of work performed on the Canadarm III program.
Revenues in satellite systems of 71 9 million in the third quarter were $34 4 million or 92% higher compared to the same quarter in 2021.
And the strong showing here was driven by higher work volume as new programs ramp dump, including the Globalstar program, which was awarded in Q1 of 2022.
Moving onto gross profit and as a reminder, gross profit represents our revenue lesser cost of revenue, which includes material labor allocated overhead shred credits and depreciation.
For Q3 gross profit was $56 4 million, representing a $17 million or <unk>, 43% increase over the same period last year.
Gross margin in Q3, 2022 was 32, 8% and that compares to 35, 4% for the same period in 2021 and.
And Thats a result of <unk>.
MDA is evolving program mix and in line with our expectations.
As discussed in previous quarters, we do anticipate the mix of the programs in 2022 to cause a slight drop in gross margins as we make our way throughout the year.
Operating expenses Q3 operating expenses of $38 $6 million were in line with last year's metric of $38 8 million, reflecting good cost control and a steady pace of R&D investment as we advance our development work of course, our next generation Earth observation constellation and other proprietary technology.
<unk>.
Adjusted EBIT in the latest quarter was $38 8 million compared to $31 8 million in Q3, 2021, reflecting higher work volumes across the business.
Adjusted EBIT margin was 22, 6% in Q3 2022, compared with 28, 6% in the same period last year.
The decline in adjusted EBIT margin is primarily attributable to the elimination of government grant income related to the Canada emergency wage subsidy income in 2022.
In Q3 of 2022, there was no <unk> income recognized compared to $9 1 million, which was recognized over the same period last year.
If you exclude the impact of Suez income contribution adjusted EBITDA in Q3 of 2020 to.
$38 8 million compared to 22 seven in Q3 of 2021.
Adjusted EBITDA margin, excluding <unk> was 22, 6% in Q3 2020 compared to 24% in Q3, 2021, again, reflecting strong execution and operating performance.
We ended the quarter with $1 4 billion in backlog, representing an increase of 70% year over year and 63% on a year to date basis. The growth in backlog was driven by the addition of a number of sizable awards in the first half of this year, including Canada three in Globalstar.
Moving onto cap Capex, we remain focused on making the right investments in the business to support our strategic growth initiatives. In Q3 of 2022, we spent $49 million on gross capital expenditures up up from $30 3 million last year.
As we ramp up our development of course and other growth initiatives.
Growth Capex was $35 million in the latest quarter up from $26 million in Q3 of 2021.
Consistent with our plan, we expect to see year over year growth in Capex spend as we advance course and invest in initiatives to support our growing business, including expanding and modernizing our physical infrastructure.
Cash from operations during the quarter was a generation of $7 million compared to cash usage of.
Points are a $5 billion in Q3 of 2021 the year over year increase was driven by higher net income and the timing of working capital requirements in Q3 2022 versus the prior quarter.
Free cash flow was negative 34 million in the latest quarter.
Free cash flow after adjusting out growth Capex investments was $1 million in Q3 2022.
And finally cash from financing activities was a generation of $23 5 billion compared to a usage of $2 2 million in Q3 2021.
Moving onto our balance sheet, we ended the quarter with a strong financial position with net debt of $194 6 million available liquidity of over $383 million and net debt to trailing 12 months adjusted EBIT ratio of one <unk>.
In summary, the team executed well this quarter and we're seeing positive inflection in our topline as we execute on our backlog.
Turning to outlook as Mike noted, we are updating our 2022 outlook to reflect greater visibility and solid operating performance.
We are reaffirming our 2022 revenue target of $6 $30 million to $650 million, which represents year over year growth of approximately 30% to 35%.
We're raising our 2022, adjusted EBIT target to $130 million to $135 million.
From $120 million to $130 million previously to reflect continued strong execution and operating performance.
Adjusted EBIT forecast excludes the $16 8 million amount reported in Q1 of 2022 related to the resolution of historical ITC claims.
And we're also narrowing our 2022 capital expenditure range to a $180 million to $195 million from the prior guidance of $180 billion to $220 billion.
Capex is primarily comprised of growth investments to support of course, and the previously outlined growth initiatives across our business areas.
With a large number of programs now in backlog.
Book of business is strong and we remain focused on executing well on our customer commitments and are leveraging our capabilities and technology to grow profitably in core and emerging markets in line with our long term plan.
Mike with that I'll turn it back to you.
Thank you.
With that we will open it up for questions.
Sir.
Ladies and gentlemen, we will now begin question and answer session for analysts if you would like to ask a question. Please press star followed by one on your Touchtone phone you will then hear eight Sweden prompt acknowledging your request and if you would like to withdraw from the question queue. Please press star followed by two.
Thank you speaker phone, we do ask that you. Please lift the handset before pressing any keys if youre an analyst. Please go ahead with westar window for your questions.
And first we'll be Doug Taylor of Canaccord Genuity. Please go ahead.
Yeah. Thank you good morning.
Doug.
Telesat provided an update that they now expect to reach some sort of conclusion with respect to financing and supply chain by the end of this year.
So I thought I would get you to refresh your own views on the prospects for that program and then as a hypothetical assuming that they're updated timetable is.
Is correct could you maybe speak to what 2023 would look like for lightspeed for MDA assuming that they.
They do conclude the financing by the end of the year.
Okay.
As you know we've taken a lightspeed out of our sort of forecast moving forward.
Continue to work it as an opportunity in our pipeline.
Certainly in our observation of the community.
Lightspeed continues to advance its efforts to arrange financing and get its contracts in place as they indicated in their earnings call as you said.
We will continue to watch that.
I would say that we've been here before so we continue to watch their current status and we will respond as that program continues to advance.
But it is like many other opportunities in our pipeline that we continue to bid on and wait for contract award to be able to talk about it to.
That makes sense.
Yes, it does make sense.
The implications.
For a pretty significant.
Step down in margins in Q4 from the Q3 level just wanted to ask is that simply related to the mix of programs that you're expecting to roll through your P&L in Q4 or is there some inflationary pressure or otherwise that youre seeing thats being factored in there.
Hi, Doug its Vito.
No nothing systemic I mean, you got to remember Q4, we do have some of the seasonal shutdowns. So in addition to the program mix that youre referencing where some of those lower margin programs have a higher proportion of our overall volume in Q4, you're absolutely right with that second factor I would just say there is typically Q4, we have lower absorption rates are lower.
Overhead absorption rate and that impacts the margin as well.
But overall feeling very very positive about our operating performance.
Alright, one last one for me.
Vito maybe refresh us on where you stand now with the spending on each of our key growth Capex initiatives chorus, buildout in Montreal and other items that would be helpful. Thank you.
Yes, you would have seen that we've we've updated our guidance there to narrow into the full year here for 180 to 195 substantially all of that is what we call growth Capex one of the.
Wonderful things in this business is as we make our way through these growth capex initiatives that we truly believe half.
Long term value creation opportunities for our organization that maintenance Capex is relatively modest.
As you look at our full year Capex requirements those are largely growth capex.
And the biggest component up.
Our 2022.
As in fact.
As effect of course.
So no no substantive changes there it's our growth Capex is focused primarily on course.
Supporting the satellite initiatives and Montreal with substantial growth in Rss with robotics, So no changes overall.
In the strategic initiatives that those growth capex expenditures are supporting.
So is the change there is that simply capex getting pushed into a different period or is there some savings that you've found.
Relative.
Just just normal timing related items no substantive changes overall in program anticipated spend okay I'll pass the line. Thank you.
Thank you.
Thank you next question will be from Donald multiples at BMO capital markets. Please go ahead Sir.
Hi, good morning.
Mike We're obviously in a tougher financing climate than was the case three or six months ago. Just curious as you look yes the opportunities in your funnel.
To what extent is that or is that not having an impact.
Yeah.
Careful opportunities involve customers had asked.
Financing in place or is there some kind of lingering uncertainty I guess, notwithstanding all telesat discussion.
Yes look I think the pipeline for us is a very very solid and stable.
Have a good mix of government customers commercial customers that have no financing issues, they've got all the money that they would need and then I've got a couple of commercial customers out there that are.
Raising their financing like the telesat conversation.
So we definitely see a mix across the pipeline, but we're very encouraged by what we're seeing across the board.
And have a very robust pipeline as the way we describe it.
Okay great.
Yes, I just want to get your perspective, I mean, obviously.
Interesting development with <unk>.
Globalstar and Apple.
Just curious in terms of your thoughts as to whether inevitably overtime.
We might start to see.
<unk> mobile devices using satellite connectivity for non emergency applications or whether there might be some costs or technical hurdles that the industry will have to overcome before we get to that point in the coming years.
Yes, I think that.
Like any other advances that we've seen in communication technology over the years.
The middle market start small and working on technology solutions and tried to advance them.
If you look at the announcements from the different players that are <unk>.
Spoken up about that over the last quarter.
We see people.
We're starting to talk about emergency services in a number of the different groups.
And then some folks looking at trying to push our technology to do more so I think it will just emerge over time as people gain confidence each step of the way.
Okay, Great and one last one for Vito.
Obviously noncash working capital was a bit of a drag on cash flow last couple of quarters, how do we think about that dynamic in the near term.
Yes, I know.
We're really pleased with how our working capital.
Over the course of the last several quarters has developed I think what youre seeing in Q3, obviously reflects that globalstar receivable that's extended into Q4, and we expect that to come back into line with.
They continue to pursue there.
Nancy options, which is progressing well from what we understand.
Okay, Great best of luck.
Thanks.
Thank you. Thank you next question will be from Chris Danley luck at Morgan Stanley . Please go ahead.
Hey, Thanks, Vito Thanks for the color on the global cash.
Taking a broader cash question EBITDA, that's up in the quarter operating cash is still pretty light can you provide more color on how we should how we should think about.
Revenue recognition and operating cash generation and what are the milestones for cash we get all follow and then also how do we think about having cash on the balance sheet versus available liquidity.
Yes. Thank you Christine well first of all maybe I'll take the second one first.
We have ample liquidity and.
With the great efforts of our Treasury group, we obviously.
Minimize cash on balance sheet.
We can turnaround on 24 hours noticing and graft further.
Cash from our revolver requirements, so thats really a interest and amortization mechanics, thats, what youre seeing there and.
Accrues to the bottom line. So no issue there with respect to quote unquote cash on the balance sheet versus available liquidity.
That's all just active treasury cash management.
In respect to your first point.
Cash operations.
Our tracking very much aligned with our expectations and we will continue to do the one item I have already referenced of course, the globalstar financing that we have agreed to revise that vendor financing terms, there and to that end I should make a note.
Part of that.
We agreed to a couple of installment payments here in the early part of the quarter and the first one.
Which has been made by globalstar. So we appreciate that.
No no substantive changes to our guidance there Kristine I think when we look at your operating cash flow lease we've guided to sort of a 60% conversion.
And the timing differences that you see working away from adjusted EBITDA to cash from operations, primarily working capital is one of those and on a year over year basis, We don't anticipate working capital requirements as we increase the revenue in this business and the other one is the ITC so the ITC.
It can bump around with some volatility from quarter over quarter, and Thats, obviously substantive lease a noncash item, but overall, we guided to a 60% conversion there on the operating cash flow and we'll stick with that for the while for the next little bit and I expect that number to grow as our business grows.
Yes.
Thanks.
With the capital markets kind of a little bit more volatile.
Would you guys.
Going forward to have a higher cash balance.
And the balance sheet.
Well like I said I think it's really really important to you recall that the.
Liquidity is available to us on 24 hours notice so when I think about the available liquidity to us which is almost $400 million right now.
We are very comfortable with that leverage positive leverage at the end of the quarter one three.
As we make our way through 2023, and we will provide guidance in 2023 with our Q4 call. Both on the revenue on the capital side.
We're incredibly comfortable with.
The available liquidity that we currently have in the business.
Not only at this point in time, but as we make our way through 2023 as well.
Thank you Peter and maybe if I could ask another one Mike.
Highlighted in your prepared remarks, the environment for space.
Is pretty robust you do have a few players.
Having a lot more activity in the U S.
So the government international and also with the new commercial players.
So with this backdrop.
Should we expect book to bill to exceed one times.
In the fourth quarter and then also.
Our backlog above one book to Bill above one times, all of which we should expect for 2023.
Sorry, I missed your question about the fourth quarter I apologize could you repeat that.
Our book to Bill for <unk> and for 2023, well they both exceed one times.
Okay.
We look at backlog and we think about that we definitely think about it on an annual basis. So we.
We're chasing some bigger fish and when we catch them.
We build a backlog, but with a bigger catch so we will look at that.
Monthly or quarterly basis in our thoughts.
CNS right now with the $1 $4 billion backlog on a on a $600 million years.
And then two time certainly as we that's how we would view.
Our 2022 year.
As we go forward into 'twenty three.
Vito said when we do our Q4 results, we'll talk about the year and sort of what are what our thinking is at the time, but with an active pipeline I would expect us to keep.
Keep filling up that backlog hopper moving forward.
Great. Thank you guys.
Okay.
Thank you.
Once again, ladies and gentlemen, as a reminder, if you would like to ask a question. Please press star followed by one on your Touchtone phone.
And your next question will be from Mark Neville at Scotia Bank. Please go ahead.
Hey, good morning.
Just unclear does all that globalstar cash come back in Q4 tied in with.
Got it.
Sorry, that's the expectations that in December we will settle up.
Okay, I guess just on the liquidity discussion.
400 million or $383 90, that's fully available because they're any tests are sort of.
Anything that's sort of at some point.
Perhaps change what's available.
No not at all I mean, obviously, we've got covenants.
But we're well within the boundaries of those covenants.
And that number that I described reflects all of those considerations.
Okay.
Yes, no. Thanks.
On the.
Just on the CFC contracts.
Not fully clear how quickly it's ramping but if there was delays on the final design I mean would there as there are risks to MDA, where work would you stop or significantly slow.
I don't think so.
It's a long steady road as these projects start up I think that what youre seeing in CSC is throughout the year of 2022.
At the top level at the ship level, there's been a lot more studies and considerations going on as they've.
<unk> been working on.
The resolution of what they call the requirements reconciliation space and starting to then gradually get into the preliminary design. So we just gradually ramp up with it as it gradually ramps up its just taking longer.
As at the ship level Theyre doing more considered reviews. So.
Our our plans and expectations.
We constantly adjust those based on the ramp up that we're seeing in the project and we'll reflect that in any.
Guidance, we're thinking that we have about the future.
Okay.
I guess final question I don't want to spend too much time on telesat.
But if.
If the financing or they were to obtain financing would there be any risk that you would need to re bid anything or.
Will there be a material changes to the contract.
Hi.
Yes.
I think that is.
We go like we always I mean, when you go through these processes each each member of the supply chain is keeping there.
Quotes and estimates into telesat up to date as we go through the process. So.
If and when Telesat got to the point, where all of their their financing was arranged and it was time to turn on all of those all of those contracts.
Full steam then.
That would be based on all the the updated bids and quotes that we've all submitted.
Okay.
Got it thanks for the time.
Okay. Thanks.
Thank you and at this time, we have no further questions registered. Please proceed with your closing remarks.
Okay, well. Thank you very much for your time this morning.
As a team we look forward to updating you on our progress during our next earnings call.
Have a great day stay safe. Thank you.
Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines have a good weekend.
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