Stock Talk 207



  1. Intro

MDA symbol MDA on the TSX is a leading provider of advanced technology and services to the rapidly expanding global space industry. The company primarily serves the US and Canadian Governments. The company has three segments; Geointellegence, Robotics & Space Operations, and Sattelite Systems.

The stock price has had an up and down year, but is still up roughly 5% year to date at a $6.65 and a market cap of $793 million.

2. Income Statement

The Company released its Q4 2023 earnings on March 23rd. The company had strong revenue growth of 34% to 641 million. The strong revenue growth can be attributed to strong growth in its two of its segments; Satellite systems and Robotics and Space Operations, which grew by 157% and 60%, respectively for the quarter year over year.

Robitics and Space Operations, primarily grew due to its work on the Canadarm3 program, while Satellite Systems growth was driven by the GlobalStar Program which it was awarded in Q1 2022.

Before I go through EBITDA and Earnings, I will preface it by saying that they are naturally lumpy due to the nature of the business, and one quarter increases OR decreases are not a sign of a trend.

Adjusted EBITDA grew to $39.9 million from $26.8 million, a 49% increase year over year. However, adjusted EBITDA margin did decrease from 23.2% in Q4 2021 to 21.4% in Q4 2022.

Diluted earnings per share increased to $0.07 from zero cents, just above break even.

Comparing the full years, Adjusted EBITDA i increased 15% to $157.9 million from $137.1 million.

2022 had an diluted earnings per share of $0.21 compared to $0.02, a significant increase on GAAP earnings.

The company has a strong backlog of $1.4 billion since it receive large contracts for its work on the Globalstar low earth orbit constellation and Phase B of the Canadaarm3 in the first half of 2022, since the initial jump at the start of 2022 the backlog has shrunk by about $150 million, sharp increases and then slow declines in backlogs is not unusual for contract based businesses like MDA’s.

3.Balance Sheet

Moving to the Balance Sheet, the company is unsurprisingly in a net debt position. MDA  holds cash of 39.3 million and debt and leases of $251.9 million resulting in the net debt position of $212.6 million. The debt is floating at a rate of CDOR plus 45 to 175 basis points depending on the companies leverage. MDA has a net debt to adjusted EBITDA of 1.3 times, which is significantly higher than previously but not unmanageable.

As well , $150 million of debt is hedge with derivatives resulting in $95 million of unhedge debt. So, while higher interest rates will negatively affect MDA it is not a case of being overly sensitive to rate changes.

4. Growth & Valuation

Let’s move to some valuation metrics.

The company does provide guidance for 2023, however I will preface this as well, the companies guidance for 2022 was high expecting $750 to $800 million for revenue with actually being at $641, with adjusted EBITDA being on the high end of the guided range, so as always take guidance with a grain of salt.

Management guidance for 2023: Revenue is expected to be between $750 million to $800 million, with adjusted EBITDA of $145 to $155 million a 19% to 20% margin. If correct this would result in 21% revenue growth but slightly lower adjusted EBITDA for the year compared to 2022.

Trailing Price-to earnings is 32 times.

Trailing Enterprise value to adjusted EBITDA is 6.6 times.

Using the guidance midpoint, forward Enterprise value to adjusted EBITDA is 7 times.

The valuation on the company is high given the muted growth in 2023. That being said MDA in the long term does have prospects for high growth given the industry’s growth, but at this time I would not be willing to pay the premium price.

We will continue to monitor the company going forward.

This question came in from Brian who is a long-time client of ours. So thank you for the question Brian.


Slide 1

Eagle Plains Resources Ltd. (EPL:TSX-V)

Price: $0.29

Market Cap: $32.0 Million


Eagle Plains Resources is a mineral exploration company operating in Western Canada exploring for gold, critical-metals, uranium, lithium, rare earth elements and industrial minerals.

But the company is multi-faceted, given it has a royalty holding company, a project generator, as well as a geological contractor through its subsidiary Terralogic Exploration services.

Over the company’s history it has paid out more than $100M in “dividends” to shareholders through spin-outs and it currently has Equity investments through 19 different companies.

Slide 2

So as I mentioned the company is both an exploration and royalty company.

  • On its exploration side it has over 35 projects in Western Canada which include 9 option agreements.

Slide 3

And I’ll quickly show up on the screen here the company’s various exploration programs and developments it has in place for the 2023 calendar year. But I will not get into the specifics of each, as there are numerous projects.

Slide 4

  • Over 70 Royalties on mining projects throughout Western Canada – but keep in mind, these are royalties on exploration projects that are not currently cash flowing… and in most cases a 1% NSR (net smelter royalty) can be bought out for about $1M.

But all of its revenue on its financial statements essentially come from the geological and exploration services that it provides through Terralogic.

Slide 5

The financials are a little messy because of the business’ operations which include investing in public junior mining companies.


Recent Financials (FY 2022)


  • Revenue for FY 2022 was $17.3M, up 38% from $12.5M for 2021. The increase in revenue was due to a large increase in exploration programs contracted.
    • These revenues are essentially from the business’ geological and exploration services that it provides through TerraLogic – such as consulting, Diamond Drilling etc.
  • One thing that I will note is the company is not profitable on an “operational basis” before its “other items”. And this has been the case for the last 10 years of operating.
  • Comprehensive Income was a loss of $(568)K or $(0.01) per share, compared to a gain of $885K or $0.01 for FY 2021. But like I was saying before, it is quite messy due to its operations of investing in public companies as you can see a gain on investments of $1.86M that they actually sold, as well as some unrealized losses as well on equity investments for $2.4M.

Slide 6


To conclude, I do believe that it is an interesting company operating in the junior mining exploration space. And though the company provides some optionality through its portfolio of Junior exploration projects as well as its portfolio of royalties… this side of the business is a bit of a flyer… even though the company does have a successful track record of returning capital back to shareholders through spinouts. However, there is no arguing that investing for future spinouts, royalties on potential future producing deposits, and royalty buyouts – is speculative in nature.

Regarding Terralogic, where the business generates all of its revenue from. There has been good growth in revenue, but the company has had difficulty breaking into operating profit, or even EBITDA, over the past several years which would leave us hesitant on the company. It would be great to see the business ramp up profitability on its Terralogic business.. but this has yet to be seen.

Now the company currently has cash on the balance sheet of $9.5M, with no debt, and is likely a business which is superior to most of the exploration companies which we come across… Especially considering Eagle Plains actually generates revenue through its Terralogic business.

But all in all, with no profitability and blue sky potential reliant on hitting big through exploration or its royalties – we would classify the stock as too speculative for our clients.

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