MDA Global Revenues

MacDonald Dettwiler (MDA on TSX) is best-known for building the Canadian Space Arm, a key part of some 60 Space Shuttle missions. MDA’s equipment also supports the International Space Station.

MDA sells principally to business, government and individual clients in two major sectors, namely Surveillance & Intelligence and Financial Services.

Geographic Diversification

While MDA is headquartered in Victoria, British Columbia, some 75% of company revenues originate from outside Canada.

1. United Kingdom … US$340,808 (36% of 2006 revenues, up 118% from 2005)
2. United States … $263,966 (27.9%, down 5.5%)
3. Canada … $244,820 (25.8%, up 6%)
4. Other Countries … $97,661 (10.3%, up 17.2%).

Over 3,000 MDA employees working in more than 25 offices in the U.K., the U.S. and Canada serve the company’s worldwide customer base.

MDA reported more than US$1 billion in 2007 revenues under two distinct business units:

• Information System (US$330,070 in 2006, up 4.7% from 2005); and
• Information Products (US$617,186 in 2006, up 41.9% from 2005).

Information Systems (65.2% of MDA revenues in 2006 compared with 29% in year 2000)

The company is the world’s top provider of planet observation systems that interpret data from Earth-orbiting satellites. MDA’s complex yet user-friendly applications have a unique ability to process data from most networked space satellites regardless of country of origin.

MDA bundles these applications into mission-critical information packages that include customisable components including computer hardware, software, support and training.

In addition to space-oriented applications, MDA makes a wide range of air, sea and land-based systems. Below are several examples:

• Ground station systems for high-resolution images
• Police mobile and wireless real-time access to law enforcement databases
• Ship and iceberg detection in the Canadian Arctic
• Advanced technologies to sense, track, map and classify airborne biological threats from the roof of a special purpose vehicle.

Information Products (34.8% of MDA revenues in 2006 compared with 71% in year 2000)

MDA has global distribution rights to sell data collected by its advanced RADARSAT satellite network. Customers around the world range from offshore oil and gas explorers to office building developers who require digital aerial maps.

The strongest drivers for MDA’s revenues are sales of its Home Information Packs (HIPs) in the U.K., with revenues that have more than doubled in just one year. The company’s property information businesses in the U.K. and Ireland now account for more than a third of total company revenues.

HIPs include a set of mandatory documents:

• an Energy Performance Certificate that rates a home’s energy efficiency (e.g. homes in the lowest fuel bill category)
• basic information about the property being sold (e.g. an unregistered vacant freehold property)
• standard search results (e.g. the property’s drainage and water services)
• proof that the seller owns the property for sale.

Home Information Packs Delayed

MDA’s stock plunged more than 20% in mid-May when the U.K. government was announcing a two-month delay to the implementation of HIPs until August 1. At that time, HIPs will only be required for the sale of four-bedroom homes and larger. After that, HIP requirements for smaller properties will be phased in.

The stock market may have overreacted to a delay that politicians say is due to a lack of trained energy performance assessors. Opposition Conservatives say that they will scrap HIPs if elected in an election predicted to happen within two years, so any delay increases the risk that mandatory HIPs will be scrapped.

Still, MDA management has a strong history of consistent revenue and earnings growth, with earnings per share for the internationally diversified company up 17% for the first three months in 2007.

Sources For This Article

This article presents independent calculations and insights based on data drawn from source material on mda.ca including MDA’s annual reports and press releases.

Earth station receiver

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