For immediate release: July 22, 2004
MDA Reports Second Quarter 2004 Results
Richmond, B.C. - MacDonald, Dettwiler and Associates Ltd. (TSX: MDA), a provider of essential information solutions, today released financial results for the second quarter of 2004.
Results from Operations
Second quarter 2004 revenues increased to $192 million compared to $147 million for the second quarter 2003. Information Products had revenues of $114.0 million, an increase of 40% compared to $81.1 million for the second quarter a year ago. Information Systems revenues were $78.0 million compared to $66.3 million for the second quarter last year.
The Company acquired Marshall & Swift / Boeckh (MS/B) during the second quarter of 2004. Included in the above revenues for the second quarter is one month of operations from the acquisition. During the second quarter of 2004 the Company amended its syndicated credit agreement to finance the acquisition.
Net earnings increased 29% to $13.4 million for the second quarter from $10.4 million for 2003. Net earnings per diluted common share increased to $0.34 for the quarter from $0.27 for the second quarter 2003.
For the second quarter of 2004, earnings before income taxes, amortization and interest expense ("EBITDA") increased to $28.0 million.
For the six months ended June 30, 2004, revenues increased to $353 million, compared to $300 million for the six months ended June 30, 2003. Information Products revenues increased 34% to $205.6 million. Information Systems revenues were $147.0 million for the six months ended June 30, 2004, unchanged from the prior year.
Net earnings increased to $24.5 million for the six months ended June 30, 2004 from $20.4 million for 2003. Net earnings per diluted common share increased to $0.62 for the six months ended June 30, 2004 from $0.53 for 2003.
As at June 30, 2004 MDA's order backlog amounted to an all-time high of $924 million.
The Company adopted CICA Handbook section 3870 - Stock-Based Compensation and Other Stock-Based Payments in 2004. In accordance with the provisions of this section the Company has accounted retroactively for all employee stock options granted or settled since January 1, 2002, using the fair value based method. The fair value based method requires expensing the fair value of employee stock options granted. The effect of this change is to reduce net earnings for the six months ended June 30, 2004 by $549,000 and for the six months ended June 30, 2003 by $705,000.
Since the last report, MDA has achieved several key new milestones in its strategy to be a leading information solutions provider:
MDA significantly advanced its presence in the agricultural information market by entering into an agreement to supply RapidEye AG of Germany with a $170 million information solution to be delivered over the next three years. The Company can participate in associated marketing for value-added information products and services. RapidEye will provide the insurance, food and agricultural sectors and a variety of government agencies throughout the world with up-to-date crop management and hazard information and services. This achievement will put MDA at the forefront of developing new information solutions and markets enabled by today's more affordable and highly sophisticated small satellite technology.
An agreement was also signed with the Canadian government to develop new information solutions based on small satellite technology for applications such as monitoring agriculture, inland and coastal waters, and military developments.
MDA made further advancement into the agricultural information market by securing commitments to supply information to the U.S. Department of Agriculture (USDA) and Agriculture and Agri-Food Canada, two large customers.
The Chicago Mercantile Exchange and a U.S.-based financial information services company commenced using the Company's information for various analyses and services.
In the defence area, the Company entered into an agreement with the United States Air Force (USAF) which will evaluate the use of RADARSAT-2 information as part of the in-theatre support for armed forces. Meanwhile, the RADARSAT-2 program achieved a major milestone as it progressed to the final assembly, integration and testing phase.
The USAF also decided to deploy the flight path safety solution delivered earlier by the Company at all Major Commands and Units. The solution ensures that arrival and departure procedures used by pilots and air traffic controllers take into account three-dimensional information such as terrain hazards and man-made obstacles. The USAF also ordered the development of significant new additions to this essential information solution.
In the U.S. property information business, MDA announced a powerful strategic expansion by acquiring privately held Marshall & Swift / Boeckh. MS/B is a leading supplier of property information and valuation solutions to the U.S. property insurance sector. The acquisition, which closed June 2, 2004, will significantly enhance the Company's critical mass in the U.S. property information market and make further inroads into the Canadian property information market. The acquisition is expected to be materially accretive to 2004 earnings. Since closing the transaction, MS/B has booked strategic orders in the claims information market including a $1.7 million annual subscription with a leading national property and insurance company. Strategic planning with MDA's other business units, particularly in the U.S., is in progress.
In the U.S. mortgage information sector, two of the top twenty U.S. banks/mortgage lenders began using the Company's proprietary product introduced last quarter.
In England and Wales, MDA's initiative to modernize the processing of land information by Local Authorities continued to gain momentum as two more Local Authorities joined the modernization program: Canterbury City Council and Sandwell Metropolitan Borough Council. This modernization initiative will enable land information requests coming from the National Land Information Service (NLIS) to be processed primarily on an electronic basis, reducing the delivery time by a factor of ten.
The Company's NLIS business continued to make steady progress. The number of Local Authorities electronically connected continued to increase, and now account for 74% of all NLIS searches. At this point, 330 Local Authorities are able to handle search requests electronically, up from 294 at last report. Despite a recent slowdown in the U.K. housing market, NLIS Hub transactions are at a similar level as last reported. New customer signups at the Company's NLIS Channel have strengthened over the past three months and value-added per transaction has increased. In addition, the Company is in final testing with its first bulk-buying customer. For this customer, MDA will regularly process a large batch of search orders overnight without operators involved.
In Scotland, sales of the property enquiry certificate product introduced last year continued to grow. A property enquiry certificate is one of the required search reports used to close a housing transaction. To produce this certificate, MDA gathers information from Local Authorities and other government bodies and also draws information from its proprietary database. The Company continues to expand its database, and plans to add information from five more Local Authorities later this year.
In British Columbia, BC OnLine transactions continued at robust levels and use of the new electronic filing solution showed good market acceptance generating nearly $2 million in revenues since being introduced at the end of last quarter.
This report contains forward-looking statements and information, which reflect the current view of MacDonald, Dettwiler and Associates Ltd. with respect to future events and financial performance. Any such forward-looking statements are subject to risks and uncertainties and MDA's actual results of operations could differ materially from historical results or current expectations. MDA assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein do not materialize.
MDA's Second Quarter 2004 unaudited Consolidated Financials are available at:
Investor/Analyst Conference Call Today
MDA President and CEO Daniel Friedmann
and Executive Vice President and CFO Anil Wirasekara
will be available on a Conference Call today, July 22, 2004 at 1:30PM Pacific (4:30PM Eastern) to explain the financial results of the Company and to answer questions.
To participate, dial 1-800-387-6216 in Canada or the United States.
In Toronto, dial 416-405-9328.
The Conference Call will also be Webcast live at:
For more information, please contact:
MDA External Relations