MacDonald, Dettwiler And Associates CEO Announces Transformational US Acquisition Conference (Transcript) - TheStreet

MacDonald, Dettwiler and Associates Ltd. (MDDWF.PK)

Transformational US Acquisition Conference Call

June 27, 2012 08:30 am ET

Executives

Daniel Friedmann - President & CEO

Anil Wirasekara - EVP & CFO

Analysts

Steve Arthur - RBC Capital Markets

Thanos Moschopoulos - BMO Capital Markets

Scott Penner - TD Securities

Stephanie Price - CIBC

Paul Steep - Scotiabank

Sera Kim - GMP Securities

Steven Li - Raymond James

Nikhil Thadani - National Bank

Catharine Sterritt - Scotia Capital

Naser Iqbal - Salman Partners

Cabot Henderson - Hudson Bay Capital

Richard Tse - Cormark Securities

Blair Abernethy - Stifel Nicolaus

Presentation

Operator

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Good morning. My name is Sarah and I will be your conference operator today. At this time, I would like to welcome everyone to the MacDonald, Dettwiler and Associates Limited announcement. (Operator Instructions) Thank you.

A number of statements that will be made on this conference call constitute forward-looking statements and information within the meaning of applicable security laws which reflect the current view of MacDonald, Dettwiler and Associates Limited, the Company or MDA with respect to future events and financial performance.

Forward-looking statements generally can be identified by the use of forward-looking terminology such as may, will, would, could, should, expect, intend, estimate, anticipate, plan, foresee, believe, or continue or the negative of such terms or variations of them or similar terminology. Such forward-looking statements are based on MDA’s current expectations, estimates, projections and assumptions made in light of its experience and perception of historical trends.

Forward-looking statements are subject to risks and uncertainties many of which are beyond MDA’s control and effects of which can be difficult to predict. MDA’s actual results of operations could differ materially from historical results or current expectation.

With regard to MDA’s proposed acquisition of Space Systems/Loral, Incorporated, SS/L, there can be no assurance that MDA will realize the anticipated benefits or results due to a variety of factors. For specific risk factors pertaining to MDA’s proposed acquisition of SS/L please refer to the news release distributed yesterday June 26, 2012 which also provides the specific disclaimer for forward-looking statements and information discussed on this conference call.

In addition, you are referred to the risk factors described in MDA’s most recent Annual Management Discussion and analyst Annual Information Form and other documents on file with the Canadian Securities Regulatory Authorities available at SEDAR, www.sedar.com or www.mdacorporation.com. All such factors should be considered carefully, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements, when making decisions with respect to MDA.

The forward-looking statements and information made on this conference call represents MDA’s views only as of today’s date. All such statements are made pursuant to the Safe Harbor provisions of applicable Canadian and US security laws. MDA disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than required by law, rule or regulation. You should not place undue reliance on forward-looking statements.

Mr. Friedmann, you may begin your conference.

Daniel Friedmann

Thank you, Sarah. Good morning ladies and gentlemen and thank you for joining us on this call. With me is Anil Wirasekara, our Chief Financial Officer. We have exciting news to talk to you about this morning.

Last night we announced that we will acquire Space Systems/Loral as part of a highly accretive transaction. This is a true game changer for MDA; one that meets many of our key strategic objectives in a single move. I am going to start today with a review of the transaction and the significant benefits we’ll realize through this combination. Anil will review the financial aspects and then we will open the line to answer your questions. We will be using a PowerPoint presentation during our discussion. If you have not had a chance to access this presentation, please go to MDA’s website, mdacorporation.com and under the Investor tab, there should be a link provided for you to view the presentation.

As we announced in our press release last night, we have signed a definitive agreement to acquire 100% of Space Systems/Loral for $875 million. Space Systems/Loral or SS/L is a global leader in commercial communication satellite. Combined with our market leading strengths in essential information, this transaction transforms MDA into a unique, global communication and information company with a strong commercial focus.

Post-acquisition, more than two-thirds of our revenues will come from the commercial market. This compares with just under one-third currently. The transaction also gives us critical mass in the United States, one of the world’s largest markets for our capabilities. Importantly, the new business maintains and increases our focus on essential end user needs. In this case by enabling Internet, mobile, broadcast and other core communication services.

Keep in mind that the benefits of the transaction are not in the future. It will provide immediate benefits including strong accretion for our shareholders. Anil will provide more detail on that in just a few moments, but first let me take a look at Space Systems/Loral.

SS/L is the world's leading supplier of commercial communication satellites. It has more GEO stationary satellite capability in orbit today than any other supplier and has delivered more than 240 satellites over its 50 year history. That makes SS/L not just the largest, but also one of the worlds most experienced providers of commercial communication infrastructure.

The company has been very successful in building large international base of well-established customers and these are strong relationships evidenced by the fact that over 80% of SS/L’s revenues comes from repeat customers. I want to emphasize that this company has long, solid track record and in 2011 it achieved about $1.1 billion in revenues and as of March 31st, it had a backlog of about $2 billion giving us good visibility on future performance.

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