VANCOUVER, May 4, 2017 /CNW/ - UrtheCast Corp. (TSX:UR)
("UrtheCast" or the "Company") today announces financial results
for the three months ended March 31,
2017.
Higher Revenues and Lower Operating Costs in the First
Quarter of 2017
(in millions of
Canadian dollars)
|
Q1
2017
|
Q1 2016
|
Revenue excluding
non-cash revenue (1)
|
9.4
|
6.8
|
Revenue
|
$
|
9.4
|
$
|
12.2
|
Operating
costs
|
15.6
|
24.0
|
Net loss
|
(5.1)
|
(11.1)
|
Adjusted
EBITDA(1)
|
(1.3)
|
(6.0)
|
1
|
Non-IFRS earnings
measure. See reconciliation to Revenue and Net Loss later in this
press release
|
Excluding the non-cash revenue related to the ISS cameras of
$5.3 million recorded in the first
quarter of 2016, revenues increased by $2.6
million, or 38%, from higher Earth Observation (EO) imagery
sales and higher engineering services revenues.
The net loss of $5.1 million in
the first quarter of 2017 (2016 - $11.1
million) improved by $6.0
million, or 54%, over the prior year. Adjusted EBITDA of
$(1.3) million also improved by
$4.7 million, or 78%, over the prior
year, primarily due to an overall decrease in UrtheCast's operating
costs resulting from its continued focus on cost-savings
initiatives, including consolidating certain software development
and operations activities and reducing cloud storage costs.
Business Highlights
EO Update
- During UrtheCast's seasonally slowest quarter, EO revenues grew
by 20% to $1.6 million, compared to
$1.3 million in the same period in
2016.
UrtheDaily Update
- As previously announced, in the first quarter of 2017 the
Company entered into a long-term agreement with GEOSYS, a
subsidiary of Land O' Lakes, Inc., to deliver geospatial data from
the planned UrtheDaily Constellation. Pursuant to the terms of the
agreement, GEOSYS will become an anchor customer for the UrtheDaily
Constellation. The agreement, for an undisclosed purchase price and
term, represents the Company's largest data-buy contract to date.
This agreement will provide Geosys with sufficient capacity to
receive imagery of the Earth's entire landmass (excluding
Antarctica) throughout the
contract term and payments will begin when UrtheCast begins
delivering UrtheDaily Constellation data to GEOSYS. The agreement
is subject to the Company arranging for the financing for the build
and launch of the first portion of the satellites in the UrtheDaily
Constellation and other customary covenants for agreements of this
nature.
OptiSAR Progress
- As previously announced, the Company entered into a binding
agreement in the first quarter of 2017 with a confidential
government customer for the sale and shared operation of the first
two satellites in the Company's planned OptiSAR Constellation for a
purchase price of approximately US$180
million. This agreement represents the first successful
conversion of the three previously announced Memoranda of
Understanding (MOUs) for the purchase of the OptiSAR Constellation
satellites into binding contracts. The agreement is subject to a
number of closing conditions, including UrtheCast obtaining the
necessary customer commitments to allow for the build, launch and
financing of the first eight satellites in the OptiSAR
Constellation, the customer obtaining funding on or before
December 31, 2017, the parties
reaching mutual agreement on the detailed procedures for the shared
operation and tasking of the two satellites, and other customary
covenants and regulatory approvals for agreements of this nature.
Provided these closing conditions are satisfied or waived, the
purchase price is expected to be paid upon achievement of certain
build-phase milestones, concurrent with the start of the
build-phase for the first eight satellites.
Government Funding
- As previously announced, during the first quarter of 2017 the
Company was awarded approximately $17.6
million in funding from Innovation, Science and Economic
Development Canada's Industrial Technologies Office as part of its
Strategic Aerospace & Defense Initiative program to support the
development of the OptiSAR Constellation. The agreement is
structured as a repayable contribution that management anticipates
will be disbursed in quarterly installments, on a
cost-reimbursement basis, over the next four years and repaid by
the Company in annual installments over 15 years, beginning in
2023.
- During the first quarter of 2017, the Company was also awarded
three non-repayable grants from the Government of Canada's Defense Innovation Research Program
to reimburse up to approximately $2.2
million of eligible OptiSAR development costs.
Financing and Liquidity
- As previously announced, the Company completed a public
offering of 13,033,341 common shares on March 6, 2017 at a price of C$1.50 per common share, for aggregate net
proceeds of approximately C$18.2
million.
- During the first quarter of 2017, the Company obtained a new
$10 million revolving demand credit
facility from the Royal Bank of Canada (RBC). Borrowings under this facility
will primarily be used to finance up to 90% of the accounts
receivable under the Company's US $65
million engineering services contract and may also be used
to finance other contracts. The interest rate on this facility, if
drawn upon, is RBC's prime rate plus 2% and borrowings are
repayable when the related accounts receivable are collected from
the customer, or on demand.
- In April 2017, the Company
obtained an additional credit facility to finance up to
1 million Euros of trade
receivables.
Guidance
For fiscal 2017, the Company expects to achieve revenue of
between $52 and $60 million and
adjusted EBITDA of between $7 and $12
million.
"The Company is continuing to execute on our current business,
which is growing and from which we've removed a lot of operating
costs," said Wade Larson,
UrtheCast's President and CEO. "At the same time, we're very
pleased with the momentum on our big initiatives of UrtheDaily and
OptiSAR. We expect to make announcements on both fronts soon."
SELECTED FINANCIAL INFORMATION
The following table provides selected financial information of
the Company, which was derived from, and should be read in
conjunction with, the unaudited condensed interim consolidated
financial statements for the three months ended March 31, 2017.
(in thousands of
Canadian dollars)
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
Revenue
|
$
|
9,396
|
|
12,152
|
Other operating
income
|
|
50
|
|
-
|
|
|
9,446
|
|
12,152
|
Operating
costs
|
|
|
|
|
Direct costs,
selling, general and administrative expenses
|
|
10,509
|
|
15,127
|
Research
expenditures
|
|
276
|
|
1,736
|
Depreciation and
amortization
|
|
4,474
|
|
6,564
|
Share-based
payments
|
|
333
|
|
558
|
|
|
15,592
|
|
23,985
|
Operating
loss
|
|
(6,146)
|
|
(11,833)
|
Net finance
costs
|
|
(442)
|
|
(521)
|
Loss on derivative
financial instruments
|
|
242
|
|
-
|
Foreign exchange
(loss) gain
|
|
(219)
|
|
(192)
|
Loss before income
taxes
|
|
(6,565)
|
|
(12,546)
|
Income tax recovery
(expense)
|
|
1,486
|
|
1,446
|
Net
loss
|
|
(5,079)
|
|
(11,100)
|
Other comprehensive
income (loss)
|
|
542
|
|
(1,959)
|
Comprehensive
loss
|
$
|
(4,537)
|
|
(13,059)
|
Net loss per share
– basic and diluted
|
$
|
(0.05)
|
|
(0.11)
|
NON-IFRS EARNINGS MEASURES
(in thousands of
Canadian dollars)
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
NON-IFRS
REVENUE:
|
|
|
|
|
Revenue per income
statement
|
$
|
9,396
|
$
|
12,152
|
Non-cash
revenue
|
|
-
|
|
(5,334)
|
NON-IFRS
REVENUE
|
$
|
9,396
|
$
|
6,818
|
|
|
|
|
|
ADJUSTED
EBITDA:
|
|
|
|
|
Net
loss
|
$
|
(5,079)
|
$
|
(11,100)
|
Add back
(subtract):
|
|
|
|
|
Depreciation and
amortization
|
|
4,474
|
|
6,564
|
Net finance
costs
|
|
442
|
|
521
|
Income tax
recovery
|
|
(1,486)
|
|
(1,446)
|
EBITDA
|
|
(1,649)
|
|
(5,461)
|
Non-cash
revenue
|
|
-
|
|
(5,334)
|
Non-cash operating
costs
|
|
-
|
|
4,066
|
Share-based payments
expense
|
|
333
|
|
558
|
Loss on derivative
financial instruments
|
|
(242)
|
|
-
|
Foreign exchange
losses (gains)
|
|
219
|
|
192
|
ADJUSTED
EBITDA
|
$
|
(1,339)
|
$
|
(5,979)
|
As previously announced, UrtheCast will host a conference call
regarding its first quarter 2017 financial results at 5:00 p.m. ET (2:00 p.m.
PT) on May 4, 2017. The
live conference call will be available by calling toll-free at
1-800-806-5484, or by toll call at +1-416-340-2217. The participant
pass code is 1998003#.
An archived version of the conference call will be made
available on the Company's investor website
(investors.urthecast.com) following the live conference call.
ABOUT URTHECAST CORP.
UrtheCast Corp. is a Vancouver-based technology company that serves
the rapidly evolving geospatial and geoanalytics markets with a
wide range of information-rich products and services. The Company
operates Earth Observation (EO) sensors in space, including two
satellites, Deimos-1 and Deimos-2, to produce imagery data that is
displayed on UrtheCast's cloud-based web platform and sold to
partners and customers. Through its subsidiary Deimos Imaging,
UrtheCast processes and distributes imagery data and value-added
products on behalf of the PanGeo Alliance, a network of eight
satellite operators with a combined 15 medium- and high-resolution
EO sensors. UrtheCast is also developing and expects to launch two
EO satellite constellations: the world's first fully-integrated
constellation of sixteen multispectral optical and SAR satellites,
called OptiSAR™, and an eight-satellite constellation designed to
capture high-quality, medium-resolution optical imagery of the
Earth's entire landmass (excluding Antarctica) every day, called UrtheDaily™.
Together, the Company believes these constellations will
revolutionize monitoring of our planet with medium- and
high-resolution, high-coverage and high-revisit imagery in all
weather conditions. Common shares of UrtheCast trade on the Toronto
Stock Exchange as ticker 'UR'.
For more information, visit UrtheCast's website
at www.urthecast.com.
Non-IFRS Financial Measures
The Company prepares its financial statements in accordance
with International Financial Reporting Standards ("IFRS"), as
issued by the International Accounting Standards Board. This
release includes certain non-IFRS financial measures, such as
non-IFRS revenues, EBITDA and adjusted EBITDA. The Company uses
these non-IFRS financial measures as supplemental indicators of its
operating performance and financial position. These measures do not
have any standardized meanings prescribed by IFRS and therefore are
unlikely to be comparable to the calculation of similar measures
used by other companies, and should not be viewed as alternatives
to measures of financial performance calculated in accordance with
IFRS or considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. These non-IFRS
financial measures should be read in conjunction with the Company's
financial statements and accompanying MD&A.
Forward Looking Information
This release contains certain information which, as
presented, constitutes "forward-looking information" or
"forward-oriented financial information" within the meaning of
applicable Canadian securities laws. Forward-looking information
involves statements that relate to future events and often
addresses expected future business and financial performance,
containing words such as "anticipate", "believe", "plan",
"estimate", "expect" and "guidance", statements that an action or
event "may", "might", "could" or "will" be taken or occur, or other
similar expressions and includes, but is not limited to, statements
relating to: UrtheCast's expectations with respect its current
sensors and proposed OptiSAR™ and
UrtheDailyTM constellations; the
satisfaction of the financing and other conditions set out in the
binding agreement for the purchase of two OptiSAR satellites in
order to trigger payment obligations thereunder; its plans
for and timing of expansion of its product offering and value-added
services; its future growth and operations plans; expectations
regarding government contributions and reimbursement grants;
expectations regarding revenue and EBITDA in fiscal 2017; and
anticipated trends and challenges in its business and the markets
in which the Company operates. Such statements reflect UrtheCast's
current views with respect to future events. Such statements
are necessarily based upon a number of estimates and assumptions
that, while considered reasonable by UrtheCast, are inherently
subject to significant uncertainties and contingencies. Many
factors could cause UrtheCast's actual results, performance or
achievements to be materially different from any future results,
performance, or achievements that may be expressed or implied by
such forward-looking statements, including, among others: any
delays or failures in the design, development, construction, launch
and operational commissioning of the proposed OptiSAR™
or UrtheDailyTM
constellations; the Company being unable to adequately
finance the development, building, launch and commissioning of the
UrtheDaily Constellation or to convert the remaining MOUs and other
customer discussions in respect of the OptiSAR™ constellation
into binding, definitive agreements; the inability of the
confidential OptiSAR customer described in this press release to
obtain budgetary approval from government or to otherwise comply
with its obligations under the binding agreement for the purchase
and operation of two satellites; any failure by Geosys, the
Government of Canada or one of
UrtheCast's third-party lenders to comply with the terms of their
respective contracts with UrtheCast, and UrtheCast's ability to
comply with any of its covenants thereunder; the decline of key
relationships in, or termination of, the PanGeo Alliance of EO
satellite operators; loss of key EO imagery sales contracts or
customers; failures aboard the ISS or the Deimos-1 or Deimos-2
satellites; failure to obtain, or loss of, regulatory approvals; as
well as those factors and assumptions discussed in UrtheCast's
annual information form dated March 28,
2017, (the "AIF"), which is available under UrtheCast's
SEDAR profile at www.sedar.com. UrtheCast undertakes no
obligation to update forward-looking statements except as required
by Canadian securities laws. Readers are cautioned against
attributing undue certainty to forward-looking statements.
SOURCE UrtheCast Corp.