VANCOUVER, Aug. 14, 2017 /CNW/ - UrtheCast Corp. (TSX:UR)
("UrtheCast" or the "Company") today announces financial results
for the three and six months ended June 30,
2017.
(in millions of
Canadian dollars)
|
Q2
2017
|
Q2 2016
|
YTD
2017
|
YTD 2016
|
Revenue excluding
non-cash revenue (1)
|
$
|
11.9
|
$
|
15.9
|
$
|
21.3
|
$
|
22.7
|
Revenue
|
11.9
|
21.0
|
21.3
|
33.1
|
Operating
costs
|
16.4
|
22.4
|
32.0
|
46.4
|
Net loss
|
(3.9)
|
(0.3)
|
(9.0)
|
(11.4)
|
Adjusted
EBITDA(1)
|
0.9
|
5.0
|
(0.4)
|
(1.0)
|
|
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
$5.1 million recorded in the second
quarter of 2016, revenues decreased by $4.0
million in the second quarter of 2017. While EO imagery
sales increased by $0.2 million
compared to the prior year, engineering services revenue was
$4.2 million lower, primarily due to
an adjustment in the second quarter of 2016 to record $8.0 million of engineering services revenue from
a contract amendment, which included some services performed in the
first quarter of 2016.
Operating costs of $16.4 million
in the second quarter were $6.0
million lower than the prior year. When excluding the
$5.1 million of depreciation and
non-cash costs related to the ISS cameras, operating costs were
$0.9 million lower than the same
period last year, mainly due to lower salary and benefit expenses
resulting from the consolidation of certain software development
activities and lower cloud storage costs.
The net loss of $3.9 million in
the second quarter of 2017 increased by $3.6
million when compared to the prior year, primarily due to
the lower engineering services revenues, which was also the main
factor in the $4.1 million decrease
in Adjusted EBITDA compared to the prior year.
Business Highlights
Earth Observation ("EO")
- EO revenues of $3.3 million grew
by 5%, compared to $3.1 million in
the same period in 2016 (excluding non-cash revenues) and were 104%
higher than in the first quarter of this year.
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. Subsequent to the
quarter end, the Company submitted its first claims for
reimbursement of eligible costs of $5,178 for the period from April 2016 to June
2017.
- 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. The Company
has submitted claims of $0.6 million
with respect to eligible costs incurred in the second quarter
($0.9 million for the six months
ending June 30, 2017).
Financing and Liquidity
- As previously announced, the Company obtained a new
C$10 million revolving demand credit
facility from the Royal Bank of Canada (RBC) in the first quarter of 2017,
which was originally intended to be used to finance up to 90% of
bank-approved accounts receivable. The agreement was amended during
the second quarter to enable the Company to have unrestricted
access to the facility by providing security in the amount of
$10 million through a combination of
bank-approved accounts receivable and cash. The interest rate on
this facility is RBC's prime rate plus 2% and borrowings are
repayable on demand. At June 30,
2017, $3 million had been
drawn under this facility.
- In April 2017, the Company
obtained an additional credit facility to finance up to
1 million Euros of trade accounts
receivables. At June 30, 2017,
$0.3 million (or 0.2 million Euros) had been drawn under this
facility.
Update on OptiSAR Constellation and UrtheDaily
Constellation
- In June 2015, the Company
announced its plans to build, launch and operate the OptiSAR
Constellation and, in March 2016, the
Company announced its plans to build, launch and operate the
UrtheDaily Constellation.
- Today, the Company announced that it had entered into a
contract with a value in excess of one hundred million Canadian
dollars with a confidential customer for the development and
delivery of a dual-frequency stand-alone SAR operational-class
satellite as an accelerator mission for the OptiSAR Constellation.
This contract will allow the Company to accelerate both the
operationalization of the SAR technology and the start of the SAR
data services business.
- The Company believes that the sale of one or more accelerator
SAR satellites mitigates some of the technical risks associated
with the OptiSAR Constellation and assists in demonstrating the
advantages of the SAR technology to the market. The accelerator
program also allows the Company to continue to work closely with
its current and prospective OptiSAR customers to refine the
technical specifications. Selling one or more stand-alone SAR
satellites provides a means to finance a significant portion of the
ongoing development costs of the OptiSAR Constellation.
- While the Company continues to work towards consummating deals
with potential OptiSAR customers, it is now believed that the
OptiSAR Constellation will not begin operations prior to 2023, or
approximately 12 months later than previously expected. The
primary reason for this delay is a result of the challenges
involved in converting customer interest into binding
contracts.
- The development of the UrtheDaily Constellation continues to
progress and, subject to financing the UrtheDaily Constellation
before the end of 2017, management believes that the UrtheDaily
Constellation remains on schedule to commence operations in
2020. The Company continues to validate market interest in
data and services derived from the UrtheDaily constellation as
evidenced by the previously announced strategic partnerships with
OmniEarth, Inc. in July 2016, the
advance data subscription agreement with GEOSYS, a subsidiary of
Land O'Lakes, Inc., announced in February
2017. The Company continues to engage in negotiations with
additional prospective UrtheDaily data purchasers, as well as
potential lenders and financing partners for the financing of the
UrtheDaily Constellation.
- Although the above statements reflect the Company's current
views on the OptiSAR Constellation and the UrtheDaily
Constellation, the completion of the Constellations are inherently
subject to significant business, economic, competitive, political,
timing and social uncertainties and contingencies and there can be
no guarantee that the Constellations will be completed on the
expected time frame or at all.
"The results this quarter are in line with our expectations and
our guidance for the year, which we are maintaining," said
Wade Larson, UrtheCast's President
and CEO. "Our focus has been on progressing our strategic
initiatives for long-term shareholder value, and we're really
pleased with the progress we're making."
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 and six months ended
June 30, 2017.
(in thousands of
Canadian dollars)
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenue
|
$
|
11,854
|
$
|
20,973
|
$
|
21,250
|
$
|
33,125
|
Other operating
income
|
|
61
|
|
695
|
|
111
|
|
695
|
|
|
11,915
|
|
21,668
|
|
21,361
|
|
33,820
|
Operating
costs
|
|
|
|
|
|
|
|
|
Direct costs,
selling, general and administrative expenses
|
|
10,894
|
|
13,915
|
|
21,403
|
|
29,042
|
Research
expenditures
|
|
112
|
|
1,493
|
|
388
|
|
3,229
|
Depreciation and
amortization
|
|
4,188
|
|
6,392
|
|
8,662
|
|
12,956
|
Asset
impairment
|
|
309
|
|
-
|
|
309
|
|
-
|
Share-based
payments
|
|
878
|
|
565
|
|
1,211
|
|
1,123
|
|
|
16,381
|
|
22,365
|
|
31,973
|
|
46,350
|
Operating
loss
|
|
(4,466)
|
|
(697)
|
|
(10,612)
|
|
(12,530)
|
Net finance
costs
|
|
(436)
|
|
(580)
|
|
(878)
|
|
(1,101)
|
Gain on derivative
financial instruments
|
|
681
|
|
-
|
|
923
|
|
-
|
Foreign exchange
loss
|
|
(986)
|
|
(210)
|
|
(1,205)
|
|
(402)
|
Loss before income
taxes
|
|
(5,207)
|
|
(1,487)
|
|
(11,772)
|
|
(14,033)
|
Income tax
recovery
|
|
1,302
|
|
1,210
|
|
2,788
|
|
2,656
|
Net
loss
|
|
(3,905)
|
|
(277)
|
|
(8,984)
|
|
(11,377)
|
Other comprehensive
income (loss)
|
|
2,463
|
|
(1,498)
|
|
3,004
|
|
(3,457)
|
Comprehensive
loss
|
$
|
(1,442)
|
$
|
(1,775)
|
$
|
(5,980)
|
$
|
(14,834)
|
Net loss per share
– basic and diluted
|
$
|
(0.03)
|
$
|
(0.00)
|
$
|
(0.08)
|
$
|
(0.11)
|
NON-IFRS EARNINGS MEASURES
(in thousands of
Canadian dollars)
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
REVENUE EXCLUDING
NON-CASH REVENUE:
|
|
|
|
|
|
|
|
|
Revenue per income
statement
|
$
|
11,854
|
$
|
20,973
|
$
|
21,250
|
$
|
33,125
|
Non-cash
revenue
|
|
-
|
|
(5,079)
|
|
-
|
|
(10,413)
|
REVENUE EXCLUDING
NON-CASH REVENUE
|
$
|
11,854
|
$
|
15,894
|
$
|
21,250
|
$
|
22,712
|
ADJUSTED
EBITDA:
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(3,905)
|
|
(277)
|
$
|
(8,984)
|
$
|
(11,377)
|
Add back
(subtract):
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
4,188
|
|
6,392
|
|
8,662
|
|
12,956
|
Net finance
costs
|
|
436
|
|
580
|
|
878
|
|
1,101
|
Income tax
recovery
|
|
(1,302)
|
|
(1,210)
|
|
(2,788)
|
|
(2,656)
|
EBITDA
|
|
(583)
|
|
5,485
|
|
(2,232)
|
|
24
|
Non-cash
revenue
|
|
-
|
|
(5,079)
|
|
-
|
|
(10,413)
|
Non-cash operating
costs
|
|
-
|
|
3,811
|
|
-
|
|
7,877
|
Impairment of
assets
|
|
309
|
|
-
|
|
309
|
|
-
|
Share-based payments
expense
|
|
878
|
|
565
|
|
1,211
|
|
1,123
|
Gain on derivative
financial instruments
|
|
(681)
|
|
-
|
|
(923)
|
|
-
|
Foreign exchange
loss
|
|
986
|
|
210
|
|
1,205
|
|
402
|
ADJUSTED
EBITDA
|
$
|
909
|
$
|
4,992
|
$
|
(430)
|
$
|
(987)
|
As previously announced, UrtheCast will host a conference call
regarding its second quarter 2017 financial results at 5:00 p.m. ET (2:00 p.m.
PT) on August 14, 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 5180873#.
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; 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; 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.