- UrtheCast entered into a binding agreement to purchase leading
geoanalytics firm Geosys, including a 13-year service level
agreement with a total contract value in excess of US$100 million
- Total UrtheCast revenue backlog now in excess of C$275 million
VANCOUVER, Aug. 14, 2018 /CNW/ - UrtheCast Corp. (TSX:UR)
("UrtheCast" or the "Company") today announces financial results
for the three and six months ended on June
30, 2018 and provides an update on its financial
condition.
Q2 2018 Financial Results
(in millions of
Canadian dollars)
|
Q2
2018
|
Q2 2017
|
YTD
2018
|
YTD 2017
|
Revenue
|
$
|
3.4
|
$
|
11.9
|
$
|
7.6
|
$
|
21.2
|
Operating
costs
|
15.6
|
16.4
|
31.0
|
32.0
|
Net loss
|
(13.3)
|
(3.9)
|
(24.3)
|
(9.0)
|
Adjusted EBITDA
(1)
|
(7.4)
|
0.9
|
(13.4)
|
(0.4)
|
|
1
Non-IFRS earnings measure. See reconciliation to Net Loss later
in this press release.
|
Revenue decreased by $8.5 million
in the second quarter of 2018 compared to the same quarter last
year. Revenue from engineering services decreased by $7.0 million in the second quarter of 2018
compared to the same quarter last year, primarily due to a change
in the expected completion date of one of our engineering services
contracts, which resulted in the remaining revenue being recognized
over a longer period. Earth Observation ("EO") imagery sales
decreased by $1.5 million in the
second quarter of 2018 compared to the same quarter last year, due
to lower contract volume in the current year and a delay in
securing a major contract award, which was announced subsequent to
June 30, 2018 as described below in
"Business Highlights".
The net loss of $13.3 million and
negative adjusted EBITDA of $7.4
million in the second quarter of 2018 were lower compared to
the net loss of $3.9 million and
adjusted EBITDA of $0.9 million in
the same quarter last year, primarily due to the decrease in
revenue.
Donald Osborne, CEO of UrtheCast,
commented, "UrtheCast is at a major inflection point in the
Company's history, having recently achieved a significant milestone
by securing financing for the groundbreaking UrtheDaily
Constellation and undergoing a leadership transition. While our
financial results for the second quarter reflect the extent of the
changes that are currently underway, we are taking decisive action
to strengthen the Company in a number of ways, including through
the acquisition of Geosys, which expands our customer footprint and
moves up the geoanalytics value chain. In this way, we believe that
we can unlock the vast potential of UrtheCast's deep industry
experience and best-in-class technology portfolio to establish
clear market leadership and create lasting value for our
shareholders."
Business Highlights
Geosys Acquisition
- UrtheCast and Land O'Lakes, Inc. today announced that they have
entered a binding term sheet for the purchase of Geosys Technology
Holding LLC ("Geosys"), a wholly owned subsidiary of Land O'Lakes
for an aggregate purchase price of US$20
million. This landmark deal brings unprecedented value to
UrtheCast, ultimately enabling the Company to offer to its
agribusiness customers a full solution of imagery data and
geoanalytical solutions.
- Upon the first closing, UrtheCast will continue to provide Land
O'Lakes with all the services currently provided by Geosys but with
an expanded utilization of data once the UrtheDaily constellation
is fully operational. Services would be provided by UrtheCast
pursuant to a 13-year agreement with total potential fees payable
over the term of the agreement in excess of US$100 million.
- The Geosys acquisition would bring UrtheCast's total contracted
revenue backlog to in excess of $275
million.
Unsecured Revolving Credit Facility
- The Company has reached an agreement in principle with
1112099 B.C. Ltd., the backstop party
which entered into the conditional backstop agreement with the
Company in connection with the private placement that closed on
May 3, 2018, to extend to the Company
an unsecured revolving credit facility of up to US$20 million. The revolving credit facility and
the terms and conditions thereof remain subject to, among other
things, the entering into of definitive documentation and the
receipt of all necessary consents and approvals.
Major EO Contract Award
- On July 12, 2018 UrtheCast and
its subsidiary, Deimos Imaging, announced that they have been
awarded a multi-million Euro contract through a consortium led by
Airbus Defence and Space to provide a very large set of EO products
and services to the European Commission and the European Space
Agency (the "ESA").
UrtheDaily Financing
- On May 18, 2018 the Company
entered into a US$142 million senior
secured credit facility (the "Credit Agreement") to finance the
construction, launch, and deployment of the six-satellite
UrtheDaily Constellation, as well as related working capital and
general corporate purposes. The loan will be available in two equal
drawdown amounts, subject to the Company meeting certain conditions
precedent.
- In May and June 2018, gross
proceeds of approximately $21.7
million were released from escrow to the Company from the
private placement that closed on May 3,
2018.
- On July 10, 2018 the Company
entered into an Escrow Release and Amending Agreement to release
the remaining $5 million principal
amount of brokered private placement debentures held in escrow, as
further detailed in the Management Discussion and Analysis for the
three and six months ended June 30,
2018
Changes to the Board of Directors and Management
- On June 19, 2018 Don Osborne was
appointed as Chief Executive Officer of UrtheCast and assumed his
role on July 5, 2018. Mr. Osborne is
a seasoned technology executive, having spent more than 30 years in
the satellite, space and defence industries. Most recently, from
2009 to 2017 he was a senior executive at MDA, a Maxar Company,
including as President of the MDA Information Systems Group where
he was responsible for MDA's Canadian businesses.
- On June 25, 2018 the Company
announced the results of its Annual General and Special Meeting of
Shareholders, including the election of all management nominees to
the board of directors. The nominees included two long-serving
directors, William M. Evans
(director since June, 2013) and James
Topham (director since May, 2015) along with two directors
appointed on May 25, 2018, namely
Mark J. Piegza and Adam M. Vore, and two other highly-qualified
candidates, Andreas M. Georghiou and
John (Jack) Shannon.
- On August 13, 2018, Don Osborne was appointed to UrtheCast's board
of directors.
Outlook
We refer you to the Company's condensed interim consolidated
financial statements for the three and six months ended
June 30, 2018 and the related
Management's Discussion & Analysis for further details relating
to the Company's liquidity position. The Company has taken steps
subsequent to the quarter ended June 30,
2018 to ensure that it is able to continue as a going
concern and that it has adequate liquidity in the near term.
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 respective periods. All financial
information is in thousands of Canadian dollars, unless otherwise
noted, and except for per share amounts.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue
|
$
|
3,377
|
$
|
11,854
|
$
|
7,644
|
$
|
21,250
|
Other operating
income
|
|
37
|
|
61
|
|
232
|
|
111
|
|
|
3,414
|
|
11,915
|
|
7,876
|
|
21,361
|
Operating
costs
|
|
|
|
|
|
|
|
|
Direct costs,
selling, general and administrative expenses
|
|
10,476
|
|
10,894
|
|
20,696
|
|
21,403
|
Research
expenditures
|
|
306
|
|
112
|
|
612
|
|
388
|
Depreciation and
amortization
|
|
4,291
|
|
4,188
|
|
8,659
|
|
8,662
|
Asset
impairment
|
|
-
|
|
309
|
|
-
|
|
309
|
Share-based
payments
|
|
520
|
|
878
|
|
1,049
|
|
1,211
|
|
|
15,593
|
|
16,381
|
|
31,016
|
|
31,973
|
Operating
loss
|
|
(12,179)
|
|
(4,466)
|
|
(23,140)
|
|
(10,612)
|
Net finance
costs
|
|
(5,904)
|
|
(436)
|
|
(6,448)
|
|
(878)
|
Gain on derivative
financial instruments
|
|
4,169
|
|
681
|
|
4,371
|
|
923
|
Foreign exchange gain
(loss)
|
|
534
|
|
(986)
|
|
696
|
|
(1,205)
|
Loss before income
taxes
|
|
(13,380)
|
|
(5,207)
|
|
(24,521)
|
|
(11,772)
|
Income tax
recovery
|
|
127
|
|
1,302
|
|
210
|
|
2,788
|
Net
loss
|
|
(13,253)
|
|
(3,905)
|
|
(24,311)
|
|
(8,984)
|
Other comprehensive
income (loss)
|
|
(1,355)
|
|
2,463
|
|
901
|
|
3,004
|
Comprehensive
loss
|
$
|
(14,608)
|
$
|
(1,442)
|
$
|
(23,410)
|
$
|
(5,980)
|
Net loss per share
– basic and diluted
|
$
|
(0.11)
|
$
|
(0.03)
|
$
|
(0.20)
|
$
|
(0.08)
|
NON-IFRS EARNINGS MEASURES
The following table reconciles our Non-IFRS earnings measures to
Net Loss prepared in accordance with IFRS.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
ADJUSTED
EBITDA:
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(13,253)
|
|
(3,905)
|
$
|
(24,311)
|
$
|
(8,984)
|
Add back
(subtract):
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
4,291
|
|
4,188
|
|
8,659
|
|
8,662
|
Net finance
costs
|
|
5,904
|
|
436
|
|
6,448
|
|
878
|
Income tax
recovery
|
|
(127)
|
|
(1,302)
|
|
(210)
|
|
(2,788)
|
EBITDA
|
|
(3,185)
|
|
(583)
|
|
(9,414)
|
|
(2,232)
|
Impairment of
assets
|
|
-
|
|
309
|
|
-
|
|
309
|
Share-based payments
expense
|
|
520
|
|
878
|
|
1,049
|
|
1,211
|
Gain on derivative
financial instruments
|
|
(4,169)
|
|
(681)
|
|
(4,371)
|
|
(923)
|
Foreign exchange
(gain) loss
|
|
(534)
|
|
986
|
|
(696)
|
|
1,205
|
ADJUSTED
EBITDA
|
$
|
(7,368)
|
$
|
909
|
$
|
(13,432)
|
$
|
(430)
|
About UrtheCast
UrtheCast Corp. is a Vancouver-based company that serves the
rapidly growing and evolving geospatial and geo-analytics markets
with a wide range of information-rich products and services. The
Company currently owns and operates two Earth Observation (EO)
satellites, Deimos-1 and Deimos-2. Together with its exclusive
partnerships, spanning an additional 20 satellites, UrtheCast
processes and distributes imagery data and value-added products on
a global scale to partners and customers in multiple markets.
UrtheCast is also launching UrtheDaily™, a satellite constellation
that will be the most advanced change detection system in the
world, designed to capture daily, scientific grade, high-quality,
medium resolution optical imagery of the Earth's entire landmass
(excluding Antarctica). UrtheCast
is also developing OptiSAR™, a constellation of SAR satellites
which, together with UrtheDaily™, will form the world's first
fully-integrated optical and SAR constellation. 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
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 to: UrtheCast's
expected completion of the Geosys acquisition on terms set out in
this press release, the definitive documentation related thereto,
or at all; UrtheCast's expectations with respect to its ability to
pay all installments making up the aggregate purchase price;
UrtheCast's expectations with respect to the revenue to be
generated by the service level agreement; Deimos Imaging's expected
ability to deliver data produced by Deimos-2 to the consortium and
fulfil its other obligations under the consortium agreement with
Airbus Defence and Space; UrtheCast's expected completion of the
UrtheDaily Financing and beginning of the UrtheDaily Constellation
build phase; UrtheCast's expectations with respect to its ability
to raise proceeds from a subordinated debt or equity offering,
achieve the required leverage and contracted revenue ratios and
otherwise satisfy the first drawdown conditions and the final
drawdown conditions under the Credit Agreement in a timely manner;
opportunities to renegotiate current and future customer contracts;
and the Company's ability to continue as a going concern. 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: UrtheCast's inability to enter into definitive
documentation or satisfy any of the other conditions to the
completion of the Geosys transaction; UrtheCast's inability to fund
the installments for the purchase price of the Geosys transaction;
Deimos Imaging or any other imaging provider supplying data to the
consortium being unable to deliver imagery products meeting the
minimum specifications required by the consortium agreement;
interruptions to or failures of Deimos' infrastructure or the
infrastructure of any other imaging provider supplying data to the
consortium; Airbus Defence and Space's inability to satisfy its
payment obligations under the consortium agreement; ESA's inability
to satisfy its payments obligations under the head contract with
Airbus Defence and Space; legal and regulatory changes; UrtheCast's
inability to raise proceeds from a subordinated debt or equity
offering, achieve the required leverage and contracted revenue
ratios or otherwise satisfy the first drawdown conditions or the
final drawdown conditions under the Credit Agreement in a timely
manner or at all; and uncertainty about UrtheCast's ability to
continue as a going concern; as well as those factors and
assumptions discussed in UrtheCast's annual information form dated
April 2, 2018 (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.