VANCOUVER, April 1, 2019 /CNW/ - UrtheCast Corp.
(TSX:UR) ("UrtheCast" or the "Company") today announces financial
results for the three months and year ended December 31, 2018.
2018 Financial Results
(in millions of
Canadian dollars)
|
Q4
2018
|
Q4 2017
|
FY
2018
|
FY 2017
|
Revenue
|
$
5.8
|
$
9.0
|
$
15.6
|
$
40.4
|
|
|
|
|
|
Operating
costs
|
33.6
|
25.0
|
79.8
|
73.0
|
|
|
|
|
|
Adjusted EBITDA
(1)
|
(3.5)
|
(2.4)
|
(23.7)
|
(3.2)
|
|
|
|
|
|
Adjusted EBITDA
(1), excluding one-time costs
|
(2.1)
|
(1.0)
|
(15.8)
|
(1.6)
|
|
|
|
|
|
Net loss
|
(42.4)
|
(16.4)
|
(83.3)
|
(31.8)
|
|
1
Non-IFRS earnings measure. See reconciliation of Adjusted EBITDA
to Net Loss under "Non-IFRS Earnings Measures"
|
Revenue for the fiscal year 2018 was $15.6 million compared to $40.4 million in 2017. Earth observation revenue
of $9.4 million in 2018 increased by
$1.6 million compared to the previous
year, primarily due to recognizing the first tranche of revenue
associated with the previously announced multi-million dollar
consortium contract with the European Space Agency. Revenue from
engineering and value-added services was $6.2 million in 2018 and declined by $26.4 million compared to 2017, primarily due to
a change in the expected completion date of one of our customer
contracts.
Operating costs of $79.8 million
in 2018 included approximately $7.9
million of certain non-recurring expenses, including
severance, bad debt expense, and costs relating to a special
committee of the board, which has since been discontinued. Fixed
operating costs, excluding these one-time expenses, have been
reduced by approximately $5.0
million, or 14%, year-over-year.
Adjusted EBITDA, excluding one-time costs, was negative
$15.8 million in 2018 compared to
negative $1.6 million in 2017. The
decrease was largely attributable to lower revenue and was partly
offset by approximately $5.0 million
of lower fixed operating costs, as described above, and a
$5.2 million decrease in variable
costs.
The net loss in 2018 was $83.3
million, which increased compared to the net loss of
$31.8 million in 2017. Current year
results were impacted by $54.5
million of adjustments required for accounting purposes that
are substantially non-cash, including $20.4
million of asset impairment charges, a $5.5 million reversal of deferred tax assets, and
a significant portion of the $28.6
million of net finance costs.
Donald Osborne, CEO of UrtheCast,
commented, "The results this past quarter continue to reflect the
major restructuring that is underway at UrtheCast. As expected, we
saw a number of one-time costs as well as significant non-cash
charges in the fourth quarter. We have also started to see a
reduction to our fixed cost base and have taken a number of other
important steps to strengthen the business, including acquiring
Geosys, a world-leader in geoanalytics in the agriculture industry,
and commencing a 13-year services contract with Geosys' former
parent company, Land O'Lakes, which will generate more than
US$10 million of annual revenue for
UrtheCast. Additionally, we are in advanced discussions to sell the
assets of our Deimos operations. The proceeds from this sale will
be used to reduce our debt and improve working capital. We believe
that these measures, among others, will unlock value for our
shareholders by putting UrtheCast in a position to start delivering
positive EBITDA during 2019 and ultimately by enabling us to secure
financing and move into the build-phase of the transformational
UrtheDaily Constellation."
Outlook & Going Concern
We refer you to the Company's consolidated financial statements
for the year ended December 31, 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 year ended December 31, 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 consolidated financial statements for the
year ended December 31, 2018. All
financial information is in thousands of Canadian dollars, unless
otherwise noted, and except for number of shares and per share
amounts.
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue
|
$
|
5,839
|
$
|
8,978
|
$
|
15,634
|
$
|
40,393
|
Other operating
income
|
|
302
|
|
137
|
|
706
|
|
338
|
|
|
6,141
|
|
9,115
|
|
16,340
|
|
40,731
|
Operating
costs
|
|
|
|
|
|
|
|
|
Direct costs,
selling, general and administrative expenses
|
|
9,257
|
|
11,136
|
|
38,255
|
|
42,957
|
Research
expenditures
|
|
356
|
|
328
|
|
1,810
|
|
927
|
Depreciation and
amortization
|
|
4,166
|
|
4,227
|
|
17,035
|
|
17,045
|
Asset
impairment
|
|
19,697
|
|
8,735
|
|
20,441
|
|
9,399
|
Share-based
payments
|
|
107
|
|
610
|
|
2,219
|
|
2,643
|
|
|
33,583
|
|
25,036
|
|
79,760
|
|
72,971
|
Operating
loss
|
|
(27,442)
|
|
(15,921)
|
|
(63,420)
|
|
(32,240)
|
Net finance
costs
|
|
(20,460)
|
|
(676)
|
|
(28,611)
|
|
(2,082)
|
Gain on derivative
financial instruments
|
|
10,478
|
|
216
|
|
13,053
|
|
1,561
|
Foreign exchange gain
(loss)
|
|
791
|
|
(88)
|
|
1,192
|
|
(2,053)
|
Loss before income
taxes
|
|
(36,633)
|
|
(16,469)
|
|
(77,786)
|
|
(34,814)
|
Income tax expense
(recovery)
|
|
5,779
|
|
(106)
|
|
5,466
|
|
(3,067)
|
Net
loss
|
|
(42,412)
|
|
(16,363)
|
|
(83,252)
|
|
(31,747)
|
Other comprehensive
income
|
|
411
|
|
1,124
|
|
662
|
|
3,788
|
Comprehensive
loss
|
$
|
(42,001)
|
$
|
(15,239)
|
$
|
(82,590)
|
$
|
(27,959)
|
Net loss per share
– basic and diluted
|
$
|
(0.33)
|
$
|
(0.14)
|
$
|
(0.67)
|
$
|
(0.27)
|
NON-IFRS EARNINGS MEASURES
The following table reconciles our Non-IFRS earnings measures to
Net Loss prepared in accordance with IFRS.
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
ADJUSTED
EBITDA:
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(42,412)
|
$
|
(16,363)
|
$
|
(83,252)
|
$
|
(31,747)
|
Add back
(subtract):
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
4,166
|
|
4,227
|
|
17,035
|
|
17,045
|
Net finance
costs
|
|
20,460
|
|
676
|
|
28,611
|
|
2,082
|
Income tax expense
(recovery)
|
|
5,779
|
|
(106)
|
|
5,466
|
|
(3,067)
|
EBITDA
|
|
(12,007)
|
|
(11,566)
|
|
(32,140)
|
|
(15,687)
|
Asset
impairment
|
|
19,697
|
|
8,735
|
|
20,441
|
|
9,399
|
Share-based payments
expense
|
|
107
|
|
610
|
|
2,219
|
|
2,643
|
Gain on derivative
financial instruments
|
|
(10,478)
|
|
(216)
|
|
(13,053)
|
|
(1,561)
|
Foreign exchange
(gain) loss
|
|
(791)
|
|
88
|
|
(1,192)
|
|
2,053
|
ADJUSTED
EBITDA
|
$
|
(3,472)
|
$
|
(2,349)
|
$
|
(23,725)
|
$
|
(3,153)
|
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. Imagery data from these sensors
is continuously downlinked to ground stations around the world and
distributed directly to partners and customers in multiple markets.
UrtheCast also processes and distributes imagery data and
value-added products on behalf of the PanGeo Alliance, a network of
EO satellite operators with a combined 13 medium- and
high-resolution EO sensors.
UrtheCast has also designed and proposes to build and launch a
satellite constellation designed to capture high-quality,
medium-resolution optical imagery of the Earth's entire land mass
(excluding Antarctica) everyday,
called UrtheDailyTM, and has developed advanced
synthetic aperture radar technology for satellites, called
OptiSARTM.
In January 2019, UrtheCast also
acquired Geosys, a digital agriculture company that provides a
suite of geo-analytics products and services to agribusinesses
around the world. The acquisition of Geosys positions UrtheCast as
a fully vertically-integrated geo-analytics solution provider for
the precision agriculture market, able to integrate satellite
imagery services with analytics.
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", "plan", "explore" and
"expect", statements that an action or event "may", "should" 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 its ability to raise
capital and to continue as a going concern; expectations regarding
UrtheCast's ability to meet its obligations and satisfy its
liabilities under its existing indebtedness; expectations
underlying the Company's financial statements, including that
they have been prepared on a going concern basis,
meaning that the Company will be able to realize its assets and
discharge its liabilities in the normal course of
operations; expectations regarding a sale or
other monetization of all or substantially all of Deimos Imaging
and its related business; UrtheCast's expectations with respect to
its ability to raise proceeds from a debt or equity offering,
achieve the required leverage and contracted value ratios and
otherwise satisfy the conditions of its indebtedness and business
needs generally; UrtheCast's ability to complete the second closing
of the acquisition of Geosys on the terms set forth in the
definitive purchase agreement or at all, and the expected benefits
of such acquisition, as well as the Company's ability to service
and obtain revenues from the Service Level Agreement with
WinField; UrtheCast's ability to
meet its obligations and satisfy its liabilities under its existing
indebtedness; UrtheCast's ability to satisfy the conditions
precedent to certain contracts related to the purchase of imagery
data from the UrtheDaily satellite constellation; expectations
regarding monetization of the OptiSAR technology and related
intellectual property developed by the Company; new product
functionality and suitability; projected operating expenses and
capital expenditures; UrtheCast's ability to secure additional
customer contracts for the planned UrtheDaily™ constellation in a
timely manner or at all; and UrtheCast's ability to secure
financing for the planned UrtheDaily™ constellation on acceptable
terms, in a timely manner, or at all, and the related expectations
regarding its build, launch and operations;. Such statements
reflect UrtheCast's current views with respect to future events,
and are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by UrtheCast as at
the date of this press release, are inherently subject to
significant uncertainties and contingencies.
Many factors could cause UrtheCast's actual results or
performance to be materially different from expectations that may
be expressed or implied by such forward-looking statements,
including, among others: the Company's ability to rectify
its current cash constraints and to continue as a going concern;
the Company's ability to enter into alternative financing for the
UrtheDaily satellite constellation, and any delays or failures in
the design, development, construction, launch and operational
commissioning of the such constellation; the Company's ability to
comply with debt and repayment obligations and avoid the exercise
of lenders' rights, including with respect to seizing secured
assets; an adverse outcome in the Company's litigation with
Eastwood Capital Corp and William
Holland; the Company's ability to successfully complete a
sale or other transaction involving Deimos Imaging on commercially
reasonable terms, or at all; UrtheCast's ability to fund the
installments for the purchase price of the Geosys transaction or
otherwise successfully complete the second closing of the Geosys
acquisition; loss, reduction in scope, termination, failure
to satisfy conditions precedent or decline in general of the
Company's agreements or relationships with its key partners,
including Land O' Lakes, Inc.; risks related to the government
funding received by UrtheCast and risks arising from breach or
default of obligations under the related agreements with certain
government agencies; delays or disputes with customers
regarding the payment milestones under the Company's data imagery
or engineering services agreements, which often include complex
criteria and/or performance by third parties to successfully
complete the contract and obtain payment; legal and regulatory
changes; and; as well as those factors and assumptions discussed in
UrtheCast's Annual Information Form dated March 29, 2019, which is available under
UrtheCast's SEDAR profile at www.sedar.com.
UrtheCast cautions readers that such factors and uncertainties are
not exhaustive and that should certain risks or uncertainties
materialize, or should underlying estimates or assumptions prove
incorrect, actual results, performance or achievements may vary
significantly from those expected. There can be no assurance that
the actual strategies, results, performance, events or activities
anticipated by the Company will be realized or, even if
substantially realized, that they will have the expected
consequences to, or effects on, the Company.
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.