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UrtheCast Reports Third Quarter 2018 Financial Results
Wednesday, November 21, 2018Company Profile | Follow Company
Vancouver, BC, November 21, 2018--(T-Net)--UrtheCast Corp. (TSX:UR) today announced financial results for the three and nine months ended on September 30, 2018 and provided an update on its financial condition.
Q3 2018 Financial Results
(in millions of Canadian dollars) |
Q3 2018 |
Q3 2017 |
YTD 2018 |
YTD 2017 |
||||
Revenue |
$ |
2.2 |
$ |
10.2 |
$ |
9.8 |
$ |
31.4 |
Operating costs |
15.2 |
16.0 |
46.2 |
47.9 |
||||
Net loss |
(16.5) |
(6.4) |
(40.8) |
(15.4) |
||||
Adjusted EBITDA (1) |
(6.8) |
(0.4) |
(20.3) |
(0.8) |
1 Non-IFRS earnings measure. See reconciliation to Net Loss later in this press release. |
Revenue decreased by $8.0 million in the third quarter of 2018 compared to the same quarter last year and by $21.6 million for the year-to-date compared to the same period last year. Revenue from engineering services decreased by $7.1 million in the third 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 during the current year, which resulted in the remaining revenue being recognized over a longer period, and due to a reduction in engineering revenue on our contracts for the provision of space hardware compared to the prior year.
Earth Observation ("EO") imagery sales decreased by $0.9 million in the third quarter of 2018 compared to the same quarter last year, due to lower contract volume in the current year and a delay in securing and meeting the revenue recognition criteria for the major contract with the ESA as discussed further below in "Business Highlights - Major EO Contract Awards".
The net loss of $16.5 million and negative adjusted EBITDA of $6.8 million in the third quarter of 2018 were higher compared to the net loss of $6.4 million and negative adjusted EBITDA of $0.4 million in the same quarter last year, primarily due to the decrease in revenue.
Donald Osborne, CEO of UrtheCast, commented, "We have made important progress in the implementation of our strategic initiatives to restructure, streamline, and strengthen UrtheCast in order to achieve long-term sustainability and profitability. By simultaneously reducing our run-rate fixed costs and dramatically expanding our contracted revenue backlog to more than $350 million, we have refocused the Company on fully realizing the value of our unique service offering and the deep UrtheCast team. Building on this improved foundation, our upcoming acquisition of Geosys will enable us to move further up the geoanalytics value chain and deliver increasingly high-margin services to both existing and new customers. As we continue to conduct negotiations with our lenders, we believe that we have materially strengthened the Company and demonstrated a significant level of demand for UrtheDaily, and as such we remain confident that we will bring the groundbreaking UrtheDaily Constellation to the market for the benefit of our shareholders."
Business Highlights
Geosys Acquisition
Secured Revolving Credit Facility
Major EO Contract Awards
UrtheDaily Financing
Outlook
We refer you to the Company's condensed interim consolidated financial statements for the three and nine months ended September 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 September 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 September 30, |
Nine Months Ended September 30, |
|||||||
2018 |
2017 |
2018 |
2017 |
|||||
Revenue |
$ |
2,151 |
$ |
10,165 |
$ |
9,795 |
$ |
31,415 |
Other operating income |
172 |
90 |
404 |
201 |
||||
2,323 |
10,255 |
10,199 |
31,616 |
|||||
Operating costs |
||||||||
Direct costs, selling, general and administrative expenses |
8,302 |
10,418 |
28,998 |
31,821 |
||||
Research expenditures |
842 |
211 |
1,454 |
599 |
||||
Depreciation and amortization |
4,210 |
4,156 |
12,869 |
12,818 |
||||
Asset impairment |
744 |
355 |
744 |
664 |
||||
Share-based payments |
1,063 |
822 |
2,112 |
2,033 |
||||
15,161 |
15,962 |
46,177 |
47,935 |
|||||
Operating loss |
(12,838) |
(5,707) |
(35,978) |
(16,319) |
||||
Net finance costs |
(1,703) |
(528) |
(8,151) |
(1,406) |
||||
(Loss) gain on derivative financial instruments |
(1,796) |
422 |
2,575 |
1,345 |
||||
Foreign exchange (loss) gain |
(295) |
(760) |
401 |
(1,965) |
||||
Loss before income taxes |
(16,632) |
(6,573) |
(41,153) |
(18,345) |
||||
Income tax recovery |
103 |
173 |
313 |
2,961 |
||||
Net loss |
(16,529) |
(6,400) |
(40,840) |
(15,384) |
||||
Other comprehensive (loss) income |
(650) |
(340) |
251 |
2,664 |
||||
Comprehensive loss |
$ |
(17,179) |
$ |
(6,740) |
$ |
(40,589) |
$ |
(12,720) |
Net loss per share - basic and diluted |
$ |
(0.13) |
$ |
(0.05) |
$ |
(0.33) |
$ |
(0.13) |
NON-IFRS EARNINGS MEASURES
The following table reconciles our Non-IFRS earnings measures to Net Loss prepared in accordance with IFRS.
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2018 |
2017 |
2018 |
2017 |
|||||
ADJUSTED EBITDA: |
||||||||
Net loss |
$ |
(16,529) |
$ |
(6,400) |
$ |
(40,840) |
$ |
(15,384) |
Add back (subtract): |
||||||||
Depreciation and amortization |
4,210 |
4,156 |
12,869 |
12,818 |
||||
Net finance costs |
1,703 |
528 |
8,151 |
1,406 |
||||
Income tax recovery |
(103) |
(173) |
(313) |
(2,961) |
||||
EBITDA |
(10,719) |
(1,889) |
(20,133) |
(4,121) |
||||
Asset impairment |
744 |
355 |
744 |
664 |
||||
Share-based payments expense |
1,063 |
822 |
2,112 |
2,033 |
||||
Loss (gain) on derivative financial instruments |
1,796 |
(422) |
(2,575) |
(1,345) |
||||
Foreign exchange loss (gain) |
295 |
760 |
(401) |
1,965 |
||||
ADJUSTED EBITDA |
$ |
(6,821) |
$ |
(374) |
$ |
(20,253) |
$ |
(804) |
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 planning to launch 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). Additionally, UrtheCast continues to seek options to exploit its unique SAR technology. 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 Management's Discussion & Analysis.
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; UrtheCast's expectations with respect to the Senior Lenders continuing to forbear on, and UrtheCast's ability to cure, the Event of Default under the Credit Agreement prior to the expiry of the Forbearance Agreement or at all; UrtheCast's ability to complete each of the first and second closings of the acquisition of Geosys on the terms set forth in the definitive purchase agreement or at all; UrtheCast's ability to meet its obligations and satisfy its liabilities under its existing indebtedness; UrtheCast's ability to enter into the definitive documentation relating to the revolving credit facility on terms acceptable to the Company or at all; UrtheCast's ability to enter into the planned UrtheDaily™ satellite constellation; UrtheCast's expectations with respect to its ability to raise proceeds from a subordinated debt or equity offering, achieve the required leverage and contracted value ratios and otherwise satisfy the first drawdown conditions under the Credit Agreement; UrtheCast's ability to satisfy the conditions precedent to certain contracts signed and announced; 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; UrtheCast's ability to secure financing for the planned UrtheDaily™ constellation on acceptable terms, in a timely manner, or at all. 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 as at the date of this press release, 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, 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.
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