UrtheCast Reports Fourth Quarter and Fiscal 2016 Financial Results

  • Non-IFRS revenue of $49.9 million in fiscal 2016 increased by 95% over the prior year (IFRS revenue of $111.3 million in 2016 increased by 205%)
  • Non-IFRS adjusted EBITDA of $5.6 million in fiscal 2016 was an improvement of $18.6M over the prior year
  • Non-IFRS revenue of $11.7 million in the fourth quarter increased by 45% over the prior year (IFRS revenue of $57.5 million in Q4 increased by 333%)
  • Non-IFRS adjusted EBITDA of $1.9 million in the fourth quarter was an improvement of $9.6 million over the prior year

VANCOUVER, March 28, 2017 /CNW/ - UrtheCast Corp. (TSX:UR) ("UrtheCast" or the "Company") today announces financial results for the three and twelve months ended on December 31, 2016.

Strong Growth in Revenue and Adjusted EBITDA Year-Over-Year

The Company is pleased to report fiscal 2016 non-IFRS revenues of $49.9 million, a 95% increase over fiscal 2015 non-IFRS revenue of $25.5 million. IFRS revenue for the year was $112.3 million as compared to $36.5 million reported in the prior year. Similarly, the Company's non-IFRS adjusted EBITDA was positive $5.6 million in the year compared to a loss of $12.9 million in the same period in 2015, amounting to an $18.6 million dollar improvement year-over-year to adjusted EBITDA. At December 31, 2016, the Company had total cash balances of $15.6 million and working capital of $18.9 million.

CFO Transition and Guidance

As announced on February 21, 2017, Mr. Sai Chu will be appointed Chief Financial Officer effective March 29, 2017. At this time, UrtheCast re-affirms its preliminary view for 2017 of growing non-IFRS revenues and expanding adjusted EBITDA margins over 2016 with similar seasonality to that of 2016.

Revenues in Earth Observation Growing by 115% Year-Over-Year

Revenues in the Company's Earth observation (EO) business in the 2016 fiscal year grew by 115% compared with fiscal 2015, growing from $7.1 million to $15.2 million (non-IFRS reporting). This triple-digit growth in the EO business is primarily due to the continued acceptance of the high-resolution imagery offering from the Deimos-2 satellite.

Impairment Charge for ISS Cameras

During the quarter, the Company recorded an additional non-cash asset impairment charge of $3.1 million for the Company's two EO cameras aboard the International Space Station (ISS). This resulted in a total non-cash impairment charge in fiscal 2016 of $10.9 million.

As the Company was unsuccessful in negotiating a new agreement with its ISS partner following the termination of the original agreement effective December 31, 2016, the deferred revenue liability associated with the ISS cameras was written off at December 31, 2016. This non-cash write-off was recognized as revenue of $40.6 million in the fourth quarter of 2016. This was offset by an acceleration of depreciation on the barter assets to reflect the reduced useful life. Following the termination of the agreement with the Company's ISS partner on December 31, 2016, the Company's financial statements will no longer require barter accounting for this partnership. 

The Company continues to seek to monetize the ISS cameras through alternative means, including licensing arrangements or an asset sale.

Business Highlights

Earth Observation Update

  • For the 2016 fiscal year, EO revenues grew by 115% compared with fiscal 2015, growing from $7.1 million to $15.2 million.
  • The Company hired Jamie Ritchie to lead the Company's EO sales and business development team under Fabrizio Pirondini, CEO of Deimos Imaging. Mr. Ritchie has been working in the EO field for over 15 years, with experience in business development, marketing and product management, including leading imagery at Esri Inc. and acting as Head of Product Portfolio and Marketing at Airbus Defence & Space, Geo-Intelligence.
  • Elecnor Deimos Space, a subsidiary of Elecnor, S.A., signed a multi-year agreement with the Ukrainian Space Agency to provide a Direct Receiving Station (DRS) for Deimos-2 data. Once the DRS is completed, Elecnor Deimos Space is expected to award a contract to Deimos Imaging to supply Deimos-2 imagery.

UrtheDaily Update

  • 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

  • The Company announced that it had entered into a binding agreement 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.
  • The Company is also continuing its negotiations to convert other MOUs and customer discussions into binding, definitive agreements. The Company expects that each agreement will have unique pricing depending on the imaging and commercial rights, ground segment features, and the operating, maintenance and training services to be provided to each customer.
  • The Company entered into a contribution agreement whereby the Company will receive approximately $17.6 million in funding, on an expense reimbursement basis, 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 over the next four years and repaid by the Company in annual installments over 15 years, beginning in 2023.

Financing and Liquidity

  • The Company closed a public offering of 13,033,341 common shares at a price of $1.50 per Common Share, for aggregate gross proceeds of $19,550,012.
  • The Company obtained a new $10,000,000 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$65,000,000 engineering services contract and may also be used to finance other contracts. The interest rate on this facility is RBC's prime rate plus 2% and borrowings are repayable when the related accounts receivable are collected from the customer, or on demand.

"We're really pleased with the progress the Company is making across the board", said Wade Larson, UrtheCast's President and CEO. "Growing EO revenue, a strengthened balance sheet, programmatic and technological progress on our development programs, significant customer signings on both OptiSAR and UrtheDaily, and an improved outlook going forward on both top-line revenue and adjusted EBITDA."

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, 2016.

 


Three Months Ended December 31,

Year Ended December 31,



2016


2015


2016


2015

Revenue    

$

57,476

$

13,267

$

111,252

$

36,519

Other operating income


229


139


985


4,615



57,705


13,406


112,237


41,134

Operating costs









Direct costs, selling, general and










administrative expenses


13,126


14,505


56,021


35,239

Research expenditures


842


5,351


4,915


15,668

Depreciation and amortization


46,851


7,407


66,128


13,410

Asset impairment


3,085


2,505


10,865


2,505

Share-based payments


702


1,015


2,594


3,312



64,606


30,783


140,523


70,134

Operating loss


(6,901)


(17,377)


(28,286)


(29,000)

Acquisition costs


-


-


-


(5,325)

Net finance costs


(353)


(344)


(1,989)


(620)

Loss on derivative financial instruments


(803)


-


(1,578)


-

Foreign exchange (loss) gain


506


(540)


400


(606)

Loss before income taxes


(7,551)


(18,261)


(31,453)


(35,551)

Income tax recovery (expense)


(766)


734


2,141


651

Net loss


(8,317)


(17,527)


(29,312)


(34,900)

Other comprehensive income (loss)


(2,455)


964


(4,486)


7,163

Comprehensive loss

$

(10,772)

$

(16,563)

$

(33,798)

$

(27,737)

Net loss per share – basic and diluted

$

(0.08)

$

(0.17)

$

(0.28)

$

(0.41)


 


Three Months ended December 31,

Year ended December 31,



2016


2015


2016


2015

NON-IFRS REVENUE:









Revenue per income statement

$

57,476

$

13,267

$

111,252

$

36,519

Non-cash revenue


(45,803)


(5,221)


(61,344)


(10,974)

NON-IFRS REVENUE


11,673


8,046

$

49,908

$

25,545










ADJUSTED EBITDA:









Net loss

$

(8,317)

$

(17,527)

$

(29,312)

$

(34,900)

Add back (subtract):









Depreciation and amortization


46,851


7,407


66,128


13,410

Net finance costs


353


344


1,989


620

Income tax recovery


766


(734)


(2,141)


(651)

EBITDA


39,653


(10,510)


36,664


(21,521)

Non-cash revenue


(45,803)


(5,221)


(61,344)


(10,974)

Non-cash operating costs


3,944


3,952


15,680


7,828

Asset impairment


3,085


2,505


10,865


2,505

Share-based payments expense


702


1,015


2,594


3,312

Deimos acquisition costs


-


-


-


5,325

Loss on derivative financial instruments


803


-


1,578


-

Foreign exchange losses (gains)


(506)


540


(400)


606

ADJUSTED EBITDA

$

1,878

$

(7,719)

$

5,637

$

(12,919)

 

As previously announced, UrtheCast will host a conference call regarding its 2016 fourth quarter and fiscal year financial results at 4:30 p.m. ET (1:30 p.m. PT) on March 28, 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 1329750.

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'.

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 expectations regarding a contract awarded by Elecnor Deimos Space; its future growth and operations plans; efforts to monetize the cameras aboard the ISS through alternative means;; 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 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; the decline of key relationships in, or termination of, the PanGeo Alliance of EO satellite operators; a decline in the relationship with Elecnor Deimos Space; 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. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, in the AIF, and as disclosed from time to time on UrtheCast's SEDAR profile. 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.

For more information, visit UrtheCast's website at www.urthecast.com.

SOURCE UrtheCast Corp.

For further information: Jeff Rath, EVP, Corporate Finance and Strategy, +1 (604) 669-1788

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