UrtheCast Reports First Quarter 2019 Financial Results

Date : 05/15/2019 @ 1:41AM
Source : PR Newswire (Canada)
Stock : UrtheCast Corp (UR)
Quote : 0.145  0.005 (3.57%) @ 3:00PM
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UrtheCast Reports First Quarter 2019 Financial Results

UrtheCast (TSX:UR)
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3 Months : From Apr 2019 to Jul 2019

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VANCOUVER, May 14, 2019 /CNW/ - UrtheCast Corp. (TSX:UR) ("UrtheCast" or the "Company"), a leading provider of information-rich products and services in the geospatial and geo-analytics markets, reported its financial results for the three months ended March 31, 2019. All financial figures are in Canadian dollars unless otherwise indicated.

As a result of the planned sale of Deimos Imaging or its assets, the operations of Deimos Imaging have been classified as discontinued operations for the three months ended March 31, 2019 and the associated comparative prior period. The financial information in this press release is based on the Company's continuing operations unless otherwise noted.

Q1 2019 Financial Results

(in millions of Canadian dollars)

Q1 2019

Q1 2018






Operating costs



Adjusted EBITDA from continuing operations1



Net loss from continuing operations



Net loss from discontinued operations



Net loss



1 Non-IFRS earnings measure. See reconciliation of Adjusted EBITDA to Net Loss under "Non-IFRS Earnings Measures"in the Company's Management Discussion & Analysis for the period ending March 31, 2019


"Our near-term focus continues to be on strengthening and streamlining our current business lines while advancing towards the build and launch of the UrtheDaily Constellation, a global change detection system that will transform the way we observe our planet. Indications of market demand for our unrivalled UrtheDaily service offering remain robust and widespread," said Donald Osborne, CEO of UrtheCast. "Additionally, our ongoing restructuring activities are beginning to yield positive results, most notably in the form of a significantly reduced fixed cost base, and we have enhanced UrtheCast's strategic focus, resilience, and ability to translate growth opportunities into positive cashflow. We continue to make progress towards delivering a positive run-rate EBITDA for UrtheCast by the end of 2019 and have already begun to see a positive EBITDA contribution from our recently completed acquisition of Geosys, a provider of world-class geo-analytics solutions for precision agriculture."

Mr. Osborne continued, "The Geosys acquisition furthers our vertical integration strategy and moves UrtheCast up the value-chain into geo-analytics, a high-margin and rapidly growing market segment. The combination of daily imagery data from UrtheDaily with the innovative analytics capabilities of Geosys is going to provide insights that will revolutionize the agriculture industry."

Revenue in the first quarter of 2019 was $4.4 million and was comprised entirely of geo-analytics products and services revenue resulting from the acquisition of Geosys and the commencement of a 13-year services contract with Geosys' former parent company, Land O'Lakes. The Company did not recognize any engineering and value-added services revenue in the first quarter of 2019, compared to $3.3 million in the first quarter of 2018, due to progress delays incurred by its key subcontractors in completing milestones under its engineering and value-added services contract. The decrease was also due to revenue being recognized on contracts for the provision of space hardware in the first quarter of 2018 which were completed during 2018.

Operating costs of $7.2 million in the first quarter of 2019 decreased by $0.4 million compared to the first quarter of 2018, due to the impact of cost reduction initiatives and a decrease in engineering subcontractor costs related to the decrease in engineering services revenues. These cost reductions were partially offset by the consolidation of Geosys operating costs from the acquisition date. Operating costs from continuing operations, exclusive of Geosys, have been reduced by more than 60% since the first quarter of 2018.

Adjusted EBITDA from continuing operations of negative $0.8 million in the first quarter of 2019 improved by $2.8 million compared to the same quarter last year due to lower corporate and engineering services related costs and a positive EBITDA contribution from Geosys.

The net loss of $6.5 million in the first quarter of 2019 improved by $4.6 million compared to the net loss from the first quarter of 2018, primarily due to higher revenue, lower operating costs, and a smaller net loss from discontinued operations.

Outlook & Going Concern

We refer you to the Company's consolidated financial statements for the three months ended March 31, 2019 and the related Management's Discussion & Analysis for further details relating to the Company's liquidity position. The Company has continued to take steps subsequent to March 31, 2019 to ensure that it is able to continue as a going concern and that it has adequate liquidity in the near term.


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 three months ended March 31, 2019. 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 March 31,








Other operating income





Operating costs

Direct costs, selling, general and administrative



Research expenditures



Depreciation and amortization



Share-based payments





Operating loss



Net finance costs



Gain on derivative financial instruments



Foreign exchange (loss) gain



Loss before income taxes



Income tax recovery (expense)



Net loss from continuing operations



Net loss from discontinued operations



Net loss



Other comprehensive income



Comprehensive loss





Loss per share – basic and diluted





Loss per share from continuing operations – basic and diluted







The following table reconciles our Non-IFRS earnings measures to Net Loss prepared in accordance with IFRS.

Three months ended March 31,




Net loss from continuing operations





Add back (subtract):

Depreciation and amortization



Net finance costs



Income tax (recovery) expense



EBITDA from continuing operations



Share-based payments



Gain on derivative financial instruments



Foreign exchange loss (gain)

















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. UrtheCast is a Big Data services company specializing in satellite imaging, data services and geo-analytics. The data the Company collects from its satellites and third parties fuel powerful cloud-based analytics platforms at the leading edge of the AI and machine learning revolution. The insights gained from the Company's imagery, cloud-based processing chain, and algorithms allows its customers to identify potential adverse events quickly, track long-term trends, monitor change, reduce intervention times, uncover opportunities, and take targeted, strategic actions to better serve their customers and fulfill their missions.  Key markets served are agriculture, forestry, environment and defense and intelligence.

UrtheCast has 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. Subject to UrtheCast financing the build and launch of the UrtheDaily Constellation satellites in a timely manner, the Company currently expects the UrtheDaily Constellation to begin operations in 2021. UrtheCast has entered into multiple agreements for the sale of imagery from the UrtheDaily Constellation once UrtheCast begins delivering data to customers.

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 (see "Business Highlights – Geosys Acquisition"). 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.

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 seven EO satellite operators with a combined 13 medium- and high-resolution EO sensors, led by Deimos Imaging, S.L.U., a wholly-owned subsidiary of UrtheCast. During the first quarter of 2019, the Company committed to a formal plan and commenced a bid process to sell all or substantially all of the assets of Deimos Imaging.

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, adjusted EBITDA, and adjusted EBITDA from continuing operations. 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. An explanation of how the Company calculates these measures is set out in the Company's MD&A under the heading "Non-IFRS Earnings Measures" for the period ending March 31, 2019, a copy of which is available on the Company's SEDAR profile and website.

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" are "going" to occur 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 and management's plans to improve the Company's financial position; expectations regarding achieving a positive run-rate EBITDA by the end of 2019 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 proposed and/or planned 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 fully integrate Geosys into the Company's other operations and achieve the expected synergies and other benefits therefrom on an ongoing basis and to complete the second closing of the acquisition of Geosys on the terms set forth in the definitive purchase agreement or at all, as well as the Company's ability to service and obtain additional revenues from the Service Level Agreement with Winfield, a subsidiary of Land O' Lakes; 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 ongoing efforts to reduce fixed costs 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; unexpected increases in fixed or variable costs; lower than expected revenues from Geosys or the Company's other products and services in the remainder of 2019; the loss of key personnel due to the Company's financial position and/or market factors; the Company's ability to fund its future operations, which is contingent on its efforts to raise additional financing and/or sell certain assets of the Company; an adverse outcome in the Company's litigation with Eastwood Capital Corp and William Holland, or additional claims made by lenders, shareholders or suppliers of the Company in connection with its operations and/or performance; 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 remaining two 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. and purchasers of advance data purchase subscription agreements for the data expected to be provided by the UrtheDaily constellation ; 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, value-added services 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, or the Company's failure to comply with listing requirements and other rules of the TSX and/or regulations of applicable securities authorities in Canada; 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.

Copyright 2019 Canada NewsWire

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