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UrtheCast Reports Third Quarter 2017 Financial Results and Expects UrtheDaily™ Constellation Financing Closing by Year End

VANCOUVER, Nov.14, 2017 — (PRNewswire) —  UrtheCast Corp. (TSX: UR) ("UrtheCast" or the "Company") today announces financial results for the three and nine months ended September 30, 2017.

(in millions of Canadian dollars)

Q3 2017

Q3 2016

YTD 2017

YTD 2016

Revenue excluding non-cash revenue (1)

$ 10.2

$ 15.5

$ 31.4

$ 38.2

Revenue    

10.2

20.7

31.4

53.8

Operating costs

16.0

29.6

47.9

75.9

Net loss

(6.4)

(9.6)

(15.4)

(21.0)

Adjusted EBITDA(1)

(0.4)

4.7

(0.8)

3.8

1

Non-IFRS earnings measure. See reconciliation to Revenue and Net Loss later in this press release

 

Excluding the non-cash revenue related to the ISS cameras of $5.1 million recorded in the third quarter of 2016, revenues decreased by $5.3 million in the third quarter of 2017. Revenues from EO imagery in the third quarter were $5.3 million lower than the prior year, primarily due to a delay related to a major contract award, while engineering services revenues in the third quarter were essentially flat compared to the prior year.

Operating costs of $16.0 million in the third quarter were $13.6 million lower than the prior year. When excluding non-cash costs such as depreciation, amortization, stock-based compensation, asset impairment charges and other non-cash costs associated with the ISS cameras in 2016, operating costs were $10.6 million in the quarter compared to $10.8 million in the prior year. The decrease in the quarter was mainly due to the consolidation of certain software development activities and lower cloud storage costs.

The net loss of $6.4 million in the third quarter of 2017 decreased by $3.2 million when compared to the prior year, primarily due to the $7.8 million asset impairment charge in 2016, which was partially offset by the decrease in revenues in the current quarter. The lower revenues were the main reason for the $5.1 decrease in Adjusted EBITDA compared to the third quarter of 2016.

Business Highlights

"During and subsequent to the third quarter, we have made significant progress in advancing our strategic growth initiatives and transitioning UrtheCast to a business model based on predictable, long-term revenue streams derived from our revolutionary earth imaging technology," said Wade Larson, UrtheCast's President and CEO. "We are proud to have secured a multi-year revenue commitment from a global leader in the aerospace industry, further validating our belief that UrtheDailyTM represents the state of the art in the rapidly expanding geoanalytics market. Additionally, we have received expressions of interest from top-tier institutional investors meaningfully in excess of our needs for the full build and launch of the UrtheDailyTM Constellation and have entered a binding build commitment agreement with leading satellite manufacturer SSTL ahead of a planned launch in 2020."

Sai Chu, UrtheCast's CFO, stated, "At this time we have expressions of interest that indicate we can finance UrtheDaily's capital needs entirely with senior secured debt and subordinated capital.   We expect this to close by the end of 2017.  The entire financing package is expected to be very attractive for shareholders.  Upon closing this financing, we believe that we will have a clear path to the launch and commercialization of the UrtheDaily Constellation."

Mr. Larson concluded, "As we take advantage of the near-term opportunity with UrtheDailyTM while securing additional contracts from high-quality global customers, we believe that UrtheCast is well positioned to create long-term value for our shareholders as a market leader in earth observation." 

Earth Observation ("EO")

Update on OptiSARTM Constellation and UrtheDailyTM Constellation

Government Funding

Financing and Liquidity

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 three and nine months ended September 30, 2017.

(in thousands of Canadian dollars)

Three Months Ended September 30,

Nine Months Ended September 30,



2017


2016


2017


2016

Revenue    

$

10,165

$

20,651

$

31,415

$

53,776

Other operating income


90


61


201


756



10,255


20,712


31,616


54,532

Operating costs









Direct costs, selling, general and










administrative expenses                    


10,418


13,853


31,821


42,895

Research expenditures


211


844


599


4,073

Depreciation and amortization


4,156


6,321


12,818


19,277

Asset impairment


355


7,780


664


7,780

Share-based payments


822


769


2,033


1,892



15,962


29,567


47,935


75,917

Operating loss


(5,707)


(8,855)


(16,319)


(21,385)

Net finance costs


(528)


(535)


(1,406)


(1,636)

Gain (loss) on derivative financial










instruments


422


(775)


1,345


(775)

Foreign exchange (loss) gain


(760)


296


(1,965)


(106)

Loss before income taxes


(6,573)


(9,869)


(18,345)


(23,902)

Income tax recovery


173


251


2,961


2,907

Net loss


(6,400)


(9,618)


(15,384)


(20,995)

Other comprehensive (loss) income


(340)


1,425


2,664


(2,031)

Comprehensive loss

$

(6,740)

$

(8,193)

$

(12,720)

$

(23,026)

Net loss per share – basic and diluted

$

(0.05)

$

(0.09)

$

(0.13)

$

(0.20)

 

NON-IFRS EARNINGS MEASURES

(in thousands of Canadian dollars)

Three Months Ended September 30,

Nine Months Ended September 30,



2017


2016


2017


2016

REVENUE EXCLUDING NON-CASH REVENUE:









Revenue per income statement

$

10,165

$

20,651

$

31,415

$

53,776

Non-cash revenue


-


(5,128)


-


(15,541)

REVENUE EXCLUDING NON-CASH REVENUE

$

10,165

$

15,523

$

31,415

$

38,235

ADJUSTED EBITDA:









Net loss

$

(6,400)

$

(9,618)

$

(15,384)

$

(20,995)

Add back (subtract):









Depreciation and amortization


4,156


6,321


12,818


19,277

Net finance costs


528


535


1,406


1,636

Income tax recovery


(173)


(251)


(2,961)


(2,907)

EBITDA


(1,889)


(3,013)


(4,121)


(2,989)

Non-cash revenue


-


(5,128)


-


(15,541)

Non-cash operating costs


-


3,859


-


11,736

Impairment of assets


355


7,780


664


7,780

Share-based payments expense


822


769


2,033


1,892

(Gain) loss on derivative financial instruments


(422)


775


(1,345)


775

Foreign exchange loss (gain)


760


(296)


1,965


106

ADJUSTED EBITDA

$

(374)

$

4,746

$

(804)

$

3,759

 

As previously announced, UrtheCast will host a conference call regarding its third quarter 2017 financial results at 5:00 p.m. ET (2:00 p.m. PT) on November 14, 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 3363233#. 

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 for partners and customers in multiple markets. Through its subsidiary Deimos Imaging, UrtheCast processes and distributes imagery data and value-added products on behalf of the PanGeo Alliance, a network of seven satellite operators with a combined 13 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 synthetic aperture radar ("SAR") satellites, called OptiSAR™, and a six-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".

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 non-IFRS revenue or revenue excluding non-cash revenue, 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", "target", "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 future growth and operations plans; expectations regarding government contributions and reimbursement grants; 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: UrtheCast's ability to satisfy the conditions precedent to certain contracts signed and announced; 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 and on acceptable terms, finance the development, building, launch and commissioning of the UrtheDailyTM Constellation or to convert the remaining MOUs and other customer discussions in respect of the OptiSAR™ constellation into binding, definitive agreements in a timely manner or at all; the inability of the confidential OptiSAR™ 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; any failure by Geosys, the Government of Canada or one of UrtheCast's third-party lenders to comply with the terms of their respective contracts with UrtheCast, and UrtheCast's ability to comply with any of its covenants thereunder; the decline of key relationships in, or termination of, the PanGeo Alliance of EO satellite operators; 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. 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.

Contact:
UrtheCast Corp.
Sai Chu, Chief Financial Officer
Phone: +1 (604) 669-1788
Web: www.urthecast.com