Yesterday UrtheCast announced its fourth quarter and fiscal year 2018 financial results which saw revenue of $15.6 million in 2018 compared to $40.4 million in 2017.
While revenue was significantly lower in 2018 compared to the year before, the company indicated that fourth quarter revenue of $5.8 million, which was its best quarter of the year, was due in part to its ongoing effort to restructure itself.
However, as part of its restructuring the company has reduced its staff by 35% over the last year and will continue to reduce staff through Q2, whereby a total of 45% reduction in staff will have taken place.
The company also reported that “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 said “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.”
UrtheCast also revealed that it had made the decision in January to sell some or all of its Deimos Imaging assets. This is a significant move. Osborne said “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.”
It was June 23, 2015 that UrtheCast announced it was acquiring Deimos Imaging for €74.2 million which was $102 million Canadian at the time. Deimos Imaging assets include the Deimos-1 and Deimos-2 satellites.
Should UrtheCast sell the Deimos Imaging assets it could lose the majority of the Deimos revenue streams depending on whether they sell a portion or all the assets.
UrtheCast says it expects to be EBITDA (earnings before interest, tax, depreciation and amortization) positive by the end of the year. Revenue in part will be generated from the sale of Geosys data as well monetizing their intellectual property (IP).
With respect to their IP, the company believe it has “near-term opportunities to monetize its cloud-based and highly-automated ground processing software, ‘UrthePipeline’ which has been developed to support the UrtheDaily and OptiSAR projects.”
The company said it is still committed to building the UrtheDaily satellite constellation and said it had “signed NDA’s and engaged with more than a dozen potential lenders and investors.”
With the right-sizing of the company and its current plan, the company believes it will be self-sustaining by the year end.