CAMBRIDGE, ON, Feb. 4, 2016 /CNW/ - exactEarth Ltd., the leading provider of Satellite AIS data services, today announced its financial results for the fourth quarter and year ended October 31, 2015 as well as the closing of the Spinout Transaction whereby exactEarth became a public company. All amounts are stated in Canadian dollars unless otherwise noted.
Summary of Results
| Three months ended |
Years ended |
|||
| In thousands of dollars, except % figures |
2015 |
2014 |
2015 |
2014 |
| Total revenue |
7,462 |
4,467 |
26,600 |
15,836 |
| Subscription services revenue* |
5,297 |
3,708 |
20,592 |
12,667 |
| Gross margin |
70.4% |
56.6% |
62.0% |
51.4% |
| Net income |
441 |
(932) |
(1,055) |
(3,705) |
| EBITDA* |
2,012 |
509 |
5,609 |
1,697 |
| Adjusted EBITDA* |
3,396 |
737 |
9,033 |
1,811 |
| * Subscription revenue, EBITDA and Adjusted EBITDA are non-IFRS measures. Please see |
Fiscal 2015 Highlights
"We are pleased to report a strong finish to an outstanding year," said Peter Mabson, President of exactEarth. "In 2015 we made important strategic advances highlighted by the long-term agreement we reached with Harris Corporation that will strengthen our offering and open up exciting new revenue opportunities. We also generated exceptional growth on the strength of a major contract with the Canadian Government, an increase in our subscriber base, and the initial revenues associated with the Harris partnership."
Mr Mabson continued: "We view 2016 as a transition year for exactEarth. Our service level will likely plateau for most of this year, but is then expected to improve significantly through 2017 with the deployment of our remaining two first generation satellites and with the Iridium NEXT satellite deployments. As a newly independent and well-funded public company we also intend to move forward on growth initiatives targeted at addressing the maritime information and satellite-internet-of-things markets and we are looking to invest significant effort over the next few years to put capabilities in place that can drive growth in these areas. I am confident that these efforts will help lay the foundation for long-term growth."
Financial Review
Total revenue was $26.6 million in the year ended October 31, 2015, an increase of $10.8 million from $15.8 million of revenue in the previous year. The revenue growth is the result of both our growing customer base and of service level and product improvements.
Subscription services revenue was $20.6 million in 2015, representing 77% of total revenues, and compares to $12.7 million in 2014. The primary driver of growth was a Canadian Government contract signed in September 2014 and covering a service period through to March 2016. The Company is currently engaged in a competitive bidding process to continue to provide AIS services to the Canadian Government. The Company is confident in its chances of winning the Canadian government contract renewal, but the scope and dollar value of the agreement remains unclear at this time.
Data Products revenue was $3.9 million in 2015, compared to $1.5 million the previous year. The 2015 results include a one-time $2.5 million USD purchase of historical data by Harris, an amount recognized in an even split between the third and fourth quarters.
Other Products & Services contributed $2.1 million of revenue in 2015, up from $1.7 million in 2014. This revenue tends to be unpredictable as it is generated from on-demand customer requests.
Gross profit was $16.5 million representing 62.0% of revenue in 2015, compared to $8.1 million or a 51.4% gross margin in 2014. The increase reflects the growing customer base, offsetting the increased operational costs of our expanded satellite constellation.
Total operating expenses were $15.9 million in 2015, an increase of $4.8 million from the previous year. The majority of the increase was attributable to selling, general and administrative expenses which grew by $3.5 million to $9.0 million. The increase in SG&A expense reflects the volume of new subscriptions and the Company's investment as we execute on our strategic plan.
EBITDA was $5.6 million in 2015, an increase of $3.9 million from $1.7 million the previous year. Adjusted EBITDA of $9.0 million was up significantly from $1.8 million the previous year. The major adjustment in 2015 was $2.9 million of offering expenses associated with the initial public offering process initiated during the year. (Both EBITDA and Adjusted EBITDA are non-IFRS measures which are defined below.)
Net loss was $1.1 million in 2015, compared to a net loss of $3.7 million in 2014. The decrease is primarily attributed to increasing revenues year over year as the number of customers and product offerings increased, partially offset by increasing operating, development, selling and depreciation costs as ground stations were added, personnel increased and additional satellite assets were commissioned, along with increased costs of executing our strategic plan.
exactEarth generated $5.9 million of cash from operating activities in 2015 compared with $3.9 million generated in 2014. The Company ended the year with $2.4 million in cash, compared with $2.4 million at the end of fiscal 2014.
Spinout Transaction
exactEarth's current majority shareholder, COM DEV International, today completed a Spinout Transaction under which COM DEV distributed its shareholdings in exactEarth to its own shareholders and exactEarth will become a publicly traded company. exactEarth shares are expected to start trading on the TSX on or about February 9th, 2016 under the symbol XCT.
Immediately prior to the completion of the Spinout Transaction, exactEarth's existing shareholders converted all of exactEarth's shareholder debt to equity, and invested an additional $20 million of cash in equity. As a result, exactEarth's balance sheet will be significantly strengthened.
Following the completion of the Spinout Transaction, the Company has 21,605,506 shares outstanding. On a fully diluted basis, the Company will have approximately 23,070,749 shares outstanding. Hisdesat will be exactEarth's largest shareholder holding approximately 27% of the outstanding Common Shares.
Conference Call
The management of exactEarth will host an investor conference call on Friday, February 5, 2016 at 8:30 a.m. to discuss these results in greater detail. All interested investors and analysts are invited to participate.
| Date: |
Friday, February 5, 2016 at 8:30 a.m. E.S.T. |
| Dial-in: |
(647) 427-7450 or 1-888-231-8191 |
| Webcast: |
To access the live webcast, please go to http://bit.ly/20IFkLe or visit the |
| The webcast will be archived for 30 days. |
|
| Replay: |
The call recording will be available for 2 hours post call. |
About exactEarth Ltd.
exactEarth is a leading provider of global maritime vessel data for ship tracking and maritime situational awareness solutions. Since its establishment in 2009, exactEarth has pioneered a powerful new method of maritime surveillance called Satellite-AIS ("S-AIS") and has delivered to its clients a view of maritime behaviours across all regions of the world's oceans unrestricted by terrestrial limitations. exactEarth has deployed an operational data processing supply chain involving a constellation of satellites, receiving ground stations, patented decoding algorithms and advanced "big data" processing and distribution facilities. This ground-breaking system provides a comprehensive picture of the location of AIS equipped maritime vessels throughout the world and allows exactEarth to deliver data and information services characterized by high performance, reliability, security and simplicity to large international markets. For more information, visit exactearth.com.
Forward-Looking Statements
This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements may include financial and other projections, as well as statements regarding exactEarth's future plans, objectives or economic performance, or the assumptions underlying any of the foregoing, including statements regarding, among other things, the intentions of the parties, the use of any intellectual property, further investments that may be made by exactEarth and new markets that may be exploited by either party. exactEarth uses words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by exactEarth in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors exactEarth believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to exactEarth's expectations and predictions is subject to any number of risks, assumptions and uncertainties. Many factors could cause exactEarth's actual results, historical financial statements, or future events to differ materially from those expressed or implied by the forward-looking statements contained in this news release. These factors include, without limitation: uncertainty in the global economic environment; fluctuations in currency exchange rates; delays in the purchasing decisions of exactEarth's customers; the competition exactEarth faces in its industry and/or marketplace; the further delayed launch of satellites; the reduced scope of significant existing contracts and the possibility of technical, logistical or planning issues in connection with the deployment of exactEarth's products or services.
Non-IFRS Measures
We measure EBITDA as net income plus interest, taxes, depreciation and amortization. [We measure EBITDA Margin as EBITDA, divided by our total revenue.] We measure Adjusted EBITDA as EBITDA plus offering related expenses, unrealized foreign exchange losses and share-based compensation costs, less unrealized foreign exchange gains. We believe that EBITDA and adjusted EBITDA provide useful supplemental information as they provide an indication of the income generated by our main business activities before taking into consideration how they are financed or taxed and exclude the impact of items that are considered by management to be outside of the Company's ongoing operating results. EBITDA and Adjusted EBITDA should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of our performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows.
We define Subscription Revenue as the dollar sum of fully executed contracts for our products and/or services to our customers that are subscription-based, typically sold with a one-year period of service and recognized in our "Subscription Services" segmented revenue.
A reconciliation of adjusted EBITDA to net income determined in accordance with IFRS, is provided below.
| Years ended October 31 |
|||||
| (in thousands of dollars) |
2015 |
2014 |
|||
| Net loss |
$ |
(1,055) |
$ |
(3,705) |
|
| Interest expense |
1,188 |
665 |
|||
| Income tax expense |
- |
- |
|||
| Depreciation and amortization |
5,476 |
4,737 |
|||
| EBITDA |
$ |
5,609 |
$ |
1,697 |
|
| Offering related expenses |
2,864 |
- |
|||
| Unrealized foreign exchange loss (gain) |
560 |
112 |
|||
| Share-based compensation |
- |
2 |
|||
| Adjusted EBITDA |
$ |
9,033 |
$ |
1,811 |
|
| exactEarth Ltd. |
|||||
| Consolidated Statement of Financial Position |
|||||
| (in thousands of Canadian Dollars) |
|||||
| As at |
As at |
||||
| 2015 |
2014 |
||||
| $ |
$ |
||||
| ASSETS |
|||||
| Current assets |
|||||
| Cash |
2,365 |
2,403 |
|||
| Trade accounts receivable |
3,865 |
2,826 |
|||
| Unbilled revenue |
1,954 |
1,845 |
|||
| Due from related parties |
- |
57 |
|||
| Prepaid expenses and other assets |
676 |
529 |
|||
| Total current assets |
8,860 |
7,660 |
|||
| Property, plant and equipment |
48,538 |
40,858 |
|||
| Intangible assets |
24,646 |
14,370 |
|||
| Total assets |
82,044 |
62,888 |
|||
| LIABILITIES & EQUITY |
|||||
| Current liabilities |
|||||
| Accounts payable and accrued liabilities |
10,966 |
5,342 |
|||
| Due to related parties |
295 |
58 |
|||
| Deferred revenue |
1,037 |
977 |
|||
| Current portion of government loan |
361 |
198 |
|||
| Total current liabilities |
12,659 |
6,575 |
|||
| Government loan |
1,436 |
1,772 |
|||
| Due to related parties |
44,801 |
30,009 |
|||
| Long-term profit sharing plan liability |
82 |
176 |
|||
| Total liabilities |
58,978 |
38,532 |
|||
| Shareholders' equity |
|||||
| Share capital |
55,120 |
55,120 |
|||
| Contributed surplus |
249 |
250 |
|||
| Accumulated other comprehensive loss |
(296) |
(62) |
|||
| Deficit |
(32,007) |
(30,952) |
|||
| Total shareholders' equity |
23,066 |
24,356 |
|||
| Total liabilities and equity |
82,044 |
62,888 |
|||
| exactEarth Ltd. |
||||||||||
| Consolidated Statement of Comprehensive Loss |
||||||||||
| (in thousands of Canadian Dollars) |
||||||||||
| October 31, |
October 31, |
|||||||||
| For the year ended |
2015 |
2014 |
||||||||
| $ |
$ |
|||||||||
| Revenue |
26,600 |
15,836 |
||||||||
| Cost of revenue |
10,114 |
7,696 |
||||||||
| Gross margin |
16,486 |
8,140 |
||||||||
| Operating expenses |
||||||||||
| Research and development |
62 |
54 |
||||||||
| Selling, general and administrative |
8,953 |
5,426 |
||||||||
| Product development |
1,424 |
928 |
||||||||
| Depreciation and amortization |
5,476 |
4,737 |
||||||||
| Earnings (loss) from operations |
571 |
(3,005) |
||||||||
| Other (income) expense |
||||||||||
| Other Income |
- |
(78) |
||||||||
| Other expense |
28 |
5 |
||||||||
| Foreign exchange loss |
410 |
108 |
||||||||
| Interest expense |
1,188 |
665 |
||||||||
| Total other expense |
1,626 |
700 |
||||||||
| Income tax expense |
- |
- |
||||||||
| Net loss |
(1,055) |
(3,705) |
||||||||
| Other comprehensive loss |
||||||||||
| Items that may be subsequently reclassified to net income: |
||||||||||
| Foreign currency translation, net of income tax expense |
(234) |
(50) |
||||||||
| Total other comprehensive loss |
(234) |
(50) |
||||||||
| Comprehensive loss |
(1,289) |
(3,755) |
||||||||
| Basic and diluted loss per share |
(0.09) |
(0.33) |
||||||||
| exactEarth Ltd. |
||||||||||
| Consolidated Statement of Cash Flows |
||||||||||
| (in thousands of Canadian Dollars) |
||||||||||
| October 31, |
October 31, |
|||||||||
| For the year ended |
2015 |
2014 |
||||||||
| $ |
$ |
|||||||||
| Net loss |
(1,055) |
(3,705) |
||||||||
| Add (deduct) items not involving cash |
||||||||||
| Imputed interest on government loan |
156 |
134 |
||||||||
| Operating grant recognized on government loan |
- |
(79) |
||||||||
| Depreciation and amortization |
5,476 |
4,737 |
||||||||
| Foreign exchange loss on revaluation of foreign currency shareholder loans |
327 |
120 |
||||||||
| Stock-based compensation and long-term incentive plan expense |
- |
2 |
||||||||
| Settlement of long-term incentive plans |
(1) |
(1) |
||||||||
| Long-term profit sharing plan liability |
(95) |
176 |
||||||||
| Change in non-cash working capital balances |
1,059 |
2,508 |
||||||||
| Cash flows generated from operations |
5,867 |
3,892 |
||||||||
| Investing activities |
||||||||||
| Acquisition of property, plant, and equipment |
(6,289) |
(2,412) |
||||||||
| Acquisition of intangible assets |
(7,906) |
(3,518) |
||||||||
| Cash flows used in investing activities |
(14,195) |
(5,930) |
||||||||
| Financing activities |
||||||||||
| Government loan advances |
- |
583 |
||||||||
| Government loan repayment |
(328) |
- |
||||||||
| Shareholder loan advances |
8,516 |
2,250 |
||||||||
| Cash flows from financing activities |
8,188 |
2,833 |
||||||||
| Effect of exchange rate changes on cash |
102 |
(7) |
||||||||
| Net increase in cash |
(38) |
788 |
||||||||
| Cash, beginning of the period |
2,403 |
1,615 |
||||||||
| Cash, end of the period |
2,365 |
2,403 |
||||||||
| - |
||||||||||
| Supplemental cash flow information |
||||||||||
| Interest paid |
2,880 |
802 |
||||||||
| Interest received |
15 |
18 |
||||||||
| Taxes paid |
- |
- |
||||||||
SOURCE exactEarth
Image with caption: "exactEarth Company Logo (CNW Group/exactEarth)". Image available at: http://photos.newswire.ca/images/download/20160204_C6298_PHOTO_EN_613601.jpg
Sean Maybee, Chief Financial Officer, Tel: +1 519-620-5876, [email protected]
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