Canada: UrtheCast has announced financial results for the three and six months ended June 30, 2017. Excluding the non-cash revenue related to the ISS cameras of $5.1 million recorded in the second quarter of 2016, revenues decreased by $4.0 million in the second quarter of 2017.
While EO imagery sales increased by $0.2 million compared to the prior year, engineering services revenue was $4.2 million lower, primarily due to an adjustment in the second quarter of 2016 to record $8.0 million of engineering services revenue from a contract amendment, which included some services performed in the first quarter of 2016.
Operating costs of $16.4 million in the second quarter were $6.0 million lower than the prior year. When excluding the $5.1 million of depreciation and non-cash costs related to the ISS cameras, operating costs were $0.9 million lower than the same period last year, mainly due to lower salary and benefit expenses resulting from the consolidation of certain software development activities and lower cloud storage costs.
The net loss of $3.9 million in the second quarter of 2017 increased by $3.6 million when compared to the prior year, primarily due to the lower engineering services revenues, which was also the main factor in the $4.1 million decrease in Adjusted EBITDA compared to the prior year.
EO revenues of $3.3 million grew by 5%, compared to $3.1 million in the same period in 2016 (excluding non-cash revenues) and were 104% higher than in the first quarter of this year.
As previously announced, during the first quarter of 2017 the company was awarded approximately $17.6 million in funding 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, on a cost-reimbursement basis, over the next four years and repaid by UrtheCast in annual installments over 15 years. Subsequent to the quarter end, UrtheCast submitted its first claims for reimbursement of eligible costs of $5,178 for the period from April 2016 to June 2017.
Update on OptiSAR Constellation and UrtheDaily Constellation
In June 2015, UrtheCast announced its plans to build, launch and operate the OptiSAR Constellation and, in March 2016, it announced that it is planning to build, launch and operate the UrtheDaily Constellation.
Today, the company announced that it had entered into a contract with a value in excess of one hundred million Canadian dollars with a confidential customer for the development and delivery of a dual-frequency stand-alone SAR operational-class satellite as an accelerator mission for the OptiSAR Constellation. This contract will allow the company to accelerate both the operationalization of the SAR technology and the start of the SAR data services business.
The company believes that the sale of one or more accelerator SAR satellites mitigates some of the technical risks associated with the OptiSAR Constellation and assists in demonstrating the advantages of the SAR technology to the market.
“The results this quarter are in line with our expectations and our guidance for the year, which we are maintaining,” said Wade Larson, UrtheCast‘s President and CEO. “Our focus has been on progressing our strategic initiatives for long-term shareholder value, and we’re really pleased with the progress we’re making.”