exactEarth Announces First Quarter Fiscal 2021 Financial Results
  • Increased total revenue by 30%
  • Increased Subscription Services revenue by 27%
  • Generated positive Adjusted EBITDA of $0.9 million
  • Completed the conversion of all convertible debentures subsequent to quarter-end

CAMBRIDGE, ON, March 11, 2021 /CNW/ - exactEarth Ltd. ("the Company"), a leading provider of Satellite-AIS data services, announces its financial results for the three-month period ended January 31, 2021. All financial figures are in Canadian dollars unless otherwise stated.

Q1 Fiscal 2021 Highlights:

  • Revenue was $5.4 million, up 30% compared to $4.1 million in Q1 2020.
  • Subscription Services1 revenue was $4.9 million, up 27% compared to Q1 2020.
  • New Order Bookings were $4.3 million compared to $7.1 million in Q1 2020.
  • Order Bookings backlog at the end of Q1 2021 was $26.7 million compared to $25.6 million at the end of Q1 2020.
  • Adjusted EBITDA2 was $900 thousand compared to $250 thousand in Q1 2020.
  • Cash from operations was $771 thousand compared to cash used in operations of $1.8 million in Q1 2020.
  • Cash, cash equivalents and short-term investments were $8.0 million at the end of Q1 2021 compared to $7.4 million at the end of Fiscal 2020.
  • Announced redemption of 2023 convertible unsecured subordinated debentures, which was completed subsequent to quarter-end.

"Q1 saw the continuation of the positive momentum we generated during 2020," said Peter Mabson, President and CEO. "Subscription revenue grew in both the commercial and government segments and we continue to experience high customer retention, which provides a strong, stable foundation to support future growth. We again grew our cash on the balance sheet fueled by the third straight quarter of positive cash from operations, and subsequent to quarter-end, our convertible debentures were converted to equity, further strengthening the balance sheet. During the remainder of the year, we will continue to invest in our sales and marketing teams in order to support our growth trend through 2021 and beyond."

Subsequent Event – Convertible Debentures Converted to Equity
On January 8, 2021 exactEarth issued a redemption notice (the "Redemption Notice") to redeem in full (the "Redemption") all of its outstanding convertible unsecured subordinated debentures due December 13, 2023 (the "Debentures"), which amounted to an aggregate of $13.0 million. As anticipated, on February 8, 2021 all holders converted the Debentures prior to Redemption. In connection with the conversion the Company issued an aggregate of 27,369,585 common shares to satisfy the principal amount and accrued and unpaid interest.

"The conversion of the debentures simplifies our capital structure, improves the leverage of the Company and eliminates the interest expense," said Mr. Mabson. "With a stronger balance sheet today, we are well positioned to continue our momentum, invest in the business and capitalize on our growth opportunities."

Q1 Fiscal 2021 Financial Review
Total revenue in the three-month period ended January 31, 2021 ("Q1 2021") was $5.4 million, up 30% compared to $4.1 million in the three-month period ended January 31, 2020 ("Q1 2020").

Subscription Services revenue was $4.9 million (91% of total revenue) in Q1 2021, up 27% from $3.8 million (93% of total revenue) in Q1 2020. Data Products revenue and Other Products & Services revenue combined in Q1 2021 was $494 thousand compared to $294 thousand in Q1 2020. Data Products revenue and Other Products & Services revenue is typically generated from on-demand customer requests and/or projects, including the sale of historical datasets, which results in variability in quarter-to-quarter revenue levels from these segments.

Total revenue and Subscription Services revenue growth for Q1 2021 was driven primarily by customer growth in the commercial market segment. Revenue from commercial customers for Q1 2021 was $4.4 million, an increase of 33% compared to Q1 2020. The increase reflects continued interest in the real-time Satellite-AIS service, exactView RT, and expansion of the Company's channel partner strategy. Revenue from government customers for Q1 2021 was $922 thousand, an increase of 15% compared to Q1 2020.

Order Bookings backlog at January 31, 2021 was $26.7 million compared to $25.6 million at the end of Q1 2020. The Company's foreign currency denominated Order Bookings backlog is affected by fluctuations in foreign exchange rates, which resulted in a decrease of $920 thousand in stated backlog at quarter-end. Revenue of $12.2 million from the current revenue backlog is forecasted to be earned in the remainder of Fiscal 2021.

Gross margin for Q1 2021 was 52% compared to 50% in Q1 2020. Gross margin improved year-over-year primarily due to revenue growth. Cost of revenue was $2.6 million in Q1 2021 compared to $2.1 million in Q1 2020. The year-over-year difference in cost of revenue was primarily due to a favourable one-time $648 thousand net adjustment recognized in Q1 2020 related to the completion of the amended L3Harris agreement.

Selling, general and administrative ("SG&A") expense for Q1 2021 was $2.8 million compared to $1.8 million in Q1 2020. The increase in SG&A was primarily due to a $765 thousand non-cash expense related to the increase in the value of Deferred Share Units ("DSUs") held by members of the Board of Directors. DSUs are settled in cash and therefore their value is updated based on the share price at the end of the quarter.

Product development and research and development ("R&D") expense for Q1 2021 was $191 thousand compared to $304 thousand in Q1 2020. Product development and R&D activities remain focused on the development of web-based functionality and new analytics-based product offerings. The year-over-year decrease in Q1 2021 was due to a reduction in discretionary consulting expenses.

Adjusted EBITDA1 for Q1 2021 was $900 thousand compared to $250 thousand in Q1 2020. Adjusted EBITDA improved year-over-year primarily due to higher revenue and increased gross margin. Of note, Adjusted EBITDA in Q1 2020 benefited from the favourable one-time $648 thousand net adjustment related to the completion of the amended L3Harris agreement.


 Three months ended Jan 31 



2021


2020

Net income (loss)

$

(1,334)

$

(613)

Interest income


(14)


(34)

Interest expense


497


426

Income tax expense


58


74

Depreciation and amortization


178


254

Unrealized foreign exchange loss (gain)


442


(167)

Long-term incentive plan expense


1,045


310

Change in COVID-19 allowance for doubtful
accounts


28


-

Adjusted EBITDA

$

900

$

250

Net loss for Q1 2021 was ($1.3) million, or ($0.06) per basic and diluted share, compared to ($613) thousand, or ($0.03) per basic and diluted share, in Q1 2020. Net loss increased primarily due to the $786 thousand non-cash expense in Q1 2021 related to the increase in the value of DSUs held by members of the Board of Directors, the one-time $648 thousand net adjustment recognized in Q1 2020 related to the completion of the amended L3Harris agreement and a foreign exchange loss of $397 thousand in Q1 2021.  

Cash generated from operations for Q1 2021 was $771 thousand, compared to cash used in operations of $1.8 million in Q1 2020. exactEarth's cash, cash-equivalents and short-term investments, which increased for the second straight quarter, were $8.0 million at January 31, 2021 compared to $7.4 million at October 31, 2020.

As of March 10, 2021, the number of issued and outstanding common shares was 49,418,226. The Company has a further 2,885,040 share units that are antidilutive at January 31, 2021.

Q1 2021 Conference Call
exactEarth will hold a conference call today at 8:30 am Eastern Daylight Time to discuss its Q1 2021 financial results. The call will be hosted by Mr. Peter Mabson, President and Chief Executive Officer and Mr. Sean Maybee, Chief Financial Officer.

CONFERENCE ID: 5457858
DATE: Thursday, March 11, 2021
TIME: 8:30 a.m. Eastern Daylight Time
DIAL-IN NUMBER: 1-888-231-8191 or 647-427-7450
WEBCAST LINK: https://produceredition.webcasts.com/starthere.jsp?ei=1425880&tp_key=cd7df8d73a
TAPED REPLAY: 1-855-859-2056 or 416-849-0833
REPLAY CODE: 5457858

The taped replay will be available for seven days and the archived webcast will be available for 90 days.

A link to the live audio webcast of the conference call will also be available on the events page of the investors section of exactEarth website at www.exactearth.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to hear the webcast.

1,2Non-IFRS Measures
We measure Adjusted EBITDA as earnings before interest expense, taxes, depreciation and amortization ("EBITDA"), plus unrealized foreign exchange losses, share-based compensation costs, impairment losses, share of equity investment loss and COVID-19 related allowances for doubtful accounts, less interest income and unrealized foreign exchange gains. We believe that Adjusted EBITDA provides useful supplemental information as it provides 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. 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.

The Company defines "Order Bookings" as the dollar sum of contracts for the supply of products and services to its customers. "Order Bookings backlog" is the dollar sum of revenue that is expected to be recognized derived from customer contracts. Order Bookings and Order Bookings backlog are indicative of firm future revenue streams; however, they do not provide a guarantee of future net income and provide no information about the timing of future revenue.

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.

About exactEarth Ltd.
exactEarth is a leading provider of global maritime vessel data for ship tracking and maritime situational awareness solutions. Since its formation in 2009, exactEarth has pioneered a powerful new method of maritime surveillance called Satellite 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's second-generation constellation, exactView RT, securely relays satellite-detected AIS vessel signals from any location on the earth's surface to the ground in seconds – thus enabling global real-time vessel tracking. This unique capability consists of 58 advanced satellite payloads designed and built by L3Harris Technologies, Inc. under agreement with exactEarth and that are hosted onboard the Iridium NEXT constellation of satellites. www.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, expectations of our exactView RT offering relative to competitors, financial impact of the Myriota transaction, expectations of the exactView RT capabilities driving growth, growth opportunities for the Company in the maritime information services market and the cost and revenue share in connection with the L3Harris Agreement. 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 anticipated benefits of the A&R SABA; the financial impact of the Myriota transaction; the impact of the COVID-19 pandemic on customers and the market generally, 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.

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Financial Position

(in thousands of Canadian dollars)

(unaudited)




As at
January  31,


As at
October 31,




2021


2020




$


$

ASSETS





Current assets






Cash and cash equivalents


7,952


7,423


Short-term investments


-


29


Accounts receivable


3,040


3,215


Unbilled revenue


1,930


1,698


Prepaid expenses


440


392


Other current assets


418


359

Total current assets


13,780


13,116








Property, plant and equipment


5,216


5,272


Intangible assets


1,238


1,286


Other long-term assets


486


566

Total assets


20,720


20,240







LIABILITIES & SHAREHOLDERS' DEFICIENCY





Current liabilities






Accounts payable and accrued liabilities


5,981


6,402


Deferred revenue


3,353


2,548


Loans payable - current


11,560


-

Total current liabilities


20,894


8,950








Loans payable


1,571


11,131


Long-term incentive plan liability


2,067


1,124


Other long-term liabilities 


108


1,660

Total liabilities


24,640


22,865







Shareholders' deficiency






Share capital


123,923


123,923


Contributed surplus


5,058


4,956


Accumulated other comprehensive loss


(218)


(155)


Deficit


(132,683)


(131,349)

Total shareholders' deficiency


(3,920)


(2,625)







Total liabilities and shareholders' deficiency


20,720


20,240

 

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficiency)

(in thousands of Canadian dollars)

(unaudited)

For the three months ended January 31, 2021



Total


Deficit

Accumulated
Other
Comprehensive
Loss

Share
Capital


Contributed
Surplus





$


$


$

$


$

Balance at October 31, 2020



(2,625)


(131,349)


(155)


123,923


4,956


Stock-based compensation expense



45


-


-


-


45


Restricted share unit expense



57


-


-


-


57


Comprehensive loss



(1,397)


(1,334)


(63)


-


-

Balance at January 31, 2021



(3,920)


(132,683)


(218)


123,923


5,058














For the three months ended January 31, 2020
















$


$


$

$


$

Balance at October 31, 2019



2,119


(126,238)


(113)


123,823


4,647


Stock-based compensation expense



42


-


-


-


42


Restricted share unit expense



90


-


-


-


90


Comprehensive loss



(675)


(613)


(62)


-


-

Balance at January 31, 2020



1,576


(126,851)


(175)


123,823


4,779














 

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Loss and Comprehensive Loss

(in thousands of Canadian dollars except for per share figures)

(unaudited)





Three months ended 





January  31,


January  31,





2021


2020





$


$
















Revenue



5,364


4,133


Cost of revenue



2,583


2,059


Gross profit



2,781


2,074
















Selling, general and administrative



2,799


1,780


Product development and research
   and development



191


304


Depreciation and amortization



178


254

Loss from operations



(387)


(264)








Other expenses







Other expense



9


-


Foreign exchange loss (gain)



397


(117)


Interest income



(14)


(34)


Interest expense



497


426

Total other expenses



889


275


Income tax expense



58


74

Net loss



(1,334)


(613)








Other comprehensive loss







Item that may be subsequently reclassified to net loss:






Foreign currency translation, net of income tax expense of nil

(63)


(62)


Total other comprehensive loss



(63)


(62)








Comprehensive loss



(1,397)


(675)








Loss per share







Basic and diluted loss per share



(0.06)


(0.03)


 

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Cash Flows

(in thousands of Canadian dollars)

(unaudited)




Three months ended




January  31,


January  31,




2021


2020




$


$

Operating activities






Net loss


(1,334)


(613)

Add (deduct) items not involving cash






Non-cash interest


279


118


Depreciation and amortization


178


254


Operating grant recognized on SIF loan


(148)


(209)


Long-term incentive plan expense


1,045


309


Net change in non-cash balances


751


(1,674)

Cash flows from (used in) operating activities


771


(1,815)







Investing activities






Acquisition of property, plant and equipment


(541)


(378)

Cash flows used in investing activities


(541)


(378)







Financing activities






Government loan repayment


-


(123)


Government loan advance


430


833


Payment of principal portion of lease obligations


(33)


-

Cash flows from financing activities


397


673







Effect of exchange rate changes on cash


(98)


4







Net increase (decrease) in cash


529


(1,516)

Cash, beginning of the period


7,423


10,188

Cash, end of the period


7,952


8,672







Supplemental cash flow information






Interest paid


197


199


Interest received


-


24


Income taxes paid


58


74

 

SOURCE exactEarth Ltd.

For further information: INVESTORS: Dave Mason, Investor Relations, Tel: +1 416-247-9652, investors@exactearth.com