ST. JOHN’S, NEWFOUNDLAND, August 26, 2021 /GLOBE NEWSWIRE/ — Kraken Robotics Inc. (TSX-V: PNG, OTCQB: KRKNF), Canada’s Ocean Company, announced it has filed its financial results for the quarter ended June 30, 2021. Additional information concerning the Company, including its consolidated financial statements and related management’s discussion and analysis (“MD&A”) for the quarter ended June 30, 2021, can be found at www.sedar.com. Unless otherwise stated, all dollar amounts are Canadian dollar denominated.
2021 Financial Guidance
- Revenue for the year ended December 31, 2021 is expected to be $28 million to $30 million, an increase of more than 130% as compared to $12 million in 2020. The forecasted growth is driven by initial deliveries of KATFISH™ 180 towed sonars and Autonomous Launch and Recovery Systems for the Danish and Polish navies and various orders for AquaPix® MINSAS sensors and SeaPower™ batteries. In addition, our revenue guidance includes the forecasted five months of contribution from the acquisition of PanGeo, which closed on July 30, 2021.
- Gross margins for 2021 are expected to be in the 47%-50% range versus 47% in 2020.
- Adjusted EBITDA* for 2021 is expected to be in the range of $3.0 million to $4.5 million compared to an Adjusted EBITDA* loss of $2.7 million in 2020. The year over year improvement is expected as a result of higher revenue offset by increased expenses on headcount and infrastructure related spending, and overall costs due to the growth of the business.
- Net income for 2021 is expected to range from a net loss of $1.0 million to net income of $1.5 million. This compares to a net loss of $5.5 million in 2020.
- Over the last 12 months, Kraken has purchased significant inventory to de-risk delivery schedules that could be negatively impacted by the COVID 19 pandemic’s impact on supply chains. The Company continues to pre-buy long lead-time inventory for current 2021 and planned 2022 deliveries, with a primary focus being on electronic integrated circuits. With the ongoing efforts of our engineering and procurement teams to expedite parts orders, we are continuing to mitigate inventory supply risks.
*Adjusted EBITDA and Adjusted EBITDA margin do not have standardized meaning under IFRS and may not be comparable to similar measures used by other issuers. We define Adjusted EBITDA as revenue less costs of sales, administrative expenses, research and development costs plus investment tax credits. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenues.
Q2 2021 Financial Highlights
- Revenue for the quarter was $1.9 million compared to $2.3 million in the year ago quarter. Revenue in the quarter related mainly to progress on the Danish Navy order.
- Adjusted EBITDA* in the quarter was negative $0.2 million, compared to Adjusted EBITDA* of $0.4 million in the year ago quarter.
- Net loss in the quarter was $0.9 million compared to $0.1 million in the year ago quarter.
- Net working capital at the end of Q2, 2021 was $5.2 million, compared to $10.9 million at the end of 2020. Kraken exited the quarter with a cash and restricted cash of $5.4 million, compared to $13.9 million at December 31, 2020. The main driver of the reduction in cash over the last 12 months has been a planned increase in inventory builds ($7 million inventory increase since Q2, 2020) to address potential supply chain challenges (as noted above) and prepare for the start of significant deliveries in the second half of 2021.
- Including federal funding we will receive for our OceanVision project, at quarter end Kraken had $7.1 million in previously awarded funding to draw upon from government agencies and project funding partners. This amount is not recorded in our financial statements until the cash is received.
Q2 2021 Corporate Developments
During the quarter, Kraken:
- Closed the acquisition of 13 Robotics Ltda of Brazil (“13R”). The 13R team, with offices in Rio de Janeiro and Salvador, Brazil, consists of software developers and engineers who have significant experience in underwater robotics and autonomous systems for the energy markets. Kraken will utilize their expertise in robotic system development, leverage their relationships with leading international energy companies, and have a base of opportunity for Robotics/Data as a Service capabilities in South America.
- Joined LifeMoor mooring chain inspection project and industry collaboration. In conjunction with Kraken becoming a new member of LifeMoor, Kraken has entered into a project agreement with a major East Coast offshore energy operator. The project objective is to validate SeaVision® Mooring Chain Inspection Tool (MCIT) on a mooring chain provided by the offshore energy operator and to integrate SeaVision® MCIT with LifeMoor analytics software.
- Signed a CRADA on pressure tolerant batteries with the US Navy. Kraken will be testing its batteries with Naval Surface Warfare Center Carderock, which has significant experience with US Navy safety requirements. Kraken believes this will help increase adoption of Kraken’s pressure tolerant batteries into US Navy programs of record and sales with US Navy defense contractors.
- Signed a cooperation agreement with SH Defense of Denmark on containerized subsea surveillance payloads for the naval and commercial marine industry. These modular payloads will include Kraken surveillance systems and SH container modules. SH Defense will globally promote and sell containerized subsea surveillance solutions with a variety of Kraken’s surveillance solutions. In Canada, Kraken, supported by SHD, will promote, sell, deliver, install and service SHD hydraulic, electric and mechanical system modular containerized solutions to the Royal Canadian Navy, Canadian Coast Guard and commercial industry.
- In July, Kraken signed a contract with a major international energy company to provide detailed underwater inspection of the customer’s subsea assets. Kraken’s SeaVision® 3D laser scanner will be used to conduct underwater inspection of an umbilical termination assembly to acquire metrology data on tubing within the internal structure. The work will be performed in Q4 of this year in a West African country.
- In July, Kraken was awarded a $0.6 million Robotics as a Service (RaaS) contract from Newfoundland and Labrador Hydro (formerly Nalcor Energy) for the Underwater Inspection of Strait of Bell Isle Submarine Cable. Under the contract, Kraken will deploy its KATFISH™ towed SAS sonar system including our Automatic/Remote Launch and Recovery System (ALARS) deployed on the R/V Ocean Seeker. This contract will be executed in Q3, 2021.
- On July 26, Kraken completed a $10 million bought deal equity financing.
- On July 30, Kraken completed the acquisition of PanGeo. Together with PanGeo, Kraken can now offer a holistic solution of world-leading technologies and services in subsea acoustic and optical imaging, autonomous robotics, and subsea batteries for customers in the defense and commercial markets.
- On August 11, PanGeo announced the award of $2.0 million in cash funding from Canada’s Ocean Supercluster for PanGeo’s Geoscan project. The Geoscan project will focus on reconfiguring PanGeo’s Acoustic Corer™ 3D technology to allow for a wider area scan and the ability to image geohazards to depths greater than 30 meters sub-seabed. In addition to providing wider area scans, PanGeo will incorporate new Artificial Intelligence (AI) processing technology to improve data acquisition and accelerate data processing. Ultimately this technology will lead to a reduction of personnel offshore and improved vessel efficiencies.
ABOUT KRAKEN ROBOTICS INC.
Kraken Robotics Inc. (TSX.V:PNG) (OTCQB: KRKNF) is a marine technology company dedicated to the production and sale of software-centric sensors, subsea batteries and thrusters, and underwater robotic systems. The company is headquartered in Newfoundland with offices in Canada, U.S., Germany, Denmark, and Brazil. In July 2021, Kraken acquired PanGeo Subsea, a leading services company specializing in high-resolution 3D acoustic imaging solutions for the sub-seabed. PanGeo with offices in Canada, the United States and the United Kingdom is now a wholly owned subsidiary of Kraken. Kraken is ranked as a Top 100 marine technology company by Marine Technology Reporter.
Certain information in this news release constitutes forward-looking statements. When used in this news release, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “seek”, “propose”, “estimate”, “expect”, and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company’s current views with respect to future events based on certain material factors and assumptions and are subject to certain risks and uncertainties, including without limitation, changes in market, competition, governmental or regulatory developments, general economic conditions and other factors set out in the Company’s public disclosure documents. Many factors could cause the Company’s actual results, performance or achievements to vary from those described in this news release, including without limitation those listed above. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release and such forward-looking statements included in, or incorporated by reference in this news release, should not be unduly relied upon. Such statements speak only as of the date of this news release. The Company does not intend, and does not assume any obligation, to update these forward-looking statements. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Neither the TSX Venture Exchange Inc. nor its Regulation Services Provide (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release, and the OTCQB has neither approved nor disapproved the contents of this press release.
For further information, please contact:
Joe MacKay, Chief Financial Officer
Greg Reid, Chief Operating Officer
Sean Peasgood, Investor Relations