Kraken Robotics Inc. (TSX-V: PNG, OTCQB: KRKNF) ("Kraken" or the
"Company"), announced it has filed its financial results for the
quarter and year ended December 31, 2022. Additional information
concerning the Company, including its consolidated financial
statements and related management's discussion and analysis
("MD&A") for the quarter and year ended December 31, 2022, can
be found at www.sedar.com. Unless otherwise stated, all dollar
amounts are Canadian dollar denominated.
CEO Comments
"2022 was a strong year for Kraken and we expect
it to continue in 2023," said President and CEO Greg Reid. “Revenue
growth of 60% and adjusted EBITDA margins of 13% reflect the right
technical solutions, strong end markets, and improving execution.
Investments we have made are positioning us well. The increasing
demand for high resolution subsea data at the lowest possible costs
combined with macro trends across our largest markets, defense and
offshore energy, is showing up in our pipeline which is broader and
deeper than ever before."
Outlook for 2023
For 2023, we expect revenue to be in the $66 -
$78 million range and adjusted EBITDA in the $12 - $17 million
range. The mid-point of our guidance range ($72 million in revenue
and $14.5 million in EBITDA) implies revenue growth of 76% over
2022 and adjusted EBITDA growth of 275%. Capex in 2023 is expected
to be $5-$6 million. Our 2023 outlook is largely driven by
contracts in hand and reflects strength across both our Products
and Services groups addressing defense and offshore energy
customers.
2022 Financial Highlights
- Revenue for the year ended December
31, 2022, was a record $40.9 million compared to $25.6 million in
the prior year. The 60% year-over-year growth was driven by the
delivery of KATFISH™ mine-hunting systems, AquaPix® synthetic
aperture sonar ("SAS"), and SeaPower™ batteries as well as a full
year of service revenue from PanGeo Subsea which was acquired in
July 2021.
- Gross margins(1) for 2022 were 42%,
compared to 44% in 2021.
- Adjusted EBITDA(1) for the year was
$5.3 million resulting in a 13% Adjusted EBITDA Margin(1), compared
to an Adjusted EBITDA(1) of $2.1 million in the prior year and a 8%
Adjusted EBITDA Margin(1).
- Net loss for the year totalled $4.2
million compared to a net loss of $3.5 million in the prior
year.
- Cash balance at year end 2022 was
$8.3 million compared to $6.8 million as of December 31, 2021.
- Total assets were $71.4 million at
year end 2022, as compared to $65.6 million as of December 31,
2021, with the increase driven by increased accounts receivable due
to the growth in the business.
- At year-end 2022, Kraken had $14.4
million in previously awarded non-repayable funding to draw upon
from government agencies and project partners for research and
development, of which cash amounting to $2.2 million has been
received for contracts to be completed in 2023.
Q4 2022 Financial Highlights
- Revenue for Q4 2022 was $8.8
million compared to $15.0 million in the prior year. Q4 2022
products revenue was $5.1 million compared to $12.7 in the prior
year with the decline being due to the delivery to the Polish Navy
in Q4 2021. Products revenue in the quarter was driven by work with
the Royal Danish Navy and multiple deliveries of our AquaPix® SAS
and SeaPower™ batteries. Services revenue in the quarter increase
60% to $3.7 million over the prior year and was driven mainly by
our utilization of our Sub-Bottom Imager™ technology.
- Gross margins(1) in Q4 2022 were
50% as compared to 43% in 2021 and increased due to a change in
product mix during the quarter to higher margin projects.
- Adjusted EBITDA(1) for the quarter
was $0.9 million, a 11% Adjusted EBITDA Margin(1) compared to an
Adjusted EBITDA (1) of $3.5 million and a 23% Adjusted EBITDA
Margin(1) in the comparable quarter with the decline driven by the
delivery to the Polish Navy in Q4 2021.
- Net loss in the quarter was $1.3
million, compared to net income of $0.5 million in the prior
year.
2022 Operational Highlights
Product Business
- During 2022, Kraken continued to
deliver on its contract to supply mine-hunting sonar equipment to
the Royal Danish Navy. At the end of 2022, the acquisition phase of
this project was largely delivered with integration and sea
acceptance testing to be completed on various components in 2023.
The sustainment portion of the contract is expected to begin during
the first half of 2023.
- In September 2022, Kraken announced
that it had signed a $9 million follow-on contract to supply
mine-hunting systems to a leading NATO Navy, which includes its
KATFISH™ towed SAS system, Tentacle® Winch system, autonomous
launch and recovery system and topsides. Deliveries will occur in
both 2023 and 2024.
- In November 2022, Kraken signed a
research & development contract with a global energy company
which will provide $8 million of cash funding to Kraken's Brazilian
subsidiary over a 3-year period. Under this project, Kraken will
continue development of artificial intelligence and machine
learning software, and subsea autonomy solutions to intelligently
analyze sensor data and learn how to respond to highly dynamic
environments in the offshore oil and gas, wind, hydrographic,
science, and defense industries.
- In November 2022, Kraken received
an order for subsea batteries valued at $14 million with deliveries
to occur in 2023.
- Throughout 2022, Kraken received
approximately $7 million in orders for its SAS product compared to
approximately $3 million in the prior year. Demand for our SAS
continues to increase over traditional side scan sonar driven by
customer desire for strong intelligence about subsea infrastructure
in both shallow and deep-water installations. The modularity and
versatility of our SAS is strong, having a track record of
successful integration on over 20 different underwater vehicle
platforms.
- In December 2022, Kraken was
awarded a prime contract with the Government of Canada to provide
Remote Mine-hunting and Disposal Systems for the Department of
National Defense. The contract consists of an estimated 24-month
acquisition program followed by an initial five-year Integrated
Logistics Support ("ILS") program, which includes options for
additional equipment, spare parts, training, and technical support.
If all options in the acquisition and ILS programs are selected,
the total value will exceed $50 million, consisting of
approximately $40 million for acquisition and $10 million for
ILS.
Service Business
- Service-related revenue in 2022
represented 39% of consolidated revenue. During 2022, we saw
growing demand for our seabed and sub-seabed technologies offered
on a services basis as customers focus on reducing risk on the
build out and maintenance of offshore infrastructure installations.
We have a strong position in the European market. We continue to
gain traction in the emerging US offshore wind market and the
Taiwan offshore wind market as our customers bring their European
supply base to those new markets.
- In September 2022, Kraken announced
that it had received approval to sell its products and services to
the Government of Canada under its Pathway to Commercialization
initiative. Under this approval, direct purchases can be made up to
$8 million per contract and are available to all government
departments. In 2023, Kraken expects discussions with numerous
government departments will start to bear fruit, as these entities
contract Kraken to provide subsea survey services.
NON-GAAP MEASURES
Non-GAAP measures, including non-GAAP financial
measures and non-GAAP ratios not recognized under IFRS are provided
where management believes they assist the reader in understanding
Kraken's results. The Company utilizes the following terms for
measurement within the MD&A that do not have a standardized
meaning or definition as prescribed by IFRS and therefore may not
be comparable with the calculation of similar measures by other
entities and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
GAAP.
Adjusted EBITDA and Adjusted EBITDA Margin
The Company believes that, in addition to
conventional measures prepared in accordance with IFRS, Adjusted
EBITDA is useful to securities analysts, investors and other
interested parties in evaluating operating performance by
presenting the results of the Company on a basis which excludes the
impact of certain non-operational items which enables the primary
readers of the MD&A to evaluate the results of the Company such
that it was operating without certain non-cash and non-recurring
items. Adjusted EBITDA is calculated as earnings before interest
expense, interest income, income taxes, depreciation and
amortization, stock-based compensation expense and non-recurring
impact transactions, if any.
Adjusted EBITDA Margin is defined at Adjusted
EBITDA divided by Total Revenue. Working capital is defined as
current assets less current liabilities.
|
|
|
|
|
Reconcilation of Net Loss to Adjusted EBITDA |
|
|
|
|
|
3 Month |
12 Month |
|
Q4 2022 |
Q4 2021 |
Q4 2022 |
Q4 2021 |
Net Loss |
(1,270 |
) |
548 |
|
(4,243 |
) |
(3,537 |
) |
Income Tax |
(1,153 |
) |
167 |
|
(1,059 |
) |
(106 |
) |
Financing costs |
816 |
|
644 |
|
3,261 |
|
1,657 |
|
Loss (gain) on disposal of assets |
- |
|
- |
|
207 |
|
- |
|
Foreign exchange (loss) gain |
411 |
|
173 |
|
301 |
|
(29 |
) |
Share-based compensation |
178 |
|
13 |
|
797 |
|
433 |
|
Depreciation and Amortization |
1,348 |
|
1,114 |
|
4,781 |
|
2,914 |
|
EBITDA - excluding restructuring and other
costs |
330 |
|
2,659 |
|
4,045 |
|
1,332 |
|
Acquisition costs and restructuring |
204 |
|
817 |
|
850 |
|
817 |
|
Impairment charge on inventory |
397 |
|
- |
|
397 |
|
- |
|
Adjusted EBITDA |
931 |
|
3,476 |
|
5,292 |
|
2,149 |
|
Adjusted EBITDA Margin |
10.6 |
% |
23.2 |
% |
12.9 |
% |
8.4 |
% |
Gross margin is defined as revenue less cost of
total sales. Gross margin percentage is defined as gross margin
dividend by total sales.
|
3 Month |
12 Month |
|
Q4 2022 |
Q4 2021 |
Q4 2022 |
Q4 2021 |
Revenue |
8,813 |
|
14,968 |
|
40,908 |
|
25,629 |
|
Cost of sales |
4,420 |
|
8,505 |
|
23,871 |
|
14,310 |
|
Gross margin |
4,393 |
|
6,463 |
|
17,037 |
|
11,319 |
|
Gross margin percentage |
49.8 |
% |
43.2 |
% |
41.6 |
% |
44.2 |
% |
ABOUT KRAKEN ROBOTICS INC.
Kraken Robotics Inc. (TSX.V: PNG) (OTCQB: KRKNF)
is a marine technology company providing complex subsea sensors,
batteries, and robotic systems. Our high-resolution 3D acoustic
imaging solutions and services enable clients to overcome the
challenges in our oceans - safely, efficiently, and sustainably.
Kraken Robotics is headquartered in Canada and has offices in North
and South America and Europe. Kraken is ranked as a Top 100 marine
technology company by Marine Technology Reporter.
Financial Outlook
The Company and its management believe that the
statements regarding 2023 revenue and adjusted EBITDA contained in
this press release are reasonable as of the date hereof, are based
on management's current views, strategies, expectations,
assumptions and forecasts, and have been calculated using
accounting policies that are generally consistent with the
Company's current accounting policies. These statements are
considered future-oriented financial outlooks and financial
information (collectively, "FOFI") under applicable securities
laws. These statements and any other FOFI included herein have been
approved by management of the Company as of the date hereof. Such
FOFI are provided for the purposes of presenting information about
management's current expectations and goals relating to the
Company's expected growth in its Products and Services groups.
However, because this information is highly subjective and subject
to numerous risks, including the risks discussed in the disclaimer
for forward looking statements below, it should not be relied on as
necessarily indicative of future results. Should one or more of
these risks or uncertainties materialize, or should assumptions
underlying the FOFI prove incorrect, actual results may vary
materially from those described herein as intended, planned,
anticipated, believed, estimated or expected. Although management
of the Company has attempted to identify important risks,
uncertainties and factors which could cause actual results to
differ materially, there may be others that cause results not to be
as anticipated, estimated or intended. The Company disclaims any
intention or obligation to update or revise any FOFI, whether as a
result of new information, future events or otherwise, except as
required by securities laws.
LINKS:www.krakenrobotics.com
SOCIAL MEDIA:LinkedIn
www.linkedin.com/company/krakenrobotics Twitter
www.twitter.com/krakenrobotics Facebook
www.facebook.com/krakenroboticsinc YouTube
www.youtube.com/channel/UCEMyaMQnneTeIr71HYgrT2A Instagram
www.instagram.com/krakenrobotics
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:
Stephen Griffin, Group Marketing
ManagerStephen.Griffin@krakenrobotics.com
Joe MacKay, Chief Financial Officer(416)
303-0605jmackay@krakenrobotics.com
Greg Reid, President & CEO(416)
818-9822greid@krakenrobotics.com
Sean Peasgood, Investor Relations(647)
955-1274sean@sophiccapital.com
(1) Adjusted EBITDA is a non-GAAP financial measure and gross
margin and adjusted EBITDA margin are non-GAAP ratios, in each case
with no standard meaning under IFRS, and may not be comparable to
similar financial measures disclosed by other issuers. Refer to the
"Non-GAAP Measures" section of this press release.
Kraken Robotics (TSXV:PNG)
Historical Stock Chart
From Apr 2024 to May 2024
Kraken Robotics (TSXV:PNG)
Historical Stock Chart
From May 2023 to May 2024