Kraken Robotics (KRKNF) announced a mine hunting program update on July 3, 2020 that it’s complaint has been accepted and they are ready to deliver KATFISH™ towed synthetic aperture sonar to the Royal Danish Navy.
The total contract value is expected to be between $35-$40 million, with the majority of that received over a 2 year equipment acquisition phase. Kraken Robotics expects product margins on this contract to be in line with its historical averages. It’s expected to finalize matters with the Royal Danish Navy during Q3, 2020.
What does Kraken Robotics (KRKNF) do?
Kraken Robotics is a marine technology company engaged in the design, development and marketing of advanced sensors for Unmanned Underwater Vehicles used in military and commercial applications. Kraken is recognized as world leading innovators of Synthetic Aperture Sonar (SAS), a revolutionary underwater imaging technology that dramatically improves seabed surveys by providing ultra-high resolution imagery at superior coverage rates.
Kraken’s series of SAS products called AquaPix® leverages nearly two decades of R&D conducted by NATO’s Undersea Research Centre and millions of dollars in funding support from NATO government sponsors. AquaPix® offers comparable performance to existing high end military systems at a fraction of the cost.
Since 2017 the company expanded from being solely an advanced sensor manufacturer to also the designing and manufacturing of complete systems, having introduced our KATFISH™ tethered underwater vehicle and recently the THUNDERFISH® autonomous underwater vehicle (AUV).
Their technology has been validated by leading laboratories and industry partners including Defence Research and Development Canada, U.S. Navy’s Naval Sea Systems Command (NAVSEA); the UK Ministry of Defence; Elbit Systems; ATLAS Elektronik; Lockheed Martin; ECA Robotics and others. Kraken’s head office and main manufacturing facility is located in beautiful Newfoundland.
Kraken Robotics (KRKNF) Partnerships
Earlier this year Kraken Robotics announced a partnership with Greensea Systems creator of OPENSEA, an open architecture robotic platform. This partnership will expand upon the collaborative efforts already undertaken between the two companies to rapidly advance the capabilities of marine robotics. Under the agreement, Greensea will support development, integration, and testing work with Kraken across several of Kraken’s technology platforms.
The companies have worked together over the last twelve months to utilize the OPENSEA Platform and provide a robust, modular, and extensible software architecture for Kraken’s autonomous underwater vehicles and towed systems.
This Partnership Agreement simplifies contracting between the companies and allows for on-going collaboration for software and hardware technologies. Greensea will support Kraken in maturing on-going programs and accelerating new commercial offerings, including supporting Kraken’s R&D programs under the scope of the OceanVision project.
The companies also intend to work together specifically in the areas of seabed residency and hull inspection and have already demonstrated successful efforts by integrating Kraken sensors into the Greensea OPENSEA Platform and Greensea hardware products, including the newly developed Greensea Hull Crawler system.
What’s next for Kraken Robotics (KRKNF)?
This year the company is looking strong with latest reports suggesting strong growth in 2020 compared to 2019.
Financial statistics for Q1 2020
- Revenue for the quarter was $6.4 million compared to $1.4 million in the year ago quarter. Revenue in the quarter was driven by the delivery of a KATFISH™ 180 system, additional subsea batteries to a military customer, acoustic signal processing software for a defense contractor as well as Robotics as a Service and data analytics for offshore energy customers.
- Adjusted EBITDA* in the quarter was positive at $1.3 million, a 20.2% Adjusted EBITDA margin* compared to an Adjusted EBITDA* loss of $0.3 million in the year ago quarter.
- Net Income in the quarter was $0.7 million compared to a net loss of $0.9 million in the year ago quarter. Share-based compensation expense in the quarter of $0.2 million compared to $0.1 million in the prior year.
- Net working capital at the end of Q1, 2020 was $8.2 million, up $1.0 million sequentially from year end 2019.
- Kraken exited the quarter with a cash balance of $2.1 million, flat as compared to December 31, 2019. Due to increased sales during the quarter, accounts receivable increased to $5.7 million, compared to $5.1 million at December 31, 2019. Subsequent to the quarter, Kraken’s credit line was increased to $1.5 million from $1.0 million and remains undrawn.
- Including federal funding we will receive for our OceanVision project, Kraken had $6.2 million in previously awarded funding to draw upon from government agencies. This amount is not recorded in our financial statements until the cash is received.
Financial statistics for 2019
- Revenue for the quarter was $4.6 million compared to $1.4 million in the year ago quarter. Revenue in the quarter was driven by the final delivery of SeaPower™ batteries to Ocean Infinity and the delivery of sensors and associated equipment to multiple customers.
- Adjusted EBITDA* in the quarter was positive at $0.5 million, an 11.7% Adjusted EBITDA margin* compared to an Adjusted EBITDA* loss of $0.9 million in the year ago quarter.
- During the quarter Kraken acquired the remaining 25% of Kraken Power GmbH not previously owned for €0.3 million. The acquisition triggered a change of control payment to an arm’s length third-party lender in an amount equal to €0.1 million payable in 2020, which has been recognized in the income statement during the quarter.
- Net loss in the quarter was $0.2 million compared to a net loss of $0.7 million in the year ago quarter. In addition to the change of control payment, discussed above, Q4 was impacted by share-based compensation expense of $0.3 million compared to $0.1 million in the prior year due to the grant of stock options to employees, officers and directors during the year.
- Kraken exited the quarter with a cash balance of $2.1 million, as compared to a cash balance of $4.9 million at December 31, 2018 which reflected the bought deal financing that closed in December 2018. Due to increased sales during the year, accounts receivable increased to $5.0 million at year end, compared to $1.7 million at December 31, 2018. Most of these receivables were collected in Q1 and early Q2.
- Kraken had $2.3 million in previously awarded funding to draw upon from government agencies. This amount is not recorded in our financial statements until the cash is received.
- Revenue for 2019 totaled $15.1 million as compared to $6.7 million in the same period of 2018, representing growth of 126%. Revenue in 2019 was highlighted by the delivery of a $9.0 million order for SeaPower™ batteries to Ocean Infinity in the second half of the year; the delivery of a KATFISH™ system in Q2 2019 as well as delivery of sensors to multiple customers.
- Adjusted EBITDA* for the year was $0.4 million compared to an Adjusted EBITDA* loss of $3.3 million a year ago while adjusted EBITDA over the second half of 2019 was positive $2.1 million.
- During Q3 2019 we delivered the ThunderFish® Alpha Autonomous Underwater Vehicle to our test partner, Defense Research and Development Canada. As a result of this contract, we recorded a gain on the disposal of assets of $0.6 million.
- Net loss for the year was $3.0 million compared to a net loss of $2.9 million in the prior year. In addition to the change of control payment that occurred in Q4, we had a gain on the disposal of ThunderFish® Alpha in Q3 of $0.6 million. The year was also impacted by share-based compensation expense of $1.4 million compared to $0.3 million in the prior due to the grant of stock options to employees, officers and directors during the year.
- Formally signed the Ocean Supercluster contract for the OceanVision™ project. This $18.8 million project will see the development of new sensor and underwater vehicle technologies as well as services such as Robotics as a Service and Data Analytics as a Service.
- Announced that the Company is the first to achieve a practical resolution of 2 cm with a commercial Synthetic Aperture Sonar (SAS). Kraken’s Ultra High Definition (UHD) software improves the AquaPix® SAS image resolution from 3.0 x 3.3 cm (across along track) to an industry-leading 1.9 x 2.1 cm and maintains constant UHD resolution across the entire swath.
- Announced an 8-year framework agreement with a leading international defense contractor for our Acoustic Signal Processing Group to provide development, maintenance, and training to enhance and modernize an anti-submarine warfare sonar product.
- Announced that the Company has been awarded a $0.5 million contract with the Government of Canada for our SeaVision® 3D laser scanner platform to be working with Parks Canada’s Underwater Archeology Team as a continuation of the Franklin Expedition in the Canadian Arctic.
- Announced $2.8 million in orders from four US companies and one Canadian company that will be fulfilled during the first half of 2020.
- Announced a Partnership Agreement with Greensea Systems, Inc., creator of OPENSEA, an open architecture robotic platform. This partnership will expand upon the collaborative efforts already undertaken between the two companies to rapidly advance the capabilities of marine robotics.
Should you buy Kraken Robotics (KRKNF) as a reliable investment?
Wall Street analysts predict that KRKNF stock is an attractive short term investment, reaching a low price tag of $0.54, an average price tag of $0.84 and a high price tag of $1.
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