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Kraken Robotics Reports Record 2023 Financial Results and Sees Strong Momentum Continuing

ST. JOHN’S, Newfoundland and Labrador, April 18, 2024 (GLOBE NEWSWIRE) — Kraken Robotics Inc. (TSX-V: PNG, OTCQB: KRKNF) (“Kraken” or the “Company”), announced it has filed its financial results for the fourth quarter and year ended December 31, 2023 (“Q4 2023”). Please refer to the Audited Consolidated Financial Statements, Management’s Discussion and Analysis (“MD&A”) and the Annual Information Form for the year ended December 31, 2023, filed on www.sedarplus.ca for more information. The MD&A contains a comprehensive analysis of Fiscal 2023, the financial quarter ended December 31, 2023 (“Q4 2023”) and other information. Unless otherwise specified, all dollar amounts are denominated in Canadian dollars.

Q4 2023 Financial Highlights

Financial Summary

($ 000s) Q4 2023 Q4 2022 % change 2023   2022   % change  
Total revenue 28,006   8,813   218% 69,581   40,908   70%  
Gross margin 1 11,714   4,393   167% 33,956   17,037   99%  
Gross margin percentage 1 42%   50%     49%   42%      
Adjusted EBITDA 2 5,728   931   515% 14,094   5,292   166%  
Adjusted EBITDA percentage 2 20%   11%     20%   13%      
               

Financial Highlights for year ended December 31, 2023

2024 Financial Guidance Unchanged

As outlined in our February 15, 2024 press release, Kraken is reiterating its 2024 financial guidance. For 2024, Kraken expects revenue between $90.0 million to $100.0 million and Adjusted EBITDA(2) in the $18.0 million to $24.0 million range. Capital expenditures in 2024 are expected to range from $6.0 million to $7.0 million. Our 2024 outlook is driven by contracts in hand and reflects strength across both our Products and Services groups addressing defense and offshore energy customers.

($ 000s)   Actual               2024 Guidance Range Implied Change
    2023   Low   High   Low   High  
Total revenue 69,581   90,000   100,000   29%   44%  
Adjusted EBITDA 2   14,094   18,000   24,000   28%   70%  
Adjusted EBITDA percentage 2   20%   20%   24%     400 bps  
Capital expenditures   7,557   6,000   7,000   -21%   -7%  
 

Management Comments

“2023 was a very strong year for Kraken, with 70% growth in revenue and 166% growth in Adjusted EBITDA(2). We expect our strong growth trajectory to continue in 2024. To use a baseball analogy, we are in the second inning of a nine-inning ball game,” said Kraken President and CEO Greg Reid. “We have a strong pipeline of opportunities and a unique competitive position. In 2023, we made significant improvements in our business, including strengthening our technical and commercial depth, adding specific skillsets to our board of directors, and making significant investments in headcount and infrastructure. While not always apparent to external parties, these changes are positioning us to capture significant new business and improve our execution in the future. Below, I highlight several points that give us confidence that our future looks bright as the Kraken team brings our world class solutions to existing and new customers across the defense and commercial markets.”

NON-IFRS MEASURES

Non-IFRS measures, including certain non-IFRS financial measures and non-IFRS ratios in this press release, are provided where management believes they supplement measures determined in accordance with IFRS and provide readers with an improved ability to evaluate the underlying performance of the Company. Non-IFRS financial measures and non-IFRS ratios do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

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 this press release 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.

($ 000s) Q4 2023 Q4 2022 2023   2022  
Net Income (Loss) 2,584   (1,270 ) 5,546   (4,243 )
Income Tax 483   (1,153 ) 776   (1,059 )
Financing costs 369   816   1,631   3,261  
Gain on extinguishment of contingent consideration     (4,044 )  
Foreign exchange gain 997   411   975   301  
Share-based compensation 58   178   378   797  
Loss on disposal of assets 1     3   207  
Impairment of Goodwill     2,757    
Depreciation and Amortization 1,236   1,348   4,940   4,781  
EBITDA – excluding restructuring and other costs 5,728   330   12,962   4,045  
Acquisition costs and restructuring   204   1,132   850  
Impairment on Inventory   397     397  
Adjusted EBITDA 5,728   931   14,094   5,292  
Adjusted EBITDA Margin 20 % 11 % 20 % 13 %
         

Gross Margin and Gross Margin Percentage

Gross margin is defined as revenue less cost of total sales. Gross margin percentage is defined as gross margin divided by total revenues.

  Q4 2023 Q4 2022 2023   2022  
Revenue 28,006   8,813   69,581   40,908  
Cost of sales 16,292   4,420   35,625   23,871  
Gross margin 11,714   4,393   33,956   17,037  
Gross margin percentage 42 % 50 % 49 % 42 %

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.

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

For further information:

Jack North, Marketing
jnorth@krakenrobotics.com

Joe MacKay, Chief Financial Officer
(416) 303-0605
jmackay@krakenrobotics.com

Greg Reid, President & CEO
(416) 818-9822
greid@krakenrobotics.com

Sean Peasgood, Investor Relations
(647) 955-1274
sean@sophiccapital.com

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.

Financial Outlook

The Company and its management believe that the statements regarding 2024 revenue, Adjusted EBITDA and capital expenditures 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.

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.

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1
Gross margin percentage is a non-IFRS ratio with no standard meaning under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Refer to the “Non-IFRS Measures” section of this press release.
2 Adjusted EBITDA margin is a non-IFRS ratio with no standard meaning under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Refer to the “Non-IFRS Measures” section of this press release.


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