Kraken Robotics results slip in third quarter

Kraken Robotics Inc. of Mount Pearl, N.L., says its revenue for the third quarter of 2020 was down from the same period in 2019, but some of the loss was related to the cost of projects that will generate revenue for the company in the future.

Some of the highlights noted by the company in its report for the period ended Sept. 30 are:

Revenue for the quarter was $1.5 million, compared to $7.8 million a year earlier. Year-ago revenue was boosted by a large battery order. Year-to-date revenue totalled $10.2 million, compared to $10.5 million last year. Key revenue drivers were the delivery of subsea batteries and a towed sonar.

• The adjusted earnings before interest, taxes, depreciation, and amortization loss in the quarter was $1.7 million, compared to an adjusted EBITDA of $1.6 million in the year-ago quarter.

Net loss in the quarter was $2.7 million, compared to a net income of $0.1 million in the year-ago quarter. The loss was attributed to lower year-overyear revenue and higher costs as Kraken did work on larger contracts that will provide revenue later. Net year-to-date loss totaled $2.1 million, compared to a net loss of $2.8 million in the prior year.

Kraken said in a news release Tuesday that its balance sheet is strong.

It finished the quarter with a cash balance of $1.9 million, compared to $2.1 million at Dec. 31, 2019. After the quarter closed, Kraken went to market to raise $10.4 million.

Looking ahead, Kraken is to receive advance payments in the next quarter on recent orders with the Danish and Polish navies totaling $8.8 million.

Kraken was also notified it will receive funding for its Oceanvision project. Kraken had $12.5 million in previously awarded funding to draw upon from government agencies and project partners. This amount is not recorded in financial statements until the cash is received.

Kraken Robotics was incorporated in May 2008. Its principal business is the design, manufacture and sale of software-centric sensors, batteries and underwater robotic systems.

In 2018, according to statements available at sedar.com, Kraken Robotics acquired Kraken Power.

Kraken Robotics designs and builds underwater sonar and laser scanners sensor equipment and underwater vehicle platforms.

Kraken Power designs and manufactures subsea power equipment such as drives, thrusters and batteries.

In October, the company also incorporated Kraken Robotics Denmark APS in conjunction with its contract to supply mine-hunting sonar equipment to the Royal Danish Navy.

Kraken also committed $4.4 million to a three-year, $20-million Oceanvision project, described as a “cross-sectoral pilot project designed to advance subsea technology and robotics-as-a-service capability, along with providing expertise and knowledge of critical subsea infrastructure.”

The company said funding for that project will come from other partners. Canada’s Ocean Supercluster will provide $6.3 million, while the balance will be provided by government agencies, industry partners (Petroleum Research Newfoundland and Labrador, Ocean Choice International, Nunavut Fisheries Association and NSP Maritime Link Inc.) and Kraken.

“Kraken’s commitment to the project is $4.4 million, of which $2.7 million remains outstanding at Sept. 30, 2020. Kraken’s commitment will be reduced if and when additional government and industry partners join the project in 2020,” the company said in its financial report. “While Q3 2020 revenue was below the prior year, revenue is relatively unchanged on a year-to-date basis,” Kraken president and CEO Karl Kenny said in a news release.

Going forward, he said, the company will focus on executing the $40-million contracts with the Danish and Polish navies.

“We are also involved in active discussions with other NATO navies,” he said.

“We are seeing continued and solid interest for our ... products within the global defence and commercial markets.”

He said while revenue from the company’s battery products was down this quarter, the order activity for subsea batteries is improving as the company acquires new customers.

“We recently completed our third successful Oceanvision offshore campaign, a project that is accelerating our efforts to develop a more significant recurring revenue base, which we characterize as robotics as a service.”