RE:Any insights from the call?hey @Retrace1 here is the info you require from today's call (below). I found the tone to be hopeful, they need a lot of chips to fall their way. But it sounds like they are confidently moving forward with a plan to right the ship....
Intro: Donald Osborne
Thank you, Sai. Please turn to page 4 of the presentation. I'm going to be focusing my discussion this morning on four areas that continue to be top priorities for us. The restructuring and rationalization of our business to get us to a positive EBITDA during 2019 and strengthen our balance sheet, securing new financing to move us into the build phase of UrtheDaily Constellation, realizing synergies from our acquisition of Geosys and lastly monetizing our world class synthetic aperture, SAR intellectual property...
On Deimos Sale: To this end, in January 2019, the company committed to a formal plan to sell all or substantially all of the assets of Deimos Imaging, which includes the Deimos-1 and Deimos-2 satellites, operations and ground station assets. The company has commenced a bid process and expects to complete the transaction in 2019. The proceeds from the sale of these assets would be used to strengthen our balance sheet by reducing debt and improving our working capital position.
We strongly believe that through this rationalization of the business, UrtheCast will be in a position to begin delivering positive operating results on the basis of its existing business lines alone and will be well poised to execute on a UrtheDaily Constellation, as a value accelerant. And although the process has been challenging, we are pleased with the progress we've been able to make to date and continued to make towards this end.
Follow up question on DEIMOS:
Doug Taylor
Okay. You've highlighted the potential for the sale of the Deimos assets as an, one way, you can bolster your balance sheet. Can you just help us understand or confirm for us? I mean, would the majority of your earth observation revenue go with the Deimos asset or would you be left with a material amount outside of Geosys of course?
Sai Chu
The majority of the revenue will go with the business if we sell the entire business, it depends whether we sell it in its entirety or parts thereof.
Doug Taylor
Okay. And I mean, the same go for, what cost base do you think you're carrying that, to support the Deimos assets at this point which would go with it and I guess I'm just trying to understand, if the Deimos business or assets were sold, to what extent that's going to, I mean, I understand the balance sheet impact is going to be immediate, but what the impact is going to be on your ongoing P&L from a sale or some of the things that you're considering with that asset?
Sai Chu
I mean, we're -- as I said earlier in the call, we are still driving to EBITDA positive with whatever business we're running by the end of this year, and we think we can achieve that.
Donald Osborne
Yeah. Doug, we look at each individual business unit on a standalone basis. And, right size the organization and the cost structure accordingly based on revenue. So, as we've noted, we've substantially restructured the operations. We're realizing the benefits, you've seen the cost reductions, there are more cost reductions coming. And we expect that we'll be able to get to ea positive during this year, as a result, the cost base that Deimos was significant. The people there have done a great job. Having said that, there were some difficult decisions in ensuring that that business is sized appropriately.
So, hopefully, that helps understand the situation. You look at it very carefully.
Doug Taylor
Yeah, just, I mean, a couple more questions to clarify, the 50% cost reduction, which is an impressive amount in the short time that you gentlemen have been involved with the company, forecast for Q1 that does not contemplate the sale of Deimos within that number. And would you confirm then that if Deimos was sold, you would expect actually the EBITDA would increase as a result of that transaction? Or the loss would improve?
Sai Chu
Well, we confirm that this does include Deimos, because we're – we’ve just completed Q1. And obviously, we can look for scenarios and analyze the situation. And again, we expect that we get the business to ea positive with or without Deimos.
You can see the transcript here:
https://seekingalpha.com/article/4252377-urthecast-corp-lfdef-ceo-donald-osborne-q4-2018-results-earnings-call-transcript?part=single