Nauticus Robotics Tests Aquanaut Mk2 Vehicle, Announces 2023 Results
- Successful preliminary testing results for Aquanaut Mk2 vehicle
- Revenue of $6.6 million for full year 2023
- Reorganization of operations and focus on revenue-producing products
- Reduction in G&A costs and engagement with early adopter customers
- Leadership updates to guide the company in commercial development
- Net loss of $50.7 million for full year 2023
- Significant increase in operating expenses
- Impairment charge of $25.3 million in Q4 2023
- Adjusted net loss of $34.4 million for 2023
Insights
Observing the significant operational changes and strategic shifts made by Nauticus Robotics, Inc., there are several key factors that could influence the company's market positioning and investor sentiment. The reorganization to focus on four main products is a strategic move to streamline operations and potentially increase revenue efficiency. This pivot could attract attention from investors interested in companies that are actively adapting to market demands. The successful testing of the Aquanaut Mk2 vehicle is a technological milestone that may enhance the company's reputation as an innovator in autonomous underwater technology.
The reduction in G&A costs projected for 2024 reflects a strong commitment to cost management, which may improve the company's financial health over time. However, the significant net loss reported for the fourth quarter and the full year of 2023, along with the impairment charge, raises concerns about the company's current profitability and the sustainability of its growth strategy. The restructuring of private warrants and additional financing indicate efforts to stabilize the balance sheet, yet the company's low cash reserves as of December 31, 2023, could be a red flag for potential liquidity issues in the near term.
The financial results released by Nauticus Robotics, Inc. show a concerning trend with an increased net loss year-over-year and a substantial impairment charge, which suggests that previous investments have not yielded the expected value. The revenue decline from the previous year also indicates that the company may be facing challenges in commercializing its products or facing competitive pressures. The adjusted net loss provides a more normalized view of the company's financial performance, excluding one-time charges, but even this metric shows a deterioration from the prior year.
Investors should carefully consider the company's long-term financial viability, given the sharp decrease in cash and cash equivalents from 2022 to 2023. While the additional financing secured may provide a temporary cushion, the company's ability to generate positive cash flow from operations will be critical for sustained growth. The expected reduction in G&A costs could be a positive step, but it remains to be seen how these cost-saving measures will affect the company's operational capabilities and growth prospects.
The successful completion of Defense Innovation Unit (DIU) contracts and the expectation of certificates of successful completion could be indicative of Nauticus' capabilities in meeting government contract requirements, which may open doors for future defense-related opportunities. From a legal and compliance standpoint, the addition of a seasoned legal executive as General Counsel is a strategic move that could strengthen the company's ability to navigate complex regulatory environments, especially in the defense sector where contracts can be subject to rigorous oversight.
However, the impairment charge for property, plant and equipment must be scrutinized for compliance with financial reporting standards. Such a charge can significantly affect a company's reported assets and equity and it is essential for investors to understand the reasons behind this write-down. The legal team's role in ensuring transparent and accurate financial disclosures is important for maintaining investor trust and avoiding potential legal ramifications.
"We have spent the past few months transforming Nauticus from a company with great R&D capabilities to one poised to be commercially successful," said John W. Gibson, Jr., Nauticus' CEO and President. "We successfully raised additional capital, reorganized our operations, materially reduced expected G&A costs, and initiated sea trials for our Aquanaut Mk2 vehicle in the Gulf of Mexico. These sea trials include not just depth, but maneuverability, emergency procedures, launch and recovery, and are milestone events in Nauticus' vision. Our team has successfully tested to a depth of greater than 1,200 meters. We've gone from promise to product. The next generation of subsea vehicle is now in the water."
Operational Highlights
- Product Structure: The Company has reorganized its personnel and operations to focus on its four main products: Autonomous Solutions, Government Solutions, Olympic Arms and toolKITT software. Each of these product groups has a dedicated leader and team focused on revenue-producing opportunities.
- Aquanaut Testing: Nauticus' Aquanaut Mk2 vehicle exceeded expectations during its initial tests in the Gulf of
Mexico , including launch and recovery, emergency procedures, and maneuverability. A video of part of the tests is available on the Company's YouTube channel at https://youtu.be/GyPD1E-vqHA. - Facility Consolidation: The Company brought assembly and maintenance in-house, eliminating external vendors in
Canada and other countries. In the first quarter of 2024, Nauticus negotiated an exit to redundant office space inHouston and continues to work on subleasing or otherwise eliminating space in other locations as well. - Customer Focus: Nauticus continued engagement with its early adopter customers. Nauticus also engaged Jorge Machnizh, a seasoned sales and business development leader. Jorge's experience includes software and service sales in deepwater markets.
- Cost Alignment: The Company took steps to bring its G&A and other costs more closely in line with other companies of its size and operational history.
- Defense Contracts: Nauticus completed
DIU contracts during the fourth quarter of 2023 and first quarter of 2024, and certificates of successful completion are expected.
Financial Results
- Revenue: Nauticus reported fourth quarter revenue of
$1.1 million $6.6 million $3.2 million $11.4 million - Operating Expenses: Total expenses during the fourth quarter were
$35.3 million $24.9 million $61.7 million $31.2 million - Impairment Charges: In the fourth quarter of 2023, Nauticus reported an impairment charge for property plant and equipment of
$25.3 million $0 - Net Loss: For the fourth quarter, Nauticus recorded a net loss of
$39.5 million $1.23 $8.2 million $50.7 million $33.2 million - Adjusted Net Loss: Nauticus reported adjusted net loss of
$8.8 million $34.4 million $5.7 million $15.7 million - 2024 G&A Cost: Nauticus is expecting to reduce G&A costs from
$18.2 million $8.3 million
Balance Sheet and Liquidity
- As of December 31, 2023, the Company had cash and cash equivalents of
$0.8 million $17.8 million - In the fourth quarter of 2023 and first quarter of 2024, the Company successfully worked with its private investors to restructure its private warrants, eliminating the overhang from the ratcheting conversion mechanism, and add additional financing of
$0.7 million - In Q1, the Company closed additional financing of
$13.3 million - During the fourth quarter, the Company classified
$2.9 million $1.2 million
Leadership Updates
Nauticus also brought in an experienced leadership team in the fourth quarter of 2023 to guide the Company to the next stage of commercial development:
- John Gibson, an established executive and CEO with 30+ years of energy, technology and public company experience, joined as President in the fourth quarter of 2023 and was named CEO in the first quarter of 2024;
- Victoria Hay, a seasoned finance and accounting executive who has worked with Nauticus for over a year as a consultant, expanded her role in the fourth quarter of 2023 to include CFO on an interim basis;
- Nick Bigney, a legal executive with experience as general counsel of both public and private companies in the energy and technology space, joined as General Counsel in the fourth quarter of 2023.
Mr. Gibson, Mrs. Hay and Mr. Bigney join the Company's longstanding Chief Technology Officer, JD Yamokoski, to form the Company's executive team.
Conference Call Details
Nauticus will host a conference call on April 10, 2024 at 10:00 a.m. Central Daylight Time (11:00 a.m. EDT) to discuss its results for the quarter and year ended December 31, 2023. To participate in the earnings conference call, participants should access the webcast at https://events.q4inc.com/attendee/275183074, or by dialing toll free 800-267-6316, conference ID: KITT. A link to the webcast will also be available on the Company's website (https://ir.nauticusrobotics.com/). Following the conclusion of the call, a recording will be available on the Company's website.
Nauticus Robotics, Inc. develops autonomous robots for the ocean industries. Autonomy requires the extensive use of sensors, artificial intelligence, and effective algorithms for perception and decision allowing the robot to adapt to changing environments. The company's business model includes using robotic systems for service, selling vehicles and components, and licensing of related software to both the commercial and defense business sectors. Nauticus has designed and is currently testing and certifying a new generation of vehicles to reduce operational cost and gather data to maintain and operate a wide variety of subsea infrastructure. Besides a standalone service offering and forward-facing products, Nauticus' approach to ocean robotics has also resulted in the development of a range of technology products for retrofit/upgrading traditional ROV operations and other third-party vehicle platforms. Nauticus' services provide customers with the necessary data collection, analytics, and subsea manipulation capabilities to support and maintain assets while reducing their operational footprint, operating cost, and greenhouse gas emissions, to improve offshore health, safety, and environmental exposure.
Cautionary Language Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Act"), and are intended to enjoy the protection of the safe harbor for forward-looking statements provided by the Act as well as protections afforded by other federal securities laws. Such forward-looking statements include but are not limited to: the expected timing of product commercialization or new product releases; customer interest in Nauticus' products; estimated operating results and use of cash; and Nauticus' use of and needs for capital. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These statements may be preceded by, followed by, or include the words "believes," "estimates," "expects," "projects," "forecasts," "may," "will," "should," "seeks," "plans," "scheduled," "anticipates," "intends," or "continue" or similar expressions. Forward-looking statements inherently involve risks and uncertainties that may cause actual events, results, or performance to differ materially from those indicated by such statements. These forward-looking statements are based on Nauticus' management's current expectations and beliefs, as well as a number of assumptions concerning future events. There can be no assurance that the events, results, or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as of the date they are made, and Nauticus is not under any obligation and expressly disclaims any obligation, to update, alter, or otherwise revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Readers should carefully review the statements set forth in the reports which Nauticus has filed or will file from time to time with the Securities and Exchange Commission (the "SEC") for a more complete discussion of the risks and uncertainties facing the Company and that could cause actual outcomes to be materially different from those indicated in the forward-looking statements made by the Company, in particular the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in documents filed from time to time with the SEC, including Nauticus' most recent Annual Report on Form 10-K. Should one or more of these risks, uncertainties, or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated, or expected. The documents filed by Nauticus with the SEC may be obtained free of charge at the SEC's website at www.sec.gov.
NAUTICUS ROBOTICS, INC. | |||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||
December 31, 2023 | December 31, 2022 | ||
ASSETS | |||
Current Assets: | |||
Cash and cash equivalents | |||
Restricted certificate of deposit | 201,822 | 250,375 | |
Short-term investments | - | 4,959,263 | |
Accounts receivable, net | 212,428 | 1,622,434 | |
Inventories | 2,198,797 | 6,666,912 | |
Contract assets | - | 573,895 | |
Prepaid expenses | 1,889,218 | 5,046,599 | |
Other current assets | 1,025,214 | 56,410 | |
Assets held for sale | 2,940,254 | - | |
Total Current Assets | 9,221,131 | 36,963,047 | |
Property and equipment, net | 15,904,845 | 15,167,367 | |
Operating lease right-of-use asset | 834,972 | 317,208 | |
Other assets | 187,527 | 155,490 | |
Total Assets | |||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||
Current Liabilities: | |||
Accounts payable | |||
Accrued liabilities | 7,339,099 | 3,142,977 | |
Contract liability | 2,767,913 | - | |
Operating lease liabilities – current | 244,774 | 410,158 | |
Total Current Liabilities | 17,387,236 | 3,877,619 | |
Warrant liabilities | 18,376,180 | 32,688,342 | |
Operating lease liabilities - long-term | 574,260 | 87,214 | |
Notes payable - long-term, net of discount (related party) | 31,597,649 | 15,922,118 | |
Total Liabilities | |||
Stockholders' Equity (Deficit) | |||
Common stock, | |||
Additional paid-in capital | 76,999,849 | 68,128,196 | |
Accumulated deficit | (118,791,703) | (68,105,102) | |
Total Stockholders' Equity (Deficit) | (41,786,850) | 27,819 | |
Total Liabilities and Stockholders' Equity (Deficit) | |||
NAUTICUS ROBOTICS, INC. | |||||||||
Unaudited Condensed Consolidated Statements of Operations | |||||||||
Three Months Ended | Twelve Months Ended | ||||||||
12/31/2023 | 12/31/2022 | 9/30/2023 | 12/31/2023 | 12/31/2022 | |||||
Revenue: | |||||||||
Service | |||||||||
Service - related party | - | 14,000 | - | 500 | 224,400 | ||||
Total revenue | 1,063,603 | 3,227,825 | 1,593,854 | 6,606,352 | 11,434,959 | ||||
Costs and expenses: | |||||||||
Cost of revenue (exclusive of items shown separately below) | 4,444,682 | 3,643,415 | 2,651,380 | 11,928,931 | 11,863,862 | ||||
Depreciation | 242,360 | 146,643 | 160,744 | 729,412 | 516,949 | ||||
Research and development | 414,678 | 282,634 | 275,154 | 1,399,560 | 2,376,912 | ||||
General and administrative | 1,194,961 | 6,278,067 | 6,303,662 | 18,271,832 | 15,040,603 | ||||
Severance | 1,075,408 | - | 401,228 | 1,476,636 | 15,962 | ||||
Impairment of property and equipment | 25,354,791 | - | - | 25,354,791 | - | ||||
Loss on contract | 2,542,913 | - | - | 2,542,913 | - | ||||
Total costs and expenses | 35,269,793 | 10,350,759 | 9,792,168 | 61,704,075 | 29,814,288 | ||||
Operating loss | (34,206,190) | (7,122,934) | (8,198,314) | (55,097,723) | (18,379,329) | ||||
Other (income) expense: | |||||||||
Other expense (income), net | (388,328) | (54,024) | (133,311) | 627,580 | (33,247) | ||||
Loss on lease termination | 453,162 | - | - | 453,162 | - | ||||
Foreign currency transaction loss (gain) | (12,041) | - | 83,654 | 44,020 | (260,615) | ||||
Loss on exchange of warrants | — | - | - | 590,266 | - | ||||
Change in fair value of warrant liabilities | 3,872,731 | 497,849 | 8,656,392 | (14,902,427) | 6,461,087 | ||||
Interest expense, net | 1,410,875 | 656,357 | 873,738 | 8,776,277 | 3,714,017 | ||||
Total other (income) expense, net | 5,336,399 | 1,100,182 | 9,480,473 | (4,411,122) | 9,881,242 | ||||
Net loss | (39,542,589) | (8,223,116) | (17,678,787) | (50,686,601) | (28,260,571) | ||||
Less: Deemed dividend from earnout shares | - | - | - | - | (4,957,366) | ||||
Net loss attributable to common stockholders | |||||||||
Basic and diluted earnings (loss) per share | |||||||||
Basic and diluted weighted average shares outstanding | 41,191,799 | 39,750,778 | 41,155,115 | 40,943,444 | 18,982,139 | ||||
NAUTICUS ROBOTICS, INC. | |||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
Years ended December 31, | |||
2023 | 2022 | ||
Cash flows used in operating activities: | |||
Net loss | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 729,412 | 516,949 | |
Accretion of debt discount | 4,033,330 | 1,342,062 | |
Amortization of debt issuance cost | 52,092 | - | |
Accretion of RCB Equities #1, LLC exit fee | 27,608 | - | |
Stock-based compensation | 4,427,073 | 2,602,175 | |
Loss on exchange of warrants | 590,266 | - | |
Change in fair value of warrant liabilities | (14,902,427) | 6,461,087 | |
Noncash impact of lease accounting | 346,714 | 196,555 | |
Interest expense assumed into Convertible Senior Secured Term Loan | 378,118 | - | |
Impairment of property and equipment | 25,354,791 | - | |
Settlement of liquidated damages with common stock | 3,685,629 | - | |
Loss on disposal of assets | 82,604 | - | |
Loss on lease termination | 453,162 | - | |
Gain on short-term investments | (40,737) | - | |
Changes in current assets and liabilities: | |||
Accounts receivable | 1,410,006 | (828,298) | |
Inventories | (11,334,716) | (6,666,912) | |
Contract assets | 573,895 | 319,480 | |
Prepaid expenses and other assets | 607,784 | (4,902,797) | |
Accounts payable and accrued liabilities | 9,400,137 | (7,731,279) | |
Contract liabilities | 2,767,913 | - | |
Operating lease liabilities | (338,979) | (323,434) | |
Net cash used in operating activities | (22,382,926) | (37,274,983) | |
Cash flows used in investing activities: | |||
Capital expenditures | (11,633,153) | (14,247,005) | |
Proceeds from sale of property and equipment | 38,704 | - | |
Proceeds from sale of short-term investments | 5,000,000 | - | |
Purchase of short-term investments | - | (4,959,263) | |
Net cash used in investing activities | (6,594,449) | (19,206,268) | |
Cash flows from financing activities: | |||
Proceeds from notes payable | 11,791,884 | 2,000,000 | |
Payment of debt issuance costs on notes payable | (607,500) | - | |
Proceeds from exercise of warrants | 338,055 | - | |
Proceeds from exercise of stock options | 421,175 | - | |
Payments of note payable | - | (17,850,333) | |
Proceeds from reverse recapitalization with CleanTech Acquisition Corp, net | - | 14,947,876 | |
Proceeds from issuance of common stock for Pipe Investment | - | 31,000,000 | |
Proceeds from issuance of debentures and SPA Warrants, net of discount | - | 35,800,000 | |
Payment of transaction costs on equity funding | - | (12,582,000) | |
Net cash from financing activities | 11,943,614 | 53,315,543 | |
Net change in cash and cash equivalents | (17,033,761) | (3,165,708) | |
Cash and cash equivalents, beginning of year | 17,787,159 | 20,952,867 | |
Cash and cash equivalents, end of year | |||
NAUTICUS ROBOTICS, INC.
Unaudited Reconciliation of Net Loss Attributable to Common Stockholders (GAAP) to Adjusted Net Loss Attributable to Common Stockholders (NON-GAAP)
Adjusted net loss attributable to common stockholders is a non-GAAP financial measure which excludes certain items that are included in net loss attributable to common stockholders, the most directly comparable GAAP financial measure. Items excluded are those which the Company believes affect the comparability of operating results and are typically excluded from published estimates by the investment community, including items whose timing and/or amount cannot be reasonably estimated or are non-recurring.
Adjusted net loss attributable to common stockholders is presented because management believes it provides useful additional information to investors for analysis of the Company's fundamental business on a recurring basis. In addition, management believes that adjusted net loss attributable to common stockholders is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies such as Nauticus.
Adjusted net loss attributable to common stockholders should not be considered in isolation or as a substitute for net loss attributable to common stockholders or any other measure of a company's financial performance or profitability presented in accordance with GAAP. A reconciliation of the differences between net loss attributable to common stockholders and adjusted net loss attributable to common stockholders is presented below. Because adjusted net loss attributable to common stockholders excludes some, but not all, items that affect net loss attributable to common stockholders and may vary among companies, our calculation of adjusted net loss attributable to common stockholders may not be comparable to similarly titled measures of other companies.
Three Months Ended | Twelve Months Ended | ||||||||
12/31/2023 | 12/31/2022 | 9/30/2023 | 12/31/2023 | 12/31/2022 | |||||
Net loss attributable to common stockholders (GAAP) | $ (39,542,589) | ||||||||
Change in fair value of warrant liabilities | 3,872,731 | 497,849 | 8,656,392 | (14,902,427) | 6,461,087 | ||||
Impairment of property and equipment | 25,354,791 | - | - | 25,354,791 | - | ||||
Stock compensation expense | 432,053 | 1,997,768 | 917,993 | 4,427,073 | 2,602,175 | ||||
Severance | 1,075,408 | - | 401,228 | 1,476,636 | 15,962 | ||||
Expenses related to business combination | - | - | - | - | 3,519,662 | ||||
Deemed dividend for earnout shares | - | - | - | - | 4,957,366 | ||||
Adjusted net loss attributable to common | |||||||||
View original content to download multimedia:https://www.prnewswire.com/news-releases/nauticus-robotics-tests-aquanaut-mk2-vehicle-announces-2023-results-302112426.html
SOURCE Nauticus Robotics, Inc.
FAQ
What were Nauticus' revenue figures for Q4 2023?
What was the net loss recorded by Nauticus for full year 2023?
Who joined Nauticus' leadership team in the fourth quarter of 2023?
What is the expected reduction in G&A costs for Nauticus in 2024?
Where can participants access the earnings conference call for Nauticus?
