Welcome!

Microsoft Cloud Authors: Lori MacVittie, Elizabeth White, Yeshim Deniz, Serafima Al, Janakiram MSV

News Feed Item

CriticalControl Announces Third Quarter 2012 Financial Results

CALGARY, ALBERTA -- (Marketwire) -- 11/07/12 -- CriticalControl Solutions Corp. (TSX:CCZ) today reported its financial results for the three and nine months ended September 30, 2012.

"The third quarter is historically our weakest quarter of the year," said Alykhan Mamdani, President & CEO of CriticalControl. "Given our continued investment in R&D and expected increased revenue from the strategic selling success associated with all parts of our business, we anticipate returning to our historic levels of profitability in 2013."

Quarter ended September 30, 2012 highlights

Revenue

--  Total revenue of $11.2 million in Q3 2012 ($36.0 million year-to-date)
    represents a 9% decrease (3% year-to-date) from the same period in 2011.
--  Revenue from the Canadian Energy Services business increased by 14%, to
    $3.0 million in Q3 2012 from $2.7 million in Q3 2011, resulting from the
    acquisitions of Vertex in Q4 2011 and DGL early in Q1 2012. Year-to-date
    revenue increased by 14% from $8.4 million in 2011 to $9.6 million in
    2012. 
--  Revenue from the US Energy Services business decreased by 7%, to $4.5
    million in Q3 2012 from $4.8 million in Q3 2011. Year-to-date revenue
    increased by 5% from $12.9 million in 2011 to $13.6 million in 2012,
    driven by $1.4 million of primarily organic growth in recurring revenue,
    offset by a $0.7 million decline in fabrication, assembly and equipment
    revenue. 
--  Revenue from the Corporation's Service Bureau Operations decreased by
    24%, from $4.9 million in Q3 2011 to $3.7 million in Q3 2012. Year-to-
    date revenue decreased by 19% from $15.9 million in 2011 to $12.9
    million in 2012. The revenue decrease is primarily attributable to the
    completion of two large imaging projects in Q3 2011.

Gross margin percentage

--  Gross margin percentage for the Corporation increased slightly to 36.4%
    in Q3 2012 from 35.2% in Q3 2011 (year-to-date increased to 36.8% from
    36.2%). 
--  Canadian Energy Services gross margin percentage declined from 66.6% in
    Q3 2011 (year-to-date 63.3%) to 59.5% in Q3 2012 (year-to-date 56.9%),
    primarily attributable to lower margins associated with the DGL and
    Vertex acquisitions, economic factors putting pressure on gas producers,
    and increasing labour costs. 
--  US Energy Services gross margin percentage increased from 23.9% in Q3
    2011 to 27.0% in Q3 2012 (year-to-date increased from 24.4% to 27.3%).
    The increase was driven by a focus on recurring revenue, pricing
    initiatives and cost control. 
--  Service Bureau Operations gross margin percentage remained relatively
    flat at 29.0% in Q3 2012 compared to 29.2% in Q3 2011 (year-to-date
    31.8% in 2012 compared to 31.5% in 2011).

Selling and administrative expenses

--  Selling and administrative expenses for the Corporation decreased by
    $207,000 for the quarter in comparison to 2011 despite the additional
    expenses associated with the acquisitions of DGL and Vertex. On a year-
    to-date basis, selling and administrative expenses increased slightly. 
--  Selling and administrative expenses for the Canadian Energy Services
    business increased in Q3 2012 compared to 2011 by $193,000 ($481,000
    year-to-date) primarily related to increased sales, marketing and
    business development activities in Q1 and Q2; facility costs related to
    acquisitions; and strategic hires. 
--  Selling and administrative expenses for the US Energy Services business
    increased in Q3 2012 compared to 2011 by $35,000 ($342,000 year-to-date)
    primarily due to increased staffing to position the business for growth,
    increased infrastructure costs, and increased sales and marketing
    activities. 
--  Selling and administrative expenses for the Service Bureau Operations
    decreased in Q3 2012 compared to 2011 by $188,000 ($434,000 year-to-
    date) primarily due to continued streamlining and integration of
    operations, and reduced sales and marketing expenses. 
--  Selling and administrative expenses for Corporate decreased in Q3 2012
    compared to 2011 by $247,000 ($375,000 year-to-date) primarily
    attributable to non-recurring costs in 2011, reduced staffing, and
    reduced reliance on consultants. 

Other operating expenses

--  Other operating expenses increased from $38,000 in Q3 2011 to $246,000
    in Q3 2012 due to the loss on disposal of leasehold improvements
    resulting from moving locations in Winnipeg. The impact on earnings
    before income tax was offset by an income inclusion related to the
    reversal of deferred lease inducements associated with the terminated
    lease. On a year-to-date basis, the increase in other operating expenses
    was even higher ($432,000) because of favorable estimate changes netted
    with the 2011 expenses that did not recur in 2012.

Earnings

--  Net earnings for the quarter when compared to Q3 2011 decreased by
    $407,000 to a net loss of $130,000. Of the decrease, $106,000 (net of
    income tax) is attributable to foreign exchange losses. Year-to-date net
    earnings decreased by $778,000 to $240,000.

Cash flow and balance sheet

--  Working capital decreased by $0.7 million from $4.4 million at December
    31, 2011 to $3.7 million at September 30, 2012. 
--  For the nine months ended September 30, net cash from operating
    activities increased by $0.9 million from $1.3 million in 2011 to $2.2
    million in 2012. 
--  Total loans and borrowings, net of cash, decreased by $0.9 million from
    December 31, 2011 to September 30, 2012 despite an additional $1.0
    million of debt incurred related to the DGL acquisition. 

Outlook

Reduced revenue from the Corporation's Service Bureau Operations is attributable to the completion of two major projects that were not replaced in 2012. Subsequent to the end of Q3 2012, the Corporation executed a master services agreement with a Schedule A Bank in Canada for the outsourced handling of certain business processes on an ongoing basis. The original term of the contract is three years. The ongoing revenue from this contract is expected to increase profitability of the Service Bureau Operations by Q2 2013 to the level experienced in 2011 based on a projected volume of documents. There can be no assurance that the volume of documents will meet management's expectations, and the agreement does not guarantee such volumes. In addition, ramp-up and delivery of such a contract is subject to certain risks that may affect overall profitability of the contract.

The Corporation has downsized its Winnipeg operations, which has resulted in reduced rent of approximately $20,000 per month starting in September 2012. Costs of downsizing such operations were recognized in the first three quarters of 2012, offset in part by a one-time benefit from the reversal of deferred lease inducements no longer applicable to the Winnipeg operations.

Gas prices remained weak during 2012, resulting in an escalation in the shut-in of low production gas wells during this period, putting additional downward pressure on the Corporation's historic revenue streams. Management undertook an ambitious expansion of its technologies in its Canadian Energy Services business in late 2011 in order to offset the decreased revenue caused by the shut-ins. This effort is based on transforming the Corporation's core volumetric business (consisting of managing gas measurement and composition production data) into a full scale system to manage oil and gas production data from the well-head to the financial accounting system. The expansion includes management of oil related production data, and the management of production data in business processes within producers that use the data currently provided by the Corporation's solutions. This includes the acquisition of Vertex, which manages volumetric data through midstream operations, including the functions of daily allocations, production accounting and financial accounting. Additionally, the acquisition of assets from DGL early in 2012 resulted in the Corporation gaining the ability to manage the production accounting and financial accounting business processes of producers on an outsourced basis.

Management continues to focus on increasing recurring revenue from its measurement focused solutions in its US Energy Services business. Management expects to retain its increased levels of recurring revenue in its US Energy Services business, which combined with anticipated increased margins from fabrication will offset reduced revenue from its US fabrication business, which remains unpredictable. Notwithstanding the measures taken by management and the success experienced, continued weak commodity prices into 2013 will impact new exploration and, subsequently, the Corporation's revenue stream from its US Energy Services business.

The necessity of executing management's plan to offset declining revenue from its historic revenue base is even more essential given the reduced gas prices seen in 2012. The Corporation continues to increase its management costs and research & development costs to rewrite certain applications acquired by the Corporation and build out its suite of products. Unless the Corporation is successful in its current strategy, revenue from the Corporation's historic revenue streams will diminish significantly, which will impact profitability.

Notwithstanding these additional costs, the increased associated sales and marketing costs already being incurred, and the price of natural gas being significantly lower than previously predicted, management is optimistic that its efforts will bear fruit by increasing revenue in 2013 to offset revenue losses from the shut-in of less productive wells, and to pay for the Corporation's increased costs. Management's plan, if successful, will result in revenue and profit growth in 2013.

Forward looking statements

Management's expectation on increasing profitability in the Corporation's Service Bureau Operations business is dependent upon a contract with a Schedule A Bank in Canada. The expected revenue from this contract is based upon certain volumes represented in a request for proposal issued by the bank, but is not guaranteed under the master services agreement. The statement of work with the bank is currently being negotiated and actual revenue may differ from management's current expectations.

The Corporation's fabrication, assembly and equipment business is now geared towards larger equipment used in shale gas production, the continued development of which is dependent upon the financial viability of gas production in the Marcellus shale play. The financial viability of gas production in the Marcellus shale play is not yet predictable and can only be proven with the passage of time.

Expected profitability in the Corporation's US operations will be dependent upon the acceptance of the Corporation's clients in the US of the Corporation's technologies, and general economic conditions including the price of natural gas, neither of which can be assured or predicted.

The Corporation has undertaken a strategic direction to penetrate further into the Corporation's client base in Canada with integrated technologies. There can be no assurance of client acceptance of this strategy, nor can there be assurance that the Corporation will be successful in the integration of its current technologies with those that have been recently acquired.

The continued decline in gas prices during 2012 has had a negative impact on the Corporation's recurring revenue. Representations have been made that the current growth in the Corporation's business is offsetting the decline. The pace of shut-in of non-profitable wells is not predictable in the current economic climate. Should the number of wells being shut-in increase, management's guidance will be negatively impacted.

About CriticalControl:

In a world of escalating globalization, with an increasingly transient workforce, enterprises are constrained from maintaining their knowledge and are forced to focus on their key market advantages to remain competitive. CriticalControl provides these enterprises with secure and cost effective solutions for the completion of document and information intensive business processes through an integrated offering of software, outsourced services and optimized business processes.

Contacts:
CriticalControl Solutions Corp.
Alykhan Mamdani
President & CEO
(403) 705-7500

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

@ThingsExpo Stories
IoT is rapidly becoming mainstream as more and more investments are made into the platforms and technology. As this movement continues to expand and gain momentum it creates a massive wall of noise that can be difficult to sift through. Unfortunately, this inevitably makes IoT less approachable for people to get started with and can hamper efforts to integrate this key technology into your own portfolio. There are so many connected products already in place today with many hundreds more on the h...
Here are the Top 20 Twitter Influencers of the month as determined by the Kcore algorithm, in a range of current topics of interest from #IoT to #DeepLearning. To run a real-time search of a given term in our website and see the current top influencers, click on the topic name. Among the top 20 IoT influencers, ThingsEXPO ranked #14 and CloudEXPO ranked #17.
Join IBM November 1 at 21st Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA, and learn how IBM Watson can bring cognitive services and AI to intelligent, unmanned systems. Cognitive analysis impacts today’s systems with unparalleled ability that were previously available only to manned, back-end operations. Thanks to cloud processing, IBM Watson can bring cognitive services and AI to intelligent, unmanned systems. Imagine a robot vacuum that becomes your personal assistant tha...
As data explodes in quantity, importance and from new sources, the need for managing and protecting data residing across physical, virtual, and cloud environments grow with it. Managing data includes protecting it, indexing and classifying it for true, long-term management, compliance and E-Discovery. Commvault can ensure this with a single pane of glass solution – whether in a private cloud, a Service Provider delivered public cloud or a hybrid cloud environment – across the heterogeneous enter...
DXWorldEXPO LLC, the producer of the world's most influential technology conferences and trade shows has announced the 22nd International CloudEXPO | DXWorldEXPO "Early Bird Registration" is now open. Register for Full Conference "Gold Pass" ▸ Here (Expo Hall ▸ Here)
The Jevons Paradox suggests that when technological advances increase efficiency of a resource, it results in an overall increase in consumption. Writing on the increased use of coal as a result of technological improvements, 19th-century economist William Stanley Jevons found that these improvements led to the development of new ways to utilize coal. In his session at 19th Cloud Expo, Mark Thiele, Chief Strategy Officer for Apcera, compared the Jevons Paradox to modern-day enterprise IT, examin...
Major trends and emerging technologies – from virtual reality and IoT, to Big Data and algorithms – are helping organizations innovate in the digital era. However, to create real business value, IT must think beyond the ‘what’ of digital transformation to the ‘how’ to harness emerging trends, innovation and disruption. Architecture is the key that underpins and ties all these efforts together. In the digital age, it’s important to invest in architecture, extend the enterprise footprint to the cl...
DXWorldEXPO LLC announced today that All in Mobile, a mobile app development company from Poland, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. All In Mobile is a mobile app development company from Poland. Since 2014, they maintain passion for developing mobile applications for enterprises and startups worldwide.
DXWorldEXPO LLC announced today that ICC-USA, a computer systems integrator and server manufacturing company focused on developing products and product appliances, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City. ICC is a computer systems integrator and server manufacturing company focused on developing products and product appliances to meet a wide range of ...
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and ...
"We are a well-established player in the application life cycle management market and we also have a very strong version control product," stated Flint Brenton, CEO of CollabNet,, in this SYS-CON.tv interview at 18th Cloud Expo at the Javits Center in New York City, NY.
In his session at @ThingsExpo, Arvind Radhakrishnen discussed how IoT offers new business models in banking and financial services organizations with the capability to revolutionize products, payments, channels, business processes and asset management built on strong architectural foundation. The following topics were covered: How IoT stands to impact various business parameters including customer experience, cost and risk management within BFS organizations.
While the focus and objectives of IoT initiatives are many and diverse, they all share a few common attributes, and one of those is the network. Commonly, that network includes the Internet, over which there isn't any real control for performance and availability. Or is there? The current state of the art for Big Data analytics, as applied to network telemetry, offers new opportunities for improving and assuring operational integrity. In his session at @ThingsExpo, Jim Frey, Vice President of S...
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settlement products to hedge funds and investment banks. After, he co-founded a revenue cycle management company where he learned about Bitcoin and eventually Ethereal. Andrew's role at ConsenSys Enterprise is a mul...
Amazon started as an online bookseller 20 years ago. Since then, it has evolved into a technology juggernaut that has disrupted multiple markets and industries and touches many aspects of our lives. It is a relentless technology and business model innovator driving disruption throughout numerous ecosystems. Amazon’s AWS revenues alone are approaching $16B a year making it one of the largest IT companies in the world. With dominant offerings in Cloud, IoT, eCommerce, Big Data, AI, Digital Assista...
The Founder of NostaLab and a member of the Google Health Advisory Board, John is a unique combination of strategic thinker, marketer and entrepreneur. His career was built on the "science of advertising" combining strategy, creativity and marketing for industry-leading results. Combined with his ability to communicate complicated scientific concepts in a way that consumers and scientists alike can appreciate, John is a sought-after speaker for conferences on the forefront of healthcare science,...
In his session at Cloud Expo, Alan Winters, U.S. Head of Business Development at MobiDev, presented a success story of an entrepreneur who has both suffered through and benefited from offshore development across multiple businesses: The smart choice, or how to select the right offshore development partner Warning signs, or how to minimize chances of making the wrong choice Collaboration, or how to establish the most effective work processes Budget control, or how to maximize project result...
In his keynote at 19th Cloud Expo, Sheng Liang, co-founder and CEO of Rancher Labs, discussed the technological advances and new business opportunities created by the rapid adoption of containers. With the success of Amazon Web Services (AWS) and various open source technologies used to build private clouds, cloud computing has become an essential component of IT strategy. However, users continue to face challenges in implementing clouds, as older technologies evolve and newer ones like Docker c...
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...