Welcome!

Microsoft Cloud Authors: Liz McMillan, John Basso, Pat Romanski, Elizabeth White, Mihai Corbuleac

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
With an estimated 50 billion devices connected to the Internet by 2020, several industries will begin to expand their capabilities for retaining end point data at the edge to better utilize the range of data types and sheer volume of M2M data generated by the Internet of Things. In his session at @ThingsExpo, Don DeLoach, CEO and President of Infobright, discussed the infrastructures businesses will need to implement to handle this explosion of data by providing specific use cases for filterin...
Is your aging software platform suffering from technical debt while the market changes and demands new solutions at a faster clip? It’s a bold move, but you might consider walking away from your core platform and starting fresh. ReadyTalk did exactly that. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, will discuss why and how ReadyTalk diverted from healthy revenue and over a decade of audio conferencing product development to start an innovati...
Early adopters of IoT viewed it mainly as a different term for machine-to-machine connectivity or M2M. This is understandable since a prerequisite for any IoT solution is the ability to collect and aggregate device data, which is most often presented in a dashboard. The problem is that viewing data in a dashboard requires a human to interpret the results and take manual action, which doesn’t scale to the needs of IoT.
So, you bought into the current machine learning craze and went on to collect millions/billions of records from this promising new data source. Now, what do you do with them? Too often, the abundance of data quickly turns into an abundance of problems. How do you extract that "magic essence" from your data without falling into the common pitfalls? In her session at @ThingsExpo, Natalia Ponomareva, Software Engineer at Google, provided tips on how to be successful in large scale machine learning...
What does it look like when you have access to cloud infrastructure and platform under the same roof? Let’s talk about the different layers of Technology as a Service: who cares, what runs where, and how does it all fit together. In his session at 18th Cloud Expo, Phil Jackson, Lead Technology Evangelist at SoftLayer, an IBM company, spoke about the picture being painted by IBM Cloud and how the tools being crafted can help fill the gaps in your IT infrastructure.
"delaPlex is a software development company. We do team-based outsourcing development," explained Mark Rivers, COO and Co-founder of delaPlex Software, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
"C2M is our digital transformation and IoT platform. We've had C2M on the market for almost three years now and it has a comprehensive set of functionalities that it brings to the market," explained Mahesh Ramu, Vice President, IoT Strategy and Operations at Plasma, in this SYS-CON.tv interview at @ThingsExpo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Traditional IT, great for stable systems of record, is struggling to cope with newer, agile systems of engagement requirements coming straight from the business. In his session at 18th Cloud Expo, William Morrish, General Manager of Product Sales at Interoute, outlined ways of exploiting new architectures to enable both systems and building them to support your existing platforms, with an eye for the future. Technologies such as Docker and the hyper-convergence of computing, networking and sto...
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
SYS-CON Events announced today that LeaseWeb USA, a cloud Infrastructure-as-a-Service (IaaS) provider, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. LeaseWeb is one of the world's largest hosting brands. The company helps customers define, develop and deploy IT infrastructure tailored to their exact business needs, by combining various kinds cloud solutions.
The cloud market growth today is largely in public clouds. While there is a lot of spend in IT departments in virtualization, these aren’t yet translating into a true “cloud” experience within the enterprise. What is stopping the growth of the “private cloud” market? In his general session at 18th Cloud Expo, Nara Rajagopalan, CEO of Accelerite, explored the challenges in deploying, managing, and getting adoption for a private cloud within an enterprise. What are the key differences between wh...
It’s 2016: buildings are smart, connected and the IoT is fundamentally altering how control and operating systems work and speak to each other. Platforms across the enterprise are networked via inexpensive sensors to collect massive amounts of data for analytics, information management, and insights that can be used to continuously improve operations. In his session at @ThingsExpo, Brian Chemel, Co-Founder and CTO of Digital Lumens, will explore: The benefits sensor-networked systems bring to ...
Large scale deployments present unique planning challenges, system commissioning hurdles between IT and OT and demand careful system hand-off orchestration. In his session at @ThingsExpo, Jeff Smith, Senior Director and a founding member of Incenergy, will discuss some of the key tactics to ensure delivery success based on his experience of the last two years deploying Industrial IoT systems across four continents.
Much of IT terminology is often misused and misapplied. Modernization and transformation are two such terms. They are often used interchangeably even though they mean different things and have very different connotations. Indeed, it is somewhat safe to assume that in IT any transformative effort is likely to also have a modernizing effect, and thus, we can see these as levels of improvement efforts. However, many businesses are being led to believe if they don’t transform now they risk becoming ...
SYS-CON Events announced today the Enterprise IoT Bootcamp, being held November 1-2, 2016, in conjunction with 19th Cloud Expo | @ThingsExpo at the Santa Clara Convention Center in Santa Clara, CA. Combined with real-world scenarios and use cases, the Enterprise IoT Bootcamp is not just based on presentations but with hands-on demos and detailed walkthroughs. We will introduce you to a variety of real world use cases prototyped using Arduino, Raspberry Pi, BeagleBone, Spark, and Intel Edison. Y...
Identity is in everything and customers are looking to their providers to ensure the security of their identities, transactions and data. With the increased reliance on cloud-based services, service providers must build security and trust into their offerings, adding value to customers and improving the user experience. Making identity, security and privacy easy for customers provides a unique advantage over the competition.
SYS-CON Events announced today that Venafi, the Immune System for the Internet™ and the leading provider of Next Generation Trust Protection, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Venafi is the Immune System for the Internet™ that protects the foundation of all cybersecurity – cryptographic keys and digital certificates – so they can’t be misused by bad guys in attacks...
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
"There's a growing demand from users for things to be faster. When you think about all the transactions or interactions users will have with your product and everything that is between those transactions and interactions - what drives us at Catchpoint Systems is the idea to measure that and to analyze it," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York Ci...
"Tintri was started in 2008 with the express purpose of building a storage appliance that is ideal for virtualized environments. We support a lot of different hypervisor platforms from VMware to OpenStack to Hyper-V," explained Dan Florea, Director of Product Management at Tintri, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.