|By Marketwired .||
|May 8, 2014 08:41 PM EDT||
CALGARY, ALBERTA -- (Marketwired) -- 05/08/14 -- CriticalControl Solutions Corp. (TSX: CCZ) today reported its financial results for the three months ended March 31, 2014.
"Significant progress in bringing our key strategic longer term investments to market is the highlight of our quarter," said Alykhan Mamdani, President and CEO of CriticalControl. "The two material sales of ProMonitor announced in the quarter combined with preparations for going to market in the US with our core software solutions positions us for growth in 2014."
Quarter ended March 31, 2014 highlights
-- Total revenue was $11.6 million in Q1 2014 compared to $10.7 million in Q1 2013, representing an increase of $0.9 or 9.0%. -- Revenue from the Canadian Energy Services was $3.2 million in Q1 2014 compared to $3.1 in Q1 2013, representing an increase of $0.1 million or 3.7%. -- Revenue from the US Energy Services business increased by $0.5 million or 14.7%, from $3.8 million in Q1 2013 to $4.3 million in Q1 2014. -- Revenue from the Corporation's Service Bureau Operations increased by $0.3 million or 8.2%, from $3.8 million in Q1 2013 to $4.1 million in Q1 2014.
Gross margin percentage
-- Gross margin percentage for the Corporation was 31.5% in Q1 2014 compared to 36.5% in Q1 2013. -- Canadian Energy Services gross margin percentage decreased from 56.2% in Q1 2013 to 43.1% in Q1 2014. The decrease is attributable to negative margins on the implementation of a large strategic ProMonitor project. -- US Energy Services gross margin percentage decreased from 28.7% in Q1 2013 to 26.2% in Q1 2014. The decrease is driven by the costs associated with ProChart implementation. -- Service Bureau Operations gross margin percentage decreased from 28.5% in Q1 2013 to 27.9% in Q1 2014.
Selling and administrative expenses
-- Selling and administrative expenses for the Corporation increased by $0.1 million from $3.7 million in Q1 2013 to $3.8 million in Q1 2014. Of the increase, $76 thousand can be attributed to the impact of the weaker Canadian dollar in relation to the US dollar. Other changes in selling and administrative expenses were primarily offsetting.
-- Research and development expense decreased by $65 thousand in Q1 2014 compared to Q1 2013, but when the impact of amounts capitalized is considered, expenditures increased by $44 thousand. -- Finance costs in Q1 2014 decreased by $0.1 million compared to Q1 2013. The decrease was primarily attributable to a favorable swing in foreign exchange rates, and decreased debt levels in relation to Q1 2013. -- Other operating expenses in Q1 2014 decreased by $0.1 million compared to Q1 2013, due to a favorable adjustment to the onerous lease provision for Edmonton.
Earnings and net earnings
-- Loss before income tax for Q1 2014 remained consistent at $0.2 million compared to Q1 2013. -- Net loss for Q1 2014 remained consistent at $0.2 million compared to Q1 2013.
Cash flow, working capital and debt
-- Working capital decreased by $0.8 million from $2.3 million at December 31, 2013 to $1.5 million at March 31, 2014. The main drivers of this were increased borrowings on the Corporation's secured bank facility and the accrual of a loss on a large strategic ProMonitor project. -- Net cash from operating activities decreased by $0.4 million from $0.5 million in Q1 2013 to $0.1 million in Q1 2014. The impact of income tax refunds in Q1 2013 and income tax payments in Q1 2014 accounted for the decrease.
Outlook and forward looking statements
The Corporation has invested significant resources in the past two years on initiatives within its Canadian and US Energy business which are anticipated to bear fruit in the next six calendar quarters. Revenue growth prior to the benefits of these initiatives being realized provides management optimism for the remainder of the year.
Specifically, the Corporation continued development of two material software initiatives related to its Canadian Energy Services business, ProMonitor and ProFDC. ProMonitor currently has two separate modules consisting of a schematics management application and a pipeline corrosion risk application offered through a common map-based interface. CriticalControl launched the schematics module commercially in 2013, with certain small to medium sized producers adopting the platform. One of Canada's largest producers adopted the schematics module, as announced by the Corporation during Q1 2014. In order to implement the module, data driven schematics need to be produced from public and proprietary databases to form the first draft schematic, which is then refined and stored as data in the system. Given the size of the producer, the number of assets in the field and the complexity of their gathering systems that integrate assets from the well to the plant, the scope of the implementation is material and significantly more complex than the Corporation's other clients.
The scope of the implementation required CriticalControl to triple the size of its team and accelerate training. The complexity of the project, combined with the fact that the schematics module is new and currently lacks the automated processes required for the scope of the producer's field assets, has resulted in an inefficient implementation. Development of the ProMonitor tool will continue and is expected to improve productivity later in 2014. However, time constraints have necessitated the use of manual efforts to complete the initial phases of the implementation, resulting in a negative margin for ProMonitor. The negative margin is attributable to the loss on the large producer implementation project of $0.4 million in Q1 2014, including a provision for $0.2 million. Management expects further losses on the contract in 2014 until the software can be adapted to materially offset current manual processes, and accordingly has taken the additional $0.2 million provision this quarter. Inability to complete necessary software changes in a timely manner would result in an investment greater than the provision taken.
The pipeline corrosion risk module was adopted by a prominent Canadian producer in Q1 2014, prior to its commercial launch in Q2 2014. Both modules of ProMonitor require significant development in the next six months, and business processes need to be built to handle the scope of growth. Notwithstanding the forgoing, the market acceptance of ProMonitor as indicated by these material engagements, reduce a critical risk factor in the commercialization of the product.
The Corporation's other large development initiative, ProFDC, a field data capture system, continues to be in development, with initial modules expected to become commercial later in 2014. The ability to successfully complete development, the ability to attract and retain implementation staff, the ability to build viable business processes and broader market acceptance of the products are risk factors that could materially, adversely affect the Corporation's profitability in 2014 and 2015.
The Corporation is in the process of finalizing its core Canadian applications, ProChart, ProTrend and NetFlow, for the US market. Management views leveraging its strong presence in the Appalachians to penetrate the US market with its core products as a strong vehicle for growth in the next year. This process is near completion, and the Corporation has been focused on building its US management and sales teams to leverage its software in the US market. These costs will increase in 2014 as the Corporation intends to add a senior gas measurement resource to its US management team. In order to benefit from these expenditures, the Corporation needs to be successful in implementing its core applications in the US. Although management is optimistic of the viability of its plan, market acceptance of these applications cannot be certain and could negatively affect profitability in 2014.
The Corporation was expecting increased revenue in Q1 2014 from its Service Bureau Operations related to a contract from a large Canadian bank. The expansion of the project has been delayed by the customer due to internal issues, and expansion into Quebec has been delayed to Q4 2014 from the original Q2 2014 expectation. Growth in the scope of this project is at the discretion of the customer, and further delays are outside of management's control.
In a world of escalating globalization, with an increasingly transient workforce, enterprises have difficulty 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.
CriticalControl Solutions Corp.
President & CEO
Microservices are a very exciting architectural approach that many organizations are looking to as a way to accelerate innovation. Microservices promise to allow teams to move away from monolithic "ball of mud" systems, but the reality is that, in the vast majority of organizations, different projects and technologies will continue to be developed at different speeds. How to handle the dependencies between these disparate systems with different iteration cycles? Consider the "canoncial problem" ...
Feb. 22, 2017 06:00 AM EST Reads: 5,210
Both SaaS vendors and SaaS buyers are going “all-in” to hyperscale IaaS platforms such as AWS, which is disrupting the SaaS value proposition. Why should the enterprise SaaS consumer pay for the SaaS service if their data is resident in adjacent AWS S3 buckets? If both SaaS sellers and buyers are using the same cloud tools, automation and pay-per-transaction model offered by IaaS platforms, then why not host the “shrink-wrapped” software in the customers’ cloud? Further, serverless computing, cl...
Feb. 22, 2017 06:00 AM EST Reads: 1,802
“We're a global managed hosting provider. Our core customer set is a U.S.-based customer that is looking to go global,” explained Adam Rogers, Managing Director at ANEXIA, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Feb. 22, 2017 05:45 AM EST Reads: 1,645
For organizations that have amassed large sums of software complexity, taking a microservices approach is the first step toward DevOps and continuous improvement / development. Integrating system-level analysis with microservices makes it easier to change and add functionality to applications at any time without the increase of risk. Before you start big transformation projects or a cloud migration, make sure these changes won’t take down your entire organization.
Feb. 22, 2017 04:45 AM EST Reads: 540
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of Soli...
Feb. 22, 2017 04:15 AM EST Reads: 204
The speed of software changes in growing and large scale rapid-paced DevOps environments presents a challenge for continuous testing. Many organizations struggle to get this right. Practices that work for small scale continuous testing may not be sufficient as the requirements grow. In his session at DevOps Summit, Marc Hornbeek, Sr. Solutions Architect of DevOps continuous test solutions at Spirent Communications, explained the best practices of continuous testing at high scale, which is rele...
Feb. 22, 2017 03:15 AM EST Reads: 5,484
Feb. 22, 2017 03:00 AM EST Reads: 2,023
Hardware virtualization and cloud computing allowed us to increase resource utilization and increase our flexibility to respond to business demand. Docker Containers are the next quantum leap - Are they?! Databases always represented an additional set of challenges unique to running workloads requiring a maximum of I/O, network, CPU resources combined with data locality.
Feb. 22, 2017 02:45 AM EST Reads: 2,004
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Feb. 22, 2017 02:00 AM EST Reads: 12,970
"A lot of times people will come to us and have a very diverse set of requirements or very customized need and we'll help them to implement it in a fashion that you can't just buy off of the shelf," explained Nick Rose, CTO of Enzu, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Feb. 22, 2017 01:45 AM EST Reads: 6,039
As software becomes more and more complex, we, as software developers, have been splitting up our code into smaller and smaller components. This is also true for the environment in which we run our code: going from bare metal, to VMs to the modern-day Cloud Native world of containers, schedulers and micro services. While we have figured out how to run containerized applications in the cloud using schedulers, we've yet to come up with a good solution to bridge the gap between getting your contain...
Feb. 22, 2017 01:30 AM EST Reads: 3,524
Feb. 22, 2017 01:30 AM EST Reads: 4,120
"We host and fully manage cloud data services, whether we store, the data, move the data, or run analytics on the data," stated Kamal Shannak, Senior Development Manager, Cloud Data Services, IBM, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Feb. 22, 2017 01:15 AM EST Reads: 5,519
Who are you? How do you introduce yourself? Do you use a name, or do you greet a friend by the last four digits of his social security number? Assuming you don’t, why are we content to associate our identity with 10 random digits assigned by our phone company? Identity is an issue that affects everyone, but as individuals we don’t spend a lot of time thinking about it. In his session at @ThingsExpo, Ben Klang, Founder & President of Mojo Lingo, discussed the impact of technology on identity. Sho...
Feb. 22, 2017 12:30 AM EST Reads: 5,327
Information technology (IT) advances are transforming the way we innovate in business, thereby disrupting the old guard and their predictable status-quo. It’s creating global market turbulence. Industries are converging, and new opportunities and threats are emerging, like never before. So, how are savvy chief information officers (CIOs) leading this transition? Back in 2015, the IBM Institute for Business Value conducted a market study that included the findings from over 1,800 CIO interviews ...
Feb. 22, 2017 12:30 AM EST Reads: 1,643