|By Marketwired .||
|August 7, 2014 09:23 PM EDT||
CALGARY, ALBERTA -- (Marketwired) -- 08/08/14 -- CriticalControl Solutions Corp. (TSX:CCZ) today reported its financial results for the three months ended June, 2014.
"We are on track to bring to market in the second half of 2014 the initiatives we have invested materially in over the past two years," said Alykhan Mamdani, President and CEO of CriticalControl. "The financing we completed in the second quarter provides us with additional flexibility for marketing and launching these initiatives as well as continued expansion in the US market."
Quarter ended June 30, 2014 highlights
-- Total revenue was $12.7 million in Q2 2014 compared to $11.9 million in Q2 2013, representing an increase of $0.8 or 6.6%. Year-to-date revenue increased by $1.8 million or 7.7%. -- Revenue from Canadian Energy Services was $3.3 million in Q2 2014 compared to $3.2 million in Q2 2013, representing an increase of $0.1 or 2.7%. Year-to-date revenue increased by $0.2 million or 3.2%. -- Revenue from the US Energy Services business increased by $0.8 million or 18.4%, from $4.4 million in Q2 2013 to $5.2 million in Q2 2014. Year- to-date revenue increased by $1.4 million or 16.7%. -- Revenue from the Corporation's Service Bureau Operations decreased by $0.1 million or 2.1%, from $4.3 million in Q2 2013 to $4.2 million in Q2 2014. Year-to-date revenue increased by $0.2 million or 2.7%.
Gross margin percentage
-- Gross margin percentage for the Corporation was 35.3% in Q2 2014 compared to 38.8% in Q2 2013. Year-to-date gross margin decreased from 37.7% to 33.5%. -- Canadian Energy Services gross margin percentage decreased from 57.9% in Q2 2013 to 48.4% in Q2 2014. Year-to-date gross margin decreased from 57.1% to 45.8%. The decrease is primarily attributable to negative margins associated with the rapid expansion and training related to ProMonitor in order to implement a large strategic ProMonitor project. -- US Energy Services gross margin percentage decreased slightly from 29.2% in Q2 2013 to 28.7% in Q2 2014. Year-to-date gross margin decreased from 29.0% to 27.5%. -- Service Bureau Operations gross margin percentage decreased from 34.4% in Q2 2013 to 33.0% in Q2 2014. Year-to-date gross margin decreased from 31.6% to 30.5%.
Selling and administrative expenses
-- Quarterly selling and administrative expenses for the Corporation were flat at $3.9 million in Q2 2014 and Q2 2013. Year-to-date selling and administrative expenses increased by $0.1 million. The year-to-date increase 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 $39 thousand in Q2 2014 compared to Q2 2013, and $103 thousand year-to-date, but when the impact of amounts capitalized and SR&ED tax credits is considered, expenditures increased by $39 thousand for the quarter and $83 thousand year-to-date. -- Finance costs in Q2 2014 increased by $268 thousand compared to Q2 2013 and $147 thousand year-to-date. The increases were attributable to an unfavorable swing in unrealized foreign exchange, offset somewhat by lower interest associated with decreased debt levels and lower bad debt expense in relation to 2013. -- Other operating expenses in Q2 2014 increased by $97 thousand compared to Q2 2013 and decreased $38 thousand year-to-date. A favourable adjustment to the Edmonton onerous lease provision in Q1 2014 was offset by a non-recurring expense in Q1 2014 and increased termination costs in Q2 2014.
Earnings and net earnings
-- The results for Q2 2014 and year-to-date were impacted by certain non- recurring or non-cash items, including unfavorable swings in unrealized foreign exchange, a loss on a large strategic ProMonitor project, a reduced onerous lease provision and other smaller or offsetting amounts. When the impact of these items is excluded from the results, the 2014 adjusted earnings (loss) before income tax is comparable to 2013. -- Loss before income tax for Q2 2014 was $114 thousand compared to earnings of $370 thousand for Q2 2013. The year-to-date loss in 2014 was $352 thousand compared to earnings of $150 thousand in 2013. -- Net loss for Q2 2014 was $110 thousand compared to net earnings of $270 thousand for Q2 2013. The year-to-date net loss in 2014 was $280 thousand compared to net earnings of $90 thousand in 2013.
Cash flow and working capital
-- Working capital increased by $2.0 million from $2.3 million at December 31, 2013 to $4.3 million at June 30, 2014. The main driver of this was private placement net proceeds of $2.7 million. -- Year-to-date net cash from operating activities decreased by $1.7 million from $1.0 million in 2013 to negative $0.7 million in 2014. The impact of income tax refunds in 2013 and income tax payments in 2014 accounted for $0.7 million of the year-to-date decrease, investment in working capital for growth accounted for $0.7 million, and the remaining decrease is primarily attributable to expenses incurred in relation to the loss on a significant ProMonitor project.
Outlook and forward looking statements
CriticalControl has invested significant resources in the past two years on initiatives within its Canadian and US Energy business. Management believes that the Corporation is on track with these initiatives, and they are anticipated to bear fruit in the next five calendar quarters. Modest revenue growth in the first half of the year 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, 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 year-to-date negative margin is attributable to the loss recognized on the large producer implementation project estimated at $576, which includes a provision of $200 for future losses. Management expects these further losses on the contract until the software can be adapted to materially offset current manual processes. Progress has been made in this regard and productivity has increased since Q1 2014, and further benefits are expected to be realized from the software development initiatives by the end of 2014. 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, reduces 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. 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 has implemented its ProTrend software in its fluid analysis labs in the US and is delivering fluid analysis results to its clients through this version of ProTrend, which has increased ProTrend's potential exposure to the US market. The US version of ProTrend to enable an oil and gas producer to validate and manage its fluid analysis from all third parties is expected to become available by Q4 2014. This expectation is based on development and testing time, which cannot be predicted with complete certainty. A delay in completion of development will result in the product being delayed to potential clients in the US.
The Corporation has launched its combined electronic fluid measurement meter and NetFlow software solution on a single price rental model in Canada in July 2014 and is expecting to launch a similar service in the US later in Q3 2014. Management is optimistic that this combined software and hardware solution will resonate with the needs of oil and gas producers in this uncertain market. Although early response to the solution has been positive, it is too early in the sales process to predict the impact of this solution to the Corporation's future growth.
In addition to the investment made on these strategic initiatives, the Corporation increased inventory during Q2 2014 in relation to the contracted fabrication of measurement related equipment. Management expects to complete, deliver and invoice these assemblies in Q3 2014. A delay in completion and shipping of these assemblies would delay the related revenue recognition.
The Corporation was expecting increased revenue in 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
Deep learning has been very successful in social sciences and specially areas where there is a lot of data. Trading is another field that can be viewed as social science with a lot of data. With the advent of Deep Learning and Big Data technologies for efficient computation, we are finally able to use the same methods in investment management as we would in face recognition or in making chat-bots. In his session at 20th Cloud Expo, Gaurav Chakravorty, co-founder and Head of Strategy Development ...
Mar. 24, 2017 10:15 AM EDT Reads: 3,216
What sort of WebRTC based applications can we expect to see over the next year and beyond? One way to predict development trends is to see what sorts of applications startups are building. In his session at @ThingsExpo, Arin Sime, founder of WebRTC.ventures, will discuss the current and likely future trends in WebRTC application development based on real requests for custom applications from real customers, as well as other public sources of information,
Mar. 24, 2017 10:00 AM EDT Reads: 108
Virtualization over the past years has become a key strategy for IT to acquire multi-tenancy, increase utilization, develop elasticity and improve security. And virtual machines (VMs) are quickly becoming a main vehicle for developing and deploying applications. The introduction of containers seems to be bringing another and perhaps overlapped solution for achieving the same above-mentioned benefits. Are a container and a virtual machine fundamentally the same or different? And how? Is one techn...
Mar. 24, 2017 09:45 AM EDT Reads: 2,708
SYS-CON Events announced today that Infranics will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Since 2000, Infranics has developed SysMaster Suite, which is required for the stable and efficient management of ICT infrastructure. The ICT management solution developed and provided by Infranics continues to add intelligence to the ICT infrastructure through the IMC (Infra Management Cycle) based on mathemat...
Mar. 24, 2017 09:45 AM EDT Reads: 2,638
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 20th Cloud Expo, which will take place on June 6-8, 2017 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 add...
Mar. 24, 2017 09:30 AM EDT Reads: 150
SYS-CON Events announced today that Cloudistics, an on-premises cloud computing company, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Cloudistics delivers a complete public cloud experience with composable on-premises infrastructures to medium and large enterprises. Its software-defined technology natively converges network, storage, compute, virtualization, and management into a ...
Mar. 24, 2017 09:15 AM EDT Reads: 1,543
Now that the world has connected “things,” we need to build these devices as truly intelligent in order to create instantaneous and precise results. This means you have to do as much of the processing at the point of entry as you can: at the edge. The killer use cases for IoT are becoming manifest through AI engines on edge devices. An autonomous car has this dual edge/cloud analytics model, producing precise, real-time results. In his session at @ThingsExpo, John Crupi, Vice President and Eng...
Mar. 24, 2017 08:45 AM EDT Reads: 3,596
What if you could build a web application that could support true web-scale traffic without having to ever provision or manage a single server? Sounds magical, and it is! In his session at 20th Cloud Expo, Chris Munns, Senior Developer Advocate for Serverless Applications at Amazon Web Services, will show how to build a serverless website that scales automatically using services like AWS Lambda, Amazon API Gateway, and Amazon S3. We will review several frameworks that can help you build serverle...
Mar. 24, 2017 08:45 AM EDT Reads: 1,462
In the enterprise today, connected IoT devices are everywhere – both inside and outside corporate environments. The need to identify, manage, control and secure a quickly growing web of connections and outside devices is making the already challenging task of security even more important, and onerous. In his session at @ThingsExpo, Rich Boyer, CISO and Chief Architect for Security at NTT i3, will discuss new ways of thinking and the approaches needed to address the emerging challenges of securit...
Mar. 24, 2017 08:30 AM EDT Reads: 4,197
The taxi industry never saw Uber coming. Startups are a threat to incumbents like never before, and a major enabler for startups is that they are instantly “cloud ready.” If innovation moves at the pace of IT, then your company is in trouble. Why? Because your data center will not keep up with frenetic pace AWS, Microsoft and Google are rolling out new capabilities In his session at 20th Cloud Expo, Don Browning, VP of Cloud Architecture at Turner, will posit that disruption is inevitable for c...
Mar. 24, 2017 08:30 AM EDT Reads: 1,846
SYS-CON Events announced today that Loom Systems will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Founded in 2015, Loom Systems delivers an advanced AI solution to predict and prevent problems in the digital business. Loom stands alone in the industry as an AI analysis platform requiring no prior math knowledge from operators, leveraging the existing staff to succeed in the digital era. With offices in S...
Mar. 24, 2017 08:15 AM EDT Reads: 822
There are 66 million network cameras capturing terabytes of data. How did factories in Japan improve physical security at the facilities and improve employee productivity? Edge Computing reduces possible kilobytes of data collected per second to only a few kilobytes of data transmitted to the public cloud every day. Data is aggregated and analyzed close to sensors so only intelligent results need to be transmitted to the cloud. Non-essential data is recycled to optimize storage.
Mar. 24, 2017 08:15 AM EDT Reads: 2,829
"I think that everyone recognizes that for IoT to really realize its full potential and value that it is about creating ecosystems and marketplaces and that no single vendor is able to support what is required," explained Esmeralda Swartz, VP, Marketing Enterprise and Cloud at Ericsson, in this SYS-CON.tv interview at @ThingsExpo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Mar. 24, 2017 08:00 AM EDT Reads: 3,856
As businesses adopt functionalities in cloud computing, it’s imperative that IT operations consistently ensure cloud systems work correctly – all of the time, and to their best capabilities. In his session at @BigDataExpo, Bernd Harzog, CEO and founder of OpsDataStore, will present an industry answer to the common question, “Are you running IT operations as efficiently and as cost effectively as you need to?” He will expound on the industry issues he frequently came up against as an analyst, and...
Mar. 24, 2017 08:00 AM EDT Reads: 3,944
In his General Session at 16th Cloud Expo, David Shacochis, host of The Hybrid IT Files podcast and Vice President at CenturyLink, investigated three key trends of the “gigabit economy" though the story of a Fortune 500 communications company in transformation. Narrating how multi-modal hybrid IT, service automation, and agile delivery all intersect, he will cover the role of storytelling and empathy in achieving strategic alignment between the enterprise and its information technology.
Mar. 24, 2017 08:00 AM EDT Reads: 7,270