CALGARY, ALBERTA — (Marketwired) — 11/07/13 — CriticalControl Solutions Corp. (TSX: CCZ) today reported its financial results for the three and nine months ended September 30, 2013.
“We executed on our objectives for Q3, which generated improved performance in each of our business segments,” said Alykhan Mamdani, President and CEO of CriticalControl. “Continued increases in our recurring revenue and improved operational performance will support the execution of our strategic vision in 2014.”
Quarter ended September 30, 2013 highlights
Revenue
Gross margin (1) percentage
Selling and administrative expenses
Other expenses
Earnings and net earnings
Cash flow, working capital and debt
Outlook and forward looking statements
Investment in gas exploration and production in the Canadian Western Sedimentary basin remains volatile and unpredictable. Ongoing growth will be dependent upon the Corporation successfully exploiting products it has recently brought to market, innovation of existing solutions, and the introduction of new products in order to replace revenue from depleted or shut-in wells. Current interest in the Corporation-s new products and innovations on existing products provides management optimism for growth in its Canadian Energy Services business segment.
Continued growth in the Corporation-s Canadian Energy Services business segment is dependent upon the continued success of the Corporation-s sales effort, market acceptance of the Company-s innovations and new products, the successful deployment of the Corporation-s ProMonitor solution launched in February 2013 and the successful and timely development of its field data capture solution, all of which constitute risk factors that may negatively impact growth.
During 2011, exploration activity in the Appalachian basin related primarily to shale gas and the deployment of multi-frac wells. This spur in activity invited greater competition into the region, primarily related to fabrication. The volatility in the price of gas during 2012 reduced exploration, and competition has subsequently declined. The uncertainty caused by the influx and departure of competition has created an opportunity for the Corporation-s US Energy Services business segment, which has operated in the region for the past 35 years. The size of the Corporation-s field staff, historic operations and track record have resulted in the division becoming the preferred vendor for measurement related services to a number of customers. This has resulted in growing interest in the Corporation-s software based solutions.
The Corporation is building a sales team and reinforcing its management team in the Appalachian basin to maximize penetration in the region with its products and services. The Corporation is in the process of rolling out its existing technologies in the US and, given the investment in development, sales and potential channel partnerships, expects evidence of success to become material in 2014.
Growth from the Corporation-s US Energy Services business segment is dependent upon acceptance of the Corporation-s technology solutions, the success of its sales capability and the successful hiring and training of staff to manage growth, none of which can be guaranteed. These risk factors, if they arise, will have a negative impact on management-s outlook and the Corporation-s profitability.
The current economic environment in Canada and the changing nature of print and document management service businesses has resulted in companies with related ability or capacity entering into the imaging market, resulting in increased competition for the Corporation-s Service Bureau Operations. In addition, offshore players are increasing their reach into Canada and are offering discounted data entry services, which erode overall margins. Management expects this trend to continue into 2014. During 2012 and 2013, management has attempted to drive efficiencies from its existing operations to become more competitive and to target its solutions away from commoditized imaging and data entry services in order to improve margins.
Based on change in operational management for the Service Bureau Operations and recent success in establishing new customer revenue, which is expected to ramp up over 2014, management is optimistic that it can generate revenue and profit growth in 2014.
Management-s longer term outlook for the Service Bureau Operations is subject to the successful change in its sales strategy and the success of its sales capability, which cannot be assured. Failure to mitigate these risks would result in reduced performance from expectations. In addition, expected growth from a contract signed with a large financial institution for day-forward imaging is dependent upon the successful ramp up of volume resulting from a change in the client-s current process, the timing of which carries uncertainty, which may in turn push revenue expectations to a later date.
About CriticalControl:
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.
Contacts:
CriticalControl Solutions Corp.
Alykhan Mamdani
President & CEO
Tel (403) 705-7500
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