CALGARY, ALBERTA — (Marketwired) — 03/18/15 — CriticalControl Solutions Corp. (TSX: CCZ) today reported its financial results for the year ended December 31, 2014.
“In 2014, we invested to bring ProMonitor to market in Canada and our core products to market in the US,” said Alykhan Mamdani, President and CEO of CriticalContol. “In 2015, we will focus on the expansion of our core products by deploying our US software investment over a larger geographic area in the United States through our recently announced acquisition.”
Annual 2014 highlights
Revenue
Gross margin percentage
Selling and administrative expenses
Other expenses
Earnings and net earnings
Cash flow and working capital
Outlook and forward looking statements
In light of the rapid decline in the price of oil commencing in Q4 2014, and the resulting reduced oil and gas exploration expected in 2015, CriticalControl has modified its short-term strategy with a view to reduce risk, increase focus and position the Corporation to capitalize on the eventual rebound in oil prices. While management is confident of an eventual rebound in investment in oil and gas, the timing of the rebound remains uncertain.
In a press release dated March 2, 2015, CriticalControl announced that it is reviewing strategic alternatives with respect to its non-energy services business, which comprised 30.6% of the Corporation–s revenue in 2014. This business segment consists of three components: The Equipment Business (consisting of reselling imaging equipment, preventative maintenance contracts and third party document imaging software); Eastern Canada Conversion (consisting of document imaging and data entry services in Quebec, Ontario and Winnipeg); and Western Canada Conversion (consisting of document imaging, data entry and business process outsourcing services in Alberta). The Corporation divested the Eastern Canada Conversion business for $1 million on March 12, 2015.
On March 16, 2015, the Corporation entered into a final agreement to sell the Equipment Business for $1.7 million, which is expected to close later in March 2015. The Corporation continues to evaluate strategic alternatives related to its Western Canada Conversion business, which it intends to complete by the end of May 2015. Notwithstanding that final documentation has been signed to divest the Equipment Business, closing is subject to certain customary conditions, the meeting of which cannot be completely guaranteed. The Corporation–s expectation that it will complete the review of the Western Canada Conversion business may change as it investigates alternatives and, based on this information, the Corporation may choose to terminate the process earlier or later than originally contemplated.
The core focus of the Corporation in the future will be its energy services business. Management expects capital expenditures by oil and gas companies in 2015 to be very low. Accordingly, the Corporation–s software development initiative for the development of a field data capture solution will be put on hold. The Corporation–s focus will be to increase penetration of its core software solutions (ProChart, NetFlow and ProTrend) into the Canadian and US markets, and the continued penetration of its emerging ProMonitor modules in Canada. The acquisition of the services division of Legacy Measurement Solutions, Inc. (“Legacy”), which is expected to close on or about April 1, 2015, provides increased geographic exposure for the Corporation to penetrate its core software in the United States. Notwithstanding that an asset purchase agreement has been executed to acquire the services division of Legacy, closing is subject to certain customary conditions, the meeting of which cannot be completely guaranteed.
The Corporation launched its combined electronic fluid measurement meter and NetFlow software solution on a single price rental or leasing model in Canada and the United States in late 2014. Management is optimistic that this combined software and hardware solution will resonate with the needs of 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. Management expects that a decline in the Corporation–s revenue from the sale of measurement related fabrication equipment in the United States due to reduced exploration will be offset by increased penetration of the Corporation–s software into the Corporation–s US and Canadian client base, which will grow with the closing of the acquisition of the Legacy assets.
About CriticalControl
CriticalControl provides solutions for the collection, control and analysis of measurement and operational data related to oil and gas wells across North America. We provide services to capture the data, cloud based software to visualize and manage it and the business intelligence to make quicker and more informed operational decisions.
Contacts:
CriticalControl Solutions Corp.
Alykhan Mamdani
President & CEO
(403) 705-7500
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