CALGARY, ALBERTA — (Marketwired) — 05/14/15 — CriticalControl Solutions Corp. (TSX: CCZ) today reported its financial results for the three months ended March 31, 2015.
“Top line growth in the first quarter in both Canada and the United States reinforces management–s decision to focus on our core energy business,” said Alykhan Mamdani, President and CEO of CriticalControl. “We will continue to execute our strategy as we streamline operations and integrate the United States based measurement services assets acquired in April 2015 to drive bottom line profitability.”
Quarter ended March 31, 2015 highlights
Through a series of transactions that were concluded on May 4, 2015, CriticalControl sold its Service Bureau Operations segment. The Service Bureau Operations segment was not previously classified as held-for-sale or as discontinued operations, but has been classified as such for the three months ended March 31, 2015. The comparative condensed consolidated interim statement of earnings for the three months ended March 31, 2014 and related disclosures have been restated to present the discontinued operations separately from continuing operations. Accordingly, the comparative numbers and related analyses included in this press release have also been restated where appropriate.
On April 1, 2015, the Corporation announced that it had acquired, through Gas Analytical Services, Inc., certain assets of a company based in Dallas, Texas relating to the interpretation of gas charts, the provision of gas and liquids analysis and the provision of measurement related field services (the “Measurement Services Acquisition”). The purchase price of US$2.0 million was paid 80% on closing with the remainder payable on December 15, 2015.
Revenue – continuing operations
Gross margin percentage – continuing operations
Selling and administrative expenses – continuing operations
Other expenses – continuing operations
Earnings and net earnings
Cash flow, working capital and debt
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. In a series of transactions which were concluded on May 4, 2015, the Corporation has divested all of these assets. The Corporation expects to incur restructuring costs in Q2 as it streamlines the organization to reflect a more focused company. The amount of these costs cannot be predicted at this time, but is expected to result in lower corporate costs in the second half of 2015.
The core focus of the Corporation is its energy services business. Management expects capital expenditures by oil and gas companies in 2015 to be very low. 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 Measurement Services Acquisition, which closed on or about April 1, 2015, provides increased geographic exposure for the Corporation to penetrate its core software in the United States.
The Corporation expects to generate losses from the Measurement Services Acquisition in the first three months as the acquired assets are integrated into the Corporation–s operations and revenue from the assets is stabilized. Management expects a positive contribution from the Measurement Services Acquisition in the second half of 2015. Notwithstanding the forgoing expectations, some of the aspects of the integration of the assets into the Corporation–s operations is outside of management–s control and a delay in such integration will delay the positive financial contribution from the assets.
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 its US and Canadian client base, which will grow with the Measurement Services Acquisition.
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:
Alykhan Mamdani
President & CEO
Tel (403) 705-7500
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