CriticalControl announces 2009 first quarter financial results



    - reports 31% increase in net income -

    CALGARY, May 5 /CNW/ - CriticalControl Solutions Corp., (TSX:CCZ) today
reported its financial results for the three month period ended March 31,
2009.

    
    Highlights for the quarter included (Q1 2009 compared to Q1 2008):

    -   8% increase in total revenue to $6.5 million from $6.0 million;
    -   gross margin as a percentage of revenue of 51% compared to 52%;
    -   31% increase in net income to $0.66 million from $0.50 million;
    -   corporation consolidated its common shares on a one new for three old
        share basis;
    -   listed its shares on the Toronto Stock Exchange on a post
        consolidated basis and simultaneously delisted its shares from the
        TSX Venture Exchange;
    -   completed the repayment of the Corporation's bank debt of $850 in the
        quarter.
    

    "Reduced transactional revenue in our registration business due to the
current economic climate was offset with organic growth in the remainder of
its business divisions during the quarter," said Alykhan Mamdani, President
and CEO of CriticalControl. "Despite expectations of continued lower levels of
economic activity in the Corporation's client base, management expects to
maintain the profitability it achieved in 2008, with further growth expected
as the economics of the Corporation's client base improves."
    Reference is made to the Corporation's 2009 First Quarter Financial
Statements and Management Discussion and Analysis, full copies of which are
available on www.sedar.com and the Corporation's website,
www.criticalcontrol.com.

    First Quarter 2009 Financial Summary

    Total revenue was $6.5 million for the quarter ended March 31, 2009
compared with $6.0 million for the same period in 2008, an increase of $0.5
million or 8%. Revenue increases were attributable to organic growth and from
the acquisitions of ScadaNet in July, 2008 and the assets of Western Corrosion
Technologies in October, 2008.
    Net income was $0.66 million for the quarter ended March 31, 2009
compared with $0.50 million for the same period in 2008, an increase of $0.16
million. Profitability increased primarily due to the growth experienced in
the Corporation's energy business.
    Cash flow from operating activities was $1.02 million for the quarter
ended March 31, 2009 compared with $0.836 million for the same period in 2008,
an increase of $0.2 million or 24%. The increase was attributable to
improvements in income generated from both the government and energy sectors.
    The Corporation's working capital improved to $3.03 million for the three
months ended March 31, 2009, compared with $1.8 million for the same period in
2008, an increase of 69%.

    Outlook:

    This Outlook and Guidance contains forward-looking statements which the
Corporation does not intend, and does not assume any obligation, to update,
except as required by law. The forward looking information and statements
include:

    
    -   The current economic and financial crisis and its effect on the
        Corporation's client base's business;
    -   The price of natural gas and its effect on capital spending and
        operating budgets of the Corporation's client base;
    -   The economic environment and its effect on the Corporation's
        government clients' expenditure plans;
    -   The demand for value added services that provide additional cost
        reduction or production optimization for the Corporation's energy
        client base; and
    -   Management's assumptions regarding the sustainability of recurring
        revenue streams and the Corporation's expected continuing
        profitability in 2009.
    

    The current economic environment has affected the Corporation's client
base in both its government and energy divisions. Management believes that the
full effect of the global financial crisis and economic slowdown on its client
base is not yet fully apparent. Although spending has been curtailed and
likely will remain so by both sets of client bases for at least the next 3
quarters, the magnitude of the cuts in spending and the effect on longer term
spending initiatives remain uncertain.
    Although the Corporation recorded strong revenue increases from the
Corporation's energy division in the first quarter of 2009 compared to the
same period last year, management expects exploration in the Western Canadian
Sedimentary Basin to be curtailed in 2009 and into 2010 due to weak commodity
prices. Although the Corporation's recurring revenue is tied to gas production
rather than exploration, a reduction in the number of gas wells drilled and
completed in 2009 and 2010 will result in lower growth in the Corporation's
business.
    The severity of decrease in the economics of gas production has seen some
low production wells shut in, especially where capital expenditure is required
to continue production. Although management has been able to absorb this
impact to the business through organic growth, the long term continuation of
this economically induced trend may impact the Corporation's recurring revenue
stream. In order to attain management's 2009 and 2010 growth objectives,
management will need to succeed in creating or acquiring value added services
to provide additional cost reduction or production optimization results for
its energy client base.
    The reduction in transactions in real estate and motor vehicles has
resulted in a significant drop in the Corporation's registration services for
provincial government ministries in the fourth quarter of 2008, and the first
quarter of 2009 and is expected to continue until the economy improves.
Although this decrease has been offset by the Corporation's other services to
its government and healthcare clients, the continuity of this additional work
is dependent upon continued spending on capital projects by the Corporation's
government clients. In the event the global economic downturn continues,
additional spending by the Corporation's government clients may be further
curtailed and will jeopardize management's growth objectives.
    Management's current opinion regarding the sustainability of its
recurring revenue streams would suggest that the Corporation will be able to
sustain continuous profitability for the remainder of 2009, consistent with
2008. The current economic climate, combined with possible continued
uncertainty associated with its impact on Canada, may have further
repercussions on the Corporation's client base which would result in lower
revenue in both the Corporation's government and energy divisions. A
deterioration of the economic climate or the prevalence of uncertainty for a
lengthy period of time may materially affect management's outlook, in which
case management's profitability targets will become dependent upon the
Corporation's ability to expand its core offering and market reach - both
organically and through acquisition, which may require a longer timeframe to
achieve.

    About CriticalControl:

    CriticalControl enables its clients to increase operational performance
through the better control of critical business information. Through the
balance of practicality, innovation and technology, we empower our clients
with everything from strategies and tools, to outsourced solutions to manage
information, wherever and in whatever form that information exists. For more
information please visit www.criticalcontrol.com.





For further information:

For further information: Alykhan Mamdani, President & CEO, Tel (403)
705-7500; or David Feick, The Equicom Group, Tel (403) 538-4787,
dfeick@equicomgroup.com

Organization Profile

CRITICALCONTROL SOLUTIONS CORP.

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