CriticalControl announces financial results for 2006



    - Acquisitions and strong organic growth lead to EBITDA increase of 72% -

    CALGARY, April 11 /CNW/ - CriticalControl Solutions Corp., (TSX-V:CCZ)
today reported its financial results for the three and twelve-month periods
ended December 31, 2006. (All dollar amounts are expressed in thousands unless
otherwise stated).

    
    Fiscal 2006 Highlights:

    -   28% increase in total revenue to $25,602 in 2006 from $20,087 in
        2005;
    -   EBITDA(1) increased by 72% to $2,782 in 2006 from $1,617 2005;
    -   3% increase in gross margin(2), as a percentage of revenue, to 45% in
        2006 from 42% in 2005;
    -   Renewed five-year, $17.25 million contract for outsourced imaging,
        analysis and information control services with a Canadian Provincial
        Government client;
    -   Acquired the Remote Data Acquisition ("RDA") Network from Crimtech
        Services Ltd;
    -   Extended the term of financing agreements with Wellington Financial;
        and
    -   Acquired 100% of ProTrend Software Inc., adding new functionality to
        upstream oil and gas solutions.
    

    "In 2006, CriticalControl assembled the foundation of an integrated
upstream oil and gas solution while managing to record solid growth in both
revenue and EBITDA," said Alykhan Mamdani, President of CriticalControl. "We
are now strategically positioned to focus our resources on our higher margin
products, expanding the Company's value proposition and fueling organic growth
in 2007."

    Fourth Quarter 2006 Financial review (in thousands):

    Total revenue was $6,539 for the three months ended December 31, 2006
compared with $5,998 for the same three month period in 2005, an increase of
$541 or 9%. Strength from the energy sector more than offset cyclical
decreases in other sectors.
    Revenue from the Energy sector was $3,570 for the fourth quarter of 2006
compared with $2,730 for the same period in 2005, an increase of $840 or 31%.
This increase is attributable to organic growth and the acquisitions of RDA
and ProTrend.
    Revenue from the Government sector was $2,794 for the fourth quarter of
2006 compared with $2,924 for the same period in 2005, a decrease of $130 or
4%. This decrease in the Corporation's Government Imaging Services Bureau was
due to the uncertainty surrounding the contract being put out to tender in the
fourth quarter. Subsequently, on April 2, 2007, the Corporation announced that
it was again awarded the contract with a minimum term of three years.
    Gross margin(1) as a percentage of revenue was 45% for the fourth quarter
of 2006 compared with 47% for the same period in 2005, a decrease of 2%.
    EBITDA increased to $776 for the fourth quarter of 2006 compared with
$675 for the same period in 2005, an increase of $101 or 15%.
    Profit was $25 (nil per share) for the fourth quarter of 2006 compared
with a net loss of $140 (nil per share) for the same period in 2005, an
improvement of $165.

    Fiscal 2006 Financial Review:

    Total revenue was $25,602 for the year ended December 31, 2006 compared
with $20,087 for 2005, an increase of $5,515 or 28%. The acquisition of RDA
Network in April 2006 and Protrend Software Inc. in August 2006 contributed
additional revenue of $893.
    Revenue from the Energy sector was $13,081 for 2006 compared with $9,005
for 2005, an increase of $4,076 or 45%. The increase is attributable to
hardware sales and gas measurement services, which increased by $2,419 and
$1,199, respectively. The acquisitions of RDA Network and ProTrend contributed
$672 and $221, respectively, and revenue from the Corporation's NetFlow
web-SCADA application increased by $618. Revenue in the areas of professional
services, EzyOps and PipeWorks decreased by $127, $355 and $567 respectively
due, in part, to management's decision to phase out operations outside its
areas of strategic focus.
    Revenue from the Government sector was $11,645 for 2006 compared with
$9,247 for 2005, an increase of $2,398 or 26%. The increase is attributable to
the renewal of the Company's primary outsourcing contract with a government
client, organic growth in both the imaging and document control services
business and enterprise content management consulting which generated growth
of $772, $1,906 and $406 respectively. The above growth was offset in part by
reduction of $686 in real property solutions consulting.
    Revenue from other sectors was $876 for 2006 compared with $1,835 for
2005, a decrease of $959 or 52%. This decrease was attributable to reduced
resources invested in areas of the business the Corporation did not deem
profitable or strategic.
    Gross margin(2) as a percentage of revenue was 45% for 2006 compared with
42% for 2005, an increase of 3%. This increase is attributable to operational
improvements and the corporate shift towards increased recurring revenue.
    EBITDA increased to $2,782 for 2006 compared with $1,617 in 2005. The
Corporation's working capital position was virtually unchanged at $2,545 at
December 31, 2006.
    Selling and administrative expenses ("SG&A") were $7,712 for 2006
compared with $5,651 for 2005, an increase of $2,061 or 36%. As with the cost
of revenue, the largest component of SG&A is salaries, which amounted to
$4,636 for 2006 compared with $3,818 for 2005, an increase of $818 or 21%.
This increase resulted from acquisitions and costs associated with organic
growth. In 2006, the Corporation continued to streamline administrative
functions and eliminate duplicate positions resulting from acquisitions in
order to offset increased labour costs.
    Interest, contract losses and other expenses were $1,481 for 2006
compared with $1,788 for 2005, a decrease of $307 or 17%. This decrease is
primarily the result of the amendment and extension of the debentures with the
Company's primary lender.
    Net loss was $273 (nil per share) for 2006 a $1,053 improvement compared
with a net loss of $1,326 (nil per share) for 2005. The reduction in loss was
due primarily to an increase in gross margin of $3,060 whereas operating
expenses increased by only $2,007.

    
    EBITDA Reconciliation to Net Income:

                                             For the                 For the
                                  three months ended     twelve months ended
                               31-Dec-06   31-Dec-05   31-Dec-06   31-Dec-05
                              ----------- ----------- ----------- -----------

    Net income (loss)                 25        (140)       (273)     (1,326)
    Add:
    Interest                         296         454       1,428       1,516
    Depreciation of Capital
     Assets                          330         271       1,156         902
    Amortization of Customer
     Contracts                       124          90         471         525
                              -----------------------------------------------
    EBITDA                           775         675       2,782       1,617
                              -----------------------------------------------
    

    Subsequent Events:

    On February 14, 2007, the Corporation announced that it was engaged to
provide $1.18 Million of services to a Western Canadian Province and certain
US municipalities related to the control of property tax and revenue
information. All revenues are expected to be recognized in 2007. The
$1.18 Million is comprised of a $575 support, maintenance and enhancement
agreement with a Western Canadian Province for a system implemented by
CriticalControl in the past and new deployments for specific US municipalities
valued at US$525.
    On March 1, 2007, the Corporation announced that it had completed the
acquisition of Idein Technologies Ltd. ("Idein"). Based in Calgary, Alberta,
Idein's primary business is providing access to and control of electronic flow
measurement and other devices at the wellsite. The control of field devices is
an essential component of CriticalControl's plan to consolidate its various
applications into a system of integrated management of energy data. As
consideration, CriticalControl paid $225 in cash and issued 1,133,333 shares
of CriticalControl to the vendors. The acquisition, which is expected to be
immediately accretive to the company, is expected to add more than $500 in
annualized revenue.
    On April 2, 2007, the Corporation announced that its wholly-owned
subsidiary CriticalControl Solutions Inc. had been awarded a renewed
three-year contract for an expanded set of imaging, analysis and information
control services (the "Services") with a Canadian Provincial Government (or
the "Client"). Based on current volumes, the contract is expected to generate
revenues in excess of $2 million annually for the initial three year term and
allows the Client to extend the contract up to three successive, two year
periods. Given the expanded Services covered by the agreement, management
expects the value of the contract to grow in size each year.

    Outlook:

    During the past four years, management completed the formation of the
basis for its go forward business strategy in both the government and energy
sectors. In 2006, management continued to execute on its plan to consolidate
technologies and service offerings critical to both the Government and Energy
sectors. The results for the fourth quarter of 2006 are indicative of the
success of this strategy.
    In March 2006, the Company announced the renewal of its relationship with
a Canadian Provincial Government, generating an annual $3,450 in recurring
revenue into 2011. This contract combined with the continued expansion of
imaging services to provincial government clients has resulted in an even
stronger recurring revenue base from the Company's government offering for at
least the next eight quarters.
    The Corporation's upstream strategy concentrates on the areas of the
Company capable of long term recurring profitability. The acquisition of the
RDA Network in April 2006 and of ProTrend Software in August 2006 is proof of
this commitment. With these acquisitions, management believes the Corporation
has developed a market leadership position in gas measurement serving more
than 250 clients in the upstream energy industry. The Corporation's
measurement services now include gas chart integration through its proprietary
ScanGas application, gas well monitoring and control through the Corporation's
proprietary NetFlow Network, and value-added services to manage fluid analysis
data and to enable well revenue accounting through the Corporation's
proprietary ProTrend application.
    The Corporation is executing a two-fold strategy designed to fuel growth
into 2007: Increase the number of measurement points being serviced; and, to
provide value added services to increase the net revenue derived from each
measurement point. The following chart is a quarter-by-quarter summary of our
measurement device activity.

    
    -------------------------------------------------------------------------
                                                           2006
    -------------------------------------------------------------------------
    Services Provided to Active Measurement     Q1      Q2      Q3      Q4
    Points at the end of each Quarter
    -------------------------------------------------------------------------
    Chart Recorders - Measurement             32,199  33,309  32,625  32,065
     (Active Meters)

    Electronic Flow Measurement Devices -        597   1,494   1,831   2,013
     Measurement and Control

    Fluid Analysis - Composition Management                   35,464  39,589
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    The acquisition of the RDA Network in April 2006 increased the number of
measurement points being serviced, whereas the acquisition of ProTrend
Software in August 2006 increased both the number of measurement points being
serviced and provided additional value added services that could be provided
to each measurement point.
    In December, 2006, ProTrend provided services for more than 39,000
measurement points to 18 clients. Of the more than 39,000 measurement points
on the ProTrend database, approximately 5,800 are serviced by CriticalControl
for gas measurement and/or well site control purposes. This presents an
opportunity to cross sell CriticalControl's expanded services within both
client bases, and combined with an aggressive strategy to increase value added
services from a measurement point perspective, is a key component of the
Corporation's growth plan. Management's efforts in this regard will continue
in 2007, resulting in increased gross margin as a percentage of revenue.

    (1) EBITDA, defined as earnings, before interest, taxes, depreciation and
    amortization, does not have any standardized meaning prescribed by GAAP,
    but management believes it is a useful supplemental measure of
    operational performance.

    (2) Gross margin, defined as revenue less direct cost of revenue, and
    gross margin percentage do not have any standardized meaning prescribed
    by GAAP, and may not be comparable to similar measures used by other
    companies. Management believes that Gross Margin is a key performance
    indicator of the operational performance of the Corporation's business
    and its ability to increase profitability through growth.

    About CriticalControl:

    CriticalControl is a technology company that builds, implements and
manages critical business process solutions. Our proprietary products are data
management tools to operate the critical business operations of our government
and energy sector clients. In addition to our proprietary products, we
implement large scale document and records management solutions using our
strong domain expertise and in depth knowledge of our customer base. Where
critical processes require unconditional continuity, our clients look to us to
manage and perform certain operational functions on a short term or long term,
outsourced basis. For more information please visit www.criticalcontrol.com.

    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this press release.

    %SEDAR: 00012919E




For further information:

For further information: Alykhan Mamdani, President, Tel (403) 705-7500;
or David Feick, The Equicom Group, Tel (403) 538-4787, Fax (403) 266-2453,
dfeick@equicomgroup.com

Organization Profile

CRITICALCONTROL SOLUTIONS CORP.

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