- Company records $3.4 million profit -
CALGARY, Feb. 25 /CNW/ - CriticalControl Solutions Corp., (TSX:CCZ) today
reported its financial results for the three and twelve month periods ended
December 31, 2008.
Fiscal 2008 Highlights
- 13% increase in total revenue to $26.0 million in 2008 from
$23.1 million in 2007;
- 13% increase in gross margin as a percentage of revenue to 54% in
2008 from 48% in 2007;
- Significant increase in net income to $3.4 million in 2008 from
$117,000 in 2007;
- Completed the purchase and cancellation of 9,384,000 pre-consolidated
common shares (amounting to 3,128,000 post consolidated common
shares) though a normal course issuer bid;
- Acquired the assets of Western Corrosion Technologies and SCADANet
for $500,000 and $800,000 respectively; and
- Increased serviced measurement points to 117,266 at the end of 2008
from 93,541 at the end of 2007.
Fourth Quarter 2008 Financial Highlights (Q4 2008 compared to Q4 2007)
- 28% increase in total revenue to $7.0 million in 2008 from
$5.5 million in 2007;
- 8% increase in gross margin as a percentage of revenue to 54% in 2008
from 50% in 2007; and
- Significant increase in net income to $1.0 million in 2008 from a
loss of ($196,000) in 2007;
"Our 2008 performance is the result of our successful drive to
profitability," said Alykhan Mamdani, President and CEO of CriticalControl.
"As we meet the challenges of the current economic environment in 2009, our
core focus on strategic growth aligned with bottom line performance remains
Reference is made to the Corporations 2008 Annual 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.
Fiscal 2008 Financial Summary
Total revenue was $26.0 million for the year ended December 31, 2008
compared with $23.1 million for 2007, an increase of $2.9 million or 13%.
Total revenue was $7.0 million for the three months ended December 31, 2008
compared with $5.5 million for the same period in 2007, an increase of $1.5
million or 28%. Revenue increases were attributable to both acquisitions and
Net income was $3.4 million for 2008, compared with $117,000 for the same
period in 2007, an increase of $3.3 million. Net income for the fourth quarter
of 2008 was $1.0 million, compared with a loss of ($196,000) for the same
period in 2007, an increase of $1.2 million. The Corporation's net income
increased substantially in the fourth quarter and on a year-to-date basis as
the Corporation successfully increased its revenue, maximized economies of
scale to maintain cost of revenue and contain operating expenses.
Cash flow from operating activities was $4.9 million for 2008 compared
with $3.7 million for 2007, an increase of $1.2 million or 34%. Cash flow for
the fourth quarter of 2008 was $2.2 million compared with $843,000 for the
same period in 2007, an increase of $1.3 million or 163%. The increase was
attributable to improvements in income generated from both the government and
energy sector. Cash required to finance non-cash working capital items was
$64,000, mainly due to the increase in accounts receivable supported by
revenue growth. Due to these improvements working capital doubled to $2.4
million at December 31, 2008 from $1.2 million at December 31, 2007.
The financial results of 2008 are the product of Management's
restructuring efforts in 2007 combined with successful execution of strategic
initiatives to enhance profitability. The current economic environment has
significantly affected the Corporation's client base in both its Government
Energy divisions. Management believes that the full effect of the global
financial crises and economic slowdown on its client base is not yet 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 affect on longer term spending initiatives remain uncertain.
Although the Corporation recorded strong revenue increases from the
Corporation's energy division in the fourth quarter of 2008, Management
expects exploration in the Western Canadian Sedimentary Basin to be
significantly 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. 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
A reduction of 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 early 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 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
at least sustain its average profitability of $1 million over the last three
quarters of 2008 into the remainder of 2009. Notwithstanding the forgoing, the
uncertainty related to the current economic environment may have further
repercussions on the Corporation's client base which 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.
This media release contains certain forward-looking statements that
reflect the current views and/or expectations of CriticalControl Solutions
Corp. with respect to their respective objectives, performance, business, and
future events. Such statements are subject to a number of risks,
uncertainties, and assumptions including 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 and the adoption of the Corporation's technology by
its energy client base, as well as those risks outlined in the Company's
filings with the Canadian securities regulatory authorities Actual results and
events may vary from management's assumptions and objectives.
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,