Edmonton, Alberta, November 26, 2015 – Titan Logix Corp., (TSX Venture: TLA), a high technology company specializing in advanced technology fluid management solutions, announces its results for the three months and year ended August 31, 2015.
Financial Highlights Summary
(in Canadian dollars)
“The dramatic decline in the price of oil during 2015 resulted in a sharp slowdown in crude oil trailer manufacturing, which resulted in a material decrease in revenue over last year,” said President and CEO, Greg McGillis. “We are in challenging times; the price of oil is not expected to return to previous levels any time soon, which means ongoing lower levels of oilfield activity.
As a result of the downturn in its markets, Titan put several new market opportunities on hold at least until such time that the full effects of this downturn can be understood. Titan is acutely focused on reducing costs wherever possible to mitigate the impacts of the downturn, strengthening its management team and systems, and monitoring and reviewing its opportunities for growth and expansion.”
“Our company is well equipped to handle this downturn, and our team is committed to securing our growth opportunities at the appropriate time.” continued McGillis.
Summary of Sales Revenue, Gross Profit and Net Earnings:
Titan Logix Corp.’s revenue for fiscal 2015 totaled $13,302,783, a decrease of $3,889,961 or 23% from revenue of $17,192,744 in the previous year. Titan’s revenue outside of Canada, primarily to the U.S., was $7,783,358 in fiscal 2015, a decrease of 9% from revenue of $8,574,089 in fiscal 2014. Revenue in Canada for fiscal 2015 was $5,519,425, a decrease of 36% from revenue of $8,618,655 in fiscal 2014. This overall decrease was offset 4% by the benefit of the strengthened U. S. dollar compared to fiscal 2014. Revenue in the first half of fiscal 2015 was higher than the previous year, and the smaller decrease in US sales for the whole year reflects Titan’s success in increasing its market penetration in the United States. Revenue for the last half of fiscal 2015 was negatively impacted by the low price of oil and resulting reduced demand for the Company’s products.
The gross profit in fiscal 2015 was $6,805,803 (51%) compared to $8,770,798 (51%) in fiscal 2014. The gross profit decline is primarily a result of the decrease in revenue. The gross profit was negatively impacted by a $287,163 write-down of inventory. Net earnings and comprehensive income for fiscal 2015 were $1,140,268 ($0.04 per diluted share) compared to $2,661,188 ($0.10 per diluted share) for fiscal 2014. This decrease is tied to the decrease in revenue and related gross profit, an increase in engineering expense as well as an intangible asset impairment loss of $431,551, partially offset by an increased gain on foreign exchange, and decreases in general and administration and marketing and sales expenses.
In the fourth quarter of 2015, Titan’s revenue was $1,736,923, a decrease of 63% from the fourth quarter revenue of $4,634,174 in fiscal 2014. Gross profit was $453,263 (26%) compared to $2,276,157 (49%) in the fourth quarter of the previous year. Gross profit was negatively impacted by a $287,163 write-down of inventory. Gross margin percentage excluding the inventory write-down was 43%. Gross margin percentage also decreased as a result of the manufacturing facility not operating at capacity. Production labour was reduced in alignment with reduced sales.
The net loss in the fourth quarter of fiscal 2015 was $984,388 ($0.04 per diluted share), compared to net income of $733,049 ($0.03 per diluted share). This change is a primarily a result of the decrease in revenue and gross profit, and a $431,551 intangible asset impairment loss. The decrease in earnings was partially offset by decreases in operating expenses and a gain on foreign exchange. Excluding the inventory write-down and intangible asset impairment, the fiscal 2015 fourth quarter net loss would have been $265,674.
Summary of Operating Expenses
In fiscal 2015, total expenses were $4,716,121, a decrease of $656,225 from $5,372,346 the previous year. Expenses for the fourth quarter were $1,050,943 compared to $1,338,194 in the prior year’s fourth quarter. Total engineering expenditures prior to the capitalization of development costs and the recording of recoveries for funding received were $1,467,625 for fiscal 2015 compared to $1,385,905 for the previous fiscal year.
At August 31, 2015 working capital was $17,218,937 compared to the August 31, 2014 year-end balance of $15,011,133. Cash and cash equivalents increased to $14,773,897 at the end of fiscal 2015 compared to $11,845,187 on August 31, 2014. Titan does not have any debt except for trade and corporate taxes payables, accrued liabilities, and finance lease obligations.
Titan continues to maintain its market share in the face of the dramatic downturn in the upstream crude oil market. Titan’s proprietary TD80/Finch II/RCM technologies continue to be widely accepted. This facilitates retrofit sales which are very important during this time of low crude oil prices. Of equal importance is our “Titan Logix Corp. gives Total Customer Care” program (TLC gives TCC) emphasizing how we work with our OEMs, dealers, strategic partners, and end user customers to ensure product suitability and reliability thus maximizing the benefit to our customers. We respond quickly and effectively to customer requests and concerns, continuously seeking their feedback to improve our products. Identifying and responding to market and customer needs has enabled us to grow our market share and build relationships that will assist us in penetrating new markets.
There are no short term expectations for an increase to higher volumes of oilfield tanker manufacturing by Titan’s OEM customers until crude oil prices recover to a level that stimulates increased oil rig activity in North America.
Titan has reduced discretionary spending and downsized production costs to match current demand. In the last quarter of fiscal 2015, in addition to layoffs in production staff, compensation was rolled back company-wide by 5% to 10% for all employees and 20% for executive and directors. Certain employee benefits were also suspended. These changes along with other cost savings initiatives result in an annualized cost reduction of approximately $475,000 for fiscal 2016. Our strong balance sheet helps us weather current uncertainties to build upon our established reputation and pursue select new opportunities. We continue to focus R&D efforts on improving the reliability and enhancing Titan’s core Guided Wave Radar liquid level gauging technology.
Titan’s UK partner is working to finalize commercialization of the advanced fluid level gauging system for refined fuel tankers (fleet fueling and fuel transport markets). As soon as they are complete Titan will begin North American climatic condition testing of the system.
Titan continues to explore opportunities to acquire and develop new products, and to expand into new markets.
Titan Logix Corp.’s audited financial statements and management’s discussion and analysis for the fiscal year ended August 31, 2015 are available on SEDAR at www.sedar.com and on the Company’s website - Finance Reports.
About Titan Logix Corp.:
Founded in 1979, Titan Logix Corp. (“Titan” or “the Company”) is a high technology company specializing in Research and Development (R&D), manufacturing and marketing of advanced technology fluid management solutions. The Company's products include Guided Wave Radar (GWR) gauges for level measurement and overfill prevention (particularly for use in mobile tanker applications), level gauges for storage tanks, and communication systems for remote alarming and control. Our products are currently used in the oil and gas, waste fluid collection, chemical and aviation industries.
These technologies and their derivatives under development are applicable to a variety of additional markets which Titan plans to expand into at the appropriate time. A common practice in many of these markets is the use of manual methods for measurement and control. Our advanced technology products are in demand by our customers due to safety considerations, the cost of managing their fluids, awareness and concerns about the environment, and technological advancements enabling better operational efficiencies. We anticipate this demand will be present as we pursue expansion into other markets.
Titan’s products are part of a complete asset management solution. The full solution consists of Titan’s products integrated with best-in-class third party solutions to enable our complete fluid management throughout each stage of their fluid handling processes. This is captured by our slogan “Advanced Technology Fluid Management Solutions, In the Field, On the Road, In the Office”™.
● In the Field: "In the Field" refers to Titan's solution offerings for storage tanks and process vessels.
● On the Road: "On the Road" refers to Titan's solution offerings for mobile tanker trucks and trailers.
● In the Office: "In the Office" refers to Titan's solution offerings that enable customers to monitor their fluid assets from the convenience of their dispatch center or other back office environment through a wired or wireless connection.
Titan Logix Corp. is a public company listed on the TSX Venture Exchange and its shares trade under the symbol TLA..
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains certain statements with information that may be forward-looking and subject to unknown risks and uncertainties. The actual results, performance and achievements of Titan Logix Corp. may differ materially from the results, performance and achievements expressed or implied by such forward-looking statements. These forward-looking statements may not relate strictly to historical or current facts. They represent management’s views as of the date of this press release and we assume no obligation to update them. We caution you not to place undue reliance on these forward-looking statements.
Greg McGillis, P.Eng.,
President and Chief Executive Officer
Ph: (780) 462-4085
TSX Venture, TLA