Edmonton, Alberta, January 14, 2016 – Titan Logix Corp., (TSX Venture: TLA) (“Titan” or the “Company”), a high technology company specializing in advanced technology fluid management announces its unaudited financial results for the first quarter of its fiscal 2016, ended November 30, 2015.
“The dramatic slowdown in crude oil trailer manufacturing as a result of the collapse in the price of oil continues to negatively impact Titan as we reflect a material decrease in revenue over last year.” said President and CEO, Greg McGillis.
“We continue to face 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. Titan continues our focus on controlling operating costs wherever possible to mitigate the impacts of the downturn. We have an experienced management team and effective systems in place equipping us to weather this downturn.”
“We are committed to securing new growth opportunities. Titan has initiated a comprehensive review of strategic initiatives and is in the final stages of completing a strategic plan that is responsive to these current realities.” continued McGillis.
Summary of Sales Revenue and Net Earnings (Loss)
Titan Logix Corp.’s revenue for the first three months of fiscal 2016 ended November 30, 2015 totaled $1,577,787, a decrease of $3,467,458 or 69% from revenue of $5,045,245 in the previous year’s first quarter. Titan’s revenue outside of Canada, primarily to the U.S., was $880,820 in the first quarter of fiscal 2016, a decrease of 68% from revenue of $2,744,114 in the first quarter of fiscal 2015. Revenue outside of Canada increased to 57% of Titan’s total revenue in the first quarter of fiscal 2016 compared to 54% in fiscal 2015’s first quarter. Revenue in Canada for the first quarter of fiscal 2016 was $696,967, a decrease of 70% from revenue of $2,301,131 in fiscal 2015’s first quarter. Crude oil trailer manufacturing has slowed significantly due to the decline in the price of oil and as a result Titan’s revenue has decreased. This overall decrease was partially offset 3% by the benefit of the strengthened U.S. dollar compared to fiscal 2015’s first quarter.
The gross profit in the first quarter of fiscal 2016 was $609,750 (39%) compared to $2,626,350 (52%) in the first quarter of fiscal 2015. The gross profit decline is primarily a result of the decrease in revenue. Gross margin percentage decreased as a result of the manufacturing facility not operating at capacity yet incurring ongoing fixed overhead costs. Production labour was reduced in line with reduced sales. Technical service and sustaining engineering costs did not decrease in proportion to the decrease in revenue as Titan continues to offer the same strong level of customer support.
The net loss in the first quarter of fiscal 2016 was $350,855 ($0.01 loss per diluted share) compared to net earnings of $1,113,928 ($0.04 per diluted share) for fiscal 2015. This decrease is tied to the decrease in revenue and related gross profit as well as lower gains on foreign exchange. These decreases to net earnings were partially offset by decreases in general, administration, marketing and sales expenses.
Summary of Operating Expenses
Total expenses excluding the gain on foreign exchange were $1,159,975 for the first quarter ended November 30, 2015 compared to $1,269,373 in the previous year. In the last half of fiscal 2015 the Company reduced costs to better align with decreases in oil and gas activity levels. Workforce reductions were made and compensation was rolled back company-wide by 5% to 10% for all employees and 20% for executive and directors including suspension of certain employee benefits.
At November 30, 2015 working capital was $16,832,165 compared to the August 31, 2015 year-end balance of $17,218,937. At November 30, 2015 cash and cash equivalents were $14,351,525 compared to $14,773,897 at the end of fiscal 2015. Titan does not have any debt except for trade payables, accrued liabilities and finance lease obligations.
There are no short term expectations for a return to higher volumes of oilfield tanker manufacturing and therefore demand for Titan’s primary products, until crude oil prices recover to a level that stimulates increased oil rig activity in North America.
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 Titan’s “Titan Logix Corp. gives Total Customer Care” program (TLC gives TCC) emphasizing how Titan works with its OEMs, dealers, strategic partners, and end user customers to ensure product suitability and reliability thus maximizing the benefit to its customers. Titan responds quickly and effectively to customer requests and concerns, continuously seeking their feedback to improve products. Identifying and responding to market and customer needs has enabled Titan to grow its market share and build relationships that will assist in penetrating new markets.
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 including suspension of certain employee benefits. Titan’s strong balance sheet helps it weather current uncertainties to build upon its established reputation. Titan continues to focus R&D efforts on advancing its core Guided Wave Radar liquid level gauging technology.
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.
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.
Information in this press release that is not current or historical factual information may constitute forward looking information within the meaning of securities laws. Implicit in this information are assumptions regarding our future operational results. These assumptions, although considered reasonable by the company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual performance of the company is subject to a number of risks and uncertainties and could differ materially from what is currently expected as set out above. For more exhaustive information on these risks and uncertainties you should refer to our Management Discussion and Analysis in respect of the year ended August 31, 2015 which is available at www.sedar.com. Forward-looking information contained in this press release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time, whether as a result of new information, future events or otherwise, except as required by applicable securities law.
Greg J. McGillis, P.Eng.
President and Chief Executive Officer
Ph: (780) 462-4085
TSX Venture, TLA