Mr. Greg McGillis reports
TITAN LOGIX CORP. REPORTS FISCAL 2014 Q4 AND YEAR END FINANCIAL RESULTS
Titan Logix Corp. has released its results for the three months and year ended Aug. 31, 2014.
FINANCIAL HIGHLIGHTS SUMMARY
Three months ended Year ended
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
2014 2013 2014 2013
Sales $4,634,174 $3,843,329 $17,192,744 $16,493,151
Gross profit (GP) 2,276,157 1,956,464 8,770,798 8,683,232
GP % 49% 51% 51% 53%
Earnings before
income tax 920,591 719,556 3,525,785 4,276,895
Net earnings 733,049 616,371 2,661,188 3,242,765
EBITDA 1,020,220 807,476 3,885,348 4,451,957
EPS (diluted) 0.03 0.02 0.10 0.12
"Our increase in sales from 2013 was a hard-won team achievement, considering the market-wide slowdown in oil industry tanker construction," said president and chief executive officer, Greg McGillis. "Our focus on strengthening our people, processes and quality, combined with the growing demand for our Finch II, RCM and Stik technologies, position us well to grow our sales in the coming year. Stik development, strategic acquisitions, partnerships and expansion into the refined fuel tanker markets are Titan's key focuses to help advance our penetration into new markets."
Summary of sales revenue and net earnings
Titan Logix's sales for fiscal 2014 totalled $17,192,744, an increase of $699,593 or 4 per cent from sales of $16,493,151 in the previous year. This increase is primarily a result of increased market penetration due to the company's continuing deep commitment to customer service/support and the introduction of new products, mitigating the impact of a market-wide slowdown in oil industry tanker construction. Earnings before income tax, for the fiscal year ended Aug. 31, 2014, were $3,525,785 compared with $4,276,895 in fiscal 2013. Net earnings and comprehensive income were $2,661,188 compared with $3,242,765 for fiscal 2013. Titan continues to be profitable for 17 consecutive quarters.
In the fourth quarter of 2014, Titan's sales were $4,634,174, an increase of 21 per cent or $790,845 from the fourth quarter sales of $3,843,329 in fiscal 2013. The increase in revenue is a result of successful efforts to increase market penetration in the United States as well as an increase from the sale of the company's new products. The net earnings in the fourth quarter of fiscal 2014 were $733,049 compared with net earnings of $616,371 in the fourth quarter of fiscal 2013. This increase in earnings is due primarily to the increased revenue for the quarter.
Titan's sales outside of Canada, primarily to the U.S., were $2,648,914 in the fourth quarter of fiscal 2014, an increase of 38 per cent from sales of $1,922,558 in the fourth quarter ended Aug. 31, 2013. Sales outside of Canada were 57 per cent of Titan's total sales in the fourth quarter of fiscal 2014 compared with 50 per cent in the comparable period of 2013. Sales in Canada for the quarter ended Aug. 31, 2014, increased by 3 per cent to $1,985,260 from sales of $1,920,771 in the comparable period of fiscal 2013.
SUMMARY OF OPERATING EXPENSES
Three months ended Aug. 31,
2014 2013
General and
administration $494,895 $613,077
Marketing and sales 491,078 520,717
Engineering and
development 274,834 101,427
Depreciation and
amortization 97,195 51,715
(Gain) on foreign
exchange (19,808) (25,009)
Total expenses 1,338,194 1,261,927
Year ended Aug. 31,
2014 2013
General and
administration $2,493,304 $2,349,422
Marketing and sales 1,836,775 1,783,995
Engineering and
development 712,459 325,217
Depreciation and
amortization 349,191 157,903
(Gain) on foreign
exchange (19,383) (137,231)
Total expenses 5,372,346 4,479,306
In fiscal 2014, total expenses were $5,372,346, an increase of $893,040 from $4,479,306 the previous year. Total engineering expenditures prior to the capitalization of development costs and the recording of recoveries for financing received were $1,385,905 for fiscal 2014 compared with $1,361,019 for the previous fiscal year.
Financial position
At Aug. 31, 2014, working capital was $15,011,133 compared with the Aug. 31, 2013, year-end balance of $12,184,559. Cash, cash equivalents and short-term investments were $11,845,187 at the end of fiscal 2014 compared with $9,257,177 on Aug. 31, 2013. Titan does not have any debt except for trade payables, accrued liabilities and finance lease obligations. Titan continues to maintain a strong balance sheet and a good cash position.
Business outlook
Titan continues to be committed to focused and targeted product innovation. This focus includes the company's formation of an enhanced in-house application and support engineering arm, led by the product management team. By doing this, product innovation will be executed more consistently and efficiently. The company has also made significant process improvements, most notably the adoption of the Cooper Stage-Gate product development model. These changes will help the company bring new and innovative products to commercialization more effectively. Due to the company's focus on commercializing the company's its Stiks and developing its next-generation Stiks, the company is assessing potential partnership opportunities to advance the development of its next-generation BMS solution.
Along with product innovation, the company's team is dedicated to customer satisfaction. Through the TLC gives TCC program (Titan Logix gives total customer care) the company works with its OEMs and end-users to ensure product suitability and reliability thus maximizing the benefit to its customers. The company is committed to respond quickly to customer requests and concerns, and continuously seek their feedback to improve the company's products. The company's focus on identifying and responding to market and customer needs has enabled it to grow its market share and build relationships that will assist it in penetrating new markets.
Titan is developing a full suite of business solutions for in the field, on the road, in the office product offerings. The company has partnered with known telematics providers. The company is working on additional partnerships in telematics and other product categories that will bring added value to the Titan brand of products. These partnerships allow the company's products to work alongside other proven products to provide reliable back office information and control solutions to the company's customers.
The company has modified its process for managing strategic acquisition opportunities. This is a focus of Titan's executive, and with recent restructuring of the management team more time and resources are dedicated to this important objective.
Products
Next phase testing including continuing North American field trials are well under way for the upcoming launch of the advanced fluid level gauging system for refined fuel tankers (fleet fuelling and fuel transport markets). The resulting system refinements from these field trials along with other product enhancements under development by the company's U.K. partner have pushed the release into mid-fiscal 2015. These developments will help ensure Titan releases a full-featured and reliable product for the North American customer base.
The company's Finch II and RCM (Rack Control Module) have been widely accepted in the market segments it serves and it is seeing a growing demand for them. Stik product development continues for other markets and applications, including associated productivity modules (for instance, displays, controllers, interface/communication technology). The company's product innovation, engineering and manufacturing teams continue to progress on the development of its Stik offerings.
Additional information
Titan Logix's audited financial statements and management's discussion and analysis for the fiscal year ended Aug. 31, 2014, are available on SEDAR and on the company's website.
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