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Titan Logix Corp. (TLA.V) |
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April 8, 2011 Issue |
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The Most Powerful Name In Corporate News and Information |
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CURRENT ISSUE | COVER ARCHIVES | INDEX | CONTACT | FINANCIALS | SERVICES | HOME PAGE |
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Titan Logix Corp. is Focused on Being the World Leader in Advanced Level Measurement, Control and Asset Monitoring in Mobile Tanker Applications |
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Founded in 1979, Titan Logix
Corp. has evolved into an advanced technology industrial instrumentation and
controls company. We design, manufacture, distribute and service
instrumentation, control and automation solutions. These technologies are
used primarily in the oil and gas, transportation and aviation industries,
which for many years have relied on manual intervention. However, due to
rising costs, concerns and awareness about the environment, (including the
importance of spill prevention) and technological advancements - to list but
a few reasons - we expect an increased demand for our products. The products
we specialize in comprise an essential part of a complete asset management
solution in the following categories:
Les Evans became involved with Titan Logix Corp. after Titan purchased the company he co-owned in 1999. He continued to consult with Titan until July 2002 at which time he was appointed V.P. of Operations. Les became the President and CEO in August 2003.
After completing his electrical engineering degree, Greg McGillis joined Titan Logix Corp. in December 1992 in an Engineering Sales role. In 1999, he had the responsibility to launch the TD80™ throughout North America. The TD80™ is Titan’s leading product for level measurement and control for mobile tanker applications.
Chief Financial Officer and Vice President of Finance and Administration Angela Schultz is responsible for preparation of financial statements, compliance with reporting requirements, internal control, audit co-ordination and the accounting policies and procedures of the company.
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – April 8, 2011
Mr.
Greg McGillis:
The vision of Titan Logix, is to be the world leader in advanced level
measurement, control and asset management in mobile tanker applications.
This means that we develop solutions to enable our customers who have liquid
assets -- for example crude oil, chemicals, aviation fuel -- to monitor and
control their rolling assets (referring to the fluid in their mobile
tankers). The price and the value of these fluids are continually
increasing. For those customers who are not aware of Titan’s products it is
common for them to use manual, mechanical or electro-mechanical methods to
monitor and control this inventory. Hence, our customers can have inventory
control difficulties that are quite challenging to resolve. Our experience
has been that Titan’s advanced electronic technologies are ideal solutions
to this problem. In addition, our products incorporate “EPA-friendly”
overfill prevention technology to help avoid expensive environmental
incidents. CEOCFO: What are you offering today and who is using your services? Mr. Greg McGillis: The solutions we currently offer have been available for over a decade, primarily in Western Canada, which is where we are located. We have achieved market dominance here and hence have recently expanded our focus to include the U.S.A. markets. In the U.S.A. our customers include large trucking companies such as Sentinel Transportation, GulfMark, and Plains Marketing. We also sell to the Original Equipment Manufacturers (OEM’s) who make the tankers for the end users. These are companies such as Heil International, Stephens Pneumatics, and Polar Tank (to name only a few). We have identified approximately fifteen mobile tanker markets that Titan is developing products for. We are currently marketing to five of them. We are enthusiastic about our opportunities for growth as we continue to penetrate the current markets and look forward to expanding into the additional targeted markets.
CEOCFO: What is the competitive landscape? Mr. Greg McGillis: There are some competitors in these mobile markets and more are trying to gain entry. Consequently, Titan has invested considerably in our Research and Development (R&D) activities to maintain and improve our leading edge advanced radar technology solutions. Our competitor’s solutions are not as technologically advanced as ours are and hence only provide the market with a subset of the benefits our solutions provide. We plan to maintain and grow that gap through our ongoing R&D investments.
CEOCFO: Is the industry well aware that that they need the type of services you are providing, or is it something they are just coming to understand now?
Mr.
Greg McGillis:
That is a very good question. Their awareness is directly correlated to how
successful we have been in getting our message out. The markets we focus on
understand the need and they buy in. Though the adoption cycle can be long
in some cases, once our customers experience the benefits for themselves
they do not look back. North America is a big market and there are many
potential customers. There is considerable work for us to do to make them
aware.
Mr.
Les Evans:
When you ask if the market is aware, in Canada we believe we have 85% of the
new crude oil tanker market sewn up. So, our industry that we serve and that
we have broke into in Canada is certainly well aware of us.
Mr.
Greg McGillis:
in the United States, it is less. We have had an active market presence
there for only the last two years. To continue to expand we have recently
hired an additional salesman and our business development manager in Kansas
City, just in the last six months. CEOCFO: What are you providing for your customers; software, hardware or both, and who does the monitoring? Mr. Greg McGillis: The main product we provide is the TD80™. The TD80™ is a guided wave radar level gauge that is installed in a tanker. It is connected to a control system/display to indicate the liquid level in the tanks. It can be tied into valves and overfill prevention systems to warn the operator/driver to turn the pumping system off in the event of a potential overfill (or to shut it off for him if necessary). It can also be tied into a wireless asset management system, which is often provided by a third party company, such as People Net or Qualcomm. The information from our system is then transmitted wirelessly (through cellular or satellite carriers), back to a data collection station, and displayed using software on that end. Titan partners with the asset management companies to make our solution interface with the customer’s existing back office software platform.
CEOCFO: Is this a one-time sale, is it an ongoing monthly monitoring; what is your revenue model?
Mr.
Greg McGillis:
The gauging system itself, the TD80™, is a one-time sale. As far as the
revenue model is concerned, with respect to the fluids we monitor, other
companies currently provide the wireless asset management component. As
Titan continues to develop our “In-the-Field, On-the-Road, In-the-Office
solution”, we will establish strategic alliances with software providers so
there will be an element of ongoing revenue that Titan will share in. CEOCFO: What should people understand about Titan that they may not see when they look at the company?
Mr.
Greg McGillis:
Our core competencies instill in our customers the confidence
to have us as their supplier. One of these core competencies is our advanced
understanding of guided wave radar (GWR) technology in mobile applications.
Considering the substantial R&D investment we have made in GWR, as well as
in earlier fluid management products, we have been serving these markets for
approximately twenty-one years. This makes us unique. Most level measurement
and controls companies focus on stationary tanks. Mobile tanker applications
are very difficult to serve. They involve a moving vessel, moving fluids,
considerable vibration, challenging mechanical constraints, etc. Providing
solutions to work in these environments is not for the faint of heart. One
of the main reasons we are successful at doing this is that our company is
an integrated supplier. We are approximately fifty people. We have our own
R&D, product management, business development, manufacturing, sales,
marketing, distribution, after sales support, and finance departments.
Because we are an integrated company we have the ability to control the
quality of our products and ensure the features our customers are looking
for are incorporated in our designs. Most of our sales are through channel
partners: we do not often sell direct to end users.
Mr.
Les Evans:
I just might add that we have come out of this recession in the last
eighteen months or so in a very strong position. We have no debt. We have a
good amount of cash, and a strong balance sheet. We are poised to go forward
as the industries start going forward also. We have made some bold moves in
adding new people as we saw the signs of the recession easing up, and we are
really looking forward to increased revenues and profits in the next year to
twenty-four months. CEOCFO: Is it that you are in a recession-proof business, or is it very good management that allows you to continue to be successful during this time? Ms. Angela Schultz: I would say it was good management that enabled us to be in this position. We were definitely impacted by the recession. Our fiscal year-end is August, so in November we released our financial results. We saw a drop in our fiscal 2010 results from our 2009 due to the impact of the recession; our sales revenue was down from 2009 revenue of $8.4 million, so we were down to $6.6 million. We did incur a loss, however we were able to stay financially strong, as Les mentioned, with a strong balance sheet and no debt. This was achieved, I believe, by dealing with the recession through strong management of our financial situation and our operations over all.
CEOCFO: You mentioned responding to customers needs; do you develop new products or applications based on what people ask you for? Mr. Greg McGillis: Yes, absolutely! That is exactly how our products are developed. We are engineers and sales and marketing professionals; we constantly strive to improve our understanding of the voice of the customer. We get a hint of a market need and we do some research. Customers ask for certain features and we do our best to delve into their minds and their operations to ask “what does the market really need and why?”. Then we develop a solution that solves their business pain, or addresses their business need, of course with the understanding that it must have a sufficient return on investment for them as well as for Titan. We have a list of hundreds of potential R&D and engineering projects we could work on based on the ideas that have been generated over the years. Of course, we can’t implement all of them, so we continually work at keeping the list pared down to a manageable level. We do so based on what we see as dominant customer needs or market trends, with the provision that it must make sense financially.
CEOCFO: Is there something specific you are working on at the moment, or something you would like to be able to do that you haven’t yet found a solution for or that you are working on a solution for? Mr. Greg McGillis: Yes, there are many, but I will address just one; it is a product we named the Deice-Stik™. The Deice-Stik™ was launched a few years ago. It is a very innovative device for monitoring the on-board inventory and the dispensing of aircraft de-icing fluid from a deice truck as it is sprayed on a plane, enabling the plane to take off safely in adverse weather conditions. There are enhancements we are completing in order to gain acceptance with a broader range of the market. One of the features we have been working on is a radically different way of measuring the concentration of glycol and water. This is a problem that leading manufacturers are trying to tackle through an optical approach. As a major focus for our R&D Group, we are trying to do it through radar technology instead. It is a very difficult problem to solve, but we are making progress. As the Deice-Stik™ and its derivative technologies mature, this new GWR series is the platform upon which we will build our other solutions to enable us to tackle the fifteen fluid management markets we identified.
CEOCFO: Do you do much investor outreach? Mr. Les Evans: That is one of our potential weaknesses that we don’t do as well as we should. We did a short-form offering about four years ago to raise a couple million dollars and it worked. It provided us cash to go forward. We are constantly looking at strategic alliances or acquisitions of other companies. They have to be the right fit and they have to be within our vision. We are not just going to have them because they are available. It is all part of going forward with our vision.
CEOCFO: Is there a roll-up in the industry? Mr. Les Evans: I do not believe so. If you look at the petroleum industry, yes there are many different companies in the industry that went under because of the recession, especially in Canada. However, in the area that we are moving forward in, the mobile tanker business, it is a high-tech industry with a need for a high-tech solution. We have talked to a few, but for one reason or another it just didn’t work out. They are usually private companies and of course the owners always see that there is light on the horizon for them and that next million dollars just over the horizon will begin to be very cautious. We are, as you know, a publically traded company so whether that evolves with another publically traded company we don’t know at this time.
CEOCFO: Why is your industry an area potential investors should be looking at, and looking at Titan specifically?
Mr.
Les Evans:
I think just to expand on what I said earlier is that we do have a strong
balance sheet, and we have a vision. We have a very strong team in our
research and development and manufacturing. We have a real go-forward look.
We plan to increase our revenues through penetration into the markets that
we are in and eventually the new markets, but again we still have that
vision of doing a deal with someone.
Mr.
Greg McGillis:
From the investor’s point of view, based on the quality of the output from
our R&D group, the innovation we have already achieved, and the innovation
we anticipate achieving, we believe the new products we will launch, will
be, in some cases, disruptive technology. They will make changes to the way
people measure, monitor and control their fluid assets, particularly in
mobile applications. We have already seen this take place. In 1989 Titan
first identified that the management of fluids in mobile applications (i.e.
rolling assets: over the road/rail) was not being done well in many markets.
At that time we developed a technology which enjoyed some success. Ten years
later, in 1999, we launched our guided wave radar technology, which is at
the core of our TD80™ system. Over this time we have seen a continual
increase in the attention paid to rolling assets. The competitive technology
that is commonly used is either mechanical or electro-mechanical, which has
a limited lifespan and provides the end user with a restricted set of
benefits in comparison to what is offered by Titan’s products. Our solution
will integrate various technologies into one system to provide our customers
with a turnkey package that provides them with a more complete picture of
the state of their liquid assets, as well as greater control of these
assets. As these fluids continue to increase in value, it is a natural
evolution to see that our customers will want to monitor these fluids at all
times and with higher accuracy as part of their asset management strategy.
This is taking place in Europe already as automobile fuel sells for more
than 2x the price in North America. It may not be many years before we are
paying prices like that. Titan is well positioned to respond to these
trends. |
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We have come out of this
recession in the last eighteen months or so in a very strong position. We
have no debt. We have a good amount of cash, and a strong balance sheet. We
are poised to go forward as the industries start going forward also. We have
made some bold moves in adding new people as we saw the signs of the
recession easing up, and we are really looking forward to increased revenues
and profits in the next year to twenty-four months. -
Les J. Evans |
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