The spending slowdown in North America’s oil and gas sector contributed to a dramatic drop in quarterly revenues and profits for an Ottawa tech company that counts the industry among its customers.
C-Com Satellite Systems Inc. (CVE:CMI) says its third-quarter profits fell nearly 94 per cent year-over-year to less than $30,000. Revenue from the quarter totaled $2.1 million, a decrease of 25.2 per cent from the same period in 2015.
Shares of the satellite antenna systems maker hit a six-month low on Wednesday after the results were released, closing the day at 90 cents per share before recovering to 95 cents Thursday.
"This third quarter was exceptionally challenging for the company in which we saw several projects delayed and some pushed into the end of 2016 and early 2017," said Leslie Klein, the president and CEO of C-Com, in a statement announcing the results.
According to the company’s MD&A statement, drops in hardware revenue are largely due to a slowdown in purchasing from customers in the United Kingdom and Argentina, as well as North America, where oil and gas exploration companies are slowing their efforts and purchasing. Revenue from these regions dropped to $664,000 this past quarter, down from $1.9 million a year previous.
Losses from these regions have been slightly offset by a revenue boom in Russian and Peruvian markets, increasing to $895,000 in the third quarter of 2016 from $200,000 a year earlier.
In the company’s outlook as part of its MD&A statement, C-Com says it is confident that it will remain well-positioned in the mobile antenna systems market as long as it can remain profitable, as it has done for 11 years.
Klein says that C-Com’s is on track in development of its flat panel antenna project, which remains a long-term focus for the company.