Carl Data Solutions Inc.’s (CSE:CRL | OTC:CDTAF | FSE:7C5) LOI to acquire a niche Industrial IoT player highlights strategic shift
SmallCapPower | May 2, 2018: Another Accretive Deal in the Works. On May 1, 2018, Carl Data Solutions Inc. (CSE:CRL | OTC:CDTAF | FSE:7C5) announced it has entered into a letter of intent (“LOI”) to acquire Astra Smart Systems Inc. (“Astra”), a technology company that produces advanced environmental sensors and devices for IIoT applications, develops complimentary data-centric software and runs a data center hosting over 1,000 servers in Trail, B.C. Astra also has research capabilities in machine-to-machine (“M2M”), smart contract and blockchain products to build distributed data storage solutions. Upon completion of the deal, expected within the next 30 days, Astra will continue operating as a wholly-owned subsidiary of Carl Data Solutions Inc.
After the deal closes, we continue to expect CRL’s annual revenue run rate to approach $3M – $4M for CY2018, implying an impressive 184% y/y growth at midpoint of the revenue range. The location of Astra’s data center & manufacturing facility, and integration framework to combine existing product lines make the Company an attractive asset for Carl Data. Management forecasts Astra’s revenues to grow beyond the current $1.4M annual run rate ($115,000 / month), driven by operational synergies from integrated end-to-end (“E2E”) solutions. Currently, CRL’s annual revenue run rate is $1.2M. Carl Data has several key catalysts that should help revenues to meaningfully pick up in the back-half of CY2018. Specifically, these drivers include: roll-out of new initiatives in the mining vertical, more clients projected to sign up for the Analytics Suite and the release of smart data loggers. Conclusively, we opine that the remainder of CY2018 is going to be strong from a revenue generation standpoint, and CRL will achieve the aforementioned $3M – $4M range.
Carl Data is emerging as a leader in Big Data analytics, with ability to leverage technology over several verticals. Big Data and IIoT are fast-growing industries; IHS estimates that 75 billion devices will be connected by 2025, with ‘Data Analytics’ as the highest growing industry sub-set, projected to grow annually by 60%. Since the acquisition of FlowWorks in 2015, the Company has built a robust Big Data-as-a-Service (BDaaS) technology stack servicing a high-quality and sticky client list in the following sectors: Water & Wastewater Infrastructure, Power, Mining and Oil & Gas. This latest deal provides Carl Data a strategic lever to provide fully-integrated E2E solutions and further bridge the industrial IoT (“IIoT”) software and hardware markets to capitalize on “Smart City” international opportunities. Consequently, we believe that at current levels, CRL shares exhibit an attractive risk/reward profile heading into the remainder of CY2018.
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