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##VALUE ADD
Added 3 weeks ago

https://www.nationalresourcesreview.com.au/product_news/rpmglobal-introduces-industry-first-hybrid-scheduling-functionality/?utm_source=mailpoet&utm_medium=email&utm_campaign=resources-sector-stands-together-to-end-family-and-domestic-violence_51

RPMGlobal has unveiled the next evolution of mine scheduling software with the latest release of its leading suite of scheduling products, XPAC Solutions.

The latest release includes speed and performance upgrades and an abundance of functionality and architectural improvements that are designed to provide the user with additional agility.

However, it is the introduction of Hybrid Scheduling in XPAC 3.1 that is already generating excitement. Hybrid Scheduling is an industry first that provides users with the flexibility of manual scheduling, together with the time savings and ease of automated scheduling.

For many years, XPAC Solutions have allowed users to start scheduling manually then seamlessly transition to automatic scheduling at any point. With Hybrid Scheduling, users can easily define the high-level strategy, such as the timing of shovel moves or opening of a new pit and leave the AutoScheduler to work out the detail.

The Hybrid Scheduling functionality includes a major update to the user interface that completely turns the traditional iterative scheduling workflow on its head.

 

 

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#Broker/Analyst Views
Added 4 weeks ago

25-Mar-2021:  CCZ Equities Research: RPMGlobal Limited (RUL.AX): Initiating Coverage:  At the coal face of technology uptake in global mining

Analyst:  Louis Bannon, lbannon@ccz.com.au, +61 2 9238 8236

  • Recommendation: BUY
  • Target Price: 173cps (Initiating coverage)
  • Market Capitalization: $299m
  • Index: N/A
  • Share Price: 131cps (133.5 cps on Fri 26-Mar-2021)
  • Sector: Enterprise Software

At the coal face of technology uptake in global mining

  • Overview: The mining industry has been a laggard in the uptake of software technology. Old processes – such as scheduling operations on excel spreadsheets – are surprisingly prevalent. This is changing, as the first wave of adoption seeps into the peloton. RUL has been preparing for this. Since FY13, RUL has spent ~$90m (fully expensed) on software development, and a further ~$30m on acquiring businesses to complete its end-to-end suite of products. As validation of management’s capital allocation, RUL has – on average – added 98c of free cash flow for every $1 of cash invested in the last three years. Further, ROCE has also been growing steadily to 17% (in FY20).
  • RUL is the only end-to end provider of software at each stage of the mining process. Products are divisible into five segments (1) Design & Scheduling; (2) Simulation; (3) Asset management; (4) Financial Modelling; and (5) Operations. Whilst these products can be sold on a standalone basis, RUL has integrated (most of) the software such that information can flow seamlessly between the apps.
  • Business quality: (1) Switching costs: churn is <5% across all products. Low churn and long-dated ARR amounts to high earnings quality. (2) IP/ first mover advantage: Whilst ‘Design and Scheduling’ is a fiercely contested segment (and 35% of ARR), we understand that RUL has a relative free kick in its ‘Asset Management’, ‘Financial Modelling’ and ‘Operations’ divisions due to the lack of competition. Combined, they contribute ~50% of ARR. (3) Complementary products (network effects): RUL has achieved interoperability between most of its software suite. This allows the flow of data between the designer, schedulers, financial modellers, maintenance teams, and management. We believe that a complementary network exists because the value of the existing products increases when users adopt new ones within the suite.
  • Most logical bear case/s? (1) ‘Design and Scheduling’ is RUL’s DNA and still accounts for ~35% of ARR in software. Whilst managements acquisitions and allocations have been fruitful our research and discussions suggest that RUL are losing this battleground to competitors – specifically Deswik. (2) Exposure to thermal coal is still considerable (~25% of ARR). This exposure is somewhat alleviated by the location of exposure (developing countries), the length of time for energy transitions, and the fact that RUL sells flow products which (after installation) are contained within operating costs.
  • Valuation and conclusion: Given the relative lack of competition in a majority of the segments – and RUL’s preparedness in building these solutions – we believe that RUL is well placed to capture the continued investment in mining technology. Given the high quality ARR, and incremental margin improvement, we think RUL will achieve a 6-7% FCF yield in FY22/23.

--- click on the link at the top to access the full CCZ report on RUL ---

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#Trading Update
Added a month ago

16-Mar-2021:  Software Subscription TCV and ARR Update

Update on Total Contracted Value (TCV) for Subscription Software sales

RPMGlobal Holdings Limited (ASX: RUL) [RPM®] is pleased to provide the following update on Total Contracted Value (TCV) and Annual Recurring Revenue (ARR) derived from software subscriptions sold during FY2021.

The company’s current software subscription TCV is $23.4m an increase of $8.9m from the $14.5m reported by RPM in its half year investor presentation released to the market on 22 February 2021. Further, RPM’s current Annual Recurring Revenue (ARR) from software subscriptions is AUD$18.4m per annum an increase of $2.6m from the $15.8m reported on 22 February 2021.

The business has also closed $0.8m ($800K) in perpetual software licenses since 31 December 2020.

For completeness, the company has not included a further $4.1m in contracted subscription revenue in the TCV number reported above (of $23.4m) due to the inclusion of a non-standard termination for convenience right in a recent software subscription contract that enables that customer to terminate the contract without having to pay the fourth and fifth years’ contracted subscription revenue. In the event that this contract proceeds to the full five-year term as envisaged, this $4.1m will be spread across RPM’s 2025 and 2026 financial years.

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[I do not hold RUL shares currently, although they are still on my Strawman.com scorecard.  The market liked today's update with RUL closing up +8.26% at $1.31, being 10 cps higher than yesterday's $1.21 close.  Their 12-month high was $1.40 set in January - 2 months ago - so they're not far off that - at $1.31.  Their 12-month low was $0.58, set in which month?  Can you guess?  Yes, it was indeed March 2020 - all I needed was a lot more money and a whole lot of confidence and I could have made a killing - on hundreds of companies - they've all more than doubled.  Some have tripled and some are up 4x since March.  Hindsight is such a wonderful thing...  But then, so is good single malt Irish whiskey.  For medicinal purposes, of course.]

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#IMAFS Acquisition
Last edited 6 months ago

28-Oct-2020:  Acquisition by RPM of IMAFS Inc

RPMGlobal Holdings Limited (ASX: RUL) [RPM®] is pleased to announce it has entered into a share purchase agreement to acquire 100% of the issued share capital of Quebec Canada headquartered, Software-as-a-Service (SaaS) and cloud delivered inventory optimisation management and forecasting solution company, IMAFS, Inc.

Privately-owned IMAFS has more than 20 years’ experience developing and selling its flagship IMAFS product, a cutting-edge, cloud delivered inventory management and forecasting software solution that has a proven track record of increasing the financial performance of asset intensive companies by greatly improving inventory management through state-of-the-art optimisation.

The IMAFS product has been designed and built for the sole purpose of optimising the inventory holdings of large asset intensive companies. In the mining industry, management and optimisation, specifically the Maintenance, Repair and Operational (MRO) inventory is critical to ensuring operational continuity and attainment of production targets.

The key to accurately forecasting any type of inventory is understanding future demand. Mining MRO inventory optimisation is often a unique challenge to solve due to low volume and/or erratic turnover with long lead times, high component costs and the complex logistics associated with operating remote locations leading to companies over-stocking parts inventory and tying up capital unnecessarily.

Mining by its very nature means carrying high levels of inventory, spare parts, and consumables. Major Enterprise Resource Planning (ERP) products are good at managing ‘steady use’ inventory, based predominately on historic patterns of use and trends. The challenges arise in managing and forecasting inventory for maintaining large complex, fixed and mobile assets which are not always scheduled or easily forecast based on history. When it comes to mining, properly managing MRO inventory is vital. If the plant, or key pieces of equipment (Loaders, Trucks, Conveyors etc.) stop operating because spare parts are not available, you have a costly operational problem. A poor inventory optimisation process can result in a company ordering inventory urgently due to reactive (poor) inventory processes rather than predictive (good) inventory processes.

IMAFS have developed a hosted subscription service that allows inventory data to be extracted from a company’s ERP product or Computerised Maintenance Management (CMM) system and analysed programmatically. IMAFS’ proprietary and cutting-edge algorithms also include Artificial Intelligence (AI) logic which incorporates parameters such as transport mode, carrier, weather, customs, seasonality, holidays, availability and many other data points. IMAFS will also identify excess or obsolete stock that can be returned or disposed of.

Commenting on the acquisition, RPM CEO and Managing Director Richard Mathews said “we are very pleased to have concluded negotiations to acquire IMAFS and are really looking forward to welcoming the Quebec based IMAFS team into the wider RPM family. This product is a great fit with the existing RPM product suite and further builds on our cloud and optimisation offerings”.

“Four years ago, we acquired iSolutions because we understood the importance of planning maintenance in parallel with production. AMT sales have been strong and the adoption rate within our customer base has been pleasing. AMT stands alone when it comes to forecasting the lifecycle cost of an asset using its dynamic lifecycle costing engine (DLCC). This real time engine accurately predicts when customers will require major parts and components. In other words, by going back to first principles (as AMT does) we can predict the future demand that can be factored into IMAFS’ advanced AI algorithms. That future demand is the critical piece of the puzzle so that IMAFS can optimise procurement and management of critical parts and components.”

“Our AMT solution is also used by the major OEM’s and their dealer network. These organisations can take forecasts from their customers into the IMAFS product thereby assisting them in optimising their massive spare parts inventory. While we haven’t had a product to do this in the past, we have been involved in a number of discussions with dealers and miners to do exactly this.”

“Whilst IMAFS can be sold stand-alone, we also intend to provide IMAFS integrated with the AMT suite as a parts and inventory optimiser. It will also be sold as part of our AMT4SAP suite.”

IMAFS has a number of active customers with committed annually recurring subscription revenue of CAD$500k per annum.

Robert Lamarre, IMAFS founder said “It is immensely pleasing to see the passion emanating from the team at RPM to championing inventory optimisation and cloud driven enterprise integration. We are convinced that the IMAFS product suite will benefit from increased investment and the sales and marketing support that RPM can offer these products right around the world.”

Following completion Robert will continue his involvement with promoting IMAFS through a third party business partner authorised to market and distribute IMAFS products to customers in North America outside of mining and resources. Mr Lamarre continued by saying “Knowing that IMAFS is in great hands with mining and resources customers right across the globe, I am proud to continue to work as a partner with RPM to market and distribute IMAFS for non-mining clients in North America.”

Following completion of the transaction, IMAFS’ employees will move across into the RPM business where they will continue to be focused on transforming mining operations through innovative software solutions.

The transaction is comprised of a once-off payment of CAD$1,300,000 paid on completion plus post completion payments of between CAD$200,000 and CAD$700,000 contingent upon new subscription customer contracts being concluded prior to closing of the acquisition and a working capital adjustment three months after completion, and is entirely funded from RPM’s existing cash reserves.

The acquisition is expected to close on 25 November 2020 (Canadian Eastern Time) subject to a number of conditions precedent and customary completion events.

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[I do not hold RUL shares directly, although they are on my Strawman.com scorecard.  I do currently hold FOR shares, and the Forager Australian Shares Fund (ASX: FOR) does have a large position in RUL - it was FOR's largest fund position at September 30, representing 8.2% of their fund, so I have indirect exposure to RUL via FOR.  I like RUL a lot.]

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#RPM's first SaaS product
Last edited 6 months ago

15-Oct-2020:  RPM's first Software as a Service (SaaS) offering

RPMGlobal Holdings Limited (ASX: RUL) [RPM®] is pleased to announce the launch of its first Software as a Service (SaaS) product, providing mining companies with the capability to undertake haulage calculations in a cloud environment.

With more and more operations choosing to move business-critical operations into the cloud, RPM has leveraged the growing shift from the “desktop” by collaborating with industry partners to launch a service-based approach to Haulage calculations, known as Haulage as a Service (HaaS).

This cloud enabled service-oriented approach to haulage analysis means users are no longer confined to one application on the desktop. Under the new SaaS model, customers are able to write their own applications to interact with HaaS. Users can then configure haul traces, haul routes, settings and trucks to run travel time calculations automatically in the cloud.

HaaS leverages the travel time calculation engine contained within RPM’s TALPAC® product which has been the de-facto standard for simulation within the mining industry for more than 40 years. This calculation engine enables users or customer applications to undertake travel time calculations on demand.

Commenting on the release of RPM’s first SaaS offering, RPM’s Chief Executive Officer Richard Mathews said “HaaS is tailored to the current requirements of our customers to cloud enable their operations and enable their businesses to be conducted remotely no matter where they or their people are physically located.”

“Providing our customers with flexible and scalable ways to use RPM’s software is a key part of our customer service promise and cloud-hosted options enhance our ability to support our customers through an internet enabled cloud access to the hosted application.”

“Making our innovative software available through a variety of delivery methods will remain critical moving forward and with a number of our customers undergoing the transition to cloud environments, we are proud to be at the forefront of this migration.”

The reporting and calibration benefits within the cloud HaaS offering are already resulting in miners requesting access to HaaS. Miners are using HaaS as a way of measuring haulage performance and identifying areas of haulage improvement, including being able to automatically compare the actual values out of their Fleet Management Systems (FMS) against calculated values, straight after the haulage route is complete on a consistent basis.

With HaaS miners have increased operational agility to undertake haulage calculations from any location. Because there is no desktop application, the calculations can be delivered via the web or mobile apps instantly.

Mr Mathews continued by saying “RPM’s cloud enabled SaaS solutions help to solve several key industry challenges, including the problem of siloed data. With HaaS, data is no longer trapped within individual desktop applications or siloed with individual users. This cloud enabled approach enables operations to get the best overall haulage performance right across their operations irrespective of where the users or applications calling the cloud service are physically located.”

“Mining is a dynamic and fluid environment, often making it difficult to benchmark the performance of trucks. Miners have had to use KPIs such as Effective Flat Haul in an attempt to normalise data. HaaS addresses this challenge by allowing miners to compare every haul against a benchmark calculated value”

“RPM has been providing customer hosted solutions for some time and the company’s investment in enterprise software development has paved the way to unlocking siloed data through cloud delivery methods, such as SaaS.”

“We are committed to investing in taking our software products to the cloud and we have introduced a dedicated team to work closely with our customers to ensure a smooth transition from where they currently are to the cloud. RPM’s heavy development investment over the past seven plus years in moving our products from the “desktop” to the “enterprise” has enabled us to move our applications into the Software as a Service environment. This investment has resulted in RPM being many years ahead of traditional software suppliers to the mining industry and we intend to use our strong balance sheet to retain our first mover advantage.”

Mr Mathews concluded by saying “If there can be one positive thing to come out of the global challenges of COVID-19 it is an understanding that companies need to be able to operate their businesses remotely no matter where they or their people are physically located and being able to utilise Software as a Service applications means they can do exactly that.”

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[I no longer hold RPM Global [ASX:RUL] shares directly, but I still hold FOR shares, and the Forager Australian Shares Fund's (FOR's) largest position (8.7% of their fund) was RPM Global at last notice (being on August 31, 2020), so I have indirect exposure to RPM (RUL) through FOR.]

About RPM:  RPMGlobal Holdings Limited (ASX: RUL) [RPM®] was listed on the Australian Securities Exchange on 27 May 2008 and is a global leader in the provision and development of mining software solutions, advisory services and professional development to the mining industry.  With history stretching back to 1968, RPM has been trusted by mining companies of all sizes and commodities to support their growth.  Their global expertise has been achieved over the past 50 years through their work in over 125 countries and their approach to the business of mining being strongly grounded in economic principles.

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#Results
Last edited 8 months ago

24-Aug-2020:  Investor Presentation - 2020 Full Year Review   and   Annual Report FY2020   plus   Appendix 4E year ended 30 June 2020

  • Group revenue finished the year up $1.2m to $80.7m (FY2019: $79.5m).
  • The Total Contracted Value (TCV) of software subscriptions sold during FY2020 increased by $24.2m (235%) to $34.5m (FY2019: $10.3m). Of the total $34.5m only $6.1m was recognised in this year's financial accounts with $28.4m from this year plus $6.3m from prior years (i.e. $34.7m total) to be recognised across the remaining duration of the committed term customer contracts which in most cases is 3 years.
  • This $24.2m year-on-year increase in subscription TCV resulted in a $1.3m increase in commissions/incentives in the FY2020 annual accounts. We believe the 235% increase in subscription TCV was the major driver for the 78% increase (from 59 cents to $1.05) in company share price and resultant $108m (86%) increase in market capitalisation over the twelve months.
  • The Company’s Operating Contribution (EBITDAR* before Foreign Exchange and one-off COVID-19 costs/provisions) finished the year at $8.4m (FY2019: $8.5m).
  • Due to COVID-19, the company incurred $0.4m in retrenchment costs and increased its accounts receivable provisioning by $0.4m.
  • The company’s Loss After Tax for FY2020 was $0.7m a $5.2m (88%) improvement over FY2019 (Loss after Tax $5.9m).
  • Cash inflows from operations for the year totalled $15.8m (FY2019: $7.3m) and as at June 30, 2020 the company had $40m in cash (and no debt).
  • The company made the final acquisition earnout payments ($2.6m) for the iSolutions and MinVu acquisitions during the year and therefore will not be required to share revenues from these products going forward.

* EBITDAR = Earnings Before Interest, Tax, Depreciation, Amortisation and Rent

--- click on links above for more ---   

[I do not curently hold RUL, but they are on my Strawman.com scorecard, and I do hold FOR shares, and the Forager Australian Shares Fund (FOR) had a 6.7% position in RUL up until July when they sold almost 2m shares, then sold another 1.5m shares on August 12th, so have now ceased to be substantial holders - they now own less than 5% of RUL.  I was holding RUL directly earlier in the year, then decided that my exposure via FOR would suffice, so I sold at a profit some months ago.]

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#TCV/ARR Update
stale
Added 9 months ago

RPM provided an update on TCV and ARR just after the FY close, subject now to audit. Full financials will be posted within 4 to 6 weeks.

The consolidated count of new Software Subscriptions contract wins (TCV of $34.5m spread over 3+ years) plus Perpetual Licenses sold ($7.5m) equates to Total Contract signings of $42m for FY2020.

Useful to consider that in 2018, this consolidation of new contracts wins yielded $15.3 m. In 2019, the number was $22.4 m. This progress and trajectory build is impressive. Unfortunately, this progress is not that apparent when looking at past HY and/or FY results.

We can add a further $1.5 m of new Maintenance Revenue for the year.

Looking at the cost side of the equation, the Company embarked on an aggressive R&D campaign 6 years ago, with annual spend peaking at $14m during FY 18 and H1 FY19. At the end of FY 19, the Company signalled that the investment in R&D  would decline to better align with industry norms. We saw the first confirmation of this with the HY2020 report, where the spend came in below $6 m ( or annualised , say $11.5 m)

Believe that the annual spend on R&D for FY2021 will decline to about $9 m. Would mean that $4-5 m would drop straight to the bottom line.

IMO, there is a lot to be liked about RPM and believe the Company is generally misunderstood by the market.

Lifting my 12 month forward valuation to $ 1.61  but will review again once we have the FY2020 results in hand.

Remains a high Conviction Buy.

 

Rob W

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#M&A
Last edited 10 months ago

09-July-2020:  Acquisition by RPM of Revolution Mining Software

Acquisition of Revolution Mining Software Inc

RPMGlobal Holdings Limited (ASX: RUL) is pleased to announce it has entered into a share purchase agreement to acquire 100% of the issued share capital of Sudbury, Canada headquartered mine scheduling optimisation company, Revolution Mining Software.

Privately-owned Revolution Mining Software has more than six years’ experience developing and selling its flagship Schedule Optimisation Tool (SOT)®, a cutting-edge mine scheduling optimisation software solution for tier one miners around the globe.

RPM has also acquired Revolution Mining Software’s Attain® and SurfaceSOT® software solutions.

SOT emerged out of research undertaken by Mining Innovation, Rehabilitation and Applied Research Corporation (MIRARCO), a not-for-profit corporation of Laurentian University in Canada that is well known for solving complicated mining industry problems through innovative thinking.

SOT is the industry’s only strategic financial optimisation tool for underground mines that enables mine planners to improve productivity and profitability by optimising the net present value (NPV) of the mine schedule.

This scheduling program adds value to mining operations in several ways, including by generating life-of-mine schedules that adhere to all specified precedence and operational constraints, optimising NPV based on the user’s financial model.

Attain® is a software solution which ensures operational mine planning is systematically aligned with the long-range plan. This approach ensures the company has optimised short-range schedules that are feasible and aligned with the long-range schedule.

SurfaceSOT® is a solution that will work for all types of mining operations to maximise their NPV by optimising their long-range schedules including management of stockpiles and product blending while minimising the re-handling of materials.

Commenting on the acquisition, RPMGlobal CEO and Managing Director Richard Mathews said “we are very pleased to have concluded negotiations to acquire Revolution Mining Software and are really looking forward to welcoming Lorrie and the rest of the Revolution team into the RPM family. We will invest in their industry leading scheduling optimisation tools to deliver innovative solutions that add real value to our customers.”

“RPM was born from the understanding that mine planning needs to be built on sound economics and the Revolution Mining product strategy is completely aligned with that core value”.

Lorrie Fava, Revolution Mining’s President said “The entire Revolution Mining team is so passionate about the solutions we have delivered to the industry, so it was important to us that RPM also shared our vision and passion, which they clearly do.”

“To be able to be a part of a company with RPM’s pedigree and history is a very exciting prospect for the team at Revolution Mining. We look forward to joining the RPM team and are convinced that the Revolution Mining Software product suite will benefit from increased investment and the sales and marketing support that RPM can offer these products right around the world.”

The acquisition of the SOT, Attain® and SurfaceSOT® solutions extend the strategic capability of RPM’s scheduling solutions. RPM’s sophisticated mathematical modelling tools for short and mid-range planning amplify the benefits its customers receive from the optimisation and schedule alignment tools.

Following completion of the transaction, all of Revolution Mining Software’s employees and management will move across into the RPM business where they will continue to be focused on transforming mining operations through innovative software solutions.

The transaction will be funded by RPM’s existing cash reserves and comprises an upfront payment and two year earn-out. The acquisition is expected to close on 31 July 2020 subject to customary completion events.

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About RPM:

RPMGlobal Holdings Limited (ASX: RUL) [RPM®] was listed on the Australian Securities Exchange on 27 May 2008 and is a global leader in the provision and development of mining software solutions, advisory services and professional development to the mining industry.

With history stretching back to 1968, RPM® has been trusted by mining companies of all sizes and commodities to support their growth. Our global expertise has been achieved over the past 50 years through our work in over 125 countries and our approach to the business of mining being strongly grounded in economic principles.

[note:  where they have used the "TM" hypertext abbreviation for "Trademark", I have replaced it with the ® symbol, which means "Registered Trademark", because that "TM" hypertext can not be replicated in a straw here.]

Disclosure:  I have RPM (ASX: RUL) on my Strawman.com scorecard, and it's done quite well, however I don't hold their shares directly.  I own them indirectly via Forager's Australian Shares Fund LIT (ASX: FOR), which I do hold.  RUL was FOR's largest position at the end of May, representing 12.5% of their portfolio - see here.

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#RUL to power ahead in FY2021
stale
Added 12 months ago

First bought into this Company in Q2-19, attracted by their leading role in Mining Consultancy, the high development spend and their decision to pursue subscription sales opposed to perpetual licence sales.   The cyclicality of mining fortunes would always yield lumpy outcomes, even for a value-adding capital item. Capex approval no longer an issue. 
Whilst the latest updates on TCV are highly encouraging, believe the benefits of higher adoption on their new design software is still to come. This is sophisticated software and will deliver invaluable efficiency and cost benefits to engineers, all in real time. Powerful tool for sensitivity analysis.
Beneficial that outside of the havoc in the oil & gas sector, rest of resources holding up pretty well during early stages of Covid-19.  So expect minimal impact to RPM’s results this FY.
A cashed up, debt free momentum stock in my book. Contract terms on avg. 3 years so d TCV of AUD 30 m this FY establishes a strong financial platform.

Valuation for CY2020 at AUD1.56

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#E#TCV/ARR Update
stale
Added one year ago

Forager bought a chunk of these a couple of days back (see my earlier post)

I bought in October for 79.5c (along with PPH for $3.03 - both following recommendations from Owen Raskiewicz)  for my children (both under 5) with the intent of keeping until they are 18. Interesting times ahead! 

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