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#1H FY24 Results
Added a month ago

Main Thesis for RPM Global is that as it migrate completely to Software subscription as opposed to maintenance, reliability of revenue will be strong and I expect they keep growing subscription revenue half on half.

This time that trend has gone little reverse.

d8203e6ebb0d71c99d3cf74fab68e0a162fff4.png

The reason for this given was below

0feac8eb9a0250f56a2c27edb9cb6113f2a870.png

Now if we trust management and apply adjustment for $2.4m ( i.e remove 2.4m revenue from 2HFY2023 and add it back to 1HFY24), the graph looks like below, which is what I would like to see.

d8d40409ee76607356392b5f35bb32ac5fd79f.png


Management didn't flag that in FY23 result there is an extra $2.4m in the numbers. If they would have flagged that then probably there isn't any concern.

I attended the call and heard CEO admit that their communication should have been clear and I got the impression that there was no intent to mislead shareholders here. In fact, CEO said that he is quite happy for share price to be low so they can keep buying shares and increase EPS by reducing share count as well as increasing earning.

So although it was poor from management but I am happy to keep it aside and consider that thesis is still intact and I quite like the frankness of Management on the call FWIW.

Happy to hold.



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#1H FY24 Results
Added a month ago

Totally don't get the SP reaction on $RUL at open this morning. As @Chagsy reported yesterday evening, the result is fine.

I am still in accumulation mode for $RUL, so will be picking up some "cheap" shares this morning.

Disc: Held in RL and SM



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Valuation of $2.43
Added a month ago

RPM reported this evening and it was good:

bdf9f78c7491581dadf4a992a2ea0bb2c766e0.png

We are starting to see the benefits of the transition from selling contracts as a one-off, to a SaaS model.

It takes a few years for the waters to clear and the true picture to emerge.

The slide showing financial guidance for NPAT demonstrates it best.

b9459725996fcc4db1cf6f094f310bb097032d.png

They have a habit of under-promising, but if we take the full year NPAT to conservatively be $17m that should give an ROE of ~30%.

Using McNiven's formula using a required return of 10%, gives a valuation of $2.43.

If we assume they over-deliver and beat guidance, say $20m, using the same required return of 10% you can get a valuation of $3.31.

Happy holder.

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#Substantial Shareholders
Added 4 months ago

The central bank of Norway just bought 5.001% of RPM.

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##broker report
Added 4 months ago

An updated broker report from MA Moelis, mild upgrades, still target price over 2 bucks

RUL broker report Nov 20 2023.pdf


Nessy

not held but interested

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#ASX Announcements
Added 5 months ago

$RUL have just upgraded FY24 guidance,.... for the second time in 6 weeks!

  • Revenue to $110-115m, (up from $107-$112m, which was up from $105-$110m)
  • Underlying EBITDA to $21.5-23.5m (up from $18.5-$20.5m which was up from $17.5-$19.5m) ....U/L excludes incentives
  • PBT to $16.5-$18.0m (up from $13.5-$15.0m, previously $12.5-$14.0m)


The key message is that this is due to a one-off payment of $3.1m, resulting from a change of control at a contract counterparty.

I'm not sure what that means, and while it's not bad news by any means, its not as if it reflects any acceleration in the underlying demand for $RUL products and services. (That is unless the change of control means a contract is being broken and that's the break fee,...but then I'd have thought they might state the negative implication as well. So, I'm wondering what I'm missing here?)

The release makes clear that they had to announce because the event means that current guidance is no longer valid, even though the transaction on its own it not materials. (Is that why, if there is a negative side to it, that element is not being disclosed?)

It will help the y-o-y comparisons look good at the FY results, particularly EPS growth.

From my perspective, today's annoucement doesn't really change anything (apart form the questions it raises for me). $RUL is still well below my valuation, and they are still in the market buying their own shares almost every day (another EPS-driver).

Disc: Held in RL and SM


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Valuation of $2.43
Edited 5 months ago

Valuation Range of $4.14 - $1.20, based on variety of Scenarios. Assume Growth maintains strong for next couple years. Base case scenario I assumed Valuation of $2.18 based off $175m Revenue by FY27 Net Margins 15% and Share Count 261m discount back to today. With blend of higher and low growth I came up with valuation of $2.43

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#2023 AGM
Last edited 5 months ago

MD's address:

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#Broker/Analyst Views
Added 6 months ago

Found this recently. Interesting valuation.

RUL broker report Oct 3 2023.pdf

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#Trading Update
Added 6 months ago

$RUL quick out of the blocks with their 1Q FY24 Trading update including an upgrade on guidance.

ASX Announcement

Highlights include:

  • Q1 TCV from software sales of $13.2m up $8m (154%) from pcp
  • ARR from software licence and maintenance at end of Q1 was $56.0m
  • Pre-contract, non-cancellable software licence and maintenance revenue to be recognised across future year at end Q1 was $133.4m
  • Signed a framework agreement to facilitate future purchases from a Tier 1 global miner, with significant term volumes within this contracted
  • Advisory also starting strongly with a lot of work coming from battery and critical minerals sectors
  • FY24 revenue upgraded to $107-112m (from $105-110m; FY23 $98.4m)
  • Underlying FY24 EBITDA upgraded to $18.5-20.5m (from $17.5-19.5m; FY23 $15.0m)
  • FY24 PBT upgraded to $13.5-15.0m (from $12.5-14.0m; FY23 $9.2m)


My Key Take Away

Off to a strong start to FY24; steadily grinding higher.

Disc: Held in RL and SM

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#Industry/competitors
Added 6 months ago

Interesting, might increase demand for mine design but perhaps not if it's only new mines but may also increase the demand for RUL's AMT if more trucks to track.


AFR - Energy transition: Electric trucks will be 19 per cent less productive (afr.com)

Battery-powered mine trucks would haul less ore and spend less time on the road than diesel-fuelled alternatives, delivering a productivity hit of between 19 per cent and 33 per cent to Australia’s biggest export industry.

A study of the most viable truck decarbonisation options found miners producing bulk commodities such as coal or iron ore would need to spend more money deploying a higher number of trucks plus recharging infrastructure if they wanted to maintain output volumes when switching to a zero emissions fleet.

Mining technology consultancy Idoba said the switch to electric mining trucks was unlikely to be seamless and the next generation of mines could be designed differently to better suit the charging needs of electric trucks.

Idoba head of mine automation and technology Craig Rodgers studied the viability of switching to electric mine trucks with batteries that would either need to be recharged, swapped or supported by overhead power cable networks, known as “trolley assist”.

The study found that battery charging would consume more time than diesel refuelling and reduce the availability of a typical mine truck by 12.5 per cent.

The weight of batteries would also reduce the amount of ore carried by trucks; the study found the type of battery needed for a typical 230-tonne truck would be at least double and potentially three times heavier than diesel fuel tanks and engines.

.....

Mr Rodgers said the productivity hit from electric trucks would not necessarily mean lower export volumes of Australian commodities.

“I think the big miners would probably throw more trucks at the problem, which would effectively require more capital to do that, so there is an argument you would see a modest reduction in terms of return on invested capital for the miners,” he told The Australian Financial Review.

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Valuation of $1.780
stale
Added 6 months ago

I like this stocks potential. the upside potential from here, $1.44 20/09/23, is strong over the long term.

Winning contracts could become hard for RUL, paradoxically, if the mining sector as a boom too quickly.. Businesses will be too busy to disrupt software and production..

RUL is currently 14% of my ASX pf. 5% over all. average cost base of $1.55 i'd be happy to add today if i could.

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#ASX Announcements
stale
Added 7 months ago

Sorry just a question on buying and selling in the SM pf. how does that work? i.e. I have an order to buy HACK at $10.04 yesterday it closed at 10.04 and yet the order was not filled. some sell orders have done the same.


i have just found a reset button, maybe i'm better to press that and start again. i'm trying to get my SM pf to be close to my RLpf.

i'm not sure of the benefits of having a SM pf that is way off your RL pf. is SM used as more of a watchlist?

p.s. i want to buy more RUL RLpf

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#Share Price references in Annu
stale
Added 7 months ago

There were a number of references for Share price - which I think is odd


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#FY23 Report
stale
Added 7 months ago

RPM Global released its FY23 result this morning.

Revenue:

ca84f4ca0511fe08e1e0d7b76995858b295e20.png

Customer Receipts:

765bd5154180658681d7c4c05c5ecc81f4abdb.png

Expense:

87bc97391e4b77dd6d8ca66704d3ead5760a4a.png

Operating Cash

e9f3e879d773d96000cb7aebaff5b6e23d1173.png

Migration from Maintenance to Software

178a300b05e6443c7f421b38b68042501fc63f.png

Software subscription as % of overall revenue

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#Buy Back
stale
Added 8 months ago

The chart below shows that $RUL have resumed their buy backs. Most of the blue dots are buy back announcements, (except the one on 16th July). They stopped buying on 3rd July and after their trading update shares popped up a little. As they've fallen back below $1.65, they have resumed buying at a steady clip of c. 90k per day, with the running total now getting towards 6m shares in this program, or just over 2.5% SOI.

$RUL is one firm I have returned to recently. The top line progress looks good and, depending on the financial result, it is on my short list to increase when the result comes out, or at some reasonable time thereafter.

The point of this post is that the Board still clearly see value at $1.65, whereas earlier we couldn't know what their view really was above $1.50.

Nothing earth-shattering here, but just an observation.

Disc: Held in RL and SM

37a30c0bf29c7484e390352eb18013d6f2786a.png

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Valuation of $2.40
stale
Added 8 months ago

06/08/2023

Trying to be much more conservative with my valuations. I still struggle to estimate the future value of the services division of RPM Global.

20% CAGR in subscription revenue => 2027 rev:$80M

2027 services remains flat: $59

2027 total rev: $140M

2027 Opex: $100M

=> 2027 EBT $40M

Assuming 230M shares and a 20 P/EBT and discounting back at 10% to 2023 gives SP: $2.40


Really difficult to create a valuation as the change in business model to subscription from perpetual license is still in progress. Updated based on FY 2021 results Valuation based on: 50% YoY growth in subscription revenue => 2026 subs rev: $114M 2026 services and software consulting revenue (remains flat): $28M Software opex increases 10% YoY, consulting opex remains flat, Dev (R&D) expense increases 10% YoY => 2026 Opex: $84M => 2026 EBITDA: $58M Assuming share dilution of 6% YoY and a 30X EV/EBITDA multiple => 2026 Price: $6 Discounted at 10% => 2021 Price: $3.5

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Valuation of $2.04
stale
Edited 8 months ago

@edgescape has posted the latest Moelis report for $RUL

RPM Global BUY Moelis

Their analysis aligns closely with my own view, so I am just going to post the key excerpt and numbers here, as the summary below is good.

0e9cdec1c71a951f91e929757019fe73b70f15.png


Note also their recent update from 11-Jul: ASX Announcement

I'll add that the products are fundamental to their customers' core mine management activities, which means that as they become embedded in the clients processes the barriers to exit increase. As products are enhanced and add more value, there are built-in growth opportunities via pricing. It is the usual enterprise SaaS story we're well used to.

Finally, it is a great way to get exposure to the mining sector without taking commodity pricing risk.

Furthermore, they have now largely completed the transition from perpetual licence sales to SaaS, a process that has taken several years. Moving forward this should drive high quality earnings.

The Board clearly have the view that the shares are undervalued, if the buy-back program is taken at face value. Personally, I'd prefer it if they had higher return opportunities to reinvest in growth, but if the gap to their view of value is large enough, then their decision is rational. I will keep them under watch in terms of capital allocation.

Again, on capital allocation, acquisition is a core mechanism to develop capability by bolting on new functionality. The acquisition multiples appear high, but I am not too worried as they remain small in scale. Being able to leverage the acquisitions across $RUL's larger client base can also quickly add value - a strategy $WTC has also proven over the years. That said, if reducing their cash pile via buybacks stops the cash burning a hole in their pocket and making larger acquistions, then you could argue that's a good thing. As I said, something to watch.

I first held $RUL in RL during 2020, but exited in early 2021 in my review of tech firms/cash burners. While many of the calls I made then were excellent, existing $RUL wasn't one of them, but you don't win them all. I recently bought back into $RUL in RL (1.8%) and SM as I assess the risk profile to be lower than in 2021 due to two years of good execution.

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#Financials
stale
Added 10 months ago

RPM Global announced to extend on-market share buy-back. Along with they also disclosed available cash at 30th April 2023

d627d429e035f7957f59ca1b7ff5169f7dfd36.png

Now at the end of 1H FY2023, i.e 31st December 2022 their cash balance was 22.3m

That means in the first 4 months of CY2023 they increased their cash balance by 10m ( RPM historically generates the majority of cash in the second half ) but this announcement just tells me that would be the case this year around as well and hence the business is going ok while the share price has taken a beating. + Management and board also think that the share price doesn't reflect the value and hence extending the buyback.

It all aligns well ( I think) for future outperformance.




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#Updated 1H FY23 presentation
stale
Added 12 months ago

I am not a fan of updating the entire presentation and release - I would prefer them just to announce what has been changed. I had to compare the two presentations to find the delta (Although they pointed it out in small letters at the end of the slide as New Slide- 21 March 2023) I had to compare to make sure they haven't sneakily submitted something.

They have updated the following two slides.


Take away for me in the following slide is that, the Advisory division already achieved its FY23 target with the 4th Q to go. and to achieve the target Software division needs to do a further 3.3m EBITDA ( RPM Global thinks it is very much achievable based on historical evidence that their largest quarter by an order of magnitude is 4th Q) - So think this is positive.

So in total, they have done 10.9m in the first 3 Qs which equates to 3.6m per Q and they need to get 3.3m in Q4 to reach their target and also points Q4 is the largest software sales quarter by an order of magnitude..-- I will take it as a positive and potential to outperforming the target.


8cd874e9e99e3b40a6a78b216d373b9f3d0c77.png

2nd new slide, in my opinion, just trying to say that their customer cash collection is heavily weighted towards H2, and the graph shows the tilt towards H2 as compared to H1 (the only exception was FY22 H2 when two customers failed to pay on the due date).

Not sure why the clarification, as this was very well known - but if they are confirming I would take it as a positive.

8491b74831efac43a68423df1c03f04b1ee7af.png

Overall, this is positive only. but this is a convoluted way of releasing positive news and that's why I am a bit suspicious.

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#Management
stale
Added one year ago

Inside Ownership                   Ordinary Shares    % RUL Issued         Net Value at $1.42

Richard Mathews                    8,220,138                    3.59%                          $11.7m

Stephen Baldwin                     3,272,987                    1.42%                          $4.65m

Angeleen Jenkins                    25,000                         -                                   $35.5k

Paul Scurrah                            26,741                         -                                   $37.9K

Ross Walker                            1,200,000                    0.52%                          $1.7m

Total                                       12,744,866                  5.56%                         $18.1m

Richard Mathews Appointed Managing Director 28 August 2012. Richard’s previous roles includes Senior Vice President, International at J D Edwards, CEO of Mincom Ltd, Chief Executive Officer and then Non-Executive Chairman of eServGlobal Limited.

Stephen Baldwin joined the Board effective 1 July 2020 and was appointed Chairman of the Board in March 2021. Stephen is a professional company director and currently sits on the Board of three other companies (Taumata, Tiaki and Lignor). Other recent Board roles have included ASX-listed Wameja (sold to Mastercard in September 2021) and Axicom (sold to Australian Tower Network in May 2022). 

Angeleen Jenkins joined the Board on 1 July 2021. Angeleen worked extensively in high risk commercial engineering & construction contracting throughout her executive career, including almost 25 years in the multi-national construction sector as a Director and Executive of a major construction group that delivered infrastructure projects to heavy industry clients (mining & metals and oil & gas sectors) throughout Australia, Asia, NZ/Pacific, and the Middle East. 

Paul Scurrah joined the Board in December 2020. Paul has been involved in the transportation, logistics, travel and aviation industries for over 25 years at both executive and non-executive levels. Paul is currently the Managing Director & CEO of Pacific National, Non- Executive Director and Chairman at Whizz Technologies and Non- Executive Director of the Gold Coast Suns AFL Team. Previous Director of Virgin Australia Holdings Limited. 

Ross Walker Joined the Board in March 2007. Joined Pitcher Partners Brisbane in 1985, Managing Partner from 1992 to 2008 and again from 2014 to 2017. Predominantly involved in corporate finance, auditing, valuations, capital raisings and mergers and acquisitions for the past 20 years.


Inside Buying Last 6 months

Ross Walker

·      27 September 2022

Indirect                       100,000 shares price $1.4996 per share ($149,960.00)

·      2 September 2022

Indirect                       100,000 shares price $1.4983 per share ($149,830.00)

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#Revenue pattern
stale
Added one year ago

It's always important to evaluate a company's revenue model and understand its long-term sustainability. RPM Global has been shifting its revenue mix from perpetual licenses to a subscription-based model in recent years.

While this shift may not be reflected in immediate revenue growth, it is a positive move in terms of the quality of revenue. Perpetual license sales provide upfront revenue, but maintenance fees can decline over time. On the other hand, SaaS models provide a recurring revenue split over the contract period, resulting in a more predictable revenue stream.

RPM Global's shift towards SaaS is evident in its declining perpetual license and maintenance revenue, as it focuses more on SaaS services and converts existing customers to the subscription model. This transition may take time to fully reflect in financial statements, but it could lead to a more sustainable revenue model in the long term. I am putting this table and graph which illustrate this transition beautifully.

f4583f687232384d922b3dc72c438e86dc1887.png

Following chart shows, How Software subscriptions and maintenance trending in last few years

ee7976959b3c4d03bb17d0edd6654ac9a1c6d3.png

Below graph shows, what % of revenue contributed by Software subscriptions ( which is recurring in nature)

c7dc3379d4f6c60d9048ff4a690acb3d59769f.png

So far so good, If RPM convert all his Perpetual customers to Subscription customer in next few years and as SaaS Revenue becomes higher % of total revenue, this transition will be evident in financial. I shall closely monitor it's execution in this transition and keep an eye on any potential challenges that may arise.

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#Acquisitions/ Divestment Histo
stale
Added one year ago

Acquisitions/ Divestment History

·      December 2021 Acquisition of Three Underground Mine Optimisation Products A$165k from Laurentian University, a leading Canadian mining University. MIRARCO has developed three separate but complementary underground mine planning optimisation software products, which RPM has under this agreement agreed to acquire and commercialise. These products extend and complement the functionality of RPM’s mine optimisation software solutions in the areas of Advanced Valuation, GeoSequencing, and Ventilation. https://www.asx.com.au/asxpdf/20211217/pdf/4548m11zq6qwwn.pdf

·      December 2021 Acquire a copy of Eden Suite A$400K - Environmental Data Management and Reporting Software. Eden Suite software used in the mining and quarrying industries along with the ability to extend and integrate use of the software inside RPM’s suite of software products. https://www.asx.com.au/asxpdf/20211216/pdf/4546z19349d127.pdf

·      September 2021 Blueprint Environmental Strategies Pty Ltd A$3.5m - Perth headquartered Environmental Social and Governance (ESG) services company. https://www.asx.com.au/asxpdf/20210921/pdf/450py4c2c3xr9b.pdf

·      August 2021 Divestment of GeoGas $500K - entered into a share sale agreement to divest 100% of its shareholding and control of the GeoGAS Pty Ltd coal gas testing business to the existing GeoGAS management and staff via a management buyout (MBO). The GeoGAS laboratories in Mackay and Wollongong carry out coal gas compliance and exploration content testing services for underground coal mining companies on the East Coast of Australia. https://www.asx.com.au/asxpdf/20210816/pdf/44zbk4g9dlv2vy.pdf

·      June 2021 Nitro Solutions Pty Ltd A$2.1m - Australian headquartered Environmental Social and Governance (ESG) services company. Privately-owned Nitro was founded in July 2015 by Ngaire Tranter who along with her experienced team of ESG professionals pride themselves on providing the mining industry with a quality focused ESG service in the areas of environmental approvals, impact assessment, regulatory advice, environmental audits, compliance reporting (due diligence) and environmental economics, policy & legislation advice. https://www.asx.com.au/asxpdf/20210616/pdf/44xdsxs417flfm.pdf

·      October 2020 IMAFS CAD$1.3m  A Canadian based software company. Its main product is IMAFS a 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. https://www.asx.com.au/asxpdf/20201028/pdf/44p632xhg2vv55.pdf

·      July 2020 Revolution Mining Software CAD$500,000  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 Surface SOT software solutions. https://www.asx.com.au/asxpdf/20200709/pdf/44kct9k3mfj1cj.pdf

·      December 2017 Minvu $1.2m upfront followed by further post completion earn out payments over a two year period up to $1.28m. Leading global provider of mine-wide operational reporting and analytics software solutions to the mining industry. https://www.asx.com.au/asxpdf/20171218/pdf/43q7xvlv7mylkf.pdf

·      August 2017 MineOptima a private company developing software applications which design the optimal equipment access layouts for underground mines. MineOptima are the exclusive developers and intellectual property owners of the Decline Optimisation Tool (DOT), Planar Underground Network Optimiser (PUNO), Large-scale Underground Network Optimiser (LUNO), Gas Gathering Network Optimiser (GGNO) and Underground Mine Optimal Infrastructure Designer (UMOID) software solutions. https://www.asx.com.au/asxpdf/20170801/pdf/43l2k89vqlb39k.pdf

·      December 2016 Acquire a copy of the source code and intellectual property rights of the Fewzion Short Interval Control (SIC) and work management software product. The Fewzion platform is designed for planning and managing frontline work, it replaces old fashioned spreadsheets, whiteboards and paper based tools with a modern, easy to use integrated management system and short interval control toolkit. This innovative system integrates high-level planning tools and empowers those working on the frontline to plan and track progress to ensure goals are met in a transparent and consistent manner. https://www.asx.com.au/asxpdf/20161221/pdf/43dwkdtcr990ty.pdf

·      June 2015 Acquire a copy of FlexSim Software Products simulation software. FlexSim and RPM have been working together since February 2014 when RPM incorporated FlexSim’s simulation engine into HAULSIM, RPM’s haulage simulation product. HAULSIM gives users the ability to accurately model complex mine haulage systems in an interactive visual 3D environment so they can easily identify and remove operational bottlenecks. This acquisition provides RPM with the underlying infrastructure capability to both extend the HAULSIM Desktop product and develop an Enterprise version of the product. https://www.asx.com.au/asxpdf/20150622/pdf/42z9x4v9k5s29h.pdf

·      January 2015 Software code of Geospatial management software from PrimeThought Software Solutions CK. RPM has acquired unrestricted rights to rebrand, commercialise and exploit the Geospatial management software code and any successor products developed by RPM. RPM’s enterprise mining software products address the transactional integration between the operational mining environment and the corporate systems. While this is a major step forward for the industry, it does not address the sharing of spatial data across the enterprise which changes every time an operational event occurs in the mine. https://www.asx.com.au/asxpdf/20150127/pdf/42w5l5hjzsbffv.pdf

·      July 2014 Software code of the Mine2-4D mine design application from South African mining technology company MineRP. RPM undertook a review of the alternatives (build, buy, partner) to obtain mine design capability, including diligence on a number of trading entities. The Mine2-4D design tool is well known across the mining industry and has recently undergone a complete rewrite, using next generation development tools, to provide superior levels of enterprise integration and processing capacity. The opportunity to fast track a specific RPM design solution, by building upon the foundations of Mine2-4D, provided the lowest risk and quickest approach to progressing RPM’s software roadmap. The acquisition of a copy of the Mine2-4D software code will allow RPM to develop its own mine design capability. https://www.asx.com.au/asxpdf/20140703/pdf/42qmczgwh60wtd.pdf

Note: Haven't included acquisitions before 2013.

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Valuation of $1.160
stale
Added one year ago

Based on P/S assuming revenue growth of 1.5 - 3% over the next 5 years. Range of $1.12 to $1.20. Rough value somewhere in the middle but current value ($1.67 at time of writing) appears overvalued.


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#Business Model/Strategy
stale
Added one year ago

rul-mamoelis-initiation-181122.pdf

For those who would like to read the Moelis case for RUL and compare to your own notes from the deep dive.

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#Deep Dive Survey Results
stale
Added one year ago

Results from the survey we did during the Company Deep Dive

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#Broker/Analyst/Fundy Views
stale
Last edited one year ago

27-Oct-2022. As well as the Moelis report on RUL that @Remorhaz mentioned today, there are a few other brokers and analysts who have covered RPM Global (RUL) in the past, and may still do. Here are some links to their reports from prior years:

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

27-Oct-2019:  Taylor Collison:  RPM Global (RUL) - Initiating coverage: 5 reasons to buy 

10-Feb-2020:  Taylor Collison:  RPM Global (RUL):  Recent update, accounting changes, review of competition

26-Mar-2020:  Taylor Collison: RPM Global (RUL): 1H20 result review and update

2020: Sequoia also covered RUL back in 2020: You searched for RPM Global - Sequoia Direct Pty Ltd

Blackpeak Capital mention them on the last line of the table on page 80 of this report: Microsoft PowerPoint - Summary Tech Presentation - March 2022 (blackpeakcapital.com.au)

RPM Global (RUL) was on the list of "included companies" on the ASX's free broker report service for FY21 - see here: Independent broker research (asx.com.au) - but it seems that they (the ASX) don't have an archive of those reports that we can access. However, thanks to some work on my part (in prior months), you may find links to some of those free reports here.

Also, Gaurav Sodhi over at Intelligent Investor covers RPM Global. Here's a snapshot of part of his latest report on them.

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For the rest of that report and more of their other fine work, try a free trial of their subscription service at Intelligent Investor.

Also, Claude Walker and Owen Raszkiewicz both cover RUL. Not sure if this is behind a paywall, but here's a link to their most recent conversation about the company: Claude Walker And Owen Raszkiewicz Chat About RPMGlobal (ASX: RUL) and Altium (ASX: ALU) - A Rich Life [19-October-2022].

Also, from Claude Walker @ "A Rich Life":

28-June-2022: Why You Should Be Watching RPM Global (ASX: RUL) - A Rich Life

25-Sept-2022: My Top 6 Fluffy Dog Stocks With Target Buy Prices - A Rich Life [RUL is #6, of 6]

12-Aug-2022: Has Forager Funds Management Changed Investment Style? - A Rich Life ["The Forager June 2022 report disclosed that the fund had 17.7% allocated RPM Global (ASX: RUL), Nitro Software (ASX: NTO), and Bigtincan (ASX: BTH) between them, and also held Whispir (ASX: WSP) and Fineos (ASX: FCL), so the overall allocation to unprofitable tech was probably around 20%, at the least."]

26-March-2022: 4 Stocks That Could Benefit From The Commodity Price Boom - A Rich Life

And from Forager Funds:

10-Dec-2019: Revving up at RPM - Forager Funds [Why they bought RUL shares]

According to Forager's latest report for their Australian Shares Fund, RPM Global (RUL) is the largest position in that fund:

Monthly Report: Australian Fund September 2022 - Forager Funds

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Source: https://foragerfunds.com/news/investor_resources/monthly-report-australian-fund-september-2022/

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Mining Software, Consulting & Training Solutions | RPMGlobal

https://rpmglobal.com/

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Disclosure: I have held RUL shares previously, and made money from holding them, but I am not a current holder. I like the company but I see better opportunities elsewhere at this point in time. While there is probable further upside with RUL, I see more upside with a number of other companies over a 3 to 5 year timeframe.


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#Expansion
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Added one year ago

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#Competition
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Added 2 years ago

Looking through the CZZ report @Bear77 posted.

Noting that CZZ saw RUL losing market share to Deswik in design and scheduling.

RUL drew attention to the fact Deswik was acquired last year (completed early this year) by Sanvik ($26B swedish company) for around $700M. Deswik had 79M in revenue (with only 45% I take to be recurring SAAS like) for over 10x revenue! Of course at the market peak.

If you took the same multiple to RUL software ARR that would be valued at over $550M. Software isn't the same and a lot of caveats but seems RUL could be undervalued... then again a pressimistic view would be that they are competing against some aboloute gorillas and they were passed over for being acquired so their software may not be as great despite it being end to end. The advisory division may also be off putting.

Sandvik announcement below

Deswik will form one of three cornerstones in the newly-created division Digital Mining Technologies, established to accelerate the execution of Sandvik Mining and Rock Solutions’ strategic priority to lead the industry development of underground sustainability and productivity solutions in electrification, automation, digitalization and end-to-end optimization. The new division also includes Sandvik Mining and Rock Solutions automation solutions and the Newtrax telemetry and collision avoidance solutions.

Privately-owned Deswik, established in 2008 and headquartered in Brisbane, has approximately 300 employees and operates 14 offices in 10 countries. The company has demonstrated strong and profitable growth over the past decade in the large and growing mining software market.

Deswik’s revenue per October 2021, on a rolling twelve month basis, totaled AUD 79 million, of which the share of recurring revenue was approximately 45 percent, and with an EBITA margin of approximately 30 percent. Impact on earnings per share (excluding non-cash amortization effects from business combinations) will be accretive. The parties have agreed not to disclose the purchase price.

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#Business Model/Strategy
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Last edited 2 years ago

Taking a look at RUL which is like by some smart investors. It is owned by Forager, and the business is liked by Gurav at Intelligent Investor and Claude from A Rich Life albeit issues around the current valuation. Alex Hughes (now at Maven) liked it back in the day – not sure about now.

 Why is it interesting now?

RUL began the transition from perpetual license sales to SAAS sales in 2017 and now 5 years later in 2022 the transition is now complete. This has acted as a headwind to revenue and profit albeit RUL has managed to keep both relatively stable throughout the period and now looks set up for growth now this headwind is gone as seen below.  The company has also now built out the software product suite so R&D should stop growing keeping costs in control. In essence and inflection point seems to about to occur as operating leverage and revenue growth kicks in.

 Split in FY22 was 32% advisory and 68% software by revenue.

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RUL clearly sees value in the shares and is currently doing an on-market buyback (they see themselves as undervalued compared to private peers).

The business

RUL provides advisory services and software to miners, mining services and OEMs. Previously the advisory business (consultants) was seen as a necessity in order to sell RUL software to miners and I believe this is still the case. In 2021 the GeoGAS division (a coal gas testing business) was sold to GeoGAS management, a small, profitable but no growth business that I don’t believe added much value moving forward so seemed like a sound move. Since 2013 the company has invested (in R&D and acquisition) over $171 million in building out the 41-software module product suite. Recent acquisitions include the move into ESG consulting acquiring Blueprint (2021) and Nitro, I think this maybe the same approach to use ESG mine consultants to sell RUL’s ESG mining software. The other acquisitions were modules in 2020 acquired Sudbury mine optimisation company (SOT and Attain modules) and IMAFS (Imafs module). Now RUL can provide end to end mine management.


Some modules include (and my understanding of what they do).

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Mine design and scheduling are the biggest modules – management has called out AMT and EXECUTE as the ‘stand out products’ in 2022 and sees a substantial sales pipeline for AMT.

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Management has said R&D will start to moderate with no new modules planned in FY23 but further work it transitioning some to the Cloud. RUL is also now looking to host customer data in the cloud.


As more mines are autopsied such as driverless trucks etc RUL should become more relevant. Battery metals needed for the transition are also likely to see the need for a number of new mines to be established even if coal mines are eventually shut.


Big well known mining customers. They service OEMs like caterpillar and also mining services companies like NWR Holdings ASX: NWH). So large addressable market.

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As to why it is attractive it is the software division that shows the most promise. I don’t see the business as that different from Envirosuite and Pointerra in that vein.

 

Risks

 

·      Numerous competitors depending on the software module, but RUL is the category leader in many of them.

·      Commodity prices are high now but RUL should still fair okay in a falling commodity pricing market as many modules are used to reduce costs. There could still be some cyclicality though.

·      Exposure to thermal coal, okay over the next few years but they will need to be replaced (maybe?) longer term if it is phased out at some point.

·      Recently exited Russia highlighting it operates in developing markets which carry extra risk.  

·      FX would have a significant impact.

·      Was CF negative in 2022 but a one off and has over $34M in cash and no debt.

·      RUL is still trading on large multiple despite the recent sell off.

 

Guidance

Management provided some clear guidance for the first-time expecting revenue to grow to over $100m next year and EBITDA of around $14m. Placing RUL on a forward EV/EBITDA multiple of 24x if guidance is met. RUL did point out that there are headwinds with higher salaries given the global job market currently.

 

The business has seen some COVID disruption due to lack of travel so this could prove a tailwind as things open up.


The company could easily be an acquisition target from an overseas acquirer. In any case if we get a sell off could be an interesting one to pick up as a profitable, growing company.


Broker Forecasts below:

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#Baby Giants Podcast Analysis
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Added 2 years ago

Baby Giants podcast did a section on RUL.

I took away the following observations:

Bull

  1. Disclosed as held by everyone except @Strawman (maybe he rushed out and bought afterwards! hahaha)
  2. Ongoing software subscription revenue growth is "hidden" by the traditional business model of licenses and consultancy work.
  3. Likes to operate around break-even at this stage in the business change to SaaS, vs high revenue or high losses with associated offsets. Figure 1.
  4. CEO chooses not to convert existing customers from licence to subscription for "easy wins". Makes his sales team go after new sales. Converting the existing customers would result in approx +$50mil ARR.
  5. ARR is growing at ~70% per FY.
  6. Propose a target of 30% growth per year for DCF models.
  7. Fair value at today's date is "somewhere above $2".
  8. RUL is likely to have pricing power as it becomes heavily integrated in the business, and seeks to be a smarter/more agile incumbent (vs its opposition).

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Figure 1.


Bear

  1. Integration risk - due to high number of recent acquisitions. If RUL finds a small software company that has a value-add 'module' they buy it rather than develop in-house.
  2. Technical risk - These acquitions come with code integration requirements also. If the code bases are different this can impact the quality of the software performance. (Bull: CTO's role is to finalise integrations by Dec 2022).
  3. CEO risk - Richard Mathews has overseen the transition from license to subscription.
  4. Revenue timing risk. ~70% of revenues are paid by customers in 2H (Jan - Jun period). This can make reports lumpy and Mr Market confused/fearful.
  5. TAM is hard to define. Perhaps it is a narrow but deep. Fewer customers, but customers buy big!


Disc. I own IRL and have been seeking the right opportunity to top up.

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#E#TCV/ARR Update
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Added 2 years ago

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#1H FY22 Results
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Added 2 years ago

At the previous straw, I documented things I will monitor for this business going forward. All matrics look good in the report.

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ESG business is going great as per the report and will provide further upside in the future as per the management commentory. Something to monitor.

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#Overview
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Added 2 years ago

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#ESG
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Added 3 years ago

As per yesterdays presentation:

What stood out to me, besides numbers I am happy with, was RUL’s focus on ESG within the report.

ESG or Environmental, Social and Governance reporting currently has no legislated or regulatory reporting guidelines or formats, however there is a growing consensus, that is creating a social licence towards ESG. Just look at that dude who sue’d his super fund!

RUL mentioned ESG in the report no less than 16x!!! 16x!!!

Part of this is obvious, RUL is in the mining industry, and therefore it’s a no-brain-required assessment to mention ESG as mining is “dirty”, or bad for the E in ESG. Three things stood out to me:

1.      They are choosing to report ESG before it is mandatory, thus making their own format and controlling their narrative – I think much of the report is written with an ESG lens or bias. This narrative helps guide investors, but also customers! If I’m a miner and I use an ESG-friendly business, then I the miner can claim I am ESG friendly. Tricksy RUL!

2.      RUL sold a subsidiary, GeoGAS to make itself cleaner and greener, and to demonstrate its commitment to ESG – proof to its narrative of words – as GeoGAS is solely a coal business.

3.      RUL is still considered a small cap ($300M to $2B) with a market cap of $420M, however I think I read comments in the presentation to the effect of “we are selling GeoGAS, to improve our ESG, and then institutions will be able to invest more in RUL as it will meet their ESG mandate requirements”.

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Valuation of $1.420
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Added 3 years ago
RUL is transitioning from a mining consultant company to SaaS business. There are also tailwinds here with commodity prices rising. Its also good to see ownership from fund managers and investment banks, this shows the company is starting to get recognized. I think the company is fairly valued as it is at $1.65 (P/S 5.8x). However, I'm waiting for the price to hit around $1.20 (P/S 4x) before I personally get in (I've put my valuation between the current price and my buy-in price.
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Valuation of $0.940
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Added 3 years ago
RPMGlobal develops and provides mining software solutions worldwide. My early thoughts on why I started looking into the company was to get exposure to the commodity sector without directly investing into the miners themselves. RUL provides software licensing, consulting, technical, and training services to the resources industry and has multiple software and solutions, such as enterprise planning framework. Top line is falling in the LTM but RPM Global is continuing to run down its perpetual licence software business as it transitions towards a subscription software model. Should see this turn around as they complete this transition. Previously was operationally cash flow positive but has since slipped due to this transition. Current ratio is greater than 2 (One of my checks) Currently trading on 4.4x EV/Rev Analyst forecast growth varies between 20-70% for the next 3 years. Quick valuation looking at analyst numbers Assumed 0.055 EPS in 2025 P/E of 30 (growth to slow closer to 20% PA by this time) Future price $1.65 Discounted back PV = 0.94 Very quick look into the company, will do some more analysis into this for some more numbers but doesn't look like I need to rush into anything. Potentially consider waiting to see how they transition to a subscription model to de risk the investment.
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##VALUE ADD
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Added 3 years 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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#IMAFS Acquisition
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Last edited 3 years 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.

--- ends ---

[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
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Last edited 3 years 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
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Last edited 4 years 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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Valuation of $1.610
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Added 4 years 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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#RUL to power ahead in FY2021
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Added 4 years 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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Valuation of $0.700
stale
Added 5 years ago
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