Overnight, $RUL announced the following product launch at MINExpro 2024 in Nevada. This is a pretty important product for mine operations.

———————

RPMGlobal Launches Fleet Optimisation Solution

26 September 2024

RPMGlobal (RPM), a global leader in mining software technology, is pleased to announce its new fleet optimisation solution at MINExpo 2024 in Las Vegas Nevada. FleetOptimiser continues RPM’s journey towards cloud-based solutions, offering a product designed for customers to calculate and optimise their trucking requirements for a shift.

The solution combines a 3D, visual user interface with RPM’s universal fleet calculation wrapped up in a secure, web accessible, cloud-based solution.

Up until now desktop models and spreadsheets have been used to calculate the viability of the mine plan. This creates downstream issues with difficulty maintaining data, accuracy issues, and version control. Several products have provided truck limited scheduling over the years which works well in a long-term horizon, however applying the same techniques to the more detailed short-term space has always fallen short.

FleetOptimiser uses the RPM travel time calculation engine, the industry standard, that is embedded across many of their mining software solutions. It calculates productivity for trucks across a haulage network while matching truck productivity to targeted loader productivity.

According to Michael Baldwin, RPMGlobal’s Chief Commercial Officer, engineers have been dreaming about this product for years. “There has always been conflict between planners and operations with respect to what an achievable plan actually is. FleetOptimiser lets the planner optimise realistic targets for the upcoming shifts while operations can use FleetOptimiser to reconfigure fleet throughout the shift as parameters change, all through a web-based 3D intuitive user experience,” said Baldwin.

Mine planners who use XECUTE, or other execution scheduling applications, can rapidly react to changes in truck availability by simulating the impact on load productivity, and then incorporate the required changes in their plan.

The solution also provides the user with functionality to update and maintain the current road network if required. Calibrated fleet settings can also be controlled through the solution, allowing for standardisation across the entire organisation.

“The market's excitement around FleetOptimiser is clear, and the feedback from our early adopters has been overwhelmingly positive. FleetOptimiser offers planners the solution they have been seeking and promises to deliver a significant productivity shift for the industry” Baldwin concluded.

For more information on the FleetOptimiser solution or other RPMGlobal solutions, please visit www.rpmglobal.com or visit the RPM Booth, number 6163 at MINExpo for live demonstrations and presentations.

I've been wondering what's been going on with the $RUL buy back program over recent weeks, i.e., nothing.

At last results, CEO John Mathews said they'd continue to buy back shares in preference to issuing dividends as they don't have the franking credits, and within the existing program there is still ample capacity. But the last buyback announcement was 30-Aug. - which given the patterns of the last 18 months or so, is a significant pause. In the recent past, SP progression hasn't inhibited them steadily chipping away, so I wondered if the apparent pause was just that they wanted to build up some cash, but that didn't really make sense as they are well cash up.

Then this morning they posted this announcement about the fothcoming release from escrow of 0.53m shares from a 2021 acquisition on 30th Sept, and a lightbulb went off.

Having held back from repurchases, they are probably poised to snap up all these shares if ESG (the owners of the $RUL shares that were put in escrow as part of the deal) decide to offload them.

What do other holders or watchers think?

This is not material in any way to my investment thesis for $RUL, but just some idle speculation. On Friday's when I've achieved my priority work around my portfolio for the week, I usually take some time generally catching up on less significant developments in my portfolio and my watchlist. A nice gentle way to wind down for the Great Australian Weekend. (I don't do lunchtime drinking!)

$RUL pretty consistently buys back $50k shares per day (apart from the mini-tech correction we had recently when they opportunistically grabbed a lot more).

But the last two days are $200k and $200K.

Looks like they are trying to fight the emerging downtrend.

Gaurav Sodhi has just posted his update on RPM for Intelligent Investor

In short he still appears to like the stock and advocates a HOLD

Some choice snippets ...

"It's easy to see why the market threw a tantrum at RPM Global yesterday. At one stage, the stock was down 20%, all because EBITDA (earnings before interest, tax, depreciation, and amortisation) guidance, previously expected to be $22m for the full year, was confirmed at $19m. Oh, that's before management incentives, by the way

The source of my own annoyance wasn't the numbers themselves - we didn't think they were too bad - but the slimy avoidance of clarity

Note to RPM management: your bonuses are real costs. You don't get to exclude them"

"This update doesn't warrant panic or a change in thesis. We note that RPM's share price rose about 65% in six months before today's fall. That rise probably contributed as much as today's announcement. We also note that the business was active buying its own shares yesterday amid the fall - they bought back over 1m shares in a day

With software sales still growing and falling to the bottom line, a net cash position, and software deeply embedded with miners, we're happy to HOLD"

Disc: Held in RL & SM

SP down ~ 16% early in the session.

Announcement

Update on Software sales and expected Financial Year 2024 (FY2024) result.

2 July 2024

RPMGlobal Holdings Limited (ASX: RUL) [RPM ®

, Company], is pleased to provide the following update on

Total Contracted Value (TCV) derived from software sales, and expected Gross Revenue, Operating EBITDA

and Profit Before Tax (PBT) for FY2024 (subject to audit).

The Company sold $50.4 million in software TCV in the second half of FY2024, bringing expected full year TCV

sold to $77.0 million (FY2023: $70.5 million) - $75.4 million in subscription licenses (FY2023: $65.8 million), $1.3

million in perpetual licenses (FY2023: $2.9 million) and new maintenance of $0.3 million (FY2023: $1.8 million).

The Company now has $161.0 million in pre-contracted, recurring, non-cancellable software revenue, which will

be recognised in future years, up $28.8 million (22%) from the same time last year (FY2023: $132.2 million).

The $75.4 million in TCV software subscription sales for FY2024, will deliver Annually Recurring Revenue

(ARR) of $9.2 million. As at 1 July 2024, the total value of ARR is $62.0 million, comprising $50.7 million from

subscriptions and $11.3 million from maintenance. As the Company’s software becomes more and more

mission critical, mining companies are asking for longer subscription terms to ensure certainty of supply. In the

second half of FY2024, the Company sold $18.4 million in software subscriptions with a committed term of

eight-years and $6.4 million with a committed term of ten-years.

The Company expects Gross Revenue for FY2024 to finish between $113.0 million and $114.0 million (FY2023:

$98.4 million), EBITDA (before management incentives) to be in the range of $18.7 million to $19.3 million

(FY2023: $15.0 million) and Profit before Tax (pre management incentives) to be in the range of $14.0 million to

$14.5 million (FY2023: $9.2 million). The lower than forecasted profitability is due to reduced perpetual license

sales and the timing of subscription licenses signed during the second half of FY2024.

Given the Company’s strategy and preference to sign subscription license sales (that deliver stable and

predictable recurring revenue reported over multiple financial years) over one off perpetual license sales (which

are fully reported as revenue in the financial year they are sold), the Company was comfortable seeing

perpetual license revenue reduce by $1.6 million year on year at the expense of an increase in subscription

license sales.

Reported subscription license revenue has risen strongly in FY2024 to $45.6 million (FY2023: $39.3 million),

however it is worth noting that the value of subscription license revenue reported within the financial year is

directly related to the timing of when that contract is signed during the financial year. The majority of software

subscription licenses sold during the second half of FY2024 were concluded in the last month of the year. This

timing profile has seen $1 million of expected subscription revenue move from being recognised in FY2024 to

future reporting years.

Given the growth in TCV, revenue and profitability in FY2024, the Company expects incentives (shared across

an increased number of employees) to be in the range of $3.5 million to $3.9 million for the FY2024 year

(FY2023: $3.0 million).

Subject to finalisation of the audit, RPM expects to release its FY2024 full year audited results in late August

2024.

Authorised by:

James O’Neill

Company Secretary

+61 7 3100 7200

companysecretary@rpmglobal.com

Up 7% in afternoon trade on no update?

Did the market assign value after the Friday lunch beer which strawpeople have known for over a year. Or is there a big announcement in the works early next week and someone knows more than we do?

RPM just announced that they are extending their existing buy back further till 13 June 2025 ( and intend to purchase further ~11m shares )

It started buy-back program in June 2022 and so far purchased 12.5m shares at an average price of $1.63.

Another bit of news is that their cash balance is 32.2m as of 27th May 2024 ( their cash balance was 23.2m at the end of 1H2024). [ They also continued purchasing shares on the market from 1H to today so considering that operation is as usual second-half weighted and business is as usual in my opinion]

We will pass a milestone today in the $RUL buy back program. Based on Friday's report, today will see the cumulative buy back reach $20 million paid for 12.3m shares. There remain a maxiumum of 10.5m to go (22.8m total or 10% total SOI).

About $12m worth has been bought back over the last 12 months.

My reason for posting is that over recent months the behaviour of the buy back has changed. For much of last year, the buyback were more stop-start, dialling up when the SP fell below $1.55 and slowing or even stopping above about $1.60.

Now, with the SP right up at $2.45, they are pretty much buying $50,000 worth every day. On some days, they do buy fewer, and I think these are lower liquiduty days, when there are low volumes with offers close enough to the current SP. But I have been monitoring for a few months and $50,000 days are pretty much the norm. So $1m a month.

The buy-backs are typically 5-6% of average daily total volumes - although this varies hugely. Highest price paid is $2.60.

If the SP was to stay flat at $2.45, and if they keep buying $50,000, then the current announced program would run for another two years. Of course, SP likely to continue to rise, so it would go for even longer. Equally, there may come a point at which they stop as there is no obligation to execute the program announced.

I'm still puzzled why at $2.60, the highest return opportunity the board can see is eating themselves.

In the short term, I'm not complaining - as this level of buyback is continuing to put some support under the SP, and of course will directly drive EPS.

Disc: Held in RL and SM

I have published RPM Global thesis at https://growthgauge.substack.com/t/asxrul

To be clear I'm not sure they are actually bogans and probably not fair to classify them as such - but is entirely meant in jest as this was the most amusing earnings call I have listened to.

It felt that they were doing this somewhat begrudgingly at request of shareholders, but since they were doing it, it they would very much do it in their own way, on their own terms, and try to enjoy themselves.

Highlight for me was, 25 minutes in, one of the senior managers said: "Oh shit, I'm not supposed to be talking about the big deals; Scrub that you didn't hear anything!".

Saying that, it actually felt well prepared and I'm sure nothing was unintentionally let slip.

Note they have not linked the recording of the call directly on their website - but you can still follow the link from the initial announcement to find the recording.

Summary

Software

• Their software is very expensive so only Tier 1 and 2 miner can afford it. They view a few of their products as, quote, "the de-facto standard" in the space (particularly among the Tier 2 miners). Namely:
• Operational software (XECUTE) the only software in it space and had become the standard for Tier 2s. Gaining traction among the Tier 1s.
• Simulate was the standard among OEMs like Hitachi and Komatsu and gaining traction elsewhere. AMT also largely in use by OEMs
• They believe they are the only enterprise solution - any of their competitors in the space are either internally built systems or separate desktop software
• They have spent the time to build out what they call their Enterprise Planning Framework - the integration layer that connects all their software - and allows 3rd party integrations as well.
• Explained the continued 2nd half weight of revenues as legacy software users tend to roll over to the subscriptions at the same time of year (Jan and Feb).

Business Fundamentals

• Focus on rebuilding the US/Americas business and expect this to become the biggest sector again (did not specify when tho).
• They got the first sale to Vale, which has been the Tier 1 they haven't been able to get across the line. Expecting further sales here.
• Churn rate of only 4% of customers (covering 3% of revenue) highlighting the stickiness of their product. They suggested this was mostly due to mine closures as the software was no longer needed - as opposed to loss to competitors
• Customers wanting to lock in long contract terms: 3-5 years with the larger customers even going to 7 year contracts
• Stability of their management: 4 senior managers have been there for 10+ years (this was a specific request of share holders to explain/highlight)
• They are focused on software for mining (and closely related OEMs and consultants) are not interested in adapting their software outside of their core competency.
• Had good examples of them making major sales of software they had acquired. Mentioning:
• Environmental Data Vault
• MinVu
• Shift manager

Financials and Capital Allocation

• Gave good explanation (at least in my mind) of the 2 one-off adjustments to the financials and admitted they could have been clearer sooner on the pull forward of the subscription revenue due to the client cancellation.
• Richard, the CEO, went to some lengths to explain that the client used other pieces of software, but this cancelling was due to the project needing AMT getting cancelled and he was expecting more work to come from that particular client.
• In relation to their peers (did not specify who they were) they think they are cheap so will continue to buy back shares
• Would be open to more acquisitions but say there is nothing out there at the moment - they are the "last man standing" in a lot of their niche.
• R&D to tick down over time. Interesting quote: "The thing with R&D is you have to know when to stop, otherwise the devs will just keep developing."
• They are getting more requests for bespoke developement (presumably as they start working with bigger players) which they keep the IP of and allows them to get paid for some of the R&D.
• They have mostly moved to their software to the cloud but still have some remaining (some products) work there.
• Pricing - Richard gave out these numbers in terms of their software - I am assuming it is the annual cost but that was not clear:
• Simulate: $120k
• Scheduler: $500k
• AMT: $1.3M
• ?? not sure - am guessing XECUTE: $500k

Advisory

I did not take notes on this part of the call. It is the piece I have the least interest in as:

• I suspect it is the most cyclical - it is quoted on a project by project basis and as such probably has little recurring revenue
• Is the least scalable - Advisory/Consultancy is dependent on the quality of the people working in it and usually takes years of experience.

A good chunk, perhaps the bulk, of the advisory was assisting companies to raise financing/capital.

Lastly, another good quote, when asked about possible takeovers, Richard said:

"Nothing to do with me there - we are for sale on the market so what will happen will happen, we'll just keep doing what we do".

What I liked

• Reaffirmed guidance and pointed their main growth driver (Americas) for the future. Will be something to watch.
• Seemed down to earth but also confident about their competence in their niche (with good the justification for it).
• Pragmatic about their use of R&D
• No mention of AI - they weren't there to sell you on pipe dreams

What I didn't like

• No mention of AI - They don't seem to want to spend money where they don't see immediate benefit (by immediate, I mean they know they be able to sell it once built). Which is probably a good thing - until a competito with a better product comes along

In general, I thought it was a very good call. The only thing in the back of my mind is maybe they sold me with their slightly brash, slightly over-honest easy going Brisbane ways. I believe they have earned the confidence in their business - but if things slowly start turning against them will they notice or will their confidence turn to hubris.

I find it interesting that $RUL are still buying back shares - albeit low volumes. The program was a non-brainer at $1.40-$1,60, given that they aren't spending a lot on developing the platform,which would be my preference, and are focused on deployment.

I assume momentum traders are at work, with 5 buyers to every seller at the moment.

However, SP has run up hard in the last 4 months, so I wonder what view on value the Board has? Some StrawPeople see further to go. Guess I need to go back and do my own valuation.

Not complaining, just observing.

Disc: Held in RL and SM

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.

The reason for this given was below

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.

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.

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

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

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

$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

MD's address:

$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

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.

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

RPM Global released its FY23 result this morning.

Revenue:

Customer Receipts:

Expense:

Operating Cash

Migration from Maintenance to Software

Software subscription as % of overall revenue

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.

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.

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

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)

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.

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

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

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.

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.

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.

Results from the survey we did during the Company Deep Dive

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.

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

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

Mining Software, Consulting & Training Solutions | RPMGlobal

https://rpmglobal.com/

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.

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.

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.

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).

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.

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.

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:

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).

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.

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

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.

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”.

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.

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.]

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.

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

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[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.]

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