Rounding out earnings: Delcam and MuM set records
We’re just about done with companies reporting earnings for the year ended December 31, 2012, and it was, by all appearances, a solid year. Lots of uncertainty about what lies ahead but, in general, most companies saw an increase in the numbers and types of customers they support, the range of products they sell and, perhaps, made acquisitions to speed up that growth. We recently heard from Delcam, the UK CAM company and Mensch und Maschine, the German VAR — and the news was very good. Later this week Exa reports about their Q4 (ended January 31) and I believe that will put 2012 to bed. But first:
Delcam reports best year ever
Delcam said earlier that Q4 ended 2012 on a high note and today filled in some of the details. Total revenue for the year was up 12% to £47.1 million, with software licence revenue up 16% to £24.5 million and maintenance revenue up 8% to £14.1 million.
The company says that toolmaking (in the automotive sector) and production machining (in automotive and aerospace) continue to be its main markets but that it is seeing growth in the footwear and healthcare sectors.
By geo, revenues from Europe accounted for 51% of sales; 25% were from Asia; and 24% from the Americas. This exactly matches what Delcam reported for 2011, showing remarkably balanced growth. The company singled out the US, Russia and UK as “fastest growing markets” but also that “there were many global examples of significant growth, with over 30 of our Sales Partners achieving increases in their sales of more than 20%”.
Delcam continues to invest heavily in R&D. It spent 24% of sales, or £11.4 million, on R&D in an industry where the average is under 20%.
In an interesting note, Delcam’s year-end announcement highlighted how it is investing to grow its international profile, citing investments in marketing, recruiting and opening new offices. Look for this sleepy company in a niche market to become more aggressive (yet in a very British way).
Delcam doesn’t give forward-looking guidance, but Chairman Peter Miles said that the steady growth of the company over the last 3 years leaves him optimistic about 2013: “Our continued progress in 2012 was very encouraging, especially given the levels of financial uncertainty which affected sentiment for investment in many of our important markets… Given the positive start to the year, we expect Delcam to make further good progress in 2013.” Analysts seem to be expecting revenue of about £51 million, up 8.5%, which seems a bit low to me given how Delcam is investing to boost its sales channels and visibility in general.
MuM continues VAR reinvention
Perhaps more than any other company in our universe, Germany’s Mensch und Maschine could have seen a significant slowdown from the economic malaise that bogged down many of its territories in 2012. But, no, MuM managed to set records for total sales, gross margin, operating and net profit in the continuing Software and VAR Business segments. (Recall that the company sold off its distribution businesses, to comparing total revenue for 2012 to 2011 will show a decline.)
Total revenue for the continuing businesses was €118.8 million, up 22%. Revenue from the VAR business was up 26% to €85.2 million, while sales of MuM’s own software products was up 15% to €33.6 million. Some of the increase in the VAR side of the business was due to acquisition, but I don’t have enough data to figure out how much was organic. On the software side, about 85% of revenue came from the company’s OPEN MIND (CAM), with the rest coming from DATAflor (gardening/landscaping).
Germany accounted for 51% of revenue in 2012 while 49% came from “international business”. In MuM’s world, that means Europe for its VAR business but global for its software. By end-industry, about half of the revenue in 2012 came from “mechanical engineering solutions”, 25% from AEC, 15% from infrastructure/gardening and landscaping and 10% from electrical engineering.
In the press release, MuM wrote that “[t]he only drop of bitterness in 2012 was the fact that the business model transition caused negative operating cash flows, because the (desired) reduction of the trading business led to a non-recurring shift from trade accounts payable to bank debt.” In other words, like many businesses, MuM now smoothes out its bumpy cash collections with short-term bank loans. CEO Adi Drotleff doesn’t see this as a problem and the company will continue to pay out a dividend as planned.
For 2013, MuM expects revenue of just under €150 million, with the bulk of growth coming from the VAR business. In all, the company is targeting revenue of €200 million by 2015, from organic sources and acquisitions.
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