EarningsRand Worldwide, one of Autodesk’s largest resellers and a provider of technology solutions in its own right, yesterday announced results for the fiscal year ended June 30, 2014. Total revenue was $92 million, up 11% over the prior year (y/y), led by product sales, where revenue grew 14% y/y. More details below.

The company also announced that it’s conducting a “self-tender offer” so that it can repurchase up to 27,530,816 shares of its common stock at $1.20 per share. That amounts to $33 million, which the company plans to cover from cash on hand ($9.5 million) and a term loan of $25 million.

Rand says that the offer represents just over 50% of the outstanding shares (just under on a fully diluted basis — you can read the details here). The company is taking this path to “maximiz[e] shareholder value and providing its shareholders an opportunity for liquidity in its common stock, which is not heavily traded. The Company’s majority stockholder, RWWI Holdings LLC, sold 9,000,000 of its shares of Company common stock to another existing stockholder on September 26, 2014 at a price of $1.20 per share and has indicated that it plans to tender its remaining shares in the tender offer, subject to proration if applicable”.

A bit of history. In 2007, Rand Worldwide, then a Canadian company, was purchased by Ampersand Ventures for CDN $43 million. In 2010, Rand was still privately-held and merged with Avatech Solutions, a publicly-traded US company. Reverse mergers, name changes, et voilà, today’s Rand is a US company that trades on the OTCBB, or Over-The-Counter Bulletin Board. It’s got the same SEC rules as other publicly traded companies but not the listing or volume requirements as the Nasdaq and New York Stock Exchange.

According to Rand’s most recent 10-K filing with the US Securities and Exchange Commission, “Rand Worldwide’s common stock is not heavily traded. Trades are affected in privately-negotiated transactions and by certain broker-dealers who make a market in the common stock through the … the OTCBB”. According to data in the 10K, the share price for the last fiscal year has had a high of $1.25 and a low of $0.91, so the $1.20 seems fair to a bit of a premium; it opened yesterday at $1.15 and closed at $1.24.

Rand says it needs to still finalize the loan but expects to start the tender offer within ten business days.

OK. Back to earnings the details. For the year ended June 30,

  • Total revenue was $91.6 million, up 11%.
  • By revenue category, product revenue was $47.8 million, up 14%
  • Services revenue was $23.5 million, up 8%
  • Commission revenue was $20.9 million, up 8%
  • By division, revenue from IMAGINiT, the Autodesk value-added reseller, was $79.5 million, up 10% y/y on 14% y/y growth in product revenue — that a bit faster than Autodesk is growing, so perhaps serves as an indicator of what we can expect from Autodesk and Mensch und Maschine, the big European VAR, during their next earnings releases
  • Revenue from the Enterprise Applications division, a catch-all of offerings  that includes data governance solutions, facilities management solutions and Dassault Systèmes products and training as well as PTC-related training, reported revenue of $9.2 million, up 23%
  • Revenue from ASCENT, the courseware division, was $2.9 million, essentially flat y/y
  • Also during September Rand spun off its Secure Data subsidiary and sold the stock of the newly formed subsidiary for $500,000 in cash, resulting in a loss of around $1 million.

What does it all mean? Rand’s largest shareholder wants out, which is reasonable four years after their initial investment enabled the Rand/Avatech merger. Buying back the shares may also raise the price overall, if a scarcity mentality takes over. But that news may overshadow the fact that Rand’s business is doing well — growing in all categories and tightening focus by continuing to sell underperforming assets.

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