CSU - Constellation Software

[Liberty]

Volaris acquisition:

 

https://www.volarisgroup.com/news/article/volaris-acquires-lifecycle-software

 

its thirteenth acquisition in the Communications and Media vertical with the acquisition of Lifecycle Software LTD (“Lifecycle”), a provider of mission critical billing, customer management, and business intelligence software solutions to mobile network operators, mobile virtual network operators, and mobile virtual network enablers and aggregators.

 

Founded in 1995 by Kim Craven, Lifecycle was formed to address a need by new UK market fixed communications providers and ISP resellers. In 2008 Lifecycle evolved its offerings to focus on the emerging needs of virtual mobile operators, enabling them with full subscriber management and billing turn-key solutions.

 

“We had been talking with Volaris regularly for quite some time and became convinced they would be the best home for Lifecycle for a number of reasons, mainly: the access to their global communications customer and partner ecosystem; being able to operate autonomously; and, the organization’s strong knowhow, best practices and financial resource to enable us to grow sustainably and entertain future M&A of our own,” said Kim Craven, Managing Director and Founder of Lifecycle. “We also liked their practice of ‘buy and hold forever’ as well as their dedication to allow us to maintain our corporate identity and accelerate the brand we have worked so hard to build over 2 decades in the market.”

[deepdiving]

Liberty: most likely, CSU have been talking to them for 10 years, until their determination to stay independent collapsed...  ;)

[Liberty]

Liberty: most likely, CSU have been talking to them for 10 years, until their determination to stay independent collapsed...  ;)

 

Trust is a seed that must be planted early and watered along the way for it to grow!

[Liberty]

Volaris acquisition in Brazil:

 

https://www.volarisgroup.com/news/article/volaris-group-acquires-dealernet-brazil

 

acquired DealerNet (“DealerNet”), a provider of Dealer Management solutions to the automotive sector. DealerNet is based in Salvador, Bahia, Brazil.

 

DealerNet has a rich history of providing automotive dealer management software solutions to car dealers and OEMs throughout Brazil. Established in 1990, the company’s Windows DMS and Workflow DMS is a mission-critical platform that helps to transform automotive dealers. Today Workflow is used by 3,000 automotive dealers across Brazil.

 

H/t @pearnick

[Liberty]

Two more acquisitions:

 

https://www.totalspecificsolutions.com/about-us/transaction-updates?tid=52

 

Total Specific Solutions (TSS) has acquired Ping Pong AB. Ping Pong believes in lifelong learning for everyone and is the Swedish market leader in Learning Management Systems. With this acquisition, TSS expands its existing market presence in Sweden, where FDT and Infoflex are already part of the group.

 

Ping Pong offers educational solutions for schools, universities, public sector and companies. For schools, the Ping Pong platform allows teachers to involve students to participate and create content. It provides teachers an easy way to assess and monitor the development of each student, including assignments, grades, attendance records, and more.

For higher education, the Ping Pong platform complements the regular curriculum, offering students the opportunity to engage in active learning, individually or with others. And it allows students and professors to follow the progression over time. The solution offers, for example, flexible test tools for examination and self-testing, tools for collaborative learning in groups, and more.

For companies and public organizations, the solution is the online meeting places for knowledge exchange and sharing of experiences. It motivates employees to further their education. It has a course administration tool, including attendance management, course implementation, and certification.

 

 

https://www.volarisgroup.com/construction

 

"Enterprise Content Management (ECM) solutions -- contract management, knowledge-sharing and electronic document and email management - for the Utilities and Construction markets."

 

h/t @pearnick

[Liberty]

One at TSS, one at Volaris:

 

https://www.totalspecificsolutions.com/about-us/transaction-updates?tid=53

 

Vlot Solutions is the market leader in the Netherlands with its software solution Orthomatic servicing multiple clients in the medical aids sector such as orthopedic shoemakers and instrument manufacturers, wig makers, surgical truss makers and distributors for diabetes related conditions. Orthomatic provides clients a single end-to-end solution for the entire process from order, purchase and stock management, electronic client dossier, chain logistics, to performance and process management. And Orthomatic provides insights into several reports. The software solution supports the entire financial process, including the processing of expenses and receivables management.

 

https://www.volarisgroup.com/news/article/tribute-inc-joins-volaris-group

 

Based in Hudson, Ohio, Tribute Software provides integrated ERP software solutions to help industrial distributors serve their customers better, streamline their operations, lower costs, and enhance margins through better cost control. Tribute systems power millions of dollars in transactions every month and supply thousands of users with critical information day and night.

 

Tribute has a deep understanding of the unique business needs of industrial distributors. The company serves hundreds of customers throughout North America providing specialized solutions for fluid power and motion control, industrial hoses, fluid handling, and more.

 

h/t @pearnick

[sane]

Does anybody know when the Constellation AGM will be in 2020 please?  They seemed to fit it next to the Omaha weekend last year, I wonder if they are deliberately trying to attract those groupies. 

[FiveSigma]

It's typically during the first week of May,  they announce it at the same time as the date for the Q1 earnings, which happens in mid-April.

[Liberty]

CFO told me: "The date is tentatively scheduled for Friday May 8."

[sane]

Thanks a lot, both of you.

[Liberty]

Two new acquisitions:

 

https://www.ejuniper.com/en/blog/2020/01/24/juniper-acquires-tsi/

 

"TSI provides products and services related to TPF/ALCS and Digital Enterprise technologies to some of the Fortune 500 companies"

 

https://www.petrosys.com.au/petrosys-acquires-globe-claritas/

 

“Claritas is a globally-recognised seismic processing solution and has been used in 30 countries by more than 75 organisations."

 

 

h/t @pearnick

[Liberty]

Volaris acquisition:

 

Google translate for the press release:

 

https://www.saatmann.de/cms/?node=1163

 

Saatmann GmbH & Co. KG joined Volaris Group Inc. on January 1, 2020. As a long-term partner, the Volaris Group enables Saatmann GmbH & Co. KG's growth and success course to continue unchanged. Saatmann GmbH & Co. KG will continue to develop its industry software for quality assurance and birth documentation as an independent business unit from the Worms location. The two main shareholders Simon Saatmann and Günther Weber hand in their tasks, Arndt Lorenz will continue his work as managing director of Saatmann GmbH & Co. KG with the established team in the usual way and without changes.

 

"With Volaris, we have found a partner who enables us to continue to run the company as a whole and thus to guarantee unchanged security for employees and customers. As part of the financially strong Constellation Software Inc., we now have further strategic growth options," said Arndt Lorenz, managing director of SAATMANN GmbH & Co. KG.

 

h/t @pearnick

[Liberty]

Jonas reviewing its acquisitions this year (17), including a new one we didn't know about:

 

https://info.jonassoftware.com/blog/2019-acquisition-year-in-review

 

Achiga: "Servicing the hotel industry for over 20 years, with 13,000+ users worldwide" 28 employees

 

h/t @pearnick

[Liberty]

New acquisition at Vela:

 

https://www.fogsoftwaregroup.com/fog-software-group-announces-acquisition-of-asc-software/

 

Dayton, OH-based ASC is a leader in supply chain solutions. Their award-winning ASCTrac® software is an enterprise solution combining warehouse management (WMS), manufacturing execution (MES) and financial accounting to help manufacturers, distributors, and third-party logistics providers (3PLs) to better manage their complex operations.

 

"Zoominfo shows 144 employees and $27.7M in sales"

 

h/t @pearnick

[wisowis]

CSU is expensive now IMO.

 

What is your estimate of fair value, where would you buy?

 

We can get this information from the president's letters, which I recommend you read. In 2013, they got their 8 analysts to do DCFs of Constellation Software:

 

 

 

 

CSI’s stock price has appreciated something like 68% per annum over the last two years while our

revenue per share and CFO/Shr have increased by only 25% and 27% per annum respectively. The

divergence between the appreciation in the stock price and the fundamentals prompted us to do an

experiment to see if the multiple expansion could be rationalized (revenue per share and ANI per share

multiples have roughly doubled during that period).

We contacted 8 analysts from the investment banks and brokerage firms that cover CSI and asked them

for their discounted cash flow valuation ("DCF") models. The analysts also use peer comparisons, market

multiples and other methods as part of their valuation process, so their DCF results don’t entirely explain

their valuations for CSI. Nevertheless, the analysts’ models do tend to highlight their underlying

assumptions about the company. When we examined the average of the analysts’ assumptions for organic

growth, acquired growth, acquisition pricing, cost of capital, margins, tax rates, and terminal growth rates,

we found that we felt reasonably comfortable with most of their assumptions.

 

The assumptions with which we felt least comfortable were the future cash tax rates and terminal growth rates (both of which

seemed low to us). We adjusted for these changes to create a DCF model consisting of the average of the

analysts assumptions plus a couple of CSI tweaks, which I’ll call the “Consensus Model”. The Consensus

Model generated a stock price that was at a slight premium to the current share price, though without the

margin of safety that we would seek when investing CSI’s capital. The upshot of the exercise was that

one could mathematically justify the current stock price based on assumptions similar to those achieved

by the company in the past.

 

So we know that based on the assumptions made in 2013, the consensus model shows that their model price approximately matches the share price.

 

At that time:

- Share price( Dec 31, 2012): $108.09

- Share price( Dec 31, 2013): $208.24

- Share price USD( Dec 31, 2013): $196.10 (1.062 CAD = 1 USD)

- Revenue per share (2013, USD): $57.13

- Multiple of revenue: 3.43x

- Revenue CAGR (2004-2013)= 30%

- Cash flow CAGR (2004-2014)= 30%

- ROIC + Organic Net revenue growth (3 years, 2011-2013): 43, 37, 39

 

Now:

- Share price (Jan 10, 2020): $ 1356.6

- Share price USD (Jan 10, 2020): $ 1038.25  (1.307 CAD = 1 USD)

- Revenue per share (LTM, USD, 09/30/2019): $158.79

- Multiple of revenue: 6.54x

- Revenue CAGR (2008-2017)= 26%

- Cash flow CAGR (2004-2014)= 31%

- ROIC + Organic Net revenue growth (3 years, 2011-2013): 35, 32, 33

 

Revenue growth has slowed, from 2018 letter:

 

Constellation's Organic Net Revenue growth has averaged only 2% during the last decade.

 

So organic growth (2008-2017) has been 2% (actually 1.9%), and in the period of 2004-2013 (which the DCF was based off of), it assumed an organic growth rate of 4.9%. How sensitive is the share price to that value? In the 2013 letter:

 

Subtract 2.5% from the base line organic growth assumption and you lose almost half the intrinsic value of the stock.

 

So a subtraction of 3% cuts the intrinsic value of the shares by more than half.

 

He also thinks that current ROIC is going to continue to drop, from 2017 letter:

The return on our shareholders’ Average Invested Capital (“ROIC”) dropped to 29% in 2017. The

decrease was a function of a slew of new investments with lower ROIC’s and of our increasing cash

balance. I expect this metric to continue to drop.

 

He also writes (2013 letter):

 

I have difficulty forecasting long-term growth in Constellation’s intrinsic value per share that exceeds

12% per annum

 

 

So to return to the same revenue multiple as 2013, we need to drop by roughly 40-50%. Then we adjust 50% again for the 3% drop in organic growth. And then adjust again for potential slipping of ROIC. Then adjust again to account for drop in growth to 12%...where do we end up?

 

If you think I am a madman for suggesting such a big disconnect between the current share price and their DCF model (even though they wrote it!), consider his discussion of JKHY in the 2015 letter (Section: Great Companies Are Not Always Great Stocks), he writes:

 

There’s one last lesson from JKHY that I’d like to share. It relates to you as shareholders. There was a

ten year period during which JKHY’s shares both underperformed the S&P 500 (2000 until 2010) and

didn’t make any money for shareholders. The underperformance vs the S&P 500 was minor …

approximately 1%. JKHY’s revenues per share and ANI per share had compound average annual growth

rates of 14% and 21%, respectively during that decade....

When the market “corrected” the JKHY stock had no margin of safety.

When really good companies start trading at 5 and 6 times revenues, it’s time to start worrying. I hope

our shareholders are never in that position.

 

Going back to our table, his idea of extreme overvaluation from the 2001 tech bubble is in the range of 5-6x revenue, and CSU is currently trading above that, at 6.54x revenue.

 

Finally, I will leave you with this piece of wisdom:

 

Ideally, we’d like CSI’s stock price to appreciate in tandem with our fundamental economics. At any

point in time, we’d prefer the price to be high enough to discourage a takeover bid and low enough so that

our sophisticated long term oriented investors are not tempted to sell. It takes lots of time and effort to

attract and educate competent shareholder/partners. The last thing we want them to do, is sell.

If a stock is over-priced and sophisticated investors sell, they are generally replaced by unsophisticated

investors who are ultimately disappointed. This may lead to a stock price that over-corrects and in turn

precipitate either a takeover bid, or more insidiously, a significant and predatory share buyback.

 

[villainx]

Going back to our table, his idea of extreme overvaluation from the 2001 tech bubble is in the range of 5-6x revenue, and CSU is currently trading above that, at 6.54x revenue.

 

 

!

[peterHK]

There are a few issues with this IMO.

 

1) Since 2010 they've invested an average of 75% of FCFE into acquisitions, and over the past 3 years it's been ~52%. Obviously that number can change and I think somewhere between 50-60% is an appropriate guess for the next 3 to 5 years.

 

2) We know they reinvest at extremely low multiples and generate at least 25% ROIC on new acquisitions, if not more.

 

Investing 55% of FCF @ 25% ROIC gets you ~13.75% growth in intrinsic value. Add to that a 2.2% free cash flow to equity yield and you're getting ~15% total returns assuming a constant multiple.

 

So the question about valuation...

 

1) in the 2000's the 10-year treasury rate was 6%. Equities (https://www.multpl.com/s-p-500-earnings-yield) traded at a 2% earnings yield, so a -400bps spread to treasuries.

 

Today the picture is reversed! Arguably, if rates fall in half, multiples assuming constant growth, margins and ROIC, should double, so the 6x sales in t he 2000's should really be 12x sales today.

 

So I don't think CSU is overvalued in the context of where the market is today. The greatest risk to CSU and frankly any high quality growth equity is that rates go up significantly in a short period of time causing rapid multiple contraction. If rates go from 2 to 4 over say 5 years, the growth in intrinsic value is going to offset the multiple contraction nicely.

[snowball82]

One key question is what is the current value if the capital deployment works and they can continue to make 75-100 acquisitions per year ?

 

 

 

[Liberty]

CSU is expensive now IMO.

 

What is your estimate of fair value, where would you buy?

 

We can get this information from the president's letters, which I recommend you read. In 2013, they got their 8 analysts to do DCFs of Constellation Software:

 

 

 

 

CSI’s stock price has appreciated something like 68% per annum over the last two years while our

revenue per share and CFO/Shr have increased by only 25% and 27% per annum respectively. The

divergence between the appreciation in the stock price and the fundamentals prompted us to do an

experiment to see if the multiple expansion could be rationalized (revenue per share and ANI per share

multiples have roughly doubled during that period).

We contacted 8 analysts from the investment banks and brokerage firms that cover CSI and asked them

for their discounted cash flow valuation ("DCF") models. The analysts also use peer comparisons, market

multiples and other methods as part of their valuation process, so their DCF results don’t entirely explain

their valuations for CSI. Nevertheless, the analysts’ models do tend to highlight their underlying

assumptions about the company. When we examined the average of the analysts’ assumptions for organic

growth, acquired growth, acquisition pricing, cost of capital, margins, tax rates, and terminal growth rates,

we found that we felt reasonably comfortable with most of their assumptions.

 

The assumptions with which we felt least comfortable were the future cash tax rates and terminal growth rates (both of which

seemed low to us). We adjusted for these changes to create a DCF model consisting of the average of the

analysts assumptions plus a couple of CSI tweaks, which I’ll call the “Consensus Model”. The Consensus

Model generated a stock price that was at a slight premium to the current share price, though without the

margin of safety that we would seek when investing CSI’s capital. The upshot of the exercise was that

one could mathematically justify the current stock price based on assumptions similar to those achieved

by the company in the past.

 

So we know that based on the assumptions made in 2013, the consensus model shows that their model price approximately matches the share price.

 

At that time:

- Share price( Dec 31, 2012): $108.09

- Share price( Dec 31, 2013): $208.24

- Share price USD( Dec 31, 2013): $196.10 (1.062 CAD = 1 USD)

- Revenue per share (2013, USD): $57.13

- Multiple of revenue: 3.43x

- Revenue CAGR (2004-2013)= 30%

- Cash flow CAGR (2004-2014)= 30%

- ROIC + Organic Net revenue growth (3 years, 2011-2013): 43, 37, 39

 

Now:

- Share price (Jan 10, 2020): $ 1356.6

- Share price USD (Jan 10, 2020): $ 1038.25  (1.307 CAD = 1 USD)

- Revenue per share (LTM, USD, 09/30/2019): $158.79

- Multiple of revenue: 6.54x

- Revenue CAGR (2008-2017)= 26%

- Cash flow CAGR (2004-2014)= 31%

- ROIC + Organic Net revenue growth (3 years, 2011-2013): 35, 32, 33

 

Revenue growth has slowed, from 2018 letter:

 

Constellation's Organic Net Revenue growth has averaged only 2% during the last decade.

 

So organic growth (2008-2017) has been 2% (actually 1.9%), and in the period of 2004-2013 (which the DCF was based off of), it assumed an organic growth rate of 4.9%. How sensitive is the share price to that value? In the 2013 letter:

 

Subtract 2.5% from the base line organic growth assumption and you lose almost half the intrinsic value of the stock.

 

So a subtraction of 3% cuts the intrinsic value of the shares by more than half.

 

He also thinks that current ROIC is going to continue to drop, from 2017 letter:

The return on our shareholders’ Average Invested Capital (“ROIC”) dropped to 29% in 2017. The

decrease was a function of a slew of new investments with lower ROIC’s and of our increasing cash

balance. I expect this metric to continue to drop.

 

He also writes (2013 letter):

 

I have difficulty forecasting long-term growth in Constellation’s intrinsic value per share that exceeds

12% per annum

 

 

So to return to the same revenue multiple as 2013, we need to drop by roughly 40-50%. Then we adjust 50% again for the 3% drop in organic growth. And then adjust again for potential slipping of ROIC. Then adjust again to account for drop in growth to 12%...where do we end up?

 

If you think I am a madman for suggesting such a big disconnect between the current share price and their DCF model (even though they wrote it!), consider his discussion of JKHY in the 2015 letter (Section: Great Companies Are Not Always Great Stocks), he writes:

 

There’s one last lesson from JKHY that I’d like to share. It relates to you as shareholders. There was a

ten year period during which JKHY’s shares both underperformed the S&P 500 (2000 until 2010) and

didn’t make any money for shareholders. The underperformance vs the S&P 500 was minor …

approximately 1%. JKHY’s revenues per share and ANI per share had compound average annual growth

rates of 14% and 21%, respectively during that decade....

When the market “corrected” the JKHY stock had no margin of safety.

When really good companies start trading at 5 and 6 times revenues, it’s time to start worrying. I hope

our shareholders are never in that position.

 

Going back to our table, his idea of extreme overvaluation from the 2001 tech bubble is in the range of 5-6x revenue, and CSU is currently trading above that, at 6.54x revenue.

 

Finally, I will leave you with this piece of wisdom:

 

Ideally, we’d like CSI’s stock price to appreciate in tandem with our fundamental economics. At any

point in time, we’d prefer the price to be high enough to discourage a takeover bid and low enough so that

our sophisticated long term oriented investors are not tempted to sell. It takes lots of time and effort to

attract and educate competent shareholder/partners. The last thing we want them to do, is sell.

If a stock is over-priced and sophisticated investors sell, they are generally replaced by unsophisticated

investors who are ultimately disappointed. This may lead to a stock price that over-corrects and in turn

precipitate either a takeover bid, or more insidiously, a significant and predatory share buyback.

 

Hey, thanks for sharing your thoughts. I'll share some of mine.

 

Mark Leonard is probably the most financially conservative person in the world. On top of that, he has an incentive in talking down the price of the stock to allow his employees to buy it lower, which is a talent retention tool. He's also said at the AGM that his sales of the stock this year (Mark Miller also said it) were signalling to try to drive down the price of the stock.

 

Mark used the analyst consensus model because it's probably the less controversial thing to use, but does it mean that the analysts get it right? We can now know with hindsight that they had it totally wrong ever since IPO, by a lot. At almost any time you could've paid double (maybe triple or more, depending on when) what the analysts said was "fair value" and still performed very well.

 

Also, aggregate organic growth hides a lot. The company is composed of multiple revenue streams that are worth different things. Hardware is worth the least, then professional services, then licenses, and then maintenance/recurring. The latter, which is where most of the value resides, has been growing organically at 4-5%.

 

Another factor is that they buy distressed assets and runoffs. This makes organic growth seem lower even if these purchases create a lot of value (high IRRs) because they buy them at such low prices and are pretty good at turning them around or at least slowing down the melting and improving margins. Some periods have higher organic growth, maybe because they have fewer distressed assets in the acquisition pool, maybe because it was during the period when they invested more in organic initiatives (they reduced that investment because they found that they got better returns from acquisitions).

 

Another thing I'd point out is that using multiples of sales can also be very misleading. Not all revenue is the same, right? You won't compare a dollar of revenue of Visa to a dollar of revenue of a grocery store or a profitless startup.

 

"his idea of extreme overvaluation from the 2001 tech bubble is in the range of 5-6x revenue, and CSU is currently trading above that, at 6.54x revenue."

 

If a business with no profits and a very uncertain future is trading at 6x revenue, that's very different from a business with high FCF margins, very sticky cashflows, and a very high internal diversification by industry verticals and geography is trading at 6x revenue. The tech bubble took place in a very different context (nascent commercial internet) with different kind of companies (growth at any cost without profits or barriers to entry for most of them).

 

At a normalized FCF margin of 30% (which isn't too extravagant for this kind of software -- it can seem lower because they keep acquiring things that have lower margins, which has some transaction costs, and then they drive up margins over time), 6x sales is 20x FCF. Is 20x FCF that high for CSU when the SP500 trades where it trades and many other high quality businesses trade at 50x FCF? (look at TYL or MKTX or whatever).

 

If CSU is supposed to trade at 3x sales, that's like 10x FCF at 30% margins. Or 15x FCF at 20% margins. Does that make sense?

 

As for the JKHY example, if you go and look, JKHY peaked at 11.5x sales and 38.4x EBITDA in 2000, and yet it only just barely underperformed the SP500 by 1% over the next 10 years. That seems a positive data-point to me. I'd say that we're not in a 2000-like tech bubble right now.

 

Mark is used to buying VMS at 1-2x sales, so 6x sales sounds very high. But CSU isn't a VMS. These businesses don't have reinvestment opportunities, they are mostly cash cows that grow at maybe 1-2x GDP. CSU has a long-track record of high ROIC re-investment, which makes its cashflows worth a lot more than the cashflows for a single VMS.

 

As an evergreen buyer of software businesses, I'm sure he's very honest in saying that he thinks prices are too high...

 

Also, the market has been discovering the economic value of software over the past decade, and valuations have risen generally (as interest rates have been falling, also increasing valuation multiples), which has also been a tailwind to CSU. It doesn't mean it'll keep going, but it can mean that software was undervalued 10 years ago, rather than assume that the valuation 10 years ago was correct (right after the bigger crisis in almost a century, back when the internet was much smaller and the total spend on software was much lower?).

 

So yeah, ROIC might go down and shareholder returns almost assuredly won't be what they've been, but don't go too far in the other direction and be careful parsing what Mark Leonard says. He's like Buffett saying in 1980 that Berkshire was now way too big and wouldn't outperform like it did. He's eventually right, but it doesn't mean the game is quite over.

 

The company has been improving its coverage of small deals, expanding to new geographies (more deals in scandinavia, europe, australia, south america, japan) and shown that it can scale up capital deployment (2019 was a great year with no big and few medium deals.. past years that have been close in size all had much bigger deals), and they've become more competitive with larger deals with the use of fenced-off leverage, so we could wake up one morning to a decent-size deal. They've only deployed something like $3bn in acquisitions in their history, so if they ever do a 500m or 750m deal, it'll be a pretty big event.

 

These are some of my thoughts. I could be wrong, though.

[Liberty]

More acquisitions:

 

https://www.bibliocommons.com/news/2020/2/10/bibliocommons-acquired-by-volaris-group

 

https://www.industrios.com/news/read/ShoplogixAcquiresIndustriOSSoftware,Inc.

 

As Pearnick says: "Constellation is pushing capital deeper into their business units:

 

CSU > Vela > FOG > Shoplogix > IndustriOS"

 

 

 

h/t @pearnick

[Liberty]

Harris acquisition:

 

https://www.harriscomputer.com/en/news/?data-ipsquote-timestamp=1581310800&article=harris-healthcare-group-acquires-doc-tor-com

 

N. Harris Computer Corporation’s (“Harris”) healthcare group announced today that it has completed the acquisition of Doc-Tor.Com L.L.C. (“Doc-Tor.com”) of Allendale, NJ. Doc-Tor.com provides an easy-to-use, cloud-based practice management system for physician offices, allowing for efficient and seamless workflow, from scheduling through collections and analytics.

 

The Doc-Tor.com transaction also included the acquisition by Harris of New Ultimate Billing LLC (“Ultimate Billing”), a full-service revenue cycle management (RCM) provider with 20 years of combined administrative leadership and medical billing experience.

 

Pearnick writes: "19 employees (16+3)"

 

 

h/t @pearnick

[gary17]

https://www.csisoftware.com/docs/default-source/press-releases/csi---press-release-q4-2019---final.pdf

 

results are out

[Liberty]

Finally getting around to looking at CSU Q4. Looks decent to me. A little weak on organic growth, but always hard to know if it's weak or if they just bought more distressed assets lately...  Big swings in licenses and hardware, which can be lumpy.

 

IFRS 16 accounting makes things less clear for FCFA2S ("using the modified retrospective approach and accordingly the information presented for 2018 has not been restated"), but if you take it into account, looks good.

 

FY19 acquisitions: "$549 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $139 million resulting in total consideration of $688 million". And that's with no big acquisitions that year.

 

Public sector revenue increased 18% in Q4, 15% for FY19.

 

Private sector revenue increase 9% in Q4, 12% for FY19.

 

ROIC looking good:

 

 

Looks like they did over 90 acquisitions this year, versus about 55 last year. In 2014 they did in the 20s acquisitions during the year, so it's been quite a change in the capital deployment capability. And the ROIC doesn't seem (yet?) to have suffered.

 

"The Average Invested Capital for 2019 was $2,260 million"

[wisowis]

Hey, thanks for sharing your thoughts. I'll share some of mine.

....

 

 

Thanks Liberty (and others), I appreciate the responses a lot.

 

You say that Mark Leonard is financially conservative, which I agree with. He knows how to value companies, having built a career on it. And he has told us what he thinks that CSU is worth, and given how much I respect his ability to value companies, I have trouble ignoring it. Thanks for pointing out interest rates, which I forgot (as always) to take into account. For a guy so scared of taking advantage of shareholders that he won't even buyback shares of his company (last line of my last response!), I don't think that his warning bells on valuation are mere posturing. I think he is truly fearful that his shareholders will suffer poor returns, even if he and his team deliver admirable business performance.

 

For what it's worth, I am bringing up the issue of valuation because I am long this company, bought at a much lower valuation that where it trades today. Somewhere in his letters Mark laments the year that his last critic capitulated. And with the sentiment around the company being so positive, I think some unsophisticated investors have joined the shareholder ranks, as he warns (as an unsophisticated investor myself, I can easily recognize my peers!).

 

Thanks again, I do appreciate the time you've taken to share your thoughts, cheers.

 

[snowball82]

Vermilion Energy Inc. Selects Omnira MOSAIC Software to Drive Growth

 

https://www.prnewswire.com/news-releases/vermilion-energy-inc-selects-omnira-mosaic-software-to-drive-growth-301006862.html