MCAD Industry View - A May 2006 Update

Dr. Russ Henke Dr. Jack Horgan Commentary

by Drs. Russ Henke & Jack Horgan
Henke Associates

In the first MCAD Industry Commentary published May 2003 in MCADCafé.com, then-recent yearly and quarterly financial performances of a selected group of public Mechanical Computer Aided Design (MCAD) companies were analyzed and compared. Expectations of future financial performances of these same MCAD entities were documented. The May 2003 MCAD Commentary was followed by twelve quarterly updates in MCADCafé.com, one for each subsequent calendar quarter. URL's on all past articles are available. The entities covered were ANSYS, Autodesk, Dassault Systèmes, UGS PLM, ESI Group, Moldflow, MSC.Software, PTC and Tecnomatix.

Due to the acquisition of Tecnomatix by UGS that closed April 1, 2005, Tecnomatix will no longer be covered here as a separate entity. While MSC.Software will be discussed in the article below, its financials will be omitted from the vendor comparisons because of MSC.Software's ongoing financial restatement issues.

Accordingly, the current article in the sequel recounts the financial performances of the remaining group-of-seven (G7) MCAD/PLM entities for the nominal first quarter of 2006.

Recent MCAD & PLM News Highlights

On March 23, 2006 Autodesk launched AutoCAD 2007 and AutoCAD LT 2007 software. On the same day, the firm announced a major update to its software portfolio, including advanced versions of more than 25 products.

On April 26, 2006 PTC announced it had signed a definitive agreement to acquire Mathsoft Engineering & Education, Inc. (Mathsoft) for $63.25 million in cash. Mathsoft is the provider of Mathcad, software that helps engineering organizations create, automate, document and reuse engineering calculations critical to the product development process, as well as other mathematics-driven processes. Mathsoft sports annual revenue of approximately $20 million and over 250,000 professional users worldwide.

On May 1, 2006 ANSYS announced that it had completed its acquisition of Fluent Inc., a global provider of computer-aided engineering (CAE) simulation software, for approximately 6,000,000 shares of ANSYS common stock and approximately $299 million in net cash.

On May 11, 2006 Dassault Systèmes announced it had completed the acquisition of MatrixOne Inc., a provider of collaborative PLM solutions for the value chain. The all cash purchase price was $410 million in the aggregate, before reflecting cash balances and estimated tax benefits.

MCAD Vendors' Financial Performances in Q1 2006

As a group, the G7 MCAD vendors generated combined revenues of $1.31 billion in the first quarter of 2006, an impressive 16.2% increase over the $1.12 billion in the first quarter of 2005, but a dip of 5.4% from the $1.38 billion in the fourth quarter of 2005 (a seasonally strong quarter). See Table 1.

Company Last
QTR
Revenue
Prev
QTR
Revenue
Last
vs.
Prev
QTR
Comparable
2004
QTR
Last QTR
vs.
Comparable
QTR
ANSYS 46 44 5.2% 38 22.3%
Autodesk 436 417 4.6% 355 22.8%
Dassault (€) 252 313 -18.3% 199 28.5%
Dassault ($) 307 373 -17.6% 261 17.7%
ESI Group (€) 24.7 12.1 104.1% 21.7 13.8%
ESI Group ($) 29.6 14.4 105.8% 28.4 4.3%
Moldflow 16.3 16.9 -3.8% 15.9 2.3%
PTC 200 193 4.0% 176 13.7%
UGS 274 327 -16.2% 253 8.4%
Total 1,309 1,384 -5.4% 1,127 16.2%
Table 1 - Quarterly Revenues of G7 MCAD Vendors (US$ millions)

All of the MCAD vendors experienced year-over-year revenue growth. On a percentage basis, Dassault, Autodesk and ANSYS grew more than 20% in local currency. PTC and ESI Group had lower double digit growth. Moldflow was at the rear with only 2% growth. On a sequential quarterly basis, ESI-Group led with a doubling of revenue. Dassault and UGS had double digit declines relative to their seasonally strong fourth quarter.

Figure 1 below provides a bar graph showing the revenue trend for each of the covered vendors, for the periods mentioned in Table 1.

Figure 1 - Quarterly Revenues of the G7 MCAD Vendors (US $ Millions)

Figure 2 - Relative Sizes by "Q106" Reported Revenue
(Excludes MSC.Software)

For the first quarter of 2006, Autodesk was easily the share leader at 34% with Dassault and UGS scrapping for second place (Figure 2).

(As always, it needs to be pointed out that unlike the other vendors in this report, Autodesk earns an important percentage of its revenue outside of the MCAD space. Autodesk does not break out its mechanical contribution. Also, both Autodesk and Dassault Systèmes sell mostly through third parties, while UGS sells mostly direct).

Company Last
QTR
Earnings
Prev
QTR
Earnings
Delta
Last
vs.
Prev
Comparable
2004
QTR
Delta
Last
vs.
2005
ANSYS 12.9 13.3 0 9.7 3.2
Autodesk 48.5 83 (34.5) 76.1 (27.6)
Dassault (€) 31.3 69 (37.7) 30.9 0.4
Dassault ($) 37.6 82.1 (44.6) 40.5 (2.9)
ESI Group (€) N/A N/A   N/A  
ESI Group ($) N/A N/A   N/A  
Moldflow 1.5 (0.1) 1.6 2.0 (0.5)
PTC 10.8 7.5 3.2 20.5 (9.8)
UGS PLM (19.2) 12.9 (32.0) (8.2) (11.0)
Total 92.1 198.7 (106.6) 140.6 (48.6)
Table 2 - Quarterly earnings of G7 MCAD Vendors (US$ Millions)


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Rating:
Reviews:
Review Article
  • October 09, 2008
    Reviewed by 'Randy Bigs'
    I agree that the authors did not clearly tie in the overall state of the economy with the topic at hand: The MCAD industry. But, based on this week's Wall Street stock meltdown, and the worry about increased inflation, It's obivious that we've got big trouble right here in River City, and it will not only negatively impact our economy in general but the MCAD industry specifically. I applaud Russ and Jack for their in depth financial analysis, but I also would like to see their US and geopolitical comments weaved into the central theme, and I hope when things turn around they'll continue to present an objective viewpoint.

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  • October 09, 2008
    Reviewed by 'Mac'
    Where's the beef? As I read the article hoping to get an update on the MCAD industry, I quickly realized that this article was just another political aid without any data that could be interpreted without a secret MCAD decoder ring. I find it ridiculas that instead of giving us a real opinions on state things in the MCAD space, the authors just threw up graphs and charts and ambigious explantions about what those caharts and graphs meant. At the end of the article, I could only grin as I kept wating for some information that might actually provide me with some insight on the state of affairs in the MCAD space, but it didn't happen.
    I guess I will have to keep on collecting data myself and come up with my own opinions as I am not on someone's pay roll and have no political agenda. Here's a noval idea, lose the jibber jabber talk (Denny Crain) and call it like it is for once.
    Mac

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  • October 09, 2008
    Reviewed by 'S. Wertel'
    This article is quite detailed and well written, but what does your political view on the current administration have anything to do with MCAD?
    The entire Economic & Geopolitical Factors section is filled with tripe and misleading statistics pulled from sources biased to anti-Bush sentiments. Is this the only medium Henke and Horgan have available to prevail themselves as some sort of economic masterminds? Please keep your political drivel to yourselves, or at least place them in a forum suited to that topic. If I were to have written something as perverse as this, my high school social studies teacher would have accused me of having diarrhea of the mouth and sent me back to perform an unbiased analysis showing both side of the story and how they relate to the topic at hand - the state of the MCAD industry. No where in the Economic & Geopolitical Factors section was there a tie between the rubbish on the page and how it relates to the topic of MCAD. Please go back to high school.
    In the future, please contain the Industry View to just an Industry View, or at least tie in the Economic and Political Factors with how they affect MCAD.

      One person found this review helpful.

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  • October 09, 2008
    Reviewed by 'Brian T.'
    What can I say, this article is not a News/Commentary article on MCAD. It is a Liberal Propaganda Tool which I will no longer subscribe to. This is my third comment on these out of place personal comments in a otherwise informative article. When the last article was being reviewed, the last I checked 6 out of 7 responses to that last article agreed with my review, then it was removed from the mcadcafe page. I guess this would be expected, that poll might not swing their way, so cut it short before it looks bad. I have never seen this report taken off this site before. These views are included in a bias manor. Some of the same information could be included with out the Liberal Bias View or the quotes from the Like Sources. Enough Said, another media tool that can't seem to go down the middle.

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