Bentley Systems' Second Annual Corporate Update Conference Call: Big theme is China

Tom Paine



Exton-based Bentley Systems, which describes itself as "the largest software provider for sustaining infastructure" held its second annual Corporate Update conference call yesterday. This event was initiated last year to improve the privately held company's communications with the various communities that follow Bentley and the industry it operates within. While not providing the degree of disclosure a public company must reveal, CEO Greg Bentley's very succinct presentation gave a good picture of where the company is heading.

Bentley announced revenue in 2011 was $523 million, a 10% increase over 2010. He indicated that the company believed it was out of the trough it had been in during the recesssion, though his comment that "“2012 has already started stronger than did either of 2009 or 2010” left me somewhat puzzled. What about 2011? Bentley said the company was "modestly optimistic" about the current outlook, and was "conservatively" forecasting 6% organic growth for 2012.

The star performing geographic region was Asia, and in particular, China. Asia now represents 19% of overall revenue, and Bentley said revenue from China, which had been doubling every three years, is now doubling every two years. He said that China may eventually become Bentley Systems' largest market, and that the company would be holding a board meeting there this year. I almost expected him to announce that Bentley would be relocating its headquarters from Exton to Beijing. China is hungry for the best technology for building infrastructure, both for new building projects and for environmental improvements such as cleaner power. As long as China can keep spending, it will be good news for Bentley.

Perhaps surprisingly, Bentley said Europe was probably holding up better than the US market, which he described as "sideways". He said commercial spending trends were stronger than the public sector, particularly in the US. Although Bentley System does not have an identical competitor in terms of product mix, Bentley said its performance in terms of revenue growth compared favorably to its most similar publicly traded competitor, Autodesk.

Bentley also spoke extensively about Bentley Systems' ProjectWise collaboration platform, which he described as the ERP of choice for complex engineering projects.He said that ProjectWise was starting to move towards a hybrid Cloud approach using Microsoft's Azure platform. He also spoke about making ProjectWise more mobile, involving not only the use of mobile apps but devices like sensors and scanners. He didn't use the term "Internet of Things", but I wondered if that was the direction he was speaking of.

Financially, Bentley announced the company had spent $40 million to repurchase the remaining shares formerly held by Intergraph Corporation (later sold to Hexagon), after settling long-running litigation with Intergraph last year. Bentley family members and associates now control 92% of all shares. He also said the company had lined up a $350 million credit facility and its current liquidity (I guess cash and near cash) was $175 million.

Bentley Systems also announced yesterday it has acquired the elcoSystem software business of Germany's Hannappel Software GmbH. The elcoSystem line of software for electrical engineering was already a fundamental component of Bentley’s Raceway and Cable Management and Building Electrical Systems offerings. Terms were not disclosed.

Not being an expert in this industry, my speculation doesn't mean much, but I've wondered whether Princeton-based Mistras Group might be an eventual acquisition target for Bentley. Mistras is a provider of technology-enabled asset protection solutions used to evaluate the structural integrity of energy, industrial and public infrastructure. Mistras, which did an IPO last year, has a current market value of $624 million, so it would be a rather large fish for Bentley to swallow, though.

Bentley Systems will hold its Be Together 2012 user conference at the Pennsylvania Convention Center in Philadelphia in May.

Note: just heard talk on CNBC that China is sending a message to the provinces to "cool down" infrastructure spending.



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