Computer Modelling Group (CMG) Canaccord Genuity 44th Annual Growth Conference & Private Company Showcase 2024 summary

Company evolution and strategy

• Transitioning from a software supplier to a technology and service consolidator for energy and adjacent sectors, now branded as CMG 4.0.

• Focused on organic growth, customer-centricity, and leveraging market trends such as digitization, talent shortages, and energy transition.

• Emphasizing profitability, maintaining operating margins above 40%, and generating strong free cash flow to fund M&A and strategic investments.

• Implemented objective-based KPIs and compensation tied to performance, with a focus on top-line growth, operating profit, and ROIC for M&A.

• Board changes include new members with operational experience to support ongoing M&A and integration.

Market trends and industry analysis

• Energy sector engineers face complex challenges, driving demand for advanced simulation software.

• Industry is behind in digital transformation but is rapidly adopting AI, machine learning, and intuitive UIs.

• Talent shortages due to past downturns and negative perceptions of oil and gas, increasing the need for integrated software and services.

• Brownfield operations and maximizing existing asset recovery are rising as easy oil declines.

• Energy transition, especially carbon capture and storage, is a key growth area, with regulatory support and early-stage adoption.

Growth initiatives and acquisitions

• Organic growth driven by customer segmentation, tailored pricing, focused R&D, and expanded sales efforts.

• Strategic partnerships with industry leaders like ABB and Kongsberg enhance solution offerings and market reach.

• Services and consulting are growing, increasing customer stickiness and supporting software adoption.

• Recent acquisitions include USI (data analytics) and Bluware (cloud-based seismic data), expanding capabilities and revenue.

• Acquisition strategy targets high-growth, under-optimized companies and technologies, with a disciplined financial approach.