Is 3D Systems Losing Focus by Acquiring Cimatron?
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We’ve written in previous articles about the large number of acquisitions that 3D Systems seems to engage in over time and the broad types of companies they like to acquire. In November of 2014, 3D Systems (NYSE:DDD) announced a definitive agreement to acquire Cimatron, a deal that was finalized just yesterday for around $97 million. With the deal now closed, just what has 3D Systems acquired?
About Cimatron Group
Founded in 1982 and with more than 40,000 installations worldwide, Israeli based Cimatron (NASDAQ:CIMT) is a leading provider of integrated, CAD/CAM software solutions for mold, tool and die makers. Their flagship product is CimatronE, an integrated CAD/CAM software solution. This 200 employee company has shown steady revenue growth and has been profitable for the past 5 years. Revenues for 2013 were $44.25 million with net income of $4.85 million and a dividend declared. While Cimatron appears to be a well-run business, their past involvement in 3D printing seems to be minimal.
Cimatron’s first mention of 3D Printing was in March 2013 when they announced that their Board of Directors had approved the establishment of a 3D Printing Advisory Board, and named industry expert Terry Wohlers as its first member. In April 2013, Cimatron announced that one of their customers, Sharon Tuvia (1982) Ltd., was using the CimatronE software suite in its additive manufacturing production process. The usage involved taking customer CAD files of products, and using CimatronE CAD functionality to perform the necessary modifications and preparations of the model in order to make it ‘printable’. The CimatronE software could then be used to finish off the part by drilling holes and threads, along with milling. In January 2014, Cimatron issued a press release titled “CimatronE to Support AMF Format for 3D Printing” which stated that its next software release planned for mid-2014, CimatronE version 12, would support the Additive Manufacturing File (AMF) format. In August of 2014, the release of CimatronE version 12 was announced in a press release titled “CimatronE 12 Launched: Includes productivity improvements and new features supporting 3D printing”. The extent of the 3D printing support was summarized as follows:
CimatronE 12 also supports the AMF (Additive Manufacturing File) format – the new standard for converting 3D models into digital files.
It does not seem like a difficult feat to enable support for a commonly used file format in a CAD program. Wikipedia describes the AMF format as follows:
Additive Manufacturing File Format (AMF) is an open standard for describing objects for additive manufacturing processes such as 3D printing. The official ISO standard is an XML-based format designed to allow any computer-aided design software to describe the shape and composition of any 3D object to be fabricated on any 3D printer.
The description states that this format should be standard for any CAD software program implying that this feature should have been implemented much sooner than just the middle of last year. The fact that CimatronE software supports the importing and exporting of any standard 3D printing file is the extent to which CimatronE is involved in 3D printing as evidenced by this statement in the Q2 2014 earnings:
As planned, CimatronE version 12 was officially released during July 2014. We have high expectations for this latest version, as it incorporates numerous key enhancements, as well as our first entry into the 3D Printing software market. Initial feedback from the field is very encouraging.
Conclusion
Cimatron appears to be a very solid business but the extent to which their CAD software package can provide synergies for 3D Systems could be questioned. The fact that the most recent software release just started to support the most widely used 3D printing file format implies that this software hasn’t been used much for 3D printing up until now. Does this CAD package perform better than other CAD packages that have long supported the 3D printing file format? Hopefully, the acquisition will not detract from the primary business that 3D Systems (NYSE:DDD) is engaged in; that of 3D Printing.
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It’s hard to say what acquisitions will mean in terms of long-term focus just yet. Interesting introspections nonetheless.