CEO: Patrick Allin
About: Textura® is the construction industry’s premier provider of cloud-based virtual collaboration and productivity technology tools designed to reduce costs, save time and lower exposure to risk. Touching on all aspects of the project lifecycle, from take-off and estimating, pre-qualification, bid management, submittals, payment, and LEED® management, Textura integrates everything a construction industry professional needs to improve efficiency. With award-winning technology, world-class customer support and consistent growth, Textura is leading the construction industry’s technology transformation.
WSA: Good day from Wall Street. This is Juan Costello, with the Wall Street Analyst. Joining us today is Patrick Allin, the CEO for Textura Corporation. The company trades on the New York Stock Exchange, ticker symbol is TXTR. Thanks for joining us today, Patrick.
Patrick Allin: You are welcome, Juan.
WSA: Great. Now starting off, please give us a history and overview of the company for some of our listeners new to your story.
Patrick Allin: The company was started in late 2004 by three former PricewaterhouseCoopers consulting partners. We decided to focus on commercial construction and create Internet-based single-instance, multi-tenant solutions that automate and facilitate the interaction of construction project participants throughout the life of a construction project. We focused initially on construction payment management, which is the monthly invoicing process that takes place between subcontractors and material suppliers and the general contractors, and then the process where the general contractor delivers the payment application to the owner. So we cover invoicing, legal documents, risk transfer, compliance, payments, lien waiver exchanges in that application. It’s about 60% of our business today. The other 40% are a number of related applications that we have either built or acquired that are used throughout the phases of a construction project.
WSA: Certainly, and so yeah talk about Submittal Exchange and CPM and some of your key processes and projects and how they are helping your clients.
Patrick Allin: So in addition to Construction Payment Management, that invoicing process, we’ve got a number of applications. Pre-Qualification Management, which is a process that takes place—it’s really a risk management tool that allows subcontractors to efficiently submit their financials and then insurability and work history, etc., to a general contractor, who then will determine whether they want to work with that subcontractor—and if they do, whether there is single contract limits or aggregate limits, etc., around their exposure. Invitation to bid, which typically takes the pre-qualified list of subcontractors and disseminates construction project documents—so the drawings, etc.—and other information, which is then used by the subcontractors to prepare bids. So our solution there is called GradeBeam.
Subcontractors, when they get a set of electronic documents, have to do what’s called estimating and takeoff—taking the electronic documents and turning it into quantities, etc., so they can then determine what their bids should be. One of the tools that we own is the estimating and takeoff tool called PlanSwift. Submittal Exchange is a document management, project management tool that’s used in both the design and the construction phase. So it facilitates the exchange of documents and the tracking of versions and changes and facilitates the communication process in the design phase between the owner, the architect, the general contractor, the engineers, etc., as they figure out how to take an architect’s drawings and turn them into a buildable set of construction drawings. And then throughout the actual construction, where the various parties need to communicate to effectively manage the construction process.
The last tool that we have acquired is LATISTA, and that was just in December. LATISTA is field management—so it’s tools that are used out in the midst of construction projects. So it’s all iPhone, iPad and Android device-based, and it allows people on a construction project as they are working around the site to carry out various activities like safety, punch-lists, etc. And it really, we think, represents the way technology will be both delivered and used on construction projects going forward.
Patrick Allin: So this whole suite of applications, and we are in the process of integrating those applications so we really end up with a fully integrated platform that the participants on a construction project can use from design to close out.
WSA: Excellent, and so in terms of some of the actual trends in the sector, how are you positioning the company to capitalize, and what makes you unique?
Patrick Allin: Well, it’s obviously a very, very big sector. And in markets we are in right now, which are Canada and the US and Australia, it’s about a $1.3 trillion construction market. For some of our solutions like the CPM—or the invoicing—solutions we are unique, there is no other competitor. If you are not using our technology, you are doing a lot of this manually, which is very inefficient and at times can be ineffective. So for 60% of our revenue we do not have a competitor. We actually have at this point, I think, 42 patents on CPM. So it is unique, there is just nothing else in the industry that facilitates that invoicing process the way we do.
Some of our other solutions, there are competitors, but we think as we move towards a full-blown, integrated platform, the fact that we have got all the information around the construction project through our invoicing system will become very valuable, and will change some of the value propositions that currently exist for some of the other applications.
WSA: Sure, and what are some of the other goals and milestones you are hoping to accomplish over the next year?
Patrick Allin: Well, our growth rate is incredibly high. The last quarter, so the December quarter, we reported 77% year-on-year growth. When you exclude the acquisitions, it’s 50% organic growth. In the SaaS space, we are the fastest growing SaaS company out there, and we believe we can sustain a high level of growth in the years going forward. So to manage that kind of growth and to continue to grow the organization and maintain high levels of service, etc.—it’s a real challenge. So our days are busy. There are huge opportunities, we are not in any way limited by the size of the market, and we are just growing as fast as we can.
WSA: Great, and perhaps you could walk us through your background and experience, Patrick, and talk a little bit about the management.
Patrick Allin: I started with Pricewaterhouse in Toronto, so I have a financial background. I became an Audit Partner, and my big client was one of the major banks in Canada. I then was involved in the consulting practice for a while, left, and joined a company a called Moore Corporation, where I was the Corporate Treasurer. Moore operated in I think about 52 countries around the world—multi-billion dollar, Toronto- and New York-listed stock. I then was sent down to the US to become sort of the CFO of a big part—about 70%—of the overall corporation. And then was asked to run the Canadian operating group and then the US operating group and the North American operating group.
I left and joined Pricewaterhouse again as a consulting partner in Chicago. With the merger of Coopers, I became the CFO of the global consulting practice, which was about a $6.5 to $7 billion business, 35,000 people, and ultimately became the Chief Operating Officer of that business. That business was sold to IBM; I left before the sale took place. Did a couple of small startup things before starting Textura. I really started looking at Textura in early 2004, and the company started—I think it was September 3, 2004—with three people. We are now 425 employees, something like that. So there’s been tremendous amount of growth in the last nine years in the world of Textura.
The rest of my team: My CFO, Jillian Sheehan, started her career at Arthur Andersen and then moved from Milwaukee back to Chicago when Andersen was having its difficulties, joined a smaller CPA firm, and it’s through them that Jillian used to come out and do all of our bookkeeping an hour a week. She about a year later joined us full time and has progressed to the point where she is now our CFO.
The two operations guys—the ones that sell, service and support CPM—have been with us for nine years. One of them runs Chicago East and Australia, the other one runs Chicago West and Canada. And they are the ones that really look after the client side of the business. Howard Niden, one of the co-founders, is our Chief Technology Officer or Chief Information Officer. And the head of corporate development, Franco Turrinelli, comes from William Blair, where he was a technology analyst for about 15 years.
And then we’ve got some of our other business units, which are run by the founders or the managers of the companies that we acquired.
WSA: Certainly, and as far as investors are concerned, Patrick, do you believe the financial community fully understands the Textura story and your message and upside?
Patrick Allin: You know, I think commercial construction is not a space the capital markets have had a huge amount of exposure to. I think everyone gets that commercial construction has inefficiencies that technology can certainly help with. Our revenue model is probably a little bit more complicated than other SaaS businesses. So, I think there are some that have done due diligence and spent time with the company and talked to our clients that really do get it. But I think there are others that—it’s something that takes a bit of effort to really have a good handle on. So I would say, generally speaking, probably not. The capital markets don’t quite get Textura. We have only been a public company for less than 12 months, and there is a learning curve I think for the markets and for the company in being a public company, and I think all that will sort of improve over the next 12 months or so.
WSA: Good, and so once again joining us today is Patrick Allin, the CEO for Textura Corporation, which trades on the New York Stock Exchange, ticker symbol TXTR, currently trading at $27.31 a share, market cap north of $670 million. And before we conclude here, Patrick, to briefly recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today?
Patrick Allin: In the capital markets, the holy trinity is revenue growth, profitability and cash flow. We’ve clearly demonstrated an ability to grow at a very rapid rate throughout our history, and we think we can sustain that. There is a huge amount of leverage in the financial model, which will become more evident over the next 12 or 18 months. So, I think as the market looks at us a year and a half, two years from now, they are going to see a rapidly growing company, highly profitable, generating a lot of free cash flow. Those latter two things, maybe a lot of people don’t see today because it’s not as evident in the numbers, but it will be over the next 18 to 24 months. And I think that’s the reason why people should invest—because those three things are what are key to the capital markets, and I think we can achieve all three in a relatively short period of time.
WSA: Well, we certainly look forward to continue to track the company’s growth and reporting your upcoming progress and would like to thank you for taking the time to join us today, Patrick, and update our investor audience on TXTR.
Patrick Allin: Thanks, Juan, appreciate it.