Ansys ( Nasdaq - ANSS ) -- War Chest Expands

Ansys (ANSS $80.00) reported excellent on target Q4 results.  Performance was affected by the slowing worldwide economy.  The company is the leading provider of engineering simulation software used in a wide range of industries and applications.  Poor conditions In Europe constrained results.  Sales climbed 15% to $808 million for the year.  In the quarter they rose 11%.  Earnings advanced 15% to $2.91 a share for all of 2012.  In the December period they improved 16% to $.79 a share.  Part of the favorable comparison resulted from share repurchases.  Cash increased $105 million during the year despite the buybacks.  Ansys also paid off $75 million in debt, leaving just $53 million to go.  Pretax margins remained around the 50% level. 

Organic growth is likely to remain below average in 2013.  But the build up in cash could lay the groundwork for another acquisition.  The company has a proven record of identifying key technologies and folding them in to its industry dominant platform.  Per share income could be amplified by further buybacks, as well.  The long term outlook remains positive.  Engineering simulation remains in an early stage of development.  Today's technology is likely to demonstrate incremental improvement over the next few years.  But it promises to reach a wider audience as hardware costs come down and emerging market customers make greater use of it.  The mathematics are likely to take several leaps forward before the industry achieves a long term plateau.  Presented with little direct competition, Ansys should capitalize on those breakthroughs and keep income rising at a fast pace well into the future.

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