The US is a nation of car enthusiasts, with almost 300 million vehicles on the road, which equates to almost one per person. The National Highway Traffic Safety Administration is responsible for the safety of these cars. As a federal agency, the watchdog has a serious job to perform. And it uses Bradford-on-Avon-based AB Dynamics to ensure the job is done right.
Founded in 1982, AB Dynamics has become a global leader in vehicle testing systems and equipment, from driving robots to advanced simulation software that mimics real-world conditions.
In most cases, the company sells products and technology to car manufacturers and testing specialists. But CEO James Routh also operates a track in California, where his company’s gadgets are used to test vehicles on behalf of customers. And that includes the American security regulator.
Things are going well in the entire group. When Midas recommended AB Dynamics in 2015, its shares were £2.34, its annual turnover was £16.5 million and its profits were £3.7 million. Since then, sales have increased sixfold, profits have more than quadrupled and shares have risen to £17.75. The number of employees has also exploded, from fewer than 70 nine years ago to about 500 today.
Routh believes there is still a lot more fuel in the tank. A certified engineer by training, he joined in 2018 with a mission to expand and professionalize the company, enter new markets, tighten systems and processes, and increase the amount of money from recurring sales. Progress has been made on all fronts and Routh now hopes to make rapid progress, more than doubling turnover over the next five years.
Drive: AB Dynamics has become a global leader in vehicle testing systems and equipment
His ambition is not just wishful thinking. The automotive industry is changing rapidly as cars become more complex, electric vehicles come into the picture and safety regulations become stricter.
In 2015, the Euro NCAP star system carried out fewer than 80 tests on cars before determining their safety profile. There are now 590 tests and this number is expected to rise to 700 in the short term. Tests are also more complicated. Driverless cars may still be a few years away, but assisted driving is all the rage, from obstacle warnings to cruise control and automatic braking.
Each of these features needs to be tested and AB Dynamics’ kit is considered one of the best on the market, with the ability to monitor how cars perform in millions of scenarios and even how sensors are affected by sunlight at different times of the day .
The company is also moving into new territory, developing technology that will allow mining companies to retrofit trucks with robots for use in difficult or dangerous conditions. The robots will be operated by mine personnel and commercial sales are expected to begin later this year.
Estate agents expect an 8 per cent rise in turnover to £109 million in the year to August, with a 7 per cent rise in profits to £17.4 million and a rise in dividend from 6.4p to at least 6.8p.
Midas judgment: Shares of AB Dynamics have risen more than sevenfold in the last nine years, and now could be a good time to take some profits. But like Synectics, this fast-growing British tech company is winning customers worldwide and Routh is a determined operator. At £17.75, the shares should still reward long-term investment.
Traded on: GOAL ticker: ABDP Contact: abdynamics.com or 01225 860200