CIMATRON CONFERENCE CALL Q1/13 TRANSCRIPT, MAY 13, 2013
VEIDAN OPERATOR
Ladies and gentlemen, thank you for standing by.
Welcome to Cimatron's 1st Quarter 2013 Results Conference Call.
All participants are at present in a listen-only mode.
Following management’s formal presentation, instructions will be
given for the question and answer session. For operator
assistance during the conference, please press * 0.
If you have not received a copy of today’s earnings release and
would like to do so, please download it from the company’s
website, www.cimatron.com, at the “Investors” page.
As a reminder, this conference is being recorded today - May
13th, 2013.
With us on the line today are:

Mr. Danny Haran, Cimatron's President and CEO; and

Mr. Ilan Erez, Cimatron's CFO.
Before I turn the call over to Mr. Danny Haran, I would like to
remind everyone that statements made during this conference
call that are not historical facts contain forward-looking
information with respect to plans, projections, or future
performance of Cimatron, the occurrence of which involve certain
risks and uncertainties, which could cause actual results to differ
materially from those currently anticipated. Such risks and
uncertainties include economic and political conditions globally
and in Israel, the impact of competition, supply constraints,
exchange rate fluctuations, as well as certain other risks and
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CIMATRON CONFERENCE CALL Q1/13 TRANSCRIPT, MAY 13, 2013
uncertainties that are detailed in Cimatron's filings with the U.S.
Securities and Exchange Commission.
The results that will be presented on this call are on a non-GAAP
basis, as Cimatron's management believes that such results better
represent the actual state of Cimatron's business, and make
comparisons to previous periods easier. Cimatron also publishes
its results on a GAAP basis, as well as reconciliation between
results on a GAAP and non-GAAP basis, and those can be found in
the press release issued earlier today. The term “Constant
Currency” relates to data, after eliminating from it the effect of
exchange rate fluctuations between comparable periods.
I would like to turn over the call to Mr. Danny Haran, Cimatron's
president and CEO.
Mr. Haran, would you like to begin?
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CIMATRON CONFERENCE CALL Q1/13 TRANSCRIPT, MAY 13, 2013
DANNY HARAN
Good morning and welcome to Cimatron’s first quarter 2013
results Conference Call.
We are pleased to report another solid first quarter, with record
license and record maintenance revenues for the first quarter of
any calendar year.
The strong 6% growth in maintenance revenues is very satisfying,
while the modest 2% growth in license revenues is below our
expectations. However, that figure is mostly the result of revenue
recognition considerations, and we believe we will be able to
recognize those revenues later this year. Furthermore, we expect
enhanced momentum and growth in product and services
revenues as the year progresses, as the new product versions are
more widely adopted in all territories.
We have continued our efforts in the Additive Manufacturing – or
as it is better known the 3D printing market, but as we said
before, this is a long-term effort, and we do not see meaningful
revenues yet.
We continue to explore partnerships, M&A opportunities, and
product development directions for this market. Just to be clear,
on the M&A side, we are looking for mature companies, with
revenues and profits, that possess technology that is relevant to
additive manufacturing.
In parallel, we continue to invest more in sales and marketing in
regions where we believe these efforts will enable us to increase
our product sales in the coming quarters.
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CIMATRON CONFERENCE CALL Q1/13 TRANSCRIPT, MAY 13, 2013
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Ilan Erez, our CFO, will now review the financial statements. Ilan,
please.
ILAN EREZ
Thank you Danny. Hello everybody and thank you for joining us.
Revenues for the first quarter of 2013 were 10.2 million dollars,
compared to 9.9 million dollars in the first quarter of 2012.
The revenue breakdown in Q1/13 was as follows – license
revenues: 44%; maintenance revenues:
49%;
and other
professional services revenues: 7%.
The geographical revenue breakdown for the quarter was as
follows: Europe: 49%; North America: 30%; Asia Pacific: 16%; and
Rest of the World: 5%.
Gross Margin for the first quarter was 88% of revenues, as
compared to 87% in the first quarter of 2012.
Operating expenses in the first quarter amounted to 8.0 million
dollars, compared to 7.5 million dollars in the first quarter of last
year. The increase mainly reflects our increased investment in
sales and marketing, as Danny mentioned earlier.
Operating profit in the first quarter was 1.0 million dollars,
compared to 1.1 million dollars in the corresponding quarter of
2012.
Net profit for the first quarter was 713 thousand dollars, or 8
cents per diluted share, compared to net profit of 986 thousand
dollars, or 11 cents per diluted share recorded in the
corresponding quarter of last year.
CIMATRON CONFERENCE CALL Q1/13 TRANSCRIPT, MAY 13, 2013
Income tax expense was 28% of income before taxes in the first
quarter of 2013, compared to 21% of income before taxes in the
first quarter of 2012. We expect income tax expense in full 2013
to be around 25% of income before taxes.
As of the end of March 2013, our cash and cash equivalents
balance, net of short-term bank credit, was 3.7 million dollars.
Due to the typical seasonality in our cash flows, we usually show
the highest cash balance by the end of June of each year. As of
today, our net cash balance has already increased by 1.5 million
dollars from the end of Q1, to approximately 5.2 million dollars.
We will now open the call for the Question and Answer session.
Operator, please.
Operator:
Thank you sir. Ladies and gentlemen, at this time
we will begin the question-and-answer session. If you have a
question, please press the star, followed by the 1, on your touchtone phone. If you wish to decline from the polling process, please
press the star, followed by a 2. Your questions will be polled in the
order they are received. The first question is from Anya Shelekhin
from Sidoti. Please go ahead.
Anya Shelekhin: Hi, I’d like to know, would it be possible for you
to give us your expected revenue growth numbers for over the
next quarter and over the next year, and could you break it down
by segment?
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CIMATRON CONFERENCE CALL Q1/13 TRANSCRIPT, MAY 13, 2013
Ilan Erez:
Well, basically, we do not provide guidance, so we
can not discuss any specific revenues or expectations. Typically we
could say that our maintenance revenues are around 50% of our
total revenues, somewhere between 48-50%. License revenues
are around 44-45% and the rest is other professional services,
mainly training that we provide together with licenses that we
sell.
Anya Shelekhin: Okay, thank you.
Operator:
If there are any additional questions please press
the star followed by the one on your touch-tone phone. If you
wish to cancel your request please press the star followed by a 2.
The next question is from Lawrence Atkins, please go ahead.
Lawrence Atkins: Thank you for taking my question. Are there any
expectations of dividends for the next quarter?
Ilan Erez:
Well, the dividends that we paid in the last 2 years
were always special cash dividends, subject to the board of
director’s resolution, so we do not have a fixed dividend payment
policy and if and when further dividends will be done, they will be
based on further board resolutions.
Lawrence Atkins: Thank you.
Operator:
There are no further questions at this time. Mr.
Haran would you like to make your concluding statement?
Danny Haran: Thank you. Well, on behalf of management I would
like to thank you for your continued interest and long term
support of our business. I do look forward to speaking with you
and updating you again next quarter. Thank you and have a good
day.
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CIMATRON CONFERENCE CALL Q1/13 TRANSCRIPT, MAY 13, 2013
Operator:
Thank you. This concludes the Cimatron 1st
Quarter 2013 Results Conference Call. Thank you for your
participation. You may go ahead and disconnect.
(End of conference call)
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