CIMATRON CONFERENCE CALL SCRIPT
VEIDAN OPERATOR
Ladies and gentlemen, thank you for standing by.
Welcome to Cimatron's 4th Quarter 2012 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 - February
19th, 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
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CIMATRON CONFERENCE CALL SCRIPT
and in Israel, the impact of competition, supply constraints, as
well as certain other risks and uncertainties which are detailed in
Cimatron's filings with the various securities authorities.
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 SCRIPT
DANNY HARAN
Good morning and welcome to Cimatron’s fourth quarter 2012
results Conference Call.
We are very pleased to report an all-time record quarter,
rounding out the best year in Cimatron’s history. As we have said
many times in the past, the operating leverage in our businessthat is our cost structure and business model, allows us to
translate a significant portion of any revenue growth into
operating profit growth. This year was no exception, with 58% of
the revenue growth hitting the operating profit line.
Over the last three months, we declared two cash distributions
amounting in total to approximately $7.9M dollars. This came in
addition to two dividends which we declared and paid in 2012,
totaling $2.9M dollars. It is our honor to share the rewards of our
success with our shareholders, and we will continue to look at
further distributions, subject to our cash needs and market
conditions.
We are looking forward to another strong year in 2013.
We expect to release two major product versions shortly, both for
CimatronE and for GibbsCAM, and we are confident that they will
continue to support our business success and growth in all our
target markets.
Recently, we have been asked about our plans and involvement in
additive manufacturing, more popularly known as 3D Printing.
Allow me to take this opportunity to delve deeper into the topic.
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CIMATRON CONFERENCE CALL SCRIPT
First of all, as you well know, Cimatron is a software company.
More likely than not, we will remain in the software business, and
support this industry from the software side rather than getting
involved in the hardware side of additive manufacturing, including
machines or materials.
However, from the software side of additive manufacturing, we are
looking for ways that we can bring added value to our customers
and partners. We believe that additive manufacturing has great
potential in areas of manufacturing, such as prototyping,
conformal mold cooling or production of complex parts in small
quantities. Our focus is geared towards metal additive
manufacturing, which seems more tightly related to our
traditional manufacturing market.
In particular, we are exploring hybrid manufacturing, where
additive and subtractive technologies are used together, taking
advantage of the benefits that each technology offers. We are
currently in the early stages of our research, and it is too early to
state when and how exactly this will have a significant effect on
our business. But we believe that we are well positioned to serve
this segment of the market and enjoy the new opportunities that
may come with it.
In summary, we are pleased with our performance and growth in
2012 and we see ourselves in a great market position as we move
into 2013.
We hope to present an even stronger year in 2013, in terms of the
top line and even more so on the bottom line.
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CIMATRON CONFERENCE CALL SCRIPT
Ilan Erez, our CFO, will now review the financial statements.
Ilan, please.
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CIMATRON CONFERENCE CALL SCRIPT
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ILAN EREZ
Thank you Danny. Hello everybody and thank you for joining us.
Revenues for the fourth quarter of 2012 were 12.4 million dollars,
compared to 12.2 million dollars in the fourth quarter of 2011.
In 2012, revenues were 42.3 million dollars, compared to 40.7
million dollars in the corresponding period of 2011, representing
an increase of 7% on a constant currency basis.
The revenue breakdown in Q4/12 was as follows – license
revenues: 49%; maintenance revenues:
43%; and other
professional services revenues: 8%.
The geographical revenue breakdown for the quarter was as
follows: Europe: 44%; North America: 35%; Asia Pacific: 18%; and
Rest of the World: 3%.
Gross Margin for the fourth quarter was 89% of revenues, the
same as for the corresponding quarter of 2011.
In full 2012, gross margin was 88% of revenues, the same as in
2011.
Operating expenses in the fourth quarter amounted to 8.7 million
dollars, the same as in the fourth quarter of last year.
In full 2012, operating expenses were 31.3 million dollars,
compared to 30.8 million dollars in 2011, reflecting our increased
level of activity that accompanied the greater demand for our
products, as shown in our increased revenues.
CIMATRON CONFERENCE CALL SCRIPT
Operating profit in the fourth quarter was 2.3 million dollars,
compared to 2.2 million dollars in the corresponding quarter of
2011.
In 2012, operating profit increased by 18% to 6.1 million dollars,
from 5.1 million dollars in 2011.
Net profit for the fourth quarter was 1.7 million dollars, or 18
cents per diluted share, compared to net profit of 1.6 million
dollars, or 18 cents per diluted share recorded in the
corresponding quarter of 2011. In 2012, net profit was 4.4 million
dollars, or 47 cents per diluted share, compared to a net profit of
4.5 million dollars, or 48 cents per diluted share, in 2011.
The contrast between operating profit (which rose significantly in
2012 compared to 2011) and net profit (which was in 2012 at the
same level as in 2011) was mainly attributable to an increase in
income tax expense. Income tax expense was 26% of income
before taxes in 2012, causing a more significant reduction in net
profit, whereas it was only 10% of income before taxes in 2011.
The main reason for the higher effective tax rate in 2012 is the
Company’s having completed the use of its remaining U.S. tax loss
carry-forwards towards the end of 2011.
As of the end of 2012, our cash and cash equivalents balance, net
of short-term bank credit, was 11.9 million dollars. Our cash flow
from operating activities in 2012, excluding the one-time royalty
payment of 2.5 million dollars to the Office of Chief Scientist in
the Israeli Ministry of Industry, Trade and Labor, was 5.7 million
Dollars, an increase of 1.1 million dollars, or 24%, compared to
2011.
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CIMATRON CONFERENCE CALL SCRIPT
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. If there are any questions, please press the star
followed by the 1. There are no questions. Mr. Haran, would you
like to make your concluding statement?
CONCLUDING STATEMENT
Yes, thank you. On behalf of the 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 nice day.
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CIMATRON CONFERENCE CALL SCRIPT
OPERATOR
Thank you. This concludes the Cimatron fourth quarter 2012
results conference call. Thank you for your participation. You may
go ahead and disconnect.
(End of conference call)
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