Cimatron Ltd.
Q2/2011 Results Conference Call
August 4, 2011
Conference Coordinator:
Ladies and gentlemen, thank you for standing by.
Welcome to Cimatron's 2nd Quarter 2011 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 website at the investors' pages: www.cimatron.com
As a reminder this conference is being recorded, August 4th, 2011.
With us on the line today are: Mr. Yossi Ben-Shalom, Cimatron’s Chairman of the
Board, 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 contained in this conference call which are not historical facts contain forwardlooking information with respect to plans, projections, or future performance of the
Company, 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 dependence on economic and political conditions globally and in
Israel, the impact of competition, supply constraints, as well as certain other risks and
uncertainties which are detailed in the Company's filings with the various securities
authorities.
I would like to turn over the call to Mr. Danny Haran, Cimatron's president and CEO.
Mr. Haran, would you like to begin?
Danny Haran:
Good morning and welcome to Cimatron’s second quarter 2011 results Conference Call.
Once again, I am happy to be here and report a strong quarter. This has been one of our
strongest “second quarters” of all times. As far as operating and net profits go, this has
been the best ever Q2. We are pleased to see substantial year-over-year growth in new
license revenues, as well as moderate growth in maintenance sales, which is the more
stable part of our business. Furthermore, the growth and strong results are broad-based,
indicating good performance in all territories and all market segments. Our cash reserves,
at 14.5 million dollars, set a new record, even after the $1.2M dividend distributed recently,
and allow us to further distribute an additional dividend in a total amount of 2.2 million
dollars.
We have just released two significant software versions, one for CimatronE and one for
GibbsCAM. They contain hundreds of improvements, large and small, all targeted at
bringing more value to our customers and improving our competitive position. Following a
successful beta period, we are confident that these versions will help us continue the
growth throughout 2011 and beyond.
Alongside CimatronE version 10, we have officially released the NC SuperBox, which we
are starting to ship to the field. An innovative patent-pending solution, we believe it will
create additional recurring revenues and help us further differentiate ourselves in the
marketplace.
To summarize, we are very pleased with the developments in 2011 so far, and look
forward to more successful quarters to come.
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.
The results we will present on this call are on a non-GAAP basis, as we believe they better
represent the actual state of our business, and make comparisons to previous periods
easier. We have also published our results on a GAAP basis, as well as reconciliation
between results on a GAAP and non-GAAP basis, and those can be found in our press
release issued earlier today.
Revenues for the second quarter of 2011 were 10.0 million Dollars, compared to 8.4
million Dollars in the second quarter of 2010, an increase of 13.0% on a constant currency
basis.
In the first six months of 2011, revenues were 18.9 million Dollars, compared to 16.3
million Dollars in the corresponding period of 2010, an increase of 12.9% on a constant
currency basis.
Moreover, new licenses revenues increased 41% on a constant currency basis in Q2/2011
from the second quarter of 2010, reflecting the continuing recovery in our target markets.
The recurring revenues from maintenance contracts increased in Q2/11 by 6% year-overyear, on a constant currency basis.
The revenue breakdown in Q2/2011 was as follows – License revenues: 43%;
Maintenance revenues: 49%; and other professional services revenues: 8%. The
geographical revenue breakdown for the quarter was as follows: Europe: 49%, North
America: 31%, Asia Pacific: 15%, and Rest of the World: 5%.
Gross Margin for the quarter was 89% of revenues, compared to 83% in the second
quarter of 2010.
In the first six months of 2011, Gross margin was 88% of revenues, as compared to 84%
of revenues in the first half of 2010.
There are two main reasons for the improvement in gross margin from 2010 to 2011: 1.
Towards the end of 2010 we stopped selling in Italy a hardware-based measurement
product, the profitability of which was negligible, whereas management and personnel
attention required for selling it were significant; and 2. Because part of our cost of sales
consists of fixed costs, gross margins grow when revenues grow.
Operating expenses in the quarter amounted to 7.6 million dollars, compared to 6.4
million Dollars in the second quarter of last year. Approximately 440 thousand dollars of
the increase in expenses was attributable to the weakening of the Dollar relative to each of
the Euro and the Israeli Shekel, while most of the remainder of the increase in operating
expenses reflected our increased level of activity that accompanied the greater demand
for our products, as shown in our increased revenues.
In the first six months of 2011, operating expenses were 14.6 million dollars, compared to
13.0 million Dollars in the corresponding period of 2010, reflecting the same trends
exhibited in our Q2/2011 results.
Operating profit in the quarter increased 118% to 1.3 million dollars, compared to an
operating profit of 596 thousand dollars in the corresponding period of 2010.
In the first six months of 2011 operating profit increased 166% to 2.0 million dollars, from
739 thousand dollars in the corresponding period of 2010.
Net profit for the quarter increased to 1.3 million dollars, or 14 Cents per diluted share,
compared to a net profit of 433 thousand dollars, or 5 Cents per diluted share recorded in
the corresponding quarter of 2010.
In the first six months of 2011, Net profit was 2.0 million Dollars, or 22 Cents per diluted
share, compared to a net profit of 488 thousand Dollars, or 5 Cents per diluted share,
recorded in the corresponding period of 2010.
Our cash and cash equivalents balance as of the end of June 2011 increased to 14.5
million Dollars, compared to a balance of 10.2 million Dollars as of the end of 2010 and
13.0 million Dollars as of the end of March 2011, with positive cash flow from operating
activities of 4.6 million Dollars in the first half of 2011, as compared to 3.9 million Dollars of
positive cash flow from operating activities in the corresponding half of 2010, an increase
of 18% year over year.
We will now open the call for Questions and Answers. Operator, please.
(No questions. End of conference call)