$5.0 Million Net Cash Generated by Operating Activities in the First Half of 2008, an Increase of 101% Year-Over-Year
Financial Highlights:
- Revenues on a non-GAAP Basis: $10.9 million in Q2/08 as
compared to $5.5 million in Q2/07
- Net Income on a non- GAAP Basis: $0.74 million in Q2/08 as
compared to $0.30 million in Q2/07
- Revenues on GAAP Basis: $10.7 million in Q2/08 as compared to
$5.5 million in Q2/07
- Net Income on GAAP Basis: $0.20 million in Q2/08 as compared to
$0.29 million in Q2/07
Cimatron presents record 99% year-over- year revenue growth in Q2 2008 on a non-GAAP basis, and as a result, 146% year-over-year growth in the quarterly net income on a non-GAAP basis, despite unfavorable currency exchange rates and a challenging global economic environment. Furthermore, net cash generated in the first half of 2008 was $5.0 million, an increase of 101% as compared to the first half of 2007. The revenue growth was attributed to both organic growth and the accretive impact of the merger transactions with Microsystem and Gibbs.
Revenue on a non-GAAP basis in 2008 excludes the effect of business combination accounting rules on the acquired deferred maintenance revenue balance of Gibbs. Expenses on a non-GAAP basis exclude the non-cash amortization of acquired intangible assets of Microsystem and Gibbs and the deferred taxes related to these acquisition- related items.
The following provides further details on Cimatron's GAAP and non-GAAP figures in the second quarter and the first half of 2008:
Revenues for the second quarter of 2008 increased 94% to $10.7 million, as compared to $5.5 million in the second quarter of 2007. For the first six months of 2008, revenue increased by 91% to $20.7 million, compared to $10.8 million in the same period of 2007. The increase was attributed both to organic growth and to the consolidation of Microsystem's and Gibbs' results.
Gross Income for the second quarter of 2008 was $8.8 million as compared to $4.7 million in the same period in 2007. Gross margin in the second quarter was 82%, compared to 85% in Q2 2007. For the first six months of 2008, gross income was $16.8 million, compared to $9.2 million in the same period of 2007. Gross margin for the six months ended on June 30th, 2008 was 81% of revenues as compared to 85% of revenues in the same period of 2007.
The decrease in gross margin is mainly attributed to business combination accounting rules, and as expected, to Microsystem's lower margins on third party hardware products sales as compared to the margins on Cimatron software sales.
Operating Income in the second quarter of 2008 was $73 thousand, compared to operating income of $282 thousand in the second quarter of 2007. In the first six months of 2008, Cimatron recorded an operating loss of $(145) thousand, compared to operating income of $395 thousand in the first six months of 2007.
Net Income for the quarter was $205 thousand, or $0.02 per diluted share, compared to net income of $291 thousand, or $0.04 per diluted share recorded in the same quarter of 2007. In the first six months of 2008 net loss was $(93) thousand, or $(0.01) per diluted share, compared to net income of $472 thousand, or $0.06 per diluted share, in the first six months of 2007.
Revenues on a non-GAAP basis for the second quarter of 2008 increased 99% to $10.9 million, as compared to $5.5 million in the second quarter of 2007. For the first six months of 2008, revenue increased by 96% to $21.2 million, compared to $10.8 million in the same period of 2007.
Gross Income on a non-GAAP basis for the second quarter of 2008 was $9.2 million as compared to $4.7 million in the same period in 2007. Gross margin on a non-GAAP basis in the second quarter of 2008 was 84%, compared to 85% in Q2 2007. In the first six months of 2008, gross income on a non-GAAP basis increased 92% to $17.6 million, compared to $9.2 million in the first six months of 2007. Gross margin on a non-GAAP basis for the six months ended on June 30th, 2008 was 83% of revenues as compared to 85% of revenues in the same period of 2007.
The decrease in gross margin is mainly attributed to Microsystem's lower margins on third party hardware products sales as compared to the margins on Cimatron software sales.
Operating Income on a non-GAAP basis in the second quarter of 2008 was $568 thousand, as compared to non-GAAP operating income of $292 thousand in the second quarter of 2007. In the first six months of 2008, Cimatron reports operating income increase to $844 thousand, compared to operating income of $415 thousand in the first six months of 2007.
Net Income on a non-GAAP basis in the second quarter of 2008 increased 146% to $740 thousand or $0.08 per diluted share, as compared to non-GAAP net income of $301 thousand, or $0.04 per diluted share in the second quarter of 2007. In the first six months of 2008, net profit increased by 98% to $974 thousand, or $0.10 per diluted share, compared to a net profit of $492 thousand, or $0.06 per diluted share, in the first six months of 2007.
Commenting on the results, Danny Haran, President and Chief Executive Officer of Cimatron, said, "We are pleased to present another quarter of record revenues and year-over-year record revenue growth. 98% net income growth on a non-GAAP basis in the first half of 2008 and 101% growth in net cash generated from operating activities in the same period represent the continuous improvement of our core business attributed both to the merger transactions with Microsystem and Gibbs, as well as to continuous organic growth. Cimatron's global distribution network is broadening its product offering with GibbsCam solutions and already recorded initial GibbsCam sales. We face a challenging currency environment, and are continuously monitoring and dealing with its effects on our financial results," concluded Mr. Haran.
Reconciliation between results on a GAAP and Non-GAAP basis is provided in a table immediately following the Consolidated Statements of Operation (Non-GAAP basis). Non-GAAP financial measures consist of GAAP financial measures adjusted to include recognition of deferred revenues of acquired companies and to exclude amortization of acquired intangible assets and deferred income tax, as well as certain business combination accounting entries. The purpose of such adjustments is to give an indication of our performance exclusive of non-GAAP charges and other items that are considered by management to be outside our core operating results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.
Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. We believe that these non- GAAP measures help investors to understand our current and future operating cash flow and performance, especially as our two most recent acquisitions have resulted in amortization and non-cash items that have had a material impact on our GAAP profits. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.
Conference Call
Cimatron's management will host a conference call with the investment community tomorrow, Thursday, August 28th, 2008, at 9:00 EST, 16:00 Israel time.
To participate, please call one of the following teleconferencing numbers. Please begin placing your call at least 5 minutes before the conference call commences.
USA: +1-888-668-9141
Israel: 03-9180610
International: +972-3-9180610
For those unable to listen to the live call, a replay of the call will be available from the day after the call under the investor relations section of Cimatron's website, at: http://www.cimatron.com
About Cimatron
With over 25 years of experience and more than 40,000 installations worldwide, Cimatron is a leading provider of integrated, CAD/CAM solutions for mold, tool and die makers as well as manufacturers of discrete parts. Cimatron is committed to providing comprehensive, cost-effective solutions that streamline manufacturing cycles, enable collaboration with outside vendors, and ultimately shorten product delivery time.
The Cimatron product line includes the CimatronE and GibbsCAM brands with solutions for mold design, die design, electrodes design, 2.5 to 5 axes milling, wire EDM, turn, Mill-turn, rotary milling, multi-task machining, and tombstone machining. Cimatron's subsidiaries and extensive distribution network serve and support customers in the automotive, aerospace, medical, consumer plastics, electronics, and other industries in over 40 countries worldwide.
Cimatron is publicly traded on the NASDAQ exchange under the symbol CIMT. For more information, please visit the company web site at: http://www.cimatron.com.
Safe Harbor Statement
This press release includes forward looking statements, within the meaning of the Private Securities Litigation Reform Act Of 1995, which are subject to risk and uncertainties that could cause actual results to differ materially from those anticipated. Such statements may relate to the company's plans, objectives and expected financial and operating results. The words "may," "could," "would," "will," "believe," "anticipate," "estimate," "expect," "intend," "plan," and similar expressions or variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of the future performance and involve risks and uncertainties, many of which are beyond the company's ability to control. The risks and uncertainties that may affect forward looking statements include, but are not limited to: currency fluctuations, global economic and political conditions, marketing demand for Cimatron products and services, long sales cycle, new product development, assimilating future acquisitions, maintaining relationships with customers and partners, and increased competition. For more details about the risks and uncertainties of the business, refer to the Company's filings with the Securities and Exchanges Commission. The company cannot assess the impact of or the extent to which any single factor or risk, or combination of them, may cause. Cimatron undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
CIMATRON LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(US Dollars in thousands, except for per share data)
June 30, June 30,
2008 2007 2008 2007
Total revenue 10,701 5,511 20,707 10,844
Total cost of revenue 1,922 806 3,916 1,677
Gross profit 8,779 4,705 16,791 9,167
Research and
development
expenses, net 1,833 1,011 3,590 2,107
Selling, general and
administrative expenses 6,873 3,412 13,346 6,665
Operating (loss) income 73 282 (145) 395
Financial Income, net. 80 76 35 145
Taxes on Income 48 (2) 7 (4)
Other 4 (65) 10 (64)
Net income (loss) $ 205 $ 291 $ (93) $ 472
Net income (loss) per
share - basic and
diluted $ 0.02 $ 0.04 $ (0.01) $ 0.06
Weighted average number
of shares outstanding
Basic EPS (in
thousands) 9,386 7,868 9,371 7,852
Diluted EPS (in
thousands) 9,441 7,967 9,425 7,871
CIMATRON LIMITED
RECONCILIATION BETWEEN GAAP AND NON-GAAP INFORMATION
(US Dollars in thousands, except for per share data)
Three months ended
June 30,
2008 2007
GAAP Adj. NON-GAAP GAAP Adj. NON-GAAP
Total revenue (1) 10,701 248 10,949 5,511 - 5,511
Total cost of
revenue (2) 1,922 (147) 1,775 806 - 806
Gross profit 8,779 395 9,174 4,705 - 4,705
Research and
development
expenses, net 1,833 - 1,833 1,011 - 1,011
Selling, general
and administrative
expenses (2) 6,873 (100) 6,773 3,412 (10) 3,402
Operating income
(loss) 73 495 568 282 10 292
Financial Income,
net. 80 - 80 76 - 76
Taxes on Income (3) 48 40 88 (2) - (2)
Other 4 - 4 (65) - (65)
Net income (loss) $ 205 $ 535 $ 740 $ 291 $ 10 $ 301
Net income (loss)
per share - basic
and diluted $ 0.02 $ 0.08 $ 0.04 $ 0.04
Weighted average
number of shares
outstanding
Basic EPS (in
thousands) 9,386 9,386 7,868 7,868
Diluted EPS (in
thousands) 9,441 9,441 7,967 7,967
(1) Non-GAAP adjustment related to Gibbs' assumed support contracts that
will not be recognized on a GAAP basis in fiscal 2008 or thereafter
due to business combination accounting rules.
(2) Non-GAAP adjustment to exclude non-cash amortization of acquired
intangible assets.
(3) Non-GAAP adjustment to exclude deferred taxes related to business
combination accounting rules.
CIMATRON LIMITED
RECONCILIATION BETWEEN GAAP AND NON-GAAP INFORMATION (Cont.)
(US Dollars in thousands, except for per share data)
Six months ended
June 30,
2008 2007
GAAP Adj. NON-GAAP GAAP Adj. NON-GAAP
Total revenue (1) 20,707 495 21,202 10,844 10,844
Total cost of
revenue (2) 3,916 (294) 3,622 1,677 1,677
Gross profit 16,791 789 17,580 9,167 9,167
Research and
development
expenses, net 3,590 3,590 2,107 2,107
Selling, general
and administrative
expenses (2) 13,346 (200) 13,146 6,665 (20) 6,645
Operating income
(loss) (145) 989 844 395 20 415
Financial Income,
net. 35 35 145 145
Taxes on Income
(3) 7 78 85 (4) (4)
Other 10 10 (64) (64)
Net income (loss) $ (93) $ 1,067 974 472 $ 20 492
Net income (loss)
per share - basic
and diluted $ (0.01) $ 0.10 $ 0.06 $ 0.06
Weighted average
number of shares
outstanding
Basic EPS (in
thousands) 9,371 9,371 7,852 7,852
Diluted EPS (in
thousands) 9,425 9,425 7,871 7,871
(1) Non-GAAP adjustment related to Gibbs' assumed support contracts that
will not be recognized on a GAAP basis in fiscal 2008 or thereafter
due to business combination accounting rules.
(2) Non-GAAP adjustment to exclude non-cash amortization of acquired
intangible assets.
(3) Non-GAAP adjustment to exclude deferred taxes related to business
combination accounting rules.
CIMATRON LIMITED
CONSOLIDATED BALANCE SHEETS
(US Dollars in thousands)
June 30, December 31,
2008 2007
ASSETS
CURRENT ASSETS:
Total cash, cash equivalents and
short-term investments $ 9,169 $ 9,026
Trade receivables 7,740 7,308
Other current assets 2,835 1,467
Total current assets 19,744 17,801
Deposits with insurance companies and
severance pay fund 3,298 2,703
LONG-TERM INVESTMENTS:
Marketable investments - 1,158
Net property and equipment 1,556 1,337
Total other assets 14,412 4,328
Total assets $ 39,010 $ 27,327
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $ 129 $ 791
Trade payables 2,197 2,258
Accrued expenses and other liabilities 9,056 7,889
Deferred revenues 5,171 742
Total current liabilities 16,553 11,680
LONG-TERM LIABILITIES:
Accrued severance pay 4,597 3,929
Long-term loan 390 403
Other 1,910 282
Total long-term liabilities 6,897 4,614
Minority interest 51 63
Total shareholders' equity 15,509 10,970
Total liabilities and shareholders'
equity $ 39,010 $ 27,327
Contact:
Ilan Erez, Chief Financial Officer Yael Nevat,
Cimatron Ltd. Commitment-IR.com
Tel.: +972-3-531-2121 Tel: +972-9-741 8866
E-mail: ilane@cimatron.com E-mail: yael@commitment-IR.com