Moldflow Reports Year-over-Year Revenue Growth of 9% for
the First Quarter of Fiscal 2006
2 November 2005
FRAMINGHAM, Mass.--(BUSINESS WIRE)--Nov. 2, 2005--Moldflow
Corporation (NASDAQ:MFLO) today announced the results for its first quarter of
fiscal 2006. Worldwide revenue was $15.3 million for the first quarter of
fiscal year 2006, compared to $14.0 million for the first quarter of last
fiscal year, representing an increase of 9%.
On July 1, 2005, Moldflow adopted Financial Accounting
Standards No. 123(R), "Share-Based Payment," which requires companies
to recognize compensation expense related to share-based awards. Accordingly, a
charge of $539,000, net of related tax effects, was recorded in our first
quarter of fiscal 2006. Excluding the impact of these newly required expenses,
net income for the first quarter of fiscal 2006 was $569,000, or $0.05 per
diluted share. Net income for the first quarter, as reported under generally
accepted accounting principles ("GAAP"), was $30,000, or $0.00 per
diluted share.
In discussing the first quarter of 2006, Roland Thomas,
Moldflow Corporation's president and CEO said, "During the quarter, we saw
a number of factors come together putting pressure on our planned growth rate.
In a similar pattern to what we saw in the third quarter of fiscal 2005, a
number of significant transactions, predominantly in our European Manufacturing
Solutions business, extended beyond the end of September. We note that some of
the deals that slipped, accounting for most of the shortfall in that business
unit, did in fact close within weeks of the end of the first quarter. While
this makes for more volatile results, we believe it is a natural symptom of a
business successfully growing from a small number of larger transactions to a
more significant number of these transactions each quarter. The two other items
impacting our growth rate relative to our expectations, which primarily had an
effect on our Design Analysis Solutions business, were the negative effects of
currency movements, particularly the Yen and Euro, and accounting for the
impact of the chapter 11 filing of a long-standing customer."
Thomas continued, "Over the course of the first
quarter, both the Americas and Asia Pacific regions continued with strong sales
performances. The Americas region has now had five consecutive quarters of
year-over-year revenue growth driven by sales to companies in the electronics,
medical and molding markets, with strong sales of our flagship Moldflow
Plastics Insight product and Altanium hot runner process controllers this
quarter. Despite the currency movement, the Asia Pacific region continued its
momentum with sales to notable manufacturers such as Fuji Electric, Brother,
Canon, Nikon and Samsung Electric. Also during the quarter, our Japanese team
had a highly successful trade fair in Tokyo, which we believe will help support
the pipeline development for all products in this region moving forward."
"Our continued investment in research and development
produced several product launches during the quarter. Our Design Analysis
business unit successfully launched version 7.2 of our Moldflow Plastics
Advisers product, which included multiple user-driven productivity enhancements
and a variety of new features, as well as new versions of our connectivity
products to help make analysis more accessible to users of a variety of CAD
products. Our Manufacturing Solutions business unit also successfully launched
two product updates in the first quarter: Shotscope 4.0 and Moldflow Plastics
Xpert 4.0. Both of these products were enhanced to increase both manufacturing
and user efficiency. Finally, we are pleased to note that during the quarter we
began shipping our Altanium product from our new manufacturing facility in
Ireland. Having this facility up and running allows us to react more quickly to
fill orders for these products," Thomas concluded.
First Quarter Financial Highlights
-- Total revenue of $15.3
million increased 9% over the same
period in the prior
year.
-- Total product revenue of
$8.7 million increased 10% over the
same period of the prior
year.
-- Services revenue,
primarily comprised of revenue from annual
maintenance and support
contracts, was $6.5 million, an
increase of 8% over the
same period of the prior year.
-- Revenue from the Design
Analysis Solutions segment totaled
$11.3 million and
represented 74% of total revenue, a 7%
increase when compared
to the same period last year.
-- Revenue from the
Manufacturing Solutions segment totaled $4.0
million, contributing
26% of total revenue, an 18% increase
when compared to the
same period last year.
-- Regionally, revenue in
the Americas represented 36% of total
revenue, while revenue
in the Asia/Pacific and European
regions represented 33%
and 31% of total revenue,
respectively.
-- Approximately 84 new
customers were added during the quarter.
-- Positive cash generated
from operations was $1.5 million.
Business Outlook
The current business outlook is based on information as of
November 2, 2005 and is current as of that day only. Due to the uncertainties
related to the magnitude of the Company's equity-based compensation expense
during fiscal 2006, at this time we are not able to estimate the magnitude of
the impact of equity-based compensation expense on our net income per diluted
share for our second quarter or the remainder of the 2006 fiscal year.
Based on the results achieved in the first quarter with the
currency effects and the variability in our Manufacturing Solutions deal
cycles, we are taking a cautious approach and adjusting our full year fiscal
2006 revenue target and expect to achieve a 12% to 15% growth rate for fiscal
2006 when compared to fiscal 2005. We expect revenue for the second fiscal
quarter of 2006 to grow between 4% and 17% when compared to the same quarter
last year.
In keeping with our stated objective to generate revenue
growth in balance with earnings growth, we have taken action on a plan for a
selective restructuring of elements of our business and anticipate that we will
take a restructuring charge of between approximately $1.0 million and $1.5
million dollars in the second quarter. As a result, for the second quarter
Moldflow expects non-GAAP net income per diluted share, adjusted to exclude the
effects of net equity-based compensation expense and the restructuring charge,
to be between $0.12 and $0.21 per share. We expect full year diluted non-GAAP
earnings per share, which excludes net equity-based compensation expense and
restructuring charges, to be slightly less than previous guidance and in the
range of $0.71 to $0.85.
Use of Non-GAAP Financial Measures
Net income excluding net equity-based compensation expense
and net income per diluted share excluding net equity-based compensation
expense and restructuring charges are supplemental non-GAAP financial measures.
Moldflow is presenting these measures because management uses this information
in evaluating the results of the Company's operations and believes that this
information provides additional insight into our operating results, as well as
enables comparison of these results to prior periods. These measures should not
be considered an alternative to measurements required by GAAP, such as net
income and net income per diluted share, and should not be considered measures
of our liquidity. In addition, these non-GAAP financial measures may not be
comparable to similar measures reported by other companies. With respect to
non-GAAP financial measures for the first quarter of fiscal year 2006, the GAAP
financial measure most directly comparable to each non-GAAP financial measure
used or discussed in this press release and a reconciliation of the differences
between each non-GAAP financial measure and the comparable GAAP financial
measure are included in this press release after the unaudited condensed
consolidated financial statements and can be found on the Investors page of the
Moldflow corporate Web site at http://www.moldflow.com/stp/english/investors/index.htm
. Due to the uncertainties related to the magnitude of the Company's net
equity-based compensation expense and any restructuring charge during fiscal
2006, we are not able to estimate at this time the magnitude of the impact of these
expenses on our net income per diluted share for the second quarter or the
remainder of the 2006 fiscal year.
Financial Results
The unaudited condensed consolidated financial statements
for the period ended September 30, 2005 follow.
Information Dissemination
Moldflow will host a conference call to discuss the first
fiscal quarter of 2006 results and future outlook at 11:00 a.m. US Eastern time
today. A live Webcast of the conference call, together with this press release
and supplemental financial information, can be accessed through the Company's
Website at www.moldflow.com in the Investors section. In addition, the call,
press release and supplemental information will be archived and can be accessed
through the same link.
About Moldflow Corporation
Moldflow (NASDAQ:MFLO) is the leading global provider of
design through manufacturing solutions for the plastics injection molding
industry. Moldflow's products and services allow companies to address part and
mold design issues at the earliest stage and maximize productivity and
profitability on the manufacturing floor. Visit www.moldflow.com for more
information.
Note to editors: Moldflow and Moldflow Plastics Advisers,
Shotscope and Moldflow Plastics Xpert are trademarks or registered trademarks
of Moldflow Corporation or its subsidiaries worldwide. All other trademarks are
properties of their respective holders.
Cautionary Statement Regarding Forward-Looking Information
Mentioned
Last
Change
MFLO
13.88
0.37dollars or (2.73%)
Pursuant to the safe harbor provisions of the United States
Private Securities Litigation Reform Act of 1995, the Company notes that any
statements contained in this press release that are not historical facts are
forward looking statements. Such forward looking statements include, but are
not limited to, those regarding Moldflow's or management's intentions, hopes,
beliefs, expectations, projections or plans for the future and statements
regarding: (i) Moldflow's market leadership and competitive position in its
market segments, including prospects for Moldflow's business in Japan and (ii)
the Company's business outlook including revenue growth, earnings guidance and
planned restructuring. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
projected. These risks and uncertainties include: (i) with respect to the
Company's market leadership and competitive position, the risks that a renewed
economic downturn will adversely impact the market for the Company's products,
that competitors will emerge with greater resources or unforeseen technological
breakthroughs and that our Manufacturing Solutions products will have a longer
sales cycle than our Design Analysis products, and (ii) with respect to the
Company's business outlook, the risks that a weak world economy will slow
capital spending by the Company's prospective customers, that the Company may
not be able to recognize the revenue derived from orders received, that the
sales cycle may lengthen based on the larger average deal sizes for our
Manufacturing Solutions products, that foreign currency fluctuations may
adversely affect our financial results, that our distribution partners will not
achieve their revenue objectives, that the overall mix of revenue differs materially
from that projected, that the costs of complying with provisions of the
Sarbanes-Oxley Act of 2002 are greater than expected, that equity-based
compensation expense will continue to have a negative impact on our GAAP
operating profit and earnings per share calculations, and that changes in US or
foreign tax legislation, or on-going tax inquiries and the on-going tax audits
of our subsidiary companies including Australia may result in a higher level of
income tax expense than that projected, as well as other risks and
uncertainties detailed from time to time in reports filed by Moldflow with the
Securities and Exchange Commission, including the Company's Annual Report on
Form 10-K for the year ended June 30, 2005 as well as its subsequent quarterly
and annual filings. Revenue and earnings guidance offered by senior management
today represents a point-in-time estimate and is based on information as of the
date of this press release. Senior management has made numerous assumptions in
providing this guidance which, while believed to be reasonable, may not prove
to be accurate. In addition, as noted above, there are numerous factors that
may cause actual results to differ materially from the guidance provided. The
Company expressly disclaims any current intention or obligation to update the
guidance provided or any other forward-looking statement in this press release
to reflect future events or changes in facts assumed for purposes of providing
this guidance or otherwise affecting the forward-looking statements contained
in this press release.
Moldflow Corporation
Unaudited Consolidated Statement of Income
(in thousands, except per share data)
Three Months Ended
-------------------
September September
30,
25,
2005 2004
--------- ---------
Revenue:
Product
$8,734 $7,927
Services
6,546
6,055
---------
---------
Total
revenue
15,280 13,982
--------- ---------
Costs and expenses:
Cost of
product revenue
2,570 1,841
Cost of
services revenue
1,613
1,295
Research and
development
2,481
1,645
Selling and
marketing
5,650
4,695
General and
administrative
3,584
2,510
Amortization
of acquired intangible assets
49
79
--------- ---------
Total
operating costs and expenses
15,947 12,065
---------
---------
Income (loss) from operations
(667) 1,917
Interest income, net
562
346
Other income (loss), net
(19) (58)
--------- ---------
Income (loss) before income taxes
(124) 2,205
Provision for (benefit from) income taxes
(154)
460
---------
---------
Net income
$30 $1,745
========= =========
Net income per common share:
Basic
$- $0.16
Diluted
$- $0.15
Shares used in computing net income per common
share:
Basic
11,003 10,628
Diluted
11,821 11,362
Moldflow Corporation
Unaudited Condensed Consolidated Balance Sheet
(in thousands)
September June
30,
30,
2005
2005
--------- ---------
Assets
Current assets:
Cash and
cash equivalents
$52,117 $48,910
Marketable securities
10,508 11,323
Accounts
receivable, net
10,074 13,449
Inventories, prepaid expenses and other current
assets
6,940
6,983
--------- ---------
Total current assets
79,639 80,665
Fixed assets,
net
3,467 3,336
Goodwill and
other acquired intangibles assets,
net
20,091 20,177
Other
assets
2,753
2,851
---------
---------
Total assets
$105,950 $107,029
========= =========
Liabilities and
Stockholders' Equity
Current
liabilities:
Accounts
payable $2,373 $3,764
Accrued
expenses
9,405 10,165
Deferred
revenue
9,760 10,748
--------- ---------
Total current
liabilities
21,538 24,677
Deferred
revenue
1,222
1,124
Other long-term
liabilities
1,035
1,079
--------- ---------
Total liabilities
23,795 26,880
--------- ---------
Stockholders'
equity:
Common
stock
111
109
Additional paid-in capital
71,474 69,626
Retained
earnings
5,324
5,295
Accumulated other comprehensive income
5,246
5,119
--------- ---------
Total stockholders'
equity
82,155 80,149
--------- ---------
Total liabilities and
stockholders' equity $105,950 $107,029
=========
=========
Moldflow Corporation
Unaudited Condensed
Consolidated Statement of Cash Flows
(in thousands)
Three Months Ended
--------------------
September September
30, 25,
2005 2004
--------- ----------
Cash provided by operating activities
$1,469
$1,172
Cash provided by investing activities
319
994
Cash provided by financing activities
1,280 265
Effect of exchange rate changes on cash and cash
equivalents
139 461
--------- ----------
Net increase in cash and cash equivalents
3,207
2,892
Cash and cash equivalents, beginning of period 48,910 35,987
--------- ----------
Cash and cash equivalents, end of period
$52,117 $38,879
========= ==========
Moldflow Corporation
Unaudited Reconciliation of GAAP Statement of Operations to
Non-GAAP
Results
(in thousands, except per share data)
Three Months Ended
September 30, 2005
-----------------------------------
GAAP (a)
Adjustments Non- (b)
Results
to GAAP
GAAP
Results Results
------- --- ----------- -------
Revenue:
Product
$8,734 $- $8,734
Services
6,546 - 6,546
-------
-------
-------
Total revenue
15,280 - 15,280
-------
-------
-------
Costs and expenses:
Cost of
product
revenue
2,570 (15) (c) 2,555
Cost of
services
revenue
1,613 (31) (c) 1,582
Research and
development 2,481
(76) (c) 2,405
Selling and
marketing
5,650 (134) (c) 5,516
General and
administrative 3,584
(314) (c) 3,270
Amortization
of intangible assets
49 -
49
-------
-------
-------
Total operating expenses
15,947 (570) 15,377
-------
-------
-------
Income (loss) from operations (667)
570
(97)
Interest income, net
562 -
562
Other income (loss),
net
(19) -
(19)
------- ------- -------
Income (loss) before income taxes (124) 570
446
Provision for (benefit from) income
taxes
(154) (31) (d) (123)
-------
-------
-------
Net income
$30
$539 $569
=======
=======
=======
Net income per common share:
Basic
$-
$0.05
Diluted
$-
$0.05
Weighted average shares:
Basic
11,003
11,003
Diluted
11,821
11,948
Moldflow Corporation
Unaudited Reconciliation of GAAP Statement of Operations to
Non-GAAP
Results
(in thousands, except per share data)
Three Months Ended
September
25, 2004
-----------------------------------------
GAAP
(a) Adjustments Non- (b)
Results to GAAP GAAP
Results Results
------------- --- ----------- -------
Revenue:
Product
$7,927
$- $7,927
Services
6,055
-
6,055
-------------
----------- -------
Total revenue
13,982
- 13,982
-------------
----------- -------
Costs and expenses:
Cost of
product revenue 1,841
-
1,841
Cost of
services revenue 1,295
-
1,295
Research and
development 1,645
-
1,645
Selling and
marketing
4,695
-
4,695
General and
administrative 2,510
-
2,510
Amortization
of intangible
assets
79
79
-------
----------- -------
Total operating expenses
12,065
- 12,065
-------
----------- -------
Income (loss) from operations 1,917
-
1,917
Interest income, net
346
- 346
Other income (loss), net
(58) -
(58)
-------------
----------- -------
Income (loss) before income
taxes
2,205
-
2,205
Provision for (benefit from)
income
taxes
460
460
------
----------- -------
Net income
$1,745
$- $1,745
=============
=========== =======
Net income per common share:
Basic $0.16
$0.16
Diluted $0.15
$0.15
Weighted average shares:
Basic 10,628
10,628
Diluted
11,362
11,362
(a) The Unaudited Consolidated Statement of Operations, prepared
in accordance with
accounting principles generally accepted in
the United States of
America ("GAAP").
(b) The Unaudited Consolidated Statement of Operations, presented
on a basis other than
GAAP, is intended to enhance the
reader's understanding
of the Company's results from
operations.
(c) Stock-based compensation expense
(d) Tax benefit related to stock-based compensation expense
CONTACT: Moldflow Corporation
Dawn Soucier, 508-358-5848 x234
dawn_soucier@moldflow.com
SOURCE: Moldflow Corporation
