Moldflow Announces Significant Revenue, Net Income And EPS Growth For Q4 And Fiscal Year 2005

FRAMINGHAM, Mass.—(BUSINESS WIRE)—Aug. 11, 2005— Moldflow Corporation (NASDAQ: MFLO) today announced the results for its fourth quarter and fiscal year ended June 30, 2005, which include:

-- Full fiscal year 2005 revenue of $64.4 million, an increase of 32% from revenue of $48.7 million in fiscal 2004.

-- Net income for full fiscal year 2005 of $6.8 million, or $0.58 per diluted share, up from $2.6 million, or $0.24 per diluted share in fiscal 2004, representing increases of 157% and 142%, respectively.

-- Fourth quarter revenue of $18.3 million and net income of $1.4 million, or $0.12 per diluted share, representing 20% increases in both revenue and earnings, respectively, from the corresponding quarter of fiscal 2004.

Roland Thomas, Moldflow's president and CEO said, "I am pleased to report our fiscal 2005 results in which we saw strong operating performance as well as significant year-over-year increases in both revenue and earnings per share. We delivered industry leading growth in our Design Analysis business unit, as well as substantial growth over a transitional year for our Manufacturing Solutions business unit. We continued our forward progress toward achievement of the strategic goals we had defined for our business, which include the worldwide commercialization of our hot runner process control products, penetration of the design analysis mid market, increased investments in Asia, the expansion of our sales network, and maintaining a balance between revenue growth and earnings growth."

Full Fiscal Year 2005 Highlights:

-- Executed first full year with two strategic business units.

-- Established strategic marketing relationship with SolidWorks to bring Moldflow analysis capabilities to their worldwide user base.

-- Released Moldflow Plastics Insight 5.0.

-- Announced expanded structural CAE interfaces for ANSYS and Abaqus.

-- Established manufacturing operations with Yudo, Ltd. in China for hot runner process controllers.

-- Expanded our Manufacturing Solutions sales network throughout the Americas, Europe and Asia Pacific with the addition of 13 new representatives.

-- Awarded important patents for Dual Domain(TM) and Mold Mounted Hot Runner Process Control technologies.

-- Held first International User Group Conference in Tokyo, Japan.

In discussing the fourth quarter of 2005, Mr. Thomas commented, "During the fourth quarter, we saw year-over-year revenue growth across all regions we serve including, for the third consecutive quarter, the Americas. It is worthwhile to note that this strong growth is fully comparable to the fourth quarter of fiscal 2004 as American MSI was acquired in January 2004. While we noted strong sales activity in each of our business units during the quarter, we also saw increased professional fees related to Sarbanes-Oxley Section 404 compliance and audit. In spite of this expense, which was heaviest in the fourth quarter, we still experienced a more than two-fold increase in profitability in fiscal 2005 as compared to fiscal 2004."

Thomas continued, "Over the course of the fiscal year, our Design Analysis business unit produced 25% year-over-year overall growth with 36% year-over-year product growth. These industry leading growth rates clearly reflect our position in the market as the pre-eminent supplier of advanced CAE solutions to the injection molding plastics market. Over the fourth quarter, this business unit produced double digit revenue growth with particular strength in the Asia Pacific region. In fact, during the fourth quarter our Japanese sales team sold its 1,000th seat of our flagship MPI product in Japan. This milestone clearly demonstrates that the implementation of analysis into the earliest stages of the design to manufacture process is a worldwide imperative and Moldflow is the preferred technology supplier to the market."

"In our Manufacturing Solutions business unit, over fiscal 2005, the first full year of the combined American MSI and Moldflow businesses, we achieved $17.2 million in revenue. In the twelve-months prior to the acquisition of American MSI, these separate businesses generated approximately $13.8 million of revenue. This 25% increase shows solid progress and validates our underlying analysis of the business combination. I am also pleased to report that during the fourth quarter, the Manufacturing Solutions business unit contributed a positive net operating margin, which represents the achievement of one of our fiscal 2005 goals. Over the quarter, we noted increased interest in both traditional shop floor and Altanium(R) hot runner process control products, as well as a growing pipeline of deals. We also took further steps to extend our sales and distribution reach via an extension to our agreement with Yudo Ltd. allowing them to manufacture our Altanium products for sale in China. This allows us to meet the needs of the rapidly expanding Asian manufacturing market and represents yet another step towards our goal of driving more of our revenue through indirect channels," said Thomas.

Fourth Quarter Highlights

-- Total revenue of $18.3 million increased 20% over the same period in the prior year and 15% when compared to the preceding quarter. Changes in foreign currency exchange rates contributed 2% and (3%) to those totals, respectively.

-- Total product revenue of $11.3 million increased 25% over the same period of the prior year and 19% when compared to the preceding quarter. Changes in foreign currency exchange rates contributed 1% and (3%) to those totals, respectively.

-- Services revenue, primarily comprised of revenue from annual maintenance and support contracts, was $7.0 million, an increase of 13% over the same period of the prior year and 10% when compared to the preceding quarter. Changes in foreign currency exchange rates contributed 4% and (2%) to those totals, respectively.

-- Revenue from the Design Analysis Solutions segment totaled $12.7 million and represented 70% of total revenue.

-- Revenue from the Manufacturing Solutions segment totaled $5.5 million, contributing 30% of total revenue.

-- Regionally, revenue in the Americas represented 38% of total revenue, while revenue in the Asia/Pacific and European regions represented 33% and 29% of total revenue, respectively, with approximately 78 new customers added during the quarter.

As of June 30, 2005, the Company had $60.2 million in cash and marketable securities and no long-term debt. Cash flow from operations for the fourth quarter of fiscal 2005 was $1.3 million. For the full fiscal 2005 year, operations generated $6.3 million of cash.

Mr. Thomas noted, "Moldflow took many significant steps in fiscal 2005 towards the achievement of our strategic product vision and longer-term stated financial goals. As we look forward to fiscal 2006, we expect continued revenue growth driven by the spending in our end user markets and our expansion into new markets. We intend to focus our products and services to meet the ever changing demands of our diverse customer base. At the same time, we will maintain a focus on continued profitable growth and increased shareholder value."

Business Outlook

The current business outlook is based on information as of August 11, 2005 and is current as of that day only. This outlook does not include the expenses associated with equity-based compensation. Beginning with fiscal 2006, the Company will begin recording expense for equity-based compensation as required by the SEC and FASB rules.


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