FRAMINGHAM, MA – August 23, 2007 – Moldflow Corporation (NASDAQ: MFLO) today announced preliminary results for the fourth quarter and full 2007 fiscal year which were in line with the Company’s previously issued guidance and reflect the sale of the assets of the Manufacturing Solutions business division on June 30, 2007. As discussed in more detail below, the results of operations reported in this release are preliminary, subject to the resolution of comments received in the normal course from the Securities and Exchange Commission concerning one aspect of the Company’s revenue recognition practices.
Preliminary Results for the Fourth Quarter of Fiscal 2007:
- Revenue of $15.0 million was up 17% from the corresponding quarter of fiscal 2006 and 2% sequentially.
- Total product revenue of $7.5 million represented a 20% increase over the same period of the prior year, and a 7% sequential decrease.
- Total services revenue of $7.5 million represented a 13% increase over the same period of the prior year, and a 12% sequential increase.
- Non-GAAP net income from continuing operations was $2.8 million, or $0.23 per diluted share, up 38% from our fourth fiscal quarter of 2006; net income from continuing operations as reported in accordance with GAAP was $2.0 million or $0.17 per diluted share, which included a charge of $850,000, net of related tax effects, for share-based compensation expense, and compared to $907,000 or $0.08 per diluted share in the same period of the prior fiscal year.
- Operating activities generated $4.0 million dollars of cash during the fourth quarter.
Preliminary Results for the Full 2007 Fiscal Year:
- Revenue of $55.9 million was up 14% from fiscal 2006.
- Total product revenue of $28.4 million represented an increase of 16% over fiscal 2006.
- Total services revenue of $27.5 million represented an increase of 12% over fiscal 2006.
- Non-GAAP net income from continuing operations was $10.6 million, or $0.89 per diluted share, up 20% from the full fiscal 2006 year; net income from continuing operations as reported in accordance with GAAP was $8.5 million, or $0.73 per diluted share, which included a charge of $2.0 million, net of related tax effects, for share-based compensation expense, and compared to $5.3 million or $0.45 per diluted share for the full fiscal 2006 year.
- EBITDA for the full fiscal 2007 year was $11.4 million, an increase of 15% over the same period of the prior year.
- Operating activities generated $12.2 million of cash for the full fiscal 2007 year.
“We are very pleased with the fourth quarter results which were in line
with the upper range of our expectations. Particularly noteworthy was the strength
of the sales performances in North America, which provided its highest quarterly
year-on-year growth rate in Moldflow’s history, and in Asia which continues
to produce strong results quarter after quarter,” said Roland Thomas,
Moldflow Corporation’s president and CEO. “Fiscal 2007 has produced
solid results for Moldflow. During the year we provided the market with major
releases of our two main products, Moldflow Plastics Advisers® and Moldflow
Plastics Insight®, and continued our geographic expansion by targeting resources
on emerging growth regions. This focus allowed us to grow our total revenue
14% year-over-year, a marked improvement over fiscal 2006. As we head into fiscal
2008, we are confident in the strength of our core business and believe we are
strongly positioned to take advantage of the continuing growth of the worldwide
CAE market and further our leadership position.”
Thomas concluded, “The sale of our Manufacturing Solutions business division
to Husky Injection Molding Systems Ltd. in the fourth quarter, and the subsequent
transition of this business division have been smooth. We believe the transaction
will not only benefit both companies, but also the customers who will now be
supported by the Husky worldwide infrastructure. The sale, which included substantially
all of the net assets of the division, did not include the software portion
of the Moldflow Plastics Xpert® (MPX®) product, which Husky will resell.
We look forward to a productive and on-going relationship with Husky as we jointly
provide service and product upgrades to our mutual MPX customer base.”
SEC Comment Letter
In December 2006, the Company received a comment letter from the SEC's
Division of Corporation Finance which was made in the normal course of the SEC’s
review of the Company’s periodic filings. Specifically, the Company is
currently discussing with the SEC its policies for determining the fair value
of maintenance contracts when they are sold to customers together with perpetual
licenses for software products. Generally accepted accounting principles require
that the Company determine what portion of the revenue to recognize in the current
period and what portion to recognize over the term of the maintenance contract.
This determination requires significant judgment. Should the SEC not agree with
the Company’s judgments in this area, revenue from certain sales may be
required to be recognized in different time periods, both historically and prospectively.
The SEC’s comments do not question the validity of the orders recorded
or the collectibility of the related receivables, and do not impact the Company’s
cash position. The Company is in the process of responding to the SEC’s
comments but, as that process is on-going, the results presented today should
be considered preliminary until the Company files its Annual Report on Form
10-K for the fiscal year ended June 30, 2007.
Business Outlook
The Company is providing preliminary fiscal 2008 guidance below. This
guidance has been prepared on the same basis as that of the Company’s
preliminary 2007 financial results and is subject to the conclusion of the on-going
SEC comment letter process described earlier in this press release. This guidance
is provided on both a GAAP and non-GAAP basis. Non-GAAP guidance excludes the
estimated charges for share-based compensation costs. Because there are significant
limitations in estimating the impact of share-based compensation costs and related
taxes, the tax benefits and estimated charges associated with share-based issuances
are unpredictable. For these reasons, the actual impact of share-based compensation
on our financial results may differ materially from the estimated amounts included
in the guidance below.
The current business outlook is based on information as of August 23, 2007 and is current as of that day only. For our full fiscal 2008 year we expect revenue to grow in the range of 10% to 13% when compared to fiscal 2007. We expect EBITDA to grow in the range of 13% to 20% in fiscal 2008 when compared to fiscal 2007. We expect non-GAAP net income per diluted share of approximately $0.94 to $1.00, based upon an estimated 12.1 million diluted shares. Non-GAAP net income per diluted share excludes charges for share-based compensation expenses which are expected to be approximately $1.8 million, net of related tax effects, and assumes an effective tax rate of approximately 21%. GAAP net income per diluted share for fiscal 2008 is expected to be between $0.78 and $0.84 based upon an estimated 12.1 million diluted shares. This GAAP estimate assumes an annual effective tax rate of approximately 25%.
Use of Non-GAAP Financial Measures
The Company has provided non-GAAP net income, non-GAAP net income per diluted
share and EBITDA as supplemental measures regarding the Company’s operating
performance. Non-GAAP net income and non-GAAP net income per diluted share exclude
the impact of share-based compensation expense and therefore have not been calculated
in accordance with GAAP. EBITDA is defined as GAAP net income from continuing
operations plus any interest expense, income taxes, depreciation, amortization
and share-based compensation expense less interest earned and therefore has
not been calculated in accordance with GAAP. Moldflow is presenting these measures
because management uses this information in evaluating the results of the Company’s
operations and for internal planning and forecasting purposes 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 from continuing operations and net income per diluted share from
continuing operations, and should not be considered a measure of our liquidity.
In addition, these non-GAAP financial measures may not be comparable to similar
measures reported by other companies. With respect to the non-GAAP financial
measures for the fourth quarter, the full 2007 fiscal year and as presented
in our business outlook for fiscal 2008, the GAAP financial measures 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 and can be found on the Investors page of the Moldflow Web site at
http://www.moldflow.com/stp/english/investors/index.htm.
Preliminary Financial Results
The preliminary unaudited condensed consolidated financial statements for the
fourth quarter and full 2007 fiscal year follow.
Information Dissemination
Moldflow will host a conference call to discuss the preliminary fourth quarter
and full 2007 fiscal year results as well as future outlook at 11:00 a.m. US
Eastern time, Thursday, August 23, 2007. The conference call dial-in number
is 877-314-4022, Conference ID #10140446. The call will be recorded with replay
(dial-in # 800-642-1687, PIN# 10140446) which will be available until August
30, 2007. In addition, 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. 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 analysis 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. Visit www.moldflow.com for more information.
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Note to editors: Moldflow, Moldflow Plastics Insight and MPI 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
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, statements
by Moldflow’s President and CEO, statements under Business Outlook and
those regarding Moldflow's or management's intentions, hopes, beliefs, expectations,
projections, plans for the future and estimates and statements regarding any
potential growth and operating leverage during the 2008 fiscal year. Forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from those projected. These risks and uncertainties include
the risks that a weak global 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; that foreign
currency fluctuations may adversely affect the Company’s financial results;
that share-based compensation expense will continue to have a negative impact
on the Company’s GAAP operating profit, net income and earnings per share
calculations; that changes in US or foreign tax legislation, or on-going tax
inquiries and the on-going tax audits of the Company’s subsidiary companies,
including Australia, may result in a higher level of income tax expense than
that projected; as well as other risks and uncertainties which are 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, 2006 as well as its subsequent quarterly and annual filings.
Further, there can be no assurance that the finalization of the review by the
SEC of the Company’s timing of the recognition of certain revenue and
related accounting will not result in adjustments to the Company’s previously
issued financial statements. In addition, the finalization of the review by
the SEC and its conclusions may adversely affect the Company’s ability
to file required reports with the SEC on a timely basis and adversely impact
the Company’s ability to meet the requirements of the Nasdaq Global Select
Market for continued listing of its shares; and may adversely impact management’s
conclusions on the effectiveness of its internal control over financial reporting
and disclosure controls and procedures, result in claims and proceedings relating
to such matters, including shareholder litigation and actions by the SEC and/or
other governmental agencies resulting from any accounting adjustments or other
factors.
Revenue growth rate, EBITDA, GAAP and non-GAAP net income per diluted share
guidance represent a point-in-time estimate and are 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 Corporate Contact:
Melissa Aytek 508-358-5848 x 258 Email Contact |
Investor Relations Contact:
Dawn Soucier 508-358-5848 x 234 Email Contact |