CIMATRON CONFERENCE CALL SCRIPT PAGE 1. Ladies and gentlemen, thank you for standing by. All participants are at present in a listen-only mode.

Transcription

1 CIMATRON CONFERENCE CALL SCRIPT PAGE 1 VEIDAN OPERATOR Ladies and gentlemen, thank you for standing by. Welcome to Cimatron's 4th Quarter 2012 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 s website, at the Investors page. As a reminder, this conference is being recorded today - February 19th, With us on the line today are: 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 made during this conference call that are not historical facts contain forward-looking information with respect to plans, projections, or future performance of Cimatron, 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 economic and political conditions globally

2 CIMATRON CONFERENCE CALL SCRIPT PAGE 2 and in Israel, the impact of competition, supply constraints, as well as certain other risks and uncertainties which are detailed in Cimatron's filings with the various securities authorities. The results that will be presented on this call are on a non-gaap basis, as Cimatron's management believes that such results better represent the actual state of Cimatron's business, and make comparisons to previous periods easier. Cimatron also publishes its results on a GAAP basis, as well as reconciliation between results on a GAAP and non-gaap basis, and those can be found in the press release issued earlier today. The term Constant Currency relates to data, after eliminating from it the effect of exchange rate fluctuations between comparable periods. I would like to turn over the call to Mr. Danny Haran, Cimatron's president and CEO. Mr. Haran, would you like to begin?

3 CIMATRON CONFERENCE CALL SCRIPT PAGE 3 DANNY HARAN Good morning and welcome to Cimatron s fourth quarter 2012 results Conference Call. We are very pleased to report an all-time record quarter, rounding out the best year in Cimatron s history. As we have said many times in the past, the operating leverage in our businessthat is our cost structure and business model, allows us to translate a significant portion of any revenue growth into operating profit growth. This year was no exception, with 58% of the revenue growth hitting the operating profit line. Over the last three months, we declared two cash distributions amounting in total to approximately $7.9M dollars. This came in addition to two dividends which we declared and paid in 2012, totaling $2.9M dollars. It is our honor to share the rewards of our success with our shareholders, and we will continue to look at further distributions, subject to our cash needs and market conditions. We are looking forward to another strong year in We expect to release two major product versions shortly, both for CimatronE and for GibbsCAM, and we are confident that they will continue to support our business success and growth in all our target markets. Recently, we have been asked about our plans and involvement in additive manufacturing, more popularly known as 3D Printing. Allow me to take this opportunity to delve deeper into the topic.

4 CIMATRON CONFERENCE CALL SCRIPT PAGE 4 First of all, as you well know, Cimatron is a software company. More likely than not, we will remain in the software business, and support this industry from the software side rather than getting involved in the hardware side of additive manufacturing, including machines or materials. However, from the software side of additive manufacturing, we are looking for ways that we can bring added value to our customers and partners. We believe that additive manufacturing has great potential in areas of manufacturing, such as prototyping, conformal mold cooling or production of complex parts in small quantities. Our focus is geared towards metal additive manufacturing, which seems more tightly related to our traditional manufacturing market. In particular, we are exploring hybrid manufacturing, where additive and subtractive technologies are used together, taking advantage of the benefits that each technology offers. We are currently in the early stages of our research, and it is too early to state when and how exactly this will have a significant effect on our business. But we believe that we are well positioned to serve this segment of the market and enjoy the new opportunities that may come with it. In summary, we are pleased with our performance and growth in 2012 and we see ourselves in a great market position as we move into We hope to present an even stronger year in 2013, in terms of the top line and even more so on the bottom line.

5 CIMATRON CONFERENCE CALL SCRIPT PAGE 5 Ilan Erez, our CFO, will now review the financial statements. Ilan, please.

6 CIMATRON CONFERENCE CALL SCRIPT PAGE 6 ILAN EREZ Thank you Danny. Hello everybody and thank you for joining us. Revenues for the fourth quarter of 2012 were 12.4 million dollars, compared to 12.2 million dollars in the fourth quarter of In 2012, revenues were 42.3 million dollars, compared to 40.7 million dollars in the corresponding period of 2011, representing an increase of 7% on a constant currency basis. The revenue breakdown in Q4/12 was as follows license revenues: 49%; maintenance revenues: 43%; and other professional services revenues: 8%. The geographical revenue breakdown for the quarter was as follows: Europe: 44%; North America: 35%; Asia Pacific: 18%; and Rest of the World: 3%. Gross Margin for the fourth quarter was 89% of revenues, the same as for the corresponding quarter of In full 2012, gross margin was 88% of revenues, the same as in Operating expenses in the fourth quarter amounted to 8.7 million dollars, the same as in the fourth quarter of last year. In full 2012, operating expenses were 31.3 million dollars, compared to 30.8 million dollars in 2011, reflecting our increased level of activity that accompanied the greater demand for our products, as shown in our increased revenues.

7 CIMATRON CONFERENCE CALL SCRIPT PAGE 7 Operating profit in the fourth quarter was 2.3 million dollars, compared to 2.2 million dollars in the corresponding quarter of In 2012, operating profit increased by 18% to 6.1 million dollars, from 5.1 million dollars in Net profit for the fourth quarter was 1.7 million dollars, or 18 cents per diluted share, compared to net profit of 1.6 million dollars, or 18 cents per diluted share recorded in the corresponding quarter of In 2012, net profit was 4.4 million dollars, or 47 cents per diluted share, compared to a net profit of 4.5 million dollars, or 48 cents per diluted share, in The contrast between operating profit (which rose significantly in 2012 compared to 2011) and net profit (which was in 2012 at the same level as in 2011) was mainly attributable to an increase in income tax expense. Income tax expense was 26% of income before taxes in 2012, causing a more significant reduction in net profit, whereas it was only 10% of income before taxes in The main reason for the higher effective tax rate in 2012 is the Company s having completed the use of its remaining U.S. tax loss carry-forwards towards the end of As of the end of 2012, our cash and cash equivalents balance, net of short-term bank credit, was 11.9 million dollars. Our cash flow from operating activities in 2012, excluding the one-time royalty payment of 2.5 million dollars to the Office of Chief Scientist in the Israeli Ministry of Industry, Trade and Labor, was 5.7 million Dollars, an increase of 1.1 million dollars, or 24%, compared to 2011.

8 CIMATRON CONFERENCE CALL SCRIPT PAGE 8 We will now open the call for the Question and Answer session. Operator, please. OPERATOR Thank you, sir. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press the star followed by the 1 on your touchtone phone... If you wish to decline from the polling process, please press the star followed by a 2. Your questions will be polled in the order they are received. If there are any questions, please press the star followed by the 1. There are no questions. Mr. Haran, would you like to make your concluding statement? CONCLUDING STATEMENT Yes, thank you. On behalf of the management, I would like to thank you for your continued interest and long-term support of our business. I do look forward to speaking with you and updating you again next quarter. Thank you and have a nice day.

9 CIMATRON CONFERENCE CALL SCRIPT PAGE 9 OPERATOR Thank you. This concludes the Cimatron fourth quarter 2012 results conference call. Thank you for your participation. You may go ahead and disconnect. (End of conference call)