Moldflow Reports Second Quarter Fiscal 2008 Results

Business Wire, Feb 7, 2008

Second Quarter Delivers Record Revenue and Increased Profitability

FRAMINGHAM, Mass. -- Moldflow Corporation (NASDAQ: MFLO) today announced results from its continuing operations for the second quarter of its 2008 fiscal year. The Company disposed of its Manufacturing Solutions business division on June 30, 2007; therefore, results from all prior periods have been reclassified to solely reflect the Company's continuing operations.

* Revenue of $17.1 million was up 19% from the corresponding quarter of fiscal 2007.

* Total product revenue of $8.9 million represented a 17% increase from the same period of the prior year.

* Total services revenue of $8.2 million represented a 22% increase from the same period of the prior year.

* Non-GAAP operating margin grew to 25%, up from 17% in the same period of the prior year.

* EBITDA was $4.7 million, up 59% on a year-over-year basis.

* Non-GAAP tax rate of 18% compared to a rate of 22% in the same period of the prior fiscal year.

* Non-GAAP net income from continuing operations of $4.4 million represented a 71% increase from the results of the corresponding quarter of fiscal 2007.

* Non-GAAP earnings per diluted share of $0.35 increased from $0.21 in the same period of the prior year.

* Net income from continuing operations as reported in accordance with GAAP was $3.8 million or $0.31 per diluted share, and included a net charge of $605,000 for share-based compensation expense, and compared to $2.2 million or $0.18 per diluted share for the prior year, which included a net charge of $386,000 for share based compensation expense.

* Our operating activities from continuing operations generated $882,000 of cash during the second quarter, up significantly from $242,000 generated the same period of the prior year.

"The results of our second quarter show the continued progress we are making towards our corporate goals for fiscal 2008. In fact, our first half has delivered strong results which are at the high end of our expectations for this point in our fiscal year, and are trending towards the higher end of our stated guidance range for the 2008 fiscal year," said Roland Thomas, Moldflow Corporation's president and CEO.

Thomas continued, "Once again this quarter, we saw very strong sales performances coming out of Asia driven largely by sales into the electronics sector, as well as modest increases in revenue coming from both Europe and the Americas. In the second half of fiscal 2007, we embarked upon a strategy to deliver products better suited to broad deployment of our technology within our customer's existing infrastructures. We call this approach 'Enterprise Enabled Simulation,' which involves the strategic creation of technologies that are accessible, configurable and process integrated. There are several facets to this strategy, but one key element is the introduction of a concurrent usage licensing option in our flagship Moldflow Plastics Insight product line. We call this new licensing option MPI-Enterprise, or MPI-e."

"During the first half of fiscal 2008, we began to see momentum grow behind the sales efforts of MPI-e, validating this vision. Providing this licensing option has increased sales into our customers with a worldwide footprint who need options in how they deploy our technologies across their enterprises. We believe that the MPI-e licensing model will not only help us increase sales into our customers, but will also allow us to gain further market penetration with some of the modules of Moldflow Plastics Insight that have not been as widely licensed on a stand-alone basis," Thomas concluded.

Business Outlook

The Company is providing full year fiscal 2008 guidance on its results from continuing operations below on both a GAAP and non-GAAP basis. Non-GAAP guidance excludes 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 February 7, 2008 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 from continuing operations 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 from continuing operations 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 from continuing operations 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%.