Commenting on the financial results, Bob Reback, Cimetrix president and CEO, stated, "2011 was another year of solid performance for Cimetrix. We benefited from strong machine shipments in the first half of the year, which enabled us to build up our cash position. During the second half of the year, our addressable markets weakened, which caused our software revenue associated with machine shipments to decline over 40% sequentially from the second quarter to the third quarter. When that happened, we demonstrated the scalability of our business model and quickly reduced variable costs, which enabled us to remain profitable for both the third and fourth quarters. While we were disappointed to see the semiconductor, PV and LED capital equipment markets contract at the same time, we were pleased to see the performance of our new business model with its variable cost strategy. Furthermore, during 2011, we gained a number of significant design wins. We continued to work closely with our new and existing customers to assist them in developing and shipping machines using Cimetrix products, which provided a significant increase in our Professional Services revenue year-over-year. As our customers go to market with their new machines, we expect to see an increase in higher margin software sales as the capital equipment cycle turns more favorable."
Mr. Reback added, "We were very fortunate to hire some very experienced and talented new engineers during late 2010 and 2011 who augmented the already strong Cimetrix engineering team. During 2011, we were able to make continual, incremental improvements in our products, begin R&D investigations of new product opportunities, and grow our professional services capabilities to better respond to customer needs. In addition, I want to give special thanks to the Cimetrix note holders, who showed their confidence and patience with the management team as we developed and implemented our new business model. I am personally proud that Cimetrix made every interest payment on time and paid all note holders in full more than one year ahead of scheduled maturity."
Recent Business Highlights:
- Growing adoption of SEMI EDA/Interface A standard. We have worked with major semiconductor wafer fabrication plants currently installing equipment using the SEMI EDA/Interface A standard. The Cimetrix CIMPortal™ software is an industry-leading product that is well-positioned to support equipment suppliers needing to implement EDA/Interface A connectivity.
- Growth in Cimetrix equipment control solutions.The Company won new customer design wins in North America, Korea, Japan, and Germany for its CIMControlFramework™ equipment control product. This growth reflects the success of our diversification strategy to broaden the Company’s business through geography, vertical market, and customer additions.
- Continued drive for increased international business.The Company added a new Japan-based distributor, Meidensha, to promote demand and supply solutions for Cimetrix factory connectivity and equipment control products. This is the second distribution agreement secured in Japan by the Company.
Outlook for 2012
Industry analysts expect the primary markets for the Company’s products, which include semiconductor, PV and LED, to be down year-over-year in 2012. The semiconductor capital equipment market is forecast to be down 10-20% year-over-year, while the PV and LED capital equipment markets are expected to be down 60% and 40%, respectively. Based upon communications with our customers, we expect software revenues for the first quarter of 2012 to be roughly flat with the fourth quarter of 2011, with incremental growth on a quarterly basis throughout the year. Cimetrix strengthened its professional services capabilities during 2011 to support customer projects. Several of these projects were completed by the end of 2011, so professional services revenue will decrease in the first quarter of 2012. However, the result of the professional services engagements is that our customers now have new equipment that uses Cimetrix software products. As these new models gain traction in the marketplace, Cimetrix will see increases in software license revenue. Longer term, with no debt, cash in the bank, and an increasing software engineering capability, we look forward to working closely with our customers on ways in which we can provide new and improved software products to help equipment makers reduce their time-to-market and increase their overall equipment performance.