MIND C.T.I. Ltd. ( MNDO)

Q4 2010 Earnings Call

February 17, 2011 10:30 AM ET


Andrea Dray – IR

Monica Iancu – Chairperson and CEO


James Lee [ph]



Good day and welcome to the MIND’s Q4 and year-end 2010 earnings conference call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to your host today to Ms. Andrea Dray. Please go ahead, madam.

Andrea Dray

Thank you, operator. Good morning everyone and welcome to MIND’s conference call. Before we begin, I would like to point out that during this call, we will discuss certain financial information that is not prepared in accordance with GAAP. The company’s management uses its financial information and internal analysis in order to exclude the effects of acquisitions and other significant items that may have a disproportionate effect in a particular period.

Accordingly, management believes that isolating the effects of such events enables management and investors to consistently analyze the critical components and results of operations of the company’s business and to have a meaningful comparison to prior periods.

Also, this call includes information that constitutes forward-looking statements. Although we believe that expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material.

Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include but are not limited to the effects of general economic conditions and such other risks as discussed in our earnings release and at greater length in the company’s filings with the SEC.

MIND may elect to update these forward-looking statements at some point in the future. However, the company specifically disclaims any obligation to do so. Yesterday, MIND reported the results of its fourth quarter and full year 2010. The financials can be found in our Form 6K and on our website. On the call today from MIND is Ms. Monica Iancu, MIND’s CEO.

I would now like to turn the call over to Monica. Monica, please go ahead.

Monica Iancu

Thank you Andrea. Good day ladies and gentlemen. Thank you for your interest in MIND and for joining us today. In our call today, I will summarize our major achievements in 2010 and discuss our business.

You can find the full financials that we reported yesterday on our website. In this call I am delighted to have by my side our newly appointed permanent CFO, Mr. Aviram Cohen. Aviram joined MIND as Controller in June of 2006. Before joining us, he served as an auditor at E&Y. After two promising quarters of serving as Interim CFO, we now appointed Mr. Aviram Cohen as permanent CFO.

We are pleased with our total revenues for 2010 that were closed to $20 million, a 13% internal growth over 2009. Our operating income was above our target of 20% and they reached $5 million dollars or 25% of revenues including a non-cash impairment of goodwill and intangible assets of $993,000 and equity based compensation expense of $139,000.

The growth in revenues and some increased efficiency helped us increase the operating income from 2009, operating income of $2.2 million. Net income was $4.9 million or $0.26 per share. Cash flow from operating activities was $6.3 million similar to 2009. Our balance sheet continues to be strong with total cash position of $20.5 million at the end of 2010. Our backlog as of December 31, 2010 includes approximately $12.2 million, which is expected to be billed by year-end. Similar to the one, we reported on the same date last year.

We are pleased with our continued execution as well as with the growing interest in our solutions. Our technical teams, development pre and post sales support had to be praised for their great work. I wish to join our customers and thank the whole MIND’s team. And I will quote from a letter that we received from our customer in South Africa this week. I start quoting, I would like to take this opportunity to thank the MIND team involved in the MIND Bill project for the great work they have done in such a short period. The level of professionalism around customer and product interaction has been exemplary. The team has been exceptional in going the extra mile and putting in the extra effort which is greatly appreciated, end of quote.

We get appreciation for the flexibility of our solution and for the successful deliveries and we are satisfied every time as we feel we help our customers succeed and we create win-win situations that benefit both sides.

We succeeded in 2010 to secure four new customers as well as multiple follow-on orders. Our latest win which we previously announced is with the Canadian company EastLink. This is the first Canadian company that combines cable, internet and telephone service in a communications and entertainment bundle. EastLink will deploy our end-to-end prepaid and postpaid convergent billing solution for their new mobile offering.

We expect to increase the scope of this project in the future by supporting other EastLink services and needs. In recognition of the existing relationship, and the potential in closed in it, we issued EastLink a warrant to purchase 924,545 ordinary shares of MIND at an exercised price of $2.48 per share which was equal at time to the average closing price per share of MIND’s ordinary shares on the NASDAQ stock market during the 30 trading day period immediately preceding the date of the issuance.

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