Industry News, Trends and Technology, and Standards Updates

You may have noticed that there is a lot of positive news regarding the semiconductor industry and market for capital equipment. As such, we thought it would be appropriate to provide a mid-year update on Cimetrix’s performance.

We are pleased to report that Cimetrix is benefiting from a combination of the industry upcycle as well as the hard work of our employees to improve our products, build long-term relationships with our clients, and provide the highest level of support to our growing base of international clients. In addition, the benefits that Cimetrix is experiencing after going private in 2014 are higher than anticipated. As expected, the company is saving a significant amount per year in accounting, legal and consulting fees that were necessary for SEC filings, Sarbanes-Oxley compliance, and investor relations activities.  However, in addition to these financial benefits,  what we didn’t anticipate was the tremendous increase in focus and energy on our clients, markets and growth initiatives that has resulted, which has greatly exceeded our expectations.Cimetrix revenues for the first six months of 2017 were over $4M, up more than 40% year-over-year. Much of this increase was associated with strong increases in machine shipments from our growing client base. Cimetrix also gained over a dozen new design wins during the first half of 2017, which positions the Company for continued growth. In addition, Cimetrix introduced two new products in the first half of 2017, which have not contributed significant revenue yet, but are both gaining traction in the marketplace.

While Cimetrix no longer submits SEC filings, we have maintained strong internal controls and financial accounting. Our finance team was justifiably proud when a leading regional accounting firm completed its audit of our 2016 financial statements and made no audit adjustments. Cimetrix continues to operate profitably on a quarterly basis, while increasing investments in growth initiatives. For the first six months of 2017, adjusted EBITDA increased to over 15% of revenues to over $600K. All indicators show the markets Cimetrix serves should remain strong for the second half of 2017. The robust growth in revenues has enabled Cimetrix to further strengthen its cash position, balance sheet and stockholders’ equity. We continue to have no debt and now have $2.5M in cash.

Cimetrix continues to build its global brand as the leader in innovative factory automation software for equipment connectivity and control solutions by attending, presenting and exhibiting at industry tradeshows and events. These venues are a great place to meet face-to-face with clients, reinforce Cimetrix experts as industry thought leaders, and interact with many others in our chosen markets. It is exciting to participate in shows around the world as we expand our global presence.

We thank our clients for their business and trust in our products and people. We thank our employees for their dedication, hard work and quest for continuous improvement to provide the industry’s best products and services. And we also thank our shareholders for the confidence they have placed in us, as well as their patience and support.

To the Cimetrix community of clients, partners, shareholders and employees,

Cimetrix had another year of solid progress during 2016. Financial results were in-line with expectations, as Cimetrix continued to achieve profitability every quarter with full-year revenue in the $6M to $7M range.

Our key highlights include:

• Cimetrix continued to enhance its reputation for product quality and the highest levels of customer support in the industry, receiving consistently excellent feedback from our client base.

• Cimetrix continued to invest in building great products with new releases of all our product lines. Substantial improvements were made in both new features and internal testing that will benefit our clients for many years. 

• Cimetrix gained additional “design wins” for its products in North America, Europe and Japan, where the company has an established presence. In addition, Cimetrix won important new clients in China and Korea. 

• Cimetrix strengthened its organization as we added a number of new employees in business development, software engineering and technical support functions. The Company continued to invest in employee development, education and continuous improvement. We believe the concepts and training we’ve received in lean and agile processes will enable Cimetrix to build better products and more efficiently provide our clients with the highest levels of service. 

• Cimetrix made a number of key investments that we believe will lead to future long-term growth. We strengthened our local sales and technical support in a number of Asian countries. We developed a number of new product prototypes in collaboration with key clients leading to the introduction of an exciting new Cimetrix product in 2016. Several other new products are in development and have the potential to significantly expand our markets.

Cimetrix also held its first shareholder meeting since going private in late 2014, which provided a forum to explain to shareholders why the Company took that important step, the progress we’ve made since going private, and our future plans. As a result of generating positive cash flow from operations, Cimetrix was able to continue providing liquidity for shareholders that contacted the Company. Prior to going private, the Company had over 4.5M shares outstanding, adjusted for stock splits. As of December 31, 2016, the Company had fewer than 3.9M shares outstanding. This means that every current shareholder’s ownership percentage has increased by over 15%.

Going Forward

Going forward, industry analysts predict an increase in semiconductor capital equipment spending for 2017. In addition, we are seeing increased traction for the relatively new SEMI Standards for Equipment Data Acquisition (EDA), also known as Interface A. We believe these trends will enable us to achieve short-term incremental increases in revenue that support continued operations on a profitable basis and investments in new products and markets that will lead to longer-term step function increases in revenue.

We will continue to focus on satisfying our worldwide base of clients, improving our efficiencies and effectiveness, and executing our plan to expand the markets for Cimetrix products for long-term growth.

From all of us at Cimetrix, we thank our clients for the trust they have placed in our products and our team. We also thank our shareholders for their patience and support. 

Sincerely,

Robert H. Reback
President and Chief Executive Officer