Moldflow Corporation (MFLO)
Interview with:
A. Roland Thomas, President and Chief Executive Officer
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software products and services for design optimization and manufacture of injection molded plastic products.

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Moldflow Corporation – proven history of enhancing the design and manufacture of injection molded plastic parts with innovative, relevant technology solutions

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Software & Programming

Moldflow Corporation

430 Boston Post Rd.
Wayland, MA 01778
Phone: 508-358-5848

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A. Roland Thomas
President and
Chief Executive Officer

Interview conducted by:
Lynn Fosse, Editor
January 2003

Bio of CEO:
A. Roland Thomas has served as the President and Chief Executive Officer of Moldflow Corporation since June 2002 and as a Director since June 1989. Previously, Roland was Vice President of Research and Development and served in various other positions with Moldflow since 1982. Mr. Thomas holds a Bachelor of Mechanical Engineering degree from the Royal Melbourne Institute of Technology.

Company Profile:

Moldflow (NASDAQ: MFLO) is the world's leading provider of software products and services that help increase the speed, efficiency, quality and drive down the cost of the design and manufacture of injection molded plastic products. Companies use Moldflow's complete suite of products to address plastic part design issues at the earliest possible stage as well as to maximize productivity and profitability on the manufacturing floor. Our collaboration with academia, industry and customers around the world has led to a reputation for constant innovation in the complete design-to-manufacture process. Headquartered in Wayland, Massachusetts, Moldflow has offices and research and development centers in the United States, Europe, Australia and the Asia Pacific region. For more information about Moldflow visit or call 508-358-5848; fax 508-358-5868.

Two key product areas:
Moldflow Design Optimization Solutions

Moldflow Design Optimization Solutions are for everyone from part and mold designers who want to check manufacturing feasibility to CAE analysts who need detailed predictions about all phases of part and mold design, manufacturing, and resulting part quality. Integrated suites of software tools help you identify critical manufacturability and quality issues and recommend appropriate actions to address those issues. Whether you're working with CAD solid models, traditional midplane mesh models, wireframe or surface models, typical thin-walled part designs or thick or difficult-to-midplane solids, there are Moldflow Design Optimization Solution products to meet every need.

q       Moldflow Plastics Advisers™ Design-for-Manufacture Analyses

With Moldflow Plastics Advisers tools, part and mold designers are able to take control of their designs early on, enabling every part and mold concept to be tested for manufacturing feasibility before the tool is cut, when the cost of change is minimal. Seamless integration with CAD solid models means you run simulations and view results directly on the solid model. The software identifies critical manufacturability and quality issues and recommends appropriate actions to address those issues.

q       Moldflow Plastics Insight™ In-Depth Simulations for Design Validation and Optimization

Moldflow's in-depth simulations are designed for engineering analysts who need detailed predictions about all phases of part and mold design, manufacturing, and resulting part quality. Integrated suites of software tools cover a wide range of thermoplastic and reactive molding processes. Use the in-depth simulations with a variety of model formats, including traditional midplane mesh models as well as wireframe and surface models, thin-walled solids and thick or difficult-to-midplane solids.

q       CAD Connectivity Tools

Moldflow's CAD connectivity tools facilitate the transfer of the best model information possible to the Moldflow simulation you choose. The CAD connectivity modules available help you to optimize STL models, work with wireframe, boundary and surface mesh models, and create midplane meshes automatically from CAD model formats.

Moldflow Manufacturing Solutions

Moldflow Manufacturing Solutions target the problems associated with production planning and scheduling; injection molding machine setup, process optimization and process monitoring control; and production monitoring and reporting. The complementary technologies that comprise Moldflow Manufacturing Solutions may be used separately or together to achieve your particular manufacturing goals.

q       Moldflow Plastics Xpert™ Molding Process Optimization System

Moldflow Plastics Xpert tools allow production professionals to take control by eliminating the usual trial-and-error method of injection-molding machine set-up and optimization and replacing it with systematic technology. The benefits of injection molding simulation now have been brought to the shop floor, enabling process engineers and molders to quickly optimize machine set-up, reduce cycle times, and monitor and correct molding processes during production.

q       Shotscope® Process and Production Monitoring Systems

The comprehensive Shotscope product suite provides tools for both process and production monitoring, which collect critical data in real time from molding machines on the factory floor, then record, analyze, report, and allow access to the information for use in critical decision making. Shotscope products can be used for both plastics injection molding and metal die casting operations.

q       EZ-Track™ Production Monitoring and Reporting System

q       The EZ-Track system provides real-time, plant-wide production monitoring and reporting.

EZ-Track tools can be attached to injection molding machines and virtually any cyclic manufacturing equipment and machinery, such as ultrasonic welders, assembly machines, packaging equipment, and so on.

CEOCFOinterviews: Mr. Thomas, where was Moldflow when you became its CEO and what changes did you orchestrate?

Mr. Thomas: “I took over on June 6, 2002, succeeding Marc Dulude who joined the company back in 1996. Marc guided Moldflow through the process of taking an Australian company into the US and going public. I took over an already public company in a difficult purchasing environment. Our fourth fiscal quarter of 2002 was challenging and we had to make some adjustments in the business to react to what we believed the future would look like with regards to capital spending and its effect on our business. My first activity was to manage the implementation of those adjustments as we went through the restructuring. I also brought in additional management to add more structure to what was already a very strong team.”

CEOCFOinterviews: You have two different parts to your business, please explain them and tell us which generates the greatest percentage of your revenues.

Mr. Thomas:Moldflow has two main areas of focus, design optimization and manufacturing. Our design optimization solutions take our extensive knowledge of the constraints of the injection molding process, and through simulation technology, provide that knowledge to designers of plastic injection molds so they can create production efficient designs. On the other side, our manufacturing solutions are comprised of a product suite that automates and optimizes the actual molding processes. These products monitor the injection molding process and enable that data to be used to make the molding process more efficient and provide a more relevant connection from the injection-molding factory floor into the enterprise business systems.

Historically, Moldflow has been known for its design optimization solutions. In the September quarter, these products represented approximately 74% of our product revenues and the manufacturing solutions products were about 26%. However, the manufacturing solutions have been steadily increasing and they are up from about 17% the year before and even less than that the year before that. We are really pleased by the traction gained by our Manufacturing Solutions which have been growing steadily even in the current economic environment.”

CEOCFOinterviews: What is your revenue model?

Mr. Thomas: “Our revenue model is relatively straightforward. We license a product, support it through an ongoing maintenance agreement, as well as offer training and implementation services.”

CEOCFOinterviews: Does your sales platform allow you to sell more products to a customer after their initial purchase?

Mr. Thomas: “Many of our on-sell opportunities present themselves based on how our customers apply the software they already own. Initially customers use the design products to predict and resolve production problems. It is like an insurance policy; companies want to be sure their design is not going to disrupt manufacturing.  What we find is that after they recognize the value and reliability of using simulation during the design process to correct problem parts and molds, they go back and analyze molds that seemed to work.  Very often, in doing so, they find more opportunity to optimize in terms of material usage, scrap, and the actual manufacturing time, all of which leads to lowering the product cost.”

CEOCFOinterviews: Is there much customization of your products?  Do you need to work with the customers to get the product up and running?

Mr. Thomas: “There is very little customization at all; on the design side it is negligible and on the manufacturing side there is some configuration involved of the hardware and software system to enable interface with other business and manufacturing systems.”

CEOCFOinterviews: What are you doing in the research area?

Mr. Thomas: “Innovation is part or our personality. We have a long history of delivering relevant solutions for the injection molding industry; it’s really the mainstay to the success of the business over the past twenty-five years. We have, over the last year, made major changes on both sides of our business. On the Design side, we have recently released Moldflow Plastics Insight, version 4.0, which is a family of products representing the integration of the Moldflow and C-MOLD business, which we acquired in 2000. These technologies work together on an entirely new user platform that delivers a broader range of functionality to allow deeper integration with manufacturing design processes. On the manufacturing side, our applications have an established value proposition that we are working to increase by bringing our products together on a single operating platform. This would enable hardware and software leverage for our own and potentially other applications on the manufacturing floor.

In terms of future development, we are looking at the problems that face the injection molding industry such as the prediction of mechanical properties and analyzing the issues that surround the cosmetic or aesthetic aspects of injection molded parts. We have substantial long-term research projects focused on solving those sorts of problems so that we can deliver even more value into the design community.”

CEOCFOinterviews: Do you have patents on your technology?

Mr. Thomas: “Yes, we have a number of patents granted relating to key technology across both the design and manufacturing side of the business. Our software was created using very complex numerical methods, and a very detailed understanding of the way plastic materials behave. There are thousands of plastic materials and each one has widely different properties. We have developed an understanding of those properties and how to measure and model them. This represents a large body of intellectual property.”

CEOCFOinterviews: Will you give us some idea of what you needed to do in the recent restructuring and how it has been working?

Mr. Thomas: “The injection molding industry had been experiencing difficulty and the buying behaviors of our customers had changed, so we needed to build that into our plan. We restructured by reducing our headcount by approximately 15% in each of our major functional areas. But we deliberately decided not to go a lot deeper than that because we do believe that we have the plan to return to growth. And with that as a model, we did not want to cut out core capabilities and capacity from the business. We wanted to be prepared to take advantage of the market opportunity when it comes without having a long lag time as we start growing again.”

CEOCFOinterviews: Did this create a drain on your cash position?

Mr. Thomas: “No it didn’t. We have a strong business ethic to be cash-neutral to positive under most circumstances and working to that ethic allowed us to live in a constrained environment but still generate cash.”

CEOCFOinterviews: How did you keep morale up with all of the restructuring in such a large company?

Mr. Thomas:We worked hard to make sure that we communicated what we needed to do throughout the company so that the people who were staying understood how they could contribute in the company going forward. We wanted to be sure to communicate a consistent message around the world so that no one was left in a situation of knowing that some sort of restructuring was coming, but didn’t know whether they were part of it or not. I think we achieved that and managed to get the whole company to understand what was happening. Equally important, and perhaps more so, we worked closely with the outgoing staff to make sure they also understood and were as well positioned as they could be. We went through extreme efforts to make sure everyone was well treated, and I think that the people who remained respected that.”

CEOCFOinterviews: What about competition; are there other people doing what you do?

Mr. Thomas:Our competitive position is strong. For example, we believe that Moldflow products comprise nearly 85% of the solutions purchased for injection molding simulation. We are positioned as a well-capitalized, significant player in this industry. When things get difficult, purchasing from a solid company such as Moldflow takes some of the risks out of the technology decision. Most of our competitors are small regional players and they don’t share that advantage. On the manufacturing side, we have really carved out a pretty strong niche. For example, in the area of optimization for injection molding, we do not have a direct competitor. Of course, we compete on some level with anyone who sells automation solutions into the factory generically, but that landscape hasn’t really changed dramatically in recent years.”

CEOCFOinterviews: Please tell us about your business efforts in Asia Pacific.

Mr. Thomas:  “Historically, our revenues have been approximately one third for each of Asia, North America and Europe. Asia has been a strong market for us for a number of years. We have direct presence in Japan and Korea and other parts of Southeast Asia. Japan and Korea are a significant part of the plastics industry. Areas outside that region are becoming a more important part of the world’s plastic economy and we are very well positioned to take advantage of that.”

CEOCFOinterviews: Looking forward, are there segments of the plastics business that you are not heavily involved in that you would like to penetrate.

Mr. Thomas: “Of course we would always like to have penetration into a lot of different industries or segments of the plastics industry. Today, we are fairly well dispersed across a number of industries. We divide our customer base in two groups, the end-user industries and the supply chain to those industries. Of the end-user industries, automotive comprises about 18% of our overall customer base, electronics is about 19%, consumer goods are 14% and the medical industry is 4%.  The other portion of our customer base is in supply chains to each of those industries. On the supply side, contract manufacturing companies comprise about 14% of our overall customer base, service companies such as mold designers and custom molders are about 23%, and the raw materials industry comprises 8%.  Overall, we feel that we have broad industry coverage.

CEOCFOinterviews: Given your successful restructuring and financial performance, what would you like to say to shareholders and potential investors in closing?

Mr. Thomas: “We are a company with a proven history of delivering technology solutions to enhance the design and manufacture of injection molded plastic parts. The journey is to reach much further and deeper into this large industry. I believe that Moldflow is the company best positioned to take that journey.”


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