BluePhoenix Solutions Reports First Quarter 2012 Results

BluePhoenix Solutions (NASDAQ: BPHX), the leader in value-driven legacy modernization, today announced financial results for the first quarter of 2012. Revenues for the first quarter of 2012 were $6.8 million compared to $9.5 million in the previous quarter, and compared to $10 million in the first quarter of 2011.

Net loss on a non-GAAP basis for the first quarter of 2012 was $(1.7) million or $(0.27) per diluted share, compared to non-GAAP net loss of $(2.2) million or $(0.35) per diluted share in the previous quarter, and compared to a non-GAAP net income of $0.4 million or $0.06 per diluted share in the first quarter of 2011.

On a GAAP basis for the first quarter of 2012 the net loss was $(3.2) million or (0.50) per diluted share, compared to net loss of $(21.3) million or (3.39) per diluted share in the previous quarter, and compared to net loss of $(4.2) million or $(0.71) per share for the first quarter of 2011.

“In the first quarter of 2012, the company continued to sign substantial new contracts in Legacy Modernization and Knowledge Management businesses. Progress was also made in restructuring efforts to achieve positive cash-flow before year end,” commented Shimon Bar Kama, CEO of BluePhoenix. “Looking forward, The Company’s management is optimistic the continuous reduction in operating cost will soon show improvements in the results.”
                 

Non-GAAP Results (in thousands US$)
      Q1/2012       Q4/2011       Q1/2011
Sales       6,776       9,538       10,003
Operating profit (loss)       (1,955)       1,452       842
Net (Loss) Income       (1,747)       (2,166)       380
Earnings (Loss) per share, diluted*       (0.27)       (0.35)       0.06
                         
GAAP Results (in thousands US$)       Q1/2012       Q4/2011**       Q1/2011
Sales       6,776       9,538       10,003
Operating loss       (3,201)       (17,489)       (3,977)
Net loss       (3,249)       (21,274)       (4,242)
Loss per share, diluted*       (0.50)       (3.39)       (0.71)
 

Notes:

*On December 28, 2011 the company performed a one-for-four reverse split of its outstanding shares.

**Including goodwill impairment recognized in 2011 annual report at the amount of $9.6 million.

At present, following the completion of the sale of AppBuilder business, an amount of $3 million is held in escrow accounts to secure certain company obligations under the sale agreement.

Non-GAAP financial measures

The release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including non-GAAP operating income and non-GAAP net income. These non-GAAP measures exclude the following items:
  • Amortization of intangible assets;
  • Goodwill impairment;
  • Stock-based compensation;
  • One time expenses related to cost saving plan and one time charges;
  • Revaluation of warrants and discount amortization; and
  • A profit related to sale of subsidiaries and AppBuilder business.

The presentation of these non-GAAP financial measures should be considered in addition to BluePhoenix' GAAP results and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. BluePhoenix' management believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain charges and gains that may not be indicative of BluePhoenix' core business operating results. BluePhoenix believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing BluePhoenix' performance. These non-GAAP financial measures also facilitate comparisons to BluePhoenix' historical performance. BluePhoenix includes these non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. Non-GAAP measures are reconciled to comparable GAAP measures in the table entitled "Unaudited Reconciliation of GAAP to Non-GAAP."

About BluePhoenix Solutions

BluePhoenix Solutions, Ltd. (NASDAQ: BPHX) is the leading provider of value-driven legacy IT modernization solutions. The BluePhoenix portfolio includes a comprehensive suite of tools and services from global IT asset assessment and impact analysis to automated database and application migration, rehosting, and renewal. Leveraging over 20 years of best-practice domain expertise, BluePhoenix works closely with its customers to ascertain which assets should be migrated, redeveloped, or wrapped for reuse as services or business processes, to protect and increase the value of their business applications and legacy systems with minimized risk and downtime.

BluePhoenix provides modernization solutions to companies from diverse industries and vertical markets such as automotive, banking and financial services, insurance, manufacturing, and retail. BluePhoenix has 10 offices in the USA, UK, Italy, Romania, Russia and Israel.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this release may be deemed forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other Federal Securities laws. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “plans,” “believes,” “estimates,” “expects’, “predicts”, “intends,” the negative of such terms, or other comparable terminology. Because such statements deal with future events, plans, projections, or future performance of the Company, they are subject to various risks and uncertainties that could cause actual results to differ materially from the Company’s current expectations. These risks and uncertainties include but are not limited to: the inability to obtain a satisfactory equity infusion, working capital facility or debt restructuring; the failure to successfully defend claims brought against the Company; the effects of the global economic and financial crisis; market demand for the Company’s products; successful implementation of the Company’s products; changes in the competitive landscape, including new competitors or the impact of competitive pricing and products; the ability to develop new business lines; and such other risks and uncertainties as identified in BluePhoenix’s most recent Annual Report on Form 20-F and other reports filed by it with the SEC. Except as otherwise required by law, BluePhoenix undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

This press release is also available at www.bphx.com. All names and trademarks are their owners’ property.

 
BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
      Three months ended
March 31,
2012   2011*
Unaudited
 
Revenues $ 6,776 $ 10,003
 
Cost of revenues   6,661     8,675  
Gross profit 115 1,328
 
Research and development costs 491 1,151
 
Selling, general and administrative expenses 2,913 4,154
 

Gain on sale of subsidiary and AppBuilder
88 -
 
   
Total operating expenses 3,316 5,305
 
Operating loss (3,201 ) (3,977 )
 
Financial expenses, net 484 192
 
Other income 580 -
   
Loss before taxes (3,105 ) (4,169 )
 
Taxes on income 88 138
   
Net loss (3,193 ) (4,307 )
   
Net income (Loss) attributable to noncontrolling interests 56 (65 )
   
Net loss attributable to BluePhoenix   ($3,249 )   ($4,242 )
   
Net loss per share:
Basic and diluted ($0.50 ) ($0.71 )
   
Shares used in per share calculation:
Basic and diluted**   6,434     6,012  
   
* Derived from audited financial statements
** On December 28, 2011 the company performed a one-for-four reverse split of its outstanding shares.
 
 
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share data)
 
      Three months ended
March 31,
2012   2011
Unaudited
 
GAAP Gross Profit $ 115 $ 1,328
 
Amortization of intangible assets 563 1,027
Expenses related to cost saving plan and one time charges   36     1,639  
Non-GAAP gross profit $ 714   $ 3,994  
 
 
GAAP operating loss ($3,201 ) ($3,977 )
 
Amortization of intangible assets 563 1,027
Expenses related to cost saving plan and one time charges 87 3,414
Stock-based compensation 684 378

Gain on sale of subsidiary and AppBuilder
  (88 )   -  
Non-GAAP operating income (Loss)   ($1,955 ) $ 842  
 
 
GAAP Net loss attributable to BluePhoenix ($3,249 ) ($4,242 )
 
Amortization of intangible assets 563 1,027
Expenses related to cost saving plan and one time charges 87 3,414
Stock-based compensation 684 378

Gain on sale of subsidiary and AppBuilder
(88 ) -
Revaluation of warrants and discount amortization 255 (197 )
   
Non-GAAP Net income (loss) attributable to BluePhoenix   ($1,747 ) $ 380  
 
 
Shares used in diluted earnings per share calculation 6,434 6,070
 
Non - GAAP Diluted Earnings per share   ($0.27 ) $ 0.06  
 
 
BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
      March 31,   December 31,
2012 2011*
Unaudited
ASSETS
 
Current Assets:
 
Cash and cash equivalents $ 2,080 $ 3,997
Restricted cash 2,746 -
Trade accounts receivable, net 7,323 7,675
Other current assets 1,522 1,041
   
Total Current Assets 13,671 12,713
 
Non-Current Assets:
 
Restricted cash - 3,428
Property and equipment, net 882 1,021
Goodwill** 14,238 14,238
Intangible assets and other, net 2,437 3,000
   
Total Non-Current Assets   17,557   21,687
 
   
TOTAL ASSETS $ 31,228 $ 34,400
 
LIABILITIES AND EQUITY
 
Current Liabilities:
 
Short-term bank credit $ 10,357 $ 6,983
Trade accounts payable 2,955 3,403
Deferred revenues 1,028 739
Other current liabilities 3,223 3,272
   
Total Current Liabilities 17,563 14,397
 
Non-Current Liabilities
 
Accrued severance pay, net 361 410
Loans from banks and others 201 3,945
Derivative liabilities - Warrants 12 53
   
Total Non-Current Liabilities 574 4,408
 
 
Total Equity   13,091   15,595
   
TOTAL LIABILITIES AND EQUITY $ 31,228 $ 34,400
 
* Derived from audited financial statements
 
BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
      Three months ended
March 31,
2012   2011*
Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($3,193 ) ($4,307 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 694 1,180
Decrease in accrued severance pay, net (49 ) (329 )
Stock–based compensation 684 378
Change in fair value of warrants and discount amortization 255 (197 )

Gain on sale of subsidiary and AppBuilder
(88 ) -
Loss on sale of property and equipment 12 -
Deferred income taxes, net - 6
Changes in operating assets and liabilities:
Decrease in trade receivables 344 211
Increase in other current assets (1,052 ) (203 )
Increase (decrease) in trade payables (358 ) 102
Increase in other current liabilities and deferred revenues 272 190
   
Net cash provided by (used in) operating activities (2,479 ) (2,969 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash 682 3,428
Receipt of debt 200 -
Purchase of property and equipment (45 ) (103 )
Proceeds from sale of property and equipment 41 -
Additional consideration of previously acquired subsidiaries and activities - (1,163 )

Proceeds from sale of subsidiary and AppBuilder
350 -
   
Net cash provided by (used in) investing activities 1,228 2,162
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment short term bank credit, net - (2,535 )
Repayment of long-term loans (666 ) -
   
Net cash used in financing activities (666 ) (2,535 )
   
TOTAL NET DECREASE IN CASH AND CASH EQUIVALENTS (1,917 ) (3,342 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   3,997     12,295  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,080   $ 8,953  
 
* Derived from audited financial statements.
 

Copyright Business Wire 2010

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