BluePhoenix Solutions Reports Third Quarter 2012 Results Q3 Results Show Better Net Income, Much Less Debt, Increased EPS and Lower Cash Burn Business Wire HERZLIYA, Israel -- November 07, 2012 BluePhoenix Solutions (NASDAQ: BPHX), the leader in value-driven legacy modernization, today announced financial results for the third quarter of 2012. The turnaround efforts are showing results with revenues holding steady while debt was reduced and burn rate was brought under control. Net Income on a non-GAAP basis for Q3 improved 85% and while the number still shows a loss of $182 K BPHX is closely approaching breakeven. Additional achievements in Q3 include the significant reduction in total financial debt which dropped from $7.9 M to just $556 K. Earnings per share improved 89% in the third quarter with a non-GAAP loss of $(0.02) per diluted share, compared to net loss of $(0.18) per diluted share in the previous quarter. Net cash burn is down 78% in Q3 to only $314 K compared to $1,416 million in Q2. Matt Bell, CEO of BluePhoenix said, “We are making great progress on our plan to restructure the company, strengthen the balance sheet, and sell off less profitable and non-strategic businesses. Our timing appears good as the market for our core business is picking up because companies postponed projects over the last few years. A lack of knowledge in running legacy systems, higher licensing prices, and a move toward cloud technology are also fueling our demand.” BluePhoenix will go over the following numbers during their quarterly conference call today at 4:30PM Eastern US time. The call can be accessed by dialing 1-888-668-9141 within the United States, or via +972-3-9180610 if calling internationally, approximately five minutes prior to its scheduled commencement. A live Veidan Broadcasting and a replay can be accessed through a link that will be available via the BluePhoenix website. Non-GAAP Results (in thousands US$) Q3 2012 Q2 2012 Q3/2011 ** Sales 3,978 4,237 6,539 Operating profit (loss) (89) (791) 376 Net (Loss) Income (182) (1,171) 111 Earnings (Loss) per share, diluted* (0.02) (0.18) 0.02 GAAP Results (in thousands US$) Q3 2012 Q2 2012 Q3 2011 Sales 3,978 4,237 6,539 Operating profit (loss) (748) (1,301) (3,248) Net loss (3,686) (4,108) (3,206) Loss per share, diluted* (0.46) (0.62) (0.51) Notes: * On December 28, 2011 the company performed a one-for-four reverse split of its outstanding shares. ** Presented after reclassification of Liacom Ltd. as discontinued operation. At present, following the completion of the sale of AppBuilder business, an amount of $2 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; *Stock-based compensation; *Onetime expenses related to cost saving plan and one time charges; *Revaluation of derivatives and discount amortization; *Gain on sales of subsidiaries and Appbuilder; *Net loss from discontinued operation. 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 legacy IT modernization conversion 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. 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 9 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 effects of the global economic and financial trends; 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; 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 Nine months ended September 30, September 30, 2012 2011* 2012 2011* Unaudited Unaudited Revenues $3,978 $6,539 $11,815 $20,736 Cost of revenues 2,234 4,413 8,532 15,690 Gross profit 1,744 2,126 3,283 5,046 Research and development 340 1,066 1,255 3,422 costs Selling, general and 2,253 4,308 7,637 12,097 administrative expenses Gain on sales of subsidiaries and (101) - (346) - Appbuilder Total operating expenses 2,492 5,374 8,546 15,519 Operating loss (748) (3,248) (5,263) (10,473) Financial expenses, net 2,840 374 5,335 765 Other income - - (580) - Loss before taxes (3,588) (3,622) (10,018) (11,238) Taxes on income 28 23 174 78 Net loss from continued (3,616) (3,645) (10,192) (11,316) operation Net loss (profit) from - (276) 673 (97) discontinued operation Net loss (3,616) (3,369) (10,865) (11,219) Net result attributable to noncontrolling 70 (163) 175 (121) interests Loss attributed to ($3,686) ($3,206) ($11,040) ($11,098) BluePhoenix shareholders Loss per share: From continued operation- basic and ($0.46) ($0.56) ($1.48) ($1.83) diluted From discontinued operation- basic and $ 0.00 $ 0.05 ($0.10) $ 0.02 diluted Attritubed to the ($0.46) ($0.51) ($1.58) ($1.81) shareholders Shares used in per share calculation: Basic and diluted ** 7,972 6,235 7,006 6,122 * Presented after reclassification of Liacom Ltd. as discontinued operation. ** 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 Nine months ended September 30, September 30, 2012 2011 2012 2011 Unaudited Unaudited GAAP Gross Profit $1,744 $2,126 $3,283 $5,046 Amortization of intangible 317 886 1,265 2,950 assets Expenses related to cost saving plan and one time - 913 36 4,237 charges Non-GAAP gross profit $2,061 $3,925 $4,584 $12,233 GAAP operating loss ($748) ($3,248) ($5,263) ($10,473) Amortization of intangible 317 886 1,265 2,950 assets Expenses related to cost saving plan and one time - 2,433 87 9,337 charges Stock-based compensation 443 305 1,408 947 Gain on sales of subsidiaries (101) - (346) - and Appbuilder Non-GAAP operating income ($89) $376 ($2,849) $2,761 (loss) GAAP Net loss attributable to ($3,686) ($3,206) ($11,040) ($11,098) BluePhoenix Amortization of intangible 317 886 1,265 2,950 assets Expenses related to cost saving plan and one time - 2,433 87 9,337 charges Stock-based compensation 443 305 1,408 947 Gain on sales of subsidiaries (101) - (346) - and Appbuilder Revaluation of derivatives and 2,845 (31) 4,824 (288) discount amortization Net loss from discontinued - (276) 673 (97) operation Non-GAAP Net income (loss) ($182) $111 ($3,129) $1,751 attributable to BluePhoenix Shares used in diluted 7,972 6,252 7,006 6,224 earnings per share calculation Non - GAAP Diluted Earnings ($0.02) $0.02 ($0.45) $0.28 per share BluePhoenix Solutions Ltd. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2012 2011* Unaudited ASSETS Current Assets: Cash and cash equivalents $1,925 $3,997 Restricted cash 79 - Trade accounts receivable, net 2,992 7,675 Other current assets 642 1,041 Total Current Assets 5,638 12,713 Non-Current Assets: Restricted cash - 3,428 Property and equipment, net 648 1,021 Goodwill 12,501 14,238 Intangible assets and other, net 755 3,000 Total Non-Current Assets 13,904 21,687 TOTAL ASSETS $19,542 $34,400 LIABILITIES AND EQUITY Current Liabilities: Short-term bank credit $275 $6,983 Trade accounts payable 1,418 3,403 Deferred revenues 571 739 Other current liabilities 1,206 3,272 Total Current Liabilities 3,470 14,397 Non-Current Liabilities Accrued severance pay, net 425 410 Loans from banks and others 281 3,945 Derivative liabilities - Warrants 326 53 Total Non-Current Liabilities 1,032 4,408 Total Equity 15,040 15,595 TOTAL LIABILITIES AND EQUITY $19,542 $34,400 * Presented after reclassification of Liacom Ltd. as discontinued operation. BluePhoenix Solutions Ltd. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three months ended Nine months ended September 30, September 30, 2012 2011* 2012 2011* Unaudited Unaudited CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ($3,616) ($3,369) ($10,865) ($11,219) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 358 1,048 1,558 3,415 Decrease in accrued severance 18 (164) (16) (720) pay, net Stock–based compensation 443 305 1,408 947 Change in fair value of derivatives and discount 2,845 (31) 4,824 (288) amortization Gain on sales of subsidiaries (101) - 361 - and Appbuilder Loss on sale of property and - - 12 - equipment Deferred income taxes, net - (14) - (14) Long term receivable - (33) - (20) Changes in operating assets and liabilities: Decrease (increase) in trade 45 (66) 755 5,025 receivables Decrease (increase) in other 161 37 (691) (334) current assets Decrease in trade payables (411) (427) (1,106) (1,371) Decrease in other current liabilities and deferred (56) (1,263) (249) (1,828) revenues Net cash used in operating (314) (3,977) (4,009) (6,407) activities CASH FLOWS FROM INVESTING ACTIVITIES: Restricted cash - - 4,031 - Purchase of property and - (20) (60) (161) equipment Proceeds from sale of property 9 32 50 32 and equipment Additional consideration of - - - (1,163) previously acquired subsidiaries Proceeds from sales of 101 - 2,950 - subsidiaries and Appbuilder Net cash provided by (used) in 110 12 6,971 (1,292) investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Short term bank credit and (117) (1,186) (1,601) (6,054) convertible notes, net Issuance of shares and loan - - - 5,000 Exercise of warrants 120 - 120 - Repayment of long-term loans (66) - (3,553) (426) Dividend paid to noncontrolling - (76) - (217) interest Net cash used in financing (63) (1,262) (5,034) (1,697) activities NET CASH DECREASE FROM CONTINUED (267) (5,227) (2,072) (9,396) OPERATION CASH AND CASH EQUIVALENTS AT 2,192 8,114 3,997 12,295 BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END $1,925 $2,887 $1,925 $2,899 OF PERIOD * Presented after reclassification of Liacom Ltd. as discontinued operation. Contact: BluePhoenix Solutions Nir Peles, +972-9-9526110 BluePhoenix Solutions NPeles@bphx.com
BluePhoenix Solutions Reports Third Quarter 2012 Results
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