BluePhoenix Solutions Reports Record Fourth Quarter and Fiscal Year 2006 Results13 February 2007
BluePhoenix Solutions Ltd. (NASDAQ: BPHX), the leader in Enterprise IT Modernization, today reported its financial results for the fourth quarter and year ended December 31, 2006.
Fourth Quarter Results
BluePhoenix reported record fourth quarter sales of $18.3 million, an increase of 19% versus $15.4 million in the fourth quarter of 2005, and up from $17.1 million in the previous quarter. Operating income for the fourth quarter was a record $2.4 million, up 53% from $1.5 million in the fourth quarter of 2005 and up 18% from $2 million in the prior quarter. This marks the eighth consecutive quarter of growth in revenues and operating income that the Company has achieved.
Operating income margin for the fourth quarter climbed to a record 13% as compared to 12% in the previous quarter this year and 10% in the comparable fourth quarter of 2005.
Net income on a non-GAAP basis for the fourth quarter, excluding non-cash financial expenses mainly related to the convertible debentures, was $1.7 million, or $0.12 per share, as compared to $900,000, or $0.06 per share, in the fourth quarter of 2005, and $1.5 million, or $0.10 per share, in the prior quarter.
Net income on a GAAP basis for the fourth quarter was $1.38 million, or $0.09 per share, an increase of 70% as compared to $809,000, or $0.06 per share, in the fourth quarter of 2005 and up from $1.2 million, or $0.09 per share, in the previous quarter.
Fiscal Year 2006 Results
For the year ended December 31, 2006, BluePhoenix reported record sales of $68 million, up 15% from $58.9 in the previous year. The annual operating income for 2006 was $7.9 million almost double the comparable to $4 million in 2005.
Net income on a non-GAAP basis for 2006, excluding non-cash financial expenses mainly related to the convertible debentures, was $5.9 million or $0.41 per share, as compared to $2.3 million, or $0.17 per share in 2005.
Net income on a GAAP basis for 2006 was $4.7 million, or $0.33 per share, a jump of 261% from $1.8 million, or $0.13 per share, in 2005.
"The sequential growth in revenues and operational income that we achieved is the ultimate proof to our sustainable business model that we are implementing and the readiness of the market for our solutions," said Arik Kilman, chief executive officer of BluePhoenix Solutions. "The measurable and demonstrated business value that we bring to our customers serves as a catalyst in attracting new customers to use our proven solutions. This is evident in the increase in the backlog of signed purchase orders to $80 million at the beginning of 2007, as compared to $50 million at the beginning of 2006 and $35 million at the start of 2005."
Accomplishments
The following highlights were announced or occurred during 2006:
- Acquisition of the activities of our competitor CodeStream, strengthening our competitive advantage in the market, and gaining access to excellent technology, presence in the government sector and a highly professional skill base;
- Release of unique redevelopment solution for converting COBOL applications to Java and C#, incorporating a toolset, methodology and services;
- Verification of the simultaneous delivery model, which enables off-shore delivery in conjunction with on-site support. This model minimizes the interruption of customer systems and related risks during modernization projects;
New Deal Announcements During 2006
- Successful completion of Bull to HP migration for Port of Felixstowe, a member of Hutchison Ports Holding Group and the largest container port in the UK;
- Swiss Kanton Solothurn chose BluePhoenix to migrate the local government's Konsul core business process application from PowerBuilder to Java;
- Selected by Southeast Toyota Distributors and its parent company, JM Family Enterprises to modernize the company's vehicle distribution system;
- Chosen by Israel Local Authorities Data Processing Center to modernize systems from mainframe and ADABAS/Natural environment to UNIX and Java;
- Selected by the IT service provider for Gulf States Toyota, Inc., a major Toyota distributor, to modernize the company's vehicle distribution system;
- Desjardins General Insurance Group selected BluePhoenix for strategic modernization project to provide an improved technological infrastructure;
- Successful completion of an IBM OS/390 to HP Unix platform migration and DB2 to Oracle database migration project for Rural Servicios Informaticos (RSI).
"We have added over forty new customers during 2006 and are expecting significant growth in revenues and in the number of projects that we will support during 2007," stated Kilman. "In preparation for this expansion, we are anticipating the need to expand our off-shore delivery centers. As part of this process, we will evaluate the viability of moving or consolidating support and delivery centers to continue to increase efficiencies and margins, while providing customers with excellent delivery and support.
In addition, we will invest in additional sales offices in Europe and in Asia Pacific. We expect to see continued growth in revenues and in the number of projects that we will carry out. We see 2007 as the beginning of a 'new wave' in our business."
BluePhoenix will host a conference call on Monday, February 12th, 2007 at 10am EST (17:00 in Israel). Arik Kilman, CEO and Iris Yahal, CFO, will discuss the Company's fourth quarter and FY 2006 financial results.
To participate in the conference call, please call the appropriate number listed below at least five to ten minutes prior to the start of the call:
From the US: 1-(866)-254-5942
All Outside the US: +1-(612)-332-1210
Callers should reference "BluePhoenix Solutions Fourth Quarter and Year End Results 2006" to the AT&T conference call operator.
An automated replay of the conference call will be available from February 12th 01:30 P.M. until February 14th at 11:59 P.M. (EST).
To access the replay, please call:
From the US: 1-(800)-475-6701
All Outside the US: +1-(320)-365-3844
and enter the BluePhoenix Solution access code of 862383.
The automated replay can also be accessed at any time through our Web site, under the investor relations section.
About BluePhoenix Solutions
BluePhoenix Solutions (NASDAQ: BPHX) is a leading provider of value driven modernization solutions for legacy information systems. BluePhoenix's offering 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 twenty 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's solutions serve companies from diverse industries and vertical markets such as automotive, banking and financial services, insurance, manufacturing and retail. Among its prestigious customers are: Aflac, DaimlerChrysler, Danish Commerce and Companies Agency, Europe Assistance, Lawson Products, Los Angeles County Employees Retirement Association, Merrill Lynch, SDC Udvikling and TEMENOS. BluePhoenix has 12 offices in the U.S., UK, Denmark, Germany, Italy, Romania, Cyprus and Israel. The Company's major shareholder is Formula Systems (NASDAQ: FORTY), an international information technology company.
For more information, please visit our Web site at http://www.bphx.com.
BLUEPHOENIX SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED STATEMETS OF OPERATIONS
(in thousands,except per share data)
Three months ended Year ended
December 31, December 31,
2006 2005 2006 2005
Unaudited Unaudited
Revenues $18,290 $15,443 $68,004 $58,947
Cost of
revenues 7,674 6,432 28,515 25,379
Gross profit 10,616 9,011 39,489 33,568
Software
development
costs, net 2,587 2,090 9,400 8,006
Selling,
general and
administrative
expenses 5,339 5,192 21,170 20,553
2,690 1,729 8,919 5,009
Depreciation 325 182 979 1,058
Operating
income 2,365 1,547 7,940 3,951
Financial
expenses, net (1,058) (457) (3,505) (1,978)
Other income,
net --- 7 282 104
Income before
taxes 1,307 1,097 4,717 2,077
Taxes on
income (326) 146 (272) 149
1,633 951 4,989 1,928
Minority
interest (255) (142) (317) (139)
Net income $1,378 $809 $4,672 $1,789
Basic earnings
per share 0.10 0.06 0.34 0.13
Diluted
earnings per
share 0.09 0.06 0.33 0.13
Common shares
outstanding 14,092 13,558 13,889 13,557
Common shares
assuming
dilution 14,640 13,956 14,371 13,960
BLUEPHOENIX SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED BALANCE
SHEETS
(in thousands)
December 31 December 31
2006 2005
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $11,627 $10,791
Marketable securities 1,053 ---
Accounts receivable:
Trade 26,489 18,143
Other 3,096 2,495
Total current assets 42,265 31,429
LONG-TERM TRADE 1,390 ---
RECEIVABLES
INVESTMENTS --- 370
PROPERTY AND EQUIPMENT,
NET
Cost 12,092 11,465
Less - accumulated depreciation 9,945 9,305
2,147 2,160
OTHER ASSETS, NET 81,664 65,732
Total assets $127,466 $99,691
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term credit from banks and $609 $14,095
others
Convetible debentures 4,482 ---
Accounts payable and accruals:
Trade 4,594 3,088
Deffered revenue 7,790 2,776
Other 6,847 6,924
Total current liabilities 24,322 26,883
LONG-TERM LIABILITIES:
Convetible debentures 14,049 4,342
Accrued severance pay, net 1,718 1,309
Provision for losses in 1,971 1,971
formerly-consolidated subsidiary
Loans from banks and 20,109 8,389
others
Total long-term 37,847 16,011
liabilities
MINORITY INTEREST 5,348 5,031
SHAREHOLDERS' EQUITY 59,949 51,766
Total liabilities and shareholders' $127,466 $99,691
equity
BLUEPHOENIX SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
Non- GAAP Calculation Of Net Income
(in thousands,except per share
data)
Three months
ended Year ended
December 31, December 31,
2006 2005 2006 2005
Unaudited Unaudited
Net income $1,378 $809 $4,672 $1,789
Noncash financial expenses
mainly related to
convertible debentures 352 91 1,214 556
Net income excluding
special items $1,730 $900 $5,886 $2,345
Basic earnings per share 0.12 0.07 0.42 0.17
Diluted earnings per share 0.12 0.06 0.41 0.17
Common shares outstanding 14,092 13,558 13,889 13,557
Common shares assuming
dilution 14,640 13,956 14,371 13,960
SAFE HARBOR: Certain statements contained in this release may be deemed forward-looking statements, with respect to plans, projections, or future performance of the Company, the occurrence of which involves certain risks and uncertainties that could cause actual plans to differ materially from these statements. These risks and uncertainties include but are not limited to: market demand for the Company's tools, successful implementation of the Company's tools, competitive factors, the ability to manage the Company's growth, the ability to recruit and retrain additional software personnel, and the ability to develop new business lines.
Non-GAAP Financial Measures
To supplement BluePhoenix's consolidated financial statements presented in accordance with GAAP, BluePhoenix provides non-GAAP net income (loss) and non-GAAP net income (loss) per share data. The presentation of these non-GAAP financial measures should be considered in addition to BluePhoenix's 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's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain charges, gains and tax effects that may not be indicative of BluePhoenix's core business operating results. BluePhoenix believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing BluePhoenix's performance. These non-GAAP financial measures also facilitate comparisons to BluePhoenix's historical performance and its competitors' operating results. 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 "Non-GAAP Calculation of Net Income (Loss) Excluding Special Items " following the text of this press release.
Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.
All names and trademarks are their owners' property.
Company Contact: Iris Yahal +972-9-9526110
Investor Contact: Paul Holm +1-212-4967238
Source: prnewswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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