Bluephoenix Solutions Ltd (BPHX) Q2 2014 Earnings Conference Call August 14, 2014 4:30 PM ET
Rick Rinaldo - Chief Financial Officer
Matt Bell - Chief Executive Officer
Good day, and welcome to the BluePhoenix Solutions Second Quarter 2014 Investors Call. Please note, today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Rick Rinaldo. Please go ahead, sir.
Thank you, operator. Before we begin, I would like to point out that during the course of the conference call, there maybe statements made relating to future results of the company that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results, performance, or achievements could vary materially from those anticipated in such forward-looking statements as a result of certain factors including those set forth in the company’s filing with the Securities and Exchange Commission.
At this time, I would like to introduce Matt Bell, Chief Executive Officer and President of BluePhoenix. Matt?
Thank you, Rick. Thank you, everyone, for joining our call. I am pleased to report that after a two-year effort to restore BluePhoenix to a more healthy condition, we have moved to a more normal mode of operation. We continue to deliver consistent revenue in the $2 million range with Q2 2014 at $1.9 million while continuing to tightly manage our expenses.
On a GAAP basis in the quarter, we had a more favorable operation loss of $797,000 compared to $860,000 in Q1 of 2014. Earnings per share for the quarter was a loss of $0.07 per diluted share compared to Q2 of 2013 loss of $0.07 and a loss to the $0.08 in Q1 of 2014.
Quarterly numbers aside, I am excited to talk about the announcements we made earlier in the week that BluePhoenix and ATERAS are entering into a strategic merger. The combined company will be branded as Modern Systems and deliver the widest range of solutions for transitioning legacy systems to modern platforms.
Modern Systems is unique in the market because of two key factors. The first is our technology. From incremental solutions to broad-based portfolio monetization, we will leverage our technology to deliver modernized applications in a modernized way, scalable, cost effective, and fully managed for in-house or cloud-based deployments.
The second factor is our 20-year heritage of successful monetization projects with nearly 200 enterprise customers and government entities. Our process for handling critical legacy system is battle tested, rock-solid, and carried out by the most experienced modernization resources in the world.
We want our customers to know we are combining the forces of two leaders in the legacy modernization industry and incorporating the expertise of both. The deal will combine ATERAS' service delivery capabilities in the U.S. and Canada as well as new technical solution that will enable us to sell to a wider customer base with BluePhoenix's international sales organization and engineering resources.
Now I will turn the call over to Rick for a full review of the financials. Rick.
Thanks, Matt. Hello to everyone. Pleased note that references to earnings numbers unless stated otherwise are non-GAAP results. You may refer to the 8-K press release for the quarterly numbers, reconciliation of GAAP to Non-GAAP, and the 10-Q and 10-K for additional detail.
Now with that covered, let's move on to the financials. During the quarter, we had revenues of $1.9 million that was consistent with Q1 of 2014, and $480,000 unfavorable compared to $2.4 million in Q2 of 2013. We were, however, successful on maintaining a near comparable operating loss through expense reductions when compared to prior year.
The operating expenses in Q2 were $1.4 million, which was $405,000 favorable or less than Q2 of 2013 and $121,000 favorable or less than Q1 of 2014.
We are continuing to actively manage our expense and infrastructure costs. For the operating loss in Q2, it was $595,000 versus a loss of $534,000 in Q2 of 2013, and $678,000 loss in Q1 of 2014.
On a GAAP basis in the quarter, our operating loss was $797,000 compared to $860,000 in Q1 of 2014. Earnings per share for the quarter was a loss of $0.07 per diluted share and the same when compared to Q2 of 2013 and a loss of $0.08 in Q1 of 2014.
On the balance sheet and cash flow side of things, the ending cash position was $387,000 for the quarter. Cash from operation decreases $482,000. In July, we started borrowing on the line of credit and are currently in negotiations with the bank to increase the credit limit and extend the term.
That concludes the financial review. I will now turn the call back over to Matt.
Thank you, Rick. Just a couple of quick comments before we take questions, we are satisfied with the stabilization in the numbers and are excited about this pending merger. The combined entity not only makes us bigger and serves a more global market, but it broadens our technology and solution set.
The combined companies have synergies that we are excited to leverage as soon as the deal is officially closed. We expect to cut cost of the combined entities and reduce operational overlap on the executive team, marketing team, the finance team, and overall operations.
Lastly, as we referenced on our call early in a week, we anticipate moving towards breakeven cash flow in the fourth quarter. We are excited about what the new combine entity will look like in the future financially.
With that said, operator, we are ready for questions.
Thank you. (Operator Instructions). There are no questions at this time. I would like to turn the call back over to our speakers.
Okay. Well, thank you, everybody for participating. One last comment is, we expect, again, as we stated in earlier calls that this deal is expected to close in the fourth quarter between ATERAS and BluePhoenix. Going forward, we expect it to have a positive impact and Modern Systems' balance sheet from day one. We are excited about this merger and what it brings to us as a company.
We will look forward to talking to you guys on the next earnings call. Thanks for your time.
This will conclude today's conference. We thank you for your participation.
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