Tuesday, August 14, 2007
Black Box Corporation Reports First Quarter of Fiscal 2008 Results
View Details
Reports 24% increase in GAAP EPS and 26% increase in operating EPS over prior year
PITTSBURGH, PENNSYLVANIA, August 14, 2007 -- Black Box Corporation (NASDAQ:BBOX) today reported results for the first quarter of Fiscal 2008 ended June 30, 2007.
For the first quarter of Fiscal 2008, diluted earnings per share were 46¢ on net income of $8.2 million or 3.2% of revenues compared to diluted earnings per share of 37¢ on net income of $6.8 million or 3.0% of revenues for the same quarter last year. On a sequential quarter comparison basis, fourth quarter of Fiscal 2007 diluted earnings per share were 37¢ on net income of $6.6 million or 2.7% of revenues. Excluding reconciling items, operating earnings per share (which is a non-GAAP term and is defined below) for first quarter of Fiscal 2008 were 73¢ on operating net income (which is a non-GAAP term and is defined below) of $13.0 million or 5.1% of revenues compared to operating earnings per share of 58¢ on operating net income of $10.6 million or 4.6% of revenues for the same quarter last year. Management believes that presenting operating earnings per share and operating net income is useful to investors because it provides a more meaningful comparison of the ongoing operations of the Company.
During the first quarter of Fiscal 2008, the Company’s pre-tax reconciling items were $7.4 million with an after tax impact on net income and EPS of $4.7 million and 27¢, respectively. During the first quarter of Fiscal 2007, as previously disclosed, the Company’s pre-tax reconciling items were $5.8 million with an after tax impact on net income and EPS of $3.8 million and 21¢, respectively. See below for further discussion regarding management’s use of non-GAAP accounting measurements and a detailed presentation of the Company’s pre-tax reconciling items for the periods presented above.
First quarter of Fiscal 2008 total revenues were $252 million, an increase of $22 million or 10% from $230 million for the same quarter last year. On a sequential quarter comparison basis, fourth quarter of Fiscal 2007 total revenues were $250 million.
First quarter of Fiscal 2008 cash provided by operating activities was $8 million or 94% of net income, compared to $13 million or 185% of net income for the same quarter last year. First quarter of Fiscal 2008 free cash flow (which is a non-GAAP term and is defined below) was $7 million compared to $14 million for the same quarter last year. On a sequential quarter comparison basis, fourth quarter of Fiscal 2007 cash provided by operating activities was $12 million or 182% of net income and free cash flow was $13 million. Black Box utilized its first quarter of Fiscal 2008 free cash flow to fund debt reduction of $3 million, to fund payments due on prior period acquisition activity of $3 million and to pay dividends of $1 million. Management believes that free cash flow, defined by the Company as cash provided by operating activities less net capital expenditures, plus proceeds from stock option exercises, plus or minus foreign currency translation adjustments, is an important measurement of liquidity as it represents the total cash available to the Company.
The Company’s 6-month order backlog was $165 million at June 30, 2007 compared to $168 million for the same quarter ended last year. On a sequential quarter end comparison basis, the Company’s 6-month order backlog was $159 million at March 31, 2007.
The Company has received notification that its distribution agreement with Avaya, Inc. will be terminated effective September 8, 2007. The Company is in discussions with Avaya concerning the future business relationship of the parties and the handling of key accounts. The Company continues to evaluate the potential financial impact of this event as well as potential business strategies to minimize such impact. The Company currently anticipates that this event will not have a material impact on its Fiscal 2008 operating results.
As a result of the pending termination of its distribution agreement with Avaya, Inc. and an increase in the Company’s current effective tax rate from Fiscal 2007, the Company’s current targets for Fiscal 2008 are reported revenues of approximately $1.0 billion; corresponding operating earnings per share in the range of $3.30 to $3.50; and cash provided by operating activities in the range of 80% to 90% of operating net income.
All of the above ranges exclude acquisition-related expense, stock option-based expense (including the impact of SFAS 123(R)), any restructuring / severance / other costs related to the NextiraOne, LLC (“NextiraOne”) integration plan and the impact of changes in the fair market value of the Company’s interest rate swap, and are before any new mergers and acquisition activity that has not been announced.
Commenting on the first quarter results, Terry Blakemore, Interim President and Chief Executive Officer, said, “We are very pleased with our 1Q08 performance. Revenues, operating EPS and operating cash flow results achieved are consistent with our targeted ranges. We are particularly pleased with our overall organic growth of 6% as well as the positive organic growth reported in each of our geographic segments and service lines. We believe these results are attributable to the continued success in marketing our DVHTM (Data, Voice and Hotline) technical services coupled with stable end-user markets.”
Mr. Blakemore went on to say, “In addition, significant progress continues to be made towards finalizing the integration efforts related to the NextiraOne acquisition. To that end, in 1Q08, we incurred approximately $4 million in expenses primarily related to systems integration, severance and facility consolidation. We expect that these actions will reduce our ongoing operating costs by approximately $2 million per quarter and are an important step in increasing both profitability and cash flow consistent with our FY08 objectives.”
“In summary, our expectations for Black Box in FY08 remain high and are centered around continuing to deliver the highest quality technical DVH services to our clients around the world.”
The Company will conduct a conference call beginning at 5:00 p.m. Eastern Daylight Time today, August 14, 2007. Terry Blakemore, Interim President and Chief Executive Officer, will host the call. To participate in the call, please dial 612-332-1025 approximately 15 minutes prior to the starting time and ask to be connected to the Black Box Earnings Call. A replay of the conference call will be available for one week after the teleconference by dialing 320-365-3844 and using access code 882462.
Black Box is the world’s largest technical services company dedicated to designing, building and maintaining today’s complicated data and voice infrastructure systems. Black Box services 175,000 clients in 141 countries with 173 offices throughout the world. To learn more, visit the Black Box website at www.blackbox.com.
Black Box and the Double Diamond logo are registered trademarks and DVH is a trademark of BB Technologies, Inc.
Any forward-looking statements contained in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and speak only as of the date of this release. You can identify these forward-looking statements by the fact they use words such as "should," "anticipate," "estimate," "approximate," "expect," "target," "may," "will," "project," "intend," "plan," "believe" and other words of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Although it is not possible to predict or identify all risk factors, they may include the timing and final outcome of the ongoing review of the Company’s stock option practices, including the related SEC investigation, shareholder derivative lawsuit, Nasdaq Stock Market (“NASDAQ”) process regarding listing of the Company’s common stock and tax matters, and the impact of any actions that may be required or taken as a result of such review, SEC investigation, shareholder derivative lawsuit, NASDAQ process or tax matters, levels of business activity and operating expenses, expenses relating to corporate compliance requirements, cash flows, global economic and business conditions, successful integration of acquisitions, including the NextiraOne business, the timing and costs of restructuring programs, successful marketing of DVH (Data, Voice, Hotline) services, successful implementation of our M&A program, including identifying appropriate targets, consummating transactions, and successfully integrating the businesses, competition, changes in foreign, political and economic conditions, fluctuating foreign currencies compared to the U.S. dollar, rapid changes in technologies, client preferences, the ability of the Company to identify, acquire and operate additional technical services companies, the Company’s arrangements with suppliers of voice equipment and technology and various other matters, many of which are beyond the Company's control. Additional risk factors are included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2007. We can give no assurance that any goal, plan or target set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of future events or developments.
BLACK BOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three months ended June 30,
---------------------------
In thousands, except per share amounts 2007 2006
----------------------------------------------------------------------
Revenues:
Hotline products $ 56,139 $ 52,225
On-Site services 196,152 178,170
------------- -------------
Total 252,291 230,395
Cost of Sales:
Hotline products 29,362 25,461
On-Site services 131,699 119,090
------------- -------------
Total 161,061 144,551
Gross profit 91,230 85,844
Selling, general & administrative expenses 72,743 70,202
Intangibles amortization 2,318 1,506
------------- -------------
Operating income 16,169 14,136
Interest expense (income), net 3,280 3,640
Other expenses (income), net (67) 115
------------- -------------
Income before provision for income taxes 12,956 10,381
Provision for income taxes 4,768 3,568
------------- -------------
Net income $ 8,188 $ 6,813
============= =============
Earnings per common share:
Basic $ 0.47 $ 0.39
============= =============
Diluted $ 0.46 $ 0.37
============= =============
Weighted average common shares outstanding
Basic 17,527 17,626
============= =============
Diluted 17,639 18,262
============= =============
Dividends per share $ 0.06 $ 0.06
BLACK BOX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except par value June 30, 2007 March 31, 2007
----------------------------------------------------------------------
Assets
Cash and cash equivalents $ 16,295 $ 17,157
Accounts receivable, net 162,384 161,733
Inventories, net 69,745 72,807
Costs/estimated earnings in excess of
billings on uncompleted contracts 62,296 61,001
Prepaid and other current assets 33,215 31,057
------------- --------------
Total current assets 343,935 343,755
Property, plant and equipment, net 37,237 39,051
Goodwill, net 569,438 568,647
Intangibles:
Customer relationships, net 67,048 68,016
Other intangibles, net 31,916 33,258
Other assets 30,618 37,364
------------- --------------
Total assets $ 1,080,192 $ 1,090,091
============= ==============
Liabilities
Accounts payable $ 79,492 $ 74,727
Accrued compensation and benefits 20,529 21,811
Deferred revenue 32,574 35,630
Billings in excess of costs/estimated
earnings on uncompleted contracts 18,446 19,027
Income taxes 13,574 13,430
Other liabilities 58,789 62,071
------------- --------------
Total current liabilities 223,404 226,696
Long-term debt 234,999 238,194
Other liabilities 20,321 25,505
------------- --------------
Total liabilities 478,724 490,395
Stockholders' equity
Common stock 25 25
Additional paid-in capital 438,595 441,283
Retained earnings 452,048 450,022
Accumulated other comprehensive income 27,833 25,399
Treasury stock (317,033) (317,033)
------------- --------------
Total stockholders' equity 601,468 599,696
------------- --------------
Total liabilities and stockholders'
equity $ 1,080,192 $ 1,090,091
============= ==============
BLACK BOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended June 30,
---------------------------
In thousands 2007 2006
----------------------------------------------------------------------
Operating Activities
Net income $ 8,188 $ 6,813
Adjustments to reconcile net income to net
cash provided by (used for) operating
activities:
Intangibles amortization and depreciation 5,273 3,806
Loss on sale of property 481 --
Deferred taxes (7,789) (508)
Stock compensation expense 1,716 3,249
Tax impact from stock options 4,404 779
Change in fair value of interest rate swap (1,308) --
Changes in operating assets and
liabilities:
Accounts receivable, net 320 11,218
Inventories, net 3,312 (1,066)
All other current assets excluding
deferred tax asset (1,996) (2,115)
Liabilities exclusive of long-term debt (4,897) (9,569)
-------------- ------------
Net cash provided by (used for) operating
activities $ 7,704 $ 12,607
Investing Activities
Capital expenditures $ (984) $ (1,523)
Capital disposals -- 30
Acquisition of businesses
(payments)/recoveries -- (129,161)
Prior merger-related (payments)/recoveries (3,250) (1,350)
-------------- ------------
Net cash provided by (used for) investing
activities $ (4,234) $ (132,004)
Financing Activities
Proceeds from borrowings $ 47,445 $ 194,522
Repayment of borrowings (50,818) (73,769)
Repayment on discounted lease rentals -- (21)
Proceeds from exercise of options -- 3,530
Payment of dividends (1,052) (1,055)
-------------- ------------
Net cash provided by (used for) financing
activities $ (4,425) $ 123,207
Foreign currency exchange impact on cash $ 93 $ (657)
-------------- ------------
Increase / (decrease) in cash and cash
equivalents $ (862) $ 3,153
Cash and cash equivalents at beginning of
period $ 17,157 $ 11,207
-------------- ------------
Cash and cash equivalents at end of period $ 16,295 $ 14,360
============== ============
Non-GAAP Financial Measures
As a supplement to United States Generally Accepted Accounting Principles (“GAAP”), the Company provides non-GAAP financial measures such as free cash flow, cash provided by operating activities excluding restructuring payments, operating net income, operating earnings per share (EPS), Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA to illustrate the Company's operational performance. These non-GAAP financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Pursuant to the requirements of Regulation G, the Company has provided Management explanations regarding their use and the usefulness of non-GAAP financial measures, definitions of the non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures which are provided below.
Management uses non-GAAP financial measures (a) to evaluate the Company's historical and prospective financial performance as well as its performance relative to its competitors, (b) to set internal sales targets and associated operating budgets, (c) to allocate resources, (d) to measure operational profitability and (e) as an important factor in determining variable compensation for Management and its team members. Moreover, the Company has historically reported these non-GAAP financial measures as a means of providing consistent and comparable information with past reports of financial results.
While Management believes these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of non-GAAP financial measures. The limitations include (i) the non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all of the Company's competitors and may not be directly comparable to similarly titled measures of the Company's competitors due to potential differences in the exact method of calculation, (ii) the non-GAAP financial measures exclude restructuring, severance and other acquisition integration costs (collectively referred to as “restructuring charges” or “restructuring payments”) incurred during the periods reported that will impact future operating results, (iii) the non-GAAP financial measures exclude certain non-cash amortization of intangible assets on acquisitions, however, do not specifically exclude the added benefits of these costs, such as revenue and contributing operating margin, (iv) the non-GAAP financial measures exclude non-cash stock-based compensation charges, which is similar to cash compensation paid to employees and is an integral part of achieving our operating results, (v) the non-GAAP financial measures exclude non-cash asset write-up depreciation expense on acquisitions related to acquisitions made during recent years which is derived from the book value to fair market value write-up on acquired assets, (vi) the non-GAAP financial measures exclude historical stock option granting practice investigation costs, (vii) the non-GAAP financial measures exclude the non-cash change in fair value of the interest rate swap which will continue to impact the Company’s earnings until the interest rate swap is settled and (viii) there is no assurance the excluded items in the non-GAAP financial measures will not occur in the future. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.
Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. The Company's non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measurements, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.
Free Cash Flow
Free cash flow is defined by the Company as cash provided by operating activities less net capital expenditures, plus proceeds from stock option exercises, plus or minus foreign currency translation adjustments. Management’s reasons for exclusion of each item are explained in further detail below.
Net capital expenditures
The Company believes net capital expenditures must be included with cash provided by operating activities to more properly reflect the actual cash available to the Company. Net capital expenditures are typically material and directly impact the availability of the Company’s operating cash. Net capital expenditures are comprised of capital expenditures and capital disposals.
Proceeds from stock option exercises
The Company believes that proceeds from stock option exercises should be added to cash provided by operating activities to more accurately reflect the actual cash available to the Company. The Company has demonstrated a recurring inflow of cash related to its stock-based compensation plans and since this cash is immediately available to the Company, it directly impacts the availability of the Company’s operating cash. The amount of proceeds from stock option exercises is dependent upon a number of variables, including the number and exercise price of outstanding options and the trading price of the Company's common stock. In addition, the timing of stock option exercises is under the control of the individual option holder and is not in the control of the Company. As a result, there can be no assurance as to the timing or amount of any proceeds from stock option exercises.
Foreign currency translation adjustment
Due to the size of the Company’s international operations, and the ability of the Company to utilize cash generated from foreign operations locally without the need to convert such currencies to U.S. dollars on a regular basis, the Company believes that it is appropriate to adjust its operating cash flows to take into account the positive and / or negative impact of such charges as such adjustment provides an appropriate measure of the availability of the Company’s operating cash on a world-wide basis. A limitation of adjusting cash flows to account for the foreign currency impact is that it may not provide an accurate measure of cash available in U.S. dollars.
A reconciliation of cash provided by operating activities to free
cash flow is presented below:
1Q08 4Q07 1Q07
----------------------------------------------------------------------
Cash provided by operating activities $7,704 $12,040 $12,607
Capital expenditures (984) (2,411) (1,523)
Capital disposals -- 474 30
Foreign currency exchange impact on cash 93 546 (657)
------- -------- --------
Free cash flow before stock option exercises $6,813 $10,649 $10,457
Proceeds from stock option exercises -- 2,829 3,530
------ -------- --------
Free cash flow $6,813 $13,478 $13,987
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Cash provided by operating activities excluding restructuring payments
Cash provided by operating activities excluding restructuring payments is defined by the Company as cash provided by operating activities plus restructuring payments. Restructuring payments are the cash payments made during the period for restructuring charges. The Company believes that restructuring payments should be added to cash provided by operating activities to more accurately reflect the cash flow from operations.
A reconciliation of cash provided by operating activities to cash provided by operating activities excluding restructuring payments is presented below:
1Q08 4Q07 1Q07
----------------------------------------------------------------------
Cash provided by operating activities $ 7,704 $12,040 $12,607
Restructuring payments 4,017 3,446 4,710
------- ------- -------
Cash provided by operating activities
excluding restructuring payments $11,721 $15,486 $17,317
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Operating net income and operating earnings per share (EPS)
Management believes that operating net income, defined as net income less reconciling items including restructuring charges, amortization of intangible assets on acquisitions, stock-based compensation expense, asset write-up depreciation expense on acquisitions and the change in fair value of the interest rate swap and operating EPS, defined as operating net income divided by weighted average common shares outstanding (diluted), provides investors additional important information to enable them to assess, in a way Management assesses, the Company’s current and future operations. Management’s reason for exclusion of each item is explained in further detail below:
Restructuring charges
The Company believes that incurring costs in the current period(s) as part of a restructuring plan or as a result of economies of scale from acquisitions will result in a long-term positive impact on financial performance in the future. Restructuring charges are presented in accordance with GAAP in the Company’s Condensed Consolidated Statements of Income. However, due to the material amount of additional costs incurred during a single or possibly successive periods, Management believes that exclusion of these costs and their related tax impact provides a more accurate reflection of the Company’s ongoing financial performance.
Amortization of intangible assets on acquisitions
The Company incurs non-cash amortization expense from intangible assets related to various acquisitions it has made in recent years. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by Management after the acquisition.
Stock-based compensation expense
The Company records non-cash stock-based compensation expense equal to the fair value of share-based payment awards to its directors, executives and employees. Stock-based compensation expense is an integral part of ongoing operations since it is considered similar to other types of compensation to employees. However, Management believes that varying levels of stock-based compensation expense could result in misleading period-over-period comparisons and is providing an adjusted disclosure, which excludes stock-based compensation and its related tax impact.
Asset write-up depreciation expense on acquisitions
The Company incurs non-cash asset write-up depreciation expense on acquisitions related to acquisitions made during recent years. Specifically, this non-cash expenditure is derived from the book value to fair market value write-up on acquired assets. Asset write-ups are depreciated over their remaining useful life which generally falls between one to five years. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are fixed from acquisition to the end of the asset’s useful life, and generally cannot be changed or influenced by Management after the acquisition.
Historical stock option granting practices investigation costs
The Company incurred significant costs in connection with its investigation of historical stock option grant practices during the current year. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs are generally non-recurring and cannot be changed or influenced by Management.
Change in fair value of the interest rate swap
To mitigate the risk of interest-rate fluctuations associated with the Company’s variable rate debt, the Company entered into a five-year interest rate swap (“interest rate swap”) that does not qualify as a cash flow hedge. Thus, the Company records the change in fair value of the interest rate swap as an asset/liability within the Company’s Condensed Consolidated Balance Sheets with the offset to Interest expense (income) within the Company’s Condensed Consolidated Statements of Income. Management excludes this non-cash expense (income) and the related tax impact for the purpose of calculating non-GAAP financial measures when it evaluates the continuing operational performance of the Company because these costs generally cannot be changed or influenced by Management.
The following table represents the Company’s pre-tax reconciling items:
1Q08 4Q07 1Q07
----------------------------------------------------------------------
Non-cash charges:
Amortization of intangible assets on
acquisitions $ 2,269 $4,127 $1,433
Stock-based compensation expense 1,716 1,832 3,249
Asset write-up depreciation expense on
acquisitions 659 742 --
Change in fair value of interest rate swap (1,308) 426 --
-------- ------ ------
Total Non-cash charges $ 3,336 $7,127 $4,682
Cash charges:
Restructuring charges $ 4,030 $1,099 $1,115
Historical stock option granting practices
investigation costs -- 542 --
-------- ------ ------
Total Cash charges $ 4,030 $1,641 $1,115
-------- ------ ------
Total pre-tax reconciling items $ 7,366 $8,768 $5,797
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A reconciliation of net income to operating net income is
presented below:
1Q08 4Q07 1Q07
----------------------------------------------------------------------
Net income $ 8,188 $ 6,628 $ 6,813
% of revenues 3.2% 2.7% 3.0%
Reconciling items, after tax 4,655 5,611 3,805
-------- -------- --------
Operating Net Income $12,843 $12,239 $10,618
% of revenues 5.1% 4.9% 4.6%
----------------------------------------------------------------------
A reconciliation of diluted earnings per common share (EPS) to
operating EPS (may not sum due to rounding) is presented below:
1Q08 4Q07 1Q07
----------------------------------------------------------------------
Diluted EPS $0.46 $0.37 $0.37
EPS impact of reconciling items 0.27 0.32 0.21
----- ----- -----
Operating EPS $0.73 $0.69 $0.58
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EBITDA and Adjusted EBITDA
Management believes that EBITDA, defined as income before
provision for income taxes plus interest, depreciation and
amortization, is a widely accepted measure of profitability that we
believe may be used to measure the Company's ability to service its
debt. Adjusted EBITDA, defined as EBITDA plus stock compensation
expense, may also be used to measure the Company's ability to service
its debt.
A reconciliation of net income to EBITDA is presented below:
1Q08 4Q07 1Q07
----------------------------------------------------------------------
Income before provision for income taxes $12,956 $10,477 $10,381
Interest 3,280 5,185 3,640
Depreciation / Amortization 5,273 7,277 3,806
------- ------- -------
EBITDA $21,509 $22,939 $17,827
Stock compensation expense 1,716 1,832 3,249
------- ------- -------
Adjusted EBITDA $23,225 $24,771 $21,076
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Supplemental Information:
The following supplemental information including geographical
segment results, service type results, same office comparisons and
significant balance sheet ratios and other information is being
provided for comparisons of reported results for first quarter of
Fiscal 2008, fourth quarter of Fiscal 2007 and first quarter of Fiscal
2007. All dollar amounts are in thousands unless noted otherwise.
Geographical Segment Results:
Management is presented with and reviews revenues, operating
income and adjusted operating income by geographical segment. Adjusted
operating income is defined as operating income less reconciling
items, including restructuring charges, amortization of intangible
assets on acquisitions, stock-based compensation expense, asset
write-up depreciation expense on acquisitions and historical stock
option granting practice investigation costs. See above for additional
details provided by Management regarding non-GAAP financial measures.
Revenues, operating income and adjusted operating income for North
America, Europe and All Other are presented below:
1Q08 4Q07 1Q07
----------------------------------------------------------------------
Revenues:
North America $210,002 $205,828 $192,572
Europe 32,799 34,479 29,345
All Other 9,490 9,477 8,478
--------- --------- ---------
Total $252,291 $249,784 $230,395
Operating income:
North America $ 10,582 $ 8,277 $ 9,397
% of North America revenues 5.0% 4.0% 4.9%
Europe $ 3,948 $ 5,308 $ 3,143
% of Europe revenues 12.0% 15.4% 10.7%
All Other $ 1,639 $ 2,054 $ 1,596
% of All Other revenues 17.3% 21.7% 18.8%
--------- --------- ---------
Total $ 16,169 $ 15,639 $ 14,136
% of Total revenues 6.4% 6.3% 6.1%
Reconciling items (pretax):
North America $ 8,674 $ 8,342 $ 5,797
Europe -- -- --
All Other -- -- --
--------- --------- ---------
Total $ 8,674 $ 8,342 $ 5,797
Adjusted Operating Income:
North America $ 19,256 $ 16,619 $ 15,194
% of North America revenues 9.2% 8.1% 7.9%
Europe $ 3,948 $ 5,308 $ 3,143
% of Europe revenues 12.0% 15.4% 10.7%
All Other $ 1,639 $ 2,054 $ 1,596
% of All Other revenues 17.3% 21.7% 18.8%
--------- --------- ---------
Total $ 24,843 $ 23,981 $ 19,933
% of Total revenues 9.8% 9.6% 8.7%
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Service Type Results:
Management is presented with and reviews revenues and gross profit
for Data Services, Voice Services and Hotline Services which are
presented below:
1Q08 4Q07 1Q07
----------------------------------------------------------------------
Revenues:
Data Services $ 46,165 $ 44,801 $ 44,531
Voice Services 149,987 147,138 133,639
Hotline Services 56,139 57,845 52,225
--------- --------- ---------
Total $252,291 $249,784 $230,395
Gross profit:
Data Services $ 14,177 $ 14,138 $ 13,317
% of Data Services revenues 30.7% 31.6% 29.9%
Voice Services $ 50,276 $ 51,026 $ 45,763
% of Voice Services revenues 33.5% 34.7% 34.2%
Hotline Services $ 26,777 $ 27,260 $ 26,764
% of Hotline Services revenues 47.7% 47.1% 51.2%
--------- --------- ---------
Total $ 91,230 $ 92,424 $ 85,844
% of Total revenues 36.2% 37.0% 37.3%
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Same-office Comparisons:
Management is presented with and reviews revenues on a same-office
basis which excludes the effects of revenues from acquisitions since
the earliest reported period thus allowing the comparison of
same-office revenues from the earliest to current period under review.
While the information provided below is presented on a consolidated
basis, the revenue from acquisitions from first quarter of Fiscal 2007
to first quarter of Fiscal 2008 relates to North America Voice
Services.
Information on revenues on a same-office basis compared to the
same quarter last year is presented below:
1Q08 1Q07 % Change
----------------------------------------------------------------------
Revenues as reported $252,291 $230,395 10%
Less revenues from offices added since
1Q07 (72,027) (60,174)
--------- ---------
Revenues on same-office basis $180,264 $170,221 6%
----------------------------------------------------------------------
Information on revenues on a same-office basis compared to the
sequential quarter is presented below:
1Q08 4Q07 % Change
----------------------------------------------------------------------
Revenues as reported $252,291 $249,784 1%
Less revenues from offices added since
4Q07 (2,632) (1,693)
--------- ---------
Revenues on same-office basis $249,659 $248,091 1%
----------------------------------------------------------------------
Significant Balance Sheet ratios and Other Information:
Information on certain balance sheet ratios, backlog and headcount
is presented below. Dollar amounts are in millions.
1Q08 4Q07 1Q07
----------------------------------------------------------------------
Accounts receivable:
Gross accounts receivable $176.1 $176.0 $188.2
Reserve $ / % $ 13.7 7.8% $ 14.3 8.1% $ 15.9 8.5%
------ ------ ------
Net accounts receivable $162.4 $161.7 $172.3
Net days sales outstanding 53 53 57
days days days
Inventory:
Gross inventory $ 91.7 $ 95.6 $ 93.9
Reserve $ / % $ 22.0 24.0% $ 22.8 23.8% $ 25.7 27.4%
------ ------ ------
Net inventory $ 69.7 $ 72.8 $ 68.2
Net inventory turns 7.5x 7.2x 7.2x
Six-month order backlog $ 165 $ 159 $ 168
Team members 4,454 4,581 4,752
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Investor Contact:
Mike McAndrew
Chief Financial Officer
Black Box Corporation
724-873-6788
E-mail: investors@blackbox.com