Tuesday, October 26, 2004
Black Box Corporation Reports Second Quarter and YTD Fiscal 2005 Resullts
Black Box Corporation (NASDAQ:BBOX) today reported for the second quarter ended October 2, 2004 diluted earnings per share of 60¢ compared to 64¢ last year. Net income for the second quarter was $10.6 million or 8.4% of revenues, compared to $12.1 million or 9.3% of revenues last year. On a sequential comparison basis, first quarter diluted earnings per share were 54¢ with corresponding net income of $10.0 million or 8.0% of revenues. Included in the FY05 second quarter earnings per share is a 2¢ negative impact from the previously disclosed settlement of a securities class action matter.
Total revenues for the second quarter were $127 million, down 2% from $129 million for the same period last year. On a sequential comparison basis, first quarter revenues were $124 million.
Second quarter cash provided by operating activities was approximately $11 million or 108% of net income, compared to $16 million or 132% of net income for the same period last year. On a sequential comparison basis, first quarter cash provided by operating activities was $9 million. Black Box utilized its second quarter cash provided by operating activities of $11 million, together with $3 million from other sources of cash, to make a dividend payment of $1 million and repurchase $13 million of its Common Stock.
For the six months ended October 2, 2004, diluted earnings per share were $1.14 compared to $1.24 for the same period last year, down 8%. Corresponding net income for the 6-month period was $21 million or 8.2% of revenues, compared to $24 million or 9.1% of revenues for the same period last year.
Total 6-month revenues were $251 million, down 3% from $258 million for the same period last year.
Cash provided by operating activities for the six-month period was $21 million or 100% of net income, compared to $31 million or 130% of net income last year. Black Box utilized the six-month cash provided by operating activities of $21 million, together with $19 million from other sources of cash, to make dividend payments of $2 million and repurchase $38 million of its Common Stock.
The Company’s 6-month order backlog was $55 million at October 2, 2004 compared to $53 million at the end of the first quarter.
Commenting on the second quarter results, Fred C. Young, Chief Executive Officer, said, "Sequential total revenues of $127 million were up from our first quarter’s $124 million. This is the sixth consecutive quarter we have generated revenues within a fairly tight range around this number. Relative to our expected range of $127 million to $129 million, less revenues from Europe were the difference towards reaching the upper end of this range. Overall profits at $11 million and corresponding cash flow from operations at $11 million remained strong. Relative to areas of improvement, we are focused in on raising our Data Services gross profit by 2 to 3 percentage points over the next 12 months."
Mr. Young continued, "With our operational stability and strong financial performance, we are turning more of our resources towards selected growth programs. This is in respect to both organic and merger related growth. We believe more scale helps us operate even more efficiently and further increases our benchmark levels of customer satisfaction."
The Company also announced today that its Board of Directors has declared a quarterly cash dividend of 6¢ per share of common stock. The dividend was declared on all outstanding shares of Black Box’s common stock and will be payable on January 14, 2005 to stockholders of record at the close of business on December 31, 2004. Black Box will pay the dividend through its transfer agent, American Stock Transfer & Trust Company.
As previously announced, the Company will host an Investor Day Conference on Thursday, November 4, 2004 at its World Headquarters in Lawrence, Pennsylvania (20 minutes south of Pittsburgh, Pennsylvania). The event is expected to run from 10:00 a.m. Eastern Standard Time and conclude at approximately 3:30 p.m. The program, which is open to the general public, will be hosted by Fred C. Young, Chief Executive Officer, and Michael McAndrew, Chief Financial Officer. Other members of the Company’s executive staff will be present. Participants are asked to register through investors@blackbox.com or by calling Investor Relations at 724-873-6788.
The Company will conduct a conference call beginning at 5:30 p.m. Eastern Daylight Time today, October 26, 2004. Fred C. Young, Chief Executive Officer, will host the call. To participate in the call, please dial 612-326-1003 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 749591.
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. Forward-looking statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. These include levels of business activity, expenses relating to corporate compliance requirements, cash flows and global economic conditions. Additional risk factors are included in the Company’s Annual Report on Form 10-K. Any information, which is not historical in nature, constitutes such forward-looking statements and speaks only as of the date of this release.
Black Box is the world’s largest technical services company dedicated to designing, building and maintaining today's complicated network infrastructure systems. Black Box services clients through 117 offices in 141 countries throughout the world.
Black Box and the diamond logo are registered trademarks of BB Technologies, Inc.
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three months ended Six months ended
------------------------ ------------------------
In thousands, except
per share October 2, September 28, October 2, September 28,
Unaudited 2004 2003 2004 2003
======================================================================
Revenues $ 126,595 $ 129,268 $ 250,950 $ 257,615
Cost of sales 74,280 75,393 146,755 150,293
---------- ------------- ---------- -------------
Gross profit 52,315 53,875 104,195 107,322
Selling, general &
administrative exp 35,227 34,536 71,124 69,521
Intangibles
amortization 69 45 128 134
---------- ------------- ---------- -------------
Operating income 17,019 19,294 32,943 37,667
Interest expense,
net 508 440 917 860
Other expenses, net
of income 40 25 47 16
---------- ------------- ---------- -------------
Income before income
taxes 16,471 18,829 31,979 36,791
Provision for income
taxes 5,848 6,778 11,353 13,244
---------- ------------- ---------- -------------
Net income $ 10,623 $ 12,051 $ 20,626 $ 23,547
========== ============= ========== =============
Basic earnings per
common share $ 0.61 $ 0.66 $ 1.17 $ 1.28
========== ============= ========== =============
Diluted earnings per
common share $ 0.60 $ 0.64 $ 1.14 $ 1.24
========== ============= ========== =============
Weighted average
common shares 17,425 18,208 17,601 18,412
========== ============= ========== =============
Weighted average
common & common
equivalent shares
outstanding 17,705 18,803 18,068 18,931
========== ============= ========== =============
BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS
In thousands October 2, March 31,
Unaudited 2004 2004
======================================================================
Assets
Cash and cash equivalents $ 9,713 $ 9,306
Accounts receivable, net 88,854 97,203
Inventories, net 42,180 40,162
Costs and estimated earnings in excess
of billings on uncompleted contracts 18,613 13,763
Deferred tax asset 4,473 4,131
Other current assets 11,394 9,610
---------- ----------
Total current assets 175,227 174,175
========== ==========
Property, plant and equipment, net 27,441 29,269
Goodwill, net 381,134 380,769
Intangibles, net 29,389 29,546
Other assets 2,900 2,530
---------- ----------
Total assets $ 616,091 $ 616,289
========== ==========
Liabilities
Current debt $ 364 $ 1,061
Accounts payable 29,650 30,709
Billings in excess of costs and estimated
Earnings on uncompleted contracts 4,425 5,665
Accrued compensation and benefits 6,078 6,836
Other accrued expenses 12,978 16,778
Accrued income taxes 3,518 3,695
---------- ----------
Total current liabilities 57,013 64,744
Long-term debt 52,208 35,177
Deferred taxes 11,930 11,050
Other liabilities 77 414
Stockholders' Equity
Common stock 24 23
Additional paid-in capital 333,742 324,219
Retained earnings 421,395 402,675
Treasury stock, at cost (277,459) (239,885)
Accumulated other comprehensive gain 17,161 17,872
---------- ----------
Total stockholders' equity 494,863 504,904
---------- ----------
Total liabilities and stockholders' equity $ 616,091 $ 616,289
========== ==========
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Six Months Ended
------------------------ ------------------------
In thousands October 2, September 28, October 2, September 28,
Unaudited 2004 2003 2004 2003
======================================================================
Operating Activities
Net income $10,623 $12,051 $20,626 $23,547
Adjustments to
reconcile net
income to cash
provided by
operating
activities:
Intangibles
amortization 69 45 128 134
Depreciation 1,284 1,543 2,712 3,218
Gain on disposal of
assets -- (301) -- (301)
Deferred tax
(benefit)/provision (926) (988) 538 (1,252)
Stock compensation
expense 680 -- 680 --
Changes in operating
assets and
liabilities:
Account receivable,
net 4,641 630 8,104 5,903
Inventories, net (699) (330) (2,098) (356)
Other current
assets 599 (390) (3,525) 6,082
Accounts payable
and accrued
liabilities (4,788) 3,649 (6,447) (6,272)
-------------------------------------------------
Net cash provided by
operating
activities $11,483 $15,909 $20,718 $30,703
-------------------------------------------------
Investing Activities
Capital expenditures,
net (644) $821 $(941) $801
Payments related to
acquisitions, net of
cash acquired (84) (104) (347) (1,018)
-------------------------------------------------
Net cash (used
in)/provided by
investing
activities $(728) $717 $(1,288) $(217)
-------------------------------------------------
Financing Activities
Repayments on
borrowings $4,185 $(2,086) $15,976 $(1,988)
Proceeds from
exercise of options 45 2,582 5,685 2,785
Payment of dividends (871) (920) (1,774) (1,824)
Deferred financing
costs (235) - (235) -
Purchase of treasury
stock (12,718) (17,402) (37,574) (36,680)
-------------------------------------------------
Net cash used in
financing
activities $(9,594) $(17,826) $(17,922) $(37,707)
Foreign currency
exchange impact on
cash $(761) $395 $(1,101) $1,600
-------------------------------------------------
Net
Increase/(decrease)
in cash & cash
equivalents $400 $(805) $407 $(5,621)
Cash & cash
equivalents at
beginning of period 9,313 9,227 9,306 14,043
-------------------------------------------------
Cash & cash
equivalents at end
of period $9,713 $8,422 $9,713 $8,422
=================================================
RECONCILIATIONS:
In addition to reported results under U.S. GAAP for the fiscal
periods, the following financial highlights table also includes, where
appropriate, a reconciliation of free cash flow (which is a non-GAAP
measure), to the most directly comparable GAAP measure. All dollar
amounts are in thousands.
A reconciliation of cash provided by operating activities to free
cash flow is presented below:
2Q05 2Q04 2Q05YTD 2Q04YTD
======================================================================
Cash provided by operating
activities $11,483 $15,909 $20,718 $30,703
Plus or (minus):
Net capital
expenditures/disposals (644) 821 (941) 801
Proceeds from stock option
exercises 45 2,582 5,685 2,785
Foreign currency exchange impact
on cash (761) 395 (1,101) 1,600
----------------------------------------------------------------------
Free cash flow $10,123 $19,707 $24,361 $35,889
======================================================================
SUPPLEMENTAL INFORMATION:
Additionally, the following supplemental information is being
provided for comparisons of second quarter ended October 2, 2004
reported results to this year's first quarter and prior year's second
quarter. All dollar amounts are in thousands unless noted otherwise.
Information on revenues and operating income by geography is
presented below.
2Q05 1Q05 2Q04 2Q05YTD 2Q04YTD
======================================================================
Revenues:
North America $84,792 $79,532 $88,473 $164,324 $174,890
Europe 32,830 35,560 32,037 68,390 65,635
All Other 8,973 9,263 8,758 18,236 17,090
-------------------------------------------------
Total $126,595 $124,355 $129,268 $250,950 $257,615
Operating Income:
North America $10,835 $7,910 $11,806 $18,745 $23,695
% of North America
revenues 12.8% 9.9% 13.3% 11.4% 13.5%
Europe $3,697 $5,652 $5,351 $9,349 $9,953
% of Europe
revenues 11.3% 15.9% 16.7% 13.7% 15.2%
All Other $2,487 $2,362 $2,137 $4,849 $4,019
% of All Other
revenues 27.7% 25.5% 24.4% 26.6% 23.5%
-------------------------------------------------
Total $17,019 $15,924 $19,294 $32,943 $37,667
% of total revenues 13.4% 12.8% 14.9% 13.1% 14.6%
Information on revenues and gross profit for hotline services,
data services and voice services is presented below:
2Q05 1Q05 2Q04 2Q05YTD 2Q04YTD
======================================================================
Revenues:
Hotline Services $56,972 $57,852 $58,994 $114,824 $114,970
Data Services 50,537 48,189 52,543 98,726 107,143
Voice Services 19,086 18,314 17,731 37,400 35,502
-------------------------------------------------
Total $126,595 $124,355 $129,268 $250,950 $257,615
Gross Profit:
Hotline Services $30,217 $30,978 $30,862 $61,195 $59,971
% of Hotline
Services revenues 53.0% 53.5% 52.3% 53.3% 52.2%
Data Services $15,366 $14,496 $17,003 $29,862 $35,137
% of Data Services
revenues 30.4% 30.1% 32.4% 30.2% 32.8%
Voice Services $6,732 $6,406 $6,010 $13,138 $12,214
% of Voice Services
revenues 35.3% 35.0% 33.9% 35.1% 34.4%
-------------------------------------------------
Total $52,315 $51,880 $53,875 $104,195 $107,322
% of total revenues 41.3% 41.7% 41.7% 41.5% 41.7%
======================================================================
Information on various balance sheet ratios, backlog and headcount
is presented below. Dollar amounts are in millions.
2Q05 1Q05 2Q04
======================================================================
Accounts Receivable:
Gross Accounts Receivable $ $98.0 $103.8 $108.1
Reserve $ / % $9.2 / 9.4% $10.3 / 9.9% $12.0 /11.1%
----- ----- -----
Net Accounts Receivable $ $88.8 $93.5 $96.1
Net Days Sales Outstanding 57 days 61 days 62 days
Inventory:
Gross Inventory $ $47.2 $46.2 $45.3
Reserve $ / % $5.0 / 10.6% $4.7 / 10.2% $ 4.4 / 9.8%
----- ----- -----
Net Inventory $ $42.2 $41.5 $40.9
Net Inventory Turns 8.2x 8.0x 7.1x
Six-Month Order Backlog $55 $53 $58
Team Members 2,624 2,695 3,029
======================================================================
Investor Contact:
Black Box Corporation
Mike McAndrew
724-873-6788
Fax: 724-873-6799
E-mail:
investors@blackbox.com