Tuesday, July 27, 2004
Black Box Corporation Reports First Quarter Fiscal 2005 Resullts
Black Box Corporation (NASDAQ:BBOX) today reported for the first quarter ended July 3, 2004 diluted earnings per share of 54¢ compared to 60¢ last year. Net income for the first quarter was $10.0 million or 8.0% of revenues, compared to $11.5 million or 9.0% of revenues last year. On a sequential comparison basis, fourth quarter diluted earnings per share were 61¢ with corresponding net income of $11.5 million or 8.9% of revenues.
Total revenues for the first quarter were $124.4 million, down 3% from $128.3 million last year. On a sequential comparison basis, fourth quarter revenues were $129.7 million.
First quarter cash provided by operating activities was $9 million or 92% of net income, compared to $14 million or 123% of net income last year. On a sequential comparison basis, fourth quarter cash provided by operating activities was $27 million. Black Box utilized $1 million of the cash from operations for the quarter to make a dividend payment and utilized the remaining $8 million, together with $17 million from other sources of cash, to repurchase $25 million of its Common Stock.
The Company’s 6-month order backlog was $53 million at July 3, 2004 compared to $56 million at the end of March 2004.
Commenting on the first quarter results, Fred C. Young, Chief Executive Officer, said, “Revenues of $124 million were down sequentially due primarily to one specific large client delaying for 90 days certain previously scheduled IT projects of approximately $3 million and a negative impact of currency translation of approximately $1 million. Gross profit percentage of 41.7% remained strong and consistent with previous quarters. Although operating expense dollars were down sequentially, the corresponding operating expense percentage of 28.9% was up due to the lower revenues and additional professional services incurred relating to year-end auditing activities. Operating cash flow of $9 million was consistent with net income of $10 million.”
Mr. Young continued, “Relative to our second quarter, we currently expect revenues to be within a range of $127 to $129 million based on typical US government spending cycles and the return to a historical spend level with the previously mentioned large client. Gross profit is expected to be in the 41% to 42% range. Total operating expenses are expected to be in the 27.5% to 28% range.
“Operating cash flow should remain strong and increase to $12 to $15 million based on earnings and incremental working capital improvements. We will continue our stock repurchase program subject to continued business stability and at levels consistent with operating cash flow generation.
“In summary, although we had to deal with a few short-term impacts in our first quarter, the fundamental business model remains strong. And this includes our main focus centered around profitable ‘green growth’ for Black Box’s world-class technical support services.”
Relative to corporate governance, the Company received an updated Corporate Governance Quotient provided by Institutional Shareholder Services (ISS) as of July 20, 2004. In summary, this update highlighted that the Company now outperforms 88.8% of the companies in the Standard & Poor’s 600 and 95.6% of the companies in the technology hardware and equipment group. Mr. Young commented, “Black Box is proud to remain in a leadership position in this important area.”
The Company also announced that it plans to host an Investor Day Conference at its World Headquarters in Lawrence, Pennsylvania (25 minutes south of the Pittsburgh International Airport) on Thursday, November 4, 2004. The Conference program will run from 9 a.m. until 4 p.m. Interested investors should e-mail the Company at investors@blackbox.com or call Investor Relations at 724-873-6788. Further Conference details will become available in the coming weeks.
The Company will conduct a conference call beginning at 5:30 p.m. Eastern Daylight Time today, July 27, 2004. Fred 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 736863.
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 150,000 clients in 132 countries with 117 offices throughout the world.
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Quarter Ended
-------------------
July 3, June 29,
2004 2003
-------- --------
Revenues $124,355 $128,347
Cost of sales 72,475 74,900
-------- --------
Gross profit 51,880 53,447
Selling, general & administrative expenses 35,897 34,985
Intangibles amortization 59 89
-------- --------
Operating income 15,924 18,373
Interest expense, net 409 420
Other expenses, net of income 7 (9)
-------- --------
Income before income taxes 15,508 17,962
Provision for income taxes 5,505 6,466
-------- --------
Net income $ 10,003 $ 11,496
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Basic earnings per common share $ 0.56 $ 0.62
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Diluted earnings per common share $ 0.54 $ 0.60
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Weighted average common shares 17,771 18,617
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Weighted average common & common equivalent shares 18,476 19,062
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BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
July 3, March 31,
ASSETS 2004 2004
---------- ----------
Current assets:
Cash and cash equivalents $ 9,313 $ 9,306
Trade accounts receivable, net 93,527 97,203
Inventories, net 41,491 40,162
Costs and estimated earnings in excess of
billings on uncompleted contracts 19,571 13,763
Deferred tax asset 4,086 4,131
Other current assets 11,169 9,610
--------- ---------
Total current assets 179,157 174,175
--------- ---------
Property, plant and equipment, net 28,102 29,269
Goodwill, net 380,922 380,769
Other intangibles, net 29,501 29,546
Other assets 2,484 2,530
--------- ---------
Total assets $ 620,166 $ 616,289
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 307 $ 1,061
Accounts payable 30,951 30,709
Billings in excess of costs and estimated
earnings on uncompleted contracts 7,155 5,665
Accrued compensation and benefits 6,654 6,836
Accrued expenses 14,602 16,778
Accrued taxes 2,116 3,695
--------- ---------
Total current liabilities 61,785 64,744
--------- ---------
Long-term debt 48,089 35,177
Deferred taxes 12,469 11,050
Other liabilities 77 414
Stockholders' equity:
Common stock 24 23
Additional paid-in capital 333,004 324,219
Retained earnings 411,806 402,675
Treasury stock, at cost (264,741) (239,885)
Accumulated other comprehensive gain 17,653 17,872
--------- ---------
Total stockholders' equity 497,746 504,904
--------- ---------
Total liabilities and stockholders' equity $ 620,166 $ 616,289
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BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Quarter Ended
-------------------
July 3, June 29,
2004 2003
--------- ---------
Cash flows from operating activities:
Net income $ 10,003 $ 11,496
Adjustments to reconcile net income to cash
provided by operating activities:
Intangibles amortization 59 89
Depreciation 1,427 1,675
Changes in working capital items:
Account receivable, net 3,463 3,901
Inventories, net (1,399) (389)
Other current assets (4,124) 4,780
Accounts payable and accrued liabilities (195) (7,366)
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Cash provided by operating activities 9,234 14,186
-------- --------
Cash flows from investing activities:
Capital expenditures, net of disposals (297) 25
Merger transactions and prior merger-related
payments, net of cash acquired (263) (784)
-------- --------
Cash (used in)/provided by investing activities (560) (759)
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Cash flows from financing activities:
Repayments of borrowings (28,759) (91,763)
Proceeds from borrowings 40,550 91,850
Proceeds from exercise of options 5,640 203
Payment of dividends (903) (904)
Purchase of treasury stock (24,856) (19,278)
-------- --------
Cash used in financing activities (8,328) (19,892)
-------- --------
Foreign currency exchange impact on cash (339) 1,649
-------- --------
Decrease in cash & cash equivalents 7 (4,816)
Cash & cash equivalents at beginning of period 9,306 14,043
-------- --------
Cash & cash equivalents at end of period $ 9,313 $ 9,227
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SUPPLEMENTAL INFORMATION:
In addition to reported results under U.S. GAAP for the fiscal
periods, the following financial table also includes, where
appropriate, a reconciliation of free cash flow (which is a non-GAAP
measure), to the most directly comparable GAAP measure. Management
believes that free cash flow, defined by the Company as cash provided
by operating activities less net capital expenditures, plus proceeds
from option exercises, plus or minus foreign currency exchange impact
on cash, is an important measurement of liquidity as it represents the
total cash available to the Company. All dollar amounts are in
thousands.
A reconciliation of cash provided by operating activities to free
cash flow is presented below:
1Q05 1Q04
----------------------------------------------------------------------
Cash provided by operating activities $ 9,234 $ 14,186
Plus or (minus):
Net capital expenditures/disposals (297) 25
Proceeds from stock option exercises 5,640 203
Foreign currency exchange impact on cash (339) 1,649
----------------------------------------------------------------------
Free cash flow $ 14,238 $ 16,063
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Additionally, the following supplemental information is being
provided for comparisons of first quarter ended July 3, 2004 reported
results to the prior year's fourth quarter and first quarter. All
dollar amounts are in thousands unless noted otherwise.
Information on revenues and operating income by geography is
presented below.
1Q05 4Q04 1Q04
----------------------------------------------------------------------
Revenues:
North America $ 79,532 $ 81,744 $ 86,417
Europe 35,560 38,214 33,598
All Other 9,263 9,772 8,332
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Total $ 124,355 $ 129,730 $ 128,347
Operating Income:
North America $ 7,910 $ 9,686 $ 11,889
% of North America revenues 10.0% 11.8% 13.8%
Europe $ 5,652 $ 5,534 $ 4,602
% of Europe revenues 15.9% 14.5% 13.7%
All Other $ 2,362 $ 2,689 $ 1,882
% of All Other revenues 25.5% 27.5% 22.6%
---------------------------------
Total $ 15,924 $ 17,909 $ 18,373
% of total revenues 12.8% 13.8% 14.3%
Information on revenues and gross profit for hotline services,
data services and voice services is presented below:
1Q05 4Q04 1Q04
----------------------------------------------------------------------
Revenues:
Hotline Services $ 57,852 $ 61,364 $ 55,976
Data Services 48,189 52,851 54,600
Voice Services 18,314 15,515 17,771
---------------------------------
Total $ 124,355 $ 129,730 $ 128,347
Gross Profit:
Hotline Services $ 30,978 $ 32,711 $ 29,109
% of Hotline Services revenues 53.5% 53.3% 52.0%
Data Services $ 14,496 $ 15,925 $ 18,134
% of Data Services revenues 30.1% 30.1% 33.2%
Voice Services $ 6,406 $ 5,652 $ 6,204
% of Voice Services revenues 35.0% 36.4% 34.9%
---------------------------------
Total $ 51,880 $ 54,288 $ 53,447
% of total revenues 41.7% 41.8% 41.6%
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Information on various balance sheet ratios, backlog and headcount
is presented below. Dollar amounts are in millions.
1Q05 4Q04 1Q04
----------------------------------------------------------------------
Accounts Receivable:
Gross Accounts Receivable $ $ 103.8 $ 107.6 $ 108.0
Reserve $ / % $ 10.3/9.9% $ 10.4/9.7% $ 11.7/10.8%
---- ---- ----
Net Accounts Receivable $ $ 93.5 $ 97.2 $ 96.3
Net Days Sales Outstanding 61 days 63 days 63 days
Inventory:
Gross Inventory $ $ 46.2 $ 45.0 $ 44.4
Reserve $ / % $ 4.7/10.2% $ 4.8/10.8% $ 4.0/10.8%
--- --- ---
Net Inventory $ $ 41.5 $ 40.2 $ 40.4
Net Inventory Turns 8.0x 7.6x 7.2x
Six-Month Order Backlog $ 53 $ 56 $ 58
Team Members 2,695 2,779 3,009
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Investor Contact:
Black Box Corporation
Mike McAndrew
724-873-6788
Fax: 724-873-6799
E-mail:
investors@blackbox.com