Tuesday, January 20, 2004
Black Box Corporation Reports Third Quarter and YTD Fiscal 2004 Results
Black Box Corporation (NASDAQ:BBOX) Black Box Corporation today reported for the third quarter ended December 28, 2003, diluted earnings per share of 66 cents compared to 73 cents last year, down 10%. Corresponding net income for the third quarter was $12.2 million or 9.2% of revenues, compared to $14.8 million or 9.7% of revenues last year. For a sequential comparison, second quarter diluted earnings per share were 64 cents with corresponding net income of $12.1 million or 9.3% of revenues.
Total revenues for the third quarter were $133 million, down 13% from $153 million last year. For a sequential comparison, second quarter revenues were $129 million.
Third quarter cash provided by operating activities was $16 million or 128% of net income, compared to $27 million or 183% of net income last year. Third quarter free cash flow was $19 million compared to $28 million last year. For a sequential comparison, second quarter cash provided by operating activities was $16 million and free cash flow was $20 million. The third quarter's free cash flow of $19 million was used towards: Black Box stock repurchases of $16 million; dividend payments of $1 million; debt reduction of $1 million; and a cash on hand increase 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 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.
For the nine months ended December 28, 2003, diluted earnings per share were $1.90 compared to $2.17 last year, down 12%. Corresponding net income for the nine months was $35.7 million or 9.1% of revenues, compared to $44.5 million or 9.5% of revenues last year.
Total revenues for the nine months were $391 million, down 17% from $470 million last year.
Cash provided by operating activities for the nine months was $46 million or 130% of net income, compared to $69 million or 154% of net income last year. Free cash flow was $55 million compared to $71 million last year. The nine-month free cash flow of $55 million and $4 million of cash on hand was used towards: Black Box stock repurchases of $52 million; dividend payments of $3 million; debt reduction of $3 million; and merger obligations of $1 million.
In accordance with SEC Regulation G, the attached financial charts include a reconciliation of non-GAAP financial measures in this release to the most directly comparable GAAP measures.
Commenting on the third quarter results, Fred C. Young, Chief Executive Officer, said, "We are pleased with our sequential revenue growth, particularly in light of historical seasonality. Profits and cash flow remain strong. The key to this success centers around the consistent execution of world-class technical support services, our traditional customer-focused staple."
The Company will conduct a conference call beginning at 10:45 a.m. Eastern Time today, January 20, 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 713084.
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, including levels of business activity 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)
(Unaudited)
Quarter Ended Nine Months Ended
------------------- -------------------
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues $133,067 $153,062 $390,682 $470,205
Cost of sales 78,426 92,423 228,719 284,294
-------- -------- -------- --------
Gross profit 54,641 60,639 161,963 185,911
Selling, general and
administrative expenses 34,953 37,471 104,474 113,788
Intangibles amortization 64 96 198 305
-------- -------- -------- --------
Operating income 19,624 23,072 57,291 71,818
Interest expense, net 498 671 1,358 2,209
Other expenses, net of
income 75 44 91 114
-------- -------- -------- --------
Income before income taxes 19,051 22,357 55,842 69,495
Provision for income taxes 6,858 7,580 20,102 25,018
-------- -------- -------- --------
Net income $ 12,193 $ 14,777 $ 35,740 $ 44,477
======== ======== ======== ========
Basic earnings per common
share $ 0.68 $ 0.75 $ 1.96 $ 2.23
======== ======== ======== ========
Diluted earnings per common
share $ 0.66 $ 0.73 $ 1.90 $ 2.17
======== ======== ======== ========
Weighted average common shares 17,954 19,596 18,258 19,937
======== ======== ======== ========
Weighted average common and
common equivalent shares
outstanding 18,571 20,225 18,792 20,513
======== ======== ======== ========
BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited) (Audited)
December 28, March 31,
ASSETS 2003 2003
------------ ------------
Current assets:
Cash and cash equivalents $ 9,924 $ 14,043
Trade accounts receivable, net 100,632 100,263
Inventories, net 42,169 40,047
Costs and estimated earnings in excess
of billings on uncompleted contracts 15,276 18,261
Other current assets 13,301 16,052
----------- -----------
Total current assets 181,302 188,666
Property, plant and equipment, net 30,800 34,737
Intangibles, net 408,365 399,299
Other assets 2,907 4,027
----------- -----------
Total assets $ 623,374 $ 626,729
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 759 $ 926
Accounts payable 30,217 30,508
Billings in excess of costs and estimated
earnings on uncompleted contracts 3,599 3,295
Accrued expenses 26,507 32,405
Accrued taxes 2,080 2,940
----------- -----------
Total current liabilities 63,162 70,074
----------- -----------
Long-term debt 46,780 49,453
Other liabilities 10,894 12,780
Stockholders' equity:
Common stock 23 23
Additional paid-in capital 303,401 295,271
Retained earnings 392,040 359,037
Treasury stock, at cost (211,183) (163,547)
Accumulated other comprehensive gain 18,257 3,638
----------- -----------
Total stockholders' equity 502,538 494,422
----------- -----------
Total liabilities and
stockholders' equity $ 623,374 $ 626,729
=========== ===========
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Quarter Ended
December 28, December 29,
2003 2002
------------ ------------
Cash flows from operating activities:
Net income $ 12,193 $ 14,777
Adjustments to reconcile net income to
cash provided by operating activities:
Intangibles amortization 64 96
Depreciation 1,606 1,837
Changes in working capital items:
Account receivable, net (2,073) 804
Inventories, net (625) (1,020)
Other current assets 4,886 14,168
Accounts payable and accrued
liabilities (400) (3,572)
----------- -----------
Cash provided by operating activities $ 15,651 $ 27,090
----------- -----------
Cash flows from investing activities:
Capital expenditures,
net of disposals $ (435) $ (26)
Merger transactions, net of cash
acquired and prior merger-related
payments (252) (272)
----------- -----------
Cash used in investing activities $ (687) $ (298)
----------- -----------
Cash flows from financing activities:
Revolving credit repayments, net $ (953) $ (9,877)
Proceeds from exercise of options 3,178 2,239
Payment of dividends (913) -
Purchase of treasury stock (15,675) (17,138)
----------- -----------
Cash used in financing activities $ (14,363) $ (24,776)
----------- -----------
Foreign currency exchange impact on cash $ 901 $ (1,227)
----------- -----------
Increase in cash and cash equivalents $ 1,502 $ 789
Cash and cash equivalents at beginning of
period 8,422 12,658
----------- -----------
Cash and cash equivalents at end of period $ 9,924 $ 13,447
=========== ===========
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Nine Months Ended
December 28, December 29,
2003 2002
------------ ------------
Cash flows from operating activities:
Net income $ 35,740 $ 44,477
Adjustments to reconcile net income to
cash provided by operating activities:
Intangibles amortization 198 305
Depreciation 4,824 5,747
Gain on sale of property (531) -
Changes in working capital items:
Account receivable, net 3,929 12,065
Inventories, net (960) 2,783
Other current assets 11,265 11,242
Accounts payable and accrued
liabilities (8,052) (7,936)
----------- -----------
Cash provided by operating activities $ 46,413 $ 68,683
----------- -----------
Cash flows from investing activities:
Capital expenditures,
net of disposals $ 258 $ (706)
Merger transactions, net of cash
acquired and prior merger-related
payments (1,261) (7,561)
----------- -----------
Cash used in investing activities $ (1,003) $ (8,267)
----------- -----------
Cash flows from financing activities:
Revolving credit borrowings, net $ (2,959) $ (25,854)
Proceeds from exercise of options 5,963 4,366
Payment of dividends (2,737) -
Purchase of treasury stock (52,354) (37,853)
----------- -----------
Cash used in financing activities $ (52,087) $ (59,341)
----------- -----------
Foreign currency exchange impact on cash $ 2,558 $ (1,051)
----------- -----------
(Decrease)/increase in cash and cash
equivalents $ (4,119) $ 24
Cash and cash equivalents at beginning of
period 14,043 13,423
----------- -----------
Cash and cash equivalents at end of period $ 9,924 $ 13,447
=========== ===========
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:
3Q04 3Q03 3Q04YTD 3Q03YTD
------------------------------ --------- --------- --------- ---------
Cash provided by operating
activities $ 15,651 $ 27,090 $ 46,413 $ 68,683
Plus or (minus):
Net capital
expenditures/disposals (435) (26) 258 (706)
Proceeds from stock option
exercises 3,178 2,239 5,963 4,366
Foreign currency exchange
impact on cash 901 (1,227) 2,558 (1,051)
------------------------------ -------- -------- -------- --------
Free cash flow $ 19,295 $ 28,076 $ 55,192 $ 71,292
------------------------------ -------- -------- -------- --------
SUPPLEMENTAL INFORMATION:
Additionally, the following supplemental information
is being provided for comparisons of third quarter
ended December 28, 2003 reported results to
this year's second quarter and prior year's
third quarter. All dollar amounts are in thousands
unless noted otherwise.
Information on revenues and operating income
by geography is presented below:
3Q04 2Q04 3Q03 3Q04YTD 3Q03YTD
-------------------- --------- --------- --------- --------- ---------
Revenues:
North America $ 84,665 $ 88,473 $102,476 $259,555 $325,115
Europe 38,309 32,037 41,457 103,944 115,847
All Other 10,093 8,758 9,129 27,183 29,243
-------- -------- -------- -------- --------
Total $133,067 $129,268 $153,062 $390,682 $470,205
Operating Income:
North America $ 10,900 $ 11,806 $ 14,784 $ 34,595 $ 48,024
% of North America
revenues 12.9% 13.3% 14.4% 13.3% 14.8%
Europe $ 6,325 $ 5,351 $ 6,532 $ 16,278 $ 17,613
% of Europe
revenues 16.5% 16.7% 15.8% 15.7% 15.2%
All Other $ 2,399 $ 2,137 $ 1,756 $ 6,418 $ 6,182
% of All Other
revenues 23.8% 24.4% 19.2% 23.6% 21.1%
-------- -------- -------- -------- --------
Total $ 19,624 $ 19,294 $ 23,072 $ 57,291 $ 71,819
% of total
revenues 14.7% 14.9% 15.1% 14.7% 15.3%
Information on revenues and gross profit for
hotline services, data services (previously
structured cabling) and voice services (previously
telephony) is presented below:
3Q04 2Q04 3Q03 3Q04YTD 3Q03YTD
-------------------- --------- --------- --------- --------- ---------
Revenues:
Hotline Services $ 61,538 $ 58,994 $ 62,897 $176,508 $190,775
Data Services 54,305 52,543 69,323 161,448 219,147
Voice Services 17,224 17,731 20,842 52,726 60,283
-------- -------- -------- -------- --------
Total $133,067 $129,268 $153,062 $390,682 $470,205
Gross Profit:
Hotline Services $ 32,241 $ 30,862 $ 32,308 $ 92,212 $ 96,906
% of Hotline
Services revenues 52.4% 52.3% 51.4% 52.2% 50.8%
Data Services $ 16,267 $ 17,003 $ 21,439 $ 51,404 $ 70,117
% of Data Services
revenues 30.0% 32.4% 30.9% 31.8% 32.0%
Voice Services $ 6,133 $ 6,010 $ 6,892 $ 18,347 $ 18,888
% of Voice
Services revenues 35.6% 33.9% 33.1% 34.8% 31.3%
-------- -------- -------- -------- --------
Total $ 54,641 $ 53,875 $ 60,639 $161,963 $185,911
% of total
revenues 41.1% 41.7% 39.6% 41.5% 39.5%
-------------------- -------- -------- -------- -------- --------
Information on revenues on a same-office basis
is presented below:
3Q04 3Q03 Change
------------------------------------------ --------- --------- -------
Revenues as reported $133,067 $153,062 (13)%
Less revenues from offices added since
Fiscal 2003 (302) --
--------- --------- -------
Revenues on same-office basis $132,765 $153,062 (13)%
------------------------------------------ --------- --------- -------
Information on various balance sheet ratios,
backlog and headcount is presented below. Dollar
amounts are in millions.
3Q04 2Q04 3Q03
------------------------- -------------- -------------- --------------
Accounts Receivable:
Gross Accounts
Receivable $ $112.3 $108.1 $119.0
Reserve $ / % $11.7/10.4% $12.0/11.1% $8.4/7.1%
-------------- -------------- --------------
Net Accounts
Receivable $ $100.6 $96.1 $110.6
Net Days Sales 64 days 62 days 63 days
Outstanding
Inventory:
Gross Inventory $ $46.6 $45.3 $48.8
Reserve $ / % $4.4/9.4% $4.4/9.8% $3.8/7.8%
-------------- -------------- --------------
Net Inventory $ $42.2 $40.9 $45.0
Net Inventory Turns 8.0x 7.1x 9.1x
Six-Month Order Backlog $54 $58 $55
Team Members 2,928 3,029 3,517
------------------------- -------------- -------------- --------------
Investor Contact:
Black Box Corporation
Mike McAndrew
724-873-6788
Fax: 724-873-6799
E-mail:
investors@blackbox.com