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Thursday, July 28, 2005


Black Box Corporation Reports First Quarter Fiscal 2006 Results


Announces $179 million in revenues and 75¢ per share excluding restructuring charges and acquisition related expenses


Black Box Corporation (NASDAQ:BBOX) today reported for the first quarter ended July 2, 2005 diluted earnings per share of 43 cents compared to 54 cents last year. Net income for the first quarter was $7.4 million or 4.1% of revenues, compared to $10.0 million or 8.0% of revenues last year. Excluding restructuring charges and acquisition related expenses in the first quarter of Fiscal 2006 described below, diluted earnings per share were 75 cents for the quarter and net income was $12.7 million or 7.1% of revenues.


During the first quarter of Fiscal 2006, the Company recorded a pre-tax restructuring charge of $5.3 million related to staffing level adjustments and real estate consolidations in Europe and North America. These restructuring charges complete the Company's previously announced restructuring plans that were initiated during the fourth quarter of Fiscal 2005. In addition, the Company incurred non-cash charges during the first quarter of Fiscal 2006 of $2.8 million pre-tax in connection with acquisition related expenses from the fourth quarter Fiscal 2005 purchase of Norstan, Inc. ("Norstan"). Management believes that presenting diluted earnings per share and net income excluding restructuring charges and acquisition related expenses is useful to investors because it provides a more meaningful comparison of the ongoing operations of the Company.


In accordance with SEC Regulation G, the attached financial charts include a reconciliation of the non-GAAP financial measures in this release to the most directly comparable GAAP measures.


Total revenues for the first quarter were $179 million, an increase of 44% from $124 million last year. On a sequential comparison basis, fourth quarter revenues were $157 million.


First quarter cash provided by operating activities was $11 million or 146% of net income, compared to $9 million or 92% of net income last year. On a sequential comparison basis, fourth quarter cash provided by operating activities was $18 million. Black Box utilized its first quarter cash provided by operating activities of $11 million to fund $10 million of mergers completed during the quarter and a dividend payment of $1 million.


The Company's 6-month order backlog was $97 million at June 30, 2005 compared to $97 million at the end of the fourth quarter.


Commenting on the quarter, Fred C. Young, Chief Executive Officer, said, "Overall, we are very pleased with our 1Q06 results. Key metrics that include revenue, profit and operating cash flow were consistent with our targeted ranges. Revenue mix percentages by service type continue to evolve and diversify towards on-site in general and voice services specifically. Relative to total revenues Data Services were 30% compared to last year's 39%; Voice Services were 40% compared to last year's 15%; and Hotline Services were 30% compared to last year's 46%."


Continuing on, Mr. Young said, "The integration plan for our recent Norstan merger, now Black Box - Minnetonka, is progressing well. During the quarter we also successfully merged with three additional technical services companies, which primarily provide voice services in the Florida and Virginia market places.


"In summary, as we look forward our goal is to build upon this quarter's positive momentum. We will remain focused on our two primary objectives. First and foremost, cross-sell and deliver Black Box's industry-leading DVH Services (Data, Voice and Hotline) to all clients. And secondly, leverage Black Box's financial strength via additional selected M&A activity."


The Company will conduct a conference call beginning at 5:00 p.m. Eastern Daylight Time today, July 28, 2005. Fred C. Young, 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 two weeks after the teleconference by dialing 320-365-3844 and using access code 788127.


The Company mailed its Proxy Statement and Fiscal 2005 Annual Report on July 1, 2005. The Company's Annual Stockholders Meeting will be held on Tuesday, August 9, 2005 at 12:30 p.m. Eastern Daylight Time at its Worldwide Headquarters in Lawrence, Pennsylvania (20 minutes south of Pittsburgh).


The Company also plans to host an Investor Day Conference at its Minnetonka, Minnesota office on Wednesday September 14, 2005 from 10:00 a.m. until 3:00 p.m. Central Time. Interested investors should email the Company at investors@blackbox.com or call Investor Relations at 724-873-6788. Further Conference details will become available in the coming weeks.


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. 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 levels of business activity and operating expenses, expenses relating to corporate compliance requirements, cash flows, global economic conditions, successful integration of the Norstan business, the timing and costs of restructuring programs, successful marketing of DVH services and successful implementation of our M&A program, including identifying appropriate targets, consummating transactions and successfully integrating the businesses. Additional risk factors are included in the Company's Annual Report on Form 10-K. 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.


About Black Box

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 152,000 clients in 141 countries with 126 offices throughout the world.


Black Box and the Double Diamond logo are registered trademarks of BB Technologies, Inc.

 

                        BLACK BOX CORPORATION
                  CONSOLIDATED STATEMENTS OF INCOME

                                                   Three months ended
                                                   -------------------
                                                    July 2,  July 3,
In thousands, except per share                       2005     2004
----------------------------------------------------------------------
Revenues                                           $179,282  $124,355
Cost of sales                                       108,342    72,475
                                                   --------- ---------
Gross profit                                         70,940    51,880
Selling, general & administrative expenses           50,920    35,897
Restructuring charges                                 5,290        --
Intangibles amortization                              1,558        59
                                                   --------- ---------
Operating income                                     13,172    15,924
Interest expense, net                                 1,959       409
Other (income)/expenses, net                            (75)        7
                                                   --------- ---------
Income before income taxes                           11,288    15,508
Provision for income taxes                            3,894     5,505
                                                   --------- ---------
Net income                                           $7,394   $10,003
                                                   ========= =========

Basic earnings per common share                       $0.44     $0.56
                                                   ========= =========

Diluted earnings per common share                     $0.43     $0.54
                                                   ========= =========

Weighted average common shares                       16,845    17,771
                                                   ========= =========

Weighted average common & common equivalent shares
 outstanding                                         17,042    18,476
                                                   ========= =========



                        BLACK BOX CORPORATION
                     CONSOLIDATED BALANCE SHEETS

                                                    July 2,  March 31,
In thousands                                         2005      2005
----------------------------------------------------------------------
Assets
Cash and cash equivalents                           $11,008   $11,592
Accounts receivable, net                            115,141   116,865
Lease receivables                                     1,057     1,697
Inventories, net                                     52,454    57,176
Costs and estimated earnings in excess
 of billings on uncompleted contracts                29,770    25,695
Deferred tax asset                                   10,031     9,236
Net current assets of discontinued operations           316       549
Other current assets                                 16,504    14,724
                                                   --------- ---------
     Total current assets                           236,281   237,534
                                                   --------- ---------
Property, plant and equipment, net                   36,173    38,268
Goodwill, net                                       448,993   444,567
Intangibles, net                                     46,829    44,157
Lease receivables, net of current portion               378       473
Deferred tax asset                                    3,984     3,793
Discontinued operations, net of current portion         316       373
Other assets                                          4,034     3,725
                                                   --------- ---------
Total assets                                       $776,988  $772,890
                                                   --------- ---------
Liabilities
Current maturities of long-term debt                   $981      $692
Current maturities of discounted lease rentals          488       890
Accounts payable                                     32,647    36,032
Billings in excess of costs and estimated
earnings on uncompleted contracts                    10,821     8,947
Deferred revenue                                     22,401    21,456
Accrued liabilities:
  Compensation and benefits                          13,833    13,073
  Restructuring                                       7,795     6,709
  Other liabilities                                  32,189    33,905
  Income taxes                                        8,176     3,295
                                                   --------- ---------
     Total current liabilities                      129,331   124,999
                                                   --------- ---------
Long-term debt                                      150,903   147,196
Discounted lease rentals                                  9        30
Other liabilities                                        75        75
Restructuring reserve                                 9,023     9,889
Stockholders' Equity
Common stock                                             24        24
Additional paid-in capital                          336,457   336,290
Retained earnings                                   435,017   428,632
Treasury stock, at cost                            (296,797) (296,797)
Accumulated other comprehensive gain                 12,946    22,552
                                                   --------- ---------
     Total stockholders' equity                     487,647   490,701
                                                   --------- ---------
Total liabilities and stockholders' equity         $776,988  $772,890
                                                   --------- ---------



                        BLACK BOX CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                   Three months ended
                                                   -------------------
                                                    July 2,   July 3,
In thousands                                         2005      2004
                                                   -------------------
Operating Activities
Net income                                           $7,394   $10,003
Adjustments to reconcile net income to cash
  provided by operating activities:
 Intangibles amortization                             1,558        59
 Depreciation                                         2,233     1,427
 Deferred taxes                                      (2,493)    1,464
 Tax impact from exercised options                      (31)   (3,145)
Changes in operating assets and liabilities:
 Account receivable, net                              4,785     3,463
 Inventories, net                                     5,032    (1,399)
 Other current assets                                (7,371)   (2,288)
 Proceeds from lease contracts                          735        --
 Accounts payable and accrued liabilities            (1,039)     (350)
                                                   --------- ---------
Net cash provided by operating activities            10,803     9,234
                                                   --------- ---------
Investing Activities
 Capital expenditures, net                              321      (297)
 Acquisition of businesses, net of cash acquired    (13,492)       --
 Prior merger-related recovery/(payments)                44      (263)
                                                   --------- ---------
Net cash used in investing activities               (13,127)     (560)
                                                   --------- ---------
Financing Activities
 Proceeds on borrowings, net                          3,072    11,791
 Repayments on discounted lease rentals                (423)       --
 Proceeds from exercise of options                      136     5,640
 Payment of dividends                                (1,011)     (903)
 Purchase of treasury stock                              --   (24,856)
                                                   --------- ---------
Net cash provided by/(used in) financing activities   1,774    (8,328)
                                                   --------- ---------
Foreign currency exchange impact on cash                (34)     (339)
                                                   --------- ---------
(Decrease)/increase in cash & cash equivalents         (584)        7
Cash & cash equivalents at beginning of period       11,592     9,306
                                                   --------- ---------
Cash & cash equivalents at end of period            $11,008    $9,313
                                                   ========= =========

RECONCILIATIONS:

In addition to reported results under U.S. GAAP for the fiscal
periods, the following financial highlights tables also includes,
where appropriate, a reconciliation of free cash flow, cash provided
by operating activities excluding restructuring payments and
satisfaction of a litigation judgment, net income excluding
restructuring charges and acquisition related expenses and diluted EPS
excluding restructuring charges and acquisition related expenses
(which are non-GAAP measures), 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:

                                                        1Q06    1Q05
----------------------------------------------------------------------
Cash provided by operating activities                 $10,803  $9,234
   Capital expenditures                                  (492)   (741)
   Capital disposals                                      813     444
   Proceeds from stock option exercises                   136   5,640
   Foreign currency exchange impact on cash               (34)   (339)
----------------------------------------------------------------------
Free cash flow                                        $11,226 $14,238
----------------------------------------------------------------------

A reconciliation of cash provided by operating activities to cash
provided by operating activities excluding restructuring payments and
satisfaction of a litigation judgment is presented below:

                                                        1Q06    1Q05
----------------------------------------------------------------------
Cash provided by operating activities                 $10,803  $9,234
   Restructuring payments                               4,842      --
   Satisfaction of a litigation judgment                1,778      --
----------------------------------------------------------------------
Cash provided by operating activities excluding
 restructuring payments and satisfaction of a
 litigation judgment                                  $17,423  $9,234
----------------------------------------------------------------------

A reconciliation of net income to net income excluding restructuring
charges and acquisition related expenses is presented below:

                                                        1Q06    1Q05
----------------------------------------------------------------------
Net income                                             $7,394 $10,003
% of revenues                                             4.1%    8.0%
Restructuring charges, after tax impact                 3,465      --
Acquisition related expenses, after tax impact          1,854      --
----------------------------------------------------------------------
Net income excluding restructuring charges and
 acquisition related expenses                         $12,713 $10,003
% of revenues                                             7.1%    8.0%
----------------------------------------------------------------------

A reconciliation of diluted earnings per common share (EPS) to diluted
EPS excluding restructuring charges and acquisition related expenses
is presented below:

                                                       1Q06       1Q05
----------------------------------------------------------------------
Diluted EPS                                             $0.43   $0.54
EPS impact of restructuring charges                      0.20      --
EPS impact of acquisition related expenses               0.11      --
----------------------------------------------------------------------
Diluted EPS excluding restructuring charges and
 acquisition related expenses                         $0.75(1) $ 0.54
----------------------------------------------------------------------

(1) Diluted EPS excluding restructuring charges and acquisition
related expenses table does not sum due to rounding.

SUPPLEMENTAL INFORMATION:

Additionally, the following supplemental information is being provided
for comparisons of first quarter ended July 2, 2005 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. Management believes it is important to separately present the
Fiscal 2006 restructuring charges and acquisition related expenses and
the Fiscal 2005 restructuring and other charges and reconciling items
(hereafter referred to as "special charges"). Management believes this
enables a clearer understanding of the ongoing operations of the
Company.

                                             1Q06     4Q05     1Q05
----------------------------------------------------------------------
Revenues:
  North America                            $136,861 $112,047  $79,532
  Europe                                     33,750   35,501   35,560
  All Other                                   8,671    9,682    9,263
                                           ---------------------------
  Total                                    $179,282 $157,230 $124,355

Operating Income:
  North America                             $11,859    $(292)  $7,910
 % of North America revenues                    8.7%   (0.3)%    10.0%
  Europe                                      $(367)    $274   $5,652
  % of Europe revenues                        (1.1)%     0.8%    15.9%
  All Other                                  $1,680   $1,414   $2,362
  % of All Other revenues                      19.4%    14.6%    25.5%
                                           ---------------------------
  Total                                     $13,172   $1,396  $15,924
  % of Total revenues                           7.3%     1.0%    12.8%

Special Charges:
  North America                              $4,379   $9,356      $--
  Europe                                      3,742    1,003       --
  All Other                                      --       --       --
                                           ---------------------------
  Total                                      $8,121  $10,359      $--

Operating Income Excluding
Special Charges:
  North America                             $16,238   $9,064   $7,910
 % of North America revenues                   11.9%     8.1%    10.0%
  Europe                                     $3,375   $1,277   $5,652
  % of Europe revenues                         10.0%     3.6%    15.9%
  All Other                                  $1,680   $1,414   $2,362
  % of All Other revenues                      19.4%    14.6%    25.5%
                                           ---------------------------
  Total                                     $21,293  $11,755  $15,924
  % of Total revenues                          11.9%     7.5%    12.8%
----------------------------------------------------------------------

Information on revenues and gross profit for data services, voice
services and hotline services is presented below:

                                             1Q06     4Q05     1Q05
----------------------------------------------------------------------
Revenues:
  Data Services                             $52,901  $48,799  $48,189
  Voice Services                             72,929   52,921   18,314
  Hotline Services                           53,452   55,510   57,852
                                           ---------------------------
  Total                                    $179,282 $157,230 $124,355

Gross Profit:
  Data Services                             $15,524  $13,343  $14,496
 % of Data Services revenues                   29.3%    27.3%    30.1%
 Voice Services                             $27,838  $17,648   $6,406
  % of Voice Services revenues                 38.2%    33.3%    35.0%
  Hotline Services                          $27,578  $28,725  $30,978
  % of Hotline Services revenues               51.6%    51.7%    53.5%
                                           ---------------------------
  Total                                     $70,940  $59,716  $51,880
  % of Total revenues                          39.6%    38.0%    41.7%
----------------------------------------------------------------------

Information on revenues on a same-office basis as compared to prior
year is presented below:

                                              1Q06    1Q05     Change
----------------------------------------------------------------------
Revenues as reported                       $179,282 $124,355       44%
Less revenues from offices added since 1Q05 (53,582)      --
                                           ---------------------------
Revenues on same-office basis              $125,700 $124,355        1%
----------------------------------------------------------------------

Information on revenues on a same-office basis as compared to prior
quarter is presented below:

                                              1Q06    4Q05     Change
----------------------------------------------------------------------
Revenues as reported                       $179,282 $157,230       14%
Less revenues from offices added since 1Q05 (53,582) (35,208)
                                           ---------------------------
Revenues on same-office basis              $125,700 $122,022        3%
----------------------------------------------------------------------

Information on various balance sheet ratios, backlog and headcount is
presented below. Dollar amounts are in millions.

                                  1Q06         4Q05         1Q05
----------------------------------------------------------------------
Accounts Receivable:
   Gross Accounts Receivable $  $122.7       $124.2       $103.8
   Reserve $ / %                $  7.6/6.2%  $  7.3/5.9%  $ 10.3/9.9%
                                   ---          ---         ----
   Net Accounts Receivable $    $115.1       $116.9       $ 93.5

   Net Days Sales Outstanding   55 days      57 days      61 days

Inventory:
   Gross Inventory $            $ 64.8       $ 69.7       $ 46.2
   Reserve $ / %                $ 12.3/19.0% $ 12.5/18.0% $  4.7/10.2%
                                  ----         ----          ---
   Net Inventory $              $ 52.5       $ 57.2       $ 41.5

   Net Inventory Turns             7.2x         6.4x         8.0x

Six-Month Order Backlog         $   97       $   97       $   53

Team Members                     3,346        3,371        2,695
----------------------------------------------------------------------


Investor Contact:
Black Box Corporation
Mike McAndrew
724-873-6788
Fax: 724-873-6799
E-mail: investors@blackbox.com

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