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Tuesday, November 01, 2005


Black Box Corporation Reports Second Quarter And YTD Fiscal 2006 Results


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PITTSBURGH, PENNSYLVANIA, November 1, 2005 -- Black Box Corporation (NASDAQ:BBOX) today reported for the second quarter ended October 1, 2005 diluted earnings per share of 74¢ compared to 60¢ last year. Net income for the second quarter was $12.8 million or 6.9% of revenues, compared to $10.6 million or 8.4% of revenues last year. On a sequential comparison basis, first quarter diluted earnings per share were 43¢ with corresponding net income of $7.4 million or 4.1% of revenues. Excluding acquisition related expenses in the second quarter of Fiscal 2006 described below, diluted earnings per share were 78¢ and net income was $13.6 million or 7.4% of revenues.


During the second quarter of Fiscal 2006, the Company incurred non-cash charges of $1.3 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 acquisition related expenses is useful to investors because it provides a more meaningful comparison of the ongoing operations of the Company.


Total revenues for the second quarter were $185 million, an increase of 46% from $127 million for the same period last year. On a sequential comparison basis, first quarter revenues were $179 million.


Second quarter cash provided by operating activities was approximately $12 million or 91% of net income, compared to $11 million or 108% of net income for the same period last year. Second quarter free cash flow was $18 million compared to $10 million last year. On a sequential comparison basis, first quarter cash provided by operating activities was $11 million and free cash flow was $11 million. Black Box utilized its second quarter free cash flow of $18 million to fund $14 million of mergers and prior merger-related activity completed during the second quarter; net capital expenditures of $1 million; debt reduction of $2 million; and a dividend payment 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.


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.


For the six months ended October 1, 2005, diluted earnings per share were $1.17 compared to $1.14 for the same period last year, up 3%. Corresponding net income for the six-month period was $20.2 million or 5.5% of revenues, compared to $20.6 million or 8.2% of revenues for the same period last year. Excluding restructuring charges and acquisition related expenses for the six months ended October 1, 2005 described below, diluted earnings per share were $1.53 and net income was $26.3 million or 7.2% of revenues.


Total non-cash charges incurred for the six months ended October 1, 2005 associated with acquisition related expenses of Norstan was $4.1 million pre-tax. For the six-month period ended October 1, 2005, the Company incurred a pre-tax restructuring charge of $5.3 million related to staffing level adjustments and real estate consolidations in Europe and North America.


Total six-month revenues were $364 million, up 45% from $251 million for the same period last year.


Cash provided by operating activities for the six-month period was $22 million or 111% of net income, compared to $21 million or 100% of net income last year. Free cash flow was $29 million compared to $24 million last year. Black Box utilized the six-month free cash flow of $29 million to fund $27 million of mergers and prior merger-related activity completed during the period and dividend payments of $2 million.


The Company’s 6-month order backlog was $104 million at October 1, 2005 compared to $97 million at the end of the first quarter.


Commenting on the second quarter results, Fred C. Young, Chief Executive Officer, said, “We are pleased with our overall second quarter results. This quarter was the best quarter we have had in over two years as measured by the composite of total revenue, organic revenue growth, absolute EPS performance and cash flow. Contributing factors to this success include an improved global economy, excellent day-to-day execution and the successful integration of our mergers and acquisitions activity. Within the 46% total revenue growth over last year, we are particularly pleased with our 3% organic growth over last year and 4% organic growth from the sequential first quarter.”


Continuing on, Mr. Young said, “We like Black Box’s current global leadership position in the communications marketplace. And we will look to build upon this leadership position via our major strength - seamlessly delivering the highest quality data, voice and hotline technical services to our clients around the world.”


The Company will conduct a conference call beginning at 5:00 p.m. Eastern Standard Time today, November 1, 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 one week after the teleconference by dialing 320-365-3844 and using access code 798794.


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 (Data, Voice, Hotline) 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.


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 139 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 of BB Technologies, Inc.


                       BLACK BOX CORPORATION
                   CONSOLIDATED STATEMENTS OF INCOME

                            Three months ended     Six months ended
                           --------------------- ---------------------
In thousands, except per   October 1, October 2, October 1, October 2,
 share                        2005       2004       2005       2004
----------------------------------------------------------------------
Revenues                    $185,050   $126,595   $364,332   $250,950
Cost of sales                111,168     74,280    219,510    146,755
                           ---------- ---------- ---------- ----------
Gross profit                  73,882     52,315    144,822    104,195

Selling, general &

 administrative exp           50,647     35,227    101,567     71,124
Restructuring charges             --         --      5,290         --
Intangibles amortization       1,328         69      2,886        128
                           ---------- ---------- ---------- ----------
Operating income              21,907     17,019     35,079     32,943
Interest expense, net          2,330        508      4,289        917
Other expenses/(income), net      40         40        (35)        47
                           ---------- ---------- ---------- ----------
Income before income taxes    19,537     16,471     30,825     31,979
Provision for income taxes     6,740      5,848     10,634     11,353
                           ---------- ---------- ---------- ----------
Net income                   $12,797    $10,623    $20,191    $20,626
                           ========== ========== ========== ==========

Basic earnings per common
 share                         $0.75      $0.61      $1.19      $1.17
                           ========== ========== ========== ==========

Diluted earnings per common
 share                         $0.74      $0.60      $1.17      $1.14
                           ========== ========== ========== ==========

Weighted average common
 shares                       17,022     17,425     16,933     17,601
                           ========== ========== ========== ==========

Weighted average common &
 common equivalent shares
 outstanding                  17,374     17,705     17,208     18,068
                           ========== ========== ========== ==========


                       BLACK  BOX  CORPORATION
                     CONSOLIDATED BALANCE SHEETS
                                                  October 1, March 31,
In thousands                                         2005      2005
----------------------------------------------------------------------
Assets
Cash and cash equivalents                           $11,925   $11,592
Accounts receivable, net                            131,757   116,865
Lease receivables                                       645     1,697
Inventories, net                                     53,154    57,176
Costs and estimated earnings in excess
 of billings on uncompleted contracts                24,052    25,695
Deferred tax asset                                   10,496     9,236
Net current assets of discontinued operations           292       549
Other current assets                                 18,291    14,724
                                                  ---------- ---------
      Total current assets                         $250,612   237,534
                                                  ---------- ---------
Property, plant and equipment, net                   36,330    38,268
Goodwill, net                                       457,362   444,567
Intangibles, net                                     51,403    44,157
Lease receivables, net of current portion               281       473
Deferred tax asset                                    4,561     3,793
Discontinued operations, net of current portion         248       373
Other assets                                          4,019     3,725
                                                  ---------- ---------
      Total assets                                 $804,816  $772,890
                                                  ========== =========

Liabilities
Current maturities of long-term debt                   $576      $692
Current maturities of discounted lease rentals          247       890
Accounts payable                                     38,301    36,032
Billings in excess of costs and estimated
 earnings on uncompleted contracts                   11,472     8,947
Deferred revenue                                     21,931    21,456
Accrued liabilities:
  Compensation and benefits                          11,382    13,073
  Restructuring                                       5,451     6,709
  Other liabilities                                  38,320    33,905
  Income taxes                                        9,744     3,295
                                                  ---------- ---------
      Total current liabilities                     137,424   124,999
                                                  ---------- ---------
Long-term debt                                      149,308   147,196
Discounted lease rentals                                  6        30
Other liabilities                                        75        75
Restructuring reserve                                 8,548     9,889

Stockholders' Equity
Common stock                                             24        24
Additional paid-in capital                          345,713   336,290
Retained earnings                                   446,786   428,632
Treasury stock, at cost                            (296,807) (296,797)
Accumulated other comprehensive gain                 13,739    22,552
                                                  ---------- ---------
      Total stockholders' equity                    509,455   490,701
                                                  ---------- ---------
Total liabilities and stockholders' equity         $804,816  $772,890
                                                  ========== =========


                         BLACK BOX CORPORATION
                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                            Three Months Ended     Six Months Ended
                           --------------------- ---------------------
                           October 1, October 2, October 1, October 2,
In thousands                  2005       2004       2005       2004
----------------------------------------------------------------------
Operating Activities
Net income                   $12,797    $10,623    $20,191    $20,626
Adjustments to reconcile
 net income to cash
 provided by operating
 activities:
  Intangibles amortization     1,328         69      2,886        128
  Depreciation                 2,261      1,284      4,494      2,712
  Deferred taxes                 440       (926)    (2,053)       538
  Stock compensation expense      --        680         --        680
  Tax impact from exercised
   options                    (1,940)       (12)    (1,971)    (3,157)
Changes in operating assets
 and liabilities:
  Account receivable, net    (13,698)     4,641     (8,913)     8,104
  Inventories, net               672       (699)     5,704     (2,098)
  Other current assets         7,675       (829)       304     (1,808)
  Proceeds from lease
   contracts                     547         --      1,282         --
  Accounts payable and
   accrued liabilities         1,589     (3,348)       550     (5,007)
                           -------------------------------------------
Net cash provided by
 operating activities        $11,671    $11,483    $22,474    $20,718
                           -------------------------------------------

Investing Activities
  Capital expenditures, net     (920)      (644)      (599)     $(941)
  Acquisition of businesses,
   net of cash acquired      (13,362)        --    (26,854)        --
  Prior merger-related
   payments                     (209)       (84)      (165)      (347)
                           -------------------------------------------
Net cash used in investing
 activities                 $(14,491)     $(728)   (27,618)   $(1,288)
                           -------------------------------------------

Financing Activities
  Repayments / (proceeds)
   on borrowings, net        $(2,359)    $4,185       $713    $15,976
  Repayments on discounted
   lease rentals                (244)        --       (667)        --
  Proceeds from exercise of
   options                     7,316         45      7,452      5,685
  Payment of dividends        (1,010)      (871)    (2,021)    (1,774)
  Deferred financing costs        --       (235)        --       (235)
  Purchase of treasury stock     (10)   (12,718)       (10)   (37,574)
                           -------------------------------------------
Net cash provided / (used)
 in financing activities      $3,693    $(9,594)    $5,467   $(17,922)
Foreign currency exchange
 impact on cash                  $44      $(761)       $10    $(1,101)
                           -------------------------------------------
Increase in cash & cash
 equivalents                    $917       $400       $333       $407
Cash & cash equivalents at
 beginning of period         $11,008      9,313    $11,592      9,306
                           -------------------------------------------
Cash & cash equivalents at
 end of period               $11,925     $9,713    $11,925     $9,713
                           ===========================================


RECONCILIATIONS:

In addition to reported results under U.S. GAAP for the fiscal
periods, the following financial highlights tables also include, 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:

                                    2Q06     2Q05   2Q06YTD  2Q05YTD
----------------------------------------------------------------------
Cash provided by operating
 activities                       $11,671  $11,483  $22,474  $20,718
   Capital expenditures            (1,108)    (900)  (1,600)  (1,641)
   Capital disposals                  188      256    1,001      700
   Proceeds from stock option
    exercises                       7,316       45    7,452    5,685
   Foreign currency exchange
    impact on cash                     44     (761)      10   (1,101)
----------------------------------------------------------------------
Free cash flow                    $18,111  $10,123  $29,337  $24,361
----------------------------------------------------------------------


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:

                             2Q06       2Q05     2Q06YTD    2Q05YTD
----------------------------------------------------------------------
Cash provided by
 operating activities       $11,671    $11,483    $22,474    $20,718
   Restructuring payments     2,786         --      7,628         --
   Satisfaction of a
    litigation judgment          --         --      1,778         --
----------------------------------------------------------------------
Cash provided by
 operating activities
 excluding restructuring
 payments and satisfaction
 of a litigation judgment   $ 14,457   $ 11,483   $ 31,880   $ 20,718
----------------------------------------------------------------------


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

                              2Q06      2Q05     2Q06YTD    2Q05YTD
----------------------------------------------------------------------
Net income                  $12,797    $10,623    $20,191    $20,626
% of revenues                   6.9%       8.4%       5.5%       8.2%
Restructuring charges,
 after tax impact                --         --      3,465         --
Acquisition related
 expenses, after tax impact     834         --      2,689         --
----------------------------------------------------------------------
Net income excluding
 restructuring charges and
 acquisition related
 expenses                   $13,631   $ 10,623   $ 26,345   $ 20,626
% of revenues                   7.4%       8.4%       7.2%       8.2%
----------------------------------------------------------------------



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

                                   2Q06      2Q05   2Q06YTD  2Q05YTD
----------------------------------------------------------------------
Diluted EPS                       $0.74      $0.60    $1.17    $1.14
EPS impact of restructuring
 charges                             --         --     0.20       --
EPS impact of acquisition related
 expenses                          0.05         --     0.16       --
----------------------------------------------------------------------
Diluted EPS excluding
 restructuring charges and
 acquisition related expenses     $0.78 (1) $ 0.60   $ 1.53   $ 1.14
----------------------------------------------------------------------
(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 second quarter ended October 1, 2005 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. Management believes it is important to separately present the
Fiscal 2006 restructuring charges and acquisition related expenses
(hereafter referred to as "special charges"). Management believes this
enables a clearer understanding of the ongoing operations of the
Company.

                      2Q06      1Q06      2Q05     2Q06YTD   2Q05YTD
----------------------------------------------------------------------
Revenues:
 North America      $146,754  $136,861   $84,792  $283,615  $164,324
 Europe               29,199    33,750    32,830    62,949    68,390
 All Other             9,097     8,671     8,973    17,768    18,236
                    --------------------------------------------------
 Total              $185,050  $179,282  $126,595  $364,332  $250,950

Operating Income:
 North America       $16,537   $11,859   $10,835   $28,396   $18,745
 % of North America
  revenues              11.3%      8.7%     12.8%     10.0%     11.4%
 Europe                3,427     $(367)   $3,697     3,060    $9,349
 % of Europe
  revenues              11.7%    (1.1)%     11.3%      4.9%     13.7%
 All Other             1,943    $1,680    $2,487     3,623    $4,849
 % of All Other
  revenues              21.4%     19.4%     27.7%     20.4%     26.6%
                    --------------------------------------------------
 Total               $21,907   $13,172   $17,019   $35,079   $32,943
 % of total
  revenues              11.8%      7.3%     13.4%      9.6%     13.1%

Special Charges:
 North America        $1,274    $4,379       $--    $5,653       $--
 Europe                   --     3,742        --     3,742        --
 All Other                --        --        --        --        --
                    --------------------------------------------------
 Total                $1,274    $8,121       $--    $9,395       $--

Operating Income Excluding
 Special Charges:
 North America       $17,811   $16,238   $10,835   $34,049   $18,745
 % of North America
  revenues              12.1%     11.9%     12.8%     12.0%     11.4%
 Europe                3,427    $3,375    $3,697     6,802    $9,349
 % of Europe
  revenues              11.7%     10.0%     11.3%     10.8%     13.7%
 All Other             1,943    $1,680    $2,487     3,623    $4,849
 % of All Other
  revenues              21.4%     19.4%     27.7%     20.4%     26.6%
                    --------------------------------------------------
 Total                23,181   $21,293   $17,019   $44,474   $32,943
 % of Total
  revenues              12.5%     11.9%     13.4%     12.2%     13.1%
----------------------------------------------------------------------


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

                      2Q06      1Q06      2Q05     2Q06YTD   2Q05YTD
----------------------------------------------------------------------
Revenues:
 Data Services       $52,584   $52,901   $50,537  $105,485   $98,726
 Voice Services       78,410    72,929    19,086   151,339    37,400
 Hotline Services     54,056    53,452    56,972   107,508   114,824
                    --------------------------------------------------
 Total              $185,050  $179,282  $126,595  $364,332  $250,950

Gross Profit:
 Data Services       $15,482   $15,524   $15,366   $31,006   $29,862
 % of Data Services
  revenues              29.4%     29.3%     30.4%     29.4%     30.2%
 Voice Services      $31,173   $27,838    $6,732   $59,011   $13,138
 % of Voice
  Services revenues     39.8%     38.2%     35.3%     39.0%     35.1%
 Hotline Services    $27,227   $27,578   $30,217   $54,805   $61,195
 % of Hotline
  Services revenues     50.4%     51.6%     53.0%     51.0%     53.3%
                    --------------------------------------------------
 Total               $73,882   $70,940   $52,315  $144,822  $104,195
 % of total
  revenues              39.9%     39.6%     41.3%     39.8%     41.5%
----------------------------------------------------------------------

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

                                             2Q06     2Q05     Change
----------------------------------------------------------------------
Revenues as reported                      $185,050  $126,595      46%
Less revenues from offices added since
 2Q05                                      (54,920)       --
                                          ----------------------------
Revenues on same-office basis             $130,130  $126,595       3%
----------------------------------------------------------------------

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

                                             2Q06     1Q06     Change
----------------------------------------------------------------------
Revenues as reported                      $185,050  $179,282       3%
Less revenues from offices added since
 2Q05                                      (54,920)  (53,582)
                                          ----------------------------
Revenues on same-office basis             $130,130  $125,700       4%
----------------------------------------------------------------------

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

                          2Q06             1Q06            2Q05
----------------------------------------------------------------------
Accounts Receivable:
  Gross Accounts
   Receivable $          $139.5             $122.7        $98.0
  Reserve $ / %            $7.7/5.5%          $7.6/6.2%    $9.2/9.4%
                          ------             ------       ------
  Net Accounts
   Receivable $          $131.8              $115.1        $88.8

  Net Days Sales          57 days             55 days       57 days
   Outstanding

Inventory:
  Gross Inventory $        $66.6              $64.8        $47.2
  Reserve $ / %            $13.4/20.1%        $12.3/19.0%   $5.0/10.6%
                           ------            ------        ------
  Net Inventory $          $53.2              $52.5        $42.2

  Net Inventory Turns        6.9x               7.2x         8.2x

Six-Month Order Backlog     $104                $97          $55

Team Members               3,282              3,346        2,624
----------------------------------------------------------------------

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

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