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Tuesday, January 31, 2006


Black Box Corporation Reports Third Quarter and YTD Fiscal 2006 Results


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PITTSBURGH--(BUSINESS WIRE)--Jan. 31, 2006--Black Box Corporation (NASDAQ:BBOX) today reported for the third quarter ended December 31, 2005 diluted earnings per share of 70 cents compared to 52 cents last year, an increase of 35%. Net income for the third quarter was $12.5 million or 6.9% of revenues, compared to $9.2 million or 7.3% of revenues last year. On a sequential comparison basis, second quarter diluted earnings per share were 74 cents with corresponding net income of $12.8 million or 6.9% of revenues. Excluding acquisition related expenses in the third quarter of Fiscal 2006 described below, diluted earnings per share were 75 cents and net income was $13.3 million or 7.3% of revenues.


During the third quarter of Fiscal 2006, the Company incurred non-cash charges of $1.2 million pre-tax in connection with acquisition related expenses from the January 25, 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 third quarter were $182 million, an increase of 44% from $127 million for the same period last year. On a sequential comparison basis, second quarter revenues were $185 million.


Third quarter cash provided by operating activities was approximately $16 million or 131% of net income, compared to $14 million or 148% of net income for the same period last year. Third quarter free cash flow was $24 million compared to $14 million last year. On a sequential comparison basis, second quarter cash provided by operating activities was $12 million and free cash flow was $18 million. Black Box utilized its third quarter free cash flow of $24 million to fund $14 million of merger-related activity; debt reduction of $8 million; a dividend payment of $1 million; and net capital expenditures 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 nine months ended December 31, 2005, diluted earnings per share were $1.88 compared to $1.66 for the same period last year, an increase of 13%. Corresponding net income for the nine-month period was $32.7 million or 6.0% of revenues, compared to $29.9 million or 7.9% of revenues for the same period last year. Excluding restructuring charges and acquisition related expenses for the nine months ended December 31, 2005 described below, diluted earnings per share were $2.28 and net income was $39.7 million or 7.3% of revenues.


Total non-cash charges incurred for the nine months ended December 31, 2005 associated with acquisition related expenses of Norstan was $5.4 million pre-tax. For the nine-month period ended December 31, 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 nine-month revenues were $546 million, an increase of 45% from $378 million for the same period last year.


Cash provided by operating activities for the nine-month period was $39 million or 119% of net income, compared to $34 million or 115% of net income last year. Free cash flow was $53 million compared to $39 million last year. Black Box utilized the nine-month free cash flow of $53 million to fund $41 million of merger-related activity; debt reduction of $7 million; dividend payments of $3 million; and net capital expenditures of $2 million.


The Company's 6-month order backlog was $94 million at December 31, 2005 compared to $54 million at the same period last year. On a sequential comparison basis, second quarter 6-month order backlog was $101 million.


Commenting on the third quarter results, Fred C. Young, Chief Executive Officer, said, "We are pleased with our overall results for the quarter and nine-months to date. We attribute this success to our worldwide operating excellence, effective marketing of our DVH(TM) technical services and relatively stable end-markets."


Continuing on, Mr. Young said, "Our goals moving forward will be to finish FY06 strong and carry this momentum into our FY07."


The Company will conduct a conference call beginning at 5:00 p.m. Eastern Standard Time today, January 31, 2006. 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 804811.


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 143 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 and DVH is a trademark of BB Technologies, Inc.


                         BLACK BOX CORPORATION
                   CONSOLIDATED STATEMENTS OF INCOME

                         Three months ended       Nine months ended
                       ----------------------- -----------------------
In thousands, except   December 31, January 1, December 31, January 1,
 per share                  2005       2005         2005       2005
----------------------------------------------------------------------
Revenues                  $182,135   $126,896     $546,467   $377,846
Cost of sales              108,733     75,878      328,243    222,633
                          ---------  ---------    ---------  ---------
Gross profit                73,402     51,018      218,224    155,213

Selling, general &
 administrative exp         50,441     36,762      152,008    107,886
Restructuring charges            0          0        5,290          0
Intangibles
 amortization                1,349         59        4,235        187
                          ---------  ---------    ---------  ---------
Operating income            21,612     14,197       56,691     47,140
Interest expense, net        2,397        519        6,686      1,436
Other expenses, net            114         46           79         93
                          ---------  ---------    ---------  ---------
Income before income
 taxes                      19,101     13,632       49,926     45,611
Provision for income
 taxes                       6,590      4,383       17,224     15,736
                          ---------  ---------    ---------  ---------
Net income                 $12,511     $9,249      $32,702    $29,875
                          =========  =========    =========  =========

Basic earnings per
 common share                $0.72      $0.54        $1.92      $1.71
                          =========  =========    =========  =========

Diluted earnings per
 common share                $0.70      $0.52        $1.88      $1.66
                          =========  =========    =========  =========

Weighted average common
 shares                     17,286     17,293       17,050     17,499
                          =========  =========    =========  =========

Weighted average common
 & common equivalent
 shares outstanding         17,786     17,694       17,362     17,949
                          =========  =========    =========  =========


                        BLACK BOX CORPORATION
                     CONSOLIDATED BALANCE SHEETS
                                              December 31,  March 31,
In thousands                                      2005         2005
----------------------------------------------------------------------
Assets
Cash and cash equivalents                         $12,143     $11,592
Accounts receivable, net                          125,632     116,865
Lease receivables                                     465       1,697
Inventories, net                                   53,448      57,176
Costs and estimated earnings in excess
  of billings on uncompleted contracts             28,093      25,695
Deferred tax asset                                 11,084       9,236
Net current assets of discontinued operations         376         549
Other current assets                               17,642      14,724
                                                ----------   ---------
       Total current assets                       248,883     237,534
                                                ----------   ---------
Property, plant and equipment, net                 36,117      38,268
Goodwill, net                                     468,871     444,567
Intangibles, net                                   55,573      44,157
Lease receivables, net of current portion               -         473
Deferred tax asset                                  3,979       3,793
Discontinued operations, net of current
 portion                                              153         373
Other assets                                        4,327       3,725
                                                ----------   ---------
  Total assets                                   $817,903    $772,890
                                                ==========   =========
Liabilities
Current maturities of long-term debt                 $716        $692
Current maturities of discounted lease rentals         70         890
Accounts payable                                   39,487      36,032
Billings in excess of costs and estimated
earnings on uncompleted contracts                  11,604       8,947
Deferred revenue                                   21,473      21,456
Accrued liabilities:
  Compensation and benefits                        12,650      13,073
  Restructuring                                     4,589       6,709
  Other liabilities                                40,274      33,905
  Income taxes                                      9,013       3,295
                                                ----------   ---------
       Total current liabilities                  139,876     124,999
                                                ----------   ---------
Long-term debt                                    141,304     147,196
Discounted lease rentals                                3          30
Other liabilities                                     169          75
Restructuring reserve                               7,970       9,889
Stockholders' Equity
Common stock                                           24          24
Additional paid-in capital                        355,981     336,290
Retained earnings                                 458,252     428,632
Treasury stock, at cost                          (296,811)   (296,797)
Accumulated other comprehensive gain               11,135      22,552
                                                ----------   ---------
       Total stockholders' equity                 528,581     490,701
                                                ----------   ---------
  Total liabilities and stockholders' equity     $817,903    $772,890
                                                ==========   =========


                         BLACK BOX CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS

                         Three Months Ended       Nine Months Ended
                      ------------------------------------------------
                      December 31, January 1,  December 31, January 1,
In thousands               2005        2005         2005       2005
----------------------------------------------------------------------
Operating Activities
 Net income               $12,511      $9,249      $32,702    $29,875
 Adjustments to
  reconcile net income
  to cash provided by
  operating
  activities:
    Intangibles
     amortization           1,349          59        4,235        187
    Depreciation            2,284       1,658        6,778      4,370
    Deferred tax
     provision                (30)      1,237       (2,083)     1,775
    Stock compensation
     expense                   --          --           --        680
    Tax impact from
     exercised options     (1,376)       (231)      (3,347)    (3,389)
 Changes in operating
  assets and
  liabilities:
    Accounts
     receivable, net        8,986      (6,951)          73      1,153
    Inventories, net          (31)       (314)       5,673     (2,412)
    Other current
     assets                   966       4,413        1,270        888
    Proceeds from
     lease contracts          464          --        1,746         --
    Accounts payable
     and accrued
     liabilities           (8,685)      4,567       (8,135)     1,278
                      ------------------------------------------------
 Net cash provided by
  operating activities    $16,438     $13,687      $38,912    $34,405
                      ------------------------------------------------
Investing Activities
    Capital
     expenditures, net    $(1,320)      $(908)     $(1,919)   $(1,849)
    Acquisition of
     businesses, net
     of cash acquired     (13,828)       (151)     (40,682)      (498)
    Prior merger-
     related payments        (213)         --         (378)        --
                      ------------------------------------------------
 Net cash used in
  investing activities   $(15,361)    $(1,059)    $(42,979)   $(2,347)
                      ------------------------------------------------
Financing Activities
    (Repayments) /
     proceeds on
     borrowings, net      $(8,131)   $(11,940)    $(7,418)    $4,036
    Repayments on
     discounted lease
     rentals                 (180)         --         (847)        --
    Proceeds from
     exercise of
     options                8,892       1,625       16,344      7,310
    Payment of
     dividends             (1,028)     (1,035)      (3,049)    (2,809)
    Deferred financing
     costs                     --          --           --       (235)
    Purchase of
     treasury stock            (4)        (11)         (14)   (37,585)
                      ------------------------------------------------
 Net cash (used) /
  provided in
  financing activities      $(451)   $(11,361)     $5,016   $(29,283)
Foreign currency
 exchange impact on
 cash                       $(408)       $(33)       $(398)   $(1,134)
                      ------------------------------------------------
Increase in cash &
 cash equivalents            $218      $1,234         $551     $1,641
Cash & cash
 equivalents at
 beginning of period       11,925       9,713       11,592      9,306
                      ------------------------------------------------
Cash & cash
 equivalents at end of
 period                   $12,143     $10,947      $12,143    $10,947
                      ================================================

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:

                                3Q06    2Q06    3Q05  3Q06YTD 3Q05YTD
----------------------------------------------------------------------
Cash provided by operating
 activities                   $16,438 $11,671 $13,687 $38,912 $34,405
   Capital expenditures        (1,551) (1,108)   (938) (3,151) (2,579)
   Capital disposals              231     188      30   1,232     730
   Proceeds from stock option
    exercises                   8,892   7,316   1,625  16,344   7,310
   Foreign currency exchange
    impact on cash               (408)     44     (33)   (398) (1,134)
----------------------------------------------------------------------
Free cash flow                $23,602 $18,111 $14,371 $52,939 $38,732
----------------------------------------------------------------------


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:

                            3Q06     2Q06    3Q05    3Q06YTD  3Q05YTD
----------------------------------------------------------------------
Cash provided by
 operating activities     $16,438  $11,671  $13,687  $38,912  $34,405
   Restructuring payments   1,537    2,786       --    9,165       --
   Satisfaction of a
    litigation judgment        --       --       --    1,778       --
----------------------------------------------------------------------
Cash provided by
 operating activities
 excluding restructuring
 payments and
 satisfaction of a
 litigation judgment      $17,975  $14,457  $13,687  $49,855  $34,405
----------------------------------------------------------------------


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

                                      3Q06    3Q05   3Q06YTD  3Q05YTD
----------------------------------------------------------------------
Net income                          $12,511  $9,249  $32,702  $29,875
% of revenues                           6.9%    7.3%     6.0%     7.9%
Restructuring charges, after tax
 impact                                  --      --    3,465       --
Acquisition related expenses, after
 tax impact                             815      --    3,500       --
----------------------------------------------------------------------
Net income excluding restructuring
 charges and acquisition related
 expenses                           $13,326  $9,249  $39,667  $29,875
% of revenues                           7.3%    7.3%     7.3%     7.9%
----------------------------------------------------------------------


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

                                      3Q06    3Q05   3Q06YTD  3Q05YTD
----------------------------------------------------------------------
Diluted EPS                           $0.70   $0.52    $1.88    $1.66
EPS impact of restructuring charges      --      --     0.20       --
EPS impact of acquisition related
 expenses                              0.05      --     0.20       --
----------------------------------------------------------------------
Diluted EPS excluding restructuring
 charges and acquisition related
 expenses                             $0.75   $0.52    $2.28    $1.66
----------------------------------------------------------------------

SUPPLEMENTAL INFORMATION:

Additionally, the following supplemental information is being provided
for comparisons of third quarter ended December 31, 2005 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. 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.

                           3Q06     2Q06     3Q05    3Q06YTD  3Q05YTD
----------------------------------------------------------------------
Revenues:
  North America          $143,173 $146,754  $78,642 $426,788 $242,966
  Europe                   29,950   29,199   38,947   92,899  107,337
  All Other                 9,012    9,097    9,307   26,780   27,543
                         ---------------------------------------------
  Total                  $182,135 $185,050 $126,896 $546,467 $377,846

Operating Income:
  North America           $15,740  $16,537   $8,345  $44,136  $27,090
 % of North America
  revenues                   11.0%    11.3%    10.6%    10.3%    11.1%
  Europe                   $4,101   $3,427   $4,016   $7,161  $13,365
  % of Europe revenues       13.7%    11.7%    10.3%     7.7%    12.5%
  All Other                $1,771   $1,943   $1,836   $5,394   $6,685
  % of All Other revenues    19.7%    21.4%    19.7%    20.1%    24.3%
                         ---------------------------------------------
  Total                   $21,612  $21,907  $14,197  $56,691  $47,140
  % of Total revenues        11.9%    11.8%    11.2%    10.4%    12.5%

Special Charges:
 North America             $1,245   $1,274       --   $6,898       --
 Europe                        --       --       --    3,742       --
 All Other                     --       --       --       --       --
                         ---------------------------------------------
 Total                     $1,245   $1,274       --  $10,640       --

Operating Income
 Excluding Special
 Charges:
 North America            $16,985  $17,811   $8,345  $51,034  $27,090
 % of North America
  revenues                   11.9%    12.1%    10.6%    12.0%    11.1%
 Europe                    $4,101   $3,427   $4,016  $10,903  $13,365
 % of Europe revenues        13.7%    11.7%    10.3%    11.7%    12.5%
 All Other                 $1,771   $1,943   $1,836   $5,394   $6,685
 % of All Other revenues     19.7%    21.4%    19.7%    20.1%    24.3%
                         ---------------------------------------------
 Total                    $22,857  $23,181  $14,197  $67,331  $47,140
 % of Total revenues         12.5%    12.5%    11.2%    12.3%    12.5%
----------------------------------------------------------------------


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

                           3Q06     2Q06     3Q05    3Q06YTD  3Q05YTD
----------------------------------------------------------------------
Revenues:
  Data Services           $47,083  $52,584  $53,410 $152,568 $152,136
  Voice Services           82,281   78,410   16,219  233,620   53,619
  Hotline Services         52,771   54,056   57,267  160,279  172,091
                         ---------------------------------------------
  Total                  $182,135 $185,050 $126,896 $546,467 $377,846

Gross Profit:
  Data Services           $14,794  $15,482  $16,149  $45,800  $46,011
 % of Data Services
  revenues                   31.4%    29.4%    30.2%    30.0%    30.2%
 Voice Services           $32,145  $31,173   $5,469  $91,156  $18,607
  % of Voice Services
   revenues                  39.1%    39.8%    33.7%    39.0%    34.7%
  Hotline Services        $26,463  $27,227  $29,400  $81,268  $90,595
  % of Hotline Services
   revenues                  50.1%    50.4%    51.3%    50.7%    52.6%
                         ---------------------------------------------
  Total                   $73,402  $73,882  $51,018 $218,224 $155,213
  % of Total revenues        40.3%    39.9%    40.2%    39.9%    41.1%
----------------------------------------------------------------------


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

                                     3Q06        3Q05        Change
----------------------------------------------------------------------
Revenues as reported                $182,135     $126,896          44%
Less revenues from offices added
 since 3Q05                          (60,371)          --
                                 ------------ ------------------------
Revenues on same-office basis       $121,764     $126,896         (4%)
-------------------------------- ------------ ------------------------


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

                                     3Q06        2Q06        Change
----------------------------------------------------------------------
Revenues as reported                $182,135     $185,050         (2%)
Less revenues from offices added
 since 3Q05                          (60,371)     (54,920)
                                 ------------ ------------------------
Revenues on same-office basis       $121,764     $130,130         (6%)
-------------------------------- ------------ ------------------------


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

                                  3Q06         2Q06          3Q05
----------------------------------------------------------------------
Accounts Receivable:
   Gross Accounts Receivable $   $133.9       $139.5       $108.8
   Reserve $ / %                   $8.3/6.2%    $7.7/5.5%   $10.2/9.4%
                                 ------       ------        -----
   Net Accounts Receivable $     $125.6       $131.8        $98.6

   Net Days Sales Outstanding     57 days      57 days      64 days

Inventory:
   Gross Inventory $              $66.9        $66.6        $48.2
   Reserve $ / %                  $13.5/20.2%  $13.4/20.1%  $5.0/10.4%
                                  -----        -----        -----
   Net Inventory $                $53.4        $53.2        $43.2

   Net Inventory Turns              6.8x         6.9x         7.9x

Six-Month Order Backlog             $94          $101          $54

Team Members                      3,273         3,282        2,538
----------------------------------------------------------------------

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

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