Black Box Corporation (NASDAQ:BBOX), a leading technology
solutions provider dedicated to helping customers design, build,
manage and secure their IT infrastructure, today reported results
for the first quarter of Fiscal 2017.
1Q17 Results
- Revenues were $218.5 million, down 5%
from $229.2 million for the same period last year and down 3% from
$224.1 million in the sequential period.
- Provision for income taxes was $2.3
million, compared to $2.1 million for the same period last year and
compared to a benefit for income taxes of $2.6 million in the
sequential period.
- Net loss was $0.5 million, compared to
net income of $0.8 million for the same period last year and
compared to a net loss of $47.7 million in the sequential
period.
- Diluted loss per share was $0.03,
compared to diluted earnings per share of $0.05 for the same period
last year and compared to a diluted loss per share of $3.13 in the
sequential period.
- Operating net income* was $2.0 million,
down 43% from $3.5 million for the same period last year and down
4% from $2.1 million in the sequential period.
- Operating EPS* was $0.13, down 42% from
$0.22 for the same period last year and down 3% from $0.14 in the
sequential period.
- Cash flow provided by operations was
$10.9 million, compared to cash flow used for operations of $7.4
million for the same period last year and cash flow provided by
operations of $22.3 million in the sequential period.
- We provided $1.7 million to our
shareholders in the form of dividends.
* See the information under the caption "Non-GAAP Financial
Measures" below for a discussion regarding the usefulness of the
non-GAAP financial measures contained in this release, definitions
of those non-GAAP financial measures and reconciliations to their
most directly comparable GAAP financial measures.
Dividend
The Company also announced that it has declared a quarterly cash
dividend of $0.12 per share of its Common Stock. The $0.12 per
share dividend was declared on all outstanding shares of Black
Box’s Common Stock and will be payable on October 14, 2016 to
stockholders of record at the close of business on
September 30, 2016. Black Box will pay the dividend through
its transfer agent, American Stock Transfer & Trust Company,
LLC, 6201 15th Avenue, Brooklyn, NY 11219.
“Since we delivered to our internal expectations, I am generally
pleased with our results for the first quarter of
Fiscal 2017,” stated E.C. Sykes, President and CEO. “We broke
the recent cycle of under-performing in our first quarter and that
is a success. We are laying the foundation for long-term growth and
expect the comparisons to improve as the impacts from these actions
flow through. Based on backlog and other factors at this point, we
are focused on the work we have to do to deliver on our
expectations for the second quarter.”
Earnings Conference Call
The Company will conduct a conference call beginning at 5:00
p.m. Eastern Time today, August 2, 2016. E.C. Sykes, President
and Chief Executive Officer, will host the call. To listen only to
the live webcast, access the event at http://investor.blackbox.com/events.cfm. To
participate in the teleconference, dial 877-303-3145 (USA) or
253-237-1194 (International) approximately 15 minutes prior to the
starting time and ask to be connected to conference 44937620. A
replay of the audio webcast will be available at http://investor.blackbox.com/events.cfm for a
limited period of time.
About Black Box
Black Box is a leading technology solutions provider dedicated
to helping customers design, build, manage and secure their IT
infrastructure. Black Box delivers high-value products and services
through its global presence and 3,552 team members. To learn more,
visit the Black Box Web site at http://www.blackbox.com.
Black Box® and the Double Diamond logo are registered trademarks
of BB Technologies, Inc.
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 and speak only as of the
date of this release. You can identify these forward-looking
statements by the fact that 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 and business conditions,
successful integration of acquisitions, the timing, benefits and
costs of restructuring programs and other initiatives, successful
marketing of the Company's product and services offerings,
successful implementation of the Company's integration initiatives,
successful implementation of the Company's government contracting
programs, competition, changes in foreign, political and economic
conditions, fluctuating foreign currencies compared to the U.S.
dollar, rapid changes in technologies, client preferences, the
Company's arrangements with suppliers of voice equipment and
technology, government budgetary constraints and various other
matters, many of which are beyond the Company's control. Additional
risk factors are included in the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 2016. We can give no
assurance that any goal, plan or target set forth in
forward-looking statements will 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 and caution you not to
unduly rely on any such forward-looking statements.
BLACK BOX CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS In millions and may not
foot due to rounding July 2, 2016 March
31, 2016 Assets Cash and cash equivalents $ 21.4 $ 23.5
Accounts receivable, net 134.0 139.2 Inventories, net 40.0 42.7
Costs/estimated earnings in excess of billings on uncompleted
contracts 70.1 66.7 Other assets 27.9 27.3
Total current assets 293.4 299.4 Property,
plant and equipment, net 34.1 34.5 Intangibles, net 75.7 78.2
Deferred tax asset 53.8 57.1 Other assets 7.3 6.7
Total assets $ 464.2
$ 475.8 Liabilities Accounts payable $
57.2 $ 56.8 Accrued compensation and benefits 20.8 21.5 Deferred
revenue 28.9 29.4 Billings in excess of costs/estimated earnings on
uncompleted contracts 21.3 20.4 Other liabilities 38.8
42.2
Total current liabilities 166.9
170.4 Long-term debt 114.9 119.7 Other liabilities 28.7
29.5
Total liabilities $
310.5 $ 319.6 Stockholders’ equity
Common stock $ — $ — Additional paid-in capital 504.1 501.8
Retained earnings 78.3 80.6 Accumulated other comprehensive income
(loss) (15.0 ) (13.1 ) Treasury stock, at cost (413.6 )
(413.1 )
Total stockholders’ equity $ 153.7
$ 156.2 Total liabilities and
stockholders’ equity $ 464.2
$ 475.8 BLACK
BOX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS In millions, except per share amounts and
may not foot due to rounding 1Q17
4Q16 1Q16 Revenues Products $ 39.9 $
39.8 $ 40.5 Services 178.6 184.3 188.7
Total 218.5 224.1 229.2
Cost of sales Products 22.9
24.7 23.7 Services 127.9 139.8 135.9
Total 150.8 164.5 159.6
Gross profit 67.7
59.7 69.7 Selling, general & administrative
expenses 62.5 71.4 62.9 Asset impairment loss — 34.9 — Intangibles
amortization 2.5 2.5 2.6
Operating income (loss) 2.7 (49.2 )
4.2 Interest expense, net 1.2 1.1 1.4 Other expenses
(income), net (0.3 ) 0.1 (0.1 ) Income (loss)
before provision for income taxes 1.9 (50.4 ) 2.8 Provision
(benefit) for income taxes 2.3 (2.6 ) 2.1
Net income (loss) $ (0.5 )
$ (47.7 ) $ 0.8
Earnings (loss) per common share
Basic $
(0.03 ) $ (3.13 )
0.05 Diluted $ (0.03 )
$ (3.13 ) $ 0.05
Weighted-average common shares outstanding Basic 15.1
15.2 15.4 Diluted 15.1
15.2 15.5 Dividends per share $ 0.12
$ 0.11 $ 0.11
BLACK BOX CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS In
millions and may not foot due to rounding 1Q17
4Q16 1Q16 Operating Activities
Net income (loss) $ (0.5 ) $ (47.7 ) $ 0.8 Adjustments to reconcile
net income (loss) to net cash provided by (used for) operating
activities Intangibles amortization 2.5 2.5 2.6 Depreciation 2.2
2.3 2.0 Loss (gain) on sale of property (1.2 ) — — Deferred taxes
2.9 (1.9 ) 2.7 Stock compensation expense 2.2 0.8 2.3 Change in
fair value of interest-rate swaps — — (0.3 ) Asset impairment loss
— 34.9 — Provision for obsolete inventory 0.3 7.7 0.3 Provision for
(recovery of) doubtful accounts 0.2 3.8 0.3 Changes in operating
assets and liabilities (net of acquisitions) Accounts receivable
4.6 18.2 (2.1 ) Inventories 2.3 (1.7 ) 1.0 Costs/estimated earnings
in excess of billings on uncompleted contracts (3.6 ) (0.3 ) (2.1 )
All other assets (1.2 ) (4.0 ) 7.0 Accounts payable 0.5 (0.3 ) 0.6
Billings in excess of costs/estimated earnings on uncompleted
contracts 0.9 (4.0 ) (0.4 ) All other liabilities (1.2 )
12.1 (22.0 )
Net cash provided by (used for)
operating activities $ 10.9 $ 22.3
$ (7.4 ) Investing Activities Capital
expenditures $ (2.1 ) $ (2.4 ) $ (1.9 ) Capital disposals 1.4 — —
Acquisition of businesses (payments)/recoveries —
(0.8 ) —
Net cash provided by (used for) investing
activities $ (0.7 ) $ (3.1
) $ (1.9 ) Financing Activities
Proceeds (repayments) from long-term debt $ (4.8 ) $ (9.0 ) $ 7.0
Proceeds (repayments) from short-term debt (4.2 ) 0.9 2.3 Deferred
financing costs (1.0 ) — — Purchase of treasury stock (0.5 ) (4.3 )
(2.8 ) Payment of dividends (1.7 ) (1.7 ) (1.5 ) Increase
(decrease) in cash overdrafts 0.1 (0.2 ) 1.2
Net cash provided by (used for) financing activities
$ (12.1 ) $ (14.4 )
$ 6.1 Foreign currency exchange impact on cash
$ (0.2 ) $ 0.7
$ 0.1 Increase/(decrease) in cash
and cash equivalents $ (2.1 ) $
5.5 $ (3.0 ) Cash and cash equivalents
at beginning of period 23.5 18.0 23.5
Cash and cash equivalents at end of period $ 21.4
$ 23.5 $ 20.5
Non-GAAP Financial Measures
As a supplement to United States Generally Accepted Accounting
Principles ("GAAP"), the Company provides non-GAAP financial
measures such as operating income before provision for income taxes
("EBIT"), operating net income, operating earnings per share
("EPS"), revenues excluding foreign currency, adjusted operating
income, Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA"), Operating EBITDA and free cash flow to
illustrate the Company's operational performance. These non-GAAP
financial measures are not prepared in accordance with GAAP, are
not reported by all of the Company's competitors and may not be
directly comparable to similarly-titled measures of the Company's
competitors due to potential differences in the exact method of
calculation. However, each of the amounts included in the
calculation of non-GAAP financial measures are computed in
accordance with GAAP. See below for reconciliations to the most
directly comparable GAAP financial measures.
Management uses these non-GAAP financial measures (a) to
evaluate the Company's historical and prospective financial
performance as well as its performance relative to its competitors,
(b) to set internal sales targets and associated operating budgets,
(c) to allocate resources and (d) to measure operational
profitability. Management uses similar non-GAAP measures as an
important factor in determining variable compensation for
Management and its team members.
Non-GAAP financial measures are not in accordance with, or an
alternative for, GAAP financial measures. The Company's non-GAAP
financial measures are not meant to be considered in isolation or
as a substitute for comparable GAAP financial measures, and should
be read only in conjunction with the Company's consolidated
financial statements prepared in accordance with GAAP.
Operating EBIT, operating net income and operating
EPS
Management believes that operating EBIT, defined by the Company
as net income (loss) plus provision (benefit) for income taxes and
adjustments, operating net income, defined by the Company as
operating EBIT less operational income taxes, and operating EPS,
defined as operating net income divided by weighted average common
shares outstanding (diluted), provide investors additional
important information to enable them to assess, in the way
Management assesses, the Company's current and future operations.
Adjustments include intangibles amortization, the change in fair
value of the interest-rate swaps, accounts receivable impairment
loss, inventory impairment loss, asset impairment loss, each of
which are non-cash charges, and restructuring expense, CEO
transition costs and gains/losses on sales of facilities, each of
which are cash charges.
A reconciliation of Net income (loss) to operating EBIT and
Operating net income is presented below:
In millions and may not foot due to
rounding 1Q17 4Q16
1Q16 Net income (loss) $ (0.5 )
$ (47.7 ) $ 0.8 Provision
(benefit) for income taxes 2.3 (2.6 ) 2.1 Effective tax rate 125.6
% 5.2 % 73.3 %
Income (loss) before provision for
income taxes $ 1.9 $ (50.4 )
$ 2.8 Adjustments Intangibles
amortization $ 2.5 $ 2.5 $ 2.6 Interest rate swap — — (0.3 )
Restructuring expense — 6.5 0.5 CEO transition costs — 1.5 —
Accounts receivable impairment loss — 2.4 — Inventory impairment
loss — 6.0 — Loss (gain) on sale of facilities (1.2 ) —
— Asset impairment loss — 34.9
—
Total pre-tax adjustments $
1.3 $ 53.7 $ 2.8
Operating EBIT $ 3.1 $ 3.4
$ 5.7 Operational effective tax rate 35.0 % 38.5 %
38.5 % Operational income taxes (1) 1.1 1.3
2.2
Operating net income $
2.0 $ 2.1 $
3.5
(1) The effective tax rate used to determine operational income
taxes is based on the Company's projected full-year ordinary income
tax expense and the projected full-year impact of certain discreet
tax items.
A reconciliation of Diluted earnings (loss) per share to
operating EPS is presented below:
1Q17 4Q16 1Q16
Diluted EPS $ (0.03 )
$ (3.13 ) $ 0.05 EPS
impact
* 0.16 3.27 0.17
Operating EPS $ 0.13
$ 0.14 $ 0.22
* EPS impact is the result of excluding the provision for income
taxes and the adjustments and utilizing an operational effective
tax rate.
Revenues excluding foreign currency
Management is presented with and reviews revenues which exclude
foreign currency and enable an investor to assess, in the way
Management assesses, revenues from its core operations.
Information on quarterly revenues excluding foreign currency
compared to the same period last year is presented below:
In millions and may not foot due to
rounding 1Q17 1Q16 %
Change Revenues $ 218.5 $
229.2 (5 )% Foreign currency impact - North
America Products — — Foreign currency impact - North America
Services 0.1 — Foreign currency impact - International Products
(0.1 ) — Foreign currency impact - International Services 0.1
—
Revenues (excluding foreign currency)
$ 218.6 $ 229.2
(5 )%
Information on quarterly revenues excluding foreign currency
compared to the sequential quarter is presented below:
In millions and may not foot due to
rounding 1Q17 4Q16 %
Change Revenues $ 218.5 $
224.1 (2 )% Foreign currency impact - North
America Products (0.1 ) — Foreign currency impact - North America
Services (0.2 ) — Foreign currency impact - International Products
(0.6 ) — Foreign currency impact - International Services (0.1 )
—
Revenues (excluding foreign currency)
$ 217.5 $ 224.1
(3 )%
Segment Information
Management is presented with and reviews Revenues, Gross profit,
Operating income (loss) and Adjusted operating income by segment.
Management believes that Adjusted operating income, defined by the
Company as Operating income (loss) plus adjustments, provides
investors additional important information to enable them to
assess, in the way Management assesses, the Company's current and
future operations. Adjustments include intangibles amortization,
accounts receivable impairment loss, inventory impairment loss,
asset impairment loss, each of which are non-cash charges, and
restructuring expense, CEO transition costs and gains/losses on
sales of facilities, each of which are cash charges.
A reconciliation of Operating income (loss) to Adjusted
operating income (by segment) is presented below:
1Q17 4Q16
1Q16 In millions and may not foot due to rounding
$ % of Rev $ %
of Rev $ % of Rev Revenues
North America Products $19.1 $19.4 $20.8
International Products 20.8 20.5 19.7
Products $39.9
$39.8 $40.5 North America Services $171.7 $175.7
$182.0 International Services 6.9 8.6 6.7
Services
$178.6 $184.3 $188.7 Total
$218.5 $224.1 $229.2 Gross profit North
America Products $8.9 46.8% $6.8 35.0% $8.9 42.6% International
Products 8.0 38.5% 8.4 40.8% 7.9 40.4%
Products $16.9
42.5% $15.1 38.0% $16.8 41.5%
North America Services $49.1 28.6% $42.7 24.3% $51.1 28.1%
International Services 1.6 22.8% 1.9 21.7% 1.7 25.5%
Services $50.7 28.4% $44.5 24.2%
$52.8 28.0% Total $67.7 31.0%
$59.7 26.6% $69.7 30.4% Operating
income (loss) North America Products $0.9 4.7% $(13.5) (69.5)%
$1.0 4.7% International Products 0.5 2.4% (1.0) (4.7)% 0.3 1.6%
Products $1.4 3.5% $(14.4)
(36.2)% $1.3 3.2% North America Services $1.1
0.7% $(35.3) (20.1)% $2.4 1.3% International Services 0.2 2.7% 0.5
5.9% 0.5 7.3%
Services $1.3 0.7%
$(34.8) (18.9)% $2.8 1.5% Total
$2.7 1.2% $(49.2) (21.9)% $4.2
1.8% Adjustments North America Products $— $14.4 $—
International Products 0.1 2.5 0.1
Products $0.1
$16.9 $0.1 North America Services $1.0 $36.7 $3.0
International Services 0.1 0.1 —
Services $1.1
$36.8 $3.0 Total $1.2 $53.7
$3.1 Adjusted operating income North America Products
$0.9 4.9% $1.0 5.1% $1.0 4.8% International Products 0.6 2.8% 1.5
7.3% 0.4 2.0%
Products $1.5 3.8% $2.5
6.2% $1.4 3.4% North America Services $2.1
1.2% $1.4 0.8% $5.3 2.9% International Services 0.3 4.6% 0.6 7.2%
0.5 7.9%
Services $2.4 1.4% $2.1
1.1% $5.9 3.1% Total $3.9
1.8% $4.5 2.0%
$7.3 3.2%
EBITDA and Operating EBITDA
Management believes that EBITDA, defined as Net income (loss)
plus provision (benefit) for income taxes, interest, depreciation
and amortization, is a widely-accepted measure of profitability
that may be used to measure the Company's ability to service its
debt. Operating EBITDA, defined as EBITDA plus stock compensation
expense may also be used to measure the Company's ability to
service its debt.
A reconciliation of Net income (loss) to EBITDA and Operating
EBITDA is presented below:
In millions and may not foot due to
rounding 1Q17 4Q16
1Q16 Net income (loss) $ (0.5 )
$ (47.7 ) $ 0.8 Provision
(benefit) for income taxes 2.3 (2.6 ) 2.1 Interest expense, net 1.2
1.1 1.4 Intangibles amortization 2.5 2.5 2.6 Depreciation 2.2
2.3 2.0
EBITDA $
7.8 $ (44.5 ) $ 8.8 Stock
compensation expense 2.2 0.8 2.3
Operating EBITDA $ 10.0
$ (0.5 ) $ 11.1
Free cash flow
Management believes that free cash flow, defined by the Company
as Net cash provided by (used for) operating activities less net
capital expenditures, plus or minus Foreign currency exchange
impact on cash, plus Proceeds from stock option exercises, is an
important measurement of liquidity as it represents the total cash
available to the Company.
A reconciliation of Net cash provided by (used for) operating
activities to free cash flow is presented below:
In millions and may not foot due to
rounding 1Q17 4Q16
1Q16 Net cash provided by (used for) operating
activities $ 10.9 $ 22.3 $
(7.4 ) Net capital expenditures (0.7 ) (2.4 ) (1.9 )
Foreign currency exchange impact on cash (0.2 ) 0.7
0.1
Free cash flow before stock option
exercises $ 9.9 $ 20.6 $
(9.2 ) Proceeds from the exercise of stock options —
— —
Free cash flow
$ 9.9 $ 20.6
$ (9.2 )
Significant Balance Sheet ratios and Other
Information
Information on certain balance sheet ratios, backlog and
headcount is presented below:
Dollars In millions 1Q17
4Q16 1Q16 Days sales outstanding 53
days 53 days 54 days Aggregate days sales outstanding 77 days 74
days 80 days Inventory turns 13.2x 15.1x 11.0x Six-month order
backlog $ 173.8 $ 164.2 $ 184.2 Headcount 3,552 3,631 3,750 Net
Debt $ 93.5 $ 96.2 $ 124.0 Leverage ratio* 3.03 3.04
3.03
* Leverage ratio is based on Adjusted EBITDA as defined under
our credit facility with PNC Bank.
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version on businesswire.com: http://www.businesswire.com/news/home/20160802006922/en/
Black Box CorporationTimothy C. Huffmyer, Vice President, Chief
Financial Officer and Treasurer, 724-873-6788Email: investors@blackbox.com
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