Black Box Corporation (NASDAQ:BBOX) today reported for the Fiscal
2007 first quarter ended July 1, 2006, diluted earnings per share
of 43(cents) on net income of $7.8 million or 3.4% of revenues
compared to diluted earnings per share of 43(cents) on net income
of $7.4 million or 4.1% of revenues for the first quarter a year
ago. On a sequential quarter comparison basis, fourth quarter 2006
diluted earnings per share were 26(cents) with corresponding net
income of $4.7 million or 2.7% of revenues. Excluding the
reconciling items and restructuring charges described below, first
quarter 2007 diluted earnings per share were 58(cents) on net
income of $10.5 million or 4.6% of revenues compared to diluted
earnings per share of 75(cents) on net income of $12.7 million or
7.1% of revenues for the first quarter 2006. Management believes
that presenting diluted earnings per share and net income excluding
restructuring charges and reconciling items is useful to investors
because it provides a more meaningful comparison of the ongoing
operations of the Company. As of April 1, 2006, the Company
implemented Financial Accounting Standards Board Statement No. 123R
which requires share based compensation to be charged to expense.
During the first quarter of Fiscal 2007, the Company's reconciling
items include pre-tax charges of $1.6 million for share based
compensation, $1.4 million in acquisition related expenses and
charges of $1.1 million in severance expenses. During the first
quarter of Fiscal 2006 and as previously disclosed, the Company
recorded a pre-tax restructuring charge of $5.3 million and
incurred pre-tax non-cash charges of $2.8 million related to
acquisitions. Total revenues for the first quarter were $230
million, an increase of 29% from $179 million for the same period
last year. On a sequential comparison basis, fourth quarter 2006
revenues were $175 million. First quarter cash provided by
operating activities was approximately $13 million or 161% of net
income, compared to $11 million or 146% for the same period last
year. First quarter free cash flow (defined below) was $14 million
compared to $11 million last year. On a sequential comparison
basis, fourth quarter 2006 cash provided by operating activities
was $13 million or 276% of net income and free cash flow was $19
million. Black Box utilized its first quarter free cash flow of $14
million to fund debt reduction of $13 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. The Company's 6-month order backlog was
$168 million at July 1, 2006, compared to $97 million at the same
period last year. On a sequential comparison basis, fourth quarter
2006 6-month order backlog was $96 million. During the first
quarter 2007, Black Box completed two acquisitions. On April 30,
2006, Black Box acquired the USA Commercial and Government and
Canadian operations of NextiraOne, LLC ("NextiraOne") from Platinum
Equity, LLC. The acquired operations service commercial and various
government agency clients and represent approximately $270 million
to $280 million of projected annualized voice services revenues. On
May 1, 2006, Black Box acquired Nu-Vision Technologies, Inc. and
Nu-Vision Technologies, LLC (collectively referred to as "NUVT"),
which provide planning, installation, monitoring and maintenance
services for voice and data network systems. NUVT has an active
customer base, which includes commercial, education and various
government agency accounts and is expected to provide annual
revenues of approximately $55 million. Commenting on the first
quarter results, Fred C. Young, Chief Executive Officer, said, "We
are very pleased to have achieved our objective of record revenues
for 1Q07. From here, our next objective is to increase profits and
cash flows in line with what we have previously outlined. This
should result in a marked improvement in these 2 key operating
metrics for our 2Q07. And again, we should be able to achieve
another level of record revenues." Fred C. Young went on to say,
"Now at the one billion level of annual revenues, we will
aggressively position our DVH(TM) (Data Services, Voice Services
and Hotline Technical Services) service offerings and associated
cost structures accordingly." The Company will conduct a conference
call beginning at 5:00 p.m. Eastern Daylight Time today, August 1,
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 835638. 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 acquisitions, including the Norstan, Inc.
("Norstan"), NextiraOne and NUVT businesses, 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 175,000 clients in
141 countries with 168 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. -0- *T BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME Three months ended
------------------- July 1, July 2, In thousands, except per share
2006 2005
----------------------------------------------------------------------
Revenue: Hotline products $ 52,225 $ 53,452 On-Site services
178,170 125,830 -------- -------- Total 230,395 179,282 Cost of
sales: Hotline products 25,461 25,874 On-Site services 119,090
82,468 -------- -------- Total 144,551 108,342 -------- --------
Gross profit 85,844 70,940 Selling, general & administrative
expense 68,573 50,920 Restructuring and other charges - 5,290
Intangibles amortization 1,506 1,558 -------- -------- Operating
income 15,765 13,172 Interest expense, net 3,640 1,959 Other
expenses, net 115 (75) -------- -------- Income before provision
for income taxes 12,010 11,288 Provision for income taxes 4,203
3,894 -------- -------- Net income $ 7,807 $ 7,394 ========
======== Basic earnings per common share $ 0.44 $ 0.44 ========
======== Diluted earnings per common share $ 0.43 $ 0.43 ========
======== Weighted average common shares 17,626 16,845 ========
======== Weighted average common & common equivalent shares
outstanding 18,262 17,042 ======== ======== BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS July 1, March 31, In thousands 2006
2006
----------------------------------------------------------------------
Assets Cash and cash equivalents $ 14,360 $ 11,207 Accounts
receivable, net 172,315 116,713 Lease receivables 1,071 512
Inventories, net 68,243 53,926 Costs and estimated earnings in
excess of billings on uncompleted contracts 55,400 23,803 Deferred
tax asset 8,873 8,973 Net current assets of discontinued operations
404 467 Other current assets 27,187 15,523 ---------- ---------
Total current assets 347,853 231,124 ---------- --------- Property,
plant and equipment, net 39,029 35,124 Goodwill, net 593,188
468,724 Customer relationships, net 54,036 24,657 Intangibles, net
35,471 30,783 Lease receivables, net of current portion 987 -
Deferred tax asset 3,189 4,231 Other assets 3,982 5,091 ----------
--------- Total assets $1,077,735 $ 799,734 ---------- ---------
Liabilities Current maturities of long-term debt $ 704 $ 1,049
Current maturities of discounted lease rentals 9 30 Accounts
payable 73,753 44,943 Billings in excess of costs and estimated
earnings on uncompleted contracts 15,483 8,648 Deferred revenue
53,365 22,211 Accrued liabilities: Compensation and benefits 25,644
13,954 Restructuring reserve 16,090 3,292 Other liabilities 52,245
27,817 Deferred tax liability 6,300 5,924 ---------- ---------
Total current liabilities 243,593 127,868 ---------- ---------
Long-term debt 243,886 122,673 Other liabilities 16,863 887
Restructuring reserve 14,646 7,406 Stockholders' Equity Common
stock 25 25 Additional paid-in capital 367,618 362,810 Retained
earnings 468,599 461,853 Treasury stock, at cost (296,824)
(296,824) Accumulated other comprehensive income 19,329 13,036
---------- --------- Total stockholders' equity 558,747 540,900
---------- --------- Total liabilities and stockholders' equity
$1,077,735 $ 799,734 ---------- --------- BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended
-------------------- July 1, July 2, In thousands 2006 2005
---------------------------------------------------------------------
Operating Activities Net income $ 7,807 $ 7,394 Adjustments to
reconcile net income to cash provided by operating activities:
Intangibles amortization 1,506 1,558 Depreciation 2,300 2,233
Deferred tax provision/(benefit) 1,248 (2,493) Stock compensation
expense 1,620 - Tax provision/(benefit) from exercised stock
options 342 (31) Changes in operating assets and liabilities:
Accounts receivable, net 11,218 4,785 Inventories, net (1,066)
5,032 Other current assets (3,111) (7,371) Proceeds from lease
contracts 312 735 Accounts payable and accrued liabilities (9,569)
(1,039) --------- -------- Net cash provided by operating
activities $ 12,607 $ 10,803 --------- -------- Investing
Activities Capital expenditures, net $ (1,690) $ 321 Acquisition of
businesses, net of cash acquired (129,161) (13,492) Prior
merger-related (payments)/recoveries (1,350) 44 --------- --------
Net cash used in investing activities $(132,201) $(13,127)
--------- -------- Financing Activities Proceeds on borrowings, net
$ 120,950 $ 3,072 Repayments on discounted lease rentals (21) (423)
Proceeds from exercise of options 3,530 136 Payment of dividends
(1,055) (1,011) --------- -------- Net cash provided by financing
activities $ 123,404 $ 1,774 Foreign currency exchange impact on
cash (657) (34) --------- -------- Increase/(decrease) in cash and
cash equivalents $ 3,153 $ (584) Cash and cash equivalents at
beginning of period 11,207 11,592 --------- -------- Cash and cash
equivalents at end of period $ 14,360 $ 11,008 --------- --------
Non-GAAP Measurements The financial information presented in this
release contains certain non-GAAP financial measures. Management
uses the non-GAAP measures to improve the comparisons between
fiscal periods. Management believes the use of the non-GAAP
measures improves the investor's ability to make comparisons
between fiscal periods and provides useful information to investors
regarding the Company's financial condition and its results of
operations. In accordance with SEC Regulation G, the following
financial highlights tables reconcile (1) free cash flow; (2) net
income excluding restructuring charges and reconciling items; and
(3) diluted EPS excluding restructuring charges and reconciling
items; to the most directly comparable U.S. GAAP measures. The
additional non-GAAP financial information presented should be
considered in conjunction with, and not as a substitute for, or
superior to, the financial information presented in accordance with
GAAP. All dollar amounts are in thousands. 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. A
reconciliation of cash provided by operating activities to free
cash flow is presented below: 1Q07 4Q06 1Q06
----------------------------------------------------------------------
Cash provided by operating activities $12,607 $12,885 $10,803
Capital expenditures (1,720) (964) (492) Capital disposals 30 213
813 Proceeds from stock option exercises 3,530 6,976 136 Foreign
currency exchange impact on cash (657) (76) (34)
----------------------------------------------------------------------
Free cash flow $13,790 $19,304 $11,226
----------------------------------------------------------------------
Management believes that presenting net income and diluted earnings
per share excluding restructuring charges and reconciling items is
useful to investors because it provides a more meaningful
comparison of the ongoing operations of the Company. Included in
reconciling items are pre-tax charges for share based compensation,
acquisition related costs and severance expenses in 1Q07,
acquisition-related expenses from the purchase of Norstan and the
Italian Operations Adjustment previously disclosed in 4Q06 and
acquisition-related expenses from the purchase of Norstan and
restructuring charges in 1Q06. A reconciliation of net income to
net income excluding restructuring charges and reconciling items is
presented below: 1Q07 4Q06 1Q06
----------------------------------------------------------------------
Net income $ 7,807 $4,656 $ 7,394 % of revenues 3.4% 2.7% 4.1%
Restructuring charges, after tax impact - - 3,465 Reconciling
items, after tax impact 2,709 4,931 1,854
----------------------------------------------------------------------
Net income excluding restructuring charges and reconciling items
$10,516 $9,587 $12,713 % of revenues 4.6% 5.5% 7.1%
----------------------------------------------------------------------
A reconciliation of diluted earnings per common share (EPS) to
diluted EPS excluding restructuring charges and reconciling items
is presented below: 1Q07 4Q06 1Q06
----------------------------------------------------------------------
Diluted EPS $0.43 $0.26 $0.43 EPS impact of restructuring charges -
- 0.20 EPS impact of reconciling items 0.15 0.27 0.11
----------------------------------------------------------------------
Diluted EPS excluding restructuring charges and reconciling items
$0.58 $0.53 $0.75
----------------------------------------------------------------------
SUPPLEMENTAL INFORMATION: Additionally, the following supplemental
information is being provided for comparisons of the first quarter
ended July 1, 2006 reported results to the prior quarter ended
March 31, 2006 and the prior year's first quarter ended July 2,
2005. 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 restructuring charges and reconciling items. Included
in reconciling items are charges for share based compensation,
acquisition related costs and severance expenses in 1Q07,
acquisition-related expenses from the purchase of Norstan and the
Italian Operations Adjustment previously disclosed in 4Q06 and
acquisition-related expenses from the purchase of Norstan and
restructuring charges in 1Q06. Management believes this enables a
clearer understanding of the ongoing operations of the Company and
allows the reader to more accurately compare other fiscal periods
where the events did not occur. Information on revenues and
operating income for geographical segments is presented below: 1Q07
4Q06 1Q06
----------------------------------------------------------------------
Revenues: North America $192,572 $137,912 $136,861 Europe 29,345
27,152 33,750 All Other 8,478 9,804 8,671
---------------------------- Total $230,395 $174,868 $179,282
Operating income: North America $ 11,026 $ 9,414 $ 11,859 % of
North America revenues 5.7% 6.8% 8.7% Europe 3,143 (1,643) (367) %
of Europe revenues 10.7% (6.1)% (1.1)% All Other 1,596 1,733 1,680
% of All Other revenues 18.8% 17.7% 19.4%
---------------------------- Total $ 15,765 $ 9,504 $ 13,172 % of
Total revenues 6.8% 5.4% 7.3% Restructuring charges and reconciling
items: North America $ 4,168 $ 464 $ 4,379 Europe - 7,065 3,742 All
Other - - - ---------------------------- Total $ 4,168 $ 7,529 $
8,121 Operating income excluding restructuring charges and
reconciling items: North America $ 15,194 $ 9,878 $ 16,238 % of
North America revenues 7.9% 7.2% 11.9% Europe 3,143 5,422 3,375 %
of Europe revenues 10.7% 20.0% 10.0% All Other 1,596 1,733 1,680 %
of All Other revenues 18.8% 17.7% 19.4%
---------------------------- Total $ 19,933 $ 17,033 $ 21,293 % of
Total revenues 8.7% 9.7% 11.9%
----------------------------------------------------------------------
Information on revenues and gross profit for data services, voice
services and hotline services is presented below: 1Q07 4Q06 1Q06
----------------------------------------------------------------------
Revenues: Data Services $ 44,531 $ 44,017 $ 52,901 Voice Services
133,639 77,184 72,929 Hotline Services 52,225 53,667 53,452
---------------------------- Total $230,395 $174,868 $179,282 Gross
profit: Data Services $ 13,317 $ 11,268 $ 15,524 % of Data Services
revenues 29.9% 25.6% 29.3% Voice Services 45,763 28,400 27,838 % of
Voice Services revenues 34.2% 36.8% 38.2% Hotline Services 26,764
24,458 27,578 % of Hotline Services revenues 51.2% 45.6% 51.6%
---------------------------- Total $ 85,844 $ 64,126 $ 70,940 % of
Total revenues 37.3% 36.7% 39.6% Reconciling items: Data Services $
- $ 2,071 $ - Voice Services - - - Hotline Services - 1,517 -
---------------------------- Total $ - $ 3,588 $ - Gross profit
excluding reconciling items: Data Services $ 13,317 $ 13,339 $
15,524 % of Data Services revenues 29.9% 30.3% 29.3% Voice Services
45,763 28,400 27,838 % of Voice Services revenues 34.2% 36.8% 38.2%
Hotline Services 26,764 25,975 27,578 % of Hotline Services
revenues 51.2% 48.4% 51.6% ---------------------------- Total $
85,844 $ 67,714 $ 70,940 % of Total revenues 37.3% 38.7% 39.6%
Information on revenues on a same-office basis compared to prior
year is presented below: 1Q07 1Q06 Change
----------------------------------------------------------------------
Revenues as reported $230,395 $179,282 29% Less revenues from
offices added since 1Q06 (76,099) (7,437)
-------------------------- Revenues on same-office basis $154,296
$171,845 (10)%
----------------------------------------------------------------------
Information on revenues on a same-office basis compared to prior
quarter is presented below: 1Q07 4Q06 Change
----------------------------------------------------------------------
Revenues as reported $230,395 $174,868 32% Less revenues from
offices added since 4Q06 (60,158) - --------------------------
Revenues on same-office basis $170,237 $174,868 (3)%
----------------------------------------------------------------------
Information on various balance sheet ratios, backlog and headcount
is presented below. Dollar amounts are in millions. 1Q07 4Q06 1Q06
----------------------------------------------------------------------
Accounts receivable: Gross accounts receivable $ $188.2 $126.2
$122.7 Reserve $ / % $ 15.9/8.5% $ 9.5/7.5% $ 7.6/6.2%
--------------------------------------------- Net accounts
receivable $ $172.3 $116.7 $115.1 Net days sales outstanding 57
days 54 days 55 days Inventory: Gross inventory $ $ 93.9 $ 68.2 $
64.8 Reserve $ / % $ 25.7/27.4% $ 14.3/21.0% $ 12.3/19.0%
--------------------------------------------- Net inventory $ $
68.2 $ 53.9 $ 52.5 Net inventory turns 7.2x 7.3x 7.2x Six-month
order backlog $168 $ 96 $ 97 Team members 4,752 3,295 3,346
----------------------------------------------------------------------
*T
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