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 2016.
1Q16 Results
- Revenues were $229.2 million, down 7%
from $245.2 million for the same period last year and down 7% from
$245.1 million in the sequential period.
- Provision for income taxes was $2.1
million (73.3% effective rate), down 41% from $3.5 million (47.2%
effective rate) for the same period last year and compared to
benefit for income taxes of $0.4 million ((14.6)% effective rate)
in the sequential period.
- Net income was $0.8 million, down 81%
from $3.9 million for the same period last year and down 74% from
$2.9 million in the sequential period.
- Diluted earnings per share was $0.05,
down 81% from $0.25 for the same period last year and down 74% from
$0.19 in the sequential period.
- Operating net income* was $3.5 million,
down 46% from $6.4 million for the same period last year and down
51% from $7.1 million in the sequential period.
- Operating EPS* was $0.22, down 45% from
$0.41 for the same period last year and down 51% from $0.46 in the
sequential period.
- Cash flow used for operations was $7.4
million, compared to cash flow used for operations of $5.9 million
for the same period last year and compared to cash flow provided by
operations of $37.0 million in the sequential period.
- We provided $3.5 million to our
shareholders by repurchasing $2.0 million of common stock and
paying $1.5 million in 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.
Commenting on the first quarter of Fiscal 2016 results, Michael
McAndrew, President and Chief Executive Officer, said, "Growth in
our Solutions Practices and our large managed services contract
during the quarter was not able to overcome delays in awards in our
Federal business and a decline in our core North America commercial
services offerings. Our earnings shortfall is directly attributable
to that revenue shortfall. In light of these results, we believed
it was prudent to adjust our annual outlook to account for these
contemporary events.
"We have experienced an increase in backlog in our Services
offerings from last quarter. That gives us confidence that our
functional realignment will enable our goal of consistent revenue
growth. Until then, we will redouble our efforts on managing our
operating expenses in line with our expected revenues for the
remainder of Fiscal 2016 while maintaining appropriate
investments to improve our operational efficiency."
Guidance
For the second quarter of Fiscal 2016, the Company is
targeting:
- Revenues in the range of $238 million
to $243 million.
- Operating earnings per share in the
range of $0.36 to $0.41.
Included at the mid-point of the second quarter of Fiscal 2016
target is a negative impact to Revenues of $4 million and Operating
earnings per share of $0.01, related to the projected impact of
foreign currencies relative to the US dollar compared to the prior
year period.
For Fiscal 2016, the Company is targeting:
- Revenues in the range of $965 million
to $980 million.
- Operating earnings per share in the
range of $1.65 to $1.80.
Included at the mid-point of the Fiscal 2016 target is a
negative impact to Revenues of $12 million and Operating earnings
per share of $0.02, related to the projected impact of foreign
currencies relative to the US dollar compared to the prior year
period.
Included in these targets is an effective tax rate of
38.5%.These targets exclude intangible amortization, restructuring
expenses and the impact of changes in the fair market value of the
Company’s interest-rate swap.
Earnings Conference Call
The Company will conduct a conference call beginning at 5:00
p.m. Eastern Daylight Time today, July 28, 2015. Michael
McAndrew, 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 612-332-0107 approximately
15 minutes prior to the starting time and ask to be connected to
the Black Box Earnings Call. A replay of the audio webcast will be
available at http://investor.blackbox.com/events.cfm for a
limited period of time. A replay of the teleconference will be
available for one week by dialing 320-365-3844 and using access
code 363741.
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 4,000 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 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 our 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, 2015. 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 June 27,
2015 March 31, 2015 Assets Cash and
cash equivalents $ 20.5 $ 23.5 Accounts receivable, net 153.1 150.6
Inventories, net 53.4 54.4 Costs/estimated earnings in excess of
billings on uncompleted contracts 81.5 79.3 Other assets 31.1
35.5
Total current assets
339.5 343.3 Property, plant and equipment, net 32.3
32.2 Goodwill, net 191.9 191.2 Intangibles, net 85.5 88.1 Other
assets 27.8 31.4
Total assets
$ 677.0 $ 686.3
Liabilities Accounts payable $ 66.6 $ 64.5 Accrued
compensation and benefits 19.3 24.8 Deferred revenue 31.9 34.9
Billings in excess of costs/estimated earnings on uncompleted
contracts 16.1 16.4 Other liabilities 36.5
47.1
Total current liabilities 170.3
187.7 Long-term debt 144.5 137.3 Other liabilities 23.1
24.2
Total liabilities $
337.9 $ 349.1 Stockholders’ equity
Common stock $ — $ — Additional paid-in capital 500.3 498.1
Retained earnings 257.5 258.4 Accumulated other comprehensive
income (loss) (9.9 ) (13.4 ) Treasury stock, at cost (408.8 )
(406.0 )
Total stockholders’ equity $
339.1 $ 337.1
Total liabilities and stockholders’ equity $
677.0 $ 686.3
BLACK
BOX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS In millions, except per share amounts and
may not foot due to rounding 1Q16
4Q15 1Q15 Revenues
Products $ 40.5 $ 42.4 $ 43.2 Services 188.7
202.6 202.0 Total 229.2 245.1 245.2
Cost of
sales Products 23.7 23.9 25.3 Services 135.9
144.6 144.7 Total 159.6 168.5 170.0
Gross profit 69.7 76.5 75.2 Selling,
general & administrative expenses 62.9 70.0 64.0 Intangibles
amortization 2.6 2.6 2.7
Operating income (loss) 4.2 4.0 8.6
Interest expense, net 1.4 1.1 1.1 Other expenses (income), net (0.1
) 0.3 — Income (loss) before
provision for income taxes 2.8 2.6 7.5 Provision (benefit) for
income taxes 2.1 (0.4 ) 3.5
Net income (loss) $ 0.8
$ 2.9 $ 3.9
Earnings (loss) per common share
Basic $ 0.05
$ 0.19
$ 0.25 Diluted $ 0.05
$ 0.19 $
0.25 Weighted-average common shares outstanding Basic 15.4
15.4 15.5 Diluted 15.5
15.5 15.6 Dividends per
share $ 0.11 $ 0.10 $
0.10
BLACK BOX CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS In millions and
may not foot due to rounding 1Q16
4Q15 1Q15 Operating
Activities Net income (loss) $ 0.8 $ 2.9 $ 3.9 Adjustments to
reconcile net income (loss) to net cash provided by (used for)
operating activities Intangibles amortization 2.6 2.6 2.7
Depreciation 2.0 1.8 1.7 Loss (gain) on sale of property — (0.1 ) —
Deferred taxes 2.7 4.8 2.4 Stock compensation expense 2.3 1.1 2.3
Change in fair value of interest-rate swaps (0.3 ) (0.3 ) (0.2 )
Changes in operating assets and liabilities (net of acquisitions)
Accounts receivable, net (1.7 ) 25.6 (14.5 ) Inventories, net 1.3
(0.1 ) (1.4 ) Costs/estimated earnings in excess of billings on
uncompleted contracts (2.1 ) 4.1 1.7 All other assets 7.0 (16.2 )
2.8 Accounts payable 0.6 0.6 5.2 Billings in excess of
costs/estimated earnings on uncompleted contracts (0.4 ) (5.2 ) 0.9
All other liabilities (22.0 ) 15.2
(13.4 )
Net cash provided by (used for) operating
activities $ (7.4 ) $ 37.0
$ (5.9 ) Investing Activities Capital
expenditures $ (1.9 ) $ (2.1 ) $ (1.9 ) Capital disposals — — —
Prior merger-related (payments)/recoveries — —
—
Net cash provided by (used for)
investing activities $ (1.9 ) $
(2.1 ) $ (1.9 ) Financing
Activities Proceeds (repayments) from long-term debt $ 7.0 $
(40.0 ) $ 10.1 Proceeds (repayments) from short-term debt 2.3 (0.6
) 0.8 Purchase of treasury stock (2.8 ) — (3.9 ) Payment of
dividends (1.5 ) (1.5 ) (1.4 ) Increase (decrease) in cash
overdrafts 1.2 (0.4 ) (0.2 )
Net cash provided by (used for) financing activities
$ 6.1 $ (42.7 ) $
5.3 Foreign currency exchange impact on cash $
0.1 $ (1.9 )
$ (0.6 ) Increase/(decrease)
in cash and cash equivalents $ (3.0 )
$ (9.8 ) $ (3.0 ) Cash
and cash equivalents at beginning of period 23.5
33.3 30.8 Cash and cash
equivalents at end of period $ 20.5 $ 23.5
$ 27.8
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, each of which are non-cash
charges, and restructuring expense, which is a cash charge.
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
1Q16 4Q15 1Q15 Net income (loss)
$ 0.8 $ 2.9 $ 3.9
Provision (benefit) for income taxes 2.1 (0.4 ) 3.5 Effective tax
rate 73.3 % (14.6 )% 47.2 %
Income (loss) before provision for
income taxes $ 2.8 $ 2.6 $
7.5 Adjustments Intangible amortization $ 2.6
$ 2.6 $ 2.7 Change in fair value of interest-rate swaps (0.3 ) (0.3
) (0.2 ) Restructuring expense 0.5 4.1 0.6
Total pre-tax adjustments $ 2.8 $
6.4 $ 3.0 Operating EBIT
$ 5.7 $ 9.0 $ 10.5
Operational effective tax rate 38.5 % 21.4 % 39.0 % Operational
income taxes (1) 2.2 1.9 4.1
Operating net
income $ 3.5 $ 7.1
$ 6.4
(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:
1Q16 4Q15 1Q15 Diluted
EPS $ 0.05 $ 0.19 $
0.25 EPS impact
* 0.17 0.27 0.16
Operating EPS $ 0.22 $
0.46 $ 0.41
* 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
1Q16 1Q15
% Change Revenues $ 229.2
$ 245.2 (7 )% Foreign currency impact -
North America Products 0.1 — Foreign currency impact - North
America Services 0.5 — Foreign currency impact - International
Products 3.6 — Foreign currency impact - International Services 1.0
—
Revenues (excluding foreign
currency) $ 234.5
$ 245.2
(4 )%
Information on quarterly revenues excluding foreign currency
compared to the sequential quarter is presented below:
In millions and may not foot due to rounding
1Q16 4Q15
% Change Revenues $ 229.2
$ 245.1 (6 )% Foreign currency impact -
North America Products — — Foreign currency impact - North America
Services — — Foreign currency impact - International Products 0.3 —
Foreign currency impact - International Services —
—
Revenues (excluding foreign currency)
$ 229.5
$ 245.1 (6
)%
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 and
restructuring expense.
A reconciliation of Operating income (loss) to Adjusted
operating income (by segment) is presented below:
1Q16 4Q15 1Q15 In millions and may
not foot due to rounding $ % of Rev $ %
of Rev $ % of Rev Revenues North America
Products $ 20.8 $ 20.5 $ 19.7 International Products 19.7
22.0 23.5
Total Products $ 40.5
$ 42.4 $ 43.2 North America Services $
182.0 $ 195.5 $ 194.3 International Services 6.7 7.1
7.7
Total Services $ 188.7
$ 202.6 $ 202.0
Total $ 229.2 $ 245.1 $
245.2 Gross profit North America Products $ 8.9 42.6
% $ 9.7 47.6 % $ 8.0 40.3 % International Products 7.9 40.4
% 8.8 39.9 % 10.0 42.5 %
Total Products
$ 16.8 41.5 % $ 18.5
43.6 % $ 17.9 41.5 %
North America Services $ 51.1 28.1 % $ 56.0 28.6 % $ 55.2 28.4 %
International Services 1.7 25.5 % 2.1 29.0 % 2.1
26.7 %
Total Services $ 52.8
28.0 % $ 58.0 28.6
% $ 57.3 28.4 %
Total $ 69.7 30.4 % $
76.5 31.2 % $ 75.2 30.7
% Operating income (loss)(1) North America
Products $ 1.0 4.7 % $ 1.8 8.7 % $ 0.2 1.2 % International Products
0.3 1.6 % (0.9 ) (4.1 )% 0.3 1.3 %
Total
Products $ 1.3 3.2 % $
0.9 2.0 % $ 0.5 1.2
% North America Services $ 2.4 1.3 % $ 2.4 1.2 % $ 7.5 3.8 %
International Services 0.5 7.3 % 0.7 9.5 % 0.6
7.5 %
Total Services $ 2.8 1.5
% $ 3.1 1.5 % $
8.0 4.0 % Total $
4.2 1.8 % $ 4.0 1.6
% $ 8.6 3.5 % Adjustments
North America Products
$ — $ 0.2 $ — International Products 0.1 1.3 0.1
Total Products $ 0.1 $
1.4 $ 0.1 North America Services $ 3.0 $ 5.0 $
3.1 International Services — 0.3 —
Total
Services $ 3.0 $ 5.3
$ 3.1 Total $ 3.1
$ 6.7 $ 3.3 Adjusted operating
income(1) North America Products $ 1.0 4.8 % $ 1.9 9.4 %
$ 0.3 1.3 % International Products 0.4 2.0 % 0.3 1.6
% 0.4 1.8 %
Total Products $ 1.4
3.4 % $ 2.3 5.4 %
$ 0.7 1.6 % North America Services $
5.3 2.9 % $ 7.5 3.8 % $ 10.6 5.4 % International Services 0.5
7.9 % 1.0 13.6 % 0.6 7.5 %
Total
Services $ 5.9 3.1 %
$ 8.4 4.2 % $ 11.2
5.5 % Total $ 7.3
3.2 % $ 10.7 4.4 %
$ 11.8 4.8 %
(1) These results reflect a
reclassification of expense that reduced Operating income (loss)
and Adjusted operating income in North America Products by $1,218
in 1Q15, with a corresponding increase of the same amounts for
Operating income (loss) and Adjusted operating income in North
America Services. This reclassification had no effect on our
consolidated financial results.
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
1Q16 4Q15
1Q15 Net income (loss) $ 0.8
$ 2.9 $ 3.9 Provision (benefit) for
income taxes 2.1 (0.4 ) 3.5 Interest expense, net 1.4 1.1 1.1
Intangibles amortization 2.6 2.6 2.7 Depreciation 2.0
1.8 1.7
EBITDA
$ 8.8 $ 8.1 $ 13.0 Stock
compensation expense 2.3 1.1
2.3
Operating EBITDA
$ 11.1 $
9.2 $ 15.3
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
1Q16 4Q15
1Q15 Net cash provided by (used for) operating
activities $ (7.4 ) $ 37.0
$ (5.9 ) Net capital expenditures (1.9 ) (2.1
) (1.9 ) Foreign currency exchange impact on cash 0.1
(1.9 ) (0.6 )
Free cash flow
before stock option exercises $ (9.2 )
$ 32.9 $ (8.3 ) Proceeds from
the exercise of stock options — —
—
Free cash flow
$ (9.2 )
$ 32.9 $
(8.3 )
Significant Balance Sheet ratios and Other
Information
Information on certain balance sheet ratios, backlog and
headcount is presented below:
Dollars In millions 1Q16
4Q15 1Q15 Days
sales outstanding 54 days 52 days 57 days Aggregate days sales
outstanding 80 days 77 days 84 days Net inventory turns 11.0x 11.9x
10.3x Six-month order backlog $ 184.2 $ 168.7 $ 197.6 Team members
3,750 3,803 3,858 Net Debt $ 124.0 $ 113.7 $ 142.8 Leverage ratio
3.0 2.7
2.6
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Black Box CorporationTimothy C. HuffmyerVice President, Chief
Financial Officer and Treasurer724-873-6788investors@blackbox.com
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