Black Box Corporation (NASDAQ:BBOX), a leading digital solutions
provider dedicated to helping customers design, build, manage and
secure their IT infrastructure, today reported results for the
third quarter of Fiscal 2017 and nine-month period ended
December 31, 2016.
3Q17 Results
- Revenues were $210.4 million, down 5% from $222.5 million for
the same period last year and down 4% from $218.7 million in the
sequential period.
- Provision for income taxes was $0.3 million, compared to $0.1
million for the same period last year and compared to a benefit for
income taxes of $1.5 million in the sequential period.
- Net income was $1.3 million, down 77% from $5.7 million for the
same period last year and compared to a net loss of $6.1 million in
the sequential period.
- Diluted earnings per share was $0.09, down 77% from $0.37 for
the same period last year and compared to a diluted loss per share
of $0.40 in the sequential period.
- Operating net income* was $3.7 million, down 36% from $5.7
million for the same period last year and down 22% from $4.7
million in the sequential period.
- Operating EPS* was $0.24, down 35% from $0.37 for the same
period last year and down 23% from $0.31 in the sequential
period.
- Cash flow provided by operations was $9.1 million, down 69%
from $28.8 million for the same period last year and up 89% from
$4.8 million in the sequential period.
- We provided $1.8 million of dividends to our shareholders,
compared to $1.7 million for the same period last year and $1.8
million in the sequential period.
3QYTD17 Results
- Revenues were $647.6 million, down 6% from $688.5 million for
the same period last year.
- Provision for income taxes was $1.1 million, compared to a
benefit from income taxes of $19.4 million for the same period last
year.
- Net loss was $5.3 million, which included $20.2 million ($12.5
million net of tax) of expense, compared to $123.4 million, which
included $167.0 million ($140.1 million net of tax) of expense, for
the same period last year.
- Diluted loss per share was $0.35, compared to $8.04 for the
same period last year.
- Operating net income* was $10.4 million, down 30% from $14.9
million for the same period last year.
- Operating EPS* was $0.69, down 29% from $0.97 for the same
period last year.
- Cash flow provided by operations was $24.7 million, up 66% from
$14.9 million for the same period last year.
- We provided $5.3 million of dividends to our shareholders
compared to $4.9 million for the same period last year.
* 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.
"We continue to improve in areas within our
operational control - working capital, cash generation, debt
reduction and operating expense management," said E.C. Sykes,
President and CEO. "The foundation has been laid to return to
revenue growth and we are now in a position to focus more of the
efforts there. I remain convinced that we are on the
correct path to rebuild Black Box."
Earnings Conference CallThe Company will conduct
a conference call beginning at 5:00 p.m. Eastern Time today,
January 31, 2017. 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 47777706. 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 digital 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 3,476 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, among others, levels of business
activity and operating expenses, expenses relating to 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 and our
previously filed quarterly reports on Form 10-Q for Fiscal 2017. 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 |
December 31, 2016 |
March 31, 2016 |
Assets |
|
|
Cash and
cash equivalents |
$ |
13.8 |
|
$ |
23.5 |
|
Accounts
receivable, net |
133.4 |
|
139.2 |
|
Inventories, net |
25.9 |
|
42.7 |
|
Costs/estimated earnings in excess of billings on uncompleted
contracts |
75.3 |
|
66.7 |
|
Other
assets |
26.7 |
|
27.3 |
|
Total current assets |
275.0 |
|
299.4 |
|
Property,
plant and equipment, net |
30.4 |
|
34.5 |
|
Intangibles, net |
71.1 |
|
78.2 |
|
Deferred
tax asset |
52.6 |
|
57.1 |
|
Other
assets |
7.4 |
|
6.7 |
|
Total assets |
$ |
436.4 |
|
$ |
475.8 |
|
Liabilities |
|
|
Accounts
payable |
$ |
58.8 |
|
$ |
56.8 |
|
Accrued
compensation and benefits |
20.7 |
|
21.5 |
|
Deferred
revenue |
31.9 |
|
29.4 |
|
Billings
in excess of costs/estimated earnings on uncompleted contracts |
18.2 |
|
20.4 |
|
Other
liabilities |
45.2 |
|
42.2 |
|
Total current liabilities |
174.8 |
|
170.4 |
|
Long-term
debt |
94.0 |
|
119.7 |
|
Other
liabilities |
25.1 |
|
29.5 |
|
Total liabilities |
$ |
293.9 |
|
$ |
319.6 |
|
Stockholders’
equity |
|
|
Common
stock |
$ |
— |
|
$ |
— |
|
Additional paid-in capital |
505.7 |
|
501.8 |
|
Retained
earnings |
69.8 |
|
80.6 |
|
Accumulated other comprehensive income (loss) |
(19.4 |
) |
(13.1 |
) |
Treasury
stock, at cost |
(413.6 |
) |
(413.1 |
) |
Total stockholders’ equity |
$ |
142.6 |
|
$ |
156.2 |
|
Total liabilities and stockholders’ equity |
$ |
436.4 |
|
$ |
475.8 |
|
|
|
|
|
|
|
BLACK BOX CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
|
|
|
|
In millions, except per share amounts and may not foot due
to rounding |
3Q17 |
2Q17 |
3Q16 |
3QYTD17 |
3QYTD16 |
Revenues |
|
|
|
|
|
Products |
$ |
36.1 |
|
$ |
42.3 |
|
$ |
41.9 |
|
$ |
118.3 |
|
$ |
126.7 |
|
Services |
174.3 |
|
176.5 |
|
180.5 |
|
529.3 |
|
561.8 |
|
Total |
210.4 |
|
218.7 |
|
222.5 |
|
647.6 |
|
688.5 |
|
Cost of
sales |
|
|
|
|
|
Products |
20.1 |
|
27.2 |
|
23.7 |
|
70.3 |
|
72.8 |
|
Services |
127.8 |
|
137.1 |
|
129.2 |
|
392.8 |
|
405.0 |
|
Total |
147.9 |
|
164.3 |
|
152.9 |
|
463.1 |
|
477.8 |
|
Gross
profit |
62.4 |
|
54.4 |
|
69.6 |
|
184.5 |
|
210.7 |
|
Selling, general &
administrative expenses |
57.4 |
|
58.1 |
|
60.0 |
|
178.0 |
|
184.2 |
|
Asset impairment
loss |
— |
|
0.5 |
|
— |
|
0.5 |
|
157.3 |
|
Intangibles
amortization |
2.3 |
|
2.3 |
|
2.6 |
|
7.1 |
|
7.8 |
|
Operating
income (loss) |
2.8 |
|
(6.5 |
) |
7.1 |
|
(1.1 |
) |
(138.6 |
) |
Interest expense,
net |
1.1 |
|
1.1 |
|
1.2 |
|
3.3 |
|
3.7 |
|
Other expenses
(income), net |
0.1 |
|
— |
|
0.1 |
|
(0.2 |
) |
0.4 |
|
Income (loss) before
provision for income taxes |
1.6 |
|
(7.6 |
) |
5.8 |
|
(4.1 |
) |
(142.7 |
) |
Provision (benefit) for
income taxes |
0.3 |
|
(1.5 |
) |
0.1 |
|
1.1 |
|
(19.4 |
) |
Net income
(loss) |
$ |
1.3 |
|
$ |
(6.1 |
) |
$ |
5.7 |
|
$ |
(5.3 |
) |
$ |
(123.4 |
) |
Earnings (loss) per
common share |
|
|
|
|
|
Basic |
$ |
0.09 |
|
$ |
(0.40 |
) |
$ |
0.37 |
|
$ |
(0.35 |
) |
$ |
(8.04 |
) |
Diluted |
$ |
0.09 |
|
$ |
(0.40 |
) |
$ |
0.37 |
|
$ |
(0.35 |
) |
$ |
(8.04 |
) |
Weighted-average common
shares outstanding |
|
|
|
|
|
Basic |
15.1 |
|
15.1 |
|
15.4 |
|
15.1 |
|
15.3 |
|
Diluted |
15.3 |
|
15.1 |
|
15.4 |
|
15.1 |
|
15.3 |
|
Dividends
per share |
$ |
0.12 |
|
$ |
0.12 |
|
$ |
0.11 |
|
$ |
0.36 |
|
$ |
0.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLACK BOX CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
|
|
|
|
|
In millions and may not foot due to rounding |
3Q17 |
2Q17 |
3Q16 |
3QYTD17 |
3QYTD16 |
Operating
Activities |
|
|
|
|
|
Net income (loss) |
$ |
1.3 |
|
$ |
(6.1 |
) |
$ |
5.7 |
|
$ |
(5.3 |
) |
$ |
(123.4 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by (used for)
operating activities |
|
|
|
|
|
Intangibles amortization |
2.3 |
|
2.3 |
|
2.6 |
|
7.1 |
|
7.8 |
|
Depreciation |
2.5 |
|
2.4 |
|
2.2 |
|
7.1 |
|
6.3 |
|
Loss
(gain) on sale of property |
0.3 |
|
— |
|
— |
|
(0.9 |
) |
— |
|
Deferred
taxes |
1.9 |
|
(0.8 |
) |
(1.1 |
) |
4.0 |
|
(24.3 |
) |
Stock
compensation expense |
0.7 |
|
0.9 |
|
1.1 |
|
3.9 |
|
4.3 |
|
Change in
fair value of interest-rate swaps |
— |
|
— |
|
— |
|
— |
|
(0.4 |
) |
Asset
impairment loss |
— |
|
0.5 |
|
— |
|
0.5 |
|
157.3 |
|
Provision
for obsolete inventory |
0.5 |
|
9.4 |
|
1.3 |
|
10.2 |
|
1.8 |
|
Provision
for (recovery of) doubtful accounts |
0.6 |
|
0.1 |
|
0.8 |
|
0.9 |
|
1.0 |
|
Changes in operating
assets and liabilities (net of acquisitions) |
|
|
|
|
|
Accounts
receivable |
10.7 |
|
(12.2 |
) |
3.1 |
|
3.1 |
|
(11.3 |
) |
Inventories |
(0.7 |
) |
4.5 |
|
0.2 |
|
6.2 |
|
4.0 |
|
Costs/estimated earnings in excess of billings on uncompleted
contracts |
(3.8 |
) |
(1.6 |
) |
12.6 |
|
(9.0 |
) |
13.0 |
|
All other
assets |
(1.8 |
) |
0.9 |
|
(7.7 |
) |
(2.1 |
) |
3.7 |
|
Accounts
payable |
(2.5 |
) |
4.4 |
|
(1.0 |
) |
2.4 |
|
(7.3 |
) |
Billings
in excess of costs/estimated earnings on uncompleted contracts |
(4.1 |
) |
1.1 |
|
5.8 |
|
(2.2 |
) |
8.0 |
|
All other
liabilities |
1.1 |
|
(1.1 |
) |
3.1 |
|
(1.2 |
) |
(25.6 |
) |
Net cash provided by (used for) operating
activities |
$ |
9.1 |
|
$ |
4.8 |
|
$ |
28.8 |
|
$ |
24.7 |
|
$ |
14.9 |
|
Investing
Activities |
|
|
|
|
|
Capital
expenditures |
$ |
(2.3 |
) |
$ |
(1.8 |
) |
$ |
(3.6 |
) |
$ |
(6.1 |
) |
$ |
(8.1 |
) |
Capital
disposals |
2.2 |
|
— |
|
— |
|
3.6 |
|
0.1 |
|
Acquisition of businesses (payments)/recoveries |
— |
|
— |
|
— |
|
— |
|
— |
|
Net cash provided by (used for) investing
activities |
$ |
(0.1 |
) |
$ |
(1.8 |
) |
$ |
(3.6 |
) |
$ |
(2.5 |
) |
$ |
(8.0 |
) |
Financing
Activities |
|
|
|
|
|
Proceeds
(repayments) from long-term debt |
$ |
(7.7 |
) |
$ |
(13.1 |
) |
$ |
(22.7 |
) |
$ |
(25.6 |
) |
$ |
(8.8 |
) |
Proceeds
(repayments) from short-term debt |
(1.3 |
) |
5.8 |
|
(3.2 |
) |
0.4 |
|
3.2 |
|
Deferred
financing costs |
— |
|
— |
|
— |
|
(1.0 |
) |
— |
|
Purchase
of treasury stock |
— |
|
— |
|
— |
|
(0.5 |
) |
(2.8 |
) |
Payment
of dividends |
(1.8 |
) |
(1.8 |
) |
(1.7 |
) |
(5.3 |
) |
(4.9 |
) |
Increase
(decrease) in cash overdrafts |
— |
|
0.3 |
|
0.1 |
|
0.4 |
|
0.1 |
|
Net cash provided by (used for) financing
activities |
$ |
(10.8 |
) |
$ |
(8.8 |
) |
$ |
(27.6 |
) |
$ |
(31.7 |
) |
$ |
(13.2 |
) |
Foreign
currency exchange impact on cash |
$ |
(0.5 |
) |
$ |
0.6 |
|
$ |
0.1 |
|
$ |
(0.2 |
) |
$ |
0.8 |
|
Increase/(decrease) in cash and cash
equivalents |
$ |
(2.3 |
) |
$ |
(5.2 |
) |
$ |
(2.3 |
) |
$ |
(9.7 |
) |
$ |
(5.5 |
) |
Cash and cash
equivalents at beginning of period |
16.1 |
|
21.4 |
|
20.3 |
|
23.5 |
|
23.5 |
|
Cash and cash
equivalents at end of period |
$ |
13.8 |
|
$ |
16.1 |
|
$ |
18.0 |
|
$ |
13.8 |
|
$ |
18.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (amounts incurred during 4Q16 and 3Q17
represent the additions to reserves for past services that we
settled in January 2017), inventory impairment loss, and long-lived
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 |
3Q17 |
2Q17 |
3Q16 |
3QYTD17 |
3QYTD16 |
Net income
(loss) |
$ |
1.3 |
|
$ |
(6.1 |
) |
$ |
5.7 |
|
$ |
(5.3 |
) |
$ |
(123.4 |
) |
Provision (benefit) for
income taxes |
0.3 |
|
(1.5 |
) |
0.1 |
|
1.1 |
|
(19.4 |
) |
Effective tax rate |
19.7 |
% |
20.0 |
% |
1.1 |
% |
(27.4 |
)% |
13.6 |
% |
Income (loss)
before provision for income taxes |
$ |
1.6 |
|
$ |
(7.6 |
) |
$ |
5.8 |
|
$ |
(4.1 |
) |
$ |
(142.7 |
) |
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
Intangibles amortization |
$ |
2.3 |
|
$ |
2.3 |
|
$ |
2.6 |
|
$ |
7.1 |
|
$ |
7.8 |
|
Interest
rate swap |
— |
|
— |
|
— |
|
— |
|
(0.4 |
) |
Restructuring expense |
1.1 |
|
2.9 |
|
0.9 |
|
4.1 |
|
2.3 |
|
CEO
transition costs |
— |
|
— |
|
— |
|
— |
|
— |
|
Accounts
receivable impairment loss |
0.3 |
|
— |
|
— |
|
0.3 |
|
— |
|
Inventory
impairment loss |
— |
|
9.1 |
|
— |
|
9.1 |
|
— |
|
Loss
(gain) on sale of facility |
0.3 |
|
— |
|
— |
|
(0.9 |
) |
— |
|
Asset
impairment loss |
— |
|
0.5 |
|
— |
|
0.5 |
|
157.3 |
|
Total pre-tax
adjustments |
$ |
4.0 |
|
$ |
14.9 |
|
$ |
3.5 |
|
$ |
20.2 |
|
$ |
167.0 |
|
|
|
|
|
|
|
Operating
EBIT |
$ |
5.7 |
|
$ |
7.3 |
|
$ |
9.3 |
|
$ |
16.1 |
|
$ |
24.3 |
|
Operational effective
tax rate |
35.0 |
% |
35.0 |
% |
38.5 |
% |
35.0 |
% |
38.5 |
% |
Operational income
taxes (1) |
2.0 |
|
2.6 |
|
3.6 |
|
5.6 |
|
9.3 |
|
Operating net income |
$ |
3.7 |
|
$ |
4.7 |
|
$ |
5.7 |
|
$ |
10.4 |
|
$ |
14.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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:
|
3Q17 |
2Q17 |
3Q16 |
3QYTD17 |
3QYTD16 |
Diluted
EPS |
$ |
0.09 |
|
$ |
(0.40 |
) |
$ |
0.37 |
|
$ |
(0.35 |
) |
$ |
(8.04 |
) |
EPS impact
* |
0.15 |
|
0.71 |
|
— |
|
1.04 |
|
9.01 |
|
Operating EPS |
$ |
0.24 |
|
$ |
0.31 |
|
$ |
0.37 |
|
$ |
0.69 |
|
$ |
0.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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 |
3Q17 |
3Q16 |
% Change |
Revenues |
$ |
210.4 |
|
$ |
222.5 |
|
(5 |
)% |
Foreign currency impact
- North America Products |
— |
|
— |
|
|
Foreign currency impact
- North America Services |
— |
|
— |
|
|
Foreign currency impact
- International Products |
0.3 |
|
— |
|
|
Foreign currency impact
- International Services |
1.0 |
|
— |
|
|
Revenues (excluding foreign currency) |
$ |
211.7 |
|
$ |
222.5 |
|
(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 |
3Q17 |
2Q17 |
% Change |
Revenues |
$ |
210.4 |
|
$ |
218.7 |
|
(4 |
)% |
Foreign currency impact
- North America Products |
— |
|
— |
|
|
Foreign currency impact
- North America Services |
— |
|
— |
|
|
Foreign currency impact
- International Products |
0.6 |
|
— |
|
|
Foreign currency impact
- International Services |
0.4 |
|
— |
|
|
Revenues (excluding foreign currency) |
$ |
211.4 |
|
$ |
218.7 |
|
(3 |
)% |
|
|
|
|
|
|
|
|
|
Information on year-to-date revenues excluding
foreign currency compared to the same period last year is presented
below:
In millions and may not foot due to rounding |
3QYTD17 |
3QYTD16 |
% Change |
Revenues |
$ |
647.6 |
|
$ |
688.5 |
|
(6 |
)% |
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 |
1.7 |
|
— |
|
|
Revenues (excluding foreign currency) |
$ |
649.7 |
|
$ |
688.5 |
|
(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, accounts receivable impairment
loss, inventory impairment loss, long-lived 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:
|
3Q17 |
2Q17 |
3Q16 |
3QYTD17 |
3QYTD16 |
In millions and may not foot due to rounding |
$ |
% of Rev |
$ |
% of Rev |
$ |
% of Rev |
$ |
% of Rev |
$ |
% of Rev |
Revenues |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$ |
16.7 |
|
|
$ |
21.0 |
|
|
$ |
20.1 |
|
|
$ |
56.8 |
|
|
$ |
65.3 |
|
|
International Products |
|
19.4 |
|
|
|
21.3 |
|
|
|
21.8 |
|
|
|
61.5 |
|
|
|
61.4 |
|
|
Products |
$ |
36.1 |
|
|
$ |
42.3 |
|
|
$ |
41.9 |
|
|
$ |
118.3 |
|
|
$ |
126.7 |
|
|
North
America Services |
$ |
166.6 |
|
|
$ |
169.8 |
|
|
$ |
172.6 |
|
|
$ |
508.1 |
|
|
$ |
540.1 |
|
|
International Services |
|
7.6 |
|
|
|
6.7 |
|
|
|
7.9 |
|
|
|
21.2 |
|
|
|
21.7 |
|
|
Services |
$ |
174.3 |
|
|
$ |
176.5 |
|
|
$ |
180.5 |
|
|
$ |
529.3 |
|
|
$ |
561.8 |
|
|
Total |
$ |
210.4 |
|
|
$ |
218.7 |
|
|
$ |
222.5 |
|
|
$ |
647.6 |
|
|
$ |
688.5 |
|
|
Gross
profit |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$ |
7.8 |
|
46.9 |
% |
$ |
6.5 |
|
31.2 |
% |
$ |
9.1 |
|
45.2 |
% |
$ |
23.3 |
|
41.1 |
% |
$ |
28.9 |
|
44.2 |
% |
International Products |
|
8.1 |
|
42.0 |
% |
|
8.5 |
|
40.0 |
% |
|
9.2 |
|
42.0 |
% |
|
24.7 |
|
40.1 |
% |
|
25.0 |
|
40.7 |
% |
Products |
$ |
16.0 |
|
44.2 |
% |
$ |
15.1 |
|
35.6 |
% |
$ |
18.2 |
|
43.5 |
% |
$ |
48.0 |
|
40.6 |
% |
$ |
53.9 |
|
42.5 |
% |
North
America Services |
$ |
44.9 |
|
26.9 |
% |
$ |
38.0 |
|
22.4 |
% |
$ |
49.6 |
|
28.7 |
% |
$ |
132.0 |
|
26.0 |
% |
$ |
151.7 |
|
28.1 |
% |
International Services |
|
1.6 |
|
20.6 |
% |
|
1.4 |
|
21.5 |
% |
|
1.8 |
|
22.4 |
% |
|
4.6 |
|
21.6 |
% |
|
5.1 |
|
23.4 |
% |
Services |
$ |
46.5 |
|
26.7 |
% |
$ |
39.4 |
|
22.3 |
% |
$ |
51.4 |
|
28.5 |
% |
$ |
136.6 |
|
25.8 |
% |
$ |
156.8 |
|
27.9 |
% |
Total |
$ |
62.4 |
|
29.7 |
% |
$ |
54.4 |
|
24.9 |
% |
$ |
69.6 |
|
31.3 |
% |
$ |
184.5 |
|
28.5 |
% |
$ |
210.7 |
|
30.6 |
% |
Operating
income (loss) |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$ |
(1.0 |
) |
(6.2 |
)% |
$ |
(1.2 |
) |
(5.5 |
)% |
$ |
0.7 |
|
3.6 |
% |
$ |
(1.3 |
) |
(2.3 |
)% |
$ |
(21.2 |
) |
(32.5 |
)% |
International Products |
|
1.5 |
|
7.9 |
% |
|
0.5 |
|
2.2 |
% |
|
2.0 |
|
9.0 |
% |
|
2.4 |
|
3.9 |
% |
|
(2.8 |
) |
(4.6 |
)% |
Products |
$ |
0.5 |
|
1.4 |
% |
$ |
(0.7 |
) |
(1.6 |
)% |
$ |
2.7 |
|
6.4 |
% |
$ |
1.1 |
|
0.9 |
% |
$ |
(24.0 |
) |
(18.9 |
)% |
North
America Services |
$ |
1.8 |
|
1.1 |
% |
$ |
(6.1 |
) |
(3.6 |
)% |
$ |
3.9 |
|
2.3 |
% |
$ |
(3.2 |
) |
(0.6 |
)% |
$ |
(108.7 |
) |
(20.1 |
)% |
International Services |
|
0.5 |
|
6.5 |
% |
|
0.3 |
|
3.8 |
% |
|
0.5 |
|
6.2 |
% |
|
1.1 |
|
5.0 |
% |
|
(5.9 |
) |
(27.3 |
)% |
Services |
$ |
2.3 |
|
1.3 |
% |
$ |
(5.9 |
) |
(3.3 |
)% |
$ |
4.4 |
|
2.4 |
% |
$ |
(2.1 |
) |
(0.4 |
)% |
$ |
(114.6 |
) |
(20.4 |
)% |
Total |
$ |
2.8 |
|
1.3 |
% |
$ |
(6.5 |
) |
(3.0 |
)% |
$ |
7.1 |
|
3.2 |
% |
$ |
(1.1 |
) |
(0.2 |
)% |
$ |
(138.6 |
) |
(20.1 |
)% |
Adjustments |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$ |
0.3 |
|
|
$ |
2.9 |
|
|
$ |
0.1 |
|
|
$ |
3.2 |
|
|
$ |
25.3 |
|
|
International Products |
|
0.3 |
|
|
|
0.8 |
|
|
|
— |
|
|
|
1.2 |
|
|
|
5.9 |
|
|
Products |
$ |
0.6 |
|
|
$ |
3.7 |
|
|
$ |
0.1 |
|
|
$ |
4.5 |
|
|
$ |
31.2 |
|
|
North
America Services |
$ |
3.4 |
|
|
$ |
11.2 |
|
|
$ |
3.3 |
|
|
$ |
15.7 |
|
|
$ |
128.9 |
|
|
International Services |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7.3 |
|
|
Services |
$ |
3.4 |
|
|
$ |
11.2 |
|
|
$ |
3.3 |
|
|
$ |
15.7 |
|
|
$ |
136.2 |
|
|
Total |
$ |
4.0 |
|
|
$ |
14.9 |
|
|
$ |
3.5 |
|
|
$ |
20.2 |
|
|
$ |
167.4 |
|
|
Adjusted operating income |
|
|
|
|
|
|
|
|
|
North
America Products |
$ |
(0.7 |
) |
(4.5 |
)% |
$ |
1.8 |
|
8.5 |
% |
$ |
0.8 |
|
4.1 |
% |
$ |
1.9 |
|
3.4 |
% |
$ |
4.1 |
|
6.3 |
% |
International Products |
|
1.9 |
|
9.7 |
% |
|
1.3 |
|
5.9 |
% |
|
2.0 |
|
9.1 |
% |
|
3.6 |
|
5.9 |
% |
|
3.1 |
|
5.0 |
% |
Products |
$ |
1.1 |
|
3.1 |
% |
$ |
3.0 |
|
7.2 |
% |
$ |
2.8 |
|
6.7 |
% |
$ |
5.6 |
|
4.7 |
% |
$ |
7.2 |
|
5.7 |
% |
North
America Services |
$ |
5.1 |
|
3.1 |
% |
$ |
5.1 |
|
3.0 |
% |
$ |
7.2 |
|
4.2 |
% |
$ |
12.5 |
|
2.5 |
% |
$ |
20.2 |
|
3.7 |
% |
International Services |
|
0.5 |
|
6.6 |
% |
|
0.3 |
|
4.1 |
% |
|
0.5 |
|
6.5 |
% |
|
1.1 |
|
5.1 |
% |
|
1.4 |
|
6.3 |
% |
Services |
$ |
5.6 |
|
3.2 |
% |
$ |
5.3 |
|
3.0 |
% |
$ |
7.7 |
|
4.3 |
% |
$ |
13.6 |
|
2.6 |
% |
$ |
21.5 |
|
3.8 |
% |
Total |
$ |
6.8 |
|
3.2 |
% |
$ |
8.4 |
|
3.8 |
% |
$ |
10.5 |
|
4.7 |
% |
$ |
19.1 |
|
3.0 |
% |
$ |
28.8 |
|
4.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, accounts receivable impairment loss,
inventory impairment loss, and long-lived asset impairment loss 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 |
3Q17 |
2Q17 |
3Q16 |
3QYTD17 |
3QYTD16 |
Net income
(loss) |
$ |
1.3 |
|
$ |
(6.1 |
) |
$ |
5.7 |
|
$ |
(5.3 |
) |
$ |
(123.4 |
) |
Provision
(benefit) for income taxes |
0.3 |
|
(1.5 |
) |
0.1 |
|
1.1 |
|
(19.4 |
) |
Interest
expense, net |
1.1 |
|
1.1 |
|
1.2 |
|
3.3 |
|
3.7 |
|
Intangibles amortization |
2.3 |
|
2.3 |
|
2.6 |
|
7.1 |
|
7.8 |
|
Depreciation |
2.5 |
|
2.4 |
|
2.2 |
|
7.1 |
|
6.3 |
|
EBITDA |
$ |
7.5 |
|
$ |
(1.9 |
) |
$ |
11.8 |
|
$ |
13.3 |
|
$ |
(125.0 |
) |
Stock
compensation expense |
0.7 |
|
0.9 |
|
1.1 |
|
3.9 |
|
4.3 |
|
Accounts
receivable impairment loss |
0.3 |
|
— |
|
— |
|
0.3 |
|
— |
|
Inventory
impairment loss |
— |
|
9.1 |
|
— |
|
9.1 |
|
— |
|
Asset
impairment loss |
— |
|
0.5 |
|
— |
|
0.5 |
|
157.3 |
|
Operating EBITDA |
$ |
8.5 |
|
$ |
8.7 |
|
$ |
12.9 |
|
$ |
27.2 |
|
$ |
36.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
3Q17 |
2Q17 |
3Q16 |
3QYTD17 |
3QYTD16 |
Net cash
provided by (used for) operating activities |
$ |
9.1 |
|
$ |
4.8 |
|
$ |
28.8 |
|
$ |
24.7 |
|
$ |
14.9 |
|
Net
capital expenditures |
(0.1 |
) |
(1.8 |
) |
(3.6 |
) |
(2.5 |
) |
(8.0 |
) |
Foreign
currency exchange impact on cash |
(0.5 |
) |
0.6 |
|
0.1 |
|
(0.2 |
) |
0.8 |
|
Free cash flow
before stock option exercises |
$ |
8.5 |
|
$ |
3.6 |
|
$ |
25.3 |
|
$ |
22.1 |
|
$ |
7.7 |
|
Proceeds
from the exercise of stock options |
— |
|
— |
|
— |
|
— |
|
— |
|
Free cash flow |
$ |
8.5 |
|
$ |
3.6 |
|
$ |
25.3 |
|
$ |
22.1 |
|
$ |
7.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant Balance Sheet ratios and
Other Information
Information on certain balance sheet ratios,
backlog and headcount is presented below:
Dollars In millions |
3Q17 |
2Q17 |
3Q16 |
Days sales
outstanding |
|
53
days |
|
|
56
days |
|
|
62
days |
|
Aggregate days sales
outstanding |
|
79
days |
|
|
80
days |
|
|
80
days |
|
Inventory turns |
21.9x |
|
22.6x |
|
11.7x |
|
Six-month order
backlog |
$ |
171.2 |
|
$ |
183.7 |
|
$ |
172.7 |
|
Headcount |
3,476 |
|
3,566 |
|
3,637 |
|
Net debt* |
$ |
80.2 |
|
$ |
85.6 |
|
$ |
110.7 |
|
Leverage
ratio** |
2.69 |
|
2.79 |
|
2.79 |
|
|
|
|
|
|
|
|
* Net debt is defined by the Company as Long-term debt less Cash
and cash equivalents.** Leverage ratio is based on Adjusted EBITDA
as defined under our credit facility with PNC Bank.
Contact
Black Box Corporation
Anthony J. Massetti
Senior Vice President, Chief Financial Officer and Treasurer
Phone: (724) 873-6788
Email: investors@blackbox.com
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