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
fourth quarter of Fiscal 2018 and twelve-month period ended
March 31, 2018.
Fourth Quarter Results
- Revenues declined by $14.2 million or 6.8% to $194.0 million
compared to the same period last year, while the revenue decline
from the prior quarter was $0.9 million or 0.5%.
- Gross profit margin was 27.3%, down 80 basis points from 28.1%
for the same period last year. This decrease was primarily
due to a decline in our higher margin legacy unified communication
business and lower margin incremental projects in both our Products
and Services segments during this quarter. The gross profit margin
in the prior quarter was 27.0%.
- Selling, general and administrative expenses were $58.8
million, up 4.3% from $56.4 million for the same period last year
and down 0.3% from $59.0 million in the prior quarter. The increase
from the comparable prior year period was primarily due to higher
spending on the U.S.-based ERP project, partially offset by lower
variable compensation costs.
- The Company recorded a $9.7 million non-cash asset impairment
charge related to the write down of intangible assets as a result
of its annual impairment assessment.
- Loss before income taxes was $19.3 million, compared to a loss
before income taxes of $1.2 million for the same period last year
and compared to a loss before income taxes of $9.8 million in the
prior quarter.
- Provision for income taxes was $31.7 million, compared to $0.6
million for the same period last year and compared to $18.1 million
in the prior quarter. The variance from the statutory rate in the
current quarter was principally due to a valuation allowance
recorded on the Company's deferred tax assets.
- Net loss was $51.0 million, compared to a net loss of $1.8
million for the same period last year and compared to a net loss of
$27.9 million in the prior quarter.
- Diluted loss per share was $3.37, compared to a diluted loss
per share of $0.12 for the same period last year and compared to a
diluted loss per share of $1.85 in the prior quarter.
- Cash flow used for operating activities was $3.5 million,
compared to cash flow provided by operating activities of $15.2
million for the same period last year and compared to cash flow
used by operating activities of $27.5 million in the prior quarter.
The variance compared to the prior quarter was principally due to
improved working capital management.
Year to Date Results
- Revenues were $774.6 million, down 9.5% from $855.7 million for
the prior year.
- Gross profit margin was 27.7%, down 70 basis points from 28.4%
last year. The decrease was primarily due to a decline in our
higher margin legacy unified communication business and lower
margin project work in our commercial services business within
North America Services.
- Selling, general and administrative expenses were $241.4
million, up 3.0% from $234.4 million last year. The increase was
primarily due to higher spending on the U.S.-based ERP project,
partially offset by lower variable compensation costs.
- Loss before income taxes was $52.3 million, compared to a loss
before income taxes of $5.3 million for the same period last
year.
- Provision for income taxes was $47.8 million, compared to $1.8
million for the same period last year. The variance from the
statutory rate in fiscal 2018 was principally due to the impact of
tax reform as well as a valuation allowance recorded on the
Company’s deferred tax assets.
- Net loss was $100.1 million, compared to a net loss of $7.1
million for the same period last year.
- Diluted loss per share was $6.64, compared to a diluted loss
per share of $0.47 for the same period last year.
- Cash flow used for operating activities was $46.6 million,
compared to cash flow provided by operating activities of $39.9
million for the same period last year.
CEO Comment
“I have spent the last few weeks visiting with
customers and hearing about the critical and valued services we are
providing,” stated Joel Trammell, President and CEO. “I have
assured them as well as our vendors and employees that we have many
work streams in process that are intended to restore the
profitability and financial health of Black Box. Our Credit
Agreement Amendment was only step one. The sale of our
Federal Business will be step two. As mentioned in our Form
10-K, the next steps include plans to potentially restructure,
refinance and/or sell additional assets. Of course, during
this time, we are also working to improve the operating
profitability and cash flow of our Company.”
“I am pleased with our operating results given
the issues we have been dealing with as noted in our recent
filings,” continued Mr. Trammell. “This quarter marks the
fourth consecutive quarter where revenue has been relatively
flat. Our operations teams have done a great job of remaining
focused on serving our clients well, despite the
distractions. I would like to acknowledge our lenders for
providing us the additional support to smoothly operate our
business. Additionally, I thank our customers, vendors, suppliers
and team members who continue to support our efforts. They
are the reason I am proud to be leading Black Box.”
Mr. Trammell concluded by saying, “While we
continue to face many challenges, our expectations for the first
quarter of Fiscal 2019 is for flat to slightly lower revenues and
improved gross profit margin.”
Earnings Conference Call
The Company will conduct a conference call
beginning at 10:00 a.m. Eastern Time today, July 16, 2018.
Joel Trammell, 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 8580458. 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 3,264 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, liquidity, compliance
with bank covenants, our going concern qualification, the Company's
arrangements with its vendors and subcontractors, levels of
business activity and operating expenses, expenses relating to
compliance requirements, cash flows, global economic and business
conditions, the timing and costs of restructuring programs and
other initiatives, such as our enterprise resource planning system
initiatives, successful marketing of the Company's product and
services offerings, successful implementation of the Company's
integration initiatives and successful implementation of the
Company's government contracting programs, as well as competition,
changes in foreign, political and economic conditions, fluctuating
foreign currencies compared to the U.S. dollar, rapid changes in
technologies, client preferences, 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,
2018, filed contemporaneously with this Form 8-K. 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 |
March 31, 2018 |
|
March 31, 2017 |
|
Assets |
|
|
Cash and
cash equivalents |
$ |
33.5 |
|
$ |
14.2 |
|
Accounts
receivable, net |
114.5 |
|
128.5 |
|
Inventories, net |
27.0 |
|
25.4 |
|
Costs/estimated earnings in excess of billings on uncompleted
contracts |
82.4 |
|
71.9 |
|
Assets
held for sale |
0.2 |
|
— |
|
Other
assets |
29.3 |
|
28.5 |
|
Total current assets |
286.8 |
|
268.6 |
|
Property,
plant and equipment, net |
24.2 |
|
29.1 |
|
Intangibles, net |
50.2 |
|
68.8 |
|
Deferred
tax asset |
6.5 |
|
53.5 |
|
Other
assets |
8.6 |
|
7.0 |
|
Total assets |
$ |
376.3 |
|
$ |
427.1 |
|
Liabilities |
|
|
Accounts
payable |
$ |
64.8 |
|
$ |
69.9 |
|
Accrued
compensation and benefits |
17.3 |
|
21.6 |
|
Deferred
revenue |
27.7 |
|
31.6 |
|
Billings
in excess of costs/estimated earnings on uncompleted contracts |
14.7 |
|
16.5 |
|
Short-term debt |
157.8 |
|
1.0 |
|
Other
liabilities |
26.8 |
|
37.0 |
|
Total current liabilities |
309.0 |
|
177.5 |
|
Long-term
debt |
0.5 |
|
88.8 |
|
Other
liabilities |
16.5 |
|
19.2 |
|
Total liabilities |
$ |
326.0 |
|
$ |
285.5 |
|
Stockholders’
equity |
|
|
Common
stock |
$ |
— |
|
$ |
— |
|
Additional paid-in capital |
510.0 |
|
506.4 |
|
Retained
earnings |
(35.7 |
) |
66.2 |
|
Accumulated other comprehensive income (loss) |
(8.0 |
) |
(15.5 |
) |
Treasury
stock, at cost |
(416.0 |
) |
(415.6 |
) |
Total stockholders’ equity |
$ |
50.3 |
|
$ |
141.6 |
|
Total liabilities and stockholders’ equity |
$ |
376.3 |
|
$ |
427.1 |
|
|
|
|
|
|
BLACK BOX CORPORATION |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
In millions, except per share amounts and may not foot due
to rounding |
4Q18 |
|
3Q18 |
|
4Q17 |
|
FY18 |
|
FY17 |
|
Revenues |
|
|
|
|
|
Products |
$ |
32.9 |
|
$ |
34.4 |
|
$ |
36.7 |
|
$ |
137.4 |
|
$ |
154.9 |
|
Services |
161.1 |
|
160.5 |
|
171.4 |
|
637.3 |
|
700.8 |
|
Total |
194.0 |
|
194.9 |
|
208.1 |
|
774.6 |
|
855.7 |
|
Cost of
sales |
|
|
|
|
|
Products |
18.3 |
|
21.1 |
|
21.0 |
|
79.6 |
|
91.3 |
|
Services |
122.7 |
|
121.1 |
|
128.7 |
|
480.3 |
|
521.5 |
|
Total |
141.0 |
|
142.2 |
|
149.7 |
|
559.9 |
|
612.8 |
|
Gross
profit |
53.0 |
|
52.7 |
|
58.4 |
|
214.8 |
|
243.0 |
|
Selling, general &
administrative expenses |
58.8 |
|
59.0 |
|
56.4 |
|
241.4 |
|
234.4 |
|
Asset impairments |
9.7 |
|
— |
|
— |
|
11.2 |
|
0.5 |
|
Intangibles
amortization |
1.6 |
|
1.6 |
|
2.3 |
|
7.5 |
|
9.3 |
|
Operating
income (loss) |
(17.1 |
) |
(7.9 |
) |
(0.3 |
) |
(45.3 |
) |
(1.3 |
) |
Interest expense,
net |
2.1 |
|
1.7 |
|
1.0 |
|
6.9 |
|
4.4 |
|
Other expenses
(income), net |
0.1 |
|
0.2 |
|
(0.1 |
) |
0.2 |
|
(0.4 |
) |
Income (loss) before
provision for income taxes |
(19.3 |
) |
(9.8 |
) |
(1.2 |
) |
(52.3 |
) |
(5.3 |
) |
Provision (benefit) for
income taxes |
31.7 |
|
18.1 |
|
0.6 |
|
47.8 |
|
1.8 |
|
Net income
(loss) |
$ |
(51.0 |
) |
$ |
(27.9 |
) |
$ |
(1.8 |
) |
$ |
(100.1 |
) |
$ |
(7.1 |
) |
Earnings (loss) per
common share |
|
|
|
|
|
Basic |
$ |
(3.37 |
) |
$ |
(1.85 |
) |
$ |
(0.12 |
) |
$ |
(6.64 |
) |
$ |
(0.47 |
) |
Diluted |
$ |
(3.37 |
) |
$ |
(1.85 |
) |
$ |
(0.12 |
) |
$ |
(6.64 |
) |
$ |
(0.47 |
) |
Weighted-average common
shares outstanding |
|
|
|
|
|
Basic |
15.1 |
|
15.1 |
|
15.2 |
|
15.1 |
|
15.1 |
|
Diluted |
15.1 |
|
15.1 |
|
15.2 |
|
15.1 |
|
15.1 |
|
Dividends
per share |
$ |
— |
|
$ |
— |
|
$ |
0.12 |
|
$ |
0.12 |
|
$ |
0.48 |
|
|
|
BLACK BOX CORPORATION |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
In millions and may not foot due to rounding |
4Q18 |
|
3Q18 |
|
4Q17 |
|
FY18 |
|
FY17 |
|
Operating
Activities |
|
|
|
|
|
Net income (loss) |
$ |
(51.0 |
) |
$ |
(27.9 |
) |
$ |
(1.8 |
) |
$ |
(100.1 |
) |
$ |
(7.1 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by (used for)
operating activities |
|
|
|
|
|
Intangibles amortization |
1.6 |
|
1.6 |
|
2.3 |
|
7.5 |
|
9.3 |
|
Depreciation |
2.2 |
|
2.5 |
|
2.3 |
|
9.5 |
|
9.4 |
|
Loss
(gain) on sale of property |
(1.4 |
) |
— |
|
(0.1 |
) |
(1.4 |
) |
(1.0 |
) |
Deferred
taxes |
32.8 |
|
17.7 |
|
(2.6 |
) |
48.6 |
|
1.4 |
|
Stock
compensation expense |
0.1 |
|
0.1 |
|
0.7 |
|
3.5 |
|
4.6 |
|
Asset
impairment loss |
9.7 |
|
— |
|
— |
|
11.2 |
|
0.5 |
|
Provision
for obsolete inventory |
0.4 |
|
0.5 |
|
0.5 |
|
1.2 |
|
10.7 |
|
Provision
for (recovery of) doubtful accounts |
0.6 |
|
0.1 |
|
0.5 |
|
1.2 |
|
1.4 |
|
Changes in operating
assets and liabilities (net of acquisitions) |
|
|
|
|
|
Accounts
receivable |
9.3 |
|
0.6 |
|
5.0 |
|
15.2 |
|
8.1 |
|
Inventories |
3.7 |
|
(3.4 |
) |
0.2 |
|
(0.7 |
) |
6.3 |
|
Costs/estimated earnings in excess of billings on uncompleted
contracts |
4.7 |
|
(14.4 |
) |
3.4 |
|
(10.0 |
) |
(5.5 |
) |
All other
assets |
(0.1 |
) |
1.8 |
|
0.4 |
|
0.7 |
|
(1.7 |
) |
Accounts
payable |
(14.8 |
) |
2.1 |
|
10.1 |
|
(10.8 |
) |
12.5 |
|
Billings
in excess of costs/estimated earnings on uncompleted contracts |
(0.9 |
) |
1.9 |
|
(1.7 |
) |
(1.9 |
) |
(3.9 |
) |
All other
liabilities |
(0.4 |
) |
(10.7 |
) |
(4.0 |
) |
(20.1 |
) |
(5.1 |
) |
Net cash provided by (used for) operating
activities |
$ |
(3.5 |
) |
$ |
(27.5 |
) |
$ |
15.2 |
|
$ |
(46.6 |
) |
$ |
39.9 |
|
Investing
Activities |
|
|
|
|
|
Capital
expenditures |
$ |
(0.8 |
) |
$ |
(0.9 |
) |
$ |
(1.0 |
) |
$ |
(4.5 |
) |
$ |
(7.2 |
) |
Capital
disposals |
1.6 |
|
— |
|
0.1 |
|
1.7 |
|
3.7 |
|
Net cash provided by (used for) investing
activities |
$ |
0.8 |
|
$ |
(0.9 |
) |
$ |
(0.9 |
) |
$ |
(2.8 |
) |
$ |
(3.4 |
) |
Financing
Activities |
|
|
|
|
|
Proceeds
(repayments) from long-term debt |
$ |
14.4 |
|
$ |
12.3 |
|
$ |
(5.7 |
) |
$ |
61.3 |
|
$ |
(31.3 |
) |
Proceeds
(repayments) from short-term debt |
(1.9 |
) |
2.2 |
|
(5.0 |
) |
5.2 |
|
(4.7 |
) |
Deferred
financing costs |
(0.1 |
) |
— |
|
— |
|
(0.7 |
) |
(1.0 |
) |
Purchase
of treasury stock |
— |
|
— |
|
(2.0 |
) |
(0.4 |
) |
(2.5 |
) |
Payment
of dividends |
— |
|
— |
|
(1.8 |
) |
(3.6 |
) |
(7.1 |
) |
Increase
(decrease) in cash overdrafts |
5.4 |
|
0.4 |
|
0.7 |
|
4.7 |
|
1.1 |
|
Net cash provided by (used for) financing
activities |
$ |
17.9 |
|
$ |
14.9 |
|
$ |
(13.8 |
) |
$ |
66.6 |
|
$ |
(45.6 |
) |
Foreign
currency exchange impact on cash |
$ |
(0.1 |
) |
$ |
1.5 |
|
$ |
— |
|
$ |
2.1 |
|
$ |
(0.2 |
) |
Increase/(decrease) in cash and cash
equivalents |
$ |
15.1 |
|
$ |
(12.1 |
) |
$ |
0.4 |
|
$ |
19.2 |
|
$ |
(9.3 |
) |
Cash and cash
equivalents at beginning of period |
18.4 |
|
30.5 |
|
13.8 |
|
14.2 |
|
23.5 |
|
Cash and cash
equivalents at end of period |
$ |
33.5 |
|
$ |
18.4 |
|
$ |
14.2 |
|
$ |
33.5 |
|
$ |
14.2 |
|
|
|
|
|
|
|
|
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 or
operating net loss, 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, which is
a non-cash charge, and restructuring expense 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 (loss) is presented
below:
|
In millions and may not foot due to rounding |
4Q18 |
3Q18 |
4Q17 |
FY18 |
FY17 |
Net income
(loss) |
$ |
(51.0) |
|
$ |
(27.9) |
|
$ |
(1.8) |
|
$ |
(100.1) |
|
$ |
(7.1) |
|
Provision (benefit) for
income taxes |
31.7 |
|
18.1 |
|
0.6 |
|
47.8 |
|
1.8 |
|
Effective tax rate |
(164.1)% |
|
(185.3)% |
|
(53.7)% |
|
(91.3)% |
|
(33.2)% |
|
Income (loss)
before provision for income taxes |
$ |
(19.3) |
|
$ |
(9.8) |
|
$ |
(1.2) |
|
$ |
(52.3) |
|
$ |
(5.3) |
|
Adjustments |
|
|
|
|
|
Intangibles amortization |
$ |
1.6 |
|
$ |
1.6 |
|
$ |
2.3 |
|
$ |
7.5 |
|
$ |
9.3 |
|
Restructuring expense |
0.1 |
|
1.0 |
|
0.6 |
|
5.6 |
|
4.7 |
|
Accounts
receivable impairment loss |
— |
|
— |
|
— |
|
— |
|
0.3 |
|
Inventory
impairment loss |
— |
|
— |
|
— |
|
— |
|
9.1 |
|
Loss
(gain) on sale of assets |
(1.4) |
|
— |
|
— |
|
(1.4) |
|
(0.9) |
|
Asset
impairment loss |
9.7 |
|
— |
|
— |
|
11.2 |
|
0.5 |
|
Total pre-tax
adjustments |
$ |
10.1 |
|
$ |
2.6 |
|
$ |
2.9 |
|
$ |
22.9 |
|
$ |
23.1 |
|
Operating
EBIT |
$ |
(9.3) |
|
$ |
(7.2) |
|
$ |
1.7 |
|
$ |
(29.4) |
|
$ |
17.8 |
|
Operational effective
tax rate |
25.0% |
|
35.0% |
|
35.0% |
|
33.7% |
|
35.0% |
|
Operational income
taxes (1) |
(2.3) |
|
(2.5) |
|
0.6 |
|
(9.9) |
|
6.2 |
|
Operating net income (loss) |
$ |
(6.9) |
|
$ |
(4.7) |
|
$ |
1.1 |
|
$ |
(19.5) |
|
$ |
11.6 |
|
(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:
|
May not foot due to rounding |
4Q18 |
|
3Q18 |
|
4Q17 |
|
FY18 |
|
FY17 |
|
Diluted
EPS |
$ |
(3.37 |
) |
$ |
(1.85 |
) |
$ |
(0.12 |
) |
$ |
(6.64 |
) |
$ |
(0.47 |
) |
EPS impact
* |
2.97 |
|
1.54 |
|
0.19 |
|
5.37 |
|
1.23 |
|
Operating EPS |
$ |
(0.40 |
) |
$ |
(0.31 |
) |
$ |
0.07 |
|
$ |
(1.27 |
) |
$ |
0.77 |
|
* EPS
impact is the result of excluding the provision for income taxes
and the adjustments and utilizing an operational effective tax
rate. |
EBITDA, Operating EBITDA and Adjusted
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 asset impairment loss (consisting of
fixed assets, indefinite-lived intangible assets and goodwill) may
also be used to measure the Company's ability to service its
debt.
Pursuant to the First Amendment to its Credit
Agreement (the "Amended Credit Agreement"), the Company was
required to maintain a minimum trailing twelve month ("TTM")
Adjusted EBITDA (as defined in the Amended Credit Agreement) during
each quarter through the first quarter of Fiscal 2019. The Adjusted
EBITDA definition in the Amended Credit Agreement incorporates
Operating EBITDA and adds back ERP implementation costs,
restructuring expenses and certain other charges.
A reconciliation of Net income (loss) to EBITDA,
Operating EBITDA, and Adjusted EBITDA is presented below:
|
In millions and may not foot due to rounding |
4Q18 |
|
3Q18 |
|
4Q18 TTM |
|
4Q17 TTM |
|
Net income
(loss) |
$ |
(51.0 |
) |
$ |
(27.9 |
) |
$ |
(100.1 |
) |
$ |
(7.1 |
) |
Provision
(benefit) for income taxes |
31.7 |
|
18.1 |
|
47.8 |
|
1.8 |
|
Interest
expense, net |
2.1 |
|
1.7 |
|
6.9 |
|
4.4 |
|
Intangibles amortization |
1.6 |
|
1.6 |
|
7.5 |
|
9.3 |
|
Depreciation |
2.2 |
|
2.5 |
|
9.5 |
|
9.4 |
|
EBITDA |
$ |
(13.4 |
) |
$ |
(4.0 |
) |
$ |
(28.5 |
) |
$ |
17.8 |
|
Stock
compensation expense |
0.1 |
|
0.1 |
|
3.5 |
|
4.6 |
|
Accounts
receivable impairment loss |
— |
|
— |
|
— |
|
0.3 |
|
Inventory
impairment loss |
— |
|
— |
|
— |
|
9.1 |
|
Asset
impairment loss |
9.7 |
|
— |
|
11.2 |
|
0.5 |
|
Operating
EBITDA |
$ |
(3.6 |
) |
$ |
(3.8 |
) |
$ |
(13.8 |
) |
$ |
32.4 |
|
ERP
implementation costs |
2.0 |
|
4.4 |
|
12.8 |
|
1.6 |
|
Restructuring expense |
0.1 |
|
1.0 |
|
5.6 |
|
4.7 |
|
Other
charges |
1.4 |
|
1.0 |
|
3.5 |
|
2.2 |
|
Adjusted EBITDA |
$ |
0.0 |
|
$ |
2.6 |
|
$ |
8.1 |
|
$ |
40.9 |
|
On June 29, 2018, Black Box Corporation (the
“Company”) and certain direct and indirect wholly-owned
subsidiaries of the Company (collectively, the “Guarantors” and
together with the Company, the “Loan Parties”) entered into a
Second Amendment with PNC Bank, National Association, as
administrative agent (the “Agent”), and certain other lenders party
thereto (together with the Agent, the “Lenders”) to amend the
Credit Agreement entered into among the Loan Parties, the Agent and
the Lenders on May 9, 2016 (as amended by the Amendment and Joinder
Agreement, dated August 9, 2017, the “Amended Credit Agreement,”
and as further amended by the Second Amendment, the “Second Amended
Credit Agreement” or the “Second Amendment”), as defined in the
Annual Report on Form 10-K for the fiscal year ended
March 31, 2018, filed contemporaneously with this
Form 8-K. The Second Amendment establishes a new “last in
first out” senior revolving credit facility in an amount not to
exceed $10 million (the "LIFO Facility"). The Company entered into
the Second Amendment to waive and modify certain covenants,
including the Adjusted EBITDA covenant as defined in the Amended
Credit Agreement above, and other provisions contained in the
Amended Credit Agreement and to fund its ongoing operations with
the LIFO Facility.
The Second Amendment, among other things,
revises the Company’s covenants under the Amended Credit Agreement
to, among other things, (i) suspend the leverage ratio and fixed
charge coverage ratio covenants until December 15, 2018; and (ii)
modify the minimum consolidated EBITDA ("Amended Adjusted EBITDA")
covenant to require that the Company’s minimum consolidated EBITDA
for the three fiscal month period ending on the close of each
fiscal month equal or exceed (i) ($3.0 million) for the fiscal
months ending June 30, 2018, July 31, 2018 and August 31, 2018, and
(ii) ($3.5 million) for the fiscal months ending September 30, 2018
and thereafter. The Amended Adjusted EBITDA definition in the
Second Amended Credit Agreement incorporates Operating EBITDA and
adds back certain other charges but does not add back ERP
implementation costs or restructuring charges.
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 asset impairment charges, each
of which are non-cash charges, and restructuring expense 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:
|
4Q18 |
3Q18 |
4Q17 |
FY18 |
FY17 |
In millions and may notfoot due to rounding |
$ |
% of Rev |
$ |
% of Rev |
$ |
% of Rev |
$ |
% of Rev |
$ |
% of Rev |
Revenues |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$16.0 |
|
$15.5 |
|
$16.9 |
|
$68.6 |
|
$73.7 |
|
International Products |
16.9 |
|
18.9 |
|
19.7 |
|
68.8 |
|
81.2 |
|
Products |
$32.9 |
|
$34.4 |
|
$36.7 |
|
$137.4 |
|
$154.9 |
|
North
America Services |
$149.6 |
|
$150.4 |
|
$163.9 |
|
$601.1 |
|
$672.0 |
|
International Services |
11.5 |
|
10.1 |
|
7.5 |
|
36.2 |
|
28.8 |
|
Services |
$161.1 |
|
$160.5 |
|
$171.4 |
|
$637.3 |
|
$700.8 |
|
Total |
$194.0 |
|
$194.9 |
|
$208.1 |
|
$774.6 |
|
$855.7 |
|
Gross
profit |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$7.0 |
44.0% |
$6.5 |
42.0% |
$7.9 |
46.5% |
$30.5 |
44.4% |
$31.2 |
42.3% |
International Products |
7.5 |
44.4% |
6.8 |
35.9% |
7.8 |
39.5% |
27.3 |
39.7% |
32.5 |
40.0% |
Products |
$14.5 |
44.2% |
$13.3 |
38.7% |
$15.7 |
42.7% |
$57.8 |
42.1% |
$63.7 |
41.1% |
North
America Services |
$36.2 |
24.2% |
$37.1 |
24.7% |
$41.1 |
25.1% |
$149.3 |
24.8% |
$173.1 |
25.8% |
International Services |
2.3 |
19.9% |
2.3 |
22.5% |
1.6 |
21.3% |
7.7 |
21.2% |
6.2 |
21.5% |
Services |
$38.4 |
23.9% |
$39.4 |
24.5% |
$42.7 |
24.9% |
$157.0 |
24.6% |
$179.3 |
25.6% |
Total |
$53.0 |
27.3% |
$52.7 |
27.0% |
$58.4 |
28.1% |
$214.8 |
27.7% |
$243.0 |
28.4% |
Operating
income (loss) |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$(0.5) |
(3.0)% |
$(0.9) |
(5.6)% |
$1.7 |
9.8% |
$(1.0) |
(1.4)% |
$2.2 |
3.0% |
International Products |
(1.3) |
(7.8)% |
(1.8) |
(9.5)% |
(1.5) |
(7.5)% |
(7.2) |
(10.5)% |
(0.9) |
(1.1)% |
Products |
$(1.8) |
(5.4)% |
$(2.7) |
(7.7)% |
$0.2 |
0.4% |
$(8.2) |
(5.9)% |
$1.2 |
0.8% |
North
America Services |
$(15.7) |
(10.5)% |
$(5.8) |
(3.9)% |
$(0.7) |
(0.4)% |
$(36.0) |
(6.0)% |
$(3.9) |
(0.6)% |
International Services |
0.3 |
3.0% |
0.6 |
5.8% |
0.3 |
3.8% |
(1.1) |
(3.0)% |
1.3 |
4.6% |
Services |
$(15.3) |
(9.5)% |
$(5.2) |
(3.3)% |
$(0.4) |
(0.2)% |
$(37.1) |
(5.8)% |
$(2.6) |
(0.4)% |
Total |
$(17.1) |
(8.8)% |
$(7.9) |
(4.0)% |
$(0.3) |
(0.1)% |
$(45.3) |
(5.8)% |
$(1.3) |
(0.2)% |
Adjustments |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$0.3 |
|
$0.2 |
|
$0.4 |
|
$1.1 |
|
$3.6 |
|
International Products |
(0.3) |
|
0.1 |
|
0.1 |
|
0.7 |
|
1.4 |
|
Products |
$— |
|
$0.3 |
|
$0.5 |
|
$1.8 |
|
$5.0 |
|
North
America Services |
$10.5 |
|
$2.5 |
|
$2.3 |
|
$20.5 |
|
$18.1 |
|
International Services |
(0.5) |
|
(0.2) |
|
— |
|
0.5 |
|
— |
|
Services |
$10.1 |
|
$2.3 |
|
$2.3 |
|
$21.1 |
|
$18.1 |
|
Total |
$10.1 |
|
$2.6 |
|
$2.9 |
|
$22.9 |
|
$23.1 |
|
Adjusted operating income |
|
|
|
|
|
|
|
|
|
North
America Products |
$(0.2) |
(1.3)% |
$(0.7) |
(4.5)% |
$2.1 |
12.2% |
$0.1 |
0.2% |
$5.8 |
7.9% |
International Products |
(1.6) |
(9.5)% |
(1.7) |
(8.8)% |
(1.4) |
(6.8)% |
(6.5) |
(9.4)% |
0.5 |
0.6% |
Products |
$(1.8) |
(5.5)% |
$(2.4) |
(6.9)% |
$0.7 |
1.9% |
$(6.4) |
(4.6)% |
$6.3 |
4.0% |
North
America Services |
$(5.1) |
(3.4)% |
$(3.3) |
(2.2)% |
$1.6 |
1.0% |
$(15.5) |
(2.6)% |
$14.2 |
2.1% |
International Services |
(0.1) |
(1.0)% |
0.4 |
3.8% |
0.3 |
3.8% |
(0.5) |
(1.5)% |
1.4 |
4.7% |
Services |
$(5.3) |
(3.3)% |
$(2.9) |
(1.8)% |
$1.9 |
1.1% |
$(16.0) |
(2.5)% |
$15.5 |
2.2% |
Total |
$(7.1) |
(3.6)% |
$(5.3) |
(2.7)% |
$2.6 |
1.3% |
$(22.4) |
(2.9)% |
$21.8 |
2.5% |
|
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 |
4Q18 |
|
3Q18 |
|
4Q17 |
|
FY18 |
|
FY17 |
|
Net cash
provided by (used for) operating activities |
$ |
(3.5 |
) |
$ |
(27.5 |
) |
$ |
15.2 |
|
$ |
(46.6 |
) |
$ |
39.9 |
|
Net
capital expenditures |
0.8 |
|
(0.9 |
) |
(0.9 |
) |
(2.8 |
) |
(3.5 |
) |
Foreign
currency exchange impact on cash |
(0.1 |
) |
1.5 |
|
— |
|
2.1 |
|
(0.2 |
) |
Free cash flow
before stock option exercises |
$ |
(2.7 |
) |
$ |
(26.9 |
) |
$ |
14.3 |
|
$ |
(47.3 |
) |
$ |
36.2 |
|
Proceeds
from the exercise of stock options |
— |
|
— |
|
— |
|
— |
|
— |
|
Free cash flow |
$ |
(2.7 |
) |
$ |
(26.9 |
) |
$ |
14.3 |
|
$ |
(47.3 |
) |
$ |
36.2 |
|
|
Significant Balance Sheet Ratios and
Other Information
Information on certain balance sheet ratios,
backlog and headcount is presented below:
Dollars in millions |
4Q18 |
|
3Q18 |
|
4Q17 |
Days sales
outstanding |
48 days |
|
53 days |
|
46 days |
Aggregate days sales
outstanding |
86 days |
|
90 days |
|
72 days |
Inventory turns |
34.4x |
|
25.6x |
|
23.9x |
Six-month order
backlog |
$ |
179.8 |
|
$ |
164.8 |
|
$ |
153.2 |
Total backlog |
$ |
351.0 |
|
$ |
344.5 |
|
$ |
306.6 |
Headcount |
3,264 |
|
3,339 |
|
3,488 |
Net
debt* |
$ |
124.8 |
|
$ |
124.4 |
|
$ |
75.5 |
* Net debt
is defined by the Company as Debt less Cash and cash
equivalents. |
|
ContactBlack Box CorporationDavid J. RussoExecutive Vice
President, Chief Financial Officer and TreasurerPhone: (724)
873-6788Email: investors@blackbox.com
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