Black Box Corporation Reports Second Quarter of Fiscal 2013 Results

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Black Box Corporation Reports Second Quarter of Fiscal 2013 Results

PITTSBURGH--(BUSINESS WIRE)-- Black Box Corporation (NAS: BBOX) , a leading communications system integrator dedicated to designing, sourcing, implementing and maintaining today's complex communications solutions, today reported results for the second quarter of Fiscal 2013.

Second quarter of Fiscal 2013 diluted earnings per share was 43¢ on net income of $7.1 million or 2.7% of revenues compared to diluted earnings per share of 83¢ on net income of $14.8 million or 5.2% of revenues for the same quarter last year. On a sequential quarter comparison basis, first quarter of Fiscal 2013 diluted earnings per share was 34¢ on net income of $5.9 million or 2.4% of revenues. Excluding provision for income taxes and reconciling items (which are identified below) and utilizing an operational effective tax rate (as described below), operating earnings per share (which is a non-GAAP term and is defined below) for the second quarter of Fiscal 2013 was 65¢ on operating net income (which is a non-GAAP term and is defined below) of $10.9 million or 4.2% of revenues compared to operating earnings per share of 93¢ on operating net income of $16.6 million or 5.8% of revenues for the same quarter last year. Second quarter of Fiscal 2013 pre-tax reconciling items were $6.1 million compared to $2.6 million for the same quarter last year. See below for further discussion regarding Management's use of non-GAAP accounting measurements and a detailed presentation of the Company's pre-tax reconciling items for the periods presented above.


Second quarter of Fiscal 2013 total revenues were $260 million, a decrease of 9% from $287 million for the same quarter last year. On a sequential quarter comparison basis, first quarter of Fiscal 2013 total revenues were $248 million.

Second quarter of Fiscal 2013 cash provided by operating activities was $18 million or 250% of net income, compared to cash used for operating activities of $0.3 million or (2)% of net income for the same quarter last year. Second quarter of Fiscal 2013 free cash flow (which is a non-GAAP term and is defined below) was $17 million compared to $(3) million for the same quarter last year. On a sequential quarter comparison basis, first quarter of Fiscal 2013 cash used for operating activities was $3 million or (57)% of net income and free cash flow was $(5) million. During the second quarter of Fiscal 2013, Black Box invested $10 million to repurchase common stock and $1 million to pay dividends.Management believes that free cash flow, defined by the Company as cash provided by operating activities less net capital expenditures, plus proceeds from stock 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.

For the six (6) months ended September 29, 2012, diluted earnings per share was $0.77 on net income of $13.1 million or 2.6% of revenues compared to diluted earnings per share of $1.36 on net income of $24.5 million or 4.4% of revenues for the same period last year. Excluding provision for income taxes and reconciling items and utilizing an operational effective tax rate, operating earnings per share for the six (6) months ended September 29, 2012 was $1.21 on operating net income of $20.6 million or 4.1% of revenues compared to operating earnings per share of $1.53 on operating net income of $27.6 million or 5.0% of revenues for the same period last year. Pre-tax reconciling items for the six (6) months ended September 29, 2012 were $12.2 million compared to $4.7 million for the same period last year.

For the six (6) months ended September 29, 2012, total revenues were $508 million, a decrease of 9% from $556 million for the same period last year.

For the six (6) months ended September 29, 2012, cash provided by operating activities was $14 million or 111% of net income, compared to cash provided by operating activities of $13 million or 54% of net income for the same period last year. Free cash flow for the six (6) months ended September 29, 2012 was $12 million compared to $9 million for the same period last year. For the six (6) months ended September 29, 2012, Black Box invested $27 million to repurchase common stock and $3 million to pay dividends.

The Company's six-month order backlog was $203 million at September 29, 2012, compared to $223 million for the same quarter last year. On a sequential quarter-end comparison basis, the Company's six-month order backlog was $192 million at June 30, 2012.

For Fiscal 2013, the Company is targeting reported revenues of approximately $990 million to $1.01 billion and corresponding operating earnings per share in the range of $2.45 to $2.55. Included in these projections is an effective tax rate of 38.0%. For the third quarter of Fiscal 2013, the Company is targeting reported revenues of approximately $240 million to $250 million and corresponding operating earnings per share in the range of 63¢ to 68¢. These targets exclude acquisition-related expense, restructuring and the impact of changes in the fair market value of the Company's interest-rate swaps, and are before any new mergers and acquisition activity that has not been announced.

Commenting on the second quarter of Fiscal 2013 results, Terry Blakemore, Chief Executive Officer, said, "The current economic backdrop continues to negatively impact demand for our services and create competitive challenges in our end markets. Despite these challenges, we remain focused on positive cash flow generation and will continue to balance cost management initiatives with investment in future offerings until demand returns."

Michael McAndrew, President and Chief Operating Officer, said, "As a comprehensive communications system integrator, Black Box is committed to adapt to the changes in our market by expanding our offerings and leveraging our service and product platforms. We recognize that we must continue to identify and invest in emerging communications trends to enhance our skills and market position. I am confident that these investments will create value for our clients and shareholders."

The Company will conduct a conference call beginning at 5:00 p.m. Eastern Daylight Time today, October 30, 2012. Terry Blakemore, Chief Executive Officer, will host the call. To participate in the call, please 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 conference call will be available for one week after the teleconference by dialing 320-365-3844 and using access code 266580. A live, listen-only audio webcast of the call will be available through a link on the Investor Relations page of the Company's Web site at http://www.blackbox.com. A webcast replay of the call will also be archived on Black Box's Web site for a limited period of time following the conference call.

Black Box is a leading communications system integrator dedicated to designing, sourcing, implementing and maintaining today's complex communications solutions. Black Box services more than 175,000 clients in approximately 150 countries with approximately 200 offices throughout the world. 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 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, successful marketing of the Company's product and services offerings, successful implementation of the Company's M&A program, including identifying appropriate targets, consummating transactions and successfully integrating the businesses, 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, 2012. 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 CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

  
In thousands, except par value September 29, 2012 March 31, 2012
Assets
Cash and cash equivalents$25,496$22,444
Accounts receivable, net153,050163,888
Inventories, net56,70656,956
Costs/estimated earnings in excess of billings on uncompleted contracts110,45587,634
Other assets24,105  22,678 
Total current assets369,812353,600
Property, plant and equipment, net27,24727,109
Goodwill, net346,191346,438
Intangibles, net119,600126,541
Other assets30,131  34,335 
Total assets$892,981  $888,023 
Liabilities
Accounts payable$78,888$71,095
Accrued compensation and benefits23,65631,151
Deferred revenue34,85835,601
Billings in excess of costs/estimated earnings on uncompleted contracts18,49414,315
Income taxes1,1792,574
Other liabilities40,581  32,697 
Total current liabilities197,656187,433
Long-term debt190,508179,621
Other liabilities24,606  26,585 
Total liabilities$412,770$393,639
Stockholders' equity
Common stock$26$26
Additional paid-in capital483,214478,726
Retained earnings357,629347,242
Accumulated other comprehensive income5,5787,262
Treasury stock, at cost(366,236) (338,872)
Total stockholders' equity$480,211  $494,384 
Total liabilities and stockholders' equity$892,981  $888,023 
 

BLACK BOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

  
Three (3) months ended

Six (6) months ended

September 29 and October 1 September 29 and October 1
In thousands, except per share amounts 2012 2011 2012 2011
Revenues  
Products$46,490$50,329$90,638$98,048
On-Site services213,671 236,842 417,360 457,549
Total260,161287,171507,998555,597
Cost of sales
Products26,07627,66050,27753,927
On-Site services154,031  170,645  298,393  326,223
Total180,107198,305348,670380,150
Gross profit80,05488,866159,328175,447
Selling, general & administrative expenses62,59663,256126,546129,900
Intangibles amortization3,474  3,176  6,938  6,235
Operating income13,98422,43425,84439,312
Interest expense (income), net1,8937693,8231,834
Other expenses (income), net588  273  949  565
Income before provision for income taxes11,50321,39221,07236,913
Provision for income taxes4,370  6,548  8,007  12,446
Net income$7,133  $14,844  $13,065  $24,467
Earnings per common share
Basic$0.43  $0.83  $0.77  $1.37
Diluted$0.43  $0.83  $0.77  $1.36
Weighted-average common shares outstanding
Basic16,696  17,858  16,990  17,917
Diluted16,752  17,865  17,040  17,968
Dividends per share $0.08  $0.07  $0.16  $0.14
 
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BLACK BOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

  
Three (3) months ended

Six (6) months ended

September 29 and October 1 September 29 and October 1
In thousands 2012 2011 2012 2011
Operating Activities  
Net income$7,133$14,844$13,065$24,467
Adjustments to reconcile net income to net cash provided by (used for) operating activities
Intangibles amortization and depreciation4,8214,5559,6509,034
Loss (gain) on sale of property(63)(125)(85)(142)
Deferred taxes495(3,251)1,909(550)
Stock compensation expense1,7352,0464,6065,418
Change in fair value of interest-rate swaps549(604)1,195(1,516)
Changes in operating assets and liabilities (net of acquisitions)
Accounts receivable, net2,847(20,886)10,693(13,373)
Inventories, net330(4,704)251(11,286)
Costs/estimated earnings in excess of billings on uncompleted contracts(8,677)(1,467)(22,804)(4,613)
All other assets1,660983743362
Billings in excess of costs/estimated earnings on uncompleted contracts1,818(1,283)4,164559
All other liabilities5,162  9,546  (8,947) 4,896 
Net cash provided by (used for) operating activities$17,810$(346)$14,440$13,256
Investing Activities
Capital expenditures$(1,114)$(1,998)$(2,902)$(4,034)
Capital disposals111126135144
Acquisition of businesses (payments)/recoveries(13,188)17(13,188