Black Box Corporation Reports Second Quarter of Fiscal 2013 Results

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, net

153,050

163,888

Inventories, net

56,706

56,956

Costs/estimated earnings in excess of billings on uncompleted contracts

110,455

87,634

Other assets

24,105

22,678

Total current assets

369,812

353,600

Property, plant and equipment, net

27,247

27,109

Goodwill, net

346,191

346,438

Intangibles, net

119,600

126,541

Other assets

30,131

34,335

Total assets

$

892,981

$

888,023

Liabilities

Accounts payable

$

78,888

$

71,095

Accrued compensation and benefits

23,656

31,151

Deferred revenue

34,858

35,601

Billings in excess of costs/estimated earnings on uncompleted contracts

18,494

14,315

Income taxes

1,179

2,574

Other liabilities

40,581

32,697

Total current liabilities

197,656

187,433

Long-term debt

190,508

179,621

Other liabilities

24,606

26,585

Total liabilities

$

412,770

$

393,639

Stockholders' equity

Common stock

$

26

$

26

Additional paid-in capital

483,214

478,726

Retained earnings

357,629

347,242

Accumulated other comprehensive income

5,578

7,262

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 services

213,671

236,842

417,360

457,549

Total

260,161

287,171

507,998

555,597

Cost of sales

Products

26,076

27,660

50,277

53,927

On-Site services

154,031

170,645

298,393

326,223

Total

180,107

198,305

348,670

380,150

Gross profit

80,054

88,866

159,328

175,447

Selling, general & administrative expenses

62,596

63,256

126,546

129,900

Intangibles amortization

3,474

3,176

6,938

6,235

Operating income

13,984

22,434

25,844

39,312

Interest expense (income), net

1,893

769

3,823

1,834

Other expenses (income), net

588

273

949

565

Income before provision for income taxes

11,503

21,392

21,072

36,913

Provision for income taxes

4,370

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

Basic

16,696

17,858

16,990

17,917

Diluted

16,752

17,865

17,040

17,968

Dividends per share

$

0.08

$

0.07

$

0.16

$

0.14

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 depreciation

4,821

4,555

9,650

9,034

Loss (gain) on sale of property

(63

)

(125

)

(85

)

(142

)

Deferred taxes

495

(3,251

)

1,909

(550

)

Stock compensation expense

1,735

2,046

4,606

5,418

Change in fair value of interest-rate swaps

549

(604

)

1,195

(1,516

)

Changes in operating assets and liabilities (net of acquisitions)

Accounts receivable, net

2,847

(20,886

)

10,693

(13,373

)

Inventories, net

330

(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 assets

1,660

983

743

362

Billings in excess of costs/estimated earnings on uncompleted contracts

1,818

(1,283

)

4,164

559

All other liabilities

5,162

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 disposals

111

126

135

144

Acquisition of businesses (payments)/recoveries

(13,188

)

17

(13,188