Black Box Corporation Reports Third Quarter of Fiscal 2013 Results

Black Box Corporation Reports Third 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 third quarter of Fiscal 2013.

Third quarter of Fiscal 2013 diluted earnings per share was 52¢ on net income of $8.5 million or 3.4% of revenues compared to diluted loss per share of $16.12 on net loss of $283.4 million or (102.7)% of revenues for the same quarter last year. Included in our diluted earnings per share for the third quarter of Fiscal 2013 and the third quarter of Fiscal 2012 was a loss ($2.7 million, pre-tax and $1.7 million, after-tax) resulting from the expected divestiture of our non-controlling interest in Genesis Networks Integration Services, LLC and the previously disclosed goodwill impairment charge ($317.8 million, pre-tax and $296.0 million, after-tax), respectively. On a sequential quarter comparison basis, second quarter of Fiscal 2013 diluted earnings per share was 43¢ on net income of $7.1 million or 2.7% of revenues. Excluding provision (benefit) 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 third quarter of Fiscal 2013 was 79¢ on operating net income (which is a non-GAAP term and is defined below) of $13.0 million or 5.2% of revenues compared to operating earnings per share of 85¢ on operating net income of $15.0 million or 5.4% of revenues for the same quarter last year. Third quarter of Fiscal 2013 pre-tax reconciling items, including the divestiture charge noted above, were $7.3 million compared to $321.8 million, which included the goodwill impairment loss, 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.


Third quarter of Fiscal 2013 total revenues were $252 million, a decrease of 9% from $276 million for the same quarter last year. On a sequential quarter comparison basis, second quarter of Fiscal 2013 total revenues were $260 million.

Third quarter of Fiscal 2013 cash provided by operating activities was $16 million or 191% of net income, compared to cash provided by operating activities of $30.6 million or (11)% of net loss for the same quarter last year. Third quarter of Fiscal 2013 free cash flow (which is a non-GAAP term and is defined below) was $15 million compared to $27 million for the same quarter last year. On a sequential quarter comparison basis, second quarter of Fiscal 2013 cash provided by operating activities was $18 million or 250% of net income and free cash flow was $17 million. During the third quarter of Fiscal 2013, Black Box invested $6 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 (used for) 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 nine months ended December 29, 2012, diluted earnings per share was $1.28 on net income of $21.6 million or 2.8% of revenues compared to diluted loss per share of $14.54 on net loss of $259.0 million or (31.1)% of revenues for the same period last year. Excluding provision (benefit) for income taxes and reconciling items and utilizing an operational effective tax rate, operating earnings per share for the nine months ended December 29, 2012 was $1.99 on operating net income of $33.6 million or 4.4% of revenues compared to operating earnings per share of $2.38 on operating net income of $42.6 million or 5.1% of revenues for the same period last year. Pre-tax reconciling items for the nine months ended December 29, 2012 were $19.4 million compared to $326.4 million for the same period last year.

For the nine months ended December 29, 2012, total revenues were $760 million, a decrease of 9% from $832 million for the same period last year.

For the nine months ended December 29, 2012, cash provided by operating activities was $31 million or 142% of net income, compared to cash provided by operating activities of $44 million or (17)% of net income for the same period last year. Free cash flow for the nine months ended December 29, 2012 was $27 million compared to $36 million for the same period last year. For the nine months ended December 29, 2012, Black Box invested $33 million to repurchase common stock and $4 million to pay dividends.

The Company's six-month order backlog was $188 million at December 29, 2012, compared to $208 million for the same quarter last year. On a sequential quarter-end comparison basis, the Company's six-month order backlog was $203 million at September 29, 2012.

For Fiscal 2013, the Company is targeting reported revenues of approximately $990 million to $995 million and corresponding operating earnings per share in the range of $2.50 to $2.55. Included in these projections is an effective tax rate of 38.0%. For the fourth quarter of Fiscal 2013, the Company is targeting reported revenues of approximately $230 million to $235 million and corresponding operating earnings per share in the range of 51¢ to 56¢. 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 third quarter of Fiscal 2013 results, Terry Blakemore, Chief Executive Officer, said, "I am pleased with our operating results from the third quarter of Fiscal 2013. Our earnings and positive cash flow reflect the leverage in our financial and operating model created by our continued focus on the efficient execution of our business operations."

Michael McAndrew, President and Chief Operating Officer, said, "At Black Box, we know that we must continue to execute, adapt and grow to create long-term value for our clients and shareholders. We are actively transitioning our business to align with the rapid evolution of enterprise communications. Our transition will require continued strategic investment in new solutions and leverageable resources. I am confident that expanding our portfolio of product and service offerings while deepening our centralized expertise will position Black Box to best serve our clients as they optimize their communications investments."

Black Box also announced that Ronald Basso will join the Company as Executive Vice President of Business Development and General Counsel. Mr. Basso previously served as the company's lead engagement partner from the law firm of Buchanan Ingersoll & Rooney PC.

The Company will conduct a conference call beginning at 5:00 p.m. Eastern Daylight Time today, January 29, 2013. 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 277403. 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 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, 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 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.

BLACK BOX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands, except par value

December 29, 2012

March 31, 2012

Assets

Cash and cash equivalents

$

29,469

$

22,444

Accounts receivable, net

158,568

163,888

Inventories, net

56,265

56,956

Costs/estimated earnings in excess of billings on uncompleted contracts

110,365

87,634

Other assets

23,248

22,678

Total current assets

377,915

353,600

Property, plant and equipment, net

27,101

27,109

Goodwill, net

346,546

346,438

Intangibles, net

113,982

126,541

Other assets

28,141

34,335

Total assets

$

893,685

$

888,023

Liabilities

Accounts payable

$

74,672

$

71,095

Accrued compensation and benefits

23,858

31,151

Deferred revenue

34,364

35,601

Billings in excess of costs/estimated earnings on uncompleted contracts

18,202

14,315

Income taxes

4,087

2,574

Other liabilities

38,420

32,697

Total current liabilities

193,603

187,433

Long-term debt

191,803

179,621

Other liabilities

23,859

26,585

Total liabilities

$

409,265

$

393,639

Stockholders' equity

Common stock

$

26

$

26

Additional paid-in capital

484,842

478,726

Retained earnings

364,843

347,242

Accumulated other comprehensive income

6,603

7,262

Treasury stock, at cost

(371,894

)

(338,872

)

Total stockholders' equity

$

484,420

$

494,384

Total liabilities and stockholders' equity

$

893,685

$

888,023

BLACK BOX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three-months ended

Nine-months ended

December 29 and 31

December 29 and 31

In thousands, except per share amounts

2012

2011

2012

2011

Revenues

Products

$

46,854

$

51,379

$

137,492

$

149,427

On-Site services

205,235

224,560

622,595

682,109

Total

252,089

275,939

760,087

831,536

Cost of sales

Products

26,735

29,088

77,012

83,015

On-Site services

143,622

158,538

442,015

484,761

Total

170,357

187,626

519,027

567,776

Gross profit

81,732

88,313

241,060

263,760

Selling, general & administrative expenses

60,542

62,644

187,088

192,544

Goodwill impairment loss

317,797

317,797

Intangibles amortization

3,478

3,249

10,416

9,484

Operating income (loss)

17,712

(295,377

)

43,556

(256,065

)

Interest expense (income), net

1,133

1,856

4,956

3,690

Other expenses (income), net

2,839

311

3,788

876

Income (loss) before provision (benefit) for income taxes

13,740

(297,544

)

34,812

(260,631

)

Provision (benefit) for income taxes

5,222

(14,101

)

13,229

(1,655

)

Net income (loss)

$

8,518

$

(283,443

)

$

21,583

$

(258,976

)

Earnings (loss) per common share

Basic

$

0.52

$

(16.12

)

$

1.29

$

(14.54

)

Diluted

$

0.52

$

(16.12

)

$

1.28

$

(14.54

)

Weighted-average common shares outstanding

Basic

16,412

17,581

16,783

17,806

Diluted

16,525

17,581

16,863

17,806

Dividends per share

$

0.08

$

0.07

$

0.24

$

0.21

BLACK BOX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three-months ended

Nine-months ended

December 29 and 31

December 29 and 31

In thousands

2012

2011

2012

2011

Operating Activities

Net income (loss)

$

8,518

$

(283,443

)

$

21,583

$

(258,976

)

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities

Intangibles amortization and depreciation

4,777

4,547

14,427

13,581

Loss (gain) on sale of property

(41

)

(24

)