Black Box Corporation (NASDAQ:BBOX), a leading technology
solutions provider dedicated to helping customers design, build,
manage, and secure their IT infrastructure, today reported results
for the first quarter of Fiscal 2015.
1Q15 Results
- Revenues were $245.2 million, down 1%
from $246.9 million for the same period last year and up 3% from
$238.3 million in the sequential period.
- Provision for income taxes was $3.5
million (47.2% effective rate), down 22% from $4.5 million (39.5%
effective rate) for the same period last year and compared to
benefit from income taxes of $11.1 million (7.6% effective rate) in
the sequential period.
- Net income was $3.9 million, down 43%
from $6.9 million for the same period last year and compared to net
loss of $135.0 million in the sequential period.
- Diluted earnings per share was $0.25,
down 41% from $0.43 for the same period last year and compared to
diluted loss per share of $8.65 in the sequential period.
- Operating net income* was $6.4 million,
down 27% from $8.7 million for the same period last year and down
16% from $7.6 million in the sequential period.
- Operating EPS* was $0.41, down 24% from
$0.54 for the same period last year and down 15% from $0.48 in the
sequential period.
- Cash flow used for operations was $5.9
million compared to cash flow provided by operations of $20.5
million for the same period last year and cash flow provided by
operations of $28.4 million in the sequential period.
- We provided $4.4 million to our
shareholders by repurchasing $3.0 million of common stock and
paying $1.4 million in dividends.
* 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.
Commenting on the first quarter of Fiscal 2015 results, Michael
McAndrew, President and Chief Executive Officer, said, "I am very
pleased with the sequential quarter and year over year growth in
North America Services revenue and consolidated revenue backlog.
These are indicators that our growth programs are gaining traction
and our team is delivering desired outcomes to our clients.
"We will continue to invest in our transformation with a focus
on efficiently delivering innovative IT product and service
solutions to our clients. I am confident that these initiatives
will continue to widen our competitive advantage and drive value
for our shareholders."
Guidance
For the second quarter of Fiscal 2015, the Company is
targeting:
- Revenues in the range of $250 million
to $255 million.
- Operating earnings per share in the
range of $0.50 to $0.55.
For Fiscal 2015, the Company is targeting:
- Revenues in the range of $990 million
to $1.01 billion.
- Operating earnings per share in the
range of $2.07 to $2.27.
Included in these targets is an effective tax rate of 39.0%.
These targets exclude intangibles amortization, restructuring
expense 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.
Earnings Conference Call
The Company will conduct a conference call beginning at 5:00
p.m. Eastern Daylight Time today, July 29, 2014. Michael
McAndrew, President and 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
331159. 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.
About Black Box
Black Box is a leading technology 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 approximately 4,000 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 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, 2014. 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 CORPORATIONCONDENSED
CONSOLIDATED BALANCE SHEETS
In millions and may not foot due to rounding
June 28, 2014 March 31, 2014
Assets Cash and cash equivalents $ 27.8 $ 30.8 Accounts
receivable, net 171.2 156.5 Inventories, net 53.7 52.2
Costs/estimated earnings in excess of billings on uncompleted
contracts 88.0 89.8 Other assets 24.7 27.0
Total current assets 365.4 356.3 Property,
plant and equipment, net 29.3 29.1 Goodwill, net 193.2 193.0
Intangibles, net 96.0 98.6 Other assets 32.4 35.0
Total assets $ 716.3
$ 712.0 Liabilities Accounts payable $
69.7 $ 64.6 Accrued compensation and benefits 20.0 26.1 Deferred
revenue 30.8 33.8 Billings in excess of costs/estimated earnings on
uncompleted contracts 16.8 15.9 Income taxes 1.2 3.2 Other
liabilities 35.6 37.0
Total current
liabilities 174.2 180.6 Long-term debt 170.5
160.4 Other liabilities 19.6 19.8
Total
liabilities $ 364.3 $ 360.9
Stockholders’ equity Common stock $ — $ — Additional paid-in
capital 494.7 492.4 Retained earnings 251.6 249.2 Accumulated other
comprehensive income 7.5 7.3 Treasury stock, at cost (401.8 )
(397.9 )
Total stockholders’ equity $
352.0 $ 351.1 Total
liabilities and stockholders’ equity $ 716.3
$ 712.0
BLACK BOX CORPORATIONCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
In millions, except per share amounts and
may not foot due to rounding 1Q15
4Q14 1Q14 Revenues Products $ 43.2 $
46.2 $ 48.2 Services 202.0 192.1 198.7
Total 245.2 238.3 246.9
Cost of sales Products 25.3 27.0
28.5 Services 144.7 135.7 141.4 Total
170.0 162.6 169.9
Gross profit 75.2 75.6
77.0 Selling, general & administrative expenses 64.0
63.4 61.3 Goodwill impairment loss — 154.4 — Intangibles
amortization 2.7 2.7 3.3
Operating
income (loss) 8.6 (144.9 ) 12.5
Interest expense, net 1.1 1.1 0.9 Other expenses (income), net —
0.1 0.1 Income (loss) before provision
for income taxes 7.5 (146.1 ) 11.4 Provision (benefit) for income
taxes 3.5 (11.1 ) 4.5
Net income (loss)
$ 3.9 $ (135.0 )
$ 6.9 Earnings (loss) per common share
Basic $ 0.25 $
(8.65 ) $ 0.43 Diluted
$ 0.25 $ (8.65 )
$ 0.43 Weighted-average common shares
outstanding Basic 15.5 15.6 16.1
Diluted 15.6 15.6 16.2 Dividends per
share $ 0.10 $ 0.09 $ 0.09
BLACK BOX CORPORATIONCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
In millions and may not foot due to
rounding 1Q15 4Q14
1Q14 Operating Activities Net income (loss) $ 3.9 $
(135.0 ) $ 6.9 Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities Intangibles
amortization 2.7 2.7 3.3 Depreciation 1.7 1.6 1.4 Loss (gain) on
sale of property — — — Deferred taxes 2.4 (13.7 ) 2.1 Stock
compensation expense 2.3 1.1 2.4 Change in fair value of
interest-rate swaps (0.2 ) (0.2 ) (0.5 ) Goodwill impairment loss —
154.4 — Joint venture investment loss — — — Changes in operating
assets and liabilities (net of acquisitions) Accounts receivable,
net (14.5 ) 11.4 7.5 Inventories, net (1.4 ) 0.5 1.0
Costs/estimated earnings in excess of billings on uncompleted
contracts 1.7 2.1 4.3 All other assets 2.8 (2.0 ) (0.1 ) Billings
in excess of costs/estimated earnings on uncompleted contracts 0.9
0.3 2.4 Accounts payable 5.2 4.4 (2.6 ) All other liabilities (13.4
) 0.9 (7.7 )
Net cash provided by (used
for) operating activities $ (5.9 )
$ 28.4 $ 20.5 Investing
Activities Capital expenditures $ (1.9 ) $ (1.8 ) $ (2.0 )
Capital disposals — — — Prior merger-related (payments)/recoveries
— — —
Net cash provided by
(used for) investing activities $ (1.9 )
$ (1.8 ) $ (2.0 )
Financing Activities Proceeds (repayments) from long-term
debt $ 10.1 $ (18.9 ) $ (9.4 ) Proceeds (repayments) from
short-term debt 0.8 (1.7 ) (0.1 ) Purchase of treasury stock (3.9 )
(3.0 ) (6.8 ) Proceeds from the exercise of stock options — — —
Payment of dividends (1.4 ) (1.4 ) (1.3 ) Increase (decrease) in
cash overdrafts (0.2 ) 0.2 —
Net
cash provided by (used for) financing activities $
5.3 $ (24.9 ) $ (17.6
) Foreign currency exchange impact on cash $
(0.6 ) $ 3.4
$ (0.1 ) Increase/(decrease) in cash and
cash equivalents $ (3.0 ) $
5.2 $ 0.9 Cash and cash equivalents at
beginning of period 30.8 25.6 30.7
Cash and cash equivalents at end of period $ 27.8
$ 30.8 $ 31.6
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"), Adjusted 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, goodwill impairment loss and the
joint venture investment loss, each of which are non-cash charges,
and restructuring, which is a cash charge.
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
1Q15 4Q14 1Q14 Net income
(loss) $ 3.9 $ (135.0
) $ 6.9 Provision (benefit) for income
taxes 3.5 (11.1 ) 4.5 Effective tax rate 47.2 % 7.6 %
39.5 %
Income (loss) before provision for income taxes
$ 7.5 $ (146.1 ) $
11.4 Adjustments Intangible amortization $ 2.7
$ 2.7 $ 3.3 Change in fair value of interest-rate swaps (0.2 ) (0.2
) (0.5 ) Restructuring expense 0.6 1.7 0.1 Goodwill impairment loss
— 154.4 — Joint venture investment loss — —
—
Total pre-tax adjustments $
3.1 $ 158.6 $ 2.9
Operating EBIT $ 10.5 $ 12.6
$ 14.4 Operational effective tax rate 39.0 % 39.5 %
39.5 % Operational income taxes (1) 4.1 5.0
5.7
Operating net income $
6.4 $ 7.6 $
8.7
(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:
1Q15 4Q14 1Q14
Diluted earnings (loss) per share $
0.25 $ (8.65 ) $
0.43 EPS impact
* 0.16 9.13 0.11
Operating EPS $ 0.41 $
0.48 $ 0.54
* 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
1Q15 1Q14 % Change
Revenues $ 245.2 $
246.9 (1 )% Foreign currency impact -
North America Products 0.1 — Foreign currency impact - North
America Services 0.3 — Foreign currency impact - International
Products (0.4 ) — Foreign currency impact - International Services
(0.4 ) —
Revenues (excluding foreign currency)
$ 244.8 $ 246.9
(1 )%
Information on quarterly revenues excluding foreign currency
compared to the sequential quarter is presented below:
In millions and may not foot due to rounding
1Q15 4Q14 % Change
Revenues $ 245.2 $
238.3 3 % Foreign currency impact -
North America Products — — Foreign currency impact - North America
Services — — Foreign currency impact - International Products (0.1
) — Foreign currency impact - International Services —
—
Revenues (excluding foreign currency)
$ 245.0 $ 238.3
3 %
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,
goodwill impairment loss and restructuring expense.
A reconciliation of Operating income (loss) to Adjusted
operating income (by segment) is presented below:
1Q15 4Q14 1Q14 In
millions and may not foot due to rounding $
% of Rev $ % of Rev
$ % of Rev Revenues
North America Products $ 19.7 $ 20.7 $
21.0 International Products 23.5 25.6 27.2
Total Products $ 43.2 $ 46.2
$ 48.2 North America Services $ 194.3 $ 183.5 $ 189.7
International Services 7.7 8.5 9.0
Total
Services $ 202.0 $ 192.1
$ 198.7 Total $
245.2 $ 238.3 $ 246.9 Gross
profit North America Products $ 8.0 40.3 % $ 8.4 40.5 % $ 8.9
42.4 % International Products 10.0 42.5 % 10.9 42.6 %
10.8 39.8 %
Total Products $ 17.9
41.5 % $ 19.2 41.6 %
$ 19.7 40.9 % North America Services $
55.2 28.4 % $ 54.8 29.9 % $ 55.2 29.1 % International Services 2.1
26.7 % 1.6 18.8 % 2.1 23.6 %
Total
Services $ 57.3 28.4 %
$ 56.4 29.4 % $
57.3 28.8 % Total $
75.2 30.7 % $ 75.6 31.7
% $ 77.0 31.2 % Operating
income (loss) North America Products $ 1.4 7.3 % $ (41.2 )
(199.4 )% $ 1.1 5.2 % International Products 0.3 1.3 % (18.8
) (73.7 )% 1.6 6.1 %
Total Products $
1.8 4.0 % $ (60.0 )
(129.9 )% $ 2.8 5.7 %
North America Services $ 6.2 3.2 % $ (79.8 ) (43.5 )% $ 9.4 5.0 %
International Services 0.6 7.5 % (5.1 ) (59.2 )% 0.3
3.1 %
Total Services $ 6.8 3.4
% $ (84.8 ) (44.2 )%
$ 9.7 4.9 % Total
$ 8.6 3.5 % $ (144.9
) (60.8 )% $ 12.5 5.0
% Adjustments North America Products $ — $ 42.7 $ —
International Products 0.1 20.4 —
Total
Products $ 0.1 $ 63.2 $
— North America Services $ 3.1 $ 90.5 $ 3.4 International
Services — 5.2 —
Total Services
$ 3.1 $ 95.7 $
3.4 Total $ 3.3 $
158.8 $ 3.4 Adjusted operating income
North America Products $ 1.5 7.5 % $ 1.5 7.4 % $ 1.1 5.3 %
International Products 0.4 1.8 % 1.6 6.3 % 1.7
6.1 %
Total Products $ 1.9 4.4 %
$ 3.2 6.8 % $ 2.8
5.8 % North America Services $ 9.4 4.8 % $ 10.7 5.8 %
$ 12.8 6.8 % International Services 0.6 7.5 % 0.1 1.3
% 0.3 3.3 %
Total Services $ 9.9
4.9 % $ 10.8 5.6 %
$ 13.1 6.6 % Total
$ 11.8 4.8 % $
14.0 5.9 % $
15.9 6.4 %
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. Adjusted EBITDA, defined as EBITDA plus stock compensation
expense, the goodwill impairment loss and the joint venture
investment loss may also be used to measure the Company's ability
to service its debt.
A reconciliation of Net income (loss) to EBITDA and Adjusted
EBITDA is presented below:
In millions and may not foot due to rounding
1Q15 4Q14 1Q14 Net income
(loss) $ 3.9 $ (135.0
) $ 6.9 Provision (benefit) for income
taxes 3.5 (11.1 ) 4.5 Interest expense, net 1.1 1.1 0.9 Intangibles
amortization 2.7 2.7 3.3 Depreciation 1.7 1.6
1.4
EBITDA $ 13.0 $ (140.7
) $ 17.0 Stock compensation expense 2.3 1.1
2.4 Goodwill impairment loss — 154.4 — Joint venture investment
loss — — —
Adjusted EBITDA
$ 15.3 $ 14.9
$ 19.5
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 Proceeds from stock option exercises,
plus or minus Foreign currency exchange impact on cash, 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
1Q15 4Q14 1Q14 Net cash
provided by (used for) operating activities $
(5.9 ) $ 28.4 $
20.5 Net capital expenditures (1.9 ) (1.8 ) (2.0 ) Foreign
currency exchange impact on cash (0.6 ) 3.4
(0.1 )
Free cash flow before stock option exercises $
(8.3 ) $ 30.1 $ 18.5
Proceeds from the exercise of stock options — —
—
Free cash flow $
(8.3 ) $ 30.1
$ 18.5
Significant Balance Sheet ratios and Other
Information
Information on certain balance sheet ratios, backlog and
headcount is presented below:
Dollars In millions 1Q15 4Q14
1Q14 Days sales outstanding 57 days 54
days 51 days Aggregate days sales outstanding 84 days 86
days 80 days Net inventory turns 10.3x 9.3x 9.2x Six-month order
backlog $ 197.6 $ 183.4 $ 184.6 Team members 3,858 3,959 4,044 Net
debt $ 142.8 $ 129.6 $ 146.7 Leverage ratio 2.6 2.3
2.2
Black Box CorporationGary Doyle, 724-873-6788Vice President of
Corporate Communications and Investor Relationsinvestors@blackbox.com
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