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
second quarter of Fiscal 2019 and six-month period ended
September 29, 2018. Discussion of results reflect the
continuing operations of the Company unless otherwise noted.
Second Quarter Results
- Revenues declined by $5.8 million or 3.5% to $158.7 million
compared to the same period last year, while the revenue decline
from the prior quarter was $3.8 million or 2.4%. The decline when
compared to the same period last year was primarily due to the
Products business, mainly in North America Products. The decline
when compared to the prior quarter was primarily due to North
America Services.
- Gross profit margin was 27.3%, down 270 basis points from 30.0%
for the same period last year. This decrease was primarily
due to revenue growth in lower margin International Services
combined with lower revenues in the other segments. The gross
profit margin in the prior quarter was 28.5%.
- Selling, general and administrative expenses were $50.1
million, down 9.0% from $55.1 million for the same period last year
and down 3.1% from $51.7 million in the prior quarter. The $5.0
million decrease from the same period last year was primarily due
to reductions of $3.5 million in compensation and benefit costs,
$2.7 million in ERP implementation costs, $0.6 million in foreign
exchange costs and $0.5 million in stock compensation expense,
partially offset by an increase of $2.8 million in financial
advisory costs.
- Interest expense was $4.2 million, compared to $1.8 million for
the same period last year. The $2.4 million increase was due to
higher rates, higher amortization amounts of deferred financing
fees and the write-off of certain deferred financing fees in the
quarter.
- Loss before income taxes was $13.9 million, compared to a loss
before income taxes of $10.5 million for the same period last year
and compared to a loss before income taxes of $9.5 million in the
prior quarter.
- Benefit from income taxes was $7.7 million, compared to a
provision for income taxes of $1.9 million for the same period last
year and compared to a benefit from income taxes of $0.7 million in
the prior quarter. The variance from the statutory rate in the
current quarter was principally due to the intraperiod tax
allocation of valuation allowances between continuing and
discontinued operations.
- Loss from continuing operations was $6.2 million, compared to
loss from continuing operations of $12.4 million for the same
period last year and compared to loss from continuing operations of
$8.9 million in the prior quarter.
- Diluted loss per share from continuing operations was $0.41,
compared to a diluted loss per share from continuing operations of
$0.82 for the same period last year and compared to a diluted loss
per share from continuing operations of $0.59 in the prior
quarter.
- Cash flow used for continuing operating activities was $6.1
million, compared to cash flow provided by continuing operating
activities of $0.8 million for the same period last year and
compared to cash flow used for continuing operating activities of
$4.2 million in the prior quarter. The variance compared to the
prior quarter was principally due to lower gross profit, higher
interest expense and an increase in primary working capital.
2QYTD19 Results
- Revenues were $321.2 million, down 1.2% from $325.2 million for
the same period last year. The decline was primarily due to the
Products business, mainly in North America Products.
- Gross profit margin was 27.9%, down 110 basis points from 29.0%
for the same period last year. The decline was primarily due to
North America Services.
- Selling, general and administrative expenses were $101.9
million, down 9.9% from $113.0 million for the same period last
year. The $11.1 million decrease from the comparable prior year
period was primarily due to reductions of $5.6 million in
compensation and benefit costs, $4.6 million in ERP implementation
costs, $4.1 million in restructuring costs, $1.7 million in stock
compensation expense and $1.1 million in foreign exchange expense,
partially offset by an increase of $5.8 million in financial
advisory costs.
- Interest expense was $6.7 million, compared to $3.0 million for
the same period last year. The $3.7 million increase was due to
higher rates, higher amortization amounts of deferred financing
fees and the write-off of certain deferred financing fees in the
quarter.
- Loss before income taxes was $23.5 million, compared to a loss
before income taxes of $26.6 million for the same period last
year.
- Benefit from income taxes was $8.4 million, compared to a
benefit from income taxes of $3.3 million for the same period last
year.
- Loss from continuing operations was $15.1 million, compared to
loss from continuing operations of $23.4 million.
- Diluted loss per share from continuing operations was $0.99,
compared to a diluted loss per share from continuing operations of
$1.55 for the same period last year.
- Cash flow used for continuing operating activities was $10.3
million, compared to cash flow used for continuing operating
activities of $15.9 million for the same period last year.
Agreement and Plan of Merger
On November 11, 2018, Black Box entered
into an Agreement and Plan of Merger (the "Merger Agreement") with
AGC Networks Pte Ltd., a company organized under the laws of
Singapore, a wholly-owned subsidiary of global solutions integrator
AGC Networks Ltd (BSE/NSE: AGCNET). AGC Singapore has agreed
to acquire all the outstanding shares of Black Box for $1.08 per
share in cash, subject to customary closing conditions and
regulatory approvals.
Please see the Company’s Current Report on Form
8-K, file number 0-18706, filed with the SEC on November 13, 2018
for further details regarding the transaction.
Sale of Federal Business
On August 27, 2018, the Company sold its federal
government IT services business (the "Federal Business"). The
results of the Federal Business have been presented as discontinued
operations and the related assets and liabilities have been
reclassified as held for sale for all periods presented.
CEO Comment
"This quarter presented unique challenges as we
dealt with a difficult business environment as well as potentially
disruptive deal-related activities," stated Joel Trammell,
President and CEO. "I am pleased with the team’s efforts in
maintaining a "business as usual" mindset while meeting the
challenges of these circumstances. Our results reflect this strong
team effort."
Earnings Conference Call
The Company will conduct a conference call
beginning at 2:00 p.m. Eastern Time today, November 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 2283476. 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 2,849 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.
Additional Information and Where to Find It
The tender offer described herein has not yet
commenced. This document is for informational purposes only and is
neither an offer to purchase nor a solicitation of an offer to sell
any common stock of the Company or any other securities. On the
commencement date of the tender offer, a tender offer statement on
Schedule TO, including an offer to purchase, a letter of
transmittal and related documents, will be filed with the United
States Securities and Exchange Commission (the “SEC”) by AGC, and a
solicitation/recommendation statement on Schedule 14D-9 will be
filed with the SEC by the Company. The offer to purchase common
stock of the Company will only be made pursuant to the offer to
purchase, the letter of transmittal and related documents filed as
a part of the Schedule TO. THE TENDER OFFER MATERIALS (INCLUDING AN
OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN
OTHER TENDER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION
STATEMENT ON SCHEDULE 14D-9 WILL CONTAIN IMPORTANT INFORMATION.
STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THESE DOCUMENTS
CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION THAT SUCH STOCKHOLDERS SHOULD CONSIDER BEFORE
MAKING ANY DECISION REGARDING TENDERING THEIR SHARES. Investors and
security holders may obtain a free copy of these statements (when
available) and other documents filed with the SEC at the website
maintained by the SEC at www.sec.gov or by directing such requests
to the information agent for the tender offer that will be named in
the tender offer statement on Schedule TO.
Cautionary Forward-Looking Statements
All of the statements in this document, other
than historical facts, are forward-looking statements, including,
without limitation, the statements made concerning the pending
acquisition of Black Box by the Parent Entities, and are based on a
number of assumptions that could ultimately prove inaccurate.
Forward-looking statements made herein with respect to the tender
offer, the merger and related transactions, including, for example,
the timing of the completion of the merger and the potential
benefits of the merger, reflect the current analysis of existing
information and are subject to various risks and uncertainties. As
a result, caution must be exercised in relying on forward-looking
statements. Due to known and unknown risks, Black Box’s actual
results may differ materially from its expectations or projections.
The following factors, among others, could cause actual plans and
results to differ materially from those described in
forward-looking statements: (i) uncertainties as to the timing of
the tender offer and the merger; (ii) uncertainties as to how many
Black Box stockholders will tender their shares of Black Box common
stock in the tender offer; (iii) the possibility that competing
acquisition proposals will be made; (iv) the possibility that Black
Box will terminate the merger agreement to enter into an
alternative business combination, refinancing, or other
recapitalization transaction; (v) the possibility that various
closing conditions for the transactions contemplated by the merger
agreement may not be satisfied or waived; (vi) the risk that the
merger agreement may be terminated in circumstances requiring Black
Box to pay a termination fee; (vii) risks related to the filing or
filings to be made with CFIUS, and unanticipated developments in
related law; (viii) the possibility that the transactions
contemplated by the merger agreement may not be timely completed,
if at all; (ix) the risk that, prior to the completion of the
transactions contemplated by the merger agreement, if at all, Black
Box’s business and its relationships with employees, collaborators,
vendors and other business partners could experience significant
disruption, whether due to uncertainty related to the tender offer,
the merger and related transactions or otherwise, continued
degradation in Black Box’s financial performance, or other factors;
(x) the risk that AGC’s equity financing, debt financing or both
are unavailable to complete the tender offer or the merger; (xi)
the risk that stockholder litigation in connection with the tender
offer or the merger may result in significant costs of defense,
indemnification and liability; (xii) the risk that Black Box does
not generate sufficient cash flow from operations to meet its
obligations during the period prior to the completion of the
transactions contemplated by the merger agreement; (xiii) the risks
and uncertainties pertaining to Black Box’s business; and (xiv)
other factors included elsewhere in Black Box’s public periodic
filings with the SEC, as well as the tender offer materials filed
and to be filed by AGC and/or its affiliates in connection with the
tender offer. Other factors that could cause actual results to
differ materially include those set forth in Black Box’s SEC
reports, including, without limitation, the risks described in
Black Box’s Annual Report on Form 10-K for its fiscal year ended
March 31, 2018, Black Box’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2018 and the Current Report on Form 8-K,
filed July 2, 2018, each of which are on file with the SEC. Black
Box’s SEC filings are available publicly on the SEC’s website at
www.sec.gov, on Black Box’s website at
https://www.blackbox.com/ under the Investor Relations section
or upon request via phone at 724-873-6788. Black Box disclaims any
obligation or undertaking to update or revise the forward-looking
statements contained herein, whether as a result of new
information, future events or otherwise, except as required by
law.
Contact
Black Box CorporationDavid J. RussoExecutive
Vice President, Chief Financial Officer and TreasurerPhone: (724)
873-6788Email: investors@blackbox.com
BLACK BOX CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
In millions and may not foot due to rounding |
September 29, 2018 |
|
March 31, 2018 |
|
Assets |
|
|
Cash and cash
equivalents |
$ |
21.9 |
|
$ |
35.6 |
|
Accounts
receivable, net |
104.0 |
|
99.2 |
|
Inventories, net |
20.0 |
|
26.1 |
|
Costs/estimated earnings in excess of billings on uncompleted
contracts |
50.8 |
|
52.7 |
|
Other
current assets |
30.7 |
|
26.1 |
|
Current
assets held for sale |
0.2 |
|
47.2 |
|
Total current assets |
$ |
227.6 |
|
$ |
286.8 |
|
Property,
plant and equipment, net |
19.6 |
|
23.2 |
|
Intangibles, net |
35.4 |
|
39.1 |
|
Deferred
tax asset |
4.2 |
|
6.5 |
|
Other
non-current assets |
11.0 |
|
8.4 |
|
Non-current assets held for sale |
— |
|
12.3 |
|
Total assets |
$ |
297.8 |
|
$ |
376.3 |
|
Liabilities |
|
|
Accounts
payable |
$ |
44.0 |
|
$ |
49.2 |
|
Accrued
compensation and benefits |
13.9 |
|
15.8 |
|
Deferred
revenue |
23.9 |
|
27.4 |
|
Billings
in excess of costs/estimated earnings on uncompleted contracts |
12.2 |
|
12.5 |
|
Short-term debt |
101.5 |
|
157.5 |
|
Other
current liabilities |
26.3 |
|
25.9 |
|
Current
liabilities held for sale |
— |
|
20.6 |
|
Total current liabilities |
221.8 |
|
309.0 |
|
Long-term
debt |
0.3 |
|
0.5 |
|
Other
non-current liabilities |
15.7 |
|
15.9 |
|
Non-current liabilities held for sale |
— |
|
0.6 |
|
Total liabilities |
$ |
237.8 |
|
$ |
326.0 |
|
Stockholders’
equity |
|
|
Common
stock |
$ |
— |
|
$ |
— |
|
Additional paid-in capital |
511.4 |
|
510.0 |
|
Retained
earnings |
(22.8 |
) |
(35.7 |
) |
Accumulated other comprehensive income (loss) |
(12.6 |
) |
(8.0 |
) |
Treasury
stock, at cost |
(416.1 |
) |
(416.0 |
) |
Total stockholders’ equity |
$ |
59.9 |
|
$ |
50.3 |
|
Total liabilities and stockholders’ equity |
$ |
297.8 |
|
$ |
376.3 |
|
|
|
|
|
BLACK BOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
In millions, except per share amounts and may not foot due
to rounding |
2Q19 |
|
1Q19 |
|
2Q18 |
|
2QYTD19 |
|
2QYTD18 |
|
Revenues |
|
|
|
|
|
Products |
$ |
32.8 |
|
$ |
31.6 |
|
$ |
37.2 |
|
$ |
64.4 |
|
$ |
70.1 |
|
Services |
125.8 |
|
130.9 |
|
127.2 |
|
256.8 |
|
255.1 |
|
Total |
158.7 |
|
162.5 |
|
164.5 |
|
321.2 |
|
325.2 |
|
Cost of
sales |
|
|
|
|
|
Products |
18.9 |
|
18.2 |
|
21.2 |
|
37.1 |
|
40.2 |
|
Services |
96.4 |
|
98.0 |
|
94.0 |
|
194.4 |
|
190.7 |
|
Total |
115.3 |
|
116.2 |
|
115.1 |
|
231.5 |
|
230.9 |
|
Gross
profit |
43.4 |
|
46.3 |
|
49.3 |
|
89.7 |
|
94.3 |
|
Selling, general &
administrative expenses |
50.1 |
|
51.7 |
|
55.1 |
|
101.9 |
|
113.0 |
|
Asset impairments |
1.6 |
|
— |
|
1.4 |
|
1.6 |
|
1.4 |
|
Intangibles
amortization |
1.1 |
|
1.1 |
|
1.7 |
|
2.2 |
|
3.6 |
|
Operating
income (loss) |
(9.4 |
) |
(6.5 |
) |
(8.9 |
) |
(15.9 |
) |
(23.7 |
) |
Interest expense,
net |
4.2 |
|
2.5 |
|
1.8 |
|
6.7 |
|
3.0 |
|
Other expenses
(income), net |
0.3 |
|
0.5 |
|
(0.2 |
) |
0.8 |
|
(0.1 |
) |
Income (loss) before
provision for income taxes |
(13.9 |
) |
(9.5 |
) |
(10.5 |
) |
(23.5 |
) |
(26.6 |
) |
Provision (benefit) for
income taxes |
(7.7 |
) |
(0.7 |
) |
1.9 |
|
(8.4 |
) |
(3.3 |
) |
Income (loss)
from continuing operations |
(6.2 |
) |
(8.9 |
) |
(12.4 |
) |
(15.1 |
) |
(23.4 |
) |
Income (loss) from
discontinued operations, net of tax |
(2.0 |
) |
1.6 |
|
1.0 |
|
(0.4 |
) |
2.2 |
|
Gain from sale of
discontinued operations, net of tax |
31.0 |
|
— |
|
— |
|
31.0 |
|
— |
|
Net income
(loss) |
$ |
22.9 |
|
$ |
(7.3 |
) |
$ |
(11.4 |
) |
$ |
15.6 |
|
$ |
(21.1 |
) |
Basic earnings
(loss) per common share |
|
|
|
|
|
Continuing operations |
$ |
(0.41 |
) |
$ |
(0.59 |
) |
$ |
(0.82 |
) |
$ |
(0.99 |
) |
$ |
(1.55 |
) |
Discontinued operations |
1.91 |
|
0.10 |
|
0.07 |
|
2.02 |
|
0.15 |
|
Net earnings (loss) per common share |
$ |
1.50 |
|
$ |
(0.48 |
) |
$ |
(0.75 |
) |
$ |
1.03 |
|
$ |
(1.40 |
) |
Diluted
earnings (loss) per common share |
|
|
|
|
|
Continuing operations |
$ |
(0.41 |
) |
$ |
(0.59 |
) |
$ |
(0.82 |
) |
$ |
(0.99 |
) |
$ |
(1.55 |
) |
Discontinued operations |
1.91 |
|
0.10 |
|
0.07 |
|
2.02 |
|
0.15 |
|
Net earnings (loss) per common share |
$ |
1.50 |
|
$ |
(0.48 |
) |
$ |
(0.75 |
) |
$ |
1.03 |
|
$ |
(1.40 |
) |
Weighted-average common
shares outstanding |
|
|
|
|
|
Basic |
15.2 |
|
15.2 |
|
15.1 |
|
15.2 |
|
15.1 |
|
Diluted |
15.2 |
|
15.2 |
|
15.1 |
|
15.2 |
|
15.1 |
|
Dividends
per share |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
0.12 |
|
|
BLACK BOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
In millions and may not foot due to rounding |
2Q19 |
|
1Q19 |
|
2Q18 |
|
2QYTD19 |
|
2QYTD18 |
|
Operating
Activities |
|
|
|
|
|
Net income
(loss) |
$ |
22.9 |
|
$ |
(7.3 |
) |
$ |
(11.4 |
) |
$ |
15.5 |
|
$ |
(21.2 |
) |
Less: Net income (loss)
from discontinued operations |
29.1 |
|
1.6 |
|
1.0 |
|
30.6 |
|
2.2 |
|
Net income
(loss) from continuing operations |
$ |
(6.2 |
) |
$ |
(8.9 |
) |
$ |
(12.4 |
) |
$ |
(15.1 |
) |
$ |
(23.4 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by (used for)
continuing operating activities |
|
|
|
|
|
Intangibles amortization |
$ |
1.1 |
|
$ |
1.1 |
|
$ |
1.7 |
|
$ |
2.2 |
|
$ |
3.6 |
|
Depreciation |
2.0 |
|
2.1 |
|
2.2 |
|
4.1 |
|
4.5 |
|
Loss
(gain) on sale of property |
0.1 |
|
— |
|
0.8 |
|
0.1 |
|
— |
|
Deferred
taxes |
(8.2 |
) |
— |
|
1.5 |
|
(8.3 |
) |
(3.1 |
) |
Stock
compensation expense |
0.5 |
|
0.9 |
|
1.0 |
|
1.4 |
|
3.1 |
|
Asset
impairment loss |
1.6 |
|
— |
|
1.4 |
|
1.6 |
|
1.4 |
|
Provision
for obsolete inventory |
0.1 |
|
0.9 |
|
0.2 |
|
1.1 |
|
0.3 |
|
Provision
for (recovery of) doubtful accounts |
0.1 |
|
0.2 |
|
0.4 |
|
0.3 |
|
0.5 |
|
Changes in operating
assets and liabilities (net of effects of discontinued
operations) |
|
|
|
|
|
Accounts
receivable |
5.5 |
|
(8.4 |
) |
(6.7 |
) |
(2.9 |
) |
9.0 |
|
Inventories |
2.5 |
|
1.8 |
|
(2.2 |
) |
4.2 |
|
(3.2 |
) |
Costs/estimated earnings in excess of billings on uncompleted
contracts |
(8.5 |
) |
2.7 |
|
1.1 |
|
(5.8 |
) |
1.6 |
|
All other
assets |
6.5 |
|
(2.1 |
) |
8.5 |
|
4.4 |
|
(3.1 |
) |
Accounts
payable |
(6.0 |
) |
3.5 |
|
9.3 |
|
(2.5 |
) |
3.1 |
|
Billings
in excess of costs/estimated earnings on uncompleted contracts |
1.8 |
|
(2.1 |
) |
1.3 |
|
(0.3 |
) |
(2.0 |
) |
All other
liabilities |
1.2 |
|
4.1 |
|
(7.3 |
) |
5.3 |
|
(8.2 |
) |
Net cash provided by (used for) continuing operating
activities |
(6.1 |
) |
(4.2 |
) |
0.8 |
|
(10.3 |
) |
(15.9 |
) |
Net cash
provided by (used for) discontinued operating activities |
0.6 |
|
1.9 |
|
(0.2 |
) |
2.5 |
|
0.3 |
|
Net cash provided by (used for) operating
activities |
$ |
(5.5 |
) |
$ |
(2.3 |
) |
$ |
0.6 |
|
$ |
(7.8 |
) |
$ |
(15.6 |
) |
Investing
Activities |
|
|
|
|
|
Capital
expenditures |
$ |
(0.4 |
) |
$ |
(0.4 |
) |
$ |
(1.6 |
) |
$ |
(0.8 |
) |
$ |
(2.3 |
) |
Capital
disposals |
0.1 |
|
— |
|
0.1 |
|
0.1 |
|
0.1 |
|
Net cash provided by (used for) continuing investing
activities |
(0.3 |
) |
(0.4 |
) |
(1.5 |
) |
(0.6 |
) |
(2.3 |
) |
Net cash
provided by (used for) discontinued investing activities |
63.1 |
|
(0.1 |
) |
— |
|
63.0 |
|
(0.4 |
) |
Net cash provided by (used for) investing
activities |
$ |
62.9 |
|
$ |
(0.5 |
) |
$ |
(1.5 |
) |
$ |
62.4 |
|
$ |
(2.6 |
) |
Financing
Activities |
|
|
|
|
|
Proceeds
from (repayments of) long-term debt |
$ |
(45.5 |
) |
$ |
(3.1 |
) |
$ |
24.4 |
|
$ |
(48.6 |
) |
$ |
34.6 |
|
Proceeds
from (repayments of) short-term debt |
(9.1 |
) |
2.1 |
|
— |
|
(7.0 |
) |
5.0 |
|
Deferred
financing costs |
(1.9 |
) |
(1.3 |
) |
(0.6 |
) |
(3.1 |
) |
(0.6 |
) |
Purchase
of treasury stock |
— |
|
(0.1 |
) |
— |
|
(0.1 |
) |
(0.4 |
) |
Payment
of dividends |
— |
|
— |
|
(1.8 |
) |
— |
|
(3.6 |
) |
Increase
(decrease) in cash overdrafts |
(0.4 |
) |
(5.3 |
) |
(0.1 |
) |
(5.7 |
) |
(1.1 |
) |
Net cash
provided by (used for) continuing financing
activities |
(56.8 |
) |
(7.7 |
) |
21.8 |
|
(64.5 |
) |
33.8 |
|
Net cash provided by
(used for) discontinued financing activities |
— |
|
(2.1 |
) |
— |
|
(2.1 |
) |
— |
|
Net cash
provided by (used for) financing activities |
$ |
(56.8 |
) |
$ |
(9.8 |
) |
$ |
21.8 |
|
$ |
(66.7 |
) |
$ |
33.8 |
|
Foreign
currency exchange impact on cash |
(0.7 |
) |
(0.9 |
) |
(0.9 |
) |
(1.6 |
) |
0.7 |
|
Increase/(decrease) in cash and cash
equivalents |
$ |
(0.1 |
) |
$ |
(13.6 |
) |
$ |
20.0 |
|
$ |
(13.7 |
) |
$ |
16.2 |
|
Cash and cash
equivalents at beginning of period |
$ |
22.0 |
|
$ |
35.6 |
|
$ |
10.5 |
|
$ |
35.6 |
|
$ |
14.2 |
|
Cash and cash
equivalents at end of period |
$ |
21.9 |
|
$ |
22.0 |
|
$ |
30.5 |
|
$ |
21.9 |
|
$ |
30.5 |
|
|
|
|
|
|
|
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 |
2Q19 |
|
1Q19 |
|
2Q18 |
|
2QYTD19 |
|
2QYTD18 |
|
Income (loss)
from continuing operations |
$ |
(6.2 |
) |
$ |
(8.9 |
) |
$ |
(12.4 |
) |
$ |
(15.1 |
) |
$ |
(23.4 |
) |
Provision (benefit) for
income taxes |
(7.7 |
) |
(0.7 |
) |
1.9 |
|
(8.4 |
) |
(3.3 |
) |
Effective tax rate |
55.6 |
% |
7.0 |
% |
(18.6 |
)% |
35.8 |
% |
12.3 |
% |
Income (loss)
before provision for income taxes |
$ |
(13.9 |
) |
$ |
(9.5 |
) |
$ |
(10.5 |
) |
$ |
(23.5 |
) |
$ |
(26.6 |
) |
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
Intangibles amortization |
$ |
1.1 |
|
$ |
1.1 |
|
$ |
1.7 |
|
$ |
2.2 |
|
$ |
3.6 |
|
Restructuring expense |
0.2 |
|
0.2 |
|
0.1 |
|
0.4 |
|
4.5 |
|
Asset
impairment loss |
1.6 |
|
— |
|
1.4 |
|
1.6 |
|
1.4 |
|
Total pre-tax
adjustments |
$ |
2.8 |
|
$ |
1.3 |
|
$ |
3.3 |
|
$ |
4.1 |
|
$ |
9.4 |
|
|
|
|
|
|
|
Operating
EBIT |
$ |
(11.1 |
) |
$ |
(8.3 |
) |
$ |
(7.2 |
) |
$ |
(19.4 |
) |
$ |
(17.2 |
) |
Operational effective
tax rate |
25.0 |
% |
25.0 |
% |
35.0 |
% |
25.0 |
% |
35.0 |
% |
Operational income
taxes (1) |
(2.8 |
) |
(2.1 |
) |
(2.5 |
) |
(4.9 |
) |
(6.0 |
) |
Operating net income (loss) |
$ |
(8.3 |
) |
$ |
(6.2 |
) |
$ |
(4.7 |
) |
$ |
(14.5 |
) |
$ |
(11.2 |
) |
(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 discrete tax items.
A reconciliation of Diluted earnings (loss) per
share to operating EPS is presented below:
May not foot due to rounding |
2Q19 |
|
1Q19 |
|
2Q18 |
|
2QYTD19 |
|
2QYTD18 |
|
Diluted
EPS |
$ |
(0.41 |
) |
$ |
(0.59 |
) |
$ |
(0.82 |
) |
$ |
(0.99 |
) |
$ |
(1.55 |
) |
EPS impact
* |
(0.14 |
) |
0.18 |
|
0.51 |
|
0.04 |
|
0.81 |
|
Operating EPS |
$ |
(0.55 |
) |
$ |
(0.41 |
) |
$ |
(0.31 |
) |
$ |
(0.96 |
) |
$ |
(0.74 |
) |
* 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 Second Amendment to its Credit
Agreement (the "Amended Credit Agreement"), the Company is required
to maintain a minimum consolidated three-month Adjusted EBITDA on
the close of each fiscal month starting June 30, 2018. The Adjusted
EBITDA definition in the Amended Credit Agreement incorporates
Operating EBITDA and adds back certain other charges.
A reconciliation of Net income (loss) to EBITDA,
Operating EBITDA, and Adjusted EBITDA, inclusive of discontinued
operations, is presented below:
In millions and may not foot due to rounding |
2Q19 |
|
1Q19 |
|
Net income
(loss) |
$ |
22.9 |
|
$ |
(7.3 |
) |
Provision
(benefit) for income taxes |
0.5 |
|
(0.2 |
) |
Interest
expense, net |
4.2 |
|
2.5 |
|
Intangibles amortization |
1.3 |
|
1.5 |
|
Depreciation |
2.1 |
|
2.2 |
|
EBITDA |
$ |
31.0 |
|
$ |
(1.2 |
) |
Stock
compensation expense |
0.5 |
|
1.0 |
|
Asset
impairment loss |
4.6 |
|
— |
|
Operating
EBITDA |
$ |
36.0 |
|
$ |
(0.2 |
) |
Other
charges |
4.5 |
|
4.0 |
|
Adjusted EBITDA |
$ |
40.5 |
|
$ |
3.8 |
|
Pursuant to the Amended Credit Agreement, the
Company was required to maintain a minimum consolidated three-month
Adjusted EBITDA of negative $3.5 million at September 30, 2018.
Actual Adjusted EBITDA was $40.5 million, or $37.0 million higher
than the required minimum.
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:
|
2Q19 |
1Q19 |
2Q18 |
2QYTD19 |
2QYTD18 |
In millions and may not foot due to rounding |
$ |
% ofRev |
$ |
% ofRev |
$ |
% ofRev |
$ |
% ofRev |
$ |
% ofRev |
Revenues |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$ |
16.8 |
|
|
$ |
15.8 |
|
|
$ |
19.9 |
|
|
$ |
32.6 |
|
|
$ |
37.1 |
|
|
International Products |
|
16.0 |
|
|
|
15.8 |
|
|
|
17.4 |
|
|
|
31.7 |
|
|
|
33.0 |
|
|
Products |
$ |
32.8 |
|
|
$ |
31.6 |
|
|
$ |
37.2 |
|
|
$ |
64.4 |
|
|
$ |
70.1 |
|
|
North
America Services |
$ |
116.3 |
|
|
$ |
120.5 |
|
|
$ |
118.8 |
|
|
$ |
236.7 |
|
|
$ |
240.6 |
|
|
International Services |
|
9.5 |
|
|
|
10.5 |
|
|
|
8.4 |
|
|
|
20.0 |
|
|
|
14.5 |
|
|
Services |
$ |
125.8 |
|
|
$ |
130.9 |
|
|
$ |
127.2 |
|
|
$ |
256.8 |
|
|
$ |
255.1 |
|
|
Total |
$ |
158.7 |
|
|
$ |
162.5 |
|
|
$ |
164.5 |
|
|
$ |
321.2 |
|
|
$ |
325.2 |
|
|
Gross
profit |
|
|
|
|
|
|
|
|
|
|
North America
Products |
$ |
7.5 |
|
44.6 |
% |
$ |
6.8 |
|
42.7 |
% |
$ |
9.1 |
|
46.1 |
% |
$ |
14.3 |
|
43.7 |
% |
$ |
16.9 |
|
45.6 |
% |
International Products |
|
6.4 |
|
40.3 |
% |
|
6.6 |
|
41.8 |
% |
|
6.9 |
|
39.9 |
% |
|
13.0 |
|
41.0 |
% |
|
13.0 |
|
39.4 |
% |
Products |
$ |
14.0 |
|
42.5 |
% |
$ |
13.3 |
|
42.3 |
% |
$ |
16.1 |
|
43.2 |
% |
$ |
27.3 |
|
42.4 |
% |
$ |
29.9 |
|
42.7 |
% |
North
America Services |
$ |
27.4 |
|
23.5 |
% |
$ |
31.1 |
|
25.8 |
% |
$ |
31.4 |
|
26.4 |
% |
$ |
58.5 |
|
24.7 |
% |
$ |
61.3 |
|
25.5 |
% |
International Services |
|
2.0 |
|
21.2 |
% |
|
1.8 |
|
17.6 |
% |
|
1.9 |
|
22.4 |
% |
|
3.9 |
|
19.3 |
% |
|
3.1 |
|
21.3 |
% |
Services |
$ |
29.4 |
|
23.4 |
% |
$ |
33.0 |
|
25.2 |
% |
$ |
33.2 |
|
26.1 |
% |
$ |
62.4 |
|
24.3 |
% |
$ |
64.4 |
|
25.2 |
% |
Total |
$ |
43.4 |
|
27.3 |
% |
$ |
46.3 |
|
28.5 |
% |
$ |
49.3 |
|
30.0 |
% |
$ |
89.7 |
|
27.9 |
% |
$ |
94.3 |
|
29.0 |
% |
Operating
income (loss) |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$ |
(0.5 |
) |
(3.0 |
)% |
$ |
(1.3 |
) |
(8.0 |
)% |
$ |
1.8 |
|
9.3 |
% |
$ |
(1.8 |
) |
(5.4 |
)% |
$ |
0.4 |
|
1.0 |
% |
International Products |
|
(0.7 |
) |
(4.3 |
)% |
|
(0.4 |
) |
(2.5 |
)% |
|
(0.4 |
) |
(2.1 |
)% |
|
(1.1 |
) |
(3.4 |
)% |
|
(4.1 |
) |
(12.4 |
)% |
Products |
$ |
(1.2 |
) |
(3.6 |
)% |
$ |
(1.7 |
) |
(5.3 |
)% |
$ |
1.5 |
|
4.0 |
% |
$ |
(2.9 |
) |
(4.4 |
)% |
$ |
(3.7 |
) |
(5.3 |
)% |
North
America Services |
$ |
(8.0 |
) |
(6.9 |
)% |
$ |
(4.1 |
) |
(3.4 |
)% |
$ |
(8.7 |
) |
(7.3 |
)% |
$ |
(12.1 |
) |
(5.1 |
)% |
$ |
(18.0 |
) |
(7.5 |
)% |
International Services |
|
(0.2 |
) |
(2.1 |
)% |
|
(0.7 |
) |
(7.1 |
)% |
|
(1.7 |
) |
(20.1 |
)% |
|
(0.9 |
) |
(4.7 |
)% |
|
(2.0 |
) |
(13.8 |
)% |
Services |
$ |
(8.2 |
) |
(6.5 |
)% |
$ |
(4.8 |
) |
(3.7 |
)% |
$ |
(10.4 |
) |
(8.2 |
)% |
$ |
(13.1 |
) |
(5.1 |
)% |
$ |
(20.0 |
) |
(7.8 |
)% |
Total |
$ |
(9.4 |
) |
(5.9 |
)% |
$ |
(6.5 |
) |
(4.0 |
)% |
$ |
(8.9 |
) |
(5.4 |
)% |
$ |
(15.9 |
) |
(5.0 |
)% |
$ |
(23.7 |
) |
(7.3 |
)% |
Adjustments |
|
|
|
|
|
|
|
|
|
|
North
America Products |
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.7 |
) |
|
$ |
— |
|
|
$ |
0.6 |
|
|
International Products |
|
0.1 |
|
|
|
— |
|
|
|
(0.9 |
) |
|
|
0.1 |
|
|
|
0.9 |
|
|
Products |
$ |
0.1 |
|
|
$ |
— |
|
|
$ |
(1.6 |
) |
|
$ |
0.1 |
|
|
$ |
1.5 |
|
|
North
America Services |
$ |
2.7 |
|
|
$ |
1.2 |
|
|
$ |
3.7 |
|
|
$ |
4.0 |
|
|
$ |
6.7 |
|
|
International Services |
|
— |
|
|
|
— |
|
|
|
1.2 |
|
|
|
— |
|
|
|
1.2 |
|
|
Services |
$ |
2.7 |
|
|
$ |
1.3 |
|
|
$ |
4.9 |
|
|
$ |
4.0 |
|
|
$ |
7.9 |
|
|
Total |
$ |
2.8 |
|
|
$ |
1.3 |
|
|
$ |
3.3 |
|
|
$ |
4.1 |
|
|
$ |
9.4 |
|
|
Adjusted operating income |
|
|
|
|
|
|
|
|
|
North
America Products |
$ |
(0.5 |
) |
(2.9 |
)% |
$ |
(1.3 |
) |
(8.0 |
)% |
$ |
1.2 |
|
6.0 |
% |
$ |
(1.8 |
) |
(5.4 |
)% |
$ |
1.0 |
|
2.8 |
% |
International Products |
|
(0.6 |
) |
(3.7 |
)% |
|
(0.4 |
) |
(2.4 |
)% |
|
(1.3 |
) |
(7.5 |
)% |
|
(1.0 |
) |
(3.0 |
)% |
|
(3.2 |
) |
(9.8 |
)% |
Products |
$ |
(1.1 |
) |
(3.3 |
)% |
$ |
(1.6 |
) |
(5.2 |
)% |
$ |
(0.1 |
) |
(0.3 |
)% |
$ |
(2.7 |
) |
(4.2 |
)% |
$ |
(2.2 |
) |
(3.1 |
)% |
North
America Services |
$ |
(5.3 |
) |
(4.5 |
)% |
$ |
(2.9 |
) |
(2.4 |
)% |
$ |
(5.0 |
) |
(4.2 |
)% |
$ |
(8.2 |
) |
(3.5 |
)% |
$ |
(11.2 |
) |
(4.7 |
)% |
International Services |
|
(0.2 |
) |
(2.1 |
)% |
|
(0.7 |
) |
(6.8 |
)% |
|
(0.5 |
) |
(6.0 |
)% |
|
(0.9 |
) |
(4.6 |
)% |
|
(0.8 |
) |
(5.5 |
)% |
Services |
$ |
(5.5 |
) |
(4.4 |
)% |
$ |
(3.6 |
) |
(2.7 |
)% |
$ |
(5.5 |
) |
(4.3 |
)% |
$ |
(9.1 |
) |
(3.5 |
)% |
$ |
(12.0 |
) |
(4.7 |
)% |
Total |
$ |
(6.6 |
) |
(4.1 |
)% |
$ |
(5.2 |
) |
(3.2 |
)% |
$ |
(5.6 |
) |
(3.4 |
)% |
$ |
(11.8 |
) |
(3.7 |
)% |
$ |
(14.2 |
) |
(4.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
2Q19 |
|
1Q19 |
|
2Q18 |
|
2QYTD19 |
|
2QYTD18 |
|
Net cash
provided by (used for) operating activities |
$ |
(6.1 |
) |
$ |
(4.2 |
) |
$ |
0.8 |
|
$ |
(10.3 |
) |
$ |
(15.9 |
) |
Net
capital expenditures |
(0.3 |
) |
(0.4 |
) |
(1.5 |
) |
(0.7 |
) |
(2.2 |
) |
Foreign
currency exchange impact on cash |
(0.7 |
) |
(0.9 |
) |
(0.9 |
) |
(1.6 |
) |
0.7 |
|
Free cash flow
before stock option exercises |
$ |
(7.0 |
) |
$ |
(5.5 |
) |
$ |
(1.6 |
) |
$ |
(12.6 |
) |
$ |
(17.5 |
) |
Proceeds
from the exercise of stock options |
— |
|
— |
|
— |
|
— |
|
— |
|
Free cash flow |
$ |
(7.0 |
) |
$ |
(5.5 |
) |
$ |
(1.6 |
) |
$ |
(12.6 |
) |
$ |
(17.5 |
) |
Significant Balance Sheet Ratios and
Other Information
Information on certain balance sheet ratios,
backlog and headcount is presented below:
Dollars in millions |
2Q19 |
|
1Q19 |
|
2Q18 |
|
Days sales
outstanding* |
52 days |
|
55 days |
|
51 days |
|
Aggregate days sales
outstanding* |
73 days |
|
91 days |
|
83 days |
|
Inventory turns* |
43.9x |
|
35.2x |
|
30.4x |
|
Six-month order
backlog |
$ |
127.3 |
|
$ |
126.8 |
|
$ |
121.6 |
|
Total backlog |
$ |
247.3 |
|
$ |
256.5 |
|
$ |
272.3 |
|
Headcount |
2,849 |
|
2,883 |
|
2,998 |
|
Net
debt** |
$ |
80.2 |
|
$ |
134.4 |
|
$ |
98.7 |
|
* Comparable periods are inclusive of discontinued operations.**
Net debt is defined by the Company as Debt less Cash and cash
equivalents.
Black Box Corp. (NASDAQ:BBOX)
過去 株価チャート
から 9 2024 まで 10 2024
Black Box Corp. (NASDAQ:BBOX)
過去 株価チャート
から 10 2023 まで 10 2024