Black Box Corporation (BBOX)

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Black Box Corp (BBOX)

F3Q10 (Qtr. End 12/26/09) Earnings Call

January 26, 2010 05:00 pm ET


Gary Doyle - Director, IR

Terry Blakemore - President and CEO

Mike McAndrew - VP and CFO


Greg Burns - Sidoti & Company

Scott Blumenthal - Emerald Advisors

Nat Kellogg - Next Generation Equity Research

Jeff Beach - Stifel Nicolaus

Josh Overholt - ICM



Ladies and gentlemen, thank you for standing by. Welcome to the third quarter fiscal 2010 earnings call. At this time, all participants are in a listen-only mode. Later there will be an opportunity for questions, the instructions will be given at that time. (Operator instructions). And as a reminder, this conference is being recorded.

I’d now turn the conference over to your host, Mr. Gary Doyle, Director of Investor Relations. Please go ahead.

Gary Doyle

Thank you. Good evening, and welcome to Black Box Corporation’s third quarter fiscal of fiscal 2010 earnings conference call.

My name is Gary Doyle and I am the Director of Investor Relations for Black Box. With us today are Terry Blakemore, President and CEO of Black Box Corporation, and Mike McAndrew, our Vice President and Chief Financial Officer.

Earlier today, we announced our third quarter fiscal 2010 results by issuing a press release and furnishing it to the Securities and Exchange Commission on Form 8-K. We also posted this press release on our website at We will start today’s call with an overview of our results from Terry Blakemore, followed by a more detailed discussion from Mike and Terry. Following this, we will field questions as time allows.

Before we begin, and as a reminder, matters discussed in this call may contain forward-looking statements that involve risks and uncertainties concerning Black Box’s expected financial performance. Actual results may differ materially from expected results and reported results should not be considered as an indication of future performance.

Potential factors that could affect our business and financial results include changes in economic conditions in our end markets and the general market at large. Additional factors are included in our most recent Form 10-K and today’s press release including the ongoing shareholder derivative lawsuit and related matters.

On this call and as presented in today’s press release, we will discuss some financial information that includes non-GAAP financial measures including operating net income, operating earnings per share, free cash flow, EBITDA, adjusted EBITDA and organic or same-office revenue comparisons.

We will limit any non-GAAP financial discussions today to the specific measures in our press release. As I said earlier, our press release was filed with the SEC and posted to our website prior to this call. Please refer to the schedule that accompanies the press release for a reconciliation of non-GAAP financial measurements to the most directly comparable GAAP financial measurements and other supplemental information.

We have a very busy IR calendar for the rest of this quarter. We will present at the Emerald Advisors Conference on February 4 in Philadelphia, the Credit Suisse Global Services conference on February 23 in Phoenix, the Next Generation Research One-on-One conference in Chicago on March 1. And the Sidoti Spring Conference in New York on March 23. Now I would like to turn the call over to Mr. Terry Blakemore.

Terry Blakemore

Thanks, Gary. I am pleased to report that our results for the third quarter of fiscal 2010 demonstrate our business continues to show signs of stabilization. As we build a strong foundation for growth and anticipation of economic recovery. Revenues for the third quarter were $253 million, a 3% decrease from last year’s $262 million and a 9% increase over last quarter’s $232 million. In the third quarter, each of our business segments posted sequential organic growth. We believe that this is an indication of stabilization in our served markets.

Year-to-date revenues were $721 million, a 5% decrease from last year’s $758 million. Our third quarter results include $11 million of revenue which was accelerated as we completed certain projects ahead of schedule. Mike will discuss the impact of this event later in the call. Our third quarter operating earnings per share were $0.77, down $0.08 from last year’s $0.85 and up $0.05 from last quarter’s $0.72.

Year-to-date operating earnings per share were $2.20 compared to $2.47 for the same period last year. Third quarter free cash flow was $11 million equivalent to the $11 million last year. Free cash flow for the year stands at $41 million versus $49 million for the same period last year. Free cash for the quarter was used to fund acquisitions and pay dividends. Also during the quarter, we finalized a new distribution agreement with Avaya. We are very excited to again have Avaya in our portfolio of communication solutions that we offer to our clients.

We are working diligently to build our capabilities to sell, install and maintain Avaya products at the high levels that our clients have come to expect from Black Box. I'll give you more detail on our efforts later in the call.

Although we remain cautious with respect to the near-term economic conditions, I'm very encouraged by the work that our management team has done globally to prepare us for future growth. Recovery will come and Black Box will be financially and strategically positioned to take advantage of the anticipated opportunities.

I'll turn it over to Mike now for a more detailed discussion of our financial results.

Mike McAndrew

Thank you, Terry. As Terry just mentioned, we posted quarterly revenues of $253 million versus $262 million for the same period last year. Excluding $43 million of incremental revenue contribution in the third quarter related to acquisitions over the last two years and a $4 million positive impact from foreign currency, same office revenues for the third quarter are down $28 million or 12% over the third quarter of the prior year.

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