BBOX

Black Box Corporation (BBOX)

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Black Box Network Services (BBOX)

F2Q2011 Earnings Call

November 2, 2010 5:00 p.m. ET

Executives

Gary Doyle - Director of Investor Relations

Terry Blakemore - President and Chief Executive Officer

Michael McAndrew - Vice President and Chief Financial Officer

Ken Davis - Vice President and Executive Officer

Analysts

Greg Burns - Sidoti & Company

Jeff Beach - Stifel Nicolaus

Josh Overholt - ICM

Joseph Gardner - [inaudible] Advisors

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter Fiscal 2011 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. The instructions will be given at that time. [Operator Instructions.] As a reminder this conference is being recorded. I would now like to turn the conference over to our host, Director of Investor Relations Gary Doyle. Please go ahead.

Gary Doyle

Thank you. Good evening and welcome to Black Box Corporation's second quarter of fiscal 2011 earnings conference call. My name is Gary Doyle and I'm the Director of Investor Relations for Black Box. With us today are Terry Blakemore, President and CEO of Black Box Corporation; Mike McAndrew, our Executive Vice President and Chief Financial Officer; and Ken Davis, who will join us today in his new role as an executive officer of the company.

Earlier today, we announced our second quarter fiscal 2011 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 blackbox.com.

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.

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-store 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 schedules that accompany the press release for a reconciliation of non-GAAP financial measurements to the most directly comparable GAAP financial measurement and other supplemental information.

Coming up on the IR calendar, we will present at the SunTrust Robinson Humphrey Unconference in New York City on November 4, the Sidoti Third-Annual New York Conference on November 16, and the NASDAQ 25th-Annual Investor Program in London on December 8. In addition, Terry will host our annual investor day here in Pittsburgh on December 10. More details will be announced in a press release later this month.

Now, I'd like to turn the call over to Mr. Terry Blakemore.

Terry Blakemore

Thanks Gary. I am pleased to report strong financial results for the second quarter of fiscal 2011, including record quarterly revenues, year-over-year organic revenue growth, and improved financial guidance for fiscal 2011.

Revenues for the second quarter were$273 million, which is an 18% increase over last year's $232 million and a 4% increase over last quarter's $264 million. This is our highest quarterly revenue since the company was founded back in 1976. I want to congratulate and thank everyone on our team for this terrific effort.

Year-to-date revenues were $537 million, a 15% increase from last year's $467 million. Our second quarter operating earnings per share were $0.86, up $0.14 from last year's $0.72, and up $0.02 from last quarter's $0.84.

Year-to-date operating earnings per share were $1.70 compared to $1.43 for the same period last year. Second quarter free cash flow was $7 million, compared to $14 million last year. Free cash flow for the year stands at $8 million versus $30 million for the same period last year. The decrease in cash flow is a result of business growth factors, which Mike will describe shortly.

We used our cash primarily to decrease our outstanding debt and to pay dividends. I'll turn it over to Mike now for a more detailed discussion of our financial results.

Michael McAndrew

Thanks Terry. As Terry just mentioned, we posted record quarterly revenues of $273 million, an increase of $41 million over the $232 million reported for the same period last year.

Excluding $7 million of incremental revenue contribution in the second quarter related to acquisitions over the last $2 years, and the $1 million negative impact from foreign currency, same-office revenues for the second quarter were up $34 million, representing 15% organic growth over the same quarter last year.

On a sequential basis, revenue was up $9 million, from $264 million in the first quarter of fiscal 2011, and when you exclude the $1 million positive impact from foreign currency, same-office revenues were up 3% sequentially. The sequential increase was primarily attributable to the early completion of a project from our Q1 backlog that was originally scheduled to be complete in Q3.

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