Transcript Document

Black Box Corporation
12th Annual Needham
Growth Stock Conference
January 14, 2010
Black Box Network Services
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Forward-Looking Statements - Any forward-looking statements contained in this presentation 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
presentation. 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. Forward-looking statements are inherently subject to a variety of risks and uncertainties that could
cause actual results to differ materially from those projected. Risk factors are included in our Annual Report on Form
10-K for the fiscal year ended March 31, 2009 and our other filings with the Securities and Exchange Commission
(the “SEC”). We can give no assurance that any goal, plan or target set forth in forward-looking statements can 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.
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GAAP Reconciliation -This presentation also includes, as a supplement to United States Generally Accepted
Accounting Principles (“GAAP”), certain non-GAAP financial measures. These non-GAAP financial measures
exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Pursuant to
the requirements of the SEC’s Regulation G, we provide in our SEC filings additional information regarding these nonGAAP financial measures, including a reconciliation of them to their most comparable GAAP financial measures,
management’s explanations regarding the use and usefulness of non-GAAP financial measures and the limitations
associated with the use of non-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 measurements, and should be
read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.
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Company Confidential
Terry Blakemore
President and CEO
Company Highlights
Black Box is the
leading
independent
provider of major
communications
and infrastructure
technologies
A Robust Company
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194 offices Worldwide
4,500+ team members
2,500+ technicians
175,000+ clients
4,000,000+ ports under maintenance
Servicing over 85 of the Fortune 100
Financially Strong and Stable
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Public company (NASDAQ: BBOX) since 1994
$1 billion in annual revenue
Double digit margins
Positive cash flow for 32 consecutive years
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Company Confidential
Black Box Corporation
Voice Communications
Services
Remote and on-site services to plan,
design, install, monitor and manage voice
and data communications systems
Data Infrastructure
Services
Services to plan, design, install and
maintain the underlying infrastructure for
communications networks
Hotline Networking
Products
Sales and support of networking
products and refurbished phones and
cards
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Company Confidential
Capabilities
Voice Communications
Solutions: 60% of revenue
Traditional Telephony
Voice over IP
Remote Monitoring
Unified Communications
Network Security
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Company Confidential
Strategic Advantage:
Our Communications Portfolio & Partners
• Relationships around the
globe
• 500,000 ports on
maintenance
• Coverage: U.S.
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No. 1 channel partner in
North America
700,000+ ports on
maintenance
Coverage: U.S., Canada
Jan 2010 – Added New
reseller territory (Australia, New
Zealand, UK, France, Italy, Germany, Mexico)
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No. 1 U.S. channel partner
25-year relationship
1M+ ports on maintenance
Coverage: U.S.
Leader in Pure IP Telephony
20,000 ports on maintenance
Coverage: U.S., Canada, UK
and Australia
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Top 3 Channel Partner
25-year relationship
2M+ ports on maintenance
Coverage: U.S., Canada,
U.S. Federal Government –
worldwide coverage
New agreement announced
November 20, 2009 as
Silver Partner Status
January 2010 moved to
Platinum Partner status
Coverage: U.S., Canada,
Mexico
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Company Confidential
Market Share
Enterprise Line Shipments, North America, 2008
Others, 22.5%
Cisco, 23.5%
Siemens, ~1.9%
ShoreTel, 2.1%
Toshiba, 3.7%
Avaya, 15.2%
Mitel,
7.5%
NEC,
8.5%
Nortel, 15.0%
Source: Market Share: Enterprise
Telephony Equipment, Worldwide, 2008
Gartner (March, 2009)
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Company Confidential
Capabilities
Data Infrastructure
Services: 19% of revenue
Networking
Structured Cabling
Data Networking
Data Centers
Digital Signage, CATV
& Video
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Company Confidential
Capabilities
Hotline Products:
21% of revenue
Cables
KVM
Cabinets & Racks
Routers, Switches
Custom Solutions
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Company Confidential
Worldwide Market Size
Communications and networking products and services
Voice Communications
$50B
Data Infrastructure
3B
Hotline Products
7B
Total Worldwide Market
Source: Derived from data provided by
Gartner and other industry analyses.
$60B
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Company Confidential
Client Spotlight
Our clients include:
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Company Confidential
Client Opportunity
Our view of how our clients see the market today
» Telcos vs. System Integrators vs. Manufacturers and Their
Channel Partners
– Confusing relationships
– Overlap in services and responsibilities
– Need a single point of contact
» Increasingly Complex Communications Technology Requires
Higher Degree of Specialization
– Customers need a partner that can integrate multiple, complex technologies with business strategy
– Customers need a partner with the flexibility to support, augment or entirely outsource communications
resources
• Black Box is uniquely positioned to work independently and as a single
point-of-contact among telcos, systems integrators and manufacturers
• Black Box’s team has the right mix of skills to support advanced
communications at all stages of the communications lifecycle
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Company Confidential
Black Box Solution
Promises made and kept to meet our customers’ needs
Consultative Approach
• Comprehensive portfolio
• Vendor independent
• Understands interoperability
• Single point-of-contact
• Planning for future
development
Technical Expertise
• Breadth of knowledge
• Single-source provider
• 2,500+ certified technicians
• 7 NOCs, 24/7 support
• Keeping clients abreast of
technology advancements
Experience
• 33 years of proven results
• Entrusted to drive
communications strategy
• Strong leadership
• Diverse and long-term customer
base
Black Box’s consultative approach, technical expertise and experience
enable us to fill gaps in the operational and strategic communications
needs of our customers – TODAY AND INTO THE FUTURE !
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Company Confidential
Mike McAndrew
Chief Financial Officer
Well-Diversified Revenues
Revenue by
Industry
Source: Derived from Company data and
Company’s 2009 Form 10-K .
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Company Confidential
Well-Diversified Revenues
Revenue by
Geography
Revenue by
Client Size
Source: Derived from Company data and
Company’s 2009 Form 10-K .
Revenue by
Client Type
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Company Confidential
Revenue Visibility
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
6 month Backlog (in millions) $ 158
$ 196
$ 195
$ 194
$ 210
$ 207
Maintenance Revenue
as a % of total Revenue
21%
23%
24%
23%
23%
21%
Backlog represents expected revenue related to executed client purchase orders or contracts that are estimated
to be complete within 180 days of quarter end.
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Source: Derived from Company data and Company’s
2009 Form 10-K and 9/30/09 form 10Q.
Company Confidential
Solid Sustainable Margins
10.4%
12.0%
10.2%
$1,016
$1,017
$1,000
10.3%
10.3%
Revenue (M)
$1,000
$800
$600
$721
9.5%
10.0%
8.0%
8.7%
$535
$467
6.0%
$400
4.0%
$200
2.0%
$-
0.0%
2005
2006
2007
2008
2009
6 Mos. 2010
Fiscal Year
* See attached reconciliation
Adjusted Operating
Income Percentage *
$1,200
Source: Derived from Company data and Company’s
2009 Form 10-K and 9/30/09 form 10Q.
GAAP/Non-GAAP Reconciliation
Operating income
Non-cash reconciling items
Amortization of intangible assets
on acquisitions
Asset write-up depreciation expense
on acquisitions
Cash reconciling items
Employee severance and facility
consolidation costs
Acquisition integration costs
Historical stock option granting
practices investigation and
related matters cost
409A expenses
Other
FY 2005
% of
$
Rev.
$ 43
8.1%
FY 2006
% of
$
Rev.
$ 55
7.6%
$
FY 2008
% of
$
Rev.
85
8.3%
$
FY 2009
% of
$
Rev.
80
8.0%
1
4
10
7
11
2
2
3
2
2
5
5
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2
9
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1
1
-
7
13
2.3%
56
10.4%
Adjusted operating income
$
Annual Revenue
$ 535
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$
18
2.5%
73
10.2%
$ 721
$
89
8.7%
$ 1,016
20
$
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4
-
20
2.0%
105
10.3%
$ 1,017
2
1
1.5%
6
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1
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6 Mos. 2010
% of
$
Rev.
$
30
6.4%
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Total pre-tax reconciling items
$
FY 2007
% of
$
Rev.
73 7.2%
$
2
23
2.3%
103
10.3%
$ 1,000
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3.0%
$
44
9.5%
$
467
Source: Derived from Company data and Company’s
2009 Form 10-K and 6/30/09 form 10Q.
Company Confidential
Consistent Positive Cash Flow
Cash flow from Operations (M)
$90
$81
$80
$72
$70
$60
$52
$52
$50
$37
$40
$30
$30
$20
$10
$2005
2006
2007
2008
2009
6 Mos. 2010
Derived from Company data and Company’s
Fiscal Year Source:
2009 Form 10-K and 9/30/09 form 10Q.
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Company Confidential
Balance Sheet Statistics
2005
2006
2007
2008
2009
6 mos.
2010
DSO Days
57
54
53
55
53
51
Inventory Turns
6.4
7.3
7.2
7.1
8.5
8.4
Capex (M)
$3.5
$4.1
$5.9
$3.2
$2.2
$1.0
Capex as % of
Rev.
0.7%
0.6%
0.6%
0.3%
0.2%
0.2%
Headcount
3,371
3,295
4,581
4,313
4,542
4,335
Debt / Equity
.3 to 1
.2 to 1
.4 to 1 .3 to 1
.4 to 1
.4 to 1
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Source: Derived from Company data and Company’s
2009 Form 10-K and 9/30/09 form 10Q.
Company Confidential
Liquidity
At September 30, 2009
• $24 million in cash
• $350 million syndicated line of credit
» $221M drawn down
» Leverage ratio - 2.4, Covenant < 3.0
» Interest Coverage Ratio – 9.1, Covenant > 3.0
» Borrowing rate – LIBOR + .875% = 1.4%
» Expires January 2013
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Company Confidential
Business Framework
• Operating Margin Percentage
» Flexible cost structure, revenue visibility
• Operating Margin Dollar Growth
» Contribution
• DSO
» Operating CF focus, balance sheet strength
• Revenue Growth
» Markets, clients, M&A
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Company Confidential
Black Box Network Services (BBOX)
» Well-Diversified Revenues
» Solid, Sustainable Margins
» Consistent, Positive Cash Flow
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Company Confidential
NASDAQ: BBOX