PLAINFIELD, Ind., May 6, 2008 (PRIME NEWSWIRE) -- Brightpoint, Inc. (Nasdaq:CELL) reported its financial results for the first quarter ended March 31, 2008. Unless otherwise noted, amounts pertain to the first quarter of 2008.
FOR THE FIRST QUARTER OF 2008:
Revenue was $1.2 billion for the first quarter of 2008, an increase of 86% from the first quarter of 2007.
Income from continuing operations of $0.8 million or $0.01 per diluted share compared to $1.8 million or $0.04 per diluted share for the first quarter of 2007. Weighted average common shares outstanding (diluted) of 81.5 million for the first quarter of 2008 compared to 50.4 million for the first quarter of 2007.
Adjusted income from continuing operations (non-GAAP) of $7.3 million or $0.09 per diluted share compared to $3.6 million or $0.07 per diluted share for the first quarter of 2007. Please see the disclosure below regarding adjusted income from continuing operations. Adjustments to income from continuing operations for the first quarter of 2008 include:
* $3.6 million restructuring charges (pre-tax) primarily in connection with consolidating the Brightpoint and Dangaard operations in Germany during the first quarter of 2008. * $4.5 million (pre-tax) of non-cash amortization expense related to intangible assets acquired in connection with the CellStar and Dangaard Telecom transactions during the first quarter of 2008. * $1.6 million (pre-tax) of non-cash stock based compensation expense.
Additionally, first quarter 2008 results were negatively impacted by the following items:
* $1.3 million (pre-tax) loss in Slovakia related to the locally branded notebook PC distribution model, which is under evaluation. * $1.7 million (pre-tax) operating loss from the re-launch of our Middle East-based business in which we resumed operations in August 2007.
Cash provided by operating activities was $98.4 million for the first quarter of 2008 compared to cash used in operating activities of $9.8 million for the first quarter of 2007. Cash provided by operating activities as well as cash on hand was used to pay down borrowings by $102.3 million as of March 31, 2008.
EBITDA was $18.5 million for the first quarter of 2008 compared to $7.4 million for the first quarter of 2007.
We handled 21.8 million wireless devices for the first quarter of 2008, which represents an increase of approximately 50% from the first quarter of 2007.
Gross margin was 7.3% for the first quarter of 2008, an increase of 2.2 percentage points from the first quarter of 2007. The increase in gross margin was primarily driven by the Dangaard Telecom acquisition.
SG&A expenses were $71.8 million for the first quarter of 2008, which represents a 2% decrease from $73.1 million in the fourth quarter of 2007. Compared to the first quarter of 2007, SG&A expenses increased 154% from $28.3 million primarily driven by the impact of the Dangaard Telecom and CellStar acquisitions. SG&A expenses as a percent of revenue were 6.0% for the first quarter of 2008 compared to 4.4% for the first quarter of 2007. The increase in SG&A as a percent of revenue was largely driven by the impact of the Dangaard Telecom operations, sales-mix shift, and a lower average selling price within our distribution business.
Interest expense was $7.5 million for the first quarter of 2008 compared to $1.2 million for the first quarter of 2007.
FOR THE 2008 FISCAL YEAR, MANAGEMENT CURRENTLY EXPECTS:
* Adjusted annual (non-GAAP) SG&A expenses as a percent of revenue are expected to be between 4.5% to 4.9%, a change from the previously disclosed range of 4.3% to 4.7%. * Annual effective tax rate from 32% to 35%. * Non-GAAP weighted average common shares outstanding (diluted) of approximately 83.3 million. * A loss of approximately $1.7 million to $2.0 million in Colombia resulting from the sale of certain assets to the former general manager.
Please see the attached Schedules and the Brightpoint website at www.Brightpoint.com for an explanation and reconciled presentation of the results for the first quarter ended March 31, 2008 prepared in accordance with U.S. GAAP and on an as adjusted non-GAAP basis. The explanation includes the reasons why management believes such non-GAAP measures are useful both to management and investors. Any financial measure other than those prepared in accordance with U.S. GAAP should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. In addition, please see the attached Supplemental Information for a reconciliation of EBITDA.
"In the first quarter of 2008 we continued to focus on the execution of our growth strategy including the integration of the Dangaard operations," stated Robert J. Laikin, Brightpoint's Chief Executive Officer and Chairman of the Board. "Our financial results for Q1 were below our expectations, and we remain focused on executing our operating plan. The global wireless industry continues to offer many exciting growth opportunities for our company and we remain committed to enhancing long term shareholder value. We will continue to leverage our global footprint and work closely with the industry leading manufacturers and network operators on a worldwide basis. Based on the recent data points on the wireless industry, I am reiterating my previously estimated global sell-in range of 1.25 billion to 1.35 billion units for the global wireless device industry in 2008."
"I am very pleased with the generation of operating cash flow during the quarter," said Tony Boor, Brightpoint's Chief Financial Officer. "Our positive operating cash flow allowed us to pay down our debt by over $100 million near the end of the first quarter. Therefore, I am raising my previously targeted debt reduction of $100 to $150 million to a new target of $150 million to $200 million reduction in average reported debt by the end of 2008."
SUMMARY FINANCIAL RESULTS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
------------------------
March 31,
2008 2007
---------- ----------
Wireless devices handled 21,784 14,530
Revenue $1,194,781 $ 641,629
Gross profit $ 87,269 $ 32,715
Gross margin 7.3% 5.1%
Selling, general and
administrative expenses $ 71,751 $ 28,253
Operating income from continuing
operations $ 7,182 $ 4,382
Income from continuing operations $ 759 $ 1,842
Net income $ 775 $ 1,850
Diluted per share:
Income from continuing operations $ 0.01 $ 0.04
Net income $ 0.01 $ 0.04
Brightpoint, Inc. (NASDAQGS: CELL) is a global leader in the distribution of wireless devices and in providing customized logistic services to the wireless industry. In 2007, Brightpoint handled approximately 83 million wireless devices globally. Brightpoint's innovative services include distribution, channel development, fulfillment, product customization, eBusiness solutions, and other outsourced services that integrate seamlessly with its customers. Brightpoint's effective and efficient platform allows its customers to benefit from quickly deployed, flexible, and cost effective solutions. The company has approximately 3,300 employees in over 25 countries. In 2007 Brightpoint generated revenue of $4.3 billion and net income of $47.4 million. Brightpoint provides distribution and customized services to over 25,000 B2B customers worldwide. Additional information about Brightpoint can be found on its website at www.brightpoint.com, or by calling its toll-free Information and Investor Relations line at 877-IIR-CELL (877-447-2355).
Certain information in this press release may contain forward-looking statements regarding future events or the future performance of the Company including, without limitation, its expectations regarding SG&A as a percent of revenue, annual effective tax rate, and non-GAAP weighted average common shares outstanding (diluted). These statements are only predictions and actual events or results may differ materially. Please refer to the documents the Company files, from time to time, with the Securities and Exchange Commission; specifically, the Company's most recent Form 10-K and most recent Form 10-Q and the cautionary statements and risk factors contained therein and in Exhibit 99.1 thereto. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in or implied by these forward-looking statements. These risk factors include, without limitation, uncertainties relating to customer plans and commitments, including, without limitation, (i) loss of significant customers or a reduction in prices we charge these customers: Dobson Communications Corporation was recently acquired. In addition Rural Cellular Corporation (RCC) and Suncom have recently announced plans to be acquired. The completion of any of these acquisitions may negatively impact our operating results. (ii) our significant payment obligations under certain debt, lease and other contractual arrangements and our ability to reduce these obligations; (iii) possible adverse effect on demand for our products resulting from consolidation of mobile operators; (iv) dependence upon principal suppliers and availability and price of wireless products including the risk of consolidation of these suppliers; (v) our ability to borrow additional funds; (vi) possible difficulties collecting our accounts receivable; (vii) our ability to increase volumes and maintain our margins; (viii) investment in and implementation of sophisticated information systems technologies and our reliance upon the proper functioning of such systems; (ix) our ability to expand and implement our future growth strategy, including acquisitions; (x) uncertainty regarding future volatility in our Common Stock price; (xi) uncertainty regarding whether wireless equipment manufacturers and wireless network operators will continue to outsource aspects of their business to us; (xii) our reliance upon third parties to manufacture products which we distribute and reliance upon their quality control procedures; (xiii) the potential for our operations to be materially affected by fluctuations in regional demand and economic factors; (xiv) our ability to respond to rapid technological changes in the wireless communications and data industry; (xv) access to or the cost of increasing amounts of capital, trade credit or other financing; (xvi) risks of foreign operations, including currency, trade restrictions and political risks in our foreign markets; (xvii) effect of natural disasters, epidemics, hostilities or terrorist attacks on our operations; (xviii) our ability to manage and sustain future growth at our historical or current rates; (xix) certain relationships and financings, which may provide us with minimal returns or losses on our investments; (xx) the impact that seasonality may have on our business and results; (xxi) our ability to attract and retain qualified management and other personnel, cost of complying with labor agreements and high rate of personnel turnover; (xxii) our ability to protect our proprietary information; (xxiii) our ability to maintain adequate insurance at a reasonable cost; (xxiv) the potential issuance of additional equity, including our Common Stock, which could result in dilution of existing shareholders and may have an adverse impact on the price of our Common Stock; (xxv) existence of anti-takeover measures; (xxvi) the fact that a substantial number of shares will be eligible for future sale by Dangaard Holding and the sale of those shares could adversely affect our stock price; (xxvii) if we are not able to integrate Dangaard Telecom's operations in a timely manner, we may not realize anticipated benefits of the transaction in a timely fashion, or at all, and our business could be harmed; (xxviii) we incurred significant financial obligations as a result of the acquisition of Dangaard Telecom, and our inability to satisfy these could materially and adversely affect our operating results and financial condition and harm our business; (xxix) acquisition related accounting impairment and amortization charges may delay and reduce our post-acquisition profitability; (xxx) exposure to unknown pre-existing liabilities of Dangaard Telecom could cause us to incur substantial financial obligations and harm our business; (xxxi) possible adverse effects of future medical claims regarding the use of wireless devices; (xxxii) our ability to meet intense industry competition. Because of the aforementioned uncertainties affecting our future operating results, past performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate future results or trends. The words "believe," "expect," "anticipate," "intend," and "plan" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which speak only as of the date that such statement was made. We undertake no obligation to update any forward-looking statement.
BRIGHTPOINT, INC.
NON-GAAP RECONCILIATION OF CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, 2008(1)
US GAAP Non-GAAP As
As Reported Adjustments(2) Adjusted
-----------------------------------------
Revenue
Distribution revenue $ 1,089,010 $ 1,089,010
Logistic services revenue 105,771 105,771
-----------------------------------------
Total revenue 1,194,781 1,194,781
Cost of revenue
Cost of distribution
revenue 1,039,145 1,039,145
Cost of logistic services
revenue 68,367 68,367
-----------------------------------------
Total cost of revenue 1,107,512 1,107,512
-----------------------------------------
Gross profit 87,269 87,269
Selling, general and
administrative expenses 71,751 $ (1,645) 70,106
Amortization 4,722 (4,509) 213
Restructuring charge
(benefit) 3,614 (3,614) --
-----------------------------------------
Operating income from
continuing operations 7,182 9,768 16,950
Interest, net 7,544 7,544
Other (income) expenses (1,965) (1,965)
-----------------------------------------
Income from continuing opera-
tions before income taxes 1,603 9,768 11,371
Income tax expense 705 3,273 3,978
-----------------------------------------
Income from continuing opera-
tions before minority
interest 898 6,495 7,393
Minority interest 139 139
-----------------------------------------
Income from continuing
operations 759 $ 6,495 $ 7,254
==========================
Discontinued operations, net
of income taxes:
Gain from discontinued
operations 16
Gain on disposal of
discontinued operations --
-----------
Total discontinued operations,
net of income taxes 16
-----------
Net income $ 775
===========
Earnings per share - basic:
Income from continuing
operations $ 0.01 $ 0.09
===========
Discontinued operations,
net of income taxes --
-----------
Net income $ 0.01
===========
Earnings per share - diluted:
Income from continuing
operations $ 0.01 $ 0.09
===========
Discontinued operations,
net of income taxes --
-----------
Net income $ 0.01
===========
Weighted average common
shares outstanding:
Basic 77,523 77,523
=========== ===========
Diluted 81,519 1,261 82,780
=========================================
Three Months Ended
March 31, 2007(1)
US GAAP Non-GAAP As
As Reported Adjustments(3) Adjusted
-----------------------------------------
Revenue
Distribution revenue $ 567,040 $ 567,040
Logistic services revenue 74,589 74,589
-----------------------------------------
Total revenue 641,629 641,629
Cost of revenue
Cost of distribution
revenue 550,414 550,414
Cost of logistic services
revenue 58,500 58,500
-----------------------------------------
Total cost of revenue 608,914 608,914
-----------------------------------------
Gross profit 32,715 32,715
Selling, general and
administrative expenses 28,253 $ (2,677) 25,576
Amortization 80 -- 80
Restructuring charge
(benefit) -- -- --
-----------------------------------------
Operating income from
continuing operations 4,382 2,677 7,059
Interest, net 1,150 1,150
Other (income) expenses 44 44
-----------------------------------------
Income from continuing opera-
tions before income taxes 3,188 2,677 5,865
Income tax expense 1,346 964 2,310
-----------------------------------------
Income from continuing opera-
tions before minority
interest 1,842 1,713 3,555
Minority interest -- --
-----------------------------------------
Income from continuing
operations 1,842 $ 1,713 $ 3,555
==========================
Discontinued operations, net
of income taxes:
Gain from discontinued
operations 4
Gain on disposal of
discontinued operations 4
-----------
Total discontinued operations,
net of income taxes 8
-----------
Net income $ 1,850
===========
Earnings per share - basic:
Income from continuing
operations $ 0.04 $ 0.07
===========
Discontinued operations,
net of income taxes --
-----------
Net income $ 0.04
===========
Earnings per share - diluted:
Income from continuing
operations $ 0.04 $ 0.07
===========
Discontinued operations,
net of income taxes --
-----------
Net income $ 0.04
===========
Weighted average common
shares outstanding:
Basic 49,488 49,488
=========== ===========
Diluted 50,424 1,028 51,452
=========================================
See accompanying "Notes to Non-GAAP Adjustments."
Notes to Non-GAAP Adjustments:
(1) We have provided income from continuing operations and
earnings per share on both a U.S. GAAP basis and an as adjusted
non-GAAP basis because the Company's management believes it
provides meaningful information to investors. Among other things,
it may assist investors in evaluating the Company's on-going
operations. Adjustments to earnings per share from continuing
operations generally include certain non-cash charges such as
stock based compensation and amortization of acquired finite
lived intangible assets as well as other items that are
considered to be unusual or infrequent in nature such as
restructuring charges. Non-GAAP earnings per share is calculated
by dividing non-GAAP income from continuing operations by
non-GAAP weighted average common shares outstanding (diluted).
For purposes of calculating non-GAAP earnings per share, we add
back certain shares presumed to be repurchased under the U.S.
GAAP treasury stock method related to stock based compensation
expense. We believe these non-GAAP disclosures provide important
supplemental information to management and investors regarding
financial and business trends relating to the Company's financial
condition and results of operations. Management uses these
non-GAAP measures internally to evaluate the performance of the
business and to evaluate results relative to incentive
compensation targets for certain employees. Investors should
consider non-GAAP measures in addition to, not as a substitute
for, or as superior to measures of financial performance prepared
in accordance with U.S. GAAP.
(2) Adjustments for the three months ended March 31, 2008 include:
* $3.6 million restructuring charges in connection with consoli-
dating the Brightpoint and Dangaard operations in Germany.
* $4.5 million of non-cash amortization expense related to in-
tangible assets acquired in connection with the CellStar and
Dangaard Telecom transactions.
* $1.6 million of non-cash stock based compensation expense.
* $3.3 million tax impact of items described above.
(3) Adjustments for the three months ended March 31, 2007 include:
* $1.6 million of non-cash stock based compensation expense.
* $1.0 million of consulting fees for integration planning
associated with the CellStar acquisition.
* $1.0 million tax impact of the items described above.
BRIGHTPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
March 31, December 31,
----------- -----------
2008 2007
----------- -----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 90,753 $ 102,160
Accounts receivable (less allowance
for doubtful accounts of $18,034 in
2008 and $17,157 in 2007) 578,811 754,238
Inventories 471,107 474,951
Other current assets 70,505 69,261
----------- -----------
Total current assets 1,211,176 1,400,610
Property and equipment, net 58,663 55,732
Goodwill 371,166 349,646
Other intangibles, net 139,198 135,431
Other assets 34,510 30,942
----------- -----------
Total assets $ 1,814,713 $ 1,972,361
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 571,560 $ 666,085
Accrued expenses 165,875 189,415
Current portion of long-term debt 12,382 19,332
Lines of credit and other short-term
borrowings 9,703 --
----------- -----------
Total current liabilities 759,520 874,832
Long-term liabilities:
Lines of credit, long-term 126,989 208,399
Long-term debt 229,333 233,122
Other long-term liabilities 59,513 54,425
----------- -----------
Total long-term liabilities 415,835 495,946
----------- -----------
Total liabilities 1,175,355 1,370,778
COMMITMENTS AND CONTINGENCIES
Minority interest 1,014 818
Shareholders' equity:
Preferred stock, $0.01 par value: 1,000
shares authorized; no shares issued or
outstanding -- --
Common stock, $0.01 par value: 100,000
shares authorized; 88,647 issued in
2008 and 88,418 issued in 2007 886 884
Additional paid-in-capital 586,389 584,806
Treasury stock, at cost, 6,951 shares
in 2008 and 6,930 shares in 2007 (58,952) (58,695)
Retained earnings 30,242 29,467
Accumulated other comprehensive income 79,779 44,303
----------- -----------
Total shareholders' equity 638,344 600,765
----------- -----------
Total liabilities and shareholders' equity $ 1,814,713 $ 1,972,361
=========== ===========
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three Months Ended
March 31,
----------------------
2008 2007
----------------------
Operating activities
Net income $ 775 $ 1,850
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 9,507 3,059
Discontinued operations 16 (8)
Pledged cash requirements -- (1,342)
Non-cash compensation 1,645 1,552
Restructuring charge 3,614 --
Change in deferred taxes (4,262) 1,348
Minority interest 139 --
Other non-cash 3,330 1,091
----------------------
14,764 7,550
Changes in operating assets and liabilities,
net of effects from acquisitions and
divestitures:
Accounts receivable 211,058 35,764
Inventories 29,298 71,593
Other operating assets (3,154) (3,224)
Accounts payable and accrued expenses (153,557) (121,512)
----------------------
Net cash provided by (used in) operating
activities 98,409 (9,829)
Investing activities
Capital expenditures (6,377) (4,847)
Acquisitions, net of cash acquired (1,252) (67,018)
Decrease (increase) in other assets 1,002 (1,472)
----------------------
Net cash used in investing activities (6,627) (73,337)
Financing Activities
Net proceeds from (repayments on) lines of
credit (79,134) 76,434
Repayments on Global Term Loans (23,130) --
Deferred financing costs paid -- (1,627)
Purchase of treasury stock (257) (353)
Excess (deficit) tax benefit from equity-
based compensation (82) 104
Proceeds from common stock issuances under
employee stock option plans 22 255
----------------------
Net cash provided by (used in) financing
activities (102,581) 74,813
Effect of exchange rate changes on cash and
cash equivalents (608) 943
----------------------
Net decrease in cash and cash equivalents (11,407) (7,410)
Cash and cash equivalents at beginning
of period 102,160 54,130
----------------------
Cash and cash equivalents at end of period $ 90,753 $ 46,720
======================
Supplemental Information
(Amounts in thousands)
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA")
Three Months Ended
---------------------------------
March 31, March 31, December 31,
2008 2007 2007
--------- --------- ---------
Net income (1) $ 775 $ 1,850 $ 14,894
Net interest expense (1) 7,544 1,148 8,694
Income taxes (1) 705 1,346 8,188
Depreciation and amortization (1) 9,507 3,059 10,088
--------- --------- ---------
EBITDA $ 18,531 $ 7,403 $ 41,864
========= ========= =========
(1) Includes discontinued operations
EBITDA is a non-GAAP financial measure. Management believes EBITDA
provides it with an indicator of how much cash the Company
generates, excluding non-cash charges and any changes in working
capital. Management also reviews and utilizes the entire statement
of cash flows to evaluate cash flow performance.
Cash Conversion Cycle Days
Management utilizes the cash conversion cycle days metric and its
components to evaluate the Company's ability to manage its working
capital and its cash flow performance. Cash conversion cycle days
and its components for the quarters ending March 31, 2008 and 2007,
and December 31, 2007 were as follows:
Three Months Ended
---------------------------------
March 31, March 31, December 31,
2008 2007 2007
--------- --------- ---------
Days sales outstanding in
accounts receivable 32 22 33
Days inventory on-hand 37 50 27
Days payable outstanding (41) (48) (33)
--------- --------- ---------
Cash Conversion Cycle Days 28 24 27
========= ========= =========
Return on Invested Capital ("ROIC")
The Company uses ROIC to measure the effectiveness of its use of
invested capital to generate profits. ROIC for the quarters and
trailing four quarters ended March 31, 2008 and 2007, and December
31, 2007, was as follows:
Three Months Ended
------------------------------------
March 31, March 31, December 31,
2008 2007 2007
---------- ---------- ----------
Operating income after taxes:
Operating income from continuing
operations $ 7,182 $ 4,382 $ 30,725
Plus: restructuring charge 3,614 -- 8,495
Less: estimated income taxes (1) (4,746) (1,850) (14,242)
---------- ---------- ----------
Operating income after taxes $ 6,050 $ 2,532 $ 24,978
========== ========== ==========
Invested Capital:
Debt $ 378,407 $ 94,405 $ 460,853
Shareholders' equity 638,344 200,063 600,765
---------- ---------- ----------
Invested capital $1,016,751 $ 294,468 $1,061,618
========== ========== ==========
Average invested capital (2) $1,039,184 $ 253,460 $1,019,392
ROIC (3) 2% 4% 10%
Trailing Four Quarters Ended
------------------------------------
March 31, March 31, December 31,
2008 2007 2007
---------- ---------- ----------
Operating income after taxes:
Operating income from continuing
operations $ 68,714 $ 40,184 $ 65,913
Plus: restructuring charge 12,275 -- 8,661
Less: estimated income taxes (1) (5,741) (10,587) (2,844)
---------- ---------- ----------
Operating income after taxes $ 75,248 $ 29,597 $ 71,730
========== ========== ==========
Invested Capital:
Debt $ 378,407 $ 94,405 $ 460,853
Shareholders' equity 638,344 200,063 600,765
---------- ---------- ----------
Invested capital $1,016,751 $ 294,498 $1,061,618
========== ========== ==========
Average invested capital (2) $ 734,773 $ 199,565 $ 573,913
ROIC (3) 10% 15% 12%
(1) Estimated income taxes were calculated by multiplying the sum
of operating income from continuing operations and the
restructuring charge by the respective periods' effective tax
rate.
(2) Average invested capital for quarterly periods represents the
simple average of the beginning and ending invested capital
amounts for the respective quarter. Average invested capital for
the trailing four quarters represents the simple average of the
invested capital amounts for the current and four prior quarter
period ends.
(3) ROIC is calculated by dividing operating income after taxes by
average invested capital. ROIC for quarterly periods is stated on
an annualized basis and is calculated by dividing operating
income after taxes by average invested capital and multiplying
the results by four.