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.