Sequential Sales Up 9% to $837 Million
Quarterly Earnings Improve to $0.40 per Share and Non-GAAP
Earnings to $0.28 per Share
SAN JOSE, Calif., March 3, 2010 (GLOBE NEWSWIRE) -- Bell
Microproducts Inc. (Nasdaq:BELM), one of the world's largest
value-added distributors of storage and computing technology, today
announced its financial results for the three and twelve months
ended December 31, 2009.
Net sales in the fourth fiscal quarter of 2009 were $837.0
million, an increase of 9% compared to both the third quarter of
2009 and the fourth quarter of 2008. Net income for the fourth
fiscal quarter of 2009 was $12.9 million, or $0.40 per diluted
share, compared to net income of $1.7 million, or $0.05 per diluted
share in the prior quarter, and a net loss of $(33.5) million, or
$(1.04) per share in the fourth quarter of 2008. On a non-GAAP
basis, the Company generated net income of $9.1 million, or $0.28
per diluted share in the fourth fiscal quarter of 2009, as compared
to non-GAAP net income of $4.2 million, or $0.13 per diluted share
in the prior quarter and a non-GAAP net loss of $(16.4) million, or
$(0.51) per share, in the fourth quarter of 2008.
"We are pleased to report significantly improved profits and
fundamentals in the fourth quarter as we concluded a year full of
accomplishments," said W. Donald Bell, President and
CEO. "Sales increased in each major geography as market
conditions improved and we executed against our goals. We
were particularly encouraged by Europe, where sales increased 14%
compared to same quarter last year and 17% sequentially. With
our sales growth, solid margins and lower expenses, we generated
significant sequential increases in our GAAP and non-GAAP
profits. Our 2010 focus is on further improving our execution
and shareholder returns."
Key Financial Highlights for the Fourth Quarter of
2009:
-
Net sales were $837.0 million, up 9% compared to the third
fiscal quarter of 2009.
-
Selling, general and administrative expenses (excluding
professional fees) were down 25% and professional fees were down
76% from the fourth quarter of 2008.
-
The Company reported operating income of 2.1% of sales and net
income of $12.9 million ($0.40 per diluted share).
-
Non-GAAP net income was $9.1 million ($0.28 per diluted share),
up from $4.2 million ($0.13 per diluted share) in the third quarter
of 2009.
-
Working capital, defined as current assets less current
liabilities, increased 14% to $152 million, and the cash conversion
cycle declined from 41 days to 40 days, compared to September 30,
2009.
-
In September 2009, the Company became current with its SEC
filing requirements, and in early 2010:
- the Company's shares became relisted on The NASDAQ Global
Market under the symbol "BELM", and
- the Company announced that the SEC investigation concerning
its accounting and financial reporting matters had been completed
and that no enforcement action was recommended.
Non-GAAP results reflect the exclusion of various non-cash and
other charges and credits from the Company's reported GAAP results
as detailed in the attached supplemental reconciliation table,
including the following recorded in the fourth quarter of 2009:
-
a $3.2 million credit recorded upon a contract settlement,
and
-
net tax credits of $8.6 million to reverse a portion of the
valuation allowance previously recorded on certain deferred tax
assets.
Net Sales and Product Mix by Region
The following is a comparison of the Company's net sales and
product mix for the fourth quarter of 2009 in each of its three
major geographic regions:
-
North American net sales were $354.0 million (42% of total
revenues), a sequential increase of 4%. The sales growth was
primarily fueled by an improved market for storage components,
improved execution of semiconductor sales and continued growth in
value-added products and services. Compared to the fourth quarter
of 2008, North American net sales increased 1%.
-
European region net sales were $351.7 million (42% of total
revenues), a sequential increase of 17% (16% in constant currency),
primarily attributable to an improved market for storage
components, a seasonal increase in enterprise product sales and a
strengthening of foreign currencies in relation to the US
dollar. Compared to the fourth quarter of 2008, European net
sales increased 14% (5% in constant currency).
-
Latin American net sales were $130.8 million (16% of total
revenues), a sequential increase of 6% (5% in constant
currency). Compared to the fourth quarter of 2008, Latin
American net sales increased 19% (13% in constant currency) due to
an improved market for semiconductor products and storage
components.
The following is a net sales breakdown for Bell Micro's major
categories of products and services for the fourth fiscal
quarter:
-
The Components and Peripherals category, which represented 46%
of net sales, increased 16% sequentially and increased 27% compared
to the comparable quarter of 2008. Disk drive sales increased
16% from both comparable prior periods, primarily in Europe and
North America, and primarily due to stabilized unit pricing and a
favorable product mix. Disk drive sales represented 26% of
total net sales. Also contributing to the growth in Components
and Peripherals was increased sales of certain semiconductor
products, primarily in Latin America.
-
The Solutions category increased 5% sequentially to represent
54% of total net sales in the fourth quarter of 2009. The
sequential increase was primarily due to higher sales of software
licenses in Europe and higher sales of computer platform products,
primarily in North America. Solutions sales declined by nearly
3% compared to the fourth quarter of 2008.
Fiscal 2009 Overview
Annual net sales for 2009 were $3.0 billion, a 16% decrease from
net sales for 2008. Net income for 2009 was $7.5 million, or
$0.23 per diluted share, as compared to a net loss of $(82.5)
million, or $(2.55) per share, in 2008. Non-GAAP net income
generated in 2009 was $16.4 million, or $0.50 per diluted share, as
compared to a non-GAAP net loss of $(23.0) million, or $(0.71) per
diluted share, in 2008.
Balance Sheet
The Company's key balance sheet metrics as of December 31, 2009,
as compared to December 31, 2008, are as follows:
-
Total debt declined 8% to $350 million, and the Company is in
compliance with all financial covenants of its banking
agreements;
-
Working capital, defined as current assets less current
liabilities, increased 30% to $152 million and the cash conversion
cycle declined from 46 days to 40 days;
-
Accounts receivable increased 1% to $435 million and days sales
outstanding declined from 50 days to 47 days;
-
Inventory increased 28% to $296 million and accounts payable and
cash overdraft increased 31% to $361 million due to opportunistic
purchases of storage components late in the quarter.
First Quarter 2010 Outlook
Management anticipates first quarter 2010 sales of $780 million
to $815 million, an increase of 9% to 14% from the first quarter of
2009. Further, based upon foreign currency exchange rate changes to
date, we anticipate first quarter currency losses of approximately
$3 to $4 million.
Conference Call
A conference call is scheduled for today, March 3, 2010, at 1:30
p.m. Pacific Time. The Company will broadcast the conference
call via a webcast over the internet. To listen to the
webcast, please visit the investors section of the Bell Micro
website at www.bellmicro.com. A replay will be available following
the call on Bell Micro's Investor Relations web site or for one
week at the following numbers: 888-286-8010 or 617-801-6888 with
ID#55032448.
About Bell Microproducts Inc.
Bell Microproducts (Nasdaq:BELM) is an international,
value-added distributor of a wide range of high-tech products,
solutions and services, including storage systems, servers,
software, computer components, and peripherals, as well as
maintenance and professional services. An industry-recognized
specialist in storage products, the Company is one of the world's
largest storage-centric value-added distributors.
Bell Microproducts is uniquely qualified with deep technical and
application expertise to service a broad range of information
technology needs. From design to deployment, its products are
available at any level of integration, from components to subsystem
assemblies and fully-integrated, tested and certified system
solutions. More information can be found in the Company's SEC
filings, or by visiting the Bell Microproducts website at
http://www.bellmicro.com.
Safe Harbor Statement
Some of the statements included in this press release constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. You should not place
undue reliance on these statements. These forward-looking
statements include statements that reflect the current views of our
senior management with respect to our financial performance and
future events with respect to our business and our industry in
general. Statements that include the words "expect," "intend,"
"plan," "believe," "anticipate," "estimate" and similar statements
of a future or forward-looking nature identify forward-looking
statements.
Forward-looking statements address matters that involve risks
and uncertainties. Accordingly, there are or will be important
factors that could cause our actual results to differ materially
from those indicated in these statements. We believe that
these factors include, but are not limited to, the
following: our ability to comply with the financial covenants
in our credit agreements; our ability to achieve cost reductions
and other benefits in connection with our strategic initiatives;
the circumstances resulting in the restatement of our historical
financial statements and the material weaknesses in our internal
control over financial reporting and in our disclosure controls and
procedures; our ability to remain current in our SEC filings; loss
or adverse effect on our supplier relationships; our ability to
accurately forecast customer demand and order sufficient product
quantities; competition in the markets in which we operate; the
products we sell may not satisfy shifting customer demand; our
reliance on third parties to manufacture the products we sell; our
reliance on credit provided by our manufacturers to finance our
inventory purchases; risks related to our substantial indebtedness,
including the inability to obtain additional financing for our
operations on terms acceptable to us or at all; limitations on our
operating and strategic flexibility under the terms of our debt
agreements; our ability to attract and retain qualified personnel;
risks associated with doing business abroad, including foreign
currency risks; our inability to identify, acquire and integrate
acquired businesses; the outcome of any pending or future
litigation or regulatory proceedings, including the pending French
tax proceeding, the current shareholder lawsuit and any claims or
litigation related to the restatement of our consolidated financial
statements; the effects of a prolonged economic downturn; and our
ability to reduce professional fees for audit, legal, tax and
outside accounting advisor services.
For a more detailed discussion of how these and other risks and
uncertainties could cause our actual results to differ materially
from those indicated in our forward-looking statements, see our
reports filed with SEC (available at www.sec.gov), including our
Annual Report on Form 10-K for the year ended December 31,
2008.
BELL MICROPRODUCTS INC.
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands)
|
|
(unaudited)
|
|
|
|
|
December 31,
|
|
2009
|
2008 (1)
|
ASSETS
|
|
|
Current assets:
|
|
|
Cash (2)
|
$ 21,132
|
$ 22,775
|
Accounts receivable, net
|
434,858
|
429,853
|
Inventories
|
295,692
|
230,652
|
Prepaid expenses and other current assets
|
44,088
|
24,907
|
Total current assets
|
795,770
|
708,187
|
|
|
|
Property and equipment, net
|
15,710
|
19,042
|
Goodwill and other intangibles
|
27,717
|
28,526
|
Other long-term assets
|
17,779
|
26,371
|
Total assets
|
$ 856,976
|
$ 782,126
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
Current liabilities:
|
|
|
Accounts payable and cash overdraft
|
$ 360,868
|
$ 274,745
|
Borrowings under lines of credit and current portion of
long-term debt
|
190,788
|
221,691
|
Other accrued liabilities
|
91,784
|
94,658
|
Total current liabilities
|
643,440
|
591,094
|
|
|
|
Long-term debt, net of current portion
|
159,494
|
161,063
|
Other long-term liabilities
|
22,210
|
24,269
|
Total liabilities
|
825,144
|
776,426
|
|
|
|
Shareholders' equity
|
31,832
|
5,700
|
Total liabilities and shareholders' equity
|
$ 856,976
|
$ 782,126
|
|
|
|
(1) Adjusted for the retrospective adoption of
Financial Accounting Standards Board ("FASB") ASC 470-20, Debt
with Conversion and Other Options ("ASC 470-20").
(2) Includes approximately $2.0 million of
compensating balances under certain of the Company's credit
arrangements at December 31, 2009.
BELL MICROPRODUCTS INC.
|
|
|
|
Condensed Consolidated Statements of Operations
|
|
|
|
(In thousands, except per share data)
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
Dec. 31,
|
Sep. 30,
|
Dec. 31,
|
|
December 31,
|
|
2009
|
2009
|
2008(1)
|
|
2009
|
2008(1)
|
Net sales
|
$ 836,967
|
$ 765,156
|
$ 768,806
|
|
$ 3,021,167
|
$ 3,579,499
|
Cost of sales
|
758,568
|
693,431
|
690,301
|
|
2,725,127
|
3,244,053
|
Gross profit
|
78,399
|
71,725
|
78,505
|
|
296,040
|
335,446
|
|
|
|
|
|
|
|
Selling, general and administrative expense
|
54,652
|
59,040
|
73,307
|
|
226,329
|
302,416
|
Professional fees
|
4,197
|
2,906
|
17,220
|
|
26,129
|
56,763
|
Impairment of goodwill and other intangibles
|
--
|
--
|
5,864
|
|
--
|
5,864
|
Restructuring costs
|
1,696
|
--
|
1,949
|
|
3,795
|
4,289
|
Total operating expenses
|
60,545
|
61,946
|
98,340
|
|
256,253
|
369,332
|
|
|
|
|
|
|
|
Operating income (loss)
|
17,854
|
9,779
|
(19,835)
|
|
39,787
|
(33,886)
|
Interest and other expense, net
|
8,979
|
7,517
|
14,281
|
|
30,976
|
48,053
|
Income (loss) before income taxes
|
8,875
|
2,262
|
(34,116)
|
|
8,811
|
(81,939)
|
Provision for (benefit from) income taxes
|
(4,073)
|
597
|
(637)
|
|
1,289
|
527
|
Net income (loss)
|
$ 12,948
|
$ 1,665
|
$ (33,479)
|
|
$ 7,522
|
$ (82,466)
|
|
|
|
|
|
|
|
Income (loss) per share:
|
|
|
|
|
|
|
Basic
|
$ 0.41
|
$ 0.05
|
$ (1.04)
|
|
$ 0.24
|
$ (2.55)
|
Diluted
|
$ 0.40
|
$ 0.05
|
$ (1.04)
|
|
$ 0.23
|
$ (2.55)
|
|
|
|
|
|
|
|
Shares used in per share calculation:
|
|
|
|
|
|
|
Basic
|
31,919
|
31,879
|
32,070
|
|
31,859
|
32,299
|
Diluted
|
32,694
|
32,575
|
32,070
|
|
32,595
|
32,299
|
(1) Adjusted for the retrospective adoption of ASC
470-20.
BELL MICROPRODUCTS INC.
|
|
|
|
Supplemental Reconciliation of GAAP to Non-GAAP Results
|
|
|
|
(In thousands, except per share data)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
Dec. 31,
|
Sep. 30,
|
Dec. 31,
|
|
December 31,
|
|
2009
|
2009
|
2008
|
|
2009
|
2008
|
Net income (loss):
|
|
|
|
|
|
|
GAAP net income (loss)
|
$ 12,948
|
$ 1,665
|
$ (33,479)
|
|
$ 7,522
|
$ (82,466)
|
Adjustments:
|
|
|
|
|
|
|
Professional fees (1)
|
1,997
|
706
|
15,020
|
|
17,329
|
47,963
|
Trade settlements
|
--
|
(334)
|
(4,461)
|
|
(15,058)
|
(10,563)
|
ProSys derivative and related settlement
|
(3,224)
|
(2,374)
|
1,217
|
|
(6,156)
|
4,019
|
Intangible amortization
|
798
|
815
|
793
|
|
3,170
|
3,405
|
Stock-based compensation
|
776
|
477
|
709
|
|
2,518
|
2,955
|
Restructuring costs
|
1,696
|
--
|
1,949
|
|
3,795
|
4,289
|
Amortization of debt discount and issuance costs
|
3,526
|
3,386
|
3,130
|
|
13,554
|
11,614
|
Income tax credits
|
(8,623)
|
--
|
--
|
|
(8,623)
|
--
|
Income tax impacts of non-GAAP items (2)
|
(744)
|
(174)
|
(1,245)
|
|
(1,665)
|
(4,248)
|
Total adjustments to GAAP net income (loss)
|
(3,798)
|
2,502
|
17,112
|
|
8,864
|
59,434
|
Non-GAAP net income (loss)
|
$ 9,150
|
$ 4,167
|
$ (16,367)
|
|
$ 16,386
|
$(23,032)
|
|
|
|
|
|
|
|
Shares used in computing non-GAAP net income:
|
|
|
|
|
|
|
Basic
|
31,919
|
31,879
|
32,070
|
|
31,859
|
32,299
|
Diluted
|
32,694
|
32,575
|
32,070
|
|
32,595
|
32,299
|
|
|
|
|
|
|
|
Basic net income (loss) per share:
|
|
|
|
|
|
|
GAAP
|
$ 0.41
|
$ 0.05
|
$ (1.04)
|
|
$ 0.24
|
$ (2.55)
|
Adjustments
|
(0.12)
|
0.08
|
0.53
|
|
0.27
|
1.84
|
Non-GAAP
|
$ 0.29
|
$ 0.13
|
$ (0.51)
|
|
$ 0.51
|
$ (0.71)
|
|
|
|
|
|
|
|
Diluted net income (loss) per share:
|
|
|
|
|
|
|
GAAP
|
$ 0.40
|
$ 0.05
|
$ (1.04)
|
|
$ 0.23
|
$ (2.55)
|
Adjustments
|
(0.12)
|
0.08
|
0.53
|
|
0.27
|
1.84
|
Non-GAAP
|
$ 0.28
|
$ 0.13
|
$ (0.51)
|
|
$ 0.50
|
$ (0.71)
|
|
|
|
|
|
|
|
(1) Excluded from non-GAAP net income is
professional fees for auditors, investigators, lawyers and other
outside advisors incurred in excess of $2.2 million for each
three-month period presented, as management believes $2.2 million
represents approximately one quarter of the Company's expected
annual spending on such professional fees. The actual
professional fees incurred may be significantly different than this
estimate, and such costs will likely fluctuate significantly from
quarter-to-quarter and year-to-year.
(2) Amount represents the income tax
effect of the adjustments to GAAP net income (loss).
ABOUT NON-GAAP FINANCIAL MEASURES
In addition to the Company's condensed consolidated financial
statements prepared in accordance with accounting principles
generally accepted in the United States of America, or GAAP, the
Company is providing in this release supplemental non-GAAP net
income (loss) and non-GAAP net income (loss) per share as compared
to the corresponding financial measures prepared in accordance with
GAAP.
The presentation of supplemental non-GAAP financial information,
which is not prepared under any comprehensive set of accounting
rules or principles, is not intended to be considered in isolation
or as a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP. In addition, these
measures may be materially different from non-GAAP financial
measures used by other companies.
The Company is providing these non-GAAP financial measures
because it believes that such measures provide important
supplemental information to management and investors about its core
operating results, primarily because the non-GAAP measures exclude
certain charges and credits that management believes that investors
benefit by being provided with such information. Company management
uses these non-GAAP financial measures, in addition to the
corresponding GAAP financial measures, in evaluating the Company's
operating performance, in planning and forecasting future periods,
in making decisions regarding business operations and the
allocation of resources, and in comparing the Company's performance
against its historical performance. The Company excludes the
following items from its non-GAAP financial measures:
Professional fees. These amounts include certain
costs of auditors, investigators, lawyers and other outside
advisors, through September 30, 2009, these costs
were utilized in connection with: 1) independent accounting
investigations, 2) the restatement of certain previously-filed
financial statements, and 3) the preparation of the delinquent
financial statements necessary to regain SEC reporting
compliance. Management has excluded such costs incurred in
excess of $2.2 million for each three-month period presented, as it
believes $2.2 million represents approximately one quarter of the
Company's estimated annual spending for such professional fees on
matters other than those listed above. The actual professional
fees incurred in future periods may be significantly different than
this estimate, and such costs will likely fluctuate significantly
from quarter-to-quarter and year-to-year.
Trade settlements. These credits were recorded upon
the settlement of certain disputed trade receivable credits
(recorded as an increase in net sales) and trade payable credits
(recorded as a reduction of cost of goods sold) received in prior
periods, but settled in the period recorded. Although the
resolution of disputed trade credits is an ongoing part of the
Company's business, these credits are typically identified and a
resolution initiated and completed within a normal operating
cycle. During the process of restating its consolidated
financial statements and the filing of its December 2006 10-K, the
Company identified a significant number of historical credits that
lacked sufficient documentation. The Company obtained
additional documentation and recorded a higher than typical amount
of credits to income in 2009.
ProSys derivative and related settlement. These
charges and credits represent amounts recorded under agreements
with the former shareholders of ProSys, under which the Company has
granted those shareholders rights to put certain shares to the
Company and rights to receive cash from the Company upon open
market sales under certain conditions. Also included in the
fourth quarter of 2009 was a credit recorded upon settlement of a
related dispute.
Intangible amortization. These charges reflect the
non-cash amortization of certain intangible assets.
Stock-based compensation. These non-cash charges
reflect amounts recorded pertaining to stock options and restricted
stock units granted under stock-based compensation plans.
Restructuring costs. At various times in the past,
we have implemented restructuring plans to improve operating
performance. Restructuring costs consist of estimated expenses
associated with workforce reductions, the consolidation of excess
facilities and the impairment of leasehold improvements and other
equipment associated with abandoned facilities. While we
believe it is important to understand these charges, we do not
believe that these charges are indicative of our future operating
results.
Amortization of debt discount and issuance costs.
These charges represent the non-cash amortization related to
the retrospective adoption of ASC 470-20 and certain issuance costs
that are being amortized over the term of the underlying
debt.
Income tax credits. The Company recorded credits in
the fourth quarter of 2009 related to the reversal of a portion of
the valuation allowance previously recorded on certain deferred tax
assets. Of the $8.6 million recorded, $2.4 million was
pertaining to prior periods, which is considered immaterial.
Income tax impacts of non-GAAP items. The Company
adjusts its provision for income taxes to reflect the tax effects
of excluding the non-GAAP items noted above.
All supplemental non-GAAP financial measures are unaudited, and
should be read in conjunction with the comparable information
presented in accordance with GAAP.
CONTACT: Bell Microproducts Inc.
Investor Relations
Nicole Noutsios
(510) 451-2952
ir@bellmicro.com
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