Black Box Corporation (NASDAQ:BBOX) Q1 2019 Earnings Conference Call - Final Transcript
Aug 20, 2018 • 09:00 am ET
Good day, ladies and gentlemen, and welcome to Black Box Corporation's First Quarter Fiscal 2019 Financial Results Conference. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session, and instructions will be provided at that time. (Operator Instructions)
I'd now like to turn the conference over to Ron Basso, EVP and General Counsel. Please go ahead.
Thank you, James. Good morning, and welcome to Black Box Corporation's First Quarter Fiscal 2019 Earnings Conference Call. With me today are our President and CEO, Joel Trammell; and Dave Russo, our EVP and CFO.
Earlier today, we announced our first quarter fiscal 2019 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 in the Investor Relations section of our website, blackbox.com.
(Forward-Looking Cautionary Statements)
On this call, we may discuss some non-GAAP financial measures. Please refer to the schedules that accompany the press release for a reconciliation of these non-GAAP financial measurements to the most directly comparable GAAP financial measurement and other supplemental information.
Now I'd like to turn the call over to Joel.
Thanks, Ron. Welcome and thank you for joining us today. I will start by discussing the Q1 financial results and then give an update on our efforts to improve our liquidity position.
Q1 financial results were consistent with our plan and the guidance we gave during our Q4 call. While revenue was down slightly year-over-year and quarter-over-quarter, our margins did expand modestly. Normal operating expenses were well controlled, and we continue to adjust costs to align with our current revenue levels. EBITDA levels increased significantly on a year-over-year and quarter-over-quarter basis.
As you probably know, we announced the signing of a definitive agreement to sell our federal business unit to an established private equity firm for $75 million. That deal is scheduled to close by the end of the month. Net proceeds from this transaction will first be used to pay off any indebtedness on our new $10 million LIFO line, which will then be available to borrow to run our business. Remaining net proceeds will go to paying off other bank indebtedness. This is the first of potentially multiple transactions to create additional liquidity for the company. While this sale will reduce our debt significantly, it does not solve our financing issues. We will continue to work with our Board, Raymond James, and our banking partners to position ourselves for future success.
Over the last month we have experienced issues with our business related to our 8-K filing of June 29. In that filing, we detailed our bank amendment, including the new LIFO facility. While we perceive this as a vote of confidence by our lenders, some in the market did not. Because of our disclosure of certain risk factors inherent to the situation, we've seen negative impacts to our business. We cannot yet quantify this impact, but it has created issues with certain vendors and customers.