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Black Box Corporation 12 th Annual Needham Growth Stock Conference January 14, 2010
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Company Confidential 2 Black Box Network Services 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. 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 non- GAAP 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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Terry Blakemore President and CEO
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Company Confidential 4 4 Company Highlights Financially Strong and Stable Public company (NASDAQ: BBOX) since 1994 $1 billion in annual revenue Double digit margins Positive cash flow for 32 consecutive years A Robust Company 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 Black Box is the leading independent provider of major communications and infrastructure technologies
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Company Confidential 5 Black Box Corporation Voice Communications Services Data Infrastructure Services Hotline Networking Products Services to plan, design, install and maintain the underlying infrastructure for communications networks Remote and on-site services to plan, design, install, monitor and manage voice and data communications systems Sales and support of networking products and refurbished phones and cards
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Company Confidential 6 Capabilities Remote MonitoringNetwork Security Voice over IPUnified CommunicationsTraditional Telephony Voice Communications Solutions: 60% of revenue
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Company Confidential 7 Strategic Advantage: Our Communications Portfolio & Partners Top 3 Channel Partner 25-year relationship 2M+ ports on maintenance Coverage: U.S., Canada, U.S. Federal Government – worldwide coverage Top 3 Channel Partner 25-year relationship 2M+ ports on maintenance Coverage: U.S., Canada, U.S. Federal Government – worldwide coverage Relationships around the globe 500,000 ports on maintenance Coverage: U.S. Relationships around the globe 500,000 ports on maintenance Coverage: U.S. No. 1 U.S. channel partner 25-year relationship 1M+ ports on maintenance Coverage: U.S. 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 Leader in Pure IP Telephony 20,000 ports on maintenance Coverage: U.S., Canada, UK and Australia 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) 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) New agreement announced November 20, 2009 as Silver Partner Status January 2010 moved to Platinum Partner status Coverage: U.S., Canada, Mexico 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 8 Market Share Cisco, 23.5% Avaya, 15.2% Nortel, 15.0% NEC, 8.5% Mitel, 7.5% Toshiba, 3.7% ShoreTel, 2.1% Others, 22.5% Enterprise Line Shipments, North America, 2008 Source: Market Share: Enterprise Telephony Equipment, Worldwide, 2008 Gartner (March, 2009) Siemens, ~1.9%
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Company Confidential 9 Capabilities Networking Data Centers Data Networking Structured Cabling Digital Signage, CATV & Video Data Infrastructure Services: 19% of revenue
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Company Confidential 10 Capabilities Custom Solutions Hotline Products: 21% of revenue CablesCabinets & RacksKVMRouters, Switches
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Company Confidential 11 Worldwide Market Size Voice Communications$50B Data Infrastructure3B Hotline Products7B Total Worldwide Market$60B Communications and networking products and services Source: Derived from data provided by Gartner and other industry analyses.
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Company Confidential 12 Our clients include: Company Confidential 12 Client Spotlight
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Company Confidential 13 Company Confidential 13 Client Opportunity Our view of how our clients see the market today 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 » »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
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Company Confidential 14 Company Confidential 14 Black Box Solution Promises made and kept to meet our customers’ needs Consultative ApproachTechnical ExpertiseExperience 33 years of proven results Entrusted to drive communications strategy Strong leadership Diverse and long-term customer base Comprehensive portfolio Vendor independent Understands interoperability Single point-of-contact Planning for future development Breadth of knowledge Single-source provider 2,500+ certified technicians 7 NOCs, 24/7 support Keeping clients abreast of technology advancements 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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Mike McAndrew Chief Financial Officer
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Company Confidential 16 Well-Diversified Revenues Revenue by Industry Source: Derived from Company data and Company’s 2009 Form 10-K.
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Company Confidential 17 Well-Diversified Revenues Revenue by Geography Revenue by Client Size Revenue by Client Type Source: Derived from Company data and Company’s 2009 Form 10-K.
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Company Confidential 18 Revenue Visibility Backlog represents expected revenue related to executed client purchase orders or contracts that are estimated to be complete within 180 days of quarter end. Source: Derived from Company data and Company’s 2009 Form 10-K and 9/30/09 form 10Q.
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Solid Sustainable Margins * See attached reconciliation Source: Derived from Company data and Company’s 2009 Form 10-K and 9/30/09 form 10Q.
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Company Confidential 20 GAAP/Non-GAAP Reconciliation Source: Derived from Company data and Company’s 2009 Form 10-K and 6/30/09 form 10Q.
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Company Confidential 21 Consistent Positive Cash Flow Source: Derived from Company data and Company’s 2009 Form 10-K and 9/30/09 form 10Q.
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Company Confidential 22 Balance Sheet Statistics 20052006200720082009 6 mos. 2010 DSO Days575453555351 Inventory Turns6.47.37.27.18.58.4 Capex (M)$3.5$4.1$5.9$3.2$2.2$1.0 Capex as % of Rev. 0.7%0.6% 0.3%0.2% Headcount3,3713,2954,5814,3134,5424,335 Debt / Equity.3 to 1.2 to 1.4 to 1.3 to 1.4 to 1 Source: Derived from Company data and Company’s 2009 Form 10-K and 9/30/09 form 10Q.
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Company Confidential 23 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 24 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 25 Black Box Network Services (BBOX) » Well-Diversified Revenues » Solid, Sustainable Margins » Consistent, Positive Cash Flow
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NASDAQ: BBOX
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