Black Box F3Q08 (Qtr End 12/29/07) Earnings Call Transcript

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2008-01-29 16:40:39.0

Tags: Black Box Corp.

Question-and-Answer Session

Operator

(Operator Instructions) We have a question from the line of Jeff Beach of Stifel Nicolaus. Please go ahead.

Jeff Beach - Stifel Nicolaus

Good afternoon, Terry and Mike. Congratulations on the best quarter I can remember in a while.

Terry Blakemore

Thank you, Jeff.

Mike McAndrew

Thanks, Jeff

Jeff Beach - Stifel Nicolaus

Can you comment on the recent trends in data services in each of the different segments. Especially the third quarter, I think, it's a little bit of a seasonal quarter. It didn't seem to show up much here. What do you see in the end markets looking ahead in these businesses, and is basically the pruning and the fixing of the Nextira over, and you would look to the revenue base beginning to turn and move the other way in voice?

Mike McAndrew

I will take that one, Jeff. Relative to the -- let's start with the end there, the Nextira base has kind of flagged out some of that attrition; you can see we put up some pretty consistent quarters from a revenue perspective. So, we worked our way through that and we are getting some reasonable comps on a year-to-year basis. So, that's relative to the three segments. I'd say we had a very strong data service quarter. That segment is much chunkier than perhaps the others. It's more project driven, and so quarters-to-quarters, that's robust.

We've had a good year in the data services. We did take a hit, as we recall, on the second quarter relative to the gross margin and we expected that to rebound. The margins were up over 31% for the quarter, and back to normal. So far, so good there. Relative to voice, again, we put up a couple of quarters in a row relative to organic growth, and we are pleased with that segment's performance, and, as we highlighted, the increased operating margin of the whole business. Clearly, a lot of that is being driven by our integration efforts with Nextira. That's driving that. And again, we saw some increase in the gross margin in that business as well.

So, I'd say that is performing well. The weakest spot, I would say, is Hot Line. We've had probably a year and a half of organic growth in Hot Line, and with the currency impact it's actually down a little bit. And in particular, at the end of the quarter, December month was slower than we had expected.

 

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