Bell Microproducts Posts Record Q3 2000 Results
Bell Microproducts Inc. today announced its financial results for the third
quarter ended September 30, 2000.
Revenues for the third quarter were a record $511.0 million, up 80 percent as
compared with sales of $283.4 million in the third quarter of 1999. Net income
in the third quarter of 2000 was $4.8 million, up 104 percent from net income of
$2.4 million in the third quarter of 1999. The Company reported basic earnings
per share of $0.32 on 14.9 million shares, up 88 percent from $0.17 on 13.6
million shares in the third quarter of 1999. On a fully diluted basis, the
Company reported earnings per share of $0.28 on 17.3 million shares, up 65
percent from $0.17 on 13.8 million shares in the third quarter of 1999.
Sales for the first nine months of the current fiscal year were a record
$1,259.7 million, up 71% as compared with sales of $734.6 million in the first
nine months of last year. For the first nine months of fiscal 2000, Bell
Microproducts reported net income of $12.0 million, up 168 percent from net
income of $4.5 million in the first nine months of last year. Basic earnings per
share were $0.83 per share on 14.3 million shares, up 77 percent from $0.47 on
13.5 million shares in the first nine months of last year. On a fully diluted
basis, earnings per share were $0.75 per share on 16.0 million shares, up 60
percent from $0.47 on 13.6 million shares in the first nine months of last year.
In the second quarter of 1999, the company sold its Quadrus contract
manufacturing division, which is reported as a discontinued operation.
"We are pleased to report that our sales and earnings per share have improved
for six consecutive quarters and are now at a new record level," said Don Bell,
Bell Microproducts' president and chief executive officer. "Operating results
for the third quarter reflect continued growth in volume, generally firmer
pricing, and a shift towards an overall richer mix of products. Sequential
quarterly and year-to-year sales increases in semiconductors, storage products,
and other computer products contributed to the record third quarter revenues,"
added Bell. "The market for our storage and computer products is benefiting not
only from the growth in computing hardware, but also from the growing need for
more powerful storage products and systems, and computing platforms to manage
the expanding Internet infrastructures," said Bell. "Revenues from continuing
operations have grown at a total compounded annual rate of 39% over the past
three years. Moreover, the growth in our revenues has accelerated in the recent
quarters due to acquisitions, geographic expansion, addition of new lines,
market share gains and strong growth in the technology markets."
Operating Trends
We are also pleased to report an increase in our gross profit margin to 9.4% in
the third quarter, up from 8.5% in the third quarter of 1999, and compared to
9.2% in the second quarter of 2000. Gross profit margin was at the highest level
in seven quarters. The higher gross margin resulted from a continued overall
favorable mix shift and the strategy to emphasize margins over top line growth.
Recently acquired Rorke Data also contributed to the higher gross profit margin.
The increase in the gross margin was achieved despite the lower gross margin of
recently acquired Ideal Hardware.
Selling, general & administrative expenses as a percentage of sales were 6.8 %
in the third quarter, up from 6.4% in the third quarter of 1999, and up from
6.7% in the second quarter of 2000. The increase reflects an increase in
staffing in support of the Company's recent strategic initiatives, as well as
the higher expenses as a percentage of sales of recently acquired Rorke Data.
Our long-term financial model calls for increasing gross margins through a
continuing positive mix shift, and decreasing operating expenses in each of our
divisions as a percentage of sales, through realization of additional
efficiencies and productivity, which should result in higher operating margin.
Third Quarter 2000 Achievements
On July 6, 2000, Bell Microproducts announced the completion of a $180 million
Subordinated Debt Financing with the Retirement System of Alabama (RSA). The RSA
financing consists of a 10-year, long-term, $100 million note, and a 1-year, $80
million note. The financing is subordinated to the Company's bank debt. The
purpose of the $180 million Subordinated Financing is to reposition Bell
Microproducts' domestic and international commercial banking and debt structure.
The Company also plans to use the funds for working capital purposes, to fund
future acquisitions, to reduce bank debt and to open a Corporate Technology
Center in Montgomery, Alabama.
The new Corporate Technology Center is scheduled to begin operations in November
2000, and when fully staffed will include high technology positions in sales,
applications engineering, technical support, credit administration, information
technology, and other support functions. The Montgomery operations will also
house Bell Microproducts' new corporate data center. This state-of-the-art
facility will be the computing nerve center for Bell Microproducts' North
American operations, in addition to serving as the hub for global voice and data
communications. The activation of the new data center, by mid 2001, will also
signal the completion of the Company's disaster-recovery/business resumption
plan. Facilities in San Jose will provide complete computing and network
redundancy to the Montgomery center.
On August 3rd, Bell Microproducts announced that it has completed the
acquisition of Ideal Hardware Limited, a wholly owned subsidiary of InterX plc.
Ideal Hardware (http://www.ideal.co.uk) is a leading UK-based value-added,
storage-centric distributor. With Ideal Hardware, Bell Microproducts gains a
strong presence in the UK and coverage of the European continent. Ideal Hardware
is focused on the high end of the storage market with many of the same lines
carried by Bell Microproducts, including IBM, Quantum, Seagate Technology,
Emulex, Gadzoox Networks, and Cobalt Networks. Ideal also is a leading
distributor of Compaq servers, PCs and storage products, and is one of only 12
Compaq distributors worldwide to be awarded the prestigious CIP accreditation
for high-end products. Ideal has strategic relationships with approximately 80
suppliers of enterprise storage, computer systems, software, and media products.
These strategic products are packaged with Ideal's value-added programs and
services to provide complete NAS, SAS and SAN solutions, a strategy that mirrors
Bell Microproducts storage solutions initiative for the Americas.
During the quarter, the Company's Board of Directors declared a 3-for-2 split of
its Common Stock.
The stock split was in the form of a 50% Common Stock dividend paid at the close
of business on August 31, 2000 to shareholders of record on August 11, 2000.
On August 1st, Bell Microproducts announced the launch of PartnerNet, a new
strategic on-line business-to-business commerce portal and services capability
blending the best of technology with the broadest offering for storage product
resellers.
On September 11, Bell Microproducts announced an extension of its relationship
with Quantum Corporation to add Quantum's complete Snap Server family of
products to its network attached storage solutions offering. Through this
agreement, Bell Microproducts brings its customer base of VARs, resellers, and
system integrators an enhanced offering of network attached solutions.
Also, on September 20, Bell Microproducts announced that it has expanded its
distribution agreement with Sun Microsystems, Inc. to market Sun Microsystems'
comprehensive lines of processors and single-board computer subsystems to VARs,
OEMs and system integrators throughout Latin America.
The third quarter was also marked by several announcements of customer orders
with our recently acquired Rorke Data subsidiary for Fibre Channel SAN products
and solutions. We are pleased with the performance of Rorke as it focuses on
storage integration and services in medical archive, audio/video, prepress,
imaging and document management applications.
Outlook
"Over the long term, we remain focused on growing our sales and improving our
margins in order to achieve continued improvement in profitability," noted Bell.
"The keys to achieving these goals include the targeted expansion of our
supplier and customer base, enriching our margin mix, and improving asset
management," Bell added. "In particular, we will continue to drive the
transition of Bell Microproducts from a traditional component distribution model
to a broader solutions provider model."
Conference Call on the Web
At 10:30am EST Wednesday, October 18, 2000, a live Internet broadcast of the
Company's third quarter earnings conference call will be available via the
Company's web site at www.bellmicro.com http://www.bellmicro.com or through
this direct link
http://www.bellmicro.com/Investor/information/Conference_Calls.htm.
About Bell Microproducts
Bell Microproducts is an international value added provider of a wide range of
high technology products, solutions, and services to the industrial and
commercial marketplace. The company's offering includes semiconductors, computer
platforms, peripherals, and storage products of various types including desktop,
high-end computer and storage subsystems, fibre channel connectivity products,
RAID, NAS and SAN storage systems and back-up products. Bell Microproducts is an
industry-recognized specialist in storage products and is one of the world's
largest storage-centric value-added distributors.
The company's products are available at any level of integration from
components, to subsystem assemblies, to fully integrated, tested and certified
system solutions. The company adds value with a broad range of services
including testing, software loading, kitting, mass storage system integration,
and computer system integration. Trained and certified technical personnel
complete each of these processes at Bell Microproducts' ISO 9002 facilities.
Bell Microproducts markets and distributes more than 150 brand name product
lines, as well as its own BellStor storage and Trademark(R) computer brands, to
original equipment manufacturers (OEMs), contract electronic manufacturing
services (EMS) customers, value-added resellers (VARs) and system integrators in
the Americas and Europe. More information can be found in SEC filings, or by
visiting the Bell Microproducts Web site at www.bellmicro.com.
Safe Harbor Statement. This release may contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements, which reflect the Company's current views of future
events and financial performance, involve known and unknown risks and
uncertainties which could cause actual results or facts to differ materially
from such statements for a variety of reasons including, but not limited to: the
ability to successfully integrate the operations of recent acquisitions,
industry conditions, changes in product supply, pricing, and customer demand,
competition, other vagaries in the computer and electronic components markets,
changes in relationships with key suppliers, foreign currency fluctuations and
the other risks described from time to time in the Company's reports to the
Securities and Exchange Commission (including the company's Annual Report on
Form 10-K). Investors should take such risks into account when making investment
decisions. Shareholders and other readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date on
which they are made. The company undertakes no obligation to update publicly or
revise any forward-looking statements.
Balance Sheets
(in thousands)
(unaudited)
Sept. 30, 2000 Dec. 31, 1999
ASSETS
Current assets:
Cash $ 6,576 $ 5,103
Accounts receivable, net 344,932 168,857
Inventories 216,222 156,648
Prepaid expenses and other current assets 8,430 5,458
Total current assets 576,160 336,066
Property and equipment, net 17,729 7,626
Goodwill and other intangibles 45,664 16,059
Other assets 8,448 600
Total assets $ 648,001 $ 360,351
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable $ 251,143 $ 143,632
Borrowings under the line of credit 38,638 --
Short-term note payable and current portion of
long-term notes payable 87,000 --
Other accrued liabilities 51,972 9,808
Total current liabilities 428,753 153,440
Borrowings under the line of credit 262 110,600
Long-term notes payable 93,000 --
Other long-term liabilities 4,982 38
Total liabilities 526,997 264,078
Shareholders' equity:
Common Stock 72,080 58,527
Retained earnings 49,234 37,285
Cumulative translation adjustment (310) 461
Total shareholders' equity 121,004 96,273
Total liabilities and shareholders' equity $ 648,001 $ 360,351
BELL MICROPRODUCTS INC.
Statements of Income
(in thousands, except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
Sales $511,007 $283,359 $1,259,684 $734,585
Cost of sales 463,115 259,384 1,147,385 670,387
Gross profit 47,892 23,975 112,299 64,198
Selling, general
and administrative expenses 34,967 18,253 81,794 49,134
Income from continuing operations 12,925 5,722 30,505 15,064
Interest expense (4,218) (1,676) (9,543) (4,456)
Remeasurement gain/(loss) (406) 123 (276) 481
Income from continuing operations
Before income taxes 8,301 4,169 20,686 11,089
Provision for income taxes 3,486 1,813 8,687 4,719
Income from continuing operations 4,815 2,356 11,999 6,370
Loss from
discontinued operations,
net of income tax benefit -- -- -- (2,946)
Gain on sale of contract
manufacturing segment -- -- -- 1,054
Net income $4,815 $2,356 $11,999 $4,478
Earnings per share
Basic
Continuing operations $0.32 $0.17 $0.83 $0.47
Discontinued operations -- -- -- (0.14)
Total $0.32 $0.17 $0.83 $0.33
Earnings per share
Diluted
Continuing operations $0.28 $0.17 $0.75 $0.47
Discontinued operations -- -- -- (0.14)
Total $0.28 $0.17 $0.75 $0.33
Shares used in per share calculation
Basic 14,856 13,644 14,272 13,487
Diluted 17,275 13,817 16,002 13,602
SOURCE: Bell Microproducts Inc.