[BELL MICROPRODUCTS LOGO]
CONTACT: Rob Damron
Investor Relations Representative
Bell Microproducts Inc.
(414) 224-1668
ir@bellmicro.com
FOR IMMEDIATE RELEASE
BELL MICROPRODUCTS REPORTS FIRST QUARTER FINANCIAL RESULTS
ACHIEVES RECORD QUARTERLY SALES OF $660 MILLION AND $0.06 INCOME PER SHARE
SAN JOSE, CA--(April 28, 2004)-- Bell Microproducts Inc. (Nasdaq: BELM) today
announced its financial results for the first quarter ended March 31, 2004.
Revenues for the first quarter of 2004 reached a record $660 million, up 24%
over last year's first quarter revenues of $533 million, and up 3% from fourth
quarter 2003 revenues of $640 million. Net earnings for the first quarter were
$1.7 million, or $0.06 per share on 28.1 million diluted shares. This compares
to last year's first quarter GAAP net loss of $4.9 million, or $0.25 per share
on 20.1 million basic shares. In the fourth quarter of 2003, the Company
reported net earnings of $2.4 million, or $0.09 per share on 27.7 million
diluted shares.
Commenting on the first quarter 2004 financial results, Don Bell, Chairman and
CEO of Bell Microproducts said, "We are pleased to report record first quarter
revenues and improving profitability. We generated revenue improvement in all
geographies and in all major product categories compared to last year's first
quarter. Our gross profit increased both as a percent of sales and in absolute
terms, and costs remained under control. This resulted in our ability to
generate a significant increase in our operating margins and overall
profitability, as compared to last year's first quarter. We also grew sales
sequentially from the fourth quarter of 2003 despite historical seasonal
softness in the first quarter."
Mr. Bell added, "In addition to our strong first quarter operating results, we
also substantially improved our capital structure during the quarter with the
successful completion of our $110 million convertible subordinated notes
offering in March 2004. This financing materially reduces our interest costs by
enabling us to pay down higher interest rate debt and the additional capital
provides us with significant incremental financial capacity to grow our business
through acquisitions and strategic investments."
Bell Microproducts Announces Q1 2004 Results Page 2 of 7
March 31, 2004
OPERATING TRENDS
Revenue in the first quarter was split among the Company's geographies as
follows: North America 41%, Europe 46%, and Latin America 13%.
GEOGRAPHIC HIGHLIGHTS:
o In North America, total revenue increased 21% compared with the
first quarter of 2003 and 3% compared with the fourth quarter of
2003.
o Latin America revenue increased 41% compared with the first
quarter of 2003 and 25% compared with the fourth quarter of 2003.
Excluding the acquisition of EBM Mayorista, S.A. de C.V. in
Mexico which occurred in October of 2003, Latin America revenue
increased 27% compared with the first quarter of 2003.
o In Europe, revenue increased 22% compared with the first quarter
of 2003 and decreased by 1% compared with the fourth quarter of
2003 due to seasonal factors in that market.
SOLUTIONS AND COMPONENTS AND PERIPHERALS HIGHLIGHTS:
o In the first quarter of 2004, Solutions represented 51% of the
Company's product mix and Components and Peripherals accounted
for 49% of the mix.
o The Solutions category of the Company's business increased 26%
compared with the first quarter of 2003 and 2% compared with the
fourth quarter of 2003. Within the Solutions category, Software
increased 40% compared with the first quarter of 2003 and 7%
compared to the fourth quarter of 2003.
o The Components and Peripherals category of the Company's business
increased 22% compared with the first quarter of 2003 and 5%
compared to the fourth quarter of 2003. Within the Components and
Peripherals category, Industrial Products and related components,
which include semiconductors, increased 105% compared with the
first quarter of 2003 and 16% compared to the fourth quarter of
2003. The strong Industrial Products growth was due to sales
execution and increasing strength in the Americas market.
o Sales of the hard disk drives increased 6% compared with the
first quarter of 2003 and 1% compared to the fourth quarter of
2003. First quarter hard disk drive sales were 31% of total
sales, down from 36% in Q1 of 2003.
Gross profit margins in the first quarter of 2004 increased to 7.5% versus 7.1%
in the first quarter of 2003 and were flat sequentially. The increase in gross
profit percentage came from increases in both the Solutions and the Components
and Peripherals product categories.
Operating expenses continue to remain under tight control. Operating expenses of
$42.7 million in the first quarter of 2004 were up from $40.7 million in the
first quarter of 2003 and from $40.5 million in fourth quarter of 2003. However,
as a percent of sales operating expenses declined to 6.5% in the first quarter
of 2004 versus 7.6% in the first quarter of 2003 and increased slightly from
6.3% in the fourth quarter of 2003. The slight sequential increase in operating
expenses as a percent of sales is primarily due to the recognition of benefit
and social costs which occur in the first part of each year.
Bell Microproducts Announces Q1 2004 Results Page 3 of 7
March 31, 2004
Inventories were $236 million at March 31, 2004 as compared to $257 million at
December 31, 2003 and $194 million at March 31, 2003. This resulted in average
inventory turns of 10.4 times (35 days) in the first quarter of 2004 versus 9.2
times (39 days) in the fourth quarter of 2003 and 10.2 times (35 days) in the
first quarter of 2003.
Accounts Receivable were $301 million at March 31, 2004 as compared to $310
million at December 31, 2003 and $265 million at March 31, 2003. Days sales
outstanding (DSO) continued to improve to 41 days in the first quarter of 2004
versus 44 days in the fourth quarter of 2003 and 45 days in the first quarter of
2003.
Total Debt increased to $235 million at March 31, 2004 as compared to $220 at
December 31, 2003 and $207 million at March 31, 2003. This increase in debt was
the result of the higher sales levels in the quarter, coupled with taking
advantage of vendor early payment discounts.
MANAGEMENT DISCUSSION AND OUTLOOK
Mr. Bell concluded, "Bell Microproducts' financial results have shown
significant improvement over the last year. The first quarter ended on a strong
note as March, 2004 was the best sales month in the history of the Company. We
are optimistic that the IT recovery will continue. Based on this improvement in
technology spending we expect to set another revenue record in 2004, accompanied
by a significant improvement in profitability."
"We will continue to pursue our strategic initiatives in enterprise storage
solutions, strengthening our business partner alliances and expanding
geographically. Furthermore, with the additions to key management positions in
our Company, including the recently announced hiring of Graeme Watt as our
President of European operations, and additional capital available to support
new strategic investments and acquisitions, we are well positioned to continue
to grow and gain share in the markets we serve."
CONFERENCE CALL ON THE WEB
Bell Microproducts will host a conference call to discuss first quarter results
at 4:30 PM Eastern on Wednesday, April 28, 2004. A live Internet broadcast of
the Company's conference call will be available via the Company's web site at
www.bellmicro.com.
ABOUT PRO FORMA PRESENTATION
In addition to our consolidated financial results prepared under generally
accepted accounting principles ("GAAP"), we use a pro forma measure of net
income or loss that is equal to GAAP adjusted to exclude certain costs and
expenses. Our pro forma presentation gives an indication of our performance
before restructuring costs and special charges that are considered by management
to be outside of our core distribution operating results. We compute pro forma
results by adjusting GAAP net income or loss with the impact of cost of sales
adjustments for discontinued product lines, and restructuring costs related to
severance and benefits for involuntary employee terminations and vacated excess
facilities. These measures are not in accordance with, or an alternative for
GAAP and
Bell Microproducts Announces Q1 2004 Results Page 4 of 7
March 31, 2004
may be materially different from pro forma measures used by other
companies. The presentation of this additional information should not be
considered in isolation or as a substitute for net income prepared in accordance
with GAAP.
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 markets. 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 and 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 140 brand name product
lines, as well as its own Rorke Data storage and Trademark(R) computer brands,
to original equipment manufacturers (OEMs), contract electronic manufacturing
services (CEMS) customers, value-added resellers (VARs) and system integrators
in the Americas and Europe. More information can be found in the Company's 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 our expected growth
rates, profitability and other 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: changing industry and economic conditions;
changes in product supply, pricing, and customer demand; competition; other
vagaries in the computer and electronic components markets; effects of recent
restructuring initiatives; changes in relationships with key suppliers;
availability of financing; 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.
Bell Microproducts Announces Q1 2004 Results Page 5 of 7
March 31, 2004
BELL MICROPRODUCTS INC.
Balance Sheets
(in thousands)
(Unaudited)
March 31, 2004 December 31, 2003
-------------- -----------------
ASSETS
Current assets:
Cash $ 3,441 $ 4,904
Accounts receivable, net 301,068 309,905
Inventories 235,981 256,992
Prepaid expenses and other current assets 23,390 23,595
-------- --------
Total current assets 563,880 595,396
-------- --------
Property and equipment, net 42,679 43,545
Goodwill and other intangibles 67,325 66,780
Other assets 11,429 7,278
-------- --------
Total assets $685,313 $712,999
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $199,930 250,494
Borrowings under lines of credit 1,652 3,009
Short-term note payable and current portion of
long-term notes payable 8,349 11,848
Other accrued liabilities 48,204 46,411
-------- --------
Total current liabilities 258,135 311,762
Borrowings under lines of credit 57,438 127,416
Long-term notes payable 167,626 77,608
Other long-term liabilities 3,578 2,803
-------- --------
Total liabilities 486,777 519,589
-------- --------
Shareholders' equity:
Common Stock 157,909 157,251
Retained earnings 22,549 20,837
Cumulative translation adjustment 18,078 15,322
-------- --------
Total shareholders' equity 198,536 193,410
-------- --------
-------- --------
Total liabilities and shareholders' equity $685,313 $712,999
======== ========
Bell Microproducts Announces Q1 2004 Results Page 6 of 7
March 31, 2004
BELL MICROPRODUCTS INC.
PRO FORMA STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
--------------------------------- ---------------------------------
As Reported Excluding Restructure
--------------------------------- ---------------------------------
Three Months Ended March 31, Three Months Ended March 31,
2004 2003 2004 2003
---------------- --------------- --------------- ----------------
Net sales $ 660,331 $ 532,653 $ 660,331 $ 532,653
Cost of sales 611,044 495,027 611,044 493,484
--------------- --------------- -------------- ----------------
Gross profit 49,287 37,626 49,287 39,169
Operating expenses:
Selling, general and administrative expenses 42,731 39,274 42,731 39,274
Restructuring costs - 1,383 - -
--------------- --------------- -------------- ----------------
Total operating expenses 42,731 40,657 42,731 39,274
Income (loss) from operations 6,556 (3,031) 6,556 (105)
Interest expense (3,838) (4,019) (3,838) (4,019)
--------------- --------------- -------------- ----------------
Income (loss) before income taxes 2,718 (7,050) 2,718 (4,124)
Provision for (benefit from) income taxes 1,006 (2,115) 1,006 (1,735)
--------------- --------------- -------------- ----------------
Net income (loss) $ 1,712 $ (4,935) $ 1,712 $ (2,389)
=============== =============== ============== ================
Earnings (loss) per share
Basic $ 0.06 $ (0.25) $ 0.06 $ (0.12)
=============== =============== ============== ================
Diluted $ 0.06 $ (0.25) $ 0.06 $ (0.12)
=============== =============== ============== ================
Shares used in per share calculation
Basic 27,068 20,131 27,068 20,131
=============== =============== ============== ================
Diluted 28,079 20,131 28,079 20,131
=============== =============== ============== ================
Pro forma presentation does not include restructuring and special pre tax
charges of $2,926 for the three months ended March 31, 2003.
Bell Microproducts Announces Q1 2004 Results Page 7 of 7
March 31, 2004
BELL MICROPRODUCTS INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
------------------------------
Three Months Ended March 31,
2004 2003
------------------------------
Net sales $ 660,331 $ 532,653
Cost of sales 611,044 495,027
---------- ----------
Gross profit 49,287 37,626
Operating expenses:
Selling, general and administrative expenses 42,731 39,274
Restructuring costs - 1,383
---------- ----------
Total operating expenses 42,731 40,657
Income (loss) from operations 6,556 (3,031)
Interest expense (3,838) (4,019)
---------- ----------
Income (loss) before income taxes 2,718 (7,050)
Provision for (benefit from) income taxes 1,006 (2,115)
---------- ----------
Net income (loss) $ 1,712 $ (4,935)
========== ==========
Earnings (loss) per share
Basic $ 0.06 $ (0.25)
========== ==========
Diluted $ 0.06 $ (0.25)
========== ==========
Shares used in per share calculation
Basic 27,068 20,131
========== ==========
Diluted 28,079 20,131
========== ==========