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Benchmark Electronics Reports First Quarter 2019 Results

- Quarterly revenue of $603 million

- Quarterly EPS of $0.34 ($0.33 non-GAAP)

TEMPE, Ariz., April 24, 2019 /PRNewswire/ -- Benchmark Electronics, Inc. (BHE) today announced financial results for the first quarter ended March 31, 2019.

Benchmark Electronics (PRNewsfoto/Benchmark Electronics, Inc.)

 



Three Months Ended



Mar 31,



Dec 31,


Mar 31,

In millions, except EPS

2019



2018


2018

Net sales

$603



$657


$608

Net income (loss)(1)

$14



$28


($24)

Net income – non-GAAP(2)

$13



$18


$20

Diluted EPS(1)

$0.34



$0.64


($0.49)

Diluted EPS – non-GAAP(2)

$0.33



$0.41


$0.41









Operating margin

2.7%



2.3%


3.0%

Operating margin – non-GAAP(2)

2.9%



3.2%


3.7%


(1) Includes $40 million ($0.82 per share) for the three months ended March 31, 2018 of foreign withholding taxes and state tax expense of repatriation of foreign cash to US parent company.


(2) A reconciliation of GAAP and non-GAAP results is included below.

Jeff Benck, Benchmark's President and CEO stated, "We delivered a solid first quarter with revenue and earnings in line with our expectations.  Revenues were up year-over-year in our targeted A&D, Medical, and Telecommunications markets and non-GAAP gross margins increased 40 bps sequentially to 8.8%."

"Since joining Benchmark Electronics, I have visited several of our facilities and have experienced first-hand our unique and differentiated capabilities.  I am excited by the talent of our employees across the business and the dedication they bring to solving our customers' most challenging problems.  Our advanced design and manufacturing services as well as technology solutions provide a strong foundation for innovation and industry excellence as we enable our customers' new product ideas.  Looking ahead, we remain focused on capturing opportunities to grow our revenue, expand our operating margins, and create long-term value for our shareholders."

Cash Conversion Cycle



Mar 31,


Dec 31,


Mar 31,



2019


2018


2018








Accounts receivable days


61


64


59

Contract asset days


23


19


22

Inventory days


52


46


50

Accounts payable days


(61)


(63)


(60)

Customer deposits


(3)


(4)


(3)



72


62


68

First Quarter 2019 Industry Sector Update
Revenue and percentage of sales by industry sector (in millions) was as follows.




Mar 31,




Dec 31,




Mar 31,



Higher-Value Markets


2019




2018



2018

Industrials

$

116


20

%


$

121


18

%


$

125


20

%

A&D


104


17




105


16




98


16


Medical


103


17




104


16




97


16


Test & Instrumentation


66


11




70


11




102


17




$

389


65

%


$

400


61

%


$

422


69

%










































Mar 31,




Dec 31,




Mar 31,



Traditional Markets


2019




2018



2018

Computing

$

124


21

%


$

171


26

%


$

103


17

%

Telecommunications


90


14




86


13




83


14




$

214


35

%


$

257


39

%


$

186


31

%


Total

$

603


100

%


$

657


100

%


$

608


100

%

Higher-value markets were down 8% year-over-year from softer demand in Test & Instrumentation (primarily semi-capital equipment).  Traditional market revenues were up 14% year-over-year primarily from higher Computing revenues.

First Quarter 2019 Bookings Update

  • New program bookings of $161 million at the midpoint of projected annualized revenue.
  • 20 engineering awards supporting early engagement opportunities.
  • 34 manufacturing wins across all market sectors.

The Company projects that new program bookings for the first quarter will result in annualized revenue of $134 to $188 million when fully launched in the next 12-24 months, medical up to 36 months.

Second Quarter 2019 Outlook

  • Revenue between $555 - $585 million.
  • Diluted GAAP earnings per share between $0.15 - $0.25.
  • Diluted non-GAAP earnings per share between $0.28 - $0.36 (excluding restructuring charges and other costs and amortization of intangibles).

First Quarter 2019 Results Conference Call Details
A conference call hosted by Benchmark management will be held today at 5:00 p.m. Eastern Time to discuss the Company's financial results and outlook.  This call will be broadcast via the internet and may be accessed by logging on to the Company's website at www.bench.com.

About Benchmark Electronics, Inc.
Benchmark is a worldwide provider of innovative product design, engineering services, technology solutions and advanced manufacturing services.  From initial product concept to volume production, including direct order fulfillment and aftermarket services, Benchmark has been providing integrated services and solutions to original equipment manufacturers since 1979.  Today, Benchmark proudly serves the following industries: aerospace and defense, medical technologies, complex industrials, test and instrumentation, next-generation telecommunications and high-end computing.  Benchmark's global operations network includes facilities in eight countries and common shares trade on the New York Stock Exchange under the symbol BHE.

Forward-Looking Statements
This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  The words "expect," "estimate," "anticipate," "predict" and similar expressions, and the negatives thereof, often identify forward-looking statements, which are not limited to historical facts.  Forward-looking statements include, among other things: guidance for 2019 results; projected annual revenues resulting from new program bookings; statements, express or implied, concerning future operating results or margins, the ability to generate sales and income or cash flow; and Benchmark's business and growth strategies and expected growth and performance.  Although Benchmark believes these statements are based upon reasonable assumptions, they involve risks and uncertainties relating to operations, markets and the business environment generally.  If one or more of these risks or uncertainties materializes, or underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.  Readers are advised to consult further disclosures on these risks and uncertainties, particularly in Item 1A, "Risk Factors", of the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and in its subsequent filings with the Securities and Exchange Commission.  All forward-looking statements included in this document are based upon information available to the Company as of the date of this document, and it assumes no obligation to update them.

Non-GAAP Financial Measures
This document includes certain financial measures that exclude items and therefore are not in accordance with U.S. generally accepted accounting principles ("GAAP").  A detailed reconciliation between GAAP results and results excluding special items ("non-GAAP") is included in the following tables attached to this document.  Management discloses non-GAAP information to provide investors with additional information to analyze the Company's performance and underlying trends.  Management uses non-GAAP measures that exclude certain items in order to better assess operating performance and help investors compare results with our previous guidance.  The Company's non-GAAP information is not necessarily comparable to the non-GAAP information used by other companies.  Non-GAAP information should not be viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as a measure of the Company's profitability or liquidity.  Readers should consider the types of events and transactions for which adjustments have been made.

Benchmark Electronics, Inc. and Subsidiaries









Reconciliation of GAAP to Non-GAAP Financial Results

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)




















Three Months Ended




March 31,


December 31,


March 31,




2019


2018


2018







Income from operations (GAAP)

$

16,087

$

15,265

$

17,967

Restructuring charges and other costs


1,576


3,527


2,235

Customer recovery


(2,742)


(113)


(341)

Amortization of intangible assets


2,367


2,384


2,366

Non-GAAP income from operations

$

17,288

$

21,063

$

22,227









Gross Profit (GAAP)

$

53,800

$

55,199

$

58,318

Customer recovery


(1,024)


(113)


(341)

Non-GAAP Gross Profit

$

52,776

$

55,086

$

57,977









Net income (loss) (GAAP)

$

13,773

$

27,716

$

(23,641)

Restructuring charges and other costs


1,576


3,527


2,235

Customer recovery


(2,742)


(113)


(341)

Amortization of intangible assets


2,367


2,384


2,366

Settlement


(1,836)


-


-

Income tax adjustments(1)


206


(1,050)


(818)

Tax Cuts and Jobs Act(2)


-


(14,529)


40,114

Non-GAAP net income

$

13,344

$

17,935

$

19,915









Diluted earnings (loss) per share:








Diluted (GAAP)

$

0.34

$

0.64

$

(0.49)


Diluted (Non-GAAP)

$

0.33

$

0.41

$

0.41









Weighted-average number of shares used in calculating earnings (loss) per share:








Diluted (GAAP)


40,853


43,229


48,517


Diluted (Non-GAAP)


40,853


43,229


48,837



(1)

This amount represents the tax impact of the non-GAAP adjustments using the applicable effective tax rates.



(2)

This amount represents the impact of repatriating foreign earnings from our foreign jurisdictions to the U.S., offset by available U.S. foreign tax credits, and a non-recurring tax true-up benefit as a result of finalizing our federal and state income tax accounting for the U.S. transitions toll tax from the 2017 Tax Cuts and Jobs Act.

 

Benchmark Electronics, Inc. and Subsidiaries







Consolidated Statements of Income

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)





Three Months Ended




March 31,



2019


2018






Sales

$

602,820

$

608,136

Cost of sales


549,020


549,818


Gross profit


53,800


58,318

Selling, general and administrative expenses


33,770


35,750

Amortization of intangible assets


2,367


2,366

Restructuring charges and other costs


1,576


2,235


Income from operations


16,087


17,967

Interest expense


(1,609)


(2,428)

Interest income


1,297


1,933

Other income, net


1,604


43


Income before income taxes


17,379


17,515

Income tax expense


3,606


41,156


Net income (loss)

$

13,773

$

(23,641)







Earnings (loss) per share:






Basic

$

0.34

$

(0.49)


Diluted

$

0.34

$

(0.49)







Weighted-average number of shares used in calculating earnings (loss) per share:






Basic


40,630


48,517


Diluted


40,853


48,517

 

Benchmark Electronics, Inc. and Subsidiaries











Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)







March 31,


December 31,







2019



2018











Assets







Current assets:








Cash and cash equivalents

$

395,316


$

458,102



Accounts receivable, net


405,358



468,161



Contract assets


157,025



140,082



Inventories


315,563



309,975



Other current assets


24,667



27,230





Total current assets


1,297,929



1,403,550


Property, plant and equipment, net


203,796



210,954


Operating lease right-of-use assets


81,159



-


Goodwill and other, net


286,046



285,279





Total assets

$

1,868,930


$

1,899,783











Liabilities and Shareholders' Equity







Current liabilities:








Current installments of long-term debt and finance lease obligations

$

8,706


$

6,793



Accounts payable


371,732



422,053



Accrued liabilities


109,798



108,313





Total current liabilities


490,236



537,159


Long-term debt and finance lease obligations, less current installments


145,205



147,277


Operating lease liabilities


70,859



-


Other long-term liabilities


83,905



83,122


Shareholders' equity


1,078,725



1,132,225





Total liabilities and shareholders' equity

$

1,868,930


$

1,899,783

 

Benchmark Electronics, Inc. and Subsidiaries











Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

















Three Months Ended







March 31,







2019



2018











Cash flows from operating activities:







Net income (loss)

$

13,773


$

(23,641)


Depreciation and amortization


12,172



12,384


Stock-based compensation expense


2,772



2,870


Accounts receivable, net


64,176



33,419


Contract assets


(16,943)



(1,127)


Inventories


(5,862)



(38,210)


Accounts payable


(45,914)



2,337


Other changes in working capital and other, net


(7,760)



36,498



Net cash provided by operations


16,414



24,530








Cash flows from investing activities:







Additions to property, plant and equipment and software


(10,074)



(20,877)


Other investing activities, net


(97)



(122)



Net cash used in investing activities


(10,171)



(20,999)











Cash flows from financing activities:







Share repurchases


(61,080)



(58,381)


Equity forward contract related to accelerated share repurchase


-



(10,000)


Net debt activity


(274)



(4,551)


Other financing activities, net


(7,160)



2,316



Net cash used in financing activities


(68,514)



(70,616)

Effect of exchange rate changes


(515)



866

Net decrease in cash and cash equivalents


(62,786)



(66,219)


Cash and cash equivalents at beginning of year


458,102



742,546


Cash and cash equivalents at end of period

$

395,316


$

676,327

 

Cision

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