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Benchmark Electronics Reports Second Quarter 2019 Results

- Quarterly revenue of $602 million

- Quarterly EPS of $0.24 ($0.36 non-GAAP)

- Cash flow from operations of $52 million and free cash flow of $47 million

- Announces site consolidations for operational efficiency improvements

TEMPE, Ariz., July 24, 2019 /PRNewswire/ -- Benchmark Electronics, Inc. (BHE) today announced financial results for the second quarter ended June 30, 2019.



Three Months Ended



Jun 30,



Mar 31,


Jun 30,

In millions, except EPS

2019



2019


2018

Sales

$602



$603


$661

Net income

$9



$14


$11

Net income – non-GAAP(1)

$14



$13


$14

Diluted EPS

$0.24



$0.34


$0.23

Diluted EPS – non-GAAP(1)

$0.36



$0.33


$0.30









Operating margin

2.0%



2.7%


2.2%

Operating margin – non-GAAP(1)

3.1%



2.9%


2.7%



(1)

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

Benchmark Electronics (PRNewsfoto/Benchmark Electronics, Inc.)

Jeff Benck, Benchmark's President and CEO stated, "We delivered solid results in the quarter reflecting both year-over-year and sequential non-GAAP operating margin growth.  More importantly, non-GAAP gross margins were over 10% excluding our legacy computing contract revenue, which reflects the potential leverage in our model with an improving portfolio.  We also refined our strategic priorities for the coming year and we made progress on these initiatives in the quarter."

Benck continued, "I am excited about the recent executive leadership additions of our Chief Revenue Officer, Rob Crawford and Chief Human Resources Officer, Rhonda Turner.  Their broad experience and previous accomplishments position them both to meaningfully contribute to the next phase of growth for Benchmark.  After visiting most of our sites, and engagement with many of our large customers since I joined in March, I am even more energized about our future opportunities and the incremental value we can bring to our customers as an innovation conduit and strategic partner."

Cash Conversion Cycle



Jun 30,




Mar 31,




Jun 30,




2019




2019




2018











Accounts receivable days


54




61




61


Contract asset days


23




23




20


Inventory days


52




52




47


Accounts payable days


(61)




(61)




(57)


Customer deposits


(3)




(3)




(2)




65




72




69


Second Quarter 2019 Industry Sector Update

Revenue and percentage of sales by industry sector (in millions) was as follows.




Jun 30,




Mar 31,




Jun 30,



Higher-Value Markets


2019




2019



2018

Industrials

$

115


19

%


$

116


20

%


$

118


18

%

A&D


107


18




104


17




100


15


Medical


114


19




103


17




97


15


Semi-Cap


63


10




66


11




106


16




$

399


66

%


$

389


65

%


$

421


64

%










































Jun 30,




Mar 31,




Jun 30,



Traditional Markets


2019




2019



2018

Computing

$

133


22

%


$

124


21

%


$

161


24

%

Telecommunications


70


12




90


14




79


12




$

203


34

%


$

214


35

%


$

240


36

%


Total

$

602


100

%


$

603


100

%


$

661


100

%

Overall, higher-value markets were down 5% year-over-year from softer demand in Semi-Cap, despite year-over-year growth in Medical and A&D.  Traditional market revenues were down 15% year-over-year primarily from legacy Computing revenues.

Second Quarter 2019 Bookings Update

  • New program bookings of approximately $130 million of projected annualized revenue
  • 25 engineering awards supporting early engagement opportunities
  • 28 manufacturing wins across all market sectors

Third Quarter 2019 Outlook

  • Revenue between $525 - $555 million
  • Diluted GAAP earnings per share between $0.21 - $0.24
  • Diluted non-GAAP earnings per share between $0.33 - $0.39 (excluding restructuring charges and other costs and amortization of intangibles)

Third quarter guidance reflects the substantial completion of a long standing legacy computing contract in the second quarter and continued muted recovery in the semi-cap sector.  Additionally, we have elected to close manufacturing operations at our San Jose, California and Guaymas, Mexico sites with customer transitions expected into other locations in the Benchmark network by mid 2020.  Restructuring charges associated with these consolidations are expected to range between $1 million to $2 million in the third quarter.

Second 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 provides comprehensive solutions across the entire product life cycle; leading through its innovative technology and engineering design services; leveraging its optimized global supply chain; and delivering world-class manufacturing services in the following industries: aerospace and defense (A&D), medical, complex industrials, semiconductor capital equipment (Semi-Cap), next-generation telecommunications and advanced computing.  Benchmark's global operations network includes facilities in seven 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



Six Months Ended





Jun, 30


Mar 31,


Jun, 30



Jun, 30





2019


2019


2018



2019


2018












Income from operations (GAAP)

$

11,941

$

16,087

$

14,349


$

28,028

$

32,316


Restructuring charges and other costs


3,414


1,576


1,758



4,990


3,993


Settlement


773


-


-



773


-


Customer recovery


(16)


(2,742)


(330)



(2,758)


(671)


Amortization of intangible assets


2,361


2,367


2,367



4,728


4,733


Non-GAAP income from operations

$

18,473

$

17,288

$

18,144


$

35,761

$

40,371
















Gross Profit (GAAP)

$

52,998

$

53,800

$

54,299


$

106,798

$

112,617


Settlement


773


-


-



773


-


Customer recovery


(16)


(1,024)


(330)



(1,040)


(671)


Non-GAAP gross profit

$

53,755

$

52,776

$

53,969


$

106,531

$

111,946
















Net income (loss) (GAAP)

$

9,447

$

13,773

$

10,943


$

23,220

$

(12,698)


Restructuring charges and other costs


3,414


1,576


1,758



4,990


3,993


Customer recovery


(16)


(2,742)


(330)



(2,758)


(671)


Amortization of intangible assets


2,361


2,367


2,367



4,728


4,733


Settlements


(330)


(1,836)


-



(2,166)


-


Income tax adjustments(1)


(1,039)


206


(811)



(833)


(1,629)


Tax Cuts and Jobs Act(2)


-


-


423



-


40,537


Non-GAAP net income

$

13,837

$

13,344

$

14,350


$

27,181

$

34,265
















Diluted earnings (loss) per share:














Diluted (GAAP)

$

0.24

$

0.34

$

0.23


$

0.58

$

(0.26)



Diluted (Non-GAAP)

$

0.36

$

0.33

$

0.30


$

0.68

$

0.71
















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













Diluted (GAAP)


38,583


40,853


47,631



39,843


47,981



Diluted (Non-GAAP)


38,583


40,853


47,631



39,843


48,314




(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












Condensed Consolidated Statements of Income

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)





Three Months Ended



Six Months Ended




June 30,



June 30,



2019


2018



2019


2018










Sales

$

601,602

$

660,591


$

1,204,422

$

1,268,727

Cost of sales


548,604


606,292



1,097,624


1,156,110


Gross profit


52,998


54,299



106,798


112,617

Selling, general and administrative expenses


35,282


35,825



69,052


71,575

Amortization of intangible assets


2,361


2,367



4,728


4,733

Restructuring charges and other costs


3,414


1,758



4,990


3,993


Income from operations


11,941


14,349



28,028


32,316

Interest expense


(1,718)


(2,293)



(3,327)


(4,721)

Interest income


1,053


1,645



2,350


3,578

Other income (expense), net


808


(355)



2,412


(312)


Income before income taxes


12,084


13,346



29,463


30,861

Income tax expense


2,637


2,403



6,243


43,559


Net income (loss)

$

9,447

$

10,943


$

23,220

$

(12,698)












Earnings (loss) per share:











Basic

$

0.25

$

0.23


$

0.59

$

(0.26)


Diluted

$

0.24

$

0.23


$

0.58

$

(0.26)












Weighted-average number of shares used in calculating









   earnings (loss) per share:










Basic


38,426


47,451



39,522


47,981


Diluted


38,583


47,631



39,843


47,981

 











Benchmark Electronics, Inc. and Subsidiaries











Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)







June 30,



December 31,







2019



2018











Assets







Current assets:








Cash and cash equivalents

$

396,613


$

458,102



Accounts receivable, net


362,881



468,161



Contract assets


155,546



140,082



Inventories


316,237



309,975



Other current assets


26,533



27,230





Total current assets


1,257,810



1,403,550


Property, plant and equipment, net


202,665



210,954


Operating lease right-of-use assets


83,985



-


Goodwill and other, net


283,418



285,279





Total assets

$

1,827,878


$

1,899,783











Liabilities and Shareholders' Equity







Current liabilities:








Current installments of long-term debt and finance lease obligations

$

8,744


$

6,793



Accounts payable


372,106



422,053



Accrued liabilities


106,810



108,313





Total current liabilities


487,660



537,159


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


143,115



147,277


Operating lease liabilities


73,878



-


Other long-term liabilities


78,175



83,122


Shareholders' equity


1,045,050



1,132,225





Total liabilities and shareholders' equity

$

1,827,878


$

1,899,783

 











Benchmark Electronics, Inc. and Subsidiaries











Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

















Six Months Ended







June 30,







2019



2018











Cash flows from operating activities:







Net income (loss)

$

23,220


$

(12,698)


Depreciation and amortization


24,125



25,083


Stock-based compensation expense


5,720



5,405


Accounts receivable, net


106,749



(8,980)


Contract assets


(15,464)



(1,735)


Inventories


(6,327)



(52,063)


Accounts payable


(49,428)



23,103


Other changes in working capital and other, net


(19,823)



5,703



Net cash provided by (used in) operations


68,772



(16,182)








Cash flows from investing activities:







Additions to property, plant and equipment and software


(15,495)



(38,363)


Other investing activities, net


49



(2,201)



Net cash used in investing activities


(15,446)



(40,564)











Cash flows from financing activities:







Share repurchases


(100,039)



(65,868)


Equity forward contract related to accelerated share repurchase


-



(10,000)


Net debt activity


(2,441)



(9,121)


Other financing activities, net


(12,628)



(4,530)



Net cash used in financing activities


(115,108)



(89,519)











Effect of exchange rate changes


293



(642)

Net decrease in cash and cash equivalents


(61,489)



(146,907)


Cash and cash equivalents at beginning of year


458,102



742,546


Cash and cash equivalents at end of period

$

396,613


$

595,639











 

Cision

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