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Benchmark Reports Second Quarter 2021 Results

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Second quarter 2021 results:

- Quarterly revenue of $545 million

- 11% year-over-year revenue growth

- Semi-Cap revenue growth of 60% year-over-year

- Industrials revenue growth of 15% year-over-year

- A&D revenue growth of 9% year-over-year

- Higher-value markets revenue mix of 82%

- GAAP diluted EPS of $0.20 and non-GAAP diluted EPS of $0.27

TEMPE, Ariz., July 28, 2021 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the second quarter ended June 30, 2021.

Benchmark Electronics (PRNewsfoto/Benchmark Electronics, Inc.)
Benchmark Electronics (PRNewsfoto/Benchmark Electronics, Inc.)



Three Months Ended



Jun 30,


Mar 31,


Jun 30,

In millions, except EPS


2021


2021


2020

Sales


$

545



$

506



$

491


Net income(2)


$

7



$

8



$

(3)


Net income – non-GAAP(1)(2)


$

10



$

8



$

3


Diluted earnings per share(2)


$

0.20



$

0.22



$

(0.09)


Diluted EPS – non-GAAP(1)(2)


$

0.27



$

0.21



$

0.07


Operating margin(2)



2.0

%



2.4

%



(0.4)

%

Operating margin – non-GAAP(1)(2)



2.5

%



2.3

%



1.2

%



(1)

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

(2)

Results for the second quarter ended June 30, 2021 and 2020 and first quarter ended March 31, 2021 include the impact of approximately $0.9 million, $4.1 million and $1.4 million of net COVID-19 related costs, respectively.

"In the second quarter, we delivered double digit revenue growth year-over-year from continued strength in the Semi-Cap market, improving Industrials demand, and strength in the Telecommunications sector," said Jeff Benck, Benchmark's President and CEO. "Additionally, we expanded gross and operating margins supported by our strong revenue growth."

"I am particularly pleased with our team's execution in the quarter given the challenges related to the global supply chain constraints and facility disruptions in Malaysia related to the pandemic. Strong end market demand, new program ramps, and operational execution provide momentum for sequential growth in revenue and gross margins through the balance of 2021."

Cash Conversion Cycle



Jun 30,


Mar 31,


Jun 30,



2021


2021


2020

Accounts receivable days



48




49




55


Contract asset days



26




26




28


Inventory days



75




69




72


Accounts payable days



(69)




(64)




(61)


Advance payments from customers days



(16)




(15)




(10)


Cash Conversion Cycle days



64




65




84


Second Quarter 2021 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


2021


2021


2020

Medical


$

109


20

%


$

109


21

%


$

135


27

%

Semi-Cap



139


26




113


22




87


18


A&D



97


18




89


18




88


18


Industrials



100


18




95


19




87


18




$

445


82

%


$

406


80

%


$

397


81

%



















Jun 30,


Mar 31,


Jun 30,

Traditional Markets


2021


2021


2020

Computing


$

40


7

%


$

44


9

%


$

44


9

%

Telecommunications



60


11




56


11




50


10




$

100


18

%


$

100


20

%


$

94


19

%

Total


$

545


100

%


$

506


100

%


$

491


100

%

Overall, higher-value market revenues were up 9% quarter-over-quarter and 12% year-over-year from growth in semi-cap, industrials and A&D. Traditional market revenues were flat quarter-over-quarter and up 7% year-over-year primarily from growth in the telecommunications sector.

Third Quarter 2021 Outlook

  • Revenue between $555 - $595 million

  • Diluted GAAP earnings per share between $0.27 - $0.35

  • Diluted non-GAAP earnings per share between $0.33 - $0.41 (excluding restructuring charges and other costs and amortization of intangibles)

  • This guidance takes into consideration all known constraints for the quarter and assumes no further significant interruptions to our supply base, operations or customers. Guidance also assumes no material changes to end market conditions due to COVID-19.

Restructuring charges are expected to range between $0.8 million and $1.2 million in the third quarter and the amortization of intangibles is expected to be $1.7 million in the third quarter.

Second Quarter 2021 Earnings Conference Call
The Company will host a conference call to discuss the results today at 5:00 p.m. Eastern Time. The live webcast of the call and accompanying reference materials will be accessible by logging on to the Company's website at www.bench.com. A replay of the broadcast will also be available until Wednesday, August 4, 2021 on the Company's website.

About Benchmark Electronics, Inc.
Benchmark provides comprehensive solutions across the entire product life cycle by 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: commercial aerospace, defense, advanced computing, next generation telecommunications, complex industrials, medical, and semiconductor capital equipment. Benchmark's global operations include facilities in seven countries and its common shares trade on the New York Stock Exchange under the symbol BHE.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts and may include words such as "anticipate," "believe," "intend," "plan," "project," "forecast," "strategy," "position," "continue," "estimate," "expect," "may," "will," "could," "predict," and similar expressions or the negative or other variations thereof. In particular, statements, express or implied, concerning future operating results, our ability to generate sales, income or cash flow, the anticipated impact of the COVID-19 pandemic, the outlook and guidance for third quarter 2021 results, our anticipated plans and responses to the COVID-19 pandemic, our expected revenue mix, our business strategy and strategic initiatives, our repurchases of shares of our common stock and our intentions concerning the payment of dividends, among others, are forward-looking statements. Although we believe these statements are based upon reasonable assumptions, they involve risks, uncertainties and assumptions that are beyond our ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of the company's Annual Report on Form 10-K for the year ended December 31, 2020 and in any of our subsequent reports filed with the Securities and Exchange Commission (SEC). In particular, these statements also depend on the duration, severity and evolution of the COVID-19 pandemic and related risks, including the emergence and severity of its variants, the availability of vaccines and potential hesitancy to utilize them, government and other third-party responses to it and the consequences for the global economy, our business and the businesses of our suppliers and customers, as well as our ability (or inability) to execute on our plans to respond to the COVID-19 pandemic. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes, including the future results of our operations, may vary materially from those indicated. Undue reliance should not be placed on any forward-looking statements. Forward-looking statements are not guarantees of performance. All forward-looking statements included in this document are based upon information available to us as of the date of this document, and we assume no obligation to update.

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 certain 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 also uses non–GAAP measures in order to better assess operating performance and help investors compare results with our previous guidance. In situations where a non-GAAP reconciliation has not been provided, the Company was unable to provide such a reconciliation without unreasonable effort due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. 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


Condensed Consolidated Statements of Income (Loss)

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)




Three Months Ended


Six Months Ended



June 30,


June 30,



2021


2020


2021


2020

Sales


$

544,662



$

490,966



$

1,050,383



$

1,005,930


Cost of sales



496,749




456,294




960,243




927,897


Gross profit



47,913




34,672




90,140




78,033


Selling, general and administrative expenses



34,034




28,516




64,582




60,091


Amortization of intangible assets



1,599




2,371




3,197




4,752


Restructuring charges and other costs



1,581




5,657




3,172




8,572


Ransomware incident related costs (recovery), net









(3,444)





Income (loss) from operations



10,699




(1,872)




22,633




4,618


Interest expense



(2,079)




(2,351)




(4,228)




(4,053)


Interest income



164




287




329




886


Other income (expense), net



440




32




164




(630)


Income (loss) before income taxes



9,224




(3,904)




18,898




821


Income tax expense (benefit)



1,855




(497)




3,612




376


Net income (loss)


$

7,369



$

(3,407)



$

15,286



$

445


Earnings (loss) per share:













Basic


$

0.21



$

(0.09)



$

0.42



$

0.01


Diluted


$

0.20



$

(0.09)



$

0.42



$

0.01


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













Basic



35,753




36,439




36,000




36,614


Diluted



36,061




36,439




36,474




36,863


Benchmark Electronics, Inc. and Subsidiaries


Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)




June 30,


December 31,



2021


2020

Assets







Current assets:







Cash and cash equivalents


$

369,301



$

390,808


Restricted cash



1,142




5,182


Accounts receivable, net



290,073




309,331


Contract assets



154,629




142,779


Inventories



415,322




327,377


Other current assets



36,510




26,874


Total current assets



1,266,977




1,202,351


Property, plant and equipment, net



188,318




185,272


Operating lease right-of-use assets



89,567




79,966


Goodwill and other, net



273,929




276,646


Total assets


$

1,818,791



$

1,744,235









Liabilities and Shareholders' Equity







Current liabilities:







Current installments of long-term debt and finance lease obligations


$

9,259



$

9,161


Accounts payable



380,164




282,208


Advance payments from customers



88,686




84,122


Accrued liabilities



103,300




105,645


Total current liabilities



581,409




481,136


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



126,639




131,051


Operating lease liabilities



80,580




72,120


Other long-term liabilities



62,885




70,340


Shareholders' equity



967,278




989,588


Total liabilities and shareholders' equity


$

1,818,791



$

1,744,235


Benchmark Electronics, Inc. and Subsidiaries


Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)




Six Months Ended



June 30,



2021


2020

Cash flows from operating activities:







Net income


$

15,286



$

445


Depreciation and amortization



21,994




24,531


Stock-based compensation expense



6,863




6,044


Accounts receivable, net



18,959




20,356


Contract assets



(11,850)




7,420


Inventories



(88,634)




(48,668)


Accounts payable



92,677




6,980


Advance payments from customers



4,563




15,267


Other changes in working capital and other, net



(19,585)




(12,457)


Net cash provided by operations



40,273




19,918









Cash flows from investing activities:







Additions to property, plant and equipment and software



(18,619)




(23,290)


Other investing activities, net



188




2,576


Net cash used in investing activities



(18,431)




(20,714)









Cash flows from financing activities:







Share repurchases



(30,319)




(19,329)


Net debt activity



(4,543)




25,608


Other financing activities, net



(14,204)




(12,802)


Net cash used in financing activities



(49,066)




(6,523)









Effect of exchange rate changes



1,677




(218)


Net increase in cash and cash equivalents and restricted cash



(25,547)




(7,537)


Cash and cash equivalents and restricted cash at beginning of year



395,990




363,956


Cash and cash equivalents and restricted cash at end of period


$

370,443



$

356,419


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,



2021


2021


2020


2021


2020

Income (loss) from operations (GAAP)


$

10,699



$

11,934



$

(1,872)



$

22,633



$

4,618


Restructuring charges and other costs



1,581




1,591




5,657




3,172




7,565


Ransomware incident related costs (recovery), net






(3,444)







(3,444)





Impairment















1,007


Customer insolvency (recovery)



(153)




(32)




(353)




(185)




(353)


Amortization of intangible assets



1,599




1,598




2,371




3,197




4,752


Non-GAAP income from operations


$

13,726



$

11,647



$

5,803



$

25,373



$

17,589


















Gross Profit (GAAP)


$

47,913



$

42,227



$

34,672



$

90,140



$

78,033


Customer insolvency (recovery)



(153)




(32)




(353)




(185)




(353)


Non-GAAP gross profit


$

47,760



$

42,195



$

34,319



$

89,955



$

77,680


















Selling, general and administrative expenses (GAAP)


$

34,034



$

30,548



$

28,516



$

64,582



$

60,091


Non-GAAP selling, general and administrative expenses


$

34,034



$

30,548



$

28,516



$

64,582



$

60,091


















Net income (loss) (GAAP)


$

7,369



$

7,917



$

(3,407)



$

15,286



$

445


Restructuring charges and other costs



1,581




1,591




5,657




3,172




7,565


Ransomware incident related costs (recovery), net






(3,444)







(3,444)





Customer insolvency (recovery)



(153)




(32)




(353)




(185)




(353)


Amortization of intangible assets



1,599




1,598




2,371




3,197




4,752


Impairment















1,007


Income tax adjustments(1)



(633)




169




(1,584)




(464)




(2,623)


Non-GAAP net income


$

9,763



$

7,799



$

2,684



$

17,562



$

10,793


















Diluted earnings (loss) per share:
















Diluted (GAAP)


$

0.20



$

0.22



$

(0.09)



$

0.42



$

0.01


Diluted (Non-GAAP)


$

0.27



$

0.21



$

0.07



$

0.48



$

0.29


















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
















Diluted (GAAP)



36,061




36,711




36,439




36,474




36,863


Diluted (Non-GAAP)



36,061




36,711




36,689




36,474




36,863


















Net cash provided by operations


$

3,660



$

36,613



$

23,027



$

40,273



$

19,918


Additions to property, plant and equipment and software



(12,197)




(6,422)




(10,394)




(18,619)




(23,290)


Free cash flow (free cash flow used)


$

(8,537)



$

30,191



$

12,633



$

21,654



$

(3,372)




(1)

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

Cision
Cision

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SOURCE Benchmark Electronics, Inc.