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EX-99.2 - EXHIBIT 99.2 - BENCHMARK ELECTRONICS INCex99-2.htm
8-K - FORM 8-K - BENCHMARK ELECTRONICS INCform8k.htm

 

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

BENCHMARK ELECTRONICS REPORTS SECOND QUARTER 2017 RESULTS

 

·          Quarterly revenue of $617 million

·          Quarterly operating margin of 3.6% (4.1% non-GAAP)

·          Quarterly EPS of $0.34 ($0.38 non-GAAP)

·          Improved cash conversion cycle to 65 days

·          Operating cash flow of $15 million

 

SCOTTSDALE, AZ, July 19, 2017 – Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the second quarter ended June 30, 2017.

 

 

 

 

Three Months Ended

 

 

 

 

Jun 30,

 

 

Mar 31,

 

 

Jun 30,

 

In millions, except EPS

 

2017

 

 

2017

 

 

2016

 

Net sales

 

$617

 

 

$567

 

 

$579

 

Net income

 

$17

 

 

$10

 

 

$13

 

Net income – non-GAAP

 

$19

 

 

$17

 

 

$17

 

Diluted EPS

 

$0.34

 

 

$0.19

 

 

$0.26

 

Diluted EPS – non-GAAP

 

$0.38

 

 

$0.34

 

 

$0.35

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

3.6%

 

 

2.2%

 

 

3.1%

 

Operating margin – non-GAAP

 

4.1%

 

 

3.8%

 

 

4.2%

 

 

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

 

“I am very pleased with our second quarter performance; the Company delivered on its commitments and posted strong operational results for the quarter.  Revenue exceeded guidance and reflected year-on-year growth for the second consecutive quarter.  Non-GAAP EPS of $0.38 exceeded the high end of our guidance by $0.03; cash cycle days ended at 65 days, well below our 70 day target; and we achieved 9.5% ROIC, a 50 bps quarter-over-quarter improvement,” said Paul Tufano, Benchmark’s President and CEO.

 

“We remain focused on the key initiatives to transform and reposition the Company to achieve our long-term business model objectives, namely the optimization of our global network, the implementation of our market-sector sales organization and the expansion of our engineering solutions capability,” added Tufano.  “We are in the process of relocating our corporate headquarters to Arizona and anticipate that the majority of this move will be completed in the third quarter.  I am also very pleased to have Mike Buseman join us as our new head of Global Operations.  Under Mike’s leadership, we will look to accelerate our initiatives related to operational excellence and customer experience.  Additionally, our market-sector sales focus is beginning to yield new customer growth, especially in our targeted higher-value markets, as reflected in our bookings for the quarter.  We continue to emphasize engineering-led customer

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engagements and are aggressively expanding our offerings to provide higher-value propositions to current and potential customers.”

 

Second Quarter 2017 Financial Highlights

·         Operating margin was 3.6% (non-GAAP 4.1%).

·         Cash flows from operating activities were $15 million.

·         Cash conversion cycle improved 18 days from 83 at June 30, 2016 to 65 days at June 30, 2017.

·         Cash was $749 million at June 30, of which $92 million was available in the U.S.

 

Cash Conversion Cycle

 

 

Jun 30,

 

 

 

Mar 31,

 

 

 

Jun 30,

 

 

 

2017

 

 

 

2017

 

 

 

2016

 

Accounts receivable days

 

57

 

 

 

61

 

 

 

66

 

Inventory days

 

67

 

 

 

70

 

 

 

64

 

Accounts payable days

 

(55)

 

 

 

(60)

 

 

 

(47)

 

Customer deposits

 

(4)

 

 

 

(4)

 

 

 

-

 

 

 

65

 

 

 

67

 

 

 

83

 

 

Second Quarter 2017 Industry Sector Update

Revenue by industry sector (dollars in millions) was as follows.

 

 

 

Jun 30,

 

 

 

Mar 31,

 

 

 

Jun 30,

 

 

Higher-Value Markets

 

2017

 

 

 

2017

 

 

 

2016

 

Industrials

$

124

 

20

%

 

$

118

 

21

%

 

$

144

 

25

%

A&D

 

100

 

16

 

 

 

104

 

18

 

 

 

86

 

15

 

Medical

 

86

 

14

 

 

 

86

 

15

 

 

 

92

 

16

 

Test Instrumentation

 

89

 

15

 

 

 

77

 

14

 

 

 

60

 

10

 

 

 

$

399

 

65

%

 

$

385

 

68

%

 

$

382

 

66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jun 30,

 

 

 

Mar 31,

 

 

 

Jun 30,

 

 

Traditional Markets

 

2017

 

 

 

2017

 

 

 

2016

 

Computing

$

142

 

23

%

 

$

101

 

18

%

 

$

110

 

19

%

Telecommunications

 

76

 

12

 

 

 

81

 

14

 

 

 

87

 

15

 

 

 

$

218

 

35

%

 

$

182

 

32

%

 

$

197

 

34

%

 

Total

$

617

 

100

%

 

$

567

 

100

%

 

$

579

 

100

%

 

Overall revenue increased 6% year-over-year driven by continued strong demand in Test & Instrumentation serving the semi-capital equipment market, Computing growth from existing storage and new security customers, and Aerospace and Defense (A&D) growth from defense programs.  Industrials and Medical growth remained muted year-over-year from softness across several of our top customers.

 

 

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Second Quarter 2017 Bookings Update

·         New program bookings of $129 to $155 million.

·         14 engineering awards supporting early engagement opportunities.

·         25 manufacturing wins across all market sectors.

 

The Company projects that new program bookings for the second quarter will result in annualized revenue of $129 to $155 million when fully launched in the next 12-18 months.  The new program bookings align with Benchmark’s strategic focus on higher-value markets.

 

Third Quarter 2017 Outlook

·         Revenue between $575 - $595 million.

·         Diluted GAAP earnings per share between $0.29 - $0.33.

·         Diluted non-GAAP earnings per share between $0.32 - $0.36 (excluding restructuring charges and amortization of intangibles expected to approximate $0.03 per share).  The income tax impact of the non-GAAP adjustments using the applicable effective tax rates is $0.03 per share.

 

Second Quarter 2017 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 worldwide integrated electronics manufacturing services (EMS), engineering and design services, and precision machining services to original equipment manufacturers in the following industries: industrial controls, aerospace and defense, telecommunications, computers and related products for business enterprises, medical devices, and test and instrumentation.  Benchmark’s global operations include facilities in seven countries, and its common shares trade on the New York Stock Exchange under the symbol BHE.

 

For More Information, Please Contact:

Lisa K. Weeks, VP of Strategy & Investor Relations

480-372-4304 or lisa.weeks@bench.com

 

Non-GAAP Financial Measures

This press release includes financial measures that exclude certain items and therefore do not follow U.S. generally accepted accounting principles (GAAP).  A detailed reconciliation between the GAAP results and results excluding special items (non-GAAP) is included at the end of this press release.  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.  Benchmark’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

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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.

 

Forward-Looking Statements

This press release contains certain forward-looking statements within the scope of the Securities Act of 1933 and the Securities Exchange Act of 1934.  The words “expect,” “estimate,” “plan,” “anticipate,” “project,” “predict,” “goals,” “targeting” and similar terms, and the negatives thereof, often identify forward-looking statements, which are not limited to historical facts.  The Company’s forward-looking statements include, among other things, projections relating to the future value of bookings and third quarter 2017 revenues and diluted earnings per share.  Although Benchmark believes these statements are based upon reasonable assumptions, they involve risks and uncertainties relating to operations, markets and 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.

 

All forward-looking statements included in this release are based upon information available to Benchmark as of the date hereof, and the Company assumes no obligation to update them.  Readers are advised to consult further disclosures on related subjects, particularly in Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, in its other filings with the Securities and Exchange Commission and in its press releases.

 

###

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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,

 

 

June 30,

 

 

 

2017

 

2017

 

2016

 

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations (GAAP)

$

22,227

$

12,417

$

17,740

 

$

34,644

$

34,008

Restructuring charges and other costs

 

1,544

 

1,511

 

3,602

 

 

3,055

 

6,391

Customer insolvency (recovery)

 

(710)

 

5,120

 

-

 

 

4,410

 

-

Amortization of intangible assets

 

2,481

 

2,481

 

2,972

 

 

4,962

 

5,775

Non-GAAP income from operations

$

25,542

$

21,529

$

24,314

 

$

47,071

$

46,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

17,176

$

9,687

$

12,685

 

$

26,863

$

23,737

Restructuring charges and other costs

 

1,544

 

1,511

 

3,602

 

 

3,055

 

6,391

Customer insolvency (recovery)

 

(710)

 

5,120

 

-

 

 

4,410

 

-

Amortization of intangible assets

 

2,481

 

2,481

 

2,972

 

 

4,962

 

5,775

Income tax adjustments(1)

 

(1,265)

 

(1,580)

 

(2,087)

 

 

(2,845)

 

(3,729)

Non-GAAP net income

$

19,226

$

17,219

$

17,172

 

$

36,445

$

32,174

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share: (GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.35

$

0.20

$

0.26

 

$

0.54

$

0.48

 

Diluted

$

0.34

$

0.19

$

0.26

 

$

0.54

$

0.47

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share: (Non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.39

$

0.35

$

0.35

 

$

0.73

$

0.65

 

Diluted

$

0.38

$

0.34

$

0.35

 

$

0.73

$

0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in

 

 

 

 

 

 

 

 

 

 

   calculating earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

49,766

 

49,511

 

49,323

 

 

49,640

 

49,586

 

Diluted

 

50,239

 

50,080

 

49,667

 

 

50,209

 

50,042

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

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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,

 

 

2017

 

2016

 

 

2017

 

2016

Sales

$

616,904

$

579,342

 

$

1,183,405

$

1,128,567

Cost of sales

 

558,317

 

526,488

 

 

1,075,758

 

1,025,396

 

Gross profit

 

58,587

 

52,854

 

 

107,647

 

103,171

Selling, general and administrative expenses

 

32,335

 

28,540

 

 

64,986

 

56,997

Amortization of intangible assets

 

2,481

 

2,972

 

 

4,962

 

5,775

Restructuring charges and other costs

 

1,544

 

3,602

 

 

3,055

 

6,391

 

Income from operations

 

22,227

 

17,740

 

 

34,644

 

34,008

Interest expense

 

(2,312)

 

(2,299)

 

 

(4,537)

 

(4,633)

Interest income

 

1,213

 

329

 

 

2,287

 

593

Other income (expense), net

 

(830)

 

71

 

 

(911)

 

(152)

 

Income before income taxes

 

20,298

 

15,841

 

 

31,483

 

29,816

Income tax expense

 

3,122

 

3,156

 

 

4,620

 

6,079

 

Net income

$

17,176

$

12,685

 

$

26,863

$

23,737

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

Basic

$

0.35

$

0.26

 

$

0.54

$

0.48

 

Diluted

$

0.34

$

0.26

 

$

0.54

$

0.47

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in calculating

 

 

 

 

 

 

 

 

   earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

49,766

 

49,323

 

 

49,640

 

49,586

 

Diluted

 

50,239

 

49,667

 

 

50,209

 

50,042

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Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)

 

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

 

 

2017

 

2016

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

749,311

$

681,433

 

 

Accounts receivable, net

 

391,830

 

440,692

 

 

Inventories

 

416,030

 

381,334

 

 

Other current assets

 

40,473

 

28,203

 

 

 

 

Total current assets

 

1,597,644

 

1,531,662

 

Property, plant and equipment, net

 

172,080

 

166,148

 

Goodwill and other, net

 

294,716

 

300,858

 

 

 

 

Total assets

$

2,064,440

$

1,998,668

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current installments of long-term debt and capital lease obligations

$

15,333

$

12,396

 

 

Accounts payable

 

343,241

 

326,249

 

 

Accrued liabilities

 

87,548

 

73,736

 

 

 

 

Total current liabilities

 

446,122

 

412,381

 

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

 

202,122

 

211,252

 

Other long-term liabilities

 

10,359

 

9,570

 

Shareholders’ equity

 

1,405,837

 

1,365,465

 

 

 

 

Total liabilities and shareholders’ equity

$

2,064,440

$

1,998,668

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Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

June 30,

 

 

 

 

 

 

2017

 

2016

Cash flows from operating activities:   

 

 

 

 

 

 

Net income

$

26,863

$

23,737

 

Depreciation and amortization

 

24,317

 

27,900

 

Stock-based compensation expense

 

4,505

 

3,981

 

Accounts receivable, net

 

49,394

 

57,044

 

Inventories

 

(34,218)

 

37,034

 

Accounts payable

 

16,675

 

23,084

 

Other changes in working capital and other

 

4,993

 

(14,646)

 

 

Net cash provided by operations

 

92,529

 

158,134

 

 

 

 

 

 

Cash flows from investing activities:   

 

 

 

 

 

 

Additions to property, plant and equipment and software

 

(26,379)

 

(16,203)

 

Other investing activities, net

 

380

 

305

 

 

Net cash used in investing activities

 

(25,999)

 

(15,898)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:   

 

 

 

 

 

 

Share repurchases  

 

 

(2,000)

 

(29,315)

 

Net debt activity

 

(6,185)

 

(6,149)

 

Other financing activities, net

 

7,282

 

409

 

 

Net cash used in financing activities

 

(903)

 

(35,055)

Effect of exchange rate changes   

 

 

2,251

 

72

Net increase in cash and cash equivalents

 

67,878

 

107,253

 

Cash and cash equivalents at beginning of year

 

681,433

 

465,995

 

Cash and cash equivalents at end of period

$

749,311

$

573,248

 

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