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

 

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

BENCHMARK ELECTRONICS REPORTS THIRD QUARTER 2017 RESULTS

 

·          Quarterly revenue of $604 million

·          Quarterly operating margin of 3.4% (4.1% non-GAAP)

·          Quarterly EPS of $0.35 ($0.39 non-GAAP)

 

SCOTTSDALE, AZ, October 18, 2017 – Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the third quarter ended September 30, 2017.

 

 

 

 

Three Months Ended

 

 

 

 

Sep 30,

 

 

Jun 30,

 

 

Sep 30,

 

In millions, except EPS

 

2017

 

 

2017

 

 

2016

 

Net sales

 

$604

 

 

$617

 

 

$574

 

Net income

 

$18

 

 

$17

 

 

$22

 

Net income – non-GAAP

 

$20

 

 

$19

 

 

$18

 

Diluted EPS

 

$0.35

 

 

$0.34

 

 

$0.44

 

Diluted EPS – non-GAAP

 

$0.39

 

 

$0.38

 

 

$0.36

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

3.4%

 

 

3.6%

 

 

3.1%

 

Operating margin – non-GAAP

 

4.1%

 

 

4.1%

 

 

4.3%

 

 

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

 

“I am pleased by the Company’s performance in the third quarter, meeting or exceeding each of our commitments.  Revenues exceeded our guidance and marked the third consecutive quarter that we experienced year-on-year revenue growth.  Non-GAAP EPS of $0.39 exceeded the high-end of our guidance by $0.03; cash cycle days ended at 72, within our target range, and an eight-day improvement from the year ago period; and we achieved 9.9% ROIC, a 40 bps quarter‐over‐quarter improvement,” said Paul Tufano, Benchmark’s President and CEO.

 

“As we work to reposition the Company to achieve our business model objectives, we remain focused on the key initiatives critical to our success, namely the optimization of our global network; the implementation of our market-sector sales organization; and the expansion of our engineering and solutions capabilities,” added Tufano.  “The transition of our headquarters to the Phoenix area is substantially complete, and we are making progress on our operational excellence and customer care initiatives.  Our market-sector sales focus and incremental go-to-market investments are beginning to yield results as reflected in our third quarter bookings, which were above the $150 million level for the first time in 12 quarters.”

 

“We continue to emphasize our engineering-led customer engagements including the recent announcement that Benchmark was named Qualcomm Life’s partner to commercialize their new product line of interconnected biometric sensors and to be the FDA manufacturer of

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record,” said Tufano.  “We will work with Qualcomm to have the device ready for FDA submission in 2018 with a goal of commercial availability to customers next year.  This engagement is a pivotal milestone, which reinforces our engineering-led solutions business model and supports our ongoing IoT investment strategy.”

 

“Today, we also announce with mixed emotions that Don Adam, Chief Financial Officer, will be retiring from the Company.  Don has determined that a permanent relocation to Phoenix would not be in the best interest of his family and will be departing by the end of the year.  A search for his successor is currently underway,” said Tufano.  “Don has been a devoted Benchmark employee for the past 15 years and has been invaluable to me this past year as we have formulated plans to transform Benchmark.  We are indebted to Don for his service and wish him all the best in his future endeavors.”

 

Third Quarter 2017 Financial Highlights

·         Operating margin was 3.4% (non-GAAP 4.1%).

·         Cash conversion cycle improved 8 days from 80 at September 30, 2016 to 72 days at September 30, 2017.

·         Cash was $730 million at September 30, of which $75 million was available in the U.S.

 

Cash Conversion Cycle

 

 

Sep 30,

 

 

 

Jun 30,

 

 

 

Sep 30,

 

 

 

2017

 

 

 

2017

 

 

 

2016

 

Accounts receivable days

 

61

 

 

 

57

 

 

 

65

 

Inventory days

 

70

 

 

 

67

 

 

 

68

 

Accounts payable days

 

(55)

 

 

 

(55)

 

 

 

(53)

 

Customer deposits

 

(4)

 

 

 

(4)

 

 

 

-

 

 

 

72

 

 

 

65

 

 

 

80

 

 

Third Quarter 2017 Industry Sector Update

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

 

 

 

Sep 30,

 

 

 

Jun 30,

 

 

 

Sep 30,

 

 

Higher-Value Markets

 

2017

 

 

 

2017

 

 

 

2016

 

Industrials

$

124

 

20

%

 

$

124

 

20

%

 

$

141

 

25

%

A&D

 

96

 

16

 

 

 

100

 

16

 

 

 

82

 

14

 

Medical

 

101

 

17

 

 

 

86

 

14

 

 

 

86

 

15

 

Test Instrumentation

 

88

 

15

 

 

 

89

 

15

 

 

 

66

 

11

 

 

 

$

409

 

68

%

 

$

399

 

65

%

 

$

375

 

65

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sep 30,

 

 

 

Jun 30,

 

 

 

Sep 30,

 

 

Traditional Markets

 

2017

 

 

 

2017

 

 

 

2016

 

Computing

$

124

 

20

%

 

$

142

 

23

%

 

$

107

 

19

%

Telecommunications

 

71

 

12

 

 

 

76

 

12

 

 

 

92

 

16

 

 

 

$

195

 

32

%

 

$

218

 

35

%

 

$

199

 

35

%

 

Total

$

604

 

100

%

 

$

617

 

100

%

 

$

574

 

100

%

 

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Overall revenue increased 5% year-over-year driven by continued strong demand in Test & Instrumentation serving the semi-capital equipment market, Computing growth from existing and new customers, Medical growth from new programs and Aerospace and Defense (A&D) growth from defense programs.  Industrials and Telecommunications growth remained muted year-over-year from softness across several of our top customers.

 

Third Quarter 2017 Bookings Update

·         New program bookings of $138 to $165 million.

·         14 engineering awards supporting early engagement opportunities.

·         31 manufacturing wins across all market sectors.

 

The Company projects that new program bookings for the third quarter will result in annualized revenue of $138 to $165 million when fully launched in the next 12-18 months.  The new program bookings align with Benchmark’s strategic focus on higher-value markets.

 

Fourth Quarter 2017 Outlook

·         Revenue between $590 - $610 million.

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

·         Diluted non-GAAP earnings per share between $0.34 - $0.38 (excluding restructuring charges and amortization of intangibles expected to approximate $0.05 per share).  The income tax impact of the non-GAAP adjustments using the applicable effective tax rates is $0.02 per share.

 

Third 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 eight 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

623-300-7052 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

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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 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 “project,” “expect,” “estimate,” “plan,” “anticipate,” “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 fourth 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 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.

 

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

 

 

Nine Months Ended

 

 

 

Sep 30,

 

Jun 30,

 

Sep 30,

 

 

September 30,

 

 

 

2017

 

2017

 

2016

 

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations (GAAP)

$

20,815

$

22,227

$

18,082

 

$

55,459

$

52,090

Restructuring charges and other costs

 

2,511

 

1,544

 

3,485

 

 

5,566

 

9,876

Customer insolvency (recovery)

 

(1,514)

 

(710)

 

-

 

 

2,896

 

-

Amortization of intangible assets

 

2,736

 

2,481

 

3,170

 

 

7,698

 

8,945

Non-GAAP income from operations

$

24,548

$

25,542

$

24,737

 

$

71,619

$

70,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

17,512

$

17,176

$

21,742

 

$

44,375

$

45,479

Restructuring charges and other costs

 

2,511

 

1,544

 

3,485

 

 

5,566

 

9,876

Customer insolvency (recovery)

 

(1,514)

 

(710)

 

-

 

 

2,896

 

-

Amortization of intangible assets

 

2,736

 

2,481

 

3,170

 

 

7,698

 

8,945

Income tax adjustments(1)

 

(1,674)

 

(1,265)

 

(2,207)

 

 

(4,519)

 

(5,935)

Discrete tax benefits

 

-

 

-

 

(8,270)

 

 

-

 

(8,270)

Non-GAAP net income

$

19,571

$

19,226

$

17,920

 

$

56,016

$

50,095

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share: (GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.35

$

0.35

$

0.44

 

$

0.89

$

0.92

 

Diluted

$

0.35

$

0.34

$

0.44

 

$

0.88

$

0.91

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share: (Non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.39

$

0.39

$

0.37

 

$

1.13

$

1.01

 

Diluted

$

0.39

$

0.38

$

0.36

 

$

1.11

$

1.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in

 

 

 

 

 

 

 

 

 

 

   calculating earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

49,865

 

49,766

 

48,965

 

 

49,716

 

49,377

 

Diluted

 

50,330

 

50,239

 

49,414

 

 

50,292

 

49,878

(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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

2017

 

2016

 

 

2017

 

2016

Sales

$

603,550

$

574,341

 

$

1,786,955

$

1,702,908

Cost of sales

 

545,395

 

521,519

 

 

1,621,153

 

1,546,915

 

Gross profit

 

58,155

 

52,822

 

 

165,802

 

155,993

Selling, general and administrative expenses

 

32,093

 

28,085

 

 

97,079

 

85,082

Amortization of intangible assets

 

2,736

 

3,170

 

 

7,698

 

8,945

Restructuring charges and other costs

 

2,511

 

3,485

 

 

5,566

 

9,876

 

Income from operations

 

20,815

 

18,082

 

 

55,459

 

52,090

Interest expense

 

(2,324)

 

(2,302)

 

 

(6,861)

 

(6,935)

Interest income

 

1,334

 

577

 

 

3,621

 

1,170

Other expense, net

 

(394)

 

(383)

 

 

(1,305)

 

(535)

 

Income before income taxes

 

19,431

 

15,974

 

 

50,914

 

45,790

Income tax expense (benefit)

 

1,919

 

(5,768)

 

 

6,539

 

311

 

Net income

$

17,512

$

21,742

 

$

44,375

$

45,479

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

Basic

$

0.35

$

0.44

 

$

0.89

$

0.92

 

Diluted

$

0.35

$

0.44

 

$

0.88

$

0.91

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in calculating

 

 

 

 

 

 

 

 

   earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

49,865

 

48,965

 

 

49,716

 

49,377

 

Diluted

 

50,330

 

49,414

 

 

50,292

 

49,878

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Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

 

 

2017

 

2016

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

730,146

$

681,433

 

 

Accounts receivable, net

 

411,550

 

440,692

 

 

Inventories

 

421,858

 

381,334

 

 

Other current assets

 

42,349

 

28,203

 

 

 

 

Total current assets

 

1,605,903

 

1,531,662

 

Property, plant and equipment, net

 

178,122

 

166,148

 

Goodwill and other, net

 

292,681

 

300,858

 

 

 

 

Total assets

$

2,076,706

$

1,998,668

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current installments of long-term debt and capital lease obligations

$

16,804

$

12,396

 

 

Accounts payable

 

335,315

 

326,249

 

 

Accrued liabilities

 

93,674

 

73,736

 

 

 

 

Total current liabilities

 

445,793

 

412,381

 

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

 

197,766

 

211,252

 

Other long-term liabilities

 

8,236

 

9,570

 

Shareholders’ equity

 

1,424,911

 

1,365,465

 

 

 

 

Total liabilities and shareholders’ equity

$

2,076,706

$

1,998,668

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Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

2017

 

2016

Cash flows from operating activities:   

 

 

 

 

 

 

Net income

$

44,375

$

45,479

 

Depreciation and amortization

 

36,591

 

42,002

 

Stock-based compensation expense

 

6,819

 

4,302

 

Accounts receivable, net

 

30,926

 

61,776

 

Inventories

 

(38,778)

 

13,991

 

Accounts payable

 

3,922

 

59,183

 

Other changes in working capital and other

 

6,035

 

1,851

 

 

Net cash provided by operations

 

89,890

 

228,584

 

 

 

 

 

 

Cash flows from investing activities:   

 

 

 

 

 

 

Additions to property, plant and equipment and software

 

(37,736)

 

(25,398)

 

Business acquisition, net of cash acquired

 

-

 

10,750

 

Other investing activities, net

 

364

 

213

 

 

Net cash used in investing activities

 

(37,372)

 

(14,435)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:   

 

 

 

 

 

 

Share repurchases  

 

 

(5,887)

 

(40,862)

 

Net debt activity

 

(9,288)

 

(9,224)

 

Other financing activities, net

 

9,012

 

5,289

 

 

Net cash used in financing activities

 

(6,163)

 

(44,797)

Effect of exchange rate changes   

 

 

2,358

 

336

Net increase in cash and cash equivalents

 

48,713

 

169,688

 

Cash and cash equivalents at beginning of year

 

681,433

 

465,995

 

Cash and cash equivalents at end of period

$

730,146

$

635,683

 

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