EX-99.1 2 ex99_1.htm EXHIBIT 99.1  

 

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

BENCHMARK ELECTRONICS REPORTS FIRST QUARTER 2017 RESULTS

 

·          Quarterly revenue of $567 million

·          Quarterly operating margin of 2.2% (3.8% non-GAAP)

·          Quarterly EPS of $0.19 ($0.34 non-GAAP)

·          Improved cash conversion cycle to 67 days

·          Operating cash flow of $78 million

 

ANGLETON, TX, April 19, 2017 – Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the first quarter ended March 31, 2017.

 

 

 

 

Three Months Ended

 

 

 

 

Mar 31,

 

 

Dec 31,

 

 

Mar 31,

 

In millions, except EPS

 

2017

 

 

2016

 

 

2016

 

Net sales

 

$567

 

 

$608

 

 

$549

 

Net income

 

$10

 

 

$19

 

 

$11

 

Net income – non-GAAP

 

$17

 

 

$22

 

 

$15

 

Diluted EPS

 

$0.19

 

 

$0.37

 

 

$0.22

 

Diluted EPS – non-GAAP

 

$0.34

 

 

$0.45

 

 

$0.30

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

2.2%

 

 

3.9%

 

 

3.0%

 

Operating margin – non-GAAP

 

3.8%

 

 

4.8%

 

 

4.0%

 

 

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

 

“I am pleased by the Company’s strong performance in our first quarter, providing an excellent start to the year.  Revenues and margins exceeded guidance, and this quarter marks the first quarter in the past eleven that we experienced year-on-year revenue growth.  Non-GAAP EPS of $0.34 exceeded the high end of our guidance by $0.06; cash cycle days improved by 7 days to 67 days; and we generated operating cash flow of $78 million,” said Paul Tufano, Benchmark’s President and CEO.

 

“As we work to transform and reposition the Company in 2017 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.  “Our recent announcement to relocate our corporate headquarters to the Phoenix metropolitan area is a major step in advancing these initiatives.  Arizona offers great access to a highly skilled talent pool, a pro-business climate and proximity to major research universities.  This move will allow us to consolidate our headquarters staff and drive greater efficiency and speed; expand our engineering and solutions capabilities and establish a partnership with Arizona State University;

1 

 

position us closer to our growing aerospace and defense customer base and serve as a foundation to expand our existing precision technology business.”

  

 

First Quarter 2017 Financial Highlights

·         Operating margin was 2.2% (non-GAAP 3.8%).

·         The Company incurred a $5.1 million charge ($0.10 per share) for the write-down of inventory and provisions to accounts receivable associated with the insolvency of a customer.  These charges increased cost of sales by $3.4 million and SG&A by $1.7 million and are reflected as a non-GAAP adjustment.

·         Cash flows from operating activities were $78 million.

·         Cash conversion cycle improved 7 days from 74 at December 31, 2016 to 67 days at March 31, 2017.

·         Cash was $752 million at March 31, of which $93 million was available in the U.S.

 

Cash Conversion Cycle

 

 

Mar 31,

 

 

 

Dec 31,

 

 

 

Mar 31,

 

 

 

2017

 

 

 

2016

 

 

 

2016

 

Accounts receivable days

 

61

 

 

 

65

 

 

 

68

 

Inventory days

 

70

 

 

 

62

 

 

 

70

 

Accounts payable days

 

(60)

 

 

 

(53)

 

 

 

(39)

 

Customer deposits

 

(4)

 

 

 

-

 

 

 

-

 

 

 

67

 

 

 

74

 

 

 

99

 

 

First Quarter 2017 Industry Sector Update

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

 

 

 

Mar 31,

 

 

 

Dec 31,

 

 

 

Mar 31,

 

 

Higher-Value Markets

 

2017

 

 

 

2016

 

 

 

2016

 

Industrials

$

118

 

21

%

 

$

120

 

20

%

 

$

138

 

25

%

A&D

 

104

 

18

 

 

 

102

 

17

 

 

 

91

 

16

 

Medical

 

86

 

15

 

 

 

86

 

14

 

 

 

83

 

15

 

Test &  Instrumentation

 

77

 

14

 

 

 

65

 

11

 

 

 

53

 

10

 

 

 

$

385

 

68

%

 

$

373

 

62

%

 

$

365

 

66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mar 31,

 

 

 

Dec 31,

 

 

 

Mar 31,

 

 

Traditional Markets

 

2017

 

 

 

2016

 

 

 

2016

 

Computing

$

101

 

18

%

 

$

136

 

22

%

 

$

91

 

17

%

Telecommunications

 

81

 

14

 

 

 

99

 

16

 

 

 

93

 

17

 

 

 

$

182

 

32

%

 

$

235

 

38

%

 

$

184

 

34

%

 

Total

$

567

 

100

%

 

$

608

 

100

%

 

$

549

 

100

%

 

Overall revenue increased 3% year-over-year driven by strong Test & Instrumentation growth serving the semi-capital equipment market, Aerospace and Defense (A&D) growth primarily from defense programs, and Computing strength from new and existing customers. To reflect

2 

 

our increasing emphasis on A&D as part of our overall strategy, we will now report this sector separately going forward. 

 

Medical demand was muted by softness across several top customers, and Industrials remains challenged by broad-based demand softness in energy and infrastructure related products.

 

First Quarter 2017 Bookings Update

·         New program bookings of $118 to $149 million.

·         21 engineering awards supporting early engagement opportunities.

·         27 manufacturing wins across all market sectors.

 

The Company projects that new program bookings for the first quarter will result in annualized revenue of $118 to $149 million when fully launched in the next 12-18 months.  The new program bookings align with Benchmark’s strategic focus on higher-value markets.

 

Second Quarter 2017 Outlook

·         Revenue between $565 - $585 million.

·         Diluted GAAP earnings per share between $0.26 - $0.30.

·         Diluted non-GAAP earnings per share between $0.31 - $0.35 (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 $0.03 per share.

 

First 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 machine 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

979-331-1361 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

3 

 

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 “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 second 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.

 

###

4 

 

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,

 

 

 

 

2017

 

2016

 

2016

 

 

 

 

 

 

 

 

 

 

Income from operations (GAAP)

$

12,417

$

23,548

$

16,268

 

Restructuring charges and other costs

 

1,511

 

2,663

 

2,789

 

Customer insolvency

 

5,120

 

-

 

-

 

Amortization of intangible assets

 

2,481

 

2,893

 

2,804

 

Non-GAAP income from operations

$

21,529

$

29,104

$

21,861

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

9,687

$

18,568

$

11,052

 

Restructuring charges and other costs

 

1,511

 

2,663

 

2,789

 

Customer insolvency

 

5,120

 

-

 

-

 

Amortization of intangible assets

 

2,481

 

2,893

 

2,804

 

Income tax adjustments(1)

 

(1,580)

 

(1,781)

 

(1,642)

 

Non-GAAP net income

$

17,219

$

22,343

$

15,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share: (GAAP)

 

 

 

 

 

 

 

 

Basic

$

0.20

$

0.38

$

0.22

 

 

Diluted

$

0.19

$

0.37

$

0.22

 

 

 

 

 

 

 

 

 

 

Earnings per share: (Non-GAAP)

 

 

 

 

 

 

 

 

Basic

$

0.35

$

0.46

$

0.30

 

 

Diluted

$

0.34

$

0.45

$

0.30

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used

 

 

 

 

 

 

 

 in calculating earnings per share:

 

 

 

 

 

 

 

 

Basic

 

49,511

 

49,063

 

49,848

 

 

Diluted

 

50,080

 

49,544

 

50,287

 

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

5 

 

Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

Consolidated Statements of Income

 

(Amounts in Thousands, Except Per Share Data)

 

(UNAUDITED)

 

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

2017

 

2016

 

Sales

$

566,501

$

549,225

 

Cost of sales

 

517,441

 

498,908

 

 

Gross profit

 

49,060

 

50,317

 

Selling, general and administrative expenses

 

32,651

 

28,456

 

Amortization of intangible assets

 

2,481

 

2,804

 

Restructuring charges and other costs

 

1,511

 

2,789

 

 

Income from operations

 

12,417

 

16,268

 

Interest expense

 

(2,225)

 

(2,334)

 

Interest income

 

1,074

 

264

 

Other expense, net

 

(81)

 

(223)

 

 

Income before income taxes

 

11,185

 

13,975

 

Income tax expense

 

1,498

 

2,923

 

 

Net income

$

9,687

$

11,052

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

Basic

$

0.20

$

0.22

 

 

Diluted

$

0.19

$

0.22

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Basic

 

49,511

 

49,848

 

 

Diluted

 

50,080

 

50,287

 

6 

 

Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)

 

 

 

 

 

 

March 31,

 

December 31,

 

 

 

 

 

 

2017

 

2016

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

752,477

$

681,433

 

 

Accounts receivable, net

 

381,200

 

440,692

 

 

Inventories

 

404,023

 

381,334

 

 

Other current assets

 

35,352

 

28,203

 

 

 

 

Total current assets

 

1,573,052

 

1,531,662

 

Property, plant and equipment, net

 

165,080

 

166,148

 

Goodwill and other, net

 

297,641

 

300,858

 

 

 

 

Total assets

$

2,035,773

$

1,998,668

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current installments of long-term debt and capital lease obligations

$

13,865

$

12,396

 

 

Accounts payable

 

343,796

 

326,249

 

 

Accrued liabilities

 

79,507

 

73,736

 

 

 

 

Total current liabilities

 

437,168

 

412,381

 

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

 

206,463

 

211,252

 

Other long-term liabilities

 

10,083

 

9,570

 

Shareholders’ equity

 

1,382,059

 

1,365,465

 

 

 

 

Total liabilities and shareholders’ equity

$

2,035,773

$

1,998,668

7 

 

Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2017

 

2016

Cash flows from operating activities:   

 

 

 

 

 

 

Net income

$

9,687

$

11,052

 

Depreciation and amortization

 

12,273

 

13,907

 

Stock-based compensation expense

 

2,160

 

2,113

 

Accounts receivable, net

 

59,685

 

65,382

 

Inventories

 

(22,512)

 

22,756

 

Accounts payable

 

16,225

 

(31,940)

 

Other changes in working capital and other

 

387

 

(6,189)

 

 

Net cash provided by operations

 

77,905

 

77,081

 

 

 

 

 

 

Cash flows from investing activities:   

 

 

 

 

 

 

Additions to property, plant and equipment and software

 

(7,578)

 

(7,837)

 

Other investing activities, net

 

109

 

192

 

 

Net cash used in investing activities

 

(7,469)

 

(7,645)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:   

 

 

 

 

 

 

Share repurchases  

 

 

(1,000)

 

(14,205)

 

Net debt activity

 

(3,082)

 

(3,078)

 

Other financing activities, net

 

4,349

 

344

 

 

Net cash provided by (used in) financing activities

 

267

 

(16,939)

Effect of exchange rate changes   

 

 

341

 

675

Net increase in cash and cash equivalents

 

71,044

 

53,172

 

Cash and cash equivalents at beginning of year

 

681,433

 

465,995

 

Cash and cash equivalents at end of period

$

752,477

$

519,167

 

8