EX-99.1 2 ex991.htm EXHIBIT 99.1  

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

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, AZ, July 24, 2019 – Benchmark Electronics, Inc. (NYSE: 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.

 

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.”

1 

 

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

 

 

 

 

2 

 

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.

 

For More Information, Please Contact:

Lisa K. Weeks, VP of Strategy & Investor Relations

623-300-7052 or lisa.weeks@bench.com

 

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. 

3 

 

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.

###

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

 

 

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.

5 

 

 

 

 

 

 

 

 

 

 

 

 

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

6 

 

 

 

 

 

 

 

 

 

 

 

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

7 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

8