EX-99.1 2 ex991.htm EXHIBIT 99.1  

 

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

BENCHMARK ELECTRONICS REPORTS THIRD QUARTER 2019 RESULTS

 

·        Quarterly revenue of $555 million

·        Medical revenue growth of 33% year-over-year

·        A&D revenue growth of 10% year-over-year

·        Quarterly gross margin expansion of 60 bps to 9.5%

·        Quarterly EPS of $0.19 ($0.36 non-GAAP)

 

TEMPE, AZ, October 24, 2019 – Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the third quarter ended September 30, 2019.

 

 

 

Three Months Ended

 

 

Sep 30,

 

 

Jun 30,

 

Sep 30,

In millions, except EPS

2019

 

 

2019

 

2018

Sales

$555

 

 

$602

 

$641

Net income

$7

 

 

$9

 

$8

Net income – non-GAAP(1)

$14

 

 

$14

 

$15

Diluted EPS

$0.19

 

 

$0.24

 

$0.17

Diluted EPS – non-GAAP(1)

$0.36

 

 

$0.36

 

$0.33

 

 

 

 

 

 

 

 

Operating margin

1.8%

 

 

2.0%

 

1.7%

Operating margin – non-GAAP(1)

3.2%

 

 

3.1%

 

2.9%

 

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

 

Jeff Benck, Benchmark's President and CEO stated, “We are pleased with the solid execution of our team in the third quarter.  Revenues were up year-over-year in our Medical and Aerospace & Defense (A&D) markets with non-GAAP gross margins improving 60 bps sequentially to 9.5% and operating margins up 10 bps sequentially to 3.2% respectively.”

 

“We are laying the groundwork for an even stronger Benchmark with the progress our engaged team has made on our strategic priorities which are focused on:  improving our go-to-market approach, driving continued operational efficiencies, centralizing our G&A organization, and accelerating our solutions in the market.”

 

 

1 

 

Cash Conversion Cycle

 

 

Sep 30,

 

 

 

Jun 30,

 

 

 

Sep 30,

 

 

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

 

 

 

 

 

 

 

Accounts receivable days

 

56

 

 

 

54

 

 

 

64

 

Contract asset days

 

26

 

 

 

23

 

 

 

22

 

Inventory days

 

57

 

 

 

52

 

 

 

49

 

Accounts payable days

 

(53)

 

 

 

(61)

 

 

 

(57)

 

Customer deposits

 

(7)

 

 

 

(3)

 

 

 

(4)

 

Cash Conversion Cycle days  

 

79

 

 

 

65

 

 

 

74

 

 

Third Quarter 2019 Industry Sector Update

Revenue and percentage of sales by industry sector (in millions) was as follows.

 

 

 

Sep 30,

 

 

 

Jun 30,

 

 

 

Sep 30,

 

 

Higher-Value Markets

 

2019

 

 

 

2019

 

 

2018

Industrials

$

115

 

21

%

 

$

115

 

19

%

 

$

128

 

20

%

A&D

 

115

 

21

 

 

 

107

 

18

 

 

 

105

 

16

 

Medical

 

128

 

23

 

 

 

114

 

19

 

 

 

96

 

15

 

Semi-Cap

 

68

 

12

 

 

 

63

 

10

 

 

 

77

 

12

 

 

 

$

426

 

77

%

 

$

399

 

66

%

 

$

406

 

63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sep 30,

 

 

 

Jun 30,

 

 

 

Sep 30,

 

 

Traditional Markets

 

2019

 

 

 

2019

 

 

2018

Computing

$

59

 

11

%

 

$

133

 

22

%

 

$

146

 

23

%

Telecommunications

 

70

 

12

 

 

 

70

 

12

 

 

 

89

 

14

 

 

 

$

129

 

23

%

 

$

203

 

34

%

 

$

235

 

37

%

 

Total

$

555

 

100

%

 

$

602

 

100

%

 

$

641

 

100

%

 

Overall, higher‐value markets were up 5% year‐over‐year due to growth in Medical and A&D, despite softer demand in Semi-Cap.  Traditional market revenues were down 45% year-over-year primarily from legacy Computing revenues.

 

 

 

 

2 

 

Fourth Quarter 2019 Outlook

·        Revenue between $520 - $570 million

·        Diluted GAAP earnings per share between $0.21 - $0.29

·        Diluted non-GAAP earnings per share between $0.34 - $0.42 (excluding restructuring charges and other costs and amortization of intangibles)

 

Restructuring charges are expected to range between $3.5 million to $4.5 million in the fourth quarter.

 

Third 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.  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

3 

 

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 provide additional insight into operating results and underlying trends 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

 

 

Nine Months Ended

 

 

 

 

Sep 30,

 

Jun 30,

 

Sep 30,

 

 

Sep 30,

 

 

 

 

2019

 

2019

 

2018

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

Income from operations (GAAP)

$

9,798

$

11,941

$

10,957

 

$

37,826

$

43,273

 

Restructuring charges and other costs

 

5,843

 

3,414

 

1,845

 

 

10,833

 

5,838

 

Settlement

 

-

 

773

 

-

 

 

773

 

-

 

Customer insolvency (recovery)

 

-

 

(16)

 

3,295

 

 

(2,758)

 

2,624

 

Amortization of intangible assets

 

2,367

 

2,361

 

2,368

 

 

7,095

 

7,101

 

Non-GAAP income from operations

$

18,008

$

18,473

$

18,465

 

$

53,769

$

58,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit (GAAP)

$

52,883

$

52,998

$

52,777

 

$

159,681

$

165,394

 

Settlement

 

-

 

773

 

-

 

 

773

 

-

 

Customer insolvency (recovery)

 

-

 

(16)

 

1,581

 

 

(1,040)

 

910

 

Non-GAAP gross profit

$

52,883

$

53,755

$

54,358

 

$

159,414

$

166,304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) (GAAP)

$

7,136

$

9,447

$

7,799

 

$

30,356

$

(4,899)

 

Restructuring charges and other costs

 

6,168

 

3,414

 

1,845

 

 

11,158

 

5,838

 

Customer insolvency (recovery)

 

-

 

(16)

 

3,295

 

 

(2,758)

 

2,624

 

Amortization of intangible assets

 

2,367

 

2,361

 

2,368

 

 

7,095

 

7,101

 

Settlements

 

(83)

 

(330)

 

-

 

 

(2,248)

 

-

 

Refinancing of credit facilities

 

-

 

-

 

1,982

 

 

-

 

1,982

 

Income tax adjustments(1)

 

(1,879)

 

(1,039)

 

(1,914)

 

 

(2,711)

 

(3,542)

 

Tax Cuts and Jobs Act(2)

 

-

 

-

 

-

 

 

-

 

40,537

 

Non-GAAP net income

$

13,709

$

13,837

$

15,375

 

$

40,892

$

49,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (GAAP)

$

0.19

$

0.24

$

0.17

 

$

0.77

$

(0.10)

 

 

Diluted (Non-GAAP)

$

0.36

$

0.36

$

0.33

 

$

1.04

$

1.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in

 

 

 

 

 

 

 

 

 

 

 

   calculating diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (GAAP)

 

37,645

 

38,583

 

46,455

 

 

39,184

 

47,415

 

 

Diluted (Non-GAAP)

 

37,645

 

38,583

 

46,455

 

 

39,184

 

47,754

 

(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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

2019

 

2018

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Sales

$

555,229

$

640,688

 

$

1,759,651

$

1,909,415

Cost of sales

 

502,346

 

587,911

 

 

1,599,970

 

1,744,021

 

Gross profit

 

52,883

 

52,777

 

 

159,681

 

165,394

Selling, general and administrative expenses

 

34,875

 

37,607

 

 

103,927

 

109,182

Amortization of intangible assets

 

2,367

 

2,368

 

 

7,095

 

7,101

Restructuring charges and other costs

 

5,843

 

1,845

 

 

10,833

 

5,838

 

Income from operations

 

9,798

 

10,957

 

 

37,826

 

43,273

Interest expense

 

(1,687)

 

(3,822)

 

 

(5,014)

 

(8,543)

Interest income

 

734

 

1,619

 

 

3,084

 

5,197

Other income (expense), net

 

(136)

 

1,139

 

 

2,276

 

827

 

Income before income taxes

 

8,709

 

9,893

 

 

38,172

 

40,754

Income tax expense

 

1,573

 

2,094

 

 

7,816

 

45,653

 

Net income (loss)

$

7,136

$

7,799

 

$

30,356

$

(4,899)

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

Basic

$

0.19

$

0.17

 

$

0.78

$

(0.10)

 

Diluted

$

0.19

$

0.17

 

$

0.77

$

(0.10)

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in calculating

 

 

 

 

 

 

 

 

   earnings (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

37,419

 

46,301

 

 

38,813

 

47,415

 

Diluted

 

37,645

 

46,455

 

 

39,184

 

47,415

6 

 

 

 

 

 

 

 

 

 

 

 

Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

348,042

 

$

458,102

 

 

Accounts receivable, net

 

348,099

 

 

468,161

 

 

Contract assets

 

161,068

 

 

140,082

 

 

Inventories

 

315,835

 

 

309,975

 

 

Other current assets

 

25,071

 

 

27,230

 

 

 

 

Total current assets

 

1,198,115

 

 

1,403,550

 

Property, plant and equipment, net

 

199,256

 

 

210,954

 

Operating lease right-of-use assets

 

79,854

 

 

-

 

Goodwill and other, net

 

281,521

 

 

285,279

 

 

 

 

Total assets

$

1,758,746

 

$

1,899,783

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current installments of long-term debt and finance lease obligations

$

8,784

 

$

6,793

 

 

Accounts payable

 

295,693

 

 

422,053

 

 

Accrued liabilities

 

136,760

 

 

108,313

 

 

 

 

Total current liabilities

 

441,237

 

 

537,159

 

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

 

141,017

 

 

147,277

 

Operating lease liabilities

 

70,167

 

 

-

 

Other long-term liabilities

 

77,553

 

 

83,122

 

Shareholders’ equity

 

1,028,772

 

 

1,132,225

 

 

 

 

Total liabilities and shareholders’ equity

$

1,758,746

 

$

1,899,783

7 

 

 

 

 

 

 

 

 

 

 

 

Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

$

30,356

 

$

(4,899)

 

Depreciation and amortization

 

36,389

 

 

39,643

 

Stock-based compensation expense

 

8,461

 

 

8,229

 

Accounts receivable, net

 

121,171

 

 

(20,019)

 

Contract assets

 

(20,986)

 

 

(9,402)

 

Inventories

 

(6,557)

 

 

(54,342)

 

Accounts payable

 

(122,156)

 

 

12,620

 

Other changes in working capital and other, net

 

10,636

 

 

10,877

 

 

Net cash provided by (used in) operations

 

57,314

 

 

(17,293)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Additions to property, plant and equipment and software

 

(25,942)

 

 

(52,933)

 

Other investing activities, net

 

252

 

 

(2,102)

 

 

Net cash used in investing activities

 

(25,690)

 

 

(55,035)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Share repurchases

 

(118,350)

 

 

(122,053)

 

Net debt activity

 

(4,614)

 

 

(57,758)

 

Other financing activities, net

 

(17,699)

 

 

(13,897)

 

 

Net cash used in financing activities

 

(140,663)

 

 

(193,708)

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes

 

(1,021)

 

 

(797)

Net decrease in cash and cash equivalents

 

(110,060)

 

 

(266,833)

 

Cash and cash equivalents at beginning of year

 

458,102

 

 

742,546

 

Cash and cash equivalents at end of period

$

348,042

 

$

475,713

 

 

 

 

 

 

 

 

 

 

 

8