EX-99.1 2 bhe-ex99_1.htm EX-99.1 EX-99.1

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

BENCHMARK REPORTS THIRD QUARTER 2021 RESULTS

 

Third quarter 2021 results:

Quarterly revenue of $572 million
9% year-over-year revenue growth
Semi-Cap revenue growth of 35% year-over-year
Industrials revenue growth of 26% year-over-year
Higher-value markets revenue mix of 81%
GAAP and non-GAAP gross margins of 9.4%
GAAP diluted EPS of $0.23 and non-GAAP diluted EPS of $0.39

 

TEMPE, AZ, October 27, 2021 – Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the third quarter ended September 30, 2021.

 

 

 

Three Months Ended

 

 

 

Sep 30,

 

 

Jun 30,

 

 

Sep 30,

 

In millions, except EPS

 

2021

 

 

2021

 

 

2020

 

Sales

 

$

572

 

 

$

545

 

 

$

526

 

Net income(2)

 

$

8

 

 

$

7

 

 

$

6

 

Net income – non-GAAP(1)(2)

 

$

14

 

 

$

10

 

 

$

12

 

Diluted earnings per share(2)

 

$

0.23

 

 

$

0.20

 

 

$

0.16

 

Diluted EPS – non-GAAP(1)(2)

 

$

0.39

 

 

$

0.27

 

 

$

0.32

 

Operating margin(2)

 

 

2.1

%

 

 

2.0

%

 

 

1.6

%

Operating margin – non-GAAP(1)(2)

 

 

3.3

%

 

 

2.5

%

 

 

3.0

%

 

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

(2) Results for the third quarter ended September 30, 2021 and 2020 and second quarter ended June 30, 2021 include the impact of approximately $1.2 million, $1.3 million and $0.9 million of net COVID-19 related costs, respectively.

 

"We continued to execute well in the face of unprecedented supply chain constraints delivering strong revenue and profit growth in the third quarter,” said Jeff Benck, Benchmark’s President and CEO. “Our revenues were up 5% sequentially and 9% year-over-year fueled by strong demand in Semi-Cap and high-performance Computing, and improving demand in the Industrials vertical. Our third quarter non-GAAP gross margins improved to 9.4% and non-GAAP operating margins improved 80 basis points or 32% sequentially, which is a testament to the strong operational performance of our team.”

 

“Entering the fourth quarter, we expect that our revenue will again increase sequentially supported by Semi-Cap, Defense, and Computing strength, which we are projecting will enable double digit year-over-year revenue growth in the quarter and non-GAAP gross margins at 9% for the full year. As we look towards 2022 with our current strong demand momentum, we are expecting another year of solid growth and financial results aligned with the mid-term financial model that we set over a year ago.

 

 

 

 

 

1


 

Cash Conversion Cycle

 

 

 

Sep 30,

 

 

Jun 30,

 

 

Sep 30,

 

 

 

2021

 

 

2021

 

 

2020

 

Accounts receivable days

 

 

49

 

 

 

48

 

 

 

52

 

Contract asset days

 

 

25

 

 

 

26

 

 

 

28

 

Inventory days

 

 

83

 

 

 

75

 

 

 

66

 

Accounts payable days

 

 

(70

)

 

 

(69

)

 

 

(54

)

Advance payments from customers days

 

 

(16

)

 

 

(16

)

 

 

(11

)

Cash Conversion Cycle days

 

 

71

 

 

 

64

 

 

 

81

 

 

 

Third Quarter 2021 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

 

2021

 

 

2021

 

 

2020

 

Medical

 

$

118

 

 

 

21

%

 

$

109

 

 

 

20

%

 

$

134

 

 

 

26

%

Semi-Cap

 

 

133

 

 

 

23

 

 

 

139

 

 

 

26

 

 

 

99

 

 

 

19

 

A&D

 

 

101

 

 

 

18

 

 

 

97

 

 

 

18

 

 

 

105

 

 

 

20

 

Industrials

 

 

108

 

 

 

19

 

 

 

100

 

 

 

18

 

 

 

86

 

 

 

16

 

 

 

$

460

 

 

 

81

%

 

$

445

 

 

 

82

%

 

$

424

 

 

 

81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sep 30,

 

 

Jun 30,

 

 

Sep 30,

 

Traditional Markets

 

2021

 

 

2021

 

 

2020

 

Computing

 

$

57

 

 

 

10

%

 

$

40

 

 

 

7

%

 

$

44

 

 

 

8

%

Telecommunications

 

 

55

 

 

 

9

 

 

 

60

 

 

 

11

 

 

 

58

 

 

 

11

 

 

 

$

112

 

 

 

19

%

 

$

100

 

 

 

18

%

 

$

102

 

 

 

19

%

Total

 

$

572

 

 

 

100

%

 

$

545

 

 

 

100

%

 

$

526

 

 

 

100

%

 

Overall, higher-value market revenues were up 4% quarter-over-quarter from growth in Industrials, A&D and Medical and 9% year-over-year from growth in Semi-Cap and Industrials. Traditional market revenues were up 12% quarter-over-quarter and up 9% year-over-year from growth in the computing sector.

 

Fourth Quarter 2021 Outlook

Revenue between $560 - $610 million
Diluted GAAP earnings per share between $0.24 - $0.32
Diluted non-GAAP earnings per share between $0.37 - $0.45 (excluding restructuring charges and other costs and amortization of intangibles)
This guidance takes into consideration all known constraints for the quarter and assumes no further significant interruptions to our supply base, operations or customers. Guidance also assumes no material changes to end market conditions and our operations due to COVID-19.

 

Restructuring charges are expected to range between $4.0 million and $4.5 million in the fourth quarter and the amortization of intangibles is expected to be $1.7 million in the fourth quarter.

 

 

 

 

 

2


 

Third Quarter 2021 Earnings Conference Call

The Company will host a conference call to discuss the results today at 5:00 p.m. Eastern Time. The live webcast of the call and accompanying reference materials will be accessible by logging on to the Company's website at www.bench.com. A replay of the broadcast will also be available until Wednesday, November 3, 2021 on the Company's website.

 

About Benchmark Electronics, Inc.

Benchmark provides comprehensive solutions across the entire product life cycle by 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: commercial aerospace, defense, advanced computing, next generation telecommunications, complex industrials, medical, and semiconductor capital equipment. 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, Senior Vice President, Chief Strategy Officer

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

 

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts and may include words such as “anticipate,” “believe,” “intend,” “plan,” “project,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” “could,” “predict,” and similar expressions or the negative or other variations thereof. In particular, statements, express or implied, concerning future operating results, our ability to generate sales, income or cash flow, the anticipated impact of the COVID-19 pandemic, the outlook and guidance for fourth quarter 2021 results, our anticipated plans and responses to the COVID-19 pandemic, our expected revenue mix, our business strategy and strategic initiatives, our repurchases of shares of our common stock and our intentions concerning the payment of dividends, among others, are forward-looking statements. Although we believe these statements are based upon reasonable assumptions, they involve risks, uncertainties and assumptions that are beyond our ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of the company's Annual Report on Form 10-K for the year ended December 31, 2020, Part II, Item 1A of the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 and in any of our subsequent reports filed with the Securities and Exchange Commission (SEC). In particular, these statements also depend on the duration, severity and evolution of the COVID-19 pandemic and related risks, including the emergence and severity of its variants, the availability of vaccines and potential hesitancy to utilize them, government and other third-party responses to it and the consequences for the global economy, our business and the businesses of our suppliers and customers, as well as our ability (or inability) to execute on our plans to respond to the COVID-19 pandemic. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes, including the future results of our operations, may vary materially from those indicated. Undue reliance should not be placed on any forward-looking statements. Forward-looking statements are not guarantees of performance. All forward-looking statements included in this document are based upon information available to us as of the date of this document, and we assume no obligation to update.

 

 

 

3


 

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 certain 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 also uses non‐GAAP measures in order to better assess operating performance and help investors compare results with our previous guidance. In situations where a non-GAAP reconciliation has not been provided, the Company was unable to provide such a reconciliation without unreasonable effort due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. 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

 

Condensed Consolidated Statements of Income

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Sales

 

$

571,882

 

 

$

525,951

 

 

$

1,622,265

 

 

$

1,531,881

 

Cost of sales

 

 

518,177

 

 

 

479,597

 

 

 

1,478,420

 

 

 

1,407,494

 

Gross profit

 

 

53,705

 

 

 

46,354

 

 

 

143,845

 

 

 

124,387

 

Selling, general and administrative expenses

 

 

34,387

 

 

 

29,724

 

 

 

98,969

 

 

 

89,815

 

Amortization of intangible assets

 

 

1,596

 

 

 

2,368

 

 

 

4,793

 

 

 

7,120

 

Restructuring charges and other costs

 

 

6,428

 

 

 

7,161

 

 

 

9,600

 

 

 

15,480

 

Ransomware incident related costs (recovery), net

 

 

(500

)

 

 

(1,558

)

 

 

(3,944

)

 

 

(1,305

)

Income from operations

 

 

11,794

 

 

 

8,659

 

 

 

34,427

 

 

 

13,277

 

Interest expense

 

 

(1,987

)

 

 

(2,136

)

 

 

(6,215

)

 

 

(6,189

)

Interest income

 

 

122

 

 

 

154

 

 

 

451

 

 

 

1,040

 

Other income (expense), net

 

 

500

 

 

 

439

 

 

 

664

 

 

 

(191

)

Income before income taxes

 

 

10,429

 

 

 

7,116

 

 

 

29,327

 

 

 

7,937

 

Income tax expense

 

 

2,364

 

 

 

1,201

 

 

 

5,976

 

 

 

1,577

 

Net income

 

$

8,065

 

 

$

5,915

 

 

$

23,351

 

 

$

6,360

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.23

 

 

$

0.16

 

 

$

0.65

 

 

$

0.17

 

Diluted

 

$

0.23

 

 

$

0.16

 

 

$

0.64

 

 

$

0.17

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

35,423

 

 

 

36,467

 

 

 

35,806

 

 

 

36,565

 

Diluted

 

 

35,666

 

 

 

36,544

 

 

 

36,287

 

 

 

36,821

 

 

 

 

 

 

 

 

 

5


 

Benchmark Electronics, Inc. and Subsidiaries

 

Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

288,567

 

 

$

390,808

 

Restricted cash

 

 

2,630

 

 

 

5,182

 

Accounts receivable, net

 

 

311,384

 

 

 

309,331

 

Contract assets

 

 

160,194

 

 

 

142,779

 

Inventories

 

 

478,325

 

 

 

327,377

 

Other current assets

 

 

37,909

 

 

 

26,874

 

Total current assets

 

 

1,279,009

 

 

 

1,202,351

 

Property, plant and equipment, net

 

 

188,858

 

 

 

185,272

 

Operating lease right-of-use assets

 

 

102,440

 

 

 

79,966

 

Goodwill and other, net

 

 

270,059

 

 

 

276,646

 

Total assets

 

$

1,840,366

 

 

$

1,744,235

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current installments of long-term debt and finance lease obligations

 

$

7,663

 

 

$

9,161

 

Accounts payable

 

 

401,106

 

 

 

282,208

 

Advance payments from customers

 

 

91,464

 

 

 

84,122

 

Accrued liabilities

 

 

99,936

 

 

 

105,645

 

Total current liabilities

 

 

600,169

 

 

 

481,136

 

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

 

 

123,510

 

 

 

131,051

 

Operating lease liabilities

 

 

94,219

 

 

 

72,120

 

Other long-term liabilities

 

 

60,132

 

 

 

70,340

 

Shareholders’ equity

 

 

962,336

 

 

 

989,588

 

Total liabilities and shareholders’ equity

 

$

1,840,366

 

 

$

1,744,235

 

 

6


 

Benchmark Electronics, Inc. and Subsidiaries

 

Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

23,351

 

 

$

6,360

 

Depreciation and amortization

 

 

32,963

 

 

 

36,939

 

Stock-based compensation expense

 

 

10,856

 

 

 

9,464

 

Accounts receivable, net

 

 

(2,342

)

 

 

16,410

 

Contract assets

 

 

(17,415

)

 

 

(335

)

Inventories

 

 

(151,518

)

 

 

(37,131

)

Accounts payable

 

 

114,477

 

 

 

(18,260

)

Advance payments from customers

 

 

7,341

 

 

 

21,075

 

Other changes in working capital and other, net

 

 

(19,021

)

 

 

(8,907

)

Net cash provided by (used in) operations

 

 

(1,308

)

 

 

25,615

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Additions to property, plant and equipment and software

 

 

(32,437

)

 

 

(29,102

)

Other investing activities, net

 

 

294

 

 

 

2,586

 

Net cash used in investing activities

 

 

(32,143

)

 

 

(26,516

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Share repurchases

 

 

(40,216

)

 

 

(19,329

)

Net debt activity

 

 

(6,458

)

 

 

8,395

 

Other financing activities, net

 

 

(20,254

)

 

 

(18,747

)

Net cash used in financing activities

 

 

(66,928

)

 

 

(29,681

)

 

 

 

 

 

 

 

Effect of exchange rate changes

 

 

(4,414

)

 

 

1,436

 

Net decrease in cash and cash equivalents and restricted cash

 

 

(104,793

)

 

 

(29,146

)

Cash and cash equivalents and restricted cash at beginning of year

 

 

395,990

 

 

 

363,956

 

Cash and cash equivalents and restricted cash at end of period

 

$

291,197

 

 

$

334,810

 

 

7


 

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,

 

 

 

2021

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Income from operations (GAAP)

 

$

11,794

 

 

$

10,699

 

 

$

8,659

 

 

$

34,427

 

 

$

13,277

 

Amortization of intangible assets

 

 

1,596

 

 

 

1,599

 

 

 

2,368

 

 

 

4,793

 

 

 

7,120

 

Restructuring charges and other costs

 

 

2,070

 

 

 

1,581

 

 

 

1,425

 

 

 

5,242

 

 

 

8,737

 

Impairment

 

 

4,358

 

 

 

 

 

 

5,736

 

 

 

4,358

 

 

 

6,743

 

Ransomware incident related costs (recovery), net

 

 

(500

)

 

 

 

 

 

(1,558

)

 

 

(3,944

)

 

 

(1,305

)

Customer insolvency (recovery)

 

 

(168

)

 

 

(153

)

 

 

(796

)

 

 

(353

)

 

 

(1,149

)

Non-GAAP income from operations

 

$

19,150

 

 

$

13,726

 

 

$

15,834

 

 

$

44,523

 

 

$

33,423

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit (GAAP)

 

$

53,705

 

 

$

47,913

 

 

$

46,354

 

 

$

143,845

 

 

$

124,387

 

Customer insolvency (recovery)

 

 

(168

)

 

 

(153

)

 

 

(796

)

 

 

(353

)

 

 

(1,149

)

Non-GAAP gross profit

 

$

53,537

 

 

$

47,760

 

 

$

45,558

 

 

$

143,492

 

 

$

123,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses (GAAP)

 

$

34,387

 

 

$

34,034

 

 

$

29,724

 

 

$

98,969

 

 

$

89,815

 

Non-GAAP selling, general and administrative expenses

 

$

34,387

 

 

$

34,034

 

 

$

29,724

 

 

$

98,969

 

 

$

89,815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

 

$

8,065

 

 

$

7,369

 

 

$

5,915

 

 

$

23,351

 

 

$

6,360

 

Amortization of intangible assets

 

 

1,596

 

 

 

1,599

 

 

 

2,368

 

 

 

4,793

 

 

 

7,120

 

Restructuring charges and other costs

 

 

2,070

 

 

 

1,581

 

 

 

1,425

 

 

 

5,242

 

 

 

8,737

 

Impairment

 

 

4,358

 

 

 

 

 

 

5,736

 

 

 

4,358

 

 

 

6,743

 

Ransomware incident related costs (recovery), net

 

 

(500

)

 

 

 

 

 

(1,558

)

 

 

(3,944

)

 

 

(1,305

)

Customer insolvency (recovery)

 

 

(168

)

 

 

(153

)

 

 

(796

)

 

 

(353

)

 

 

(1,149

)

Income tax adjustments(1)

 

 

(1,491

)

 

 

(633

)

 

 

(1,458

)

 

 

(1,955

)

 

 

(4,123

)

Non-GAAP net income

 

$

13,930

 

 

$

9,763

 

 

$

11,632

 

 

$

31,492

 

 

$

22,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (GAAP)

 

$

0.23

 

 

$

0.20

 

 

$

0.16

 

 

$

0.64

 

 

$

0.17

 

Diluted (Non-GAAP)

 

$

0.39

 

 

$

0.27

 

 

$

0.32

 

 

$

0.87

 

 

$

0.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

calculating diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (GAAP)

 

 

35,666

 

 

 

36,061

 

 

 

36,544

 

 

 

36,287

 

 

 

36,821

 

Diluted (Non-GAAP)

 

 

35,666

 

 

 

36,061

 

 

 

36,544

 

 

 

36,287

 

 

 

36,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operations

 

$

(41,581

)

 

$

3,660

 

 

$

5,697

 

 

$

(1,308

)

 

$

25,615

 

Additions to property, plant and equipment and software

 

 

(13,818

)

 

 

(12,197

)

 

 

(5,812

)

 

 

(32,437

)

 

 

(29,102

)

Free cash flow (used)

 

$

(55,399

)

 

$

(8,537

)

 

$

(115

)

 

$

(33,745

)

 

$

(3,487

)

 

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

8