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

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

BENCHMARK REPORTS THIRD QUARTER 2022 RESULTS

 

 

Third quarter 2022 results:

•
Revenue of $772 million; 35% year-over-year growth
o
Computing and Telco combined revenue growth of 60% year-over-year
o
Industrials revenue growth of 44% year-over-year
o
Medical revenue growth of 41% year-over-year
o
Semi-Cap revenue growth of 39% year-over-year
•
GAAP operating income up 114% year-over-year
•
Non-GAAP operating income up 44% year-over-year
•
GAAP diluted EPS of $0.53, up 130% year-over-year
•
Non-GAAP diluted EPS of $0.57, up 46% year-over-year

 

TEMPE, AZ, October 26, 2022 – Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the third quarter ended September 30, 2022.

 

 

 

Three Months Ended

 

 

 

Sept 30,

 

 

June 30,

 

 

Sept 30,

 

In millions, except EPS

 

2022

 

 

2022

 

 

2021

 

Sales

 

$

772

 

 

$

728

 

 

$

572

 

Net income

 

$

19

 

 

$

17

 

 

$

8

 

Net income – non-GAAP(1)

 

$

20

 

 

$

18

 

 

$

14

 

Diluted earnings per share

 

$

0.53

 

 

$

0.49

 

 

$

0.23

 

Diluted EPS – non-GAAP(1)

 

$

0.57

 

 

$

0.50

 

 

$

0.39

 

Operating margin

 

 

3.3

%

 

 

3.1

%

 

 

2.1

%

Operating margin – non-GAAP(1)

 

 

3.6

%

 

 

3.1

%

 

 

3.3

%

 

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

 

“Despite the well-known challenges with which we and the industry have had to navigate, Benchmark continues to execute on its strategy. Our third quarter results achieved the important financial targets within our mid-term model,” said Jeff Benck, Benchmark’s President and CEO.

 

Benck continued “Our third quarter results demonstrated another solid quarter of revenue growth, with five of our six targeted sectors growing more than 35% year-over-year. This has enabled us to drive non-GAAP earnings growth of more than 46% over the same period. We look forward to updating you on our long term strategy and growth potential for the company at our upcoming analyst day on November 8th.”

 

 

1

 

Cash Conversion Cycle

 

 

 

Sept 30,

 

 

June 30,

 

 

Sept 30,

 

 

 

2022

 

 

2022

 

 

2021

 

Accounts receivable days

 

 

56

 

 

 

55

 

 

 

49

 

Contract asset days

 

 

22

 

 

 

22

 

 

 

25

 

Inventory days

 

 

95

 

 

 

90

 

 

 

83

 

Accounts payable days

 

 

(67

)

 

 

(67

)

 

 

(70

)

Advance payments from customers days

 

 

(27

)

 

 

(23

)

 

 

(16

)

Cash conversion cycle days

 

 

79

 

 

 

77

 

 

 

71

 

 

Third Quarter 2022 Industry Sector Update

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

 

 

 

Sept 30,

 

 

June 30,

 

 

Sept 30,

 

Higher-Value Markets

 

2022

 

 

2022

 

 

2021

 

Medical

 

$

166

 

 

 

21

%

 

$

166

 

 

 

23

%

 

$

118

 

 

 

21

%

Semi-Cap

 

 

186

 

 

 

24

 

 

 

175

 

 

 

24

 

 

 

133

 

 

 

23

 

A&D

 

 

86

 

 

 

11

 

 

 

90

 

 

 

12

 

 

 

101

 

 

 

18

 

Industrials

 

 

155

 

 

 

20

 

 

 

159

 

 

 

22

 

 

 

108

 

 

 

19

 

 

 

$

593

 

 

 

76

%

 

$

590

 

 

 

81

%

 

$

460

 

 

 

81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sept 30,

 

 

June 30,

 

 

Sept 30,

 

Traditional Markets

 

2022

 

 

2022

 

 

2021

 

Computing

 

$

95

 

 

 

13

%

 

$

69

 

 

 

10

%

 

$

57

 

 

 

10

%

Telecommunications

 

 

84

 

 

 

11

 

 

 

69

 

 

 

9

 

 

 

55

 

 

 

9

 

 

 

$

179

 

 

 

24

%

 

$

138

 

 

 

19

%

 

$

112

 

 

 

19

%

Total

 

$

772

 

 

 

100

%

 

$

728

 

 

 

100

%

 

$

572

 

 

 

100

%

 

Overall, higher-value market revenues were up 29% year-over-year from strength in the Industrials, Medical and Semi-Cap sectors. Traditional market revenues were up 60% year-over-year from strength in both Computing and Telecommunications sectors.

 

Fourth Quarter 2022 Guidance

•
Revenue between $760 - $800 million
•
Diluted GAAP earnings per share between $0.52 - $0.56
•
Diluted non-GAAP earnings per share between $0.58 - $0.62 (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.

 

Restructuring charges are expected to range between $0.8 million and $1.0 million in the fourth quarter and the amortization of intangibles is expected to be $1.6 million in the fourth quarter.

 

Third Quarter 2022 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 2, 2022 on the Company's website.

 

2

 

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:

Paul Mansky, Investor Relations and Corporate Development

512-580-2719 or paul.mansky@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. 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 of the negative or other variations thereof. In particular, statements, express or implied, concerning the estimated financial impact of the COVID-19 pandemic, the company’s outlook and guidance for fourth quarter 2022 results, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the company’s business strategy and strategic initiatives, the company’s repurchases of shares of its common stock, the company’s expectations regarding restructuring charges and amortization of intangibles, and the company’s intentions concerning the payment of dividends, among others, are forward-looking statements. Although the company believes these statements are based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions that are beyond the company’s 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, 2021, and in any of the company’s subsequent reports filed with the Securities and Exchange Commission. 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 the crisis and the consequences for the global economy, the company’s business and the businesses of its suppliers and customers. Events relating to the possibility of customer demand fluctuations, supply chain constraints, inflationary pressures, the effects of foreign currency fluctuations, or the ability to utilize the company’s manufacturing facilities at sufficient levels to cover its fixed operating costs, may have resulting impacts on the company’s business, financial condition, results of operations, and the company’s ability (or inability) to execute on its plans. 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 the company as of the date of this document, and the company assumes no obligation to update.

 

Non-GAAP Financial Measures

Management discloses non‐GAAP information to provide investors with additional information to analyze the Company’s performance and underlying trends. A detailed reconciliation between GAAP

3

 

results and results excluding certain items (“non-GAAP”) is included in the following tables attached to this document. 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. 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. This document also references “free cash flow”, which the Company defines as cash flow from operations less additions to property, plant and equipment and purchased software. 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,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Sales

 

$

771,575

 

 

$

571,882

 

 

$

2,135,687

 

 

$

1,622,265

 

Cost of sales

 

 

704,825

 

 

 

518,177

 

 

 

1,952,579

 

 

 

1,478,420

 

Gross profit

 

 

66,750

 

 

 

53,705

 

 

 

183,108

 

 

 

143,845

 

Selling, general and administrative expenses

 

 

38,544

 

 

 

34,387

 

 

 

110,675

 

 

 

98,969

 

Amortization of intangible assets

 

 

1,591

 

 

 

1,596

 

 

 

4,792

 

 

 

4,793

 

Restructuring charges and other costs

 

 

1,331

 

 

 

6,428

 

 

 

4,518

 

 

 

9,600

 

Ransomware incident related costs (recovery), net

 

 

—

 

 

 

(500

)

 

 

—

 

 

 

(3,944

)

Income from operations

 

 

25,284

 

 

 

11,794

 

 

 

63,123

 

 

 

34,427

 

Interest expense

 

 

(3,493

)

 

 

(1,987

)

 

 

(7,428

)

 

 

(6,215

)

Interest income

 

 

452

 

 

 

122

 

 

 

843

 

 

 

451

 

Other income, net

 

 

1,087

 

 

 

500

 

 

 

1,577

 

 

 

664

 

Income before income taxes

 

 

23,330

 

 

 

10,429

 

 

 

58,115

 

 

 

29,327

 

Income tax expense

 

 

4,501

 

 

 

2,364

 

 

 

11,105

 

 

 

5,976

 

Net income

 

$

18,829

 

 

$

8,065

 

 

$

47,010

 

 

$

23,351

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.54

 

 

$

0.23

 

 

$

1.34

 

 

$

0.65

 

Diluted

 

$

0.53

 

 

$

0.23

 

 

$

1.32

 

 

$

0.64

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

35,151

 

 

 

35,423

 

 

 

35,184

 

 

 

35,806

 

Diluted

 

 

35,348

 

 

 

35,666

 

 

 

35,604

 

 

 

36,287

 

 

 

 

5

 

Benchmark Electronics, Inc. and Subsidiaries

 

Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

247,298

 

 

$

271,749

 

Restricted cash

 

 

2,039

 

 

 

—

 

Accounts receivable, net

 

 

478,835

 

 

 

355,883

 

Contract assets

 

 

187,730

 

 

 

155,243

 

Inventories

 

 

746,920

 

 

 

523,240

 

Other current assets

 

 

45,381

 

 

 

42,029

 

Total current assets

 

 

1,708,203

 

 

 

1,348,144

 

Property, plant and equipment, net

 

 

204,154

 

 

 

186,666

 

Operating lease right-of-use assets

 

 

95,533

 

 

 

99,158

 

Goodwill and other, net

 

 

268,617

 

 

 

269,912

 

Total assets

 

$

2,276,507

 

 

$

1,903,880

 

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current installments of long-term debt and finance lease obligations

 

$

3,452

 

 

$

985

 

Accounts payable

 

 

522,499

 

 

 

426,555

 

Advance payments from customers

 

 

211,601

 

 

 

118,124

 

Accrued liabilities

 

 

111,348

 

 

 

108,718

 

Total current liabilities

 

 

848,900

 

 

 

654,382

 

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

 

 

296,425

 

 

 

129,289

 

Operating lease liabilities

 

 

87,983

 

 

 

90,878

 

Other long-term liabilities

 

 

42,582

 

 

 

55,529

 

Shareholders’ equity

 

 

1,000,617

 

 

 

973,802

 

Total liabilities and shareholders’ equity

 

$

2,276,507

 

 

$

1,903,880

 

 

6

 

Benchmark Electronics, Inc. and Subsidiaries

 

Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

47,010

 

 

$

23,351

 

Depreciation and amortization

 

 

32,987

 

 

 

32,963

 

Stock-based compensation expense

 

 

13,282

 

 

 

10,856

 

Accounts receivable, net

 

 

(123,600

)

 

 

(2,342

)

Contract assets

 

 

(32,487

)

 

 

(17,415

)

Inventories

 

 

(228,501

)

 

 

(151,518

)

Accounts payable

 

 

84,588

 

 

 

114,477

 

Advance payments from customers

 

 

93,476

 

 

 

7,341

 

Other changes in working capital and other, net

 

 

(11,473

)

 

 

(19,021

)

Net cash used in operations

 

 

(124,718

)

 

 

(1,308

)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Additions to property, plant and equipment and software

 

 

(33,594

)

 

 

(32,437

)

Other investing activities, net

 

 

5,666

 

 

 

294

 

Net cash used in investing activities

 

 

(27,928

)

 

 

(32,143

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Share repurchases

 

 

(9,391

)

 

 

(40,216

)

Net debt activity

 

 

169,303

 

 

 

(6,458

)

Other financing activities, net

 

 

(20,127

)

 

 

(20,254

)

Net cash provided by (used in) financing activities

 

 

139,785

 

 

 

(66,928

)

 

 

 

 

 

 

 

Effect of exchange rate changes

 

 

(9,552

)

 

 

(4,414

)

Net decrease in cash and cash equivalents and restricted cash

 

 

(22,412

)

 

 

(104,793

)

Cash and cash equivalents and restricted cash at beginning of year

 

 

271,749

 

 

 

395,990

 

Cash and cash equivalents and restricted cash at end of period

 

$

249,337

 

 

$

291,197

 

 

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

 

 

 

Sept 30,

 

 

June 30,

 

 

Sept 30,

 

 

Sept 30,

 

 

 

2022

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Income from operations (GAAP)

 

$

25,284

 

 

$

22,432

 

 

$

11,794

 

 

$

63,123

 

 

$

34,427

 

Amortization of intangible assets

 

 

1,591

 

 

 

1,592

 

 

 

1,596

 

 

 

4,792

 

 

 

4,793

 

Restructuring charges and other costs

 

 

1,331

 

 

 

1,266

 

 

 

2,070

 

 

 

4,911

 

 

 

5,242

 

(Gain) loss on assets held for sale

 

 

—

 

 

 

(2,376

)

 

 

—

 

 

 

(393

)

 

 

—

 

Impairment

 

 

—

 

 

 

—

 

 

 

4,358

 

 

 

—

 

 

 

4,358

 

Ransomware incident related costs (recovery), net

 

 

—

 

 

 

—

 

 

 

(500

)

 

 

—

 

 

 

(3,944

)

Customer insolvency (recovery)

 

 

(599

)

 

 

—

 

 

 

(168

)

 

 

(599

)

 

 

(353

)

Non-GAAP income from operations

 

$

27,607

 

 

$

22,914

 

 

$

19,150

 

 

$

71,834

 

 

$

44,523

 

GAAP operating margin

 

 

3.3

%

 

 

3.1

%

 

 

2.1

%

 

 

3.0

%

 

 

2.1

%

Non-GAAP operating margin

 

 

3.6

%

 

 

3.1

%

 

 

3.3

%

 

 

3.4

%

 

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit (GAAP)

 

$

66,750

 

 

$

58,756

 

 

$

53,705

 

 

$

183,108

 

 

$

143,845

 

Customer insolvency (recovery)

 

 

(425

)

 

 

—

 

 

 

(168

)

 

 

(425

)

 

 

(353

)

Non-GAAP gross profit

 

$

66,325

 

 

$

58,756

 

 

$

53,537

 

 

$

182,683

 

 

$

143,492

 

GAAP gross margin

 

 

8.7

%

 

 

8.1

%

 

 

9.4

%

 

 

8.6

%

 

 

8.9

%

Non-GAAP gross margin

 

 

8.6

%

 

 

8.1

%

 

 

9.4

%

 

 

8.6

%

 

 

8.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

38,544

 

 

$

35,842

 

 

$

34,387

 

 

$

110,675

 

 

$

98,969

 

Customer recovery

 

 

174

 

 

 

—

 

 

 

—

 

 

 

174

 

 

 

—

 

Non-GAAP selling, general and administrative expenses

 

$

38,718

 

 

$

35,842

 

 

$

34,387

 

 

$

110,849

 

 

$

98,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

 

$

18,829

 

 

$

17,221

 

 

$

8,065

 

 

$

47,010

 

 

$

23,351

 

Amortization of intangible assets

 

 

1,591

 

 

 

1,592

 

 

 

1,596

 

 

 

4,792

 

 

 

4,793

 

Restructuring charges and other costs

 

 

1,331

 

 

 

1,266

 

 

 

2,070

 

 

 

4,911

 

 

 

5,242

 

(Gain) loss on assets held for sale

 

 

—

 

 

 

(2,376

)

 

 

—

 

 

 

(393

)

 

 

—

 

Impairment

 

 

—

 

 

 

—

 

 

 

4,358

 

 

 

—

 

 

 

4,358

 

Ransomware incident related costs (recovery), net

 

 

—

 

 

 

—

 

 

 

(500

)

 

 

—

 

 

 

(3,944

)

Customer insolvency (recovery)

 

 

(599

)

 

 

—

 

 

 

(168

)

 

 

(599

)

 

 

(353

)

Settlement

 

 

(611

)

 

 

—

 

 

 

—

 

 

 

(611

)

 

 

—

 

Income tax adjustments(1)

 

 

(351

)

 

 

(82

)

 

 

(1,491

)

 

 

(1,639

)

 

 

(1,955

)

Non-GAAP net income

 

$

20,190

 

 

$

17,621

 

 

$

13,930

 

 

$

53,471

 

 

$

31,492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (GAAP)

 

$

0.53

 

 

$

0.49

 

 

$

0.23

 

 

$

1.32

 

 

$

0.64

 

Diluted (Non-GAAP)

 

$

0.57

 

 

$

0.50

 

 

$

0.39

 

 

$

1.50

 

 

$

0.87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (GAAP)

 

 

35,348

 

 

 

35,336

 

 

 

35,666

 

 

 

35,604

 

 

 

36,287

 

Diluted (Non-GAAP)

 

 

35,348

 

 

 

35,336

 

 

 

35,666

 

 

 

35,604

 

 

 

36,287

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operations

 

$

(31,208

)

 

$

(25,485

)

 

$

(41,581

)

 

$

(124,718

)

 

$

(1,308

)

Additions to property, plant and equipment and software

 

 

(8,623

)

 

 

(6,996

)

 

 

(13,818

)

 

 

(33,594

)

 

 

(32,437

)

Free cash flow (used)

 

$

(39,831

)

 

$

(32,481

)

 

$

(55,399

)

 

$

(158,312

)

 

$

(33,745

)

 

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

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