UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to________________

Commission File Number: 1-10560

BENCHMARK ELECTRONICS, INC.

(Exact name of registrant as specified in its charter)

Texas	74-2211011
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)
56 South Rockford Drive	85281
Tempe, Arizona	(Zip Code)
(Address of principal executive offices)

(623) 300-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.10 per share	BHE	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of November 1, 2022, there were 35,176,226 shares of common stock of Benchmark Electronics, Inc., par value $0.10 per share, outstanding.

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Shareholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.	Exhibits	34
SIGNATURES		35

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

	September 30,			December 31,
(in thousands, except par value)	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	247,298		$	271,749
Restricted cash		2,039			—
Accounts receivable, net of allowance for doubtful accounts of    $408 and $788, respectively		478,835			355,883
Contract assets		187,730			155,243
Inventories		746,920			523,240
Prepaid expenses and other assets		45,009			41,688
Income taxes receivable		372			341
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		192,116			192,116
Deferred income taxes		8,669			5,972
Other assets, net		67,832			71,824
	$	2,276,507		$	1,903,880
Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt	$	3,452		$	985
Accounts payable		522,499			426,555
Advance payments from customers		211,601			118,124
Income taxes payable		12,007			6,164
Accrued liabilities		99,341			102,554
Total current liabilities		848,900			654,382
Long-term debt, less current installments		296,425			129,289
Operating lease liabilities		87,983			90,878
Other long-term liabilities		42,498			55,445
Deferred income taxes		84			84
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.10 par value; 5,000 shares authorized, none    issued		—			—
Common stock, $0.10 par value; 145,000 shares authorized;    issued and outstanding – 35,153 and 35,213, respectively		3,515			3,521
Additional paid-in capital		513,808			507,447
Retained earnings		504,419			479,992
Accumulated other comprehensive loss		(21,125	)		(17,158	)
Total shareholders’ equity		1,000,617			973,802
	$	2,276,507		$	1,903,880

See accompanying notes to condensed consolidated financial statements.

1

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	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 related incident 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		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 outstanding:
Basic		35,151			35,423			35,184			35,806
Diluted		35,348			35,666			35,604			36,287

See accompanying notes to condensed consolidated financial statements.

2

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022			2021			2022			2021
Net income	$	18,829		$	8,065		$	47,010		$	23,351
Other comprehensive income (loss):
Foreign currency translation adjustments		(3,541	)		(1,438	)		(8,197	)		(3,146	)
Unrealized gain on derivatives, net of tax		730			214			4,293			1,796
Other		(22	)		113			(63	)		369
Other comprehensive loss		(2,833	)		(1,111	)		(3,967	)		(981	)
Comprehensive income	$	15,996		$	6,954		$	43,043		$	22,370

See accompanying notes to condensed consolidated financial statements.

3

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(unaudited)

(in thousands)	Shares			Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balances, December 31, 2021		35,213		$	3,521		$	507,447		$	479,992		$	(17,158	)	$	973,802
Stock-based compensation expense		—			—			13,282			—			—			13,282
Shares repurchased and retired		(376	)		(37	)		(4,177	)		(5,177	)		—			(9,391	)
Stock options exercised		33			3			468			—			—			471
Vesting of restricted stock units		407			41			(41	)		—			—			—
Shares withheld for taxes		(124	)		(13	)		(3,171	)		—			—			(3,184	)
Dividends declared		—			—			—			(17,406	)		—			(17,406	)
Net income		—			—			—			47,010			—			47,010
Other comprehensive loss		—			—			—			—			(3,967	)		(3,967	)
Balances, September 30, 2022		35,153		$	3,515		$	513,808		$	504,419		$	(21,125	)	$	1,000,617
Balances, June 30, 2022		35,140		$	3,514		$	509,172		$	491,379		$	(18,292	)	$	985,773
Stock-based compensation expense		—			—			4,795			—			—			4,795
Stock options exercised		1			—			12			—			—			12
Vesting of restricted stock units		18			2			(2	)		—			—			—
Shares withheld for taxes		(6	)		(1	)		(169	)		—			—			(170	)
Dividends declared		—			—			—			(5,789	)		—			(5,789	)
Net income		—			—			—			18,829			—			18,829
Other comprehensive loss		—			—			—			—			(2,833	)		(2,833	)
Balances, September 30, 2022		35,153		$	3,515		$	513,808		$	504,419		$	(21,125	)	$	1,000,617

(in thousands)	Shares			Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balances, December 31, 2020		36,295		$	3,629		$	510,405		$	492,205		$	(16,651	)	$	989,588
Stock-based compensation expense		—			—			10,856			—			—			10,856
Shares repurchased and retired		(1,380	)		(137	)		(15,364	)		(24,715	)		—			(40,216	)
Stock options exercised		29			3			343			—			—			346
Vesting of restricted stock units		373