Benchmark Electronics Reports Second Quarter 2019 Results

TEMPE, Ariz., July 24, 2019 /PRNewswire/ -- Benchmark Electronics, Inc. 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.

Benchmark Electronics (PRNewsfoto/Benchmark Electronics, Inc.)

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."

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

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.

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 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.





























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.

 























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

 





















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

 





















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





















 

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SOURCE Benchmark Electronics, Inc.

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