Benchmark Reports Second Quarter 2020 Results

TEMPE, Ariz., July 29, 2020 /PRNewswire/ -- Benchmark Electronics, Inc. BHE today announced financial results for the second quarter ended June 30, 2020. 





Three Months Ended





Jun 30,





Mar 31,



Jun 30,

In millions, except EPS

2020





2020



2019

Sales

$491





$515



$602

Net income (loss)(2)

$(3)





$4



$9

Net income – non-GAAP(1)(2)

$3





$8



$14

Diluted earnings (loss) per share(2)

$(0.09)





$0.10



$0.24

Diluted EPS – non-GAAP(1)(2)

$0.07





$0.22



$0.36

Operating margin(2)

(0.4)%





1.3%



2.0%

Operating margin – non-GAAP(1)(2)

1.2%





2.3%



3.1%





(1) 

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

(2) 

Results for the second quarter ended June 30, 2020 include the impact of approximately $4.1 million of COVID-19 related costs.

"Thanks to the commitment and tireless work of our global Benchmark team, we continue to successfully navigate this challenging pandemic environment.  Protecting our people remains our highest priority and we will continue our vigilance to keep people safe and our locations operational," said Jeff Benck, Benchmark President and CEO.

"Despite the current macro conditions, our team has focused on delivering products to meet the needs of our customers.  Our diversified portfolio remains a strength at this time as we saw strong second quarter growth in our Medical and Semi-cap sectors. Moving into the third quarter, we expect sequential improvements in revenue, profit and utilization underpinned by stronger demand from our Semi-Cap and Defense customers where we have industry leading positions."

Cash Conversion Cycle







Jun 30,







Mar 31,







Jun 30,







2020







2020







2019





















Accounts receivable days



55







56







54



Contract asset days



28







28







23



Inventory days



72







65







52



Accounts payable days



(61)







(61)







(60)



Customer deposits



(10)







(7)







(3)



Cash Conversion Cycle days 



84







81







66



 

Second Quarter 2020 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



2020







2020







2019



Medical

$

135



27

%



$

118



23

%



$

114



19

%

Semi-Cap



87



18







83



16







63



10



A&D



88



18







119



23







107



18



Industrials



87



18







103



20







115



19







$

397



81

%



$

423



82

%



$

399



66

%



















































































Jun 30,







Mar 31,







Jun 30,





Traditional Markets



2020







2020







2019



Computing

$

44



9

%



$

36



7

%



$

133



22

%

Telecommunications



50



10







56



11







70



12







$

94



19

%



$

92



18

%



$

203



34

%



Total

$

491



100

%



$

515



100

%



$

602



100

%

Overall, higher-value market revenues during the second quarter were down 6% quarter-over-quarter and flat year-over-year.  Demand strength in Medical supporting COVID-19 solutions and new product ramps, as well as the continued Semi-cap recovery, were offset by weakness in commercial Aerospace and Industrial markets.  Traditional market revenues were up 2% quarter-over-quarter due to stronger demand for high performance computing products and down 54% year-over-year primarily from the Company's conscious exit of a legacy computing contract in 2019.

Third Quarter 2020 Outlook

  • Revenue between $490 - $530 million
  • Diluted GAAP earnings per share between $0.21 - $0.26
  • Diluted non-GAAP earnings per share between $0.26 - $0.30 (excluding restructuring charges and other costs and amortization of intangibles)
  • Our guidance includes known constraints due to COVID-19 and assumes no further significant interruptions occur to our supply base, operations, or customers. Guidance also assumes no material changes to market conditions due to COVID-19.

Restructuring charges are expected to range between $0.8 million to $1.2 million in the third quarter and the amortization of intangibles is expected to be $2.4 million in the third quarter.

Second Quarter 2020 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, August 5, 2020 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.

Forward-Looking Statements

This press release 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," "could", "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, the estimated financial impact of the COVID-19 pandemic, our outlook and guidance for third quarter 2020 results, the company's anticipated plans and responses to the COVID-19 pandemic, statements (express or implied) concerning future operating results or margins, the ability to generate sales and income or cash flow, and expected revenue mix, and Benchmark's business and growth strategies. Although the company believes these statements are based on and derived from reasonable assumptions, they involve risks and uncertainties relating to operations, markets and the business environment generally.  These statements also depend on the duration and severity of the COVID-19 pandemic and related risks, including government and other third-party responses to the crisis and the consequences for the global economy, our business and the businesses of our suppliers and customers.  Events relating to or resulting from the COVID-19 pandemic, including the possibility of customer demand fluctuations, supply chain constraints, or the ability to utilize our manufacturing facilities at sufficient levels to cover our 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 to respond to the COVID-19 pandemic.  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 Part 1, Item 1A, "Risk Factors" of the company's Annual Report on Form 10-K for the year ended December 31, 2019 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

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.  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.























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,





2020



2019





2020



2019



















Sales

$

490,966

$

601,602



$

1,005,930

$

1,204,422

Cost of sales



456,294



552,379





927,897



1,105,162



Gross profit



34,672



49,223





78,033



99,260

Selling, general and administrative expenses



28,516



31,507





60,091



61,514

Amortization of intangible assets



2,371



2,361





4,752



4,728

Restructuring charges and other costs



5,657



3,414





8,572



4,990



Income (loss) from operations



(1,872)



11,941





4,618



28,028

Interest expense



(2,351)



(1,718)





(4,053)



(3,327)

Interest income



287



1,053





886



2,350

Other income (expense), net



32



808





(630)



2,412



Income (loss) before income taxes



(3,904)



12,084





821



29,463

Income tax expense (benefit)



(497)



2,637





376



6,243



Net income (loss)

$

(3,407)

$

9,447



$

445

$

23,220























Earnings (loss) per share:





















Basic

$

(0.09)

$

0.25



$

0.01

$

0.59



Diluted

$

(0.09)

$

0.24



$

0.01

$

0.58























Weighted-average number of shares used in calculating

















   earnings (loss) per share:



















Basic



36,439



38,426





36,614



39,522



Diluted



36,439



38,583





36,863



39,843

For comparative purposes, certain prior year amounts have been reclassified to conform to the current year presentation.





















Benchmark Electronics, Inc. and Subsidiaries





















Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)













June 30,





December 31,













2020





2019





















Assets













Current assets:















Cash and cash equivalents

$

356,419



$

363,956





Accounts receivable, net



302,068





324,424





Contract assets



153,641





161,061





Inventories



363,665





314,956





Other current assets



32,326





30,685









Total current assets



1,208,119





1,195,082



Property, plant and equipment, net



198,001





205,819



Operating lease right-of-use assets



74,170





76,859



Goodwill and other, net



277,745





282,114









Total assets

$

1,758,035



$

1,759,874





















Liabilities and Shareholders' Equity













Current liabilities:















Current installments of long-term debt and finance lease obligations

$

8,912



$

8,825





Accounts payable



304,601





302,994





Accrued liabilities



151,107





147,426









Total current liabilities



464,620





459,245



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



164,664





138,912



Operating lease liabilities



64,768





67,898



Other long-term liabilities



79,623





78,987



Shareholders' equity



984,360





1,014,832









Total liabilities and shareholders' equity

$

1,758,035



$

1,759,874

 





















Benchmark Electronics, Inc. and Subsidiaries





















Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

































Six Months Ended













June 30,













2020





2019





















Cash flows from operating activities:













Net income

$

445



$

23,220



Depreciation and amortization



24,531





24,125



Stock-based compensation expense



6,044





5,720



Accounts receivable, net



20,356





106,749



Contract assets



7,420





(15,464)



Inventories



(48,668)





(6,327)



Accounts payable



6,980





(49,428)



Other changes in working capital and other, net



2,810





(19,823)





Net cash provided by operations



19,918





68,772















Cash flows from investing activities:













Additions to property, plant and equipment and software



(23,290)





(15,495)



Other investing activities, net



2,576





49





Net cash used in investing activities



(20,714)





(15,446)





















Cash flows from financing activities:













Share repurchases



(19,329)





(100,039)



Net debt activity



25,608





(2,441)



Other financing activities, net



(12,802)





(12,628)





Net cash used in financing activities



(6,523)





(115,108)





















Effect of exchange rate changes



(218)





293

Net decrease in cash and cash equivalents



(7,537)





(61,489)



Cash and cash equivalents at beginning of year



363,956





458,102



Cash and cash equivalents at end of period

$

356,419



$

396,613





















 





























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,









2020



2020



2019





2020



2019























Income (loss) from operations (GAAP)

$

(1,872)

$

6,490

$

11,941



$

4,618

$

28,028



Restructuring charges and other costs



5,657



1,908



3,414





7,565



4,990



Settlement







773







773



Impairment





1,007







1,007





Customer insolvency (recovery)



(353)





(16)





(353)



(2,758)



Amortization of intangible assets



2,371



2,381



2,361





4,752



4,728



Non-GAAP income from operations

$

5,803

$

11,786

$

18,473



$

17,589

$

35,761































Gross Profit (GAAP)

$

34,672

$

43,361

$

49,223



$

78,033

$

99,260



Settlement







773







773



Customer insolvency (recovery)



(353)





(16)





(353)



(1,040)



Non-GAAP gross profit

$

34,319

$

43,361

$

49,980



$

77,680

$

98,993































Net income (loss) (GAAP)

$

(3,407)

$

3,852

$

9,447



$

445

$

23,220



Restructuring charges and other costs



5,657



1,908



3,414





7,565



4,990



Customer insolvency (recovery)



(353)





(16)





(353)



(2,758)



Amortization of intangible assets



2,371



2,381



2,361





4,752



4,728



Settlements







(330)







(2,166)



Impairment





1,007







1,007





Income tax adjustments(1)



(1,584)



(1,078)



(1,039)





(2,623)



(833)



Non-GAAP net income

$

2,684

$

8,070

$

13,837



$

10,793

$

27,181































Diluted earnings (loss) per share:



























Diluted (GAAP)

$

(0.09)

$

0.10

$

0.24



$

0.01

$

0.58





Diluted (Non-GAAP)

$

0.07

$

0.22

$

0.36



$

0.29

$

0.68































Weighted-average number of shares used in























   calculating diluted earnings (loss) per share:

























Diluted (GAAP)



36,439



37,071



38,583





36,863



39,843





Diluted (Non-GAAP)



36,689



37,071



38,583





36,863



39,843





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

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/benchmark-reports-second-quarter-2020-results-301102507.html

SOURCE Benchmark Electronics, Inc.

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