SCOTTSDALE, Ariz., July 24, 2018 /PRNewswire/ -- Benchmark
Electronics, Inc. (NYSE: BHE) today announced financial results for the second quarter ended June 30,
2018.
|
|
|
Three Months Ended
|
|
|
|
Jun 30,
|
|
|
Mar 31,
|
|
Jun 30,
|
In millions, except EPS
|
|
2018
|
|
|
2018
|
|
2017(1)
|
Net sales
|
|
$661
|
|
|
$608
|
|
$620
|
Net income (loss) (2)
|
|
$11
|
|
|
$(24)
|
|
$18
|
Net income – non-GAAP
|
|
$14
|
|
|
$20
|
|
$20
|
Diluted EPS (2)
|
|
$0.23
|
|
|
$(0.49)
|
|
$0.36
|
Diluted EPS – non-GAAP
|
|
$0.30
|
|
|
$0.41
|
|
$0.40
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
2.2%
|
|
|
3.0%
|
|
3.7%
|
Operating margin – non-GAAP
|
|
2.7%
|
|
|
3.7%
|
|
4.3%
|
(1) Prior period amounts have been adjusted to reflect the
adoption of ASC 606 on a retrospective basis.
|
(2) Includes $40 million ($0.82 per share) for the three months
ended March 31, 2018 of foreign withholding taxes and state tax expense related to repatriation of foreign cash to US
parent company.
|
On January 1, 2018, we adopted new accounting guidance, FASB ASC Topic 606 "Revenue from
Contracts with Customers" (ASC 606), relating to revenue recognition. We adopted ASC 606 using the full retrospective
transition method. Accordingly, we have adjusted prior period information to be consistent with ASC 606. The adoption
of ASC 606 did not materially impact our overall financial position.
A reconciliation of GAAP and non-GAAP results is included below.
"On balance, we met our commitments for the second quarter. Bookings grew to $177 million
and were above our target mix; revenue was up 7% year-over-year; and cash cycle days of 69 were at the lower end of our target
range. During the quarter, we navigated through a number of medical transitions and made meaningful progress in addressing
program ramp challenges. While our operating margin profile was lower than expected from higher computing
revenue, results were in line with our expectations," said Paul Tufano, Benchmark's President
and CEO.
"Over the past 90 days, we have completed our ASR program and year-to-date have repurchased $78
million worth of stock, which puts us on track to exceed our $100 million target for the
year. We also refinanced and expanded our credit facilities to a combined total of $650
million, which will be accretive to earnings on an annual basis."
"Our guidance for the third quarter of 2018 reflects our continuing improvement in operational execution and revenue
expansion, but is tempered by softness in the semi-cap market."
Capital Allocation Highlights
- Accelerated Share Repurchase (ASR) Program completed on July 18 reducing common shares
outstanding by 1.7 million shares.
- Completed expansion of credit facilities to $650 million from $430
million on July 20.
- Extended maturity date of credit facilities to July 2023.
Cash Conversion Cycle
|
|
Jun 30,
|
|
|
|
Mar 31,
|
|
|
|
Jun 30,
|
|
|
2018
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
(as adjusted)
|
Accounts receivable days
|
|
61
|
|
|
|
59
|
|
|
|
57
|
Contract asset days
|
|
20
|
|
|
|
22
|
|
|
|
22
|
Inventory days
|
|
47
|
|
|
|
50
|
|
|
|
45
|
Accounts payable days
|
|
(57)
|
|
|
|
(60)
|
|
|
|
(55)
|
Customer deposits
|
|
(2)
|
|
|
|
(3)
|
|
|
|
(4)
|
|
|
69
|
|
|
|
68
|
|
|
|
65
|
Second Quarter 2018 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
|
|
2018
|
|
|
|
2018
|
|
|
2017 (as adjusted)
|
Industrials
|
$
|
118
|
|
18
|
%
|
|
$
|
125
|
|
20
|
%
|
|
$
|
125
|
|
20
|
%
|
A&D
|
|
103
|
|
15
|
|
|
|
98
|
|
16
|
|
|
|
100
|
|
16
|
|
Medical
|
|
97
|
|
15
|
|
|
|
97
|
|
16
|
|
|
|
87
|
|
14
|
|
Test & Instrumentation
|
|
106
|
|
16
|
|
|
|
102
|
|
17
|
|
|
|
89
|
|
15
|
|
|
|
$
|
424
|
|
64
|
%
|
|
$
|
422
|
|
69
|
%
|
|
$
|
401
|
|
65
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jun 30,
|
|
|
|
Mar 31,
|
|
|
|
Jun 30,
|
|
|
Traditional Markets
|
|
2018
|
|
|
|
2018
|
|
|
2017 (as adjusted)
|
Computing
|
$
|
160
|
|
24
|
%
|
|
$
|
103
|
|
17
|
%
|
|
$
|
142
|
|
23
|
%
|
Telecommunications
|
|
77
|
|
12
|
|
|
|
83
|
|
14
|
|
|
|
77
|
|
12
|
|
|
|
$
|
237
|
|
36
|
%
|
|
$
|
186
|
|
31
|
%
|
|
$
|
219
|
|
35
|
%
|
|
Total
|
$
|
661
|
|
100
|
%
|
|
$
|
608
|
|
100
|
%
|
|
$
|
620
|
|
100
|
%
|
Higher‐value markets were up 6% year‐over‐year from stronger demand in Test & Instrumentation and new Medical program
ramps. Traditional market revenues were up 8% year-over-year primarily from strong storage demand.
Second Quarter 2018 Bookings Update
- New program bookings of $177 million at the midpoint of projected annualized revenue.
- 25 engineering awards supporting early engagement opportunities.
- 25 manufacturing wins across all market sectors.
The Company projects that new program bookings for the second quarter will result in annualized revenue of $148 to $205 million when fully launched in the next 12-24 months, medical up to
36 months. The new program bookings align with Benchmark's strategic focus.
Third Quarter 2018 Outlook
- Revenue between $610 - $650 million.
- Diluted GAAP earnings per share between $0.19 - $0.26.
- Diluted non-GAAP earnings per share between $0.28 - $0.36
(excluding any additional impact related to U.S. Tax Reform, restructuring charges and other costs, amortization of intangibles
and the write-off of existing deferred financing charges).
Second Quarter 2018 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 worldwide engineering services, integrated technology solutions and manufacturing services (both
electronics manufacturing services (EMS) and precision machining services) to original equipment manufacturers in the following
industries: industrial controls, aerospace and defense, telecommunications, computers and related products for business
enterprises, medical devices, and test and instrumentation. Benchmark's global operations include facilities in eight
countries, and its 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 2018 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, 2017
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.
All forward-looking statements included in this release are based upon information available to Benchmark as of the date
hereof, and the Company 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,
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
(as adjusted)
|
|
|
(as adjusted)
|
Income from operations (GAAP)
|
$
|
14,349
|
$
|
17,967
|
$
|
23,124
|
|
$
|
32,316
|
$
|
34,013
|
|
Restructuring charges and other costs
|
|
1,758
|
|
2,235
|
|
1,544
|
|
|
3,993
|
|
3,055
|
|
Customer insolvency (recovery)
|
|
(330)
|
|
(341)
|
|
(710)
|
|
|
(671)
|
|
4,410
|
|
Amortization of intangible assets
|
|
2,367
|
|
2,366
|
|
2,481
|
|
|
4,733
|
|
4,962
|
|
Non-GAAP income from operations
|
$
|
18,144
|
$
|
22,227
|
$
|
26,439
|
|
$
|
40,371
|
$
|
46,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) (GAAP)
|
$
|
10,943
|
$
|
(23,641)
|
$
|
18,074
|
|
$
|
(12,698)
|
$
|
26,629
|
|
Restructuring charges and other costs
|
|
1,758
|
|
2,235
|
|
1,544
|
|
|
3,993
|
|
3,055
|
|
Customer insolvency (recovery)
|
|
(330)
|
|
(341)
|
|
(710)
|
|
|
(671)
|
|
4,410
|
|
Amortization of intangible assets
|
|
2,367
|
|
2,366
|
|
2,481
|
|
|
4,733
|
|
4,962
|
|
Income tax adjustments(1)
|
|
(811)
|
|
(818)
|
|
(1,265)
|
|
|
(1,629)
|
|
(2,845)
|
|
Tax Cuts and Jobs Act(2)
|
|
423
|
|
40,114
|
|
-
|
|
|
40,537
|
|
-
|
|
Non-GAAP net income
|
$
|
14,350
|
$
|
19,915
|
$
|
20,124
|
|
$
|
34,265
|
$
|
36,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (GAAP)
|
$
|
0.23
|
$
|
(0.49)
|
$
|
0.36
|
|
$
|
(0.26)
|
$
|
0.53
|
|
|
Diluted (Non-GAAP)
|
$
|
0.30
|
$
|
0.41
|
$
|
0.40
|
|
$
|
0.71
|
$
|
0.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares used in
|
|
|
|
|
|
|
|
|
|
|
|
calculating diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (GAAP)(3)
|
|
47,631
|
|
48,517
|
|
50,239
|
|
|
47,981
|
|
50,209
|
|
|
Diluted (Non-GAAP)
|
|
47,631
|
|
48,837
|
|
50,239
|
|
|
48,314
|
|
50,209
|
|
|
|
(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. For the three months ended June 30 and March 31, 2018, this includes estimated foreign
withholding taxes applicable to historical earnings prior to December 31, 2017 and for the applicable state tax impact of
foreign cash distributions into the U.S.
|
(3)
|
Potentially diluted securities totaling 0.3 million for the three months
ended March 31, 2018 and six months ended June 30, 2018 were not included in the computation of GAAP diluted loss per
share because their effect would have decreased the loss per share.
|
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,
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
|
|
(as adjusted)
|
|
|
|
(as adjusted)
|
Sales
|
$
|
660,591
|
$
|
619,611
|
|
$
|
1,268,727
|
$
|
1,177,514
|
Cost of sales
|
|
606,292
|
|
560,127
|
|
|
1,156,110
|
|
1,070,498
|
|
Gross profit
|
|
54,299
|
|
59,484
|
|
|
112,617
|
|
107,016
|
Selling, general and administrative expenses
|
|
35,825
|
|
32,335
|
|
|
71,575
|
|
64,986
|
Amortization of intangible assets
|
|
2,367
|
|
2,481
|
|
|
4,733
|
|
4,962
|
Restructuring charges and other costs
|
|
1,758
|
|
1,544
|
|
|
3,993
|
|
3,055
|
|
Income from operations
|
|
14,349
|
|
23,124
|
|
|
32,316
|
|
34,013
|
Interest expense
|
|
(2,293)
|
|
(2,312)
|
|
|
(4,721)
|
|
(4,537)
|
Interest income
|
|
1,645
|
|
1,213
|
|
|
3,578
|
|
2,287
|
Other expense, net
|
|
(355)
|
|
(830)
|
|
|
(312)
|
|
(911)
|
|
Income before income taxes
|
|
13,346
|
|
21,195
|
|
|
30,861
|
|
30,852
|
Income tax expense
|
|
2,403
|
|
3,121
|
|
|
43,559
|
|
4,223
|
|
Net income (loss)
|
$
|
10,943
|
$
|
18,074
|
|
$
|
(12,698)
|
$
|
26,629
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.23
|
$
|
0.36
|
|
$
|
(0.26)
|
$
|
0.54
|
|
Diluted
|
$
|
0.23
|
$
|
0.36
|
|
$
|
(0.26)
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares used in calculating
|
|
|
|
|
|
|
|
|
earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
47,451
|
|
49,766
|
|
|
47,981
|
|
49,640
|
|
Diluted
|
|
47,631
|
|
50,239
|
|
|
47,981
|
|
50,209
|
For the three months ended June 30, 2017, the adoption of ASC 606 increased revenue by
$2.7 million, operating income by $0.9 million, net income by
$0.9 million and diluted earnings per share by $0.02. For the
six months ended June 30, 2017, the adoption of ASC 606 decreased revenue by $5.9 million, operating income by $0.6 million, net income by $0.2 million and diluted earnings per share by $0.01.
Benchmark Electronics, Inc. and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets
|
(UNAUDITED)
|
(in thousands)
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
(as adjusted)
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
595,639
|
|
$
|
742,546
|
|
|
Accounts receivable, net
|
|
444,953
|
|
|
436,560
|
|
|
Contract assets
|
|
148,231
|
|
|
146,496
|
|
|
Inventories
|
|
318,986
|
|
|
268,917
|
|
|
Other current assets
|
|
35,277
|
|
|
36,138
|
|
|
Total current assets
|
|
1,543,086
|
|
|
1,630,657
|
|
Property, plant and equipment, net
|
|
203,872
|
|
|
186,473
|
|
Goodwill and other, net
|
|
290,227
|
|
|
292,174
|
|
|
Total assets
|
$
|
2,037,185
|
|
$
|
2,109,304
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Current installments of long-term debt and capital lease
obligations
|
$
|
21,219
|
|
$
|
18,274
|
|
|
Accounts payable
|
|
383,606
|
|
|
362,701
|
|
|
Accrued liabilities
|
|
96,171
|
|
|
97,342
|
|
|
Total current liabilities
|
|
500,996
|
|
|
478,317
|
|
Long-term debt and capital lease obligations, less current
installments
|
|
181,777
|
|
|
193,406
|
|
Other long-term liabilities
|
|
110,267
|
|
|
98,443
|
|
Shareholders' equity
|
|
1,244,145
|
|
|
1,339,138
|
|
Total liabilities and shareholders'
equity
|
$
|
2,037,185
|
|
$
|
2,109,304
|
|
|
|
|
|
|
|
|
|
|
Benchmark Electronics, Inc. and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Cash Flows
|
(in thousands)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
(as adjusted)
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(12,698)
|
|
$
|
26,629
|
|
Depreciation and amortization
|
|
25,083
|
|
|
24,317
|
|
Stock-based compensation expense
|
|
5,405
|
|
|
4,505
|
|
Accounts receivable, net
|
|
(8,980)
|
|
|
49,394
|
|
Contract assets
|
|
(1,735)
|
|
|
3,466
|
|
Inventories
|
|
(52,063)
|
|
|
(39,478)
|
|
Accounts payable
|
|
23,103
|
|
|
16,675
|
|
Other changes in working capital and other, net
|
|
5,703
|
|
|
7,021
|
Net cash provided
by (used in) operations
|
|
(16,182)
|
|
|
92,529
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Additions to property, plant and equipment and software
|
|
(38,363)
|
|
|
(26,379)
|
|
Other investing activities, net
|
|
(2,201)
|
|
|
380
|
Net cash used in
investing activities
|
|
(40,564)
|
|
|
(25,999)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Share repurchases
|
|
(65,868)
|
|
|
(2,000)
|
|
Equity forward contract related to accelerated share repurchase
|
|
(10,000)
|
|
|
-
|
|
Net debt activity
|
|
(9,121)
|
|
|
(6,185)
|
|
Other financing activities, net
|
|
(4,530)
|
|
|
7,282
|
Net cash used in
financing activities
|
|
(89,519)
|
|
|
(903)
|
Effect of exchange rate changes
|
|
(642)
|
|
|
2,251
|
Net increase (decrease) in cash and cash equivalents
|
|
(146,907)
|
|
|
67,878
|
Cash and cash equivalents at beginning of
year
|
|
742,546
|
|
|
681,433
|
Cash and cash equivalents at end of
period
|
$
|
595,639
|
|
$
|
749,311
|
|
|
|
|
|
|
|
|
|
|
View original content with multimedia:http://www.prnewswire.com/news-releases/benchmark-electronics-reports-second-quarter-2018-results-300685890.html
SOURCE Benchmark Electronics, Inc.