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NYSEBHE
Benchmark Electronics Reports Third Quarter 2017 Results
- Quarterly revenue of $604 million
- Quarterly operating margin of 3.4% (4.1% non-GAAP)
- Quarterly EPS of $0.35 ($0.39 non-GAAP)
PR Newswire
SCOTTSDALE, Ariz.

SCOTTSDALE, Ariz., Oct. 18, 2017 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the third quarter ended September 30, 2017.




Three Months Ended





Sep 30,



Jun 30,



Sep 30,


In millions, except EPS


2017



2017



2016


Net sales


$604



$617



$574


Net income


$18



$17



$22


Net income – non-GAAP


$20



$19



$18


Diluted EPS


$0.35



$0.34



$0.44


Diluted EPS – non-GAAP


$0.39



$0.38



$0.36













Operating margin


3.4%



3.6%



3.1%


Operating margin – non-GAAP


4.1%



4.1%



4.3%



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

"I am pleased by the Company's performance in the third quarter, meeting or exceeding each of our commitments.  Revenues exceeded our guidance and marked the third consecutive quarter that we experienced year-on-year revenue growth.  Non-GAAP EPS of $0.39 exceeded the high-end of our guidance by $0.03; cash cycle days ended at 72, within our target range, and an eight-day improvement from the year ago period; and we achieved 9.9% ROIC, a 40 bps quarter‐over‐quarter improvement," said Paul Tufano, Benchmark's President and CEO.

"As we work to reposition the Company to achieve our business model objectives, we remain focused on the key initiatives critical to our success, namely the optimization of our global network; the implementation of our market-sector sales organization; and the expansion of our engineering and solutions capabilities," added Tufano.  "The transition of our headquarters to the Phoenix area is substantially complete, and we are making progress on our operational excellence and customer care initiatives.  Our market-sector sales focus and incremental go-to-market investments are beginning to yield results as reflected in our third quarter bookings, which were above the $150 million level for the first time in 12 quarters."

"We continue to emphasize our engineering-led customer engagements including the recent announcement that Benchmark was named Qualcomm Life's partner to commercialize their new product line of interconnected biometric sensors and to be the FDA manufacturer of record," said Tufano.  "We will work with Qualcomm to have the device ready for FDA submission in 2018 with a goal of commercial availability to customers next year.  This engagement is a pivotal milestone, which reinforces our engineering-led solutions business model and supports our ongoing IoT investment strategy."

"Today, we also announce with mixed emotions that Don Adam, Chief Financial Officer, will be retiring from the Company.  Don has determined that a permanent relocation to Phoenix would not be in the best interest of his family and will be departing by the end of the year.  A search for his successor is currently underway," said Tufano.  "Don has been a devoted Benchmark employee for the past 15 years and has been invaluable to me this past year as we have formulated plans to transform Benchmark.  We are indebted to Don for his service and wish him all the best in his future endeavors."

Third Quarter 2017 Financial Highlights

  • Operating margin was 3.4% (non-GAAP 4.1%).
  • Cash conversion cycle improved 8 days from 80 at September 30, 2016 to 72 days at September 30, 2017.
  • Cash was $730 million at September 30, of which $75 million was available in the U.S.

Cash Conversion Cycle



Sep 30,




Jun 30,




Sep 30,




2017




2017




2016


Accounts receivable days


61




57




65


Inventory days


70




67




68


Accounts payable days


(55)




(55)




(53)


Customer deposits


(4)




(4)




-




72




65




80


Third Quarter 2017 Industry Sector Update
Revenue by industry sector (dollars in millions) was as follows.




Sep 30,




Jun 30,




Sep 30,



Higher-Value Markets


2017




2017




2016


Industrials

$

124


20

%


$

124


20

%


$

141


25

%

A&D


96


16




100


16




82


14


Medical


101


17




86


14




86


15


Test & Instrumentation


88


15




89


15




66


11




$

409


68

%


$

399


65

%


$

375


65

%










































Sep 30,




Jun 30,




Sep 30,



Traditional Markets


2017




2017




2016


Computing

$

124


20

%


$

142


23

%


$

107


19

%

Telecommunications


71


12




76


12




92


16




$

195


32

%


$

218


35

%


$

199


35

%


Total

$

604


100

%


$

617


100

%


$

574


100

%

Overall revenue increased 5% year-over-year driven by continued strong demand in Test & Instrumentation serving the semi-capital equipment market, Computing growth from existing and new customers, Medical growth from new programs and Aerospace and Defense (A&D) growth from defense programs.  Industrials and Telecommunications growth remained muted year-over-year from softness across several of our top customers.

Third Quarter 2017 Bookings Update

  • New program bookings of $138 to $165 million.
  • 14 engineering awards supporting early engagement opportunities.
  • 31 manufacturing wins across all market sectors.

The Company projects that new program bookings for the third quarter will result in annualized revenue of $138 to $165 million when fully launched in the next 12-18 months.  The new program bookings align with Benchmark's strategic focus on higher-value markets.

Fourth Quarter 2017 Outlook

  • Revenue between $590 - $610 million.
  • Diluted GAAP earnings per share between $0.29 - $0.33.
  • Diluted non-GAAP earnings per share between $0.34 - $0.38 (excluding restructuring charges and amortization of intangibles expected to approximate $0.05 per share). The income tax impact of the non-GAAP adjustments using the applicable effective tax rates is $0.02 per share.

Third Quarter 2017 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 integrated electronics manufacturing services (EMS), engineering and design services, 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.

Non-GAAP Financial Measures
This press release includes financial measures that exclude certain items and therefore do not follow U.S. generally accepted accounting principles (GAAP).  A detailed reconciliation between the GAAP results and results excluding special items (non-GAAP) is included at the end of this press release.  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.  Benchmark'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.

Forward-Looking Statements
This press release contains certain forward-looking statements within the scope of the Securities Act of 1933 and the Securities Exchange Act of 1934.  The words "project," "expect," "estimate," "plan," "anticipate," "predict," "goals," "targeting" and similar terms, and the negatives thereof, often identify forward-looking statements, which are not limited to historical facts.  The Company's forward-looking statements include, among other things, projections relating to the future value of bookings and fourth quarter 2017 revenues and diluted earnings per share.  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.

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.  Readers are advised to consult further disclosures on related subjects, particularly in Item 1A, "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2016, in its other filings with the Securities and Exchange Commission and in its press releases.

 

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




Sep 30,


Jun 30,


Sep 30,



September 30,




2017


2017


2016



2017


2016














Income from operations (GAAP)

$

20,815

$

22,227

$

18,082


$

55,459

$

52,090

Restructuring charges and other costs


2,511


1,544


3,485



5,566


9,876

Customer insolvency (recovery)


(1,514)


(710)


-



2,896


-

Amortization of intangible assets


2,736


2,481


3,170



7,698


8,945

Non-GAAP income from operations

$

24,548

$

25,542

$

24,737


$

71,619

$

70,911



























Net income (GAAP)

$

17,512

$

17,176

$

21,742


$

44,375

$

45,479

Restructuring charges and other costs


2,511


1,544


3,485



5,566


9,876

Customer insolvency (recovery)


(1,514)


(710)


-



2,896


-

Amortization of intangible assets


2,736


2,481


3,170



7,698


8,945

Income tax adjustments(1)


(1,674)


(1,265)


(2,207)



(4,519)


(5,935)

Discrete tax benefits


-


-


(8,270)



-


(8,270)

Non-GAAP net income

$

19,571

$

19,226

$

17,920


$

56,016

$

50,095














Earnings per share: (GAAP)













Basic

$

0.35

$

0.35

$

0.44


$

0.89

$

0.92


Diluted

$

0.35

$

0.34

$

0.44


$

0.88

$

0.91














Earnings per share: (Non-GAAP)













Basic

$

0.39

$

0.39

$

0.37


$

1.13

$

1.01


Diluted

$

0.39

$

0.38

$

0.36


$

1.11

$

1.00














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
























Basic


49,865


49,766


48,965



49,716


49,377


Diluted


50,330


50,239


49,414



50,292


49,878


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

 

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,



2017


2016



2017


2016

Sales

$

603,550

$

574,341


$

1,786,955

$

1,702,908

Cost of sales


545,395


521,519



1,621,153


1,546,915


Gross profit


58,155


52,822



165,802


155,993

Selling, general and administrative expenses


32,093


28,085



97,079


85,082

Amortization of intangible assets


2,736


3,170



7,698


8,945

Restructuring charges and other costs


2,511


3,485



5,566


9,876


Income from operations


20,815


18,082



55,459


52,090

Interest expense


(2,324)


(2,302)



(6,861)


(6,935)

Interest income


1,334


577



3,621


1,170

Other expense, net


(394)


(383)



(1,305)


(535)


Income before income taxes


19,431


15,974



50,914


45,790

Income tax expense (benefit)


1,919


(5,768)



6,539


311


Net income

$

17,512

$

21,742


$

44,375

$

45,479












Earnings per share:











Basic

$

0.35

$

0.44


$

0.89

$

0.92


Diluted

$

0.35

$

0.44


$

0.88

$

0.91












Weighted-average number of shares used in calculating









   earnings per share:










Basic


49,865


48,965



49,716


49,377


Diluted


50,330


49,414



50,292


49,878

 


Benchmark Electronics, Inc. and Subsidiaries










Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)







September 30,


December 31,







2017


2016

Assets






Current assets:







Cash and cash equivalents

$

730,146

$

681,433



Accounts receivable, net


411,550


440,692



Inventories


421,858


381,334



Other current assets


42,349


28,203





Total current assets


1,605,903


1,531,662


Property, plant and equipment, net


178,122


166,148


Goodwill and other, net


292,681


300,858





Total assets

$

2,076,706

$

1,998,668










Liabilities and Shareholders' Equity






Current liabilities:







Current installments of long-term debt and capital lease obligations

$

16,804

$

12,396



Accounts payable


335,315


326,249



Accrued liabilities


93,674


73,736





Total current liabilities


445,793


412,381


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


197,766


211,252


Other long-term liabilities


8,236


9,570


Shareholders' equity


1,424,911


1,365,465





Total liabilities and shareholders' equity

$

2,076,706

$

1,998,668

 

Benchmark Electronics, Inc. and Subsidiaries










Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)
















Nine Months Ended







September 30,







2017


2016

Cash flows from operating activities:  






Net income

$

44,375

$

45,479


Depreciation and amortization


36,591


42,002


Stock-based compensation expense


6,819


4,302


Accounts receivable, net


30,926


61,776


Inventories


(38,778)


13,991


Accounts payable


3,922


59,183


Other changes in working capital and other


6,035


1,851


     Net cash provided by operations


89,890


228,584







Cash flows from investing activities:  






Additions to property, plant and equipment and software


(37,736)


(25,398)


Business acquisition, net of cash acquired


-


10,750


Other investing activities, net


364


213


     Net cash used in investing activities


(37,372)


(14,435)










Cash flows from financing activities:  






Share repurchases


(5,887)


(40,862)


Net debt activity


(9,288)


(9,224)


Other financing activities, net


9,012


5,289


     Net cash used in financing activities


(6,163)


(44,797)

Effect of exchange rate changes  


2,358


336

Net increase in cash and cash equivalents


48,713


169,688


Cash and cash equivalents at beginning of year


681,433


465,995


Cash and cash equivalents at end of period

$

730,146

$

635,683

 

View original content:http://www.prnewswire.com/news-releases/benchmark-electronics-reports-third-quarter-2017-results-300539250.html

SOURCE Benchmark Electronics, Inc.

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