SCOTTSDALE, Ariz., Oct. 18, 2017 /PRNewswire/ -- Benchmark
Electronics, Inc. (NYSE: BHE) today announced financial results for
the third quarter ended September 30,
2017.
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Three Months
Ended
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Sep
30,
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Jun 30,
|
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Sep 30,
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In millions,
except EPS
|
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2017
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2017
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2016
|
|
Net sales
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$604
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|
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$617
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|
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$574
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Net income
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$18
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$17
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$22
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Net income –
non-GAAP
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$20
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$19
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$18
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Diluted
EPS
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$0.35
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$0.34
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$0.44
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Diluted EPS –
non-GAAP
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$0.39
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$0.38
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$0.36
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Operating
margin
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3.4%
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3.6%
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3.1%
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Operating margin –
non-GAAP
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4.1%
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4.1%
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4.3%
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A reconciliation of
GAAP and non-GAAP results is included below.
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"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
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Sep 30,
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Jun 30,
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Sep 30,
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2017
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2017
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2016
|
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Accounts receivable
days
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61
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57
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65
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Inventory
days
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70
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67
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68
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Accounts payable
days
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(55)
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(55)
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(53)
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Customer
deposits
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(4)
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(4)
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-
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72
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65
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|
|
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80
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|
Third Quarter 2017 Industry Sector Update
Revenue by
industry sector (dollars in millions) was as follows.
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Sep 30,
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Jun 30,
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Sep 30,
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Higher-Value
Markets
|
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2017
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2017
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2016
|
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Industrials
|
$
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124
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20
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%
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$
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124
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20
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%
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$
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141
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25
|
%
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A&D
|
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96
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16
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100
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16
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82
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14
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Medical
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101
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17
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86
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14
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86
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15
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Test &
Instrumentation
|
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88
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15
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89
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15
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|
|
66
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|
11
|
|
|
|
$
|
409
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|
68
|
%
|
|
$
|
399
|
|
65
|
%
|
|
$
|
375
|
|
65
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
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|
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Sep 30,
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Jun 30,
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Sep 30,
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Traditional
Markets
|
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2017
|
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2017
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2016
|
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Computing
|
$
|
124
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|
20
|
%
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$
|
142
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23
|
%
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$
|
107
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|
19
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%
|
Telecommunications
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71
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12
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76
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12
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92
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16
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$
|
195
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|
32
|
%
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|
$
|
218
|
|
35
|
%
|
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$
|
199
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|
35
|
%
|
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Total
|
$
|
604
|
|
100
|
%
|
|
$
|
617
|
|
100
|
%
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$
|
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
|
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|
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.