Attached files
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| EX-99.2 - EXHIBIT 99.2 - BENCHMARK ELECTRONICS INC | ex992.htm |
| 8-K - FORM 8-K - BENCHMARK ELECTRONICS INC | bheForm8k20201028.htm |
1
Exhibit 99.1
FOR IMMEDIATE RELEASE
BENCHMARK REPORTS THIRD QUARTER 2020 RESULTS
●
Quarterly revenue of $526 million
●
Semi-Cap revenue growth of 45% year-over-year
●
Medical revenue growth of 5% year-over-year
●
Quarterly GAAP diluted EPS of $0.16 and non-GAAP diluted EPS of $0.32
TEMPE, AZ, October 28, 2020 – Benchmark Electronics, Inc. (NYSE: BHE) today announced financial
results for the third quarter ended September 30, 2020.
Three Months Ended
Sep 30,
Jun 30,
Sep 30,
In millions, except EPS
2020
2020
2019
Sales
$526
$491
$555
Net income (loss)
(2)
$6
$(3)
$7
Net income – non-GAAP
(1)(2)
$12
$3
$14
Diluted earnings (loss) per share
(2)
$0.16
$(0.09)
$0.19
Diluted EPS – non-GAAP
(1)(2)
$0.32
$0.07
$0.36
Operating margin
(2)
1.6%
(0.4)%
1.8%
Operating margin – non-GAAP
(1)(2)
3.0%
1.2%
3.2%
(1)
(2)
impact of approximately $1.3 million and $3.4 million of COVID-19 related costs, respectively.
“We delivered sequential revenue and earnings growth in the third quarter as our business started to
recover from second quarter disruptions, enabling earnings to come in above our guidance for the
quarter,” said CEO and President Jeff Benck. “The results were driven by a 45% year-over-year
improvement in Semi-cap and an 18% sequential improvement in the Aerospace and Defense sector,
where demand for defense related products remains strong. In addition, third quarter non-GAAP gross
and operating margins improved significantly from the second quarter, reaching 8.7% and 3.0%
respectively, as our global network returned to normal operating capacity.”
“Entering the fourth quarter, we expect stronger demand and new programs in Defense, Industrials, and
Telecommunications to offset declines in Medical as we are completing some of the incremental upside
builds for COVID-19 related therapeutic equipment. We continue to make progress on improving gross
margins as we expect to achieve our 9% target in the fourth quarter, which will enable us to also
improve earnings sequentially.”
2
Cash Conversion Cycle
Sep 30,
Jun 30,
Sep 30,
2020
2020
2019
Accounts receivable days
52
55
56
Contract asset days
28
28
26
Inventory days
66
72
56
Accounts payable days
(54)
(61)
(52)
Customer deposits
(11)
(10)
(7)
Cash Conversion Cycle days
81
84
79
Third Quarter 2020 Industry Sector Update
Revenue and percentage of sales by industry sector (in millions) was as follows.
Sep 30,
Jun 30,
Sep 30,
Higher-Value Markets
2020
2020
2019
Medical
$
134
26
%
$
135
27
%
$
128
23
%
Semi-Cap
99
19
87
18
68
12
A&D
105
20
88
18
115
21
Industrials
86
16
87
18
115
21
$
424
81
%
$
397
81
%
$
426
77
%
Sep 30,
Jun 30,
Sep 30,
Traditional Markets
2020
2020
2019
Computing
$
44
8
%
$
44
9
%
$
59
11
%
Telecommunications
58
11
50
10
70
12
$
102
19
%
$
94
19
%
$
129
23
%
Total
$
526
100
%
$
491
100
%
$
555
100
%
Overall, higher-value market revenues during the third quarter were up 7% quarter-over-quarter and
down 1% year-over-year. Traditional market revenues were up 9% quarter-over-quarter due to stronger
demand for high performance computing and telecommunications products and down 21% year-over-
year primarily from the Company’s exit of a legacy Computing contract in 2019, which it decided not to
renew.
Fourth Quarter 2020 Outlook
●
Revenue between $500 - $540 million
●
Diluted GAAP earnings per share between $0.20 - $0.24
●
Diluted non-GAAP earnings per share between $0.32 - $0.36 (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 $2.8 million to $3.2 million in the fourth quarter
and the amortization of intangibles is expected to be $2.4 million in the fourth quarter.
3
Third 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,
November 4, 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.
For More Information, Please Contact:
Lisa K. Weeks, VP of Strategy & Investor Relations
623-300-7052 or lisa.weeks@bench.com
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 fourth 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.
4
Non-GAAP Financial Measures
Management discloses non‐GAAP information to provide investors with additional information to
analyze the Company
’
s performance and underlying trends. A detailed reconciliation between GAAP
results and results excluding special items (
“
non-GAAP
”
) is included in the following tables attached to
this document. In situations where a non-GAAP reconciliation has not been provided, the Company was
unable to provide such a reconciliation without unreasonable effort due to the uncertainty and inherent
difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP
adjustments may be recognized. 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.
“
free cash flow
”
, which the Company defines as cash flow from
operations less additions to property, plant and equipment and purchased software.
’
s
non‐GAAP information is not necessarily comparable to the non‐GAAP information used by other
companies.
or other data prepared in accordance with GAAP as a measure of the Company
’
s profitability or
liquidity.
been made.
###
5
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,
2020
2019
2020
2019
Sales
$
525,951
$
555,229
$
1,531,881
$
1,759,651
Cost of sales
479,597
506,274
1,407,494
1,611,436
Gross profit
46,354
48,955
124,387
148,215
Selling, general and administrative expenses
29,724
30,947
89,815
92,461
Amortization of intangible assets
2,368
2,367
7,120
7,095
Restructuring charges and other costs
7,161
5,843
15,480
10,833
Ransomware incident related costs (recovery), net
(1,558)
—
(1,305)
—
Income from operations
8,659
9,798
13,277
37,826
Interest expense
(2,136)
(1,687)
(6,189)
(5,014)
Interest income
154
734
1,040
3,084
Other income (expense), net
439
(136)
(191)
2,276
Income before income taxes
7,116
8,709
7,937
38,172
Income tax expense
1,201
1,573
1,577
7,816
Net income
$
5,915
$
7,136
$
6,360
$
30,356
Earnings per share:
Basic
$
0.16
$
0.19
$
0.17
$
0.78
Diluted
$
0.16
$
0.19
$
0.17
$
0.77
Weighted-average number of shares used in calculating
Basic
36,467
37,419
36,565
38,813
Diluted
36,544
37,645
36,821
39,184
For comparative purposes, certain prior year amounts have been reclassified to conform to the current
year presentation.
6
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(UNAUDITED)
(in thousands)
September 30,
December 31,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
334,810
$
363,956
Accounts receivable, net
306,242
324,424
Contract assets
161,396
161,061
Inventories
352,851
314,956
Other current assets
29,928
30,685
Total current assets
1,185,227
1,195,082
Property, plant and equipment, net
190,610
205,819
Operating lease right-of-use assets
82,849
76,859
Goodwill and other, net
275,821
282,114
Total assets
$
1,734,507
$
1,759,874
Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt and finance lease obligations
$
8,956
$
8,825
Accounts payable
282,591
302,994
Accrued liabilities
157,938
147,426
Total current liabilities
449,485
459,245
Long-term debt and finance lease obligations, less current installments
147,522
138,912
Operating lease liabilities
74,407
67,898
Other long-term liabilities
72,766
78,987
Shareholders’ equity
990,327
1,014,832
Total liabilities and shareholders’ equity
$
1,734,507
$
1,759,874
7
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(in thousands)
(UNAUDITED)
Nine Months Ended
September 30,
2020
2019
Cash flows from operating activities:
Net income
$
6,360
$
30,356
Depreciation and amortization
36,939
36,389
Stock-based compensation expense
9,464
8,461
Accounts receivable, net
16,410
121,171
Contract assets
(335)
(20,986)
Inventories
(37,131)
(6,557)
Accounts payable
(18,260)
(122,156)
Other changes in working capital and other, net
12,168
10,636
Net cash provided by operations
25,615
57,314
Cash flows from investing activities:
Additions to property, plant and equipment and software
(29,102)
(25,942)
Other investing activities, net
2,586
252
Net cash used in investing activities
(26,516)
(25,690)
Cash flows from financing activities:
Share repurchases
(19,329)
(118,350)
Net debt activity
8,395
(4,614)
Other financing activities, net
(18,747)
(17,699)
Net cash used in financing activities
(29,681)
(140,663)
Effect of exchange rate changes
1,436
(1,021)
Net decrease in cash and cash equivalents
(29,146)
(110,060)
Cash and cash equivalents at beginning of year
363,956
458,102
Cash and cash equivalents at end of period
$
334,810
$
348,042
8
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,
Sep 30,
2020
2020
2019
2020
2019
Income (loss) from operations (GAAP)
$
8,659
$
(1,872)
$
9,798
$
13,277
$
37,826
Restructuring charges and other costs
1,425
5,574
5,843
8,737
10,833
Ransomware incident related costs (recovery), net
(1,558)
83
—
(1,305)
—
Settlement
—
—
—
—
773
Impairment
5,736
—
—
6,743
—
Customer insolvency (recovery)
(796)
(353)
—
(1,149)
(2,758)
Amortization of intangible assets
2,368
2,371
2,367
7,120
7,095
Non-GAAP income from operations
$
15,834
$
5,803
$
18,008
$
33,423
$
53,769
Gross Profit (GAAP)
$
46,354
$
34,672
$
48,955
$
124,387
$
148,215
Settlement
—
—
—
—
773
Customer insolvency (recovery)
(796)
(353)
—
(1,149)
(1,040)
Non-GAAP gross profit
$
45,558
$
34,319
$
48,955
$
123,238
$
147,948
Net income (loss) (GAAP)
$
5,915
$
(3,407)
$
7,136
$
6,360
$
30,356
Restructuring charges and other costs
1,425
5,574
6,168
8,737
11,158
Ransomware incident related costs (recovery), net
(1,558)
83
—
(1,305)
—
Customer insolvency (recovery)
(796)
(353)
—
(1,149)
(2,758)
Amortization of intangible assets
2,368
2,371
2,367
7,120
7,095
Settlements
—
—
(83)
—
(2,248)
Impairment
5,736
—
—
6,743
—
Income tax adjustments
(1)
(1,458)
(1,584)
(1,879)
(4,123)
(2,711)
Non-GAAP net income
$
11,632
$
2,684
$
13,709
$
22,383
$
40,892
Diluted earnings (loss) per share:
Diluted (GAAP)
$
0.16
$
(0.09)
$
0.19
$
0.17
$
0.77
Diluted (Non-GAAP)
$
0.32
$
0.07
$
0.36
$
0.61
$
1.04
Weighted-average number of shares used in
Diluted (GAAP)
36,544
36,439
37,645
36,821
39,184
Diluted (Non-GAAP)
36,544
36,689
37,645
36,821
39,184
(1)
This amount represents the tax impact of the non-GAAP adjustments using the applicable effective tax rates.