Benchmark Electronics Reports Fourth Quarter 2018 Results

Actualizado el 7 de febrero, 2019 - 22.10hs.

Benchmark Electronics Reports Fourth Quarter 2018 Results

- Quarterly revenue of $657 million

- Quarterly EPS of $0.64 ($0.41 non-GAAP)

PR Newswire

TEMPE, Ariz., Feb. 7, 2019 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the fourth quarter and year ended December 31, 2018.



Three Months Ended



Dec 31,


Sep 30,


Dec 31,

In millions, except EPS

2018


2018


2017(1)

Net sales

$657


$641


$666

Net income (loss)

$28


$8


(76)

Net income – non-GAAP(2)

$18


$15


$25

Diluted EPS

$0.64


$0.17


($1.54)

Diluted EPS – non-GAAP(2)

$0.41


$0.33


$0.49








Operating margin

2.3%


1.7%


3.3%

Operating margin – non-GAAP(2)

3.2%


2.9%


4.1%



Twelve Months Ended


Dec 31,


Dec 31,

In millions, except EPS

2018


2017(1)

Net sales

$2,566


$2,454

Net income (loss)

$23


($32)

Net income – non-GAAP(2)

$68


$81

Diluted EPS

$0.49


($0.64)

Diluted EPS – non-GAAP(2)

$1.45


$1.61

Operating margin

2.3%


3.1%

Operating margin – non-GAAP(2)

3.1%


4.0%


(1) 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.


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

Benchmark Electronics (PRNewsfoto/Benchmark Electronics, Inc.)

"We capped 2018 with strong results in the fourth quarter, with revenue at $657 million and earnings at $0.41, both above the high end of our guidance," said Paul Tufano, Benchmark's President and CEO.  "Bookings increased 23% for the full year and 13% sequentially to $198M; operating margins, on a non-GAAP basis, improved 30 bps quarter-over-quarter to 3.2%, but remain muted from continuing softness in semi-cap; and cash cycle days were 62 for the quarter and 68 days for the full year within our target range.  As a result, operating cash flow was $94 million in the quarter and $77 million for the full year.  During 2018, we spent $212 million on share repurchases reducing our outstanding shares by 17% year-over-year and have $202 million remaining with our existing program.

"As part of our ongoing process to review marginal and dilutive contracts, we have notified a long standing Computing customer that we will not renew a legacy contract that expires at the end of 2019 in its current form.  The resulting reduction in annual revenue will be in the range of $280 million - $320 million, and annualized gross margins will improve by approximately 80 – 90 basis points, which more appropriately shows the strength of our underlying business.  During this contractual transition year, we will discuss our actual results with and without the presence of this contract.

"Over the past several years, we have made progress on a number of key initiatives including  the implementation of our market‐sector sales organization to drive bookings and revenue growth; the expansion of our engineering and solutions capabilities to extend our value proposition to customers; and, the optimization of our global network and continued focus on operational execution," added Tufano.  "The progress on these initiatives will enable 3-5% revenue growth on our base business, excluding the legacy Computing contract. For 2019, we also expect gross and operating margin expansion from improved execution, effective cost and expense management, and the growth of additional service offerings including RF and high-speed design capabilities.  We remain committed to the achievement of our long-term business model as we continue to pursue growth and create value for our shareholders."

Cash Conversion Cycle



Dec 31,


Sep 30,


Dec 31,



2018


2018


2017







(as adjusted)

Accounts receivable days


64


64


59

Contract asset days


19


22


20

Inventory days


46


49


40

Accounts payable days


(63)


(57)


(54)

Customer deposits


(4)


(4)


(3)



62


74


62

Fourth Quarter 2018 Industry Sector Update
Revenue and percentage of sales by industry sector (in millions) was as follows.




Dec 31,




Sep 30,




Dec 31,



Higher-Value Markets


2018




2018



2017 (as adjusted)

Industrials

$

121


18

%


$

128


20

%


$

129


19

%

A&D


105


16




105


16




95


15


Medical


104


16




96


15




100


15


Test & Instrumentation


70


11




77


12




93


14




$

400


61

%


$

406


63

%


$

417


63

%










































Dec 31,




Sep 30,




Dec 31,



Traditional Markets


2018




2018



2017 (as adjusted)

Computing

$

171


26

%


$

146


23

%


$

172


26

%

Telecommunications


86


13




89


14




77


11




$

257


39

%


$

235


37

%


$

249


37

%


Total

$

657


100

%


$

641


100

%


$

666


100

%

Higher‐value markets were down 4% year‐over‐year from softer demand in Test & Instrumentation (primarily semi-capital equipment).  Traditional market revenues were up 3% year-over-year primarily from new program ramps in Telecommunications.

Fourth Quarter 2018 Bookings Update

  • New program bookings of $198 million at the midpoint of projected annualized revenue.
  • 17 engineering awards supporting early engagement opportunities.
  • 34 manufacturing wins across all market sectors.

The Company projects that new program bookings for the fourth quarter will result in annualized revenue of $165 to $233 million when fully launched in the next 12-24 months, medical up to 36 months.

First Quarter 2019 Outlook

  • Revenue between $570 - $610 million.
  • Diluted GAAP earnings per share between $0.23 - $0.31.
  • Diluted non-GAAP earnings per share between $0.29 - $0.37 (excluding any additional impact related to U.S. Tax Reform, restructuring charges and other costs and amortization of intangibles).

Fourth 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 is a worldwide provider of innovative product design, engineering services, technology solutions and advanced manufacturing services.  From initial product concept to volume production, including direct order fulfillment and aftermarket services, Benchmark has been providing integrated services and solutions to original equipment manufacturers since 1979.  Today, Benchmark proudly serves the following industries: aerospace and defense, medical technologies, complex industrials, test and instrumentation, next-generation telecommunications and high-end computing.  Benchmark's global operations network includes facilities in eight countries and 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 2019 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.

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



Year Ended





Dec 31,


Sep 30,


Dec 31,



Dec 31,





2018


2018


2017



2018


2017








(as adjusted)



(as adjusted)

Income from operations (GAAP)

$

15,265

$

10,957

$

21,910


$

58,538

$

76,826


Restructuring charges and other costs


3,527


1,845


3,062



9,365


8,628


Customer insolvency (recovery)


(113)


3,295


(239)



2,511


2,657


Amortization of intangible assets


2,384


2,368


2,367



9,485


10,065


Non-GAAP income from operations

$

21,063

$

18,465

$

27,100


$

79,899

$

98,176
















Gross Profit (GAAP)

$

55,199

$

52,777

$

60,661


$

220,593

$

225,920


Customer insolvency (recovery)


(113)


1,581


(239)



797


960


Non-GAAP gross profit

$

55,086

$

54,358

$

60,422


$

221,390

$

226,880
















Net income (loss) (GAAP)

$

27,716

$

7,799

$

(76,361)


$

22,817

$

(31,901)


Restructuring charges and other costs


3,527


1,845


3,062



9,365


8,628


Customer insolvency (recovery)


(113)


3,295


(239)



2,511


2,657


Amortization of intangible assets


2,384


2,368


2,367



9,485


10,065


Refinancing of credit facilities


-


1,982


-



1,982


-


Income tax adjustments(1)


(1,050)


(1,914)


(1,793)



(4,592)


(6,312)


Tax Cuts and Jobs Act(2)


(14,529)


-


97,633



26,008


97,633


Non-GAAP net income

$

17,935

$

15,375

$

24,669


$

67,576

$

80,770
















Diluted Earnings (loss) per share:














Diluted (GAAP)

$

0.64

$

0.17

$

(1.54)


$

0.49

$

(0.64)



Diluted (Non-GAAP)

$

0.41

$

0.33

$

0.49


$

1.45

$

1.61
















Weighted-average number of shares used in calculating diluted earnings (loss) per share:













Diluted (GAAP)


43,229


46,455


49,576



46,655


49,680



Diluted (Non-GAAP)


43,229


46,455


49,998



46,655


50,250




(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., offset by available U.S. foreign tax credits, and a non-recurring tax true-up benefit as a result of finalizing our federal and state income tax accounting for the U.S. transitions toll tax from the 2017 Tax Cuts and Jobs Act.

 

Benchmark Electronics, Inc. and Subsidiaries












Condensed Consolidated Statements of Income

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)





Three Months Ended



Year Ended




December 31,



December 31,



2018


2017



2018


2017





(as adjusted)




(as adjusted)

Sales

$

657,050

$

666,036


$

2,566,465

$

2,454,479

Cost of sales


601,851


605,375



2,345,872


2,228,559


Gross profit


55,199


60,661



220,593


225,920

Selling, general and administrative expenses


34,023


33,322



143,205


130,401

Amortization of intangible assets


2,384


2,367



9,485


10,065

Restructuring charges and other costs


3,527


3,062



9,365


8,628


Income from operations


15,265


21,910



58,538


76,826

Interest expense


(1,930)


(2,544)



(10,473)


(9,405)

Interest income


1,651


1,749



6,848


5,370

Other income (expense), net


(199)


(481)



628


(1,786)


Income before income taxes


14,787


20,634



55,541


71,005

Income tax expense (benefit)


(12,929)


96,995



32,724


102,906


Net income (loss)

$

27,716

$

(76,361)


$

22,817

$

(31,901)












Earnings (loss) per share:











Basic

$

0.64

$

(1.54)


$

0.49

$

(0.64)


Diluted

$

0.64

$

(1.54)


$

0.49

$

(0.64)












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










Basic


43,120


49,576



46,332


49,680


Diluted


43,229


49,576



46,655


49,680

For the three months ended December 31, 2017, the adoption of ASC 606 decreased revenue by $13.8 million, operating income by $1.2 million and net income by $21 thousand.  For the year ended December 31, 2017, the adoption of ASC 606 decreased revenue by $12.3 million, decreased operating income by $1.8 million and increased net income by $0.1 million.

Benchmark Electronics, Inc. and Subsidiaries


Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)







December 31,



December 31,







2018



2017










(as adjusted)

Assets







Current assets:








Cash and cash equivalents

$

458,102


$

742,546



Accounts receivable, net


468,161



436,560



Contract assets


140,082



146,496



Inventories


309,975



268,917



Other current assets


27,230



36,138





Total current assets


1,403,550



1,630,657


Property, plant and equipment, net


210,954



186,473


Goodwill and other, net


285,279



292,174





Total assets

$

1,899,783


$

2,109,304











Liabilities and Shareholders' Equity







Current liabilities:








Current installments of long-term debt and capital lease obligations

$

6,793


$

18,274



Accounts payable


422,053



362,701



Accrued liabilities


108,313



97,342





Total current liabilities


537,159



478,317


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


147,277



193,406


Other long-term liabilities


83,122



98,443


Shareholders' equity


1,132,225



1,339,138





Total liabilities and shareholders' equity

$

1,899,783


$

2,109,304

As of December 31, 2017, the adoption of ASC 606 increased current assets by $12.0 million, increased total liabilities by $1.7 million and increased shareholder's equity by $10.3 million.

Benchmark Electronics, Inc. and Subsidiaries


Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)




Year Ended



December 31,



2018



2017






(as adjusted)

Cash flows from operating activities:







Net income (loss)

$

22,817


$

(31,901)


Depreciation and amortization


51,839



48,672


Stock-based compensation expense


10,089



7,815


Accounts receivable, net


(33,952)



6,354


Contract assets


6,414



9,710


Inventories


(43,264)



(24,570)


Accounts payable


61,391



29,542


Other changes in working capital and other, net


1,353



100,220



Net cash provided by operations


76,687



145,842







Cash flows from investing activities:







Additions to property, plant and equipment and software


(66,732)



(54,506)


Other investing activities, net


(2,117)



(1,615)



Net cash used in investing activities


(68,849)



(56,121)







Cash flows from financing activities:







Share repurchases


(211,858)



(29,348)


Net debt activity


(58,024)



(12,396)


Other financing activities, net


(21,085)



10,392



Net cash used in financing activities


(290,967)



(31,352)

Effect of exchange rate changes


(1,315)



2,744

Net increase (decrease) in cash and cash equivalents


(284,444)



61,113


Cash and cash equivalents at beginning of year


742,546



681,433


Cash and cash equivalents at end of period

$

458,102


$

742,546

 

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SOURCE Benchmark Electronics, Inc.

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