By Staff Writer |
4 years ago |
04/29/2020
Free Content

Benchmark Reports First Quarter 2020 Results

– Quarterly revenue of $515 million

– Semi-Cap revenue growth of 25% year-over-year

– A&D revenue growth of 15% year-over-year

– Medical revenue growth of 14% year-over-year

– Quarterly GAAP diluted EPS of $0.10 and non-GAAP diluted EPS of $0.22

PR Newswire

TEMPE, Ariz., April 29, 2020

TEMPE, Ariz., April 29, 2020 /PRNewswire/ — Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the first quarter ended March 31, 2020. 

Three Months Ended

Mar 31,

Dec 31,

Mar 31,

In millions, except EPS

2020

2019

2019

Sales

$515

$508

$603

Net income (loss)

$4

$(7)

$14

Net income – non-GAAP(1)

$8

$10

$13

Diluted earnings (loss) per share

$0.10

$(0.19)

$0.34

Diluted EPS – non-GAAP(1)

$0.22

$0.27

$0.33

Operating margin

1.3%

(1.8)%

2.7%

Operating margin – non-GAAP(1)

2.3%

2.6%

2.9%

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

“I want to thank our extraordinary team for their hard work to deliver our results for the first quarter.  While adhering to safety and government guidelines, we were able to navigate a very difficult start to the year that began with challenges in our Suzhou, China facility early in the quarter and then migrated to our global locations in late March,” said Jeff Benck, Benchmark President and CEO.

“Looking ahead, while we are not immune to the economic impacts created by COVID-19 and the associated labor and supply chain challenges, we expect continued strength in Medical, Defense, and Semi-cap sectors as compared to our other vertical markets.  We continue to play a key role in the COVID-19 fight with a number of products we design, test, and manufacture in the Medical sector that directly support efforts to battle this disease.  Our teams also continue to build essential products supporting the energy, semiconductor, security, and defense markets.”

“We remain in close contact with our customers, monitoring their end markets and the ever-changing labor and supply chain conditions.  We are proactively deploying a number of prioritized cost and cash management actions to reduce expenses and conserve cash during this period of uncertainty.  We have a strong balance sheet and I have the utmost confidence in the Benchmark global team to manage through these challenging times and emerge stronger as we focus on meeting the priority needs of our customers.”

Cash Conversion Cycle

Mar 31,

Dec 31,

Mar 31,

2020

2019

2019

Accounts receivable days

56

57

61

Contract asset days

28

29

23

Inventory days

65

60

51

Accounts payable days

(61)

(58)

(60)

Customer deposits

(7)

(7)

(3)

Cash Conversion Cycle days 

81

81

72

First Quarter 2020 Industry Sector Update
Revenue and percentage of sales by industry sector (in millions) was as follows.

Mar 31,

Dec 31,

Mar 31,

Higher-Value Markets

2020

2019

2019

Medical

$

118

23

%

$

103

20

%

$

103

17

%

Semi-Cap

83

16

81

16

66

11

A&D

119

23

106

21

104

17

Industrials

103

20

107

21

116

20

$

423

82

%

$

397

78

%

$

389

65

%

Mar 31,

Dec 31,

Mar 31,

Traditional Markets

2020

2019

2019

Computing

$

36

7

%

$

45

9

%

$

124

21

%

Telecommunications

56

11

66

13

90

14

$

92

18

%

$

111

22

%

$

214

35

%

Total

$

515

100

%

$

508

100

%

$

603

100

%

Overall, higher-value market revenues during the first quarter were up 6% quarter-over-quarter and 8% year-over-year due to stronger demand despite labor and supply chain challenges related to COVID-19 which occurred late in the quarter.  Traditional market revenues were down 57% year-over-year primarily from our exit of the legacy computing contract.

Second Quarter 2020 Outlook
Due to the effects of the COVID-19 pandemic and the unpredictable impact on our operations due to government enacted plant shut downs and shelter in place restrictions, particularly in our Tijuana, Mexico, Penang, Malaysia, and California operations as well as supply chain impacts, we are unable to forecast with certainty the effect on Benchmark’s financial and operational results for the second quarter of 2020.

First 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, May 6, 2020 on the Company’s website.

About Benchmark Electronics, Inc.
Benchmark provides comprehensive solutions across the entire product life cycle; 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.

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, guidance for second 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 upon 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 it 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 crisis, 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.

Non-GAAP Financial Measures
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.  This document also references “free cash flow”, which the Company defines as cash flow from operations less additions to property, plant and equipment and purchased software.  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

March 31,

December 31,

March 31,

2020

2019

2019

Income (loss) from operations (GAAP)

$

6,490

$

(9,281)

$

16,087

Restructuring charges and other costs

1,908

9,949

1,576

Settlement

–

(773)

–

Impairment

1,007

–

–

Customer insolvency (recovery)

–

11,036

(2,742)

Amortization of intangible assets

2,381

2,366

2,367

Non-GAAP income from operations

$

11,786

$

13,297

$

17,288

Gross Profit (GAAP)

$

43,361

$

37,313

$

50,037

Settlement

–

(773)

–

Customer insolvency (recovery)

–

967

(1,024)

Non-GAAP Gross Profit

$

43,361

$

37,507

$

49,013

Net income (loss) (GAAP)

$

3,852

$

(6,931)

$

13,773

Restructuring charges and other costs

1,908

9,949

1,576

Customer insolvency (recovery)

–

11,036

(2,742)

Amortization of intangible assets

2,381

2,366

2,367

Settlement

–

(773)

(1,836)

Impairment

1,007

–

–

Income tax adjustments(1)

(1,078)

(5,385)

206

Non-GAAP net income

$

8,070

$

10,262

$

13,344

Diluted earnings (loss) per share:

Diluted (GAAP)

$

0.10

$

(0.19)

$

0.34

Diluted (Non-GAAP)

$

0.22

$

0.27

$

0.33

Weighted-average number of shares used

 in calculating earnings (loss) per share:

Diluted (GAAP)

37,071

36,928

40,853

Diluted (Non-GAAP)

37,071

37,374

40,853

(1)

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

 

Benchmark Electronics, Inc. and Subsidiaries

Consolidated Statements of Income

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)

Three Months Ended

March 31,

2020

2019

Sales

$

514,964

$

602,820

Cost of sales

471,603

552,783

Gross profit

43,361

50,037

Selling, general and administrative expenses

31,575

30,007

Amortization of intangible assets

2,381

2,367

Restructuring charges and other costs

2,915

1,576

Income from operations

6,490

16,087

Interest expense

(1,702)

(1,609)

Interest income

599

1,297

Other income (expense), net

(662)

1,604

Income before income taxes

4,725

17,379

Income tax expense

873

3,606

Net income

$

3,852

$

13,773

Earnings per share:

Basic

$

0.10

$

0.34

Diluted

$

0.10

$

0.34

Weighted-average number of shares used in calculating

  earnings per share:

Basic

36,790

40,630

Diluted

37,071

40,853

For comparative purposes, certain prior year amounts have been reclassified to conform to the current year presentation.

Benchmark Electronics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)

March 31,

December 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

411,786

$

363,956

Accounts receivable, net

317,862

324,424

Contract assets

159,962

161,061

Inventories

338,437

314,956

Other current assets

36,955

30,685

Total current assets

1,265,002

1,195,082

Property, plant and equipment, net

201,580

205,819

Operating lease right-of-use assets

77,033

76,859

Goodwill and other, net

279,767

282,114

Total assets

$

1,823,382

$

1,759,874

Liabilities and Shareholders’ Equity

Current liabilities:

Current installments of long-term debt and finance lease obligations

$

8,868

$

8,825

Accounts payable

315,729

302,994

Accrued liabilities

134,742

147,426

Total current liabilities

459,339

459,245

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

231,798

138,912

Operating lease liabilities

67,009

67,898

Other long-term liabilities

75,614

78,987

Shareholders’ equity

989,622

1,014,832

Total liabilities and shareholders’ equity

$

1,823,382

$

1,759,874

 

Benchmark Electronics, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

Three Months Ended

March 31,

2020

2019

Cash flows from operating activities:

Net income

$

3,852

$

13,773

Depreciation and amortization

12,192

12,172

Stock-based compensation expense

2,739

2,772

Accounts receivable, net

6,414

64,176

Contract assets

1,099

(16,943)

Inventories

(23,769)

(5,862)

Accounts payable

14,882

(45,914)

Other changes in working capital and other, net

(20,518)

(7,760)

Net cash (used in) provided by operations

(3,109)

16,414

Cash flows from investing activities:

Additions to property, plant and equipment and software

(12,896)

(10,074)

Other investing activities, net

1,405

(97)

Net cash used in investing activities

(11,491)

(10,171)

Cash flows from financing activities:

Share repurchases

(19,329)

(61,080)

Net debt activity

92,813

(274)

Other financing activities, net

(6,946)

(7,160)

Net cash provided by (used in) financing activities

66,538

(68,514)

Effect of exchange rate changes

(4,108)

(515)

Net increase (decrease) in cash and cash equivalents

47,830

(62,786)

Cash and cash equivalents at beginning of year

363,956

458,102

Cash and cash equivalents at end of period

$

411,786

$

395,316

 

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SOURCE Benchmark Electronics, Inc.