Benchmark Electronics Reports Second Quarter Results

- Revenue of $664 million at the high end of guidance

- Non-GAAP operating margin increased 40 basis points quarter-over-quarter

- Strong operating cash flow of $52 million

- Returned $19 million to shareholders through share repurchases

Jul 23, 2015, 07:00 ET from Benchmark Electronics, Inc.

ANGLETON, Texas, July 23, 2015 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the quarter ended June 30, 2015.

Three Months Ended

Jun 30,

Mar 31,

Jun 30,

2015

2015

2014

Net sales (in millions)

$664

$621

$717

Net income (in millions)

$21

$14

$22

Net income – non-GAAP (in millions)

$22

$18

$23

Diluted EPS

$0.40

$0.27

$0.41

Diluted EPS – non-GAAP

$0.42

$0.34

$0.43

Operating margin (%)

3.9%

3.0%

3.8%

Operating margin – non-GAAP (%)

4.2%

3.8%

4.1%

"Benchmark performed well, as evidenced by our 4.2% non-GAAP operating margin and revenue at the high end of our previously announced guidance range," said Gayla Delly, Benchmark's President and CEO. "Despite broad variability in end-market demand, consistent execution resulted in year-over-year revenue increases in the medical and test & instrumentation sectors where we have had strong new program bookings in the last 12 months. We also experienced higher demand during the quarter from computing and telecom customers."

"Second quarter new program bookings should result in annualized revenue of $110-130 million when fully launched within the next 12-18 months. Bookings again aligned well with our focus on early engineering engagement and long-term manufacturing solutions for customers in both higher growth and traditional markets."

"Benchmark returned $19 million to shareholders through share repurchases during the second quarter, and a total of $66 million over the last 12 months. We continue to have a strong balance sheet and the financial flexibility to simultaneously repurchase shares, reinvest in the business, and support strategic growth initiatives."

Delly concluded, "We remain focused on our key strategic priorities that drive value for our customers and shareholders, including diversification of our portfolio towards higher margin programs, strong execution linked to lean and operational initiatives, and working capital management. Our results this quarter show continued progress in each of these long-term objectives."

Second Quarter 2015 Financial Highlights

  • Cash flows from operating activities were $52 million
  • Cash and cash equivalents were $409 million at June 30, 2015
  • Accounts receivable were $501 million at June 30, 2015; calculated days sales outstanding were 68 days compared to 71 days at March 31, 2015
  • Inventories were $445 million at June 30, 2015; inventory turns were 5.5 times compared to 5.3 at March 31, 2015
  • Restructuring charges and integration costs totaled $2 million

The cash conversion cycle improved by eight days from the previous quarter driven by improvements in receivables, payables and inventory. Benchmark expects further improvements throughout the year.

Second Quarter 2015 Industry Sector Update

The following table sets forth revenue by industry sector for the referenced quarters.

Jun 30,

Mar 31,

Jun 30,

2015

2015

2014

Industrial Controls

30

%

32

%

29

%

Telecommunications

27

27

29

Computing

20

19

21

Medical

14

13

11

Test & Instrumentation

9

9

10

100

%

100

%

100

%

Revenues across all sectors improved quarter-over-quarter. Revenues from Industrial Controls benefitted from the positive impact of new program introductions, offsetting weaker demand for programs related to energy markets. Telecommunications and Computing customer revenues improved with strong sales in the final month of the quarter. Medical and Test & Instrumentation grew at a healthy pace with the successful qualification of new products.

Second Quarter 2015 Bookings Update

  • New program bookings were $110-130 million
  • 13 engineering awards supporting early engagement opportunities
  • 29 manufacturing wins across all market sectors

Margin Improvement Initiatives

Benchmark continues to diversify its portfolio into higher margin business sectors and pursue lean and operational excellence initiatives. Improved operating margins reflect the benefits of these programs and the Company expects further benefits to accrue over time. Benchmark remains committed to achieving its long-term goal of a 4.5% operating margin.

Capital Allocation

  • Second quarter 2015 common share repurchases totaled $19 million or 0.8 million shares
  • Amount remaining on current share repurchase program is $69 million
  • Over the past three years, more than 50% of free cash flows returned to shareholders through buybacks

In addition to ongoing share repurchases, Benchmark has spent $8 million in the second quarter and $25 million year-to-date on capital expenditures related to improving operations and expanding capabilities for customers. For the full year, capital expenditures are expected to range from $40-50 million.

Third Quarter 2015 Outlook

  • Revenue between $635-$665 million
  • Diluted earnings per share between $0.38-$0.42 (excluding restructuring charges)

Second Quarter 2015 Results Conference Call Details

A conference call hosted by Benchmark management will be held today at 10:00 am (Central Time) to discuss the financial results of the Company and its future 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 integrated manufacturing, design and engineering services to original equipment manufacturers of industrial control equipment (including equipment for the aerospace and defense industries), telecommunication equipment, computers and related products for business enterprises, medical devices, and test and instrumentation products. Benchmark's global operations include facilities in seven 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 for earnings and earnings per share 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 of net income and earnings per share that exclude certain items in order to better assess operating performance and help investors compare results with our previous guidance. Our non-GAAP information is not necessarily comparable to 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 measures of our profitability or liquidity. Users of this financial information 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 "expect," "estimate," "anticipate," "predict," "goals" and similar terms, and the negatives thereof, often identify forward-looking statements, which are not limited to historical facts. Our forward-looking statements include, among other things, those relating to future revenues from new program bookings, share repurchases, capital investment, strategic growth initiatives, cash management, operating margins, revenues, earnings per share, and other statements, express or implied, concerning: future operating results or the ability to generate sales, income or cash flow; and Benchmark's business and growth strategies, including expected internal growth and performance goals. Although Benchmark believes these statements are based upon reasonable assumptions, they involve risks and uncertainties relating to our operations, markets and business environment generally. If one or more of these risks or uncertainties materialize, 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 of this release, 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, 2014, 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

Six Months Ended

Jun 30,

Mar 31,

Jun 30,

June 30,

2015

2015

2014

2015

2014

Income from operations (GAAP)

$

26,208

$

18,708

$

27,144

$

44,916

$

49,576

Restructuring charges and integration costs

1,588

4,869

1,907

6,457

4,016

Thailand flood-related items, net of insurance

-

-

-

-

(1,571)

Non-GAAP income from operations

$

27,796

$

23,577

$

29,051

$

51,373

$

52,021

Net income (GAAP)

$

21,210

$

14,205

$

22,150

$

35,415

$

41,275

Restructuring charges and integration costs, net of tax

772

3,595

1,243

4,368

2,626

Thailand flood-related items, net of insurance and tax

-

-

-

-

(1,263)

Non-GAAP net income

$

21,982

$

17,800

$

23,393

$

39,783

$

42,638

Earnings per share: (GAAP)

Basic

$

0.41

$

0.27

$

0.41

$

0.68

$

0.77

Diluted

$

0.40

$

0.27

$

0.41

$

0.67

$

0.76

Earnings per share: (Non-GAAP)

Basic

$

0.42

$

0.34

$

0.43

$

0.76

$

0.79

Diluted

$

0.42

$

0.34

$

0.43

$

0.75

$

0.78

Weighted-average number of shares used in

calculating earnings per share:

Basic

52,180

52,463

53,826

52,321

53,738

Diluted

52,671

53,045

54,405

52,884

54,394

 

Benchmark Electronics, Inc. and Subsidiaries

Consolidated Statements of Income

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Sales

$

664,038

$

716,868

$

1,284,963

$

1,356,212

Cost of sales

608,322

659,117

1,177,468

1,247,338

Gross profit

55,716

57,751

107,495

108,874

Selling, general and administrative expenses

27,920

28,700

56,122

56,853

Restructuring charges and integration costs

1,588

1,907

6,457

4,016

Thailand flood-related items, net of insurance

-

-

-

(1,571)

Income from operations

26,208

27,144

44,916

49,576

Interest expense

(497)

(473)

(932)

(949)

Interest income

293

668

725

1,183

Other income (expense), net

596

99

(461)

125

Income before income taxes

26,600

27,438

44,248

49,935

Income tax expense

5,390

5,288

8,833

8,660

Net income

$

21,210

$

22,150

$

35,415

$

41,275

Earnings per share:

Basic

$

0.41

$

0.41

$

0.68

$

0.77

Diluted

$

0.40

$

0.41

$

0.67

$

0.76

Weighted-average number of shares used in calculating

earnings per share:

Basic

52,180

53,826

52,321

53,738

Diluted

52,671

54,405

52,884

54,394

 

Benchmark Electronics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

June 30,

December 31,

2015

2014

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

409,315

$

427,376

Accounts receivable, net

500,713

520,389

Inventories

444,652

401,261

Other current assets

44,876

39,527

Total current assets

1,399,556

1,388,553

Long-term investments

924

1,008

Property, plant and equipment, net

185,535

190,180

Goodwill and other, net

96,486

99,148

Total assets

$

1,682,501

$

1,678,889

Liabilities and Shareholders' Equity

Current liabilities:

Current installments of capital lease obligations

$

724

$

676

Accounts payable

286,379

289,786

Accrued liabilities

73,009

68,636

Total current liabilities

360,112

359,098

Capital lease obligations, less current installments

8,470

8,845

Other long-term liabilities

19,593

19,906

Shareholders' equity

1,294,326

1,291,040

Total liabilities and shareholders' equity

$

1,682,501

$

1,678,889

 

 

SOURCE Benchmark Electronics, Inc.



RELATED LINKS

http://www.bench.com