Benchmark Reports Second Quarter 2020 Results

- Quarterly revenue of $491 million

- Semi-Cap revenue growth of 39% year-over-year

- Medical revenue growth of 18% year-over-year

- Quarterly GAAP diluted loss per share of $(0.09) and non-GAAP diluted EPS of $0.07

- Operating cash flow of $23 million

News provided by

Benchmark Electronics, Inc.

Jul 29, 2020, 16:07 ET

TEMPE, Ariz., July 29, 2020 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the second quarter ended June 30, 2020. 



Three Months Ended



Jun 30,



Mar 31,


Jun 30,

In millions, except EPS

2020



2020


2019

Sales

$491



$515


$602

Net income (loss)(2)

$(3)



$4


$9

Net income – non-GAAP(1)(2)

$3



$8


$14

Diluted earnings (loss) per share(2)

$(0.09)



$0.10


$0.24

Diluted EPS – non-GAAP(1)(2)

$0.07



$0.22


$0.36

Operating margin(2)

(0.4)%



1.3%


2.0%

Operating margin – non-GAAP(1)(2)

1.2%



2.3%


3.1%



(1) 

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

(2) 

Results for the second quarter ended June 30, 2020 include the impact of approximately $4.1 million of COVID-19 related costs.

"Thanks to the commitment and tireless work of our global Benchmark team, we continue to successfully navigate this challenging pandemic environment.  Protecting our people remains our highest priority and we will continue our vigilance to keep people safe and our locations operational," said Jeff Benck, Benchmark President and CEO.

"Despite the current macro conditions, our team has focused on delivering products to meet the needs of our customers.  Our diversified portfolio remains a strength at this time as we saw strong second quarter growth in our Medical and Semi-cap sectors. Moving into the third quarter, we expect sequential improvements in revenue, profit and utilization underpinned by stronger demand from our Semi-Cap and Defense customers where we have industry leading positions."

Cash Conversion Cycle




Jun 30,




Mar 31,




Jun 30,




2020




2020




2019











Accounts receivable days


55




56




54


Contract asset days


28




28




23


Inventory days


72




65




52


Accounts payable days


(61)




(61)




(60)


Customer deposits


(10)




(7)




(3)


Cash Conversion Cycle days 


84




81




66


Second Quarter 2020 Industry Sector Update

Revenue and percentage of sales by industry sector (in millions) was as follows.





Jun 30,




Mar 31,




Jun 30,



Higher-Value Markets


2020




2020




2019


Medical

$

135


27

%


$

118


23

%


$

114


19

%

Semi-Cap


87


18




83


16




63


10


A&D


88


18




119


23




107


18


Industrials


87


18




103


20




115


19




$

397


81

%


$

423


82

%


$

399


66

%










































Jun 30,




Mar 31,




Jun 30,



Traditional Markets


2020




2020




2019


Computing

$

44


9

%


$

36


7

%


$

133


22

%

Telecommunications


50


10




56


11




70


12




$

94


19

%


$

92


18

%


$

203


34

%


Total

$

491


100

%


$

515


100

%


$

602


100

%

Overall, higher-value market revenues during the second quarter were down 6% quarter-over-quarter and flat year-over-year.  Demand strength in Medical supporting COVID-19 solutions and new product ramps, as well as the continued Semi-cap recovery, were offset by weakness in commercial Aerospace and Industrial markets.  Traditional market revenues were up 2% quarter-over-quarter due to stronger demand for high performance computing products and down 54% year-over-year primarily from the Company's conscious exit of a legacy computing contract in 2019.

Third Quarter 2020 Outlook

  • Revenue between $490 - $530 million
  • Diluted GAAP earnings per share between $0.21 - $0.26
  • Diluted non-GAAP earnings per share between $0.26 - $0.30 (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 $0.8 million to $1.2 million in the third quarter and the amortization of intangibles is expected to be $2.4 million in the third quarter.

Second 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, August 5, 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.

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 third 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.

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












Condensed Consolidated Statements of Income

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)





Three Months Ended



Six Months Ended




June 30,



June 30,



2020


2019



2020


2019










Sales

$

490,966

$

601,602


$

1,005,930

$

1,204,422

Cost of sales


456,294


552,379



927,897


1,105,162


Gross profit


34,672


49,223



78,033


99,260

Selling, general and administrative expenses


28,516


31,507



60,091


61,514

Amortization of intangible assets


2,371


2,361



4,752


4,728

Restructuring charges and other costs


5,657


3,414



8,572


4,990


Income (loss) from operations


(1,872)


11,941



4,618


28,028

Interest expense


(2,351)


(1,718)



(4,053)


(3,327)

Interest income


287


1,053



886


2,350

Other income (expense), net


32


808



(630)


2,412


Income (loss) before income taxes


(3,904)


12,084



821


29,463

Income tax expense (benefit)


(497)


2,637



376


6,243


Net income (loss)

$

(3,407)

$

9,447


$

445

$

23,220












Earnings (loss) per share:











Basic

$

(0.09)

$

0.25


$

0.01

$

0.59


Diluted

$

(0.09)

$

0.24


$

0.01

$

0.58












Weighted-average number of shares used in calculating









   earnings (loss) per share:










Basic


36,439


38,426



36,614


39,522


Diluted


36,439


38,583



36,863


39,843

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)







June 30,



December 31,







2020



2019











Assets







Current assets:








Cash and cash equivalents

$

356,419


$

363,956



Accounts receivable, net


302,068



324,424



Contract assets


153,641



161,061



Inventories


363,665



314,956



Other current assets


32,326



30,685





Total current assets


1,208,119



1,195,082


Property, plant and equipment, net


198,001



205,819


Operating lease right-of-use assets


74,170



76,859


Goodwill and other, net


277,745



282,114





Total assets

$

1,758,035


$

1,759,874











Liabilities and Shareholders' Equity







Current liabilities:








Current installments of long-term debt and finance lease obligations

$

8,912


$

8,825



Accounts payable


304,601



302,994



Accrued liabilities


151,107



147,426





Total current liabilities


464,620



459,245


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


164,664



138,912


Operating lease liabilities


64,768



67,898


Other long-term liabilities


79,623



78,987


Shareholders' equity


984,360



1,014,832





Total liabilities and shareholders' equity

$

1,758,035


$

1,759,874











Benchmark Electronics, Inc. and Subsidiaries











Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

















Six Months Ended







June 30,







2020



2019











Cash flows from operating activities:







Net income

$

445


$

23,220


Depreciation and amortization


24,531



24,125


Stock-based compensation expense


6,044



5,720


Accounts receivable, net


20,356



106,749


Contract assets


7,420



(15,464)


Inventories


(48,668)



(6,327)


Accounts payable


6,980



(49,428)


Other changes in working capital and other, net


2,810



(19,823)



Net cash provided by operations


19,918



68,772








Cash flows from investing activities:







Additions to property, plant and equipment and software


(23,290)



(15,495)


Other investing activities, net


2,576



49



Net cash used in investing activities


(20,714)



(15,446)











Cash flows from financing activities:







Share repurchases


(19,329)



(100,039)


Net debt activity


25,608



(2,441)


Other financing activities, net


(12,802)



(12,628)



Net cash used in financing activities


(6,523)



(115,108)











Effect of exchange rate changes


(218)



293

Net decrease in cash and cash equivalents


(7,537)



(61,489)


Cash and cash equivalents at beginning of year


363,956



458,102


Cash and cash equivalents at end of period

$

356,419


$

396,613

























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,



Jun 30,





2020


2020


2019



2020


2019












Income (loss) from operations (GAAP)

$

(1,872)

$

6,490

$

11,941


$

4,618

$

28,028


Restructuring charges and other costs


5,657


1,908


3,414



7,565


4,990


Settlement


—


—


773



—


773


Impairment


—


1,007


—



1,007


—


Customer insolvency (recovery)


(353)


—


(16)



(353)


(2,758)


Amortization of intangible assets


2,371


2,381


2,361



4,752


4,728


Non-GAAP income from operations

$

5,803

$

11,786

$

18,473


$

17,589

$

35,761
















Gross Profit (GAAP)

$

34,672

$

43,361

$

49,223


$

78,033

$

99,260


Settlement


—


—


773



—


773


Customer insolvency (recovery)


(353)


—


(16)



(353)


(1,040)


Non-GAAP gross profit

$

34,319

$

43,361

$

49,980


$

77,680

$

98,993
















Net income (loss) (GAAP)

$

(3,407)

$

3,852

$

9,447


$

445

$

23,220


Restructuring charges and other costs


5,657


1,908


3,414



7,565


4,990


Customer insolvency (recovery)


(353)


—


(16)



(353)


(2,758)


Amortization of intangible assets


2,371


2,381


2,361



4,752


4,728


Settlements


—


—


(330)



—


(2,166)


Impairment


—


1,007


—



1,007


—


Income tax adjustments(1)


(1,584)


(1,078)


(1,039)



(2,623)


(833)


Non-GAAP net income

$

2,684

$

8,070

$

13,837


$

10,793

$

27,181
















Diluted earnings (loss) per share:














Diluted (GAAP)

$

(0.09)

$

0.10

$

0.24


$

0.01

$

0.58



Diluted (Non-GAAP)

$

0.07

$

0.22

$

0.36


$

0.29

$

0.68
















Weighted-average number of shares used in












   calculating diluted earnings (loss) per share:













Diluted (GAAP)


36,439


37,071


38,583



36,863


39,843



Diluted (Non-GAAP)


36,689


37,071


38,583



36,863


39,843



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

SOURCE Benchmark Electronics, Inc.