8-K

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):    February 3, 2015

BENCHMARK ELECTRONICS, INC.

(Exact name of registrant as specified in its charter)

Texas (State or other jurisdiction of incorporation) 1-10560 (Commission File Number) 74-2211011 (I.R.S. Employer Identification No.)

3000 Technology Drive, Angleton, Texas77515 

(Address of principal executive offices)  (Zip code)

Registrant’s telephone number, including area code:  (979) 849-6550

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     [  ] Written communications pursuant to Rule 425 under the Securities Act

     (17 CFR 230.425)

     [  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act

     (17 CFR 240.14a-12)

     [  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the

     Exchange Act (17 CFR 240.14d-2(b))

     [  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the

     Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.   Results of Operations and Financial Condition.

On February 3, 2015, we issued a press release announcing our results of operations for the quarter and year ended December 31, 2014 and held an earnings conference call. Copies of the press release and presentation slides used in connection with the conference call are attached as Exhibit 99.1 and Exhibit 99.2 to this report and are hereby incorporated herein by reference.

Item 9.01.   Financial Statements and Exhibits.

                (d)  Exhibits 

Exhibit 99.1  Press release

Exhibit 99.2  Presentation slides

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

BENCHMARK ELECTRONICS, INC.

Dated: February 3, 2015	By: /s/ Donald F. Adam
	Donald F. Adam
	Chief Financial Officer

EXHIBIT INDEX
Exhibit
Number	Description of Exhibit
99.1	Press Release
99.2	Presentation slides

EX-99.1

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

BENCHMARK ELECTRONICS REPORTS INCREASED REVENUE AND

STRONG OPERATING CASH FLOWS IN 2014

ANGLETON, TX, FEBRUARY 3, 2015 – Benchmark Electronics, Inc. (NYSE: BHE), a leading integrated contract manufacturing provider, today announced financial results for the quarter and year ending December 31, 2014.

	Three Months Ended
	Dec 31,		Sep 30,		Dec 31,
	2014		2014		2013
Net sales (in millions)	$710		$731		$757
Net income (in millions)	$24		$17		$67
Net income – non-GAAP (in millions)	$23		$23		$24
Diluted EPS	$0.45		$0.32		$1.24
Diluted EPS – non-GAAP	$0.43		$0.43		$0.43
Operating margin (%)	4.0	%	3.0	%	8.0	%
Operating margin – non-GAAP (%)	4.0	%	4.0	%	4.1	%

	Year Ended
	December 31,
	2014		2013
Net sales (in millions)	$2,797		$2,506
Net income (in millions)	$82		$111
Net income – non-GAAP (in millions)	$89		$69
Diluted EPS	$1.52		$2.03
Diluted EPS – non-GAAP	$1.65		$1.26
Operating margin (%)	3.6	%	4.6	%
Operating margin – non-GAAP (%)	3.9	%	3.5	%

“Although our Computing and Telecom demand was weaker than expected in the fourth quarter, it was offset by new program ramps and increased demand in our non-traditional markets. Combining another quarter of solid operational performance with this favorable business mix, we achieved a 4% operating margin,” said CEO Gayla Delly. “For the full year, we enjoyed robust 12% revenue growth, strong operating cash flows of $137 million and improved margins of 3.9%. We believe our current performance, recent bookings and continued diversification of our portfolio position us well to meet our long-term financial goals.”

Fourth Quarter 2014 Highlights

·Revenue of $710 million was at the low end of our expectations due to softness in the computing and telecom sectors.

·Cash flows provided by operating activities were $23 million.

·Cash and cash equivalents balance was $427 million at December 31, 2014.

·Repurchases of common shares totaled $19 million or 0.8 million shares.

·New program bookings were $120 million to $160 million.

·Accounts receivable was $520 million at December 31, 2014; calculated days sales outstanding were 66 days compared to 66 days at September 30, 2014 and 67 days at December 31, 2013.

·Inventory was $401 million at December 31, 2014; inventory turns were 6.5 times compared to 6.2 at September 30, 2014 and 7.0 at December 31, 2013.

Fourth Quarter Industry Sector Update

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

	Dec 31,		Sep 30,		Dec 31,
	2014		2014		2013
Industrial control equipment	32	%	30	%	26	%
Telecommunication equipment	29		32		24
Computers and related products	20		21		32
Medical devices	11		10		10
Testing and instrumentation products	8		7		8
	100	%	100	%	100	%

First Quarter 2015 Outlook

·Revenue between $615 and $645 million.

·Diluted earnings per share between $0.30 and $0.34 (excluding restructuring charges and integration costs).

“Our first quarter guidance reflects lingering headwinds in Computing and Telecom; however, we expect growth to resume in these sectors in the second half of the year. For 2015, we anticipate that our non-traditional revenue base of Industrial, Medical, and Test & Instrumentation will continue to strengthen,” said CFO Don Adam.

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 industry), telecommunication equipment, computers and related products for business enterprises, medical devices, and testing 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.

For More Information, Please Contact:

Lisa K. Weeks, VP of Strategy & Investor Relations

979-849-6550 (ext. 1361) or lisa.weeks@bench.com

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, the statements “we believe our current performance, recent bookings and continued diversification of our portfolio position us well to meet our long-term financial goals,” “we expect growth to resume” and “we anticipate that our non-traditional revenue base … will continue to strengthen”, as well as 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, 2013, 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						Year Ended
			Dec 31,		Sep 30,		Dec 31,		December 31,
			2014		2014		2013		2014		2013
Income from operations (GAAP)		$	28,653	$	21,915	$	60,275	$	100,144	$	116,524
Restructuring charges and integration
and acquisition-related costs			955		2,160		2,025		7,131		9,348
Asset impairment charge and other			(1,547)		-		-		(1,547)		2,606
Thailand flood-related items, net of insurance			-		-		(31,577)		(1,571)		(41,325)
Customer bankruptcy			-		5,029		-		5,029		-
Non-GAAP income from operations		$	28,061	$	29,104	$	30,723	$	109,186	$	87,153
Net income (GAAP)		$	24,011	$	17,156	$	67,489	$	82,442	$	111,159
Restructuring charges and integration
and acquisition-related costs, net of tax			740		1,504		1,343		4,886		8,290
Asset impairment charge and other,
net of tax			(1,547)		-		-		(1,547)		2,849
Thailand flood-related items, net of insurance
and tax			-		-		(27,810)		(1,263)		(35,627)
Customer bankruptcy, net of tax			-		4,831		-		4,831		-
Discrete US tax benefit			-		-		(17,500)		-		(17,500)
Non-GAAP net income		$	23,204	$	23,491	$	23,522	$	89,349	$	69,171
Earnings per share: (GAAP)
	Basic	$	0.45	$	0.32	$	1.26	$	1.54	$	2.05
	Diluted	$	0.45	$	0.32	$	1.24	$	1.52	$	2.03
Earnings per share: (Non-GAAP)
	Basic	$	0.44	$	0.44	$	0.44	$	1.67	$	1.28
	Diluted	$	0.43	$	0.43	$	0.43	$	1.65	$	1.26
Weighted-average number of shares used in calculating earnings per share:
	Basic		53,020		53,660		53,773		53,538		54,213
	Diluted		53,609		54,265		54,327		54,222		54,779

Benchmark Electronics, Inc. and Subsidiaries
Consolidated Statements of Income
(Amounts in Thousands, Except Per Share Data)
(UNAUDITED)
			Three Months Ended				Year Ended
			December 31,				December 31,
			2014		2013		2014		2013
Sales		$	709,547	$	756,843	$	2,797,061	$	2,506,467
Cost of sales			653,858		697,000		2,577,204		2,319,983
	Gross profit		55,689		59,843		219,857		186,484
Selling, general and administrative expenses			27,628		29,120		115,700		99,331
Restructuring charges and integration
and acquisition-related costs			955		2,025		7,131		9,348
Asset impairment charge and other			(1,547)		-		(1,547)		2,606
Thailand flood-related items, net of insurance			-		(31,577)		(1,571)		(41,325)
	Income from operations		28,653		60,275		100,144		116,524
Interest expense			(447)		(531)		(1,890)		(1,934)
Interest income			330		691		2,048		1,688
Other income (expense), net			528		(661)		(452)		(101)
	Income before income taxes		29,064		59,774		99,850		116,177
Income tax expense (benefit)			5,053		(7,715)		17,408		5,018
	Net income	$	24,011	$	67,489	$	82,442	$	111,159
Earnings per share:
	Basic	$	0.45	$	1.26	$	1.54	$	2.05
	Diluted	$	0.45	$	1.24	$	1.52	$	2.03
Weighted-average number of shares used in calculating earnings per share:
	Basic		53,020		53,773		53,538		54,213
	Diluted		53,609		54,327		54,222		54,779

Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
					December 31,		December 31,
					2014		2013
					(unaudited)
Assets
	Current assets:
		Cash and cash equivalents		$	427,376	$	345,555
		Accounts receivable, net			520,389		559,763
		Inventories, net			401,261		396,699
		Other current assets			39,527		40,816
			Total current assets		1,388,553		1,342,833
	Long-term investments				1,008		9,921
	Property, plant and equipment, net				190,180		185,319
	Goodwill and other, net				99,148		119,298
			Total assets	$	1,678,889	$	1,657,371
Liabilities and Shareholders’ Equity
	Current liabilities:
		Current installments of capital lease obligations		$	676	$	582
		Accounts payable			289,786		320,953
		Accrued liabilities			68,636		76,842
			Total current liabilities		359,098		398,377
	Capital lease obligations, less current installments				8,845		9,521
	Other long-term liabilities				19,906		22,440
	Shareholders’ equity				1,291,040		1,227,033
			Total liabilities and shareholders’ equity	$	1,678,889	$	1,657,371

EX-99.2

Exhibit 99.2

Fourth Quarter and Full Year 2014 February 3, 2015 Financial Results

design develop deliver advanced technology 2 Forward - Looking Statements This document 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 ” and similar expressions, and the negatives thereof, often identify forward - looking statements, which are not limited to historical facts . Our forward - looking statements include, among other things, our sales and earnings per share guidance for the first quarter of 2015 , as well as 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 document are based upon information available to Benchmark as of the date of this document, and the Company assumes no obligation to update them . Readers are advised to consult further disclosures on related subjects particularly in Item 1 A, “Risk Factors” of the Company’s Annual Report on Form 10 - K for the year ended December 31 , 2013 , in its other filings with the Securities and Exchange Commission and in its press releases . This document includes certain financial measures, such as earnings and earnings per share, that exclude certain items and therefore are not in accordance with generally accepted accounting principles (“GAAP”) . A detailed reconciliation between GAAP results and results excluding special items (“non - GAAP”) is included in our press release and in the Appendix of this document .

design develop deliver advanced technology 3 Fourth Quarter 2014 Results (In millions, except EPS) Dec 31, 2014 Sep 30, 2014 Dec 31, 2013 Net Sales $709.5 $731.3 $756.8 Net Income – GAAP $24.0 $17.2 $67.5 Net Income – non - GAAP $23.2 $23.5 $23.5 Diluted EPS – GAAP $0.45 $0.32 $1.24 Diluted EPS – non - GAAP $0.43 $0.43 $0.43 Operating Margin – GAAP 4.0% 3.0% 8.0% Operating Margin – non - GAAP 4.0% 4.0% 4.1% Effective Tax Rate – non - GAAP 18.5% 16.2% 22.2% For the Three Months Ended Guidance Provided for the December 31, 2014 Quarter: ▪ Revenue $710 – $740 Results Within Guidance ▪ Diluted EPS – non - GAAP $0.41 – $0.45 Results Within Guidance

design develop deliver advanced technology 4 Fiscal Year 2014 Results (In millions, except EPS) Dec 31, 2014 Dec 31, 2013 Net Sales $2,797.1 $2,506.5 Net Income – GAAP $82.4 $111.2 Net Income – non - GAAP $89.3 $69.2 Diluted EPS – GAAP $1.52 $2.03 Diluted EPS – non - GAAP $1.65 $1.26 Operating Margin – GAAP 3.6% 4.6% Operating Margin – non - GAAP 3.9% 3.5% Effective Tax Rate – non - GAAP 17.9% 20.3% For Years Ended ▪ Strong Year - over - Year growth and earnings performance

design develop deliver advanced technology 5 Fourth Quarter Industry Sector Update Revenue by Industry Sector Sector Dec 31, 2014 Sep 30, 2014 Dec 31, 2013 Q4 YoY Industrial Control Equipment 32% $230 30% $219 26% $199 16% Telecommunication Equipment 29% $202 32% $231 24% $183 11% Computers and Related Products for Business Enterprises 20% $143 21% $155 32% $243 (41%) Medical Devices 11% $81 10% $76 10% $73 11% Testing and Instrumentation Products 8% $54 7% $50 8% $59 (8%) Total Revenue $710 $731 $757

design develop deliver advanced technology 6 Financial Statement Highlights Balance Sheet and Cash Flows (In millions) Dec 31, 2014 Sep 30, 2014 Dec 31, 2013 Cash $427.4* $420.2 $345.6 Cash Flows from Operating Activities $22.8 $28.2 ($0.9) Capital Expenditures $8.8 $6.3 $8.6 Depreciation & Amortization $12.5 $11.8 $11.3 Accounts Receivable $520.4 $534.0 $559.8 Days Sales Outstanding 66 66 67 Inventory $401.3 $434.2 $396.7 Inventory Turns 6.5x 6.2x 7.0x Total Cost of Shares Repurchased $18.8 $13.2 $10.5 * Approximately $79 million of cash available in the U.S.

design develop deliver advanced technology 7 First Quarter 2015 Guidance Guidance Net Sales (in millions) $615 – $645 Diluted EPS – non - GAAP $0.30 – $0.34 ▪ Outlook is for the first quarter ending March 31, 2015.

design develop deliver advanced technology 8 President and CEO Commentary

design develop deliver advanced technology 9 Portfolio Trends Traditional Revenue ▪ Continued demand variation in Traditional Markets ▪ Predominant growth of less variable Non - Traditional Markets Non - Traditional Revenue (Computing & Telecom) (Industrial, Medical & T&I) 3 - Year CAGR = 5% 3 - Year CAGR = 10%

design develop deliver advanced technology 10 Fourth Quarter 2014 New Business Wins Q4 2014 Number of New Business Wins by Segment ▪ Q4 2014: 46 new business bookings including 11 engineering projects ▪ E stimated annual revenue run rate between $120 - $160 million Quarterly Estimated Annual Revenue Run Rate for New Business Wins

design develop deliver advanced technology 11 Benchmark Market Overview Non - Traditional Markets Dec 31, 2014 Q1 - 15 Outlook (%) 2015 Outlook Industrial Control Equipment 32% $230 Down Mid - Single Digits Growth Medical Devices 11% $81 Up Low - Single Digits Growth Testing and Instrumentation Products 8% $54 Up Low - Single Digits Stable Total Revenue $365 Traditional Markets Dec 31, 2014 Q1 - 15 Outlook (%) 2015 Outlook Telecommunication Equipment 29% $202 Mid - Teen Digit Decrease Decline Computers for Business Enterprises 20% $143 Down ~20% Stable Total Revenue $345

design develop deliver advanced technology 12 ▪ Fourth Quarter Results – Strong and Consistent Performance in 2014 ▪ Strategic Priorities: o Portfolio Management o Operational Excellence o Customer Focus ▪ Continued Focus on Operating Margin Expansion Summary Fourth Quarter 2014

design develop deliver advanced technology 13 Appendix

design develop deliver advanced technology 14 Reconciliation of GAAP to non - GAAP Financial Results (Amounts in Thousands, Except Per Share Data) – (UNAUDITED) Dec 31, Sep 30, Dec 31, 2014 2014 2013 2014 2013 $ 28,653 $ 21,915 $ 60,275 $ 100,144 $ 116,524 955 2,160 2,025 7,131 9,348 (1,547) - - (1,547) 2,606 - - (31,577) (1,571) (41,325) - 5,029 - 5,029 - $ 28,061 $ 29,104 $ 30,723 $ 109,186 $ 87,153 $ 24,011 $ 17,156 $ 67,489 $ 82,442 $ 111,159 740 1,504 1,343 4,886 8,290 (1,547) - - (1,547) 2,849 - - (27,810) (1,263) (35,627) - 4,831 - 4,831 - - - (17,500) - (17,500) $ 23,204 $ 23,491 $ 23,522 $ 89,349 $ 69,171 Basic $ 0.45 $ 0.32 $ 1.26 $ 1.54 $ 2.05 Diluted $ 0.45 $ 0.32 $ 1.24 $ 1.52 $ 2.03 Basic $ 0.44 $ 0.44 $ 0.44 $ 1.67 $ 1.28 Diluted $ 0.43 $ 0.43 $ 0.43 $ 1.65 $ 1.26 Income from operations (GAAP) Net income (GAAP) Year EndedThree Months Ended December 31, Customer bankruptcy Restructuring charges and integration Thailand flood-related items, net of insurance Non-GAAP income from operations and acquisition-related costs Non-GAAP net income Earnings per share: (GAAP) Restructuring charges and integration Earnings per share: (Non-GAAP) Asset impairment charge and other Asset impairment charge and other, and acquisition-related costs, net of tax Discrete US tax benefit net of tax and tax Customer bankruptcy, net of tax Thailand flood-related items, net of insurance