EX-99.1 2 ex991.htm EXHIBIT 99.1  

 

 

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

 

BENCHMARK ELECTRONICS REPORTS FOURTH QUARTER AND FY 2017 RESULTS

 

·          Quarterly revenue of $680 million

·          Quarterly operating margin of 3.4% (4.2% non-GAAP)

·          Quarterly loss per share of $1.54 and non-GAAP EPS of $0.49

·          Annual loss per share of $0.64 and non-GAAP EPS of $1.61

 

SCOTTSDALE, AZ, February 7, 2018 – Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the fourth quarter and year ended December 31, 2017.

 

 

 

 

Three Months Ended

 

 

 

 

Dec 31,

 

 

Sep 30,

 

 

Dec 31,

 

In millions, except EPS

 

2017

 

 

2017

 

 

2016

 

Net sales

 

$680

 

 

$604

 

 

$608

 

Net income (loss) (1)

 

$(76)

 

 

$18

 

 

$19

 

Net income – non-GAAP

 

$25

 

 

$20

 

 

$22

 

Diluted EPS (1)

 

($1.54)

 

 

$0.35

 

 

$0.37

 

Diluted EPS – non-GAAP

 

$0.49

 

 

$0.39

 

 

$0.45

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

3.4%

 

 

3.4%

 

 

3.9%

 

Operating margin – non-GAAP

 

4.2%

 

 

4.1%

 

 

4.8%

 

 

 

 

 

Twelve Months Ended

 

 

 

 

Dec 31,

 

 

Dec 31,

 

In millions, except EPS

 

2017

 

 

2016

 

Net sales

 

$2,467

 

 

$2,310

 

Net income (loss) (1)

 

($32)

 

 

$64

 

Net income – non-GAAP

 

$81

 

 

$72

 

Diluted EPS (1)

 

($0.64)

 

 

$1.29

 

Diluted EPS – non-GAAP

 

$1.61

 

 

$1.45

 

Operating margin

 

3.2%

 

 

3.3%

 

Operating margin – non-GAAP

 

4.1%

 

 

4.3%

 

 

(1) Includes $98 million ($1.95 per share for the three months and $1.94 per share for the twelve months ended December 31, 2017) of tax expense related to the effects of the U.S. Tax Cuts and Jobs Act (U.S. Tax Reform).

 

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

 

“I am extremely pleased with both our fourth quarter performance as well as the progress we have made in 2017, posting a 7% revenue increase for the full year.  We continue to expand our gross margins and have made further improvement on balance sheet management, resulting in operating cash flows for the full year of $146 million.  Additionally, ROIC improved by 210 bps year-over-year to 10.5%,” said Paul Tufano, Benchmark’s President and CEO.

 

 

 

“During 2017, we made significant progress on our key initiatives to reposition the Company,” added Tufano.  “As we look forward to 2018, we will continue our focus on these foundational areas: customer acquisition and experience, engineering and solutions expansion, operational excellence, and balance sheet management.  In 2018, we plan to leverage and refine the base we established this past year.  Our resulting progress will shape our trajectory for years to come.”

 

Fourth Quarter 2017 Financial Highlights

Cash flow from operations was $56 million for the three months ended December 31, 2017 driven by an improvement in our cash conversion cycle.

 

Cash Conversion Cycle

 

 

Dec 31,

 

 

 

Sep 30,

 

 

 

Dec 31,

 

 

 

2017

 

 

 

2017

 

 

 

2016

 

Accounts receivable days

 

58

 

 

 

61

 

 

 

65

 

Inventory days

 

58

 

 

 

70

 

 

 

62

 

Accounts payable days

 

(53)

 

 

 

(55)

 

 

 

(53)

 

Customer deposits

 

(3)

 

 

 

(4)

 

 

 

-

 

 

 

60

 

 

 

72

 

 

 

74

 

 

Fourth Quarter 2017 Industry Sector Update

Revenue by industry sector (dollars in millions) was as follows.

 

 

 

Dec 31,

 

 

 

Sep 30,

 

 

 

Dec 31,

 

 

Higher-Value Markets

 

2017

 

 

 

2017

 

 

 

2016

 

Industrials

$

131

 

19

%

 

$

124

 

20

%

 

$

137

 

22

%

A&D

 

98

 

15

 

 

 

96

 

16

 

 

 

102

 

17

 

Medical

 

103

 

15

 

 

 

101

 

17

 

 

 

86

 

14

 

Test &  Instrumentation

 

95

 

14

 

 

 

88

 

15

 

 

 

65

 

11

 

 

 

$

427

 

63

%

 

$

409

 

68

%

 

$

390

 

64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dec 31,

 

 

 

Sep 30,

 

 

 

Dec 31,

 

 

Traditional Markets

 

2017

 

 

 

2017

 

 

 

2016

 

Computing

$

174

 

26

%

 

$

124

 

20

%

 

$

119

 

20

%

Telecommunications

 

79

 

11

 

 

 

71

 

12

 

 

 

99

 

16

 

 

 

$

253

 

37

%

 

$

195

 

32

%

 

$

218

 

36

%

 

Total

$

680

 

100

%

 

$

604

 

100

%

 

$

608

 

100

%

 

Fourth quarter revenues from higher-value markets were in line with expectations, including strong demand in Test & Instrumentation from semi-capital equipment customers.  Higher-value markets were up 10% year-over-year from Test & instrumentation and Medical markets.

 

Traditional markets revenues in Computing and Telecommunications were up sequentially from exceptionally stronger Computing demand and increased Telecommunications orders.  Traditional markets were up 16% year-over-year driven by Computing.

 

 

 

Fourth Quarter 2017 Bookings Update

·         New program bookings of $156 million at the midpoint.

·         13 engineering awards supporting early engagement opportunities.

·         30 manufacturing wins across all market sectors.

 

The Company projects that new program bookings for the fourth quarter will result in annualized revenue of $142 to $170 million when fully launched in the next 12-24 months.  The new program bookings align with Benchmark’s strategic focus.

 

First Quarter 2018 Outlook

·         Revenue between $585 - $605 million.

·         Diluted GAAP earnings per share between $0.27 - $0.31.

·         Diluted non-GAAP earnings per share between $0.34 - $0.38 (excluding any additional impact related to U.S. Tax Reform, restructuring charges and amortization of intangibles).

 

Fourth Quarter 2017 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 provides worldwide integrated electronics manufacturing services (EMS), engineering and design services, and precision machining services to original equipment manufacturers in the following industries: industrial controls, aerospace and defense, telecommunications, computers and related products for business enterprises, medical devices, and test and instrumentation.  Benchmark’s global operations include facilities in eight 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

623-300-7052 or lisa.weeks@bench.com

 

 

 

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 2018 results; 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, 2016 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.

 

All forward-looking statements included in this release are based upon information available to Benchmark as of the date hereof, and the Company 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 Appendix of 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.  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

 

 

Year Ended

 

 

 

Dec 31,

 

Sep 30,

 

Dec 31,

 

 

December 31,

 

 

 

2017

 

2017

 

2016

 

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations (GAAP)

$

23,144

$

20,815

$

23,548

 

$

78,603

$

75,638

Restructuring charges and other costs

 

3,062

 

2,511

 

2,663

 

 

8,628

 

12,539

Customer insolvency (recovery)

 

(239)

 

(1,514)

 

-

 

 

2,657

 

-

Amortization of intangible assets

 

2,367

 

2,736

 

2,893

 

 

10,065

 

11,838

Non-GAAP income from operations

$

28,334

$

24,548

$

29,104

 

$

99,953

$

100,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) (GAAP)

$

(76,340)

$

17,512

$

18,568

 

$

(31,965)

$

64,047

Restructuring charges and other costs

 

3,062

 

2,511

 

2,663

 

 

8,628

 

12,539

Customer insolvency (recovery)

 

(239)

 

(1,514)

 

-

 

 

2,657

 

-

Amortization of intangible assets

 

2,367

 

2,736

 

2,893

 

 

10,065

 

11,838

Income tax adjustments(1)

 

(1,793)

 

(1,674)

 

(1,781)

 

 

(6,312)

 

(7,695)

Tax Cuts and Jobs Act(2)

 

97,633

 

-

 

-

 

 

97,633

 

-

Discrete tax benefits

 

-

 

-

 

-

 

 

-

 

(8,270)

Non-GAAP net income

$

24,690

$

19,571

$

22,343

 

$

80,706

$

72,459

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (GAAP)

$

(1.54)

$

0.35

$

0.37

 

$

(0.64)

$

1.29

 

Diluted (Non-GAAP)

$

0.49

$

0.39

$

0.45

 

$

1.61

$

1.45

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in

 

 

 

 

 

 

 

 

 

 

   calculating diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

Diluted (GAAP)(3)

 

49,576

 

50,330

 

49,544

 

 

49,680

 

49,825

 

Diluted (Non-GAAP)

 

49,998

 

50,330

 

49,544

 

 

50,250

 

49,825

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

(2)                 This amount represents the estimated impact of the U.S. Tax Reform and includes the impact of a one-time mandatory tax on the deemed repatriation of undistributed foreign earnings and the re-measurement of U.S. deferred tax assets and liabilities for the decrease in the U.S. federal tax rate from 35% to 21%.

(3)                 Potentially diluted securities totaling 0.4 million and 0.6 million for the three and twelve months ended December 31, 2017, respectively, were not included in the computation of GAAP diluted loss per share because their effect would have decreased the loss per share.

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

2017

 

2016

 

 

2017

 

2016

Sales

$

679,856

$

607,507

 

$

2,466,811

$

2,310,415

Cost of sales

 

617,961

 

550,037

 

 

2,239,114

 

2,096,952

 

Gross profit

 

61,895

 

57,470

 

 

227,697

 

213,463

Selling, general and administrative expenses

 

33,322

 

28,366

 

 

130,401

 

113,448

Amortization of intangible assets

 

2,367

 

2,893

 

 

10,065

 

11,838

Restructuring charges and other costs

 

3,062

 

2,663

 

 

8,628

 

12,539

 

Income from operations

 

23,144

 

23,548

 

 

78,603

 

75,638

Interest expense

 

(2,544)

 

(2,369)

 

 

(9,405)

 

(9,304)

Interest income

 

1,749

 

966

 

 

5,370

 

2,136

Other income (expense), net

 

(481)

 

253

 

 

(1,786)

 

(282)

 

Income before income taxes

 

21,868

 

22,398

 

 

72,782

 

68,188

Income tax expense

 

98,208

 

3,830

 

 

104,747

 

4,141

 

Net income (loss)

$

(76,340)

$

18,568

 

$

(31,965)

$

64,047

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

Basic

$

(1.54)

$

0.38

 

$

(0.64)

$

1.30

 

Diluted

$

(1.54)

$

0.37

 

$

(0.64)

$

1.29

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in calculating

 

 

 

 

 

 

 

 

   earnings (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

49,576

 

49,063

 

 

49,680

 

49,298

 

Diluted

 

49,576

 

49,544

 

 

49,680

 

49,825

 

 

 

 

 

 

 

 

 

 

 

Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)

 

 

 

 

 

 

December 31,

 

December 31,

 

 

 

 

 

 

2017

 

2016

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

742,546

$

681,433

 

 

Accounts receivable, net

 

436,560

 

440,692

 

 

Inventories

 

397,181

 

381,334

 

 

Other current assets

 

42,383

 

28,203

 

 

 

 

Total current assets

 

1,618,670

 

1,531,662

 

Property, plant and equipment, net

 

186,473

 

166,148

 

Goodwill and other, net

 

292,174

 

300,858

 

 

 

 

Total assets

$

2,097,317

$

1,998,668

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current installments of long-term debt and capital lease obligations

$

18,274

$

12,396

 

 

Accounts payable

 

362,701

 

326,249

 

 

Accrued liabilities

 

97,341

 

73,736

 

 

 

 

Total current liabilities

 

478,316

 

412,381

 

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

 

193,406

 

211,252

 

Other long-term liabilities

 

96,776

 

9,570

 

Shareholders’ equity

 

1,328,819

 

1,365,465

 

 

 

 

Total liabilities and shareholders’ equity

$

2,097,317

$

1,998,668

 

 

 

 

 

 

 

 

 

 

 

Benchmark Electronics, Inc. and Subsidiaries

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

2017

 

2016

Cash flows from operating activities:   

 

 

 

 

 

 

Net income (loss)

$

(31,965)

$

64,047

 

Depreciation and amortization

 

48,672

 

55,139

 

Stock-based compensation expense

 

7,815

 

5,322

 

Accounts receivable, net

 

6,354

 

37,573

 

Inventories

 

(14,015)

 

27,749

 

Accounts payable

 

29,542

 

76,039

 

Other changes in working capital and other

 

99,439

 

7,219

 

 

Net cash provided by operations

 

145,842

 

273,088

 

 

 

 

 

 

Cash flows from investing activities:   

 

 

 

 

 

 

Additions to property, plant and equipment and software

 

(54,506)

 

(32,334)

 

Business acquisition, net of cash acquired

 

-

 

10,750

 

Other investing activities, net

 

(1,615)

 

339

 

 

Net cash used in investing activities

 

(56,121)

 

(21,245)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:   

 

 

 

 

 

 

Share repurchases  

 

 

(29,348)

 

(41,929)

 

Net debt activity

 

(12,396)

 

(12,301)

 

Other financing activities, net

 

10,392

 

18,920

 

 

Net cash used in financing activities

 

(31,352)

 

(35,310)

Effect of exchange rate changes   

 

 

2,744

 

(1,095)

Net increase in cash and cash equivalents

 

61,113

 

215,438

 

Cash and cash equivalents at beginning of year

 

681,433

 

465,995

 

Cash and cash equivalents at end of period

$

742,546

$

681,433