TEMPE, Ariz., Oct. 28, 2020 /PRNewswire/ -- Benchmark
Electronics, Inc. (NYSE: BHE) today announced financial
results for the third quarter ended September 30, 2020.
|
|
Three Months
Ended
|
|
|
Sep
30,
|
|
|
Jun 30,
|
|
Sep 30,
|
In millions,
except EPS
|
2020
|
|
|
2020
|
|
2019
|
Sales
|
$526
|
|
|
$491
|
|
$555
|
Net income
(loss)(2)
|
$6
|
|
|
$(3)
|
|
$7
|
Net income –
non-GAAP(1)(2)
|
$12
|
|
|
$3
|
|
$14
|
Diluted earnings
(loss) per share(2)
|
$0.16
|
|
|
$(0.09)
|
|
$0.19
|
Diluted EPS –
non-GAAP(1)(2)
|
$0.32
|
|
|
$0.07
|
|
$0.36
|
Operating
margin(2)
|
1.6%
|
|
|
(0.4)%
|
|
1.8%
|
Operating margin –
non-GAAP(1)(2)
|
3.0%
|
|
|
1.2%
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|
3.2%
|
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|
(1)
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A reconciliation of
GAAP and non-GAAP results is included below.
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(2)
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Results for the third
quarter ended September 30, 2020 and second quarter ended June 30,
2020 include the impact of approximately $1.3 million and $3.4
million of COVID-19 related costs, respectively.
|
"We delivered sequential revenue and earnings growth in the
third quarter as our business started to recover from second
quarter disruptions, enabling earnings to come in above our
guidance for the quarter," said CEO and President Jeff Benck. "The results were driven by a 45%
year-over-year improvement in Semi-cap and an 18% sequential
improvement in the Aerospace and Defense sector, where demand for
defense related products remains strong. In addition, third
quarter non-GAAP gross and operating margins improved significantly
from the second quarter, reaching 8.7% and 3.0% respectively, as
our global network returned to normal operating capacity."
"Entering the fourth quarter, we expect stronger demand and new
programs in Defense, Industrials, and Telecommunications to offset
declines in Medical as we are completing some of the incremental
upside builds for COVID-19 related therapeutic equipment. We
continue to make progress on improving gross margins as we expect
to achieve our 9% target in the fourth quarter, which will enable
us to also improve earnings sequentially."
Cash Conversion Cycle
|
|
Sep 30,
|
|
|
|
Jun 30,
|
|
|
|
Sep 30,
|
|
|
|
2020
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
days
|
|
52
|
|
|
|
55
|
|
|
|
56
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|
Contract asset
days
|
|
28
|
|
|
|
28
|
|
|
|
26
|
|
Inventory
days
|
|
66
|
|
|
|
72
|
|
|
|
56
|
|
Accounts payable
days
|
|
(54)
|
|
|
|
(61)
|
|
|
|
(52)
|
|
Customer
deposits
|
|
(11)
|
|
|
|
(10)
|
|
|
|
(7)
|
|
Cash Conversion Cycle
days
|
|
81
|
|
|
|
84
|
|
|
|
79
|
|
Third Quarter 2020 Industry Sector Update
Revenue and percentage of sales by industry sector (in millions)
was as follows.
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|
Sep 30,
|
|
|
|
Jun 30,
|
|
|
|
Sep 30,
|
|
|
Higher-Value
Markets
|
|
2020
|
|
|
|
2020
|
|
|
2019
|
Medical
|
$
|
134
|
|
26
|
%
|
|
$
|
135
|
|
27
|
%
|
|
$
|
128
|
|
23
|
%
|
Semi-Cap
|
|
99
|
|
19
|
|
|
|
87
|
|
18
|
|
|
|
68
|
|
12
|
|
A&D
|
|
105
|
|
20
|
|
|
|
88
|
|
18
|
|
|
|
115
|
|
21
|
|
Industrials
|
|
86
|
|
16
|
|
|
|
87
|
|
18
|
|
|
|
115
|
|
21
|
|
|
|
$
|
424
|
|
81
|
%
|
|
$
|
397
|
|
81
|
%
|
|
$
|
426
|
|
77
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sep 30,
|
|
|
|
Jun 30,
|
|
|
|
Sep 30,
|
|
|
Traditional
Markets
|
|
2020
|
|
|
|
2020
|
|
|
2019
|
Computing
|
$
|
44
|
|
8
|
%
|
|
$
|
44
|
|
9
|
%
|
|
$
|
59
|
|
11
|
%
|
Telecommunications
|
|
58
|
|
11
|
|
|
|
50
|
|
10
|
|
|
|
70
|
|
12
|
|
|
|
$
|
102
|
|
19
|
%
|
|
$
|
94
|
|
19
|
%
|
|
$
|
129
|
|
23
|
%
|
|
Total
|
$
|
526
|
|
100
|
%
|
|
$
|
491
|
|
100
|
%
|
|
$
|
555
|
|
100
|
%
|
Overall, higher-value market revenues during the third quarter
were up 7% quarter-over-quarter and down 1% year-over-year.
Traditional market revenues were up 9% quarter-over-quarter due to
stronger demand for high performance computing and
telecommunications products and down 21% year-over-year primarily
from the Company's exit of a legacy Computing contract in 2019,
which it decided not to renew.
Fourth Quarter 2020 Outlook
- Revenue between $500 -
$540 million
- Diluted GAAP earnings per share between $0.20 - $0.24
- Diluted non-GAAP earnings per share between $0.32 - $0.36
(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 $2.8 million to $3.2
million in the fourth quarter and the amortization of
intangibles is expected to be $2.4
million in the fourth quarter.
Third 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,
November 4, 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 fourth 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. A detailed reconciliation between GAAP results
and results excluding special items ("non-GAAP") is included in the
following tables attached to this document. In situations where a
non-GAAP reconciliation has not been provided, the Company was
unable to provide such a reconciliation without unreasonable effort
due to the uncertainty and inherent difficulty predicting the
occurrence, the financial impact and the periods in which the
non-GAAP adjustments may be recognized. 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
|
|
|
Nine Months
Ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
525,951
|
$
|
555,229
|
|
$
|
1,531,881
|
$
|
1,759,651
|
Cost of
sales
|
|
479,597
|
|
506,274
|
|
|
1,407,494
|
|
1,611,436
|
|
Gross
profit
|
|
46,354
|
|
48,955
|
|
|
124,387
|
|
148,215
|
Selling, general and
administrative expenses
|
|
29,724
|
|
30,947
|
|
|
89,815
|
|
92,461
|
Amortization of
intangible assets
|
|
2,368
|
|
2,367
|
|
|
7,120
|
|
7,095
|
Restructuring charges
and other costs
|
|
7,161
|
|
5,843
|
|
|
15,480
|
|
10,833
|
Ransomware incident
related costs (recovery), net
|
|
(1,558)
|
|
—
|
|
|
(1,305)
|
|
—
|
|
Income from
operations
|
|
8,659
|
|
9,798
|
|
|
13,277
|
|
37,826
|
Interest
expense
|
|
(2,136)
|
|
(1,687)
|
|
|
(6,189)
|
|
(5,014)
|
Interest
income
|
|
154
|
|
734
|
|
|
1,040
|
|
3,084
|
Other income
(expense), net
|
|
439
|
|
(136)
|
|
|
(191)
|
|
2,276
|
|
Income before income
taxes
|
|
7,116
|
|
8,709
|
|
|
7,937
|
|
38,172
|
Income tax
expense
|
|
1,201
|
|
1,573
|
|
|
1,577
|
|
7,816
|
|
Net income
|
$
|
5,915
|
$
|
7,136
|
|
$
|
6,360
|
$
|
30,356
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.16
|
$
|
0.19
|
|
$
|
0.17
|
$
|
0.78
|
|
Diluted
|
$
|
0.16
|
$
|
0.19
|
|
$
|
0.17
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares used in calculating earnings per
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
36,467
|
|
37,419
|
|
|
36,565
|
|
38,813
|
|
Diluted
|
|
36,544
|
|
37,645
|
|
|
36,821
|
|
39,184
|
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)
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
334,810
|
|
$
|
363,956
|
|
|
Accounts receivable,
net
|
|
306,242
|
|
|
324,424
|
|
|
Contract
assets
|
|
161,396
|
|
|
161,061
|
|
|
Inventories
|
|
352,851
|
|
|
314,956
|
|
|
Other current
assets
|
|
29,928
|
|
|
30,685
|
|
|
|
|
Total current
assets
|
|
1,185,227
|
|
|
1,195,082
|
|
Property, plant and
equipment, net
|
|
190,610
|
|
|
205,819
|
|
Operating lease
right-of-use assets
|
|
82,849
|
|
|
76,859
|
|
Goodwill and other,
net
|
|
275,821
|
|
|
282,114
|
|
|
|
|
Total
assets
|
$
|
1,734,507
|
|
$
|
1,759,874
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Current installments
of long-term debt and finance lease obligations
|
$
|
8,956
|
|
$
|
8,825
|
|
|
Accounts
payable
|
|
282,591
|
|
|
302,994
|
|
|
Accrued
liabilities
|
|
157,938
|
|
|
147,426
|
|
|
|
|
Total current
liabilities
|
|
449,485
|
|
|
459,245
|
|
Long-term debt and
finance lease obligations, less current installments
|
|
147,522
|
|
|
138,912
|
|
Operating lease
liabilities
|
|
74,407
|
|
|
67,898
|
|
Other long-term
liabilities
|
|
72,766
|
|
|
78,987
|
|
Shareholders'
equity
|
|
990,327
|
|
|
1,014,832
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
1,734,507
|
|
$
|
1,759,874
|
Benchmark
Electronics, Inc. and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Cash Flows
|
(in
thousands)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
|
$
|
6,360
|
|
$
|
30,356
|
|
Depreciation and
amortization
|
|
36,939
|
|
|
36,389
|
|
Stock-based
compensation expense
|
|
9,464
|
|
|
8,461
|
|
Accounts receivable,
net
|
|
16,410
|
|
|
121,171
|
|
Contract
assets
|
|
(335)
|
|
|
(20,986)
|
|
Inventories
|
|
(37,131)
|
|
|
(6,557)
|
|
Accounts
payable
|
|
(18,260)
|
|
|
(122,156)
|
|
Other changes in
working capital and other, net
|
|
12,168
|
|
|
10,636
|
|
|
Net cash provided by
operations
|
|
25,615
|
|
|
57,314
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Additions to
property, plant and equipment and software
|
|
(29,102)
|
|
|
(25,942)
|
|
Other investing
activities, net
|
|
2,586
|
|
|
252
|
|
|
Net cash used in
investing activities
|
|
(26,516)
|
|
|
(25,690)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Share
repurchases
|
|
(19,329)
|
|
|
(118,350)
|
|
Net debt
activity
|
|
8,395
|
|
|
(4,614)
|
|
Other financing
activities, net
|
|
(18,747)
|
|
|
(17,699)
|
|
|
Net cash used in
financing activities
|
|
(29,681)
|
|
|
(140,663)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes
|
|
1,436
|
|
|
(1,021)
|
Net decrease in cash
and cash equivalents
|
|
(29,146)
|
|
|
(110,060)
|
|
Cash and cash
equivalents at beginning of year
|
|
363,956
|
|
|
458,102
|
|
Cash and cash
equivalents at end of period
|
$
|
334,810
|
|
$
|
348,042
|
Benchmark
Electronics, Inc. and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP to Non-GAAP Financial Results
|
(Amounts in
Thousands, Except Per Share Data)
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
Sep 30,
|
|
Jun 30,
|
|
Sep 30,
|
|
|
Sep 30,
|
|
|
|
2020
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations (GAAP)
|
$
|
8,659
|
$
|
(1,872)
|
$
|
9,798
|
|
$
|
13,277
|
$
|
37,826
|
Restructuring charges
and other costs
|
|
1,425
|
|
5,574
|
|
5,843
|
|
|
8,737
|
|
10,833
|
Ransomware incident
related costs (recovery), net
|
|
(1,558)
|
|
83
|
|
—
|
|
|
(1,305)
|
|
—
|
Settlement
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
773
|
Impairment
|
|
5,736
|
|
—
|
|
—
|
|
|
6,743
|
|
—
|
Customer insolvency
(recovery)
|
|
(796)
|
|
(353)
|
|
—
|
|
|
(1,149)
|
|
(2,758)
|
Amortization of
intangible assets
|
|
2,368
|
|
2,371
|
|
2,367
|
|
|
7,120
|
|
7,095
|
Non-GAAP income from
operations
|
$
|
15,834
|
$
|
5,803
|
$
|
18,008
|
|
$
|
33,423
|
$
|
53,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
(GAAP)
|
$
|
46,354
|
$
|
34,672
|
$
|
48,955
|
|
$
|
124,387
|
$
|
148,215
|
Settlement
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
773
|
Customer insolvency
(recovery)
|
|
(796)
|
|
(353)
|
|
—
|
|
|
(1,149)
|
|
(1,040)
|
Non-GAAP gross
profit
|
$
|
45,558
|
$
|
34,319
|
$
|
48,955
|
|
$
|
123,238
|
$
|
147,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(GAAP)
|
$
|
5,915
|
$
|
(3,407)
|
$
|
7,136
|
|
$
|
6,360
|
$
|
30,356
|
Restructuring charges
and other costs
|
|
1,425
|
|
5,574
|
|
6,168
|
|
|
8,737
|
|
11,158
|
Ransomware incident
related costs (recovery), net
|
|
(1,558)
|
|
83
|
|
—
|
|
|
(1,305)
|
|
—
|
Customer insolvency
(recovery)
|
|
(796)
|
|
(353)
|
|
—
|
|
|
(1,149)
|
|
(2,758)
|
Amortization of
intangible assets
|
|
2,368
|
|
2,371
|
|
2,367
|
|
|
7,120
|
|
7,095
|
Settlements
|
|
—
|
|
—
|
|
(83)
|
|
|
—
|
|
(2,248)
|
Impairment
|
|
5,736
|
|
—
|
|
—
|
|
|
6,743
|
|
—
|
Income tax
adjustments(1)
|
|
(1,458)
|
|
(1,584)
|
|
(1,879)
|
|
|
(4,123)
|
|
(2,711)
|
Non-GAAP net
income
|
$
|
11,632
|
$
|
2,684
|
$
|
13,709
|
|
$
|
22,383
|
$
|
40,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
(GAAP)
|
$
|
0.16
|
$
|
(0.09)
|
$
|
0.19
|
|
$
|
0.17
|
$
|
0.77
|
|
Diluted
(Non-GAAP)
|
$
|
0.32
|
$
|
0.07
|
$
|
0.36
|
|
$
|
0.61
|
$
|
1.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares used in calculating diluted earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
(GAAP)
|
|
36,544
|
|
36,439
|
|
37,645
|
|
|
36,821
|
|
39,184
|
|
Diluted
(Non-GAAP)
|
|
36,544
|
|
36,689
|
|
37,645
|
|
|
36,821
|
|
39,184
|
|
|
(1)
|
This amount
represents the tax impact of the non-GAAP adjustments using the
applicable effective tax rates.
|
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SOURCE Benchmark Electronics, Inc.