TEMPE, Ariz., Feb. 7, 2019 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the fourth quarter and year ended December 31, 2018.
"We capped 2018 with strong results in the fourth quarter, with revenue at $657 million and earnings at $0.41, both above the high end of our guidance," said Paul Tufano, Benchmark's President and CEO. "Bookings increased 23% for the full year and 13% sequentially to $198M; operating margins, on a non-GAAP basis, improved 30 bps quarter-over-quarter to 3.2%, but remain muted from continuing softness in semi-cap; and cash cycle days were 62 for the quarter and 68 days for the full year within our target range. As a result, operating cash flow was $94 million in the quarter and $77 million for the full year. During 2018, we spent $212 million on share repurchases reducing our outstanding shares by 17% year-over-year and have $202 million remaining with our existing program.
"As part of our ongoing process to review marginal and dilutive contracts, we have notified a long standing Computing customer that we will not renew a legacy contract that expires at the end of 2019 in its current form. The resulting reduction in annual revenue will be in the range of $280 million - $320 million, and annualized gross margins will improve by approximately 80 – 90 basis points, which more appropriately shows the strength of our underlying business. During this contractual transition year, we will discuss our actual results with and without the presence of this contract.
"Over the past several years, we have made progress on a number of key initiatives including the implementation of our market-sector sales organization to drive bookings and revenue growth; the expansion of our engineering and solutions capabilities to extend our value proposition to customers; and, the optimization of our global network and continued focus on operational execution," added Tufano. "The progress on these initiatives will enable 3-5% revenue growth on our base business, excluding the legacy Computing contract. For 2019, we also expect gross and operating margin expansion from improved execution, effective cost and expense management, and the growth of additional service offerings including RF and high-speed design capabilities. We remain committed to the achievement of our long-term business model as we continue to pursue growth and create value for our shareholders."
Cash Conversion Cycle
Fourth Quarter 2018 Industry Sector Update
Revenue and percentage of sales by industry sector (in millions) was as follows.
Higher-value markets were down 4% year-over-year from softer demand in Test & Instrumentation (primarily semi-capital equipment). Traditional market revenues were up 3% year-over-year primarily from new program ramps in Telecommunications.
Fourth Quarter 2018 Bookings Update
- New program bookings of $198 million at the midpoint of projected annualized revenue.
- 17 engineering awards supporting early engagement opportunities.
- 34 manufacturing wins across all market sectors.
The Company projects that new program bookings for the fourth quarter will result in annualized revenue of $165 to $233 million when fully launched in the next 12-24 months, medical up to 36 months.
First Quarter 2019 Outlook
- Revenue between $570 - $610 million.
- Diluted GAAP earnings per share between $0.23 - $0.31.
- Diluted non-GAAP earnings per share between $0.29 - $0.37 (excluding any additional impact related to U.S. Tax Reform, restructuring charges and other costs and amortization of intangibles).
Fourth Quarter 2018 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 is a worldwide provider of innovative product design, engineering services, technology solutions and advanced manufacturing services. From initial product concept to volume production, including direct order fulfillment and aftermarket services, Benchmark has been providing integrated services and solutions to original equipment manufacturers since 1979. Today, Benchmark proudly serves the following industries: aerospace and defense, medical technologies, complex industrials, test and instrumentation, next-generation telecommunications and high-end computing. Benchmark's global operations network includes facilities in eight countries and common shares trade on the New York Stock Exchange under the symbol BHE.
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 2019 results; projected annual revenues resulting from new program bookings; 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, 2017 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
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 following tables attached to 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. 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.
For the three months ended December 31, 2017, the adoption of ASC 606 decreased revenue by $13.8 million, operating income by $1.2 million and net income by $21 thousand. For the year ended December 31, 2017, the adoption of ASC 606 decreased revenue by $12.3 million, decreased operating income by $1.8 million and increased net income by $0.1 million.
As of December 31, 2017, the adoption of ASC 606 increased current assets by $12.0 million, increased total liabilities by $1.7 million and increased shareholder's equity by $10.3 million.
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SOURCE Benchmark Electronics, Inc.