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Benchmark Electronics, Inc.$25.02$.20.81%

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 Benchmark Electronics Reports Fourth Quarter And FY 2016 Results
   Wednesday, February 08, 2017 7:00:00 AM ET

Benchmark Electronics, Inc. (BHE ) today announced financial results for the fourth quarter and year ended December 31, 2016.

                             Three Months Ended
                             Dec 31,   Sep 30,   Dec 31,
In millions, except EPS      2016      2016      2015
Net sales                    $608      $574      $626
Net income                   $19       $22       $39
Net income - non-GAAP        $22       $18       $24
Diluted EPS                  $0.37     $0.44     $0.77
Diluted EPS - non-GAAP       $0.45     $0.36     $0.48
Operating margin             3.9%      3.1%      3.5%
Operating margin - non-GAAP  4.8%      4.3%      4.8%
                                 Twelve Months Ended
                                 Dec 31,   Dec 31,
In millions, except EPS          2016      2015
Net sales                        $2,310    $2,541
Net income                       $64       $95
Net income - non-GAAP            $72       $88
Diluted EPS                      $1.29     $1.83
Diluted EPS - non-GAAP           $1.45     $1.68
Operating margin (%)             3.3%      3.7%
Operating margin - non-GAAP (%)  4.3%      4.4%

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

"I am pleased by the Company’s performance in the fourth quarter, which met or exceeded each of our commitments. Revenue and margins were at the top end of our guidance, and non-GAAP EPS of $0.45 exceeded by two cents. We generated operating cash flow of $273 million for the year and ended 2016 with cash conversion days of 74, one day lower than our target and a twenty-day improvement from the year ago period," said Paul Tufano, Benchmark’s CEO and President.

"During 2017, we will be realigning and invigorating the organization with three priorities critical to our success", Tufano added. "First, the optimization of our global network coupled with a relentless focus on execution excellence. Within our global teams, we are driving greater ownership and accountability and a heightened sense of urgency. Second, the investment in a market segment organization tasked with driving appropriate customer acquisition, revenue and margin growth. Third, the expansion of our engineering capabilities to provide our customers with the design services and technology building blocks that will allow them to go to market faster and more economically."

Tufano concluded, "I remain excited by our opportunities going forward and the enthusiasm and support of our customers and employees. Looking ahead, our objective is to meet our commitments to customers, shareholders and employees while we reposition Benchmark for long-term growth."

Fourth Quarter 2016 Financial Highlights

-- Operating margin was 3.9% (non-GAAP 4.8%).

-- Cash flows from operating activities were $44 million during the quarter and $273 million for the year.

-- Cash conversion cycle improved 6 days from 80 at September 30, 2016 to 74 days at December 31, 2016.

-- Cash was $681 million at December 31, of which $626 million was held outside the U.S.

Cash Conversion Cycle

                          Dec 31,    Sep 30,    Dec 31,
                          2016       2016       2015
Accounts receivable days  65         65         69
Inventory days            62         68         65
Accounts payable days     (53)       (53)       (40)
                          74         80         94

"We exceeded our 75-day cash conversion cycle target and exited the year at 74 days," said Don Adam, CFO. "For the fourth quarter, we generated $44 million of cash flow from operations, bringing our full year total to $273 million. We are targeting a cash conversion cycle range of 68-73 days and annual operating cash flows in the range of $125 - $150 million in 2017. For the full year, we purchased $42 million of our common shares and have $93 million remaining in our current share repurchase program."

Fourth Quarter 2016 Industry Sector Update

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

                                   Dec 31,       Sep 30,       Dec 31,
            Higher-Value Markets   2016          2016          2015
Industrials                      $ 230  37  %  $ 217  38  %  $ 223  35  %
Medical                            86   14       86   15       91   15
Test & Instrumentation             65   11       66   11       52   8
                                 $ 381  62  %  $ 369  64  %  $ 366  58  %
                                   Dec 31,       Sep 30,       Dec 31,
            Traditional Markets    2016          2016          2015
Computing                        $ 120  20  %  $ 107  19  %  $ 155  25  %
Telecommunications                 107  18       98   17       105  17
                                 $ 227  38  %  $ 205  36  %  $ 260  42  %
            Total                $ 608  100 %  $ 574  100 %  $ 626  100 %

Fourth quarter revenues from higher-value markets were in line with expectations. Test & Instrumentation revenues from semi-capital equipment customers remained strong, and new Industrial programs ramped as expected. Medical revenues were slightly lower than anticipated due to regulatory delays. Traditional revenues in Computing and Telecommunications were up on stronger computing demand and the completion of Telecommunications qualifications.

Fourth Quarter 2016 Bookings Update

-- New program bookings of $115 to $140 million.

-- 12 engineering awards supporting early engagement opportunities.

-- 19 manufacturing wins across all market sectors.

The Company projects that new program bookings for the fourth quarter will result in annualized revenue of $115 to $140 million when fully launched in the next 12-18 months. The new program bookings align with Benchmark’s strategic focus on higher-value markets.

First Quarter 2017 Outlook

-- Revenue between $530-$550 million.

-- Diluted GAAP earnings per share between $0.19-$0.23.

-- Diluted non-GAAP earnings per share between $0.24-$0.28 (excluding restructuring charges and amortization of intangibles expected to approximate $0.05 per share). The income tax impact of the non-GAAP adjustments using the applicable effective tax rates is $0.02 per share.

Fourth Quarter 2016 Results Conference Call Details A conference call hosted by Benchmark management will be held today at 4:30 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 machine services to original equipment manufacturers of industrial equipment (including equipment for the aerospace and defense industries), telecommunication equipment, computers and related products for business enterprises, medical devices, and test 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.

Non-GAAP Financial Measures This press release includes financial measures 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 that exclude certain items in order to better assess operating performance and help investors compare results with our previous guidance. Benchmark’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.

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," "plan," "anticipate," "project," "predict," "goals," "targeting" and similar terms, and the negatives thereof, often identify forward-looking statements, which are not limited to historical facts. The Company’s forward-looking statements include, among other things, projections relating to expanding or realigning contractual terms, optimizing execution, realigning its footprint, maximizing operational performance, its cash conversion cycle, operating cash flows, the future value of bookings and first quarter 2017 revenues and diluted earnings per share. 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 materializes 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 hereof, 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, 2015, 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,
                                          2016         2016         2015           2016         2015
Income from operations (GAAP)         $   23,548  $    18,082  $    21,905    $    75,638  $    92,969
Restructuring charges and other costs     2,663        3,485        6,308          12,539       13,861
Amortization of intangible assets(1)      2,893        3,170        1,923          11,838       4,962
Non-GAAP income from operations       $   29,104  $    24,737  $    30,136    $    100,015 $    111,792
Net income (GAAP)                     $   18,568  $    21,742  $    39,421    $    64,047  $    95,401
Restructuring charges and other costs     2,663        3,485        6,308          12,539       13,861
Amortization of intangible assets(1)      2,893        3,170        1,923          11,838       4,962
Income tax adjustments(2)                 (1,781)      (2,207)      (2,234)        (7,695)      (5,495)
Discrete tax benefits                     -            (8,270)      (21,174)       (8,270)      (21,174)
Non-GAAP net income                   $   22,343  $    17,920  $    24,244    $    72,459  $    87,555
Earnings per share: (GAAP)
                   Basic              $   0.38    $    0.44    $    0.78      $    1.30    $    1.85
                   Diluted            $   0.37    $    0.44    $    0.77      $    1.29    $    1.83
Earnings per share: (Non-GAAP)
                   Basic              $   0.46    $    0.37    $    0.48      $    1.47    $    1.70
                   Diluted            $   0.45    $    0.36    $    0.48      $    1.45    $    1.68
Weighted-average number of shares used in
calculating earnings per share:
                   Basic                  49,063       48,965       50,482         49,298       51,573
                   Diluted                49,544       49,414       50,914         49,825       52,088
(1) Beginning with the third quarter of 2016, our non-GAAP income and earnings per share exclude the impact of the amortization of intangible assets. The non-GAAP earnings per share for prior periods presented above exclude the impact of the amortization of intangible assets.
(2) This amount represents the tax impact of the non-GAAP adjustments using the applicable effective tax rates.
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,
                                                      2016      2015           2016           2015
Sales                                             $   607,507 $ 625,719   $    2,310,415 $    2,540,873
Cost of sales                                         550,037   568,810        2,096,952      2,321,619
                       Gross profit                   57,470    56,909         213,463        219,254
Selling, general and administrative expenses          28,366    26,773         113,448        107,462
Amortization of intangible assets                     2,893     1,923          11,838         4,962
Restructuring charges and other costs                 2,663     6,308          12,539         13,861
                       Income from operations         23,548    21,905         75,638         92,969
Interest expense                                      (2,369)   (1,569)        (9,304)        (2,996)
Interest income                                       966       236            2,136          1,207
Other income (expense), net                           253       441            (282)          (1,141)
                       Income before income taxes     22,398    21,013         68,188         90,039
Income tax expense (benefit)                          3,830     (18,408)       4,141          (5,362)
                       Net income                 $   18,568  $ 39,421    $    64,047    $    95,401
Earnings per share:
                       Basic                      $   0.38    $ 0.78      $    1.30      $    1.85
                       Diluted                    $   0.37    $ 0.77      $    1.29      $    1.83
Weighted-average number of shares used in calculating
earnings per share:
                       Basic                          49,063    50,482         49,298         51,573
                       Diluted                        49,544    50,914         49,825         52,088
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(UNAUDITED)
(in thousands)
                                                                                                    December 31,      December 31,
                                                                                                    2016              2015
Assets
        Current assets:
                          Cash and cash equivalents                                            $    681,433      $    465,995
                          Accounts receivable, net                                                  440,692           479,140
                          Inventories                                                               381,334           411,986
                          Other current assets                                                      28,203            31,507
                                                  Total current assets                              1,531,662         1,388,628
        Property, plant and equipment, net                                                          166,148           178,170
        Goodwill and other, net                                                                     300,858           327,080
                                                  Total assets                                 $    1,998,668    $    1,893,878
Liabilities and Shareholders’ Equity
        Current liabilities:
                          Current installments of long-term debt and capital lease obligations $    12,396       $    12,284
                          Accounts payable                                                          326,249           251,163
                          Accrued liabilities                                                       73,736            69,647
                                                  Total current liabilities                         412,381           333,094
        Long-term debt and capital lease obligations, less current installments                     211,252           222,909
        Other long-term liabilities                                                                 9,570             15,971
        Shareholders’ equity                                                                        1,365,465         1,321,904
                                                  Total liabilities and shareholders’ equity   $    1,998,668    $    1,893,878
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(in thousands)
(UNAUDITED)
                                                                             Year Ended
                                                                             December 31,
                                                                             2016       2015
Cash flows from operating activities:
         Net income                                                        $ 64,047   $ 95,401
         Depreciation and amortization                                       55,139     49,672
         Stock-based compensation expense                                    5,322      7,709
         Accounts receivable, net                                            37,573     52,847
         Inventories                                                         27,749     3,974
         Accounts payable                                                    76,039     (41,388)
         Other changes in working capital and other                          6,651      (21,411)
                       Net cash provided by operations                       272,520    146,804
Cash flows from investing activities:
         Additions to property, plant and equipment and software             (32,334)   (38,062)
         Business acquisition, net of cash acquired                          10,750     (229,582)
         Other investing activities, net                                     339        843
                       Net cash used in investing activities                 (21,245)   (266,801)
Cash flows from financing activities:
         Share repurchases                                                   (41,929)   (68,365)
         Net debt activity                                                   (12,301)   229,324
         Other financing activities, net                                     19,488     (1,322)
                       Net cash provided by (used in) financing activities   (34,742)   159,637
Effect of exchange rate changes                                              (1,095)    (1,021)
Net increase in cash and cash equivalents                                    215,438    38,619
         Cash and cash equivalents at beginning of year                      465,995    427,376
         Cash and cash equivalents at end of period                        $ 681,433  $ 465,995

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/benchmark-electronics-reports-fourth-quarter-and-fy-2016-results-300404009.html

SOURCE Benchmark Electronics, Inc.

https://rt.prnewswire.com/rt.gif?NewsItemId=DA07284&Transmission_Id=201702080700PR_NEWS_USPR_____DA07284&DateId=20170208



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