Benchmark Electronics Reports Fourth Quarter And FY 2017 Results
SCOTTSDALE, Ariz., Feb. 7, 2018 /PRNewswire/ -- 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.
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
View original content with multimedia:http://www.prnewswire.com/news-releases/benchmark-electronics-reports-fourth-quarter-and-fy-2017-results-300595352.html
SOURCE Benchmark Electronics, Inc.
