Benchmark Reports Fourth Quarter And Full Year 2020 Results
TEMPE, Ariz., Feb. 4, 2021 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the fourth quarter and year ended December 31, 2020.
Three Months Ended
Dec 31, Sep 30, Dec 31,
In millions, except EPS 2020 2020 2019
---
Sales $
521 $
526 $
508
Net income (loss)(2) $
8 $
6 $
(7)
Net income - non-GAAP(1)(2) $
13 $
12 $
10
Diluted earnings (loss) per share(2) $
0.21 $
0.16 $
(0.19)
Diluted EPS - non-GAAP(1)(2) $
0.34 $
0.32 $
0.27
Operating margin(2) 2.3
% %
% 1.6 (1.8)
Operating margin - non-GAAP(1)(2) 3.4
% %
% 3.0 2.6
Twelve Months Ended
Dec 31, Dec 31,
In millions, except EPS 2020 2019
---
Net sales $
2,053 $
2,268
Net income(3) $
14 $
23
Net income - non-GAAP(1)(3) $
35 $
51
Diluted EPS(3) $
0.38 $
0.60
Diluted EPS - non-GAAP(1)(3) $
0.95 $
1.32
Operating margin(3) 1.2 1.3
% %
Operating margin - non-GAAP(1)(3) 2.5 3.0
% %
(1) A reconciliation of GAAP and non-
GAAP results is included below.
(2) Results for the fourth quarter
ended December 31, 2020 and third
quarter ended September 30, 2020
include the impact of
approximately $1.6 million and
$1.3 million of net COVID-19
related costs, respectively.
(3) Results for the year ended December
31, 2020 include the impact of
approximately $7.1 million of net
COVID-19 related costs.
Jeff Benck, Benchmark's President and CEO stated, "We closed out a very challenging year, delivering fourth quarter results that not only met our expectations, but demonstrated sequential improvement in both non-GAAP gross margins at 9.6% and higher non-GAAP earnings at $0.34 enabled by higher-value sector mix and improved utilization across the company. I am very proud of our team, which has proven to be very resourceful and resilient in the face of this pandemic and continues to deliver for our customers."
Benck continued, "Our focused efforts on improving working capital management are also bearing fruit as we generated $95 million of operating cash flow in the quarter and over $120 million for the year, which exceeded our forecast. I look forward to 2021 with optimism knowing that our strategic investments in the business to drive differentiated value and sustainability have solidified a path to achieve revenue, margin, and earnings growth in 2021 aligned with our mid-term financial goals."
Cash Conversion Cycle
Dec 31, Sep 30, Dec 31,
2020 2020 2019
Accounts receivable days 53 52 57
Contract asset days 25 28 29
Inventory days 63 66 60
Accounts payable days (54) (54) (58)
Advance payments from customers days (16) (11) (7)
Cash Conversion Cycle days 71 81 81
Fourth Quarter 2020 Industry Sector Update
Revenue and percentage of sales by industry sector (in millions) was as follows.
Dec 31, Sep 30, Dec 31,
Higher-Value Markets 2020 2020 2019
---
Medical $
111 21 $
134 26 $
103 20
% % %
Semi-Cap 101 20 99 19 81 16
A&D 111 21 105 20 106 21
Industrials 97 19 86 16 107 21
$
420 81 $
424 81 $
397 78
% % %
Dec 31, Sep 30, Dec 31,
Traditional Markets 2020 2020 2019
---
Computing $
46 9 $
44 8 $
45 9
% % %
Telecommunications 55 10 58 11 66 13
$
101 19 $
102 19 $
111 22
% % %
Total $
521 100 $
526 100 $
508 100
% % %
Overall, higher-value market revenues were up 6% year-over-year from strength in the Semi-Cap, Medical, and A&D sectors. Traditional market revenues were down from program transitions.
First Quarter 2021 Outlook
-- Revenue between $480 - $520 million
-- Diluted GAAP earnings per share between $0.11 - $0.14
-- Diluted non-GAAP earnings per share between $0.18 - $0.22 (excluding
restructuring charges and other costs and amortization of intangibles)
-- This guidance takes into consideration all known constraints for the
quarter and assumes no further significant interruptions to our supply
base, operations or customers. Guidance also assumes no material changes
to end market conditions due to COVID-19.
Restructuring charges are expected to range between $1.0 million and $2.0 million in the first quarter and the amortization of intangibles is expected to be $2.0 million in the first quarter.
Fourth Quarter 2020 and CY2020 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 Thursday, February 11, 2021 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 first quarter 2021 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 fourth-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 Part II, Item 1A, "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 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
Year Ended
December 31,
December 31,
2020 2019 2020 2019
Sales $
521,250 $
508,444 $
2,053,131 $
2,268,095
Cost of sales 470,589 471,131 1,878,083 2,082,567
Gross profit 50,661 37,313 175,048 185,528
Selling, general and
administrative expenses 32,380 34,279 122,195 126,740
Amortization of intangible
assets 1,979 2,366 9,099 9,461
Restructuring charges and other
costs 4,490 2,268 19,970 13,101
Ransomware incident related
costs (recovery), net (45) 7,681 (1,350) 7,681
Income (loss) from operations 11,857 (9,281) 25,134 28,545
Interest expense (2,175) (1,650) (8,364) (6,664)
Interest income 156 745 1,196 3,829
Other income (expense), net (482) (717) (673) 1,559
Income (loss) before income
taxes 9,356 (10,903) 17,293 27,269
Income tax expense 1,661 (3,972) 3,238 3,844
Net income (loss) $
7,695 $
(6,931) $
14,055 $
23,425
Earnings (loss) per share:
Basic $
0.21 $
(0.19) $
0.38 $
0.61
Diluted $
0.21 $
(0.19) $
0.38 $
0.60
Weighted-average number of
shares used in calculating
earnings per share:
Basic 36,402 36,928 36,524 38,338
Diluted 36,596 36,928 36,817 38,763
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)
December 31, December 31,
2020 2019
---
Assets
Current assets:
Cash and cash equivalents $
390,808 $
347,558
Restricted cash 5,182 16,398
Accounts receivable, net 309,331 324,424
Contract assets 142,779 161,061
Inventories 327,377 314,956
Other current assets 26,874 30,685
Total current assets 1,202,351 1,195,082
Property, plant and equipment, net 185,272 205,819
Operating lease right-of-use assets 79,966 76,859
Goodwill and other, net 276,646 282,114
Total assets $
1,744,235 $
1,759,874
===
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt and finance lease obligations $
9,161 $
8,825
Accounts payable 282,208 302,994
Advance payments from customers 84,122 37,511
Accrued liabilities 105,645 109,915
Total current liabilities 481,136 459,245
Long-term debt and finance lease obligations, less current installments 131,051 138,912
Operating lease liabilities 72,120 67,898
Other long-term liabilities 70,340 78,987
Shareholders' equity 989,588 1,014,832
Total liabilities and shareholders' equity $
1,744,235 $
1,759,874
===
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(in thousands)
(UNAUDITED)
Year Ended
December 31,
2020 2019
---
Cash flows from operating activities:
Net income $
14,055 $
23,425
Depreciation and amortization 48,792 48,427
Stock-based compensation expense 10,398 10,194
Accounts receivable, net 13,586 134,926
Contract assets 18,282 (20,979)
Inventories (10,799) (5,238)
Accounts payable (15,553) (121,860)
Advance payments from customers 46,612 9,254
Other changes in working capital and other, net (4,935) 14,987
Net cash provided by operations 120,438 93,136
Cash flows from investing activities:
Additions to property, plant and equipment and software (39,519) (35,118)
Other investing activities, net 5,136 255
Net cash used in investing activities (34,383) (34,863)
Cash flows from financing activities:
Share repurchases (25,220) (122,110)
Net debt activity (7,987) (6,794)
Other financing activities, net (24,319) (23,933)
Net cash used in financing activities (57,526) (152,837)
Effect of exchange rate changes 3,505 418
Net increase (decrease) in cash and cash equivalents and restricted cash 32,034 (94,146)
Cash and cash equivalents and restricted cash at beginning of year 363,956 458,102
Cash and cash equivalents and restricted cash at end of year $
395,990 $
363,956
===
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,
Dec 31,
2020 2020 2019 2020 2019
---
Income (loss) from
operations (GAAP) $
11,857 $
8,659 $
(9,281) $
25,134 $
28,545
Restructuring charges and
other costs 4,490 1,425 2,268 13,227 13,101
Ransomware incident related
costs (recovery), net (45) (1,558) 7,681 (1,350) 7,681
Settlement (773)
Impairment 5,736 6,743
Customer insolvency
(recovery) (553) (796) 11,036 (1,702) 8,278
Amortization of intangible
assets 1,979 2,368 2,366 9,099 9,461
Non-GAAP income
from operations $
17,728 $
15,834 $
13,297 $
51,151 $
67,066
===
Gross Profit
(GAAP) $
50,661 $
46,354 $
37,313 $
175,048 $
185,528
Settlement (773)
Customer insolvency
(recovery) (553) (796) 967 (1,702) (73)
Non-GAAP gross
profit $
50,108 $
45,558 $
37,507 $
173,346 $
185,455
===
Net income (loss)
(GAAP) $
7,695 $
5,915 $
(6,931) $
14,055 $
23,425
Restructuring charges and
other costs 4,490 1,425 2,268 13,227 13,426
Ransomware incident related
costs (recovery), net (45) (1,558) 7,681 (1,350) 7,681
Customer insolvency
(recovery) (553) (796) 11,036 (1,702) 8,278
Amortization of intangible
assets 1,979 2,368 2,366 9,099 9,461
Settlements (773) (3,021)
Impairment 5,736 6,743
Income tax adjustments(1) (1,006) (1,458) (5,385) (5,157) (8,095)
Non-GAAP net
income $
12,560 $
11,632 $
10,262 $
34,915 $
51,155
===
Diluted earnings (loss) per
share:
Diluted (GAAP) $
0.21 $
0.16 $
(0.19) $
0.38 $
0.60
Diluted (Non-
GAAP) $
0.34 $
0.32 $
0.27 $
0.95 $
1.32
Weighted-average number of
shares used in
calculating diluted earnings
(loss) per share:
Diluted (GAAP) 36,596 36,544 36,928 36,817 38,763
Diluted (Non-GAAP) 36,596 36,544 37,374 36,817 38,763
(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.
