BENCHMARK REPORTS RECORD FISCAL YEAR 2022 RESULTS

Fourth quarter 2022 results:

Revenue of $751 million, up 19% year-over-year
GAAP operating income up 45% year-over-year
Non-GAAP operating income up 34% year-over-year
GAAP diluted EPS of $0.60, up 71% year-over-year
Non-GAAP diluted EPS of $0.60, up 25% year-over-year

Full year 2022 results:

Revenue of $2,886 million; 28% year-over-year growth

Advanced Computing and Next Gen Communications combined revenue growth of 45% year-over-year
Industrials revenue growth of 39% year-over-year
Medical revenue growth of 28% year-over-year
Semi-Cap revenue growth of 31% year-over-year

GAAP operating income up 70% year-over-year
Non-GAAP operating income up 52% year-over-year
GAAP diluted EPS of $1.91, up 93% year-over-year
Non-GAAP diluted EPS of $2.09, up 55% year-over-year

TEMPE, Ariz.,  Feb. 1, 2023 /PRNewswire/ — Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the fourth quarter and year ended December 31, 2022.

Three Months Ended

Dec 31,

Sept 30,

Dec 31,

In millions, except EPS

2022

2022

2021

Sales

$

751

$

772

$

633

Net income

$

21

$

19

$

12

Net income – non-GAAP(1)

$

21

$

20

$

17

Diluted earnings per share

$

0.60

$

0.53

$

0.35

Diluted EPS – non-GAAP(1)

$

0.60

$

0.57

$

0.48

Operating margin

3.6

%

3.3

%

2.9

%

Operating margin – non-GAAP(1)

4.3

%

3.6

%

3.8

%

Year Ended

Dec 31,

Dec 31,

In millions, except EPS

2022

2021

Sales

$

2,886

$

2,255

Net income

$

68

$

36

Net income – non-GAAP(1)

$

75

$

49

Diluted EPS

$

1.91

$

0.99

Diluted EPS – non-GAAP(1)

$

2.09

$

1.35

Operating margin

3.1

%

2.4

%

Operating margin – non-GAAP(1)

3.6

%

3.0

%

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

“As we close out 2022, I’m proud to see the team’s continued execution of our strategy which culminated in our reporting a record year of revenue and earnings,” said Jeff Benck, Benchmark’s President and CEO. “These results enabled us to exceed the operating targets we laid out more than two years ago, despite the unforeseen global challenges we encountered during this period.”

Benck continued “Looking forward, we have a new set of objectives, which we introduced at our analyst meeting last November. I am as confident today as I was then in our ability to deliver to our commitments, or better, over the multi-year period.” 

Cash Conversion Cycle

Dec 31,

Sept 30,

Dec 31,

2022

2022

2021

Accounts receivable days

59

56

51

Contract asset days

22

22

22

Inventory days

97

95

82

Accounts payable days

(56)

(67)

(67)

Advance payments from customers days

(26)

(27)

(19)

Cash conversion cycle days

96

79

69

Fourth Quarter 2022 Industry Sector UpdateRevenue and percentage of sales by industry sector (in millions) were as follows.

Dec 31,

Sept 30,

Dec 31,

2022

2022

2021

Medical

$

144

19

%

$

166

21

%

$

127

20

%

Semi-Cap

178

24

186

24

163

26

A&D

90

12

86

11

95

15

Industrials

143

19

155

20

125

20

Advanced Computing

92

12

95

13

60

9

Next Gen Communications

104

14

84

11

63

10

Total

$

751

100

%

$

772

100

%

$

633

100

%

Overall, revenues were up 19% year-over-year from strength in the Next Gen Communications, Advanced Computing, Industrials, Medical and Semi-Cap sectors.

First Quarter 2023 Guidance

Revenue between $640 – $680 million
Diluted GAAP earnings per share between $0.35 – $0.40
Diluted non-GAAP earnings per share between $0.39 – $0.45 (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.

Restructuring charges are expected to range between $0.2 million and $0.6 million in the first quarter and the amortization of intangibles is expected to be $1.6 million in the first quarter.

Fourth Quarter 2022 Earnings Conference CallThe 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 for one year 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 StatementsThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts and may include words such as “anticipate,” “believe,” “intend,” “plan,” “project,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” “could,” “predict,” and similar expressions of the negative or other variations thereof. In particular, statements, express or implied, concerning the estimated financial impact of the COVID-19 pandemic, the Company’s outlook and guidance for first quarter and fiscal year 2023 results, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the Company’s business strategy and strategic initiatives, the Company’s repurchases of shares of its common stock, the Company’s expectations regarding restructuring charges and amortization of intangibles, and the Company’s intentions concerning the payment of dividends, among others, are forward-looking statements. Although the Company believes these statements are based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions that are beyond the Company’s ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and in any of the Company’s subsequent reports filed with the Securities and Exchange Commission. In particular, these statements also depend on the duration, severity and evolution of the COVID-19 pandemic and related risks, including the emergence and severity of its variants, the availability of vaccines and potential hesitancy to utilize them, government and other third-party responses to the crisis and the consequences for the global economy, the Company’s business and the businesses of its suppliers and customers. Events relating to the possibility of customer demand fluctuations, supply chain constraints, continued inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including trade restrictions, or the ability to utilize the company’s manufacturing facilities at sufficient levels to cover its 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. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes, including the future results of our operations, may vary materially from those indicated. Undue reliance should not be placed on any forward-looking statements. Forward-looking statements are not guarantees of performance. All forward-looking statements included in this document are based upon information available to the Company as of the date of this document, and the Company assumes no obligation to update.

Non-GAAP Financial MeasuresManagement 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 certain 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,

2022

2021

2022

2021

Sales

$

750,644

$

633,054

$

2,886,331

$

2,255,319

Cost of sales

678,517

570,998

2,631,096

2,049,418

Gross profit

72,127

62,056

255,235

205,901

Selling, general and administrative expenses

39,540

37,731

150,215

136,700

Amortization of intangible assets

1,592

1,591

6,384

6,384

Restructuring charges and other costs

4,049

4,099

8,567

13,699

Ransomware incident related costs (recovery), net

—

—

—

(3,944)

Income from operations

26,946

18,635

90,069

53,062

Interest expense

(5,466)

(2,257)

(12,894)

(8,472)

Interest income

887

89

1,730

540

Other income (expense), net

3,860

(387)

5,437

277

Income before income taxes

26,227

16,080

84,342

45,407

Income tax expense

5,008

3,661

16,113

9,637

Net income

$

21,219

$

12,419

$

68,229

$

35,770

Earnings per share:

Basic

$

0.60

$

0.35

$

1.94

$

1.00

Diluted

$

0.60

$

0.35

$

1.91

$

0.99

Weighted-average number of shares used in
calculating earnings per share:

Basic

35,166

35,209

35,179

35,655

Diluted

35,630

35,410

35,718

36,101

Benchmark Electronics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets
(UNAUDITED)
(in thousands)

December 31,

December 31,

2022

2021

Assets

Current assets:

Cash and cash equivalents

$

207,430

$

271,749

Accounts receivable, net

491,957

355,883

Contract assets

183,613

155,243

Inventories

727,749

523,240

Other current assets

41,400

42,029

Total current assets

1,652,149

1,348,144

Property, plant and equipment, net

211,478

186,666

Operating lease right-of-use assets

93,081

99,158

Goodwill and other, net

270,623

269,912

Total assets

$

2,227,331

$

1,903,880

Liabilities and shareholders’ equity

Current liabilities:

Current installments of long-term debt and finance lease obligations

$

4,275

$

985

Accounts payable

424,272

426,555

Advance payments from customers

197,937

118,124

Accrued liabilities

122,652

108,718

Total current liabilities

749,136

654,382

Long-term debt and finance lease obligations, less current installments

320,675

129,289

Operating lease liabilities

86,687

90,878

Other long-term liabilities

44,417

55,529

Shareholders’ equity

1,026,416

973,802

Total liabilities and shareholders’ equity

$

2,227,331

$

1,903,880

Benchmark Electronics, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows
(in thousands)
(UNAUDITED)

Year Ended

December 31,

2022

2021

Cash flows from operating activities:

Net income

$

68,229

$

35,770

Depreciation and amortization

44,252

44,152

Stock-based compensation expense

18,485

15,262

Accounts receivable, net

(135,955)

(46,967)

Contract assets

(28,370)

(12,464)

Inventories

(206,247)

(197,867)

Accounts payable

(16,656)

139,952

Advance payments from customers

93,476

34,002

Other changes in working capital and other, net

(14,681)

(14,462)

Net cash used in operations

(177,467)

(2,622)

Cash flows from investing activities:

Additions to property, plant and equipment and software

(46,774)

(42,177)

Other investing activities, net

5,600

302

Net cash used in investing activities

(41,174)

(41,875)

Cash flows from financing activities:

Share repurchases

(9,391)

(40,216)

Net debt activity

194,261

(7,648)

Other financing activities, net

(25,641)

(26,088)

Net cash provided by (used in) financing activities

159,229

(73,952)

Effect of exchange rate changes

(4,907)

(5,792)

Net decrease in cash and cash equivalents and restricted cash

(64,319)

(124,241)

Cash and cash equivalents and restricted cash at beginning of year

271,749

395,990

Cash and cash equivalents and restricted cash at end of year

$

207,430

$

271,749

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,

Sept 30,

Dec 31,

Dec 31,

2022

2022

2021

2022

2021

Income from operations (GAAP)

$

26,946

$

25,284

$

18,635

$

90,069

$

53,062

Amortization of intangible assets

1,592

1,591

1,591

6,384

6,384

Restructuring charges and other costs

799

1,331

4,099

5,710

9,341

(Gain) loss on assets held for sale

—

—

—

(393)

—

Impairment

—

—

—

—

4,358

Ransomware incident related costs (recovery), net

—

—

—

—

(3,944)

Settlement

3,250

—

—

3,250

—

Customer insolvency (recovery)

—

(599)

(72)

(599)

(425)

Non-GAAP income from operations

$

32,587

$

27,607

$

24,253

$

104,421

$

68,776

GAAP operating margin

3.6

%

3.3

%

2.9

%

3.1

%

2.4

%

Non-GAAP operating margin

4.3

%

3.6

%

3.8

%

3.6

%

3.0

%

Gross Profit (GAAP)

$

72,127

$

66,750

$

62,056

$

255,235

$

205,901

Settlement

—

—

—

—

—

Customer insolvency (recovery)

—

(425)

(72)

(425)

(425)

Non-GAAP gross profit

$

72,127

$

66,325

$

61,984

$

254,810

$

205,476

GAAP gross margin

9.6

%

8.7

%

9.8

%

8.8

%

9.1

%

Non-GAAP gross margin

9.6

%

8.6

%

9.8

%

8.8

%

9.1

%

Selling, general and administrative expenses

$

39,540

$

38,544

$

37,731

$

150,215

$

136,700

Customer recovery

—

174

—

174

—

Non-GAAP selling, general and administrative expenses

$

39,540

$

38,718

$

37,731

$

150,389

$

136,700

Net income (GAAP)

$

21,219

$

18,829

$

12,419

$

68,229

$

35,770

Amortization of intangible assets

1,592

1,591

1,591

6,384

6,384

Restructuring charges and other costs

799

1,331

4,099

5,710

9,341

(Gain) loss on assets held for sale

—

—

—

(393)

—

Impairment

—

—

—

—

4,358

Ransomware incident related costs (recovery), net

—

—

—

—

(3,944)

Settlement

(2,344)

(611)

—

(2,955)

—

Customer insolvency (recovery)

—

(599)

(72)

(599)

(425)

Refinancing of Credit Facilities

—

—

276

—

276

Income tax adjustments(1)

(5)

(351)

(1,212)

(1,644)

(3,178)

Non-GAAP net income

$

21,261

$

20,190

$

17,101

$

74,732

$

48,582

Diluted earnings per share:

Diluted (GAAP)

$

0.60

$

0.53

$

0.35

$

1.91

$

0.99

Diluted (Non-GAAP)

$

0.60

$

0.57

$

0.48

$

2.09

$

1.35

Weighted-average number of shares used in calculating diluted earnings per share:

Diluted (GAAP)

35,630

35,348

35,410

35,718

36,101

Diluted (Non-GAAP)

35,630

35,348

35,410

35,718

36,101

Net cash used in operations

$

(52,749)

$

(31,208)

$

(1,314)

$

(177,467)

$

(2,622)

Additions to property, plant and equipment and software

(13,180)

(8,623)

(9,740)

(46,774)

(42,177)

Free cash flow (used)

$

(65,929)

$

(39,831)

$

(11,054)

$

(224,241)

$

(44,799)

(1)     This amount represents the tax impact of the non-GAAP adjustments using the applicable effective tax rates.

SOURCE Benchmark Electronics, Inc.

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