BENCHMARK REPORTS THIRD QUARTER 2023 RESULTS

Third quarter 2023 results:

Revenue of $720 million
GAAP operating income of $30 million, up 20% year-over-year
Non-GAAP(1) operating income of $34 million, up 22% year-over-year
GAAP and non-GAAP earnings per share of $0.57

TEMPE, Ariz., Oct. 25, 2023 /PRNewswire/ — Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the third quarter ended September 30, 2023.

Three Months Ended

September 30,

June 30,

September 30,

In millions, except EPS

2023

2023

2022

Sales

$

720

$

733

$

772

Net income

$

20

$

14

$

19

Income from operations

$

30

$

24

$

25

Net income – non-GAAP(1)

$

21

$

17

$

20

Income from operations – non-GAAP(1)

$

34

$

29

$

28

Diluted earnings per share

$

0.57

$

0.39

$

0.53

Diluted EPS – non-GAAP(1)

$

0.57

$

0.48

$

0.57

Operating margin

4.2

%

3.3

%

3.3

%

Operating margin – non-GAAP(1)

4.7

%

4.0

%

3.6

%

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

“Benchmark’s strategy is to serve high-complexity growth opportunities within our targeted sectors. This focus, coupled with the team’s commitment to operational improvement, enabled us to deliver another set of strong results in the third quarter,” said Jeff Benck, Benchmark’s President and CEO. 

Benck continued “I am proud of the team’s continued execution despite the dynamic market environment. Looking forward, we remain focused on delivering continued operating leverage and believe we are well positioned to capitalize on the opportunities in front of us.”

Cash Conversion Cycle

September 30,

June 30,

September 30,

2023

2023

2022

Accounts receivable days

60

59

56

Contract asset days

24

23

22

Inventory days

100

102

95

Accounts payable days

(53)

(56)

(67)

Advance payments from customers days

(26)

(25)

(27)

Cash Conversion Cycle days

105

103

79

Third Quarter 2023 Industry Sector UpdateRevenue and percentage of sales by industry sector (in millions) were as follows.

September 30,

June 30,

September 30,

2023

2023

2022

Medical

$

149

21

%

$

145

20

%

$

166

21

%

Semi-Cap

165

23

164

22

186

24

A&D

100

14

80

11

86

11

Industrials

154

21

167

23

155

20

Advanced Computing

66

9

81

11

95

13

Next Gen Communications

86

12

96

13

84

11

Total

$

720

100

%

$

733

100

%

$

772

100

%

Revenue decreased quarter over quarter and year over year primarily due to a decrease in Advanced Computing of 19% and 30%, respectively, due to completion of a high performance compute program, partially offset by an increase in A&D of 24% and 16%, respectively.

Fourth Quarter 2023 Guidance

Revenue between $675 – $725 million
Diluted GAAP earnings per share between $0.49 – $0.55
Diluted non-GAAP earnings per share between $0.54 – $0.60 (excluding restructuring charges and other costs and amortization of intangibles)

Restructuring charges are expected to range between $0.8 million and $1.2 million in the fourth quarter and the amortization of intangibles is expected to be $1.2 million in the fourth quarter.

Third Quarter 2023 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 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 Company’s outlook and guidance for fourth 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, 2022, and in any of the Company’s subsequent reports filed with the Securities and Exchange Commission. Events relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including trade restrictions and sanctions, 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 the Company’s 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

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022

Sales

$

719,695

$

771,575

$

2,147,622

$

2,135,687

Cost of sales

650,618

704,825

1,947,556

1,952,579

Gross profit

69,077

66,750

200,066

183,108

Selling, general and administrative expenses

35,509

38,544

111,379

110,675

Amortization of intangible assets

1,592

1,591

4,775

4,792

Restructuring charges and other costs

1,635

1,331

6,348

4,518

Income from operations

30,341

25,284

77,564

63,123

Interest expense

(8,475)

(3,493)

(23,183)

(7,428)

Interest income

1,343

452

4,223

843

Other income, net

2,384

1,087

280

1,577

Income before income taxes

25,593

23,330

58,884

58,115

Income tax expense

5,181

4,501

12,121

11,105

Net income

$

20,412

$

18,829

$

46,763

$

47,010

Earnings per share:

Basic

$

0.57

$

0.54

$

1.32

$

1.34

Diluted

$

0.57

$

0.53

$

1.30

$

1.32

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

Basic

35,647

35,151

35,535

35,184

Diluted

35,876

35,348

35,879

35,604

Benchmark Electronics, Inc. and Subsidiaries

 

Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)

September 30,

December 31,

2023

2022

Assets

Current assets:

Cash and cash equivalents

$

259,542

$

207,430

Restricted cash

1,218

—

Accounts receivable, net

477,685

491,957

Contract assets

190,085

183,613

Inventories

725,349

727,749

Other current assets

53,190

41,400

Total current assets

1,707,069

1,652,149

Property, plant and equipment, net

231,661

211,478

Operating lease right-of-use assets

122,104

93,081

Goodwill and other, net

272,311

270,623

Total assets

$

2,333,145

$

2,227,331

Liabilities and Shareholders’ Equity

Current liabilities:

Current installments of long-term debt

$

4,281

$

4,275

Accounts payable

382,170

424,272

Advance payments from customers

189,058

197,937

Accrued liabilities

123,595

122,652

Total current liabilities

699,104

749,136

Long-term debt, less current installments

428,231

320,675

Operating lease liabilities

114,279

86,687

Other long-term liabilities

28,482

44,417

Shareholders’ equity

1,063,049

1,026,416

Total liabilities and shareholders’ equity

$

2,333,145

$

2,227,331

Benchmark Electronics, Inc. and Subsidiaries

 

Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)

Nine Months Ended

September 30,

2023

2022

Cash flows from operating activities:

Net income

$

46,763

$

47,010

Depreciation and amortization

34,103

32,987

Stock-based compensation expense

12,331

13,282

Accounts receivable

12,937

(123,600)

Contract assets

(6,472)

(32,487)

Inventories

1,789

(228,501)

Accounts payable

(24,420)

84,588

Advance payments from customers

(8,879)

93,476

Other changes in working capital and other, net

(30,938)

(11,472)

Net cash provided by (used in) operations

37,214

(124,717)

Cash flows from investing activities:

Additions to property, plant and equipment and software

(66,713)

(33,594)

Other investing activities, net

588

5,666

Net cash used in investing activities

(66,125)

(27,928)

Cash flows from financing activities:

Share repurchases

—

(9,391)

Net debt activity

107,194

169,303

Other financing activities, net

(23,306)

(20,127)

Net cash provided by financing activities

83,888

139,785

Effect of exchange rate changes

(1,647)

(9,552)

Net increase (decrease) in cash and cash equivalents and restricted cash

53,330

(22,412)

Cash and cash equivalents and restricted cash at beginning of year

207,430

271,749

Cash and cash equivalents and restricted cash at end of period

$

260,760

$

249,337

Benchmark Electronics, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Results

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)

Three Months Ended

Nine Months Ended

Sept. 30,

June 30,

Sept. 30,

September 30,

2023

2023

2022

2023

2022

Income from operations (GAAP)

$

30,341

$

24,481

$

25,284

$

77,564

$

63,123

Amortization of intangible assets

1,592

1,591

1,591

4,775

4,792

Restructuring charges and other costs

1,437

2,364

1,331

5,227

4,911

Gain on assets held for sale

—

—

—

—

(393)

Asset impairment

198

923

—

1,121

—

Customer insolvency (recovery)

—

—

(599)

—

(599)

Non-GAAP income from operations

$

33,568

$

29,359

$

27,607

$

88,687

$

71,834

GAAP operating margin

4.2

%

3.3

%

3.3

%

3.6

%

3.0

%

Non-GAAP operating margin

4.7

%

4.0

%

3.6

%

4.1

%

3.4

%

Gross Profit (GAAP)

$

69,077

$

67,031

$

66,750

$

200,066

$

183,108

Customer insolvency (recovery)

—

—

(425)

—

(425)

Non-GAAP gross profit

$

69,077

$

67,031

$

66,325

$

200,066

$

182,683

GAAP gross margin

9.6

%

9.1

%

8.7

%

9.3

%

8.6

%

Non-GAAP gross margin

9.6

%

9.1

%

8.6

%

9.3

%

8.6

%

Selling, general and administrative expenses

$

35,509

$

37,672

$

38,544

$

111,379

$

110,675

Customer insolvency (recovery)

—

—

174

—

174

Non-GAAP selling, general and administrative
expenses

$

35,509

$

37,672

$

38,718

$

111,379

$

110,849

Net income (GAAP)

$

20,412

$

13,991

$

18,829

$

46,763

$

47,010

Amortization of intangible assets

1,592

1,591

1,591

4,775

4,792

Restructuring charges and other costs

1,437

2,364

1,331

5,227

4,911

Gain on assets held for sale

—

—

—

—

(393)

Asset impairment

198

923

—

1,121

—

Settlement

(3,375)

(1,155)

(611)

(4,530)

(611)

Customer insolvency (recovery)

—

—

(599)

—

(599)

Income tax adjustments(1)

245

(670)

(351)

(941)

(1,639)

Non-GAAP net income

$

20,509

$

17,044

$

20,190

$

52,415

$

53,471

Diluted earnings per share:

Diluted (GAAP)

$

0.57

$

0.39

$

0.53

$

1.30

$

1.32

Diluted (Non-GAAP)

$

0.57

$

0.48

$

0.57

$

1.46

$

1.50

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

Diluted (GAAP)

35,876

35,676

35,348

35,879

35,604

Diluted (Non-GAAP)

35,876

35,676

35,348

35,879

35,604

Net cash provided by (used in) operations

$

37,583

$

24,538

$

(31,208)

$

37,214

$

(124,717)

Additions to property, plant and equipment and
software

(19,664)

(8,318)

(8,623)

(66,713)

(33,594)

Free cash flow (used)

$

17,919

$

16,220

$

(39,831)

$

(29,499)

$

(158,311)

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

SOURCE Benchmark Electronics, Inc.


Go to Source