PR Newswire | Feb 4, 2021 04:07PM EST

02/04 15:07 CST

Benchmark Reports Fourth Quarter And Full Year 2020 ResultsFourth quarter 2020 results:- Revenue of $521 million- GAAP gross margin of 9.7% and non-GAAP gross margin of 9.6%- Cash flow generated from operations of $95 million- GAAP diluted EPS of $0.21 and non-GAAP diluted EPS of $0.34Full year 2020 results:- Revenue of $2.1 billion- Semi-Cap revenue growth of 33% year-over-year- Medical revenue growth of 11% year-over-year- Higher-value markets revenue mix greater than 80%- Cash flow generated from operations of $120 million and free cash flow of $81 million- Annual GAAP diluted EPS of $0.38 and non-GAAP diluted EPS of $0.95 TEMPE, Ariz., Feb. 4, 2021

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 %

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

^ Results for the fourth quarter ended December 31, 2020 and third quarter(2) ended September 30, 2020 include the impact of approximately $1.6 million and $1.3 million of net COVID-19 related costs, respectively.

^ Results for the year ended December 31, 2020 include the impact of(3) 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 UpdateRevenue 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 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 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 StatementsThis 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 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 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 32,380 34,279 122,195 126,740administrative expenses

Amortization of intangible 1,979 2,366 9,099 9,461assets

Restructuring charges and 4,490 2,268 19,970 13,101other costs

Ransomware incident related (45) 7,681 (1,350) 7,681costs (recovery), net

Income (loss) from 11,857 (9,281) 25,134 28,545operations

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 9,356 (10,903) 17,293 27,269taxes

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 ofshares used in calculatingearnings 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 $ 11,857 $ 8,659 $ (9,281) $ 25,134 $ 28,545operations (GAAP)

Restructuring charges and 4,490 1,425 2,268 13,227 13,101other costs

Ransomware incidentrelated costs (recovery), (45) (1,558) 7,681 (1,350) 7,681net

Settlement - - (773) - -

Impairment - 5,736 - 6,743 -

Customer insolvency (553) (796) 11,036 (1,702) 8,278(recovery)

Amortization of 1,979 2,368 2,366 9,099 9,461intangible assets

Non-GAAP income from $ 17,728 $ 15,834 $ 13,297 $ 51,151 $ 67,066operations

Gross Profit (GAAP) $ 50,661 $ 46,354 $ 37,313 $ 175,048 $ 185,528

Settlement - - (773) - -

Customer insolvency (553) (796) 967 (1,702) (73)(recovery)

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 4,490 1,425 2,268 13,227 13,426other costs

Ransomware incidentrelated costs (recovery), (45) (1,558) 7,681 (1,350) 7,681net

Customer insolvency (553) (796) 11,036 (1,702) 8,278(recovery)

Amortization of 1,979 2,368 2,366 9,099 9,461intangible assets

Settlements - - (773) - (3,021)

Impairment - 5,736 - 6,743 -

Income tax adjustments^ (1,006) (1,458) (5,385) (5,157) (8,095)(1)

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 numberof shares used incalculating dilutedearnings (loss) pershare:

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.