PR Newswire | Oct 27, 2021 04:07PM EDT

10/27 15:07 CDT

Benchmark Reports Third Quarter 2021 ResultsThird quarter 2021 results:- Quarterly revenue of $572 million- 9% year-over-year revenue growth- Semi-Cap revenue growth of 35% year-over-year- Industrials revenue growth of 26% year-over-year- Higher-value markets revenue mix of 81%- GAAP and non-GAAP gross margins of 9.4%- GAAP diluted EPS of $0.23 and non-GAAP diluted EPS of $0.39 TEMPE, Ariz., Oct. 27, 2021

TEMPE, Ariz., Oct. 27, 2021 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the third quarter ended September 30, 2021.

Three Months Ended

Sep 30, Jun 30, Sep 30,

In millions, except EPS 2021 2021 2020

Sales $572 $545 $526

Net income^(2) $8 $7 $6

Net income - non-GAAP^(1)(2) $14 $10 $12

Diluted earnings per share^(2) $0.23 $0.20 $0.16

Diluted EPS - non-GAAP^(1)(2) $0.39 $0.27 $0.32

Operating margin^(2) 2.1 % 2.0 % 1.6 %

Operating margin - non-GAAP^(1)(2) 3.3 % 2.5 % 3.0 %

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

Results for the third quarter ended September 30, 2021 and 2020 and second^ quarter ended June 30, 2021 include the impact of approximately $1.2(2) million, $1.3 million and $0.9 million of net COVID-19 related costs, respectively.

"We continued to execute well in the face of unprecedented supply chain constraints delivering strong revenue and profit growth in the third quarter," said Jeff Benck, Benchmark's President and CEO. "Our revenues were up 5% sequentially and 9% year-over-year fueled by strong demand in Semi-Cap and high-performance Computing, and improving demand in the Industrials vertical. Our third quarter non-GAAP gross margins improved to 9.4% and non-GAAP operating margins improved 80 basis points or 32% sequentially, which is a testament to the strong operational performance of our team."

"Entering the fourth quarter, we expect that our revenue will again increase sequentially supported by Semi-Cap, Defense, and Computing strength, which we are projecting will enable double digit year-over-year revenue growth in the quarter and non-GAAP gross margins at 9% for the full year. As we look towards 2022 with our current strong demand momentum, we are expecting another year of solid growth and financial results aligned with the mid-term financial model that we set over a year ago."

Cash Conversion Cycle

Sep 30, Jun 30, Sep 30,

2021 2021 2020

Accounts receivable days 49 48 52

Contract asset days 25 26 28

Inventory days 83 75 66

Accounts payable days (70) (69) (54)

Advance payments from customers days (16) (16) (11)

Cash Conversion Cycle days 71 64 81

Third Quarter 2021 Industry Sector UpdateRevenue and percentage of sales by industry sector (in millions) was as follows.

Sep 30, Jun 30, Sep 30,

Higher-Value Markets2021 2021 2020

Medical $11821 %$10920 %$13426 %

Semi-Cap 13323 13926 99 19

A&D 10118 97 18 10520

Industrials 10819 10018 86 16

$46081 %$44582 %$42481 %



Sep 30, Jun 30, Sep 30,

Traditional Markets 2021 2021 2020

Computing $57 10 %$40 7 %$44 8 %

Telecommunications 55 9 60 11 58 11

$11219 %$10018 %$10219 %

Total $572100%$545100%$526100%

Overall, higher-value market revenues were up 4% quarter-over-quarter from growth in Industrials, A&D and Medical and 9% year-over-year from growth in Semi-Cap and Industrials. Traditional market revenues were up 12% quarter-over-quarter and up 9% year-over-year from growth in the computing sector.

Fourth Quarter 2021 Outlook

* Revenue between $560 - $610 million * Diluted GAAP earnings per share between $0.24 - $0.32 * Diluted non-GAAP earnings per share between $0.37 - $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. Guidance also assumes no material changes to end market conditions and our operations due to COVID-19.

Restructuring charges are expected to range between $4.0 million and $4.5 million in the fourth quarter and the amortization of intangibles is expected to be $1.7 million in the fourth quarter.

Third Quarter 2021 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 Wednesday, November 3, 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, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). 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 or the negative or other variations thereof. In particular, statements, express or implied, concerning future operating results, our ability to generate sales, income or cash flow, the anticipated impact of the COVID-19 pandemic, the outlook and guidance for fourth quarter 2021 results, our anticipated plans and responses to the COVID-19 pandemic, our expected revenue mix, our business strategy and strategic initiatives, our repurchases of shares of our common stock and our intentions concerning the payment of dividends, among others, are forward-looking statements. Although we believe these statements are based upon reasonable assumptions, they involve risks, uncertainties and assumptions that are beyond our 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, 2020, Part II, Item 1A of the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 and in any of our subsequent reports filed with the Securities and Exchange Commission (SEC). 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 it and the consequences for the global economy, our business and the businesses of our suppliers and customers, as well as our ability (or inability) to execute on our plans to respond to the COVID-19 pandemic. 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 us as of the date of this document, and we assume no obligation to update.

Non-GAAP Financial MeasuresThis 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 certain items ("non-GAAP") is included in the following tables attached to this document. Management discloses non-GAAP information to provide investors with additional information to analyze the Company's performance and underlying trends. Management also uses non-GAAP measures in order to better assess operating performance and help investors compare results with our previous guidance. 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. 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,

2021 2020 2021 2020

Sales $571,882$525,951$1,622,265$1,531,881

Cost of sales 518,177 479,597 1,478,420 1,407,494

Gross profit 53,705 46,354 143,845 124,387

Selling, general and 34,387 29,724 98,969 89,815 administrative expenses

Amortization of 1,596 2,368 4,793 7,120 intangible assets

Restructuring charges and 6,428 7,161 9,600 15,480 other costs

Ransomware incident related costs (recovery), (500) (1,558) (3,944) (1,305) net

Income from operations 11,794 8,659 34,427 13,277

Interest expense (1,987) (2,136) (6,215) (6,189)

Interest income 122 154 451 1,040

Other income (expense), 500 439 664 (191) net

Income before income 10,429 7,116 29,327 7,937 taxes

Income tax expense 2,364 1,201 5,976 1,577

Net income $8,065 $5,915 $23,351 $6,360

Earnings per share:

Basic $0.23 $0.16 $0.65 $0.17

Diluted $0.23 $0.16 $0.64 $0.17

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

Basic 35,423 36,467 35,806 36,565

Diluted 35,666 36,544 36,287 36,821

Benchmark Electronics, Inc. and Subsidiaries



Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)



September 30,December 31,

2021 2020

Assets

Current assets:

Cash and cash equivalents $288,567 $390,808

Restricted cash 2,630 5,182

Accounts receivable, net 311,384 309,331

Contract assets 160,194 142,779

Inventories 478,325 327,377

Other current assets 37,909 26,874

Total current assets 1,279,009 1,202,351

Property, plant and equipment, net 188,858 185,272

Operating lease right-of-use assets 102,440 79,966

Goodwill and other, net 270,059 276,646

Total assets $1,840,366 $1,744,235



Liabilities and Shareholders' Equity

Current liabilities:

Current installments of long-term debt and $7,663 $9,161 finance lease obligations

Accounts payable 401,106 282,208

Advance payments from customers 91,464 84,122

Accrued liabilities 99,936 105,645

Total current liabilities 600,169 481,136

Long-term debt and finance lease obligations, 123,510 131,051 less current installments

Operating lease liabilities 94,219 72,120

Other long-term liabilities 60,132 70,340

Shareholders' equity 962,336 989,588

Total liabilities and shareholders' equity $1,840,366 $1,744,235

Benchmark Electronics, Inc. and Subsidiaries



Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)



Nine Months Ended

September 30,

2021 2020

Cash flows from operating activities:

Net income $23,351 $6,360

Depreciation and amortization 32,963 36,939

Stock-based compensation expense 10,856 9,464

Accounts receivable, net (2,342) 16,410

Contract assets (17,415) (335)

Inventories (151,518) (37,131)

Accounts payable 114,477 (18,260)

Advance payments from customers 7,341 21,075

Other changes in working capital and other, net (19,021) (8,907)

Net cash provided by (used in) operations (1,308) 25,615



Cash flows from investing activities:

Additions to property, plant and equipment and (32,437) (29,102)software

Other investing activities, net 294 2,586

Net cash used in investing activities (32,143) (26,516)



Cash flows from financing activities:

Share repurchases (40,216) (19,329)

Net debt activity (6,458) 8,395

Other financing activities, net (20,254) (18,747)

Net cash used in financing activities (66,928) (29,681)



Effect of exchange rate changes (4,414) 1,436

Net decrease in cash and cash equivalents and (104,793) (29,146)restricted cash

Cash and cash equivalents and restricted cash at 395,990 363,956 beginning of year

Cash and cash equivalents and restricted cash at $291,197 $334,810 end of period

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

Sep 30, Jun 30, Sep 30, Sep 30,

2021 2021 2020 2021 2020

Income from operations $11,794 $10,699 $8,659 $34,427 $13,277 (GAAP)

Amortization of intangible 1,596 1,599 2,368 4,793 7,120 assets

Restructuring charges and 2,070 1,581 1,425 5,242 8,737 other costs

Impairment 4,358 - 5,736 4,358 6,743

Ransomware incident related (500) - (1,558) (3,944) (1,305) costs (recovery), net

Customer insolvency (168) (153) (796) (353) (1,149) (recovery)

Non-GAAP income $19,150 $13,726 $15,834 $44,523 $33,423 from operations



Gross Profit $53,705 $47,913 $46,354 $143,845 $124,387 (GAAP)

Customer insolvency (168) (153) (796) (353) (1,149) (recovery)

Non-GAAP gross $53,537 $47,760 $45,558 $143,492 $123,238 profit



Selling, general and $34,387 $34,034 $29,724 $98,969 $89,815 administrative expenses (GAAP)

Non-GAAP selling, general and $34,387 $34,034 $29,724 $98,969 $89,815 administrative expenses



Net income $8,065 $7,369 $5,915 $23,351 $6,360 (GAAP)

Amortization of intangible 1,596 1,599 2,368 4,793 7,120 assets

Restructuring charges and 2,070 1,581 1,425 5,242 8,737 other costs

Impairment 4,358 - 5,736 4,358 6,743

Ransomware incident related (500) - (1,558) (3,944) (1,305) costs (recovery), net

Customer insolvency (168) (153) (796) (353) (1,149) (recovery)

Income tax (1,491) (633) (1,458) (1,955) (4,123) adjustments^(1)

Non-GAAP net $13,930 $9,763 $11,632 $31,492 $22,383 income



Diluted earnings per share:

Diluted (GAAP) $0.23 $0.20 $0.16 $0.64 $0.17

Diluted $0.39 $0.27 $0.32 $0.87 $0.61 (Non-GAAP)



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

Diluted (GAAP) 35,666 36,061 36,544 36,287 36,821

Diluted 35,666 36,061 36,544 36,287 36,821 (Non-GAAP)



Net cash provided by $(41,581)$3,660 $5,697 $(1,308) $25,615 (used in) operations

Additions to property, plant (13,818) (12,197) (5,812) (32,437) (29,102)and equipment and software

Free cash flow $(55,399)$(8,537) $(115) $(33,745)$(3,487) (used)

(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.