Benchmark Electronics, Inc.
Sales for the year ended December 31, 2006 were $2.9 billion, a 29% increase from $2.3 billion in the previous year. Net income for the year ended December 31, 2006 was $111.7 million, or $1.71 per diluted share. In the prior year, net income was $80.6 million, or $1.25 per diluted share. Excluding restructuring charges, the impact of stock-based compensation expense and a tax benefit resulting from the closure of our UK facility, the Company would have reported net income of $113.1 million, or $1.74 per diluted share, in 2006.
"We are pleased with our performance in the fourth quarter. We had a solid finish to 2006 and achieved record annual sales and earnings," stated Benchmark's CEO Cary T. Fu. "Our teams have delivered strong revenue growth for the past five years."
Fourth Quarter 2006 Financial Highlights -- Operating margin for the fourth quarter was 4.3% on a GAAP basis and was 4.5%, excluding restructuring charges and the impact of stock-based compensation expense. -- Cash flows used in operating activities for the fourth quarter were $28 million. -- Cash and short-term investments balance at December 31, 2006 of $224 million. -- No debt outstanding. -- Accounts receivable balance at December 31, 2006 of $463 million; calculated days sales outstanding were 57 days. -- Inventory of $420 million at December 31, 2006, a decrease of $112 million compared to September 30; inventory turns were 6.5 times. -- Effective tax rate for the full year 2006 of 15.2% compared to 23.8% in 2005. 2007 Outlook
The outlook for Benchmark remains positive moving into fiscal 2007. A moderation in end market demands and growth rates is expected when compared to 2006. For 2007, including the impact of the acquisition of Pemstar, we expect top line growth of 12-15% for the year and earnings growth in the range of 15- 20%, excluding integration costs and the impact of stock-based compensation expense.
Specifically, sales for the first quarter of 2007 are expected to be between $735 million and $765 million. Diluted earnings per share for the first quarter, excluding integration costs and the impact of stock-based compensation expense, are expected to be between $0.37 and $0.42.
Non-GAAP Financial Measures
This press release includes financial measures for earnings and earnings per share that excludes certain items and therefore are not in accordance with generally accepted accounting principles (GAAP). A detailed reconciliation between the GAAP results and results excluding special items (non-GAAP) is included at the end of this press release. By disclosing this non-GAAP information, management intends to provide investors with additional information to further analyze the company's performance and underlying trends. Management utilizes a measure of net income and earnings per share on a non-GAAP basis that excludes certain items to better assess operating performance and to help investors compare our results with our previous guidance.
Non-GAAP information is not necessarily comparable to Non-GAAP information of 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 measures of our profitability or liquidity. Users of this financial information should consider the types of events and transactions for which adjustments have been made.
This news release contains certain forward-looking statements within the scope of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words "expect," "estimate," "anticipate," "predict," and similar expressions, and the negatives of such expressions, are intended to identify forward-looking statements. In particular, statements, express or implied, concerning future operating results or the ability to generate sales, income or cash flow are forward-looking statements. Although Benchmark believes that these statements are based upon reasonable assumptions, such statements involve risks, uncertainties and assumptions, including but not limited to industry and economic conditions, customer actions and the other factors discussed in Benchmark's Form 10-K for the year ended December 31, 2005 and its other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.
Benchmark Electronics, Inc. is in the business of manufacturing electronics and provides its services to original equipment manufacturers of computers and related products for business enterprises, medical devices, industrial control equipment, testing and instrumentation products, and telecommunication equipment. With the acquisition of Pemstar, Benchmark's global operations now include 24 facilities in nine countries. Benchmark's Common Shares trade on the New York Stock Exchange under the symbol BHE.
A conference call hosted by Benchmark management will be held today at 10:00 am (Central time) to discuss the financial results of the Company and its future outlook. This call will be broadcast via the Internet and may be accessed by logging on to our website at http://www.bench.com/.
Benchmark Electronics, Inc. and Subsidiaries Consolidated Statements of Income (Amounts in Thousands, Except Per Share Data) (UNAUDITED) Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005 Net sales $737,340 $625,374 $2,907,304 $2,257,225 Cost of sales 687,742 580,307 2,707,781 2,095,623 Gross profit 49,598 45,067 199,523 161,602 Selling, general and administrative expenses 17,312 16,015 69,299 62,322 Restructuring charges 245 - 4,723 - Income from operations 32,041 29,052 125,501 99,280 Other income (expense): Interest expense (86) (92) (354) (330) Other 1,102 2,176 6,610 6,864 Total other income, net 1,016 2,084 6,256 6,534 Income before income taxes 33,057 31,136 131,757 105,814 Income tax expense 4,762 6,481 20,080 25,225 Net income $28,295 $24,655 $111,677 $80,589 Denominator for basic earnings per share - weighted average number of common shares outstanding during the period 64,705 62,985 64,306 62,682 Incremental common shares attributable to exercise of outstanding dilutive options 692 1,355 815 1,597 Denominator for diluted earnings per share 65,397 64,340 65,121 64,279 Earnings per share: Basic $0.44 $0.39 $1.74 $1.29 Diluted $0.43 $0.38 $1.71 $1.25 Benchmark Electronics, Inc. and Subsidiaries Condensed Consolidated Balance Sheet December 31, 2006 (Amounts in Thousands) (UNAUDITED) Assets Current assets: Cash and cash-equivalents $123,872 Short-term investments 100,460 Accounts receivable, net 462,953 Inventories, net 420,347 Other current assets 62,978 Total current assets 1,170,610 Property, plant and equipment, net 110,912 Other assets, net 11,599 Goodwill, net 112,999 Total assets $1,406,120 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $335,470 Other current liabilities 74,248 Total current liabilities 409,718 Other long-term liabilities 11,380 Shareholders' equity 985,022 Total liabilities and shareholders' equity $1,406,120 Benchmark Electronics, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Financial Results Three Months and Year Ended December 31, 2006 (Amounts in Thousands, Except Per Share Data) (UNAUDITED) Three Months Ended Year Ended December 31, 2006 December 31, 2006 Income from operations (GAAP) $32,041 $125,501 Stock-based compensation 669 2,952 Restructuring charges 245 4,723 Non-GAAP income from operations $32,955 $133,176 Net income (GAAP) $28,295 $111,677 Stock-based compensation, net of tax 500 2,167 Restructuring charges, net of tax 191 4,044 UK investment tax benefit - (4,760) Non-GAAP net income $28,986 $113,128 Earnings per share: (GAAP) Basic $0.44 $1.74 Diluted $0.43 $1.71 Earnings per share: (Non-GAAP) Basic $0.45 $1.76 Diluted $0.44 $1.74 Weighted average shares used in calculating earnings per share: Basic 64,705 64,306 Diluted 65,397 65,121
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SOURCE: Benchmark Electronics, Inc.
CONTACT: Ellen M. Sykora, Investor Relations of Benchmark Electronics,
Web site: http://www.bench.com/