Benchmark Electronics, Inc.
"We are pleased with our operating results for the second quarter," said Cary T. Fu, the Company's Chief Executive Officer. "We saw a number of highlights this quarter, notably continued strength in new program bookings, solid performance across our teams and improvements in cash flow management."
"The EMS industry is undergoing change and continues to evolve," Fu continued. "Benchmark anticipated the market evolution years ago, and today, we are seeing the changes take place. We believe Benchmark remains well positioned for profitable growth as the industry is redefined."
Second Quarter 2007 Financial Highlights -- Operating margin for the second quarter was 3.7% on a GAAP basis and was 4.2%, excluding restructuring charges, integration costs, amortization of intangibles and the impact of stock-based compensation expense. -- Cash flows provided by operating activities for the second quarter were approximately $66 million. -- Cash and short-term investments balance was $318 million at June 30, 2007. -- Total debt outstanding was $13 million. -- Accounts receivable was $501 million at June 30, 2007; calculated days sales outstanding were 60 days. -- Inventory was $385 million at June 30, 2007; inventory turns were 7.3 times. Third Quarter and Full Year 2007 Guidance
We now expect a more moderate demand environment in the third quarter than previously anticipated. It will likely be a transitional quarter for several of the programs we are ramping. Looking forward, we anticipate new bookings and new program ramps to provide very strong growth for the fourth quarter. The softer demand environment during the third quarter should result in only a slight overall impact to our full year revenue and earnings guidance.
Sales for the third quarter of 2007 are expected to be between $730 million and $770 million. Diluted earnings per share for the third quarter, excluding restructuring charges, integration costs, amortization of intangibles and the impact of stock-based compensation expense, are expected to be between $0.38 and $0.42.
Sales for the full year are expected to be between $3.0 billion and $3.1 billion. Diluted earnings per share for 2007, excluding restructuring charges, integration costs, amortization of intangibles and the impact of stock-based compensation expense, are expected to be between $1.58 and $1.66.
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. Our forward-looking statements may be deemed to include, among other things, the statement that "The EMS industry is undergoing change and continues to evolve ... We believe Benchmark remains well positioned for profitable growth as the industry is redefined.", and our sales and earnings per share guidance for the third quarter and full year of 2007, as well as other statements, express or implied, concerning: future operating results or the ability to generate sales, income or cash flow; Benchmark's business and growth strategies, including expected internal growth and performance goals; and the anticipated effects of any developments or events on financial results. 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, and customer actions.
All forward-looking statements included in this release are based upon information available to Benchmark as of the date of the release, and Benchmark assumes no obligation to update any such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. Persons are advised to consult further disclosures on related subjects in Benchmark's Form 10-K for the year ended December 31, 2006, in its other filings with the Securities and Exchange Commission and in its press releases.
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. Benchmark's global operations include 25 facilities in ten 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 Reconciliation of GAAP to Non-GAAP Financial Results (Amounts in Thousands, Except Per Share Data) (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Income from operations (GAAP) $27,624 $32,630 $55,072 $58,857 Stock-based compensation 1,184 1,177 1,812 1,662 Restructuring charges and integration costs 2,205 1,261 5,550 4,030 Amortization of intangibles 447 - 894 - Non-GAAP income from operations $31,460 $35,068 $63,328 $64,549 Net income (GAAP) $25,921 $27,524 $50,397 $54,046 Stock-based compensation, net of tax 803 835 1,245 1,207 Restructuring charges and integration costs, net of tax 1,551 1,041 4,168 3,594 Amortization of intangibles, net of tax 292 - 614 - UK investment tax benefit - - - (4,760) Non-GAAP net income $28,567 $29,400 $56,424 $54,087 Numerator for basic earnings per share - net income (GAAP) $25,921 $27,524 $50,397 $54,046 Interest expense on convertible debt, net of tax 32 - 147 - Numerator for diluted earnings per share (GAAP) $25,953 $27,524 $50,544 $54,046 Earnings per share: (GAAP) Basic $0.36 $0.43 $0.70 $0.84 Diluted $0.35 $0.42 $0.69 $0.83 Numerator for basic earnings per share - net income (Non-GAAP) $28,567 $29,400 $56,424 $54,087 Interest expense on convertible debt, net of tax 32 - 147 - Numerator for diluted earnings per share (Non-GAAP) $28,599 $29,400 $56,571 $54,087 Earnings per share: (Non-GAAP) Basic $0.39 $0.46 $0.78 $0.85 Diluted $0.39 $0.45 $0.77 $0.83 Weighted average shares used in calculating earnings per share: Basic 72,540 64,320 71,991 63,963 Diluted 73,346 65,273 73,026 65,041 Benchmark Electronics, Inc. and Subsidiaries Consolidated Statements of Income (Amounts in Thousands, Except Per Share Data) (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Net sales $756,295 $749,171 $1,508,777 $1,400,415 Cost of sales 701,800 696,871 1,399,794 1,302,749 Gross profit 54,495 52,300 108,983 97,666 Selling, general and administrative expenses 24,219 18,409 47,467 34,779 Amortization of intangibles 447 - 894 - Restructuring charges and integration costs 2,205 1,261 5,550 4,030 Income from operations 27,624 32,630 55,072 58,857 Other income (expense): Interest expense (564) (97) (1,375) (183) Other 3,587 1,981 5,302 3,670 Total other income, net 3,023 1,884 3,927 3,487 Income before income taxes 30,647 34,514 58,999 62,344 Income tax expense 4,726 6,990 8,602 8,298 Net income $25,921 $27,524 $50,397 $54,046 Numerator for basic earnings per share - net income $25,921 $27,524 $50,397 $54,046 Interest expense on convertible debt, net of tax 32 - 147 - Numerator for diluted earnings per share $25,953 $27,524 $50,544 $54,046 Denominator for basic earnings per share - weighted average number of common shares outstanding during the period 72,540 64,320 71,991 63,963 Incremental common shares attributable to exercise of outstanding equity instruments 806 953 1,035 1,078 Denominator for diluted earnings per share 73,346 65,273 73,026 65,041 Earnings per share: Basic $0.36 $0.43 $0.70 $0.84 Diluted $0.35 $0.42 $0.69 $0.83 Benchmark Electronics, Inc. and Subsidiaries Condensed Consolidated Balance Sheet June 30, 2007 (Amounts in Thousands) (UNAUDITED) Assets Current assets: Cash and cash-equivalents $161,331 Short-term investments 157,135 Accounts receivable, net 500,859 Inventories, net 384,557 Other current assets 103,020 Total current assets 1,306,902 Property, plant and equipment, net 154,111 Other assets, net 28,233 Goodwill, net 288,875 Total assets $1,778,121 Liabilities and Shareholders' Equity Current liabilities: Current installments of long-term debt and capital lease obligations $619 Convertible debt - Accounts payable 369,105 Other current liabilities 65,902 Total current liabilities 435,626 Long-term debt and capital lease obligations, less current installments 12,350 Other long-term liabilities 42,128 Shareholders' equity 1,288,017 Total liabilities and shareholders' equity $1,778,121
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SOURCE: Benchmark Electronics, Inc.
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