Benchmark Electronics, Inc.
Excluding restructuring charges, integration costs, amortization of intangibles, the impact of stock-based compensation costs and the tax benefit, the Company would have reported net income of $17 million, or $0.24 per diluted share, in the third quarter of 2007. Excluding restructuring charges and the impact of stock-based compensation costs, the Company would have reported net income of $30 million, or $0.46 per diluted share, in the third quarter of 2006.
"We are clearly disappointed with our revenue performance for the third quarter," said Cary T. Fu, the Company's Chief Executive Officer. "However, as our fourth quarter guidance reflects, we continue to believe that Benchmark is well positioned for the future based on our operating focus and execution, new program bookings and continued strong cash flows from operations."
Third Quarter 2007 Financial Highlights
-- Operating margin for the third quarter was 2.2% on a GAAP basis and was
2.6%, excluding restructuring charges, integration costs, amortization
of intangibles and the impact of stock-based compensation expense.
-- Selling, general and administrative expenses for the third quarter were
$22 million, a decrease of 9.2% from the second quarter of 2007.
-- Cash flows provided by operating activities for the third quarter were
approximately $66 million.
-- Cash and short-term investments balance was $379 million at September
30, 2007.
-- Total debt outstanding was $13 million.
-- Accounts receivable was $451 million at September 30, 2007; calculated
days sales outstanding were 60 days.
-- Inventory was $382 million at September 30, 2007; inventory turns were
6.6 times.
-- Repurchases of common shares through October 24, 2007 were $30 million.
Fourth Quarter 2007 Guidance
Looking forward, sales for the fourth quarter of 2007 are expected to be between $700 million and $740 million. Diluted earnings per share for the fourth quarter, excluding restructuring charges, integration costs, amortization of intangibles and the impact of stock-based compensation expense, are expected to be between $0.32 and $0.38.
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.
Forward-Looking Statements
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 "we continue to believe that Benchmark is well positioned for the future based on our operating focus and execution, new program bookings and continued strong cash flows from operations", and our sales and earnings per share guidance for the fourth quarter 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.
Additional Information
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 Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Income from operations (GAAP) $14,880 $34,603 $69,952 $93,460
Stock-based compensation 628 621 2,440 2,283
Restructuring charges and
integration costs 1,451 448 7,001 4,478
Amortization of intangibles 447 -- 1,341 -
Non-GAAP income from operations $17,406 $35,672 $80,734 $100,221
Net income (GAAP) $22,009 $29,336 $72,406 $83,382
Stock-based compensation, net of tax 443 460 1,688 1,667
Restructuring charges and
integration costs, net of tax 1,043 259 5,211 3,853
Amortization of intangibles,
net of tax 291 -- 905 --
Income tax benefit (6,481) -- (6,481) (4,760)
Non-GAAP net income $17,305 $30,055 $73,729 $84,142
Numerator for basic earnings
per share - net income (GAAP) $22,009 $29,336 $72,406 $83,382
Interest expense on convertible
debt, net of tax -- -- 147 --
Numerator for diluted earnings
per share (GAAP) $22,009 $29,336 $72,553 $83,382
Earnings per share: (GAAP)
Basic $0.30 $0.45 $1.00 $1.30
Diluted $0.30 $0.45 $0.99 $1.28
Numerator for basic earnings
per share - net income (Non-GAAP) $17,305 $30,055 $73,729 $84,142
Interest expense on convertible
debt, net of tax -- -- 147 --
Numerator for diluted earnings
per share (Non-GAAP) $17,305 $30,055 $73,876 $84,142
Earnings per share: (Non-GAAP)
Basic $0.24 $0.47 $1.02 $1.31
Diluted $0.24 $0.46 $1.01 $1.29
Weighted average shares used in
calculating earnings per share:
Basic 72,951 64,585 72,314 64,172
Diluted 73,626 65,492 73,313 65,203
Benchmark Electronics, Inc. and Subsidiaries
Consolidated Statements of Income
(Amounts in Thousands, Except Per Share Data)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Net sales $672,595 $769,549 $2,181,372 $2,169,964
Cost of sales 633,818 717,290 2,033,612 2,020,039
Gross profit 38,777 52,259 147,760 149,925
Selling, general and
administrative expenses 21,999 17,208 69,466 51,987
Amortization of intangibles 447 -- 1,341 --
Restructuring charges and
integration costs 1,451 448 7,001 4,478
Income from operations 14,880 34,603 69,952 93,460
Other income (expense):
Interest expense (411) (85) (1,786) (268)
Other 3,831 1,838 9,133 5,508
Total other income, net 3,420 1,753 7,347 5,240
Income before income taxes 18,300 36,356 77,299 98,700
Income tax expense (benefit) (3,709) 7,020 4,893 15,318
Net income $22,009 $29,336 $72,406 $83,382
Numerator for basic earnings
per share - net income $22,009 $29,336 $72,406 $83,382
Interest expense on convertible
debt, net of tax -- -- 147 --
Numerator for diluted earnings
per share $22,009 $29,336 $72,553 $83,382
Denominator for basic earnings
per share - weighted-average
number of common shares
outstanding during the period 72,951 64,585 72,314 64,172
Incremental common shares
attributable to exercise of
outstanding equity instruments 675 907 999 1,031
Denominator for diluted earnings
per share 73,626 65,492 73,313 65,203
Earnings per share:
Basic $0.30 $0.45 $1.00 $1.30
Diluted $0.30 $0.45 $0.99 $1.28
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
September 30, 2007
(Amounts in Thousands)
(UNAUDITED)
Assets
Current assets:
Cash and cash-equivalents $163,581
Short-term investments 215,440
Accounts receivable, net 450,703
Inventories, net 382,474
Other current assets 99,728
Total current assets 1,311,926
Property, plant and equipment, net 150,905
Other assets, net 29,138
Goodwill, net 283,386
Total assets $1,775,355
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt
and capital lease obligations $600
Accounts payable 344,676
Accrued liabilities 57,930
Total current liabilities 403,206
Long-term debt and capital lease obligations,
less current installments 12,179
Other long-term liabilities 44,718
Shareholders' equity 1,315,252
Total liabilities and shareholders' equity $1,775,355
First Call Analyst:
FCMN Contact: james.walker@bench.com
SOURCE: Benchmark Electronics, Inc.
CONTACT: Ellen M. Sykora, Investor Relations of Benchmark Electronics,
Inc., +1-979-849-6550
Web site: http://www.bench.com/
