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.
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.
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
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SOURCE: Benchmark Electronics, Inc.
CONTACT: Ellen M. Sykora, Investor Relations of Benchmark Electronics,
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