Benchmark Electronics, Inc.
Excluding amortization of intangibles and the impact of stock-based compensation costs, the Company would have reported net income of $24 million, or $0.35 per diluted share, in the second quarter of 2008. Excluding restructuring charges, integration costs, amortization of intangibles and the impact of stock-based compensation costs, the Company would have reported net income of $29 million, or $0.39 per diluted share, in the second quarter of 2007.
"Our focus in this environment is on strong operational execution and solid program bookings," said Cary T. Fu, the Company's Chief Executive Officer. "Operationally our execution was solid during the second quarter, although revenues were impacted by maturing programs declining at a more rapid pace than our new programs ramped, and by the impact of a soft macro environment. We believe this is a near-term challenge and that we are well positioned for growth, given the number of new programs that we have won."
Second Quarter 2008 Financial Highlights
-- Operating margin for the second quarter was 3.4% on a GAAP basis and was 3.6%, excluding amortization of intangibles and the impact of stock-based compensation expense.
-- Cash flows provided by operating activities for the second quarter were approximately $2 million.
-- Cash, short-term and long-term investments balance was $344 million at June 30, 2008. Long-term investments consist of $55 million of auction rate securities.
-- Accounts receivable was $472 million at June 30, 2008; calculated days sales outstanding were 62 days.
-- Inventory was $393 million at June 30, 2008; inventory turns were 6.5 times.
-- Repurchases of common shares for the second quarter totaled $30 million. On July 21, 2008, the Company completed the repurchase of 6.8 million shares under the $125 million share repurchase program approved in July 2007.
Third Quarter 2008 Outlook
Looking forward, sales for the third quarter of 2008 are expected to range from $650 million to $690 million. Diluted earnings per share for the third quarter, excluding amortization of intangibles and the impact of stock-based compensation expense, are expected to be between $0.32 and $0.37.
Non-GAAP Financial Measures
This press release includes financial measures for earnings and earnings per share that exclude 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.
The non-GAAP information included in this press release 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 believe this is a near-term challenge and that we are well positioned for growth, given the number of new programs that we have won", and our sales and earnings per share guidance for the third quarter of 2008, as well as other statements, express or implied, concerning: future operating results or the ability to generate sales, income or cash flow; and Benchmark's business and growth strategies, including expected internal growth and performance goals. 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, 2007, in its other filings with the Securities and Exchange Commission and in its press releases.
Additional Information
Benchmark Electronics, Inc. provides electronics manufacturing, design and engineering 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 20 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, 2008 2007 2008 2007 Income from operations (GAAP) $22,918 $27,624 $44,411 $55,072 Stock-based compensation 1,260 1,184 2,048 1,812 Restructuring charges and integration costs -- 2,205 -- 5,550 Amortization of intangibles 447 447 894 894 Non-GAAP income from operations $24,625 $31,460 $47,353 $63,328 Net income (GAAP) $22,432 $25,921 $45,051 $50,397 Stock-based compensation, net of tax 877 803 1,434 1,245 Restructuring charges and integration costs, net of tax -- 1,551 -- 4,168 Amortization of intangibles, net of tax 285 292 570 614 Non-GAAP net income $23,594 $28,567 $47,055 $56,424 Numerator for basic earnings per share -- net income (GAAP) $22,432 $25,921 $45,051 $50,397 Interest expense on convertible debt, net of tax -- 32 -- 147 Numerator for diluted earnings per share (GAAP) $22,432 $25,953 $45,051 $50,544 Earnings per share: (GAAP) Basic $0.33 $0.36 $0.66 $0.70 Diluted $0.33 $0.35 $0.66 $0.69 Numerator for basic earnings per share -- net income (Non-GAAP) $23,594 $28,567 $47,055 $56,424 Interest expense on convertible debt, net of tax -- 32 -- 147 Numerator for diluted earnings per share (Non-GAAP) $23,594 $28,599 $47,055 $56,571 Earnings per share: (Non-GAAP) Basic $0.35 $0.39 $0.69 $0.78 Diluted $0.35 $0.39 $0.69 $0.77 Weighted average shares used in calculating earnings per share: Basic 67,541 72,540 68,436 71,991 Diluted 67,714 73,346 68,672 73,026 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, 2008 2007 2008 2007 Net sales $682,416 $756,295 $1,366,725 $1,508,777 Cost of sales 636,389 701,800 1,275,483 1,399,794 Gross profit 46,027 54,495 91,242 108,983 Selling, general and administrative expenses 22,662 24,219 45,937 47,467 Amortization of intangibles 447 447 894 894 Restructuring charges and integration costs -- 2,205 -- 5,550 Income from operations 22,918 27,624 44,411 55,072 Other income (expense): Interest income 1,986 2,700 5,229 4,449 Interest expense (359) (564) (724) (1,375) Other 709 887 2,337 853 Total other income, net 2,336 3,023 6,842 3,927 Income before income taxes 25,254 30,647 51,253 58,999 Income tax expense 2,822 4,726 6,202 8,602 Net income $22,432 $25,921 $45,051 $50,397 Numerator for basic earnings per share -- net income $22,432 $25,921 $45,051 $50,397 Interest expense on convertible debt, net of tax -- 32 -- 147 Numerator for diluted earnings per share $22,432 $25,953 $45,051 $50,544 Denominator for basic earnings per share -- weighted average number of common shares outstanding during the period 67,541 72,540 68,436 71,991 Incremental common shares attributable to exercise of outstanding equity instruments 173 806 236 1,035 Denominator for diluted earnings per share 67,714 73,346 68,672 73,026 Earnings per share: Basic $0.33 $0.36 $0.66 $0.70 Diluted $0.33 $0.35 $0.66 $0.69 Benchmark Electronics, Inc. and Subsidiaries Condensed Consolidated Balance Sheet June 30, 2008 (Amounts in Thousands) (UNAUDITED) Assets Current assets: Cash and cash-equivalents $288,015 Short-term investments 1,000 Accounts receivable, net 472,183 Inventories, net 393,020 Other current assets 58,818 Total current assets 1,213,036 Long-term investments 55,484 Property, plant and equipment, net 145,209 Other assets, net 27,337 Goodwill, net 285,125 Total assets $1,726,191 Liabilities and Shareholders' Equity Current liabilities: Current installments of long-term debt and capital lease obligations $333 Accounts payable 339,715 Accrued liabilities 55,051 Total current liabilities 395,099 Long-term debt and capital lease obligations, less current installments 12,000 Other long-term liabilities 44,505 Shareholders' equity 1,274,587 Total liabilities and shareholders' equity $1,726,191
First Call Analyst:
FCMN Contact:
SOURCE: Benchmark Electronics, Inc.
CONTACT: Ellen M. Dylla, Investor Relations of Benchmark Electronics,
Inc., +1-979-849-6550
Web site: http://www.bench.com/