Benchmark Electronics, Inc.
Excluding restructuring charges, amortization of intangibles, the impact of stock-based compensation costs and a discrete tax benefit relating to a previously closed facility, the Company would have reported net income of $21 million, or $0.32 per diluted share, in the third quarter of 2008. Excluding restructuring charges, integration costs, amortization of intangibles, the impact of stock-based compensation costs and a discrete tax benefit relating to a previously closed facility, the Company would have reported net income of $17 million, or $0.24 per diluted share, in the third quarter of 2007.
"The recent deterioration and unprecedented volatility in end market demands which began in late September resulted in revenue softness that began to materialize in the third quarter," said Cary T. Fu, the Company's Chief Executive Officer. "Generally, I am pleased with our overall operating performance during the quarter and am confident in the ability of our organization to manage through, and take advantage of, the additional outsourcing opportunities that this environment may bring. Our revenue diversification and new program wins have been strong, but not strong enough to allow us to sidestep the current macro downturn."
Third Quarter 2008 Financial Highlights -- Operating margin for the third quarter was 3.5% on a GAAP basis and was 3.6%, excluding restructuring charges, amortization of intangibles and the impact of stock-based compensation expense. -- Cash flows provided by operating activities for the third quarter were approximately $76 million. -- Cash and long-term investments totaled $389 million at September 30, 2008. Long-term investments consist of $48 million of auction rate securities. -- Accounts receivable was $415 million at September 30, 2008; calculated days sales outstanding were 58 days. -- Inventory was $363 million at September 30, 2008; inventory turns were 6.6 times. -- Repurchases of common shares for the third quarter totaled $20 million or 1.3 million shares. Fourth Quarter 2008 Outlook
Recent demand weakness is expected to continue into the fourth quarter of 2008. While it is not possible to forecast with precision the specific impacts to each of the industries we serve, it is anticipated that the slowdown in technology spending will continue. Sales for the fourth quarter of 2008 are expected to range from $600 million to $640 million. To maintain consistency with published analysts' reports, earnings guidance going forward will only exclude restructuring charges and will no longer exclude the impact of stock-based compensation and amortization of intangibles. Diluted earnings per share for the fourth quarter, excluding restructuring charges, are expected to be between $0.25 and $0.32.
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.
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 "it is anticipated that the slowdown in technology spending will continue", that we are "confident in the ability of our organization to not only manage through, but to take advantage of, the additional outsourcing opportunities that this environment may bring", and our sales and diluted earnings per share, excluding restructuring charges, guidance for the fourth 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.
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 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, 2008 2007 2008 2007 Income from operations (GAAP) $22,267 $14,880 $ 66,678 $ 69,952 Stock-based compensation 384 628 2,432 2,440 Restructuring charges and integration costs 253 1,451 253 7,001 Amortization of intangibles 446 447 1,340 1,341 Non-GAAP income from operations $23,350 $17,406 $ 70,703 $ 80,734 Net income (GAAP) $23,925 $22,009 $ 68,976 $ 72,406 Stock-based compensation, net of tax 306 443 1,740 1,688 Restructuring charges and integration costs, net of tax 228 1,043 228 5,211 Amortization of intangibles, net of tax 284 291 854 905 Income tax benefit (3,440) (6,481) (3,440) (6,481) Non-GAAP net income $21,303 $17,305 $ 68,358 $ 73,729 Numerator for basic earnings per share - net income (GAAP) $23,925 $22,009 $ 68,976 $ 72,406 Interest expense on convertible debt, net of tax -- -- -- 147 Numerator for diluted earnings per share (GAAP) $23,925 $22,009 $ 68,976 $ 72,553 Earnings per share: (GAAP) Basic $ 0.36 $ 0.30 $ 1.02 $ 1.00 Diluted $ 0.36 $ 0.30 $ 1.01 $ 0.99 Numerator for basic earnings per share - net income (Non-GAAP) $21,303 $17,305 $ 68,358 $ 73,729 Interest expense on convertible debt, net of tax -- -- -- 147 Numerator for diluted earnings per share (Non-GAAP) $21,303 $17,305 $ 68,358 $ 73,876 Earnings per share: (Non-GAAP) Basic $ 0.32 $ 0.24 $ 1.01 $ 1.02 Diluted $ 0.32 $ 0.24 $ 1.00 $ 1.01 Weighted average shares used in calculating earnings per share: Basic 66,268 72,951 67,693 72,314 Diluted 66,630 73,626 68,251 73,313 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, 2008 2007 2008 2007 Net sales $ 641,672 $ 672,595 $ 2,008,397 $ 2,181,372 Cost of sales 597,376 633,818 1,872,859 2,033,612 Gross profit 44,296 38,777 135,538 147,760 Selling, general and administrative expenses 21,329 21,999 67,266 69,466 Amortization of intangibles 446 447 1,340 1,341 Restructuring charges and integration costs 253 1,451 253 7,001 Income from operations 22,268 14,880 66,679 69,952 Other income (expense): Interest income 1,680 3,106 6,909 7,555 Interest expense (378) (411) (1,102) (1,786) Other income (expense) (790) 725 1,547 1,578 Total other income, net 512 3,420 7,354 7,347 Income before income taxes 22,780 18,300 74,033 77,299 Income tax expense (benefit) (1,145) (3,709) 5,057 4,893 Net income $ 23,925 $ 22,009 $ 68,976 $ 72,406 Numerator for basic earnings per share - net income $ 23,925 $ 22,009 $ 68,976 $ 72,406 Interest expense on convertible debt, net of tax -- -- -- 147 Numerator for diluted earnings per share $ 23,925 $ 22,009 $ 68,976 $ 72,553 Denominator for basic earnings per share - weighted average number of common shares outstanding during the period 66,268 72,951 67,693 72,314 Incremental common shares attributable to restricted shares and the exercise of outstanding equity instruments 362 675 558 999 Denominator for diluted earnings per share 66,630 73,626 68,251 73,313 Earnings per share: Basic $ 0.36 $ 0.30 $ 1.02 $ 1.00 Diluted $ 0.36 $ 0.30 $ 1.01 $ 0.99 Benchmark Electronics, Inc. and Subsidiaries Condensed Consolidated Balance Sheet September 30, 2008 (Amounts in Thousands) (UNAUDITED) Assets Current assets: Cash and cash-equivalents $ 341,361 Accounts receivable, net 415,455 Inventories, net 362,692 Other current assets 51,204 Total current assets 1,170,712 Long-term investments 47,907 Property, plant and equipment, net 141,745 Other assets, net 25,810 Goodwill, net 283,194 Total assets $1,669,368 Liabilities and Shareholders' Equity Current liabilities: Current installments of long-term debt and capital lease obligations $ 273 Accounts payable 289,725 Accrued liabilities 58,697 Total current liabilities 348,695 Long-term debt and capital lease obligations, less current installments 11,749 Other long-term liabilities 41,501 Shareholders' equity 1,267,423 Total liabilities and shareholders' equity $1,669,368
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SOURCE: Benchmark Electronics, Inc.
CONTACT: Ellen M. Dylla, Investor Relations of Benchmark Electronics,
Web Site: http://www.bench.com/