ANGLETON, Texas, Oct. 26 /PRNewswire-FirstCall/ -- Benchmark Electronics, Inc. (NYSE: BHE), a leading contract manufacturing provider, announced sales of $614 million for the quarter ended September 30, 2010, a 20% increase compared to $510 million for the same quarter in the prior year. The Company reported third quarter net income of $23 million, or $0.37 per diluted share. In the comparable period in 2009, the Company reported net income of $16 million, or $0.25 per diluted share. Excluding special items, the Company would have reported $0.38 per diluted share for the third quarter of 2010, which represented a 41% increase when compared to $0.27 per diluted share, in the third quarter of 2009. The reconciliation of GAAP to Non-GAAP financial results at the end of this press release includes a description of our special items.
"We are pleased with another quarter of solid operating results, which were driven by strong revenue growth and excellent execution," said Cary T. Fu, the Company's Chief Executive Officer. "Strategic initiatives expanding our precision technology services and diversification of our customer base have strengthened our business model and further enhanced our margin potential."
Third Quarter 2010 Financial Highlights
- Operating margin for the third quarter was 4.0% excluding special items and 3.9% on a GAAP basis.
- Cash flows provided by operating activities for the third quarter were approximately $14 million.
- Cash and long-term investments balance was $383 million at September 30, 2010. Long-term investments consist of $36 million of auction rate securities.
- Accounts receivable was $427 million at September 30, 2010; calculated days sales outstanding were 63 days.
- Inventory was $381 million at September 30, 2010; inventory turns were 5.9 times.
- Repurchases of common shares for the third quarter totaled $21 million or 1.3 million shares.
Industry Sectors
The following table sets forth sales by industry sector for the quarters ended September 30, 2010, June 30, 2010 and March 31, 2010.
September 30, | June 30, | March 31, | ||
2010 | 2010 | 2010 | ||
Computers and related products for business enterprises | 31% | 32% | 32% | |
Telecommunications equipment | 22% | 23% | 23% | |
Industrial control equipment | 26% | 25% | 24% | |
Medical devices | 10% | 10% | 12% | |
Testing and instrumentation products | 11% | 10% | 9% | |
Fourth Quarter 2010 Outlook
Sales for the fourth quarter of 2010 are expected to range from $590 million to $630 million. Diluted earnings per share for the fourth quarter, excluding special items, are expected to be between $0.33 and $0.37. This guidance reflects a recent increase in cautiousness from our customers regarding the economic climate.
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 "strategic initiatives expanding our precision technology services and diversification of our customer base have strengthened our business model and further enhanced our margin potential", our sales and diluted earnings per share (excluding special items) guidance for the fourth quarter of 2010, 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. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.
All forward-looking statements included in this release are based upon information available to Benchmark as of the date of this release, and Benchmark assumes no obligation to update any such forward-looking statements. Persons are advised to consult further disclosures on related subjects in Benchmark's Form 10-K for the year ended December 31, 2009, in its other filings with the Securities and Exchange Commission and in its press releases.
Additional Information
Benchmark Electronics, Inc. provides integrated 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 23 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, | ||||
2010 | 2009 | 2010 | 2009 | ||
Income from operations (GAAP) | $23,890 | $11,674 | $68,884 | $34,199 | |
Restructuring charges | 452 | 3,754 | 2,149 | 5,901 | |
Non-GAAP income from operations | $24,342 | $15,428 | $71,033 | $40,100 | |
Net income (GAAP) | $22,998 | $16,416 | $62,025 | $37,209 | |
Restructuring charges, net of tax | 365 | 3,647 | 1,283 | 5,343 | |
Discrete US tax benefit | — | (2,668) | — | (2,668) | |
Non-GAAP net income | $23,363 | $17,395 | $63,308 | $39,884 | |
Earnings per share: (GAAP) | |||||
Basic | $0.37 | $0.25 | $0.99 | $0.57 | |
Diluted | $0.37 | $0.25 | $0.98 | $0.57 | |
Earnings per share: (Non-GAAP) | |||||
Basic | $0.38 | $0.27 | $1.01 | $0.61 | |
Diluted | $0.38 | $0.27 | $1.00 | $0.61 | |
Weighted average shares used in calculating | |||||
earnings per share: | |||||
Basic | 61,712 | 64,754 | 62,597 | 64,955 | |
Diluted | 62,103 | 65,194 | 63,162 | 65,206 | |
Benchmark Electronics, Inc. and Subsidiaries | ||||||||||
Consolidated Statements of Income | ||||||||||
(Amounts in Thousands, Except Per Share Data) | ||||||||||
(UNAUDITED) | ||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2010 | 2009 | 2010 | 2009 | |||||||
Net sales | $ | 613,864 | $ | 510,461 | $ | 1,775,218 | $ | 1,489,030 | ||
Cost of sales | 566,143 | 473,648 | 1,635,258 | 1,386,027 | ||||||
Gross profit | 47,721 | 36,813 | 139,960 | 103,003 | ||||||
Selling, general and administrative expenses | 23,379 | 21,385 | 68,927 | 62,903 | ||||||
Restructuring charges | 452 | 3,754 | 2,149 | 5,901 | ||||||
Income from operations | 23,890 | 11,674 | 68,884 | 34,199 | ||||||
Other income (expense): | ||||||||||
Interest income | 394 | 382 | 1,208 | 1,710 | ||||||
Interest expense | (343) | (350) | (1,022) | (1,051) | ||||||
Other | 1,212 | (575) | 162 | (970) | ||||||
Total other income (expense), net | 1,263 | (543) | 348 | (311) | ||||||
Income before income taxes | 25,153 | 11,131 | 69,232 | 33,888 | ||||||
Income tax benefit (expense) | (2,155) | 5,285 | (7,207) | 3,321 | ||||||
Net income | $ | 22,998 | $ | 16,416 | $ | 62,025 | $ | 37,209 | ||
Denominator for basic earnings per share - weighted average number of common shares outstanding during the period | 61,712 | 64,754 | 62,597 | 64,955 | ||||||
Incremental common shares attributable to restricted shares and the exercise of outstanding equity instruments | 391 | 440 | 565 | 251 | ||||||
Denominator for diluted earnings per share | 62,103 | 65,194 | 63,162 | 65,206 | ||||||
Earnings per share: | ||||||||||
Basic | $ | 0.37 | $ | 0.25 | $ | 0.99 | $ | 0.57 | ||
Diluted | $ | 0.37 | $ | 0.25 | $ | 0.98 | $ | 0.57 | ||
Benchmark Electronics, Inc. and Subsidiaries | ||
Condensed Consolidated Balance Sheet | ||
September 30, 2010 | ||
(Amounts in Thousands) | ||
(UNAUDITED) | ||
Assets | ||
Current assets: | ||
Cash and cash-equivalents | $346,299 | |
Accounts receivable, net | 426,868 | |
Inventories, net | 380,644 | |
Other current assets | 53,246 | |
Total current assets | 1,207,057 | |
Long-term investments | 36,252 | |
Property, plant and equipment, net | 129,171 | |
Other assets, net | 60,041 | |
Goodwill, net | 37,912 | |
Total assets | $1,470,433 | |
Liabilities and Shareholders' Equity | ||
Current liabilities: | ||
Current installments of capital lease obligations | $348 | |
Accounts payable | 264,080 | |
Accrued liabilities | 65,204 | |
Total current liabilities | 329,632 | |
Capital lease obligations, less current installments | 11,110 | |
Other long-term liabilities | 24,064 | |
Shareholders' equity | 1,105,627 | |
Total liabilities and shareholders' equity | $1,470,433 | |
SOURCE Benchmark Electronics, Inc.
