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NYSEBHE
Benchmark Reports Third Quarter 2021 Results
Third quarter 2021 results:
- Quarterly revenue of $572 million
- 9% year-over-year revenue growth
- Semi-Cap revenue growth of 35% year-over-year
- Industrials revenue growth of 26% year-over-year
- Higher-value markets revenue mix of 81%
- GAAP and non-GAAP gross margins of 9.4%
- GAAP diluted EPS of $0.23 and non-GAAP diluted EPS of $0.39

TEMPE, Ariz., Oct. 27, 2021 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the third quarter ended September 30, 2021.



Three Months Ended



Sep 30,


Jun 30,


Sep 30,

In millions, except EPS


2021


2021


2020

Sales


$

572



$

545



$

526


Net income(2)


$

8



$

7



$

6


Net income – non-GAAP(1)(2)


$

14



$

10



$

12


Diluted earnings per share(2)


$

0.23



$

0.20



$

0.16


Diluted EPS – non-GAAP(1)(2)


$

0.39



$

0.27



$

0.32


Operating margin(2)



2.1

%



2.0

%



1.6

%

Operating margin – non-GAAP(1)(2)



3.3

%



2.5

%



3.0

%



(1)

A reconciliation of GAAP and non-GAAP results is included below.

(2)

Results for the third quarter ended September 30, 2021 and 2020 and second quarter ended June 30, 2021 include the impact of approximately $1.2 million, $1.3 million and $0.9 million of net COVID-19 related costs, respectively.

"We continued to execute well in the face of unprecedented supply chain constraints delivering strong revenue and profit growth in the third quarter," said Jeff Benck, Benchmark's President and CEO. "Our revenues were up 5% sequentially and 9% year-over-year fueled by strong demand in Semi-Cap and high-performance Computing, and improving demand in the Industrials vertical. Our third quarter non-GAAP gross margins improved to 9.4% and non-GAAP operating margins improved 80 basis points or 32% sequentially, which is a testament to the strong operational performance of our team."

"Entering the fourth quarter, we expect that our revenue will again increase sequentially supported by Semi-Cap, Defense, and Computing strength, which we are projecting will enable double digit year-over-year revenue growth in the quarter and non-GAAP gross margins at 9% for the full year. As we look towards 2022 with our current strong demand momentum, we are expecting another year of solid growth and financial results aligned with the mid-term financial model that we set over a year ago."

Cash Conversion Cycle



Sep 30,


Jun 30,


Sep 30,



2021


2021


2020

Accounts receivable days



49




48




52


Contract asset days



25




26




28


Inventory days



83




75




66


Accounts payable days



(70)




(69)




(54)


Advance payments from customers days



(16)




(16)




(11)


Cash Conversion Cycle days



71




64




81


Third Quarter 2021 Industry Sector Update
Revenue and percentage of sales by industry sector (in millions) was as follows.



Sep 30,


Jun 30,


Sep 30,

Higher-Value Markets


2021


2021


2020

Medical


$

118



21

%


$

109



20

%


$

134



26

%

Semi-Cap



133



23




139



26




99



19


A&D



101



18




97



18




105



20


Industrials



108



19




100



18




86



16




$

460



81

%


$

445



82

%


$

424



81

%























Sep 30,


Jun 30,


Sep 30,

Traditional Markets


2021


2021


2020

Computing


$

57



10

%


$

40



7

%


$

44



8

%

Telecommunications



55



9




60



11




58



11




$

112



19

%


$

100



18

%


$

102



19

%

Total


$

572



100

%


$

545



100

%


$

526



100

%

Overall, higher-value market revenues were up 4% quarter-over-quarter from growth in Industrials, A&D and Medical and 9% year-over-year from growth in Semi-Cap and Industrials. Traditional market revenues were up 12% quarter-over-quarter and up 9% year-over-year from growth in the computing sector.

Fourth Quarter 2021 Outlook

  • Revenue between $560 - $610 million
  • Diluted GAAP earnings per share between $0.24 - $0.32
  • Diluted non-GAAP earnings per share between $0.37 - $0.45 (excluding restructuring charges and other costs and amortization of intangibles)
  • This guidance takes into consideration all known constraints for the quarter and assumes no further significant interruptions to our supply base, operations or customers. Guidance also assumes no material changes to end market conditions and our operations due to COVID-19.

Restructuring charges are expected to range between $4.0 million and $4.5 million in the fourth quarter and the amortization of intangibles is expected to be $1.7 million in the fourth quarter.

Third Quarter 2021 Earnings Conference Call
The Company will host a conference call to discuss the results today at 5:00 p.m. Eastern Time.  The live webcast of the call and accompanying reference materials will be accessible by logging on to the Company's website at www.bench.com. A replay of the broadcast will also be available until Wednesday, November 3, 2021 on the Company's website.

About Benchmark Electronics, Inc.
Benchmark provides comprehensive solutions across the entire product life cycle by leading through its innovative technology and engineering design services, leveraging its optimized global supply chain and delivering world-class manufacturing services in the following industries: commercial aerospace, defense, advanced computing, next generation telecommunications, complex industrials, medical, and semiconductor capital equipment. Benchmark's global operations include facilities in seven countries and its common shares trade on the New York Stock Exchange under the symbol BHE.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts and may include words such as "anticipate," "believe," "intend," "plan," "project," "forecast," "strategy," "position," "continue," "estimate," "expect," "may," "will," "could," "predict," and similar expressions or the negative or other variations thereof. In particular, statements, express or implied, concerning future operating results, our ability to generate sales, income or cash flow, the anticipated impact of the COVID-19 pandemic, the outlook and guidance for fourth quarter 2021 results, our anticipated plans and responses to the COVID-19 pandemic, our expected revenue mix, our business strategy and strategic initiatives, our repurchases of shares of our common stock and our intentions concerning the payment of dividends, among others, are forward-looking statements. Although we believe these statements are based upon reasonable assumptions, they involve risks, uncertainties and assumptions that are beyond our ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of the company's Annual Report on Form 10-K for the year ended December 31, 2020, Part II, Item 1A of the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021  and in any of our subsequent reports filed with the Securities and Exchange Commission (SEC). In particular, these statements also depend on the duration, severity and evolution of the COVID-19 pandemic and related risks, including the emergence and severity of its variants, the availability of vaccines and potential hesitancy to utilize them, government and other third-party responses to it and the consequences for the global economy, our business and the businesses of our suppliers and customers, as well as our ability (or inability) to execute on our plans to respond to the COVID-19 pandemic. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes, including the future results of our operations, may vary materially from those indicated. Undue reliance should not be placed on any forward-looking statements. Forward-looking statements are not guarantees of performance. All forward-looking statements included in this document are based upon information available to us as of the date of this document, and we assume no obligation to update.

Non-GAAP Financial Measures
This document includes certain financial measures that exclude items and therefore are not in accordance with U.S. generally accepted accounting principles ("GAAP").   A detailed reconciliation between GAAP results and results excluding certain items ("non-GAAP") is included in the following tables attached to this document. Management discloses non–GAAP information to provide investors with additional information to analyze the Company's performance and underlying trends. Management also uses non–GAAP measures in order to better assess operating performance and help investors compare results with our previous guidance. In situations where a non-GAAP reconciliation has not been provided, the Company was unable to provide such a reconciliation without unreasonable effort due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. The Company's non–GAAP information is not necessarily comparable to the non–GAAP information used by 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 a measure of the Company's profitability or liquidity.  Readers should consider the types of events and transactions for which adjustments have been made.

Benchmark Electronics, Inc. and Subsidiaries


Condensed Consolidated Statements of Income

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)




Three Months Ended



Nine Months Ended




September 30,



September 30,




2021



2020



2021



2020


Sales


$

571,882



$

525,951



$

1,622,265



$

1,531,881


Cost of sales



518,177




479,597




1,478,420




1,407,494


Gross profit



53,705




46,354




143,845




124,387


Selling, general and administrative expenses



34,387




29,724




98,969




89,815


Amortization of intangible assets



1,596




2,368




4,793




7,120


Restructuring charges and other costs



6,428




7,161




9,600




15,480


Ransomware incident related costs (recovery), net



(500)




(1,558)




(3,944)




(1,305)


Income from operations



11,794




8,659




34,427




13,277


Interest expense



(1,987)




(2,136)




(6,215)




(6,189)


Interest income



122




154




451




1,040


Other income (expense), net



500




439




664




(191)


Income before income taxes



10,429




7,116




29,327




7,937


Income tax expense



2,364




1,201




5,976




1,577


Net income


$

8,065



$

5,915



$

23,351



$

6,360


Earnings per share:













Basic


$

0.23



$

0.16



$

0.65



$

0.17


Diluted


$

0.23



$

0.16



$

0.64



$

0.17


Weighted-average number of shares used in calculating earnings per share:













Basic



35,423




36,467




35,806




36,565


Diluted



35,666




36,544




36,287




36,821


 

Benchmark Electronics, Inc. and Subsidiaries


Condensed Consolidated Balance Sheets

(UNAUDITED)

(in thousands)




September 30,



December 31,




2021



2020


Assets







Current assets:







Cash and cash equivalents


$

288,567



$

390,808


Restricted cash



2,630




5,182


Accounts receivable, net



311,384




309,331


Contract assets



160,194




142,779


Inventories



478,325




327,377


Other current assets



37,909




26,874


Total current assets



1,279,009




1,202,351


Property, plant and equipment, net



188,858




185,272


Operating lease right-of-use assets



102,440




79,966


Goodwill and other, net



270,059




276,646


Total assets


$

1,840,366



$

1,744,235









Liabilities and Shareholders' Equity







Current liabilities:







Current installments of long-term debt and finance lease obligations


$

7,663



$

9,161


Accounts payable



401,106




282,208


Advance payments from customers



91,464




84,122


Accrued liabilities



99,936




105,645


Total current liabilities



600,169




481,136


Long-term debt and finance lease obligations, less current installments



123,510




131,051


Operating lease liabilities



94,219




72,120


Other long-term liabilities



60,132




70,340


Shareholders' equity



962,336




989,588


Total liabilities and shareholders' equity


$

1,840,366



$

1,744,235


 

Benchmark Electronics, Inc. and Subsidiaries


Condensed Consolidated Statement of Cash Flows

(in thousands)

(UNAUDITED)




Nine Months Ended




September 30,




2021



2020


Cash flows from operating activities:







Net income


$

23,351



$

6,360


Depreciation and amortization



32,963




36,939


Stock-based compensation expense



10,856




9,464


Accounts receivable, net



(2,342)




16,410


Contract assets



(17,415)




(335)


Inventories



(151,518)




(37,131)


Accounts payable



114,477




(18,260)


Advance payments from customers



7,341




21,075


Other changes in working capital and other, net



(19,021)




(8,907)


Net cash provided by (used in) operations



(1,308)




25,615









Cash flows from investing activities:







Additions to property, plant and equipment and software



(32,437)




(29,102)


Other investing activities, net



294




2,586


Net cash used in investing activities



(32,143)




(26,516)









Cash flows from financing activities:







Share repurchases



(40,216)




(19,329)


Net debt activity



(6,458)




8,395


Other financing activities, net



(20,254)




(18,747)


Net cash used in financing activities



(66,928)




(29,681)









Effect of exchange rate changes



(4,414)




1,436


Net decrease in cash and cash equivalents and restricted cash



(104,793)




(29,146)


Cash and cash equivalents and restricted cash at beginning of year



395,990




363,956


Cash and cash equivalents and restricted cash at end of period


$

291,197



$

334,810


 

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




Sep 30,



Jun 30,



Sep 30,



Sep 30,




2021



2021



2020



2021



2020


Income from operations (GAAP)


$

11,794



$

10,699



$

8,659



$

34,427



$

13,277


Amortization of intangible assets



1,596




1,599




2,368




4,793




7,120


Restructuring charges and other costs



2,070




1,581




1,425




5,242




8,737


Impairment



4,358







5,736




4,358




6,743


Ransomware incident related costs (recovery), net



(500)







(1,558)




(3,944)




(1,305)


Customer insolvency (recovery)



(168)




(153)




(796)




(353)




(1,149)


Non-GAAP income from operations


$

19,150



$

13,726



$

15,834



$

44,523



$

33,423


















Gross Profit (GAAP)


$

53,705



$

47,913



$

46,354



$

143,845



$

124,387


Customer insolvency (recovery)



(168)




(153)




(796)




(353)




(1,149)


Non-GAAP gross profit


$

53,537



$

47,760



$

45,558



$

143,492



$

123,238


















Selling, general and administrative expenses (GAAP)


$

34,387



$

34,034



$

29,724



$

98,969



$

89,815


Non-GAAP selling, general and administrative expenses


$

34,387



$

34,034



$

29,724



$

98,969



$

89,815


















Net income (GAAP)


$

8,065



$

7,369



$

5,915



$

23,351



$

6,360


Amortization of intangible assets



1,596




1,599




2,368




4,793




7,120


Restructuring charges and other costs



2,070




1,581




1,425




5,242




8,737


Impairment



4,358







5,736




4,358




6,743


Ransomware incident related costs (recovery), net



(500)







(1,558)




(3,944)




(1,305)


Customer insolvency (recovery)



(168)




(153)




(796)




(353)




(1,149)


Income tax adjustments(1)



(1,491)




(633)




(1,458)




(1,955)




(4,123)


Non-GAAP net income


$

13,930



$

9,763



$

11,632



$

31,492



$

22,383


















Diluted earnings per share:
















Diluted (GAAP)


$

0.23



$

0.20



$

0.16



$

0.64



$

0.17


Diluted (Non-GAAP)


$

0.39



$

0.27



$

0.32



$

0.87



$

0.61


















Weighted-average number of shares used in calculating diluted earnings per share:
















Diluted (GAAP)



35,666




36,061




36,544




36,287




36,821


Diluted (Non-GAAP)



35,666




36,061




36,544




36,287




36,821


















Net cash provided by (used in) operations


$

(41,581)



$

3,660



$

5,697



$

(1,308)



$

25,615


Additions to property, plant and equipment and software



(13,818)




(12,197)




(5,812)




(32,437)




(29,102)


Free cash flow (used)


$

(55,399)



$

(8,537)



$

(115)



$

(33,745)



$

(3,487)




(1)

This amount represents the tax impact of the non-GAAP adjustments using the applicable effective tax rates.

 

SOURCE Benchmark Electronics, Inc.

For further information: Lisa K. Weeks, Senior Vice President, Chief Strategy Officer, 623-300-7052 or lisa.weeks@bench.com
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Lisa.Weeks@bench.com

 

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