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NYSEBHE
BENCHMARK REPORTS FOURTH QUARTER AND FISCAL YEAR 2023 RESULTS

Fourth quarter 2023 results:

  • Revenue of $691 million
  • Generated net cash provided by operations of $137 million and positive free cash flow(1) of $126 million
  • GAAP and non-GAAP(1) gross margin of 10.3%
  • GAAP operating margin of 4.6% and non-GAAP(1) operating margin of 5.1%
  • GAAP and non-GAAP(1) earnings per share of $0.49 and $0.58, respectively

Full year 2023 results:

  • Revenue of $2.8 billion
  • Delivered net cash provided by operations of $174 million and positive free cash flow(1) of $97 million
  • GAAP and non-GAAP(1) gross margin of 9.5%, up 70 basis points year-over-year
  • GAAP operating margin of 3.9% and non-GAAP(1) operating margin of 4.4%
  • GAAP and non-GAAP(1) earnings per share of $1.79 and $2.04, respectively

TEMPE, Ariz., Jan. 31, 2024 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the fourth quarter and year ended December 31, 2023.



Three Months Ended




December 31,



September 30,



December 31,


(Amounts in millions, except per share data)


2023



2023



2022


Sales


$

691



$

720



$

751


Net income


$

18



$

20



$

21


Income from operations


$

32



$

30



$

27


Net income – non-GAAP(1)


$

21



$

21



$

21


Income from operations – non-GAAP(1)


$

35



$

34



$

33


Diluted earnings per share


$

0.49



$

0.57



$

0.60


Diluted earnings per share – non-GAAP(1)


$

0.58



$

0.57



$

0.60


Operating margin



4.6

%



4.2

%



3.6

%

Operating margin – non-GAAP(1)



5.1

%



4.7

%



4.3

%

 





Year Ended






December 31,


(Amounts in millions, except per share data)




2023



2022


Sales




$

2,839



$

2,886


Net income




$

64



$

68


Income from operations




$

110



$

90


Net income – non-GAAP(1)




$

73



$

75


Income from operations – non-GAAP(1)




$

124



$

104


Diluted earnings per share




$

1.79



$

1.91


Diluted earnings per share – non-GAAP(1)




$

2.04



$

2.09


Operating margin





3.9

%



3.1

%

Operating margin – non-GAAP(1)





4.4

%



3.6

%



(1)

A reconciliation of non-GAAP results to the most directly comparable GAAP measures and a discussion of why management believes these non-GAAP results are useful is included below.

 

"Benchmark delivered another solid year of performance in 2023 as we continued to execute to our strategic plan. I'm particularly pleased with our free cash flow performance which was aided by inventory reductions.  At the same time, our operational discipline allowed us to expand both gross and operating margin despite the dynamic environment," said Jeff Benck, Benchmark's President and CEO. 

Benck continued, "Looking forward, we expect the current demand softness across several of our end-markets will likely persist through the first half of 2024, driven by customers closely managing inventories. However, as demonstrated by our performance this past year, I am confident in our ability to deliver further margin expansion and positive free cash flow in 2024."

Cash Conversion Cycle



December 31,



September 30,



December 31,




2023



2023



2022


Accounts receivable days



59




60




59


Contract asset days



23




24




22


Inventory days



99




100




97


Accounts payable days



(53)




(53)




(56)


Advance payments from customers days



(30)




(26)




(26)


Cash conversion cycle days



98




105




96


 

Fourth Quarter 2023 Industry Sector Update
Revenue and percentage of sales by industry sector were as follows.



December 31,



September 30,



December 31,


(In millions)


2023



2023



2022


Medical


$

126




18

%


$

149




21

%


$

144




19

%

Semi-Cap



168




24




165




23




178




24


A&D



102




15




100




14




90




12


Industrials



132




19




154




21




143




19


Advanced Computing



95




14




66




9




92




12


Next Gen Communications



68




10




86




12




104




14


Total


$

691




100

%


$

720




100

%


$

751




100

%

 

Revenue decreased year over year primarily due to a decrease in Next Gen Communications of 35% and a decrease in Medical of 13%, partially offset by an increase in A&D of 13%. 

First Quarter 2024 Guidance

  • Revenue between $625 million - $665 million
  • Diluted GAAP earnings per share between $0.32 - $0.38
  • Diluted non-GAAP earnings per share between $0.42 - $0.48 (excluding restructuring charges and other costs and amortization of intangibles)

Restructuring charges are expected to range between $3.1 million and $3.5 million in the first quarter of 2024 and the amortization of intangibles is expected to be $1.2 million in the first quarter.

Fourth Quarter 2023 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 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. 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 of the negative or other variations thereof. In particular, statements, express or implied, concerning the Company's outlook and guidance for first quarter and fiscal year 2024 results, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the Company's business strategy and strategic initiatives, the Company's repurchases of shares of its common stock, the Company's expectations regarding restructuring charges and amortization of intangibles, and the Company's intentions concerning the payment of dividends, among others, are forward-looking statements. Although the Company believes these statements are based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions that are beyond the Company's 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, 2022, and in any of the Company's subsequent reports filed with the Securities and Exchange Commission. Events relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including continuing hostilities and tensions, trade restrictions and sanctions, or the ability to utilize the Company's manufacturing facilities at sufficient levels to cover its fixed operating costs, may have resulting impacts on the Company's business, financial condition, results of operations, and the Company's ability (or inability) to execute on its plans. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes, including the future results of the Company's 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 the Company as of the date of this document, and the Company assumes no obligation to update.

Non-GAAP Financial Measures
Management discloses non‐GAAP information to provide investors with additional information to analyze the Company's performance and underlying trends. A detailed reconciliation between GAAP results and results excluding certain items ("non-GAAP") is included in the following tables attached to this document. 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. Management uses non‐GAAP measures that exclude certain items in order to better assess operating performance and help investors compare results with our previous guidance. This document also references "free cash flow", a non-GAAP measure, which the Company defines as cash flow from operations less additions to property, plant and equipment and purchased software. 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



Year Ended




December 31,



December 31,




2023



2022



2023



2022


Sales


$

691,354



$

750,644



$

2,838,976



$

2,886,331


Cost of sales



620,350




678,517




2,567,906




2,631,096


Gross profit



71,004




72,127




271,070




255,235


Selling, general and administrative expenses



35,646




39,540




147,025




150,215


Amortization of intangible assets



1,204




1,592




5,979




6,384


Restructuring charges and other costs



2,054




4,049




8,402




8,567


Income from operations



32,100




26,946




109,664




90,069


Interest expense



(8,692)




(5,466)




(31,875)




(12,894)


Interest income



2,033




887




6,256




1,730


Other (expense) income, net



(3,105)




3,860




(2,825)




5,437


Income before income taxes



22,336




26,227




81,220




84,342


Income tax expense



4,784




5,008




16,905




16,113


Net income


$

17,552



$

21,219



$

64,315



$

68,229


Earnings per share:













Basic


$

0.49



$

0.60



$

1.81



$

1.94


Diluted


$

0.49



$

0.60



$

1.79



$

1.91


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













Basic



35,658




35,166




35,566




35,179


Diluted



35,956




35,630




35,973




35,718


 

Benchmark Electronics, Inc. and Subsidiaries




Condensed Consolidated Balance Sheets

(In Thousands)

(UNAUDITED)






December 31,




2023



2022


Assets







Current assets:







Cash and cash equivalents


$

277,391



$

207,430


Restricted cash



5,822





Accounts receivable, net



449,404




491,957


Contract assets



174,979




183,613


Inventories



683,801




727,749


Other current assets



44,350




41,400


Total current assets



1,635,747




1,652,149


Property, plant and equipment, net



227,698




211,478


Operating lease right-of-use assets



130,830




93,081


Goodwill and other, net



280,480




270,623


Total assets


$

2,274,755



$

2,227,331









Liabilities and Shareholders' Equity







Current liabilities:







Current installments of long-term debt


$

4,283



$

4,275


Accounts payable



367,480




424,272


Advance payments from customers



204,883




197,937


Accrued liabilities



136,901




122,652


Total current liabilities



713,547




749,136


Long-term debt, less current installments



326,674




320,675


Operating lease liabilities



123,385




86,687


Other long-term liabilities



32,064




44,417


Shareholders' equity



1,079,085




1,026,416


Total liabilities and shareholders' equity


$

2,274,755



$

2,227,331


 

Benchmark Electronics, Inc. and Subsidiaries




Condensed Consolidated Statements of Cash Flows

(In Thousands)

(UNAUDITED)






Year Ended




December 31,




2023



2022


Cash flows from operating activities:







Net income


$

64,315



$

68,229


Depreciation and amortization



45,410




44,252


Stock-based compensation expense



15,286




18,485


Accounts receivable



42,050




(136,455)


Contract assets



8,634




(28,370)


Inventories



45,071




(206,247)


Accounts payable



(35,320)




(16,656)


Advance payments from customers



6,946




79,813


Other changes in working capital and other, net



(18,098)




(518)


Net cash provided by (used in) operating activities



174,294




(177,467)









Cash flows from investing activities:







Additions to property, plant and equipment and software



(77,739)




(46,774)


Other investing activities, net



601




5,600


Net cash used in investing activities



(77,138)




(41,174)









Cash flows from financing activities:







Share repurchases






(9,391)


Net debt activity



5,509




194,261


Other financing activities, net



(29,087)




(25,641)


Net cash provided by (used in) financing activities



(23,578)




159,229









Effect of exchange rate changes



2,205




(4,907)


Net increase (decrease) in cash and cash equivalents and restricted cash



75,783




(64,319)


Cash and cash equivalents and restricted cash at beginning of year



207,430




271,749


Cash and cash equivalents and restricted cash at end of year


$

283,213



$

207,430


 

Benchmark Electronics, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Results

(Amounts in Thousands, Except Per Share Data)

(UNAUDITED)






Three Months Ended



Year Ended




December 31,



September 30,



December 31,



December 31,



December 31,




2023



2023



2022



2023



2022


Income from operations (GAAP)


$

32,100



$

30,341



$

26,946



$

109,664



$

90,069


Amortization of intangible assets



1,204




1,592




1,592




5,979




6,384


Restructuring charges and other costs



2,054




1,437




799




7,281




5,710


Gain on assets held for sale















(393)


Asset impairment






198







1,121





Settlement









3,250







3,250


Customer insolvency (recovery)















(599)


Non-GAAP income from operations


$

35,358



$

33,568



$

32,587



$

124,045



$

104,421


GAAP operating margin



4.6

%



4.2

%



3.6

%



3.9

%



3.1

%

Non-GAAP operating margin



5.1

%



4.7

%



4.3

%



4.4

%



3.6

%

















Gross Profit (GAAP)


$

71,004



$

69,077



$

72,127



$

271,070



$

255,235


Customer insolvency (recovery)















(425)


Non-GAAP gross profit


$

71,004



$

69,077



$

72,127



$

271,070



$

254,810


GAAP gross margin



10.3

%



9.6

%



9.6

%



9.5

%



8.8

%

Non-GAAP gross margin



10.3

%



9.6

%



9.6

%



9.5

%



8.8

%

















Selling, general and administrative expenses


$

35,646



$

35,509



$

39,540



$

147,025



$

150,215


Customer insolvency (recovery)















174


Non-GAAP selling, general and administrative expenses


$

35,646



$

35,509



$

39,540



$

147,025



$

150,389


















Net income (GAAP)


$

17,552



$

20,412



$

21,219



$

64,315



$

68,229


Amortization of intangible assets



1,204




1,592




1,592




5,979




6,384


Restructuring charges and other costs



2,899




1,437




799




8,126




5,710


Gain on assets held for sale















(393)


Asset impairment






198







1,121





Settlement



(37)




(3,375)




(2,344)




(4,567)




(2,955)


Customer insolvency (recovery)















(599)


Income tax adjustments(1)



(657)




245




(5)




(1,598)




(1,644)


Non-GAAP net income


$

20,961



$

20,509



$

21,261



$

73,376



$

74,732


















Diluted earnings per share:
















Diluted (GAAP)


$

0.49



$

0.57



$

0.60



$

1.79



$

1.91


Diluted (Non-GAAP)


$

0.58



$

0.57



$

0.60



$

2.04



$

2.09


















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
















Diluted (GAAP)



35,956




35,876




35,630




35,973




35,718


Diluted (Non-GAAP)



35,956




35,876




35,630




35,973




35,718


















Net cash provided by (used in) operations


$

137,080



$

37,583



$

(52,749)



$

174,294



$

(177,467)


Additions to property, plant and equipment and software



(11,026)




(19,664)




(13,180)




(77,739)




(46,774)


Free cash flow (used)


$

126,054



$

17,919



$

(65,929)



$

96,555



$

(224,241)




(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: Paul Mansky, Investor Relations and Corporate Development, 1-623-300-7052 or paul.mansky@bench.com
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