Benchmark Electronics 8K Results of Operations and Financial Condition | BHE 28 Oct 19

Exhibit 99.1

FOR IMMEDIATE RELEASE

BENCHMARK ELECTRONICS REPORTS THIRD QUARTER 2019 RESULTS

· Quarterly revenue of $555 million

· Medical revenue growth of 33% year-over-year

· A&D revenue growth of 10% year-over-year

· Quarterly gross margin expansion of 60 bps to 9.5%

· Quarterly EPS of $0.19 ($0.36 non-GAAP)

TEMPE, AZ, October 24, 201 9 – Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the third quarter ended September 30, 2019 .

	Three Months Ended
	Sep 30,	Jun 30,	Sep 30,
In millions, except EPS	2019	2019	2018
Sales	$555	$602	$641
Net income	$7	$9	$8
Net income – non-GAAP⁽¹⁾	$14	$14	$15
Diluted EPS	$0.19	$0.24	$0.17
Diluted EPS – non-GAAP⁽¹⁾	$0.36	$0.36	$0.33

Operating margin	1.8%	2.0%	1.7%
Operating margin – non-GAAP⁽¹⁾	3.2%	3.1%	2.9%

⁽¹⁾ A reconciliation of GAAP and non-GAAP results is included below.

Jeff Benck, Benchmark's President and CEO stated, “We are pleased with the solid execution of our team in the third quarter. Revenues were up year-over-year in our Medical and Aerospace & Defense (A&D) markets with non-GAAP gross margins improving 60 bps sequentially to 9.5% and operating margins up 10 bps sequentially to 3.2% respectively.”

“We are laying the groundwork for an even stronger Benchmark with the progress our engaged team has made on our strategic priorities which are focused on: improving our go-to-market approach, driving continued operational efficiencies, centralizing our G&A organization, and accelerating our solutions in the market.”

Cash Conversion Cycle

	Sep 30,	Jun 30,	Sep 30,
	2019	2019	2018

Accounts receivable days	56	54	64
Contract asset days	26	23	22
Inventory days	57	52	49
Accounts payable days	(53)	(61)	(57)
Customer deposits	(7)	(3)	(4)
Cash Conversion Cycle days	79	65	74

Third Quarter 2019 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		2019				2019			2018
Industrials		$	115	21	%	$	115	19	%	$	128	20	%
A&D			115	21			107	18			105	16
Medical			128	23			114	19			96	15
Semi-Cap			68	12			63	10			77	12
		$	426	77	%	$	399	66	%	$	406	63	%


			Sep 30,				Jun 30,				Sep 30,
	Traditional Markets		2019				2019			2018
Computing		$	59	11	%	$	133	22	%	$	146	23	%
Telecommunications			70	12			70	12			89	14
		$	129	23	%	$	203	34	%	$	235	37	%
	Total	$	555	100	%	$	602	100	%	$	641	100	%

Overall, higher‐value markets were up 5% year‐over‐year due to growth in Medical and A&D, despite softer demand in Semi-Cap. Traditional market revenues were down 45% year-over-year primarily from legacy Computing revenues.

Fourth Quarter 2019 Outlook

· Revenue between $520 - $570 million

· Diluted GAAP earnings per share between $0.21 - $0.29

· Diluted non-GAAP earnings per share between $0.34 - $0.42 (excluding restructuring charges and other costs and amortization of intangibles)

Restructuring charges are expected to range between $3.5 million to $4.5 million in the fourth quarter.

Third Quarter 2019 Results Conference Call Details

A conference call hosted by Benchmark management will be held today at 5:00 p.m. Eastern Time to discuss the Company’s financial results and outlook. This call will be broadcast via the internet and may be accessed by logging on to the Company’s website at www.bench.com.

About Benchmark Electronics, Inc.

Benchmark provides comprehensive solutions across the entire product life cycle; 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: aerospace and defense (A&D), medical, complex industrials, semiconductor capital equipment (Semi-Cap), next-generation telecommunications and advanced computing. Benchmark’s global operations network includes facilities in seven countries and common shares trade on the New York Stock Exchange under the symbol BHE.

For More Information, Please Contact:

Lisa K. Weeks, VP of Strategy & Investor Relations

623-300-7052 or lisa.weeks@bench.com

Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “expect,” “estimate,” “anticipate,” “predict” and similar expressions, and the negatives thereof, often identify forward-looking statements, which are not limited to historical facts. Forward-looking statements include, among other things: guidance for 2019 results; projected annual revenues resulting from new program bookings; statements, express or implied, concerning future operating results or margins, the ability to generate sales and income or cash flow; and Benchmark’s business and growth strategies and expected growth and performance. Although Benchmark believes these statements are based upon reasonable assumptions, they involve risks and uncertainties relating to operations, markets and the business environment generally. If one or more of these risks or uncertainties materializes, or underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. Readers are advised to consult further disclosures on these risks and uncertainties, particularly in Item 1A, “Risk Factors”, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018

and in its subsequent filings with the Securities and Exchange Commission. All forward-looking statements included in this document are based upon information available to the Company as of the date of this document, and it assumes no obligation to update them.

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 special 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 uses non‐GAAP measures that exclude certain items in order to provide additional insight into operating results and underlying trends and help investors compare results with our previous guidance. 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.

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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,
			2019		2019		2018		2019		2018

Income from operations (GAAP)		$	9,798	$	11,941	$	10,957	$	37,826	$	43,273
Restructuring charges and other costs			5,843		3,414		1,845		10,833		5,838
Settlement			-		773		-		773		-
Customer insolvency (recovery)			-		(16)		3,295		(2,758)		2,624
Amortization of intangible assets			2,367		2,361		2,368		7,095		7,101
Non-GAAP income from operations		$	18,008	$	18,473	$	18,465	$	53,769	$	58,836

Gross Profit (GAAP)		$	52,883	$	52,998	$	52,777	$	159,681	$	165,394
Settlement			-		773		-		773		-
Customer insolvency (recovery)			-		(16)		1,581		(1,040)		910
Non-GAAP gross profit		$	52,883	$	53,755	$	54,358	$	159,414	$	166,304

Net income (loss) (GAAP)		$	7,136	$	9,447	$	7,799	$	30,356	$	(4,899)
Restructuring charges and other costs			6,168		3,414		1,845		11,158		5,838
Customer insolvency (recovery)			-		(16)		3,295		(2,758)		2,624
Amortization of intangible assets			2,367		2,361		2,368		7,095		7,101
Settlements			(83)		(330)		-		(2,248)		-
Refinancing of credit facilities			-		-		1,982		-		1,982
Income tax adjustments⁽¹⁾			(1,879)		(1,039)		(1,914)		(2,711)		(3,542)
Tax Cuts and Jobs Act⁽²⁾			-		-		-		-		40,537
Non-GAAP net income		$	13,709	$	13,837	$	15,375	$	40,892	$	49,641

Diluted earnings (loss) per share:
	Diluted (GAAP)	$	0.19	$	0.24	$	0.17	$	0.77	$	(0.10)
	Diluted (Non-GAAP)	$	0.36	$	0.36	$	0.33	$	1.04	$	1.04

Weighted-average number of shares used in
calculating diluted earnings (loss) per share:
	Diluted (GAAP)		37,645		38,583		46,455		39,184		47,415
	Diluted (Non-GAAP)		37,645		38,583		46,455		39,184		47,754

⁽¹⁾This amount represents the tax impact of the non-GAAP adjustments using the applicable effective tax rates.

⁽²⁾This amount represents the impact of repatriating foreign earnings from our foreign jurisdictions to the U.S., offset by available U.S. foreign tax credits, and a non-recurring tax true-up benefit as a result of finalizing our federal and state income tax accounting for the U.S. transitions toll tax from the 2017 Tax Cuts and Jobs Act.


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,
			2019		2018		2019		2018

Sales		$	555,229	$	640,688	$	1,759,651	$	1,909,415
Cost of sales			502,346		587,911		1,599,970		1,744,021
	Gross profit		52,883		52,777		159,681		165,394
Selling, general and administrative expenses			34,875		37,607		103,927		109,182
Amortization of intangible assets			2,367		2,368		7,095		7,101
Restructuring charges and other costs			5,843		1,845		10,833		5,838
	Income from operations		9,798		10,957		37,826		43,273
Interest expense			(1,687)		(3,822)		(5,014)		(8,543)
Interest income			734		1,619		3,084		5,197
Other income (expense), net			(136)		1,139		2,276		827
	Income before income taxes		8,709		9,893		38,172		40,754
Income tax expense			1,573		2,094		7,816		45,653
	Net income (loss)	$	7,136	$	7,799	$	30,356	$	(4,899)

Earnings (loss) per share:
	Basic	$	0.19	$	0.17	$	0.78	$	(0.10)
	Diluted	$	0.19	$	0.17	$	0.77	$	(0.10)

Weighted-average number of shares used in calculating
earnings (loss) per share:
	Basic		37,419		46,301		38,813		47,415
	Diluted		37,645		46,455		39,184		47,415


Benchmark Electronics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets
(UNAUDITED)
(in thousands)
					September 30,		December 31,
					2019		2018

Assets
	Current assets:
		Cash and cash equivalents		$	348,042	$	458,102
		Accounts receivable, net			348,099		468,161
		Contract assets			161,068		140,082
		Inventories			315,835		309,975
		Other current assets			25,071		27,230
			Total current assets		1,198,115		1,403,550
	Property, plant and equipment, net				199,256		210,954
	Operating lease right-of-use assets				79,854		-
	Goodwill and other, net				281,521		285,279
			Total assets	$	1,758,746	$	1,899,783

Liabilities and Shareholders’ Equity
	Current liabilities:
		Current installments of long-term debt and finance lease obligations		$	8,784	$	6,793
		Accounts payable			295,693		422,053
		Accrued liabilities			136,760		108,313
			Total current liabilities		441,237		537,159
	Long-term debt and finance lease obligations, less current installments				141,017		147,277
	Operating lease liabilities				70,167		-
	Other long-term liabilities				77,553		83,122
	Shareholders’ equity				1,028,772		1,132,225
			Total liabilities and shareholders’ equity	$	1,758,746	$	1,899,783


Benchmark Electronics, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows
(in thousands)
(UNAUDITED)

				Nine Months Ended
				September 30,
				2019		2018

Cash flows from operating activities:
	Net income (loss)		$	30,356	$	(4,899)
	Depreciation and amortization			36,389		39,643
	Stock-based compensation expense			8,461		8,229
	Accounts receivable, net			121,171		(20,019)
	Contract assets			(20,986)		(9,402)
	Inventories			(6,557)		(54,342)
	Accounts payable			(122,156)		12,620
	Other changes in working capital and other, net			10,636		10,877
		Net cash provided by (used in) operations		57,314		(17,293)

Cash flows from investing activities:
	Additions to property, plant and equipment and software			(25,942)		(52,933)
	Other investing activities, net			252		(2,102)
		Net cash used in investing activities		(25,690)		(55,035)

Cash flows from financing activities:
	Share repurchases			(118,350)		(122,053)
	Net debt activity			(4,614)		(57,758)
	Other financing activities, net			(17,699)		(13,897)
		Net cash used in financing activities		(140,663)		(193,708)

Effect of exchange rate changes				(1,021)		(797)
Net decrease in cash and cash equivalents				(110,060)		(266,833)
	Cash and cash equivalents at beginning of year			458,102		742,546
	Cash and cash equivalents at end of period		$	348,042	$	475,713

Benchmark Electronics (BHE) 8-KResults of Operations and Financial Condition

Exhibit 99.1

FOR IMMEDIATE RELEASE

BENCHMARK ELECTRONICS REPORTS THIRD QUARTER 2019 RESULTS