Press Release
For More Information, Call:
| ELLEN M. DYLLA | |
| INVESTOR RELATIONS | July 24, 2008 |
| (979) 849-6550 | |
FOR IMMEDIATE RELEASE
BENCHMARK ELECTRONICS REPORTS RESULTS FOR THE
QUARTER ENDED JUNE 30, 2008
ANGLETON, TX, JULY 24, 2008 – Benchmark Electronics, Inc. (NYSE: BHE), a leading contract manufacturing provider, announced sales of $682 million for the quarter ended June 30, 2008, compared to $756 million for the same quarter in the prior year. Second quarter net income was $22 million, or $0.33 per diluted share. In the comparable period of 2007, net income was $26 million, or $0.35 per diluted share.
Excluding amortization of intangibles and the impact of stock-based compensation costs, the Company would have reported net income of $24 million, or $0.35 per diluted share, in the second quarter of 2008. Excluding restructuring charges, integration costs, amortization of intangibles and the impact of stock-based compensation costs, the Company would have reported net income of $29 million, or $0.39 per diluted share, in the second quarter of 2007.
“Our focus in this environment is on strong operational execution and solid program bookings,” said Cary T. Fu, the Company’s Chief Executive Officer. “Operationally our execution was solid during the second quarter, although revenues were impacted by maturing programs declining at a more rapid pace than our new programs ramped, and by the impact of a soft macro environment. We believe this is a near-term challenge and that we are well positioned for growth, given the number of new programs that we have won.”
Second Quarter 2008 Financial Highlights
| | · | Operating margin for the second quarter was 3.4% on a GAAP basis and was 3.6%, excluding amortization of intangibles and the impact of stock-based compensation expense. |
| | · | Cash flows provided by operating activities for the second quarter were approximately $2 million. |
| | · | Cash, short-term and long-term investments balance was $344 million at June 30, 2008. Long-term investments consist of $55 million of auction rate securities. |
| | · | Accounts receivable was $472 million at June 30, 2008; calculated days sales outstanding were 62 days. |
| | · | Inventory was $393 million at June 30, 2008; inventory turns were 6.5 times. |
| | · | Repurchases of common shares for the second quarter totaled $30 million. On July 21, 2008, the Company completed the repurchase of 6.8 million shares under the $125 million share repurchase program approved in July 2007. |
Third Quarter 2008 Outlook
Looking forward, sales for the third quarter of 2008 are expected to range from $650 million to $690 million. Diluted earnings per share for the third quarter, excluding amortization of intangibles and the impact of stock-based compensation expense, are expected to be between $0.32 and $0.37.
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 that “we believe this is a near-term challenge and that we are well positioned for growth, given the number of new programs that we have won”, and our sales and earnings per share guidance for the third 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.
Additional Information
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.
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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 | | Six Months Ended | |
| | | June 30, | | June 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
| Income from operations (GAAP) | | $ | 22,918 | | $ | 27,624 | | $ | 44,411 | | $ | 55,072 | |
| Stock-based compensation | | | 1,260 | | | 1,184 | | | 2,048 | | | 1,812 | |
| Restructuring charges and integration costs | | | — | | | 2,205 | | | — | | | 5,550 | |
| Amortization of intangibles | | | 447 | | | 447 | | | 894 | | | 894 | |
| | | | | | | | | | | | | | |
| Non-GAAP income from operations | | $ | 24,625 | | $ | 31,460 | | $ | 47,353 | | $ | 63,328 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Net income (GAAP) | | $ | 22,432 | | $ | 25,921 | | $ | 45,051 | | $ | 50,397 | |
| Stock-based compensation, net of tax | | | 877 | | | 803 | | | 1,434 | | | 1,245 | |
| Restructuring charges and integration costs, net of tax | | | — | | | 1,551 | | | — | | | 4,168 | |
| Amortization of intangibles, net of tax | | | 285 | | | 292 | | | 570 | | | 614 | |
| | | | | | | | | | | | | | |
| Non-GAAP net income | | $ | 23,594 | | $ | 28,567 | | $ | 47,055 | | $ | 56,424 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Numerator for basic earnings per share - net income (GAAP) | | $ | 22,432 | | $ | 25,921 | | $ | 45,051 | | $ | 50,397 | |
| Interest expense on convertible debt, net of tax | | | — | | | 32 | | | — | | | 147 | |
| | | | | | | | | | | | | | |
| Numerator for diluted earnings per share (GAAP) | | $ | 22,432 | | $ | 25,953 | | $ | 45,051 | | $ | 50,544 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Earnings per share: (GAAP) | | | | | | | | | | | | | |
| Basic | | $ | 0.33 | | $ | 0.36 | | $ | 0.66 | | $ | 0.70 | |
| Diluted | | $ | 0.33 | | $ | 0.35 | | $ | 0.66 | | $ | 0.69 | |
| | | | | | | | | | | | | | |
| Numerator for basic earnings per share - net income (Non-GAAP) | | $ | 23,594 | | $ | 28,567 | | $ | 47,055 | | $ | 56,424 | |
| Interest expense on convertible debt, net of tax | | | — | | | 32 | | | — | | | 147 | |
| | | | | | | | | | | | | | |
Numerator for diluted earnings per share (Non-GAAP) | | $ | 23,594 | | $ | 28,599 | | $ | 47,055 | | $ | 56,571 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Earnings per share: (Non-GAAP) | | | | | | | | | | | | | |
| Basic | | $ | 0.35 | | $ | 0.39 | | $ | 0.69 | | $ | 0.78 | |
| Diluted | | $ | 0.35 | | $ | 0.39 | | $ | 0.69 | | $ | 0.77 | |
| | | | | | | | | | | | | | |
| Weighted average shares used in calculating earnings per share: | | | | | | | | | | | | | |
| Basic | | | 67,541 | | | 72,540 | | | 68,436 | | | 71,991 | |
| Diluted | | | 67,714 | | | 73,346 | | | 68,672 | | | 73,026 | |
Benchmark Electronics, Inc. and Subsidiaries
Consolidated Statements of Income
(Amounts in Thousands, Except Per Share Data)
(UNAUDITED)
| | | Three Months Ended June 30, | | Six Months Ended June 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
| Net sales | | $ | 682,416 | | $ | 756,295 | | $ | 1,366,725 | | $ | 1,508,777 | |
| Cost of sales | | | 636,389 | | | 701,800 | | | 1,275,483 | | | 1,399,794 | |
| | | | | | | | | | | | | | |
| Gross profit | | | 46,027 | | | 54,495 | | | 91,242 | | | 108,983 | |
| | | | | | | | | | | | | | |
| Selling, general and administrative expenses | | | 22,662 | | | 24,219 | | | 45,937 | | | 47,467 | |
| Amortization of intangibles | | | 447 | | | 447 | | | 894 | | | 894 | |
| Restructuring charges and integration costs | | | — | | | 2,205 | | | — | | | 5,550 | |
| | | | | | | | | | | | | | |
| Income from operations | | | 22,918 | | | 27,624 | | | 44,411 | | | 55,072 | |
| | | | | | | | | | | | | | |
| Other income (expense): | | | | | | | | | | | | | |
| Interest income | | | 1,986 | | | 2,700 | | | 5,229 | | | 4,449 | |
| Interest expense | | | (359 | ) | | (564 | ) | | (724 | ) | | (1,375 | ) |
| Other | | | 709 | | | 887 | | | 2,337 | | | 853 | |
| Total other income, net | | | 2,336 | | | 3,023 | | | 6,842 | | | 3,927 | |
| | | | | | | | | | | | | | |
| Income before income taxes | | | 25,254 | | | 30,647 | | | 51,253 | | | 58,999 | |
| | | | | | | | | | | | | | |
| Income tax expense | | | 2,822 | | | 4,726 | | | 6,202 | | | 8,602 | |
| | | | | | | | | | | | | | |
| Net income | | $ | 22,432 | | $ | 25,921 | | $ | 45,051 | | $ | 50,397 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Numerator for basic earnings per share - net income | | $ | 22,432 | | $ | 25,921 | | $ | 45,051 | | $ | 50,397 | |
| Interest expense on convertible debt, net of tax | | | — | | | 32 | | | — | | | 147 | |
| Numerator for diluted earnings per share | | $ | 22,432 | | $ | 25,953 | | $ | 45,051 | | $ | 50,544 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Denominator for basic earnings per share - weighted average number of common shares outstanding during the period | | | 67,541 | | | 72,540 | | | 68,436 | | | 71,991 | |
| Incremental common shares attributable to exercise of outstanding equity instruments | | | 173 | | | 806 | | | 236 | | | 1,035 | |
| Denominator for diluted earnings per share | | | 67,714 | | | 73,346 | | | 68,672 | | | 73,026 | |
| Earnings per share: | | | | | | | | | | | | | |
| Basic | | $ | 0.33 | | $ | 0.36 | | $ | 0.66 | | $ | 0.70 | |
| Diluted | | $ | 0.33 | | $ | 0.35 | | $ | 0.66 | | $ | 0.69 | |
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
June 30, 2008
(Amounts in Thousands)
(UNAUDITED)
Assets | | | | |
| | | | | |
| Current assets: | | | | |
| Cash and cash-equivalents | | $ | 288,015 | |
| Short-term investments | | | 1,000 | |
| Accounts receivable, net | | | 472,183 | |
| Inventories, net | | | 393,020 | |
| Other current assets | | | 58,818 | |
| | | | | |
| Total current assets | | | 1,213,036 | |
| | | | | |
| Long-term investments | | | 55,484 | |
| Property, plant and equipment, net | | | 145,209 | |
| Other assets, net | | | 27,337 | |
| Goodwill, net | | | 285,125 | |
| | | | | |
| Total assets | | $ | 1,726,191 | |
| | | | | |
| Liabilities and Shareholders’ Equity | | | | |
| | | | | |
| Current liabilities: | | | | |
| Current installments of long-term debt and capital lease obligations | | $ | 333 | |
| Accounts payable | | | 339,715 | |
| Accrued liabilities | | | 55,051 | |
| | | | | |
| Total current liabilities | | | 395,099 | |
| | | | | |
| Long-term debt and capital lease obligations, less current installments | | | 12,000 | |
| Other long-term liabilities | | | 44,505 | |
| Shareholders’ equity | | | 1,274,587 | |
| | | | | |
| Total liabilities and shareholders’ equity | | $ | 1,726,191 | |
