Press Release | |
For More Information, Call: | |
| | |
| ELLEN M. DYLLA | |
| INVESTOR RELATIONS | October 23, 2008 |
| (979) 849-6550 | |
FOR IMMEDIATE RELEASE
BENCHMARK ELECTRONICS REPORTS RESULTS FOR THE
QUARTER ENDED SEPTEMBER 30, 2008
ANGLETON, TX, OCTOBER 23, 2008 - Benchmark Electronics, Inc. (NYSE: BHE), a leading contract manufacturing provider, announced sales of $642 million for the quarter ended September 30, 2008, compared to $673 million for the same quarter in the prior year. Third quarter net income was $24 million, or $0.36 per diluted share. In the comparable period of 2007, net income was $22 million, or $0.30 per diluted share.
Excluding restructuring charges, amortization of intangibles, the impact of stock-based compensation costs and a discrete tax benefit relating to a previously closed facility, the Company would have reported net income of $21 million, or $0.32 per diluted share, in the third quarter of 2008. Excluding restructuring charges, integration costs, amortization of intangibles, the impact of stock-based compensation costs and a discrete tax benefit relating to a previously closed facility, the Company would have reported net income of $17 million, or $0.24 per diluted share, in the third quarter of 2007.
“The recent deterioration and unprecedented volatility in end market demands which began in late September resulted in revenue softness that began to materialize in the third quarter,” said Cary T. Fu, the Company’s Chief Executive Officer. “Generally, I am pleased with our overall operating performance during the quarter and am confident in the ability of our organization to manage through, and take advantage of, the additional outsourcing opportunities that this environment may bring. Our revenue diversification and new program wins have been strong, but not strong enough to allow us to sidestep the current macro downturn.”
Third Quarter 2008 Financial Highlights
| · | Operating margin for the third quarter was 3.5% on a GAAP basis and was 3.6%, excluding restructuring charges, amortization of intangibles and the impact of stock-based compensation expense. |
| · | Cash flows provided by operating activities for the third quarter were approximately $76 million. |
| · | Cash and long-term investments totaled $389 million at September 30, 2008. Long-term investments consist of $48 million of auction rate securities. |
| · | Accounts receivable was $415 million at September 30, 2008; calculated days sales outstanding were 58 days. |
| · | Inventory was $363 million at September 30, 2008; inventory turns were 6.6 times. |
| · | Repurchases of common shares for the third quarter totaled $20 million or 1.3 million shares. |
Fourth Quarter 2008 Outlook
Recent demand weakness is expected to continue into the fourth quarter of 2008. While it is not possible to forecast with precision the specific impacts to each of the industries we serve, it is anticipated that the slowdown in technology spending will continue. Sales for the fourth quarter of 2008 are expected to range from $600 million to $640 million. To maintain consistency with published analysts’ reports, earnings guidance going forward will only exclude restructuring charges and will no longer exclude the impact of stock-based compensation and amortization of intangibles. Diluted earnings per share for the fourth quarter, excluding restructuring charges, are expected to be between $0.25 and $0.32.
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 “it is anticipated that the slowdown in technology spending will continue”, that we are “confident in the ability of our organization to not only manage through, but to take advantage of, the additional outsourcing opportunities that this environment may bring”, and our sales and diluted earnings per share, excluding restructuring charges, guidance for the fourth 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 | | Nine Months Ended | |
| | September 30, | | September 30, | |
| | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
| Income from operations (GAAP) | | $ | 22,267 | | $ | 14,880 | | $ | 66,678 | | $ | 69,952 | |
| Stock-based compensation | | | 384 | | | 628 | | | 2,432 | | | 2,440 | |
| Restructuring charges and integration costs | | | 253 | | | 1,451 | | | 253 | | | 7,001 | |
| Amortization of intangibles | | | 446 | | | 447 | | | 1,340 | | | 1,341 | |
| | | | | | | | | | | | | | |
| Non-GAAP income from operations | | $ | 23,350 | | $ | 17,406 | | $ | 70,703 | | $ | 80,734 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Net income (GAAP) | | $ | 23,925 | | $ | 22,009 | | $ | 68,976 | | $ | 72,406 | |
| Stock-based compensation, net of tax | | | 306 | | | 443 | | | 1,740 | | | 1,688 | |
| Restructuring charges and integration costs, net of tax | | | 228 | | | 1,043 | | | 228 | | | 5,211 | |
| Amortization of intangibles, net of tax | | | 284 | | | 291 | | | 854 | | | 905 | |
| Income tax benefit | | | (3,440 | ) | | (6,481 | ) | | (3,440 | ) | | (6,481 | ) |
| | | | | | | | | | | | | | |
| Non-GAAP net income | | $ | 21,303 | | $ | 17,305 | | $ | 68,358 | | $ | 73,729 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Numerator for basic earnings per share - net | | | | | | | | | | | | | |
| income (GAAP) | | $ | 23,925 | | $ | 22,009 | | $ | 68,976 | | $ | 72,406 | |
| Interest expense on convertible debt, net of tax | | | — | | | — | | | — | | | 147 | |
| | | | | | | | | | | | | | |
| Numerator for diluted earnings per share (GAAP) | | $ | 23,925 | | $ | 22,009 | | $ | 68,976 | | $ | 72,553 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Earnings per share: (GAAP) | | | | | | | | | | | | | |
| Basic | | $ | 0.36 | | $ | 0.30 | | $ | 1.02 | | $ | 1.00 | |
| Diluted | | $ | 0.36 | | $ | 0.30 | | $ | 1.01 | | $ | 0.99 | |
| | | | | | | | | | | | | | |
| Numerator for basic earnings per share - net | | | | | | | | | | | | | |
| income (Non-GAAP) | | $ | 21,303 | | $ | 17,305 | | $ | 68,358 | | $ | 73,729 | |
| Interest expense on convertible debt, net of tax | | | — | | | — | | | — | | | 147 | |
| | | | | | | | | | | | | | |
| Numerator for diluted earnings per | | | | | | | | | | | | | |
| share (Non-GAAP) | | $ | 21,303 | | $ | 17,305 | | $ | 68,358 | | $ | 73,876 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Earnings per share: (Non-GAAP) | | | | | | | | | | | | | |
| Basic | | $ | 0.32 | | $ | 0.24 | | $ | 1.01 | | $ | 1.02 | |
| Diluted | | $ | 0.32 | | $ | 0.24 | | $ | 1.00 | | $ | 1.01 | |
| | | | | | | | | | | | | | |
| Weighted average shares used in calculating | | | | | | | | | | | | | |
| earnings per share: | | | | | | | | | | | | | |
| Basic | | | 66,268 | | | 72,951 | | | 67,693 | | | 72,314 | |
| Diluted | | | 66,630 | | | 73,626 | | | 68,251 | | | 73,313 | |
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, | |
| | | | | | | | | | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
| Net sales | | $ | 641,672 | | $ | 672,595 | | $ | 2,008,397 | | $ | 2,181,372 | |
| Cost of sales | | | 597,376 | | | 633,818 | | | 1,872,859 | | | 2,033,612 | |
| | | | | | | | | | | | | | |
| Gross profit | | | 44,296 | | | 38,777 | | | 135,538 | | | 147,760 | |
| | | | | | | | | | | | | | |
| Selling, general and administrative expenses | | | 21,329 | | | 21,999 | | | 67,266 | | | 69,466 | |
| Amortization of intangibles | | | 446 | | | 447 | | | 1,340 | | | 1,341 | |
| Restructuring charges and integration costs | | | 253 | | | 1,451 | | | 253 | | | 7,001 | |
| | | | | | | | | | | | | | |
| Income from operations | | | 22,268 | | | 14,880 | | | 66,679 | | | 69,952 | |
| | | | | | | | | | | | | | |
| Other income (expense): | | | | | | | | | | | | | |
| Interest income | | | 1,680 | | | 3,106 | | | 6,909 | | | 7,555 | |
| Interest expense | | | (378 | ) | | (411 | ) | | (1,102 | ) | | (1,786 | ) |
| Other income (expense) | | | (790 | ) | | 725 | | | 1,547 | | | 1,578 | |
| Total other income, net | | | 512 | | | 3,420 | | | 7,354 | | | 7,347 | |
| | | | | | | | | | | | | | |
| Income before income taxes | | | 22,780 | | | 18,300 | | | 74,033 | | | 77,299 | |
| | | | | | | | | | | | | | |
| Income tax expense (benefit) | | | (1,145 | ) | | (3,709 | ) | | 5,057 | | | 4,893 | |
| | | | | | | | | | | | | | |
| Net income | | $ | 23,925 | | $ | 22,009 | | $ | 68,976 | | $ | 72,406 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Numerator for basic earnings per share - net income | | $ | 23,925 | | $ | 22,009 | | $ | 68,976 | | $ | 72,406 | |
| Interest expense on convertible debt, net of tax | | | — | | | — | | | — | | | 147 | |
| Numerator for diluted earnings per share | | $ | 23,925 | | $ | 22,009 | | $ | 68,976 | | $ | 72,553 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Denominator for basic earnings per share - weighted average number of common shares outstanding during the period | | | 66,268 | | | 72,951 | | | 67,693 | | | 72,314 | |
| Incremental common shares attributable to restricted shares and the exercise of outstanding equity instruments | | | 362 | | | 675 | | | 558 | | | 999 | |
| Denominator for diluted earnings per share | | | 66,630 | | | 73,626 | | | 68,251 | | | 73,313 | |
Earnings per share: | | | | | | | | | | | | | |
| Basic | | $ | 0.36 | | $ | 0.30 | | $ | 1.02 | | $ | 1.00 | |
| Diluted | | $ | 0.36 | | $ | 0.30 | | $ | 1.01 | | $ | 0.99 | |
| | | | | | | | | | | | | | |
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
September 30, 2008
(Amounts in Thousands)
(UNAUDITED)
Assets | | | |
| | | | |
| Current assets: | | | |
| Cash and cash-equivalents | | $ | 341,361 | |
| Accounts receivable, net | | | 415,455 | |
| Inventories, net | | | 362,692 | |
| Other current assets | | | 51,204 | |
| | | | | |
| Total current assets | | | 1,170,712 | |
| | | | | |
| Long-term investments | | | 47,907 | |
| Property, plant and equipment, net | | | 141,745 | |
| Other assets, net | | | 25,810 | |
| Goodwill, net | | | 283,194 | |
| | | | | |
| Total assets | | $ | 1,669,368 | |
| | | | | |
| | | | | |
Liabilities and Shareholders’ Equity | | | | |
| | | | | |
| Current liabilities: | | | | |
| Current installments of long-term debt and capital lease obligations | | $ | 273 | |
| Accounts payable | | | 289,725 | |
| Accrued liabilities | | | 58,697 | |
| | | | | |
| Total current liabilities | | | 348,695 | |
| | | | | |
| Long-term debt and capital lease obligations, less current installments | | | 11,749 | |
| Other long-term liabilities | | | 41,501 | |
| Shareholders’ equity | | | 1,267,423 | |
| | | | | |
| | | | | |
| Total liabilities and shareholders’ equity | | $ | 1,669,368 | |
| | | | | |
