Benchmark Electronics Reports First Quarter 2018 Results

SCOTTSDALE, Ariz., April 25, 2018 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the first quarter ended March 31, 2018.

On January 1, 2018, we adopted new accounting guidance, FASB ASC Topic 606 "Revenue from Contracts with Customers" (ASC 606), relating to revenue recognition.  We adopted ASC 606 using the full retrospective transition method.  Accordingly, we have adjusted prior period information to be consistent with ASC 606.  The adoption of ASC 606 did not materially impact our overall financial position.

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

"Overall, performance in the first quarter was solid. Revenues were up 9% year-over-year and gross margins improved 40 bps to 9.5%.  Non‐GAAP EPS of $0.41 exceeded the high end of our guidance by $0.03; cash cycle days ended at 68 days, within our 73 to 68 day target range; and we achieved 11.2% ROIC, a 90 bps quarter‐over‐quarter improvement," said Paul Tufano, Benchmark's President and CEO.

"We continue to see good progress in bookings and are encouraged by the quality of our new customer engagements.  For the second quarter, the convergence of timing dynamics related to mix shifts primarily in medical, new customer ramp headwinds, and planned investments in engineering and solutions will impact our reported financials.  Consequently, our guidance reflects these factors with sequential revenue in the range of $590 million to $630 million and non-GAAP EPS between $0.26 and $0.34," continued Tufano.  "We are confident in our ability to address these challenges and remain positive about the second half and our long-term model."

Cash Conversion Cycle

First Quarter 2018 Industry Sector Update
Revenue by industry sector (in millions) was as follows.

First quarter revenues from higher-value markets were in line with expectations, including strong demand in Test & Instrumentation from semi-capital equipment customers.  Higher-value markets were up 12% year-over-year from Test & Instrumentation and Medical markets.

Traditional market revenues in Computing and Telecommunications were down sequentially from seasonality in Computing demand and up 3% year-over-year.

First Quarter 2018 Bookings Update

• New program bookings of $171 million at the midpoint.
• 17 engineering awards supporting early engagement opportunities.
• 32 manufacturing wins across all market sectors.

The Company projects that new program bookings for the first quarter will result in annualized revenue of $141 to $201 million when fully launched in the next 12-24 months.  The new program bookings align with Benchmark's strategic focus.

Second Quarter 2018 Outlook

• Revenue between $590 - $630 million.
• Diluted GAAP earnings per share between $0.21 - $0.29.
• Diluted non-GAAP earnings per share between $0.26 - $0.34 (excluding any additional impact related to U.S. Tax Reform, restructuring charges and amortization of intangibles).

First Quarter 2018 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 worldwide engineering services, integrated technology solutions and manufacturing services (both electronics manufacturing services (EMS) and precision machining services) to original equipment manufacturers in the following industries: industrial controls, aerospace and defense, telecommunications, computers and related products for business enterprises, medical devices, and test and instrumentation.  Benchmark's global operations include facilities in eight countries, and its common shares trade on the New York Stock Exchange under the symbol BHE.

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 2018 results; 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, 2017 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.

All forward-looking statements included in this release are based upon information available to Benchmark as of the date hereof, and the Company 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 better assess operating performance and help investors compare results with our previous guidance.  This document also references "ROIC", which the Company defines as operating income for the last twelve months excluding restructuring charges and other costs, amortization of intangible assets and stock-based compensation, adjusted for taxes, divided by the quarterly average of invested capital.  Average invested capital is defined as shareholders' equity plus long-term debt minus cash as of the last five quarterly balance sheets.  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.

For the three months ended March 31, 2017, the adoption of ASC 606 reduced revenue by $8.6 million, operating income by $1.5 million, net income by $1.1 million and diluted earnings per share by $0.02.

As of December 31, 2017, the adoption of ASC 606 increased current assets by $12.0 million, increased total liabilities by $1.7 million and increased shareholder's equity by $10.3 million.

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SOURCE Benchmark Electronics, Inc.