Benchmark Electronics Reports Third Quarter Results

ANGLETON, Texas, Oct. 20, 2016 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the third quarter ended September 30, 2016.

"In the September quarter, we made good progress on working capital management, reducing our cash conversion cycle by three days and generating $70M of operating cash flow.  We modestly expanded operating margins on a sequential basis and delivered on our published guidance.  However, the lack of sustained revenue growth continues to be a challenge and a critical focus area for the organization going forward," said Paul Tufano, Benchmark's President and CEO.

Mr. Tufano added, "Since being named Benchmark's CEO four weeks ago, I have traveled to a number of our sites and visited with a variety of customers.  I am excited by the capabilities that we possess, the strength of our customer relationships and the commitment of our people.  As we look forward, we are defining a clear strategy to accelerate long-term revenue growth aligned to an optimized global footprint that leverages our core strengths in design, electronics manufacturing, and precision technologies to add significant value for our customers and shareholders."

Third Quarter 2016 Financial Highlights

• Operating margin was 3.1% (non-GAAP 4.3%).
• Cash flows from operating activities were $70 million during the quarter and $228 million for the first nine months of the year.
• Common stock repurchases totaled $12 million or 483,000 shares. The amount remaining under the Company's current share repurchase plan is $94 million.
• Cash conversion cycle improved 3 days from 83 at June 30, 2016 to 80 days at September 30, 2016.
• Cash was $636 million at September 30, of which $592 million was available outside the U.S.

Cash Conversion Cycle

"We improved our cash conversion cycle to 80 days during the third quarter and remain on track to achieve 75 days exiting the year," said Don Adam, CFO.  "We generated $70 million in cash flow from operations during the quarter, bringing our year-to-date total to $228 million – which is nearly a 100% increase over the same 9-month period last year.  During the quarter, we purchased $12 million of our common shares, extending our share repurchases to 37 consecutive quarters.  We have $94 million remaining in our current share repurchase program."

Third Quarter 2016 Industry Sector Update

Revenue by industry sector (dollars in millions) was as follows.

Third quarter revenues from Benchmark's higher-value markets were in-line with expectations.  Test & Instrumentation revenues were strong, primarily from semi-capital equipment customers; Medical was stable; and Industrials were lower due to new program delays.  In traditional markets, demand was strong, but Telecommunication revenues were below expectations because of customer qualification timing.  The Company expects Telecommunications demand to remain strong through the fourth quarter.

Third Quarter 2016 Bookings Update

• New program bookings of $110 to $135 million.
• 20 engineering awards supporting early engagement opportunities.
• 29 manufacturing wins across all market sectors.

The Company projects new program bookings for the third quarter will result in annualized revenue of $110 to $135 million when fully launched in the next 12-18 months.  The new program bookings align with Benchmark's strategic focus on higher-value markets.  For the last 12 months, 75% of new bookings came from these targeted growth markets.

Fourth Quarter 2016 Outlook

• Revenue between $590-$610 million.
• Diluted GAAP earnings per share between $0.33-$0.37.
• Diluted non-GAAP earnings per share between $0.39-$0.43 (excluding restructuring charges and amortization of intangibles expected to approximate $0.06 per share). The income tax impact of the non-GAAP adjustments using the applicable effective tax rates is $0.03 per share.

Third Quarter 2016 Results Conference Call Details

A conference call hosted by Benchmark management will be held today at 4:00 p.m. Central Time (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 integrated manufacturing, design and engineering services to original equipment manufacturers of industrial equipment (including equipment for the aerospace and defense industries), telecommunication equipment, computers and related products for business enterprises, medical devices, and test and instrumentation products.  Benchmark's global operations include facilities in seven countries, and its common shares trade on the New York Stock Exchange under the symbol BHE.

Non-GAAP Financial Measures

This press release includes financial measures for earnings and earnings per share that exclude certain items and therefore do not follow U.S. 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.  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 of net income and earnings per share that exclude certain items in order to better assess operating performance and help investors compare results with our previous guidance.  Benchmark'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.

Forward-Looking Statements

This press 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," "plan," "anticipate," "project," "predict," "goals" and similar terms, and the negatives thereof, often identify forward-looking statements, which are not limited to historical facts.  The Company's forward-looking statements include, among other things, the statement "the Company expects Telecommunications demand to remain strong through the fourth quarter"; projections relating to capital expenditures, strategic growth initiatives, share repurchases, improving shareholder value, portfolio diversification, cost and operating efficiencies, working capital improvements and increasing operating margins; and fourth quarter 2016 revenues and diluted earnings per share.  Although Benchmark believes these statements are based upon reasonable assumptions, they involve risks and uncertainties relating to our operations, markets and 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.

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.  Readers are advised to consult further disclosures on related subjects, particularly in Item 1A, "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2015, in its other filings with the Securities and Exchange Commission and in its press releases.

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SOURCE Benchmark Electronics, Inc.