Benchmark Electronics Reports Results for the Quarter Ended June 30, 2012

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Jul 26, 2012, 07:00 ET

ANGLETON, Texas, July 26, 2012 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE), a leading integrated contract manufacturing provider, today announced financial results for the second quarter which ended June 30, 2012.

Second Quarter 2012 Results

Three Months Ended
	June 30,	March 31,	June 30,
	2012	2012	2011
Net Sales (in millions)	$630	$593	$586
Net Income (in millions)	$14	$6	$15
Net Income – non-GAAP (in millions)	$18	$14	$15
Diluted EPS	$0.24	$0.10	$0.24
Diluted EPS – non-GAAP	$0.32	$0.25	$0.25
Operating margin (%)	2.9%	1.3%	2.4%
Operating margin – non-GAAP (%)	3.7%	3.0%	2.5%

Second Quarter 2012 Highlights

Revenue of $630 million increased 6% and 8%, respectively, over Q1 of 2012 and Q2 of 2011.
Non-GAAP diluted earnings per share of $0.32 increased 28% over both Q1 of 2012 and Q2 of 2011.
Operating margin for the second quarter was 3.7% excluding restructuring and Thailand flood related charges of $5 million.
Thailand flood related charges of $5 million consist of costs directly attributable to the Thailand flood which are expected to be recovered from insurance in subsequent periods.
Cash flows provided by operating activities for Q2 2012 were approximately $41 million.
Cash and long-term investments balance was $297 million at June 30, 2012. Long-term investments consist of $16 million of auction rate securities.
Accounts receivable was $458 million at June 30, 2012; calculated days sales outstanding were 65 days compared to 72 days at March 31, 2012.
Inventory was $388 million at June 30, 2012; inventory turns improved to 6.0 times from 5.5 at March 31, 2012 and 5.5 at June 30, 2011.
Repurchases of common shares for the second quarter totaled $19 million or 1.4 million shares.

President and CEO Gayla J. Delly commented, "We are very pleased with the solid execution of our team for the second quarter in a weakening environment. Notably, our revenue and margin improvements were achieved while supporting numerous program ramps from previous quarters' bookings as well as the ongoing Thailand recovery efforts. Looking forward, the second quarter business development efforts provided strong bookings which is meaningful as these upcoming program launches together with the programs recently introduced will drive positive momentum in the face of a challenging macro environment."

Second Quarter Industry Sector Update

The following table sets forth revenue by industry sector for the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011.

	June 30,	March 31,	June 30,
	2012	2012	2011
Computers and related products for business enterprises	31%	31%	28%
Industrial control equipment	26%	27%	28%
Telecommunications equipment	25%	25%	23%
Medical devices	10%	9%	10%
Testing and instrumentation products	8%	8%	11%

Third Quarter 2012 Outlook

Revenue between $595 and $625 million
Diluted earnings per share between $0.27 and $0.32 (excluding restructuring and Thailand flood related charges)

Conference Call Details

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.

About Benchmark Electronics, Inc.

Benchmark Electronics, Inc. provides integrated manufacturing, design and engineering services to original equipment manufacturers of computers and related products for business enterprises, medical devices, industrial control equipment (which includes equipment for the aerospace and defense industry), testing and instrumentation products, and telecommunication equipment. Benchmark's global operations include 21 facilities in nine countries. Benchmark's 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 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 "these upcoming program launches together with the programs recently introduced will drive positive momentum in the face of a challenging macro environment", our sales and diluted earnings per share (excluding special items) guidance for the third quarter of 2012, as well as other statements, express or implied, concerning: the potential recovery of insurance proceeds; 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. Should one or more of these risks or uncertainties materialize, or should 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 of this release, and Benchmark assumes no obligation to update any such forward-looking statements. Persons are advised to consult further disclosures on related subjects in Benchmark's Form 10-K for the year ended December 31, 2011, in its other filings with the Securities and Exchange Commission and in its press releases.

Benchmark Electronics, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Financial Results (Amounts in Thousands, Except Per Share Data) (UNAUDITED)

		Three Months Ended June 30,				Six Months Ended June 30,
		2012		2011		2012		2011

Income from operations (GAAP)	$	18,268	$	14,166	$	26,093	$	29,947
Restructuring charges		286		480		250		480
Thailand flood related charges		4,658		—		14,876		—

Non-GAAP income from operations	$	23,212	$	14,646	$	41,219	$	30,427



Net income (GAAP)	$	13,580	$	14,701	$	19,178	$	29,214
Restructuring charges, net of tax		287		477		161		477
Thailand flood related charges		4,373		—		13,375		—

Non-GAAP net income	$	18,240	$	15,178	$	32,714	$	29,691



Earnings per share: (GAAP)
Basic	$	0.24	$	0.24	$	0.34	$	0.48
Diluted	$	0.24	$	0.24	$	0.33	$	0.48

Earnings per share: (Non-GAAP)
Basic	$	0.32	$	0.25	$	0.57	$	0.49
Diluted	$	0.32	$	0.25	$	0.57	$	0.49

Weighted average shares used in calculating
earnings per share:
Basic		56,963		60,159		57,223		60,537
Diluted		57,198		60,567		57,599		61,125

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,

		2012			2011		2012			2011

Net sales	$	630,031		$	585,549	$	1,223,448		$	1,123,861
Cost of sales		584,040			547,798		1,136,949			1,048,486

Gross profit		45,991			37,751		86,499			75,375

Selling, general and administrative expenses		22,779			23,105		45,280			44,948
Restructuring charges		286			480		250			480
Thailand flood related charges		4,658			—		14,876			—

Income from operations		18,268			14,166		26,093			29,947

Other income (expense):
Interest income		231			443		609			847
Interest expense		(322)			(331)		(647)			(663)
Other		(448)			731		(82)			296
Total other income (expense), net		(539)			843		(120)			480

Income before income taxes		17,729			15,009		25,973			30,427

Income tax expense		4,149			308		6,795			1,213

Net income	$	13,580		$	14,701	$	19,178		$	29,214


Denominator for basic earnings per share - weighted average number of common shares outstanding during the period		56,963			60,159		57,223			60,537
Incremental common shares attributable to restricted shares and the exercise of outstanding equity instruments		235			408		376			588
Denominator for diluted earnings per share		57,198			60,567		57,599			61,125
Earnings per share:
Basic	$	0.24		$	0.24	$	0.34		$	0.48
Diluted	$	0.24		$	0.24	$	0.33		$	0.48

Benchmark Electronics, Inc. and Subsidiaries Condensed Consolidated Balance Sheet June 30, 2012 (Amounts in Thousands) (UNAUDITED)

Assets

Current assets:
Cash and cash-equivalents	$	280,812
Accounts receivable, net		457,969
Inventories, net		387,665
Other current assets		74,722

Total current assets		1,201,168

Long-term investments		15,729
Property, plant and equipment, net		168,483
Other assets, net		69,665
Goodwill, net		37,912


Total assets	$	1,492,957

Liabilities and Shareholders' Equity

Current liabilities:
Current installments of capital lease obligations	$	458
Accounts payable		277,042
Accrued liabilities		66,488

Total current liabilities		343,988

Capital lease obligations, less current installments		10,361
Other long-term liabilities		22,169
Shareholders' equity		1,116,439


Total liabilities and shareholders' equity	$	1,492,957