BENCHMARK REPORTS FIRST QUARTER 2023 RESULTS
First quarter 2023 results:
- Revenue of
$695 million 9% year-over-year led by: - Advanced Computing growth of
74% - Medical growth of
17% - Next Generation Communications growth of
45% - GAAP operating income of
$23 million 48% year-over-year - Non-GAAP(1) operating income of
$26 million 21% year-over-year - GAAP diluted EPS of
$0.35 13% year-over-year
Three Months Ended | ||||||||||||
March 31, | Dec 31, | March 31, | ||||||||||
In millions, except EPS | 2023 | 2022 | 2022 | |||||||||
Sales | $ | 695 | $ | 751 | $ | 636 | ||||||
Net income | $ | 12 | $ | 21 | $ | 11 | ||||||
Income from operations | $ | 23 | $ | 27 | $ | 15 | ||||||
Net income – non-GAAP(1) | $ | 15 | $ | 21 | $ | 16 | ||||||
Income from operations – non-GAAP(1) | $ | 26 | $ | 33 | $ | 21 | ||||||
Diluted earnings per share | $ | 0.35 | $ | 0.60 | $ | 0.31 | ||||||
Diluted EPS – non-GAAP(1) | $ | 0.42 | $ | 0.60 | $ | 0.44 | ||||||
Operating margin | 3.3 | % | 3.6 | % | 2.4 | % | ||||||
Operating margin – non-GAAP(1) | 3.7 | % | 4.3 | % | 3.4 | % | ||||||
(1) A reconciliation of GAAP and non-GAAP results is included below. | |
"Our first quarter results include double-digit year-over-year product shipment growth despite the pause in Semi-Cap spending, demonstrating the power of our sector diversification," said Jeff Benck, Benchmark's President and CEO.
Benck continued "While 2023 has already been a dynamic year, we are encouraged by the demand trends we are experiencing across the majority of our sectors. Coupled with our continued execution, we remain confident in our outlook for the current year as well as our ability to execute to our long-term targets."
Cash Conversion Cycle
Mar 31, | Dec 31, | Mar 31, | ||||||||||
2023 | 2022 | 2022 | ||||||||||
Accounts receivable days | 60 | 59 | 54 | |||||||||
Contract asset days | 25 | 22 | 24 | |||||||||
Inventory days | 111 | 97 | 95 | |||||||||
Accounts payable days | (60) | (56) | (71) | |||||||||
Advance payments from customers days | (27) | (26) | (20) | |||||||||
Cash Conversion Cycle days | 109 | 96 | 82 | |||||||||
First Quarter 2023 Industry Sector Update
Revenue and percentage of sales by industry sector (in millions) were as follows.
Mar 31, | Dec 31, | Mar 31, | ||||||||||||||||||||||
Higher-Value Markets | 2023 | 2022 | 2022 | |||||||||||||||||||||
Medical | $ | 137 | 20 | % | $ | 144 | 19 | % | $ | 117 | 18 | % | ||||||||||||
Semi-Cap | 149 | 21 | 178 | 24 | 183 | 29 | ||||||||||||||||||
A&D | 79 | 11 | 90 | 12 | 82 | 13 | ||||||||||||||||||
Industrials | 144 | 21 | 143 | 19 | 137 | 22 | ||||||||||||||||||
Advanced Computing | 96 | 14 | 92 | 12 | 55 | 8 | ||||||||||||||||||
Next Gen Communications | 90 | 13 | 104 | 14 | 62 | 10 | ||||||||||||||||||
Total | $ | 695 | 100 | % | $ | 751 | 100 | % | $ | 636 | 100 | % | ||||||||||||
Overall, revenues were up
Second Quarter 2023 Guidance
- Revenue between
$670 $710 million - Diluted GAAP earnings per share between
$0.35 $0.41 - Diluted non-GAAP earnings per share between
$0.43 $0.49 - This guidance takes into consideration all known constraints for the quarter and assumes no further significant interruptions to our supply base, operations or customers.
Restructuring charges are expected to range between
First Quarter 2023 Earnings Conference Call
The Company will host a conference call to discuss the results today at 5:00 p.m. Eastern Time. The live webcast of the call and accompanying reference materials will be accessible by logging on to the Company's website at www.bench.com. A replay of the broadcast will also be available on the Company's website.
About Benchmark Electronics, Inc.
Benchmark provides comprehensive solutions across the entire product life cycle by leading through its innovative technology and engineering design services, leveraging its optimized global supply chain and delivering world-class manufacturing services in the following industries: commercial aerospace, defense, advanced computing, next generation telecommunications, complex industrials, medical, and semiconductor capital equipment. Benchmark's global operations include facilities in seven countries and its common shares trade on the New York Stock Exchange under the symbol BHE.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts and may include words such as "anticipate," "believe," "intend," "plan," "project," "forecast," "strategy," "position," "continue," "estimate," "expect," "may," "will," "could," "predict," and similar expressions of the negative or other variations thereof. In particular, statements, express or implied, concerning the Company's outlook and guidance for second quarter and fiscal year 2023 results, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the Company's business strategy and strategic initiatives, the Company's repurchases of shares of its common stock, the Company's expectations regarding restructuring charges and amortization of intangibles, and the Company's intentions concerning the payment of dividends, among others, are forward-looking statements. Although the Company believes these statements are based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions that are beyond the Company's ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and in any of the Company's subsequent reports filed with the Securities and Exchange Commission. Events relating to the possibility of customer demand fluctuations, supply chain constraints, continued inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including trade restrictions, or the ability to utilize the Company's manufacturing facilities at sufficient levels to cover its fixed operating costs, may have resulting impacts on the Company's business, financial condition, results of operations, and the Company's ability (or inability) to execute on its plans. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes, including the future results of the Company's operations, may vary materially from those indicated. Undue reliance should not be placed on any forward-looking statements. Forward-looking statements are not guarantees of performance. All forward-looking statements included in this document are based upon information available to the Company as of the date of this document, and the Company assumes no obligation to update.
Non-GAAP Financial Measures
Management discloses non–GAAP information to provide investors with additional information to analyze the Company's performance and underlying trends. A detailed reconciliation between GAAP results and results excluding certain items ("non-GAAP") is included in the following tables attached to this document. In situations where a non-GAAP reconciliation has not been provided, the Company was unable to provide such a reconciliation without unreasonable effort due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. 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 "free cash flow", which the Company defines as cash flow from operations less additions to property, plant and equipment and purchased software. 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.
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Amounts in Thousands, Except Per Share Data) (UNAUDITED) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Sales | $ | 694,695 | $ | 636,083 | ||||
Cost of sales | 630,737 | 578,481 | ||||||
Gross profit | 63,958 | 57,602 | ||||||
Selling, general and administrative expenses | 38,198 | 36,289 | ||||||
Amortization of intangible assets | 1,592 | 1,609 | ||||||
Restructuring charges and other costs | 1,426 | 4,297 | ||||||
Income from operations | 22,742 | 15,407 | ||||||
Interest expense | (6,450) | (1,750) | ||||||
Interest income | 1,258 | 130 | ||||||
Other income (expense), net | (2,165) | (294) | ||||||
Income before income taxes | 15,385 | 13,493 | ||||||
Income tax expense | 3,025 | 2,533 | ||||||
Net income | $ | 12,360 | $ | 10,960 | ||||
Earnings per share: | ||||||||
Basic | $ | 0.35 | $ | 0.31 | ||||
Diluted | $ | 0.35 | $ | 0.31 | ||||
Weighted-average number of shares used in calculating earnings per share: | ||||||||
Basic | 35,336 | 35,245 | ||||||
Diluted | 35,592 | 35,470 | ||||||
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (UNAUDITED) (in thousands) | ||||||||
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 210,893 | $ | 207,430 | ||||
Restricted cash | 797 | — | ||||||
Accounts receivable, net | 461,905 | 491,957 | ||||||
Contract assets | 194,134 | 183,613 | ||||||
Inventories | 778,137 | 727,749 | ||||||
Other current assets | 45,006 | 41,400 | ||||||
Total current assets | 1,690,872 | 1,652,149 | ||||||
Property, plant and equipment, net | 221,016 | 211,478 | ||||||
Operating lease right-of-use assets | 95,156 | 93,081 | ||||||
Goodwill and other, net | 271,604 | 270,623 | ||||||
Total assets | $ | 2,278,648 | $ | 2,227,331 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Current installments of long-term debt and finance lease obligations | $ | 3,456 | $ | 4,275 | ||||
Accounts payable | 421,746 | 424,272 | ||||||
Advance payments from customers | 185,808 | 197,937 | ||||||
Accrued liabilities | 100,853 | 122,652 | ||||||
Total current liabilities | 711,863 | 749,136 | ||||||
Long-term debt and finance lease obligations, less current installments | 399,924 | 320,675 | ||||||
Operating lease liabilities | 87,561 | 86,687 | ||||||
Other long-term liabilities | 44,674 | 44,417 | ||||||
Shareholders' equity | 1,034,626 | 1,026,416 | ||||||
Total liabilities and shareholders' equity | $ | 2,278,648 | $ | 2,227,331 | ||||
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows (in thousands) (UNAUDITED) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 12,360 | $ | 10,960 | ||||
Depreciation and amortization | 11,100 | 10,897 | ||||||
Stock-based compensation expense | 4,790 | 4,206 | ||||||
Accounts receivable, net | 30,398 | (26,356) | ||||||
Contract assets | (10,521) | (13,431) | ||||||
Inventories | (49,864) | (85,751) | ||||||
Accounts payable | 15,375 | 35,869 | ||||||
Advance payments from customers | (12,129) | 34,002 | ||||||
Other changes in working capital and other, net | (26,415) | (38,421) | ||||||
Net cash used in operations | (24,906) | (68,025) | ||||||
Cash flows from investing activities: | ||||||||
Additions to property, plant and equipment and software | (38,731) | (17,975) | ||||||
Other investing activities, net | 19 | 1,330 | ||||||
Net cash used in investing activities | (38,712) | (16,645) | ||||||
Cash flows from financing activities: | ||||||||
Share repurchases | — | (5,482) | ||||||
Net debt activity | 78,316 | 72,959 | ||||||
Other financing activities, net | (11,292) | (8,343) | ||||||
Net cash provided by financing activities | 67,024 | 59,134 | ||||||
Effect of exchange rate changes | 854 | (1,278) | ||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 4,260 | (26,814) | ||||||
Cash and cash equivalents and restricted cash at beginning of year | 207,430 | 271,749 | ||||||
Cash and cash equivalents and restricted cash at end of period | $ | 211,690 | $ | 244,935 | ||||
Benchmark Electronics, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Results (Amounts in Thousands, Except Per Share Data) (UNAUDITED) | ||||||||||||
Three Months Ended | ||||||||||||
Mar 31, | Dec 31, | Mar 31, | ||||||||||
2023 | 2022 | 2022 | ||||||||||
Income from operations (GAAP) | $ | 22,742 | $ | 26,946 | $ | 15,407 | ||||||
Amortization of intangible assets | 1,592 | 1,592 | 1,609 | |||||||||
Restructuring charges and other costs | 1,426 | 799 | 2,314 | |||||||||
Loss on the sale of property, plant and equipment | — | — | 1,983 | |||||||||
Settlement | — | 3,250 | — | |||||||||
Non-GAAP income from operations | $ | 25,760 | $ | 32,587 | $ | 21,313 | ||||||
GAAP operating margin | 3.3 | % | 3.6 | % | 2.4 | % | ||||||
Non-GAAP operating margin | 3.7 | % | 4.3 | % | 3.4 | % | ||||||
Gross Profit (GAAP) | $ | 63,958 | $ | 72,127 | $ | 57,602 | ||||||
Non-GAAP gross profit | $ | 63,958 | $ | 72,127 | $ | 57,602 | ||||||
GAAP gross margin | 9.2 | % | 9.6 | % | 9.1 | % | ||||||
Non-GAAP gross margin | 9.2 | % | 9.6 | % | 9.1 | % | ||||||
Selling, general and administrative expenses | $ | 38,198 | $ | 39,540 | $ | 36,289 | ||||||
Non-GAAP selling, general and administrative expenses | $ | 38,198 | $ | 39,540 | $ | 36,289 | ||||||
Net income (GAAP) | $ | 12,360 | $ | 21,219 | $ | 10,960 | ||||||
Amortization of intangible assets | 1,592 | 1,592 | 1,609 | |||||||||
Restructuring charges and other costs | 1,426 | 799 | 2,314 | |||||||||
Loss on the sale of property, plant and equipment | — | — | 1,983 | |||||||||
Settlement | — | (2,344) | — | |||||||||
Income tax adjustments(1) | (516) | (5) | (1,206) | |||||||||
Non-GAAP net income | $ | 14,862 | $ | 21,261 | $ | 15,660 | ||||||
Diluted earnings per share: | ||||||||||||
Diluted (GAAP) | $ | 0.35 | $ | 0.60 | $ | 0.31 | ||||||
Diluted (Non-GAAP) | $ | 0.42 | $ | 0.60 | $ | 0.44 | ||||||
Weighted-average number of shares used in calculating diluted earnings per share: | ||||||||||||
Diluted (GAAP) | 35,592 | 35,630 | 35,470 | |||||||||
Diluted (Non-GAAP) | 35,592 | 35,630 | 35,470 | |||||||||
Net cash used in operations | $ | (24,906) | $ | (52,749) | $ | (68,025) | ||||||
Additions to property, plant and equipment and software | (38,731) | (13,180) | (17,975) | |||||||||
Free cash flow (used) | $ | (63,637) | $ | (65,929) | $ | (86,000) | ||||||
(1) This amount represents the tax impact of the non-GAAP adjustments using the applicable effective tax rates. | |
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SOURCE Benchmark Electronics, Inc.
