Benchmark Reports Fourth Quarter 2018 Revenue and Earnings; CEO Retirement
TEMPE, Ariz., – Benchmark Electronics, Inc. (NYSE: BHE) announced financial results for the fourth quarter and year ended December 31, 2018.
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Three Months Ended |
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Dec 31, |
Sep 30, |
Dec 31, |
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In millions, except EPS |
2018 |
2018 |
2017(1) |
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Net sales |
$657 |
$641 |
$666 |
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Net income (loss) |
$28 |
$8 |
(76) |
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Net income – non-GAAP(2) |
$18 |
$15 |
$25 |
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Diluted EPS |
$0.64 |
$0.17 |
($1.54) |
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Diluted EPS – non-GAAP(2) |
$0.41 |
$0.33 |
$0.49 |
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Operating margin |
2.3% |
1.7% |
3.3% |
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Operating margin – non-GAAP(2) |
3.2% |
2.9% |
4.1% |
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Twelve Months Ended |
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Dec 31, |
Dec 31, |
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In millions, except EPS |
2018 |
2017(1) |
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Net sales |
$2,566 |
$2,454 |
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Net income (loss) |
$23 |
($32) |
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Net income – non-GAAP(2) |
$68 |
$81 |
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Diluted EPS |
$0.49 |
($0.64) |
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Diluted EPS – non-GAAP(2) |
$1.45 |
$1.61 |
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Operating margin |
2.3% |
3.1% |
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Operating margin – non-GAAP(2) |
3.1% |
4.0% |
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(1) 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. |
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(2) A reconciliation of GAAP and non-GAAP results is included below. |
“We capped 2018 with strong results in the fourth quarter, with revenue at $657 million and earnings at $0.41, both above the high end of our guidance,” said Paul Tufano, Benchmark’s President and CEO. “Bookings increased 23% for the full year and 13% sequentially to $198M; operating margins, on a non-GAAP basis, improved 30 bps quarter-over-quarter to 3.2%, but remain muted from continuing softness in semi-cap; and cash cycle days were 62 for the quarter and 68 days for the full year within our target range. As a result, operating cash flow was $94 million in the quarter and $77 million for the full year. During 2018, we spent $212 million on share repurchases reducing our outstanding shares by 17% year-over-year and have $202 million remaining with our existing program.
“As part of our ongoing process to review marginal and dilutive contracts, we have notified a long standing Computing customer that we will not renew a legacy contract that expires at the end of 2019 in its current form. The resulting reduction in annual revenue will be in the range of $280 million – $320 million, and annualized gross margins will improve by approximately 80 – 90 basis points, which more appropriately shows the strength of our underlying business. During this contractual transition year, we will discuss our actual results with and without the presence of this contract.
“Over the past several years, we have made progress on a number of key initiatives including the implementation of our market‐sector sales organization to drive bookings and revenue growth; the expansion of our engineering and solutions capabilities to extend our value proposition to customers; and, the optimization of our global network and continued focus on operational execution,” added Tufano. “The progress on these initiatives will enable 3-5% revenue growth on our base business, excluding the legacy Computing contract. For 2019, we also expect gross and operating margin expansion from improved execution, effective cost and expense management, and the growth of additional service offerings including RF and high-speed design capabilities. We remain committed to the achievement of our long-term business model as we continue to pursue growth and create value for our shareholders.”
In addition, Benchmark Electronics, Inc. (NYSE: BHE) announced that Paul J. Tufano, President and Chief Executive Officer, will retire after transitioning his responsibilities to a successor to be identified by the Board of Directors. He will also resign from the Board once his successor assumes the role of CEO. The Board of Directors has engaged a leading national executive search firm and is well underway to identify Mr. Tufano’s successor. Mr. Tufano will remain with the company as an advisor through December 31, 2019.
