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Benchmark Electronics, Inc. announced financial results for the third quarter ended September 30, 2018.
"Third quarter revenue and earnings were in line with our expectations," said Paul Tufano, Benchmark's president and CEO. "Bookings remained strong at $175 million; revenue was up 5% year-over-year; and gross margins, on a non-GAAP basis, improved 30 bps quarter-over-quarter to 8.5%, but remain muted from continuing softness in semi-cap. Cash cycle days were 74 and slightly above our target range due to the linearity of shipments; we expect our Q4 cash cycle days to be within our target range. As a result, we expect full year operating cash flow to be positive in 2018."
"As of this earnings release, we have spent $152 million on share repurchases year-to-date and are expecting to exceed $200 million in share repurchases exiting this year, which well exceeds our $100 million target for 2018," said Tufano. "Additionally, the board has authorized an additional $100 million for share repurchases above our existing program."
"Our fourth quarter guidance reflects strength in our core business and sustained operational improvement, but remains tempered by softness in the semi‐cap market, which we expect to persist through the first half of 2019. Despite an expected 10% year-over-year reduction in the Test & Instrumentation sector, we expect annual revenue growth in 2019 of 3-5%. For 2019, we also expect gross and operating margin expansion from not only operational execution and the progressive growth of our new RF and high-speed design center, but also the reduction of our cost and expense structure, including SG&A and the evaluation of marginal or dilutive contracts. We are committed to the achievement of our business model and are encouraged by the opportunities to further expand customer engagements," said Tufano.
Higher‐value markets were down 2% year‐over‐year from softer demand in Test & Instrumentation (primarily semi-capital equipment) and medical program transitions. Traditional market revenues were up 19% year-over-year primarily from strong storage demand in Computing and new program ramps in Telecommunications.
Third Quarter 2018 Bookings Update
- New program bookings of $175 million at the midpoint of projected annualized revenue.
- 27 engineering awards supporting early engagement opportunities.
- 31 manufacturing wins across all market sectors.
The Company projects that new program bookings for the third quarter will result in annualized revenue of $162 to $182 million when fully launched in the next 12-24 months, medical up to 36 months.
Additional Share Repurchase Authorization and Capital Allocation Update
On March 7, 2018, the board expanded an existing share repurchase program by $250 million. The Company has repurchased $122 million of common stock shares year-to-date through September 30, 2018 and $152 million through October 29, 2018. On October 26, 2018, the Board authorized an additional $100 million and the total remaining authorization outstanding is $262 million.
Fourth Quarter 2018 Outlook
- Revenue between $610 - $650 million.
- Diluted GAAP earnings per share between $0.21 - $0.32.
- Diluted non-GAAP earnings per share between $0.32 - $0.40 (excluding any additional impact related to U.S. Tax Reform, restructuring charges and other costs and amortization of intangibles).
About Benchmark Electronics, Inc.
Benchmark is a worldwide provider of innovative product design, engineering services, technology solutions and advanced manufacturing services. From initial product concept to volume production, including direct order fulfillment and aftermarket services, Benchmark has been providing integrated services and solutions to original equipment manufacturers since 1979. Today, Benchmark proudly serves the following industries: aerospace and defense, medical technologies, complex industrials, test and instrumentation, next-generation telecommunications and high-end computing. Benchmark's global operations network includes facilities in eight countries and common shares trade on the New York Stock Exchange under the symbol BHE.