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Benchmark Electronics, Inc. announced financial results for the fourth quarter and year ended December 31, 2018.
"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."
Higher‐value markets were down 4% year‐over‐year from softer demand in Test & Instrumentation (primarily semi-capital equipment). Traditional market revenues were up 3% year-over-year primarily from new program ramps in Telecommunications.
Fourth Quarter 2018 Bookings Update
- New program bookings of $198 million at the midpoint of projected annualized revenue.
- 17 engineering awards supporting early engagement opportunities.
- 34 manufacturing wins across all market sectors.
The Company projects that new program bookings for the fourth quarter will result in annualized revenue of $165 to $233 million when fully launched in the next 12-24 months, medical up to 36 months.
First Quarter 2019 Outlook
- Revenue between $570 - $610 million.
- Diluted GAAP earnings per share between $0.23 - $0.31.
- Diluted non-GAAP earnings per share between $0.29 - $0.37 (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.