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Benchmark Electronics, Inc. today announced financial results for the second quarter ended June 30, 2016.
"Second quarter revenues were $579 million, with non-GAAP EPS of $0.31," said Gayla Delly, Benchmark's President and CEO. "Our year-over-year revenue from higher-value markets increased from 53% to 63% for the first half of the year driven by the successful transformation of our customer portfolio and the Secure acquisition."
"We are encouraged by the progress of our initiatives to improve our cash conversion cycle from 99 to 83 days. We have transitioned a number of new programs to more efficient supply chain solutions over the last 18 months, primarily in our international locations and are on track to achieve 75 days as we exit the fourth quarter."
Delly concluded, "Our balance sheet remains strong, supporting continued investment in our business, strategic growth initiatives and our share repurchase program. Our results for the quarter show continued progress on our strategy to drive shareholder value, including diversifying our portfolio, executing on our lean and operational initiatives and managing our working capital. While our third quarter outlook reflects caution from customer forecasts, we remain committed to delivering higher returns on invested capital through better operating margins and working capital management."
Second Quarter 2016 Financial Highlights
- Operating margin was 3.1% (non-GAAP 3.7%).
- Cash flows from operating activities were $81 million during the quarter and $158 million through the first half of the year.
- Common stock repurchases totaled $15 million or 750,000 shares. The amount remaining under our current share repurchase plan is $105 million.
- Cash conversion cycle improved 16 days from 99 at March 31, 2016 to 83 days at June 30, 2016.
- Cash was $573 million at June 30, of which $535 million was held outside the U.S.
"We continue to deliver strong cash flows from operations, which in the second quarter totaled $81 million and free cash flow of $73 million," said Don Adam, Benchmark's CFO. "During the second quarter we repurchased $15 million of common stock, which represents the 36th consecutive quarter of share buybacks."
Revenues across all sectors improved quarter-over-quarter, other than Telecommunications, which declined as projected. Among the higher-value markets, Medical and Test & Instrumentation performed better than expected, while product qualification delays reduced revenues to Industrials primarily in the aerospace and defense markets. Computing revenues were higher than anticipated with strong late-quarter demand.
Second Quarter 2016 Bookings Update
- New program bookings were $105 to $130 million.
- 12 engineering awards supporting early engagement opportunities.
- 33 manufacturing wins across all market sectors.
The Company projects new program bookings for the second quarter will result in annualized revenue of $105 to $130 million when fully launched in the next 12-18 months. The new program bookings align with Benchmark's strategic focus in higher-value markets. For the last 12 months, 77% of new bookings came from these targeted growth markets.
Third Quarter 2016 Outlook
- Revenue between $570-$600 million.
- Diluted GAAP earnings per share between $0.28-$0.33.
- Diluted non-GAAP earnings per share between $0.33-$0.38 (excluding restructuring charges and amortization of intangibles expected to approximate $0.05 per share). The income tax impact of the non-GAAP adjustments using the applicable effective tax rates is $0.02 per share.
- Beginning with the third quarter, our non-GAAP EPS outlook excludes the impact of the amortization of intangibles of approximately $3 million or $0.04 per share net of tax.
About Benchmark Electronics, Inc.
Benchmark provides integrated manufacturing, design and engineering services to original equipment manufacturers of industrial equipment (including equipment for the aerospace and defense industries), telecommunication equipment, computers and related products for business enterprises, medical devices, and test and instrumentation products. Benchmark's global operations include facilities in seven countries, and its common shares trade on the New York Stock Exchange under the symbol BHE.