Benchmark Electronics(BHE) - 2024 Q2 - Quarterly Results

Second Quarter 2024 Financial Highlights Key Financial and Operational Results Benchmark reported solid results for the second quarter of 2024, with revenue of $666 million, achieving a GAAP diluted EPS of $0.43 and a non-GAAP diluted EPS of $0.57, alongside improved operating margins and strong free cash flow Q2 2024 Key Financial Metrics | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Sales (Millions) | $666M | $676M | $733M | | GAAP Net Income (Millions) | $16M | $14M | $14M | | Non-GAAP Net Income (Millions) | $21M | $20M | $20M | | GAAP Diluted EPS ($) | $0.43 | $0.38 | $0.39 | | Non-GAAP Diluted EPS ($) | $0.57 | $0.55 | $0.56 | | GAAP Operating Margin (%) | 4.1% | 3.8% | 3.3% | | Non-GAAP Operating Margin (%) | 5.1% | 4.9% | 4.5% | - Generated $56 million in net cash from operations and $47 million in positive free cash flow during the second quarter of 2024[17] Cash Conversion Cycle (Days) | Period | June 30, 2024 | March 31, 2024 | June 30, 2023 | | :--- | :--- | :--- | :--- | | Cash Conversion Cycle | 90 | 94 | 103 | Management Commentary and Dividend Management highlighted the company's consistent progress and solid results, maintaining focus on execution, margin protection, inventory reduction, and positive free cash flow, which is now expected to exceed $120 million for fiscal year 2024, alongside a quarterly dividend increase to $0.17 per share - The Board of Directors authorized an increase in the quarterly dividend from $0.165 to $0.17 per share[25] - CEO Jeff Benck stated the company delivered solid results and is making consistent progress toward long-term objectives[26] - The company now expects free cash flow to exceed $120 million in fiscal year 2024, focusing on protecting margins and driving down inventories amidst market uncertainty[10] Financial Performance Analysis Revenue by Industry Sector Total revenue for Q2 2024 was $666 million, a decrease from both the prior quarter ($676 million) and the same quarter last year ($733 million), driven by lower sales in Complex Industrials, Medical, and AC&C sectors, partially offset by growth in Semi-Cap and Aerospace & Defense (A&D) Revenue by Sector (Millions) | Sector | Q2 2024 Revenue | % of Total | Q2 2023 Revenue | % of Total | | :--- | :--- | :--- | :--- | :--- | | Semi-Cap | $172 | 26% | $164 | 22% | | Complex Industrials | $142 | 21% | $167 | 23% | | Medical | $111 | 17% | $145 | 20% | | A&D | $109 | 16% | $80 | 11% | | AC&C | $132 | 20% | $177 | 24% | | Total | $666 | 100% | $733 | 100% | - Year-over-year revenue decrease was primarily due to declines in Complex Industrials, Medical, and Advanced Computing and Communications (AC&C), partially offset by increases in Semi-Cap and A&D sales[35] Condensed Consolidated Statements of Income For the second quarter of 2024, sales decreased to $665.9 million from $733.2 million year-over-year, yet gross profit remained stable at $68.0 million, and income from operations increased to $27.3 million from $24.5 million, resulting in net income rising to $15.5 million, or $0.43 per diluted share Consolidated Income Statement Summary (Thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Sales (Thousands) | $665,896 | $733,232 | $1,341,471 | $1,427,927 | | Gross Profit (Thousands) | $67,950 | $67,031 | $135,358 | $130,989 | | Income from Operations (Thousands) | $27,253 | $24,481 | $52,782 | $47,223 | | Net Income (Thousands) | $15,528 | $13,991 | $29,530 | $26,351 | | Diluted EPS ($) | $0.43 | $0.39 | $0.81 | $0.74 | Condensed Consolidated Balance Sheets As of June 30, 2024, Benchmark's total assets were $2.15 billion, down from $2.27 billion at the end of 2023, primarily due to reductions in inventories and accounts receivable, while total liabilities also decreased to $1.06 billion from $1.20 billion, mainly from lower long-term debt and advance payments, with shareholders' equity increasing slightly to $1.10 billion Balance Sheet Summary (Thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents (Thousands) | $309,287 | $277,391 | | Inventories (Thousands) | $599,842 | $683,801 | | Total current assets (Thousands) | $1,510,651 | $1,635,747 | | Total assets (Thousands) | $2,154,739 | $2,274,755 | | Total current liabilities (Thousands) | $643,060 | $713,547 | | Long-term debt (Thousands) | $283,559 | $326,674 | | Total liabilities (Thousands) | $1,059,635 | $1,195,670 | | Shareholders' equity (Thousands) | $1,095,104 | $1,079,085 | Condensed Consolidated Statements of Cash Flows For the first six months of 2024, net cash provided by operating activities was $104.3 million, a significant improvement from a net use of $0.4 million in the same period of 2023, largely due to positive changes in working capital, particularly a decrease in inventories, with net cash used in investing activities at $15.8 million and financing activities at $58.9 million Cash Flow Summary - Six Months Ended June 30 (Thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities (Thousands) | $104,274 | ($368) | | Net cash used in investing activities (Thousands) | ($15,812) | ($46,464) | | Net cash (used in) provided by financing activities (Thousands) | ($58,892) | $84,941 | | Net increase in cash (Thousands) | $26,652 | $37,900 | Outlook Third Quarter 2024 Guidance For the third quarter of 2024, Benchmark anticipates revenue to be between $630 million and $670 million, projecting diluted GAAP earnings per share in the range of $0.36 to $0.42, and non-GAAP diluted earnings per share between $0.52 and $0.58 Q3 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenue (Millions) | $630M - $670M | | Diluted GAAP EPS ($) | $0.36 - $0.42 | | Diluted non-GAAP EPS ($) | $0.52 - $0.58 | - Expected charges in Q3 2024 include approximately $1.0 million for restructuring, $4.5 million for stock-based compensation, and $1.2 million for amortization of intangible assets[28] Supplemental Information Reconciliation of GAAP to Non-GAAP Financial Measures The company provides non-GAAP financial measures to help investors analyze performance by excluding items like restructuring charges, stock-based compensation, and amortization of intangibles, with Q2 2024 GAAP income from operations of $27.3 million adjusting to a non-GAAP figure of $34.1 million, and GAAP net income of $15.5 million reconciling to a non-GAAP net income of $21.0 million - Management uses non-GAAP measures, which exclude items such as restructuring charges, stock-based compensation, and amortization of intangibles, to better assess operating performance and compare results with previous guidance[38] Q2 2024 GAAP to Non-GAAP Reconciliation (Thousands) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Income from operations (Thousands) | $27,253 | $6,861 | $34,114 | | Net income (Thousands) | $15,528 | $5,424 | $20,952 | About Benchmark Electronics, Inc. Benchmark Electronics, Inc. provides comprehensive design and manufacturing solutions across the entire product life cycle, serving various sectors including semiconductor capital equipment, complex industrials, medical, commercial aerospace, defense, and advanced computing and communications, operating globally with facilities in seven countries and traded on the NYSE under the symbol BHE - Benchmark offers end-to-end product life cycle solutions, including technology and engineering design, supply chain management, and manufacturing services[5] - The company serves the following key industries: semiconductor capital equipment, complex industrials, medical, commercial aerospace, defense, and advanced computing and communications[5] Forward-Looking Statements This report contains forward-looking statements concerning the company's outlook, guidance, and business strategy, which are based on current assumptions but involve risks and uncertainties, such as customer demand fluctuations, supply chain constraints, inflation, and geopolitical tensions, that could cause actual results to differ materially - Forward-looking statements include guidance for Q3 and fiscal year 2024, future operating results, and business strategy initiatives[14] - Key risks that could affect future results include customer demand fluctuations, supply chain constraints, inflationary pressures, foreign currency fluctuations, high interest rates, and geopolitical uncertainties[14] Conference Call Information Benchmark will host a conference call at 5:00 p.m. Eastern Time to discuss the second quarter 2024 results, with a live webcast and replay available on the company's website, www.bench.com - The company will host a conference call at 5:00 p.m. Eastern Time to discuss the Q2 2024 results[19] - A live webcast and replay of the call are accessible on the company's website at www.bench.com[19](index=19&type=chunk)