Slide 1: Benchmark Electronics, Inc. Q1 2019 Earnings
© 2018 Benchmark Electronics, Inc. Benchmark Electronics, Inc. Q1 2019 Earnings April 24, 2019
Slide 2: Forward-Looking Statements
| 2 © 2018 Benchmark Electronics, Inc. Forward - Looking Statements This document contains forward - looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934. The words “expect,” “estimate,” “anticipate,” “predict” and
Slide 3: Implementation of ASC 606 – Revenue from Contracts with Customers
| 3 © 2018 Benchmark Electronics, Inc. Implementation of ASC 606 – Revenue from Contracts with Customers Effective January 1, 2018, the Company implemented ASC 606 the accounting standard governing “Revenue from Contracts with Customers” using the full retrospective transition method. Under ASC 606,
Slide 4: CEO Perspective
| 4 © 2018 Benchmark Electronics, Inc. CEO Perspective Jeff Benck President & Chief Executive Officer ► Began as CEO on March 18, 2019 ► +25 years in technology industry ► Deep experience with products & solutions
Slide 5: First Quarter 2019 Summary
© 2018 Benchmark Electronics, Inc. | 5 First Quarter 2019 Summary Revenue and non - GAAP diluted EPS within g uidance ► Year - over - year growth in A&D, Medical, and Telco ► Non - GAAP gross margins increased 40 bps sequentially to 8.8% ► Continued softness in semi - cap; down 36% year - over - yea
Slide 6: Initial Observations
© 2018 Benchmark Electronics, Inc. | 6 Initial Observations Company Strategy ► Continue focus on higher - value vertical markets ► Accelerate engineering value - add with rich technical solutions ► Increase customer awareness of full capabilities ► Maintain current c apital allocation plans Business
Slide 7: Focus Areas
© 2018 Benchmark Electronics, Inc. | 7 Focus Areas Optimize Go - to - Market ► Improve customer engagement ► Evaluate organizational alignment and resource deployment ► Increase revenue conversion of new opportunities & reduce program attrition Business Execution and Efficiencies ► Assess overall cu
Slide 8: CFO Updates & Q1 Financial Highlights
| 8 © 2018 Benchmark Electronics, Inc. CFO Updates & Q1 - 19 Financial Highlights Roop Lakkaraju Chief Financial Officer
Slide 9: New Business Wins with Focus on Market Sector Sales
© 2018 Benchmark Electronics, Inc. | 9 New Business Wins with Focus on Market Sector Sales Q1 - 19 New Business Wins by Segment Estimated Annual Revenue from New Business Wins ► 34 manufacturing and 20 engineering project awards ► Estimated annual revenue run rate between $134 – 188 million ► Estima
Slide 10: First Quarter 2019 Financial Summary
© 2018 Benchmark Electronics, Inc. | 10 First Quarter 2019 Financial Summary For the Three Months Ended (In millions, except EPS) Mar. 31 , 2019 Dec. 31 , 2018 Q/Q Mar. 31 , 2018 Y/Y Net Sales $603 $657 (8%) $608 (1%) GAAP Operating Margin 2.7% 2.3% 40 bps 3.0% (30 bps) GAAP Diluted EPS $0.34 $0.64
Slide 11: Revenue by Market Sector
© 2018 Benchmark Electronics, Inc. | 11 Higher - Value Markets Mar. 31 , 2019 Dec. 31 , 2018 Q/Q Industrials 20% $116 18% $121 (4%) Aerospace & Defense 17% $104 16% $105 (1%) Medical 17% $103 16% $104 -- Test & Instrument. 11% $66 11% $70 (5%) Total Revenue $389 $400 (3%) Revenue by Market Sector (1
Slide 12: GAAP Key Business Trends
© 2018 Benchmark Electronics, Inc. | 12 GAAP Key Business Trends Return on Invested Capital (LTM) Operating Margin ($M) SG&A ($M) Revenue & Gross Margin ($ M ) NOPAT Inv. Capital 18.0 14.3 11.0 15.3 16.1 3.0% 2.2% 1.7% 2.3% 2.7% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 0.0 10.0 20.0 30.0 40.0 50.0 60
Slide 13: Non-GAAP Key Business Trends
© 2018 Benchmark Electronics, Inc. | 13 Non - GAAP Key Business Trends Operating Margin ($M) SG&A ($M) Revenue & Gross Margin ($ M ) NOPAT Inv. Capital Non - GAAP ROIC = (Non - GAAP TTM income from operations – Non - GAAP Tax Impact) · [Average Invested Capital for last 5 quarters] (1) Excludes the
Slide 14: Cash Flow / Working Capital Highlights
© 2018 Benchmark Electronics, Inc. | 14 Cash Flow / Working Capital Highlights (1) Free cash flow (FCF) defined as net cash provided by operations (GAAP) less capex (In millions) Mar. 31 , 2019 Dec. 31 , 2018 Mar. 31 , 2018 Cash Flows from (used in) Operations $16 $94 $25 FCF $6 $80 $4 Cash $395 $45
Slide 15: Working Capital Update
© 2018 Benchmark Electronics, Inc. | 15 Working Capital Update Ongoing Cash Conversion Cycle Days will Range between 73 and 68 Days Q1 - 17 Q2 - 17 Q3 - 17 Q4 - 17 Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18 Q1 - 19 Accounts Receivable Days 62 57 61 59 59 61 64 64 61 Contract Asset Days 24 22 24 20 22 20 22 19
Slide 16: Capital Allocation Update
© 2018 Benchmark Electronics, Inc. | 16 Capital Allocation Update Dividends ► Recurring quarterly dividend of $0.15 per share announced in March 2018 ► First dividend was paid on April 11, 2018 ► Dividend of $6.2 million paid in January 2019 Share repurchases ► Share repurchases of $212 million comp
Slide 17: Second Quarter 2019 Guidance
© 2018 Benchmark Electronics, Inc. | 17 Second Quarter 2019 Guidance * The above guidance excludes the impact of amortization of intangible assets and estimated restructuring charges and other costs Guidance Net Sales (in millions) $555 – $585 Diluted EPS – non - GAAP* $0.28 – $0.36
Slide 18: Sequential Modeling Information
© 2018 Benchmark Electronics, Inc. | 18 Sequential Modeling Information ( Including Legacy Computing Contract) Higher - Value Markets Q2 - 19 Outlook (%) Industrials Flat Aerospace & Defense Up High Singles Medical Up Mid Singles Test & Instrumentation Down Mid Doubles Traditional Markets Q2 - 19 Ou
Slide 19: Waypoint Progress Milestones 2019
© 2018 Benchmark Electronics, Inc. | 19 $584 $721 2017 2018 2019 Waypoint 74% 74% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2017 2018 2019 Waypoint $36 $36 $34 $35 $25 $27 $29 $31 $33 $35 $37 $39 Q2 - 18 Q3 - 18 Q4 - 18 Q1 - 19 2H-2019 Waypoint 9.2% 9.3% 9.5% 9.4% -1.0% 1.0% 3.0% 5.0% 7.0% 9.0% 11
Slide 20: Appendix
| 20 © 2018 Benchmark Electronics, Inc. Appendix
Slide 21: Appendix 1 - Reconciliation of GAAP to non-GAAP Financial Results
design develop deliver advanced technology 21 © 2018 Benchmark Electronics, Inc. | 21 APPENDIX 1 - Reconciliation of GAAP to non - GAAP Financial Results (Amounts in Thousands, Except Per Share Data) – (UNAUDITED)
Slide 22: Appendix 2 - Reconciliation of GAAP to non-GAAP Financial Measures
design develop deliver advanced technology 22 © 2018 Benchmark Electronics, Inc. | 22 APPENDIX 2 - Reconciliation of GAAP to non - GAAP Financial Measures (Amounts in Thousands, Except Per Share Data) – (UNAUDITED) Mar 31, 2019 Dec 31, 2018 Mar 31, 2018 GAAP gross profit 53,800$ 55,199$ 58,318$ Cust
Slide 23: Appendix 3 - Reconciliation of Free Cash Flow
design develop deliver advanced technology 23 © 2018 Benchmark Electronics, Inc. | 23 APPENDIX 3 - Reconciliation of Free Cash Flow (Amounts in Thousands, Except Per Share Data) – (UNAUDITED) Mar 31, 2019 Dec 31, 2018 Mar 31, 2018 Net Cash provided by Operations 16,414$ 93,980$ 24,530$ Additions to
Slide 24: Appendix 4: Reminder - Impact of Legacy Computing Contract
design develop deliver advanced technology 24 © 2018 Benchmark Electronics, Inc. | 24 $2,169 $2,243 2017 2018 With Legacy Computing Contract Without Legacy Computing Contract ► $280 - $320M annual Impact ► ~3.5% growth without legacy Computing contract Appendix 4: Reminder - Impact of Legacy Computi
Slide 25: Appendix 5: 2020 Modeling Information
design develop deliver advanced technology 25 © 2018 Benchmark Electronics, Inc. | 25 Appendix 5: 2020 Modeling Information to Reflect Expiration of Legacy Computing Contract in 2019 Traditional Markets 2020 Outlook Computing Revenue Down $280 - $320M 2020 Outlook Gross Margin - non - GAAP * Up 80 t