Slide 1: Benchmark Electronics, Inc. Q3 2018 Earnings
© 2018 Benchmark Electronics, Inc. Benchmark Electronics, Inc. Q3 2018 Earnings October 30, 2018
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 Update
| 4 © 2018 Benchmark Electronics, Inc. CEO Update
Slide 5: Third Quarter 2018 Summary
© 2018 Benchmark Electronics, Inc. | 5 Third Quarter 2018 Summary O perational p erformance ► Revenue and non - GAAP diluted EPS within Q3 guidance ► Year - over - year revenue growth of 5% ► Non - GAAP gross margins increased to 8.5% ► Delivered $0.33 non - GAAP EPS for the quarter Working capital
Slide 6: New Business Wins with Focus on Market Sector Sales
© 2018 Benchmark Electronics, Inc. | 6 New Business Wins with Focus on Market Sector Sales Q3 2018 New Business Wins by Segment Estimated Annual Revenue from New Business Wins ► 31 manufacturing and 27 engineering project awards ► Estimated annual revenue run rate between $162 – 182 million ► Estima
Slide 7: Q4 Guidance
© 2018 Benchmark Electronics, Inc. | 7 Q4 Guidance * The above guidance excludes the impact of amortization of intangible assets and estimated restructuring charges and other costs Guidance Net Sales (in millions) $610 – $650 Diluted EPS – non - GAAP* $0.32 – $0.40 ► Demand softness and mix shifts i
Slide 8: Progress Milestones 2H-18
© 2018 Benchmark Electronics, Inc. | 8 Progress Milestones 2H - 18 ► Expect full year at 65% Higher - Value dependent on strength of computing in Q4 ► Higher mix of Computing and lower mix of T&I pressure margins ► Moderating SG&A expenses ► Current funnel supports achieving target ► Lower utilizati
Slide 9: Preliminary 2019 Observations
© 2018 Benchmark Electronics, Inc. | 9 Preliminary 2019 Observations Expect year - over - year revenue growth ► Revenue growth of 3 - 5% ► Assumes continued T&I (front - end semi - cap) softness in 1H - 19 and ~10% year - over - year decline Operating margins will expand from current levels ► Target
Slide 10: Q3 2018 Financial Highlights
| 10 © 2018 Benchmark Electronics, Inc. Q3 2018 Financial Highlights
Slide 11: Third Quarter 2018 Financial Summary
© 2018 Benchmark Electronics, Inc. | 11 Third Quarter 2018 Financial Summary For the Three Months Ended (In millions, except EPS) Sep. 30 , 2018 Jun. 30 , 2018 Q/Q Sep. 30 , 2017 Y/Y Net Sales $641 $661 (3%) $611 5% GAAP Operating Margin 1.7% 2.2% (50 bps) 3.4% (170 bps) GAAP Diluted EPS $0.17 $0.23
Slide 12: Revenue by Market Sector
© 2018 Benchmark Electronics, Inc. | 12 Higher - Value Markets Sep. 30 , 2018 Jun. 30 , 2018 Q/Q Industrials 20% $128 18% $118 9% Aerospace & Defense 16% $105 15% $100 5% Medical 15% $96 15% $97 -- Test & Instrument. 12% $77 16% $106 (28%) Total Revenue $406 $421 (4%) Revenue by Market Sector (1) In
Slide 13: GAAP Key Business Trends
© 2018 Benchmark Electronics, Inc. | 13 GAAP Key Business Trends Return on Invested Capital (LTM) Operating Margin ($M) SG&A ($M) Revenue & Gross Margin ($ M ) NOPAT Inv. Capital 20.9 21.9 18.0 14.3 11.0 3.4% 3.3% 3.0% 2.2% 1.7% 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 14: Non-GAAP Key Business Trends
© 2018 Benchmark Electronics, Inc. | 14 Non - GAAP Key Business Trends Operating Margin ($M) SG&A ($M) Revenue & Gross Margin ($ M ) NOPAT Inv. Capital Non - GAAP ROIC = (Non - GAAP income from operations – Non - GAAP Tax Impact) · [Average Invested Capital for last 5 quarters] (1) Excludes the impa
Slide 15: Cash Flow / Working Capital Highlights
© 2018 Benchmark Electronics, Inc. | 15 (In millions) Sep. 30 , 2018 Jun. 30 , 2018 Sep. 30 , 2017 Cash Flows from (used in) Operations ($1) ($41) ($3) FCF ($16) ($58) ($14) Cash $476 $596 $730 International $170 $177 $655 US $306 $419 $75 Inventory $321 $319 $281 Accounts Receivable $456 $445 $412
Slide 16: Working Capital Update
© 2018 Benchmark Electronics, Inc. | 16 Working Capital Update Ongoing Cash Conversion Cycle Days will Range between 73 and 68 Days Q3 - 16 Q4 - 16 Q1 - 17 Q2 - 17 Q3 - 17 Q4 - 17 Q1 - 18 Q2 - 18 Q3 - 18 Accounts Receivable Days 64 63 62 57 61 59 59 61 64 Contract Asset Days 22 23 24 22 24 20 22 20
Slide 17: Capital Allocation Update
© 2018 Benchmark Electronics, Inc. | 17 Capital Allocation Update Stock repurchase authorizations in 2018 ► Q1 - 18: Board approved stock repurchase of up to an additional $250 million of common stock ► Q4 - 18 : Board approved stock repurchase of up to an additional $100 million of common stock Rec
Slide 18: Fourth Quarter 2018 Guidance
design develop deliver advanced technology 18 © 2018 Benchmark Electronics, Inc. | 18 Fourth Quarter 2018 Guidance * The above guidance excludes the impact of amortization of intangible assets and estimated restructuring charges and other costs Guidance Net Sales (in millions) $610 – $650 Diluted EP
Slide 19: Sequential Modeling Information
design develop deliver advanced technology 19 © 2018 Benchmark Electronics, Inc. | 19 Sequential Modeling Information Higher - Value Markets Q4 - 18 Outlook (%) Industrials Down Mid Teens Aerospace & Defense Up Mid Singles Medical Up Low Singles Test & Instrumentation Down Mid Teens Traditional Mark
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) Sep 30, Jun 30, Sep 30, 2018 2018 2017 2018 2017 $ 10,957 $ 14,349 $ 20,903 $ 43,273 $
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) Sep 30, 2018 Jun 30, 2018 Sep 30, 2017 Sep 30, 2018 Sep 30, 2017 GAAP gross profit 52