Slide 1: Benchmark Electronics, Inc. Q1 2018 Earnings
© 2018 Benchmark Electronics, Inc. Benchmark Electronics, Inc. Q1 2018 Earnings April 25, 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: First Quarter 2018 Summary
© 2018 Benchmark Electronics, Inc. | 5 First Quarter 2018 Summary O perational p erformance ► Revenue and non - GAAP EPS exceeded the high end of Q1 guidance ► Year - over - year revenue growth of 9% driven by higher - value markets ► Non - GAAP gross margins expanded for the quarter to 9.5% ► Deliv
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 Q1 2018 New Business Wins by Segment Estimated Annual Revenue from New Business Wins Comp, Telco 37% Industrials 30% A&D 13% Medical 17% T&I 3% Traditional Markets Higher - Value Markets ► 32 manufacturing and
Slide 7: 2018 Optimization Year: Leverage Investments
© 2018 Benchmark Electronics, Inc. | 7 2018 Optimization Year: Leverage Investments Extend value proposition for customers ► Expanding microelectronics ► Investing in RF components ► Developing high - speed circuits Expand engineering and technology investments ► Defense solutions ► RF module design
Slide 8: Q2 Guidance – Convergence of Timing Dynamics Impacting Financials
© 2018 Benchmark Electronics, Inc. | 8 Q2 Guidance – Convergence of Timing Dynamics Impacting Financials * The above guidance excludes the impact of amortization of intangible assets and estimated restructuring charges Guidance Net Sales (in millions) $590 – $630 Diluted EPS – non - GAAP* $0.26 – $0
Slide 9: Progress Milestones 2H-18 Waypoint
© 2018 Benchmark Electronics, Inc. | 9 $152 $156 $171 $200 Q3-17 Q4-17 Q1-18 2H-18 Waypoint 68% 63% 69% >67 % 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q3-17 Q4-17 Q1-18 2H-18 Waypoint $28 $26 $24 $29 $- $5 $10 $15 $20 $25 $30 $35 $40 $45 Q3-17 Q4-17 Q1-18 2H-18 Waypoint 5.3% 5.0% 5.9% ~5.0 % 9.3%
Slide 10: Q1 2018 Financial Highlights
| 10 © 2018 Benchmark Electronics, Inc. Q1 2018 Financial Highlights
Slide 11: First Quarter 2018 Financial Summary
© 2018 Benchmark Electronics, Inc. | 11 First Quarter 2018 Financial Summary For the Three Months Ended (In millions, except EPS) Mar. 31 , 2018 Dec. 31 , 2017 Q/Q Mar. 31 , 2017 Y/Y Net Sales $608 $666 (9%) $558 9% GAAP Operating Margin 3.0% 3.3% (30 bps) 2.0% 100 bps GAAP Diluted EPS ($0.49) ($1.5
Slide 12: Revenue by Market Sector
© 2018 Benchmark Electronics, Inc. | 12 Higher - Value Markets Mar. 31 , 2018 Dec. 31 , 2017 Q/Q Industrials 20% $125 19% $129 (3%) Aerospace & Defense 16% $98 15% $95 3% Medical 16% $97 15% $100 (3%) Test & Instrument. 17% $102 14% $93 10% Total Revenue $422 $417 1% Revenue by Market Sector (1) In
Slide 13: GAAP Key Business Trends
© 2018 Benchmark Electronics, Inc. | 13 GAAP Key Business Trends Return on Invested Capital (LTM) Operating Margin ($M) SG&A ($M) Revenue & Gross Margin ($ M ) NOPAT Inv. Capital 10.9 23.1 20.9 21.9 18.0 2.0% 3.7% 3.4% 3.3% 3.0% 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: SG&A Investments
© 2018 Benchmark Electronics, Inc. | 15 SG&A Investments Continued Investments for Future Growth ► Expand capabilities to increase customer value proposition ► Investments vary between fixed expenses and variable & non - cash expenses ► Benchmark includes stock compensation expense in SG&A Q4 - 17 S
Slide 16: Cash Flow / Working Capital Highlights
© 2018 Benchmark Electronics, Inc. | 16 (In millions) Mar. 31 , 2018 Dec. 31 , 2017 Mar. 31 , 2017 Cash Flows from (used in) Operations $25 $56 $78 FCF $4 $39 $70 Cash $676 $743 $752 International $438 $674 $659 US $238 $69 $93 Inventory $306 $269 $272 Accounts Receivable $404 $437 $381 Contract Ass
Slide 17: Working Capital Update
© 2018 Benchmark Electronics, Inc. | 17 Working Capital Update Ongoing Cash Conversion Cycle Days will Range between 73 and 68 Days Q1 - 16 Q2 - 16 Q3 - 16 Q4 - 16 Q1 - 17 Q2 - 17 Q3 - 17 Q4 - 17 Q1 - 18 Accounts Receivable Days 69 66 64 63 62 57 61 59 59 Contract Asset Days 22 21 22 23 24 22 24 20
Slide 18: U.S. Tax Reform: Benchmark Impacts
design develop deliver advanced technology 18 © 2018 Benchmark Electronics, Inc. | 18 U.S. Tax Reform: Benchmark Impacts Repatriation and tax expenses ► Decision in Q1 - 18 to change historical repatriation strategy ► Repatriation of $277 million to the U.S. in Q1 - 18 ► Applicable foreign withholdi
Slide 19: Capital Allocation Update
design develop deliver advanced technology 19 © 2018 Benchmark Electronics, Inc. | 19 Capital Allocation update New dividend ► Announced first quarterly cash dividend of $0.15 per share to shareholders of record as of March 29, 2018 ► Dividend was paid on April 11, 2018 Stock repurchase authorizatio
Slide 20: Second Quarter 2018 Guidance
design develop deliver advanced technology 20 © 2018 Benchmark Electronics, Inc. | 20 Second Quarter 2018 Guidance * The above guidance excludes the impact of amortization of intangible assets and estimated restructuring charges Guidance Net Sales (in millions) $590 – $630 Diluted EPS – non - GAAP*
Slide 21: Sequential Modeling Information
design develop deliver advanced technology 21 © 2018 Benchmark Electronics, Inc. | 21 Sequential Modeling Information Higher - Value Markets Q2 - 18 Outlook (%) Industrials Up Mid - Singles Aerospace & Defense Down Mid - Singles Medical Down Low Teens Test & Instrumentation Up Mid - Singles Traditio
Slide 22: Appendix
| 22 © 2018 Benchmark Electronics, Inc. Appendix
Slide 23: APPENDIX 1 - Reconciliation of GAAP to non-GAAP Financial Results
design develop deliver advanced technology 23 © 2018 Benchmark Electronics, Inc. | 23 APPENDIX 1 - Reconciliation of GAAP to non - GAAP Financial Results (Amounts in Thousands, Except Per Share Data) – (UNAUDITED) March 31, December 31, March 31, 2018 2017 2017 $ 17,967 $ 21,910 $ 10,889 2,235 3,062
Slide 24: APPENDIX 2 - Reconciliation of GAAP to non-GAAP Financial Measures
design develop deliver advanced technology 24 © 2018 Benchmark Electronics, Inc. | 24 APPENDIX 2 - Reconciliation of GAAP to non - GAAP Financial Measures (Amounts in Thousands, Except Per Share Data) – (UNAUDITED) Mar 31, 2018 Mar 31, 2017 GAAP gross profit 58,318$ 47,532$ Customer Insolvency (reco