Benchmark Electronics, Inc. · NYSE:BHE
Benchmark Electronics — FY2016 Earnings Presentation
25 slides from Benchmark Electronics's earnings presentation, Feb 8, 2017
Slide 1: Q4 and FY 2016 Earnings Presentation
Q4 and FY 2016 Earnings Presentation February 8, 2017 design develop deliver advanced technology
Slide 2: Forward-Looking Statements
Forward-Looking Statements This document contains forward-looking statements within the scope of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “expect,” “estimate,” “anticipate,” “predict” and similar expressions, and the negatives thereof, often identify forward-look
Slide 3: CEO Update
CEO Update design develop deliver advanced technology 3
Slide 4: Fourth Quarter 2016 Summary
Fourth Quarter 2016 Summary Revenue and operating margins at the top end of guidance Stronger than expected Test & Instrumentation and Computing demand Historical high gross margin of 9.5%, a 30 bps Q2Q improvement Exceeded working capital target Achieved cash conversion cycle of 74 days One
Slide 5: New Business Wins
New Business Wins 2016 New Business Estimated Annual Revenue from New Wins by Segment Business Wins $160 $150 $140 $125 $125 $123 $128 $130 $115 $120 $120 $118 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $- Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 $ (USD M) Q4 New Business Wins Highlig
Slide 6: 2016 Financial Summary
2016 Financial Summary For the Twelve Months Ended (In millions, except EPS) Dec 31, 2016 Dec 31, 2015 ‘15 to ’16 Y/Y Net Sales $2,310 $2,541 ($231) (9%) Gross Margin $213 $219 ($6) (3%) Gross Margin % 9.2% 8.6% 60 bps SG&A $113 $107 $6 6% SG&A % 4.9% 4.2% 70 bps Non-GAAP Operating Income $100 $11
Slide 7: 2016 Results
2016 Results Revenue and SG&A ($M) Gross Margin ($M) 5,000 250 8.0% 13.0% 4,500 7.0% 4,000 9.2% Revenue decline of 11.0% 200 SG&A increase of 8.6% $231 million – in 4.9% 6.0% $6M for engineering 4.2% 3,500 5.0% 9.0% 3,000 traditional markets 150 solutions and go-to- 2,500 market investments 4.0%
Slide 8: CEO Observations
CEO Observations • Unique set of highly leverageable assets • Strong customer engagements and a dedicated/ motivated workforce • Federation of sites, built by acquisition of distressed assets and managed independently • Regional company with international sites design develop deliver advanced techno
Slide 9: 2017: Our Priorities in a Transition Year
2017: Our Priorities in a Transition Year Long-Term Revenue Growth Leverage engineering solutions for higher margin engagements Balance mix of higher-value and traditional market opportunities Reorient to a market sector-focused sales organization Increase bookings to achieve growth beyond 2
Slide 10: Our Financial Goals
Our Financial Goals Target Business Model Revenue $2.8 – $3.2B Gross Margin 9.8 – 10% SG&A 4.8 – 4.5% Non-GAAP Operating Income >5.5% ROIC >12% Cash Conversion Cycle <70 Days design develop deliver advanced technology 10
Slide 11: Progress Milestones
Progress Milestones Target Waypoint Current (2H 2017) (as of 12/31/16) Bookings $125M/Qtr Revenue Bookings >$150M/Qtr >$250M/Qtr >70% Higher- Revenue Mix >66% 63% Value Markets Gross Margin 9.8 – 10% >9.5% 9.2% SG&A 4.5 – 4.8% ~5% 4.9% Profit per Sq Ft >$45 ~$32 $27 design develop deliver advanced t
Slide 12: Balanced Capital Deployment
Balanced Capital Deployment Focus on Generating Cash from Operations Continued emphasis on cash conversion cycle improvements Target range of 73 to 68 days Anticipate 2017 cash from operations in the range of $125-150 million Strong Balance Sheet Provides Flexibility Net cash position of $45
Slide 13: Q4 & 2016 Financial Highlights
Q4 & 2016 Financial Highlights design develop deliver advanced technology 13
Slide 14: Fourth Quarter 2016 Financial Summary
Fourth Quarter 2016 Financial Summary For the Three Months Ended Dec 31, Sep 30, Dec 31, (In millions, except EPS) Q/Q Y/Y 2016 2016 2015 Net Sales $608 $574 6% $626 (3%) Non-GAAP Operating Margin 4.8% 4.3% 50 bps 4.8% --- Non-GAAP Diluted EPS $0.45 $0.36 25% $0.48 (6%) GAAP Operating Margin 3.9% 3.
Slide 15: Benchmark Revenue Results by Market Sector
Benchmark Revenue Results by Market Sector For the Three Months Ended Higher-Value (1) (1) Dec 31, 2016 Sep 30, 2016 (1) Q/Q Dec 31, 2015 Y/Y Markets Industrials 37% $230 38% $217 6% 35% $223 3% Medical 14% $86 15% $86 --- 15% $92 (6%) Test & Instrument. 11% $65 11% $66 (1%) 8% $51 26% Total Revenue
Slide 16: Key Business Trends
Key Business Trends 1,400 Revenue & Gross Margin ($M) 15.0% 70.0 SG&A ($M) 8.0% 7.0% 13.0% 60.0 1,200 9.5% 11.0% 50.0 5.2% 4.9% 4.9% 6.0% 1,000 9.1% 9.2% 9.1% 9.2% 4.7% 9.0% 40.0 4.3% 5.0% 800 4.0% 7.0% 30.0 600 3.0% 626 579 574 608 26.8 28.5 28.5 28.1 28.4 400 549 5.0% 20.0 2.0% 3.0% 10.0 200 1.0%
Slide 17: Fiscal Year 2016 Financial Summary
Fiscal Year 2016 Financial Summary For the Twelve Months Ended (In millions, except EPS) Dec 31, 2016 Dec 31, 2015 Y/Y Net Sales $2,310 $2,541 (9%) Non-GAAP Operating Margin 4.3% 4.4% (10 bps) Non-GAAP Diluted EPS $1.45 $1.68 (14%) GAAP Operating Margin 3.3% 3.7% (40 bps) GAAP Diluted EPS $1.29 $1.8
Slide 18: 2016 Revenue Results by Market Sector
2016 Revenue Results by Market Sector For the Twelve Months Ended (1) Higher-Value Markets Dec 31, 2016 Dec 31, 2015 (1) Y/Y Industrials 38% $874 32% $820 7% Medical 15% $346 14% $351 (1%) Test & Instrument. 11% $244 9% $224 9% Total Revenue $1,464 $1,395 5% (1) (1) Traditional Markets Dec 31, 2016
Slide 19: Cash Flow / Working Capital Highlights
Cash Flow / Working Capital Highlights For the Twelve Months Ended For the Three Months Ended Dec 31, Dec 31, Dec 31, Sep 30, Dec 31, (In millions) 2016 2015 2016 2016 2015 Cash Flows from (used in) Operations $273 $147 $44 $70 $28 1 FCF $240 $109 $38 $61 $23 Cash $681 $466 $681 $636 $466 Internatio
Slide 20: Working Capital Update
Working Capital Update 105 99 99 94 91 90 85 83 80 75 74 65 45 25 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Target Q4-16 Accounts Receivable Days Accounts Payable Days Inventory Days Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Accounts Receivable Days 71 68 67 69 68 66 65 65 Accounts Payable Day
Slide 21: Share Repurchases
Share Repurchases 38th Consecutive Quarter of Stock Repurchases $532 million returned to shareholders since 2007 100 70.0 59.8 56.6 90 54.8 54.2 52.1 60.0 80 49.7 50.0 70 60 68.4 40.0 56.3 50 30.0 40 47.1 43.8 30 41.2 41.9 20.0 20 10.0 10 0 0.0 2011 2012 2013 2014 2015 2016 Share Repurchases Shares
Slide 22: First Quarter 2017 Guidance
First Quarter 2017 Guidance Guidance Net Sales (in millions) $530 – $550 Operating Margin – non-GAAP* 3.0% – 3.4% Diluted EPS – non-GAAP* $0.24 – $0.28 * The above guidance excludes the impact of amortization of intangible assets and estimated restructuring charges – See Appendix 1 design develop de
Slide 23: Benchmark Modeling Information
Benchmark Modeling Information Q1-17 Q1-17 Higher-Value Markets Outlook (%) Traditional Markets Outlook (%) Industrials Down High-Singles Computing Down >30% Medical Up Mid-Singles Telecommunications Down >15% Test & Instrumentation Up >10% Q1-17 (1) Guidance Interest Expense (in millions) $2.3 Effe
Slide 24: Appendix
Appendix design develop deliver advanced technology 24
Slide 25: Reconciliation of GAAP to non-GAAP Financial Results
APPENDIX 1 - Reconciliation of GAAP to non-GAAP Financial Results (Amounts in Thousands, Except Per Share Data) – (UNAUDITED) Three Months Ended Year Ended Dec 31, Sep 30, Dec 31, December 31, 2016 2016 2015 2016 2015 Income from operations (GAAP) $ 23,548 $ 18,082 $ 21,905 $ 75,638 $ 92,969 Restruc