Slide 1: Benchmark Electronics, Inc. Q4 and FY 2018 Earnings
© 2018 Benchmark Electronics, Inc. Benchmark Electronics, Inc. Q4 and FY 2018 Earnings February 7, 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 Update
| 4 © 2018 Benchmark Electronics, Inc. CEO Update
Slide 5: Fourth Quarter and 2018 Summary
© 2018 Benchmark Electronics, Inc. | 5 Fourth Quarter and 2018 Summary O perational p erformance ► Revenue and non - GAAP diluted EPS exceeded the high end of Q4 guidance ► Full year revenue growth of 5% ► Delivered $ 1.45 non - GAAP EPS for the full year with $ 0.41 in Q4 Working capital ► Cash con
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 Q4 - 18 New Business Wins by Segment Estimated Annual Revenue from New Business Wins ► 34 manufacturing and 17 engineering project awards ► Estimated annual revenue run rate between $165 – 233 million ► Estima
Slide 7: Impact of Legacy Computing Contract
© 2018 Benchmark Electronics, Inc. | 7 $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 Impact of Legacy Computing Contract $2,454 9.2% 8.6% 2017 2018 Without Legacy Computing Contra
Slide 8: Progress Milestones 2H-2018
© 2018 Benchmark Electronics, Inc. | 8 Progress Milestones 2H - 18 ► Strength in Computing drove shortfall to 2H - 18 Waypoint ► Excluding legacy contract range was 72% - 75% ► Higher mix of Computing and lower mix of T&I pressured margins ► Improving sequential margin without legacy Computing ► Ach
Slide 9: Our Financial Goals Remain Unchanged
© 2018 Benchmark Electronics, Inc. | 9 Our Financial Goals Remain Unchanged 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
Slide 10: Updated 2019 Observations (Excluding Legacy Computing Contract)
© 2018 Benchmark Electronics, Inc. | 10 Updated 2019 Observations (Excluding Legacy Computing Contract) 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 Margins will expand fro
Slide 11: Progress Milestones 2019 (Excluding Legacy Computing Contract)
© 2018 Benchmark Electronics, Inc. | 11 $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 $36 $34 $25 $27 $29 $31 $33 $35 $37 $39 Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18 2H-2019 Waypoint 10.1% 9.2% 9.3% 9.5% -1.0% 1.0% 3.0% 5.0% 7.0% 9.0% 1
Slide 12: Evolution to Date and the Future
© 2018 Benchmark Electronics, Inc. | 12 Evolution to Date and the Future Repositioning and Realignment of Benchmark ► Implementation of market - sector sales organization to drive growth ► Expansion of engineering and technology capabilities ► Optimization of our network for elevated operational exe
Slide 13: Q4 & 2018 Financial Highlights
| 13 © 2018 Benchmark Electronics, Inc. Q4 & 2018 Financial Highlights
Slide 14: Fourth Quarter 2018 Financial Summary
© 2018 Benchmark Electronics, Inc. | 14 Fourth Quarter 2018 Financial Summary For the Three Months Ended (In millions, except EPS) Dec. 31 , 2018 Sep. 30 , 2018 Q/Q Dec. 31 , 2017 Y/Y Net Sales $657 $641 3% $666 (1%) GAAP Operating Margin 2.3% 1.7% 60 bps 3.3% (100 bps) GAAP Diluted EPS $0.64 $0.17
Slide 15: Revenue by Market Sector – Fourth Quarter
© 2018 Benchmark Electronics, Inc. | 15 Higher - Value Markets Dec. 31 , 2018 Sep. 30 , 2018 Q/Q Industrials 18% $121 20% $128 (6%) Aerospace & Defense 16% $105 16% $105 -- Medical 16% $104 15% $96 8% Test & Instrument. 11% $70 12% $77 (9%) Total Revenue $400 $406 (2%) Revenue by Market Sector (1) I
Slide 16: GAAP Key Business Trends
© 2018 Benchmark Electronics, Inc. | 16 GAAP Key Business Trends Return on Invested Capital (LTM) Operating Margin ($M) SG&A ($M) Revenue & Gross Margin ($ M ) NOPAT Inv. Capital 21.9 18.0 14.3 11.0 15.3 3.3% 3.0% 2.2% 1.7% 2.3% 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 17: Non-GAAP Key Business Trends
© 2018 Benchmark Electronics, Inc. | 17 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 18: 2018 Financial Summary
© 2018 Benchmark Electronics, Inc. | 18 2018 Financial Summary For the Twelve Months Ended (In millions, except EPS) Dec. 31 , 2018 Dec. 31 , 2017 ‘17 to ’18 Y/Y Net Sales $2,566 $2,454 $112 5% Non - GAAP Gross Margin $221 $227 ($6) (2%) Non - GAAP Gross Margin % 8.6% 9.2% (60 bps) Non - GAAP SG&A
Slide 19: 2018 Revenue Results by Market Sector
© 2018 Benchmark Electronics, Inc. | 19 2018 Revenue Results by Market Sector (1) In millions For the Twelve Months Ended Higher - Value Markets Up 2% YoY Higher - Value Markets Dec. 31 , 2018 Dec. 31 , 2017 Y/Y Industrials 19% $493 20% $496 (1%) Aerospace & Defense 16% $406 16% $392 4% Medical 15%
Slide 20: Cash Flow / Working Capital Highlights
© 2018 Benchmark Electronics, Inc. | 20 Cash Flow / Working Capital Highlights (1) Free cash flow (FCF) defined as net cash provided by operations (GAAP) less capex (In millions) Dec. 31, 2018 Dec. 31, 2017 Dec. 31 , 2018 Sep. 30 , 2018 Dec. 31 , 2017 Cash Flows from (used in) Operations $77 $146 $9
Slide 21: Working Capital Update
© 2018 Benchmark Electronics, Inc. | 21 Working Capital Update Ongoing Cash Conversion Cycle Days will Range between 73 and 68 Days Q4 - 16 Q1 - 17 Q2 - 17 Q3 - 17 Q4 - 17 Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18 Accounts Receivable Days 63 62 57 61 59 59 61 64 64 Contract Asset Days 23 24 22 24 20 22 20 22
Slide 22: Capital Allocation Update
© 2018 Benchmark Electronics, Inc. | 22 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 23: First Quarter 2019 Guidance
© 2018 Benchmark Electronics, Inc. | 23 First 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) $570 – $610 Diluted EPS – non - GAAP* $0.29 – $0.37
Slide 24: Sequential Modeling Information (Including Legacy Computing Contract)
© 2018 Benchmark Electronics, Inc. | 24 Sequential Modeling Information ( Including Legacy Computing Contract) Higher - Value Markets Q1 - 19 Outlook (%) Industrials Down Low Singles Aerospace & Defense Flat Medical Up Low Singles Test & Instrumentation Down 10% Traditional Markets Q1 - 19 Outlook (
Slide 25: 2020 Modeling Information to Reflect Expiration of Legacy Computing Contract
© 2018 Benchmark Electronics, Inc. | 25 2020 Modeling Information to Reflect Expiration of Legacy Computing Contract in 2019 Traditional Markets 2020 Outlook Computing Revenue Down $280 - $320M 2020 Outlook Gross Margin - non - GAAP * Up 80 to 90 bps * The above guidance excludes the impact of amort
Slide 26: Appendix
| 26 © 2018 Benchmark Electronics, Inc. Appendix
Slide 27: Appendix 1 - Reconciliation of GAAP to non-GAAP Financial Results
design develop deliver advanced technology 27 © 2018 Benchmark Electronics, Inc. | 27 APPENDIX 1 - Reconciliation of GAAP to non - GAAP Financial Results (Amounts in Thousands, Except Per Share Data) – (UNAUDITED)
Slide 28: Appendix 2 - Reconciliation of GAAP to non-GAAP Financial Measures
design develop deliver advanced technology 28 © 2018 Benchmark Electronics, Inc. | 28 APPENDIX 2 - Reconciliation of GAAP to non - GAAP Financial Measures (Amounts in Thousands, Except Per Share Data) – (UNAUDITED)
Slide 29: Appendix 3 - Reconciliation of Free Cash Flow
design develop deliver advanced technology 29 © 2018 Benchmark Electronics, Inc. | 29 APPENDIX 3 - Reconciliation of Free Cash Flow (Amounts in Thousands, Except Per Share Data) – (UNAUDITED) Dec 31, 2018 Sep 30, 2018 Dec 31, 2017 Dec 31, 2018 Dec 31, 2017 Net Cash provided by Operations 93,980$ (1,