Benchmark Electronics, Inc. · NYSE:BHE
Benchmark Electronics — Q3 2020 Earnings Presentation
20 slides from Benchmark Electronics's earnings presentation, Oct 29, 2020
Slide 1: Benchmark Q3-20 Earnings Call
Exhibit 99.2 Benchmark Q3-20 Earnings Call October 28, 2020 Benchmark 1 2020 Benchmark Electronics, Inc. 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "expect," "estimate," "anticipate," "could" "predict" and similar expressions, and the n
Slide 3: Third Quarter 2020 Overview
Third Quarter 2020 Overview Achieved revenue of $526 million Realized Non-GAAP gross margin of 8.7% and Non-GAAP operating margin of 3.0% Global facilities returned to normal operating capacity; employee safety remains a priority Non-GAAP earnings per share of $0.32 Cash conversion cycle of 81 days
Slide 4: New Business Wins Continue
New Business Wins Continue Medical Rapid COVID-19 diagnostic device manufacturing (mfg) Pulmonary pharmaceutical device (process design, & mfg) Optical diagnostic product for renal applications (design) Semi-Cap Control box for Semi-Cap tools (design) Lithography device (manufacturing) Aerospace & D
Slide 5: Roop Lakkaraju, Chief Financial Officer
Roop Lakkaraju Chief Financial Officer Benchmark 5 2020 Benchmark Electronics, Inc. 5
Slide 6: Revenue by Mix and Market Sector
Revenue by Mix and Market Sector For the Three Months Ended Sept. 30, 2020 June 30, 2020 Sept. 30, 2019 Higher-Value Markets Mix % Revenue Mix % Revenue Q/Q Mix % Revenue Y/Y Medical 26% $134 27% $135 0% 23% $128 5% Semi-Cap 19% $99 18% $87 14% 12% $68 45% Aerospace & Defense 20% $105 18% $88 18% 21
Slide 7: Third Quarter 2020 Financial Summary (GAAP)
Third Quarter 2020 Financial Summary (GAAP) For the Three Months Ended (In millions, except EPS) Sept. 30, 2020 June 30, 2020 Q/Q Sept. 30, 2019 Y/Y Net Sales $526 $491 7% $555 (5%) GAAP Gross Margin 8.8% 7.1% 170 bps 8.8% -- GAAP SG&A $29.7 $28.5 4% $30.9 (4%) GAAP Operating Margin 1.6% (0.4%) 200
Slide 8: Third Quarter 2020 Financial Summary (Non-GAAP)
Third Quarter 2020 Financial Summary (Non-GAAP) For the Three Months Ended (In millions, except EPS) Sept. 30, 2020 June 30, 2020 Q/Q Sept. 30, 2019 Y/Y Net Sales $526 $491 7% $555 (5%) Non-GAAP Gross Margin 8.7% 7.0% 170 bps 8.8% (10 bps) Non-GAAP SG&A $29.7 $28.5 4% $30.9 (4%) Non-GAAP Operating M
Slide 9: Cash Flow / Balance Sheet Summary
Cash Flow / Balance Sheet Summary For the Three Months Ended Cash (In millions) Sept. 30, 2020 June 30, 2020 Sept. 30, 2019 Cash Flows from (used in) Operations $6 $23 ($11) FCF (1) $0 $13 ($22) Cash $335 $356 $348 International $174 $162 $180 US $161 $194 $168 (1) Free cash flow (FCF) defined as ne
Slide 10: Working Capital Update
Working Capital Update Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Accounts Receivable Days 54 56 57 56 55 52 Contract Asset Days 23 26 29 28 28 28 Inventory Days 52 56 60 65 72 66 Deposits 3 7 7 7 10 11 Accounts Payable Days 60 52 58 61 61 54 Cash Conversion Cycle 66 79 81 81 84 81 The updated CCC target i
Slide 11: Capital Allocation Update
Capital Allocation Update Dividends Quarterly dividend of $0.16 per share totaling $5.8 million paid in October 2020 Recurring quarterly dividends to continue until further notice Share Repurchases Remaining authorization to repurchase shares of $210 million as of September 30, 2020 Will opportunist
Slide 12: Fourth Quarter 2020 Guidance
Fourth Quarter 2020 Guidance Guidance Net Sales (in millions) $500 – $540 Diluted EPS – non-GAAP* $0.32 – $0.36 Q4-20 Model Inputs Operating Margin - non-GAAP* 3.3 – 3.5% Other Expenses, Net (in millions) $2.7 Effective Tax Rate 18 - 20% Weighted Average Shares (in millions) ~36.5* The above guidanc
Slide 13: Jeff Benck, President & Chief Executive Officer
Jeff Benck President & Chief Executive Officer Benchmark 13 2020 Benchmark Electronics, Inc. 13
Slide 14: Revenue Trends by Market Sector
Revenue Trends by Market Sector Sector Q4-20 Market Demand Q4-20 Revenue Outlook Comments Medical Softer demand as COVID-19 product build out abates Non-COVID devices recovering in first half 2021 Semi-Cap Demand outlook for Q4 remains strong Expect demand to remain strong through next year Defense
Slide 15: Key Strategic Initiatives Remain on Track
Key Strategic Initiatives Remain on Track Focus on the Customer Optimize customer experience; customer satisfaction remains high Aligning Benchmark capabilities to customer technology roadmaps Grow Our Business Expand and scale strategic customers in target markets Investing in technology innovation
Slide 16: Mid-Term Target Model (through 2022)
Mid-Term Target Model (through 2022) ~5% Annual Revenue Growth 9.3 – 9.7% Expand Non-GAAP Gross Margins < 6% Manage SG&A Expenses 3.4 – 3.8% Increase Non-GAAP Operating Margins Highly selective and targeted customer base for strategic account growth Effective management of SG&A expenses Expect to gr
Slide 17: Appendix
Appendix Benchmark 17 2020 Benchmark Electronics, Inc. 17
Slide 18: 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 Sep 30, Jun 30, Sep 30, 2020 2020 2019 Income (loss) from operations (GAAP) $ 8,659 $ (1,872)$ 9,798 Restructuring charges and other costs 1,425 5,574 5,84
Slide 19: Reconciliation of GAAP to Non-GAAP Financial Measures
APPENDIX 2 - Reconciliation of GAAP to Non-GAAP Financial Measures (Amounts in Thousands) – (UNAUDITED) Three Months Ended Sep 30, 2020 June 30, 2020 Sep 30, 2019 GAAP Gross Profit $46,354 $34,672 $48,955 Customer insolvency (recovery) (796) (353) - Non-GAAP Gross Profit $45,558 $34,319 $48,955 Benc
Slide 20: Reconciliation of Free Cash Flow
APPENDIX 3 - Reconciliation of Free Cash Flow (Amounts in Thousands) – (UNAUDITED) Three Months Ended Sep 30, 2020 June 30, 2020 Sep 30, 2019 Net Cash Provided by (Used in) Operations $5,697 $23,027 ($11,458) Additions to property, plant and equipment and software (5,812) (10,394) (10,447) Free Cash
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