Benchmark Electronics, Inc. · NYSE:BHE

Benchmark Electronics — Q4 2017 Earnings Presentation

28 slides from Benchmark Electronics's earnings presentation, Feb 12, 2018

  1. Slide 1: Benchmark Electronics Q4 and FY 2017 Earnings

    © 2018 Benchmark Electronics, Inc. Benchmark Electronics Q4 and FY 2017 Earnings February 7, 2018

  2. 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

  3. Slide 3: CEO Update

    | 3 © 2018 Benchmark Electronics, Inc. CEO Update

  4. Slide 4: Fourth Quarter and 2017 Summary

    © 2018 Benchmark Electronics, Inc. | 4 Fourth Quarter and 2017 Summary Strong operational p erformance ► Revenue and non - GAAP operating margins exceeded the high end of Q4 guidance ► Year - over - year revenue growth of 7% driven by higher - value markets and Computing ► Gross margins expanded for

  5. Slide 5: New Business Wins with Focus on Market Sector Sales

    © 2018 Benchmark Electronics, Inc. | 5 New Business Wins with Focus on Market Sector Sales 2017 New Business Wins by Segment Estimated Annual Revenue from New Business Wins Comp, Telco 34% Industrials 26% A&D 18% Medical 16% T&I 6% Traditional Markets Higher - Value Markets $125 $118 $123 $128 $134

  6. Slide 6: Current Progress Milestones Exiting 2017

    © 2018 Benchmark Electronics, Inc. | 6 Current Progress Milestones Exiting 2017 4.7% 5.5% 5.2% 5.3% 4.9% ~5.0 % 9.5% 9.3 % 9.4% 9.4% 9.1% >9.5 % 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 2H-17 Waypoint LTM Profit per Square Foot ( $ ) Gross Margin & SG&A (%) 64% 68% 65

  7. Slide 7: Update on Priorities

    design develop deliver advanced technology 7 © 2018 Benchmark Electronics, Inc. | 7 2017 Transition Year: Repositioning and Realignment ► Optimize our network for elevated execution ► Implementation of market - sector sales organization ► Expansion of engineering solutions and capabilities 2018 Opti

  8. Slide 8: Market Trends Driving Opportunities for Benchmark

    design develop deliver advanced technology 8 © 2018 Benchmark Electronics, Inc. | 8 Aging Population & Increasing Healthcare Needs ► Advanced treatment therapies ► Remote patient monitoring ► Effective pharmaceutical delivery ► Performance - based outcomes Requirement for Higher Bandwidth and Speed

  9. Slide 9: Investments in Differentiation

    design develop deliver advanced technology 9 © 2018 Benchmark Electronics, Inc. | 9 Investments in Differentiation Aligning Benchmark to Take Advantage of Market Trends 2017 Results* Turnkey Product Design Qualcomm Partnership Medical Platforms FDA Regulatory Mgt. Medical $376M Secure Defense Platfo

  10. Slide 10: Our Financial Goals

    © 2018 Benchmark Electronics, Inc. | 10 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

  11. Slide 11: Progress Milestones 2H-18

    © 2018 Benchmark Electronics, Inc. | 11 $152 $156 $200 Q3-17 Q4-17 2H-18 Waypoint 68% 63% >67% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q3-17 Q4-17 2H-18 Waypoint $27 $26 $29* $- $5 $10 $15 $20 $25 $30 $35 $40 $45 Q3-17 Q4-17 2H-18 Waypoint 5.3% 4.9% ~5.0 % 9.4% 9.1% >9.7% 0.0% 2.0% 4.0% 6.0% 8.0

  12. Slide 12: ROIC: Key Determinant of Capital Allocation Strategy

    © 2018 Benchmark Electronics, Inc. | 12 ROIC : Key Determinant of Capital Allocation Strategy Cumulative Capital Allocation FY11 - FY17 Balanced approach to capital allocation 1 Free cash flow (FCF) defined as net cash provided by operations (GAAP) less capex $320 33% $ 334 34% $328 33% Repurchases

  13. Slide 13: Q4 & 2017 Financial Highlights

    | 13 © 2018 Benchmark Electronics, Inc. Q4 & 2017 Financial Highlights

  14. Slide 14: Fourth Quarter 2017 Financial Summary

    © 2018 Benchmark Electronics, Inc. | 14 Fourth Quarter 2017 Financial Summary For the Three Months Ended (In millions, except EPS) Dec. 31 , 2017 Sep. 30 , 2017 Q/Q Dec. 31 , 2016 Y/Y Net Sales $680 $604 13% $608 12% GAAP Operating Margin 3.4% 3.4% -- 3.9% (50 bps) GAAP Diluted EPS ($1.54) $0.35 (54

  15. Slide 15: Revenue by Market Sector

    © 2018 Benchmark Electronics, Inc. | 15 Higher - Value Markets Dec. 31 , 2017 Sep. 30 , 2017 Q/Q Industrials 19% $131 20% $124 6% Aerospace & Defense 15% $98 16% $96 2% Medical 15% $103 17% $101 3% Test & Instrument. 14% $95 15% $88 8% Total Revenue $427 $409 4% Revenue by Market Sector (1) In milli

  16. 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 23.5 12.4 22.2 20.8 23.1 3.9% 2.2% 3.6% 3.4% 3.4% 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

  17. 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 ROIC = [(GAAP income from operations)*(1 - Tax Rate)] · [Average Invested Capital less Average Cash for last 5 quarters] (1) Excludes the impact of

  18. Slide 18: SG&A Investments Continued

    © 2018 Benchmark Electronics, Inc. | 18 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

  19. Slide 19: 2017 Financial Summary

    © 2018 Benchmark Electronics, Inc. | 19 2017 Financial Summary For the Twelve Months Ended (In millions, except EPS) Dec. 31 , 2017 Dec. 31 , 2016 ‘16 to ’17  Y/Y Net Sales $2,467 $2,310 $156 7% Non - GAAP Gross Margin $229 $213 $15 7% Non - GAAP Gross Margin % 9.3% 9.2% 10 bps Non - GAAP SG&A $129

  20. Slide 20: 2017 Revenue Results by Market Sector

    © 2018 Benchmark Electronics, Inc. | 20 2017 Revenue Results by Market Sector (1) In millions For the Twelve Months Ended Higher - Value Markets Up 8% YoY Higher - Value Markets Dec. 31 , 2017 Dec. 31 , 2016 Y/Y Industrials 20% $497 23% $543 (8%) Aerospace & Defense 16% $398 16% $361 10% Medical 15%

  21. Slide 21: Cash Flow / Working Capital Highlights

    © 2018 Benchmark Electronics, Inc. | 21 Cash Flow / Working Capital Highlights Generated $146 million of Cash from Operations in 2017 (1) Free cash flow (FCF) defined as net cash provided by operations (GAAP) less capex (In millions) Dec. 31, 2017 Dec. 31, 2016 Dec. 31 , 2017 Sep. 30 , 2017 Dec. 31

  22. Slide 22: Working Capital Update

    © 2018 Benchmark Electronics, Inc. | 22 Working Capital Update Exceeded Target of 70 Days Exiting 2017 Ongoing Cash Conversion Cycle Days will Range between 73 and 68 Days 99 83 80 74 67 65 72 60 0 20 40 60 80 100 120 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1 - 16 Q2 - 16 Q3 - 16 Q4 - 16 Q1

  23. Slide 23: U.S. Tax Reform: Benchmark Impacts

    design develop deliver advanced technology 23 © 2018 Benchmark Electronics, Inc. | 23 U.S. Tax Reform: Benchmark Impacts Q4 - 17 tax expense of $98 million ($1.95 GAAP loss per diluted share) ► Estimated $102 million tax expense for mandatory repatriation of undistributed foreign earnings ► Estimate

  24. Slide 24: First Quarter 2018 Guidance

    design develop deliver advanced technology 24 © 2018 Benchmark Electronics, Inc. | 24 First Quarter 2018 Guidance * The above guidance excludes the impact of amortization of intangible assets and estimated restructuring charges Guidance Net Sales (in millions) $585 – $605 Operating Margin – non - GA

  25. Slide 25: Sequential Modeling Information

    © 2018 Benchmark Electronics, Inc. | 25 Sequential Modeling Information Expected sequential growth in Aerospace & Defense and Test & Instrumentation Higher - Value Markets Q1 - 18 Outlook (%) Industrials Down 10% Aerospace & Defense Up Mid - Singles Medical Down Mid - Singles Test & Instrumentation

  26. Slide 26: Appendix

    | 26 © 2018 Benchmark Electronics, Inc. Appendix

  27. 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) Dec 31, Sep 30, Dec 31, 2017 2017 2016 2017 2016 $ 23,144 $ 20,815 $ 23,548 $ 78,603 $

  28. 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)

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