EX-99.1 2 ex99_1.htm EXHIBIT 99.1

## Exhibit 99.1

## FOR IMMEDIATE RELEASE

###

### BENCHMARK ELECTRONICS REPORTS FIRST QUARTER 2017 RESULTS

· Quarterly revenue of $567 million

· Quarterly operating margin of 2.2% (3.8% non-GAAP)

· Quarterly EPS of $0.19 ($0.34 non-GAAP)

· Improved cash conversion cycle to 67 days

· Operating cash flow of $78 million

ANGLETON, TX, April 19, 201 7 – Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the first quarter ended March 31, 2017.

|  |  | Three Months Ended |
|  |  | Mar 31, |  |  | Dec 31, |  |  | Mar 31, |
In millions, except EPS |  | 2017 |  |  | 2016 |  |  | 2016 |
Net sales |  | $567 |  |  | $608 |  |  | $549 |
Net income |  | $10 |  |  | $19 |  |  | $11 |
Net income – non-GAAP |  | $17 |  |  | $22 |  |  | $15 |
Diluted EPS |  | $0.19 |  |  | $0.37 |  |  | $0.22 |
Diluted EPS – non-GAAP |  | $0.34 |  |  | $0.45 |  |  | $0.30 |
Operating margin |  | 2.2% |  |  | 3.9% |  |  | 3.0% |
Operating margin – non-GAAP |  | 3.8% |  |  | 4.8% |  |  | 4.0% |

A reconciliation of GAAP and non-GAAP results is included below.

“I am pleased by the Company’s strong performance in our first quarter, providing an excellent start to the year. Revenues and margins exceeded guidance, and this quarter marks the first quarter in the past eleven that we experienced year-on-year revenue growth. Non-GAAP EPS of $0.34 exceeded the high end of our guidance by $0.06; cash cycle days improved by 7 days to 67 days; and we generated operating cash flow of $78 million,” said Paul Tufano, Benchmark’s President and CEO.

“As we work to transform and reposition the Company in 2017 to achieve our business model objectives, we remain focused on the key initiatives critical to our success, namely the optimization of our global network; the implementation of our market-sector sales organization; and the expansion of our engineering and solutions capabilities,” added Tufano. “Our recent announcement to relocate our corporate headquarters to the Phoenix metropolitan area is a major step in advancing these initiatives. Arizona offers great access to a highly skilled talent pool, a pro-business climate and proximity to major research universities. This move will allow us to consolidate our headquarters staff and drive greater efficiency and speed; expand our engineering and solutions capabilities and establish a partnership with Arizona State University;

1

position us closer to our growing aerospace and defense customer base and serve as a foundation to expand our existing precision technology business.”

First Quarter 2017 Financial Highlights

· Operating margin was 2.2% (non-GAAP 3.8%).

· The Company incurred a $5.1 million charge ($0.10 per share) for the write-down of inventory and provisions to accounts receivable associated with the insolvency of a customer. These charges increased cost of sales by $3.4 million and SG&A by $1.7 million and are reflected as a non-GAAP adjustment.

· Cash flows from operating activities were $78 million.

· Cash conversion cycle improved 7 days from 74 at December 31, 2016 to 67 days at March 31, 2017.

· Cash was $752 million at March 31, of which $93 million was available in the U.S.

Cash Conversion Cycle

|  | Mar 31, |  |  |  | Dec 31, |  |  |  | Mar 31, |
|  | 2017 |  |  |  | 2016 |  |  |  | 2016 |
Accounts receivable days |  | 61 |  |  |  | 65 |  |  |  | 68 |
Inventory days |  | 70 |  |  |  | 62 |  |  |  | 70 |
Accounts payable days |  | (60) |  |  |  | (53) |  |  |  | (39) |
Customer deposits |  | (4) |  |  |  | - |  |  |  | - |
|  | 67 |  |  |  | 74 |  |  |  | 99 |

First Quarter 2017 Industry Sector Update

Revenue by industry sector (dollars in millions) was as follows.

|  |  | Mar 31, |  |  |  | Dec 31, |  |  |  | Mar 31, |
| Higher-Value Markets |  | 2017 |  |  |  | 2016 |  |  |  | 2016 |
Industrials | $ | 118 |  | 21 | % |  | $ | 120 |  | 20 | % |  | $ | 138 |  | 25 | %
A&D |  | 104 |  | 18 |  |  |  | 102 |  | 17 |  |  |  | 91 |  | 16 |
Medical |  | 86 |  | 15 |  |  |  | 86 |  | 14 |  |  |  | 83 |  | 15 |
Test & Instrumentation |  | 77 |  | 14 |  |  |  | 65 |  | 11 |  |  |  | 53 |  | 10 |
|  | $ | 385 |  | 68 | % |  | $ | 373 |  | 62 | % |  | $ | 365 |  | 66 | %
|  |  | Mar 31, |  |  |  | Dec 31, |  |  |  | Mar 31, |
| Traditional Markets |  | 2017 |  |  |  | 2016 |  |  |  | 2016 |
Computing | $ | 101 |  | 18 | % |  | $ | 136 |  | 22 | % |  | $ | 91 |  | 17 | %
Telecommunications |  | 81 |  | 14 |  |  |  | 99 |  | 16 |  |  |  | 93 |  | 17 |
|  | $ | 182 |  | 32 | % |  | $ | 235 |  | 38 | % |  | $ | 184 |  | 34 | %
| Total | $ | 567 |  | 100 | % |  | $ | 608 |  | 100 | % |  | $ | 549 |  | 100 | %

Overall revenue increased 3% year-over-year driven by strong Test & Instrumentation growth serving the semi-capital equipment market, Aerospace and Defense (A&D) growth primarily from defense programs, and Computing strength from new and existing customers. To reflect

2

our increasing emphasis on A&D as part of our overall strategy, we will now report this sector separately going forward.

Medical demand was muted by softness across several top customers, and Industrials remains challenged by broad-based demand softness in energy and infrastructure related products.

First Quarter 2017 Bookings Update

· New program bookings of $118 to $149 million.

· 21 engineering awards supporting early engagement opportunities.

· 27 manufacturing wins across all market sectors.

The Company projects that new program bookings for the first quarter will result in annualized revenue of $118 to $149 million when fully launched in the next 12-18 months. The new program bookings align with Benchmark’s strategic focus on higher-value markets.

Second Quarter 2017 Outlook

· Revenue between $565 - $585 million.

· Diluted GAAP earnings per share between $0.26 - $0.30.

· Diluted non-GAAP earnings per share between $0.31 - $0.35 (excluding restructuring charges and amortization of intangibles expected to approximate $0.05 per share). The income tax impact of the non-GAAP adjustments using the applicable effective tax rates is $0.03 per share.

First Quarter 2017 Results Conference Call Details

A conference call hosted by Benchmark management will be held today at 5:00 p.m. Eastern Time to discuss the Company’s financial results and outlook. This call will be broadcast via the internet and may be accessed by logging on to the Company’s website at www.bench.com.

About Benchmark Electronics, Inc.

Benchmark provides worldwide integrated electronics manufacturing services (EMS), engineering and design services, and precision machine services to original equipment manufacturers in the following industries: industrial controls, aerospace and defense, telecommunications, computers and related products for business enterprises, medical devices, and test and instrumentation. Benchmark’s global operations include facilities in seven countries, and its common shares trade on the New York Stock Exchange under the symbol BHE.

For More Information, Please Contact:

Lisa K. Weeks, VP of Strategy & Investor Relations

979-331-1361 or lisa.weeks@bench.com

Non-GAAP Financial Measures

This press release includes financial measures that exclude certain items and therefore do not follow U.S. generally accepted accounting principles (GAAP). A detailed reconciliation between the GAAP results and results excluding special items (non-GAAP) is included at the end of this

3

press release. Management discloses non-GAAP information to provide investors with additional information to analyze the Company’s performance and underlying trends. Management uses non-GAAP measures that exclude certain items in order to better assess operating performance and help investors compare results with our previous guidance. Benchmark’s non-GAAP information is not necessarily comparable to the non-GAAP information used by other companies. Non-GAAP information should not be viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as a measure of the Company’s profitability or liquidity. Readers should consider the types of events and transactions for which adjustments have been made.

Forward-Looking Statements

This press release contains certain forward-looking statements within the scope of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “expect,” “estimate,” “plan,” “anticipate,” “project,” “predict,” “goals,” “targeting” and similar terms, and the negatives thereof, often identify forward-looking statements, which are not limited to historical facts. The Company’s forward-looking statements include, among other things, projections relating to the future value of bookings and second quarter 2017 revenues and diluted earnings per share. Although Benchmark believes these statements are based upon reasonable assumptions, they involve risks and uncertainties relating to operations, markets and business environment generally. If one or more of these risks or uncertainties materializes or underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.

All forward-looking statements included in this release are based upon information available to Benchmark as of the date hereof, and the Company assumes no obligation to update them. Readers are advised to consult further disclosures on related subjects, particularly in Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, in its other filings with the Securities and Exchange Commission and in its press releases.

###

4

Benchmark Electronics, Inc. and Subsidiaries |
Reconciliation of GAAP to Non-GAAP Financial Results |
(Amounts in Thousands, Except Per Share Data) |
(UNAUDITED) |
|  |  | Three Months Ended |
|  |  | March 31, |  | December 31, |  | March 31, |
|  |  | 2017 |  | 2016 |  | 2016 |
Income from operations (GAAP) | $ | 12,417 | $ | 23,548 | $ | 16,268 |
Restructuring charges and other costs |  | 1,511 |  | 2,663 |  | 2,789 |
Customer insolvency |  | 5,120 |  | - |  | - |
Amortization of intangible assets |  | 2,481 |  | 2,893 |  | 2,804 |
Non-GAAP income from operations | $ | 21,529 | $ | 29,104 | $ | 21,861 |
Net income (GAAP) | $ | 9,687 | $ | 18,568 | $ | 11,052 |
Restructuring charges and other costs |  | 1,511 |  | 2,663 |  | 2,789 |
Customer insolvency |  | 5,120 |  | - |  | - |
Amortization of intangible assets |  | 2,481 |  | 2,893 |  | 2,804 |
Income tax adjustments(1) |  | (1,580) |  | (1,781) |  | (1,642) |
Non-GAAP net income | $ | 17,219 | $ | 22,343 | $ | 15,003 |
Earnings per share: (GAAP) |  |  |  |  |  |  |
| Basic | $ | 0.20 | $ | 0.38 | $ | 0.22 |
| Diluted | $ | 0.19 | $ | 0.37 | $ | 0.22 |
Earnings per share: (Non-GAAP) |  |  |  |  |  |  |
| Basic | $ | 0.35 | $ | 0.46 | $ | 0.30 |
| Diluted | $ | 0.34 | $ | 0.45 | $ | 0.30 |
Weighted-average number of shares used |  |  |  |  |  |  |
in calculating earnings per share: |  |  |  |  |  |  |
| Basic |  | 49,511 |  | 49,063 |  | 49,848 |
| Diluted |  | 50,080 |  | 49,544 |  | 50,287 |

(1) This amount represents the tax impact of the non-GAAP adjustments using the applicable effective tax rates.

5

Benchmark Electronics, Inc. and Subsidiaries |
Consolidated Statements of Income |
(Amounts in Thousands, Except Per Share Data) |
(UNAUDITED) |
|  |  | Three Months Ended |
|  |  | March 31, |
|  | 2017 |  | 2016 |
Sales | $ | 566,501 | $ | 549,225 |
Cost of sales |  | 517,441 |  | 498,908 |
| Gross profit |  | 49,060 |  | 50,317 |
Selling, general and administrative expenses |  | 32,651 |  | 28,456 |
Amortization of intangible assets |  | 2,481 |  | 2,804 |
Restructuring charges and other costs |  | 1,511 |  | 2,789 |
| Income from operations |  | 12,417 |  | 16,268 |
Interest expense |  | (2,225) |  | (2,334) |
Interest income |  | 1,074 |  | 264 |
Other expense, net |  | (81) |  | (223) |
| Income before income taxes |  | 11,185 |  | 13,975 |
Income tax expense |  | 1,498 |  | 2,923 |
| Net income | $ | 9,687 | $ | 11,052 |
Earnings per share: |  |  |  |  |
| Basic | $ | 0.20 | $ | 0.22 |
| Diluted | $ | 0.19 | $ | 0.22 |
Weighted-average number of shares used in calculating earnings per share: |  |  |  |  |
| Basic |  | 49,511 |  | 49,848 |
| Diluted |  | 50,080 |  | 50,287 |

6

Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(UNAUDITED)
(in thousands)
|  |  |  |  |  | March 31, |  | December 31,
|  |  |  |  |  | 2017 |  | 2016
Assets |  |  |  |
| Current assets: |  |  |  |
|  | Cash and cash equivalents | $ | 752,477 | $ | 681,433
|  | Accounts receivable, net |  | 381,200 |  | 440,692
|  | Inventories |  | 404,023 |  | 381,334
|  | Other current assets |  | 35,352 |  | 28,203
|  |  |  | Total current assets |  | 1,573,052 |  | 1,531,662
| Property, plant and equipment, net |  | 165,080 |  | 166,148
| Goodwill and other, net |  | 297,641 |  | 300,858
|  |  |  | Total assets | $ | 2,035,773 | $ | 1,998,668
Liabilities and Shareholders’ Equity |  |  |  |
| Current liabilities: |  |  |  |
|  | Current installments of long-term debt and capital lease obligations | $ | 13,865 | $ | 12,396
|  | Accounts payable |  | 343,796 |  | 326,249
|  | Accrued liabilities |  | 79,507 |  | 73,736
|  |  |  | Total current liabilities |  | 437,168 |  | 412,381
| Long-term debt and capital lease obligations, less current installments |  | 206,463 |  | 211,252
| Other long-term liabilities |  | 10,083 |  | 9,570
| Shareholders’ equity |  | 1,382,059 |  | 1,365,465
|  |  |  | Total liabilities and shareholders’ equity | $ | 2,035,773 | $ | 1,998,668

7

Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(in thousands)
(UNAUDITED)
|  |  |  |  |  | Three Months Ended
|  |  |  |  |  | March 31,
|  |  |  |  |  | 2017 |  | 2016
Cash flows from operating activities: |  |  |  |
| Net income | $ | 9,687 | $ | 11,052
| Depreciation and amortization |  | 12,273 |  | 13,907
| Stock-based compensation expense |  | 2,160 |  | 2,113
| Accounts receivable, net |  | 59,685 |  | 65,382
| Inventories |  | (22,512) |  | 22,756
| Accounts payable |  | 16,225 |  | (31,940)
| Other changes in working capital and other |  | 387 |  | (6,189)
|  | Net cash provided by operations |  | 77,905 |  | 77,081
Cash flows from investing activities: |  |  |  |
| Additions to property, plant and equipment and software |  | (7,578) |  | (7,837)
| Other investing activities, net |  | 109 |  | 192
|  | Net cash used in investing activities |  | (7,469) |  | (7,645)
Cash flows from financing activities: |  |  |  |
| Share repurchases |  | (1,000) |  | (14,205)
| Net debt activity |  | (3,082) |  | (3,078)
| Other financing activities, net |  | 4,349 |  | 344
|  | Net cash provided by (used in) financing activities |  | 267 |  | (16,939)
Effect of exchange rate changes |  | 341 |  | 675
Net increase in cash and cash equivalents |  | 71,044 |  | 53,172
| Cash and cash equivalents at beginning of year |  | 681,433 |  | 465,995
| Cash and cash equivalents at end of period | $ | 752,477 | $ | 519,167

8