UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________________ to________________
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction |
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(I.R.S. Employer |
of incorporation or organization) |
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Identification No.) |
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(Zip Code) |
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of May 3, 2022, there were
TABLE OF CONTENTS
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Page |
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PART I—FINANCIAL INFORMATION |
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Item 1. |
1 |
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1 |
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2 |
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3 |
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4 |
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5 |
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6 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
Item 3. |
30 |
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Item 4. |
30 |
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PART II—OTHER INFORMATION |
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Item 1. |
32 |
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Item 1A. |
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Item 2. |
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Item 6. |
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34 |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
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March 31, |
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December 31, |
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(in thousands, except par value) |
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2022 |
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2021 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance for doubtful accounts of |
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Contract assets |
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Inventories |
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Prepaid expenses and other assets |
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Income taxes receivable |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets |
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Goodwill |
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Deferred income taxes |
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Other assets, net |
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$ |
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$ |
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Liabilities and Shareholders’ Equity |
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Current liabilities: |
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Current installments of long-term debt |
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$ |
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$ |
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Accounts payable |
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Advance payments from customers |
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Income taxes payable |
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Accrued liabilities |
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Total current liabilities |
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Long-term debt, less current installments |
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Operating lease liabilities |
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Other long-term liabilities |
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Deferred income taxes |
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Shareholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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Total shareholders’ equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
1
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(unaudited)
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Three Months Ended |
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(in thousands, except per share data) |
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2022 |
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2021 |
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Sales |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Amortization of intangible assets |
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Restructuring charges and other costs |
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Ransomware related incident costs (recovery), net |
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( |
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Income from operations |
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Interest expense |
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( |
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( |
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Interest income |
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Other expense |
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( |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted-average number of shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes to condensed consolidated financial statements.
2
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
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Three Months Ended |
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(in thousands) |
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2022 |
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2021 |
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Net income |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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Unrealized gain on derivatives, net of tax |
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Other |
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( |
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Other comprehensive income (loss) |
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( |
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Comprehensive income |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
3
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
(unaudited)
(in thousands) |
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Shares |
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Common |
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Additional |
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Retained |
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Accumulated |
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Total |
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Balances, December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Shares repurchased and retired |
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( |
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( |
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( |
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( |
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— |
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( |
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Stock options exercised |
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— |
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— |
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Vesting of restricted stock units |
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( |
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— |
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— |
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— |
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Shares withheld for taxes |
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( |
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( |
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( |
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— |
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— |
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( |
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Dividends declared |
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— |
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— |
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— |
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( |
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— |
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( |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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Balances, March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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(in thousands) |
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Shares |
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Common |
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Additional |
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Retained |
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Accumulated |
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Total |
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Balances, December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Shares repurchased and retired |
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( |
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( |
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( |
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( |
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— |
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( |
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Stock options exercised |
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— |
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— |
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Vesting of restricted stock units |
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( |
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— |
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— |
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— |
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Shares withheld for taxes |
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( |
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( |
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( |
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— |
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— |
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( |
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Dividends declared |
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— |
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— |
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— |
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( |
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— |
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( |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Balances, March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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See accompanying notes to condensed consolidated financial statements.
4
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
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Three Months Ended |
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(in thousands) |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash |
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Depreciation |
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Amortization |
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Provision for doubtful accounts |
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Deferred income taxes |
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( |
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( |
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Loss (gain) on the sale of property, plant and equipment |
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( |
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Loss on assets held for sale |
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Stock-based compensation expense |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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Contract assets |
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( |
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( |
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Inventories |
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( |
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( |
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Prepaid expenses and other assets |
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( |
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( |
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Accounts payable |
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Advance payments from customers |
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( |
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Accrued liabilities |
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( |
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( |
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Operating leases |
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( |
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( |
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Income taxes |
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Net cash (used in) provided by operations |
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( |
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Cash flows from investing activities: |
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Additions to property, plant and equipment |
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( |
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( |
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Proceeds from the sale of property, plant and equipment |
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Proceeds from the sale of assets held for sale |
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Additions to purchased software |
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( |
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Other |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities: |
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Proceeds from stock options exercised |
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Employee taxes paid for with shares withheld |
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( |
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( |
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Dividends paid |
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( |
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( |
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Borrowings under credit agreement |
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Principal payments on credit agreement |
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( |
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( |
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Principal payments on finance leases |
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( |
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( |
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Share repurchases |
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( |
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( |
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Net cash provided by (used in) financing activities |
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( |
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Effect of exchange rate changes |
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( |
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( |
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Net (decrease) increase in cash and cash equivalents and restricted cash |
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( |
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Cash and cash equivalents and restricted cash at beginning of year |
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Cash and cash equivalents and restricted cash at end of period |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
5
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(amounts in thousands, except per share data, unless otherwise noted)
(unaudited)
Note 1 – Basis of Presentation
Benchmark Electronics, Inc. (the Company) is a Texas corporation that provides advanced manufacturing services, which includes design and engineering services and technology solutions. From initial product concept to volume production, including direct order fulfillment and aftermarket services, the Company has been providing integrated services and solutions to original equipment manufacturers (OEMs) since 1979. The Company serves the following industries: aerospace and defense (A&D), medical technologies, complex industrials, semiconductor capital equipment (Semi-Cap), next-generation telecommunications and advanced computing. The Company has manufacturing operations located in the United States and Mexico (the Americas), Asia and Europe.
The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). The condensed consolidated financial statements reflect all normal and recurring adjustments necessary in the opinion of management for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2021 (the 2021 10-K).
Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (U.S. GAAP) with consideration given to the potential impacts of the coronavirus disease (COVID) pandemic. However, actual results could differ materially from these estimates and be significantly affected by the severity and duration of the pandemic, the extent of actions to contain or treat COVID, how quickly and to what extent normal economic and operating activity can resume, and the severity and duration of the global economic downturn that results from the pandemic.
Note 2 – New Accounting Pronouncements
Not Yet Adopted
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). The pronouncement provides temporary optional expedients and exceptions for applying U.S. GAAP to transactions affected by reference rate (e.g., LIBOR) reform if certain criteria are met to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This update is effective as of March 12, 2020 through December 31, 2022. We will evaluate transactions or contract modifications occurring as a result of reference rate reform and determine whether to apply the optional guidance on an ongoing basis. The update is currently not expected to have a material impact on our consolidated financial statements.
The Company has determined that other recently issued accounting standards will either not have a material impact on its consolidated financial position, results of operations or cash flows, or will not apply to its operations.
Note 3 – Inventories
Inventory costs are summarized as follows:
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March 31, |
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December 31, |
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(in thousands) |
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2022 |
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2021 |
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Raw materials |
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$ |
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$ |
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Work in process |
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Finished goods |
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$ |
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$ |
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6
Note 4 – Goodwill and Other Intangible Assets
Goodwill allocated to the Company’s reportable segments were as follows:
(in thousands) |
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Americas |
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Asia |
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Total |
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Goodwill as of December 31, 2021 and March 31, 2022 |
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$ |
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$ |
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$ |
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Other assets, net consist primarily of acquired identifiable intangible assets and capitalized purchased software costs.
(in thousands) |
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Gross |
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Accumulated |
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Net |
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Customer relationships |
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$ |
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$ |
( |
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$ |
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Purchased software costs |
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( |
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Technology licenses |
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( |
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Trade names and trademarks |
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