BENCHMARK ELECTRONICS INC [BHE] Filings

10-Q 1 bhe-20240930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐	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: 1-10560

BENCHMARK ELECTRONICS, INC.

(Exact name of registrant as specified in its charter)


Texas		74-2211011
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

56 South Rockford Drive		85288
Tempe, Arizona		(Zip Code)
(Address of principal executive offices)

(623) 300-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.10 per share	BHE	The New York Stock Exchange

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. Yes ☑ No ☐

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). Yes ☑ No ☐

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.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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 ☐ No ☑

As of October 29, 2024, there were 35,996,919 shares of common stock of Benchmark Electronics, Inc., par value $0.10 per share, outstanding.

TABLE OF CONTENTS


		Page

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Shareholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 5.	Other Information
Item 6.	Exhibits	34

	SIGNATURES	35

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)


	September 30,			December 31,
(in thousands, except par value)	2024			2023
Assets
Current assets:
Cash and cash equivalents	$	324,423		$	277,391
Restricted cash		—			5,822
Accounts receivable, net of allowance for doubtful accounts of $241 and $470, respectively		372,276			449,404
Contract assets		186,538			174,979
Inventories		581,901			683,801
Prepaid expenses and other current assets		43,569			44,350
Total current assets		1,508,707			1,635,747
Property, plant and equipment, net		224,164			227,698
Operating lease right-of-use assets		122,117			130,830
Goodwill		192,116			192,116
Deferred income taxes		33,573			26,943
Other long-term assets		68,320			61,421
Total assets	$	2,148,997		$	2,274,755
Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt	$	6,751		$	4,283
Accounts payable		356,038			367,480
Advance payments from customers		145,350			204,883
Income taxes payable		23,865			22,225
Accrued liabilities		107,127			114,676
Total current liabilities		639,131			713,547
Long-term debt, net of current installments		272,000			326,674
Operating lease liabilities		114,181			123,385
Other long-term liabilities		21,009			32,064
Shareholders’ equity:
Preferred stock, $0.10 par value; 5,000 shares authorized, none issued		—			—
Common stock, $0.10 par value; 145,000 shares authorized; issued and outstanding – 35,969 and 35,664, respectively		3,597			3,566
Additional paid-in capital		532,417			528,842
Retained earnings		583,737			560,537
Accumulated other comprehensive loss		(17,075	)		(13,860	)
Total shareholders’ equity		1,102,676			1,079,085
Total liabilities and shareholders’ equity	$	2,148,997		$	2,274,755

See the accompanying notes to the unaudited condensed consolidated financial statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2024			2023			2024			2023
Sales	$	657,747		$	719,695		$	1,999,218		$	2,147,622
Cost of sales		591,006			650,618			1,797,119			1,947,556
Gross profit		66,741			69,077			202,099			200,066
Selling, general and administrative expenses		36,636			35,509			111,990			111,379
Amortization of intangible assets		1,205			1,592			3,613			4,775
Restructuring charges and other costs		795			1,635			5,609			6,348
Income from operations		28,105			30,341			80,887			77,564
Interest expense		(6,569	)		(8,475	)		(20,747	)		(23,183	)
Interest income		2,811			1,343			7,329			4,223
Other (expense) income, net		(3,952	)		2,384			(7,452	)		280
Income before income taxes		20,395			25,593			60,017			58,884
Income tax expense		5,021			5,181			15,113			12,121
Net income	$	15,374		$	20,412		$	44,904		$	46,763
Earnings per share:
Basic	$	0.43		$	0.57		$	1.25		$	1.32
Diluted	$	0.42		$	0.57		$	1.23		$	1.30
Weighted-average number of shares outstanding:
Basic		36,051			35,647			35,970			35,535
Diluted		36,629			35,876			36,469			35,879

See the accompanying notes to the unaudited condensed consolidated financial statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Net income	$	15,374		$	20,412		$	44,904		$	46,763
Other comprehensive income (loss):
Foreign currency translation adjustments		3,107			(1,891	)		1,047			(786	)
Unrealized (loss) gain on derivatives, net of tax		(3,813	)		(621	)		(4,504	)		1,523
Other		133			(110	)		242			322
Total other comprehensive (loss) income		(573	)		(2,622	)		(3,215	)		1,059
Comprehensive income	$	14,801		$	17,790		$	41,689		$	47,822

See the accompanying notes to the unaudited condensed consolidated financial statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(unaudited)


(in thousands)	Shares			Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
Balances, December 31, 2023		35,664		$	3,566		$	528,842		$	560,537		$	(13,860	)	$	1,079,085
Net income		—			—			—			44,904			—			44,904
Other comprehensive loss		—			—			—			—			(3,215	)		(3,215	)
Dividends declared		—			—			—			(18,024	)		—			(18,024	)
Shares repurchased and retired		(127	)		(13	)		(1,408	)		(3,680	)		—			(5,101	)
Stock-based compensation expense		—			—			10,740			—			—			10,740
Stock options exercised		23			2			480			—			—			482
Vesting of restricted stock units		612			61			(61	)		—			—			—
Shares withheld for taxes		(203	)		(19	)		(6,176	)		—			—			(6,195	)
Balances, September 30, 2024		35,969		$	3,597		$	532,417		$	583,737		$	(17,075	)	$	1,102,676

Balances, June 30, 2024		36,077		$	3,608		$	529,836		$	578,162		$	(16,502	)	$	1,095,104
Net income		—			—			—			15,374			—			15,374
Other comprehensive loss		—			—			—			—			(573	)		(573	)
Dividends declared		—			—			—			(6,119	)		—			(6,119	)
Shares repurchased and retired		(127	)		(13	)		(1,408	)		(3,680	)		—			(5,101	)
Stock-based compensation expense		—			—			4,379			—			—			4,379
Stock options exercised		—			—			12			—			—			12
Vesting of restricted stock units		26			2			(2	)		—			—			—
Shares withheld for taxes		(7	)		—			(400	)		—			—			(400	)
Balances, September 30, 2024		35,969		$	3,597		$	532,417		$	583,737		$	(17,075	)	$	1,102,676


(in thousands)	Shares			Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balances, December 31, 2022		35,164		$	3,516		$	519,238		$	519,895		$	(16,233	)	$	1,026,416
Net income		—			—			—			46,763			—			46,763
Other comprehensive income		—			—			—			—			1,059			1,059
Dividends declared		—			—			—			(17,784	)		—			(17,784	)
Stock-based compensation expense		—			—			12,331			—			—			12,331
Stock options exercised		5			1			67			—			—			68
Vesting of restricted stock units		721			72			(72	)		—			—			—
Shares withheld for taxes		(237	)		(24	)		(5,780	)		—			—			(5,804	)
Balances, September 30, 2023		35,653		$	3,565		$	525,784		$	548,874		$	(15,174	)	$	1,063,049

Balances, June 30, 2023		35,642		$	3,564		$	522,247		$	534,470		$	(12,552	)	$	1,047,729
Net income		—			—			—			20,412			—			20,412
Other comprehensive loss		—			—			—			—			(2,622	)		(2,622	)
Dividends declared		—			—			—			(6,008	)		—			(6,008	)
Stock-based compensation expense		—			—			3,674			—			—			3,674
Vesting of restricted stock units		16			2			(2	)		—			—			—
Shares withheld for taxes		(5	)		(1	)		(135	)		—			—			(136	)
Balances, September 30, 2023		35,653		$	3,565		$	525,784		$	548,874		$	(15,174	)	$	1,063,049

See the accompanying notes to the unaudited condensed consolidated financial statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Nine Months Ended September 30,
(in thousands)	2024			2023
Cash flows from operating activities:
Net income	$	44,904		$	46,763
Adjustments to reconcile net income to net cash from operating activities:
Depreciation		26,897			25,443
Amortization		7,681			8,660
Stock-based compensation expense		10,740			12,331
Provision for doubtful accounts		671			1,321
Deferred income taxes		(5,119	)		(4,465	)
Asset impairments		—			1,075
Gain on the sale of property, plant and equipment		(7	)		(335	)
Changes in operating assets and liabilities:
Accounts receivable		76,479			12,937
Contract assets		(11,559	)		(6,472	)
Inventories		102,540			1,789
Prepaid expenses and other assets		(8,888	)		(14,433	)
Accounts payable		(16,107	)		(24,420	)
Advance payments from customers		(59,533	)		(8,879	)
Accrued liabilities		(28,127	)		(14,201	)
Operating leases		1,192			830
Income taxes		1,545			(730	)
Net cash provided by operating activities		143,309			37,214
Cash flows from investing activities:
Additions to property, plant and equipment		(22,555	)		(64,014	)
Additions to capitalized purchased software		(1,666	)		(2,699	)
Proceeds from the disposal of property, plant and equipment		2,004			636
Other, net		(1,521	)		(48	)
Net cash used in investing activities		(23,738	)		(66,125	)
Cash flows from financing activities:
Borrowings under credit agreement		455,000			614,500
Principal payments on credit agreement		(507,461	)		(506,961	)
Dividends paid		(17,794	)		(17,570	)
Employee taxes paid with shares withheld		(6,195	)		(5,804	)
Proceeds from stock options exercised		482			68
Debt issuance costs		—			(216	)
Principal payments on finance leases		(135	)		(129	)
Share repurchases		(5,101	)		—
Net cash (used in) provided by financing activities		(81,204	)		83,888
Effect of exchange rate changes on cash, cash equivalents and restricted cash		2,843			(1,647	)
Net increase in cash, cash equivalents and restricted cash		41,210			53,330
Cash, cash equivalents and restricted cash at the beginning of the year		283,213			207,430
Cash, cash equivalents and restricted cash at the end of the period	$	324,423		$	260,760

See the accompanying notes to the unaudited condensed consolidated financial statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Notes to the 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 include 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 market sectors: complex industrials, aerospace and defense (A&D), medical technologies, semiconductor capital equipment (semi-cap), and advanced computing and communications (AC&C). 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) relating to interim financial statements. 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. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2023 (the 2023 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 unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (U.S. GAAP) for interim financial statements. However, actual results could differ materially from these estimates.

Note 2 – New Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740) (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the guidance and its impact to the financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires public entities disclose information about their reportable segments’ oversight and significant expenses on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is required to adopt the guidance for its 2024 annual report filed on Form 10-K. The Company is currently evaluating the impact of these amendments on its disclosures. Upon adoption, this ASU is not expected to have a material impact to the Company’s financial statements or financial position.

The Company does not believe that any other recently issued accounting standards will have a material impact on its consolidated financial position, results of operations or cash flows, or will apply to its operations.

Note 3 – Inventories

Inventory costs are summarized as follows:


	September 30,		December 31,
(in thousands)	2024		2023
Raw materials	$	555,722	$	659,210
Work in process		22,068		22,088
Finished goods		4,111		2,503
Total inventories	$	581,901	$	683,801

Note 4 – Goodwill and Other Intangible Assets

Goodwill allocated to the Company’s reportable operating segments follows:


(in thousands)	Americas		Asia		Total
Goodwill as of September 30, 2024 and December 31, 2023	$	154,014	$	38,102	$	192,116

A summary of the Company’s acquired identifiable intangible assets and capitalized purchased software costs follows:


(in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	100,118	$	(75,555	)	$	24,563
Capitalized purchased software costs		44,085		(30,351	)		13,734
Technology licenses		15,500		(15,500	)		—
Trade names and trademarks		7,800		—			7,800
Other		868		(422	)		446
Total intangible assets as of September 30, 2024	$	168,371	$	(121,828	)	$	46,543


(in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	100,105	$	(71,947	)	$	28,158
Capitalized purchased software costs		45,062		(30,463	)		14,599
Technology licenses		15,500		(15,500	)		—
Trade names and trademarks		7,800		—			7,800
Other		869		(404	)		465
Total intangible assets as of December 31, 2023	$	169,336	$	(118,314	)	$	51,022

A summary of the components of amortization expense, as presented in the consolidated statements of cash flows, follows:

         
        Three Months Ended
September 30,

        Nine Months Ended
September 30,

        (in thousands)

        2024