Q4-19 and 2019 Earnings Call February 6, 2020 | 1
Forward-Looking Statements Non-GAAP Financial Information This press release contains forward-looking statements within the meaning This document includes certain financial measures that exclude items and of Section 27A of the Securities Act of 1933 and Section 21E of the therefore are not in accordance with U.S. generally accepted accounting Securities Exchange Act of 1934. The words “expect,” “estimate,” principles (“GAAP”). A detailed reconciliation between GAAP results and “anticipate,” “could” “predict” and similar expressions, and the negatives results excluding special items (“non-GAAP”) is included in the Appendix of thereof, often identify forward-looking statements, which are not limited to this document. Management discloses non ‐ GAAP information to provide historical facts. Forward-looking statements include, among other things, investors with additional information to analyze the Company’s performance guidance for first quarter 2020 results; statements, express or implied, and underlying trends. Management uses non ‐ GAAP measures that exclude concerning future operating results or margins, the ability to generate sales certain items in order to better assess operating performance and help and income or cash flow, and expected revenue mix; and Benchmark’s investors compare results with our previous guidance. This document also business and growth strategies. Although Benchmark believes these references “free cash flow”, which the Company defines as cash flow from statements are based upon reasonable assumptions, they involve risks and operations less additions to property, plant and equipment and purchased uncertainties relating to operations, markets and the business environment software. The Company’s non ‐ GAAP information is not necessarily generally. If one or more of these risks or uncertainties materializes, or comparable to the non ‐ GAAP information used by other underlying assumptions prove incorrect, actual outcomes may vary companies. Non ‐ GAAP information should not be viewed as a substitute materially from those indicated. Readers are advised to consult further for, or superior to, net income or other data prepared in accordance with disclosures on these risks and uncertainties, particularly in Part 1, Item 1A, GAAP as a measure of the Company’s profitability or liquidity. Readers “Risk Factors”, of the Company’s Annual Report on Form 10-K for the year should consider the types of events and transactions for which adjustments ended December 31, 2018 and in Part II, Item 1A, “Risk Factors” in the have been made. Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, and in its subsequent filings with the Securities and Exchange Commission. All forward-looking statements included in this document are based upon information available to the Company as of the date of this document, and it assumes no obligation to update them. . | 2 | 2
CEO Perspective Jeff Benck President & Chief Executive Officer | 3
Fourth Quarter and 2019 Summary Cash Flow and Capital Progress on Operational Continued Go-to-Market Momentum in Targeted Allocation Efficiencies Progress Higher-value Markets Go-to-Market organization making Working capital normalized at ~80 days San Jose site closure on track for 1H-20; Better than expected quarterly progress after exiting the legacy computing contract customer transitions underway results in Semi-cap Sector strategies driving disciplined Operating cash flow of $93 million and free Guaymas, Mexico operations sold versus Year-over-year growth in Semi- customer selection closed cash flow of $58 million for the year cap and A&D in Q4 Key new wins selling the full breadth First micro-electronics production units Repurchased $122 million shares in 2019; Medical revenues up >14% of capabilities $79 million authorization remaining from Benchmark’s Lark facility in Phoenix annually Paid quarterly dividend of $0.15 per share | 4
Q4-19 Notable New Business Wins by Market Sector Facial imaging instrument (mfg.) Industrials Security scanning system (design & mfg.) Advanced DNA testing platform (process design & mfg.) Continued Progress in Medical Defibrillator product (mfg.) Capturing the Right Mix Fetal monitoring device (process design & mfg.) Front-end semi-cap in-chamber tool (precision technologies) Semi-Cap Semi-cap tool electronic sensor device (mfg.) Satellite communication device (process design & mfg.) Aerospace & F-16 cockpit electronics (design & mfg.) Defense Munition system electronics (mfg.) High-performance computing (process design & mfg.) Computing & Telco 3-D holographic display device (design) | 5
CFO Updates & Q4-19 and 2019 Financial Highlights Roop Lakkaraju Chief Financial Officer | 6
Fourth Quarter 2019 Financial Summary For the Three Months Ended Dec. 31, Sept. 30, Dec. 31, (In millions, except EPS) Q/Q Y/Y 2019 2019 2018 $508 $555 (8%) $657 (23%) Net Sales (1.8%) 1.8% (360 bps) 2.3% (410 bps) GAAP Operating Margin GAAP Diluted EPS ($0.19) $0.19 >(100%) $0.64 >(100%) 2.6% 3.2% (60 bps) 3.2% (60 bps) Non-GAAP Operating Margin Non-GAAP Diluted EPS $0.27 $0.36 (25%) $0.41 (34%) 2.9% 5.2% (230 bps) 6.2% (330 bps) GAAP ROIC 7.4% 8.2% (80 bps) 9.2% (180 bps) Non-GAAP ROIC Updated Guidance for the Fourth Quarter: See APPENDIX 1 for a reconciliation of GAAP to non-GAAP Financial Results Revenue (in millions) $505 – $510 Diluted EPS – non-GAAP $0.24 – $0.28 | 7
Revenue by Market Sector For the Three Months Ended Higher-Value Markets Dec. 31, 2019 Sept. 30, 2019 Q/Q Dec. 31, 2018 Y/Y 21% $107 21% $115 (6%) 18% $121 (11%) Industrials 21% $106 21% $115 (8%) 16% $105 1% Aerospace & Defense 20% $103 23% $128 (20%) 16% $104 (1%) Medical 16% $81 12% $68 19% 11% $70 17% Semi-Cap $397 $426 (7%) $400 (1%) Total Revenue Traditional Markets Dec. 31, 2019 Sept. 30, 2019 Q/Q Dec. 30, 2018 Y/Y 9% $45 11% $59 (25%) 26% $171 (74%) Computing 13% $66 12% $70 (4%) 13% $86 (23%) Telecommunications $111 $129 (14%) $257 (57%) Total Revenue (1) In millions | 8
GAAP Key Business Trends Revenue ($M) and Gross Margin SG&A ($M) 1,500 15.0% 7.4% Q4-19 Reflects 70.0 8.0% 6.3% 13.0% Ransomware Incident 5.9% 5.6% 60.0 9.5% 5.2% 8.9% 8.8% 11.0% 8.4% 6.0% 1,000 8.0% 50.0 9.0% 40.0 4.0% 7.0% 30.0 37.7 500 35.3 34.9 34.0 657 33.8 603 602 5.0% 20.0 555 2.0% 508 3.0% 10.0 0 1.0% 0.0 0.0% Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 60.0 7.0% Operating Profit ($M) and Margin Return on Invested Capital (LTM) 50.0 5.0% 40.0 2.3% 2.7% 2.0% 1.8% 2000 30.0 Q4-19 Reflects 3.0% 15.0% 6.2% 5.7% 5.3% 5.2% 2.9% Ransomware Incident 1500 20.0 5.0% 1.0% NOPAT 10.0 51 47 44 43 24 16.1 15.3 1000 9.8 11.9 -5.0% 0.0 Inv. Capital -1.0% -9.3 835 840 835 829 819 500 -15.0% -10.0 -20.0 -1.8% -3.0% 0 -25.0% Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 GAAP ROIC = (GAAP TTM income from operations – GAAP Tax Impact) ÷ (Average Invested Capital for last 5 quarters) | 9
Non-GAAP Key Business Trends SG&A ($M) Revenue ($M) and Gross Margin 15.0% 1,400 Q4-19 Reflects 13.0% 70.0 9.0% Ransomware Incident 1,200 9.5% 11.0% 8.0% 6.3% 8.9% 60.0 8.4% 8.8% 5.9% 5.9% 1,000 8.0% 7.0% 5.4% 9.0% 5.2% 50.0 6.0% 800 7.0% 40.0 5.0% 600 5.0% 35.5 35.3 657 34.9 4.0% 34.0 30.0 603 602 555 400 27.6 508 3.0% 3.0% 20.0 2.0% 200 1.0% 10.0 1.0% 0 -1.0% 0.0 0.0% Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 60.0 7.0% Return on Invested Capital (LTM) Operating Profit ($M) and Margin 6.0% 50.0 5.0% 40.0 1800 Q4-19 Reflects 9.2% 8.3% 8.2% 8.2% 7.4% 20.0% 3.2% 3.2% 3.1% Ransomware Incident 4.0% 1600 2.9% 10.0% 30.0 2.6% 1400 3.0% 1200 0.0% 76 70 69 68 61 1000 -10.0% 20.0 21.1 NOPAT 2.0% 800 18.5 18.0 17.3 -20.0% 840 829 835 835 819 600 Inv. Capital 13.3 10.0 -30.0% 1.0% 400 -40.0% 200 0.0 0.0% 0 -50.0% Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Non-GAAP ROIC = (Non-GAAP TTM income from operations – Non-GAAP Tax Impact) ÷ [Average Invested Capital for last 5 quarters] | 10
2019 Financial Summary For the Twelve Months Ended Dec. 31, Dec. 31, (In millions, except EPS) Q’18 to ‘19 Y/Y 2019 2018 $2,268 $2,566 ($298) (12%) Net Sales Non-GAAP Gross Profit $200 $221 ($21) (10%) Non-GAAP Gross Margin % 8.8% 8.6% (20 bps) $133 $141 ($8) (6%) Non-GAAP SG&A 5.9% 5.5% 40 bps Non-GAAP SG&A % Non-GAAP Operating Profit $67 $80 ($13) (16%) 3.0% 3.1% (10 bps) Non-GAAP Operating Margin % Non-GAAP Diluted EPS $1.32 $1.45 ($0.13) (9%) 7.4% 9.2% (180 bps) Non-GAAP ROIC See APPENDIX 1 for a reconciliation of GAAP to non-GAAP Financial Results | 11
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