Benchmark Electronics, Inc. (BHE)

Q2 2010 Earnings Call

July 29, 2010 10:00 am ET


Don Adam – CFO

Gayla Delly – President

Cary Fu – Chairman and CEO


Brian White - Ticonderoga

Sherri Scribner – Deutsche Bank

Amit Daryanani – RBC Capital Markets

Sean Hannan – Needham & Company

William Stein – Credit Suisse

Jim Suva - Citi

Brian Alexander – Raymond James



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Previous Statements by BHE
» Benchmark Electronics, Inc. Q1 2010 Earnings Call Transcript
» Benchmark Electronics Q4 2009 Earnings Call Transcript
» Benchmark Electronics Q3 2009 Earnings Call Transcript

Welcome to the Benchmark Electronics’ Second Quarter 2010 Earnings Call. At this time, all lines are on a listen-only mode. Later there will be a question and answer session and instructions will be given at that time. (Operator Instructions)

At this time then, I’d like to turn the conference over to Mr. Don Adam. Please, go ahead, sir.

Don Adam

Good morning. Welcome to the Benchmark Electronics Conference Call to discuss our financial results for the second quarter of 2010.

I’m Don Adam, CFO of Benchmark Electronics. Today, Cary Fu, our CEO, will begin our call by reviewing the current market environment and resulting impact to benchmark. Gayla Delly, our President, will then discuss our operational activities for the second quarter and our outlook for the third quarter. Then I will then follow with review of our financial metrics for the second quarter.

After our prepared remarks, Gayla, Cary, and I will take time for your questions in our Q&A session. We will hold this call to one hour.

During this conference call, we may make projections that are forward-looking statements regarding future events or the future financial performance of the company. We would like to caution you that those statements reflect our current expectations and that actual events or results may differ materially.

We also like to refer you to our reports that are filed from time to time, with the Securities and Exchange Commission, including the company’s 8K and S4 filing, quarterly filings on Form 10Q, and our annual report on Form 10-K.

These documents contain cautionary language and identify important risk factors which could cause actual results to differ materially from our projections or forward-looking statements. We undertake no obligation to update those projections or forward-looking statements in the future.

Now, I’ll turn the call over to Cary.



Good morning. Thank you for joining our call today. Benchmark Electronics second quarter results, once again show a material growth in some operating metrics.

For the quarters our revenue was up 22% compared to the same period of time of 2009, and at 3% subsequently. Earnings per share excluding [inaudible] charges, up74% compared to the same period 2009, and up 10% subsequently.

Our earnings per share result was in the guidance we reported last quarter. For Q2 our earnings per share were impacted by two items that were not forecasted; the favorable tax rate, and a favorable FX impact. These items are basically setting up our results.

For the year-to-date results on revenue, first half was up 19% compared to last years. And earnings per shares excluding the [inaudible] was up 85% compared to 2010 to 2009.

Our gross margins for the quarters, the 2010, was 4% compared to 2.8% in 2009, and consistent with our first quarter of the year.

We have a retained our operation leverage while ramping up some of the new programs which we have been talking about over the last several quarters, in addition to the overall challenging component environments.

Of course, we are disappointed that our Q2 earnings [inaudible] our revenue guidance. In comparison to our guidance, we’re negatively impacted by the continued challenging on the supply chain, changing the mix on our customers forecast, and additionally to a lack of a demand pool at the end of the quarter of one of computer customers. We expect this to impact our revenue and the inventory level as well.

For the second quarter, we’re confident with our revenue guidance. In the development of Q2 forecast, we considered the supply-chain environment. We also conservatively discounted forecast provided by our customers. But that’s not enough.

The product mix change we see from our customers was in with this condense supply change, in addition to the lower demand pools on the computer customers; we did have a slight miss on our top line.

The good news is our peers continue to do a diligent job in this environment, in meeting the needs of our customers. The long return [inaudible] component has continued to impact our ability to meet our forecast and exchanges in supporting the job order from our customers.

Our supply chain team, in support with our customers, were very diligent in walking with the supply chain to bring the demand challenge. However, this extended lead-time impact our shipment in the $30 million for the quarter.

Our revenue for the medical sector was slightly down from Q2. In Q2 from Q1, mainly due to a product transition of crossover. We do expect this to rebound in the second half of the year, with the new program, the ramping we have in front of us.

Looking at Q3 forecast, we’re looking for continued growth which our customer forecast to continue to gross quarter over quarter. In determining our guidance, particularly in the revenue for the third quarter, we have considered the supply chain challenge, and takes a more conservative discount on the forecast for the customers.

Also, consider quarter-to-day shipment at volumes. We do anticipate top-line growth for the third quarter. We do feel comfortable in the guidance we are providing today, looking at new programs ramps and the quarter today activity.

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