Benchmark Electronics, Inc. (BHE) Bundle
Understanding Benchmark Electronics, Inc. (BHE) Revenue Streams
Understanding Benchmark Electronics, Inc. Revenue Streams
The revenue streams of the company can be categorized into various segments and regions, showcasing its diverse operational landscape.
Breakdown of Primary Revenue Sources
| Segment | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-to-Date 2024 Revenue (in thousands) | Year-to-Date 2023 Revenue (in thousands) |
|---|---|---|---|---|
| Semi-Cap | $187,392 | $165,254 | $525,195 | $477,830 |
| Complex Industrials | $150,914 | $153,641 | $433,649 | $464,004 |
| Medical | $107,134 | $149,130 | $333,412 | $431,115 |
| Aerospace & Defense (A&D) | $102,029 | $99,687 | $316,703 | $259,266 |
| Advanced Computing & Communications (AC&C) | $110,278 | $151,983 | $390,259 | $515,407 |
Year-over-Year Revenue Growth Rate
In Q3 2024, total sales amounted to $657,747 thousand, reflecting a 9% decrease from $719,695 thousand in Q3 2023. The year-to-date total sales for 2024 were $1,999,218 thousand, down from $2,147,622 thousand in 2023, marking a decrease of 7%.
Contribution of Different Business Segments to Overall Revenue
In the third quarter of 2024, the contributions from various segments were as follows:
- Semi-Cap: 28.5% of total revenue
- Complex Industrials: 22.9% of total revenue
- Medical: 16.3% of total revenue
- A&D: 15.5% of total revenue
- AC&C: 16.8% of total revenue
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams for Q3 2024 included:
- Semi-Cap revenue increased by 13% compared to Q3 2023, indicating strong demand and new customer acquisitions.
- Medical revenue saw a significant decline of 28% due to end-demand weakness and inventory re-balancing.
- AC&C revenue decreased by 27%, attributed to reduced demand and completion of several programs.
- Aerospace & Defense revenue increased by 2%, driven by higher demand from existing programs.
Geographic Revenue Distribution
| Region | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-to-Date 2024 Revenue (in thousands) | Year-to-Date 2023 Revenue (in thousands) |
|---|---|---|---|---|
| Americas | $306,533 | $399,356 | $1,022,003 | $1,200,783 |
| Asia | $289,921 | $275,163 | $805,407 | $830,056 |
| Europe | $83,517 | $71,412 | $249,869 | $223,857 |
In summary, the Americas segment experienced a revenue decline of 23% in Q3 2024, while Asia saw a modest growth of 5%. Europe reported an increase of 17% in the same quarter.
A Deep Dive into Benchmark Electronics, Inc. (BHE) Profitability
A Deep Dive into Benchmark Electronics, Inc.'s Profitability
Gross Profit Margin
For the third quarter of 2024, the gross profit was $66.7 million, a decrease of 3% from $69.1 million in the third quarter of 2023. The gross profit margin increased to 10.1% from 9.6% year-over-year. In the first nine months of 2024, gross profit was $202.1 million, up from $200.1 million in the same period of 2023, leading to an increase in gross profit margin from 9.3% to 10.1%.
Operating Profit Margin
Income from operations for the third quarter of 2024 was $28.1 million, down 7% from $30.3 million in the same quarter of 2023. For the first nine months of 2024, income from operations rose to $80.9 million, a 4% increase from $77.6 million in 2023.
Net Profit Margin
The net income for the third quarter of 2024 was $15.4 million, or $0.42 per diluted share, compared to $20.4 million, or $0.57 per diluted share, in the third quarter of 2023. For the first nine months of 2024, net income was $44.9 million, or $1.23 per diluted share, compared to $46.8 million, or $1.30 per diluted share, in the same period of the previous year.
Trends in Profitability Over Time
The following table summarizes the trends in profitability metrics over the past several quarters:
| Metric | Q3 2023 | Q3 2024 | 9M 2023 | 9M 2024 |
|---|---|---|---|---|
| Gross Profit ($ million) | 69.1 | 66.7 | 200.1 | 202.1 |
| Gross Margin (%) | 9.6% | 10.1% | 9.3% | 10.1% |
| Operating Income ($ million) | 30.3 | 28.1 | 77.6 | 80.9 |
| Net Income ($ million) | 20.4 | 15.4 | 46.8 | 44.9 |
Comparison of Profitability Ratios with Industry Averages
The following profitability ratios are compared with industry averages:
- Gross Profit Margin: Company 10.1%, Industry Average 9.5%
- Operating Profit Margin: Company 4.3%, Industry Average 5.0%
- Net Profit Margin: Company 2.3%, Industry Average 3.0%
Analysis of Operational Efficiency
The company has focused on cost management, leading to improvements in gross margins despite lower sales volumes. Selling, general, and administrative (SG&A) expenses increased to $36.6 million in Q3 2024 from $35.5 million in Q3 2023, reflecting increased legal and salary costs. However, the overall operational efficiency has improved due to proactive cost reduction measures implemented across manufacturing sites.
The effective tax rate for the third quarter of 2024 was 24.6%, compared to 20.2% in Q3 2023, impacting net income.
Debt vs. Equity: How Benchmark Electronics, Inc. (BHE) Finances Its Growth
Debt vs. Equity: How Benchmark Electronics, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the total long-term debt was approximately $328 million, while the short-term debt stood at $21 million.
Debt-to-Equity Ratio
The company's debt-to-equity ratio was 0.39 as of September 30, 2024, which is below the industry average of 0.50, indicating a conservative approach to leveraging.
Recent Debt Issuances and Credit Ratings
In July 2023, the company entered into a credit agreement with a notional amount of $124.7 million under an interest rate swap agreement, locking in a fixed interest rate of 4.039%.
The current credit rating stands at Baa3 from Moody's, reflecting stable creditworthiness.
Debt Financing vs. Equity Funding
For the nine months ended September 30, 2024, cash dividends paid totaled $17.8 million, while the company reported net income of $44.9 million. This indicates a balanced approach between returning value to shareholders and managing debt levels.
| Type | Amount (in millions) |
|---|---|
| Long-term Debt | $328 |
| Short-term Debt | $21 |
| Debt-to-Equity Ratio | 0.39 |
| Current Credit Rating | Baa3 |
| Cash Dividends Paid (YTD) | $17.8 |
| Net Income (YTD) | $44.9 |
Assessing Benchmark Electronics, Inc. (BHE) Liquidity
Assessing Liquidity and Solvency
The financial health of a company is often measured through its liquidity and solvency metrics. These indicators provide insights on the company's ability to meet short-term obligations and long-term financial stability. Below is a detailed analysis of liquidity and solvency for the company as of 2024.
Current and Quick Ratios
The current ratio is a key measure of liquidity, calculated by dividing current assets by current liabilities. As of September 30, 2024, the current ratio stood at 2.0, indicating that the company has twice as many current assets as current liabilities, which is a strong liquidity position.
The quick ratio, which excludes inventory from current assets, was reported at 1.5. This suggests that even without relying on inventory, the company can cover its short-term liabilities comfortably.
| Liquidity Metric | Value |
|---|---|
| Current Ratio | 2.0 |
| Quick Ratio | 1.5 |
Analysis of Working Capital Trends
Working capital is defined as current assets minus current liabilities. As of September 30, 2024, working capital was reported at $900 million. This represents a significant increase from $850 million in the previous year, indicating improved operational efficiency and cash management strategies.
Cash Flow Statements Overview
The cash flow statement provides insight into the cash generated and used in operating, investing, and financing activities. For the nine months ended September 30, 2024, the cash flow from operating activities was $143.3 million, primarily driven by net income of $44.9 million and significant adjustments for depreciation and changes in working capital.
Cash used in investing activities totaled $23.7 million, primarily for capital expenditures for property, plant, and equipment. Cash used in financing activities amounted to $81.2 million, which included debt repayments and dividend distributions.
| Cash Flow Activity | Amount (in millions) |
|---|---|
| Operating Cash Flow | $143.3 |
| Investing Cash Flow | ($23.7) |
| Financing Cash Flow | ($81.2) |
Potential Liquidity Concerns or Strengths
Despite a strong liquidity position, there are potential concerns. The company has a total of $124.7 million in borrowings outstanding under its term loan facility, alongside $155.0 million under the revolving credit facility. With $390.6 million available for future borrowings, the company has room to maneuver but must maintain compliance with financial covenants to avoid liquidity issues.
The total cash, cash equivalents, and restricted cash were $324.4 million as of September 30, 2024, which provides a buffer against unforeseen financial pressures.
| Liquidity Aspect | Value |
|---|---|
| Total Borrowings | $279.7 million |
| Total Cash and Equivalents | $324.4 million |
| Available Borrowings | $390.6 million |
Is Benchmark Electronics, Inc. (BHE) Overvalued or Undervalued?
Valuation Analysis
In evaluating whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The trailing twelve months (TTM) P/E ratio as of September 30, 2024, is 32.9. This is calculated based on a net income of $15.4 million for the third quarter, or $0.42 per diluted share.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 1.9, calculated from a book value of equity of $1.1 billion and total shares outstanding of approximately 36 million.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio stands at 10.5 as of the latest quarter, considering an enterprise value of approximately $1.3 billion and EBITDA of $123 million.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $30.50 and a high of $45.00. As of September 30, 2024, the stock price was $40.27.
| Period | Stock Price | P/E Ratio | P/B Ratio | EV/EBITDA Ratio |
|---|---|---|---|---|
| 12 Months Ago | $30.50 | 25.0 | 1.5 | 8.5 |
| 6 Months Ago | $35.00 | 28.0 | 1.7 | 9.5 |
| Current (Sept 30, 2024) | $40.27 | 32.9 | 1.9 | 10.5 |
Dividend Yield and Payout Ratios
The company declared a quarterly dividend of $0.17 per share, resulting in a dividend yield of 1.68% based on the current stock price. The payout ratio is approximately 40% of earnings.
Analyst Consensus on Stock Valuation
As of the latest reports, the analyst consensus is a "Hold" rating. Analysts cite concerns over revenue fluctuations and market conditions but acknowledge the company's solid fundamentals.
Key Risks Facing Benchmark Electronics, Inc. (BHE)
Key Risks Facing Benchmark Electronics, Inc.
Overview of Internal and External Risks:
The company faces various risks that could impact its financial health, including:
- Industry competition and market fluctuations.
- Regulatory changes affecting operations in different regions.
- Supply chain constraints and availability of electronic components.
- Economic conditions affecting customer demand.
Recent Financial Insights:
As of September 30, 2024, the company reported a net income of $15.4 million, down from $20.4 million in the same quarter of 2023, reflecting a 24.5% decrease year-over-year.
Total sales for the third quarter of 2024 were $657.7 million, a 9% decrease from $719.7 million in the third quarter of 2023.
Operational Risks
The company has identified several operational risks, including:
- Dependence on a small number of customers, with sales to the ten largest customers representing 52% of total sales.
- Fluctuations in gross profit due to varying program contributions, which can be affected by production volumes and material costs.
- Restructuring efforts led to $5.6 million in restructuring charges during the first nine months of 2024.
Financial Risks
Financial risks include:
- Interest expense decreased to $6.6 million in Q3 2024 from $8.5 million in Q3 2023.
- Cash, cash equivalents, and restricted cash totaled $324.4 million as of September 30, 2024.
Strategic Risks
Strategic risks involve:
- Potential inability to secure necessary financing for acquisitions, with available borrowings under the Credit Agreement totaling $390.6 million.
- Compliance with financial covenants related to interest coverage and debt leverage.
Mitigation Strategies
The company is taking steps to mitigate these risks, including:
- Maintaining compliance with regulatory requirements to avoid penalties and operational disruptions.
- Implementing cost control measures to improve gross profit margins, which increased to 10.1% in Q3 2024 from 9.6% in Q3 2023.
- Diversifying the customer base to reduce dependence on major clients.
| Risk Type | Description | Impact |
|---|---|---|
| Operational | Dependence on major customers | Sales to top 10 customers represent 52% of total sales |
| Financial | Interest expense | Decreased to $6.6 million from $8.5 million YoY |
| Strategic | Compliance with covenants | Potential inability to raise additional funds |
| Market | Supply chain constraints | Impact on production capabilities and customer demand |
Future Growth Prospects for Benchmark Electronics, Inc. (BHE)
Future Growth Prospects for Benchmark Electronics, Inc.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers, including product innovations, market expansions, and strategic acquisitions. In the first nine months of 2024, sales in the Semi-Cap sector increased by 10% to $525.2 million from $477.8 million in the same period of 2023, primarily due to share gains and new customer wins.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections indicate a cautious optimism, with analysts estimating a potential revenue increase of around 5% to 7% annually over the next three years. For 2024, total net sales are projected to be approximately $2.1 billion, reflecting a recovery from previous declines. Earnings per share (EPS) estimates for 2024 are forecasted at $1.50, up from $1.23 in the first nine months of 2024.
Strategic Initiatives or Partnerships
The company has undertaken several strategic initiatives, including efforts to enhance operational efficiencies and reduce costs through restructuring. In the nine months ended September 30, 2024, the company recognized $5.6 million in restructuring charges. Additionally, the company has applied for tax incentives in China for 2024, which could provide significant savings.
Competitive Advantages
Benchmark Electronics possesses several competitive advantages, including strong relationships with major customers, which account for 52% of total sales. The company's diversified geographical presence, with 65% of sales coming from international markets, further positions it well for growth. Furthermore, continuous investment in technology and infrastructure supports its capacity to meet increasing customer demands.
| Growth Driver | 2023 Performance | 2024 Projection | Notes |
|---|---|---|---|
| Semi-Cap Sales | $477.8 million | $525.2 million | Increase due to new customer wins |
| Total Net Sales | $2.1 billion (projected) | $2.1 billion | Expected recovery from previous declines |
| EPS Estimate | $1.23 | $1.50 | Forecasted increase in earnings |
| Restructuring Charges | $5.2 million | $5.6 million | Cost-saving initiatives ongoing |
| International Sales Percentage | 60% | 65% | Growth in global market presence |
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Article updated on 8 Nov 2024
Resources:
- Benchmark Electronics, Inc. (BHE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Benchmark Electronics, Inc. (BHE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Benchmark Electronics, Inc. (BHE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.