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Benchmark Electronics Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 9, 2011 07:22PM
Benchmark Electronics Inc. (BHE) filed Quarterly Report for the period ended 2011-09-30. Benchmark Electronics Inc. has a market cap of $860.5 million; its shares were traded at around $14.44 with a P/E ratio of 11.9 and P/S ratio of 0.3. Benchmark Electronics Inc. had an annual average earning growth of 0.3% over the past 10 years.
Highlight of Business Operations:Sales for the three months ended September 30, 2011 decreased 7% to $570.1 million compared to $613.9 million for the same period of 2010. During the three months ended September 30, 2011, sales to customers in the testing and instrumentation industry, computers and related products for business enterprises industry, and medical devices industry decreased 40%, 17% and 10%, respectively, from 2010. These decreases were partially offset by a 10% and 5% increase in sales to customers in the telecommunication equipment industry and industrial control equipment industry, respectively, during the same period.
Sales for the third quarter of 2011 were $570.1 million, a 7% decrease from sales of $613.9 million for the same quarter in 2010. Sales for the nine months ended September 30, 2011 were $1.7 billion, a 5% decrease from sales of $1.8 billion for the same period in 2010. The following table sets forth, for the periods indicated, the percentages of our sales by industry sector.
Gross profit decreased 27% to $34.6 million for the three months ended September 30, 2011 from $47.2 million in the same period of 2010 and decreased 21% to $110.0 million for the nine months ended September 30, 2011 from $138.7 million in the same period of 2010, due primarily to $3.5 million of settlement costs associated with the transfer of a major program, new program ramp costs and capacity expansion costs primarily in Asia incurred in 2011. Gross profit as a percentage of sales decreased to 6.1% during the third quarter of 2011 from 7.7% in 2010 and decreased to 6.5% during the first nine months of 2011 from 7.8% in 2010, primarily due to lower sales volumes, product mix, new program ramp costs and capacity expansion costs primarily in Asia, which resulted in underabsorbed manufacturing overhead costs. We experience fluctuations in gross profit from period to period. Different programs contribute different gross profits depending on factors such as the types of services involved, location of production, size of the program, complexity of the product, and level of material costs associated with the various products. Moreover, new programs can contribute relatively less to our gross profit in their early stages when manufacturing volumes are usually lower, resulting in inefficiencies and unabsorbed manufacturing overhead costs. In addition, a number of our new and higher volume programs remain subject to competitive constraints that could exert downward pressure on our margins. During periods of low production volume, we generally have idle capacity and reduced gross profit.
Selling, general and administrative expenses decreased 2% to $22.9 million in the third quarter of 2011 from $23.4 million in the third quarter of 2010. Selling, general and administrative expenses decreased 2% to $67.8 million in the first nine months of 2011 from $68.9 million in the same period of 2010 primarily due to reduced stock-based compensation expenses, overhead resulting from cost controls and lower variable compensation expenses offset by higher employee related costs. Selling, general and administrative expenses, as a percentage of sales, were 4.0% and 3.8%, respectively, for the third quarter of 2011 and 2010, and 4.0% and 3.9%, respectively, for the first nine months of 2011 and 2010. The increase in selling, general and administrative expenses as a percentage of sales is due to the impact of lower sales volumes during 2011.
We reported net income of $49.1 million, or diluted earnings per share of $0.81 for the first nine months of 2011, compared with net income of $60.7 million, or diluted earnings per share of $0.96 for the same period of 2010. The net decrease of $11.7 million from 2010 was primarily due to the factors discussed above.
Stocks Discussed: BHE,