Benchmark Electronics, Inc. Stock Price: Quote, Forecast, Splits & News (BHE)

Perplexity Finance

BHE

Benchmark Electronics, Inc.

BHE

NYSE

Market Closed

Wednesday, May 21, 2025

$37.12

+$0.10

0.27%

At close: May 20, 4:00:02 PM EDT

$36.92

-$0.20

0.54%

After hours: 7:45:00 AM EDT

Change

+$0.10

0.27%

Financial Profile

Prev Close

$37.02

Market Cap

$1.34B

Day Range

$36.56 - $37.32

Open

$36.56

P/E Ratio

25.8

52W Range

$30.73 - $52.57

24H Volume

$7.13M

Dividend Yield

1.82%

EPS

1.44

Earnings

Report Date

Apr 29, 2025

Reported Revenue

631.8M

Miss -5.53%

Avg 1d Change

9.98%

Report Period

Q1 2025

Reported EPS

0.52

Beat +4%

Implied Move 1d

9.14%

Transcript

11m 1s

As well as in the appendix to the presentation. Please take a moment to review the forward looking statements disclosure on Slide two in the presentation materials. During our call, we will discuss forward looking information. As a reminder, any of today's remarks, which are not statements of historical fact, are forward looking statements. Which involve risks and uncertainties as described in our press releases and SEC filings. Actual results may differ materially from those statements. Benchmark undertakes no obligation to update any forward looking statements. For today's call, Jeff will start with an overview, following by Brian's deeper dive into the results and our first quarter guidance. As usual, we will conclude with Jeff sharing more insight into demand trends by sector, new business wins, and some final remarks. If you will please turn to Slide four, I will turn the call over to our CEO, Jeff Bank.

11m 58s

Thank you, Paul. Good afternoon, and thanks to everyone for joining today's call.

12m 3s

Our first quarter twenty twenty five results demonstrated our continued operational focus despite the tariff related market uncertainty that we faced late in the quarter. While some customer decisions may be temporarily impacted by today's fluid environment, have never needed our partnership advice and capabilities more. These challenges create opportunities for us as we help them navigate this turbulence and optimize their global supply chain for the most efficient distribution of their products around the world. Let me step through a few highlights on the quarter. First quarter revenue of $632,000,000 was led again by double digit growth in our semi cap and A and D sectors. At the same time, we delivered our sixth consecutive quarter of greater than 10% non GAAP gross margin and eighth quarter of positive free cash flow. Non GAAP operating margin was down sequentially and year on year due to the decrease in revenue, but we're confident in our ability to drive margins to 5% and above as we return to revenue growth. Lastly, non GAAP earnings per share of $0.52 was above the midpoint of our guidance range, continuing our trend of protecting profitability even in the face of revenue headwinds in part of our business.

13m 25s

Turning to Slide five. Looking at the quarter, we were pleased by the performance in semi cap, which was up 18% year over year in the quarter, as we continue to gain share from our competitors in this market. Our A and D sector also performed well in Q1 up 15% year over year led by our defense program where we're in the middle of several new ramps while also benefiting from strength in traditional products. At the same time, we generated another $27,000,000 in free cash flow in the quarter, totaling slightly more than 140,000,000 on a trailing twelve month basis. As for the current demand environment, we face in Q2, we've already seen customers pause in shipments while others are looking to pull in specific products given the dynamic nature of the global tariff executive orders taking place. However, with our significant U. S. Manufacturing footprint, at 36%, and our broader North American footprint representing over 55% of our total global manufacturing capacity, I believe we're exceptionally well positioned to help our customers optimize their supply chain. I would also like to take a minute to thank our Global Trade Compliance team for the amazing results they delivered over the last few weeks, ensuring that we continue to deliver on our commitments.

14m 57s

With that, I'd now like to turn it over to Brian for more detail on the quarter and our 2Q guidance.

15m 4s

Thank you, Jeff, and good afternoon, everyone. Please turn to slide six. Revenue in the quarter of $632,000,000 was down 4% sequentially and 6% year over year. Our non GAAP EPS was $0.52 which was in line with our guidance range of $0.48 to $0.54 As a reminder, our non GAAP results exclude stock based compensation, amortization of intangible assets and restructuring and other expenses.

15m 35s

For Q1, our non GAAP gross margin was 10.1%. This represents a 30 basis point decrease quarter over quarter and a 10 basis point increase year over year. Non GAAP operating margin was 4.6% down 50 basis points sequentially and 30 basis points year over year, impacted by the lower revenue base. Our first quarter non GAAP effective tax rate was 25% driven by jurisdictional income mix. Please turn to Slide seven. Our first quarter twenty twenty five revenue by market sector. Semi cap revenue decreased 2% quarter over quarter due to some sequential softening while still growing 18% year over year. Industrial revenue was similarly down 2% quarter over quarter driven by existing customer demand softness not fully offset by new program ramps.

16m 28s

In A and D, revenue was up 4% quarter over quarter Commercial aerospace demand remains consistent while defense continues to be robust. Within medical, revenue was down 12% versus the prior quarter. We continue to see demand softness in the sector led by medical devices. Finally, AC and C revenue decreased 12% quarter over quarter, As anticipated, this decline was driven by timing related weakness in both HPC and our communications business.

17m

Please turn to slide eight for trended non GAAP financials. As you will see, despite the revenue headwinds among several of our end markets, we continue to focus on protecting gross margin, which again expanded year over year. Meanwhile, operating margin declined slightly both sequentially and year over year.

17m 21s

Please refer to slide nine and ten for a discussion on our balance sheet, cash flow and working capital trends. In Q1, we generated $32,000,000 in operating cash flow and $27,000,000 in free cash flow. Our cash balance on March 31 was $355,000,000 a year over year increase of $59,000,000 As of March 31, we had $121,000,000 outstanding on our term loan and $155,000,000 outstanding against our revolver. From which we have $391,000,000 available to borrow.

17m 58s

Our Q1 twenty twenty five liquidity was calculated by our debt covenant was 0.6. Down from 0.9 in the prior year period. We invested approximately $4,000,000 in CapEx during the quarter primarily in support of our Malaysia and Thailand facilities. In support of returning capital to our shareholders, we paid cash dividends of $6,100,000 in the quarter. We also repurchased $8,000,000 of our outstanding shares, At the end of the quarter, we had approximately $142,000,000 remaining in our existing share repurchase authorization. Our cash conversion cycle in the quarter was eighty six days improving three and eight days sequentially and year over year respectively. Inventory days were up slightly sequentially which was more than offset by improvements in accounts receivable and payables. Please advance to slide 11.

18m 54s

Let me now turn to our guidance for our second quarter of twenty twenty five. We expect revenue to be within a range of $615,000,000 to $665,000,000 While first half revenue is expected to decline mid single digits year over year, We expect revenue of mid single digits in the second half.

19m 15s

We expect non GAAP gross margin to be between 10.210.4%, which is consistent with our performance year performance over the last several quarters. With those assumptions, we would expect non GAAP operating margin to be between 4.84.9%. On a GAAP basis, we expect expenses to include approximately $5,300,000 of stock based compensation and $4,700,000 to $4,800,000 of non operating expenses including amortization, restructuring and other charges. Our non GAAP diluted earnings per share is expected to be in the range of $0.52 to $0.58 Interest and other expenses are expected to be approximately $4,200,000 We expect our Q2 effective tax rate will be between 2426%, Our weighted average share count is expected to be approximately 36,700,000.0. Regarding free cash flow, we expect our Q2 capital spending to be 15,000,000 to $20,000,000 primarily related to our Penang facility expansion. In addition, our Q2 cash flow performance will be negatively impacted by a $10,000,000 legacy tax assessment related to a 2016 custom audit in Mexico. Which was reflected in our Q1 twenty twenty five GAAP results.

20m 38s

In April, we also paid our final installment of the 2017 transition tax, which totaled $20,000,000 Q1 marks the eighth quarter in a row of positive free cash flow we believe we are structurally positioned to continue this trend once we get past Q2. Which includes the tax payments noted above.

20m 58s

And with that, I would like to turn the call back over to you.

21m 1s

Jeff.

21m 4s

Thanks, Brian. Please turn to Slide 12 for a discussion of our performance and outlook by sector. Our semi cap revenue grew an impressive 18% year over year in Q1. Which was similar to our Q4 performance and clearly a multiple of the market's growth. This performance was driven by ramping wins and share gains we have achieved over the last few years. The broader industry recovery continues to be mixed. Due in part to the competing forces of AI semiconductor growth evolving restrictions on sales of advanced wafer fab equipment into China, increased domestic demand in support of new fab coming online in The U. S. And capital spending pause due to tariff on uncertainty. All things considered, we continue to expect incremental growth in this sector which has been a focus area of investment over the last several years. To that point, this past quarter, we broke ground on a new facility in Penang, Malaysia in support of our future growth plans. Further providing us confidence in our continued growth, I was pleased with our breadth of new wins in semi last quarter which cut across our precision technology engineering and EMS capabilities. Turning to our industrial sector, revenue performance was down slightly in Q1.

22m 28s

Although it may take a few quarters to return to year over year growth in this sector, I'm incredibly encouraged by our momentum in terms of new bookings which was the strongest performance for the company in Q1. These wins included a new digital display customer and new programs with a geospatial solution provider who's expanding with us. Over time, I'm confident that industrial sector will be one of the greatest sources of future growth. Both as a function of our greenfield opportunities and an expectation that outsourcing will become a greater consideration within the sector over the coming quarters. Within A and D, this sector continues to perform well for us driven by strong defense demand, and growing new programs in space, while commercial air demand remained steady. Revenue in the quarter was up 15% year on year. Based on our existing wins and new bookings, we expect growth both sequentially and year over year throughout 2025. Supporting our confidence this past quarter, saw continued bookings momentum across EMS and engineering opportunities supporting A and B. Notably within space, and defense subsectors. I'm pleased with our A and D team's performance and look forward to continued momentum over the foreseeable future.

23m 57s

In Medical, continued demand softness in existing programs and customer delays in new program ramps weighed on our results. Both sequentially and year over year. We are confident we have not lost share with any of the existing programs as we've highlighted previously, this market recovery has taken longer than anticipated. In the meantime, we've continued to make significant progress in securing new wins within the sector across both manufacturing and engineering. This comes within our traditional medical and growing life science business which I'm very optimistic about. As these take time to ramp, and our existing programs begin to recover, we're looking forward to a return to year on year growth from this sector in the second half. Of twenty twenty five. Finally, our AC and C revenue declined more than anticipated in the quarter due to new program timing issues with both the next generation HPC platform launch that's continued to push to the right and the delayed ramp from a new five gs wireless transport family of products in communications. As we've been saying for several quarters now, we expect AC and C revenue growth to remain challenged through much of 2025. However, within computing, our deep expertise in liquid cooling and complex computer system assembly is leverageable beyond HPC and we're working on that.

25m 30s

We clearly have proven capabilities from helping to build the subsystems that went into the fastest supercomputers on the planet. Combined with solid booking strength in the quarter, we believe we're well positioned to return to growth in AC and C as early as Q4 of this year. In summary, please turn to Slide 13. Our first quarter of twenty twenty five results build on our foundation of delivering consistency, We've been conscious about what sectors we play in and continue to invest where we can add greater value. This has allowed us to improve our mix and increase our value add, has resulted in us now steadily delivering greater than 10% non GAAP gross margins despite a challenging revenue environment. While today's global macroeconomic uncertainties create short term risk, they also create mid to long term opportunities based on our strong North American footprint and our global reach enabling production closer to consumption. Furthermore, are responding to customers' increased propensity to accelerate outsourcing, particularly if they're building only building product in one country in their own factory as they realize there is a need to better optimize their supply chain leveraging a partner like Benchmark. Our opportunity pipeline and inbound quote activity from new large customers is very encouraging.

27m

While our return to year over year growth is taking a quarter or two longer than anticipated, anticipated given market dynamics, there's no question it's in flight. And barring a recession brought on by tariffs, we expect to deliver sequential growth throughout the balance of the year, which should allow us to grow year over year in the second half. In the meantime, we will continue to prudently manage our spending to protect profitability and generate free cash flow for the full year. As it relates to the return of capital, we tend to consistently support our quarterly dividend while stepping up our share repurchase activity. And we will continue to evaluate M and A opportunities as they come to us that align with our strategic plans. Let me wrap up by saying this. Regardless of the market environment, Benchmark will stay on course and continue to invest in strategic growth. We're also going to continue to support our customers as a trusted partner and advisor. We will stay focused and win new business in the sectors in which we participate. There are plenty of organic opportunities for us out there, and we have the right business development organization now to capture our fair share.

28m 18s

I look forward to updating you on our success in quarters to come With that, I'll now turn the call over to the operator to conduct our Q and A session.

28m 29s

Thank you very much, sir.

28m 31s

Ladies and gentlemen, we will now begin the question and answer session. If you're using a speakerphone, please make sure to lift your handset before pressing any case. Your first question comes from the line of Jim Ricchiuti from Needham and Company. Please go ahead, sir.

29m 1s

Hi. Thanks. Good afternoon. So Jeff, it sounds like you're seeing some customers pausing, others pulling in. Is the net result of this more of a headwind for you? And are the pullings coming into Q2 from the second half?

29m 20s

Yeah. What I would say is, right now, you know, we see things balancing out. So we don't see it tipping one way or the other. I mean we've seen some of our competitors say they're not seeing movement. We're just reflecting what we're hearing and seeing from customers. What I would say is a few customers are nervous about the second half and where the tariffs may go when this three month pause is lifted and we see where things land out with executive orders. I also think if you're in an area that's got a particularly high tariff on it, you might wonder how is that going to shift and there are other things that can be done. So just I would say more activity than normal here. But that being said, don't see it overly biasing to helping us more in Q2. Or even really materially hurting. It's just there's just a little more uncertainty. But I would say in the balance, it's kinda it's kinda canceling each other out.

30m 25s

Got it. And with respect to maybe your existing customers that are looking to do some supply chain optimization or Yep. You know, some of the ones you alluded to there, newer Talk to us, are there some initial headwinds that you're gonna see from this? Is customers evaluate their supply chains and you try to accommodate them?

30m 49s

I I would tell you that our wind you know, a couple of the bids that were competing on and looking to close we've had a few that have taken longer that have elongated while folks contemplated. Think about if you're you're were thinking of going to Mexico, but maybe you were contemplating Thailand as well. You're now going, okay, USMCA seems like it's a good thing. I mean, we're excited that over 95% of our products are qualifying for USMCA. So we're able to do that without tariffs. So that's great. But earlier on, there was a lot of concern about 25% coming from Mexico. And now you got Thailand at 10% or Penang at 10%. So it's definitely causing folks to contemplate and have us run some different scenarios and look at different things. And so I would say that's elongating the cycle a bit. On the new bookings for sure. And so we're seeing some of that happen. And that's kind of I'm not sure if that's exactly where you were kinda going with your question, but we've seen that cause some of that [indiscernible] That's helpful. And last question for me, Jeff, you sound excited about some of the traction you're seeing in industrial.

32m 14s

Where are you seeing it? Are these mainly existing? Customers, new customers?

32m 19s

It's a balance of both. You know, we see some good follow on business in some of the electronic controls like for example, in HVAC subsectors and things like that. But beyond that, there just continues to be new growth in AGVs and in some of the automation solutions. And so we're seeing some nice new incremental wins, but then also some repeat business as customers look to do more with us. So I would say it's fairly balanced at this point. We also are seeing some kiosk activity. I mean, this has been a number of new subsectors that we're seeing incremental opportunities. Maybe one other one where we've got some recent wins is in the gaming subsector which we would fall under our industrial as well.

33m 25s

Thanks.

33m 28s

Your next question comes from the line of Steven Fox from Fox Advisors. Please go ahead. Hi, good afternoon. For my first question, I just want to sure I heard correctly. Sounds like you're saying first half is down mid single digit percentages year over year and the second half is up mid single digits year over year. Is that did I hear that correctly?

33m 50s

Yeah. That's correct, Steve. And if you look at it, sequential growth quarter over quarter as we look throughout the year, And so my question is like in the second half when you see that reverse in trend, obviously, defense and semi cap are doing well, but like is there anything else you're sort of seeing a reverse of fortune that we should count on for second half based on current?

34m 11s

I mean, we're certainly seeing it's interesting, it may be a little different than last last quarter. We're seeing some finally some pickup in medical. And see medical having the opportunity for a stronger second half and some of the some of the current customers that have been down are starting to show more signs of life from a growth perspective. And also as we talked about in the script, think late in the year we see compute and telco with a new win on the five gs side of things and maybe some of that's frankly easier compare as well, but we start to see year on year growth there. In industrial, I think it's a little bit of wait and see. We certainly see a lot of good new bookings, but those do take time to kick in. And we saw a little bit of softness in test and measurement So industrial right now, there's there's probably more a little more uncertainty there. But we're probably besides and then semi and A and D, think will continue to be strong through the year as we talked about. So maybe medical adds to that and then we start getting more help as you get towards the end of the year.

35m 27s

Great. That's helpful. And then just a couple other specifics. So I wasn't clear when we think about sort of high end compute programs. Do you have a line of sight to others ramping down the road at this point? And they've just been delayed. Just you could sort of give us expectation for how that business comes back, and then I have one other Yeah.

35m 46s

So we do have anticipation that will fully participate with the partners that we've been with on the next generation. It's just the actual chipset and platform seemed to continue to move to the right, which is kind of pushed us beyond our expectations that we might see improvement later this year. I guess what I would say is it was a little more pronounced down in the front end. And sometimes when you're working on these really large super computers, we've talked about helping build three of the top five supercomputers in the world. Are built on this high performance compute platform. While you may not have always Lawrence Livermore Lab putting in the new platform, There's a lot of smaller systems that leverage that same platform that get built out. And so we sort of expect some fill in from some of that. And so it's not like everything's resting only on the new platform. But we did see a more pronounced impact in the first half, which dragged down our compute business in that. We think that certainly there's new product introduction work that goes on in the second half. But the real significant wrap in HPC will probably be more in next year unfortunately.

37m 9s

Although, like I said, we could see some fill in with some smaller systems in the second half and and certainly we're engaged in in those kind of things.

37m 21s

Great. And then just lastly on semi cap. I mean so, Jeff, you talked about a lot of sort of negatives, but you're still growing 18%. So I'm just trying to understand, like like, I appreciate the disclosure, but, like, how many of those things are having a material impact on the business versus what you expected to see?

37m 43s

You know, we started the year where it's like it felt like really good momentum in semi. Like, stronger than even anticipated. Obviously, 18% year over year is great growth. So I'm not discounting that. But it's like looking out to the back half, thought, okay, we're off to the races again. [indiscernible] stock in AI and this is a driver and it drives some of the most advanced nodes and all of that. The reason that I talked about some headwinds is just talking to all of our large customers we're seeing some further restrictions on China and selling into China. And in some of these very large OEMs, it might be 20%, 25%, 30% of their traditional sales have been into China. So is that restrict if that gets restricted further or some of the restrictions that have happened have caused some order softening there. But then at the same time, we've got a brand new fab here in the Phoenix Valley that keeps building out. And as that comes online domestically, we see demand for wafer fab equipment to go into that. So guess what we're saying is in balance like there's headwinds and there's tailwinds. We still think we'll grow at a few at a multiple of the market growth rate, which I think right now what I've read recently is maybe 3%.

39m 10s

We're certainly looking to do quite a bit better than that. I just didn't want everybody to think that semi is just up into the right and there's no, you know, there's no risk there. So maybe that's where the transparency is coming from. Yeah. That's super helpful. I appreciate all that color. Thanks. Sure. Your next is from the line of Jason Smith from Lake Street. Please go ahead. Yes, thanks for taking my questions. I know you highlighted in the script that you saw some nice bookings across a number of verticals. Were your bookings up sequentially in Q1?

39m 52s

They were up year on year, but not not ups not up kinda more flattish sequentially from our fourth quarter. And I think we anticipated a little stronger and I think we talked a little bit about some of the delay where there's a few larger deals that the customer's just kind of waiting to see where things bottom out on the tariff front. And so, you know, those haven't gone away. In fact, one recently closed in February. So we'll see I think things continue to kind of free up once people have a better certainty of where the tariffs are going to land? And whether their strategy still makes sense, right? But but it was it was, again, you know, good growth year on year for us for bookings. And I know we've kind of gotten away from covering a lot of specifics, but we try to give you some color as to how we're feeling by sector and what kind of things we're winning and and we shared that in the script.

40m 57s

Okay. That's helpful. And then the expected rebound in medical here in the second half, is that going to be really driven more by channel or replenishment or new program launches?

41m 10s

Well, for a long time, we talked about medical being down because the channel inventory and some of the burn off of that and that working through. So I don't know so much that people are going to build up. That OEMs are going to build up inventory again, but just [indiscernible] what we witnessed is some of our customers their actual business wasn't down as much as the softness we were seeing. And the only way you could really get there from our dialogue with them was well, they had inventory in the channel that they were working through even though they were still seeing growth. We weren't. And certainly think that that we're gonna you know, that we will see our base get better then we've also got some new competitive takeaways that we're excited about with a couple of new logos in the medical space. So I think both will work together to help us there. And then just the last one for me and I'll jump back into queue. How should we be thinking think about the tax rate in the second half of this year?

42m 17s

Yeah. So as we're modeling it out, I mean, it dropped slightly like what we gave q '2. And then if you look out '23 and for Q3 and Q4, it drops a little bit. So call it 24% for the year. So as we look at, I mean it's 23% to twenty six kinda how we're modeling it out. So there's a range there, and we're gonna drive We have a lot of focus right now on our strategic plan around tax, and we're gonna continue to look at that and how we can drive that down. But that's kind of the model for the remainder of the year. Okay. Perfect. Thanks a lot guys.

42m 55s

Your next question is from the line of Anja Soderstrom from Sidoti. Please go ahead. Hi, thank you for taking my questions.

43m 4s

First, in terms of medical, the inventory levels there, do you feel like they have normalized and and that's why you expect to see growth in the second half or I mean, yes, I think we do believe that that a lot of OEMs have worked through the bulk of the inventory that, you know, was built up. As you can imagine, Anya, we're we're like one step removed So we don't always get perfect visibility by product line. But we knew in general there was a lot of dialogue over the last eighteen months about where they were with inventory and needing to work through it. I think that's really why we're seeing a reflection of the demand order load pick up really even Q3 and beyond. Because we do we are now getting like six months visibility and we see some improvement there. So I think that is sort of playing out for us. As you described.

44m 8s

Okay. Thank you. And you also mentioned your your large footprint in The US and North America. But what kind of capacity utilization do you have then? What availability do you have for to move projects over there?

44m 22s

Yeah. We we kinda publish really our capacity by site. But just suffice to say, I think we said over a third of our footprint is U. S. Based. Given softer macro environment we we just have a lot of, opportunity Even with some of the consolidation we've done, we've gotten more efficient in factories we're in. We're trying to make sure that we have a lot of open space because customers a lot of times won't particularly new OEMs will come and say, okay, where can my product sit here? And And we just believe that we know from where we sit that we can really accept quite a bit of incremental business. And we're certainly seeing with what's going on with the tariffs and the desire to potentially near shore or [indiscernible] we're seeing some nice inbound incremental opportunities that are coming forward. And kind of try to touch on this in the script that, if you think about an OEM that might be building in their own factory and right now OEMs that large OEMs that are in multiple sites with us saying, oh, I might want to shift some of my Thailand demand to Mexico or maybe I'm going to move China to Thailand or and they have that flexibility if they're in sites with us.

45m 53s

But if you're like building your own product only in one site, you really don't you really miss that opportunity. And I think that's causing some OEMs to say, maybe we shouldn't be building everything ourselves. If we were leveraging a partner like Benchmark they could help us pivot. We certainly are standing at the ready to help a few customers. I think a lot of customers are there's a little bit of wait and see right now like we don't see huge demand shifts. But we see a few that have said, you know what, I'm not comfortable just being in Asia, Southeast Asia or just being in Mexico. I may want to split that production. And so that's the kind of opportunity we offer But we certainly feel like that, you know, that this is a great opportunity for us. We've got a brand new site in Guadalajara that came online at the end of last year and is ramping some new medical customers for example. And then there's things that just make sense to be done in The U. S, whether it's like HPC going to a national lab, or you think about some of the build out that happening with data centers and such.

47m 5s

Mean, that's an opportunity. We talked a little bit about our water cooled infrastructure. That comes from our HPC space. But you kind of say, well, there's no question we can't help with some of the more sophisticated data center solutions that are water cooling based and we're having some early discussions on that. And trying to leverage it. So we just think that's a bit unique for us that we are not as you all know, we only have one factory in China but we've got 10 in The U. S. So if people want to build more product domestically, we're ready to go.

47m 43s

Okay. Thank you. And just in terms of the cash flows, nice improvement there in cash conversion. Is there room for further improvement there and do you have sort of target?

47m 56s

Yeah. If you think about kind of inventory, I mean, we're gonna continue to drive the days inventory down on a kind of factor of. Now what I would say is you could have some improvements on that cycle. It could be offset by some of the growth in new program launches And then on the other side, AR, I mean, we're going to continue to work that along with AP. So there's no target out there. But again, we've always talked about the four turns on inventory [indiscernible] the four turns today where we want to get to closer to the five turns. So that's what we'll continue to drive towards on that front. Yes, that's what I would say We're not satisfied it for. There is good improvement to get there. If you take net of advanced payments, we're probably north of we are north of five. But we we see opportunity to go further. I think as Brian said, growth and bringing on new customers where we need to invest in some inventory could be a headwind as we get into later part of second half. But But we certainly strategically think that we need to be north of five.

49m 6s

Okay. Thank you. And just one last one on currency with sort of pressure in the dollar. Are you hedging at all? Or What I would say is if you look at our overall revenue top line, I mean, we're about 80% U. S. Dollar already We have some natural currency hedges over in Europe We do offer or we do some hedging in addition to that. Now as you've noted, mean there has been significant fluctuation in currencies, but for the majority of it, are hedged.

49m 36s

Okay. Thank you. That was all for me.

49m 38s

Actually, $1. Okay. Thank you, Anya.

49m 44s

Your next question is from the line of Melissa Fairbanks from Raymond James. Please go ahead.

49m 50s

Hey guys, thanks so much for squeezing me in. Jeff, I just wanted to follow-up on a couple of things that you've said in answering a couple of different questions. The first was about elongating the cycle in terms of the new bookings.

50m 7s

That you're getting. I've been around a while. We've seen a lot of macro uncertainty in the past. But this really seems kind of unprecedented where some of these delayed decisions it's reliant upon a lot of moving parts. And they seem to be a little bit more weighty than than what we've seen in the past. So knowing that the lead times for a brand new program typically extend into several quarters, I've got two questions. One is, how quickly can you pivot or launch a new program in a new facility based on what your customers want? And two, does this potentially extend a bit of this headwind beyond just the next few quarters because if customers are delaying their decision making, that means we're slower to actually ramp the new program and then we're slower to bring in that new revenue. That may be a very loaded question, and I don't really expect an answer. But No, it's okay. I mean, I can give you at least my view of it.

51m 12s

Mhmm. I think that moving a customer at an existing facility it's pretty challenging to do it in a quarter. But if we're building it and we've got obviously manufacturing, you know, inside knowledge and it's something that we're building in another facility. We can leverage our teams right for their know how and that hidden factory factor that sometimes you deal with. You know, I think we've we've been successful in doing something in six months. You know, having something completely moved and and ramped pretty significantly. What's exciting about even though some of these things are delayed, some of the deals that we're looking at are actually competitive takeaways. And what I like about those, they're already in production. So when you have a new medical product that I got to go get FDA certified and I got to build samples and then I got to go test it for a year. That can take two years. Some of the deals that we're looking at that have been that have delayed or strung along. Their product that's already being built either in a region or maybe domestic domestically and they're looking to move to a lower cost region.

52m 26s

I would say even though it's elongating, those can happen quicker. When you win that kind of business versus the greenfield, right, or the brand new life sciences product, right, that we may be helping doing the engineering on. Right? And so we kind of have a mix of both, but some of what I'm what I'm seeing more recently are really competitive takeaways where they're already building the product in the region, they want to move to me in the region, But at the same time, they're like, well, if we're gonna move to you, do we move to you in Mexico? Or do we move to you in The US? You know? And can you call me in both your factories. Right? So some of that is what you know, and it is I think we are in unprecedented times in terms of it just being very dynamic and got to be flexible. But really what's kind of interesting is more of our OEMs are coming to us wanting to have the strategic sourcing discussion about how do we think about it, how can you help map where I should go, how I think about not only what you build, but the supply chain Those are some pretty interesting discussions that we can bring a lot of experience and knowledge to bear and help with those.

53m 42s

So I don't Sure. I don't know that this is a multiyear kinda cycle thing, but certainly everybody is kind of waiting to see do some of these tariff agreements get done and then this stuff continue to progress? And do they stick?

53m 58s

Yeah. Or do they right. Do they stick? Or do we see kind of a restart of what we saw at the April, which really none of us want. None of us want that.

54m 6s

Yeah.

54m 7s

Actually, the the competitive takeaways aspect of it, that's actually very That's really good news. So I'm happy to hear that. That is Yeah. That that's very good news. And then maybe just one quick follow-up to one of your answers to an earlier question was about some of there were OEMs that maybe do all of their own manufacturing internally today, whether it's across multiple facilities or within one region in particular and now they're looking to diversify. Are there opportunities for you to go in and acquire a customer's manufacturing facility and then kind of leverage that capacity Or or are these not is is this not something that, you know, from a capital return strategy makes sense for you guys?

55m

I mean, we've done operate in place and we're okay with lift shift. I mean, I don't wanna I don't wanna acquire a factory and pay a premium on it. You know what I mean? So we wouldn't really do that. But but we have we have we've jointly invested with a customer. We've also taken things over, but we're pretty sensitive. Like if you tell me, hey, can you take can you take over this factory that's in, you know, Louisiana and I've got no facilities no infrastructure. And I'm just going to ultimately look to move that to Huntsville Why would I do that? You know, I'm I but if it's if it happens to be in a footprint where I'm at, and I can leverage a team that I've got there, I think we're open to that discussion. But what I was reflecting is really more I'm an OEM, maybe mid market, but I'm building all in my own factory in Indiana. And, you know, I'm now contemplating tariffs on components of material coming into my factory in Indiana that may come from Taiwan, Singapore, China, Malaysia, And now I'm thinking okay. Now I got to pay the tariffs.

56m 17s

I'm still building in The US. I can't move the whole supply chain. So what do I do? Well, you might say, if I was building in Mexico, I could assemble if it's the right HST code and I could bring it in the country without a tariff. Okay. That may be maybe it's time to think about outsourcing.

56m 37s

Okay.

56m 40s

Perfect. That's kinda how we're thinking about it. Yeah.

56m 43s

That's excellent. Thanks so much, Jeff, and thanks thanks everyone. I appreciate it, guys.

56m 47s

Thanks.

56m 47s

Thanks.

56m 51s

Next question is from the line of Jim Ricchiuti from Needham and Company. Your line is now open.

56m 58s

I just wanted to go back to the comments about Penang. Just remind us of the timing of that ramp I know the building is is just getting started. Right?

57m 10s

Yeah. Well, this is this is the groundbreaking that we've did in the first quarter we talked about on the call. That's our fourth facility there. So it's a brand new facility. It's going to give us more vertical integration. On the island and it's going be exciting because we can go from complete frame build and do painting and whole host of other things along with a bunch of clean rooms. But we're obviously big in production already in Penang and we're seeing as reflected in our 18% growth in the first quarter. We're seeing nice growth across several OEMs there and we've got one particular OEM that's kind of new to us there. That's ramping nicely. So we kind of look for us to continue to grow year over year in Malaysia. The new facility really won't be fully online until next year. But the investment is really going in this year. And that's really with an eye towards that we're going to continue the momentum and that semi market while it might have its fits and starts and this has been unprecedentedly different recovery We're still long in the space and feel like we have a differentiated value proposition there.

58m 29s

And so we're investing long term. But I don't want you to think that new building is required for us to be able to grow because in the last down cycle we freed up quite a bit of capacity. And I should also remind you, we opened a brand new building in September of last year that was Building 3. So that's now fully online. So that gave us more headroom. This is just Building 4 that we started in First Quarter This Year.

58m 57s

And This Building 4 will be exclusively for semi cap customers, right?

59m 2s

It won't be exclusive, but we're certainly starting there. We do see an opportunity for doing medical and other aerospace machining, but right now, the wind pipeline is pretty heavily dominated towards semi.

59m 20s

Got it. You'll have the flexibility depending on what So in the old Yeah. We're it's not an exclusive semi factory percentage.

59m 28s

And just lastly, Jeff, I feel like I've heard you mention M and A the last couple of calls, and, yeah, I I don't wanna make more of it. Than than it is. But just is that geared toward potentially looking at expanding in one vertical, or is it adding some tech capability? Is this presumably, are these more tuck in type?

59m 51s

That you're you'd consider and how active is this?

59m 55s

There is just a I think with it's true thing. There's a lot of private equity firms that have been invested in manufacturing for six to eight years. And so I think every week there's a couple opportunities that kinda come to us and cross our desk. And we've said we're going to be very picky and disciplined. And there are some areas that we might say, look, this could fill a gap for something that where customers have an interest and not. But we continue to believe there's plenty of organic opportunities. So it's not like M and A is is pressing us. But we do think it could augment the strategy. And as we brought inventory down and created some capacity, it's something that we can certainly look at. But we're really sensitive to dilution and and, you know, and and wanna do things that are that can be accretive in a fairly short period of time. But we're not at this point looking to expand into necessarily a new sector than the five that we support. But we will look at where can we enhance in high value add areas in our portfolio.

1h 1m 12s

Okay. Thank you.

1h 1m 14s

Sure.

1h 1m 40s

There are no further questions at this time. I'd like to turn the call over back to Paul Mansky for closing comments. Sir, please go ahead.

1h 1m 47s

Thank you, Constantine, and thank you, everyone, participating in Benchmark's first quarter twenty twenty five earnings call. Be participating in the Sidoti Small Cap Virtual Conference on June 11, For updates to this and other upcoming investor conferences and events, please check the Events section of our IR website at ir.bench.com. With that, we thank you again for your support. Look forward to speaking with you soon.

1h 2m 12s

This concludes today's conference call. Thank you very much for your participation. May now disconnect.

Key Insights

Q1 2025 revenue was $632M, down 4% sequentially and 6% year over year, with double-digit growth in semi cap (+18% YoY) and A&D (+15% YoY) sectors, but softness in industrial, medical, and AC&C.
Non-GAAP gross margin exceeded 10% for the sixth consecutive quarter (10.1%), while non-GAAP operating margin was 4.6%, down sequentially and YoY due to lower revenue; non-GAAP EPS was $0.52, above the midpoint of guidance.
Free cash flow remained positive for the eighth straight quarter ($27M in Q1), with a cash balance of $355M and $142M remaining in share repurchase authorization; cash conversion cycle improved to 86 days.
Q2 2025 guidance: revenue expected between $615M–$665M, non-GAAP gross margin of 10.2–10.4%, non-GAAP operating margin of 4.8–4.9%, and non-GAAP EPS of $0.52–$0.58; first half revenue expected to decline mid-single digits YoY, with mid-single digit growth anticipated in the second half.
Management highlighted strong bookings momentum in industrial and A&D, ongoing supply chain optimization opportunities due to tariff uncertainty, and continued investment in capacity (notably Penang, Malaysia); medical sector expected to return to YoY growth in H2 2025, while AC&C recovery is anticipated late in the year or into next year.

Recent Transcripts

Q1 revenue of $632M with strong semi cap and defense growth, despite overall revenue decline.

Margin expansion and strong free cash flow despite revenue decline; outlook positive for 2025 growth.

Income Statement

Revenue

	2020	2021	2022	2023	2024
Revenue	$2.1B	$2.3B	$2.9B	$2.8B	$2.7B
Cost of Revenue	$1.9B	$2B	$2.6B	$2.6B	$2.4B
Gross Profit	$175M	$206M	$255M	$271M	$270M
Gross Profit %	8.5%	9.1%	8.8%	9.5%	10%
R&D Expenses	$0	$0	$0	$0	$0

2020

2021

2022

2023

2024

Revenue

$2.1B

$2.3B

$2.9B

$2.8B

$2.7B

Cost of Revenue

$1.9B

$2B

$2.6B

$2.4B

Gross Profit

$175M

$206M

$255M

$271M

$270M

Gross Profit %

8.5%

9.1%

8.8%

9.5%

10%

R&D Expenses

Cash Flow

Net Income

	2020	2021	2022	2023	2024
Net Income	$14M	$36M	$68M	$64M	$64M
Dep. & Amort.	$49M	$44M	$44M	$45M	$46M
Def. Tax	-$7.3M	-$6.9M	-$7.2M	-$15M	-$5.9M
Stock Comp.	$10M	$15M	$18M	$15M	$13M
Chg. in WC	$47M	-$98M	-$308M	$62M	$72M

2020

2021

2022

2023

2024

Net Income

$14M

$36M

$68M

$64M

Dep. & Amort.

$49M

$44M

$45M

$46M

Def. Tax

-$7.3M

-$6.9M

-$7.2M

-$15M

-$5.9M

Stock Comp.

$10M

$15M

$18M

$15M

$13M

Chg. in WC

$47M

-$98M

-$308M

$62M

$72M

Balance Sheet

Cash

	2020	2021	2022	2023	2024
Cash	$391M	$272M	$207M	$277M	$315M
ST Investments	$0	$0	$639K	$0	$0
Cash & ST Inv.	$391M	$272M	$207M	$277M	$315M
Receivables	$453M	$511M	$676M	$624M	$580M
Inventory	$327M	$523M	$728M	$684M	$554M

2020

2021

2022

2023

2024

Cash

$391M

$272M

$207M

$277M

$315M

ST Investments

$639K

Cash & ST Inv.

$391M

$272M

$207M

$277M

$315M

Receivables

$453M

$511M

$676M

$624M

$580M

Inventory

$327M

$523M

$728M

$684M

$554M

Go Deeper

Financial information provided by Financial Modeling Prep. Options data provided by Unusual Whales. Live transcripts provided by Quartr. Reported revenue and EPS data from Earnings powered by FinChat.io. All data is provided for informational purposes only, and is not intended for trading purposes or financial, investment, tax, legal, accounting or other advice.

Market Cap: $1.3B
IPO Date: 6/27/90
CEO: Mr. Jeffrey W. Benck
Fulltime Employees: 12K
Sector: Technology
Industry: Hardware, Equipment & Parts
Country: US
Exchange: New York Stock Exchange

Peers

Methode Electronics, Inc.

Richardson Electronics, Ltd.

Watchlist

Earnings

Report Date

Apr 29, 2025

Reported Revenue

631.8M

Miss -5.53%

Avg 1d Change

9.98%

Report Period

Q1 2025

Reported EPS

0.52

Beat +4%

Implied Move 1d

9.14%

Transcript

11m 1s

11m 58s

Thank you, Paul. Good afternoon, and thanks to everyone for joining today's call.

12m 3s

13m 25s

14m 57s

With that, I'd now like to turn it over to Brian for more detail on the quarter and our 2Q guidance.

15m 4s

15m 35s

16m 28s

17m

17m 21s

17m 58s

18m 54s

19m 15s

20m 38s

20m 58s

And with that, I would like to turn the call back over to you.

21m 1s

Jeff.

21m 4s

22m 28s

23m 57s

25m 30s

27m

28m 18s

I look forward to updating you on our success in quarters to come With that, I'll now turn the call over to the operator to conduct our Q and A session.

28m 29s

Thank you very much, sir.

28m 31s

29m 1s

29m 20s

30m 25s

30m 49s

32m 14s

Where are you seeing it? Are these mainly existing? Customers, new customers?

32m 19s

33m 25s

Thanks.

33m 28s

33m 50s

34m 11s

35m 27s

35m 46s

37m 9s

Although, like I said, we could see some fill in with some smaller systems in the second half and and certainly we're engaged in in those kind of things.

37m 21s

37m 43s

39m 10s

39m 52s

40m 57s

Okay. That's helpful. And then the expected rebound in medical here in the second half, is that going to be really driven more by channel or replenishment or new program launches?

41m 10s

42m 17s

42m 55s

Your next question is from the line of Anja Soderstrom from Sidoti. Please go ahead. Hi, thank you for taking my questions.

43m 4s

44m 8s

44m 22s

45m 53s

47m 5s

47m 43s

Okay. Thank you. And just in terms of the cash flows, nice improvement there in cash conversion. Is there room for further improvement there and do you have sort of target?

47m 56s

49m 6s

49m 36s

Okay. Thank you. That was all for me.

49m 38s

Actually, $1. Okay. Thank you, Anya.

49m 44s

Your next question is from the line of Melissa Fairbanks from Raymond James. Please go ahead.

49m 50s

50m 7s

51m 12s

52m 26s

53m 42s

53m 58s

Yeah. Or do they right. Do they stick? Or do we see kind of a restart of what we saw at the April, which really none of us want. None of us want that.

54m 6s

Yeah.

54m 7s

55m

56m 17s

56m 37s

Okay.

56m 40s

Perfect. That's kinda how we're thinking about it. Yeah.

56m 43s

That's excellent. Thanks so much, Jeff, and thanks thanks everyone. I appreciate it, guys.

56m 47s

Thanks.

56m 47s

Thanks.

56m 51s

Next question is from the line of Jim Ricchiuti from Needham and Company. Your line is now open.

56m 58s

I just wanted to go back to the comments about Penang. Just remind us of the timing of that ramp I know the building is is just getting started. Right?

57m 10s

58m 29s

58m 57s

And This Building 4 will be exclusively for semi cap customers, right?

59m 2s

59m 20s

Got it. You'll have the flexibility depending on what So in the old Yeah. We're it's not an exclusive semi factory percentage.

59m 28s

59m 51s

That you're you'd consider and how active is this?

59m 55s

1h 1m 12s

Okay. Thank you.

1h 1m 14s

Sure.

1h 1m 40s

There are no further questions at this time. I'd like to turn the call over back to Paul Mansky for closing comments. Sir, please go ahead.

1h 1m 47s

1h 2m 12s

This concludes today's conference call. Thank you very much for your participation. May now disconnect.

Key Insights

Q1 2025 revenue was $632M, down 4% sequentially and 6% year over year, with double-digit growth in semi cap (+18% YoY) and A&D (+15% YoY) sectors, but softness in industrial, medical, and AC&C.
Non-GAAP gross margin exceeded 10% for the sixth consecutive quarter (10.1%), while non-GAAP operating margin was 4.6%, down sequentially and YoY due to lower revenue; non-GAAP EPS was $0.52, above the midpoint of guidance.
Free cash flow remained positive for the eighth straight quarter ($27M in Q1), with a cash balance of $355M and $142M remaining in share repurchase authorization; cash conversion cycle improved to 86 days.
Q2 2025 guidance: revenue expected between $615M–$665M, non-GAAP gross margin of 10.2–10.4%, non-GAAP operating margin of 4.8–4.9%, and non-GAAP EPS of $0.52–$0.58; first half revenue expected to decline mid-single digits YoY, with mid-single digit growth anticipated in the second half.
Management highlighted strong bookings momentum in industrial and A&D, ongoing supply chain optimization opportunities due to tariff uncertainty, and continued investment in capacity (notably Penang, Malaysia); medical sector expected to return to YoY growth in H2 2025, while AC&C recovery is anticipated late in the year or into next year.

Earnings

Report Date

Reported Revenue

Avg 1d Change

Report Period

Reported EPS

Implied Move 1d

Transcript

Key Insights

Recent Transcripts

Income Statement

Cash Flow

Balance Sheet

Go Deeper

Related

Recent Transcripts

Go Deeper

Earnings

Report Date

Reported Revenue

Avg 1d Change

Report Period

Reported EPS

Implied Move 1d

Transcript

Key Insights