Benchmark Electronics Q2 2023 Earnings Call Transcript

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July 31, 2023

There are 6 speakers on the call.

Operator

Please note this event is being recorded. I would now like to turn the conference over to Paul Mantz with Benchmark Electronics. Please go ahead.

Speaker 1

Thank you, Betsy, and thanks everyone for joining us today for Benchmark's 2nd quarter Fiscal year 2023 earnings call. Joining me this afternoon are Jeff Bank, CEO and President and Roop Lakkaraju, CFO. After the market closed today, we issued an earnings release pertaining to our financial performance for the Q2 of 2023, We have prepared a presentation that we will reference on this call. Both are available on the Investor Relations section on our website atbench.com. This call is being webcast live and a replay will be available following the call.

Speaker 1

The company has provided Please take a moment to review the forward looking statements advice on Slide 2 in the presentation. 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 these statements, most notably due to ongoing supply chain strengths, macroeconomic conditions and semi cap equipment spending. Benchmark undertakes no obligation to update any forward looking statements.

Speaker 1

For today's call, Jeff will begin by providing a summary of our Q1 results. Roop will then discuss our detailed financial results and our Q3 guidance. Jeff will then return to provide more insight on demand trends by sector, business wins and then closing remarks. If you would please turn to Slide 3, I will the call over to our CEO, Jeff Bank.

Speaker 2

Thank you, Paul. Good afternoon, and thanks to everyone for joining our call today. The company executed well in the Q2 as we delivered revenue and operating income above the high end of guidance. Despite continued weakness in the semi cap market lingering component availability issues that impacted some output in the quarter. Specifically, we grew revenue 12% year over year in the quarter When excluding supply chain premiums or SCP, we believe assessing our revenue growth excluding the 0 margin pass through revenue More accurately reflects company performance.

Speaker 2

As an example, SCP was $17,000,000 in Q2 2023 $91,000,000 in Q2 2022. This represents a $74,000,000 year over year reduction. Excluding SCP, non GAAP gross margins were 9.4%, up 1.5% from the prior year, While non GAAP operating margins were 4.1%, up from 3.6% last year. This enabled us to deliver GAAP EPS at the higher end of our guidance range. Inventory came down modestly in the quarter, but we still have more to do to achieve Our days of inventory goals.

Speaker 2

Lastly, we generated positive operating and free cash flow in the quarter. Looking at the drivers of our 12% growth, we saw double digit year over year performance from 4 of our 6 sectors, including advanced computing, industrials, medical and next generation communications. Although our sequential performance in semi cap was encouraging, Industry commentary around potential timing of the broader market recovery appears to be shifting deeper into 2024. Nonetheless, we firmly believe in the constructive long term secular trends underpinning our anticipated future growth in this sector and are investing accordingly. We remain cautiously optimistic on the demand profile across our diversified sectors, Which we believe will allow us to weather the current market uncertainty while continuing to deliver to our profitability targets.

Speaker 2

Before turning it over to Roop, I'd like to highlight a couple of key announcements we've recently made, reinforcing our ability to attract world class talent to Benchmark. David Mosaddis has joined us as Chief Commercial Officer, which is a new role at Benchmark. David's 30 plus years of industry experience in operations, engineering, sales and marketing across tech And specifically within EMS, make him an incredibly valuable strategic addition to the team. David will direct Benchmark's commercial strategy, including vertical market sector plans and our global go to market approach, leveraging his deep expertise to drive continued business growth. At the same time, we also announced Dave Valkanoff has joined as our new Chief Operating Officer.

Speaker 2

Dave is the Global Manufacturing Executive, known for his successful track record in driving lean principles and operational excellence. With over 30 years of experience in sectors such as aerospace and defense, Industrial, Automotive and Semi Cap, he brings extensive global operations knowledge to our team. We are very pleased to have both executives on board and I'm confident they will make a significant impact. I also want to thank our current Chief Revenue Officer, Rob Crawford for his contributions over the past 4 years and wish him well in his retirement set to begin in August. Now let me pass it over to Roop to share more detail on the June quarter and our guidance for Q3.

Speaker 1

Thank you, Jeff, and good afternoon. Please turn to Slide 5 for our revenue by market sector. Total benchmark revenue was $733,000,000 in Q2, which 6% higher sequentially and 1% higher year over year. As Jeff mentioned, excluding the effect of SCP, Revenue was up 12% year over year in the period. A reconciliation of this and our sector level performance can be found in the section of the presentation materials.

Speaker 1

Turning to Slide 6, medical revenue for the Q2 was up 14% versus the prior year. Our growth was fueled by strength in existing programs and new programs ramping. Semi cap revenue decreased 4% year over year, In line with our expectations, A and D revenue was down 10% year over year. Defense continues to be challenged by supply availability coupled with year over year as new customer programs are ramping in areas, including test and measurement and energy efficiency. Advanced Computing increased 19% year over year as we benefited from the continued execution of multiple high performance computing programs.

Speaker 1

In the next generation communications sector, revenue was up 53% year over year. Our year over year performance was driven by continued secular strength in 5 gs Infrastructure and Satellite Communications. In the Q2, our top 10 customers represented 52% of total revenue. Please turn to Slide 7. Our GAAP earnings per share for the quarter was $0.39 Our GAAP results include restructuring and other one time costs totaling $3,300,000 For Q2, Our non GAAP gross margin of 9.1 percent decreased 10 basis points sequentially, primarily due to lower revenue within our semi cap sector.

Speaker 1

Excluding SCP, our gross margin was 9.4%, which was in line with guidance. Our SG and A was $37,700,000 sequentially because of cost actions taken in the first half coupled with lower variable compensation. Non GAAP operating margin was 4%, excluding SCP, operating margin was 4.1%, representing the high end of our guidance range. In Q2 2023, our non GAAP effective tax rate was 21.2%. For the quarter, non GAAP EPS of $0.48 was $0.02 higher than the midpoint of our guidance.

Speaker 1

Non GAAP ROIC in the 2nd quarter It was 9.5%. Please turn to Slide 8 to discuss the effects of SCP on a trended basis. In Q2, SCP declined to $17,000,000 versus $18,000,000 in Q1 $91,000,000 in Q2 2022. Excluding SCP, our revenue in the 2nd quarter was $716,000,000 a sequential increase of $39,000,000 or 6% and a year over year increase of $79,000,000 or 12%. Please turn to Slide 9 to review our cash conversion cycle performance.

Speaker 1

Our cash conversion cycle days were 103 in the 2nd quarter compared to 109 days in Q1. The largest contributor to the decrease reduction in inventory. Total inventory decreased sequentially in Q2 by 22,000,000 Turning to slide 10 for an update on liquidity and capital allocation. In Q2, we generated $25,000,000 of cash from operations and invested $8,000,000 in CapEx to support continued growth in our Mexico facilities and enhanced capabilities In our Precision Technologies business unit, we expect our CapEx spending in Q3 2023 to be between $10,000,000 $15,000,000 For the full year 2023, we expect CapEx to range between $65,000,000 to $75,000,000 Our cash balance on June 30th was $245,000,000 As of June 30, we had $129,000,000 outstanding on our term loan, $300,000,000 outstanding borrowings against our revolver and $246,000,000 available to borrow under our revolver. In Q2, we paid our regular quarterly cash dividend of $5,900,000 Please turn to Slide 11 for a review of our Q3 2023 guidance.

Speaker 1

We expect revenue excluding SCP to range from $680,000,000 to $720,000,000 SG and A expense range between $36,000,000 $38,000,000 Excluding SCP, our non GAAP operating margin range is forecasted to be 4.7% 4.9%. As a reminder, this includes approximately 50 basis points of stock based compensation. Our non GAAP guidance excludes the impact of $1,600,000 in amortization of intangible assets and $1,100,000 to $1,500,000 of estimated restructuring to $0.59 or a midpoint of $0.55 Other expenses net are expected to be approximately $9,000,000 due primarily to interest expense, which has grown due to the higher rate environment. We expect For Q3, our non GAAP effective tax rate will be between 19% 21%, the weighted average share count of $35,700,000 And with that, I'll turn the call back over to you, Jeff.

Speaker 2

Thanks, Roop. Please turn to Slide 13. All metrics I reference here are related to demand trends we are seeing by sector are excluding the effect of SCP. In medical, we continue to see strong demand from our existing products, while also ramping new programs. I'm particularly encouraged by the strong demand We are seeing in the defibrillator subsector as the benefits of having these life saving devices readily accessible are becoming increasingly well understood.

Speaker 2

We continue to build on our future success during this past quarter, securing new wins across our offerings. For example, in manufacturing, We want a program to deliver sub assemblies use the medical sterilization equipment. Within engineering, we want an engagement to design fluid pumps Used in field applications by the DoD. Lastly, we were pleased to be awarded a collaborative design engagement with a company to develop cardiovascular treatment devices. With the continued underlying medical product demand strength And a steadily improving supply chain, we expect solid year over year growth in the period and on a full year basis.

Speaker 2

Within semi cap, we're encouraged by the better performance in the quarter and believe the March quarter may have been our low point for semi cap revenue in the year. However, as I mentioned earlier, we have heard from several OEMs that the timing of the broader market recovery Maybe pushed out a bit further than initially anticipated. For Q3, we expect revenue to be relatively flat sequentially. However, the long term secular growth drivers are still very much intact, including silicon penetration, The quest for ever decreasing node sizes and the global efforts to build a broader foundry ecosystem. We continue to invest in the space to cap our disproportionate share as the next upswing commences.

Speaker 2

Moving to the A and D sector, we continue to score new wins in defense. Just this quarter, we secured a manufacturing win to provide Actuation control modules for an extended range guided multiple rocket system. Additionally, we expanded an existing engagement with the U. S. Army to manufacture camera systems used in live round tank gunnery training ranges.

Speaker 2

Within commercial aero, both demand and our ability to meet it continues to improve for us. Combined, we expect Q3 A and D revenues to be up double digits sequentially and year over year. Turning to industrials, we position ourselves well to participate in megatrends, specifically automation, Test and Measurement and Energy Efficiency Solutions. Examples of this in Q2 include a manufacturing win For geospatial devices, which enable efficiency and productivity in the agriculture and construction industries. At the same time, our design engineering teams have secured new business collaborating with customers in areas such as additive manufacturing, Environmental controls and security detection platforms.

Speaker 2

Looking forward, supply conditions in industrials are showing improvement, Which we anticipate will continue. We expect sector revenue to grow year over year in the quarter and for the full year. In advanced computing, revenues were largely consistent with our guidance provided last quarter. As a reminder, our advanced computing efforts are not in the support of cloud or data center infrastructure. Rather, we help build some of the largest and most sophisticated high performance computing machines in the world.

Speaker 2

These are often government agency sponsored and by definition relatively macro resilient. We highlighted last quarter that we expected to complete a significant project during the Q2. This happened Translating to a sequential decline in revenue, albeit still up nearly 20% year over year. Our Q3 will be the 1st full quarter without revenue from that completed project, translating to expectations of sequential and year over year declines. With the strong first half performance coupled with a new win expected to ramp in Q4, we continue to anticipate growth in this sector on a full year basis.

Speaker 2

Lastly, in Next Generation Communications, we remain cautious on this sector given the carrier and operator CapEx spending rationalization And new broadband connectivity programs focused on rural areas. However, some of these initiatives are exposed to infrastructure deployment delays And macro sensitivity. As such, we expect second half revenue performance to be challenged with sequential declines in each of the next two quarters. Although on a full year basis, we continue to expect growth. In summary, please turn to Slide 14.

Speaker 2

While there is always room for improvement, I'm pleased with the team's execution in the quarter despite the macro challenges and semi cap cyclicality. Excluding SCP, Benchmark delivered 12% annual revenue growth in the quarter. At the same time, non GAAP operating income grew 28% or more than twice the rate of revenue growth. The working capital initiatives we discussed on last quarter's call are beginning to bear fruit with positive operating and free cash flow generated in the quarter. Looking to the second half, we expect to continue to reduce inventory And maintain our focus on operational execution, particularly as supply chains are expected to continue to improve, enabling us to fulfill more of our customer demand.

Speaker 2

We will protect investment from future growth sectors, particularly semi cap, given our conviction in the long term secular drivers. Although as uncertain as to the shape of the recovery, We know it will come and we will be ready for it. These collective efforts give us continued confidence we can grow revenue in the high single digits in 2023 When excluding the effects of SCP. With that, I'll now turn the call over to the operator to conduct our Q and A session.

Operator

The first question today comes from Jim Ricchiuti with Needham and Company. Please go ahead.

Speaker 2

Hi, good afternoon. Just a question on the supply chain premium revenue that you're talking You may have given it, but what are you anticipating for Q3? I believe you said $17,000,000 is what it was in Q2?

Speaker 1

That's right, Jim. Hey, this is Ruth. Good to have you. So Q2 was $17,000,000 We actually didn't guide SCP for Q3 3 nor Q4. So the guide we gave is exclusive of any SCP as we've done throughout the year.

Speaker 1

As we've seen though, the one thing I guess I'll comment incrementally is just, if you think about going back to Q2 of 2022, we were at a high point of 91. We've seen it decline. We do think we anticipate that that should continue to do so in the 2nd part of this year, but we haven't specifically guided to that.

Speaker 2

Got it. And Roop, any color you can give us on how we should be thinking about gross margins, just given some of the mix you're anticipating for the current quarter?

Speaker 1

Yes. Actually gross margins should continue to strengthen as we think about ramps coming through, getting up to more volume level, More distributed revenue throughout our network, we anticipate growing that gross margin towards the high 9s, potentially Down at the 10% or so. So, we feel pretty good about that distribution.

Speaker 2

Got it. And Jeff, with respect to some of the market verticals, where do you have the most Confidence, I mean you've been anticipate I think we've all been anticipating a pickup in A and D, but this seems like supply chain has been weighing on that and maybe it's also your Customers just dealing with their own issues, but apart from commercial Yes, I'm happy to Holding up. Yes. I'm happy to provide some color a little bit across the verticals. As we talked about semi cap, maybe initially we saw A bigger recovery in the second half of twenty twenty three and we we're talking to our OEMs, we see that pushing into 24.

Speaker 2

So we're not expecting a significant step up in semi, but A and D is improving. Certainly supply chain is freeing up there and We're continuing to ramp up there with a number of customers on the commercial side seeing particular strength, but even some new defense stuff Happening for us. So look for that to be a bit better in the second half. And then medical and industrial are both still Good growth sectors for us, held up well in the current environment. We see pockets of depending on the segment the customers in where there might be softness, but we also see strength in other areas.

Speaker 2

We talked a little bit about that with medical around like the defibrillator space, Which it seems like everybody wants a defibrillator anywhere you can put it, right, because they're really great life saving devices. And so See strength there as well. With just turning to comms, we've seen Some push out of some larger infrastructure deployment that is probably weighing a little bit on that, but we think we're well positioned And we've had a strong first half, so that's actually going to serve us well, but not maybe not as strong in the second half of 23. But hopefully that color helps. It does.

Speaker 2

Thanks. I'll jump back in the queue.

Speaker 1

Thanks, Jim.

Operator

The next question comes from Jaeson Schmidt with Lake Street. Please go ahead.

Speaker 3

Hey guys, thanks for taking my questions. I just want to follow-up on the supply chain. I know it was down $1,000,000 sequentially in Q2 and it sounds like you expect further declines from a supply chain premium standpoint in the second half. But just at a high level, has the supply chain environment That continued to be a little weaker than you guys originally expected or kind of how should we think about it, the improvement here in the second half in that supply chain premiums?

Speaker 2

I would say broadly it's continued to improve instead of what used to be a year ago it was thousands of parts, Earlier this year, it might have been 100 and now we're maybe it's a handful of things that are gating us. We still there's still some long lead times there and there's still pockets where custom ASICs or some even some of the legacy technology where all the supply went to some of the newer nodes Has been a challenge and continues to be challenging. So it's hard to communicate to customers. Hey, everything's great, because there are still Areas where we've seen it. But we have seen a significant drop in supply chain premiums as Roop has talked about it.

Speaker 2

We kind of see that being sequentially down Quarter to quarter in Q3, it's getting to the point where it's getting smaller as we go. And so that ability to forecast it perfectly It's part of the reason that we're saying, look, let's just guide without it, recognizing that it's downward trend. And it was down Over $74,000,000 in Q2. And so we're kind of wrapping around where there's not as much need to be leveraging these brokers and Go in there because the broad based supply chain has improved.

Speaker 3

Okay. That's helpful. And when you look at your backlog or business pipeline, have you seen any significant changes when it comes from kind of de commit or cancellation standpoint?

Speaker 2

I mean, it's broadly, I'd say it's holding very consistent. I mean, we talked about a high single Digit growth in the year, which is kind of in line with where our thoughts have been. There are pockets where A customer, depending on what they're participating in or what's going on with them, may see some softness. So that's certainly weighing on Certain areas, we kind of touched on it a little bit in, for example, in communication, next gen comms That we've seen some there. But overall, I would say, our diversified portfolio is serving us well.

Speaker 2

We're seeing that we believe when you exclude supply chain premiums from a product shipment, we expect 4 or 6 sectors To grow for the full year and from that standpoint, we're seeing things hold up pretty well.

Speaker 3

Okay. And then just the last one from me and I'll jump back in the queue. Just following up on sort of those comments On your communications segment, if I'm correct, I thought you guys originally expected that to be down sequentially in Q2. It obviously was up. What was sort of the primary driver there?

Speaker 3

Was it just sort of deployment, scheduling or shipment timing?

Speaker 1

Yes, that's fair to say, Jason. It was kind of some one off. We got some parts that helped us Produced a little more in the quarter and got it out the door. So that was helpful for us on that comps. As we indicated in the latest kind of sequential view based on our outlook, we are expecting comps to come down from a sequential standpoint.

Speaker 1

So a little bit of just that timing and seeing how Customer demand is profiling through the year.

Speaker 3

Got it. Thanks a lot guys.

Speaker 1

Appreciate it, Jake. No worries. Thanks.

Operator

The next question comes from Steven Fox with Fox Advisors. Please go ahead.

Speaker 4

Hi, good afternoon. A couple of questions from me. First off, on the semi cap comments, can you just sort of maybe dice it a little bit Closer in terms of new programs versus existing programs for the second half of the year, are you seeing new programs get or just certain types of new programs get pushed out or is it all related to just sort of end markets of existing programs? How would you sort of Describe the mix of what you're seeing if things are going to stay flattish?

Speaker 2

Yes, I would say, it's a little bit of both and it's good that you kind of That you dug into that color a little bit because we just had a super strong year of bookings last year and a number of those programs Certainly expected a lot of activity in 2023 and some of those have pushed out. I will say they're still active in the sense that They're next generation tools. So there's no fear about losing a win or whatever. But it's like Where an OEM might have said, hey, let's build 6 tools this year, maybe now we're building 1, right? So that's weighed a little bit and we Sort of anticipated going, when we kind of recast it in February, we probably anticipated that We would see more activity on the new wind front building in 2023.

Speaker 2

And I would say, While there's certainly a lot of programs going on, it has moved a bit to the right. And then just, we have a broader Footprint of wins across tool sets, whether it's lithography or deposition or a lot of the front end processes. And so We have certainly seen from a broad based, right, that business came down and It stabilized and certainly Q3 we were guiding kind of sequentially flattish in the 3rd quarter. It's just we sort of anticipate initially that Q4 we'd be preparing for a huge ramp up in Q4. And Now we're just hearing signals that, hey, it may be a little longer.

Speaker 2

While there's certainly demand and we're seeing Some strength in some of the areas that are under restriction on some of the legacy nodes. We're seeing people purchase those tools And there's OEMs are looking to fulfill that. But I also would say some of the benefits like of the CHIPS Act, I don't see that at the beginning of 2024. It just recently was published that some of the builds here in Phoenix Valley are taking longer Just because the labor force and such to build those new fabs here in the valley as an example. So Still long in the space and believe that it's that the upswing when it happens will be significant.

Speaker 2

But Right now, we're just not calling in 23. Understood.

Speaker 4

And then on the Aerospace and Defense, if I have this right, I'm sorry, I don't have In front of me, but it sounded like aerospace and the defense piece was down quarter over quarter and commercial air was better.

Speaker 1

Do I have that fact right Yes, that's a fair way to characterize it.

Speaker 2

And we did have one defense program that We thought we'd start in 2Q that's pushing the 3Q. So that was certainly a factor in that weakness in defense.

Speaker 4

Okay. And then my other part of that question on that number is just, I know that there's very specific part shortages there That are especially challenging to get. Do you guys feel like you are performing in line with the market there? The only reason I ask is because it sounds like one of your peers Was able to grow in aerospace defense and you guys seem to have problems in the defense piece quarter over quarter.

Speaker 1

Yes. I think it really comes down to program specific kind of considerations there. And some of our programs and we've commented in our sector outlook, We've got some program ramps that are expected to come later in the year, these sort of things. So part of it is what programs are you on specifically, where there could be growth. The other piece is We've got some new programs, new wins that came in previous quarters that are ramping that we expect to see throughout 2023.

Speaker 1

What we can say is commercial aero has performed more consistently through the year so far, and has been in an upward trend cycle.

Operator

The next question comes from Anja Soderstrom with Sidoti. Please go ahead.

Speaker 5

Hi, thank you for taking my questions. So I'm just curious, did you quantify how much revenue you left behind due to the supply chain challenges?

Speaker 2

I don't know that we specifically called it out, but it was north of $100,000,000 that we've kind It's come down some over the last 6 months. I don't know if we addressed it on last quarter's call. Obviously, as supply chain frees up, We will fulfill more of that, but we still have a fair amount that is unfulfilled rolling into the second half of this year.

Speaker 5

Okay. Thank you. And what other opportunities do you have to improve the cash flow other than bringing down inventory?

Speaker 1

Well, Anya, I mean, I think we've got a number of items. Part of it is inventory with the inventory we have. And so we're actively working with our customers on Aligning the inventory levels and the demand schedule to the clear to build these sort of things. And I think those are really the primary. With that said, We are obviously making sure that AR collections were on top of and these sort of things.

Speaker 1

The other things we're doing more strategically in terms of strategic suppliers and terms aligning those terms more effectively, as well as finding greater flexibility from that standpoint So it's a multifaceted kind of set of challenges to drive that cash flow. But the biggest priority is Inventory alignment to clear to build and then just bleeding down that inventory as we continue to grow.

Speaker 5

Okay. Thank you. And then just lastly, in terms of the semi cap and that being pushed out a bit, how do you think that's going to affect your margins In terms of capacity utilization.

Speaker 1

Yes, maybe I'll start in terms of from margin standpoint, maybe Jeff can add incremental color. I think as we've talked about semi cap, especially the precision The Schaining side, the semi cap overall for us is a very strong market sector from a gross margin standpoint. We are making investments on a concurrent basis. It's why CapEx As we've provided the range that we have, and we're going to continue to invest in semi cap because it is cyclical and that market up is coming. What we have done is paced out those investments effectively such that when they come online, How they might be a drag on margins is reduced or limited.

Speaker 1

And then of course, as Jeff said, we've got some new programs that are starting to ramp there. So all of this combined with the expectation that it will recover is going to bode well from an overall enterprise margin standpoint. And in the interim, we're very cognizant of managing the margin profile as we work through this softness.

Speaker 2

Yes. Maybe I would just add, on the EMS side of the business, operational efficiency is improving, which is great. I think the incremental revenue that we've seen in product shipments has given it helps in areas of absorption. And so our margins are performing quite well. You saw that in 2Q and you'll see it in the guide.

Speaker 2

Without the recovery of semi cap, We kind of look forward to semi cap is on the higher end of our corporate gross margins. So when we're dealing with the downturn now, That's putting some pressure there that we've been able to successfully kind of overcome. So we're really looking forward to The opportunity to continue to drive that further towards our strategic goal as semi cap comes back with significant growth. So Maybe that's how we think about it. Okay.

Speaker 5

Thank you. That was all for me.

Speaker 1

Thanks, Sonya. Ken, thank you.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Paul Malansky for any closing remarks.

Speaker 1

Thank you, Betsy, and thank you everyone for participating in Benchmark's Q2 2023 earnings call. Before we go, I'd like to remind listeners that we'll be attending the 12th Annual Needham Virtual Industrial Tech, Robotics and Clean Tech 1 on 1 Conference on August 7. With that, thank you again for your support and we look forward to speaking with you soon.

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Key Takeaways

  • Benchmark delivered 12% year-over-year revenue growth in Q2 (excluding supply-chain premiums), with revenue and operating income above the high end of guidance, positive operating and free cash flow, and modest inventory reduction.
  • Four of six end markets achieved double-digit YoY growth, led by next-generation communications (+53%), advanced computing (+19%), medical (+14%) and industrials, while semi-cap was down 4% and aerospace & defense down 10% YoY.
  • The company strengthened its leadership team with the appointments of David Mosaddis as Chief Commercial Officer and Dave Valkanoff as Chief Operating Officer, underscoring its focus on commercial strategy and operational excellence.
  • For Q3, Benchmark expects revenue (ex-SCP) of $680–720 million, non-GAAP operating margins of 4.7–4.9%, EPS around $0.55, and CapEx of $10–15 million (with $65–75 million planned for full-year 2023).
  • Supply-chain premiums fell from $91 million in Q2 2022 to $17 million in Q2 2023, and management anticipates further declines as part of ongoing working-capital initiatives and easing component constraints.
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Earnings Conference Call
Benchmark Electronics Q2 2023
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