Benchmark Electronics Q4 Earnings Call Highlights

Key Points

• Benchmark reported Q4 revenue of $704 million (up 7% YoY) and non-GAAP EPS of $0.71 (above guidance); full-year revenue was $2.66 billion with non-GAAP EPS of $2.40, while margins improved—Q4 non-GAAP gross margin was 10.6%—and the company generated $85 million of free cash flow for the year, ending net cash positive by $111 million.
• Three end markets — Advanced Computing & Communications, Medical, and Aerospace & Defense — showed double-digit Q4 growth (with medical and AC&C expected to continue strong momentum into 2026), while Semi‑Cap was softer in Q4 but management said it’s showing signs of improvement heading into 2026.
• For Q1 FY2026 the company guided revenue of $655–695 million, non-GAAP EPS of $0.53–0.59 and gross margin of 10–10.4%, and CEO Jeff Benck said he will step down at quarter end and hand leadership to President David Moezidis.

Benchmark Electronics NYSE: BHE reported fourth-quarter and full-year fiscal 2025 results that management said reflected improving momentum through the year, along with continued margin discipline and progress on working capital efficiency.

Fourth-quarter results and profitability

For the fourth quarter, Benchmark posted revenue of $704 million, up 7% year over year and “toward the higher end” of its prior guidance, according to CFO Bryan Schumaker. Non-GAAP diluted earnings per share were $0.71, above the company’s guidance range of $0.62 to $0.68.

Non-GAAP gross margin was 10.6%, up 50 basis points sequentially and 20 basis points year over year, which Schumaker attributed to leveraging the company’s cost structure on higher revenue. CEO Jeff Benck said the quarter’s gross margin also came in above the high end of guidance, and noted that operating expense discipline helped drive non-GAAP operating margin to 5.5% in the quarter.

Full-year 2025 performance and cash generation

For fiscal 2025, Benchmark reported revenue of $2.66 billion, flat versus the prior year, while non-GAAP EPS increased 5% to $2.40. Schumaker said full-year non-GAAP gross margin was 10.2% and non-GAAP operating margin was 4.9%, down 20 basis points year over year, which he said was “primarily due to variable compensation.”

Management emphasized progress in working capital and cash generation. Benchmark generated $59 million in operating cash flow and $48 million in free cash flow in the fourth quarter. For the full year, free cash flow totaled $85 million. The company ended the year in a net cash positive position of $111 million, with $322 million of cash, $148 million outstanding on its term loan, and $65 million drawn on its revolver. Schumaker said the company had $481 million available to borrow on its revolver.

Benchmark invested approximately $39 million in capital expenditures during 2025, including $11 million in the fourth quarter. It also returned capital to shareholders via $24 million in dividends and $27 million in share repurchases. As of quarter-end, Benchmark had roughly $123 million remaining under its existing share repurchase authorization.

The company’s cash conversion cycle was 67 days in the fourth quarter, improving 10 days sequentially and 22 days year over year. Schumaker said inventory days fell 6 days sequentially and inventory turns were 5.2 in the quarter.

Sector performance: strength in A&D and medical, rebound in AC&C

Management highlighted double-digit growth in the fourth quarter across three of its five focus sectors: Advanced Computing & Communications (AC&C), medical, and aerospace & defense (A&D). The company also said Semi-Cap showed “nice signs of improvement heading into 2026” despite a softer fourth quarter.

• Semi-Cap: Revenue fell 8% sequentially and 14% year over year in Q4, which management said was expected ahead of anticipated improvement in 2026. For the full year, Semi-Cap revenue grew 2%. President David Moezidis added that 2025 included pressure from “China import restrictions,” while the company continued to secure new wins and expand capacity.
• Industrial: Revenue was down sequentially but up 3% year over year in Q4; full-year industrial revenue was consistent with the prior year. Moezidis said fourth-quarter performance was led by improved demand in transportation, HVAC, automation, and other smaller areas, while noting industrial is among the company’s most macro-sensitive markets.
• Aerospace & Defense: Q4 revenue rose 7% sequentially and 17% year over year, and full-year revenue increased 19%. Moezidis said commercial air remained stable and defense remained strong, but he expects near- to mid-term growth to moderate due to “program timing within defense.” He also said bookings momentum in space applications is broad-based and expected to support future growth as programs ramp.
• Medical: Fourth-quarter revenue increased 14% sequentially and 23% year over year, contributing to 7% growth for the full year. Moezidis reiterated that the company had signaled a bottom in the sector during the summer, and said improving demand and new program ramps—particularly in medical devices—supported the second-half recovery. He also said Benchmark expects double-digit revenue growth in medical for the first quarter and full year 2026, citing momentum in both medical devices and life sciences.
• AC&C: Full-year revenue declined in 2025 due to a challenging first half, but Q4 revenue rose 22% sequentially and 27% year over year. Schumaker said the company expects momentum to continue into the first quarter as it ramps “previously announced AI-related wins.” Moezidis said the fourth-quarter rebound was driven by strong performance in computing, and pointed to Benchmark’s “liquid cooling capabilities and capacity investments” tied to AI infrastructure and next-generation supercomputing builds.

Items highlighted during closing and Q&A

Schumaker disclosed two accounting-related items. During year-end close, the company identified and corrected “immaterial errors” in prior periods related to the tax calculation, resulting in a cumulative $8.7 million understatement of income tax expense. He said the corrections did not change previously reported cash taxes, operating cash flow, revenue, gross margin, operating margin, or non-GAAP EPS, and that revised prior periods will be reflected in Benchmark’s Form 10-K expected the week of February 23.

Benchmark also recorded an $11.1 million non-cash impairment on certain assets at an Arizona facility due to the end-of-life of several programs. Schumaker said any follow-on programs will be consolidated within other U.S. facilities.

On margins, management said the company expects operating leverage primarily through operating expenses as revenue scales, while noting that gross margin performance will depend on sector mix. In Q&A, Schumaker said there was not “anything” specific to point to on mix in the fourth quarter’s gross margin improvement, describing it as plant leverage and overall mix.

On capital spending, Schumaker said capex as a percentage of revenue could increase to 2%–2.5% in 2026 (from the company’s typical 1.5%–2%), driven by equipment needed for program wins and ongoing investment tied to the company’s expansion in Penang. Management said the company’s fourth Precision Technology building in Penang is on track for completion at the end of the second quarter and to begin operations in the third quarter.

First-quarter 2026 guidance and leadership transition

For the first quarter of fiscal 2026, Benchmark guided revenue to $655 million to $695 million. The company expects non-GAAP gross margin of 10% to 10.4% and non-GAAP operating margin of 4.7% to 4.9%. Non-GAAP EPS guidance is $0.53 to $0.59, with an anticipated effective tax rate of 26% to 27% for the first quarter and full year. Weighted average shares are expected to be about 36.3 million.

Benck also used the call to note his upcoming departure as CEO at the end of the quarter, calling this his final earnings call in the role. He said he would pass leadership to Moezidis and expressed confidence that Benchmark’s momentum would “continue but accelerate.”

About Benchmark Electronics NYSE: BHE

Benchmark Electronics, Inc is a global provider of comprehensive electronics manufacturing services (EMS) and integrated engineering solutions. The company offers a full suite of services that span the entire product lifecycle, from early‐stage design and prototyping to high‐volume production and aftermarket support. Benchmark serves diverse end markets, including industrial automation, medical devices, communications, aerospace and defense, and semiconductor equipment.

At the core of Benchmark's offering are printed circuit board assemblies (PCBA), system integration, box build assemblies and turnkey manufacturing.

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