BHE

Image source: The Motley Fool. Wednesday, July 29, 2026 at 5:00 p.m. ET Investor Relations - Paul Mansky President and CEO - David Moezidis CFO - Bryan Schumaker Operator: Hello, everyone. Thank you for joining us, and welcome to the Benchmark Electronics Q2 2026 Earnings Call. I will now hand the conference over to Paul Mansky, Benchmark Investor Relations. Please go ahead. Paul Mansky: Thank you, Piercy, and thanks, everyone, for joining us today for Benchmark's Second Quarter 2026 Earnings Call. With us today are David Moezidis, our President and CEO; and Bryan Schumaker, our CFO. After the market closed, we issued an earnings release pertaining to our financial performance for the second quarter of 2026, along with a presentation, which we will reference on this call. Both are available under the Investor Relations section of our website. This call is being webcast live, a replay of which will be available approximately 1 hour after we conclude. The company has provided a reconciliation of our GAAP to non-GAAP measures in the earnings release as well as in the appendix to the presentation. Please take a moment to review the forward-looking statements disclosure on Slide 2 of 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. Benchmark undertakes no obligation to update any forward-looking statements. For today's call, David will start with highlights from the quarter, followed by Bryan with further detail on our results and guidance. We'll then turn the call back to David to share his perspective on sector trends and closing remarks. I'll now turn the call over to our CEO, David Moezidis, to discuss Slides 4 and 5. David Moezidis: Thank you, Paul. Good afternoon, and thank you for joining us today. I'm pleased to report that our second quarter results reflect strong execution and continued broadening of demand across the markets we serve. Revenue of $756 million was up 18% compared to last year, while EPS of $0.75 grew at more than twice that rate. Both were above the high end of our guidance from last April. We saw healthy double-digit growth in 4 of our 5 sectors with A&D undergoing previously discussed program transitions. I would note that with another strong quarter of bookings in Q2, A&D led the way, which speaks to our optimism around the sector in the coming quarters. At the same time, our focus on execution allowed us to deliver operating income and EPS growth of 30% and 36%, respectively, well within our objective to grow both at 1.5x to 2x the pace of revenue throughout 2026. I'll let Bryan speak to our expectations for the September quarter in a moment. But relative to the full year, I would leave you with this. Demand in the majority of our markets continues to improve. We are winning. And while there's always room for improvement, we are executing well operationally. Combined, this gives us the confidence to increase our 2026 revenue outlook to $3 billion, representing approximately 13% growth and achieving a historical high for the company. With that, I'll turn the call over to Bryan to walk through the details for the quarter. Bryan Schumaker: Thank you, David, and good afternoon, everyone. Please turn to Slide 6. Revenue in the quarter was $756 million, up 18% year-over-year, and non-GAAP EPS was $0.75, up 36% year-over-year. Both exceeded the high end of the guidance range from our last earnings call. As a reminder, our non-GAAP results exclude certain items as detailed in Appendix 1 of this presentation. For the second quarter, non-GAAP gross margin was 10.5%, improving 30 basis points year-over-year and 20 basis points sequentially, primarily due to volume. Non-GAAP operating margin of 5.2% was up 50 basis points year-over-year and 40 basis points sequentially. This improvement was driven by higher revenue, which was partially offset by increased variable compensation expense. Our second quarter non-GAAP effective tax rate was 26.6%. Please turn to Slide 7 for the second quarter 2026 revenue performance by sector. Semi-Cap revenue grew 17%, both year-over-year and sequentially as momentum strengthened throughout the quarter. Industrial revenue increased 13% year-over-year and 20% sequentially, benefiting in part from revenue acceleration associated with the planned wind down of our Phoenix facility. Meanwhile, Medical revenue once again delivered solid performance, growing 22% year-over-year and 4% sequentially. Within AC&C, revenue grew considerably at 71% year-over-year and 21% sequentially, driven by the AI-related program wins David has spoken to over the last couple of quarters. Finally, A&D was down 12% year-over-year and 7% sequentially. Please turn to Slide 8 for our trended non-GAAP financials. In Q2, we delivered year-over-year and sequential improvement in revenue, profitability and earnings, reflecting disciplined execution and favorable mix. This momentum is expected to continue throughout the balance of 2026, positioning us to drive operating income and earnings growth at 1.5x to 2x the pace of revenue growth. Please refer to Slides 9 and 10 for an update on our balance sheet, cash flow and working capital performance. We continue to maintain a strong balance sheet, which gives us the flexibility to invest in growth, fund strategic priorities and remain disciplined in our capital allocation. We ended the quarter with $315 million of cash and $134 million of cash net of debt, while maintaining more than $0.5 billion of available borrowing capacity. In the second quarter, we generated $35 million in operating cash flow and $22 million in free cash flow while continuing to invest in inventory, capacity and capabilities to support future growth. In line with our balanced capital allocation strategy, we also returned $6 million to shareholders through dividends during the quarter. Capital expenditures were approximately $13 million in Q2, primarily supporting growth initiatives across the business. For the full year, we still expect capital spending to be in the range of 2% to 2.5% of revenue. Our fourth PT facility in Penang remains on schedule and began ramping operations earlier this quarter -- this third quarter. Additionally, in Q3 2026, we plan to break ground on our third building in the Ayutthaya, Thailand campus. We expect construction to be completed in Q4 2027 to support the growth we're seeing in the region. Turning to working capital. Our cash conversion cycle of 59 days improved 26 days year-over-year and 8 days sequentially. Consistent with our operational discipline across the organization, the improvement in cash cycle days was broad-based among the major working capital categories. Inventory turns were within our target range of 5, while payables versus receivables improved 3 days sequentially and 16 days year-over-year. These results demonstrated our ability to support growth while continuing to improve working capital efficiency and cash generation. Please turn to Slide 11 for our third quarter guidance. For the third quarter of 2026, we are guiding revenue to a range of $755 million to $795 million, representing 14% year-over-year growth at the midpoint. We forecast non-GAAP diluted earnings per share in the range of $0.76 to $0.82. We anticipate non-GAAP gross margin of 10.5% to 10.7% and non-GAAP operating margin of 5.3% to 5.5%. GAAP expenses are projected to include approximately $8.4 million of stock-based compensation and $3.5 million to $4 million of nonoperating expenses, including amortization, restructuring and other charges. Interest and other expenses are assumed to be approximately $3 million. We remain focused on initiatives to structurally lower our tax rate over time. However, for the third quarter, we anticipate our effective tax rate will be in the range of 26% to 27%. Finally, for the quarter, we project weighted average diluted shares outstanding of approximately 36.4 million. With that, I'd like to turn the call back over to David for our outlook by market sector and closing remarks. David? David Moezidis: Thank you, Bryan. Turning to Slide 12 for our outlook by sector. Within Semi-Cap, we saw demand improve throughout the quarter, and that momentum has continued into Q3. This reflects both improving end market conditions and the benefits of program wins secured during the last downturn. We expect these conditions to continue throughout 2026 and are pleased to be ramping production in our fourth Penang PT facility to support customer demand. Looking ahead, we expect second half Semi-Cap revenue growth to accelerate versus both the first half and the prior year period. Turning to Industrial. Excluding the onetime event Bryan mentioned, revenue was slightly above expectations, delivering modest year-over-year growth. Our outlook for the sector remains unchanged. Looking further out, we continue to see significant opportunities in Industrial, reflected by very strong bookings in the quarter, which included a competitive takeaway. In Aerospace and Defense, following 2 years of approximately 20% growth, we entered 2026 expecting a transition year driven primarily by program timing within defense. While this impacted first half performance, we expect to improve in the second half over the first half. Meanwhile, we have continued to win new business. That momentum was evident in Q2, where A&D was the biggest contributor to our total bookings in the quarter. For 2026, we continue to expect revenue to be roughly consistent with the prior year. However, as new programs ramp and given the multiyear nature of this market, we expect to return to growth in A&D in 2027. Moving to Medical. We are pleased with our continued performance in the quarter, both in terms of revenue growth and new bookings. Q2 included a strong number of engineering wins across multiple customers. While engineering engagements typically are smaller than manufacturing awards, they are important indicators of future growth opportunities as they convert into broader program wins and production ramps. And finally, turning to AC&C. We delivered outstanding results driven by the production ramp of one of the AI-related wins we have previously discussed. While still early in the ramp, our visibility continues to improve, and we remain excited about the opportunities ahead. In summary, turning to Slide 13. Our performance in Q2 continues to validate our strategy, maintaining relentless focus on customer success while driving operational excellence across the enterprise. Done consistently, this amplifies the good times and helps insulate the business during the more challenging periods. For Benchmark and a growing number of our customers, demand conditions are improving, reflected in double-digit growth across most of our sectors, record bookings and a revised 2026 revenue outlook that represents a new high for the company. To fully realize this opportunity, we must continue to invest in the business, and we are, not only in production capacity, including Penang and Thailand, but also in our people and processes. We will continue aligning our investments with customer demand and growth opportunities while maintaining a strong focus on return on investment. As a result, we believe we are well positioned to drive both growth and operating leverage over the long term. 2026 has been off to a strong start, but we still have work to do. We remain focused on execution and look forward to updating you on our progress throughout the year. With that, I would like to again thank our customers, shareholders and the entire Benchmark team around the world for their continued trust, dedication and execution. Operator, we can now open for questions. Operator: Your first question is from the line of Steven Fox with Fox Advisors. Steven Fox: I had a few questions. I guess, first of all, on the Aerospace business, can you give us a little more color into the new bookings that you're talking about, especially as it relates to maybe current events in Iran or government budgets changing, et cetera? Like what kind of trends do you think you're capitalizing there? And then I had a couple of follow-ups. David Moezidis: Yes. Steven, I think it's a similar question to last quarter, right? We see the defense environment remaining strong. And there's a combination of things that lead us to continue to believe that it's going to remain strong. I think I used the word replenishment in our last call. But beyond that, we're actually winning. We're winning in the defense space, and we continue to win in space, which is something that I highlighted in our previous calls as well. So we're really, really proud by the performance of the team. And as I mentioned, the team led the way in bookings this quarter. Steven Fox: Great. That's helpful. And then on the competitive takeaway you mentioned in the Industrial market, can you give a little bit more color in terms of why you were able to have success with that customer and gain share there? David Moezidis: Yes, absolutely. So fundamentally, it comes down to execution. So a lot of credit to our operations team for executing with that customer and allowing us to work closely with the customer to bring forward new creative solutions that opened the door for us to take the business away from one of our competitors and increase our share of wallet with this particular customer. Steven Fox: Got it. And then, David, just bigger picture on what you're seeing. Obviously, there's a lot of concerns over what maybe around the corner that we're not seeing. Like can you -- what can you say about just sort of the shape of the orders or bookings or anything else that maybe a nuance that gives you confidence that there's legs to the current upturn? David Moezidis: Yes. Look, we continue to remain optimistic on the year. And as you can see, if we didn't have that optimism, we wouldn't be signaling the 13% growth for the year and a new revenue high for the company. So that in itself hopefully reflects our view. Now I also want to share with you that it's not always smooth sailing, right? We've got to work the supply chain. We've got to execute operationally, which I have a lot of confidence we're going to be able to do that. The supply chain environment is tight. I signaled that a couple of quarters ago. We started seeing that tightness in memory. So we're working the supply chain proactively. We have an excellent supply chain team that is working day and night to make sure that we're able to execute and meet our customer orders. And thus far, Steven, I'm really pleased to say we've been able to do that. Operator: Your next question is from the line of Max Michaelis with Lake Street Capital Markets. Maxwell Michaelis: Congrats on kind of the beaten guide up here and the $3 billion milestone. First question for me is kind of around the advanced computing space. I mean, you're seeing a significant ramp in AI-related revenue. I mean, the clustered AI, the on-prem cloud programs you've kind of mentioned. Can you help size up sort of the next-gen HPC opportunities, how they're different? And then sort of -- I mean, I would assume we expect to see accelerating growth in 2027 from that program starting to ramp here in Q4. But can you help size that program up versus the current ones you're currently kind of ramping here? David Moezidis: Max, it's somewhat tough for us to size it, right, because we typically don't go there. What I can tell you is you actually said it properly, we expect HPC to start picking up very late in Q4 and into 2027. So from that perspective, I think we could start seeing it contribute more in '27 than we will in '26. However, if you combine the activities that we have, just like you mentioned, in clustered AI and the on-prem business and then bolt on the HPC, we remain optimistic about the prospects of AC&C. Maxwell Michaelis: Okay. No, that makes sense. And I kind of want to go back to supply chain. Is there any data you can give us around sort of lead times and kind of the difference of what those were 90 days ago maybe? David Moezidis: It really depends on the components, right, that we're talking about. The more complex the component and it has reliance on fabs out there like a TSMC or some of the players in the space, those are the ones that you need to be a lot more thoughtful about lead times increasing. In some areas, we've seen lead times go from 3, 4, 5 months to suddenly 7, 8, 9 and in some cases, 12 months. Again, as I mentioned earlier in the call, we have a fantastic supply chain team that works very hard to make sure that we're putting the orders in place in a timely manner. Naturally, we lived through this during COVID and the whole golden screw phenomenon, so there was a lot of lessons there, and we're working hard to make sure it doesn't repeat. Again, things like memory, it stands on its own, and we're managing that as well. Maxwell Michaelis: All righty. Last one for me, and then I'll hang up the mic here. So if we go back to kind of late 2025, early 2026. I mean we're all kind of waiting for Semi to return, and I would say it has. As bookings starts to pick up strength and it clearly shows it has as well. I mean, what are your thoughts going forward in '26 and 2027? Where do you think bookings in the Semi space sort of peaks? Do you expect the strength? What are your customers saying about kind of what order trends should look like going into the back half of the year and into 2027? Or does it continue to rise from here you think? David Moezidis: Okay. Look, that's a really good question, and it has several dimensions to it with regards to the response. There is a lot of bookings that we were very successful with in '23, '24, '25, and we're now seeing the fruits of that labor, if you will. So from a bookings today, new incremental bookings, I don't want you to think that those new incremental bookings are required for the performance that we've laid out in front of us in the next couple of quarters, which we're going to continue to see that strength accelerate into the second half year with our Semi group. Now with regards to our ability to continue to be successful, what I can tell you is we've been able to increase share of wallet just in this quarter with 3 of our core customers. So we're pleased with that particular performance. So there were still bookings in the quarter with respect to Semi. So this is an area that we're really positive on. Operator: Your next question comes from Anja Soderstrom with Sidoti. Anja Soderstrom: Congrats on the great quarter here. So with the expansions in Penang and Thailand, how much revenue is that expected to support? And what's the margin profile there? And what are you expected to support? What verticals are they supporting? Bryan Schumaker: Yes. We don't give the individual revenue by factory, but it is contributing to what we're seeing over there. If you think about the Penang facility, we talked about it being PT. So if you think of the margin profile of that Semi-Cap. And then the Thailand facility is more of an EMS facility. So they're complementary to other size of factories that we have already in our portfolio. So it's in line with those, just to give you an idea from a revenue standpoint. Anja Soderstrom: Okay. And how should we think about CapEx given those expansions? Bryan Schumaker: Yes. So we talked about the 2% to 2.5% for 2026. I see that probably continuing into next year as we're doing the same thing with the new factory with Thailand ramping up kind of the build-out from Q3 to next year, Q4 time frame kind of getting that up and going. So I would think right now, at this point, that's about what I'd align with is that 2% to 2.5% for next year, too, because it will change depending on kind of where we see the growth and we continue to see growth, and we're going to invest in that growth, just to be clear. Anja Soderstrom: Okay. And then in terms of cash conversion days, you had a really nice job there for the quarter. How should we think about that going forward? Bryan Schumaker: Look, we did have a great one, and we're very happy with that. The team is doing a great job to drive that on all factors. If I look at kind of where I -- when I came in, it was the 90 and now we've gotten it down to the 59. So great momentum on that front. Yes, we could as inventory grows, but we are looking at the turns, and we got into the 5 turns, and we're going to continue to drive that to the 5 to 5.5. So again, our focus is on this cash conversion cycle, and we'll continue to drive it. Anja Soderstrom: Okay. And then how should we think about the capital allocation priorities and the fact that you didn't do any buyback for the quarter? Bryan Schumaker: Yes, that has not changed. I mean we're still -- again, the dividend is solid, not changing that thing. The dividend. We're going to continue to look at buybacks to offset dilution. That is not changing. Yes, we took a pause this quarter, but it's definitely something we're still looking at for the full year to offset dilution. Operator: Your next question is from Patrick Muth with Needham. Patrick Muth This is Patrick Muth on for Jim Ricchiuti over at Needham. I wanted to dive into a little bit about the Medical side of the business. You guys mentioned signs of a turn in Medical. Can you unpack what's driving that? Is it primarily from new program ramps -- program ramps, excuse me, underlying demand improvement? Any color on that would be helpful. And then my second question is on the OpEx trajectory. How should we start to think about your expense levels going forward? And are there any step-ups in OpEx plan to support growth? Or should we expect leverage from here? Bryan Schumaker: So on the OpEx side, I'll take that first. Yes, as we look at it, we're still going to drive leverage through that. I mean we've talked about the initiatives, some of them that we have in place. and looking at the top line, driving that, getting the utilization out of our factories and dropping it down. It was impacted this quarter with variable comp as we continue to overperform for the year. So -- but we believe for the full year and going forward to leverage that OpEx. And that's why we talked about the 1.5x to 2x EPS growth compared to the top line. So that leverage will continue. David Moezidis: Okay. Patrick, I'll address your first question. If you go back to last January, actually, it was this time exactly last year, we signaled on the call that we felt Medical is -- has bottomed, has found the bottom, if you will. And fortunately, it proved to be accurate. And we've seen Medical continue to perform really well since then. Your question is what's driving the growth in Medical? And I'd say there's 3 catalysts to it. One is the overall demand picking up. That was really a big element of it. The other thing is while the medical space was going through its, if you will, channel inventory digestion period, we worked really hard to continue to drive bookings -- and one of the bookings was also a very meaningful win for us, which I've shared on these calls, which was a competitive takeaway, which actually was a lift and shift type of an engagement, which means the time to revenue is much faster. So those are the dynamics that have helped contribute to the success of Medical over the course of exactly the last 12 months. Operator: There are no further questions at this time. I will now turn the call back to Paul Mansky for closing remarks. Paul Mansky: Thank you, Piercy, and thank you, everyone, for participating in Benchmark's Second Quarter 2026 Earnings Call. During Q3, we'll be participating in Needham's 15th Annual Virtual Industrial Tech, Robotics and Power Conference on August 17 and Sidoti's Small-Cap Conference on September 24. For updates to these and other investor conferences and events, including a replay of today's call, please refer to the Events section of our website at ir.bench.com. With that, thank you again for your support, and we look forward to speaking with you soon. Operator: This concludes today's call. Thank you for attending. You may now disconnect. 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Interested in Benchmark Electronics, Inc.? Here are five stocks we like better. Benchmark Electronics exceeded second-quarter guidance: Revenue rose 18% year over year to $756 million, while non-GAAP EPS increased 36% to $0.75. Broad-based growth and higher volumes lifted non-GAAP operating margin to 5.2%. The company raised its full-year outlook: Benchmark now expects 2026 revenue of approximately $3 billion, or about 13% growth and a record high. Advanced Computing & Communications revenue surged 71% year over year on AI-related production ramps, while Aerospace & Defense declined 12% amid program transitions. Management remains optimistic but flagged supply-chain risks: Third-quarter revenue is projected at $755 million to $795 million with non-GAAP EPS of $0.76 to $0.82. Component and memory lead times have extended to as much as seven to 12 months, although the company said it has continued meeting customer orders. Top 3 Behind-the-Scenes Electronic Component Companies to Watch Benchmark Electronics (NYSE:BHE) reported second-quarter 2026 results above its prior guidance, supported by double-digit revenue growth in four of its five operating sectors and expanding profitability. The company also raised its full-year revenue outlook to $3 billion, which would represent approximately 13% growth and a historical revenue high, according to President and Chief Executive Officer David Moezidis. Second-quarter revenue rose 18% year over year to $756 million, while non-GAAP diluted earnings per share increased 36% to $0.75. Both measures exceeded the high end of the company’s previous guidance range. Moezidis said operating income and earnings per share grew 30% and 36%, respectively, as the company pursued its goal of growing profits at 1.5 to two times the pace of revenue growth. → This Tiny AI Supplier Could Be More Important Than the Chipmakers Chief Financial Officer Bryan Schumaker said non-GAAP gross margin was 10.5%, up 30 basis points from a year earlier and 20 basis points sequentially, primarily due to higher volume. Non-GAAP operating margin rose 50 basis points year over year and 40 basis points from the first quarter to 5.2%. Higher revenue drove the operating-margin improvement, though it was partly offset by increased variable compensation expense, Schumaker said. The company’s non-GAAP effective tax rate for the quarter was 26.6%. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Revenue growth was broad-based across Benchmark’s markets: Semi-Cap: Revenue increased 17% both year over year and sequentially as momentum strengthened through the quarter. Industrial: Revenue grew 13% year over year and 20% sequentially, aided in part by revenue acceleration tied to the planned wind-down of Benchmark’s Phoenix facility. Medical: Revenue rose 22% year over year and 4% sequentially. Advanced Computing & Communications: Revenue surged 71% year over year and 21% sequentially, driven by AI-related program wins entering production. Aerospace & Defense: Revenue declined 12% year over year and 7% sequentially amid previously discussed program transitions. Despite the Aerospace & Defense revenue decline, Moezidis said the sector was the largest contributor to total bookings during the second quarter. He said Benchmark continues to win business in defense and space markets and expects 2026 Aerospace & Defense revenue to be roughly consistent with the prior year before returning to growth in 2027 as new programs ramp. → Innovative ETF Strategies That Are Paying Off This Summer Benchmark ended the quarter with $315 million in cash and $134 million in cash net of debt, as well as more than $500 million of available borrowing capacity. The company generated $35 million in operating cash flow and $22 million in free cash flow during the quarter while investing in inventory, capacity and capabilities, Schumaker said. The company returned $6 million to shareholders through dividends during the quarter. It did not repurchase shares in the period, although Schumaker said Benchmark remains focused on repurchases to offset dilution and may resume them during the full year. Capital expenditures totaled approximately $13 million in the second quarter, primarily for growth initiatives. Benchmark continues to expect full-year capital spending of 2% to 2.5% of revenue, and Schumaker said that range could continue into 2027 as the company expands its footprint. Its fourth precision technologies facility in Penang, Malaysia, began ramping operations early in the third quarter. Benchmark also expects to break ground during the third quarter on a third building at its Ayutthaya, Thailand campus. Construction is expected to be completed in the fourth quarter of 2027. The cash conversion cycle improved to 59 days, down 26 days from the year-ago period and eight days sequentially. Inventory turns were within the company’s target range of five, while the relationship between payables and receivables improved by three days sequentially and 16 days year over year. For the third quarter, Benchmark forecast revenue of $755 million to $795 million, representing 14% year-over-year growth at the midpoint. It projected non-GAAP diluted earnings per share of $0.76 to $0.82, non-GAAP gross margin of 10.5% to 10.7%, and non-GAAP operating margin of 5.3% to 5.5%. The company expects a third-quarter effective tax rate of 26% to 27%, interest and other expenses of about $3 million, and approximately 36.4 million weighted-average diluted shares outstanding. It also projected GAAP expenses to include about $8.4 million of stock-based compensation and $3.5 million to $4 million of non-operating expenses, including amortization, restructuring and other charges. Moezidis said Semi-Cap demand improved throughout the second quarter and has continued into the third quarter, reflecting stronger end-market conditions and the benefits of programs won during the prior downturn. Benchmark expects second-half Semi-Cap revenue growth to accelerate compared with both the first half and the prior-year period. In Industrial, excluding the Phoenix-related one-time effect, revenue was slightly ahead of expectations and posted modest year-over-year growth. Moezidis said bookings were strong and included a competitive business win, which he attributed to the company’s operational execution and customer collaboration. Medical-market growth has been supported by improving demand, ongoing bookings activity and a meaningful competitive “lift-and-shift” program win that reached revenue more quickly, Moezidis said. The second quarter also included engineering wins across multiple medical customers. For Advanced Computing & Communications, Benchmark said production ramp-up of an AI-related program drove the quarter’s results. Moezidis said the company expects high-performance computing activity to begin increasing late in the fourth quarter and into 2027, complementing its existing clustered AI and on-premise cloud programs. Management also noted tightening conditions in portions of the supply chain, particularly for complex components and memory. Moezidis said lead times for some components have extended from roughly three to five months to seven to 12 months, though he said the company’s supply-chain team has so far been able to meet customer orders. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Benchmark Electronics Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Revenue: $756 million, up 18% year-over-year, exceeding the high end of guidance. Non-GAAP EPS: $0.75, up 36% year-over-year, exceeding the high end of guidance. Non-GAAP Gross Margin: 10.5%, improving 30 basis points year-over-year and 20 basis points sequentially. Non-GAAP Operating Margin: 5.2%, up 50 basis points year-over-year and 40 basis points sequentially. Non-GAAP Effective Tax Rate: 26.6%. Operating Cash Flow: $35 million. Free Cash Flow: $22 million. Capital Expenditures: Approximately $13 million. Cash and Cash Equivalents: $315 million. Cash, Net of Debt: $134 million. Cash Conversion Cycle: 59 days, improving 26 days year-over-year and 8 days sequentially. Dividends Returned to Shareholders: $6 million. Semi-Cap Revenue: Grew 17% year-over-year and sequentially. Industrial Revenue: Increased 13% year-over-year and 20% sequentially. Medical Revenue: Grew 22% year-over-year and 4% sequentially. AC&C Revenue: Grew 71% year-over-year and 21% sequentially. A&D Revenue: Down 12% year-over-year and 7% sequentially. 2026 Revenue Outlook: Increased to $3 billion, representing approximately 13% growth. Q3 2026 Revenue Guidance: $755 million to $795 million, representing 14% year-over-year growth at the midpoint. Q3 2026 Non-GAAP Diluted EPS Guidance: $0.76 to $0.82. Q3 2026 Non-GAAP Gross Margin Guidance: 10.5% to 10.7%. Q3 2026 Non-GAAP Operating Margin Guidance: 5.3% to 5.5%. Warning! GuruFocus has detected 3 Warning Sign with BHE. Is BHE fairly valued? Test your thesis with our free DCF calculator. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Revenue of $756 million was up 18% year over year, exceeding the high end of guidance. Non-GAAP EPS of $0.75 grew 36% year over year, more than double the revenue growth rate. Semi-Cap revenue grew 17% year over year with momentum strengthening, and second-half growth is expected to accelerate. AC&C revenue surged 71% year over year, driven by AI-related program wins. Cash conversion cycle improved to 59 days, down 26 days year over year, reflecting strong working capital management. Aerospace and Defense (A&D) revenue declined 12% year over year due to program transitions. Supply chain tightness persists, with lead times extending to 7-12 months for complex components. Increased variable compensation expense partially offset operating margin improvements. Medical sector growth, while solid, relies on a competitive takeaway and may face sustainability risks. Capital expenditures for expansions in Penang and Thailand are expected to remain elevated at 2% to 2.5% of revenue. Q: Can you provide more color on the new bookings in the Aerospace and Defense (A&D) sector, especially regarding current events and government budgets?A: David Moezidis (President and CEO): The defense environment remains strong, driven by replenishment needs and our own success in winning new business. We continue to win in both the defense and space sectors, and the A&D team led the company in total bookings for the second quarter. Q: Can you elaborate on the competitive takeaway mentioned in the Industrial market and why you were able to gain share there?A: David Moezidis (President and CEO): The win was fundamentally driven by strong execution from our operations team. This allowed us to work closely with the customer to develop new, creative solutions, which opened the door to take business away from a competitor and increase our share of wallet with that customer. Q: Can you help size up the next-generation High-Performance Computing (HPC) opportunities in the Advanced Computing & Communications (AC&C) sector and how they differ from current programs?A: David Moezidis (President and CEO): While we don't typically size specific programs, we expect HPC to start contributing more significantly in 2027 than in 2026, with a ramp beginning very late in the fourth quarter of 2026. Combined with our existing clustered AI and on-premise business, we remain optimistic about the prospects for the AC&C sector. Q: What are your thoughts on the strength and trajectory of the Semi-Cap sector going into 2026 and 2027? Where do you see bookings peaking?A: David Moezidis (President and CEO): The strong performance we are seeing is the result of successful bookings from 2023-2025. New incremental bookings are not required for our near-term outlook. We continue to win new business, having increased our share of wallet with three core customers this quarter, and we remain very positive on the sector. Q: What is driving the turn in the Medical sector? Is it new program ramps or underlying demand improvements?A: David Moezidis (President and CEO): The growth is driven by three catalysts: 1) Overall demand picking up after the market found its bottom. 2) Continued success in driving new bookings during the digestion period. 3) A very meaningful competitive takeaway win, which was a "lift and shift" engagement, meaning it converts to revenue much faster. Q: What is the revenue capacity and margin profile for the new expansions in Penang and Thailand?A: Bryan Schumaker (CFO): We don't provide individual factory revenue. The Penang facility is a Precision Technology (PT) factory, so its margin profile aligns with the Semi-Cap sector. The Thailand facility is an EMS factory, complementary to our existing facilities. Their margins are in line with those respective business profiles. Q: How should we think about CapEx given the expansions in Penang and Thailand?A: Bryan Schumaker (CFO): For 2026, we are guiding to 2% to 2.5% of revenue. I see that level continuing into 2027 as we build out the new Thailand factory. We will continue to invest in growth as we see it. Q: How should we think about the cash conversion cycle and capital allocation priorities, given the strong improvement and the pause in buybacks?A: Bryan Schumaker (CFO): We are very happy with the improvement to 59 days from 90. We will continue to drive inventory turns to our 5 to 5.5 target. Our capital allocation priorities remain unchanged. The dividend is solid, and we will continue to look at buybacks to offset dilution, though we took a pause this quarter. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Revenue growth of 18% was driven by double-digit expansion in four of five sectors, reflecting a broad-based demand recovery and successful execution of new program ramps. The Semi-Cap sector saw momentum strengthen throughout the quarter, benefiting from both improving end-market conditions and program wins secured during the previous market downturn. AC&C performance was significantly bolstered by the production ramp of a major AI-related program, with management noting improved visibility into future AI and high-performance computing (HPC) opportunities. Operating income and EPS grew at 30% and 36% respectively, validating the strategy to drive profitability at 1.5x to 2x the pace of revenue growth through operational excellence. Medical sector strength is attributed to a combination of overall demand recovery and a successful 'lift and shift' competitive takeaway that accelerated time-to-revenue. Management increased the full-year 2026 revenue outlook to $3 billion, which would represent a historical high for the company and approximately 13% year-over-year growth. Semi-Cap revenue growth is expected to accelerate in the second half of 2026 compared to the first half, supported by the ramp of the fourth Penang PT facility. A&D is characterized as being in a 'transition year' due to defense program timing, with expectations to return to growth in 2027 as new programs ramp. Supply chain lead times for complex components have extended from 3-5 months to as much as 12 months in some cases, requiring proactive management to avoid 'golden screw' delays. Capital expenditures are projected to remain at 2% to 2.5% of revenue through 2027 to support capacity expansions in Malaysia and a new building in Thailand. Next-generation HPC opportunities are expected to begin contributing to revenue in late Q4 2026 with more meaningful impact throughout 2027. Industrial revenue growth included a one-time acceleration benefit associated with the planned wind-down of the Phoenix facility. The cash conversion cycle improved by 26 days year-over-year to 59 days, driven by disciplined inventory management and improved payables versus receivables. Management paused share buybacks in Q2 but reiterated the intent to resume buybacks for the full year to offset dilution from stock-based compensation. A third building at the Ayutthaya, Thailand campus will break ground in Q3 2026, with completion targeted for Q4 2027 to meet regional demand. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that the defense environment remains strong, driven by a combination of replenishment needs and new wins in both defense and space segments. A&D led the company in total bookings for Q2, providing confidence in the sector's recovery despite current program timing transitions. Lead times for complex components relying on major fabs have increased significantly, in some instances reaching 12 months. The company is applying lessons learned from the COVID-19 pandemic to proactively manage memory supply and avoid production bottlenecks. The recovery is attributed to the sector finding its bottom a year ago, followed by a steady digestion of channel inventory. Growth was specifically aided by a 'lift and shift' competitive win, which allowed for a faster transition to production than typical new program developments. Current performance is largely driven by wins from 2023-2025 that are now reaching production stages. Management reported increasing share of wallet with three core customers during the quarter, suggesting growth is not just market-dependent but also share-driven.

Raises Fiscal 2026 Revenue Guidance to a Record $3 Billion TEMPE, Ariz., July 29, 2026--(BUSINESS WIRE)--Benchmark Electronics, Inc. (NYSE: BHE) today announced financial results for the second quarter ended June 30, 2026. Second quarter 2026 results: Revenue of $756 million, up 18% year-over-year Diluted GAAP earnings per share of $0.55 Diluted non-GAAP earnings per share of $0.75, up 36% year-over-year Operating cash flow of $35 million with free cash flow of $22 million "Our second quarter results reflect continued momentum across the business, highlighted by revenue and earnings above the high end of our prior guidance along with another record quarter of bookings," said David Moezidis, Benchmark’s President and CEO. Moezidis continued, "Strengthening demand across our end markets, growing customer engagement, and disciplined execution are contributing to broad‑based improvement throughout the portfolio. As a result, we are again raising our full year outlook and now expect revenue growth of approximately 13%, positioning Benchmark to achieve $3 billion in annual revenue for the first time in the company’s history." Third Quarter 2026 Guidance Revenue between $755 million and $795 million Diluted GAAP earnings per share between $0.51 and $0.57 Diluted non-GAAP earnings per share between $0.76 and $0.82 Non-GAAP earnings per share guidance excludes stock-based compensation expense of approximately $8.4 million and other non-operating expenses of $3.5 million to $4.0 million, which includes restructuring, amortization of intangibles and other expenses Second Quarter 2026 Earnings Conference Call The Company will host a conference call to discuss the results today at 5:00 p.m. Eastern Time. The live webcast of the call and accompanying reference materials will be accessible by logging on to the Company’s website at www.bench.com. A replay of the broadcast will also be available on the Company’s website. About Benchmark Electronics, Inc. Benchmark provides comprehensive solutions across the entire product lifecycle by leading through its innovative technology and engineering design services, leveraging its optimized global supply chain, and delivering world-class manufacturing services in the following industries: advanced computing and communications, aerospace and defense, industrial, medical, and semiconductor capital equipment. Benchmark’s global operations include facilities in eight countries and its common shares trade on the New York Stock Exchange under the symbol BHE. Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts and may include words such as "anticipate," "believe," "intend," "plan," "project," "forecast," "strategy," "position," "continue," "estimate," "expect," "may," "will," "could," "predict," and similar expressions of the negative or other variations thereof. In particular, statements, expressed or implied, concerning the Company’s outlook and guidance for third quarter and fiscal year 2026 results, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the Company’s business strategy and strategic initiatives, the Company’s expectations regarding enterprise AI opportunities, anticipated growth in bookings, and repurchases of shares of its common stock, the Company’s expectations regarding restructuring activity and charges, stock-based compensation expense, amortization of intangibles, award or extension of any tax incentives and capital expenditures, the Company’s intentions concerning the payment of dividends, the Company’s expectations regarding the impact of inflation, tariffs and trade policies, and the Company’s positions and strategies with respect to ongoing or threatened litigation and expected outcomes, among others, are forward-looking statements. Although the Company believes these statements are based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions, that are beyond the Company’s ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, and in any of the Company’s subsequent reports filed with the Securities and Exchange Commission. Risks and uncertainties relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including continuing hostilities and tensions in the Middle East and elsewhere, trade restrictions and sanctions, tariffs and retaliatory countermeasures, the ability to utilize the Company’s manufacturing facilities at sufficient levels to cover its fixed operating costs, or write-downs or write-offs of obsolete or unsold inventory, may have resulting impacts on the Company’s business, financial condition, results of operations, and the Company’s ability (or inability) to execute on its plans. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes, including the future results of the Company’s operations, may vary materially from those indicated. Undue reliance should not be placed on any forward-looking statements. Forward-looking statements are not guarantees of performance. All forward-looking statements included in this document are based upon information available to the Company as of the date of this document, and the Company assumes no obligation to update. Non-GAAP Financial Measures Management discloses certain non‐GAAP information to provide investors with additional information to analyze the Company’s performance and underlying trends. These non-GAAP financial measures exclude restructuring charges, stock-based compensation expense, amortization of intangible assets acquired in business combinations, certain legal and other settlement losses (gains), customer insolvency losses (recoveries), asset impairments, other significant non-recurring costs and the related tax impacts, including discrete tax items, and other non-GAAP tax adjustments, of all of the above. A detailed reconciliation between GAAP results and results excluding certain items ("non-GAAP") is included in the following tables attached to this document. In situations where a non-GAAP reconciliation has not been provided, the Company was unable to provide such a reconciliation without unreasonable effort due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. Management uses non‐GAAP measures that exclude certain items in order to better assess operating performance and help investors compare results with our previous guidance. This document also references "free cash flow", a non-GAAP measure, which the Company defines as cash flow from operations less additions to property, plant and equipment and purchased software. The Company’s non‐GAAP information is not necessarily comparable to the non‐GAAP information used by other companies. Non‐GAAP information should not be viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as a measure of the Company’s profitability or liquidity. Readers should consider the types of events and transactions for which adjustments have been made. View source version on businesswire.com: https://www.businesswire.com/news/home/20260729313894/en/ Contacts For More Information, Please Contact: Benchmark Investor Relations at [email protected]

The past six months have been a windfall for Benchmark’s shareholders. The company’s stock price has jumped 60.9%, hitting $79.65 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation. Is there a buying opportunity in Benchmark, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free. We’re happy investors have made money, but we don’t have much confidence in Benchmark. Here are three reasons you should be careful with BHE, plus one stock we’d rather own. We at StockStory place the most emphasis on long-term growth, but within business services, a stretched historical view may miss recent innovations or disruptive industry trends. Benchmark’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2.1% over the last two years. Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king. Benchmark broke even from a free cash flow perspective over the last five years, giving the company limited opportunities to return capital to shareholders. Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity). Benchmark historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 7.3%, somewhat low compared to the best business services companies that consistently pump out 25%+. Benchmark isn’t a terrible business, but it doesn’t pass our quality test. After the recent rally, the stock trades at 28.8× forward P/E (or $79.65 per share). This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now. Let us point you toward a top digital advertising platform riding the creator economy. ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.