Group 1 - The company is responsible for the development of transcript-related projects [1] - The company publishes thousands of quarterly earnings calls per quarter [1] - The company is continuing to grow and expand its coverage [1]

Benchmark Electronics Conference Summary Company Overview - **Company**: Benchmark Electronics (NYSE: BHE) - **Event**: Sidoti Virtual Small Cap Conference - **Date**: September 17, 2025 Key Points Leadership Transition - David Muizidis is the incoming CEO, transitioning from Jeff Bank, who will remain as an advisor for an additional year post-retirement [5][6][60]. Growth Outlook - The company is optimistic about future growth, reporting a multiyear record high in bookings as of July [11][36]. - Focus on existing customers has been emphasized, with efforts to triple down on customer relationships leading to improved performance [12][21]. Sector Performance - **Medical Sector**: Recovery post-COVID with inventory clearing; quicker revenue realization expected from competitive takeaways [13][14]. - **Advanced Compute and Communication (ACC)**: Anticipated growth starting in Q4, driven by AI-related wins [15]. - **Aerospace and Defense (A&D)**: Strong performance noted, with continued growth in commercial air and defense sectors [16]. - **Industrial Sector**: Stabilization and growth observed, with strategic investments leading to competitive takeaways [17][18]. - **Semiconductor Capital Equipment**: Despite recent slowdowns, the company has gained market share and is well-positioned for future growth [19][20]. Competitive Landscape - Competes with tier one electronic manufacturing suppliers like Jabil, Flex, and Celestica, with a focus on maintaining market share and improving bookings [34][35][36]. - The company has successfully executed competitive takeaways through quality improvements and automation [31]. Tariff Impact - The company is well-positioned to manage tariff impacts through its global manufacturing footprint, allowing for proactive solutions for customers [39][40]. - Tariffs are generally passed on to customers, with minimal direct financial impact on the company [42]. AI and Hyperscale Engagement - The company is not directly engaging with hyperscalers but is involved in the broader AI ecosystem, leveraging capabilities in liquid cooling and semiconductor capital equipment [44][46]. - Recent wins in AI-related projects highlight the company's capabilities and strategic positioning [45][47]. Margin Improvement Drivers - Focus on complex products rather than commodity items has driven margin improvements [48]. - Optimized factory utilization and improved SG&A efficiencies are expected to contribute positively to margins as revenue normalizes [49]. Capital Allocation Strategy - Prioritization of dividends and stock buybacks, with potential for strategic acquisitions if they align with growth objectives [52][53]. - Emphasis on tuck-in acquisitions that enhance existing capabilities and customer relationships [54][55]. Inventory and Cash Flow Management - Significant improvements in cash flow and inventory management, with a goal of reducing inventory days [50][51]. - The company reported approximately $80 million in free cash flow over the last twelve months [51]. Future Outlook - The leadership team is focused on building upon the existing foundation and accelerating growth strategies [60][61]. - The company is enthusiastic about its future prospects and the talent within its leadership team [63][64].

Group 1 - Benchmark Electronics, Inc. declared a quarterly dividend of $0.17 per share [1] - The dividend is payable on October 13, 2025, to shareholders of record at the close of business on September 30, 2025 [1] - Benchmark Electronics provides comprehensive solutions across the entire product lifecycle, focusing on innovative technology and engineering design services [1]

Core Insights - Benchmark Electronics reported Q2 2025 earnings that slightly exceeded expectations, with Non-GAAP EPS at $0.55 and GAAP revenue at $642 million, although both metrics declined compared to Q2 2024 [1][2] - The company achieved a multi-year record in new bookings, indicating recovering demand, but overall performance showed stabilization rather than robust growth [1][6] Financial Performance - Non-GAAP EPS was $0.55, slightly above the $0.54 estimate, while GAAP revenue was $642 million, exceeding the consensus forecast by $3 million [1][2] - Year-over-year changes showed a decline in both Non-GAAP EPS (down 3.5%) and Non-GAAP revenue (down 3.6%) compared to Q2 2024 [2] - Operating margins decreased, with GAAP operating margin at 3.2% and Non-GAAP operating margin at 4.7%, both lower than the previous year [2][8] - Free cash flow was negative at ($15.1 million), contrasting with $47.3 million in Q2 2024 [2][8] Business Overview - Benchmark operates as an electronic manufacturing services (EMS) provider, focusing on high-complexity, regulated industries such as aerospace, defense, medical devices, and semiconductor capital equipment [3] - The company's strategy emphasizes building customer relationships, expanding design and engineering offerings, and enhancing its global manufacturing footprint [4] Sector Performance - The semiconductor capital equipment sector saw revenue of $190 million, up 10% year-over-year, while aerospace and defense revenue reached $126 million, up 15% [5] - Declines were noted in the medical and industrial sectors, with Advanced Computing & Communications revenue dropping 44% to $74 million [5] Operational Developments - The company is investing in expanding its manufacturing capacity, particularly in North America and Malaysia, with 36% of production capacity in the US [7] - Non-GAAP gross margin remained steady at 10.2%, while inventory days improved to 83 from 90 year-over-year, indicating progress in supply chain management [8] Future Guidance - For Q3 2025, Benchmark expects revenue between $635 million and $685 million, with Non-GAAP EPS projected in the range of $0.56 to $0.62 [9] - Management noted that while new bookings are a positive indicator for future demand, the conversion of these bookings into revenue may take longer due to customer planning shifts and geopolitical factors [10]

PART I—FINANCIAL INFORMATION This section presents the company's unaudited financial statements and management's analysis of its financial condition and operations [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited consolidated financial statements and notes are presented for periods ending June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's financial position as of June 30, 2025, and December 31, 2024, is presented, detailing assets, liabilities, and equity | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $2,030,845 | $2,139,464 | | Total Liabilities | $923,975 | $1,026,151 | | Total Shareholders' Equity | $1,106,870 | $1,113,313 | | Cash and cash equivalents | $264,647 | $315,152 | | Inventories | $531,986 | $553,654 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section details the company's sales, net income, EPS, and income tax expense for the three and six months ended June 30, 2025, and 2024 | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (%) | | :------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Sales | $642,335 | $665,896 | -3.5% | | Net income | $972 | $15,528 | -93.7% | | Basic EPS | $0.03 | $0.43 | -93.0% | | Diluted EPS | $0.03 | $0.43 | -93.0% | | Income tax expense | $15,635 | $4,995 | +213.0% | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (%) | | :------------------ | :-------------------------------------------- | :-------------------------------------------- | :--------- | | Sales | $1,274,099 | $1,341,471 | -5.0% | | Net income | $4,616 | $29,530 | -84.4% | | Basic EPS | $0.13 | $0.82 | -84.2% | | Diluted EPS | $0.13 | $0.81 | -84.0% | | Income tax expense | $20,385 | $10,092 | +102.0% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents comprehensive income, foreign currency translation adjustments, and unrealized gains/losses on derivatives | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (%) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Comprehensive income | $11,010 | $11,646 | -5.5% | | Foreign currency translation adjustments | $7,066 | $(523) | N/A | | Unrealized gain (loss) on derivatives, net of tax | $2,852 | $(3,425) | N/A | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (%) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :--------- | | Comprehensive income | $18,796 | $26,888 | -30.1% | | Foreign currency translation adjustments | $10,296 | $(2,060) | N/A | | Unrealized gain (loss) on derivatives, net of tax | $3,684 | $(691) | N/A | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section outlines changes in total shareholders' equity, net income, other comprehensive income, dividends, and share repurchases | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Total Shareholders' Equity | $1,106,870 | $1,113,313 | | Net income (YTD) | $4,616 | $29,530 | | Other comprehensive income (YTD) | $14,180 | $(2,642) | | Dividends declared (YTD) | $(12,241) | $(11,905) | | Shares repurchased and retired (YTD) | $(15,995) | $0 | | Stock-based compensation expense (YTD) | $9,732 | $6,361 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details cash flows from operating, investing, and financing activities, and the period-end cash balance | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (%) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :--------- | | Net cash provided by operating activities | $28,680 | $104,274 | -72.5% | | Net cash used in investing activities | $(16,398) | $(15,812) | +3.7% | | Net cash used in financing activities | $(85,415) | $(58,892) | +45.0% | | Cash, cash equivalents and restricted cash at end of period | $264,647 | $309,865 | -14.6% | - Principal payments on credit agreement increased to **$446,641 thousand in H1 2025** from $361,641 thousand in H1 2024[21](index=21&type=chunk) - Share repurchases amounted to **$15,995 thousand in H1 2025**, compared to none in H1 2024[21](index=21&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, financial instruments, and other relevant financial information [Note 1 – Basis of Presentation](index=9&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation) This note describes the company's business, services, market sectors, and global manufacturing operations - Benchmark Electronics, Inc. provides advanced manufacturing services, including design and engineering services and technology solutions, to original equipment manufacturers (OEMs)[23](index=23&type=chunk) - The company serves market sectors such as industrial, aerospace and defense (A&D), medical, semiconductor capital equipment (Semi-Cap), and advanced computing and communications (AC&C)[23](index=23&type=chunk) - Manufacturing operations are located in the Americas (United States and Mexico), Asia, and Europe[23](index=23&type=chunk) [Note 2 – New Accounting Pronouncements](index=9&type=section&id=Note%202%20%E2%80%93%20New%20Accounting%20Pronouncements) This note discusses the company's evaluation of recently issued accounting standards and their potential impact on financial statements - The company is evaluating the impact of ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective for annual periods beginning after December 15, 2024[26](index=26&type=chunk) - The company is evaluating the impact of ASU 2024-03, 'Disaggregation of Income Statement Expenses,' effective for annual periods beginning after December 15, 2026[27](index=27&type=chunk) - No other recently issued accounting standards are expected to have a material impact on the company's financial statements[28](index=28&type=chunk) [Note 3 – Inventories](index=9&type=section&id=Note%203%20%E2%80%93%20Inventories) This note provides a breakdown of inventory by category, including raw materials, work in process, and finished goods | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------- | :----------------------------- | :------------------------------- | | Raw materials | $509,158 | $528,424 | | Work in process | $19,107 | $18,761 | | Finished goods | $3,721 | $6,469 | | **Total inventories** | **$531,986** | **$553,654** | [Note 4 – Goodwill and Other Intangible Assets](index=10&type=section&id=Note%204%20%E2%80%93%20Goodwill%20and%20Other%20Intangible%20Assets) This note details the carrying amounts of goodwill and other intangible

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $642 million, up 2% sequentially and at the midpoint of prior guidance [10] - Non-GAAP EPS was $0.55, also at the midpoint of prior guidance [10] - Non-GAAP gross margin was 10.2%, up 10 basis points sequentially and flat year over year [10] - Non-GAAP operating margin was 4.7%, up 10 basis points sequentially [10] - Cash balance decreased by $90 million from Q1 to $265 million, with a free cash outflow of $15 million during the quarter [13][15] Business Line Data and Key Metrics Changes - Semi cap revenue decreased 2% quarter over quarter but grew 11% year over year [11] - Industrial revenue was up 4% quarter over quarter and flat year over year [11] - A&D revenue increased 4% quarter over quarter and 16% year over year [11] - Medical revenue was up 6% quarter over quarter but down low single digits year over year [11] - AC and C revenue was flat quarter over quarter and down considerably year over year [11] Market Data and Key Metrics Changes - The semi cap sector is experiencing a slower recovery due to trade restrictions and tariff uncertainties, but is expected to outperform overall market growth [19] - The industrial sector showed mid single-digit sequential growth, with improvements in test and measurement and controls [20] - A&D sector is expected to maintain strong double-digit growth, driven by stable commercial air and strong defense demand [21] - Medical sector is anticipated to see sustained growth through the second half of the year, overcoming previous inventory challenges [21] Company Strategy and Development Direction - The company is focused on maintaining a customer-first approach and leveraging vertical integration to differentiate in the market [26] - Continued investments in semi cap and A&D sectors are expected to drive long-term growth [19][21] - The company successfully refinanced its debt, extending maturity to June 2030, and repatriated significant cash from overseas [8][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth in 2025, supported by strong bookings and a recovering market [26] - The company is managing spending prudently to protect profitability and free cash flow while supporting dividends and share repurchases [26] - There is confidence in the long-term growth potential of the semi cap industry, with expectations of a $1 trillion market by 2030 [19] Other Important Information - The company repatriated $152 million of cash from China and Thailand, using $95 million to pay down debt [14] - The cash conversion cycle improved to 85 days, with inventory days down six days sequentially [15] Q&A Session Summary Question: Can you provide more perspective on the recovery in AC and C? - Management highlighted their experience in liquid cooling and the complexity of high-performance computing systems, expecting growth to ramp in Q4 and into 2026 [31][36] Question: How much of the semi cap market challenges are due to political factors? - Management indicated that both capital spending adjustments and government restrictions are impacting recovery, but they remain optimistic about long-term growth [37][38] Question: Can you break down the sequential growth in the medical segment? - Most growth is attributed to the base business recovering from inventory challenges, with significant new bookings contributing as well [46][72] Question: What are the expectations for the aerospace and defense sector? - Management noted stabilization in commercial air travel and solid demand across various parts of the industry, with less exposure to Boeing [66] Question: How do you expect to achieve inventory improvements? - Focus on operational discipline and better systems to optimize inventory days, targeting inventory turns of 5 to 5.5 [60][62]

Second Quarter 2025 Financial Performance - Revenue reached $642 million[9] - Non-GAAP gross margin was 10.2%[9] - Non-GAAP operating margin was 4.7%[9] - Non-GAAP EPS was $0.55[9] Sector Performance (Q/Q Growth) - Semi-Cap sector sales were $190 million, up 17%[18] - AC&C sector sales were $126 million, up 30%[18] - Industrial sector sales were $74 million, up 20%[18] - Medical sector sales were $110 million, down 2.4%[18] - Aerospace & Defense sector sales were $142 million, up 3.6%[18] Balance Sheet and Cash Flow - Cash balance was $265 million[24] - Senior Secured Term Loan was $150 million[24] - Revolver drawn amount was $60 million[24] - Available Revolver borrowing capacity was $486 million[24] - Leverage ratio was 0.3x[24] - Repatriated $151.6 million, using $95 million to pay down the revolver[26] Third Quarter 2025 Guidance - Revenue is expected to be between $635 million and $685 million[28] - Non-GAAP gross margin is expected to be between 10.2% and 10.4%[28] - Non-GAAP diluted EPS is expected to be between $0.56 and $0.62[28]

Executive Summary & Second Quarter 2025 Results Benchmark reported strong Q2 2025 results with sequential growth, record bookings, and key financial highlights [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Overview) Benchmark reported Q2 2025 results validating its strategy, showing sequential growth across most sectors, with continued strength in A&D and recovery in Industrial and Medical. The company achieved a multi-year record in new bookings and expects accelerating momentum to drive future growth and operational leverage - Sequential growth across most sectors, with continued strength in **A&D** and solid recovery in the **Industrial** and **Medical** sectors[2](index=2&type=chunk) - Achieved a **multi-year record in new bookings** during the quarter[2](index=2&type=chunk) - Management is confident that **accelerating momentum** will drive **growth** and **operational leverage** in the coming quarters[3](index=3&type=chunk) [Key Financial Highlights (Q2 2025)](index=1&type=section&id=Key%20Financial%20Highlights%20%28Q2%202025%29) For Q2 2025, Benchmark reported revenue of $642 million. GAAP operating income was $20 million with diluted EPS of $0.03, while non-GAAP operating income was $30 million with diluted EPS of $0.55 Q2 2025 Summary GAAP and Non-GAAP Financial Items (Amounts in millions, except per share data) | Metric | June 30, 2024 | March 31, 2025 | June 30, 2025 | | :--- | :--- | :--- | :--- | | **GAAP Items** | | | | | Revenue | $666 | $632 | $642 | | Gross Margin | 10.2% | 10.0% | 10.1% | | Operating Margin | 4.1% | 1.9% | 3.2% | | Diluted EPS | $0.43 | $0.10 | $0.03 | | **Non-GAAP Items** | | | | | Revenue | $666 | $632 | $642 | | Gross Margin | 10.2% | 10.1% | 10.2% | | Operating Margin | 5.1% | 4.6% | 4.7% | | Diluted EPS | $0.57 | $0.52 | $0.55 | - Revenue for Q2 2025 was **$642 million**[4](index=4&type=chunk) - GAAP Operating Income was **$20 million** and GAAP earnings per share was **$0.03**[4](index=4&type=chunk) - Non-GAAP Operating Income was **$30 million** and Non-GAAP earnings per share was **$0.55**[4](index=4&type=chunk) Operational Performance The company's operational performance in Q2 2025 was characterized by sector shifts and improved cash conversion efficiency [Industry Sector Update](index=2&type=section&id=Industry%20Sector%20Update) In Q2 2025, Semi-Cap remained the largest sector at 30% of total revenue, though slightly down from Q1 2025. A&D showed continued growth, increasing to 20% of revenue, while Industrial and Medical maintained their share at 22% and 17% respectively, indicating recovery. AC&C remained stable at 11% Q2 2025 Industry Sector Revenue (in millions) | Sector | June 30, 2024 | March 31, 2025 | June 30, 2025 | | :--- | :--- | :--- | :--- | | Semi-Cap | $172 (26%) | $195 (32%) | $190 (30%) | | Industrial | $142 (21%) | $137 (22%) | $142 (22%) | | A&D | $109 (16%) | $122 (19%) | $126 (20%) | | Medical | $111 (17%) | $104 (16%) | $110 (17%) | | AC&C | $132 (20%) | $74 (11%) | $74 (11%) | | Total | $666 (100%) | $632 (100%) | $642 (100%) | - Semi-Cap revenue decreased sequentially from **$195 million (32%)** in Q1 2025 to **$190 million (30%)** in Q2 2025[5](index=5&type=chunk) - A&D revenue continued to grow sequentially from **$122 million (19%)** in Q1 2025 to **$126 million (20%)** in Q2 2025[5](index=5&type=chunk) - Industrial and Medical sectors showed solid recovery, with Industrial revenue increasing from **$137 million to $142 million** and Medical from **$104 million to $110 million** sequentially[5](index=5&type=chunk) [Cash Conversion Cycle](index=2&type=section&id=Cash%20Conversion%20Cycle) Benchmark improved its cash conversion cycle (CCC) to 85 days in Q2 2025, down from 86 days in Q1 2025 and 90 days in Q2 2024, primarily driven by a reduction in days in inventory Cash Conversion Cycle (Days) | Metric | June 30, 2024 | March 31, 2025 | June 30, 2025 | | :--- | :--- | :--- | :--- | | Days in accounts receivable | 51 | 53 | 52 | | Days in contract asset | 25 | 25 | 25 | | Days in inventory | 90 | 89 | 83 | | Days in accounts payable | (52) | (61) | (55) | | Days in advance payments from customers | (24) | (20) | (20) | | Days in cash conversion cycle | 90 | 86 | 85 | - Days in inventory decreased from **89 days** in Q1 2025 to **83 days** in Q2 2025[6](index=6&type=chunk) - Days in accounts payable improved from **(61) days** in Q1 2025 to **(55) days** in Q2 2025[6](index=6&type=chunk) Outlook and Company Information This section provides Q3 2025 financial guidance, company overview, and investor relations details [Third Quarter 2025 Guidance](index=2&type=section&id=Third%20Quarter%202025%20Guidance) For Q3 2025, Benchmark expects revenue between $635 million and $685 million. Diluted GAAP EPS is projected to be $0.28 - $0.34, and diluted non-GAAP EPS between $0.56 - $0.62, excluding specific non-operating expenses - Revenue guidance for Q3 2025 is between **$635 million - $685 million**[9](index=9&type=chunk) - Diluted GAAP earnings per share guidance for Q3 2025 is between **$0.28 - $0.34**[9](index=9&type=chunk) - Diluted non-GAAP earnings per share guidance for Q3 2025 is between **$0.56 - $0.62**, excluding stock-based compensation expense and other non-operating expenses[9](index=9&type=chunk) [About Benchmark Electronics, Inc.](index=2&type=section&id=About%20Benchmark%20Electronics%2C%20Inc.) Benchmark provides comprehensive solutions across the entire product life cycle, including technology and engineering design services, global supply chain management, and world-class manufacturing. It serves industries such as semiconductor capital equipment, industrial, medical, aerospace and defense, and advanced computing and communications, operating globally in seven countries - Benchmark provides **comprehensive solutions** across the entire product life cycle, from concept through design to global delivery and support[2](index=2&type=chunk)[8](index=8&type=chunk) - Serves industries including **semiconductor capital equipment (Semi-Cap), industrial, medical, aerospace and defense (A&D), and advanced computing and communications (AC&C)**[8](index=8&type=chunk) - Operates globally with facilities in **seven countries** and its common shares trade on the New York Stock Exchange under the symbol BHE[8](index=8&type=chunk) [Earnings Conference Call & Investor Relations](index=2&type=section&id=Earnings%20Conference%20Call%20%26%20Investor%20Relations) The company hosted a conference call on July 30, 2025, to discuss Q2 results, with a webcast and replay available on its website. Investor relations contact information is provided for further inquiries - A conference call was held on **July 30, 2025, at 5:00 p.m. Eastern Time**, with a live webcast and replay available on the company's website[7](index=7&type=chunk) - Investor Relations contact is **Paul Mansky at 1-623-300-7052 or paul.mansky@bench.com**[9](index=9&type=chunk) Disclosures and Non-GAAP Information This section outlines forward-looking statement caveats and the rationale for using non-GAAP financial measures [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements regarding future results, strategy, and financial performance, which are subject to risks and uncertainties such as customer demand fluctuations, supply chain constraints, and geopolitical factors - Statements concerning **Q3 and fiscal year 2025 results**, future operating results, business strategy, and other financial expectations are forward-looking statements[10](index=10&type=chunk) - These statements involve **risks, uncertainties, and assumptions** beyond the Company's ability to control or predict, including customer demand fluctuations, supply chain constraints, inflationary pressures, and geopolitical uncertainties[10](index=10&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) Management uses non-GAAP measures to provide additional insight into performance by excluding specific items like restructuring charges, stock-based compensation, and amortization of intangibles. These measures are not a substitute for GAAP results but help investors compare performance with previous guidance - Non-GAAP financial measures exclude **restructuring charges, stock-based compensation expense, amortization of intangible assets, certain legal and other settlement losses, customer insolvency losses, asset impairments, and related tax impacts**[11](index=11&type=chunk) - Management uses non-GAAP measures to better assess operating performance and help investors compare results with previous guidance[11](index=11&type=chunk) - Non-GAAP information should not be viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP[11](index=11&type=chunk) Condensed Consolidated Financial Statements This section presents the company's Q2 2025 income, balance sheet, and cash flow statements [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q2 2025, sales were $642.3 million, a decrease from $665.9 million in Q2 2024. Net income significantly declined to $0.97 million from $15.5 million year-over-year, resulting in diluted EPS of $0.03 Condensed Consolidated Statements of Income (Amounts in Thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Sales | $665,896 | $642,335 | $1,341,471 | $1,274,099 | | Cost of sales | $597,946 | $577,563 | $1,206,113 | $1,146,147 | | Gross profit | $67,950 | $64,772 | $135,358 | $127,952 | | Income from operations | $27,253 | $20,486 | $52,782 | $32,245 | | Net income | $15,528 | $972 | $29,530 | $4,616 | | Diluted EPS | $0.43 | $0.03 | $0.81 | $0.13 | - Sales decreased by **3.5%** year-over-year for the three months ended June 30, 2025, from **$665.9 million** to **$642.3 million**[14](index=14&type=chunk) - Net income for the three months ended June 30, 2025, was **$972 thousand**, a significant decrease from **$15.5 million** in the prior year period[14](index=14&type=chunk) - Diluted EPS for Q2 2025 was **$0.03**, down from **$0.43** in Q2 2024[14](index=14&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $2.03 billion, down from $2.14 billion at December 31, 2024. Current assets decreased, primarily due to lower cash and accounts receivable, while total liabilities also decreased, leading to a slight reduction in shareholders' equity Condensed Consolidated Balance Sheets (In Thousands) | Metric | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $315,152 | $264,647 | | Accounts receivable, net | $412,458 | $369,246 | | Inventories | $553,654 | $531,986 | | Total current assets | $1,504,229 | $1,396,990 | | Total assets | $2,139,464 | $2,030,845 | | **Liabilities & Equity** | | | | Total current liabilities | $649,099 | $592,150 | | Total liabilities | $1,026,151 | $923,975 | | Shareholders' equity | $1,113,313 | $1,106,870 | - Total assets decreased from **$2.14 billion** at December 31, 2024, to **$2.03 billion** at June 30, 2025[16](index=16&type=chunk) - Cash and cash equivalents decreased by approximately **$50.5 million** from December 31, 2024, to June 30, 2025[16](index=16&type=chunk) - Total liabilities decreased by approximately **$102.2 million**, primarily driven by reductions in current liabilities and long-term debt[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities significantly decreased to $28.7 million from $104.3 million in the prior year. This was largely offset by cash used in financing activities, including share repurchases and net debt activity, resulting in a net decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (In Thousands) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Net income | $29,530 | $4,616 | | Net cash provided by operating activities | $104,274 | $28,680 | | Net cash used in investing activities | $(15,812) | $(16,398) | | Net cash used in financing activities | $(58,892) | $(85,415) | | Net increase (decrease) in cash and cash equivalents and restricted cash | $26,652 | $(63,380) | | Cash and cash equivalents and restricted cash at end of period | $309,865 | $264,647 | - Net cash provided by operating activities for the six months ended June 30, 2025, was **$28.7 million**, a substantial decrease from **$104.3 million** in the same period of 2024[18](index=18&type=chunk) - Share repurchases amounted to **$16.0 million** for the six months ended June 30, 2025, compared to none in the prior year[18](index=18&type=chunk) - Net cash used in financing activities increased to **$85.4 million** for the six months ended June 30, 2025, from **$58.9 million** in the prior year[18](index=18&type=chunk) Reconciliation of GAAP to Non-GAAP Financial Results This section details adjustments made to reconcile GAAP and non-GAAP financial performance for Q2 2025 [Non-GAAP Adjustments and Impact](index=7&type=section&id=Non-GAAP%20Adjustments%20and%20Impact) The reconciliation highlights significant adjustments from GAAP to non-GAAP results, including restructuring charges, stock-based compensation, amortization of intangibles, and legal settlement losses. These adjustments notably increased non-GAAP net income and diluted EPS compared to GAAP figures Reconciliation of GAAP to Non-GAAP Financial Results (Three Months Ended June 30, 2025) | Metric | GAAP (Jun 30, 2025) | Adjustments | Non-GAAP (Jun 30, 2025) | | :--- | :--- | :--- | :--- | | Income from operations | $20,486 | $9,588 | $30,074 | | Operating margin | 3.2% | | 4.7% | | Gross profit | $64,772 | $514 | $65,286 | | Gross margin | 10.1% | | 10.2% | | Net income | $972 | $19,020 | $19,992 | | Diluted EPS | $0.03 | $0.52 | $0.55 | - Non-GAAP income from operations for Q2 2025 was **$30.1 million**, significantly higher than GAAP income from operations of **$20.5 million**, primarily due to adjustments for restructuring, stock-based compensation, and legal settlement losses[21](index=21&type=chunk) - Non-GAAP diluted EPS for Q2 2025 was **$0.55**, compared to GAAP diluted EPS of **$0.03**, reflecting the impact of various non-GAAP adjustments, including a **$9.2 million income tax adjustment**[21](index=21&type=chunk) - Free cash flow for the six months ended June 30, 2025, was **$12.2 million**, a decrease from **$89.9 million** in the prior year period[21](index=21&type=chunk)

Summary of Benchmark Electronics Conference Call Company Overview - **Company**: Benchmark Electronics - **Industry**: Electronics and Precision Technologies Manufacturing - **Market Capitalization**: $2.7 billion [3] Key Financial Highlights - **Free Cash Flow**: $140 million over the last twelve months, with a gross margin greater than 10% for six consecutive quarters [4][11] - **Net Cash**: $79 million at the end of Q1 [4][19] - **Revenue**: $632 million in Q1, in line with guidance [13] - **Gross Margin**: 10.1% in Q1, slightly up from 10.0% year-over-year [14] Operational Insights - **Global Manufacturing Footprint**: 21 locations, with 55% in the Americas and 36% in the U.S. [6] - **Employee Count**: 12,500 associates, including 420 engineers [4] - **Focus on Inventory Management**: Reduced inventory days from 94 to 89, aiming for 5-5.5 turns [20] Sector Performance - **Medical Sector**: 12% decline quarter-over-quarter due to demand softness, expected recovery in the latter half of the year [16][24] - **Aerospace and Defense**: 4% growth quarter-over-quarter, driven by strong defense demand [15][22] - **Industrial Sector**: Slight decline of 2% quarter-over-quarter, but positive outlook for growth [15][22] - **Semi Cap Sector**: Revenue decreased by 2%, but year-over-year growth of 18% indicates market share gains [14] Strategic Focus - **Outsourcing Trend**: Continued growth expected in outsourcing, particularly in industrial and medical sectors [8][30] - **Tariff Management**: Minimal impact from tariffs as they are considered a pass-through, with 36% U.S. footprint providing stability [12][13] - **Future Growth Areas**: Anticipated growth in semi cap and industrial sectors, with ongoing investments in technology and capacity [21][22] Capital Allocation and Shareholder Returns - **Dividends**: Commitment to maintaining dividends, with a focus on returning capital to shareholders [18][47] - **Share Buybacks**: $8 million in shares repurchased in Q1, aimed at offsetting dilution [19][47] - **M&A Strategy**: No recent acquisitions, focusing on organic growth and existing customer base [48][49] Conclusion - **Outlook**: Optimistic about future growth, particularly in semi cap and industrial sectors, while maintaining operational efficiency and margin stability [28][30]

Sales Performance - Sales for Q1 2025 were $631.8 million, a 6% decrease from $675.6 million in Q1 2024[109] - Total sales for Q1 2025 were $631.8 million, a decrease of 6.5% from $675.6 million in Q1 2024[121] - Semiconductor Capital Equipment sales increased by 18% to $195.1 million from $165.9 million in Q1 2024[117] - Aerospace and Defense sales increased by 15% to $121.9 million from $105.8 million in Q1 2024[118] - Medical sales decreased by 10% to $103.6 million from $114.7 million in Q1 2024[119] - Advanced Computing and Communications sales decreased by 50% to $74.5 million from $148.0 million in Q1 2024[119] - Sales in the Americas decreased by 24% to $284.3 million, primarily due to softness in AC&C and semi-cap sectors[121] - Sales in Asia increased by 10% to $284.0 million, driven by higher demand in the semi-cap sector[122] - Sales in Europe increased by 7% to $86.3 million, attributed to higher demand in the A&D and industrial sectors[123] - Sales to the top ten customers represented 54% of total sales for both Q1 2025 and Q1 2024[110] Financial Metrics - Gross profit margin for Q1 2025 was 10.0%, unchanged from Q1 2024[115] - Gross profit decreased by 6% to $63.2 million, with a gross profit margin remaining flat at 10.0%[124] - Net income for Q1 2025 was 0.6%, down from 2.0% in Q1 2024[115] - Income from operations decreased by 54% to $11.8 million, with a significant loss of $4.4 million reported in the Americas[125] Expenses - Selling, general and administrative expenses increased to 6.1% of sales in Q1 2025 from 5.5% in Q1 2024[115] - SG&A expenses increased to $38.8 million, primarily due to higher stock-based compensation and professional services[127] Cash and Capital Expenditures - Cash provided from operating activities was $31.5 million, with working capital reported at $0.9 billion[138] - As of March 31, 2025, the company had $355.3 million in cash and cash equivalents, including $344.0 million held outside the U.S.[136] - The company plans capital expenditures of approximately $60 million to $70 million over the next 12 months to increase production capacity[144] Debt and Interest Rate Management - As of March 31, 2025, the company had $121.4 million outstanding on the floating rate term loan facility[155] - The company has an interest rate swap agreement with a notional amount of $121.4 million and a fixed interest rate of 4.039%[155] - The interest rate swap agreement is designated as a cash flow hedge, converting floating rate interest expense to fixed interest rate expense[155] - The company is exposed to market risk for changes in interest rates on its financial instruments, particularly related to invested cash balances[154] - The company is also exposed to interest rate risk on borrowings under its Credit Agreement[155] Risk Management - The company mitigates default risk by generally investing in investment grade securities[154] - The company does not use derivative financial instruments in its investing activities[154] - The company places cash and cash equivalents and investments with various major financial institutions to protect invested principal funds[154] - Additional information regarding forward currency exchange contracts and interest rate swap agreements can be found in the financial statements[156]