Financial Data and Key Metrics Changes - First quarter revenue was $632 million, down 4% sequentially and 6% year over year [10][11] - Non GAAP earnings per share was $0.52, above the midpoint of guidance [6][10] - Non GAAP gross margin was 10.1%, a 30 basis point decrease quarter over quarter but a 10 basis point increase year over year [10][13] - Non GAAP operating margin was 4.6%, down 50 basis points sequentially and 30 basis points year over year [10][11] Business Line Data and Key Metrics Changes - Semi cap revenue grew 18% year over year but decreased 2% quarter over quarter [11][19] - A and D sector revenue was up 15% year over year and 4% quarter over quarter [11][22] - Industrial revenue was down 2% quarter over quarter due to demand softness [11][21] - Medical revenue decreased 12% quarter over quarter, reflecting ongoing demand softness [12][22] - AC and C revenue decreased 12% quarter over quarter due to timing-related weaknesses [12][22] Market Data and Key Metrics Changes - The company has a significant U.S. manufacturing footprint at 36% and over 55% in North America [8][25] - Demand in the semi cap sector is expected to continue growing despite tariff uncertainties [19][20] - Medical sector recovery is anticipated in the second half of 2025 as inventory levels normalize [22][64] Company Strategy and Development Direction - The company is focused on optimizing supply chains for customers amid tariff-related uncertainties [5][27] - Continued investment in strategic growth areas, including a new facility in Penang, Malaysia [20][96] - The company is evaluating M&A opportunities that align with strategic plans while maintaining a focus on organic growth [28][102] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are short-term risks due to global macroeconomic uncertainties, there are also mid to long-term opportunities [25][27] - The company expects to deliver sequential growth throughout the year, barring a recession caused by tariffs [27][28] - Management expressed confidence in returning to year-over-year growth in the second half of 2025 [16][40] Other Important Information - The company generated $27 million in free cash flow in the quarter, marking the eighth consecutive quarter of positive free cash flow [6][14] - Cash balance as of March 31 was $355 million, a year-over-year increase of $59 million [14] - The company paid cash dividends of $6.1 million and repurchased $8 million of outstanding shares during the quarter [14] Q&A Session Summary Question: Are customer pauses and pull-ins creating a net headwind? - Management indicated that the situation is balancing out, with some customers pausing and others pulling in orders, leading to uncertainty but not a significant bias in either direction [31][32] Question: What is the impact of supply chain optimization on existing customers? - Management noted that some bids are taking longer due to customers evaluating their supply chains, elongating the cycle for new bookings [33][34] Question: Where is the traction seen in the industrial sector? - Management highlighted a balance of new and existing customers, with strong follow-on business and new growth in automation solutions [36] Question: Is the expected rebound in medical driven by channel replenishment or new program launches? - Management indicated that both factors are contributing, with customers working through inventory and new competitive takeaways expected to drive growth [56][57] Question: What is the expected tax rate for the second half of the year? - Management projected a slight drop in the tax rate, estimating around 24% for the year [60] Question: How quickly can the company pivot or launch new programs? - Management stated that moving a customer to an existing facility is challenging, but new programs can ramp significantly in about six months if leveraging existing manufacturing knowledge [82] Question: Are there opportunities to acquire a customer's manufacturing facility? - Management expressed openness to discussions about taking over facilities if they align with existing operations but emphasized a preference against acquiring facilities at a premium [88][90]

Financial Performance - Q1 2025 - Revenue for Q1 2025 was $632 million[9], compared to $676 million in Q1 2024[16] and $657 million in Q4 2024[16] - Non-GAAP gross margin was 10.1%[9], slightly down from 10.4% in Q4 2024[16] but up from 10.0% in Q1 2024[16] - Non-GAAP operating margin was 4.6%[9], compared to 4.9% in Q1 2024[16] and 5.1% in Q4 2024[16] - Non-GAAP EPS was $0.52[9], compared to $0.55 in Q1 2024[16] and $0.61 in Q4 2024[16] Sector Performance - Semi-Cap sector revenue was $195 million, representing 32% of total revenue[18], up 18% year-over-year[11] - Aerospace & Defense (A&D) sector revenue was $137 million, representing 22% of total revenue[18], up 15% year-over-year[11] Cash Flow and Balance Sheet - Free cash flow generated in Q1 2025 was $27 million[11], and over $140 million in the last 12 months[14] - The company has $80 million net cash positive[14] - Cash balance is $355 million[28] - The company repurchased $8 million in shares[28] Q2 2025 Guidance - Net sales are expected to be between $615 million and $665 million[31] - Non-GAAP gross margin is expected to be between 10.2% and 10.4%[31] - Non-GAAP operating margin is expected to be between 4.8% and 4.9%[31] - Diluted EPS (non-GAAP) is expected to be between $0.52 and $0.58[31]

Financial Data and Key Metrics Changes - First quarter revenue was $632 million, down 4% sequentially and 6% year over year [12][14] - Non-GAAP earnings per share (EPS) was $0.52, above the midpoint of guidance [8][12] - Non-GAAP gross margin was 10.1%, a 30 basis point decrease quarter over quarter but a 10 basis point increase year over year [12][15] - Non-GAAP operating margin was 4.6%, down 50 basis points sequentially and 30 basis points year over year [12][15] - Free cash flow generated in the quarter was $27 million, totaling slightly more than $140 million on a trailing twelve-month basis [9][16] Business Line Data and Key Metrics Changes - Semi cap revenue grew 18% year over year but decreased 2% quarter over quarter [13][20] - Aerospace and Defense (A&D) revenue was up 15% year over year and 4% quarter over quarter [13][22] - Industrial revenue was down 2% quarter over quarter due to existing customer demand softness [13][22] - Medical revenue decreased 12% quarter over quarter, reflecting demand softness in medical devices [13][22] - AC and C revenue decreased 12% quarter over quarter due to timing-related weaknesses [13][22] Market Data and Key Metrics Changes - The company noted a mixed recovery in the broader industry, particularly in semi cap and A&D sectors [20][22] - Demand in the medical sector is expected to improve in the second half of 2025 as inventory levels normalize [24][66] - The company has a significant U.S. manufacturing footprint, with 36% of its capacity in the U.S. and over 55% in North America [10][68] Company Strategy and Development Direction - The company aims to optimize supply chains for customers amid tariff-related uncertainties [6][27] - Continued investment in semi cap and A&D sectors is a focus, with a new facility in Penang, Malaysia, to support future growth [21][100] - The company is exploring M&A opportunities that align with strategic plans but remains focused on organic growth [28][109] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to revenue growth despite current headwinds [7][27] - The company anticipates mid-single-digit revenue growth in the second half of 2025 [18][44] - Management highlighted the importance of adapting to customer needs and optimizing supply chains in a dynamic environment [88][90] Other Important Information - The company paid cash dividends of $6.1 million and repurchased $8 million of outstanding shares in the quarter [16][17] - The cash balance as of March 31 was $355 million, a year-over-year increase of $59 million [16][17] Q&A Session Summary Question: Are customer pauses and pull-ins creating a net headwind? - Management indicated that customer activity is balancing out, with some customers pausing shipments while others are pulling in orders [31][32] Question: What is the outlook for existing customers optimizing their supply chains? - Management noted that some bids are taking longer due to customers evaluating their supply chains amid tariff uncertainties [34][35] Question: Where is the traction seen in the industrial sector? - Management reported a balance of new and existing customers driving growth in the industrial sector, particularly in electronic controls and automation solutions [37][38] Question: Is the first half expected to decline while the second half sees growth? - Management confirmed that the first half is expected to decline mid-single digits year over year, with growth anticipated in the second half [42][43] Question: What is the expected tax rate for the second half of the year? - The expected effective tax rate for the remainder of the year is projected to be around 24% [61][62] Question: Are inventory levels in the medical sector normalized? - Management believes that OEMs have worked through much of the inventory, leading to expected growth in the second half [65][66] Question: How quickly can new programs be launched in new facilities? - Management indicated that while moving existing customers can be challenging, new programs can ramp up significantly within six months if they are competitive takeaways [86][88] Question: Is the company considering acquiring customer manufacturing facilities? - Management expressed openness to discussions about taking over facilities but emphasized a preference for leveraging existing infrastructure rather than acquiring new factories [92][94]

Revenue and Earnings Performance - Revenue for Q1 2025 was $632 million, a decrease from $676 million in Q1 2024, representing a decline of approximately 6.5%[4] - GAAP diluted earnings per share (EPS) for Q1 2025 was $0.10, down from $0.38 in Q1 2024, a decline of 73.7%[4] - Non-GAAP diluted EPS for Q1 2025 was $0.52, compared to $0.55 in Q1 2024, a decrease of 5.5%[4] - The company reported a GAAP operating income of $12 million for Q1 2025, down from $25.5 million in Q1 2024[4] - The diluted earnings per share (GAAP) for the quarter was $0.38, compared to $0.49 in the previous quarter, indicating a decline in earnings per share[19] Cash Flow and Financial Position - Free cash flow generated in Q1 2025 was over $27 million, despite a sequential revenue decline[2] - Cash flows from operating activities provided $48,457,000, down from $137,079,000 in the previous quarter, indicating a significant decrease in operational cash generation[19] - The company reported a net cash increase of $12,842,000 for the quarter, contrasting with a net cash increase of $126,053,000 in the previous quarter[19] - Free cash flow for the three months ended March 31, 2024, was $42,554,000, a decrease from $126,053,000 in the previous quarter[19] - The company’s cash and cash equivalents at the end of the period totaled $296,055,000, compared to $283,213,000 at the beginning of the year[19] Operational Efficiency - Non-GAAP gross margin for Q1 2025 was 10.1%, slightly down from 10.0% in Q1 2024[3] - The GAAP operating margin for the quarter was 3.8%, down from 4.6% in the previous quarter, indicating a decline in operational efficiency[19] - Days in cash conversion cycle improved to 86 days in Q1 2025, down from 94 days in Q1 2024[5] Future Guidance - The company anticipates Q2 2025 revenue guidance between $615 million and $665 million[9] - Non-GAAP EPS guidance for Q2 2025 is projected to be between $0.52 and $0.58[9] Manufacturing and Compensation - Benchmark operates 10 manufacturing facilities in the U.S. and has significant global manufacturing capacity to meet customer needs[3] - Stock-based compensation expense increased to $4,397,000 for the three months ended March 31, 2025, from $2,176,000 in the previous quarter[19] Profitability - The company’s gross profit (GAAP) for the quarter was $67,408,000, down from $71,004,000 in the previous quarter, reflecting a decrease in profitability[19] - Non-GAAP income from operations for the same period was $33,107,000, compared to $38,313,000 in the previous quarter, reflecting a decline of approximately 13.4%[19]

Sales Performance - Sales for 2024 were $2.7 billion, a 6% decrease from $2.8 billion in 2023, primarily due to decreases in medical and AC&C sales [173]. - Sales to the ten largest customers represented 50% of total sales in 2024, with the largest customer, Applied Materials, accounting for 14% of total sales [174]. - Sales in the Semi-Cap sector increased by 12% to $723.2 million in 2024, driven by demand from existing and new customers [181]. - Medical sales decreased by 19% to $450.7 million in 2024, attributed to inventory rebalancing and end-demand weakness [182]. Financial Performance - Net income for 2024 was $63.3 million, or $1.72 per diluted share, compared to $64.3 million, or $1.79 per diluted share, in 2023 [203]. - Gross profit margin increased to 10.2% in 2024 from 9.5% in 2023, despite gross profit remaining relatively consistent at $270.0 million [188]. - Operating income in the Americas decreased by 37% to $40.2 million in 2024, primarily due to lower revenue [190]. - Interest expense decreased to $26.9 million in 2024 from $31.9 million in 2023, mainly due to decreased borrowings [198]. Cash Flow and Investments - Cash and cash equivalents totaled $328.0 million at December 31, 2024, up from $283.2 million at December 31, 2023 [204]. - Cash provided from operating activities was $189.2 million in 2024, consisting of $63.3 million net income and $46.1 million depreciation and amortization [207]. - Cash used in investing activities was $32.8 million in 2024, primarily for capital expenditures of $31.3 million for property, plant, and equipment [209]. - Cash used in financing activities was $109.1 million in 2024, including $600.0 million in borrowings and $674.1 million in principal payments under the Credit Agreement [210]. Capital Expenditures and Borrowings - The Company plans capital expenditures of approximately $65 million to $75 million over the next 12 months to increase production capacity [217]. - As of December 31, 2024, the Company had $123.0 million in borrowings outstanding under the term loan facility and $135.0 million under the revolving credit facility [215]. - The Company amended its Credit Agreement to increase the revolving credit facility commitments from $450 million to $550 million [214]. - As of December 31, 2024, the Company had $410.6 million available for borrowings under the Credit Agreement [217]. Shareholder Returns - The Company repurchased 0.1 million shares for $5.1 million in 2024, with an average price of $40.27 per share [220]. - Cash dividends paid in 2024 totaled $23.9 million, compared to $23.5 million in 2023 and $23.2 million in 2022 [221]. Risk Management - The company is exposed to foreign currency fluctuation risks and utilizes natural hedging and forward contracts to manage transactional exposure [241]. - Sales are primarily denominated in U.S. dollars, with foreign currency cash flows generated in certain European and Asian countries and Mexico [242]. - The company is also exposed to market risks related to interest rates on financial instruments, particularly on invested cash balances [243]. - The company does not use derivative financial instruments for speculative purposes, focusing instead on managing risks associated with foreign currency and interest rates [241]. Compliance and Obligations - The Company is in compliance with all financial covenants related to its Credit Agreement as of December 31, 2024 [216]. - The company has contractual obligations extending beyond 2024 related to lease obligations and debt arrangements, with some electronic component manufacturers experiencing lead-times exceeding 52 weeks due to supply chain constraints [236]. - The company has not guaranteed obligations of any entity outside of its wholly owned subsidiaries, maintaining a conservative financial approach [236]. Goodwill and Impairment - As of December 31, 2024, the fair value of the Americas and Asia reporting units was determined to be greater than their carrying amounts, indicating no further goodwill impairment testing was required [234]. - Changes in economic and operating conditions may lead to future goodwill impairment charges, highlighting the importance of ongoing assessments [234].

Core Insights - The individual has extensive experience in the energy industry, having worked for 22 years in various roles including engineering, planning, and financial analysis [1] - The investment strategy focuses on achieving returns that match the S&P 500 with lower volatility and higher income, emphasizing long-term holdings unless compelling reasons to sell arise [1] - The approach to investment is agnostic to asset class, market cap, sector, or yield, prioritizing total return by purchasing undervalued assets [1] Company and Industry Insights - The individual has been managing their own investment portfolio since 1998, indicating a long-term commitment to investment strategies [1] - There is a beneficial long position in BRK.B shares, suggesting confidence in the company's performance and potential for growth [2] - The article reflects personal opinions and does not represent any business relationship with companies mentioned, indicating an independent analysis [2]

Benchmark Electronics Fourth Quarter and Fiscal Year 2024 Results January 29, 2025 Today's Speakers Jeff Benck, President and CEO Bryan Schumaker, EVP and CFO * See APPENDIX 1 for a reconciliation of GAAP to non-GAAP Financial Results | 4 • Revenue of $657M was in-line with guidance - Solid year-over-year growth in Semi-Cap, A&D and Industrials - Offset by anticipated softness in Medical and AC&C • GAAP EPS of $0.50 and non-GAAP EPS of $0.61 • GAAP and non-GAAP gross margin of 10.3% and 10.4% • GAAP operati ...

Revenue Performance - Fourth quarter 2024 revenue was $657 million, a decrease of 4.9% year-over-year from $691 million, primarily due to declines in Medical and AC&C sales[1] - Full year 2024 revenue totaled $2.656 billion, down from $2.839 billion in 2023, reflecting a decrease of 6.4%[1] - The Semiconductor Capital Equipment sector contributed $198 million in revenue for Q4 2024, representing 30% of total sales, up from 24% in Q4 2023[5] - First quarter 2025 guidance projects revenue between $620 million and $660 million, with diluted GAAP earnings per share expected between $0.34 and $0.40[7] Net Income and Earnings Per Share - Net income for Q4 2024 was $18 million, compared to $18 million in Q4 2023, while full year net income was $63 million, slightly down from $64 million in 2023[1] - Diluted earnings per share for Q4 2024 were $0.50, up from $0.49 in Q4 2023, and full year diluted earnings per share were $1.72, down from $1.79 in 2023[1] - Net income for 2024 was $63,327, slightly down from $64,315 in 2023, a decrease of approximately 1.54%[18] Operating Performance - The company achieved a GAAP operating margin of 4.3% in Q4 2024, consistent with Q4 2023, and a full year operating margin of 4.1%, up from 3.9% in 2023[1] - GAAP income from operations for Q4 2024 was $28,524 million, an increase from $25,529 million in Q1 2024[20] - Non-GAAP income from operations for Q4 2024 was $33,320 million, compared to $33,107 million in Q1 2024[20] - GAAP operating margin for Q4 2024 was 4.3%, consistent with Q1 2024[20] - Non-GAAP operating margin for Q4 2024 was 5.1%, compared to 4.9% in Q1 2024[20] Cash Flow and Working Capital - The company delivered $156 million in free cash flow for the full year 2024, marking the seventh consecutive quarter of positive free cash flow[1] - Cash conversion cycle improved to 89 days in Q4 2024, down from 98 days in Q4 2023, indicating better efficiency in managing working capital[3] - Net cash provided by operating activities increased to $189,225 in 2024 from $174,294 in 2023, an increase of about 8.57%[18] - Free cash flow for Q4 2024 was $36,884 million, an increase from $42,554 million in Q1 2024[20] - Net cash provided by operations for Q4 2024 was $45,916 million, compared to $48,457 million in Q1 2024[20] Balance Sheet and Shareholder Equity - Total assets decreased from $2,274,755 in 2023 to $2,139,464 in 2024, a decline of approximately 5.95%[16] - Current assets fell from $1,635,747 in 2023 to $1,504,229 in 2024, representing a decrease of about 8.03%[16] - Total liabilities decreased from $1,195,670 in 2023 to $1,026,151 in 2024, a reduction of about 14.18%[16] - Long-term debt, net of current installments, decreased from $326,674 in 2023 to $250,457 in 2024, a decline of approximately 23.29%[16] - Shareholders' equity increased from $1,079,085 in 2023 to $1,113,313 in 2024, an increase of about 3.16%[16] - The company repurchased shares worth $5,100 in 2024, indicating a commitment to returning value to shareholders[18] Cash and Cash Equivalents - Cash and cash equivalents and restricted cash at the end of 2024 rose to $328,027 from $283,213 in 2023, an increase of approximately 15.77%[18] - The net increase in cash and cash equivalents and restricted cash for the year was $44,814, down from $75,783 in 2023, a decrease of approximately 40.94%[18]

Sales Performance - Sales for Q3 2024 were $657.7 million, a 9% decrease from $719.7 million in Q3 2023[112] - Sales for Q3 2024 decreased 9% to $657.7 million from $719.7 million in Q3 2023, with a year-to-date sales decrease of 7% to $1,999.2 million from $2,147.6 million[120] - Semi-Cap sales increased 13% to $187.4 million in Q3 2024 from $165.3 million in Q3 2023, and increased 10% to $525.2 million for the first nine months of 2024[120] - Medical sales decreased 28% to $107.1 million in Q3 2024 from $149.1 million in Q3 2023, with a year-to-date decrease of 23% to $333.4 million from $431.1 million[122] - Aerospace and Defense sales increased 2% to $102.0 million in Q3 2024 from $99.7 million in Q3 2023, and increased 22% to $316.7 million for the first nine months of 2024[123] - Sales to the top ten customers represented 52% of total sales for both the nine months ended September 30, 2024 and 2023[113] Financial Metrics - Gross profit margin for Q3 2024 was 10.1%, up from 9.6% in Q3 2023[119] - Net income margin for Q3 2024 was 2.3%, down from 2.8% in Q3 2023[119] - Income from operations for Q3 2024 was 4.3%, compared to 4.2% in Q3 2023[119] - Gross profit decreased 3% to $66.7 million in Q3 2024 from $69.1 million in Q3 2023, but increased 1% to $202.1 million for the first nine months of 2024[129] - Income from operations decreased 7% to $28.1 million in Q3 2024 from $30.3 million in Q3 2023, while increasing 4% to $80.9 million for the first nine months of 2024[130] - Net income for Q3 2024 was $15.4 million, or $0.42 per diluted share, down from $20.4 million, or $0.57 per diluted share in Q3 2023[144] - For the first nine months of 2024, net income was $44.9 million, or $1.23 per diluted share, compared to $46.8 million, or $1.30 per diluted share in the same period of 2023[144] Expenses and Charges - Restructuring charges recognized during the nine months ended September 30, 2024 amounted to $5.6 million[115] - SG&A expenses increased to $36.6 million in Q3 2024 from $35.5 million in Q3 2023, and increased to $112.0 million for the first nine months of 2024 from $111.4 million[134] - Interest expense decreased to $6.6 million in Q3 2024 from $8.5 million in Q3 2023, and decreased to $20.7 million for the first nine months of 2024 from $23.2 million[139] - Income tax expense for Q3 2024 was $5.0 million with a 24.6% effective tax rate, compared to $5.2 million and a 20.2% effective tax rate in Q3 2023[142] Cash Flow and Investments - Cash, cash equivalents, and restricted cash totaled $324.4 million as of September 30, 2024, with $318.6 million held outside the United States[146] - Cash provided from operating activities was $143.3 million during the first nine months of 2024, primarily driven by a $44.9 million net income and a $102.5 million decrease in inventories[149] - Cash used in investing activities was $23.7 million, mainly for capital expenditures of $22.6 million for property, plant, and equipment[151] - Cash used in financing activities was $81.2 million, including $455.0 million in borrowings and $507.5 million in principal payments under the Credit Agreement[152] - As of September 30, 2024, the company had $124.7 million in borrowings outstanding under the term loan facility and $155.0 million under the revolving credit facility[158] Dividends and Share Repurchase - The company declared a quarterly cash dividend of $0.17 per share, totaling $6.1 million, paid on October 11, 2024[161] - The company repurchased 0.1 million shares for $5.1 million at an average price of $40.27 per share during the three and nine months ended September 30, 2024[165] Operational Efficiency - The company has seen easing of material constraints across commodity categories, except for older technologies[113] - The company employs ERP systems and lean manufacturing principles to enhance efficiency and cost-effectiveness[108] - The company anticipates capital expenditures of approximately $60 million to $70 million over the next 12 months to increase production capacity[160] International Operations - 65% of sales in Q3 2024 were from international operations, up from 60% in Q3 2023, while 62% of sales for the first nine months of 2024 were from international operations, up from 59% in the same period of 2023[125]

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $658 million, exceeding the midpoint of guidance and showing year-over-year growth in Aerospace and Defense and semiconductor capital equipment [8][9] - Non-GAAP gross margin was 10.2%, marking the fourth consecutive quarter of margins above 10% [9][17] - Non-GAAP operating margin reached 5.3%, representing the 16th consecutive quarter of year-over-year operating margin expansion [9][37] - Non-GAAP earnings per share (EPS) was $0.57, at the higher end of the guidance range of $0.52 to $0.58 [17][24] - Free cash flow for the quarter was $29 million, bringing the trailing 12-month total to $245 million [10][20] Business Line Data and Key Metrics Changes - Semiconductor capital equipment revenue increased by 13% year-over-year, driven by improving demand and new customer wins [14][26] - Industrial revenue decreased by 2%, primarily due to reduced demand from existing customers [14] - Medical revenue declined by 28% year-over-year, impacted by inventory rebalancing and end demand weakness [15] - Aerospace and Defense (A&D) revenue grew by 2%, with strong demand in commercial aerospace and defense sectors [15][33] - Advanced Computing and Communications (AC&C) revenue decreased by 27% year-over-year, driven by the completion of large high-performance computing programs [16][34] Market Data and Key Metrics Changes - The semiconductor sector is showing signs of recovery, although the pace of the next upcycle is challenging to predict [26][28] - The medical sector continues to experience broad market weakness, particularly in medical devices, expected to persist for the next few quarters [29] - The industrial sector is showing stabilization with expectations for year-over-year growth in Q4 [52] - The A&D sector is anticipated to return to double-digit growth in Q4, supported by strong demand in defense and aerospace [33] Company Strategy and Development Direction - The company is focused on high-value sectors while maintaining operational discipline, positioning itself for a structural multiyear growth cycle in the EMS industry [12][38] - Continued investment in capacity expansion, including a new facility in Penang, is aimed at capturing incremental market share [27][28] - The company emphasizes operational improvements and efficient use of working capital to support growth and shareholder returns [40] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand has stabilized, end market softness in several sectors continues to weigh on revenue growth opportunities [9][52] - There is optimism regarding the semiconductor recovery and strong performance in the A&D sector, with expectations for growth in 2025 [26][41] - The company remains committed to supporting customer success and driving operational improvements regardless of market conditions [40] Other Important Information - The company reduced debt by $11 million during the quarter, leaving $125 million outstanding on its term loan [21] - Approximately $8 million was invested in capital expenditures to support growth and enhance capabilities [21] - The company repurchased approximately 127,000 shares at an average price of $40.27 per share, totaling $5.1 million [22][39] Q&A Session Summary Question: Are there any sectors that the company is more optimistic about now than in the last call? - Management expressed encouragement regarding the semiconductor recovery and strong performance in the A&D sector, expecting growth to pick up in Q4 [42][43] Question: How has the pricing environment been for bidding on programs? - The pricing environment has remained rational, with competition present but focused on differentiated, complex solutions [44][46] Question: What is the potential for operating margin growth when demand improves? - Management anticipates an increase of 25 to 50 basis points in operating margin with a more uniform recovery in the semiconductor sector [47][48] Question: Are there signs of improvement in underperforming markets like industrial and medical? - Management noted stabilization in the industrial sector and some green shoots, while the medical sector continues to face prolonged challenges [51][52] Question: What is the focus on engineering services within the business? - There has been a pronounced number of wins in engineering, with a focus on higher value-add services that can lead to manufacturing opportunities [55][56]