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]

Revenue Performance - Revenue for Q3 2024 was $658 million, a decrease from $720 million in Q3 2023, representing a year-over-year decline of approximately 8.6%[3] - The company expects Q4 2024 revenue to be between $640 million and $680 million, with diluted GAAP earnings per share guidance of $0.40 to $0.46[7] - Revenue from the Semiconductor Capital Equipment sector was $188 million, accounting for 28% of total sales, an increase from 23% in Q3 2023[6] Earnings and Profitability - GAAP diluted earnings per share for Q3 2024 were $0.42, down from $0.57 in Q3 2023, reflecting a decrease of approximately 26.3%[3] - Non-GAAP diluted earnings per share for Q3 2024 were $0.57, unchanged from Q2 2024 but down from $0.65 in Q3 2023[3] - Net income for the third quarter of 2024 was $44,904,000, compared to $46,763,000 in the same period of 2023, representing a decrease of about 3.9%[18] - GAAP income from operations for Q3 2024 was $28,105 million, an increase from $25,529 million in Q4 2023[20] - Non-GAAP income from operations reached $34,851 million, compared to $33,107 million in Q4 2023, reflecting a growth of 5.3%[20] - GAAP operating margin improved to 4.3% in Q3 2024, up from 3.8% in Q4 2023[20] - Net income (GAAP) for Q3 2024 was $15,374 million, a decrease from $20,412 million in Q3 2023[20] - Non-GAAP net income was $20,714 million, slightly down from $23,293 million in Q3 2023[20] - Diluted earnings per share (GAAP) for Q3 2024 was $0.42, compared to $0.49 in Q3 2023[20] - Free cash flow for the period was $39,036 million, a significant decrease from $137,079 million in Q3 2023[20] - Gross profit (GAAP) was $66,741 million, down from $71,004 million in Q3 2023[20] - Non-GAAP gross profit was $67,154 million, slightly lower than $71,420 million in Q3 2023[20] Cash Flow and Working Capital - The company generated positive free cash flow of $29 million in Q3 2024, contributing to a total of $245 million over the last 12 months[3] - Net cash provided by operating activities increased significantly to $143,309,000 in September 2024 from $37,214,000 in September 2023, marking an increase of approximately 284.5%[18] - The company reported a significant increase in cash flows from operating activities, driven by improved working capital management[18] - Cash and cash equivalents at the end of the period increased to $324,423,000 from $260,760,000, reflecting an increase of approximately 24.4%[18] Asset and Liability Management - Total current assets decreased from $1,635,747,000 in December 31, 2023 to $1,508,707,000 as of September 30, 2024, a decline of approximately 7.8%[16] - Total liabilities decreased from $1,195,670,000 in December 31, 2023 to $1,046,321,000 as of September 30, 2024, a reduction of about 12.5%[16] - Current liabilities decreased from $713,547,000 in December 31, 2023 to $639,131,000 as of September 30, 2024, a decrease of approximately 10.4%[16] - Long-term debt, net of current installments, decreased from $326,674,000 in December 31, 2023 to $272,000,000 as of September 30, 2024, a reduction of about 16.7%[16] - Inventories decreased from $683,801,000 in December 31, 2023 to $581,901,000 as of September 30, 2024, a decline of about 14.9%[16] Operational Efficiency - The cash conversion cycle improved to 90 days in Q3 2024, down from 105 days in Q3 2023[4] - The company has experienced a 16th consecutive quarter of non-GAAP operating margin expansion year-over-year[3] - Future growth will be supported by the new CFO, Bryan Schumaker, who is expected to drive operational excellence[4] Other Financial Activities - Stock-based compensation expense for Q4 2024 is expected to be $3.5 million, with amortization of intangible assets at $1.2 million[8] - The company engaged in share repurchases amounting to $5,101,000 during the period[18] - The company incurred restructuring charges of $795 million in Q3 2024, compared to $2,899 million in Q3 2023[20]

Financial Results - Benchmark Electronics reported third quarter 2024 revenue of $658 million, a decrease from $666 million in the previous quarter and $720 million year-over-year [1][2][7] - The company generated net cash provided by operations of $39 million and positive free cash flow of $29 million [1][2] - GAAP gross margin was 10.1%, while non-GAAP gross margin was 10.2% [1][2][21] - GAAP operating margin was 4.3%, and non-GAAP operating margin was 5.3% [1][2][21] - GAAP earnings per share (EPS) was $0.42, and non-GAAP EPS was $0.57 [1][2][21] Year-over-Year Comparison - Revenue decreased year-over-year primarily due to declines in Medical and Advanced Computing and Communications (AC&C) sales, partially offset by increases in Semi-Cap and Aerospace & Defense (A&D) sales [7] - Net income for the third quarter was $15 million, down from $20 million in the same quarter last year [2][7] - Non-GAAP net income remained stable at $21 million compared to the previous quarter but decreased from $23 million year-over-year [2][7] Cash Conversion Cycle - The cash conversion cycle days remained at 90 days, down from 105 days a year ago [4] - Accounts receivable days improved to 51 days from 60 days year-over-year [4] - Inventory days decreased to 89 days from 100 days year-over-year [4] Industry Sector Update - Revenue by industry sector for the third quarter included Semi-Cap at $188 million (28% of sales), Complex Industrials at $151 million (23%), Medical at $107 million (16%), and A&D at $102 million (16%) [5][6][7] - The decline in revenue was primarily attributed to decreases in AC&C and Medical sales, while Semi-Cap sales saw an increase [7] Fourth Quarter Guidance - The company expects fourth quarter 2024 revenue to be between $640 million and $680 million [8] - Diluted GAAP EPS is projected to be between $0.40 and $0.46, while diluted non-GAAP EPS is expected to be between $0.53 and $0.59 [8]

TEMPE, Ariz., Oct. 7, 2024 /PRNewswire/ -- Benchmark Electronics, Inc. (NYSE: BHE), a global provider of engineering, design, and manufacturing services, today announced the appointment of Bryan Schumaker as the company's chief financial officer (CFO) effective October 8. Schumaker brings more than 20 years of financial and leadership experience across public and private sectors, driving growth, operational excellence, and strategic capital management. Bryan Schumaker, CFO, BenchmarkBryan Schumaker, CFO, Be ...