Benchmark Electronics(BHE) - 2025 Q2 - Quarterly Results

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 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] - Achieved a multi-year record in new bookings during the quarter[2] - Management is confident that accelerating momentum will drive growth and operational leverage in the coming quarters[3] Key Financial Highlights (Q2 2025) 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] - GAAP Operating Income was $20 million and GAAP earnings per share was $0.03[4] - Non-GAAP Operating Income was $30 million and Non-GAAP earnings per share was $0.55[4] Operational Performance The company's operational performance in Q2 2025 was characterized by sector shifts and improved cash conversion efficiency Industry Sector Update 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] - A&D revenue continued to grow sequentially from $122 million (19%) in Q1 2025 to $126 million (20%) in Q2 2025[5] - 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] Cash Conversion Cycle 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] - Days in accounts payable improved from (61) days in Q1 2025 to (55) days in Q2 2025[6] Outlook and Company Information This section provides Q3 2025 financial guidance, company overview, and investor relations details Third Quarter 2025 Guidance 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] - Diluted GAAP earnings per share guidance for Q3 2025 is between $0.28 - $0.34[9] - 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] About Benchmark Electronics, Inc. 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][8] - Serves industries including semiconductor capital equipment (Semi-Cap), industrial, medical, aerospace and defense (A&D), and advanced computing and communications (AC&C)[8] - Operates globally with facilities in seven countries and its common shares trade on the New York Stock Exchange under the symbol BHE[8] Earnings Conference Call & Investor Relations 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] - Investor Relations contact is Paul Mansky at 1-623-300-7052 or paul.mansky@bench.com[9] Disclosures and Non-GAAP Information This section outlines forward-looking statement caveats and the rationale for using non-GAAP financial measures Forward-Looking Statements 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] - 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] Non-GAAP Financial Measures 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] - Management uses non-GAAP measures to better assess operating performance and help investors compare results with previous guidance[11] - 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] Condensed Consolidated Financial Statements This section presents the company's Q2 2025 income, balance sheet, and cash flow statements Condensed Consolidated Statements of Income 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] - 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] - Diluted EPS for Q2 2025 was $0.03, down from $0.43 in Q2 2024[14] Condensed Consolidated Balance Sheets 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] - Cash and cash equivalents decreased by approximately $50.5 million from December 31, 2024, to June 30, 2025[16] - Total liabilities decreased by approximately $102.2 million, primarily driven by reductions in current liabilities and long-term debt[16] Condensed Consolidated Statements of Cash Flows 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] - Share repurchases amounted to $16.0 million for the six months ended June 30, 2025, compared to none in the prior year[18] - 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] 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 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] - 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] - 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]