Benchmark Electronics(US:BHE)2025-11-05 20:13Financial Performance - Sales for Q3 2025 were $680.7 million, a 3% increase from $657.7 million in Q3 2024, driven by higher revenue in Aerospace & Defense (A&D) and Medical sectors [109]. - A&D revenue increased by 26%, Medical revenue increased by 18%, while Advanced Computing & Communication (AC&C) revenue decreased by 20% [113]. - Gross profit margin for Q3 2025 was 10.0%, down from 10.1% in Q3 2024, with cost of sales at 90.0% [115]. - Net income for Q3 2025 was 2.1%, down from 2.3% in Q3 2024, with income before income taxes at 3.0% [115]. - Total net sales for the three months ended September 30, 2025, increased by 3.5% to $680.7 million compared to $657.7 million for the same period in 2024 [1]. - Semiconductor Capital Equipment sales decreased by 1% to $185.2 million for the three months ended September 30, 2025, but increased by 9% to $570.6 million for the nine months ended September 30, 2025 [1]. - Aerospace and Defense sales increased by 26% to $128.7 million for the three months ended September 30, 2025, and by 19% to $376.8 million for the nine months ended September 30, 2025 [1]. - Medical sales increased by 18% to $126.3 million for the three months ended September 30, 2025, and by 2% to $339.5 million for the nine months ended September 30, 2025 [1]. - Advanced Computing and Communications sales decreased by 20% to $88.2 million for the three months ended September 30, 2025, and by 39% to $237.2 million for the nine months ended September 30, 2025 [1]. - Gross profit for the three months ended September 30, 2025, increased by 2% to $67.9 million, while gross profit margin decreased to 10.0% from 10.1% in the same period of 2024 [1]. - Income from operations for the three months ended September 30, 2025, decreased by 16% to $23.7 million compared to $28.1 million for the same period in 2024 [1]. - Net income for the three months ended September 30, 2025, was $14.3 million, or $0.39 per diluted share, a decrease from $15.4 million, or $0.42 per diluted share, for the same period in 2024 [142]. - For the nine months ended September 30, 2025, net income was $18.9 million, or $0.52 per diluted share, down from $44.9 million, or $1.23 per diluted share, for the same period in 2024 [142]. Expenses and Costs - Selling, general and administrative expenses increased to 6.1% of sales in Q3 2025 from 5.5% in Q3 2024 [115]. - Selling, General and Administrative expenses increased to $41.5 million for the three months ended September 30, 2025, from $36.6 million for the same period in 2024 [1]. - Interest expense decreased to $4.4 million for the three months ended September 30, 2025, from $6.6 million for the same period in 2024 [1]. - Income tax expense for the three months ended September 30, 2025, was $6.3 million, representing a 30.7% effective tax rate, compared to $5.0 million and a 24.6% effective tax rate for the same period in 2024 [1]. Cash Flow and Investments - Cash provided from operating activities was $65.3 million during the nine months ended September 30, 2025, primarily driven by $18.9 million of net income and $35.6 million of depreciation and amortization [145]. - Cash used in investing activities totaled $22.8 million during the nine months ended September 30, 2025, mainly for capital expenditures of $25.2 million [147]. - Cash used in financing activities was $92.9 million during the nine months ended September 30, 2025, including $26.0 million for share repurchases and $18.4 million for dividends [148]. - As of September 30, 2025, cash, cash equivalents, and restricted cash totaled $286.1 million, with $249.2 million held outside the United States [143]. - The company had $475.6 million available for borrowings under the Credit Agreement as of September 30, 2025 [151]. Future Outlook and Strategic Initiatives - The company expects restructuring activities at its Fremont, California site and Guadalajara, Mexico facility to be fully completed in 2025 [99]. - The company continues to monitor economic uncertainties, including inflation and geopolitical instability, which may impact customer demand [112]. - The company anticipates capital expenditures of approximately $60 million to $70 million over the next 12 months to increase production capacity [151]. - The company intends to continue paying quarterly dividends, with cash dividends paid totaling $18.4 million during the nine months ended September 30, 2025 [152][153]. - The company repurchased 0.7 million shares for an aggregate of $26.0 million at an average price of $38.06 per share during the nine months ended September 30, 2025 [155]. Operational Efficiency - The company utilizes enterprise resource planning (ERP) systems and lean/six sigma methodologies to enhance procurement and manufacturing efficiency [106]. - The company has experienced improved availability of electronic components, except for older technologies where capacity constraints remain [110].