Benchmark (BHE) Q2 EPS Beats by 2%

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]