Benchmark Electronics(US:BHE)2023-02-02 01:49Financial Data and Key Metrics Changes - Revenue in Q4 2022 was $751 million, up 19% year-over-year, with a GAAP gross margin of 9.6% and a non-GAAP gross margin of 10.2% excluding supply chain premiums [20][54] - For the full year 2022, total revenue was $2.9 billion, an increase of $631 million year-over-year, with non-GAAP EPS of $2.09, representing a 55% increase year-over-year [49][29] - Non-GAAP operating margin for Q4 was 4.3%, while for the full year it was 3.6%, up 60 basis points year-over-year [54][49] Business Line Data and Key Metrics Changes - Semi-Cap revenues decreased 5% sequentially but increased 9% year-over-year, with a record year in 2022 growing revenue by 30% [51][36] - Medical revenues decreased 13% sequentially due to material constraints but increased 14% year-over-year [51] - Next-Gen Communications revenues were up 24% sequentially and 64% year-over-year, driven by demand for broadband infrastructure [25][39] Market Data and Key Metrics Changes - Industrials revenue for Q4 was down 8% sequentially but up 14% year-over-year, with increasing demand from energy-related products [24] - A&D revenues increased 5% sequentially but decreased 5% year-over-year due to supply chain constraints [51] - Advanced Computing revenues were down 2% sequentially but up 55% year-over-year due to high-performance computing program ramps [52] Company Strategy and Development Direction - The company aims to continue diversifying its business across sectors, with a focus on medical, industrials, and next-gen communications for growth [39][43] - The anticipated macro resiliency in the Medical sector and government-sponsored broadband programs are expected to drive growth in 2023 [38][39] - The company is committed to sustainable growth and has received a AA rating from MSCI, placing it in the top 10% of its peer group [42] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is softness in the Semi-Cap sector, they expect to outperform industry growth rates due to new program wins [63][95] - The company anticipates a sequential improvement in margins in the second half of 2023, despite near-term headwinds [33][96] - Management expressed confidence in the long-term targets set for 2025, despite current challenges [70] Other Important Information - The company expects Q1 2023 revenue to range from $640 million to $680 million, representing a 4% year-over-year growth [60] - Cash flow from operations in Q4 2022 fell short of projections, but the company expects to generate free cash flow in the range of $70 million to $90 million in 2023 [32] Q&A Session Summary Question: What is the outlook for the Semi-Cap market? - Management indicated that the Semi-Cap market is expected to see a decline in the first half of 2023 but anticipates recovery in the second half due to new fabs coming online and strong customer demand for 2024 [95][102] Question: Can you elaborate on the new bookings number? - The company reported $930 million in new bookings, reflecting a strong trajectory in winning new business, with a focus on projects that fit their margin profile [67][78] Question: What are the challenges in the labor market? - Management acknowledged ongoing labor challenges but expects improvements as the year progresses, particularly in international sites [114][126]