Benchmark Electronics(US:BHE)2022-08-08 02:15Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $728 million, exceeding guidance by nearly $100 million and increasing by over $180 million year-over-year, representing a 34% growth [9][17] - Non-GAAP gross margin was 8.1%, impacted by supply chain premiums, with an adjusted gross margin of 9.2% if excluding these effects [11][12] - Non-GAAP earnings per share (EPS) was $0.50, an 85% increase from $0.27 in the same period last year [13][27] - The company expects full-year revenue growth of 20% or greater and non-GAAP EPS of $2 or better, which would be a record for the company [16][64] Business Line Data and Key Metrics Changes - Medical revenues increased 42% sequentially and 53% year-over-year, driven by growth with existing customers and new program ramps [17][53] - Industrial revenues rose 16% sequentially and 59% year-over-year, fueled by demand for energy-related products [19] - Computing revenues grew 25% sequentially and 73% year-over-year, supported by high-performance computing program ramps [20] - Aerospace and Defense (A&D) revenues increased 11% sequentially but decreased 7% year-over-year due to supply chain constraints [18] Market Data and Key Metrics Changes - The top 10 customers represented 53% of sales in Q2 2022 [21] - Approximately $91 million of revenue was attributed to pass-through revenue from supply chain premiums, which is expected to normalize in 2023 [22][28] - The company anticipates strong demand indicators across most market sectors, with over $200 million of demand unfulfilled due to supply constraints [14][35] Company Strategy and Development Direction - The company is focusing on higher value markets with complex programs, which has resulted in a more diversified portfolio and stronger long-term growth potential [49][61] - Significant investments in capital and operational efficiency are expected to support growth in the semi-cap sector, with revenues projected to grow over 25% for the full year [52] - The company aims to achieve all performance metrics of its midterm target model by the end of 2022, with expectations for improved gross and operating margins [59][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning within resilient industrial and enterprise markets despite potential recession risks [15][48] - The company is optimistic about demand trends, with no significant slowdown observed from customers, and expects to grow greater than 20% for the full year [63][64] - Management highlighted the importance of navigating supply chain challenges and maintaining operational efficiency to meet customer demand [63] Other Important Information - The company plans to host an Analyst Day on November 8, commemorating its 25th year listed on the NYSE [72] - Cash balance was $264 million as of June 30, with expectations to generate cash flow from operations in fiscal year 2023 [33][32] Q&A Session Summary Question: Which end market is least resistant to an economic slowdown? - Management indicated that the compute and telco markets might be more sensitive to a slowdown, but high-performance computing and next-gen broadband solutions are expected to remain resilient [67] Question: How are new program wins balanced between new logos and existing customers? - Management noted a balanced approach, with incremental wins from existing blue-chip customers and organic growth from new clients, particularly in the semi-cap sector [68]