Benchmark Electronics(US:BHE)2023-05-08 10:56Financial Data and Key Metrics Changes - The company's GAAP earnings per share for Q1 2023 was $0.35, representing a 13% year-over-year growth [20] - Non-GAAP gross margin was 9.2%, a decrease of 40 basis points sequentially, primarily due to lower revenue in the semi-cap sector [20] - Non-GAAP effective tax rate for Q1 2023 was 19.2% [20] - Non-GAAP EPS was $0.42, in line with the midpoint of Q1 guidance [20] - Total revenue for Q1 was $695 million, a 9% year-over-year increase [48] Business Line Data and Key Metrics Changes - Medical revenue increased by 26% year-over-year, driven by existing and new programs [25] - Semi-cap revenue decreased by 16% year-over-year, aligning with expectations [25] - Advanced computing revenue grew by 81% year-over-year, benefiting from high-performance computing programs [25] - Next-gen communications revenue increased by 53% year-over-year, supported by 5G infrastructure and satellite communications [25] - A&D revenue was down 2% year-over-year, with defense facing supply constraints [25] Market Data and Key Metrics Changes - The cash conversion cycle days increased to 109 in Q1 2023 from 96 days in Q4 2022, primarily due to inventory investment [26] - Total inventory increased by $50 million sequentially in Q1 [26] - The company had a cash balance of $212 million as of March 31, with $130 million outstanding on its term loan [27] Company Strategy and Development Direction - The company is focused on operational discipline and expense controls to protect profitability while investing in future growth [24] - Continued commitment to semi-cap despite a challenging environment, with expectations for improved performance in the second half of 2023 [32] - The company is actively investing in new technologies and facilities to capture long-term growth opportunities [24] Management's Comments on Operating Environment and Future Outlook - Management noted that the supply chain environment is improving but still has constraints [4] - There is cautious optimism regarding the semi-cap sector, with expectations for a stronger second half of 2023 and 2024 [32] - The company anticipates continued growth in medical and industrial sectors, driven by strong demand and improving supply conditions [31] Other Important Information - The company plans to present at two conferences in June 2023 [8] - The company has published its second annual sustainability report, establishing specific intensity targets for greenhouse gases [19] Q&A Session Summary Question: What are the biggest risks to achieving the 2023 guidance? - Management acknowledged potential supply chain hiccups and noted that while the environment is improving, there are still constraints to navigate [4] Question: How should inventory levels be managed going forward? - Management emphasized efforts to align inventory with customer demand and mentioned initiatives like advanced deposits to manage inventory effectively [5] Question: What is the outlook for the semi-cap sector? - Management expressed cautious optimism, noting that while there was a decline in Q1, they expect stability and potential growth in the second half of the year [54]