• Revenue: $632 million, down 4% sequentially and 6% year over year.
• Non-GAAP EPS: $0.52, within guidance range of $0.48 to $0.54.
• Non-GAAP Gross Margin: 10.1%, a 30-basis-point decrease quarter over quarter and a 10-basis-point increase year over year.
• Non-GAAP Operating Margin: 4.6%, down 50 basis points sequentially and 30 basis points year over year.
• Free Cash Flow: $27 million in Q1, totaling over $140 million on a trailing 12-month basis.
• Cash Balance: $355 million as of March 30, a year-over-year increase of $59 million.
• Debt: $121 million outstanding on term loan and $155 million on revolver, with $391 million available to borrow.
• Liquidity Ratio: 0.6, down from 0.9 in the prior year period.
• CapEx: $4 million in Q1, primarily for Malaysia and Thailand facilities.
• Dividends and Share Repurchase: $6.1 million in dividends paid and $8 million in shares repurchased.
• Cash Conversion Cycle: 86 days, improving 3 days sequentially and 8 days year over year.
• Semi-Cap Revenue: Up 18% year over year, despite a 2% quarter-over-quarter decrease.
• A&D Revenue: Up 15% year over year, with a 4% quarter-over-quarter increase.
• Medical Revenue: Down 12% quarter over quarter due to demand softness.
• AC&C Revenue: Decreased 12% quarter over quarter due to timing-related weaknesses.

• Warning! GuruFocus has detected 5 Warning Signs with BHE.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Benchmark Electronics Inc (NYSE:BHE) reported first-quarter revenue of $632 million, led by double-digit growth in the Semi-Cap and A&D sectors.
• The company achieved its sixth consecutive quarter of greater than 10% non-GAAP gross margin and eighth quarter of positive free cash flow.
• Non-GAAP earnings per share of $0.52 was above the midpoint of the guidance range, demonstrating strong profitability management.
• Benchmark Electronics Inc (NYSE:BHE) generated $27 million in free cash flow in the quarter, totaling over $140 million on a trailing 12-month basis.
• The company is well-positioned to help customers optimize their supply chain with a significant US manufacturing footprint, representing over 55% of its total global manufacturing capacity.

Negative Points

• First-quarter revenue of $632 million was down 4% sequentially and 6% year over year.
• Non-GAAP operating margin decreased sequentially and year over year due to a lower revenue base.
• The medical sector experienced a 12% revenue decline versus the prior quarter, with continued demand softness.
• AC&C revenue decreased 12% quarter over quarter, driven by timing-related weaknesses in both HPC and communications businesses.
• The company faces challenges from global tariff uncertainties, impacting customer decisions and potentially elongating the cycle for new bookings.

Q & A Highlights

Q: Jeff, it sounds like you're seeing some customers pausing, others pulling in. Is the net result of this more of a headwind for you, and are the pullings coming into Q2 from the second half? A: Jeffrey Benck, CEO: Right now, we see things balancing out, so we don't see it tipping one way or the other. Some customers are nervous about the second half due to tariff uncertainties, but overall, the activity is canceling each other out.

Q: Are there initial headwinds from customers evaluating their supply chains and you trying to accommodate them? A: Jeffrey Benck, CEO: Some bids have elongated as customers contemplate options like moving to Mexico or Thailand. This has caused some delay in new bookings, but we are excited that over 95% of our products qualify for USMCA, allowing us to avoid tariffs.

Q: In the second half, what should we count on for the reversal of the trend in revenue? A: Jeffrey Benck, CEO: We expect a stronger second half in medical and some growth in computing telco with new wins on the 5G side. Industrial is a bit uncertain, but Semi-Cap and A&D should remain strong.

Q: How should we think about the tax rate in the second half of this year? A: Bryan Schumaker, CFO: We expect the tax rate to be around 24% for the year, with a range of 23% to 26%. We are focusing on strategic tax planning to potentially drive it down further.

Q: Regarding your large footprint in the US and North America, what capacity utilization do you have, and what availability do you have to move projects over there? A: Jeffrey Benck, CEO: Over a third of our footprint is US-based, and we have significant capacity to accept incremental business. We are seeing opportunities due to tariffs and the desire to nearshore or reshore production.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.