Benchmark Electronics ((BHE)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Benchmark Electronics: Optimism Amidst Challenges in Q2 2025 Earnings Call
The recent earnings call for Benchmark Electronics showcased a generally positive sentiment, with the company emphasizing consistent execution and strong sector performance, particularly in the medical and AC&C sectors. Despite facing challenges such as declines in semi-cap revenue, the overall tone was optimistic about future growth prospects.
Consistent Execution and Revenue Growth
Benchmark Electronics reported revenue of $642 million for Q2 2025, achieving a non-GAAP EPS of $0.55, both aligning with prior guidance. This performance marked the seventh consecutive quarter of achieving a gross margin greater than 10%, highlighting the company’s consistent execution and revenue growth.
Sector Performance and Strategic Wins
The company experienced double-digit annual revenue growth in the semi-cap and A&D sectors, with multiyear record bookings in the medical and AC&C sectors. This indicates strong demand and a recovery in these areas, contributing to the company’s strategic wins.
Successful Debt Refinancing and Cash Repatriation
Benchmark successfully refinanced its debt at attractive rates and repatriated $152 million from China and Thailand. Of this, $95 million was used to pay down the revolver, demonstrating effective financial management and strategic cash utilization.
Improved Cash Conversion Cycle
The company improved its cash conversion cycle by 1 day sequentially and 5 days year-over-year, with inventory days reduced by 6 days sequentially. This improvement reflects enhanced operational efficiency and better inventory management.
Semi-Cap Revenue Decline
Despite an 11% year-over-year growth, semi-cap revenue decreased by 2% quarter-over-quarter, primarily due to trade restrictions and tariff uncertainties. This decline poses a challenge for the company, although long-term growth remains a focus.
AC&C Revenue Performance
AC&C revenue remained flat quarter-over-quarter and saw a significant year-over-year decline. However, the company anticipates a return to growth in this sector later in 2025, reflecting a cautious optimism.
Free Cash Flow Challenges
The company faced a $15 million free cash outflow during Q2, attributed to one-time events related to customs and transition tax payments. This highlights the challenges in managing cash flow amidst external financial obligations.
Forward-Looking Guidance
For the third quarter of 2025, Benchmark Electronics anticipates revenue between $635 million and $685 million, indicating low-single-digit sequential growth. Non-GAAP gross margin is projected to be between 10.2% and 10.4%, with operating margin expected between 5% and 5.2%. The company forecasts non-GAAP diluted EPS to range from $0.56 to $0.62, alongside expectations for year-over-year growth in the second half of the year.
In conclusion, Benchmark Electronics’ earnings call reflected a positive outlook despite certain challenges. The company’s consistent execution, strategic wins, and improved operational efficiencies were key highlights. Looking forward, the company remains optimistic about its growth trajectory, underpinned by strong sector performance and strategic financial management.