BHE - Earnings call transcript Q1 2020 | Benchmark Electronics, Inc.

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Operator

Good afternoon and welcome to the Benchmark's First Quarter 2020 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Lisa Weeks, Vice President of Strategy and Investor Relations. Please go ahead.

Lisa Weeks

thanks, XXXX joining Earnings and Benchmark's today operator, Quarter First Call. you, everyone, us for for Thank

Joining me this President; and afternoon are Jeff Lakkaraju, Benck, CFO. Roop CEO and

available our issued After we and call. a will earnings today, The market we prepared for we that on the is release online release first closed have replay website at our Relations section and of a highlighting call. presentation reference financial presentation are the and quarter This press performance following available being call online will live under the be the an Investor this webcast www.bench.com.

has reconciliation as non-GAAP well company the our release measures the in GAAP appendix of The to provided a as presentation. earnings in the of

X Please take a to the moment Slide the in review forward-looking on presentation. advised statements

forward-looking we call, discuss this will information. During

today's and from differ undertakes reminder, and involve which of remarks are forward-looking no not fact ongoing and the in update forward-looking filings. risks releases obligation the may most statements. SEC a Actual historical COVID-XX impact any any Benchmark materially our that pandemic statements are these of As statements, press noteably statements, from described to uncertainties as of results

call, Jeff our emergency current by the including results protocol covering the will the COVID-XX conclude will outlook a global framework market status our we and of providing operations. our sector quarter by first a begin cash near with response and a of guidance Roop today's discuss a For then balance sheet before summary. demand with rundown and Jeff will Q&A. wrap of up term our call

turn the CEO, to to Slide X If the Jeff you I our in turn over all will presentation, call Benck. please

Jeffrey Benck

would to by I heartfelt responders like and to to the first impacted thanks Thank call up healthcare who those by crisis. been like courageous recognize you, would COVID-XX affected condolences care have by I the of and COVID-XX start offering the are virus. Lisa. for workers joining who also the taking afternoon us. our all Good

we priorities have of hard to months, two operations global three past against mind. been very in maintain the For with spread the pandemic working the

First and of is colleagues our their family. the safety health and

is priority we so second serve can this time. output our operations The of our sustain customers continue critical that to during to the

and senior team global Suzhou, and to early have We created our a met and direct leadership manufacturing employee safety we status impacts daily force a employee to operations global and health the protocols team. outbreak established daily China on report of the communications Since and operational operations. our received a and centralize the engineering task

critical maintain ever-changing a regulation deal government the our and the customers. our local operations and work to We stream with and also requirement to established alignment between authorities,

to our effort hour kudos XX to want out to a week This have day productive stay accomplished. a coordinated. and team in aligned, give I day is day, all they tremendous day X a for

Our responsibility our with teams customers, and community. approached employees, this have incredible to shareholders challenge results a sense local of and

Slide Please turn to X.

state and for operating follow the national, to As global the our World and well COVID local continues Benchmark and global the evolved each governments Disease Health Organization Prevention pandemic as working best as Control guidance to of Centers location. status the from for has with determine

or While this option involved some critical home an for being from design asked many the not work employees is in are directly product. manufacturing to of

cleaning, protocols more. basing expenses of working for For personnel facilities and and disinfecting added in our frequent new employees we've our and

and allow work tools continue could employees invested who remotely them have be productive. we equipment those to in to For to

as found collaborate shown are creativity these teams customer. with the to with each have ways and they and We our new communicate and pleased to have other results

to health governments saw lockdown from imposed shelter-in-place essential of products ensure orders facility. some our own each Benchmark by of way maintaining infrastructure its by the we As challenges critical human and we around are and imposed the services and teams in resources provides stay our Corona virus began forms to location. safe various make world home, and

policies government and impacted operation. have still However, implementations

were I'll approval early full reestablish ramped our Chinese start critical to products by to operations capacity with Suzhou support were medical site, March. We New impacted and after was given back which the to mid Year.

includes Our XX% full facility. continues decrees precision and force Malaysia were capacity to China only our caused were that extending This today. our there been operation machining full operate shifts, significant of starting remain we is quarter. where we In impact optimum move plant in at restrictions can local Unfortunately operating and at at by mid-March, operating new minimize capacity Penang this in the capacity now disruptions largest we changing but which We modifying workflow hard to to start to not level. coverage week. staggering the worked our have

U.S. in in European interruptions Netherlands weeks states had In of form We and California have Our are operations California facilities March full continue we hard Romania hit two full operate yet Area the Southern and were operations; some Bay and not orders. early at to our back limited the five the but capacity. the few last we all April capacity. saw implement in shelter-in-place near in in some particularly of have which three where in

Tijuana given despite sit we shut and down by an the the today, to by operate previously overnight central authorization zero Mexican closed still These remain currently a the State major passing Mexico inspection Baja output. working disruption operations we're two which locations As manufacturing in through government. practically two here our would

incredible efforts meet operating government is also remains are and of as demand fulfill we as to and capacity been has not full Our and a Guadalajara much facility our priorities the possible. environment due This highly to dynamic employees restrictions. at managing through collective

approximately today productivity. to are XX% estimate that at is Our of XX% operating we

due resume shelter-in-place in that that starts We and are curve can so teak decline orders location. intended, any hopeful as normal all operation infection to

in the its than technology a XX we're device ago line X. Please the supporting the integral as some recognized in front maintained companies we're manufacturer We've partnerships as largest Benchmark the Slide essential and world. more world playing business began and years critical turn around of medical an the the has been fight. of infrastructure proud role of journey medical

customers and We governments manufacturing where needed for critical are customers. expediting most even production and with is by working some get life-saving doubling providing volumes it equipment capacity or design to services medical quadrupling

diagnostic has including Demand for and and imaging mobile x-ray increased products devices. MRI ultrasonic products handheld

world. supporting support with which new and critical the We ventilator hospitals demand are need high multiple around in projects existing to those most are who support in the customers,

testing where the again their say On COVID-XX flexibility virus in a for heartfelt front, point teams not want I rapid devices care rapid but a matters our our supporting hour extraordinary when of across supporting critical are in infrastructure. it are and a our including we diagnostics we device. to sepsis you to customers portfolio just thank supporting most, one tester medical

our turn share will commentary call regarding further his insights you. to of I by following and I Next to future Roop over to the and over demand sector. will the view results discuss quarter business first Roop

Roop Lakkaraju

afternoon Thank hope Jeff families their safe. and you and and are I everyone good healthy everyone.

quarter to by efforts a sentiment environment Let dynamic start me our our teams echoing deliver incredible to very Jeff support results. first on of through customers the our

resources safety our As health on our through of critical customers. and remain the maintaining priorities retaining capabilities we healthy crisis operations our we the the and our centered our for Three, discuss through and as would a sheet managed employees. to these Two, COVID actions uncertainty. flexibility priorities support I four, our balance and run each results. ensuring to financial one step to the

Please turn Slide X. to

that on guidance quarter reminder, COVID-XX had we a results the February outbreak announced on we As our impact March relative XXXX X. to first XX, that would negatively provided

in cost direct considering $XXX sectors. of results driven we by the first personal by challenging Even with Our revenue inefficiencies expenses, semi-cap, our were strong Medical in supply absorption A&D impact disruptive quarter chain environment below February achieved by equipment, under associated all supported caused was and our quarter protective the which and first COVID-XX. of million labor guidance the demand

margins for gross was the were per share X.X% Our $X.XX. and non-GAAP earnings quarter

Our as COVID-XX affected employees changes otherwise restricted, by or with non-GAAP costs earnings reflect associated quarantined well who the as conditions. revenue

as higher our labor worked China factory incurred shutdown. working to we also expenses We in those overtime recover to the premiums paid and from they employees

global As a that China EPS impacted approximately we estimate factory our inefficiencies by result $X.XX. our

were as other which our beyond there conditions operations China EPS. globally impact non-GAAP inefficiencies of in reported mentioned the COVID-XX and As expanded reflected were Jeff further

we cycle and free for approximately operations associated half was flow XX expected in flow year $XX ramps. now a and cash expect million reduced cash Originally the conversion introductions quarter be We in capital to Our new product days. $XX from cash in million used CapEx. fiscal XXXX spent by focused for capital negative we XXXX million will result was of $X primarily on that our fiscal a on as expenditures and $XX spend approximately million expenditure

customers and for volume the by X quarter revenues new first year-over-year up were Slide from Demand through programs. for demand XX% strong that our XX% increased to Please turn X-ray ventilators critical existing to are across Medical the products devices, with and for sector. sequentially equipment market several for revenue quarter some cases the diagnostics controls support pandemic. remains such hospital and for devices scanning and as including increases COVID-XX increasing

which for ramp of of Penang, sector aggressive labor the Semi-cap related across and protocols our to with began most mid-March. the revenues our The increasing was by in the in were our up demand and impacted XX% in new significantly to locations California X% customers first majority year-over-year up semi-cap quarter Malaysia along portfolio. constraints customer shelter-in-place

A&D segments demand did and revenues. of quarter sequentially late revenues of new is security. for defense the commercial ramps increased which in satellite, XX% less from program for and were aerospace receive signals A&D than munitions year-over-year XX% XX% quarter first in our up sector decreases the We

XX% any first sector compared of value decreased revenues expectation revenue. large as market quarter X% represented original had impact. first industrial the the Industrial higher was QX XX% experience our from our year-over-year. Overall The COVID lower the related of and and to sequentially sector quarter for

year-over-year the the demand. XX% printing Turning was Computing build-out and related XXXX and and was down of market. completion commercial sequentially center down lower data our products. for in legacy demand from XX% traditional now contract quarter-over-quarter storage infrastructure XX% lower down products XX% sequentially Telco year-over-year computing from to and

markets traditional XX% first quarter represented of Our revenues.

sales Our top the XX% of first represented quarter. for customers XX

basis. $XXX on a Please turn to reflects Slide X. an Achieved revenues million quarter-over-quarter increased

cost quarter in $X.X related GAAP of per results earnings other These $X.X included to the GAAP million $X.XX and costs was from million costs QX. restructuring non-referring of and share included a Our million an type network impairment is that previously a and by for restructuring to held as classified sale. being other building activities around now related and our announced consolidation efforts for our $X

be previously San announced in completed track to QX. Jose is Our on closure

to a reminder As were non-GAAP there COVID-XX. to no adjustments related GAAP

QX. financial Turning our XX to non-GAAP Slide information for for

the to our points were in incurrence and due quarter-over-quarter protective XXXX of impacted our QX increase shelter-in-place gross rest government the basis point throughout labor incremental China shutdown basis global the non-GAAP, XXX X.X%, mandated expenses results XX requirement and a and QX, non-GAAP and personal equipment. Our of by margin was year-over-year. efficiencies network

QX, to million, SG&A of due variable we stock $XX.X restart $X was comp on basis. a XXXX was X.X% year-over-year approximately flat Operating in due an SG&A Our decrease payroll million to comp related increase to was a COVID-XX. a reduced the additionally QX revenue in sequentially. including from lower than inefficiencies tax. margin and QX SG&A expected was X.X% to lower have

In non-GAAP for income was to effective of expected network. due XX% the lower tax rate XXXX QX, which across the our our than distribution was quarter

income our non-GAAP distribution range around XX% of network. to in to will that rate XX% the for tax be QX continue global our again of expect because We the effective

$X.XX Jeff environment the the COVID-XX strength was to more a quarter challenging supply the and we defense, and labor seeing shortly also about semi-cap. virus. detail chain X.X%. EPS medical seeing ROIC due constraints provide in Non-GAAP are for We're and will was

of inefficiencies capital result and taking series a our cost of to actions are As these we structure a expenditures. lower proactively reduce

rest XXXX. the cut our Our take the temporary team and in leaders salary through cut a QX, executive a salary the will of the XX% CEO, X% take company senior will board senior while

on the non-U.S. will Additionally, to U.S. employees The consist our time discretionary locations factories we Cost rotating our expenses reduction of depend reduce law expect cost requirement. on factory travel. will in actions off loading actions local variable reduction levels. in such taking as other compensation a depending and

we being navigate summary, as and environment. organization very current much In we're appreciate of vigilant [indiscernible] the our entire

Please Slide our for an on and update structure. XX turn cash debt to

March available $XXX was $XXX at in cash with balance the XX Our million U.S. million

foreign from foreign We we continue in have cash balancing our to our will curves repatriate repatriate flow locations continued requirements. to future cash and while sites

proceeds balances cash from revolver Our the of line million We borrowed to includes support environment. of borrowings our under $XX current against credit. navigating revolving through proactively our

our covenants monitor compliance. to ensure We continue will and financial

to a expense net QX, liquidity a capital of manage approximately to at environment. positive are cash interest we have by expect in we of We position do our end We believe net flexibility increase position and current structure the the our through XXXK our $XXX million. QX. in Overall, provides strong XXXX business

a balance at XX. accounts December $XXX receivable March at quarter-over-quarter. from $XX million $XX late in the were million, medical December inventory changes and decrease in was semi-cap Our of million long million $XXX product $XXX quarter-over-quarter cycles XX for million, and Contract $XXX at Payables to were from up XX. our was $X Inventory mix up million assets bringing customers XX to March and quarter support production in sectors. due million

balances. needed our the investments secure We continue while to proactive critical to components make managing to support inventory customers

review Slide turn to XX cycle to our performance. conversion cash Please

the within expectations and XX challenging This environment. which was of For at expectation. achieved the was XXXX with considering even QX, our beginning cycle cash is quarter our was the conversion our consistent

previously quarter will As the between and computing legacy third cash our days. of completion the the XX XX contract after be conversion XXXX of in discussed cycle

Turing we $XX to shareholders. of quarterly million which to Slide our dividend per increased capital XXXX. February to as recently XX returned $X.XX update. allocation included million share for on recurring In $X.X part This approximately QX our cash X, we

continue to expect dividend. quarterly We the cash recurring

We also XXX,XXX million. for shares repurchased $XX approximately

available the by program of XXX the under we approximately million increase March XXXX. in current February As repurchase end share of after board had XXXX an approved the

conditions quarter repurchase related not needs in we of prioritizing such usual will next Because level uncertain operational our are detail as planning COVID-XX cash We the guidance. to provide we for to usage QX. and are not shares

an will detailed recent initiative. key demand in on of Jeff end update our strategic provide of a by and our and Jeff? business sector view overview market wins new

Jeffrey Benck

Thanks Roop update. that for

Turning by on to I current vertical to insights I visibility operational ability of Benchmark pandemic the sector. based some constraints. now would our and from to on want to supply like our XX. by on to demand market provide what the Slide demand two we're hearing and impact on customers that focus chain the into translate dimensions; of revenue each

summary, In than support chain to second demand about our and will quarter be it. supply capability the operational less

and days supply proactively part during team chain areas ensure since the of critical preventative taking in is been our supply to remain day open. our China. Our outbreak pandemic every has managing steps supply team assessing early risk this The with the suppliers lines

and same However, impacting the our global in supply affect that produce, the demand causing [indiscernible]. our ordinances suppliers sector, new base medical for remains remain medical subject are and inevitable program interruption our medical we decrees to operation our strong and products the design ultimately output. In the services

equipment half. XXXX I QX for the abilities in higher revenue half expect help increase result our customers have revenues produce demand. and and meant significant as and higher and in existing demand than segment helping we the first COVID-XX second be in will a This been medical customers will in some engaged sequentially this new discussed we this in cases Furthermore, medical to by and has fight

forecast semiconductor recovery continues our the based capital In semi-cap, current on customers. from equipment demand the for

challenges However, our all chain are California operations Malaysia and demand that in to impacting operations QX. our our in supply fulfill backlog ability of exist

remains competitive we over this have penetration several new programs strong accounts Our in where position and in one years. key expanded the sector past our

strong on the area revenue in We increased expect second of based semiconductor in this year demand. equipment the half also capital

to the industrial more some expect the Approximately than sub-sectors and we and in the of our to industrial industry sector expect throughout and support balance XX% Demand others. gas year. oil mixed the impacted be is customers softer of we demand be

infrastructure. where have industrial we of automation number and wins. spot expect robotics A be transportation new segment bright could also a in sub the We and weakness

down sector half. result second the second expect the quarter some in with be a we As industrial to recovery in the

mixed. to chain to expected second be center our impact impacting well. telco output computing computing At and In communication and should and the pressure. telco traditional operations recover markets the Malaysia are increasing satellite But demand as under of budgets related to QX, half. the but revenues build Similar Tijuana data in are products industrial, are and supply are present, infrastructure and telco up

in We half back also an associated computing and in year. revenue expect project increase high-performance the the of

approximately Our remains support fully for defense these products defense in strong is critical to that XX% aerospace. products time California shortages sub-component are we of and Demand sector comprised related this Tijuana. A&D challenged our XX% programs manufactured in but including location at are

related As improve expect these revenue. defense we higher issues

engagement demand barring For to XX. a improvement decline in and of the win we our significant workflow, seen our Despite in with manufacturing anticipate accomplished commercial lower aviation. shown we aircraft as the much and customer have global momentum disruption design major year pleased in on our program normal demand we the QX environment any commercial through continued challenging were and rest slide

awarded ultrasound imaging with In existing programs mobile medical sector, our for customers. we portable a were and a device both

automated in design our We future. this we win to for appear awarded precision are also participation win ventilator for win with which business convert in new a freezer new to expanding along program QX. manufacturing controller semi-cap are an receive EUV new a expect a chamber the we a The in awarded cutting-edge we on as that award customer program in wafer electronics design manufacturing will drug for In focused next tool machining technology. a a and with elimination generation an

electronics received manufacturing. defense, design In awards in and for flight we a process we perform which aerospace and ammunition recorder additional and will

they continues invest on to Benchmark standard. in very pipeline is the who outsourcing coming to needs segment projects encouraging of can up meet It's of in partners more expect them a of challenge Our and and this that been segment. to that defense require results months. the commitment hear is but serious this have we we in to number exacting the this segment sophisticated it clear a has made their manufacturing the large

and making of In design the LIDAR scanner. and new a manufacturing progress industrial with new devices we're for vehicle tracking and intelligence enabled wins diagnostic artificial

In new delivering to with for complex wins were addition, customers recognized to business our be products we high quality. by pleased

critical were announced used selected we of award that multi-domain our to example, military. by For an design a we supporting manufacturing the with Raytheon in related ruggedized router and epic excellence for communications

a XX Benchmark. supporting Benchmark Secure forward almost technology across partner has for look to Raytheon strategic years we and this expanding been relationship

to if XX. Now you turn please Slide

second suspend which to uncertain of magnitude the to the elected we've on quarter. government variety chain and quarter a production the action environment, current remains allow scenarios, the can under quarterly the timing of guidance for Given full supply unfold depending return The to of improvement.

we Instead, clarity more and now resume some once guideposts will and guidance have offer predictability. directional we for

Given decline revenue cannot and we sequentially time our recovered. lost modestly expect where have in the we assessment which be quarter of manufacturing to are our we operations, as

We outlook defense. that of also quarter revenue the XXXX medical, be despite demand the in expect the second will semi-cap stronger quarter lowest and

Second revenues payroll incremental operating of which quarter work. at margins expenses. from lower At present costs reduced or our under employee cannot to and shut costs primarily capacity, employees will mitigated are many absorption, if be supply come related lower associated operations down down even sequentially, levels, chain cannot productivity and be

to top demand which program outlook priority. from resource capabilities our past a months we need in given all ramps maintain Also wins XX is mentioned Roop and critical new

We second XXXX. recover margins half also to range expect gross X% of in the will the

furloughs a including quarter adjustments, expenses we've to during delays hiring of the proactive where covered, taken and manage actions compensation permissible. and As has Roop number merit

towards headcount growth. to long biasing reductions support actions versus these in near term the are We our term

approximately QX. As we will expect some the a SG&A in result actions, be of X% reduced of

costs the or balance change. will discipline we take of a very will strong navigate allow further year scenarios of our We Beyond appropriate as the in sheet the if of number conditions future. that remainder continues for continuing appropriate demand actions the execution pandemic we confident experienced, us to to while also QX to reduce and have invest run this period feel and uncertainty

a operator want I call Q&A fusible turn on XX. our with thought to the I over for prepared the remarks to Before Slide close

challenges build key to enter brought time with how we prioritize better strategic unchanged. this by initiatives year spend we our remain would Benchmark. our a COVID-XX XXXX, Even As on the we significant

goes progressing we how In with fact these initiatives current in crisis. managing hand hand are the

protocols has and journey we sure a on been calls the multiple progress of received These on and trusted our effective service on customers. to firm testaments emails make aligned. One endorsements our be and from our standardized and the our greatest our efficient partner provider priorities to customers for progress communication remain

prepare work the the We will capture continue growth company lies that on to these initiatives to to ahead. longer-term

Our competitive and remains and utmost the leadership have our position global team. in our I confidence strong

call Q&A. the turn with to over operator And I will to Operator? the that the conduct

Operator

will of [Operator Instructions] We now from Lake the question comes begin Smith Please go question-and-answer ahead. Jason first session. Street. Our

Jason Smith

QX the my share providing talking for thanks why end bookings given sort and seeing or if could relatedly understand throughout order have productivity assume QX. in but you're if a you just guys, the March fully guidance not momentum what Hey XX% April questions. curious that perspective from I you backdrop compared you're currently specific of to QX to of XX% is guideposts the maintained for

Jeffrey Benck

modestly It's we're Jason. we second constrained we current if meet operational demand can down conditions demand. some in down the Roop operations because and will to and Jeff. in state those have the come strong start talked We That really as pretty being by Thanks and not revenue seen the want. then and that sequentially, saw particularly you industrial about the to this we Yes. we did jump the the compute coming is quarter like supply of current know say areas at some and more half. look The demand -- full said we're telco. immune I chain sectors the and of I environment

QX point. second will out pretty second do like you than QX that's for as us still that saying us why see feel do better believe we strong the and we we go low you calling but shift half load order some seen We've to quarter look kind and that of

Tijuana XX% talked it in -- are able amount, as being coming of weren't the that a assumptions being Malaysia anticipating as fair unfortunately XX% guideposts to where we've can with kind Monday It of those Our we that change return of sites I in knowing closed. at about why to we really We're of some at it's report looking work and we where and We're with to going we seen were do those kind completely looking got there just today were XX%. is to at to We've operate guideposts. things which uncomfortable. today where now able we can were is XXX% XXX% weeks.

was half really positive have So that was ago a thing but about I and that a Mexico week negative. you a a would and told

So it's fluid environment. a pretty

the done job. think I has great team a

all justification want for our we have production us and certainly to be We but infrastructure the that's sites allowed to the and and and the rule local still operate jurisdictions facilities maintain day safe. critical around world the we of

taking but hope more color. we're can provides So precautions a all that the little we

Jason Smith

outlined the business No, but constraints capacity other lines inbound that's are helpful and the seeing? in given seeing momentum I know medical you some just product you any constraints you're in

Jeffrey Benck

I you of -- can one case fighting COVID the the mentioned some in and Yes fight. some imagine, products to related

quadruple, the able get to going goes to of constraints products. have parts while see XXx seen up more than demand demand you go build We course to short-term be you're when

some the not in but business products. can't to them we customers these engagement but and a that also of say on in the I isn’t and not to communications of some a new capped more do it's we're mix most know really and constrained for customers in like medical continue for critical on cases scenarios them with term calls may the daily it the So customer support, long certainly great of there few we're sustained opportunity because to we're get lot in some a in demand but this do be we

areas So some there are that are tight.

Roop Lakkaraju

Jason, global labor Maybe remember are if we have that I our network. constraints across maybe Yes. add just

you good that medical sectors we're So of demand which making we're and news sector all chasing we've suggests seeing on some as impacted upside medical we products these are the and is when about that the sure think got in can deliver components those. higher somewhat

Jason Smith

for for then guys jump become queue. will backdrop bid seeing given increasingly but and disciplined just given are any you pretty I current pricing into of process you the what about last one I Okay competitive the and been me have know programs you the bidding backdrop? back the

Jeffrey Benck

competitive space go. is at the Our

We're now which So be bids won't most space kind We to of it's know and a with that pretty do aggressive. competitively. of necessarily say we of suspects can contested. in not, I approaching revenue we people usual where limited need of XX% value a know it. the more there's that high been our are the competitively number

the site give I we time necessarily. lack face will -- We're literally say people given of stuff. have actually and can't people walk doing the really on difficult. site It's tours through to

winning been weekly. necessarily sitting see our encouraging and really even participate through I've March don't to been into have but at have I been got new say the look the encouraged I where we what that really like quarter always pretty and and I been the I've by those deal flow of pipeline to April it's on business and we're looks we here, share. fair weekly check wanted point and

all a We wins. the the host the about charge went is whole deck through

just out or to customers to which existing them great we're compliment customers a want require us visit also an doing just probably this we site new checking with customer fact, In sizable industrial engage. morning seeing QX lot numbers got roll but we're I'm award of for a that work already, doesn't an that's still, pretty will but up a our from it into the

some time anxious very you it's it months to XX in wins I'm that takes as get encouraged know to and people good or all of but see get I back to continue well and things it but to to our got that happen. is So facilities can those production design take to awards on say

Jason Smith

lot I color. guys. Okay. appreciate a Thanks the

Operator

from Soderstrom Please comes of question ahead. Anja go next Our Sidoti.

Anja Soderstrom

you taking for Thank my everyone. question. Hi

So I on said, discussion new follow-up were about the you just previous the you of have a about that pipeline business. you encouraged said Jeff

is or it say from comes would you from? it competing new from business the Is what production in-house more So competition? with

Jeffrey Benck

committed. I I mentioned that think more in remark they're defense, my

Some of move to our want to defense outsourcing. to customers continue largest

in last that can several the is was commitment we're and segment. in competing at and the I there stay times with defense who many Some look quarters environment I everyone and things think the to of but like you're in-house where going pressured cost do capacity your area tough to production point the to efficiently and feel most that

is little outsourced, typically Medical they so been might outsourced. more have a that already

strong in history we we in we're do product folks competition. to and more category gives leg our life-sustaining allows U.S. a against space. medical in food that do So our capabilities, work well do that with the can fact That's us where competing do up good things that footprint, our us FDA --

a would So it we're in by kind I industrial. and little of more seeing varies outsourcing say the defense segment. in bit

I and the think We sectors of that not. of it's know is complexion I yes a seen. secular were it's we're other but in not think telco, same at it people majority Compute kind still being majority the in we've medical long-term outsourced. trend. outsourced the

good but there's competitors lot a think of first-time it's there's also opportunities involved. there I times So often

Anja Soderstrom

Okay about the talking and then industrial.

sort to the your help more to So outsource. industrial model outsourcing slowing then a place be than that production might be needs it that take you still seems fair? like down that might others Is given because that's going but of

Jeffrey Benck

kind level with Well, to [indiscernible] industrial. of a down dig with industrial, have you a

also at is the months it's think everything whole to going that that we coming quarters and there. and opportunity is footprint going robotics is You the go then and that market but in do on stated the to everything pricing in XX% XX% tougher oil oil, got you sectors gas industrial I be and the oil in there know and great sector. we maybe to sub We look which of given which

new design lot We've continues have in a might to that but that little up stepped Automation we certainly little segment. we got but of business we wins don't then flatter industrial anticipate pressure be a bit bit transportation transportation to some be do a but some in there.

QX semi-caps given segment. the anticipating we'll we of have being it it see it medical and with to improvement I So but we the we are snapback of that kind won't a depends some from really physician but and think defense that by expect play kind have That out said

Anja Soderstrom

Okay. healthcare. talking Thank then the you. And about

So related out? products have helping you're you go we related, that COVID been in elective or about how should out seen if Have we of but search out back with cancellation you they the have product again? back that the those to pushed coming this there related products think more

Jeffrey Benck

in Elective not some category down category drag it's to us. that in products for overall one segment enough Yes. I is would softness the segment there's the surgery say but medical one the

COVID or doing. some related the In fact, some the of diagnostic upside that the bullish we're and pretty we're things of on products the some of given

COVID is As of about try you see we mean to our one for tester one-hour be the It's things. promised. great I customers of just from articulate everything kind got developing.

products that's are kind exactly and in that mean play of the needed. I We those things. the ventilators

wholesale our shift. to up hospitals back picking enable you're not want think do not that's lot to and So there's right We products a not more a fine. lot be The surgery that of see start that that hey officials more out in more but may can't we to the I that able out standpoint cancel fulfill if there's they're say of it's but that seeing we and we of I I all there. know surgery of a elective that's pressure demand how I the from watch we'll elective hurting across government like plays set like move XQ but some demand cancellations but right we're think It'll a think to to orders push in on things. would it's broad the

Anja Soderstrom

second you Roop, am to you about be was sorry I for It and tax did quarter? Thank the -- what rate expected say the Okay.

Roop Lakkaraju

Yes.

range. be to on to XX% in XX% year that it expect We

Anja Soderstrom

And Okay. about currency how currency see headwinds? Do or? any you headwinds

Roop Lakkaraju

are We little of a currency seeing headwinds. bit

from We have some the peso. impacts FX especially

continue that. little in We a persisting It's QX. bit to monitor

that proactively we'll well. look So as to manage

Anja Soderstrom

Okay. from Thank That all you. Thank was you. me.

Roop Lakkaraju

Anja. Thanks

Jeffrey Benck

Anja. Thank

Operator

next Our Company. Please Mike comes Needham go from question Cikos & of ahead.

Mike Cikos

thanks guys here. Hey the taking for questions

item. housekeeping a just First

wanted comment made the you take in thinking that sequential I script basis correct? sure that a on expense a SG&A was during I about there was that QX. down to to guys looking think I just is make are X%

Roop Lakkaraju

sequential basis, That the correct. is on

Mike Cikos

structure is concerns there how this will these temporary with or seeing profile uncertain and is about guess cost Okay cost and any a be reductions cost-cutting to the help on the more, we that there from if align is anything to take is I I'm basis measures? revenue those more away thinking changing

Roop Lakkaraju

Yes.

pieces up break into them I'll Mike. two So

you we're is cost the Jose transaction last we around and mentioned through Specifically actions and that will. in some QX. summer the comments with the was kind end temporary to did our announce if seeing remember that be in in we nature with of a of the if associated which my environment of today the those from site by call the broader current Separate the which which San in of articulated in one you the demand prepared remarks and other one on profile track closed consolidation fourth quarter completed State are I

of of actions cost we the with environment. that Separate announced as on are track a our as that taken the certain So well. part from result we've consolidation of action current sites we're

Jeffrey Benck

the just given we taken. working the really are Maybe the biased in resources been given protecting that we've that's demand fact second I add and Mike, the and and capabilities why on half will really our really we've projects so towards the

we we where current to this but disruption quarter. really been second have this around do We proactive from in temporary us a such look the world got help at site we've our tried a how in whether

Mike Cikos

up ability involves what you them your curious just trying to light that? able take thinking just imagine or but Mexico would that back similar gets and the follow to in track every would ramped that helping for is back another That gauge get I to green Thanks and that up to news question and and let's Malaysia should all sense. I get makes facility for but open ton how clear facilities a had of to next different those weeks, over how be it and getting good about be long it a guess in on we say ramps of up couple the

Jeffrey Benck

Yes.

went complex with can approval, products number operate We're shelter-in-place, critical hey thing capital initially building equipment. of products. to you So and okay as government that were in critical building I guidelines then building We're are infrastructure. is deemed have mean the do the put semiconductor and actually able XX% less week a you then Malaysia that a certain to fully imagine or medical to and we'll critical time first period when down a and we're shut let we might because a the up then semiconductor operated the than to we're weeks distance, reconfigure we we're we inspection, have month we able an correspondingly. to XX% factory, we to but for we let's production and split only short XX% step infrastructure when we those appeal the We're you and building under get shifts to able to back guidelines, it's a were we to guidelines for get to an had met industry of XX% then increase got X-X approval able you to say were our

like socially, equipment able multiple level % keeping their in facility, doing is and check country we're and and things and with Now health the masks made with to distancing, of to still comfort protective a all progress social day, a the times apart, meaning people XXX cleaning containment the that that. it's get

safe everyone not kind So stay back. four and to of the that it facilities the elongated and the take to would get process where takes necessarily a get switch. that's really teams what we're doing like that's It's weeks it in been of but an XXX% or there. to around does, time it we motivation get six I light while world for so California thing five, say to customers recognize something deliver importance is just our might there's our want

approval because said Mexico the continue we going is site different say Mexico going and bit go producing to to had is it, it. even federal not to that no, we're federal approve the approved to and top already Baja on we're little of state a though certification then And state our and going

that. all then So to we're independently and and we through certify going work we're to going shut then operations

a can here again tell. you So play-by-play there's

team think We have and a the we closure region open working been along this were lot a sites proactive to I large in really pseudo daily up that's we've very with with early, probably folks these on just of reopen after we weeks across of three five, factories feel have EMS were the down landscape in coincidentally, when Tijuana. we it but does weeks lot the looking six facilities a China other in in that

a footprint some think and going I to and that disruption through confident our bit bigger in some more we're we're than we little of hard are we're with in operationally a California areas dealing but were it hit We get have competitors.

Mike Cikos

when a the Right. state you you federal and for of governments Definitely little at bit a movement the line up. think

Roop Lakkaraju

sound that does familiar? Yes,

Mike Cikos

Right.

Jeffrey Benck

[indiscernible].

Mike Cikos

more other I that One and it that I around to correctly. you question had I wanted semi-cap. make for the was you heard sure

to Malaysian now. at due like in So demand to -- inability facility, if might of from on QX the going fulfill down might QX some be currently to anything you're it it's your based I coming the sounds partial shelter-in-place the be in be slightly utilization but guess

Jeffrey Benck

demand Yes. Semi not problem. a is

but fulfill guideposts to of that for could precision on could it at be It and to XX continue as presentation, Malaysia you our kind to both said, there demand bit up that kind flattish. look get a is We we stronger a if really We're to ability hard it is it our chart the our as saying had semi-cap footprint in the because we area fulfill this you it. is have work but where there It side we see a we demand. go grow plenty bit to challenging going bay all more said arrow we to do the of in to we making more of tried demand. technology the demanding,

Mike Cikos

queue. jump right. the guys. in you Thank Thanks All I'll and lot. helpful back That's a

Jeffrey Benck

you. Thank

Operator

turn like over back remarks. Lisa would This to concludes our session. conference Weeks any closing the question-and-answer I to for

Lisa Weeks

everyone like joining for today. to call thank just We our Yes.

any you you. families to follow-up hesitate stay an If hope We Thank certainly you next XXXX our have providing look earnings in forward reach your of second questions all don't out. calls quarter and to and well. that update you results on our please

Operator

and presentation may disconnect. today’s attending for you you Thank concluded. now now is conference The

Benchmark Electronics (BHE) 29 Apr 202020 Q1 Earnings call transcript