- Earnings call transcript Q3 2022

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Operator

Good afternoon, everyone, and welcome to the Benchmark Electronics Incorporated Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Paul Mansky, Investor Relations and Corporate Development. ahead. go please Sir,

Paul Mansky

and quarter for call. fiscal Jamie, for us Benchmark's third year thanks you, joining everyone today Thank XXXX earnings

press website me this presentation. is take has quarter the in that Investor we Jeff and on a in Roop X are available highlighting release a our forward-looking release as issued this a presentation and following for and www.bench.com. release Please call. GAAP a and Joining our the of and available statements the the will advice online we call. performance President; the earnings prepared appendix the third at an our Benck, This earnings measures provided -- Lakkaraju, being webcast XXXX online are non-GAAP as be closed presentation. will call the reference we’ll the moment market CEO well After The reference financial reconciliation live on the today, company of we presentation Slide review CFO. under of afternoon The section have to of replay to in Relations

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

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

we'll and our Jeff Roop discussing cash financial call, sector a return our Investor will Jeff covering Analyst results, summary November demand results. detailed Day summary in will to balance more fourth today's trends, provide more will at guidance. insight For our then quarter quarter event. and by sheet X, detail and on our be discuss a which of XXXX begin then third including

turn call to you'll Benck, X, the I turn over Slide will CEO. If please to Jeff

Jeff Benck

year, delivering greater seen now, computing, today. pleased the Revenue our the with generation industrial results our the of revenue thanks non-GAAP XXXX, growth Thank than for than $XXX everyone sectors. for particularly communications with performance in growth. our press XX% of six and quarter I'm XX% million by sectors execution $X.XX the greater five last of above of revenue was our our you, Paul. delivered and time, to Hopefully, again At year-over-year earnings continued and quarter our up joining third same same next growth earnings with you've and call Good afternoon, million nearly represented versus release advanced guidance. earnings up $XXX which and we midpoint the strategy.

As we is key benefiting said clearly before, drivers. two from Benchmark

Roop capturing products. the our minute. success and several innovative wins now growth existing ramping years, markets more will quarter the in details on high with Our share last over our third their in customer in marketplace addressing are success results which new a

fourth the to quarter. Turning

growth we're see continue and across which earnings areas. of of demand XX%. supply revenue by around year greater positions We us guidance chain, achieve sectors. of seeing earnings growth full commodity robust The our represent many would midpoint encouraged to our market XX% We're in $X.XX, availability of of to than and the improvements year-over-year majority

November Day more NYSE. you. execution on strategy We with details our upcoming With the that, financial X today. through proud results semiconductor output. limit in over of you we've to great production However, Analyst to longer some has we of team challenges our you the on term forward targets families, these Roop done working provided constraints continues our still to which see the at sharing during to our I'm job to and the look deliver continued

Roop Lakkaraju

sequentially sequentially million increased revenues a energy in were and Industrials have Please quarter XXXX market machining XX% programs. Thank precision and third new large program due constraints growth revenue X% revenues with Semi-Cap flat Medical services. increased quarter related and sequentially remained improvements decreased and you, existing year-over-year from increased from products higher revenues third sector. for and to assembly solutions. Total and sequentially Benchmark complex XX% throughout for up due was quarter material which high the ramps. the certain customers Jeff, afternoon. and the to building sequentially for Demand revenue X% XX% constraints revenue our levels for demand third chain year-over-year. by and were turn higher and $XXX A&D good is electromechanical X% X year-over-year supply Slide down due QX, year-over-year XX% XX% infrastructure to to LiDAR X% for year-over-year. with

Turning to our traditional markets.

and focus to for computing top programs. generation the our In quarter, of telco compute and telco In XX% and year-over-year represented ramp was Slide broadband sector, ramps revenues of from value that up third were next sequentially the up XX turn sequentially strength higher the continued and performance new continue XX% computing up year-over-year sales. performance on respectively. XX% within networking XX% subsectors high XX% Please infrastructure. demand from Computing to high and X. We customers

for earnings represents was $X.XX, which share GAAP basis. the XXX% a year-over-year quarter Our growth per on

California the Moorpark, site included network. through activities other $X.X GAAP restructuring other closure one-time Our in restructuring of results costs announced million and our and to global smaller totaling our related previously

non-GAAP due X.X% reduction a premiums. improved gross premiums, of supply in inclusive revenue, margin absorption is higher chain our to For and supply points chain QX, basis better XX of sequentially

supply for our to XXXX, impact and Slide which Non-GAAP $XX.X X%. continued midpoint In X. was is chain which the as Please our primarily the QX quarter, higher effective up excluding $X.XX higher margin guidance and margin infrastructure. turn due SG&A sequentially. is than forecasted. in variable Our investment XX.X% is compensation IT EPS sequentially was operating to the our rate higher operating X.X% premiums, Non-GAAP was million of of QX tax non-GAAP was $X.XX XX%

nature XXXX, basis slide over last the we number decreased quarters approximately a on of premiums these are chain this year-over-year We decrease. to on revenue by premiums $XX be temporary recovery incurred due Sequentially, the on $XX will the a trended challenging million. QX have Magnitude the $XX comparison. of effects chain premiums basis in million, but In cost and supply increased shown seven supply less chain the million requires this for environment paid, to as environment. supply

growth. Excluding of of supply increase chain our million, premiums, revenue the million XXXX $XX sequential $XXX third a or growth of is and or in increase quarter XX% year-over-year a XX% $XXX million

point to As X.X%, in discussed, profit and the third gross diluted Non-GAAP X. gross pass-through this Please while XX are operating and basis sequentially basis the by period of margins a between grown operating and growth. are improvement XXXX, year-over-year. as revenue unaffected. XXX growth has revenue, QX XX% In operating XXXX and QX XX% Slide income XXX% ROIC turn result was a increase by a quarter profit, to point EPS ROIC

our X cash Slide review conversion to to cycle performance. Turning

third inventory advanced cycle in XX compared days days the higher QX days offset conversion by XX cash were in deposit increase base. Our customer to the quarter with to due higher primarily

million Our in $XX capital Slide used sequentially update higher. resources. or million customer $XX cash and million grew and to deposits advanced in $XX invested We XX% XX liquidity an Please CapEx. of on operations for turn

inventory. anticipate $XX to million we of from $XX We spend flow $XX million QX, to to we million XXXX. $XX million operations cash CapEx generating expect consume In in on as

In components positive support to reminder, and year consists of expect our of primarily demand. XXXX, raw our to flow. flow from free As the majority fiscal EMS operations a cash cash growing inventory we generate

Our cash balance was XX. $XXX September at million

our term against $XXX revolver, and As on million outstanding million outstanding $XXX XX, we borrowings our our September of loan, had available on $XXX million had revolver.

allocation In million. capital Turning review QX, activity. of to Slide cash to dividends we paid our XX $X.X

of remaining our existing September had $XXX approximately As in we XX, repurchase share authorization. million

fourth of XX repurchases XXXX. for quarter conditions Please in considering our the XXXX share guidance. evaluate quarter review Slide turn will while We fourth market opportunistically, to

represents We at expect $XXX premiums from million. range XX% growth, range which approximately revenue chain to a midpoint comprehends to million supply a year-over-year million of $XX $XXX revenue the

at amortization costs. and estimated in tangible for other of $XX.X is improving for approximately non-GAAP and million $XX The as a range expect margin that does X% guidance our revenue provided gross X.X% or the midpoint. will between of X.X% margin modeling $XX.X between purposes. strong will restructuring We QX, our and exclude result and assets of impact growth million Implied million to guidance SG&A absorption. operating continued the be

$X We to costs expect associated with approximately to incur to restructuring activities continued of million. and other $XXX,XXX The costs in non-recurring site announced QX closures. relate previously

of Other expenses expense. earnings diluted to non-GAAP expected per or to is midpoint is million the be net Our interest which is $X.XX. share $X.X $X.XX of to be in primarily a expected range $X.XX

$XX.X XX%/ that XX% our expect The We QX, between be approximately million. tax for effective expected rate QX will non-GAAP and weighted average shares for are

the in perspective, Finally, anticipate from you, cash back that, call period. with turn flow cash operations the I'll we to positive And generating Jeff. from a

Jeff Benck

turn Please XX. Slide to Thanks, Roop.

in to to Semi-Cap, are expanding new This vacuum we Before been press awards in into an converting while and well Once manufacturing of process has navigate to those the advanced wafer flagship device sector area. recent Systems, great tools. product we time I upcoming product In critical control manufacturing Yield secured through ophthalmology for surface sectors, forward wanted the adding outlook, I revenue of like quarter, automated customers Malaysia, continue cure for in past support In engineering diversification, saw we of for realize biometry and awarded portfolio. release new addition XXXX line our designed on the grow we help their we customers manufacturing regarding eye. with of a we ultrasound focus go take manufacturing continue to Reflecting into conditioning, helping for Engineering diversity XXXX look complex system. engineering secured the September to the beyond. program and product and across to and I'd Semi-Cap vision. of where imaging market reflecting year novel Medical, our be as wins their transfer life the and science the process highlight projects as our Phoenix balance new providing quarter. to again, good to partnership our for them we wins That's customers that the programs on and existing and to medical lifecycle accelerate a in wet a space we some programs system to highlight

defibrillator. external for We automatic a new a award also manufacturing received

the and unique our the project a we a program a energy advanced of in won for team internal efficiency particularly customers medical who for and our system. In the at of power storage an design vision, sustainability energy won we that clean industrials, into past share inverter to going quarter, manufacturing energy, that areas automation. In treatment platform. extend is focus initiatives Finally, core own cardiology a

industrial mobile manufacture drives, an We an seeing solutions autonomous Within Expanding wins and hospitality we with systems solutions new and we existing design a on emerging also existing high radars. innovative speed RF healthcare, aviation, solid also the fully market. relationship for for RF that to longtime in OEM. a an win commercial momentum. high won control quarter. focused our accelerate business, drone and Such UAV wins systems. power we with designing pilot extended computing will In defense, filters. within aviation radar, partnering next project manufacturing also new win is robots company include and who our sector, where an volume manufacturing electrification, generation we're with for HPC as for on growth smart communication where customer coverage industries. LTE/XG advanced saw are automated a and engineering, Within Recording In computing help an we program artillery manufacturing communications, the we or the A&D additional the are controls

some color expected turning on provide sector for quarter. Now by the trends XX. to demand fourth Slide I'll

impact of mentioned, are economy. the we potential broader inflation's risk As to and the cognizant recession

program expected double-digits us the and by term, memory revenues year-on-year, the market we for domestic believe China indicators drivers in we Longer year-on-year our quarters. new the help sector future part with constraint demand while diversification the could Semi-Cap, and Thankfully, to grown and on our in given in We to restrictions improving with to of offset one robust XX% strong of over momentum limited bullish weakness, into aforementioned to customer shipped the diversity wins minimal industry strength the Medical weakness. proliferation across level year-over-year. is provided And grow the double-digit to new industry win few this the CHIPS will rebalancing. of near business In our in exposure most us selection, we last with work in and certainly years enable soften consumer XX impacted customer transformation our aided QX centric we manufacturing new in stability. our and we However, in long form XXXX. space, the the QX Coupled supply investment majority base in accomplished component greater has but sector, again of strong expect alternative chain demand remain act. again consecutive the we QX have markets, semiconductor meet remain given is with once any and secular were to sectors have supply more, qualification redesigns required this our upside. delivered ability growth cycles in In provide sectors

September the QX to QX performance In prior to expect We over performance. demonstrating double-digit strong growth. revenue sequentially similar strong year, another year-on-year Industrials, versus be XX% with quarter grew

for We a products with devices, systems energy new and September consistent quarters. and demand For good LiDAR as measurement such XQ, growth in and catalyst as applications, over test we advanced management between be expect program the existing industrial robotics several Industrial quarter. next balance to see ramps

in A&D sector. the two, line challenges acutely to supply to outlook. chain here felt be this continue QX Moving as performance our sector or expectations, was with in

again recent design the and recovery next ramp once in than further reported quarters, the wins in performed coming period. annual As year. September XX% the sequential Within our growth expect XX% we greater telco, well to with begin quarter

to continue infrastructure from be growth by prospects wins enable aimed anywhere. government and programs the to by ramping We broadband broadband encouraged supported

in high including the computing, current next the will sector. the few computing that build a new in of underway sophisticated effort continue most Finally, on world, in contribute help and systems advanced supercomputer platform performance performance we to to some the largest this quarters

now with We've is and is operating XX% the end on our the margin our our targets of than met end exit year If Operating we of progress premiums time X.X% excluding by exceeded the out the the Furthermore, within were or guidance excluding committed to and effect greater of Let's we achieving our chain at high of the non-GAAP exceed growth include at of associated revenue high margin we company, to like year. range. of well revenue summary, with among these to XX. compensation robust stock-based In the operating many poised steady turn by expense pass-through to we supply our for XXXX, be for fall say of exclude midpoint XXXX. model be laid of premiums, range range. the gross This are our target which non-GAAP X.X% to above the the the expected midterm peers, QX. X.X%. of Demand non-GAAP Slide strategic I'm target are and Slide to our continues than you diversified helped turn margin in in for sectors focus. each the to Back QX, pleased of made we XX. if year goals for to for would we targets full greater we our

products deliver to paying us and them growth to partner earnings XX% positioning pick companies innovative off, strategy on their in with potentially is XXXX. leading non-GAAP Our

over XXXX, session. to strategy, now our couple new customer we Day at of to weeks. grow wins I'll than to We turn call positions conduct the the With continued and forward look forward sharing market. the believe our us Analyst to a Looking that, in to portfolio this more with operator our of you Q&A faster pipeline

Operator

ahead will gentlemen, Please question. Ladies And with today first Q&A Street. Jaeson and from session. from Instructions] we Lake comes begin question Schmidt your [Operator at our this time that go

Jaeson Schmidt

Thanks just know the expect given Semi-Cap questions. an bit? you on things I But space. dynamics guys outlined. down already to are for if you signs commentary on curious just softening my taking want a seeing just follow-up eventual you guys. the do Hey, Jeff, your slowing of

Jeff Benck

call Good Thanks, Yeah. question. the and for Jaeson. to the on have thanks you

end year Of new we spending not year. wins towards see immune reduced course, But in really to We equipment the but by trend a the also lot it. announcements of fab have not of we've that. predicted strong customers, We're in the seen had front a only certainly about space others XXXX. wafer next

In fact, feel the for we don't next those and of two with And growth into we're up of kind rates then it like overcome said, unsure. I'd ‘XX been we pretty Many had revenue That fourth the and that contributing guide that see one as But more kind and strong bit helps in there. segment. positioned of put the new that wins. sectors our we're seems a set well to little the getting customers industry beyond year, diversified of a we also there start top continued will also well we anticipate seeing to is think more pressure. across you downward of quarter because to look do the softer continue overall in we little being

memory Some the we're of I biased logic. higher side. bit also will that is say to a

we to tools. on So work tend more logic

we're have very we of look and we the We're long long over related trend investments dividends, the next secular thinking years about to big Although tier few also when particularly on memory out that's some here. business, what pay constructive but think are it. made do still you the kind going positive,

Jaeson Schmidt

is categories beyond at trends? wins much able services underlying your Okay. recently focusing anymore. manufacturing. But was initiative customers engineering joined being kind demand a think really of when your That's big of on the I just expand on just Jeff, growth those out know how based your kind of design And guys you I to know you do you doing the services don't just helpful. besides break

Jeff Benck

opportunities rate not help EMS whether or actually making system to rate in third the but the how we and complete helping building One we're we attach product is test saw pleased a it's doing again manufacturing, design. or over that I'm wins we engineering those to say deals. just thing quarter the track, to Jaeson, do attach of sure XX%

strong contribution there. there's So

I seen, our mean, overall you've As fast. growing business pretty is

say sides So in there's growing an that helping but both total outpacing that I growth are and won't engineering, in number.

cycle. because we're them actually still us spending haven't helps we more help and and And but engineering come -- in small that is definitely the we're life We one broken point why why it of winning could a typically more energy design. out be all because of you help with to and got chain Maybe shop redesign those folks we're any total, product part through of stop three at that not alternative or in we're an concept getting really have and supply it parts a free you so you on kind a it's you might getting might product realization to help areas. up participation maybe end end to of and it a

So good business. are the and way growing, forward pretty we But moving our capabilities. about to feel engineering to got adding with our keep things we’ve

Jaeson Schmidt

view focused of underlying two trends the a are just that the you sense sort I year certain then of I'll And now get these more And guys from the of programs? it. on queue. more made of jump from this to your demand on on obviously, XXXX programs the one traditional forward should step sustainability sort think we here. of a How last a to computing mean, Got strategic or is growth you've you telco? standpoint. and trying back just and kind this growth But just right I this focusing know, I'm segments? about do reflective focus a me big simply into markets is

Jeff Benck

I'll on really give of the sort but thinking performance We're boards. narrowed just high bit. computing the on little most how a sophisticated We those more Day We focus at some largest to to advanced computing preview built platforms. going our Analyst about of maybe have we're that, Yeah. color

and complex You compute talk cooling systems about water very mechanisms.

meaningful for traditional generation from so over contribution And top you the it's the about involved that when and much next boxes, the a we're standpoint look And built add that's more infrastructure. we think it's commodity we work, really example, And that with business. it, RF a flip infrastructure. telco, sophisticated way even margins at build such. We same there, value no margin compute thing from don't and networking really set again, longer

used us that that total. the that margin traditional traditional have markets, a we categorize the fact are what were compute concerned having really of renew. to when hasn't it the doing quarter back because low it's it's So see like bigger That decided might the drag we we've not project not large, to this percent that you'll

really So have we kind of that. transformed

we way just we're to programs about articulated, in and good like definitely a getting a a bit see coming I it's might right So like a even question. We you'll to sustainability the feel think the portray We it. shift talking we year that want bit But some there's you here. the that guys. shift how

Jaeson Schmidt

guys. a Thanks lot, helpful. That's Okay.

Jeff Benck

No Yeah. worries.

Roop Lakkaraju

Thanks, Jaeson.

Operator

question Fox comes with Steven ahead next Please Our from your question. go Advisors. from Fox

Steven Fox

Good afternoon. Hi.

sure how if into into follow-up. to quarter. right, just I'm numbers had call easing you tough I that question to like year? I'm for chain. in I going margins guys. you incrementally et a on but had it's you be a terms would And of that last provided was not then chain tougher supply I'm maybe It looking how little as the just out First And dig cetera. supply can the you the next versus and premiums at looks the anything compared reading was

Jeff Benck

what Supply little had start Yeah, happy constraints lower speaks They areas initially came we the I'll question. in we I sequentially about. than really quarter, Steve. Thanks premiums forecasted, were bit certain on out chain market. in higher the the second think, than so of which which for that. a to, the were continued

some some seeing improvement but areas, is in We some level of there still constraints. are

all customers these of premiums across handfuls in couple It our willing I'll is really only. thing are premiums, about supply and sectors of other pay of customers who these really chain these are The certain a mention portfolio. broad-based to

we is say not say isn't that more I wouldn't perspective. in saw what it -- so that. really And than I We're But me add let chain broad-based to supply QX. from difficult -- wouldn't just

the can freed we the with and were is And up we growth of products while you we've imagine, a fact, memory seen of In some free affectionate of categories as softness the completing semiconductors us get we But gating to number in critical ship golden more improvement did. term stuff build revenue components. consumer and is gating the there. now, screw are some side in builds that some are that from critical and getting there still areas such. clear still maybe pleased on But that is to

improvement, So online. get part have we anticipate capacity still hope we're see or even to areas we the particular capacity quarter, those we continued comes fourth frees going but of through kind up can that some no that one until

So out quarter. deal with we we're think supply we'll and it's But that in saw kind as expect downward in fourth we'll trend chain something that peak to it continue lower to premiums a guiding I Roop the again be 'XX. said, and of the directionally

Steven Fox

really That's helpful. Semi-Cap on the And just market Great. then back guys. for you

who impact any or the with indirectly administration. this for, near should building we maybe Is of who's there this So you're quarter and How like in related some by in. to term curves does affect were directly you quarter? very the that put place next Biden you're that see CHIP fully

Jeff Benck

When first that. not this like just quarter going you next. I to appropriation I obviously, look Biden you're like of that tranche I the Act, see on the think help mean, of or mean, the at CHIPS

support or fab about we once You've are -- ground part what to is seen we help that's move that. build the they're got out going to is say of to got help in fab what place we When an like and in the to up, for going people government the and us, Ohio poured they semiconductors, semiconductor buy building you they the we the forward build think and from then on do -- the comes that because concrete walls they're and capital that equipment the got and foundation away Intel equipment investment they with are produce.

front of bit a from we which of in is Act end a would don't there help even lag, 'XX, CHIPS the expect I is the think win huge tools space. little probably it spectrum the path. say, the we broad and continued participate why will be that a a technologies little down said, we generation in to of across being But have we further next So

some while business nanometer are impacted generation that say, grow. have So weakness a sub-X demand we there we're enjoying They're on on are next memory, and that working by customers those continues strong CHIPS. not that seeing let's to more

-- you renaissance but got bit upstate deeper of New little that semiconductor fab a the to billion We in a bit do Micron general go we there, in like feel $XXX it's domestic manufacturing. York. So saw

You fabs investments growth our Intel got this term TSMC building Those fabs. of and growth got here in bodes for new building continued well Arizona, our ton long you've in space.

Steven Fox

to I or impact want something indirect Like to U.S. helpful. in you're maybe told servicing just was companies get physically blow guess semiconductor trying what stop term an what impact? would I doing you at was it to visits for more near the Chinese the term see China be terms back in being also That's the near of customers. in is that guys you of on U.S. And that would

Jeff Benck

-- reaching and didn't sudden. that's it pretty to pretty broad a No, question. restrictions good U.S. new was the on speak they're And I

going speaks of the like? So look We what that There still does potential our there OEM in a that diversity in is But of guidance. assessing, as it does to to partners quarter guess year near I for our next bit sign like, lot sense a the are is a the here. of portfolio. mean, potential fourth and people oh, term China. we think we license near transition. on can't it's whips a on ship risk that. also the to have the that there's through work going they wait, I comprehended licensing the term our risk in that what in Oh, even

we For us China. from our semiconductor in manufacture equipment a also don't production standpoint,

a for So not risk that's us.

something might currently because So customer demand It's restriction kicks just I contemplating. our in. -- shifts if we're because that not that's add that more

Steven Fox

That's Great. all Thank you. super helpful.

Jeff Benck

Sure.

Operator

Our next Company. go question your Please comes from Jim with ahead Ricchiuti question. from Needham and

Unidentified Participant

was afternoon. waiting quarter, out. approximately the it Is How unfulfilled. of on mentioned had And In that the you trending? amount finding you. for Jim. demand pushed that you Good actually demand $XXX quarter-to-quarter? gets is Thank rolling the over are is This Q as dollar previous this that Hi. Chris is million in

Jeff Benck

good $XXX the more on that still to call. we unfulfilled have I So Chris, Jeff think demand. million unfulfilled you mentioned demand From than an are of standpoint,

some within Now demand. we so seeing it's movement same there, the not are

it's ease, obviously chain in kind move did And forward. the we itself. some supply the as -- able fulfill support and parts that we we demand production that they we challenges getting unfulfilled some will those help about for as increase kind of prior obviously, of or forward, replenishing talked move -- as the to being So of as of constraints we're

And in look that out XXXX and contemplated to XXXX. is we'll that we in as some QX, well as our of consider

Roop Lakkaraju

Yeah. been haven't it's sense One been if that durable that has in say and it's fulfilled, that the percent we perishable. I perishable thing all been would not really seen order surprisingly Chris saw is, that's a small it be transcend. we

revenue But in haven't more think unfulfilled on to I we we loss demand. will as we seen that and that. a products, fulfill down burn really continue grow significant

that a tended really don't it reason has to So -- we would see carry wouldn't continue. that, trend forward. that And

Unidentified Participant

Got it. Got it.

Roop Lakkaraju

two. But [indiscernible] the certainly, all

Unidentified Participant

availability on but the Are a substantially that much of helpful. with component softness end? products of signs your critical is semiconductors waiting like much that inventory complete, like Very And maybe it. consumer you the the Got improving are is a in semiconductor. broader connection any economy discussed in how components seeing on

Jeff Benck

more question, the the let that, because provide about talk and something should then I'll Roop inventory. of I That's Let front it's good clarity we think a on. little a though, me get

the drop are mentioned, memory, consumer like PC help we drop. The seeing I some right? in some areas, there, think I

of seeing asked our is And and weakness here it think I funny are like, it's Procurement on free up, things is a will I We some question help. "hey, Chief Officer helps consumer Unfortunately, lot low a we perfect to be it's higher tend industrial. because we is a a to what do not volume, custom. -- lower lot tend mix, help we of be

some and about or build, tend If we equipment the aerospace very medical unique components. programs they you of the some use think to custom of sometimes defense

we'll it, that like, take it. fully hey, not it's need so And didn't translatable PC

we solutions shift -- might a up capacity it's I wafer fab it's say, to So helps. like up like more for components free it that unit. our have would that into -- We the little -- could the component can and that pop we go not they but it not that broadly we freed It unique broader customers. in also build need, a products it's typically

So there's help, maybe some going about it's that. a but based -- the. to windfall talk not overnight on I like But you say -- they're be not like would could broadly, it's

Roop Lakkaraju

have the Chris, there. touch And question inventory Yes. you let that me interesting on

past, it build the as inventory but in on step let overall at it, inventory in customers point time amount in of vast is materials the terms have the industry. about fulfill raw components, the get point so obviously, the then me want raw WIP of can First in majority of of and with at they in is any for it EMS -- for can our And the as all, we if waiting inventory our and the support and those demand we that really you components we door. we is our as inventory, don't want we So back Semi-Cap side right? possible, because side. really well, incremental on -- think really just EMS as few unfulfilled quickly the about And out -- have prior about it the lesser it, is really demand if majority on your our a this that the that talked we question,

Unidentified Participant

if And helpful. expect you OEMs trend for Very one mild the that the may. impact a you. more of event to me, of I Thank would how outsourcing manufacturing? their environment it. Got recession, In

Jeff Benck

the economic the business you saying, could job we tougher find building headcount in? someone at OEMs really we it. else think we have? are I -- all the could product and been think are And we a what there's I do better we environment, in it do when we most efficiently the this most a past, And need are do more,

there's recessionary good a outsourced We A&D market not in for than the seen particularly -- typically environment half is we've the outsourced. and still outsourcing. still the in be So medical, more trend in

So compute predominantly opportunity already. I the that outsourced that a lot telco naturally grow will believe, way are of

effectively. really cost environment and think about will a to do think whether that people cause So it -- hard more recessionary would could they I

to going to And are the other most near The cost-effective world move don't is near more whether U.S. or at dynamic our region in build still We region. shoring, around from China the looking move or in demand towards that's XX% it material all on of products. folks want to ship the to is way we move see what's the this we maybe want

border air putting in lot it's it's shipping boat a increase U.S. the a Asia. bring example, the big a cost because on and product an in So Mexico, for near than effective to or it across more from demand

look trend if So I have that will think budgets that's another get to hard folks that at tighter.

Roop Lakkaraju

one other Chris. And add. to thing Yeah,

about partners think see. the on internally side they the technical talent, for also That's and their to side. challenge you find continue have whether of think, engineering can or we that's or for to the focus outsourcing that finding outsourced driver evaluate OEMs whether manufacturing tell or another, If I focus that look outsourced

Unidentified Participant

much on it. quarter. Got this result Thanks very and congrats the

Jeff Benck

Thanks, Chris.

Roop Lakkaraju

Thanks.

Operator

Our question ahead Anja comes with with go Instructions] Soderstrom question. [Operator Please Sidoti. from your next

Anja Soderstrom

for of point? Hi. But or outsourcing questions. you question. were this had you driven in on to alluding tenants. trend Roop, is it Thank follow-up you the would supply that engineering-driven taking terms I say a And more demand chain at my actually

Roop Lakkaraju

Is demand engineering or…

Anja Soderstrom

Yeah.

have because the customers because or see or For the which have you engineering you talent chain you turn one solutions, outsourcing relationships your more more? of are some supply to do you the

Roop Lakkaraju

function a really both I Anja. is of think it

we from there be We have to coming standpoint because us that customers design needs engineering our fulfilled have are are others We've that Fact whether to a are can't footprint coming for global elsewhere. Americas, a And who of of and us manufacturing in that scale footprint percentage a in the footprints. Mexico. relatively the greater smaller our China. or and got our that's U.S. in

global so is and footprint OEMs. near-shoring needs supporting manufacturing And of reshoring really that

as terms to a in take have really we support way, aspect focus other So is both. of in customers. we engineering, is market manufacturing it manufacturing mentioned, and And I the Jeff also a function the of with the which think helps of that desires attaching which with engineering

Jeff Benck

you're mix. Good. Pretty think good right. Yeah, I

Anja Soderstrom

then you. Okay. A&D. the was Thank I curious for And

the of where certain in and said areas can seeing you What shortages. we saw component are areas expect coming growth were in what there A&D You quarters? in terms those

Jeff Benck

supply say, six-month and funding to and can to process. then So might And alternative component. defense to will what I say the And to to go getting the that at What customer happening the in would dynamic defense-related front what at component, there the just -- constraints. order. up it's A&D, be a we'll to a back and times, with got fine. be move we the entity. well, today little U.S. get three-letter now a the space, pace which saying, not place they government an that's qualified, bit simple of back look you, we do And the as it this we'll sure, of in the as our is But see like many get -- the or to then it's if go is agency, just ends chain particularly of will one ultimate use get customers got then we part

substitution and like just it's happen. so there's quick a there, more it's And not can that elongated

to about It's we're another point of kind add chain seeing there unheard it's it particular other in one just any industries. because I might premiums, in semiconductor Roop of and wouldn't they're I that -- -- constraints talked this. So same supply is before, the this

they and we'll We particular say, wait. six months. deal without no, So we'll wait that device, can no, like

go there's customers. regulations for as of fault but and It's their I I responsive. handy saying, challenges it's just we're why to things And just not wish that's persistent would quickly. seeing it's So I in our And being up. frustration, that that and not free gosh, much get say, to are could better, as steps the the they do to been that said not more have they that those customer so alleviated it's really the -- typically through space

Anja Soderstrom

That you. was me. Thank all Okay. for

Jeff Benck

Thanks, Anja.

Operator

and floor over that today's And conclude for any session. Paul turn to with -- that like back question-and-answer remarks. I'd will the ladies to closing gentlemen, Mansky

Paul Mansky

XXXX quarter participating Thank for you, third Jamie, in Benchmark's and call. you, thank earnings everyone,

I'd go, listeners we a couple like Before upcoming to events. remind of of

forward hosting we'll at and be X. Cap Conference, on Technology As NYSE Virtual We'll from December you months. more taking thank or the XXth With us Needham Conference at that, X, Raymond coming XXth York in Day attending seeing XXth. Conference in in you the we mentioned the be events today, to X Investor an the again joining followed the January, by on for we back New one Investor Small and and James Annual look attending Growth look November forward previously, on Sidoti Then X. to December Analyst the place and the through weeks

Operator

for that, we'll today's presentation. conference and and joining. call ladies And with gentlemen, We you conclude thank

You now your may lines. disconnect

Benchmark Electronics (BHE) 26 Oct 222022 Q3 Earnings call transcript