Earnings call transcript Q4 2022

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Operator

Good day and welcome to the Benchmark Electronics, Inc. Fourth Quarter 2022 Earnings 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 note this event is being recorded.

to Electronics. conference like Mansky to now Benchmark with would turn over the Paul I ahead. go Please

Paul Mansky

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

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

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

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

of SEC any may materially involve as chain today's to due risks of from global in macroeconomic statements, impact uncertainties the that releases statements of are reminder, supply results constraints, historical statements, fact and a As and described press most notably our which filings. not Actual are and forward-looking remarks these COVID. differ the ongoing conditions

forward-looking update to statements. Benchmark any obligation undertakes no

insight fiscal wins, demand will guidance. sector year business and our will and Jeff results year call, a detailed of fiscal discuss and provide trends, closing return results. first to Jeff today's For then and covering XXXX quarter commentary. more then our fourth will on summary our be Roop quarter financial

to turn X. please will, you If Slide

over I'll to Benck. CEO, our turn Jeff call the

Jeff Benck

joining Thank our million execution again fourth of release Referencing Good was up growth to the seen Slide you year-over-year. X, now, and our results of have you, the continued for of revenue and demonstrated XX% call quarter $XXX XXXX, our everyone which press afternoon Hopefully in our today. for by thanks Paul. fourth strategy. quarter

non-GAAP and than on see Supply quarter a our X.X%, guidance while approximately million continue as lower operating in X.X% GAAP basis. Our was we chain the these decreases. margin gross premiums or $XX was our margin were X.X% non-GAAP GAAP to

Excluding XX.X% we the chain non-GAAP effect of premiums, non-GAAP delivered margin supply of margin gross X.X%. of operating and

given of our compensation most the stock-based points from non-GAAP who our of basis XX our comparing stock-based included results, compensation When X.X% their results. exclude the peers, margin would non-GAAP approximately be in

we per both than late earnings greater which in with company. delivered strength quarter, at was $X.XX GAAP we although of the quarter double the Semi-Cap EMS of earnings softening the managed continued of expected range. still another model, non-GAAP diversity our Semi-Cap fourth into and share, of In and some the record the Finally, year-on-year. midpoint saw well our the the to we in the Coupled delivered quarter, sector digits grow we for in quarterly earnings guidance

of grew GAAP margins X.X%. X. up margins year-on-year. the basis On $X.XX. on record points X.X% gross Turning XX% operating to for In margins while delivered X.X%, represented the earnings non-GAAP were a XXXX, a company. This basis, year XX and were we non-GAAP our Slide were performance earnings operating non-GAAP GAAP full revenue and of

digit up XX% X%, basis Excluding to to operating X.X% was five year-over-year margin with chain $X.X in Non-GAAP gross the of of our supply effects grew and growth margin year-over-year. XX six double points approximately of billion expanded non-GAAP sectors. premiums, revenue

on I as our strategic would the Benchmark to execution like their congratulate for entire deliver continued objectives. team we

the in communicated end we in possible global middle what of XXXX. were targets by financial aware, XXXX pandemic specific indicated back These are the was established you that we of of many the As felt the targets of disruptions execution every exceeded these effect were of and full met we metric. known. these our lost related or the challenges, each focus across ultimately before Despite supply on never chain and

we represented waypoint, key journey for recognize have much improvement. room this while and a further we However, XXXX's is results a

to me let share to few pass details. Roop Now it over a more

Roop Lakkaraju

due you, increased afternoon. for Medical for Slide existing but worked X% revenue sector. sequentially XX% decreased supply chain X% and XX% while ramps. customers with higher program And to year-over-year quarter to market revenues try Please Semi-Cap constraints, QX, increased $XXX constraints. Total increased to the year-over-year revenue increasing fourth our due sequentially, and Thank new by Jeff. X% year-over-year. demand, to lower Benchmark decreased sequentially revenues quarter sequentially for good due fourth to decreased the we offset to XX% X% turn X% growth revenues in material A&D is but was million X as year-over-year. which continued

LiDAR up Industrials revenue the the were building and X% Throughout quarter year-over-year. XX% for down solutions. sequentially, products, saw fourth increasing infrastructure demand but from energy-related we year,

to down XX% ramp of due Advanced up programs. the sequentially, computing Computing X% year-over-year was high-performance

Next-Gen Communications sequentially were year-over-year XX sector from for top continued represented of XX% customers new programs In strength due and and quarter, the In broadband XX% our up sales. existing ramps revenues infrastructure. demand XX% to the fourth

turn Please to X. Slide

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

from by previously to costs, $X.X site net closure Moorpark, California, related results one-time of settlements. announced restructuring the Our offset GAAP included of our totaling legal million gain at $XXX,XXX other in

For chain a a QX, improved gross our our XXX and across sequentially, X.X% sites non-GAAP better supply primarily to in absorption basis margin reduction premiums. due points of

chain our gross Excluding was margin supply premiums, XX.X%.

and healthcare SG&A was due $XX.X primarily Our up variable sequentially million, higher to expenses. compensation

effective chain to was QX supply XX.X%, was as operating XXXX, excluding non-GAAP X.X%. margin was tax Non-GAAP This forecasted. which our In rate premiums. margin compares of X.X%, operating

in non-GAAP sequentially year-over-year. line with XX basis up ROIC basis was $X.XX point guidance, quarter the X.X%, For was year-over-year. the XXX fourth increase EPS of QX the quarter in midpoint our point of and Non-GAAP XX% a improvement

increase year-over-year, XXXX aided XXXX year Benchmark XXXX. of for for Slide full Turn in comparison by all Total an to million X growth A&D. versus the revenue our revenue $XXX billion, by sectors $X.X except for sector market is

to ramps. For customer revenues performance the planned increased Advanced continue by will revenues declined sector Semi-Cap The year. increased growth XX% were to medical systems for with Industrials base. our to A&D revenues improve programs control and new year, from X% continue as execution XX% XX% continued and the was ramp even fab throughout end demand up of building existing throughout primarily XXXX. year-over-year market from programs. up increased across due program due wafer oil the demand subsystems from that from improvements infrastructure gas demand constraints, XX% and high computing and Computing customers

primarily new program and continued up XX% Next-Gen broadband infrastructure strength ramps, in were from Communications revenues programs.

XX% ten top year revenue that had one sales XXXX. of customer represented customers Our XX% for full Materials greater full than Applied was year. the for of the We

Please X. Slide turn to

Our GAAP basis. per year-over-year a share earnings fiscal growth XX% year for on was XXXX $X.XX, representing

results related of one-time a $X.X activities legal previously million totaling other $X million Moorpark, settlements. other the site, smaller announced GAAP restructuring and of net restructuring cost closure Our to our gain from and included California and

chain Our gross premiums, due margin X.X% gross points non-GAAP Without supply of X.X%. margin was our decreased premiums. basis to chain supply XX higher

expenses. year-over-year continued investment Non-GAAP due SG&A $XXX.X compensation, primarily medical IT X.X%. variable higher in and infrastructure operating Our million, margin was to was up

X%. our premiums, impact Excluding chain was margin of operating supply the

year-over-year. tax XX% for EPS non-GAAP Our rate XX.X% was the Non-GAAP year. of effective higher $X.XX was

eight on trended a review Slide XX basis effects to last premiums supply of chain this quarters. the the over Turning

premiums supply in $XX to quarter. expected did million We QX sequentially $XX in to prior chain million they decline and the versus

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

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

conversion the days, quarter QX. inventory largest was in lower quarter. XX was accounts payable were cash which compared impacted days contributor cycle to by in the the The procured XX to Our due increase fourth being days earlier to the in

in payable inventory accounts XX% million by million. decreased Total sequentially or Our QX $XX lower. sequentially $XX declined

update XX liquidity and Slide CapEx. and capital $XX used million we In Turn resources. to in QX, $XX cash of on an invested and million operations for

on December was Our XX $XXX cash million. balance

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

this million capital Turning In capital XX, XXXX, in Slide we activity. expenditures. review our allocation to invested $XX

XXXX $XX and million. $X.X have dividends QX, spending be $XX paid culminating In totaling we cash cash CapEx our QX dividends million of for million XXXX, to a million. we full XXXX. the expect We between million, $XX paid Since $XXX in year

reduction total outstanding of or We X% not the $X.X The a shares did repurchase shares fiscal any shares the share in quarter. was of repurchase XXXX beginning to equal year. approximately of the since XXX,XXX outstanding in million

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

evaluate to continue XXXX. while in share repurchases conditions considering We market opportunistically

making we're in of $XX to capital of continue to range in XXXX. QX and operations While to projection. the cash inventory XXXX free flow we the reducing Based our million other short progress on flow in $XX cash fell generate management our working elements, expect million from in

turn guidance. for review Slide our of first to XXXX quarter Please a XX

represents We which growth. expect to X% from midpoint to revenue a million the range $XXX at year-over-year $XXX million,

in outlook. are we supply chain our including As no longer premiums

midpoint XX% comparable are basis. we these, Excluding growth equal guiding to to a year-on-year a on

lower X.X% expect for throughout We QX, the merit taxes, payroll will reduced to semi-cap be gross enterprise. X.X% due between and margin higher sequentially revenue, our that increases to

program we to favorable gross better do forecasted due through a headwinds temporary revenue continuing levels Our of gross than EMS expected some new might up our which ramp, wins margins. that are to will are to first quarter holding XXXX, indicate number have margins mix, provide

we expect margins. of half through the in improvement second As sequential proceed we XXXX,

will and expense million range $XX SG&A between million. $XX

modeling is range from margin operating non-GAAP to Our be to purposes. X.X% X.X% forecasted

the intangible does other restructuring of exclude of Our and guidance in non-GAAP costs. estimated impact amortization assets

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

per $X.XX or $X.XX. non-GAAP expected of earnings share range to the diluted be a in to Our of mid-point is $X.XX

$X primarily are be net million expected expenses to expense. to interest Other due

year-over-year function additional expense as growth interest as interest rate the of as is our borrowings higher in support well the growing a environment. to Our sequentially

interest our generate We cash flow. expense free borrowings as our to reduce expect XXXX we throughout and

expect of a between QX XX.X million rate XX% in We share effective will for and with average tax that count weighted the be our non-GAAP period. XX%

And I’ll to call over you, turn the back that, with Jeff.

Jeff Benck

Thanks, to Roop. XX. turn Please Slide

updates First, color additional provided. the Roop on me let that some provide

several and sector see guidance Semi-Cap first first in impacting other the continue softness being we sectors case, medical, That to strength next-gen including of comprehends industrials the communications. XXXX. Our quarter half

effective both underlying our chain In the XXXX, sectors. premiums in several growth XXXX rate of the obscured supply and of

closed these For in XX%. a comparative the view we of XXXX, premiums, your for providing a have presented In Semi-Cap, excluding banner revenue out which growing we reference. we’re XX sectors in purposes, year Slide

including restrictions, industry several the the seen this analysts spending, wafer global fab Semi-Cap lower news those for Commerce. attributable Department memory from in all forecast weakness stemming from We’ve markets of companies and regarding the trade in equipment the and space to U.S.

Our involvement exposure and logic to systems us from memory share our partially gains, this versus insulated our with downturn. EUV

On have believe However, coming a to XXXX, budgets we referencing not which estimates first be immune. half weighted. capital seen many WFE we’re XX% XXXX basis, entirely most in down near-term XX% will

expect and further standards in including downturn be the are increasing as content, and historical demand here this the multi-year measures Act. CHIPS Arizona emergence domestic by via drivers like many briefed confident fabs silicon TSMC We government new investment such to in the for of

been forecasting ability in we We This chain In and rates we in XX% given continue be to sector. decline more, Medical, our year-over-year wins impacted have starting are QX, XXXX. sequential to growth grew during the but meet in acutely outperform we’ll in challenges could XXXX, revenue that but our sector demand supply believe fully that this will much program year. a

Looking the macro in us Medical resiliency give forward, customers of quarter of installed our together and strength growth year. anticipated and the base supply expected the for confidence improving sector the full

new increased In continued XX% back from Industrials, and existing wins. growth chain saw on and supply customer premiums program XXXX revenue of products the excluding momentum

to see to industrial and and solutions. business efficiency our automation continue We support shift energy

growth our XXXX expect to sector. be for We Industrial another year

to Moving recovery expecting the A&D in XXXX. sector, we’re

redesign where option. was year, more and improved sector challenges heavily not legacy impacted chain Although the is by throughout commercial defense our sub is demand in supply an systems aero

A&D demand growth. continued steady expect support of deployment solid However, a next-generation to defense and improvement to will growth. we and confident spending we is contributor and be later that systems are this component our With availability year,

XXXX, XX% Next a last with higher much revenue to in Communications, sector the grew the by growing quarters rate. in Generation Turning at few we

sponsored position We benefit infrastructure satellite and from communications wireless broadband government major to are here well investments, programs. broadband proliferation

XXXX significant will to expected sector for expect year prove to exceed the us corporate in We with be growth well space averages. a our

the most and helping the systems largest in Finally, world. performance build in Computing, computing Advanced some we’ve sophisticated of high been

have quarters will the in that this a a new project We large currently performance underway two to sector. supercomputer on platform next contribute

revenue moderate in completes, project year. relatively sector for that we’re As growth flat the resulting expecting to

help wins Turning to in the me diversity the balance secured Slide good the that Once discussion highlighting our sector accelerate and leading to across we in This reflecting XX, year future key customers on their navigate a we indicator by take finish the time quarter. of we $XXX helped some us let the million which is of growth. projects market. again, over bookings, with lifecycle saw to through product end December complex new portfolio,

cosmetic and robotic solution, system. continue minimally be design surgical and platform treatment win as well we life In to device opportunities Medical, science quarter programs, evasive critical won rapid we a as for a this a diagnostic cancer new manufacturing a surgery awarded medical for novel

a wins. number significant execute In of with Semi-Cap, continue we to

for Our award new we a for next project. edge generation us XXXX metrology a engineering year handling In process we record manufacturing way in in wins a And services, and platform. tool had performance bookings. key won cutting lithography was in in for QX,

In won computer flight compact for RF manufacturing a we in will be the used application. sector, program, a an which space A&D

communications design We and jets. manufacturing into goes of module won an fighter that advanced also the

for want communications we military vehicles. Finally, module to secure ground

environment. In that space up continue to will energy in impact wins also Industrials, the positively we the rack

This those we heat energy wins wind system quarter, are pumps. Within manufacturing controllers. for systems designing development climate a and test management efficient for energy included engineering,

this in and Within in key for existing had in EMS, a won secure quarter Computing engineering. two wins one we Communications, In customer. and program Advanced EMS biometric reader the Next Generation we

We also for a high logo business optical performance won provide the which a represents to new transceiver, us.

functional existing a customer Finally, an high in a tester engineer helping large Advanced Computing, computing we’re performance platform. for

with our challenges six earnings. In year summary, many and XXXX please sectors. aid We growth for record in revenue overcame digit was us this of significant another turn as of double the we to Slide XX. delivering did five

six. continue in most of expect meet sectors and least chain supply our the in momentum We of recognize escalated, customers persist, have grow and some peers, with We guiding current as we’re like at to will that are we all XXXX issues frustrated the our of not across demand. costs our to are environment four able

forward improvement critical XXXX working our we continue issues. fact, saw million demand close year, on but to to gap in approximately meaningfully customers In have We last $XXX the with gradual OEM unfulfilled exiting these in look XXXX. solving closely

us published Finally, rating. say proud peer to MSCI’s group the XX% in I’d November for team’s like top of of effort ESG. us in MSCI That highlight I’m very to a AA in elevated in Benchmark. puts its XXXX. to the report

the as effort headwinds, conclusion, our back by obviously further November while In just in I XXXX. is growth, team Benchmark near-term sustainable our member despite were We’ve to still which for want I in confident for XXXX. today should a Semi-Cap long-term invested that reiterate, Benchmark This one was team targets be Analyst that to are I proud. introduced I overcome our to am every future say believe demonstrating Day we as achievable for and at unforeseen want resiliency challenges. the in

and develop forward ultimately like companies the the to our beyond to trend partners complex of With leading and key return sourcing. build ever us and to come. coupled growing anticipated today toward XXXX, in the more outsourcing discussions and help on quarters products. manufacturing need growth progress Semi-Cap We innovative larger The to with look frequency increasingly sectors tomorrow of the growth you than their near in updating

operator session. I’ll now our the call conduct to over the Q&A turn With that, to

Operator

ahead. And be from Schmidt first Lake Instructions] the Jaeson Please from question Street. you. Thank will [Operator

Jaeson Schmidt

taking for Hey questions. Thanks guys. my

to Semi-Cap want on the with market. commentary the start Just

could Just what on curious if of color you you’re more sort provide seeing.

softening started it started that within mentioned cancellations decommits at is this and order You or more primarily QX. to of from have mean, I segment? that soften the to you end see just customers

Jeff Benck

did that’s we’re see the and quarters. XXXX reflected out what It kind orders for drop in Jaeson. looking of at to was pushing of We been really demand

our had As of as we of bring the end with we but were earnings than say in the still anticipated quarter more to start. said, the it was that I back we kind considering to it of midpoint did and We got fourth guidance, was pronounced we slowdown some guidance. the had in diversity the quarter the thankfully And able portfolio, of anticipated. in our would

But into XXXX, half in look as semi the we that continues. particularly first that softness

would China were on say I memory since Analyst also, We further there didn’t even the environment and Day our get restrictions better. the

equipment a fab XX%, we with And OEMs. that. feed we saw of down our that on XX%, be large of wafer increased so, some picking lot incrementally, pressure into industry to I are people The obviously, think

that said, the we the last it – That that will still being we new see some few better do do a industry. customer of that share there and to we segment, backlog customers think will a And that of that so help years supporting in have being of also us do We is also every But had that we you there have that lot contribute there. hasn’t in wasn’t us than changed, the said, gained number are kind wins reflecting in headwinds that Semi-Cap. business.

Jaeson Schmidt

helpful. really confidence the first of that gives is what Okay. you just just curious, this half No, that’s sort the issue. And

better? better just ease the orders first half half constraints Just some to tough assuming, visibility that half do is, the in some comfort start little the you’ll into just given Or how I Can you why better? be have mean, in us second bit second should half? the give a should of supply chain and this be you ship second

Jeff Benck

there. the the on for color back the sequential half environment, little in do of have mean, this I we certainly improvement based reflected XXXX. have a demand we particularly opportunity that’s into And give us. on see can I do visibility Yes. we

Of strong want to that and we’ve prepare of very change. they all key that. now porting our can XXXX customers But to course, Everyone’s to right talked a here. for

So, about But in of what even half XXXX? the improve some the thought back incrementally pronounced from Does here? first quarter is – we’re the fourth there’s does the half. more impact or what it seeing

Jaeson Schmidt

one back just I’ll me, into and Okay. queue. then jump the And last from

to right. heard I want Just make sure

step it QX I programs margin but take So, as you mean, improvement gross QX new ramp, like in an expect a these sequentially? will sounds back and

Jeff Benck

Jason. right, that’s Yes,

QX, sequential ramps the QX with to staying new there, indicated. incremental timeframe a we’ll little but the then from it we’ll the through strong. the to of and QX a or middle ramps drop, headwind in QX from obviously a still So, standpoint, slight a But you’d see year, see of as back sequentially up picks bit

Jaeson Schmidt

Perfect. Okay. guys. Thanks lot a

Jeff Benck

worries. Thanks, Jaeson. No

Operator

And the Fox next ahead. question Fox is go Please from Advisors. from Steven

Steven Fox

Hi, good questions. afternoon. I had a few

XXXX? First about considering to coming that Are half the terms in provide be governments of of China had confident Semi-Cap along transitions, from just thinking you the Jeff, other enacted. incremental be about your this up following you online those fabs to some those online? year. revised are mainly all, it seemed And then up. a why I can question of second you in restrictions follow other color lines, any were customers Semi-Cap? there to And of would new for No sort attribute on your

Jeff Benck

they from it’s – use imagine once and at silicon incremental would second, to able coming new not that just yet. the looking that’s fabs completed. aren’t I building buildings in fab call not a as lot The buy out completely been produce most, can to a and headquartered, typical, and got to Phoenix where come Yes, the just of you XXXX, we’re I other to substantial well. across of right way what signed more on. multi-node the the going there’s silicon you a Phoenix of TSMC to online, handheld to their but think area, ground those got the Intel here all fab. you We up equipment going here is And we’re All is device indications that fab customers are coming the that’s fab stuff. obviously And really online when buy I meaningful. mean, certainly here, look be

that, certainly we good So, pickup. as see I a pretty think

a the that people to right of suppliers, that have pretty commentary and can’t pressure sell now view, closer best bullish gets some there’s equipment I much Also, and just the – memory but are they’re senior it, think the an first mean, they’re on talking we’re watching just off we’re wafer and and – on but to TSMC, from been change lot commentary have what on incremental to burned we, trying to we at believe half universally directly customers positive seeing at obviously that, the we lot our just you there’s we and relationships in we that. of a about they’re inventory But but Intel sell give they fab this that they because what XXXX. insight the Doesn’t that point. we don’t to them

dependent that advanced some able X-nanometer, think the do X-nanometer significantly is achieve that. EUV on to I growth more more to be the of and there technology nodes, the

So, really strength a demand and lot we’re in solid of there. platforms EUV seeing,

also that we’ve bit that strong that position great outlook. there is So supports a and got also a little our that

where, So how see things. we of that’s kind

Steven Fox

following like just on except just point, China through covered And other restrictions. everything you the one for Netherlands

Jeff Benck

got I It’s or those the big It’s licenses little bit. interesting. was in of that the necessarily though fully that another to of that, thought two. we would China some in that’s because reflected last I and muted out say fourth can’t impact only interesting a ship impact people there That’s but tell year quarter restrictions, you then and Yes. came for week from that kind a

oh, it’s this but saw little to at first another moderate one a then, so pretty So is other the bit. like, I a dynamic, impact, bit big hard – it’s there’s

that those out to of kind plays customers. wins are and we’re people’s So, with kind where see of how fab waiting

be don’t Japan fabs built a There’s know also outside seen, incremental I China. Europe commitment, to if in been you’ve of for and but

with the increased the this CHIPS we’re by on of outside support domestically while and so fabs Act lot go seeing governments China. And commitment there’s a

Steven Fox

what’s as pretty – XXX just level new with drivers follow-up, you most the that bookings us? then Thanks. really key are the new rates, And number That’s going What high you’ve us is helpful. Great. successful? Yes. you behind a gave Can win bookings the new where just on number your tell impressive, million. been maybe from a standpoint, is latest sort just of

Jeff Benck

I mean, might had a I trajectory. Yes. vary million year a think we’ve pretty been three, got about then, lot. and strong years good done we on in we does and to XXX four ago bookings have Well, XXX It and year. another then this XXX

And make that’s winning which don’t on quarterly business what taking But winning going to indication we’ve add at We’ve so, from that we’ve as been complexity share did rate good is, makes we’re this we’re don’t selective. sure us. value what competitiveness, because increased a after. we our fair gotten We win trying the that profile give still of I really we’re away like we’re reporting sense we the that pretty it. margin for capacity, to got fits hey, more would of a say, but the actually want – feel the little our I and that rate. share some

that, are tool since investing some to had buildings particularly related and new takes there it next encouraged incremental because We we’re there for nugget a year going that pretty talked generation to XXXX But Semi-Cap. really not contribute We in time we to unfortunately, some that with to a was capacity online. Semi-Cap, did, come wins. were They strong about. we in in

do quarter that we the and double important that digits one we’ve out if So very us, across, medical But it’s not long-term grow for the a we really fraction was like, other. we in put is good it’s to as Obviously, that continue that rate. a in industrial the participation strong it’s pretty model. of well. But win think at balanced want

Steven Fox

very That’s Great. all you. helpful. Thank

Jeff Benck

No question. Yes. Okay. problem. No

Operator

next is question Ricchiuti Needham Please the with Company. from go & ahead. And Jim

Chris Grenga

Chris good on is This for Hi, evening. Jim. Grenga actually

to to and you and outperform could Semi could about to than the industry, market respect perhaps higher with that comment talk the outperformance factors expect growth? lead some Just that you of the that

Jeff Benck

think little mean, can bit, I I I Yes, but reinforce. touched a we certainly

We – gaining a frame years and has the been been where capability and tools build piece machine, a welding there while, places allowed or solutions to share produced then integrate we been have our last some start we’ve able hadn’t in and been with few can sourced work where of we the had of single OEMs with vertically I to all can think where the over our and that. a vertical we some integration machining sub-assembly for it into aluminum they’ve part us participate but of some were

movement We’ve also seen anything of next ramp little going those tools. a and aren’t if next won to gen generation And bit some while significantly effective, we’ve tools.

will doing give business. NPIs, still are We that us work some incremental some pilots and some some new introduction product

dominant a we – were one a And Semi-Cap few then, space that ago, the pretty player have really we diversified now with quite we in large years fact and bit. the across

to a it. down like there well really it And grow do they bit depending where mitigate as we in not how bit down us seems there’s so, said, But on EUV we will of But is just to kind those in that we’re impact. – in that we less. participation of this immune a enabling the we’ll much think more environment solutions resiliency they’re be

Roop Lakkaraju

point the additional by just a out that’s the is One heavily memory news come Chris. situation. reinforce to Yes, maybe or memory influenced focused more lot of

towards weighting greater memory. logic than a have We

demand of some us helps that up well. obviously keep as strong So that

Chris Grenga

very you that? to there replenishment there of? Or could date? getting is good a Yes, had seen that Great. mentioned A&D that And just around point. conversations Are be tailwind. the you having weapon you’re that you What much. Thank have system with that respect something ahead to – Thanks. you are

Jeff Benck

they do I war because they're subsystems effort systems parts that drop us, going the seen mean, I in bigger incremental and that. there in cycle And challenge it’s and Europe. defense The is over on – a A&D the Yes, there's is for support for second alternatives lead supporting are in that we of have and time orders about careful certainly think demand. and within particularly even a source really think long obviously, I contractors we've life some lot

not given even to it's or So us get flexibility quite components. places the brokers look to other at

with perishable we've those that imagine, struggled we see kind indicating. of as but that's used business is there; of can nonetheless you what are that, munitions bit and were orders so as of replenishment some And you so then a

Chris Grenga

Great. Thank Very you. helpful.

Jeff Benck

Chris. Thanks

Operator

Soderstrom from next question will Sidoti. go The Instructions] from Anja be [Operator Please ahead.

Anja Soderstrom

elaborate questions. little in just they You are from find the Hi, because Can improve you're taking that it currently, seeing challenges? about but you been and thank the still for bit very where that at I've challenging? pace hearing what what a throughout to you others expect and my year, you component

Jeff Benck

Yes. said more where a or capacity capacity, legacy specific I'm what a a what would've so – in many stuff XX-nanometer custom believe that it we're might on I the devices particular ago, year there's reluctance to was increasing across actually, hanya and XX-nanometer semiconductor is It build so What manufacturer analog [ph] seeing broad-based like product, I there's more maybe so is specific but more the nodes. nodes now node. be classes product. that mean, of semiconductors and like not it old is new

are shrink difficult build. in we still that times can have down broadly bit. fact But come gate seeing seen pockets that that We are very a lead have a and quite

which a not were lead where it's also solving probably wide something we're clear than or we than something a in – but finding to be of would opportunity ago, not able able on what past. is the provides deliver shorter a bit say, incrementally might time a look, it's problems we more open, we to I'm So get be year

XXXX. be we're So to it's incrementally going better, that We to through with still this mean dealing hey, bets it's but all indicate off. didn't are

The so out buffer sound other thing you inventory upsides, see not other right, inventory, with. so bringing to setting is inventory things more willingness our on ton right? do and down We're now excess go may you you like a vigilant as – to being of – you're

seeing. what of things So we but line have to these that's that, up, kind we're

to anything add that. if know I to don't you want

Anja Soderstrom

you. that labor, you in of there been developing? And see terms how – see do or challenges has Thank still

Jeff Benck

of when or some actions, I feels going it, is like Maybe It's in – consumer marketplace laptop side and interesting. are the that the things the there's more it related to in look up layoffs that. on in the doing compute business. around soften people – It's some even like particularly resource

anticipating I'm going see So that we're more resource. available to

improve own As to we a making At make. going what obviously demand I and we market labor they people shift, of want resource semi-cap that But we're with one there. anticipate also will do. we're going business on – resource continue the after our going to we as point were we’re lot be the you to what balancing to the imagine get through cuts can moderate bring going in incremental to

course. of in six new are we all needs ramp on We in still we of U.S., will with our and not incremental have the four sectors of growing in, research, and and are facilities products a significant that some need pretty

be that, So, I inflation on to And as improved think up year. pushing think an going still that. the resource we puts environment I that seeing that, go we and be wages but go through as pressure we’re right, will

Roop Lakkaraju

Anja, our I it’s of I’ll just think and is additional add sites. are I it and comment think, seeing mention he load in growth some important and international to we where Jeff’s of

in in U.S. here available locations and beyond become and the resources to some And bringing so Mexico, of might the set labor the be challenging on skill of some well level in of Malaysia the the will these as in continue what

Anja Soderstrom

thank of existing and you of wins, new also from new you. them adding in most logos the Okay, And talk about customers can program competitive landscape? your terms just are are

Roop Lakkaraju

It’s balanced. pretty

new number logos. of a have We

referenced call. I one the or on two think we

some business as winning incremental well. We’re

in environment, found economy, in this? we’re and best that. with more looking time don’t pursuing the internal change we this this a customers are ton what we of necessarily see environment ourselves we that, supply if and in this sourced make a we’re particular So constraints said, EMS had it partner seeing or is in providers I in customers the to of a think as A the to competing past, is of plans you’ve to switch the do there? manufacturing have have lot right because hey, for that,

new wins us. to seen that with decisions product folks but we also follow And out build so already then with have are us, shoot on the with a of

attach there. new team if the build would the encouraging We ago a that belief that pretty rational. develop XX% of rate. been it’s And if help longstanding I for also weeks makes had, noticed an saw with been to because product pretty of us. stat we in the a I sense that’s I few environment, to over our the of belief component engineering good than then also, just do which say seen have engineering from we a we’re we I competitive pretty who wins is ours had some – better it,

we’ve as We an seen space at seen, competitors haven’t something this, irrational the made profitability of RFQ margins. difficult I kind seen compete it and environment. inherently do more in whole look to has that haven’t any

from think I that’s So, that standpoint encouraging.

Anja Soderstrom

That’s you. for all thank Okay, me.

Jeff Benck

Anja. Thanks,

Operator

this over like gentlemen, turn for Mansky the to Ladies any our conference closing would back concludes Paul and to question-and-answer remarks. session. I

Paul Mansky

Thank earnings you, in participating fourth XXXX everybody Chad and for quarter thank call. Benchmark’s you

Before remind speaking for thank night. XXnd presenting March being to March listeners held at With you I’d support like look will again we Sidoti Good you XXrd. Virtual be the the to forward and that, with that soon. Conference we your go, through next

Operator

The attending you conference now has Thank for concluded. presentation. today’s

You may now disconnect.

Benchmark Electronics (BHE) 1 Feb 232022 Q4 Earnings call transcript