Benchmark Electronics, Inc. (BHE) This fall 2025 Earnings Name Transcript | AlphaStreet – Imperial Wire

Benchmark Electronics, Inc. (NYSE: BHE) This fall 2025 Earnings Name dated Feb. 03, 2026

Company Members:

Paul Mansky — Senior Director of Investor Relations and Company Growth

Jeffrey (Jeff) Benck — Chief Government Officer & Director

Bryan Schumaker — EVP & Chief Monetary Officer

David Moezidis — President

Analysts:

Jim Ricciuti — Analyst

Steven Fox — Analyst

Maxwell (Max) Michaelis — Analyst

Anja Soderstrom — Analyst

Presentation:

operator

Good afternoon women and gents and welcome to the benchmark This fall and monetary yr 2025 earnings name and webcast. Presently all traces are in lesson solely mode. Following the presentation, we’ll conduct a query and reply session. If at any time throughout this name you require quick help, please press star zero for the operator. This name is being recorded on February third, 2025 and I’d now like to show the convention over to Mr. Paul Mansky, Benchmark Investor Relations please.

Paul Mansky — Senior Director of Investor Relations and Company Growth

Thanks Ina and thanks everybody for becoming a member of us as we speak for Benchmark’s fourth quarter and monetary yr 2025 earnings name. With us as we speak are Jeff financial institution, our CEO, David Moises, our President and Brian Shoemaker, our CFO. After the market closed, we issued an earnings launch pertaining to our monetary efficiency for the fourth quarter and monetary yr ending December 2025 and it ready a presentation which we’ll reference on this name. Each the press launch and presentation can be found underneath the Investor Relations part of our web site@bench.com this name is being webcast stay, a replay of which can be out there on our web site roughly one hour after we conclude the Firm has offered a reconciliation of our GAAP to non GAAP measures within the earnings launch in addition to the appendix to the presentation.

Please take a second to overview the ahead wanting statements disclosure on slide 2 of the presentation throughout our name we’ll focus on ahead wanting data. As a reminder, any of as we speak’s remarks which aren’t statements of historic reality are ahead wanting statements which contain dangers and uncertainties as described in our press releases and SEC filings. Precise outcomes might differ materially from these statements. Benchmark undertakes no obligation to replace any ahead wanting statements. For as we speak’s name, Jeff will begin with an summary adopted by Brian’s element of our This fall and monetary yr 2025 outcomes in addition to Q1 212026 steering. We are going to then flip the decision over to David to share his perspective on sector traits, enterprise path and shutting remarks, this being his final convention name as CEO. After Q& A, we’ll flip the decision again to Jeff for some parting ideas. For those who please flip to Slide 4. I’ll flip the decision over to our CEO Jeff Financial institution.

Jeffrey (Jeff) Benck — Chief Government Officer & Director

Thanks Paul. Good afternoon and because of everybody for becoming a member of as we speak’s name. Earlier than I get began, I wish to thank the whole Benchmark group for his or her contribution to closing out 2025 on a excessive notice with continued progress in opposition to our strategic goals. This culminated in fourth quarter income of 704 million which was up excessive single digits and included double digit progress throughout three of our 5 Focus, ACNC Medical and A and D. On the similar time, our fourth quarter earnings of $0.71 exceeded the excessive finish of our steering vary offered final November. Our semi cap sector is displaying good indicators of enchancment heading into 2026 after a softer This fall of 2025.

Regardless of the anticipated semi softness within the quarter, we nonetheless managed to ship gross margin of 10.6% which was above the excessive finish of our steering vary. This coupled with our continued working expense self-discipline drove working margin to five.5% demonstrating the leverage in our mannequin. Once more, nice execution by the group throughout the board. Turning to the complete yr on slide 5, 2025 income of two.66 billion was in keeping with our prior yr. Nevertheless, it performed out otherwise due to as an alternative of decelerating as in 2024, in 2025 we confirmed bettering momentum, sequential progress and higher yr over yr efficiency because the yr progressed, which enabled us to ship yr over yr progress within the second half as we anticipated.

On the similar time, we drove sequential working margin enchancment all year long and increasing 90 foundation factors from Q1 to This fall. This enchancment enabled us to ship $2.40 in earnings representing our fifth consecutive yr of backside line efficiency outpacing the highest line. Relating to our 2025 enterprise highlights on Slide 6, our technique is obvious. We goal 5 core excessive worth markets by specializing in complicated excessive combine alternatives that go well with our strengths. We keep away from commoditized markets and are pursuing an ODM method, constructing vanilla options. For those who take a look at our enterprise as we speak, you’ll see a really evenly balanced portfolio, every sector representing long run progress alternatives the place we imagine we are able to excel and differentiate.

It’s this focus that has led us to constantly ship 10% or higher gross margin. We’re driving the identical self-discipline in our inner operations as you see in our exterior go to market efforts. The previous yr demonstrated this with regular sequential progress and working margin even with typically difficult finish market situations. On the similar time, we’ve been profitable with our efforts to enhance working capital effectivity, driving vital money cycle enchancment all year long. Combining this with our progress in internet earnings, we have been capable of ship one other yr of optimistic free money circulation on the excessive finish of our goal vary.

We did so whereas persevering with to put money into the enterprise. Trying ahead to and David will click on down on this extra in a minute. We have been more than happy by the momentum in our bookings over the course of 2025. This got here from each new and current prospects and included some significant wins in increased progress subsectors for us, notably Area, Medtech and Enterprise AI. Our price proposition resonates with prospects and we proceed to enhance our execution, making it simpler to seize new enterprise from our put in base whereas attracting new prospects. Due to the distinctive worth we provide, we’re investing proactively within the enterprise given the numerous variety of new wins.

This consists of growth of our world precision know-how footprint, particularly including a fourth constructing in Penang which is nicely timed for the semi cap restoration cycle that’s underway. We’re additionally investing in manufacturing tools in our factories world wide aligned with the brand new enterprise now we have gained. I’m very inspired by the momentum we’re seeing within the enterprise throughout medical and acnc and now the semi house is poised for a robust restoration in 2026 as nicely. With that, I’d like to show the decision over to Brian to debate our fourth quarter and monetary yr 2025 leads to extra element in addition to present our first quarter outlook. Brian, over to you.

Bryan Schumaker — EVP & Chief Monetary Officer

Thanks Jeff and good afternoon everybody. Please flip to Slide 7. Income within the quarter of $704 million was up 7% yr over yr and towards the upper finish of our prior steering. Our non GAAP EPS was $0.71 which exceeded our prior steering of 62 to $0.68. As a reminder, our non GAAP outcomes exclude inventory based mostly compensation, amortization of intangible belongings, restructuring impairment and different objects as famous in Appendix 1 of this presentation. For This fall, our non GAAP gross margin was 10.6%, up 50 foundation factors sequentially and 20 foundation factors yr over yr as a result of quantity and blend.

Non GAAP working margin of 5.5% was up 70 foundation factors sequentially and 40 foundation factors yr over yr pushed by our skill to leverage our value foundation on increased income. Our fourth quarter non GAAP efficient tax fee was 25.4%. Please flip to Slide 8 for the complete yr 2025 monetary outcomes for the fiscal yr Income of $2.66 billion was flat in comparison with the prior yr, whereas non GAAP EPS was up 5% to $2.40. For the complete yr, our non GAAP Gross margin was 10.2%. Non GAAP working margin of 4.9% was down 20 foundation factors yr over yr primarily as a result of variable compensation.

Our full yr non GAAP efficient tax fee was 24.8%. Please flip to slides 9 and 10. For our fourth quarter and full yr 2025 income efficiency by sector Semicap income decreased 8% quarter over quarter and 14% yr over yr. This was in step with our expectations of a softer This fall previous to anticipated enhancements in 2026. For the complete yr Semicap income grew 2% inside Industrial though down sequentially, income was up 3% yr over yr. This was in keeping with our expectations for the quarter. For the complete yr, Industrial income was in step with the prior yr. A and D posted one other sturdy efficiency within the quarter and yr, up 7% sequentially and 17% yr over yr.

Full yr income progress was additionally nicely into the double digits at 19%. In the meantime, medical continued to enhance with fourth quarter income up 14% quarter over quarter and 23% in comparison with the prior yr. Improved second half efficiency drove 7% progress on a full yr foundation. For our last sector full yr ACNC income was down in 2025 pushed by a difficult first half. Nevertheless, we’re happy with a return to progress within the fourth quarter with income up 22% sequentially and 27% yr over yr. We count on this momentum to proceed into Q1 as we ramp beforehand introduced AI associated wins.

Please flip to Slide 11 for trended non GAAP financials. Our This fall income continued the sequential enhancements that we noticed all year long, exiting at just a little over 700 million which was up 7% versus This fall 2024. On the similar time, fourth quarter gross margin of 10.6% continued our multi quarter development of 10% or higher. Efficiency coupled with expense administration, this translated into sequential enhancements in working margin and EPS efficiency all year long, with fourth quarter and full yr EPS rising higher than twice the speed of income progress. Please Seek advice from slides 12 and 13 for dialogue of our stability sheet.

Money Circulate and Working Capital Traits In This fall, we generated $59 million in working money circulation and $48 million in free money circulation. For fiscal yr 2025, we generated 85 million in free money circulation. As of December 31, we’re in a internet money optimistic place of 111 million. Our money stability was 322 million and a sequential improve of $36 million. As of December 31, we had $148 million excellent on our time period mortgage and 65 million excellent in opposition to our revolver, from which now we have $481 million out there to borrow. We invested roughly 39 million in capital expenditures through the yr, together with 11 million in This fall.

Our fourth PT constructing introduced final yr is on monitor to be accomplished on the finish of Q2 and start operations in Q3, which would require a step up in capital spending over the following few quarters. Demonstrating our ongoing dedication to return worth, we distributed money dividends of $24 million and repurchased $27 million in inventory through the yr. On the finish of the quarter, we had roughly $123 million remaining underneath our current share repurchase authorization. Our money conversion cycle within the quarter was 67 days as our working capital focus drove appreciable enhancements of 10 days sequentially and 22 days yr over yr.

Stock days have been down 6 days sequentially as we continued to actively handle our stock. As we grew the highest line, this focus translated into stock turns of 5.2 within the quarter. Earlier than discussing our Q1 steering, there are two issues that I wish to spotlight. First, throughout our yr finish shut course of, we recognized and corrected immaterial errors in prior intervals associated to our tax calculation, leading to a cumulative understatement of earnings tax expense of 8.7 million. The combination impression of those corrections was a rise to earnings tax expense of two.2 million for the fiscal yr ended December 31, 2024 and a rise of earnings tax expense of 6.5 million two years previous to 2024.

Importantly, these corrections resulted in no change to beforehand reported money taxes, working money circulation, income, gross and working margin or non GAAP earnings per share. In step with GAAP steering, prior yr intervals in as we speak’s launch have been revised accordingly, which can even be mirrored in our kind 10K set to be printed the week of February twenty third. Second, as we glance to optimize our footprint, we recorded an 11.1 million non money impairment on sure belongings situated at one in every of our Arizona amenities. As a result of finish of life of some applications, any observe on applications can be consolidated inside our different U.S.

amenities. Please advance to Slide 14. Let me now flip to our steering. For the primary quarter of 2026, we count on income to be inside a spread of 655 to $695 million, up 7% yr over yr. On the midpoint, we count on non GAAP gross margin to be between 10 and 4, 10 and 10.4%. With these assumptions, we’d count on non GAAP working margin to be between 4.7 and 4.9%. We anticipate GAAP bills to incorporate roughly 5.4 million of inventory based mostly compensation and 5.1 to five.5 million of non working bills together with amortization, restructuring and different costs. Our non GAAP diluted earnings per share is anticipated to be within the vary of 53 to 59 cents.

Curiosity and different bills are anticipated to be roughly $4.7 million. We’re endeavor initiatives aimed toward structurally bettering our tax fee over the long run. Nevertheless, for the primary quarter and full yr, we anticipate that our efficient tax fee can be within the vary of 26 to 27%. Lastly, our weighted common share rely is anticipated to be roughly 36.3 million. With that, I want to flip the decision over to David to debate market sector efficiency and outlook. David

David Moezidis — President

thanks Brian and hiya everybody. Let’s please flip to slip 15 for a dialogue of our sector outlook. As Jeff talked about, we noticed good income momentum within the again half of the yr. This was pushed by various components, beginning with the brand new bookings now we have secured over the past 12 to 24 months, which included a few aggressive takeaways. We additionally benefited from improved promote via aligning with more healthy finish demand throughout a few of our sectors as channel stock normalized. Final however not least was our concentrate on operational execution, which we noticed in our profitable launches and excessive marks in buyer satisfaction.

Let’s step via the demand dynamics we’re seeing by sector beginning with Semicap in 2025. Income grew low single digits yr over yr through the semi market’s longer than standard cyclical downturn. Moreover, China import restrictions added some stress this previous yr. All of the whereas we proceed to safe new wins and concentrate on increasing capability, positioning us nicely for the upturn. On our final name we pointed to the again half of 2026 as prone to be the demand inflection. Since that point now we have seen mounting proof of it choosing up earlier within the yr. Inside Industrial income noticed enchancment within the second half however was flat for the complete yr in 2025.

This was in step with expectations we shared with you final quarter which referred to as for a return to yr progress within the fourth quarter. Efficiency within the quarter was led by improved demand in transportation, H Vac, automation and another minor sectors. Industrial is among the many most macro delicate sectors we promote into whereas on the similar time it represents one of many biggest alternatives for future upside for the corporate when it comes to addressable market. It could take just a little extra time to completely ramp our efforts right here, however with the wins now we have already secured coupled with a gentle macro backdrop, we count on progressively bettering efficiency as we progress via the yr.

Transferring to A and D we had one other sturdy income efficiency for the quarter and full yr in 2025. Industrial air remained steady whereas Protection continued to be sturdy in step with the broader demand profile from this subsector within the close to to midterm complete and income progress is anticipated to reasonable from its double digit trajectory over the previous few years due primarily to program timing inside Protection. Nevertheless, I’m extraordinarily happy with our now a number of quarters of bookings momentum throughout a broad set of house utility which bodes nicely for our future progress prospects these applications ramp over the approaching quarters Turning to medical this previous summer season we signaled the underside for this sector’s efficiency based mostly on bettering demand and new program ramps.

Regardless of the difficult first half, our again half execution drove stable income progress for the complete yr led by our medical system applications. We count on these similar dynamics to carry true in 2026 with double digit income progress anticipated for the primary quarter and full yr additional out, our bookings momentum in 2025 inside MedTech has positioned us nicely to construct upon our medical sector efficiency. Rounding out our sectors AC and C income rebounded sharply within the first quarter fourth quarter pushed by very sturdy efficiency in computing. We count on this momentum to proceed into the primary half of the yr.

We imagine strongly in our liquid cooling capabilities and capability investments. We look ahead to bringing these capabilities to bear in each the AI infrastructure and subsequent era supercomputer builds to return shifting to slip 16 earlier than turning over to Q and A I’d sum up the state of our enterprise as follows. I’m much more inspired as we speak than I used to be when becoming a member of the corporate over two and a half years in the past about our future. Let me inform you why. First, 2025 was a stable yr of progress in direction of our progress goals. We had a robust yr of bookings which was a nicely balanced throughout the whole portfolio and we’re significantly inspired by our rising alternatives in house, Medtech and whereas nonetheless just a little early AI associated wins.

the identical time, finish markets in medical and semi cap are bettering. Whereas industrial nonetheless has some work to do. We predict we’re positioned for progress later in 2026. Operationally, we carried out various initiatives in 2025 that place us to exhibit growing working leverage as income scales. Moreover, we see no change to our capital allocation method as our priorities proceed to work nicely and stay shareholder pleasant. We are going to proceed to help the dividend search, offset annual dilution via share repurchases and put money into the enterprise to help our progress. Lastly, as we glance forward, we’re very inspired by how the yr is shaping up.

We stay assured in our mid single digit progress steering and we imagine that outlook might strengthen additional within the coming weeks as we acquire extra visibility from our prospects. With that, I’d wish to thank our prospects, staff and companions for a profitable 2025 and I’m wanting ahead to constructing upon that in 2026 and past. Operator we are able to now open the decision to Q and A.

Questions and Solutions:

operator

Thanks women and gents. We are going to now start the query and reply session. Ought to you’ve gotten a query, please press STAR adopted by the one in your phone keypad you’ll hear a immediate that your hand has been raised and do you have to want to cancel your request, please press star adopted by the 2. In case you are utilizing a speakerphone, please raise the handset earlier than urgent any keys. One second, please, on your first query. Thanks. And your first query comes from the road of Jim Ricciutti from Needham and Firm. Please go forward.

Jim Ricciuti

Hello. Thanks. Good afternoon. Congrats on the quarter. And to you, Jeff, on your accomplishments at bench through the years.

Jeffrey (Jeff) Benck

Thanks, Jeff.

Jim Ricciuti

So, you already know, it sounds if we, you already know, from the tone, in addition to semi cap, you appear to be suggesting elevated confidence in a few areas of the enterprise. David, I believe you highlighted Medical, however simply generally, are there areas in addition to sending cap, which I believe we all know we’ve seen some actual clear drivers and I assume you’re going to listen to extra out of your prospects over the following couple of months. However what areas of the enterprise specifically has the tone of demand modified versus, say, three months in the past?

David Moezidis

Hey, Jim, good talking with you, I’d say, you already know, there’s actually no shock total on the subject of the efficiency we’re seeing throughout the whole enterprise. We began signaling to all of you in July of final yr that we felt Medical has turned a nook. We additionally talked about Asian C wanting prefer it’s going to have a robust This fall, and it did. And proper now we see that momentum persevering with into the primary half semi. We signaled in October that it appears like issues are going to choose up. And as we closed out the yr and we began the brand new yr, we actually began seeing that. And eventually, I believe industrial has been actually very constant to us. Proper. It’s only a regular eddy sector that we see it progressively choosing up as we work our method all through the quarter.

Jim Ricciuti

Okay. Wish to simply shift gears just a little bit simply speaking about margins. I imply, you’ve accomplished a pleasant job of delivering 10% gross margins fairly constantly, you already know, even in a considerably difficult high line surroundings. Yeah. So I’m simply questioning how we might be interested by gross margins as the highest line begins accelerating or, you already know, do you imagine that perhaps the higher alternative goes to be driving some OPEX leverage?

Bryan Schumaker

Yeah. I imply, as we take a look at the highest margin, once more, such as you stated, I imply, 10.6 is what we have been capable of ship on the Gross margin for This fall and sort of, should you take a look at our vary for Q1, when the income’s down barely from This fall, I imply, we’re nonetheless midpoint of 10.2 on that share. So we be ok with how we’re monitoring at that stage. However you’re proper, I imply should you take a look at our working margin and our skill to ship on that line, I imply that’s the place we see our leverage as we proceed to speed up income. I imply we really feel we’re nicely positioned and capable of make the most of sort of our footprint and our precise sgna. So we be ok with with the ability to leverage that. Going out into 26 appears to us.

Jeffrey (Jeff) Benck

You recognize, clearly semi is, is excessive worth enterprise for us so a restoration there helps. However we all know, you already know, once we discuss scale within the mannequin it’s as a lot, about as a lot as, as we develop income, you already know, our SGA doesn’t have to develop on the similar fee which you already know, drops extra. To the underside line.

Jim Ricciuti

Thanks guys. I’ll bounce again within the queue.

Bryan Schumaker

Thanks Jeff. Take care.

operator

Thanks. And your subsequent query comes from the road of fax Stephen from Fox Advisors, please go forward.

Steven Fox

Hello, good afternoon everybody. To start with Jeff, congratulations for some nice accomplishments at Benchmark. Particularly you weren’t at all times out the most effective macro playing cards on the earth while you joined. However when it comes to a few of the feedback, I used to be questioning should you can develop on a pair feedback on finish markets. To start with, you stated on the economic enterprise, there’s nice upside within the TAM that’s out there to you. Are you able to give us some hints on what you envision, form of how that TAM increasing and form of the same query on house. You talked about new bookings in house and the way that may assist progress. I had a pair observe ups.

David Moezidis

Yeah, positive. Stephen, it’s David. How are you?

Steven Fox

Hello David.

David Moezidis

So let me discuss industrial first across the tam. In order you would simply respect, the economic section is an especially, extraordinarily broad section with a broad set of shoppers on the market globally and that enables us to actually take part in various completely different subsectors. So if you consider the subsectors, you would take part in H Vac, you would take part in transportation. Agriculture is an space that we’ve been profitable. Development is an space that we’ve been profitable, simply to call a couple of. Proper. Constructing administration and so forth and so forth. There are loads of corporations on the market, whether or not it’s sort of these mid tier kind corporations, mid cap gamers, all the way in which to the big large cap guys that we’re all conversant in that you’d consider them as giant, broader conglomerates.

Once more, each Western Europe in addition to North America, shifting gears to house functions. We’ve talked about this within the prior quarter and we’re excited by the bookings momentum we’re seeing in that house. That is Going to contribute properly to our and sector. And you already know we’re, we’re simply beginning the early phases of a few of the ramps. We count on it to actually present itself in 2027 and has been actually performing nicely for the previous few years. Double digits and this yr we see it moderating, however we see it choosing proper again up given the bookings momentum that we’ve, we’ve had in, within the house functions.

Steven Fox

Nice, that’s very useful. After which just a bit extra perspective I hoped for on the gross margin. In order that they expanded from to 10.6 from like 10:1 in a single quarter. And such as you stated, semi cap was not, probably not contributing from a gross sales progress standpoint. So like what number of foundation factors was associated to simply combine versus simply typical quantity drop down and is there any that stood out when it comes to what, what was optimistic on the combo aspect to assist the margins?

Bryan Schumaker

Yeah, there wasn’t actually something I’d level to on the combo. I imply it was simply sort of simply the leverage of a few of our crops and simply total combine I assume throughout the board. So I wouldn’t level to. I imply you’re proper, semicap was down within the quarter however I wouldn’t rely on that abruptly seeing that progress all year long and that margin increasing considerably as a result of it’s additionally going to depend upon acnc. We’ve talked about that being on the decrease finish. So that you simply bought to stability that as you go all year long.

Jeffrey (Jeff) Benck

However there’s a little bit of seasonality in Q1 that relying on the place it hits when it comes to the demand shift and alter that you simply see it, we don’t get fairly as a lot leverage on the highest aspect. But additionally when you’ve got sectors which might be decrease margin total, you already know that may weigh on it as nicely. So it’s just a little bit arduous so that you can get there, you already know, as a result of there’s loads of dynamics at play right here.

Steven Fox

Understood, that’s useful. And simply actual fast, final one on the semi cap restoration that we might begin baking in for interim mannequin. Like I perceive, you already know, you’re seeing it earlier now however like several assistance on how, what sort of slope we needs to be interested by at the least for now based mostly on what you’re listening to from prospects. Thanks very a lot.

David Moezidis

Yeah, proper now we’re nonetheless working via that. Stephen, As I shared, we’re feeling actually good about it, choosing up based mostly on a few of the forecast changes that we’re getting from our prospects. So we’re going via the method of what can we pull in into the sooner quarters from the again finish. And the way that’s going to search for us. We do plan on getting that readability within the coming weeks, and we’ll be offering that replace as we get.

Jeffrey (Jeff) Benck

Is sort of ironic that This fall was mushy and we referred to as it mushy going into it. We sort of felt that a few of our prospects stated 26 goes to be nice, however we’re going to see some softness closing the yr. And it performed out as we anticipated. It’s nice to see that snap again. I believe that’s just a little bit the place there’s just a little warning in. Okay. You recognize, it’s nice to see that come again, however, you already know, what does this appear to be as you fill within the yr? That’s what David’s speaking about.

Steven Fox

Understood. Thanks very a lot.

Jeffrey (Jeff) Benck

Thanks.

operator

Thanks. And your subsequent query comes from the road of Max Micheles from Lake Road Capital. Please go forward.

Maxwell (Max) Michaelis

Hey, guys, thanks for taking my name. Your hats on the quarter as nicely. I simply wish to return to Medical and perhaps a few of the program. Are you able to. Is there any method you’ll be able to go into just a little bit extra element round a few of the program wins in Medical after which perhaps if these. The momentum persevering with into 2026, if these are completely different type of applications, new wins. Are you able to simply assist me perceive just a little bit extra in regards to the applications?

David Moezidis

Yeah, yeah. So, Max, we’ve been profitable on this house in sort of two classes, Proper. If we take into consideration how we take a look at medical, there’s classes that we’re profitable in round med gadgets, after which there’s classes we’re profitable in life sciences. So these are the 2 areas that we see continued momentum. Now once we begin speaking about how is that going to roll into 2027, it’s actually the momentum of the ramps. We’re going to be ramping and we’re accelerating the manufacturing. And we’re additionally seeing demand choose up from our finish prospects, their present base prospects. So while you put these two collectively, we’re going to have a superb FY26 in medical. And by the point we get in direction of second half or later within the yr, we needs to be totally ramped on a few of the bookings that we had in 2025. And that’s why I commented that that momentum ought to proceed into 2027.

Maxwell (Max) Michaelis

Okay. After which additionally one other one you would in all probability assist me out with right here is once we take into consideration the ramp up in semi, I imply, are prospects coming to you already after which form of your mid-2026 again half of 2026 restoration, is that while you begin to see a few of these orders really roll via or are you guys capable of simply just about scale up because the orders come, I assume assist me perceive form of the timeline across the ramp up, I assume with the return?

David Moezidis

Yeah, Max, I believe the way in which to consider it’s relying on what the orders and what kind of pull ins we get, we might reply to it inside one to 3 months. So sure orders have been capable of speed up a lot faster. And this isn’t one thing that catches us abruptly. We’ve been working with our prospects now since final late summer season of final yr doing capability planning, doing simulations, actually understanding what it might appear to be. So within the October earnings name I had signaled that it feels completely different this time. It feels prefer it’s actual. And 2026 goes to be the yr that semi lastly comes again.

And it took about 60 days for the verbal conversations to develop into one thing extra significant. And now we’re sharing that with you that it’s turning into extra significant and, and we’re going to be taking a look at it, we’re going to see the way it performs out and the orders which might be being pulled in, we’re going to be working intently with our prospects to speed up these outputs.

Maxwell (Max) Michaelis

Nice. Thanks for taking my questions.

David Moezidis

Certain. Good speaking to you, Max.

operator

Thanks. And your subsequent query comes from the road of Ennis Soderstrom from cdot. Please go forward.

Anja Soderstrom

Thanks for taking my questions and congrats on the great quarter right here. Simply in aerospace and protection, you stated you noticed some slowdown in protection earlier than it picks up or.

David Moezidis

Yeah, yeah. Hello Ania, how are you? So you already know, we had actually sturdy run in A and D for the previous few years. Proper. Final couple years it’s been sturdy, double digit progress and you already know you get occasionally, program timing modifications issues, finish of life, new program, awards come to play. And we’re seeing that being the case as we’re in 2026. That’s why we’re saying A and D goes to reasonable in 2026. We’re not saying it’s falling aside or something damaging about it. We’re simply saying it’s going to ease, it’s going to reasonable and we’re going to see it choose again up in 2027. And as I discussed in my commentary, our business air appears good. It’s actually extra round some timing round a few of the protection applications and we’re actually, actually bullish on the chances of house.

Anja Soderstrom

Okay. And might you remind me your publicity to the business air?

David Moezidis

So we work with a number of prospects and in business functions the place we construct merchandise for them after which they go forward and combine it into their Merchandise after which lastly cross that product alongside to the likes of Airbus or Boeing, and many others.

Anja Soderstrom

Okay, thanks. After which inside the ACNC you count on that to proceed to be sturdy. What sort of visibility do you’ve gotten there given the slightly giant initiatives you’ve gotten there?

David Moezidis

Yeah, so we really count on the primary half to proceed to look sturdy as you would respect within the AI house. As our prospects win, we see these wins translate into orders for us. So the visibility is sweet within the first half and we’re going to proceed to work with our prospects and, and we imagine that the second half might probably fill in, however we’re not able proper now to begin signaling that these are challenge based mostly alternatives as you talked about, Anya, and that’s why ready and letting it fill in is basically essential for us.

Anja Soderstrom

Okay, thanks. After which when it comes to the money cycle days, you had a fairly good enchancment there. How ought to we, what are you concentrating on there? Ought to we take into consideration 2026 now as.

Bryan Schumaker

You talked about, Anya, and thanks for the query. I imply you take a look at the advance we made in This fall to 67 on the money conversion cycle days, I imply we had vital momentum once more in our stock line as we glance to sort of ramp a few of these initiatives or applications. I imply we’re limiting sort of that, I assume improve, you’ll see or sorry, stability is what we hope to see on that stock days monitoring proper round that 69. I imply we’re going to proceed to drive that and hopefully get some extra momentum. However we’re not relying on a big quantity there. I imply there’s different line objects there we’re going to proceed to drive. However I believe based mostly on the momentum and what we’ve accomplished over the past yr over yr with 22 days enchancment, I imply once more we’ll proceed to drive it, however I imply don’t rely on a big quantity.

Anja Soderstrom

Okay, thanks. After which when it comes to CapEx, I believe you stated you count on that to tick up just a little bit driving that and is that growth in Penang included there or have you ever spent most of that?

Bryan Schumaker

No, I imply should you consider sort of the second half of the yr that we’re going to be sort of getting it operation or, sorry, the primary half after which into Q3 of getting it operational, that’s the place you’ll see a few of that tick up related to that. However we even have a few of the program wins as you consider what you’ve been listening to right here, that may purchase some CapEx inside our present footprint. So sometimes we are saying the one and a half to 2 p.c of CapEx for the yr. This can be two to 2 and a half p.c as you consider this yr, simply based mostly on a few of the issues I’ve stated. And once more, that is all funding in progress as you consider what we’re doing right here.

Jeffrey (Jeff) Benck

Yeah, it form of goes in hand with the stronger bookings final yr and. After which additionally the construct out of the fourth constructing in our and Precision Know-how over in Penang.

Anja Soderstrom

Okay, nice. Thanks. That was all from em. And congrats, Jeff, on the accomplishment at Benchmark.

David Moezidis

Thanks.

Bryan Schumaker

Thanks, Anya.

operator

Thanks. And there aren’t any additional questions at the moment. I’ll now hand the decision again to Mr. Jeff Spank for any closing remarks.

Jeffrey (Jeff) Benck

Thanks, operator. As I transition out of the CEO position on the finish of this quarter, this can be my final earnings name with all of you. I simply needed to take a second to precise how extremely proud I’m of what we’ve achieved collectively over my seven years main Benchmark. None of this may have been attainable with out the dedication of my government group and the 12,000 plus gifted professionals who make Benchmark their dwelling. Throughout my tenure, we achieved a number of milestones that set new information for our firm and income, margins, earnings and share worth.

I’m deeply grateful to our traders, the analysts who’ve coated us, and my board for his or her unwavering help all through this journey. On the finish of the quarter, I’ll be passing the reins to David, whose succesful management provides me nice confidence that Benchmark’s momentum won’t solely proceed, however speed up. The longer term is vibrant and I look ahead to watching this nice firm attain even higher heights. Thanks all and farewell for now.

operator

And this concludes as we speak’s name. Thanks for collaborating. You could all disconnect.

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