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Date

Feb. 3, 2026 at 5 p.m. ET

Call participants

  • Chief Executive Officer — Jeffrey Benck
  • Incoming Chief Executive Officer — David Moezidis
  • Chief Financial Officer — Bryan Schumaker

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Takeaways

  • Revenue -- $704 million for the quarter, representing 7% year-over-year growth, with high single-digit growth company-wide and double-digit gains in Advanced Computing & Connectivity, Medical, and Aerospace & Defense sectors.
  • Non-GAAP Earnings Per Share -- $0.71, exceeding the guidance range of $0.62 to $0.68.
  • Gross Margin -- 10.6% (non-GAAP) for the quarter, up 50 basis points sequentially and 20 basis points year over year, exceeding the high end of management’s guidance.
  • Operating Margin -- 5.5% (non-GAAP) for the quarter, an increase of 70 basis points sequentially and 40 basis points year over year, linked to revenue leverage and cost discipline.
  • Full-year revenue -- $2.66 billion, flat compared to the prior year, with positive year-over-year momentum in the second half and improving sequential performance through the year.
  • Full-year non-GAAP EPS -- $2.40, a 5% increase, marking the fifth consecutive year of bottom-line growth outpacing the top line.
  • Free cash flow -- $48 million generated in Q4; $85 million for the year, at the high end of the company’s stated range.
  • Bookings momentum -- Management highlighted "meaningful wins in higher growth subsectors," specifically citing space, MedTech, and enterprise AI, driving booking strength in 2025.
  • Cash position -- $322 million at quarter-end, a sequential increase of $36 million, with net cash position of $111 million and $481 million of revolver availability.
  • Inventory management -- Cash conversion cycle improved to 67 days, down 10 sequential days and 22 year over year, with inventory turns of 5.2.
  • Sector performance -- Semi cap revenue declined 8% sequentially and 14% year over year, while Advanced Computing & Connectivity grew 22% sequentially and 27% year over year in the quarter; Medical grew 14% sequentially and 23% year over year; Aerospace & Defense delivered 7% sequential and 17% year-over-year growth in the quarter.
  • Outlook for next quarter -- Revenue guidance of $655 million to $695 million (up 7% at midpoint), non-GAAP gross margin of 10.4%-10.6%, and non-GAAP EPS of $0.53 to $0.59.
  • Capital allocation -- $24 million in cash dividends and $27 million in share repurchases during the year, with $123 million remaining on the repurchase authorization at quarter-end.
  • Impairment charge -- An $11.1 million non-cash impairment was recorded for certain assets located at an Arizona facility as a result of program end-of-life.
  • Guidance on tax rate -- Effective non-GAAP tax rate expected at 26%-27% for Q1 and the full upcoming year, with initiatives underway to structurally improve it longer term.

Summary

Benchmark Electronics (BHE +3.97%) reported sequential revenue and margin growth, highlighted strategic sector gains, and described specific capital deployment decisions that may inform investment outlooks. The company addressed prior-period tax misstatements with quantified restatements, making explicit that operating cash flow, revenue, margins, and non-GAAP EPS were unaffected. Management provided guidance for continued mid-single-digit revenue growth and commented on accelerating momentum across medical, space, and artificial intelligence segments, while noting near-term moderation in aerospace and defense and incremental capital expenditure plans aligned with business expansion, particularly in Penang.

  • Incoming CEO Moezidis said, "we are particularly encouraged by our growing opportunities in space, MedTech, and while still a little early, AI-related wins."
  • The company’s previously signaled inflection for semiconductor capital equipment ("semi cap") demand in 2026 is now emerging earlier, with management referencing "mounting evidence of it picking up earlier in the year."
  • Significant improvement in working capital metrics was driven, in part, by active inventory management, as highlighted by a 22-day year-over-year decrease in the cash conversion cycle.
  • The fourth building in Penang, targeting global precision technology capacity for semi cap recovery, is expected to be operational in Q3, signaling a planned production ramp.
  • Capital expenditures are projected to increase to 2%-2.5% of revenue in the coming year to support new business wins and facility expansion.
  • Management will maintain the current capital return framework, continuing cash dividends and share repurchases as priorities.

Industry glossary

  • Semi cap: Short for semiconductor capital equipment; refers to manufacturing and test hardware used in semiconductor device fabrication.
  • AC and C: Advanced Computing & Connectivity, one of the primary end-markets served by Benchmark Electronics.
  • MedTech: Medical technology, including medical devices and life sciences customers and programs.
  • Cash conversion cycle: The number of days it takes for a company to convert resource inputs into cash flows from sales, a measure of working capital efficiency.

Full Conference Call Transcript

Jeffrey will start with an overview followed by Bryan's detail of our Q4 and fiscal year 2025 results, as well as Q1 2026 guidance. We will then turn the call over to David to share his perspective on sector trends, business direction, and closing remarks. This being his last conference call as CEO, after Q&A, we'll turn the call back to Jeffrey for some parting thoughts. If you please turn to Slide four, I'll turn the call over to our CEO, Jeffrey Benck.

Jeffrey Benck: Thank you, Paul. Good afternoon, and thanks to everyone for joining today's call. Before I get started, I want to thank the entire Benchmark team for their contribution to closing out 2025 on a high note. With continued progress against our strategic objectives. This culminated in fourth quarter revenue of $704 million, which was up high single digits and included double-digit growth across three of our five focus sectors: AC and C, medical, and A and D. At the same time, our fourth quarter earnings of $0.71 exceeded the high end of our guidance range provided last November. Our semi cap sector is showing nice signs of improvement heading into 2026, after a softer 2025.

Despite the expected semi softness in the quarter, we still managed to deliver a gross margin of 10.6%, which was above the high end of our guidance range. This, coupled with our continued operating expense discipline, drove operating margin to 5.5%, demonstrating the leverage in our model. Again, great execution by the team across the board. Turning to the full year on slide five. 2025 revenue of $2.66 billion was in line with our prior year. However, it played out differently because instead of decelerating as in 2024, in 2025, we showed improving momentum, sequential growth, and better year-over-year performance as the year progressed. Which enabled us to deliver year-over-year growth in the second half as we expected.

At the same time, we drove sequential operating margin improvement throughout the year, expanding 90 basis points from Q1 to Q4. This improvement enabled us to deliver $2.40 in earnings, representing our fifth consecutive year of bottom-line performance outpacing the top line. Regarding our 2025 business highlights on slide six, our strategy is clear. We target five core high-value markets by focusing on complex, high-mix opportunities that suit our strengths. We avoid commoditized markets and aren't pursuing an ODM approach building vanilla solutions. If you look at our business today, you'll see a very evenly balanced portfolio. Each sector represents long-term growth opportunities where we believe we can excel and differentiate.

It is this focus that has led us to consistently deliver 10% or better gross margin. We are driving the same discipline in our internal operations as you see in our external go-to-market efforts. The past year demonstrated this with steady sequential progress and operating margin even with sometimes challenging end market conditions. At the same time, we've been successful with our efforts to improve working capital efficiency, driving significant cash cycle improvement throughout the year. Combining this with our growth in net income, we were able to deliver another year of positive free cash flow at the high end of our target range. We did so while continuing to invest in the business.

Looking forward, and David will click down on this more in a minute, we were very pleased by the momentum in our bookings over the course of 2025. This came from both new and existing customers and included some meaningful wins in higher growth subsectors for us. Notably space, med tech, and enterprise AI. Our value proposition resonates with customers and we continue to improve our execution, making it easier to capture new business from our installed base while attracting new customers because of the unique value we offer. We are investing proactively in the business given the significant number of new wins.

This includes expansion of our global precision technology footprint, specifically adding a fourth building in Penang, which is well-timed for the semi cap recovery cycle that's underway. We are also investing in production equipment in our factories around the world, aligned with the new business we have won. I'm very encouraged by the momentum we're seeing in the business across medical and AC and C. And now the semi space is poised for a strong recovery in 2026 as well. With that, I'd like to turn the call over to Bryan to discuss our fourth quarter and fiscal year 2025 results in more detail as well as provide our first quarter outlook. Bryan, over to you.

Bryan Schumaker: Thank you, Jeffrey, and good afternoon, everyone. Please turn to Slide seven. Revenue in the quarter of $704 million was up 7% year over year, and toward the higher end of our prior guidance. Our non-GAAP EPS was $0.71, which exceeded our prior guidance of $0.62 to $0.68. As a reminder, our non-GAAP results exclude stock-based compensation, amortization of intangible assets, restructuring, impairment, and other items as noted in appendix one of this presentation. For Q4, our non-GAAP gross margin was 10.6%, up 50 basis points sequentially and 20 basis points year over year due to volume and mix.

Non-GAAP operating margin of 5.5% was up 70 basis points sequentially and 40 basis points year over year, driven by our ability to leverage our cost basis on higher revenue. Our fourth quarter non-GAAP effective tax rate was 25.4%. Please turn to slide eight for the full year 2025 financial results. For the fiscal year, revenue of $2.66 billion was flat compared to the prior year, while non-GAAP EPS was up 5% to $2.40. For the full year, our non-GAAP gross margin was 10.2%, and non-GAAP operating margin of 4.9% was down 20 basis points year over year, primarily due to variable compensation. Our full-year non-GAAP effective tax rate was 24.8%.

Please turn to slides nine and ten for our fourth quarter and full-year 2025 revenue performance by sector. Semi cap revenue decreased 8% quarter over quarter and 14% year over year. This was consistent with our expectations of a softer Q4 prior to expected improvements in 2026. For the full year, semi cap revenue grew 2%. Within industrial, although down sequentially, revenue was up 3% year over year. This was in line with our expectations for the quarter. For the full year, industrial revenue was consistent with the prior year. A and D posted another strong performance in the quarter and year, up 7% sequentially and 17% year over year.

Full-year revenue growth was also well into the double digits at 19%. Meanwhile, medical continued to improve with fourth-quarter revenue up 14% quarter over quarter and 23% compared to the prior year. The improved second-half performance drove 7% growth on a full-year basis. For our final sector, full-year AC and C revenue was down in 2025, driven by a challenging first half. However, we are pleased with the return to growth in the fourth quarter with revenue up 22% sequentially and 27% year over year. We expect this momentum to continue into Q1 as we ramp previously announced AI-related wins. Please turn to slide 11 for trended non-GAAP financials.

Our Q4 revenue continued the sequential improvements that we saw throughout the year, exiting at a little over $700 million, which was up 7% versus Q4 2024. At the same time, fourth-quarter gross margin of 10.6% continued our multi-quarter trend of 10% or greater performance. Coupled with expense management, this translated into sequential improvements in operating margin and EPS performance throughout the year, with fourth-quarter and full-year EPS growing greater than twice the rate of revenue growth. Please refer to slides twelve and thirteen for discussion of our balance sheet, cash flow, and working capital trends. In Q4, we generated $59 million in operating cash flow, and $48 million in free cash flow.

For fiscal year 2025, we generated $85 million in free cash flow. As of December 31, we are in a net cash positive position of $111 million. Our cash balance was $322 million, a sequential increase of $36 million. As of December 31, we had $148 million outstanding on our term loan and $65 million outstanding against our revolver, from which we have $481 million available to borrow. We invested approximately $39 million in capital expenditures during the year, including $11 million in Q4. Which will require a step up in capital spending over the next few quarters. Our fourth building in Penang is expected to be completed in Q2 and begin operations in Q3.

Demonstrating our ongoing commitment to return, we distributed cash dividends of $24 million and repurchased $27 million in stock during the year. At the end of the quarter, we had $123 million remaining under our existing share repurchase authorization. Our cash conversion cycle in the quarter was sixty-seven days as our working capital focus drove considerable improvements of ten days sequentially and twenty-two days year over year. Inventory days were down six days sequentially as we continued to actively manage our inventory as we grew the top line. This focus translated into inventory turns of 5.2 in the quarter. Before discussing our Q1 guidance, there are two things that I want to highlight.

First, during our year-end close process, we identified and corrected immaterial errors in prior periods related to our tax calculation resulting in a cumulative understatement of income tax expense of $8.7 million. The aggregate impact of these corrections was an increase to income tax expense of $2.2 million for the fiscal year ended 12/31/2024, and an increase of income tax expense of $6.5 million two years prior to 2024. Importantly, these corrections resulted in no change to previously reported cash taxes, operating cash flow, revenue, gross and operating margin, or non-GAAP earnings per share.

Consistent with GAAP guidance, prior year periods in today's release have been revised accordingly, which will also be reflected in our Form 10-K set to be published the week of February 23. Second, as we look to optimize our footprint, we recorded an $11.1 million noncash impairment on certain assets located at one of our Arizona facilities due to the end of life of a few programs. Any follow-on programs will be consolidated within our other US facilities. Please advance to slide 14. Let me now turn to our guidance for 2026. We expect revenue to be within a range of $655 to $695 million, up 7% year over year at the midpoint.

We expect non-GAAP gross margin to be between 10.4% and 10.6%. With those assumptions, we would expect non-GAAP operating margin to be between 4.7% and 4.9%. We anticipate GAAP expenses to include approximately $5.4 million of stock-based compensation and $5.1 to $5.5 million of non-operating expenses including amortization, restructuring, and other charges. Our non-GAAP diluted earnings per share is expected to be in the range of $0.53 to $0.59. Interest and other expenses are expected to be approximately $4.7 million. We are undertaking initiatives aimed at structurally improving our tax rate over the long term. However, for the first quarter and full year, we anticipate that our effective tax rate will be in the range of 26% to 27%.

Finally, our weighted average share count is expected to be approximately 36.3 million. With that, I would like to turn the call over to David to discuss market sector performance and outlook. David?

David Moezidis: Thank you, Bryan, and hello, everyone. Let's please turn to slide 15 for a discussion of our sector outlook. As Jeffrey mentioned, we saw good revenue momentum in the back half of the year. This was driven by a number of factors. Starting with the new bookings we have secured over the last twelve to twenty-four months, which included a couple of competitive takeaways. We also benefited from improved sell-through aligning with healthier end demand across some of our sectors as channel inventory normalized. Last but not least was our focus on operational execution, which we saw in our successful launches and high marks in customer satisfaction. Let's step through the demand dynamics we're seeing by sector.

Starting with semi cap. In 2025, revenue grew low single digits year over year during the semi market's longer than usual cyclical downturn. Additionally, China import restrictions added some pressure this past year. All the while, we continue to secure new wins and focus on expanding capacity, positioning us well for the upturn. On our last call, we pointed to 2026 as likely to be the demand inflection. Since that time, we have seen mounting evidence of it picking up earlier in the year. Within industrial, revenue saw improvement in the second half but was flat for the full year in 2025.

This was consistent with expectations we shared with you last quarter, which called for a return to year-over-year growth in the fourth quarter. Performance in the quarter was led by improved demand in transportation, HVAC, automation, and some other minor sectors. Industrial is among the most macro-sensitive sectors we sell into. While at the same time, it represents one of the greatest opportunities for future upside for the company in terms of addressable market. It may take a little more time to fully ramp our efforts here, but with the wins we have already secured, coupled with a steady macro backdrop, we expect gradually improving performance as we progress through the year. Moving to A and D.

We had another strong revenue performance for the quarter and full year in 2025. Commercial air remained stable, while defense continued to be strong consistent with the broader demand profile from this subsector. In the near to midterm, total A and D revenue growth is expected to moderate from its double-digit trajectory over the last few years due primarily to program timing within defense. However, I'm extremely pleased with our now multiple quarters of bookings momentum across a broad set of space applications, which bodes well for our future growth prospects as these programs ramp over the coming quarters. Turning to medical.

This past summer, we signaled the bottom for this sector's performance based on improving demand and new program ramps. Despite the challenging first half, our back half execution drove solid revenue growth for the full year led by our medical device programs. We expect these same dynamics to hold true in 2026 with double-digit revenue growth expected for the first quarter and full year. Further out, our bookings momentum in 2025 within MedTech has positioned us well to build upon our medical sector performance. Rounding out our sectors, AC and C revenue rebounded sharply in the fourth quarter, driven by very strong performance in computing. We expect this momentum to continue into the first half of the year.

We believe strongly in our liquid cooling capabilities and capacity investments. We look forward to bringing these capabilities to bear in both the AI infrastructure and next-generation supercomputer builds to come. Moving to slide 16 before turning over to Q&A. I would sum up the state of our business as follows. I'm even more encouraged today than I was when joining the company over two and a half years ago about our future. Let me tell you why. First, 2025 was a solid year of progress towards our growth objectives. We had a strong year of bookings, which was well balanced across the entire portfolio.

And we are particularly encouraged by our growing opportunities in space, MedTech, and while still a little early, AI-related wins. At the same time, end markets in medical and semi cap are improving. While industrial still has some work to do, we think we're positioned for growth later in 2026. Operationally, we implemented a number of initiatives in 2025 that position us to demonstrate increasing operating leverage as revenue scales. Additionally, we see no change to our capital allocation approach. As our priorities continue to work well and remain shareholder-friendly. We will continue to support the dividend, seek to offset annual dilution through share repurchases, and invest in the business to support our growth.

Finally, as we look ahead, we're very encouraged by how the year is shaping up. We remain confident in our mid-single-digit growth guidance and we believe that outlook could strengthen further in the coming weeks as we gain additional visibility from our customers. With that, I'd like to thank our customers, employees, and partners for a successful 2025 and I'm looking forward to building upon that in 2026 and beyond. Operator, we can now open the call to Q&A.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. And your first question comes from the line of Jim Ricchiuti from Needham and Company. Please go ahead.

Jim Ricchiuti: Hi, thank you. Good afternoon. Congrats on the quarter and to you, gents, for your accomplishments at Benchmark over the years.

Jeffrey Benck: Yeah. Thanks, Jim.

Jim Ricchiuti: So, you know, it sounds if we, you know, from the tone, besides semi cap, you seem to be suggesting increased confidence in a couple of areas of the business. David, I think you highlighted medical, but just in general, are there areas besides semi cap, which I think we know, we've seen some real clear drivers, and I assume you're gonna hear more from your customers over the next couple of months. But what areas of the business in particular has the tone of demand changed versus, say, three months ago?

David Moezidis: Hey, Jim. Good speaking with you. I would say, you know, there's really no surprise overall with regards to the performance we're seeing across the entire enterprise. We started signaling to all of you in July that we felt medical has turned a corner. We also talked about AC and C's looking like it's gonna have a strong Q4, and it did. And right now, we see that momentum continuing into the first half. Semi, we signaled in October that it looks like things are gonna pick up. And as we closed out the year and we started the new year, we certainly started seeing that. And, finally, I think industrial has been really very consistent to us. Right?

It's just a steady Eddie. Sector that we see it gradually picking up as we work our way throughout the quarter.

Jim Ricchiuti: Okay. Wanna just shift gears a little bit. Just talk about margins. I mean you've done a nice job delivering 10% gross margins pretty consistently, you know, even in a somewhat challenging line environment. So I'm just wondering, how we should be thinking about gross margins as the top line begins accelerating? Or do you believe that maybe the greater opportunity is gonna be driving some OpEx leverage?

Bryan Schumaker: Yeah. I mean, as we look at the top margin, again, like you said, I mean, 10.6 is what we were able to deliver on the gross margin for Q4. And kind of if you look at our range for Q1 when the revenue is down slightly from Q4, I mean, we're still midpoint of 10.2 on that percentage. So feel good about how we're tracking at that level. But you're right. I mean, if you look at our operating margin and our ability to deliver on that line, I mean, that's where we see our leverage as we continue to accelerate revenue.

I mean, we feel we're well positioned and able to utilize kind of our footprint and our actual SG&A. So we feel good about being able to leverage that going out into '26.

David Moezidis: Seems to us know, obviously, semi is high-value business for us. So a recovery there helps. But we know, you know, when we talk about scale on the model, it's as much about as much as we grow revenue, you know, our SG&A does not need to grow at the same rate, which, you know, drops more to the bottom line.

Jim Ricchiuti: Got it. Thanks, guys. I'll jump back in the queue.

Jeffrey Benck: Thanks, Jim. Take care.

Operator: Thank you. And your next question comes from the line of Steven Fox from Fox Advisors. Please go ahead.

Steven Fox: Hi. Good afternoon, everyone. First of all, Jeffrey, congratulations for some great accomplishments at Benchmark, especially you weren't always got the best macro cards in the world when you joined.

Jeffrey Benck: Oh, that's correct.

Steven Fox: In terms of some of the comments, I was wondering if you can expand on a couple of comments on end markets. First of all, you said on the industrial business, there's great upside in the TAM available to you. Can you give us some hints on what you envision sort of how that TAM expanding? And sort of a similar question on space, you mentioned new bookings in space and how that can help growth. And then I had a couple follow-ups.

David Moezidis: Yeah. Sure, Steven. It's David. How are you?

Steven Fox: David.

David Moezidis: So let me talk about industrial first around the TAM. So as you could just appreciate, the industrial segment is an extremely, extremely broad segment with a broad set of customers out there. Globally. And that allows us to really participate in a number of different subsectors. So if you think about the subsectors you could participate in HVAC. You could participate in transportation. Agriculture is an area that we've been successful. Construction is an area that we've been successful. Just to name a few. Right? Building management and so on and so forth.

There are a lot of companies out there whether it's kind of those mid-tier type companies, mid-cap players, all the way to the large big cap guys that we're all familiar with that you would think of them as large broader conglomerates. Again, both Western Europe, as well as North America. Shifting gears to space applications, you know, we've talked about this in the prior quarter. And we're excited by the bookings momentum we're seeing in that space. This is gonna contribute nicely to our A and D sector. And you know, we're just starting the early stages of some of the ramps. We expect it to really show itself in 2027.

A and D has been really performing well for the last few years, double digits. And this year, we see it moderating but we see it picking right back up given the bookings momentum that we've had in the space applications.

Steven Fox: Great. That's very helpful. And then, just a little more perspective I was hoping for on the gross margin. So they expanded from to ten six from, like, ten one in one quarter. And like you said, in the semi cap was not really contributing from a sales growth standpoint. So like, how many basis points was related to just mix versus just typical volume drop down? And is there anything that stood out in terms of what was positive on the mix side to help the margins?

Bryan Schumaker: Yeah. There wasn't really anything I would point to on the mix. I mean, it was just kind of just the leverage of some of our plants and just overall mix, I guess, across the board. So I wouldn't point to I mean, you're right. Semi cap was down in the quarter, but I wouldn't count on that all of a sudden. Seeing that growth throughout the year and that margin expanding significantly because it's also gonna depend on AT and T. We've talked to that being at the lower end. So you just gotta balance that as you go throughout the year.

But there is a bit of seasonality in Q1 that, you know, depending on where it hits in terms of the demand shift and change that, you know, you may you know, you see it. We don't get quite as much leverage on the top side. Also, if you have sectors that are you know, lower margin overall, you know, that can weigh on it as well. So it's a little bit hard for you to get there, you know, because there's a lot of dynamics at play here.

Steven Fox: Understood. That's helpful. And just real quick last one. On the semi cap recovery that we're we could start baking in for internal model, like, I understand, you know, you're seeing it earlier now, but, like, any help on how what kind of slope we should be thinking about at least for now based on what you're hearing from customers?

David Moezidis: Yeah. Right now, we're still working through that, Steven. As I shared, we're feeling really good about it picking up. Based on some of the forecast adjustments that we're getting from our customers. So we're going through the process of, you know, what can we pull in into the earlier quarters from the back end and how that's going to look for us. We do plan on getting that clarity in the coming weeks, and we'll be providing that update as we get it.

Jeffrey Benck: It is kind of ironic that, you know, Q4 was soft, and we called it soft. Going into it. We kind of felt that some of our customers said '26 is gonna be great. But, you know, we're gonna see some softness at closing the year, and it played out. As we expected. It is great to see that snap back. I think that's a little bit where there's a little caution in. Okay. You know, it's great to see that come back, but, you know, what does this look like as you fill in the year? That's what David's talking about.

Steven Fox: Understood. Thank you very much.

David Moezidis: Thanks.

Operator: Thank you. And your next question comes from the line of Maxwell Michaelis from Lake Street Capital. Please go ahead.

Maxwell Michaelis: Hey, guys. Thanks for taking my call. Congrats on the quarter as well. Just want to go back to medical and maybe some of the program. Can you there any way you can go into a little bit more detail around some of the program wins in medical and then maybe if those the momentum continuing into 2026, if those are different style of programs, new wins, Can you just help me understand a little bit more about the programs?

David Moezidis: Yeah. Yeah. So, Max, we've been winning in this space kind of two categories. Right? If we think about how we look at medical, there's categories that we're winning in around med devices. And then there's categories we're winning in life sciences. So those are the two areas that we see continued momentum. Now when we start talking about how is that gonna roll into 2027, it is really the momentum of the ramps. We're gonna be ramping, and we're accelerating the production. And we're also seeing demand pickup from our end customers, our current base customers. So when you put those two together, we're gonna have a good FY '26 in medical.

And by the time we get towards the second half or later in the year, we should be fully ramped on the bookings that we had in 2025. And that's why I commented that momentum should continue into 2027.

Maxwell Michaelis: Okay. And then also another one you probably help me out with here is when we think about the ramp up in semi, I mean, are customers coming to you already and then sort of the year mid-2026, back 2026 recovery? Is that when you start to see some of these orders actually roll through, or are you guys able to just pretty much scale up as the orders come, I guess? Help me understand sort of the timeline around the ramp up, I guess, with the return of

David Moezidis: Yeah, Max. I think the thing the way to think about it is depending on what the orders and what type of pull-ins we get, we could respond to it within one to three months. So certain orders were able to accelerate much quicker. And this is not something that catches us by surprise. We have been working with our customers now since last late summer of last year doing capacity planning, doing simulations, really understanding what it could look like. So in our in the October earnings call, I had signaled that it feels different this time. It feels like it's real, and 2026 is going to be the year that Semi finally comes back.

And it took about sixty days for the verbal conversations to become something more meaningful. And now we're sharing that with you that it's becoming more meaningful, and we're gonna be looking at it. We're gonna see how it plays out. And the orders that are being pulled in, we're gonna be working closely with our customers to accelerate those outputs.

Maxwell Michaelis: Great. Thanks for taking my questions.

David Moezidis: Sure. Thanks. Nice talking to you, Max.

Operator: Thank you. And our next question comes from the line of Anja Soderstrom from Sidoti. Please go ahead.

Anja Soderstrom: Hi, and thank you for taking my questions and congrats on the nice quarter here. Just in aerospace and defense, you said you saw some slowdown in the defense before it picks up.

David Moezidis: Yeah. Hi, Anja. How are you? So, you know, we had really strong run-in A and D for the last few years. Right? Last couple of years, it's been strong double-digit growth. And you get from time to time program timing changes, things end of life, new program awards come to play. And we're seeing that being the case as we are in 2026. That's why we're saying A and D is gonna moderate in 2026. We're not saying it's falling apart or anything negative about it. We're just saying it's gonna ease. It's gonna moderate. We're gonna see it pick back up in 2027. And as I mentioned in my commentary, our commercial air looks good.

It's really more around some timing around some of the defense programs. And we're really, really bullish on the possibilities of space.

Anja Soderstrom: Okay. And can you remind me your exposure to the commercial air?

David Moezidis: So we work with several customers, and in commercial applications where we build products for them, and then they go ahead and integrate it into their products. And then finally, pass that product along to the likes of Airbus or Boeing, etcetera.

Anja Soderstrom: Okay. Thank you. And then within the AC and C, you expect that to continue to be strong. What kind of visibility do you have there given the rather large projects you have there?

David Moezidis: Yeah. So we actually expect the first half to continue to look strong. As you could appreciate, in the AI space, as our customers win, we see those wins translate into orders for us. So the visibility is good in the first half. And we're gonna continue to work with our customers and we believe that the second half could potentially fill in but we're not in a position right now to start signaling that. These are project-based opportunities, as you mentioned, Anja. And that's why waiting and letting it fill in is really important for us.

Anja Soderstrom: Okay. Thank you. And then, in terms of the cash cycle days, you had a pretty nice improvement there. How should we what are you targeting there? How should we think about the 2026?

Bryan Schumaker: Now as you mentioned, Anja, and thanks for the question, I mean, you look at the improvement we made in Q4 to '67, on the cash conversion cycle days. I mean, we had significant momentum again in our line. As we look to kind of ramp some of these projects, or programs, I mean, we're limiting kind of that I guess, increase you'll see or sorry. Stability is what we hope to see on that inventory days. Tracking right around that 69. I mean, we're gonna continue to drive that and hopefully get some more momentum. But, we're not counting on a significant amount there.

I mean, there's other line items there we're gonna continue to drive, but I think based on the momentum and what we've done over the last year over year with twenty-two days improvement, I mean, again, we'll continue to drive it, but, I mean, don't count on a significant amount.

Anja Soderstrom: Okay. Thank you. And then in terms of CapEx, I think you said you expect that to tick up a little bit. What's driving that? And is that expansion in Penang included there? Or have you spent most of that?

Bryan Schumaker: No. I mean, if you think of kind of the second half of the year that we're gonna be kind of getting it operation or sorry, the first half and then into three of getting it operational. That's where you'll see some of that tick up associated with that. We also have some of the program wins as you think about, what you've been hearing here that will require some CapEx within our current footprint. So typically, we say the one and a half to 2% of CapEx for the year. This may be two to 2.5% as you think about this year just based on some of the things I've said.

And, this is all investment and growth as you think about what we're doing here.

David Moezidis: Yeah. It sort of goes in hand with the stronger bookings last year and then also the build-out of the fourth building in our precision technology over in Penang.

Anja Soderstrom: Okay. Great. Thank you. That was all for me, and congrats Jeffrey, on the accomplishment at Benchmark.

Jeffrey Benck: Yeah. Thank you, Anja.

David Moezidis: Thanks, Anja.

Operator: Thank you. And there are no further questions at this time. I will now hand the call back to Mr. Jeffrey Benck for any closing remarks.

Jeffrey Benck: Thank you, operator. As I transition out of the CEO role at the end of this quarter, this will be my last earnings call with all of you. I just wanted to take a moment to express how incredibly proud I am of what we've achieved together over my seven years leading Benchmark. None of this would have been possible without the dedication of my executive team and the 12,000 plus talented professionals who make Benchmark their home. During my tenure, we accomplished several milestones that set new records for our company in revenue, margins, earnings, and share price.

I'm deeply grateful to our investors, the analysts who have covered us, and my board for their unwavering support throughout this journey. At the end of the quarter, I'll be passing the reins to David, whose capable leadership gives me great confidence that Benchmark's momentum will not only continue but accelerate. The future is bright, and I look forward to watching this great company reach even greater heights. Thank you all, and farewell for now.

Operator: And this concludes today's call. Thank you for participating. You may all disconnect.