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    BHE
    Earnings call· Jun 2026(Q2 FY26)

    BENCHMARK ELECTRONICS Q2 FY26 earnings call BHE

    Jul 29, 2026 Source

    Executive summary

    Benchmark Electronics Q2 FY26 — Strong Revenue and EPS Growth, Increased Full-Year Outlook

    Benchmark Electronics delivered strong Q2 FY26 results, surpassing guidance with robust revenue and EPS growth driven by broad-based demand and operational execution. The company raised its full-year revenue outlook to a record $3 billion, reflecting continued optimism despite ongoing program transitions in A&D and a tight supply chain environment. Investments in capacity and capabilities are underway to support future growth.

    Highlights

    5

    • Revenue of $756 million, up 18% year-over-year, exceeded the high end of guidance.

    • Non-GAAP EPS of $0.75, up 36% year-over-year, exceeded the high end of guidance.

    • Non-GAAP operating income and EPS grew 30% and 36% respectively, meeting the objective of 1.5x to 2x revenue growth.

    • Increased 2026 revenue outlook to $3 billion, representing approximately 13% growth and a historical high for the company.

    • Strong bookings in Q2, with Aerospace & Defense (A&D) leading the way.

    Concerns

    2

    • Aerospace & Defense (A&D) revenue was down 12% year-over-year and 7% sequentially due to program transitions.

    • The supply chain environment is tight, with lead times for complex components increasing from 3-5 months to 7-12 months in some cases.

    Guidance & targets

    13
    CategoryTargetConfidence
    Q3 FY26 Revenue
    $755 million to $795 million
    high materiality
    High
    Q3 FY26 Non-GAAP Diluted EPS
    $0.76 to $0.82
    high materiality
    High
    Q3 FY26 Non-GAAP Gross Margin
    10.5% to 10.7%
    medium materiality
    High
    Q3 FY26 Non-GAAP Operating Margin
    5.3% to 5.5%
    medium materiality
    High
    Q3 FY26 Non-GAAP Effective Tax Rate
    26% to 27%
    low materiality
    Medium
    Q3 FY26 Weighted Average Diluted Shares Outstanding
    approximately 36.4 million
    low materiality
    High
    FY26 Revenue Outlook
    $3 billion
    high materiality
    High
    FY26 Capital Spending
    2% to 2.5% of revenue
    medium materiality
    High
    FY26 Operating Income and EPS Growth
    1.5x to 2x the pace of revenue growth
    high materiality
    High
    FY26 A&D Revenue
    roughly consistent with the prior year
    medium materiality
    Medium
    2027 A&D Revenue
    return to growth
    medium materiality
    High
    HPC Contribution
    start picking up very late in Q4 and into 2027
    medium materiality
    Medium
    FY27 Capital Spending
    2% to 2.5% of revenue
    medium materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Semi-Cap
    Momentum strengthened throughout the quarter, reflecting improving end market conditions and benefits of program wins. Ramping production in the fourth Penang PT facility to support demand. Expect second half revenue growth to accelerate versus both H1 and prior year.
    		—17%17%—
    Industrial
    Benefited in part from revenue acceleration associated with the planned wind down of the Phoenix facility. Excluding this one-time event, revenue was slightly above expectations, delivering modest year-over-year growth. Strong bookings in the quarter, including a competitive takeaway.
    		—13%20%—
    Medical
    Delivered solid performance in terms of revenue growth and new bookings. Q2 included a strong number of engineering wins across multiple customers. Growth driven by overall demand picking up and competitive takeaways.
    		—22%4%—
    AC&C
    Delivered outstanding results driven by the production ramp of AI-related program wins. Visibility continues to improve, and the company is optimistic about future opportunities, including HPC picking up late Q4 2026 and into 2027.
    		—71%21%—
    A&D
    Impacted by program timing within defense, following 2 years of approximately 20% growth. Expect improvement in the second half over the first half. Strong new business wins, leading total bookings in Q2. Expect to return to growth in 2027.
    		—-12%-7%—

    Operational metrics

    20
    Non-GAAP Gross Margin
    10.5%up 30 bps YoY, up 20 bps sequentially
    Q2 FY26
    Non-GAAP Operating Margin
    5.2%up 50 bps YoY, up 40 bps sequentially
    Q2 FY26
    Non-GAAP Effective Tax Rate
    26.6%
    Q2 FY26
    Cash and investments balance
    $315 million
    Q2 FY26

    As of quarter end.

    Net cash/(debt)
    $134 million
    Q2 FY26

    Cash net of debt, as of quarter end.

    Available borrowing capacity
    more than $0.5 billion
    Q2 FY26

    As of quarter end.

    Dividends paid
    $6 million
    Q2 FY26

    Returned to shareholders.

    Capital expenditures
    approximately $13 million
    Q2 FY26

    Primarily supporting growth initiatives.

    Cash conversion cycle
    59 daysimproved 26 days YoY, 8 days sequentially
    Q2 FY26

    Improvement was broad-based among major working capital categories.

    Inventory turns
    within target range of 5
    Q2 FY26
    Payables vs receivables improvement
    3 days sequentially, 16 days YoY
    Q2 FY26
    Stock-based compensation (GAAP expenses)
    approximately $8.4 million
    Q3 FY26

    Projected for Q3 FY26.

    Nonoperating expenses (GAAP expenses)
    $3.5 million to $4 million
    Q3 FY26

    Projected for Q3 FY26.

    Interest and other expenses
    approximately $3 million
    Q3 FY26

    Assumed for Q3 FY26.

    Bookings
    Record bookings
    Q2 FY26

    Company-wide.

    A&D Bookings
    led the way
    Q2 FY26

    Biggest contributor to total bookings in the quarter.

    Industrial Bookings
    very strong
    Q2 FY26
    Medical Bookings
    strong number of engineering wins
    Q2 FY26

    Across multiple customers.

    Semi-Cap Bookings
    increased share of wallet
    Q2 FY26
    Lead times (complex components)
    from 3-5 months to 7-12 months
    Q2 FY26

    In some areas, lead times have increased.

    Industry KPIs

    7
    MetricValueDetails
    Orders book to billRecord bookings
    Segment revenue growthSemi-Cap: 17%; Industrial: 13%; Medical: 22%; AC&C: 71%; A&D: -12%%
    Design wins product cycle rampsStrong number of engineering wins
    Supply demand imbalance lead timesLead times increased
    Capacity expansion internal sourcingFourth PT facility in Penang ramping operations; Third building in Ayutthaya, Thailand campus breaking ground
    End market revenue mix organic growthSemi-Cap: 17%; Industrial: 13%; Medical: 22%; AC&C: 71%; A&D: -12%%
    Operating margin incremental leverage5.2%%

    Orderbook & backlog

    5
    BookingsRecord bookingsQ2 FY26

    Company-wide.

    A&D Bookingsled the wayQ2 FY26

    Biggest contributor to total bookings in the quarter.

    Industrial Bookingsvery strongQ2 FY26

    Included a competitive takeaway.

    Medical Bookingsstrong number of engineering winsQ2 FY26

    Across multiple customers.

    Semi-Cap Bookingsincreased share of walletQ2 FY26

    With 3 core customers.

    Capital programs

    2
    Fourth PT facility in Penangramping operations
    Start: Q3 2026

    Benefit: Support Semi-Cap customer demand

    The facility remains on schedule and began ramping operations earlier this quarter.

    Third building in Ayutthaya, Thailand campusplan to break ground
    Start: Q3 2026

    Benefit: Support growth in the region

    Plan to break ground in Q3 2026, with construction expected to be completed in Q4 2027.

    Risks & headwinds

    2
    A&D program transitionsImpacted H1 FY26

    Revenue down 12% YoY and 7% sequentially in Q2 FY26

    Mitigation: Expect improvement in H2 FY26 and return to growth in 2027; continued new business wins (A&D led Q2 bookings).

    Tight supply chain environmentOngoing

    Lead times for complex components increased from 3-5 months to 7-12 months

    Mitigation: Proactive management by supply chain team, putting orders in place timely, leveraging lessons from COVID.

    What to watch in Q3 FY26

    5

    A&D Revenue Growth

    H2 FY26
    CurrentDown 12% YoY in Q2 FY26
    TargetImprovement in H2 FY26

    Why it matters

    A&D is a key sector undergoing transition; its recovery is important for overall growth and validates new program ramps.

    In Aerospace and Defense, following 2 years of approximately 20% growth, we entered 2026 expecting a transition year driven primarily by program timing within defense. While this impacted first half performance, we expect to improve in the second half over the first half.

    Q&A highlights

    6

    Can you provide more color on new A&D bookings, especially in relation to current events and government budgets, and what trends you are capitalizing on?

    Management stated the defense environment remains strong, driven by replenishment and new program wins in both defense and space. A&D led total bookings in Q2, reflecting optimism for the sector in coming quarters.

    “We see the defense environment remaining strong. And there's a combination of things that lead us to continue to believe that it's going to remain strong. I think I used the word replenishment in our last call. But beyond that, we're actually winning. We're winning in the defense space, and we continue to win in space, which is something that I highlighted in our previous calls as well.”

    asked by Steven Fox · answered by David Moezidis

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Q2 Performance and Raised Outlook

    Benchmark reported Q2 FY26 revenue of $756 million, an 18% year-over-year increase, and non-GAAP EPS of $0.75, up 36% year-over-year, both exceeding guidance. This strong performance led to an increased full-year 2026 revenue outlook of $3 billion, representing 13% growth and a new historical high for the company, driven by improving demand across most markets and strong execution.

    02

    Sectoral Growth Dynamics

    Four out of five sectors experienced healthy double-digit growth. AC&C led with 71% YoY growth due to AI-related program wins. Semi-Cap and Medical also showed strong growth of 17% and 22% YoY, respectively. A&D, while down 12% YoY due to program transitions, saw strong bookings in Q2, indicating future optimism and an expected return to growth in 2027.

    03

    Operational Efficiency and Capital Allocation

    The company demonstrated disciplined execution, improving non-GAAP gross margin to 10.5% and operating margin to 5.2%. Operating cash flow was $35 million and free cash flow was $22 million, with a cash conversion cycle improving to 59 days. Capital allocation remains balanced, with $6 million returned to shareholders via dividends and continued investment in capacity expansion, including new facilities in Penang and Thailand.

    04

    Supply Chain Management and Lead Times

    Management acknowledged a tight supply chain environment, particularly for complex components and memory, with lead times extending from 3-5 months to 7-12 months in some cases. The company's supply chain team is proactively managing these challenges to ensure customer order fulfillment, leveraging lessons learned from past disruptions during COVID.

    05

    Strategic Investments in Capacity

    Benchmark is expanding its global footprint with a fourth PT facility in Penang ramping operations in Q3 2026 and a third building in Ayutthaya, Thailand, breaking ground in Q3 2026 with completion expected in Q4 2027. These investments are aimed at supporting anticipated growth in Semi-Cap and the broader EMS business in the region.

    AI-generated summary of the company’s earnings call. Not investment advice.