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Benchmark Electronics (BHE) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Jul 29, 2026

Source: earnings call transcript

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

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

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%—

Orderbook & backlog

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

Included a competitive takeaway.

Medical Bookings strong number of engineering wins Q2 FY26

Across multiple customers.

Semi-Cap Bookings increased share of wallet Q2 FY26

With 3 core customers.

Capital programs

Fourth PT facility in Penang ramping 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 campus plan 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

A&D program transitions Impacted 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 environment Ongoing

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

A&D Revenue Growth

H2 FY26
Current Down 12% YoY in Q2 FY26
Target Improvement 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.

Find out whether BHE delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.