Benchmark Electronics Q4 2025 Benchmark Electronics Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Benchmark Electronics Inc Earnings Call
Speaker #1: Good afternoon, ladies and gentlemen, and welcome to the BENCHMARK Q4 and fiscal year 2025 earnings call and webcast. At this time, all lines are in listen, only mode.
Speaker #1: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.
Speaker #1: This call is being recorded on February 3rd, 2025, and I would now like to turn the call over to Benchmark investor relations. Please go ahead, Mr. Paul Mansky.
Speaker #2: Thank you, Ina, and thanks everyone for joining us today for BENCHMARK's fourth quarter and fiscal year 2025 earnings call. With us today are Jeff Bank, our CEO; David Moezidis, our president; and Brian Schumaker, our CFO.
Paul Mansky: Thank you, Ina, and thanks everyone for joining us today for Benchmark's fourth quarter and fiscal year 2025 earnings call. With us today are Jeff Benck, our CEO, David Moezidis, our President, and Bryan Schumaker, our CFO. After the market closed, we issued an earnings release pertaining to our financial performance for the fourth quarter and fiscal year ending December 2025, and it prepared a presentation which we will re-reference on this call. Both the press release and presentation are available under the investor relations section of our website at bench.com. This call is being webcast live, a replay of which will be available on our website approximately 1 hour after we conclude. The company has provided a reconciliation of our GAAP to non-GAAP measures in the earnings release, as well as in the appendix to the presentation.
Paul Mansky: Thank you, Ina, and thanks everyone for joining us today for Benchmark's fourth quarter and fiscal year 2025 earnings call. With us today are Jeff Benck, our CEO, David Moezidis, our President, and Bryan Schumaker, our CFO. After the market closed, we issued an earnings release pertaining to our financial performance for the fourth quarter and fiscal year ending December 2025, and it prepared a presentation which we will re-reference on this call. Both the press release and presentation are available under the investor relations section of our website at bench.com. This call is being webcast live, a replay of which will be available on our website approximately 1 hour after we conclude. The company has provided a reconciliation of our GAAP to non-GAAP measures in the earnings release, as well as in the appendix to the presentation.
Speaker #2: After the market closed, we issued an earnings release pertaining to our financial performance for the fourth quarter and fiscal year ending December 2025, and prepared a presentation which we will reference on this call.
Speaker #2: Both the press release and presentation are available under the investor bench.com. This call is being relations section of our website at webcast live a replay of which will be available on our website approximately one company has provided a reconciliation of our hour after we conclude.
Speaker #2: gap to non-gap measures in the earnings release, as The well as the appendix to the presentation. Please take a moment to review the forward-looking statements disclosure on slide two of the presentation.
Paul Mansky: Please take a moment to review the forward-looking statements disclosure on slide 2 of the presentation. During our call, we will discuss forward-looking information. As a reminder, any of today's remarks, which are not statements of historical fact, are forward-looking statements, which involve risks and uncertainties as described in our press releases and SEC filings. Actual results may differ materially from these statements. Benchmark undertakes no obligation to update any forward-looking statements. For today's call, Jeff 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 Jeff for some parting thoughts.
Paul Mansky: Please take a moment to review the forward-looking statements disclosure on slide 2 of the presentation. During our call, we will discuss forward-looking information. As a reminder, any of today's remarks, which are not statements of historical fact, are forward-looking statements, which involve risks and uncertainties as described in our press releases and SEC filings. Actual results may differ materially from these statements. Benchmark undertakes no obligation to update any forward-looking statements. For today's call, Jeff 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 Jeff for some parting thoughts.
Speaker #2: During our call, we will discuss forward-looking information. As a reminder, any of today's remarks which are not statements of historical fact are forward-looking statements.
Speaker #2: uncertainties as described in our press releases and Which involve risks and SEC filings. Actual results may differ materially from these obligation to update any forward-looking statements.
Speaker #2: statements. For today's call, Jeff will start with an overview, BENCHMARK undertakes no followed by Brian's detail of our Q4 and fiscal year 21 2026 guidance.
Speaker #2: 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 we'll turn the call back to Jeff for some parting thoughts.
Speaker #2: Conference call as CEO. After Q&A, please turn to slide four. I'll turn the call over to our CEO, Jeff.
Paul Mansky: If you please, turn to slide four. I'll turn the call over to our CEO, Jeff Benck.
Paul Mansky: If you please, turn to slide four. I'll turn the call over to our CEO, Jeff Benck.
Speaker #2: Bank. Thank
Speaker #3: 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.
Jeff 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 Q4 revenue of $704 million, which was up high single digits and included double-digit growth across three of our five focus sectors, AC&C, medical, and A&D. At the same time, our Q4 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 Q4 of 2025. Despite the expected semi softness in the quarter, we still managed to deliver gross margin of 10.6%, which was above the high end of our guidance range.
Jeff 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 Q4 revenue of $704 million, which was up high single digits and included double-digit growth across three of our five focus sectors, AC&C, medical, and A&D. At the same time, our Q4 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 Q4 of 2025. Despite the expected semi softness in the quarter, we still managed to deliver gross margin of 10.6%, which was above the high end of our guidance range.
Speaker #3: 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.
Speaker #3: AC&C, medical, and A&D. At the same time, our fourth quarter earnings of $0.71 exceeded the high end of our guidance range provided last November.
Speaker #3: Our semi-cap sector is heading into 2026 after a softer Q4 of 2025. Despite the showing nice signs of improvement expected semi-softness in the quarter, we still managed to deliver gross margin of 10.6%, which was above the high end of our guidance range.
Jeff Benck: 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 5, 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.
Jeff Benck: 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 5, 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.
Speaker #3: our continued operating expense This coupled with discipline drove operating margin to 5.5%, demonstrating a leverage in our model. Again, great execution by the team across the board.
Speaker #3: 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 of instead of decelerating as in 2024, in 2025 we showed improving momentum.
Speaker #3: 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.
Speaker #3: improvement enabled us to deliver $2.40 in This 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.
Jeff Benck: Regarding our 2025 business highlights on slide 6, our strategy is clear. We target 5 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 representing 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.
Jeff Benck: Regarding our 2025 business highlights on slide 6, our strategy is clear. We target 5 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 representing 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.
Speaker #3: Five core high-value markets by focusing on. We target complex, high-mix opportunities that suit our strengths. We avoid commoditized markets and aren't pursuing an ODM approach, building vanilla solutions.
Speaker #3: If you look at our business today, you'll see a very evenly balanced portfolio. Each sector representing long-term growth opportunities where we believe we can excel and differentiate.
Speaker #3: 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.
Speaker #3: The past year demonstrated this with steady sequential progress in 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.
Speaker #3: 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.
Jeff Benck: Combining this with our growth and 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, MedTech, 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.
Jeff Benck: Combining this with our growth and 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, MedTech, 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.
Speaker #3: 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.
Speaker #3: This came from both new and existing customers and included some meaningful wins in higher-gross subsectors for us. Notably, space, med tech, and enterprise AI.
Speaker #3: 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.
Speaker #3: 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.
Jeff Benck: 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&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 Q4 and fiscal year 2025 results in more detail, as well as provide our Q1 outlook. Bryan, over to you.
Jeff Benck: 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&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 Q4 and fiscal year 2025 results in more detail, as well as provide our Q1 outlook. Bryan, over to you.
Speaker #3: 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&C and now the semi space is poised for a strong recovery in 2026 as well.
Speaker #3: With that, I'd like to turn the call over to Brian to discuss our fourth quarter and fiscal year 2025 results in more detail as well as provide our first quarter outlook.
Speaker #3: Brian, over to you.
Speaker #2: Thank you, Jeff, 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.
Bryan Schumaker: Thank you, Jeff, and good afternoon, everyone. Please turn to Slide 7. 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.
Bryan Schumaker: Thank you, Jeff, and good afternoon, everyone. Please turn to Slide 7. 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.
Speaker #2: 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.
Speaker #2: For Q4, our non-gap gross margin was 10.6% up 50 basis points sequentially and 20 basis points year-over-year due to volume and mix. Non-gap 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.
Speaker #2: Our fourth
Bryan Schumaker: Our fourth quarter non-GAAP effective tax rate was 25.4%. Please turn to Slide 8 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%. 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 9 and 10 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.
Bryan Schumaker: Our fourth quarter non-GAAP effective tax rate was 25.4%. Please turn to Slide 8 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%. 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 9 and 10 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.
Speaker #1: non-GAAP A quarter effective tax rate was 25.4% . Please turn to slide eight for the full year 2020 . Financial results year . For the full 2025 financial results for the year , fiscal revenue to the $2.66 billion was of flat compared was up 5% $2.40 .
Speaker #1: to prior year , while EPs For the full year , our non-GAAP gross margin non-GAAP was operating 10.2% . margin of 4.9% was non-GAAP down points 20 basis over year , year variable primarily due to compensation .
Speaker #1: Our full year effective non-GAAP rate tax 24.8% . was to Please turn slides nine and ten for our quarter and fourth full year 2025 revenue performance by sector semi cap decreased revenue quarter and 14% year over year .
Bryan Schumaker: 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&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.
Bryan Schumaker: 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&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.
Speaker #1: This was consistent with our expectations of a softer Q4 prior to expected improvements For the in 2026 . year , semi full cap revenue grew 2% , with an industrial .
Speaker #1: Although down sequentially, revenue was up 3% year over year. This was in line with our expectations for the quarter and for the full year.
Speaker #1: Industrial revenue was the consistent with prior year another strong and posted performance in quarter and year the up , and 7% sequentially 17% year over .
Speaker #1: year Full revenue growth was well into the double also digits year at 19% . Meanwhile , medical continued to improve , with fourth quarter revenue up 14% quarter over quarter in 23% compared to the prior year .
Speaker #1: The improved second half performance drove 7% growth on a full year basis . For our final sector , full year revenue was down in 2025 , driven by a challenging However , we first half .
Bryan Schumaker: For our final sector, full year AC&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.
Bryan Schumaker: For our final sector, full year AC&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.
Speaker #1: are pleased with a return to growth in the fourth quarter with revenue up sequentially 22% and 27% year over year . We expect this momentum to continue Q1 as into we ramp announced previously AI related wins Please .
Speaker #1: turn to slide 11 for non-GAAP financials . Our revenue sequential continued to improvements that throughout year the at a little , exiting over $700 million , which was up 7% versus For Q4 2020 .
Speaker #1: at the time , fourth quarter same gross margin 10.6% continued . Our multi-quarter trend of 10% or greater performance , coupled with expense management .
Bryan Schumaker: Coupled with expense management, this translated into sequential improvements in operating margin and EPS performance throughout the year, with Q4 and full year EPS growing greater than twice the rate of revenue growth. Please refer to Slides 12 and 13 for a 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 31 December, we are in a net cash positive position of $111 million. Our cash balance was $322 million, and a sequential increase of $36 million.
Bryan Schumaker: Coupled with expense management, this translated into sequential improvements in operating margin and EPS performance throughout the year, with Q4 and full year EPS growing greater than twice the rate of revenue growth. Please refer to Slides 12 and 13 for a 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 31 December, we are in a net cash positive position of $111 million. Our cash balance was $322 million, and a sequential increase of $36 million.
Speaker #1: This translated into sequential improvements in operating margin and EPS performance throughout the fourth quarter and full year, EPS growing greater than twice the rate of revenue growth.
Speaker #1: Please refer to slides 12 and 13 for discussion of our balance sheet . Cash flow , capital trends and working . In Q4 , we generated $59 million in operating cash flow and cash flow for fiscal year $48 million in free 2025 , we generated 85 million in free cash flow as of We are December 31st .
Speaker #1: net cash position 111 million . Our of cash balance was 322 million and a sequential increase of $36 million December 31st , of we as $148 million outstanding on our loan , and term 65 million outstanding against our revolver , had which we have $481 million available to .
Bryan Schumaker: 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. Our fourth PT building, announced last year, is on track to be completed at the end of Q2 and begin operations in Q3, which will require a step-up in capital spending over the next few quarters. Demonstrating our ongoing commitment to return value to shareholders, we distributed cash dividends of $24 million and repurchased $27 million in stock during the year. At the end of the quarter, we had approximately $123 million remaining under our existing share repurchase authorization.
Bryan Schumaker: 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. Our fourth PT building, announced last year, is on track to be completed at the end of Q2 and begin operations in Q3, which will require a step-up in capital spending over the next few quarters. Demonstrating our ongoing commitment to return value to shareholders, we distributed cash dividends of $24 million and repurchased $27 million in stock during the year. At the end of the quarter, we had approximately $123 million remaining under our existing share repurchase authorization.
Speaker #1: invested borrow approximately 39 million in capital expenditures the during year , including 11 million in Q4 . Our fourth party building announced last year , track to is on be completed at the end of begin Q2 and operations in Q3 , which will require a step up in capital spending over the next few quarters .
Speaker #1: Demonstrating our commitment ongoing to return value to We shareholders . distributed cash dividends of 24 million and repurchased 27 million in stock during the year .
Speaker #1: end of the quarter , we had At the 123 million remaining under our existing share repurchase authorization . Our cash conversion cycle in the quarter was 67 As our days .
Bryan Schumaker: Our cash conversion cycle in the quarter was 67 days, as our working capital focus drove considerable improvements of 10 days sequentially and 22 days year-over-year. Inventory days were down 6 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 2 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.
Bryan Schumaker: Our cash conversion cycle in the quarter was 67 days, as our working capital focus drove considerable improvements of 10 days sequentially and 22 days year-over-year. Inventory days were down 6 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 2 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.
Speaker #1: focus working drove considerable improvements of ten days and sequentially year 22 days year over . Inventory days were six days down sequentially as we continued to actively manage our As we inventory .
Speaker #1: grew the top . This focus translated into inventory turns of 5.2 in the quarter . Before discussing our Q1 , there are guidance highlight .
Speaker #1: During our year-end close process, we identified corrected immaterial errors in prior periods related to tax, resulting in a cumulative understatement of tax income of $8.7 million.
Bryan Schumaker: The aggregate impact of these corrections was an increase to income tax expense of $2.2 million for the fiscal year ended December 31, 2024, and an increase of income tax expense of $6.5 million to 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 non-cash impairment on certain assets located at one of our Arizona facilities due to the end of life of a few programs.
Bryan Schumaker: The aggregate impact of these corrections was an increase to income tax expense of $2.2 million for the fiscal year ended December 31, 2024, and an increase of income tax expense of $6.5 million to 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 non-cash impairment on certain assets located at one of our Arizona facilities due to the end of life of a few programs.
Speaker #1: The expense aggregate these an corrections was increase to income impact of tax expense of 2.2 million for the fiscal year ended December 31st , 2024 , and an increase of income tax expense of 6.5 million to years prior 2024 .
Speaker #1: Importantly , corrections these resulted in no change to previously reported cash taxes . Operating cash flow , revenue growth , and operating share earnings per non-GAAP , or with GAAP guidance , prior year consistent periods in today's been revised release have accordingly , which will also be reflected in our form 10-K set to be published the week of February 23rd .
Speaker #1: Second, as we look to optimize our footprint, we recorded an $11.1 million non-cash impairment on certain assets located at one of our Arizona facilities due to the end of life of a few programs.
Bryan Schumaker: 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 Q1 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 10.0 and 10.4%. 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.
Bryan Schumaker: 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 Q1 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 10.0 and 10.4%. 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.
Speaker #1: Programs will be consolidated within our other facilities in the US. Please advance to slide 14. Let me now turn to our guidance for the first quarter of 2026.
Speaker #1: expect revenue to be within a We range 655 to $695 million , up 7% year over year at the . We midpoint expect non-GAAP gross margin to be between 10 and 10 and 10.4% , those we would expect with assumptions , non-GAAP be margin to between 4.7 and 4.9% .
Speaker #1: We operating anticipate GAAP expenses to include 5.4 million of stock based compensation , and non-operating expenses , including 5.1 to 5.5 million of amortization , and other restructuring .
Speaker #1: charges Our non-GAAP diluted earnings is per share expected to be in the range of 53 to $0.59 . Interest and other expenses are to be expected approximately $4.7 million .
Bryan Schumaker: 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 Q1 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?
Bryan Schumaker: 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 Q1 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?
Speaker #1: We are undertaking initiatives aimed at tax rate over structurally improving term . However , for the first quarter and full year , we anticipate that our effective tax rate will be in the range of Finally , our weighted average share count is expected to be 26 to 27% .
Speaker #1: Approximately $36.3 million. With that, I would like to turn the call over to David to discuss market sector performance and outlook.
David Moezidis: Thank you, Bryan, and hello, everyone. Let's please turn to slide 15 for a discussion of our sector outlook. As Jeff 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 12 to 24 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.
David Moezidis: Thank you, Bryan, and hello, everyone. Let's please turn to slide 15 for a discussion of our sector outlook. As Jeff 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 12 to 24 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.
Speaker #1: David .
Speaker #2: Brian , Thank you , everyone . Let's please slide turn to and hello discussion 15 for a outlook sector of our Jeff mentioned , we saw good revenue momentum back half of the year .
Speaker #2: was This driven by a number of factors , starting with the new bookings we have secured over the last 12 to 24 months , which included a couple of competitive takeaways also .
Speaker #2: benefited from improved sell We through aligning healthier in with demand across some of our sectors . As channel inventory normalized . Last but not least focus on operational execution , which we saw in our successful was our launches and high marks in customer satisfaction .
Speaker #2: Let's step through the demand dynamics we're seeing sector , starting with by semi cap in 2025 , revenue grew low . Single digits year over year during the semi markets , longer than usual .
Speaker #2: Cyclical downturn . Additionally , China import restrictions added some year past pressure this . All the while we continue to wins focus on expanding capacity , positioning us well for the upturn on our last call , we pointed to the half back of 2026 as likely to the be demand inflection .
David Moezidis: All the while, we continued to secure new wins and focus on expanding capacity, positioning us well for the upturn. On our last call, we pointed to the back half of 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 Q4. 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.
David Moezidis: All the while, we continued to secure new wins and focus on expanding capacity, positioning us well for the upturn. On our last call, we pointed to the back half of 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 Q4. 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.
Speaker #2: Since that time , we have seen mounting evidence of it picking up earlier in the year within revenues industrial saw improvement in the second half , but was flat full for the year in 2025 .
Speaker #2: This was consistent with expectations shared with you in Q3, which called for a return to year-over-year growth in the fourth quarter.
Speaker #2: Performance in the quarter was led by improved demand in transportation . HVAC , automation and some other minor sectors . Industrial is among the macro most sensitive sectors .
Speaker #2: We sell , while at the same into one of the greatest represents opportunities future for for the upside of company in terms addressable market .
David Moezidis: 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&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&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 application, which bodes well for our future growth prospects. These programs ramp over the coming quarters. Turning to medical.
David Moezidis: 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&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&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 application, which bodes well for our future growth prospects. These programs ramp over the coming quarters. Turning to medical.
Speaker #2: may take a It little more time to fully ramp our efforts here , but with the wins , we have already secured , coupled with steady a macro backdrop , we expect gradually improving performance as we through the year progress .
Speaker #2: Moving to Q4. And 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.
Speaker #2: From this subsector, in the near to total mid-term, ad revenue growth is expected to moderate from its double-digit levels over the last years, due primarily to program timing within defense.
Speaker #2: However , I'm pleased extremely with our now multiple quarters of bookings momentum across a broad set of space which applications , bodes well for our future prospects .
Speaker #2: growth 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 .
David Moezidis: 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 Q1 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&C revenue rebounded sharply in Q4, 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.
David Moezidis: 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 Q1 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&C revenue rebounded sharply in Q4, 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.
Speaker #2: Despite the ramps challenging our first half , 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 year full further out , our bookings momentum in 2025 within MedTech has positioned us well to build upon our medical sector performance .
Speaker #2: our Rounding out sectors , Acac revenue rebounded in the sharply quarter , driven by very strong performance in computing . We momentum to continue into expect this first half of the .
Speaker #2: year believe We strongly in our the liquid cooling capabilities and investments . We capacity forward to bringing these bear in both capabilities to the AI and next infrastructure generation to supercomputer builds come .
David Moezidis: 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.
David Moezidis: 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.
Speaker #2: Moving to slide 16 before to Q&A , I would turning over sum up the state of our business as follows more even I'm today encouraged than I was when joining the company over two and a half years ago about our future .
Speaker #2: 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 a well balanced across the entire portfolio we are , and particularly encouraged by our growing opportunities in space .
Speaker #2: MedTech and, while still a little early, AI-related wins at the same time. End markets are medical and semi improving, and while industrial still has some work to do, we think we're positioned for growth later in 2026.
David Moezidis: 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 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.
David Moezidis: 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 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.
Speaker #2: Operationally , we implemented a number of in initiatives in 2025 that positioned us to demonstrate increasing operating leverage as revenue scales Additionally , .
Speaker #2: we see no change to capital allocation our approach as our priorities continue to work well and remain shareholder friendly . We will dividend , seek offset annual dilution through share repurchases , and invest in the business to our growth support .
Speaker #2: Finally , as we look ahead , very we're encouraged by how the year is shaping up . We confident in our digit growth remain guidance , and we believe outlook could that strengthen further in the coming weeks as we gain visibility from our customers additional .
Speaker #2: With thank our like to customers , employees partners for a 2025 . successful And I'm looking forward to building upon that in 2026 .
Speaker #2: And beyond .
Speaker #3: Operator: We can now open the call for Q&A.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. 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're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you. Your first question comes on the line of James Ricchiuti from Needham & Company. Please go ahead.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. 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're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you. Your first question comes on the line of James Ricchiuti from Needham & Company. Please go ahead.
Speaker #4: Thank you . Ladies and gentlemen , we will now begin the question and answer session . Should you have a question , please press star , followed by the one on your telephone keypad .
Speaker #4: You will hear a 'Johanna has been raised.' Should you wish to cancel your request, please press star followed by the two.
Speaker #4: If you are using a speakerphone , please lift your handset before pressing any keys . moment please . For your One first question .
Speaker #4: Thank you . And your first question comes from the line of Jim Ricchiuti Needham and from Company . Please go ahead .
James Ricchiuti: Hi. Thank you. Good afternoon. Congrats on the quarter, and to you, gents, for your accomplishments at Bench over the years.
James Ricchiuti: Hi. Thank you. Good afternoon. Congrats on the quarter, and to you, gents, for your accomplishments at Bench over the years.
Speaker #5: Thank Hi . you . Good afternoon Congrats on the . And quarter . to you , Jeff , for your your accomplishments at bench over the years .
David Moezidis: Yeah, thanks, Jim. So, you know, it sounds, 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, I you know, are there areas besides Semi-Cap, which I think we know, and 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? 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.
David Moezidis: Yeah, thanks, Jim. So, you know, it sounds, 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, I you know, are there areas besides Semi-Cap, which I think we know, and 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? 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.
Speaker #5: Jim Thanks , . So , know , you it sounds if we , you know , from the semi tone cap besides , you be seem to suggesting increased confidence in a couple of areas of the business .
Speaker #5: David , I think you highlighted but medical it in general , you know , are there areas besides which I think we semi cap know when we've seen some some real clear drivers and I assume you're going to hear more from your customers over the next couple of months .
Speaker #5: But what areas of the business in particular has the the tone of demand change versus , say , three months ago ?
Speaker #2: Jim , good , good Hey , . Speaking with you would , I say , you know , there's really no surprise overall with regards to the we're seeing across entire the enterprise performance .
David Moezidis: We started signaling to all of you in July of last year that we felt medical has turned a corner. We also talked about AC&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. Finally, I think industrial has been really very consistent to us, right? It's just a steady eddy sector that we see it gradually picking up as we work our way throughout the quarter.
David Moezidis: We started signaling to all of you in July of last year that we felt medical has turned a corner. We also talked about AC&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. Finally, I think industrial has been really very consistent to us, right? It's just a steady eddy sector that we see it gradually picking up as we work our way throughout the quarter.
Speaker #2: We started all signaling of you July of in last that year felt medical has talked about We corner . a also looking like it's going to have a strong Q4 , and it did .
Speaker #2: And right now we see momentum continuing into the first half, semi. We signaled in that October, it looks like things are gonna pick up.
Speaker #2: as we close out the year and we new year , we certainly started the seeing that . And finally I think industrial has been really very consistent to us .
Speaker #2: Right . steady eddy just a It's sector that we it see gradually picking up as we work our way quarter throughout the .
James Ricchiuti: Okay, I wanna just shift gears a little bit. Just talking about margins, I mean, you've done a nice job of delivering 10% gross margins pretty, pretty consistently, you know, even in a somewhat challenging top-line environment. Yeah, so I'm just wondering, you know, how we should be thinking about gross margins as the top line begins accelerating or, you know, do you believe that maybe the greater opportunity is gonna be driving some OpEx leverage?
James Ricchiuti: Okay, I wanna just shift gears a little bit. Just talking about margins, I mean, you've done a nice job of delivering 10% gross margins pretty, pretty consistently, you know, even in a somewhat challenging top-line environment. Yeah, so I'm just wondering, you know, how we should be thinking about gross margins as the top line begins accelerating or, you know, do you believe that maybe the greater opportunity is gonna be driving some OpEx leverage?
Speaker #5: Okay . I want to just shift gears a little bit . Just talking about margins . I mean , you've done a nice job of delivering 10% gross margins .
Speaker #5: Pretty , pretty consistently . You know , even in a somewhat challenging top line environment . Yeah . So I'm just how we be thinking about wondering as the margins top line begins accelerating do you , or believe that maybe the greater opportunity is driving some opex going to be leverage ?
David Moezidis: 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 we 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-
David Moezidis: 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 we 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-
Speaker #1: Yeah , I mean , as we look at the top margin , again , like you said , I mean , 10.6 is what we were able to on the gross margin for deliver Q4 .
Speaker #1: And kind of if you look at our range Q1 , when the revenue's down slightly from for Q4 , I mean , we're still of 10.2 on that percentage .
Speaker #1: So we feel good we're tracking at that about how But you're right . I mean , if you level . look at our operating margin and our ability to deliver on that line , I mean , that's where our leverage as we we see accelerate continue to revenue .
Bryan Schumaker: ... 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 2026.
Bryan Schumaker: ... 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 2026.
Speaker #1: I mean, we feel positioned and able to utilize kind of our, we're well, 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, you know, obviously, semi is high-value business for us, so a recovery there helps. But we know, you know, when we talk about scale in the model, it's as much about, as much as, 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.
David Moezidis: Seems to us, you know, obviously, semi is high-value business for us, so a recovery there helps. But we know, you know, when we talk about scale in the model, it's as much about, as much as, 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.
Speaker #1: .
Speaker #6: Seems to us , you know , semi is is high value business for us . we'll recover So there . Helps . But we know you know when we talk about scale in the model it's as much about as much as as we grow You know our revenue .
Speaker #6: G&A does not need to grow at the same rate, which, as you know, drops more to the bottom line.
Jeff Benck: Got it. Thanks, guys. I'll jump back in the queue.
James Ricchiuti: Got it. Thanks, guys. I'll jump back in the queue.
Bryan Schumaker: Thanks, Jim.
Bryan Schumaker: Thanks, Jim.
Speaker #5: Thanks , guys . I'll jump back in the queue .
David Moezidis: Thanks, Jim. Take care.
David Moezidis: Thanks, Jim. Take care.
Operator: Thank you, and your next question comes from the line of Steven Fox from Fox Advisors. Please go ahead.
Operator: Thank you, and your next question comes from the line of Steven Fox from Fox Advisors. Please go ahead.
Speaker #1: Thanks , Jim .
Speaker #2: Take care .
Speaker #4: Thank you . And your question next comes from the line of Steven from Please go Advisors . Fox ahead .
Steven Fox: Hi. Good afternoon, everyone. First of all, Jeff, congratulations for some great accomplishments at Benchmark, especially you weren't always got the best macro cards in the world when you joined. But in terms-
Steven Fox: Hi. Good afternoon, everyone. First of all, Jeff, congratulations for some great accomplishments at Benchmark, especially you weren't always got the best macro cards in the world when you joined. But in terms-
Speaker #7: Hi . Good afternoon everyone . First of all , Jeff , congratulations for some great accomplishments at benchmark , especially . You weren't always dealt the best macro cards in the world .
Speaker #7: When you joined. But in terms of, yeah, in terms of some of the comments, I was wondering if you can expand on a couple of comments on end markets.
Bryan Schumaker: Right.
Bryan Schumaker: Right.
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 the growth. And then I had a couple follow-ups.
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 the growth. And then I had a couple follow-ups.
Speaker #7: First of all , you said on the industrial business , great there's upside in the Tam you . Can you give us some what you what hints on envision sort of how that Tam available to expanding and sort of a question similar on mentioned space .
Speaker #7: New bookings in space and how that can help growth—you. And then I had a couple follow-ups.
David Moezidis: Yeah, sure, Steven. It's David. How are you?
David Moezidis: Yeah, sure, Steven. It's David. How are you?
Steven Fox: Hi, David.
Steven Fox: Hi, David.
David Moezidis: So let me talk about industrial first around the TAM. So as you could just, you know, appreciate, the industrial segment is an 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.
Speaker #2: Yeah , sure . Steven , it's David , how are you ? Hi . So so let me let me talk industrial the first around Tam .
David Moezidis: So let me talk about industrial first around the TAM. So as you could just, you know, appreciate, the industrial segment is an 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.
Speaker #2: So as , as you could just , you know , appreciate the industrial segment is an extremely , extremely broad . Segment with a broad set of out customers there globally .
Speaker #2: And that allows us to really participate in of a number different subsectors . So if you think about the subsectors , you could participate in HVAC , you could participate in transportation .
Speaker #2: Agriculture is an area that we've been successful . Construction is an area that we've been successful . Just just to name name a few .
David Moezidis: 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, 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&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.
Speaker #2: Building Right . just to management and so on . And so forth . There are a companies lot of out there , whether kind of those it's mid-tier companies type , mid-cap players , all the to way the large big cap guys that we're all familiar with , that you would think of them as as large , broader conglomerates .
David Moezidis: 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, 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&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.
Speaker #2: 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 .
Speaker #2: seeing that in in space . This is going to contribute nicely to our and sector . And you know , we're we're just starting the early stages of some of the ramps .
Speaker #2: We expect it to really show itself in 2027. It has been performing well for the last few years, with a few double-digit results.
David Moezidis: A&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.
David Moezidis: A&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.
Speaker #2: And this see it year we moderating , but we see it right back momentum that up . bookings , we've we've had Given the picking in the in applications space
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 10.1% to 10.6% in one quarter, and like you said, 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?
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 10.1% to 10.6% in one quarter, and like you said, 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?
Speaker #2: .
Speaker #7: helpful . Great . 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 1 in 1 like you said quarter .
Speaker #7: And cap was , semi not not really from a contributing sales growth standpoint . So how many basis points was related to just mix versus just typical volume drop down .
Speaker #7: 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 AC&C. We've talked to that- about that being at the lower end. So you just got to balance that as you go throughout the year. But-
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 AC&C. We've talked to that- about that being at the lower end. So you just got to balance that as you go throughout the year. But-
Speaker #1: Yeah , there really anything I would point to mix . I was just kind of on the mean , it just the of some leverage of our and just overall plants guess , across the I wouldn't point board .
Speaker #1: to I mean , So right , semi cap you're was but I wouldn't count on that . All of a sudden quarter , that growth seeing throughout the year in that margin , expanding because it's also going to depend Acnc .
Speaker #1: to I mean , So right , semi cap you're was but I wouldn't count on that . All of a sudden quarter , that growth seeing throughout the year in that margin , expanding because it's also going to depend significantly about that being at the lower end .
Speaker #1: So on you the year . balance that as throughout just got to But
David Moezidis: 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. But 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 to- for you to get there, you know, because there's a lot of dynamics at play here.
David Moezidis: 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. But 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 to- for you to get there, you know, because there's a lot of dynamics at play here.
Speaker #6: is a bit . in Q1 you know , that , on depending where it hits in the terms of shift and change that , you know , you may you see don't get it , we quite much as leverage on the on the top side , but also you have if sectors that are , you know , lower margin overall , can you know , that weigh on it as well .
Speaker #6: of
Speaker #6: it's a little bit So you to get there , you know , because there's a lot of dynamics at hard to for play here .
Steven Fox: Understood. That's helpful. Just real quick, last one. On the Semi-Cap recovery that we could start baking into our 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? Thanks very much.
Steven Fox: Understood. That's helpful. Just real quick, last one. On the Semi-Cap recovery that we could start baking into our 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? Thanks very much.
Speaker #7: Understood. That's helpful. And just real quick, last one on the semi cap recovery that we could start baking in internally for the model.
Speaker #7: Like, I understand. You know, you're earlier now. But seeing it, any help on, like, what kind of slope we should be thinking about for BE at, based on now you're—what—hearing from at least customers.
David Moezidis: Yeah. So 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.
David Moezidis: Yeah. So 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.
Speaker #7: Thanks very much .
Speaker #2: So right Yeah . now we're still through that working . . Stephen As I as shared , feeling really we're good about up based it .
Speaker #2: Picking on some of the forecasts, getting adjustments that we're seeing from our customers. So we're going through the process, you know, what can we pull into the earlier quarters in from the back end, and how to look at that—so that's us?
Speaker #2: We for do plan on getting that clarity in the coming and we'll be And providing that weeks . as , update as we get it .
Bryan Schumaker: 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, "2026 is gonna be great, but, you know, we're gonna see some softness closing the year." And it played out as we expected. It is great to see that snap back.
Bryan Schumaker: 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, "2026 is gonna be great, but, you know, we're gonna see some softness closing the year." And it played out as we expected. It is great to see that snap back.
Speaker #6: It of is kind ironic that , you know , was soft and called it we Q4 going into it , we felt soft that some of our customers said , great , but , we're going 26 is going to be some to see softness in closing the year .
Speaker #6: And you know , we as expected . It out to see that is great snap back it played . I think little bit where there's that's a caution and okay , you know , it's see come back .
David Moezidis: ... 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.
David Moezidis: ... 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.
Speaker #6: you know But what does like as you fill in this look That's the David's what about .
Steven Fox: Understood. Thank you very much.
Steven Fox: Understood. Thank you very much.
David Moezidis: Thanks.
David Moezidis: Thanks.
Speaker #7: Thank you very much. Understood.
Operator: Thank you. Your next question comes from the line of Max Michaelis from Lake Street Capital. Please go ahead.
Operator: Thank you. Your next question comes from the line of Max Michaelis from Lake Street Capital. Please go ahead.
Speaker #2: Thanks
Speaker #2: .
Speaker #4: next And
Speaker #4: Thank you, Michaelis. Max Lake from Capital. Please go ahead, Street.
Max Michaelis: Hey, guys. Thanks for taking my call. Congrats on the quarter as well. I just wanna go back to medical and maybe some of the programs. Can you - is 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?
Max Michaelis: Hey, guys. Thanks for taking my call. Congrats on the quarter as well. I just wanna go back to medical and maybe some of the programs. Can you - is 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?
Speaker #8: Thanks for guys . taking my call
Speaker #8: . Congrats . Hi , on the I well . just want to quarter as medical and go back to the program can maybe some of is there any you way you can go into a more little bit detail around some program wins in medical ?
Speaker #8: And then maybe of the those the momentum continuing into 2026 , if those are style programs , new wins , can you different little bit more about understand a the the programs ?
David Moezidis: So, Max, we've been winning in this space in kinda 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 pick up from our end customers, our current base customers.
David Moezidis: So, Max, we've been winning in this space in kinda 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 pick up from our end customers, our current base customers.
Speaker #2: Yeah , yeah . So Max , we've been winning in this space in kind of two categories . Right ? so If we think about how we look at medical , there's categories that we're winning in med around devices .
Speaker #2: 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 going to roll into is it is really the it 2027 , momentum of the ramps .
Speaker #2: We're going to be ramping and we're the accelerating the production . And we're also seeing demand pick up from our end customers . Their current base customers .
David Moezidis: So when you put those two together, we're gonna have a good FY 2026 in medical, and by the time we get towards second half or later in the year, we should be fully ramped on some of the bookings that we had in 2025, and that's why I commented that that momentum should continue into 2027.
David Moezidis: So when you put those two together, we're gonna have a good FY 2026 in medical, and by the time we get towards second half or later in the year, we should be fully ramped on some of the bookings that we had in 2025, and that's why I commented that that momentum should continue into 2027.
Speaker #2: So when you put those two together, we're going to have a good FY26 in Medical. And by the time we get to the second half or later in the year, we should be fully ramped on some of the programs that we had in 2025.
Speaker #2: And that's bookings—why I commented that that momentum should continue into 2027.
Max Michaelis: Okay. And then also another one you could 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 to your mid-2026, back half of 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 semi.
Max Michaelis: Okay. And then also another one you could 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 to your mid-2026, back half of 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 semi.
Speaker #8: And then Okay .
Speaker #8: also another one you can probably help me out with here is when we think ramp about the into up in semi , I mean , our coming to customers you already and then sort of your mid 2026 back half of 2026 recovery .
Speaker #8: When do you expect to start seeing some of these orders actually roll through, or are you guys pretty much able to just scale up as the orders come?
Speaker #8: Guess, can you help me understand sort of the timeline around the ramp up? I guess with the return of semi.
David Moezidis: Yeah, Max, I think the way to think about it is, depending on what the order is in, what type of pull-ins we get, we could respond to it within one to three months. So certain orders we're able to accelerate much quicker, and this is not something that catches us by surprise. We've been working with our customers now since late summer of last year, doing capacity planning, doing simulations, really understanding what it could look like. 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.
David Moezidis: Yeah, Max, I think the way to think about it is, depending on what the order is in, what type of pull-ins we get, we could respond to it within one to three months. So certain orders we're able to accelerate much quicker, and this is not something that catches us by surprise. We've been working with our customers now since late summer of last year, doing capacity planning, doing simulations, really understanding what it could look like. 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.
Speaker #2: Max , I Yeah . the think the thing , the way to think about it depending on what the orders , in is what type of pull ins we get , we could respond to it within 1 to 3 months .
Speaker #2: So certain orders were able to accelerate much quicker and this is not something that catches by us surprise . We've been working with our customers now since last late summer of last doing year , capacity planning , doing simulations , really understanding what it could look like .
Speaker #2: So in our in the October earnings call , I had signaled that it feels different . This time . It feels like real .
Speaker #2: It's going to be the year that semi comes finally back, and it took about 60 days for the verbal conversations to become something meaningful—more sharing.
Speaker #2: it's going to be the year that semi comes finally back and it took about 60 days for the verbal conversations to become something meaningful more sharing now we're And that with you , that And and meaningful .
David Moezidis: And it took about 60 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.
David Moezidis: And it took about 60 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.
Speaker #2: Becoming more, we're going to—it's looking at it. We're going to see how it pans out, and the orders that are being pulled in.
Speaker #2: We're going to be working closely with our customers to accelerate those outputs.
Max Michaelis: Great. Thanks for taking my questions.
Max Michaelis: Great. Thanks for taking my questions.
David Moezidis: Sure.
David Moezidis: Sure.
Max Michaelis: Thanks.
Max Michaelis: Thanks.
David Moezidis: Nice talking to you, Max.
David Moezidis: Nice talking to you, Max.
Speaker #8: Great. Thanks for taking my questions.
Speaker #2: Nice talking to you , Max
Operator: Thank you, and your next question comes from the line of Anja Soderstrom from Sidoti. Please go ahead.
Operator: Thank you, and your next question comes from the line of Anja Soderstrom from Sidoti. Please go ahead.
Speaker #2: .
Speaker #4: Thank you. And your next question comes from the line of Anna Soderstrom from Sidoti. Please go ahead.
Speaker #4: Thank you . And your next question comes from the line of Anna Soderstrom from Sidoti . Please go ahead .
Anja Soderstrom: Hey, 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 Defense before it picks up, or?
Anja Soderstrom: Hey, 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 Defense before it picks up, or?
Speaker #9: Thank you for the hi and for taking my questions, and congrats on the nice quarter here. Just in aerospace and defense, you said you saw some slowdown before—was that in defense or in the...
David Moezidis: Yeah, yeah. Hi, Enya, how are you? You know, we had really strong run in A&D for the last few years, right? Last couple of years, it's been strong double digits growth. And you know, 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&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, and we're gonna see it pick back up in 2027. And as I mentioned in my commentary, our commercial air looks good.
David Moezidis: Yeah, yeah. Hi, Enya, how are you? You know, we had really strong run in A&D for the last few years, right? Last couple of years, it's been strong double digits growth. And you know, 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&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, and we're gonna see it pick back up in 2027. And as I mentioned in my commentary, our commercial air looks good.
Speaker #2: yeah . Hi , you
Speaker #2: ? So how are you know , Yeah , we really picks up strong run in and for the last few years right . Last couple of years it's been strong double digits growth you and know you get from time program timing changes things .
Speaker #2: End of life new program awards come to play . And we're seeing that being the case as we are in 2026 . we're we're That's why saying and is moderate in 2026 .
Speaker #2: not saying We're it's falling apart or anything negative about it . We're just saying it's going to ease . It's going to moderate , and we're going to see it pick back up in 2027 .
Speaker #2: And, as I mentioned in my commentary, our air commercial looks good. It's really more around some timing around some of the defense programs.
David Moezidis: It's really more around some timing around some of the defense programs, and we're really, really bullish on the possibilities of space.
David Moezidis: It's really more around some timing around some of the defense programs, and we're really, really bullish on the possibilities of space.
Speaker #2: And we're really bullish on the possibilities of space, really.
Anja Soderstrom: Okay, and can you remind me your exposure to the commercial air?
Anja Soderstrom: Okay, and can you remind me your exposure to the commercial air?
Speaker #9: Okay. And can you remind me of your exposure to the commercial air?
David Moezidis: So we work with several customers 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, et cetera.
David Moezidis: So we work with several customers 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, et cetera.
Speaker #2: So we work with several customers in in commercial applications where we build products for them . And and they when they then go ahead and integrate into it products and then their finally pass that product along to the likes of Airbus or Boeing , etc.
Anja Soderstrom: Okay, thank you. And then within the AC&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?
Anja Soderstrom: Okay, thank you. And then within the AC&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?
Speaker #2: .
Speaker #9: Okay . Thank you . And then within the . You continue to be strong . What kind of expect that to visibility do you have there given the 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.
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.
Speaker #2: 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 translate into order wins for us.
Speaker #2: So the visibility is good in the first half . And we're going to continue to our customers . And and we believe work with that second half could potentially the fill in .
Speaker #2: But we're not in a position right now to start signaling that these are project based opportunities . As you Anya mentioned , . 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 as we think about 2026?
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 as we think about 2026?
Speaker #9: you . And Okay . Thank then in terms of the cash cycle , you had a pretty nice improvement there . How should we what are you targeting there ?
Bryan Schumaker: As you mentioned, Anja, and thanks for the question. I mean, you look at the improvement we made in Q4 to 67, the cash conversion cycle days. I mean, we had significant momentum again in our inventory 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.
Bryan Schumaker: As you mentioned, Anja, and thanks for the question. I mean, you look at the improvement we made in Q4 to 67, the cash conversion cycle days. I mean, we had significant momentum again in our inventory 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.
Speaker #9: Should we think about 2026?
Speaker #1: Yeah . As you mentioned on you and thanks for the question . I mean , you look at the improvement we made in Q4 to 67 on the cash conversion days .
Speaker #1: cycle I mean , we had significant momentum again in our inventory line as we look to kind ramp some of of these projects or programs .
Speaker #1: I mean , we're limiting kind of that . I guess increase . You'll see , or sorry , stability is what we hope inventory on that days .
Speaker #1: Tracking right around that 69. I mean, we're going to continue to drive that and hopefully get some more momentum. But we're not counting on a significant amount there.
Bryan Schumaker: 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 22 days improvement, I mean, again, we'll continue to drive it, but, I mean, don't count on a significant amount.
Bryan Schumaker: 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 22 days improvement, I mean, again, we'll continue to drive it, but, I mean, don't count on a significant amount.
Speaker #1: I mean , there's other line items there . We're going to continue to drive . But I think based on the momentum and what we've done over the last year over with year , mean , 22 days I improvement , again , we'll continue to But I mean , don't drive it .
Speaker #1: 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 on-
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 on-
Speaker #9: Okay . Thank you . And then in terms of CapEx , I think you said you expect that to tick up a little bit .
Speaker #9: Driving—what's that? And is Penang included there, or is the expansion in Penang where you have spent most of that on?
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 Q3 of getting it operational, that's where you'll see some of that tick up associated with that. But 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 1.5 to 2% of CapEx for the year; this may be 2 to 2.5% as you think about this year, just based on some of the things I've said. And again, this is all investment and growth as you think about what we're doing here.
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 Q3 of getting it operational, that's where you'll see some of that tick up associated with that. But 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 1.5 to 2% of CapEx for the year; this may be 2 to 2.5% as you think about this year, just based on some of the things I've said. And again, this is all investment and growth as you think about what we're doing here.
Speaker #1: No , I mean , if you think kind of the year that we're second half of the going to be kind of getting it operational or first half , , sorry , the and then into Q3 of getting it where you'll see some of operational , that's that tick up associated with that .
Speaker #1: But 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.
Speaker #1: So typically we say the one and a half to 2% of CapEx for the this may year , be 2 to 2.5% , as you think about this year , just based on some of the things I've said .
Speaker #1: And again, 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, in the precision technology over in Penang.
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, in the precision technology over in Penang.
Speaker #6: Yeah , goes in it's sort hand with the stronger of Last bookings . year . and then also the build out of the fourth building in our in the precision technology over in Penang .
Anja Soderstrom: Okay, great. Thank you. That was all for me, and congrats, Jeff, on the accomplishment at Benchmark.
Anja Soderstrom: Okay, great. Thank you. That was all for me, and congrats, Jeff, on the accomplishment at Benchmark.
Speaker #9: Okay . Great . Thank you . That was all for me . And congrats Jeff on on your accomplishment .
David Moezidis: Yeah, thank you, Anja.
David Moezidis: Yeah, thank you, Anja.
Bryan Schumaker: Thanks, Anya.
Bryan Schumaker: Thanks, Anya.
Jeff Benck: Thank you. Thank you, Anja.
Jeff Benck: Thank you. Thank you, Anja.
Speaker #6: you .
Speaker #1: you . Thank Thank
Operator: Thank you, and there are no further questions at this time. I will now hand the call back to Mr. Jeff Benck for any closing remarks.
Operator: Thank you, and there are no further questions at this time. I will now hand the call back to Mr. Jeff Benck for any closing remarks.
Speaker #2: Thank you Anya .
Speaker #4: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Jeffrey Benck for any closing remarks.
Jeff 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+ 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.
Jeff 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+ 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.
Speaker #6: 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.
Speaker #6: 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.
Speaker #6: would have been None 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 set that new records for our company and revenue margins , earnings , and share price .
Speaker #6: I'm deeply grateful to our investors , analysts who the have covered us , and my for their board unwavering support throughout this journey .
Jeff Benck: 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.
Jeff Benck: 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.
Speaker #6: At the end of the I'll be quarter , passing the David , reins to who's capable . Leadership gives me great confidence that benchmarks will not momentum only continue , but accelerate .
Speaker #6: The future is bright, and I look forward to watching this great company reach even greater heights. Thank you, farewell for now.
Operator: This concludes today's call. Thank you for participating. You may all disconnect.
Operator: This concludes today's call. Thank you for participating. You may all disconnect.
