BENCHMARK ELECTRONICS INC — Call Transcript 2026

Thank you for standing by. Welcome to the Benchmark Q1 fiscal year 2026 earnings call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the conference over to Paul Mansky, Benchmark Investor Relations. You may begin. Thank you, operator, thanks everyone for joining us today for Benchmark's Q1 2026 earnings call. With us today are David Moezidis, our President and CEO, and Bryan Schumaker, our CFO. After the market closed, we issued an earnings release pertaining to our financial performance for the Q1 of 2026, along with a presentation which we will reference on this call. Both are available under the Investor Relations section of our website. This call is being webcast live, a replay of which will be available approximately one 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. Please take a moment to review the forward-looking statements disclosure on slide two of the presentation. During our call, we will discuss forward-looking information. As a reminder, any of today's remarks which are not historical statements of 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, David will start with an overview, followed by Bryan's further detail of our Q1 results and guidance. We'll turn the call back to David to share his perspective on sector trends and closing remarks. If you please turn to slide four, I'll turn the call over to our CEO, David Moezidis. Thank you, Paul. Good afternoon, thank you for joining us today. In the Q1, we delivered revenue of $677 million and EPS of $0.58, both coming in towards the higher end of our expectations. Our Q1 performance reflects solid execution across the business and meaningful progress in our strategic priorities. As we look ahead, the combination of improving end market conditions and our momentum in Semi-Cap and AC&C and the operational discipline we've been emphasizing gives us greater confidence in our outlook for the year. We now expect full year revenue growth to be in the 9%-10% range, up from our prior expectations of mid-single-digit growth. We also expect EPS growth to outpace revenue as we remain focused on execution and disciplined expense management. Turning to slide five. During the quarter, we saw evidence of improvement across a broad cross-section of our end markets, reflecting the benefits of our well-balanced portfolio. Medical revenue continued to accelerate year-over-year. Semi-Cap returned to double-digit sequential growth. Within AC&C, the AI-related wins we've discussed on prior calls have begun to ramp. Our confidence continues to improve. Meanwhile, performance across the rest of the portfolio was in line with our expectations. These are early but clear signs that the customer-first initiatives we began implementing over the past two years are taking hold. That shows up in more disciplined customer engagements, clearer program prioritization, and more consistent execution across the portfolio. We also delivered another quarter of solid bookings performance. This consistency reinforces our confidence in both the pacing of the year and the sustainability of our growth outlook. Operationally, we continued to drive leverage with both operating income and earnings growing faster than revenue year-over-year. At the same time, our sustained focus on working capital efficiency drove another quarter of strong free cash flow despite stepped up investments to support future growth. While we remain mindful of the broader environment, demand signals are stronger today than they were 90 days ago. Regardless, our priorities do not change. Stay close to our customers, execute with consistency, and continue to build a more resilient operating model. In short, we're encouraged by how the year has started and by the momentum we're seeing as we move forward. With that, I'll turn the call over to Bryan to walk through the financial details for the quarter. Thank you, David, and good afternoon, everyone. Please turn to slide six. Revenue in the quarter was $677 million, up 7% year-over-year and above the midpoint of our prior guidance of $655 million-$695 million. Non-GAAP EPS was $0.58, which was at the higher end of our prior guidance range of $0.53-$0.59. As a reminder, our non-GAAP results exclude stock-based compensation, amortization of intangible assets, restructuring, impairment, and other items as detailed in appendix one of this presentation. For the Q1, non-GAAP gross margin was 10.3%, improving 20 basis points year-over-year and decreasing 30 basis points sequentially, primarily due to volume. Non-GAAP operating margin of 4.8% was also up 20 basis points year-over-year, down 70 basis points sequentially, driven by lower revenue and higher variable compensation. Our Q1 non-GAAP effective tax rate was 27.4%, slightly above our prior guidance range, driven by jurisdictional mix. Please turn to slide seven for the Q1 2026 revenue performance by sector. Semi-Cap revenue, while down slightly year-over-year, increased 12% sequentially, reflecting improved momentum as we progress through the quarter. As expected, Industrial and A&D moderated year-over-year, down 3% and 2% respectively. Meanwhile, Medical revenue grew 24% and AC&C grew 41% year-over-year. Please turn to slide eight for our trended non-GAAP financials. Year-over-year, we saw a consistent improvement across revenue, profitability, and earnings. This reflects continued discipline in execution and mix. Although these metrics were sequentially down this quarter due to seasonal volume and variable expenses, we expect both sequentially and year-over-year improvement for revenue, profitability, and earnings throughout the balance of 2026. Please refer to slides nine and 10 for a discussion of our balance sheet, cash flow, and working capital trends. In the Q1, we generated $47 million in operating cash flow and $29 million in free cash flow, despite investing in both inventory and capital equipment to support our future growth. As of March 31st, we were $121 million net cash positive. Our cash balance was $325 million, representing a $3 million sequential increase. We had $145 million outstanding on our term loan and $60 million outstanding on our revolver, leaving $486 million in available borrowing capacity. We invested approximately $18 million in capital expenditures during the quarter. Our fourth PT building in Penang remains on track to begin operations in Q3. Based on the momentum we are seeing in the business, we expect full year 2026 capital spending to track to the higher end of the 2.0%-2.5% range. Demonstrating our continued commitment to return value to shareholders, we distributed $6 million in cash dividends and repurchased $6 million in stock during the quarter. At quarter end, we had approximately $117 million remaining under our share repurchase authorization. Our cash conversion cycle for the quarter was 67 days, which is a 19-day improvement year-over-year and consistent with our strong Q4 performance. A key contributor to that progress was disciplined inventory management. Inventory days declined 14 days year-over-year, even as we grew the top line over the same period. This discipline translated into an improvement in turns to 4.8 as compared to 4.0 in the prior year period. Please turn to slide 11 for our Q2 guidance. For the Q2 of 2026, we expect revenue to be within a range of $700 million-$740 million, representing 12% year-over-year growth at the midpoint. We expect non-GAAP gross margin to be between 10.4% and 10.6% and non-GAAP operating margin to be between 5.1% and 5.3%. We anticipate GAAP expenses will include approximately $6.1 million of stock-based compensation and $0.8 million-$1.2 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 $0.65-$0.71. Interest and other expenses are expected to be approximately $3.5 million. We continue to advance initiatives aimed at structurally improving our tax rate over the long term. However, for the Q2 and full year, we expect our effective tax rate will be in the range of 26%-27%. Finally, for the quarter, our weighted average share count is expected to be approximately 36.3 million. With that, I would like to turn the call back over to David for our outlook by market sector and closing remarks. Thanks, Bryan. Let's turn to slide 12 for our outlook by sector. Within Semi-Cap, since late last year, we've been sharing our view that a potential recovery in 2026 was showing more promise. This became more evident in the Q1 as revenues were stronger than expected, increasing double digits sequentially. Over the past several years, we supported existing programs, secured new wins, and invested in capacity, including investments such as our Penang Four facility in anticipation of an industry upturn. Looking ahead, we expect this to translate into both sequential and year-over-year growth throughout the year. Within Industrial, revenue was in line with our expectations, and we see modest growth in 2026. Within the sector, we're seeing good performance from transportation and agriculture, while automation and HVAC saw softer conditions. Overall, we remain positive on the outlook for the sector longer term. Turning to Aerospace and Defense, our commercial air business continues to perform well. After two years of double-digit growth, we expect A&D to moderate in 2026, driven primarily by program timing within Defense. Importantly, bookings activity across Defense and Space remains strong. Positioning the sector for a return to growth as these programs are expected to ramp later in the year and into 2027. Medical delivered another standout quarter in Q1, and we expect this performance to continue over the next several quarters, supporting our growth for the year. I am particularly encouraged by the breadth of the growth drivers in medical, which includes our competitive wins, strong end markets, and new program ramps. Lastly, in AC&C, we delivered exceptional year-over-year results in the quarter, driven by the initial ramp of AI-related wins we've discussed over the past several quarters. These wins were enabled in part by our liquid cooling capabilities, which supported our HPC programs and are now seeing traction in clustered AI solutions. While still early in the ramp, our visibility continues to improve, leading us to expect strong growth from this sector in 2026. As a validation that our customer-first initiatives are working, I'm pleased that we were recently named HP Enterprise's 2026 Manufacturing Partner of the Year, a meaningful acknowledgment from a strategic customer. In summary, turning to slide 13, we are pleased with our Q1 performance and how 2026 is taking shape. The progress we're seeing did not start in Q1. It reflects the work we've put in over the past several years, which gives us the confidence to raise our full year revenue outlook to 9%-10%, with operating income and earnings growing faster than revenue, both sequentially and year-over-year throughout the remainder of the year. At the same time, we remain committed to investing in the business with customer satisfaction as our central focus. This includes continued capacity expansion around the world, as well as ongoing investment in our leadership and capabilities. Whether capacity, talent, or manufacturing efficiency, these investments share a common objective: to deepen customer engagement, accelerate innovation, and support the opportunities ahead of us. With that, I'd like to thank our customers, our shareholders, and the entire Benchmark team around the world for their continued trust, dedication, and execution. Operator, we can now open for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, please press star one again. Your first question comes from the line of Max Michaelis with Lake Street Capital Markets. Please go ahead. Hey, guys. Thanks for taking my questions, and congrats on the quarter as well as the guide. First one from me, kind of wanna stick to Semi-Cap here. With Penang 4 opening up in Q3, can you remind me how much capacity, excess capacity that will bring online? Max, we don't discuss kind of how the capacity online is, but what we can tell you is the additional capacity that is coming online is setting us up to serve our customers inside of 2026 and positioning us for further growth in 2027. Perfect. Then sticking with Semi, I mean, when we think about this strength here going throughout 2026, are you seeing this broad-based strength across your entire customer base, or is it kind of a onesie, twosie deal? No, no. This is broad-based. This is definitely broad-based. We started hearing the signals at SEMICON in October, and I shared that information in one of our earlier calls, and those signals started materializing into orders, now we're up and running, as you could see with our performance. Yeah, last one, just with AC&C. You talked about strong momentum with enterprise AI clusters as well as on-prem cloud infrastructure. Any other use cases you can touch on or, maybe potential visibility into future orders that you're in conversations with right now? Well, what I can say is those are the two key drivers, but we're also anticipating as we exit the year and enter 2027, HPC is gonna actually start picking up on its own and contributing nicely as well. All righty. Thanks, guys. You're welcome. The next question comes from the line of Steven Fox with Fox Advisors. Please go ahead. Hi. Good afternoon. I had a couple questions as well. I guess, first of all, I was wondering if you could dial in on the operating leverage you're seeing, as per the guidance for Q2. I was wondering, first of all, if there's any sort of unusual headwinds, like, you know, as you ramp capacity that maybe is limiting that. As your mix shifts, how do we think about operating leverage as you get into the H2 of the year? I had a follow-up. Yeah. If you look at our operating leverage, Steven, thanks for the question. As we've referenced, I mean, we expect kind of the bottom line to kind of grow at the 1.5 to 2.0 is what we're thinking on dropping to the EPS. As you get throughout the year The current operating margin will be impacted a little bit as we've expanded kind of the overall growth, some, by some variable compensation, and a little bit of impact from just other corporate expenses due to some ramp and some other things. Overall, I mean, we feel good about the back half and being able to leverage up on the operating margin as we continue throughout the year. You see some of that from Q1 are guiding Q2, and then kind of throughout the remainder of the year you'll see that coming through. Great. That's helpful. Just as a follow-up, David, I mean, you mentioned, you know, new programs that you've been working on for years, capabilities, et cetera, in the Semi-Cap space. Can you give us a better sense of like what's coming to fruition now that maybe changes the mix or supports the growth? I'm just trying to get a sense for how some of those efforts are paying off maybe in the next six to twelve months. Thanks. Yeah. I would frame it into two areas. One is we're increasing our share of wallet with our existing customers, and two, we're actually winning new share with some new customers, so newer brands, newer logos, if you will. It, it's contributing from both fronts and, you know, from our perspective, this is an area that we made investments in over the course of the last several years, and we're starting to see the fruits of those labors. If I could just follow up on that real quick. When you talk about some of these wins, like, does the products or the services you're providing in the future, is it similar mix to what you would say you've done over the last two to three years, or there's any changes on that front? Yeah, Steven, I would say it's very similar for the most part. Now you'll see products change with regards to the level of complexity, but how we serve our customers in the semiconductor capital equipment space is a combination of our precision technology solutions as it relates to machining and such, as well as electronic mechatronics, system integration, and PCBA assembly. It's really the total breadth of services that we're able to bring to bear for our customers. Great. That's super helpful. Thanks. Congratulations on the quarter. Thank you. Thank you, Steven. The next question comes from the line of Anja Soderstrom with Sidoti & Co. Please go ahead. Hi, and thank you for taking my questions, and congrats on the quarter here. I'm just curious, in the Semi-Cap, you say expect sequential growth, but do you expect the H2 to be much stronger still or? Yeah. Hi, Anja. This is David. We do, and we're looking at. You know, we don't typically go out and start providing specific sector growth rates, but we decided that for this sector specifically, 'cause there's been a lot of questions for us to share with you, that will be somewhere around the mid-teens from an overall growth in this space. Okay. Also for AC&C, how should we think about that? That was very strong for the quarter, do you expect that to step up, or is it gonna be on the same sort of level as the Q1? Yeah, I would say, you know, as we continue our ramp, we expect it to continue to improve. To what extent, we'll report back on that next quarter. Okay. Just remind me again for Penang, is that higher margin business or is it corporate average? Yeah, Anja, this is Bryan. Yes, it is higher margin, it's primarily focused on precision technology Semi-Cap, that's why it is bringing the higher margins. Just to take that into consideration and then you look at our overall portfolio, you have the growth that we're seeing in the Semi-Cap space, and you also have the AC&C, which is the lower end, so they kind of offset. Yes, as far as PT goes and that expansion, it is on the Semi-Cap, the higher end. Okay. Thank you. That was all for me. Okay. Thanks, Anja. Thank you, Anja. Once again, if you would like to ask a question, please press star one. Oh, sorry. Your next question comes from the line of Anja Soderstrom with Sidoti & Co. Please go ahead. Hi. Sorry, I just had one more I wanted to squeeze in. Do you see any sort of difficulty in the supply chain or component availability at all? Yeah. Anja, we're starting to see select lead times increasing in pockets, and we're seeing the same challenges as pretty much everybody in the memory space. Really, we're doing our very best to get in front of it and make sure that we manage the supply chain properly. Okay, great. Thank you. That was all for me. Thanks, Anja. We do have a follow-up question coming from the line of Steven Fox with Fox Advisors. Please go ahead. Hi. Thanks for taking the follow-up. I was just curious, you know, maybe some of this takes a little time to matriculate, but how do you think the conflict in Iran is impacting, you know, defense program run rates, maybe not this quarter, but over the back half of the year? Is that something we should think about beyond just sort of the secular trends that you're riding? Thanks. Yeah, Steven. you know, our view on that is even if you have immediate resolution, defense is gonna perhaps remain strong, for the next 12, 18 to 24 months as those investments will need to really be there for replenishment purposes. That's my opinion on that, from an order perspective and market share and bookings, we continue to see momentum there. We're winning defense programs, and as I shared in my script, we're also winning in space. We remain very positive in this sector, and we see it picking back up in 2027. Great. Thanks again. Sure, Steven. I have no further questions at this time. I would like to turn it back to Paul Mansky for closing remarks. Thank you, operator, and thank you everyone for participating in Benchmark's Q1 2026 earnings call. For updates to upcoming investor conferences and events, including a replay of this call, please refer to the events section of our IR website at bench.com. With that, thank you again for your support, and we look forward to speaking with you soon. This concludes today's conference call. You may now disconnect.

Speaker 5: Thank you for standing by. Welcome to the Benchmark Q1 fiscal year 2026 earnings call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the conference over to Paul Mansky, Benchmark Investor Relations. You may begin. Thank you for standing by. thank you for standing by Welcome to the Benchmark Q1 fiscal year 2026 earnings call and webcast. welcome to the benchmark q1 fiscal year 2026 earnings call and webcast All lines have been placed on mute to prevent any background noise. all lines have been placed on mute to prevent any background noise After the speaker's remarks, there will be a question and answer session. after the speaker's remarks there will be a question and answer session If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. if you would like to ask a question during this time simply press star followed by the number one on your telephone keypad If you would like to withdraw your question, please press star one again. if you would like to withdraw your question please press star one again Thank you. thank you I would now like to turn the conference over to Paul Mansky, Benchmark Investor Relations. i would now like to turn the conference over to paul mansky benchmark investor relations You may begin. you may begin

Speaker 6: Thank you, operator, thanks everyone for joining us today for Benchmark's Q1 2026 earnings call. With us today are David Moezidis, our President and CEO, and Bryan Schumaker, our CFO. After the market closed, we issued an earnings release pertaining to our financial performance for the Q1 of 2026, along with a presentation which we will reference on this call. Both are available under the Investor Relations section of our website. This call is being webcast live, a replay of which will be available approximately one 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. Please take a moment to review the forward-looking statements disclosure on slide two of the presentation. During our call, we will discuss forward-looking information. Thank you, operator, thanks everyone for joining us today for Benchmark's Q1 2026 earnings call. thank you operator thanks everyone for joining us today for benchmark's q1 2026 earnings call With us today are David Moezidis, our President and CEO, and Bryan Schumaker, our CFO. with us today are david moezidis our president and ceo and bryan schumaker our cfo After the market closed, we issued an earnings release pertaining to our financial performance for the Q1 of 2026, along with a presentation which we will reference on this call. after the market closed we issued an earnings release pertaining to our financial performance for the q1 of 2026 along with a presentation which we will reference on this call Both are available under the Investor Relations section of our website. both are available under the investor relations section of our website This call is being webcast live, a replay of which will be available approximately one hour after we conclude. this call is being webcast live a replay of which will be available approximately one 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. 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 Please take a moment to review the forward-looking statements disclosure on slide two of the presentation. please take a moment to review the forward-looking statements disclosure on slide two of the presentation During our call, we will discuss forward-looking information. during our call we will discuss forward-looking information As a reminder, any of today's remarks which are not historical statements of 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, David will start with an overview, followed by Bryan's further detail of our Q1 results and guidance. We'll turn the call back to David to share his perspective on sector trends and closing remarks. If you please turn to slide four, I'll turn the call over to our CEO, David Moezidis. As a reminder, any of today's remarks which are not historical statements of fact are forward-looking statements which involve risks and uncertainties as described in our press releases and SEC filings. as a reminder any of today's remarks which are not historical statements of 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. actual results may differ materially from these statements Benchmark undertakes no obligation to update any forward-looking statements. benchmark undertakes no obligation to update any forward-looking statements For today's call, David will start with an overview, followed by Bryan's further detail of our Q1 results and guidance. for today's call david will start with an overview followed by bryan's further detail of our q1 results and guidance We'll turn the call back to David to share his perspective on sector trends and closing remarks. we'll turn the call back to david to share his perspective on sector trends and closing remarks If you please turn to slide four, I'll turn the call over to our CEO, David Moezidis. if you please turn to slide four i'll turn the call over to our ceo david moezidis

Speaker 3: Thank you, Paul. Good afternoon, thank you for joining us today. In the Q1, we delivered revenue of $677 million and EPS of $0.58, both coming in towards the higher end of our expectations. Our Q1 performance reflects solid execution across the business and meaningful progress in our strategic priorities. As we look ahead, the combination of improving end market conditions and our momentum in Semi-Cap and AC&C and the operational discipline we've been emphasizing gives us greater confidence in our outlook for the year. We now expect full year revenue growth to be in the 9%-10% range, up from our prior expectations of mid-single-digit growth. We also expect EPS growth to outpace revenue as we remain focused on execution and disciplined expense management. Turning to slide five. Thank you, Paul. thank you paul Good afternoon, thank you for joining us today. good afternoon thank you for joining us today In the Q1, we delivered revenue of $677 million and EPS of $0.58, both coming in towards the higher end of our expectations. in the q1 we delivered revenue of $677 million and eps of $0.58 both coming in towards the higher end of our expectations Our Q1 performance reflects solid execution across the business and meaningful progress in our strategic priorities. our q1 performance reflects solid execution across the business and meaningful progress in our strategic priorities As we look ahead, the combination of improving end market conditions and our momentum in Semi-Cap and AC&C and the operational discipline we've been emphasizing gives us greater confidence in our outlook for the year. as we look ahead the combination of improving end market conditions and our momentum in semi-cap and ac&c and the operational discipline we've been emphasizing gives us greater confidence in our outlook for the year We now expect full year revenue growth to be in the 9%-10% range, up from our prior expectations of mid-single-digit growth. we now expect full year revenue growth to be in the 9%-10% range up from our prior expectations of mid-single-digit growth We also expect EPS growth to outpace revenue as we remain focused on execution and disciplined expense management. we also expect eps growth to outpace revenue as we remain focused on execution and disciplined expense management Turning to slide five. turning to slide five During the quarter, we saw evidence of improvement across a broad cross-section of our end markets, reflecting the benefits of our well-balanced portfolio. Medical revenue continued to accelerate year-over-year. Semi-Cap returned to double-digit sequential growth. Within AC&C, the AI-related wins we've discussed on prior calls have begun to ramp. Our confidence continues to improve. Meanwhile, performance across the rest of the portfolio was in line with our expectations. These are early but clear signs that the customer-first initiatives we began implementing over the past two years are taking hold. That shows up in more disciplined customer engagements, clearer program prioritization, and more consistent execution across the portfolio. We also delivered another quarter of solid bookings performance. This consistency reinforces our confidence in both the pacing of the year and the sustainability of our growth outlook. During the quarter, we saw evidence of improvement across a broad cross-section of our end markets, reflecting the benefits of our well-balanced portfolio. during the quarter we saw evidence of improvement across a broad cross-section of our end markets reflecting the benefits of our well-balanced portfolio Medical revenue continued to accelerate year-over-year. medical revenue continued to accelerate year-over-year Semi-Cap returned to double-digit sequential growth. semi-cap returned to double-digit sequential growth Within AC&C, the AI-related wins we've discussed on prior calls have begun to ramp. within ac&c the ai-related wins we've discussed on prior calls have begun to ramp Our confidence continues to improve. our confidence continues to improve Meanwhile, performance across the rest of the portfolio was in line with our expectations. meanwhile performance across the rest of the portfolio was in line with our expectations These are early but clear signs that the customer-first initiatives we began implementing over the past two years are taking hold. these are early but clear signs that the customer-first initiatives we began implementing over the past two years are taking hold That shows up in more disciplined customer engagements, clearer program prioritization, and more consistent execution across the portfolio. that shows up in more disciplined customer engagements clearer program prioritization and more consistent execution across the portfolio We also delivered another quarter of solid bookings performance. we also delivered another quarter of solid bookings performance This consistency reinforces our confidence in both the pacing of the year and the sustainability of our growth outlook. this consistency reinforces our confidence in both the pacing of the year and the sustainability of our growth outlook Operationally, we continued to drive leverage with both operating income and earnings growing faster than revenue year-over-year. At the same time, our sustained focus on working capital efficiency drove another quarter of strong free cash flow despite stepped up investments to support future growth. While we remain mindful of the broader environment, demand signals are stronger today than they were 90 days ago. Regardless, our priorities do not change. Stay close to our customers, execute with consistency, and continue to build a more resilient operating model. In short, we're encouraged by how the year has started and by the momentum we're seeing as we move forward. With that, I'll turn the call over to Bryan to walk through the financial details for the quarter. Operationally, we continued to drive leverage with both operating income and earnings growing faster than revenue year-over-year. operationally we continued to drive leverage with both operating income and earnings growing faster than revenue year-over-year At the same time, our sustained focus on working capital efficiency drove another quarter of strong free cash flow despite stepped up investments to support future growth. at the same time our sustained focus on working capital efficiency drove another quarter of strong free cash flow despite stepped up investments to support future growth While we remain mindful of the broader environment, demand signals are stronger today than they were 90 days ago. while we remain mindful of the broader environment demand signals are stronger today than they were 90 days ago Regardless, our priorities do not change. regardless our priorities do not change Stay close to our customers, execute with consistency, and continue to build a more resilient operating model. stay close to our customers execute with consistency and continue to build a more resilient operating model In short, we're encouraged by how the year has started and by the momentum we're seeing as we move forward. in short we're encouraged by how the year has started and by the momentum we're seeing as we move forward With that, I'll turn the call over to Bryan to walk through the financial details for the quarter. with that i'll turn the call over to bryan to walk through the financial details for the quarter

Speaker 2: Thank you, David, and good afternoon, everyone. Please turn to slide six. Revenue in the quarter was $677 million, up 7% year-over-year and above the midpoint of our prior guidance of $655 million-$695 million. Non-GAAP EPS was $0.58, which was at the higher end of our prior guidance range of $0.53-$0.59. As a reminder, our non-GAAP results exclude stock-based compensation, amortization of intangible assets, restructuring, impairment, and other items as detailed in appendix one of this presentation. For the Q1, non-GAAP gross margin was 10.3%, improving 20 basis points year-over-year and decreasing 30 basis points sequentially, primarily due to volume. Thank you, David, and good afternoon, everyone. thank you david and good afternoon everyone Please turn to slide six. please turn to slide six Revenue in the quarter was $677 million, up 7% year-over-year and above the midpoint of our prior guidance of $655 million-$695 million. revenue in the quarter was $677 million up 7% year-over-year and above the midpoint of our prior guidance of $655 million-$695 million Non-GAAP EPS was $0.58, which was at the higher end of our prior guidance range of $0.53-$0.59. non-gaap eps was $0.58 which was at the higher end of our prior guidance range of $0.53-$0.59 As a reminder, our non-GAAP results exclude stock-based compensation, amortization of intangible assets, restructuring, impairment, and other items as detailed in appendix one of this presentation. as a reminder our non-gaap results exclude stock-based compensation amortization of intangible assets restructuring impairment and other items as detailed in appendix one of this presentation For the Q1, non-GAAP gross margin was 10.3%, improving 20 basis points year-over-year and decreasing 30 basis points sequentially, primarily due to volume. for the q1 non-gaap gross margin was 10.3% improving 20 basis points year-over-year and decreasing 30 basis points sequentially primarily due to volume Non-GAAP operating margin of 4.8% was also up 20 basis points year-over-year, down 70 basis points sequentially, driven by lower revenue and higher variable compensation. Our Q1 non-GAAP effective tax rate was 27.4%, slightly above our prior guidance range, driven by jurisdictional mix. Please turn to slide seven for the Q1 2026 revenue performance by sector. Semi-Cap revenue, while down slightly year-over-year, increased 12% sequentially, reflecting improved momentum as we progress through the quarter. As expected, Industrial and A&D moderated year-over-year, down 3% and 2% respectively. Meanwhile, Medical revenue grew 24% and AC&C grew 41% year-over-year. Please turn to slide eight for our trended non-GAAP financials. Year-over-year, we saw a consistent improvement across revenue, profitability, and earnings. This reflects continued discipline in execution and mix. Non-GAAP operating margin of 4.8% was also up 20 basis points year-over-year, down 70 basis points sequentially, driven by lower revenue and higher variable compensation. non-gaap operating margin of 4.8% was also up 20 basis points year-over-year down 70 basis points sequentially driven by lower revenue and higher variable compensation Our Q1 non-GAAP effective tax rate was 27.4%, slightly above our prior guidance range, driven by jurisdictional mix. our q1 non-gaap effective tax rate was 27.4% slightly above our prior guidance range driven by jurisdictional mix Please turn to slide seven for the Q1 2026 revenue performance by sector. please turn to slide seven for the q1 2026 revenue performance by sector Semi-Cap revenue, while down slightly year-over-year, increased 12% sequentially, reflecting improved momentum as we progress through the quarter. semi-cap revenue while down slightly year-over-year increased 12% sequentially reflecting improved momentum as we progress through the quarter As expected, Industrial and A&D moderated year-over-year, down 3% and 2% respectively. as expected industrial and a&d moderated year-over-year down 3% and 2% respectively Meanwhile, Medical revenue grew 24% and AC&C grew 41% year-over-year. meanwhile medical revenue grew 24% and ac&c grew 41% year-over-year Please turn to slide eight for our trended non-GAAP financials. please turn to slide eight for our trended non-gaap financials Year-over-year, we saw a consistent improvement across revenue, profitability, and earnings. year-over-year we saw a consistent improvement across revenue profitability and earnings This reflects continued discipline in execution and mix. this reflects continued discipline in execution and mix Although these metrics were sequentially down this quarter due to seasonal volume and variable expenses, we expect both sequentially and year-over-year improvement for revenue, profitability, and earnings throughout the balance of 2026. Please refer to slides nine and 10 for a discussion of our balance sheet, cash flow, and working capital trends. In the Q1, we generated $47 million in operating cash flow and $29 million in free cash flow, despite investing in both inventory and capital equipment to support our future growth. As of March 31st, we were $121 million net cash positive. Our cash balance was $325 million, representing a $3 million sequential increase. We had $145 million outstanding on our term loan and $60 million outstanding on our revolver, leaving $486 million in available borrowing capacity. Although these metrics were sequentially down this quarter due to seasonal volume and variable expenses, we expect both sequentially and year-over-year improvement for revenue, profitability, and earnings throughout the balance of 2026. although these metrics were sequentially down this quarter due to seasonal volume and variable expenses we expect both sequentially and year-over-year improvement for revenue profitability and earnings throughout the balance of 2026 Please refer to slides nine and 10 for a discussion of our balance sheet, cash flow, and working capital trends. please refer to slides nine and 10 for a discussion of our balance sheet cash flow and working capital trends In the Q1, we generated $47 million in operating cash flow and $29 million in free cash flow, despite investing in both inventory and capital equipment to support our future growth. in the q1 we generated $47 million in operating cash flow and $29 million in free cash flow despite investing in both inventory and capital equipment to support our future growth As of March 31st, we were $121 million net cash positive. as of march 31st we were $121 million net cash positive Our cash balance was $325 million, representing a $3 million sequential increase. our cash balance was $325 million representing a $3 million sequential increase We had $145 million outstanding on our term loan and $60 million outstanding on our revolver, leaving $486 million in available borrowing capacity. we had $145 million outstanding on our term loan and $60 million outstanding on our revolver leaving $486 million in available borrowing capacity We invested approximately $18 million in capital expenditures during the quarter. Our fourth PT building in Penang remains on track to begin operations in Q3. Based on the momentum we are seeing in the business, we expect full year 2026 capital spending to track to the higher end of the 2.0%-2.5% range. Demonstrating our continued commitment to return value to shareholders, we distributed $6 million in cash dividends and repurchased $6 million in stock during the quarter. At quarter end, we had approximately $117 million remaining under our share repurchase authorization. Our cash conversion cycle for the quarter was 67 days, which is a 19-day improvement year-over-year and consistent with our strong Q4 performance. A key contributor to that progress was disciplined inventory management. We invested approximately $18 million in capital expenditures during the quarter. we invested approximately $18 million in capital expenditures during the quarter Our fourth PT building in Penang remains on track to begin operations in Q3. our fourth pt building in penang remains on track to begin operations in q3 Based on the momentum we are seeing in the business, we expect full year 2026 capital spending to track to the higher end of the 2.0%-2.5% range. based on the momentum we are seeing in the business we expect full year 2026 capital spending to track to the higher end of the 2.0%-2.5% range Demonstrating our continued commitment to return value to shareholders, we distributed $6 million in cash dividends and repurchased $6 million in stock during the quarter. demonstrating our continued commitment to return value to shareholders we distributed $6 million in cash dividends and repurchased $6 million in stock during the quarter At quarter end, we had approximately $117 million remaining under our share repurchase authorization. at quarter end we had approximately $117 million remaining under our share repurchase authorization Our cash conversion cycle for the quarter was 67 days, which is a 19-day improvement year-over-year and consistent with our strong Q4 performance. our cash conversion cycle for the quarter was 67 days which is a 19-day improvement year-over-year and consistent with our strong q4 performance A key contributor to that progress was disciplined inventory management. a key contributor to that progress was disciplined inventory management Inventory days declined 14 days year-over-year, even as we grew the top line over the same period. This discipline translated into an improvement in turns to 4.8 as compared to 4.0 in the prior year period. Please turn to slide 11 for our Q2 guidance. For the Q2 of 2026, we expect revenue to be within a range of $700 million-$740 million, representing 12% year-over-year growth at the midpoint. We expect non-GAAP gross margin to be between 10.4% and 10.6% and non-GAAP operating margin to be between 5.1% and 5.3%. Inventory days declined 14 days year-over-year, even as we grew the top line over the same period. inventory days declined 14 days year-over-year even as we grew the top line over the same period This discipline translated into an improvement in turns to 4.8 as compared to 4.0 in the prior year period. this discipline translated into an improvement in turns to 4.8 as compared to 4.0 in the prior year period Please turn to slide 11 for our Q2 guidance. please turn to slide 11 for our q2 guidance For the Q2 of 2026, we expect revenue to be within a range of $700 million-$740 million, representing 12% year-over-year growth at the midpoint. for the q2 of 2026 we expect revenue to be within a range of $700 million-$740 million representing 12% year-over-year growth at the midpoint We expect non-GAAP gross margin to be between 10.4% and 10.6% and non-GAAP operating margin to be between 5.1% and 5.3%. we expect non-gaap gross margin to be between 10.4% and 10.6% and non-gaap operating margin to be between 5.1% and 5.3% We anticipate GAAP expenses will include approximately $6.1 million of stock-based compensation and $0.8 million-$1.2 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 $0.65-$0.71. Interest and other expenses are expected to be approximately $3.5 million. We continue to advance initiatives aimed at structurally improving our tax rate over the long term. However, for the Q2 and full year, we expect our effective tax rate will be in the range of 26%-27%. Finally, for the quarter, our weighted average share count is expected to be approximately 36.3 million. With that, I would like to turn the call back over to David for our outlook by market sector and closing remarks. We anticipate GAAP expenses will include approximately $6.1 million of stock-based compensation and $0.8 million-$1.2 million of non-operating expenses, including amortization, restructuring, and other charges. we anticipate gaap expenses will include approximately $6.1 million of stock-based compensation and $0.8 million-$1.2 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 $0.65-$0.71. our non-gaap diluted earnings per share is expected to be in the range of $0.65-$0.71 Interest and other expenses are expected to be approximately $3.5 million. interest and other expenses are expected to be approximately $3.5 million We continue to advance initiatives aimed at structurally improving our tax rate over the long term. we continue to advance initiatives aimed at structurally improving our tax rate over the long term However, for the Q2 and full year, we expect our effective tax rate will be in the range of 26%-27%. however for the q2 and full year we expect our effective tax rate will be in the range of 26%-27% Finally, for the quarter, our weighted average share count is expected to be approximately 36.3 million. finally for the quarter our weighted average share count is expected to be approximately 36.3 million With that, I would like to turn the call back over to David for our outlook by market sector and closing remarks. with that i would like to turn the call back over to david for our outlook by market sector and closing remarks

Speaker 3: Thanks, Bryan. Let's turn to slide 12 for our outlook by sector. Within Semi-Cap, since late last year, we've been sharing our view that a potential recovery in 2026 was showing more promise. This became more evident in the Q1 as revenues were stronger than expected, increasing double digits sequentially. Over the past several years, we supported existing programs, secured new wins, and invested in capacity, including investments such as our Penang Four facility in anticipation of an industry upturn. Looking ahead, we expect this to translate into both sequential and year-over-year growth throughout the year. Within Industrial, revenue was in line with our expectations, and we see modest growth in 2026. Within the sector, we're seeing good performance from transportation and agriculture, while automation and HVAC saw softer conditions. Overall, we remain positive on the outlook for the sector longer term. Thanks, Bryan. thanks bryan Let's turn to slide 12 for our outlook by sector. let's turn to slide 12 for our outlook by sector Within Semi-Cap, since late last year, we've been sharing our view that a potential recovery in 2026 was showing more promise. within semi-cap since late last year we've been sharing our view that a potential recovery in 2026 was showing more promise This became more evident in the Q1 as revenues were stronger than expected, increasing double digits sequentially. this became more evident in the q1 as revenues were stronger than expected increasing double digits sequentially Over the past several years, we supported existing programs, secured new wins, and invested in capacity, including investments such as our Penang Four facility in anticipation of an industry upturn. over the past several years we supported existing programs secured new wins and invested in capacity including investments such as our penang four facility in anticipation of an industry upturn Looking ahead, we expect this to translate into both sequential and year-over-year growth throughout the year. looking ahead we expect this to translate into both sequential and year-over-year growth throughout the year Within Industrial, revenue was in line with our expectations, and we see modest growth in 2026. within industrial revenue was in line with our expectations and we see modest growth in 2026 Within the sector, we're seeing good performance from transportation and agriculture, while automation and HVAC saw softer conditions. within the sector we're seeing good performance from transportation and agriculture while automation and hvac saw softer conditions Overall, we remain positive on the outlook for the sector longer term. overall we remain positive on the outlook for the sector longer term Turning to Aerospace and Defense, our commercial air business continues to perform well. After two years of double-digit growth, we expect A&D to moderate in 2026, driven primarily by program timing within Defense. Importantly, bookings activity across Defense and Space remains strong. Positioning the sector for a return to growth as these programs are expected to ramp later in the year and into 2027. Medical delivered another standout quarter in Q1, and we expect this performance to continue over the next several quarters, supporting our growth for the year. I am particularly encouraged by the breadth of the growth drivers in medical, which includes our competitive wins, strong end markets, and new program ramps. Lastly, in AC&C, we delivered exceptional year-over-year results in the quarter, driven by the initial ramp of AI-related wins we've discussed over the past several quarters. Turning to Aerospace and Defense, our commercial air business continues to perform well. turning to aerospace and defense our commercial air business continues to perform well After two years of double-digit growth, we expect A&D to moderate in 2026, driven primarily by program timing within Defense. after two years of double-digit growth we expect a&d to moderate in 2026 driven primarily by program timing within defense Importantly, bookings activity across Defense and Space remains strong. Positioning the sector for a return to growth as these programs are expected to ramp later in the year and into 2027. importantly bookings activity across defense and space remains strong. positioning the sector for a return to growth as these programs are expected to ramp later in the year and into 2027 Medical delivered another standout quarter in Q1, and we expect this performance to continue over the next several quarters, supporting our growth for the year. medical delivered another standout quarter in q1 and we expect this performance to continue over the next several quarters supporting our growth for the year I am particularly encouraged by the breadth of the growth drivers in medical, which includes our competitive wins, strong end markets, and new program ramps. i am particularly encouraged by the breadth of the growth drivers in medical which includes our competitive wins strong end markets and new program ramps Lastly, in AC&C, we delivered exceptional year-over-year results in the quarter, driven by the initial ramp of AI-related wins we've discussed over the past several quarters. lastly in ac&c we delivered exceptional year-over-year results in the quarter driven by the initial ramp of ai-related wins we've discussed over the past several quarters These wins were enabled in part by our liquid cooling capabilities, which supported our HPC programs and are now seeing traction in clustered AI solutions. While still early in the ramp, our visibility continues to improve, leading us to expect strong growth from this sector in 2026. As a validation that our customer-first initiatives are working, I'm pleased that we were recently named HP Enterprise's 2026 Manufacturing Partner of the Year, a meaningful acknowledgment from a strategic customer. In summary, turning to slide 13, we are pleased with our Q1 performance and how 2026 is taking shape. The progress we're seeing did not start in Q1. These wins were enabled in part by our liquid cooling capabilities, which supported our HPC programs and are now seeing traction in clustered AI solutions. these wins were enabled in part by our liquid cooling capabilities which supported our hpc programs and are now seeing traction in clustered ai solutions While still early in the ramp, our visibility continues to improve, leading us to expect strong growth from this sector in 2026. while still early in the ramp our visibility continues to improve leading us to expect strong growth from this sector in 2026 As a validation that our customer-first initiatives are working, I'm pleased that we were recently named HP Enterprise's 2026 Manufacturing Partner of the Year, a meaningful acknowledgment from a strategic customer. as a validation that our customer-first initiatives are working i'm pleased that we were recently named hp enterprise's 2026 manufacturing partner of the year a meaningful acknowledgment from a strategic customer In summary, turning to slide 13, we are pleased with our Q1 performance and how 2026 is taking shape. in summary turning to slide 13 we are pleased with our q1 performance and how 2026 is taking shape The progress we're seeing did not start in Q1. the progress we're seeing did not start in q1 It reflects the work we've put in over the past several years, which gives us the confidence to raise our full year revenue outlook to 9%-10%, with operating income and earnings growing faster than revenue, both sequentially and year-over-year throughout the remainder of the year. At the same time, we remain committed to investing in the business with customer satisfaction as our central focus. This includes continued capacity expansion around the world, as well as ongoing investment in our leadership and capabilities. Whether capacity, talent, or manufacturing efficiency, these investments share a common objective: to deepen customer engagement, accelerate innovation, and support the opportunities ahead of us. With that, I'd like to thank our customers, our shareholders, and the entire Benchmark team around the world for their continued trust, dedication, and execution. Operator, we can now open for questions. It reflects the work we've put in over the past several years, which gives us the confidence to raise our full year revenue outlook to 9%-10%, with operating income and earnings growing faster than revenue, both sequentially and year-over-year throughout the remainder of the year. it reflects the work we've put in over the past several years which gives us the confidence to raise our full year revenue outlook to 9%-10% with operating income and earnings growing faster than revenue both sequentially and year-over-year throughout the remainder of the year At the same time, we remain committed to investing in the business with customer satisfaction as our central focus. at the same time we remain committed to investing in the business with customer satisfaction as our central focus This includes continued capacity expansion around the world, as well as ongoing investment in our leadership and capabilities. this includes continued capacity expansion around the world as well as ongoing investment in our leadership and capabilities Whether capacity, talent, or manufacturing efficiency, these investments share a common objective: to deepen customer engagement, accelerate innovation, and support the opportunities ahead of us. whether capacity talent or manufacturing efficiency these investments share a common objective to deepen customer engagement accelerate innovation and support the opportunities ahead of us With that, I'd like to thank our customers, our shareholders, and the entire Benchmark team around the world for their continued trust, dedication, and execution. with that i'd like to thank our customers our shareholders and the entire benchmark team around the world for their continued trust dedication and execution Operator, we can now open for questions. operator we can now open for questions

Speaker 5: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, please press star one again. Your first question comes from the line of Max Michaelis with Lake Street Capital Markets. Please go ahead. Thank you. thank you Ladies and gentlemen, we will now begin the question and answer session. ladies and gentlemen we will now begin the question and answer session If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. if you have dialed in and would like to ask a question please press star one on your telephone keypad to raise your hand and join the queue If you would like to withdraw your question, please press star one again. if you would like to withdraw your question please press star one again Your first question comes from the line of Max Michaelis with Lake Street Capital Markets. your first question comes from the line of max michaelis with lake street capital markets Please go ahead. please go ahead

Speaker 4: Hey, guys. Thanks for taking my questions, and congrats on the quarter as well as the guide. First one from me, kind of wanna stick to Semi-Cap here. With Penang 4 opening up in Q3, can you remind me how much capacity, excess capacity that will bring online? Hey, guys. hey guys Thanks for taking my questions, and congrats on the quarter as well as the guide. thanks for taking my questions and congrats on the quarter as well as the guide First one from me, kind of wanna stick to Semi-Cap here. first one from me kind of wanna stick to semi-cap here With Penang 4 opening up in Q3, can you remind me how much capacity, excess capacity that will bring online? with penang 4 opening up in q3 can you remind me how much capacity excess capacity that will bring online

Speaker 3: Max, we don't discuss kind of how the capacity online is, but what we can tell you is the additional capacity that is coming online is setting us up to serve our customers inside of 2026 and positioning us for further growth in 2027. Max, we don't discuss kind of how the capacity online is, but what we can tell you is the additional capacity that is coming online is setting us up to serve our customers inside of 2026 and positioning us for further growth in 2027. max we don't discuss kind of how the capacity online is but what we can tell you is the additional capacity that is coming online is setting us up to serve our customers inside of 2026 and positioning us for further growth in 2027

Speaker 4: Perfect. Then sticking with Semi, I mean, when we think about this strength here going throughout 2026, are you seeing this broad-based strength across your entire customer base, or is it kind of a onesie, twosie deal? Perfect. perfect Then sticking with Semi, I mean, when we think about this strength here going throughout 2026, are you seeing this broad-based strength across your entire customer base, or is it kind of a onesie, twosie deal? then sticking with semi i mean when we think about this strength here going throughout 2026 are you seeing this broad-based strength across your entire customer base or is it kind of a onesie twosie deal

Speaker 3: No, no. This is broad-based. This is definitely broad-based. We started hearing the signals at SEMICON in October, and I shared that information in one of our earlier calls, and those signals started materializing into orders, now we're up and running, as you could see with our performance. No, no. no no This is broad-based. this is broad-based This is definitely broad-based. this is definitely broad-based We started hearing the signals at SEMICON in October, and I shared that information in one of our earlier calls, and those signals started materializing into orders, now we're up and running, as you could see with our performance. we started hearing the signals at semicon in october and i shared that information in one of our earlier calls and those signals started materializing into orders now we're up and running as you could see with our performance

Speaker 4: Yeah, last one, just with AC&C. You talked about strong momentum with enterprise AI clusters as well as on-prem cloud infrastructure. Any other use cases you can touch on or, maybe potential visibility into future orders that you're in conversations with right now? Yeah, last one, just with AC&C. yeah last one just with ac&c You talked about strong momentum with enterprise AI clusters as well as on-prem cloud infrastructure. you talked about strong momentum with enterprise ai clusters as well as on-prem cloud infrastructure Any other use cases you can touch on or, maybe potential visibility into future orders that you're in conversations with right now? any other use cases you can touch on or maybe potential visibility into future orders that you're in conversations with right now

Speaker 3: Well, what I can say is those are the two key drivers, but we're also anticipating as we exit the year and enter 2027, HPC is gonna actually start picking up on its own and contributing nicely as well. Well, what I can say is those are the two key drivers, but we're also anticipating as we exit the year and enter 2027, HPC is gonna actually start picking up on its own and contributing nicely as well. well what i can say is those are the two key drivers but we're also anticipating as we exit the year and enter 2027 hpc is gonna actually start picking up on its own and contributing nicely as well

Speaker 4: All righty. Thanks, guys. All righty. all righty Thanks, guys. thanks guys

Speaker 3: You're welcome. You're welcome. you're welcome

Speaker 5: The next question comes from the line of Steven Fox with Fox Advisors. Please go ahead. The next question comes from the line of Steven Fox with Fox Advisors. the next question comes from the line of steven fox with fox advisors Please go ahead. please go ahead

Speaker 7: Hi. Good afternoon. I had a couple questions as well. I guess, first of all, I was wondering if you could dial in on the operating leverage you're seeing, as per the guidance for Q2. I was wondering, first of all, if there's any sort of unusual headwinds, like, you know, as you ramp capacity that maybe is limiting that. As your mix shifts, how do we think about operating leverage as you get into the H2 of the year? I had a follow-up. Hi. hi Good afternoon. good afternoon I had a couple questions as well. i had a couple questions as well I guess, first of all, I was wondering if you could dial in on the operating leverage you're seeing, as per the guidance for Q2. i guess first of all i was wondering if you could dial in on the operating leverage you're seeing as per the guidance for q2 I was wondering, first of all, if there's any sort of unusual headwinds, like, you know, as you ramp capacity that maybe is limiting that. i was wondering first of all if there's any sort of unusual headwinds like you know as you ramp capacity that maybe is limiting that As your mix shifts, how do we think about operating leverage as you get into the H2 of the year? as your mix shifts how do we think about operating leverage as you get into the h2 of the year I had a follow-up. i had a follow-up

Speaker 2: Yeah. If you look at our operating leverage, Steven, thanks for the question. As we've referenced, I mean, we expect kind of the bottom line to kind of grow at the 1.5 to 2.0 is what we're thinking on dropping to the EPS. As you get throughout the year Yeah. yeah If you look at our operating leverage, Steven, thanks for the question. if you look at our operating leverage steven thanks for the question As we've referenced, I mean, we expect kind of the bottom line to kind of grow at the 1.5 to 2.0 is what we're thinking on dropping to the EPS. as we've referenced i mean we expect kind of the bottom line to kind of grow at the 1.5 to 2.0 is what we're thinking on dropping to the eps As you get throughout the year as you get throughout the year The current operating margin will be impacted a little bit as we've expanded kind of the overall growth, some, by some variable compensation, and a little bit of impact from just other corporate expenses due to some ramp and some other things. Overall, I mean, we feel good about the back half and being able to leverage up on the operating margin as we continue throughout the year. You see some of that from Q1 are guiding Q2, and then kind of throughout the remainder of the year you'll see that coming through. The current operating margin will be impacted a little bit as we've expanded kind of the overall growth, some, by some variable compensation, and a little bit of impact from just other corporate expenses due to some ramp and some other things. the current operating margin will be impacted a little bit as we've expanded kind of the overall growth some by some variable compensation and a little bit of impact from just other corporate expenses due to some ramp and some other things Overall, I mean, we feel good about the back half and being able to leverage up on the operating margin as we continue throughout the year. overall i mean we feel good about the back half and being able to leverage up on the operating margin as we continue throughout the year You see some of that from Q1 are guiding Q2, and then kind of throughout the remainder of the year you'll see that coming through. you see some of that from q1 are guiding q2 and then kind of throughout the remainder of the year you'll see that coming through

Speaker 7: Great. That's helpful. Just as a follow-up, David, I mean, you mentioned, you know, new programs that you've been working on for years, capabilities, et cetera, in the Semi-Cap space. Can you give us a better sense of like what's coming to fruition now that maybe changes the mix or supports the growth? I'm just trying to get a sense for how some of those efforts are paying off maybe in the next six to twelve months. Thanks. Great. great That's helpful. that's helpful Just as a follow-up, David, I mean, you mentioned, you know, new programs that you've been working on for years, capabilities, et cetera, in the Semi-Cap space. just as a follow-up david i mean you mentioned you know new programs that you've been working on for years capabilities et cetera in the semi-cap space Can you give us a better sense of like what's coming to fruition now that maybe changes the mix or supports the growth? can you give us a better sense of like what's coming to fruition now that maybe changes the mix or supports the growth I'm just trying to get a sense for how some of those efforts are paying off maybe in the next six to twelve months. i'm just trying to get a sense for how some of those efforts are paying off maybe in the next six to twelve months Thanks. thanks

Speaker 3: Yeah. I would frame it into two areas. One is we're increasing our share of wallet with our existing customers, and two, we're actually winning new share with some new customers, so newer brands, newer logos, if you will. It, it's contributing from both fronts and, you know, from our perspective, this is an area that we made investments in over the course of the last several years, and we're starting to see the fruits of those labors. Yeah. yeah I would frame it into two areas. i would frame it into two areas One is we're increasing our share of wallet with our existing customers, and two, we're actually winning new share with some new customers, so newer brands, newer logos, if you will. one is we're increasing our share of wallet with our existing customers and two we're actually winning new share with some new customers so newer brands newer logos if you will It, it's contributing from both fronts and, you know, from our perspective, this is an area that we made investments in over the course of the last several years, and we're starting to see the fruits of those labors. it it's contributing from both fronts and you know from our perspective this is an area that we made investments in over the course of the last several years and we're starting to see the fruits of those labors

Speaker 7: If I could just follow up on that real quick. When you talk about some of these wins, like, does the products or the services you're providing in the future, is it similar mix to what you would say you've done over the last two to three years, or there's any changes on that front? If I could just follow up on that real quick. if i could just follow up on that real quick When you talk about some of these wins, like, does the products or the services you're providing in the future, is it similar mix to what you would say you've done over the last two to three years, or there's any changes on that front? when you talk about some of these wins like does the products or the services you're providing in the future is it similar mix to what you would say you've done over the last two to three years or there's any changes on that front

Speaker 3: Yeah, Steven, I would say it's very similar for the most part. Now you'll see products change with regards to the level of complexity, but how we serve our customers in the semiconductor capital equipment space is a combination of our precision technology solutions as it relates to machining and such, as well as electronic mechatronics, system integration, and PCBA assembly. It's really the total breadth of services that we're able to bring to bear for our customers. Yeah, Steven, I would say it's very similar for the most part. yeah steven i would say it's very similar for the most part Now you'll see products change with regards to the level of complexity, but how we serve our customers in the semiconductor capital equipment space is a combination of our precision technology solutions as it relates to machining and such, as well as electronic mechatronics, system integration, and PCBA assembly. now you'll see products change with regards to the level of complexity but how we serve our customers in the semiconductor capital equipment space is a combination of our precision technology solutions as it relates to machining and such as well as electronic mechatronics system integration and pcba assembly It's really the total breadth of services that we're able to bring to bear for our customers. it's really the total breadth of services that we're able to bring to bear for our customers

Speaker 7: Great. That's super helpful. Thanks. Congratulations on the quarter. Great. great That's super helpful. that's super helpful Thanks. thanks Congratulations on the quarter. congratulations on the quarter

Speaker 3: Thank you. Thank you, Steven. Thank you. thank you Thank you, Steven. thank you steven

Speaker 5: The next question comes from the line of Anja Soderstrom with Sidoti & Co. Please go ahead. The next question comes from the line of Anja Soderstrom with Sidoti & Co. the next question comes from the line of anja soderstrom with sidoti & co Please go ahead. please go ahead

Speaker 1: Hi, and thank you for taking my questions, and congrats on the quarter here. I'm just curious, in the Semi-Cap, you say expect sequential growth, but do you expect the H2 to be much stronger still or? Hi, and thank you for taking my questions, and congrats on the quarter here. hi and thank you for taking my questions and congrats on the quarter here I'm just curious, in the Semi-Cap, you say expect sequential growth, but do you expect the H2 to be much stronger still or? i'm just curious in the semi-cap you say expect sequential growth but do you expect the h2 to be much stronger still or

Speaker 3: Yeah. Hi, Anja. This is David. We do, and we're looking at. You know, we don't typically go out and start providing specific sector growth rates, but we decided that for this sector specifically, 'cause there's been a lot of questions for us to share with you, that will be somewhere around the mid-teens from an overall growth in this space. Yeah. yeah Hi, Anja. hi anja This is David. this is david We do, and we're looking at. we do and we're looking at You know, we don't typically go out and start providing specific sector growth rates, but we decided that for this sector specifically, 'cause there's been a lot of questions for us to share with you, that will be somewhere around the mid-teens from an overall growth in this space. you know we don't typically go out and start providing specific sector growth rates but we decided that for this sector specifically 'cause there's been a lot of questions for us to share with you that will be somewhere around the mid-teens from an overall growth in this space

Speaker 1: Okay. Also for AC&C, how should we think about that? That was very strong for the quarter, do you expect that to step up, or is it gonna be on the same sort of level as the Q1? Okay. okay Also for AC&C, how should we think about that? also for ac&c how should we think about that That was very strong for the quarter, do you expect that to step up, or is it gonna be on the same sort of level as the Q1? that was very strong for the quarter do you expect that to step up or is it gonna be on the same sort of level as the q1

Speaker 3: Yeah, I would say, you know, as we continue our ramp, we expect it to continue to improve. To what extent, we'll report back on that next quarter. Yeah, I would say, you know, as we continue our ramp, we expect it to continue to improve. yeah i would say you know as we continue our ramp we expect it to continue to improve To what extent, we'll report back on that next quarter. to what extent we'll report back on that next quarter

Speaker 1: Okay. Just remind me again for Penang, is that higher margin business or is it corporate average? Okay. okay Just remind me again for Penang, is that higher margin business or is it corporate average? just remind me again for penang is that higher margin business or is it corporate average

Speaker 2: Yeah, Anja, this is Bryan. Yes, it is higher margin, it's primarily focused on precision technology Semi-Cap, that's why it is bringing the higher margins. Just to take that into consideration and then you look at our overall portfolio, you have the growth that we're seeing in the Semi-Cap space, and you also have the AC&C, which is the lower end, so they kind of offset. Yes, as far as PT goes and that expansion, it is on the Semi-Cap, the higher end. Yeah, Anja, this is Bryan. yeah anja this is bryan Yes, it is higher margin, it's primarily focused on precision technology Semi-Cap, that's why it is bringing the higher margins. yes it is higher margin it's primarily focused on precision technology semi-cap that's why it is bringing the higher margins Just to take that into consideration and then you look at our overall portfolio, you have the growth that we're seeing in the Semi-Cap space, and you also have the AC&C, which is the lower end, so they kind of offset. just to take that into consideration and then you look at our overall portfolio you have the growth that we're seeing in the semi-cap space and you also have the ac&c which is the lower end so they kind of offset Yes, as far as PT goes and that expansion, it is on the Semi-Cap, the higher end. yes as far as pt goes and that expansion it is on the semi-cap the higher end

Speaker 1: Okay. Thank you. That was all for me. Okay. okay Thank you. thank you That was all for me. that was all for me

Speaker 2: Okay. Thanks, Anja. Okay. okay Thanks, Anja. thanks anja

Speaker 3: Thank you, Anja. Thank you, Anja. thank you anja

Speaker 5: Once again, if you would like to ask a question, please press star one. Oh, sorry. Your next question comes from the line of Anja Soderstrom with Sidoti & Co. Please go ahead. Once again, if you would like to ask a question, please press star one. once again if you would like to ask a question please press star one Oh, sorry. oh sorry Your next question comes from the line of Anja Soderstrom with Sidoti & Co. your next question comes from the line of anja soderstrom with sidoti & co Please go ahead. please go ahead

Speaker 1: Hi. Sorry, I just had one more I wanted to squeeze in. Do you see any sort of difficulty in the supply chain or component availability at all? Hi. hi Sorry, I just had one more I wanted to squeeze in. sorry i just had one more i wanted to squeeze in Do you see any sort of difficulty in the supply chain or component availability at all? do you see any sort of difficulty in the supply chain or component availability at all

Speaker 3: Yeah. Anja, we're starting to see select lead times increasing in pockets, and we're seeing the same challenges as pretty much everybody in the memory space. Really, we're doing our very best to get in front of it and make sure that we manage the supply chain properly. Yeah. yeah Anja, we're starting to see select lead times increasing in pockets, and we're seeing the same challenges as pretty much everybody in the memory space. anja we're starting to see select lead times increasing in pockets and we're seeing the same challenges as pretty much everybody in the memory space Really, we're doing our very best to get in front of it and make sure that we manage the supply chain properly. really we're doing our very best to get in front of it and make sure that we manage the supply chain properly

Speaker 1: Okay, great. Thank you. That was all for me. Okay, great. okay great Thank you. thank you That was all for me. that was all for me

Speaker 2: Thanks, Anja. Thanks, Anja. thanks anja

Speaker 5: We do have a follow-up question coming from the line of Steven Fox with Fox Advisors. Please go ahead. We do have a follow-up question coming from the line of Steven Fox with Fox Advisors. we do have a follow-up question coming from the line of steven fox with fox advisors Please go ahead. please go ahead

Speaker 7: Hi. Thanks for taking the follow-up. I was just curious, you know, maybe some of this takes a little time to matriculate, but how do you think the conflict in Iran is impacting, you know, defense program run rates, maybe not this quarter, but over the back half of the year? Is that something we should think about beyond just sort of the secular trends that you're riding? Thanks. Hi. hi Thanks for taking the follow-up. thanks for taking the follow-up I was just curious, you know, maybe some of this takes a little time to matriculate, but how do you think the conflict in Iran is impacting, you know, defense program run rates, maybe not this quarter, but over the back half of the year? i was just curious you know maybe some of this takes a little time to matriculate but how do you think the conflict in iran is impacting you know defense program run rates maybe not this quarter but over the back half of the year Is that something we should think about beyond just sort of the secular trends that you're riding? is that something we should think about beyond just sort of the secular trends that you're riding Thanks. thanks

Speaker 3: Yeah, Steven. you know, our view on that is even if you have immediate resolution, defense is gonna perhaps remain strong, for the next 12, 18 to 24 months as those investments will need to really be there for replenishment purposes. That's my opinion on that, from an order perspective and market share and bookings, we continue to see momentum there. We're winning defense programs, and as I shared in my script, we're also winning in space. We remain very positive in this sector, and we see it picking back up in 2027. Yeah, Steven. you know, our view on that is even if you have immediate resolution, defense is gonna perhaps remain strong, for the next 12, 18 to 24 months as those investments will need to really be there for replenishment purposes. yeah steven you know our view on that is even if you have immediate resolution defense is gonna perhaps remain strong for the next 12 18 to 24 months as those investments will need to really be there for replenishment purposes That's my opinion on that, from an order perspective and market share and bookings, we continue to see momentum there. that's my opinion on that from an order perspective and market share and bookings we continue to see momentum there We're winning defense programs, and as I shared in my script, we're also winning in space. we're winning defense programs and as i shared in my script we're also winning in space We remain very positive in this sector, and we see it picking back up in 2027. we remain very positive in this sector and we see it picking back up in 2027

Speaker 7: Great. Thanks again. Great. great Thanks again. thanks again

Speaker 3: Sure, Steven. Sure, Steven. sure steven

Speaker 5: I have no further questions at this time. I would like to turn it back to Paul Mansky for closing remarks. I have no further questions at this time. i have no further questions at this time I would like to turn it back to Paul Mansky for closing remarks. i would like to turn it back to paul mansky for closing remarks

Speaker 6: Thank you, operator, and thank you everyone for participating in Benchmark's Q1 2026 earnings call. For updates to upcoming investor conferences and events, including a replay of this call, please refer to the events section of our IR website at bench.com. With that, thank you again for your support, and we look forward to speaking with you soon. Thank you, operator, and thank you everyone for participating in Benchmark's Q1 2026 earnings call. thank you operator and thank you everyone for participating in benchmark's q1 2026 earnings call For updates to upcoming investor conferences and events, including a replay of this call, please refer to the events section of our IR website at bench.com. for updates to upcoming investor conferences and events including a replay of this call please refer to the events section of our ir website at bench.com With that, thank you again for your support, and we look forward to speaking with you soon. with that thank you again for your support and we look forward to speaking with you soon

Speaker 5: This concludes today's conference call. You may now disconnect. This concludes today's conference call. this concludes today's conference call You may now disconnect. you may now disconnect