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01/10 16:59
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: a decline in revenue and liquidity challenges are offset by strong EPS, cash flow, and share repurchases. Q&A insights reveal cautious optimism with growth expected in the second half, particularly in medical and compute sectors. However, concerns about customer hesitancy and China-related order softening persist. Given these factors and the company's small-cap status, the stock price is likely to remain stable, leading to a neutral prediction.
Revenue $632,000,000, down 6% year-over-year due to market uncertainty and customer decision delays.
Non GAAP Gross Margin 10.1%, a 10 basis point increase year-over-year, reflecting continued operational focus despite revenue headwinds.
Non GAAP Operating Margin 4.6%, down 30 basis points year-over-year due to lower revenue base.
Non GAAP Earnings Per Share $0.52, above the midpoint of guidance, indicating strong profitability protection.
Free Cash Flow $27,000,000 for the quarter, totaling slightly more than $140,000,000 on a trailing twelve month basis.
Operating Cash Flow $32,000,000 for the quarter.
Cash Balance $355,000,000, a year-over-year increase of $59,000,000.
Term Loan Outstanding $121,000,000.
Revolver Outstanding $155,000,000.
Liquidity Ratio 0.6, down from 0.9 in the prior year period.
CapEx Investment Approximately $4,000,000 primarily in support of Malaysia and Thailand facilities.
Dividends Paid $6,100,000 in cash dividends during the quarter.
Share Repurchase $8,000,000 of outstanding shares repurchased.
Cash Conversion Cycle 86 days, improving three and eight days sequentially and year-over-year respectively.
New Facility in Penang, Malaysia: Groundbreaking for a new facility to support future growth plans, expected to be fully online next year.
Semi Cap Revenue Growth: First quarter revenue in the semi cap sector grew 18% year over year, driven by new wins and share gains.
A&D Sector Performance: A&D sector revenue increased by 15% year over year, supported by strong defense demand and new programs.
Medical Sector Recovery: Expected recovery in the medical sector in the second half of 2025 as inventory levels normalize and new competitive takeaways are secured.
AC and C Revenue Challenges: AC and C revenue declined due to timing issues with new program launches, expected to remain challenged through much of 2025.
Free Cash Flow Generation: Generated $27 million in free cash flow in Q1, marking the eighth consecutive quarter of positive free cash flow.
Operational Efficiency: Maintained non GAAP gross margin above 10% for six consecutive quarters despite revenue headwinds.
Cash Conversion Cycle Improvement: Improved cash conversion cycle to 86 days, with enhancements in accounts receivable and payables.
Focus on Strategic Growth: Continued investment in strategic growth areas and support for customers in optimizing their supply chains.
M&A Opportunities: Open to evaluating M&A opportunities that align with strategic plans, focusing on enhancing capabilities in high value add areas.
Tariff-related Market Uncertainty: The company faces tariff-related market uncertainty, which has led to some customer decisions being temporarily impacted. This uncertainty may create headwinds for revenue growth as customers pause shipments or pull in specific products.
Supply Chain Optimization Delays: Customers are evaluating their supply chains, which is elongating the decision-making process for new bookings. This could lead to slower revenue ramp-up as customers contemplate various options.
Competitive Pressures: The company is experiencing competitive pressures, particularly in the semi cap sector, where restrictions on sales to China may impact order volumes. Despite this, the company is gaining market share.
Economic Factors: Global macroeconomic uncertainties, particularly related to tariffs, pose short-term risks to the company's performance. However, these uncertainties may also create mid to long-term opportunities.
Medical Sector Demand Softness: There is ongoing demand softness in the medical sector, which has affected revenue. The recovery in this sector is taking longer than anticipated.
AC and C Revenue Challenges: The AC and C sector is expected to face challenges throughout 2025 due to timing-related weaknesses and delays in new program launches.
Tax Assessment Impact: The company anticipates a negative impact on cash flow performance due to a $10 million legacy tax assessment related to a 2016 customs audit in Mexico.
Liquidity Ratio Decline: The company's liquidity ratio has declined from 0.9 to 0.6 year over year, indicating potential liquidity challenges.
New Facility in Penang, Malaysia: Groundbreaking for a new facility to support future growth plans, expected to be fully online next year.
Focus on Supply Chain Optimization: Helping customers navigate tariff-related uncertainties and optimize their global supply chains.
Investment in Strategic Growth: Continuing to invest in sectors where Benchmark can add greater value, particularly in semi cap and A&D.
M&A Opportunities: Evaluating M&A opportunities that align with strategic plans, focusing on enhancing capabilities in high value add areas.
Q2 Revenue Guidance: Expected revenue range of $615 million to $665 million.
Q2 Non-GAAP Gross Margin Guidance: Expected to be between 10.2% and 10.4%.
Q2 Non-GAAP Operating Margin Guidance: Expected to be between 4.8% and 4.9%.
Q2 Non-GAAP EPS Guidance: Expected in the range of $0.52 to $0.58.
CapEx Guidance for Q2: Expected capital spending of $15 million to $20 million, primarily for Penang facility expansion.
Free Cash Flow Outlook: Expecting to maintain positive free cash flow despite Q2 tax payments impacting cash flow performance.
Yearly Revenue Growth Outlook: First half revenue expected to decline mid single digits year over year, with mid single digit growth anticipated in the second half.
Cash Dividends Paid: $6,100,000 in cash dividends were paid in the quarter.
Share Repurchase: $8,000,000 of outstanding shares were repurchased during the quarter.
Remaining Share Repurchase Authorization: Approximately $142,000,000 remains in the existing share repurchase authorization.
The earnings call shows strong financial results with revenue and EPS at the high end of guidance, positive free cash flow, and significant shareholder returns through dividends and share repurchases. The Q&A section highlights optimism in sectors like AI and A&D, despite some uncertainties in semi-cap. The company's positive outlook for 2026, coupled with strategic investments, suggests a positive market reaction. Given the small-cap nature, the stock is likely to see a positive movement of 2% to 8% over the next two weeks.
The earnings call reveals mixed signals: positive growth in medical and AI sectors, strategic cash management, and shareholder returns. However, concerns arise from cash outflow, AC&C sector challenges, and semi-cap market uncertainties due to China restrictions. The Q&A highlights optimism in future growth but lacks detailed guidance. Given the market cap of $1.4 billion, these mixed factors suggest a neutral stock price movement within the -2% to 2% range over the next two weeks.
The earnings call presents a mixed picture: while revenue declined YoY and recession risks loom, the company maintained EPS guidance, improved cash flow, and executed share repurchases. The Q&A highlights balanced customer sentiment and potential growth in medical and automation sectors. Despite headwinds from tariffs and a customs audit, the company shows resilience. The stock market cap suggests moderate sensitivity. Overall, the sentiment is neutral, with no strong catalysts for a significant stock price change in the next two weeks.
The earnings call presents a mixed picture: a decline in revenue and liquidity challenges are offset by strong EPS, cash flow, and share repurchases. Q&A insights reveal cautious optimism with growth expected in the second half, particularly in medical and compute sectors. However, concerns about customer hesitancy and China-related order softening persist. Given these factors and the company's small-cap status, the stock price is likely to remain stable, leading to a neutral prediction.
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