Benchmark Electronics, Inc.

and welcome to the Benchmark Electronics Incorporated first quarter 2019 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Lisa Weeks, Vice President of Strategy and Investor Relations. Please go ahead.

Thank you, Operator, and thanks, everyone, for joining us today for Benchmark's first quarter 2019 earnings call. With me this afternoon, I have Jeff Banks, CEO and President, and Ruth Makaraji, CFO. Jeff will provide an overview of our first quarter results and introductory comments, and Ruth will provide a detailed review of our first quarter results and second quarter outlook. We will conclude our call today with a Q&A session. After the market closed, we issued an earnings release highlighting our financial performance for the first quarter 2019, and we have prepared a presentation that we will reference on this call. The press release and presentation are available online under the investor relations section of our website at www.bench.com. This call is being webcast live and a replay will be available online following the call. Please take a moment to review the forward-looking statements advice on slide two in the presentation. During our call, we will discuss forward-looking information. As a reminder, Any of today's remarks that are not statements of historical fact are forward-looking statements, which involve risks and uncertainties described in our press releases and SEC filings. Actual results may differ materially from these statements, and Benchmark undertakes no obligation to update any forward-looking statements. The company has provided a reconciliation of our GAAP to non-GAAP measures in the earnings release as well as in the appendix of the presentation. If you will please turn to slide four in the presentation, I will now turn the call over to our CEO, Jeff Bank.

Thanks, Lisa, and welcome to everyone joining us for this afternoon's call. I'm excited to be here, and it's been a great first month working with the extended benchmark team. I've had the privilege of leading a number of great technology companies before joining Benchmark, and with my product and engineering background, I bring a set of experiences that can help the company navigate through the business transformation underway, as we deliver richer offerings to increase the value that we provide to our customers. Before I share my initial observations and areas of focus, I will provide a brief overview of our first quarter 2019 results. Please turn to slide five. In the quarter ending March 31, 2019, we delivered revenue of $603 million and non-GAAP EPS of 33 cents. both at or above the midpoint of our guidance range. Revenue is driven by year-over-year increases in the higher-value A&D and medical markets, assisted by increased traditional demand in telco and legacy computing. Even with semi-cap headwinds, revenue is comparable to the first quarter of 2018. Our non-GAAP gross margins improved 40 basis points sequentially to 8.8 percent on bigger contribution from the higher-value markets despite continued softening in SEMICAP, which is part of our test and instrumentation market sector, and was down 36% from the first quarter of 2018. Our cash conversion cycle was 72 days in the first quarter, which was within the target range of 73 to 68 days. Cash from operations was approximately $16 million in the quarter, and we continue to expect full-year operating cash flow in the range of $40 to $50 million. We continue to execute on our capital allocation strategy, which Rup will cover in more detail. Now, let me share some initial observations about the company. Please turn to slide six. Since joining the company last month, I've been spending time with customers and our team to gain a better understanding of customers' needs, our priorities, and the state of our business. I've experienced firsthand our unique and differentiated capabilities and I have a deep appreciation for the complexity of technical problems we are solving, working side by side with our customers. As we think about the company strategy going forward, our focus on higher value markets remains unchanged. Five years ago, the benchmark revenue mix between traditional EMS markets and higher value markets was roughly 50-50. After the legacy computing contract exit, that we announced will be completed later this year, our mix by sector will be 75% higher value and 25% traditional markets, which is at our target ratio. Another key element of our strategy is providing rich technical solutions. We have more opportunity in front of us to provide higher value engineering services across our diverse customer base, and in some cases, provide a complete product solution. This means taking an idea from concept to production where customers may rely on us to be their development team. As you might expect, we have seen a positive correlation between where we provide engineering services and where we enjoy EMS wins. So we are motivated to provide more value add and help customers speed their time to market. We have also been investing in technology building blocks based on customer feedback to capture new opportunities, which align with capabilities in our secure technology group, our lock RF design and component centers, and IoT connectivity solutions. As we bring these new capabilities to market, we have to continue to raise customer awareness. For example, I've been a benchmark customer, yet I wasn't fully aware of the depth of capabilities we bring to the table. And I want to make sure we effectively communicate this to our customers. Even in my short tenure here, I'm impressed by the team and some of the amazing projects we're collaborating on with customers. These cut across industries in some of the most demanding product applications, bringing to light for me our tagline, when it matters, go with Benchmark. Whether you're developing medical products that require FDA approval or using our surveillance systems for border protection, or developing components that ultimately will end up in an aircraft or maybe even in space. You have to have confidence that your design and manufacturing partner can handle the criticality of the application. We thrive in these environments. From some of my first customer meetings, I have heard that they need our help and we can do more. We will make sure in all engagements that customers understand the full breadth of our capabilities and we will work together to build collaborative plans for co-development or support our customers' outsourcing needs in the future. I also believe the near-term capital allocation plans the company has put in place are appropriate. We will invest in CapEx to grow the business and continue to fund tuck-in investments to expand our technical capabilities. We will opportunistically repurchase shares and maintain our quarterly dividends. While our strategy and the fundamentals of our business remain strong, we are facing some headwinds from the semi-cap market, where near-term visibility to recovery is not as transparent as we would like. I have executive-level meetings scheduled in the coming weeks to get a better perspective on the recovery timeline. In the meantime, we are dealing with these near-term challenges head-on. We have lined capacity to current demand and are evaluating further cost actions given the delayed recovery of this segment. For the long term, we remain positive on SEMICAP and we continue to win new programs. We have differentiated capabilities to serve the customers in this market. Beyond SEMICAP, we are pursuing global operational efficiency savings across the network to expand our gross margins. we have kicked off a number of projects to further improve productivity and transformation margins, which we will look to accelerate in the coming months. We are evaluating our technology investments across Benchmark to prioritize those that provide the greatest benefit to our customers, balanced with those that offer the greatest potential for return. To review our near-term focus areas, please turn to slide seven. In the near term, I will be reviewing our go-to-market approach with an eye towards execution and achieving results. I understand that this organization is relatively new and has only been built out in the past couple of years. The company has certainly made significant progress to enable revenue growth through new customer and program acquisition, but I feel we can do even more to deliver revenue. A top priority is to improve our customer engagement across our sectors and service offerings. I have been a former and prospective customer of Benchmark, so I bring a customer's perspective to the company and can add my insights and suggestions to this process. In all areas, we need to anticipate customers' technology needs and ensure our service offerings and solutions are tailored to provide maximum value aligned with these same customer priorities. Next, we will ensure we have the right organizational alignment to support tighter engagement with existing customers and sufficient coverage for new prospects and opportunities. I will be adding a sales leader to my staff to bring explicit focus to our go-to-market efforts. The go-to-market organization is critical to continuing to win new bookings, which drives revenue. While we have had success in increased bookings in the past 12 months, we must also have a parallel focus on revenue conversion, which I intend to review further. Some of the delay in conversion is given the complexity of the leading edge nature of our design ones. In some instances, program qualification timing and production ramps are slower than we had anticipated. That being said, There are ways we can greater influence revenue conversion that are within our control. While we continue to review marginal and dilutive contracts, we must also focus on program attrition. I believe there is more opportunity to help customers extend the product lifecycle of existing programs and also take a greater role in the design of new products. Part of our optimizing our go-to-market process will center on these efforts. Coupled with the go-to-market, we will evaluate our business execution and seek opportunities for further efficiencies. We are assessing the overall customer experience to ensure our customer needs remain at the forefront of the entire organization and their experience is more uniform across our global network. We have a global team driving operational excellence. Their focus is on accelerating process and tool standardization that ensures that we are executing for optimal results. We will be laser-focused on design and manufacturing transformation efficiencies. This includes driving greater utilization across our network. Lastly, we also want to ensure our RF and high-speed design center in Tempe becomes fully operational this quarter. Now, I will turn the call over to Rup to discuss our financial results for the quarter. Thank you, Jeff, and good afternoon, everyone.