Benchmark Electronics, Inc.

Good afternoon everyone and welcome to the Benchmark Electronics Inc third quarter 2021 earnings conference call. All participants will be in a 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 and then one. To withdraw your questions you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Lisa Weeks, SVP of Strategy and Investor Relations. Sam, please go ahead.

Thank you, Jamie, and thanks, everyone, for joining us today for Benchmark's third quarter 2021 earnings call. Joining me this afternoon are Jeff Bank, our CEO and president, and Roop Lakharaju, our CFO. After the market closed today, we issued an earnings release highlighting our financial performance for the third quarter of 2021, 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. 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. 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 as described in our press releases and SEC filings. Actual results may differ material from these statements, most notably from the ongoing impact of global supply chain constraints and the COVID-19 pandemic. Benchmark undertakes no obligation to update any forward-looking statements. For today's call, Jeff will begin by covering a summary of our third quarter results, including new program wins. Root will then discuss our detailed third quarter results, including a cash and balance sheet summary and fourth quarter 2021 guidance. Jeff will then wrap up with an outlook by market sector and a progress update on our strategic initiatives for the year before we conclude the call with Q&A. If you will, please turn to slide three. I will now turn the call over to our CEO, Jeff Banks.

Thank you, Lisa, and thank you to everyone for joining our call this afternoon. I'm really proud of how our team performed in the third quarter amidst this unprecedented supply chain crisis. Despite these challenges, we delivered strong results with both revenue and profit growth. As we announced earlier today, revenue of $572 million was in line with our guidance and was up 9% year over year. Third quarter revenue growth was driven by continued strength in SEMICAP, improving demand recovery in industrials, and ongoing program ramps in high performance computing. Now turning to profits. With improving revenue, our non-GAAP gross margins improved to 9.4%, and non-GAAP operating margins improved to 3.3%, which represents a 38% sequential improvement in operating margins. As a reminder, our non-GAAP operating margins include stock compensation expenses, which were approximately 70 basis points in the third quarter. Earnings per share of 39 cents was above the midpoint of our guidance, and cash conversion cycle results were 71 days, albeit higher than last quarter, driven by an increase in inventory due to the supply environment. As mentioned previously, these results were achieved with a backdrop of ongoing supply chain challenges that made it significantly more difficult to meet all customer demand and delivery expectations. In the third quarter, we estimated that we were unable to fulfill over 100 million of demand requested in the quarter from our customers. This demand is being aligned to component availability in Q4 and into the first half of 2022. While we'll expect a fair amount of the unfulfilled demand this quarter to roll into 2022, we also appreciate that some demand will likely perish as OEMs balance their demand plans against component availability in the new year. Late supplier decommits and component delivery timing challenges are also creating inefficiencies for our operations team, with continued replanning to manage volatile delivery schedules and allocations. On the COVID front, we are pleased that vaccine availability is improving around the world, especially for our international locations. Having said that, we did continue to experience intermittent disruptions to our global operations, based on the need to comply with government requirements and our own health and safety policies to protect our employees. Despite all the challenges, I'm proud of how our teams have worked tirelessly and persevered to improve our position in support of our customers. Please turn to slide four. In addition to strong sequential and year-over-year revenue growth, we had another great quarter of bookings. We are excited to see more and more of our customers have the opportunity to experience both our world-class design engineering capabilities and our complex, high-quality manufacturing skills at our operations around the world. Our go-to-market team continues to perform well, and we had some meaningful new program wins in Q3. In medical, we were awarded new manufacturing programs for a glucose monitoring device and robotic surgery systems. On the engineering front, we were awarded the design of a new mobile medical cart, which we hope will lead to a near-term manufacturing opportunity. Leading with engineering design capabilities is a key tenant of our medical strategy, and it's working well. In SEMICAP, we continue to win new programs that build on our current robust portfolio. In Q3, we were awarded programs related to a wafer handling system, and a wafer inspection tool. This was the second straight quarter where we had wins in SEMICAP that leveraged multiple business lines, including precision machining, engineering services, and electronics manufacturing. In the A&D sector, we were awarded new manufacturing programs for satellite antennas and advanced imaging sensors, as well as product design and manufacturing for combat system electronics. In industrials, we were awarded manufacturing for advanced microelectronics related to test and instrumentation products, as well as manufacturing for LiDAR systems. In Q3, our customer AI announced that Benchmark had been selected as their manufacturing partner for optical modules for AI's next generation adaptive LiDAR sensor. We're proud to be a partner for AI and we are continuing to build on our strong core competencies for manufacturing very complex LIDAR products. And finally, in the computing and telco sectors, we were awarded new manufacturing programs in commercial printers and free space optics, along with a new test design program for an optical application. Overall, our funnel and new business outlook remains strong, with all the great work from our go-to-market engineering services, and operations team. Now, I will turn the call over to Rup to give you more details on our third quarter, financial results, as well as our guidance for Q4. Rup, over to you.