Benchmark Electronics, Inc.

Good day, and welcome to the Benchmark Electronics Third Quarter 2023 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, then one on a touch-tone phone. 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 Paul Manske with Benchmark Electronics. Please go ahead.

Thank you, Betsy, and thanks everyone for joining us today for Benchmark's third quarter fiscal year 2023 earnings call. Joining me this afternoon are Jeff Bank, CEO and President, and Rupal Akaraju, CFO. After the market closed today, we issued an earnings release pertaining to our financial performance for the third quarter of 2023. and have prepared a presentation that we will reference on this call. Both are available online under the investor relations section of our website at 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 gap to non-gap 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 in the presentation. During our call, we will discuss forward-looking information. As a reminder, any of today's remarks, which are not statements of historical fact, are forward-looking statements, which involve risks and uncertainties as described in our press releases and SEC filings. Actual results may differ materially from these statements. Benchmark undertakes no obligation to update any forward-looking statements. For today's call, Jeff will begin by providing a summary of our third quarter results. Ruth will then discuss our detailed financial results and our fourth quarter guidance. Jeff will then return to provide more insight into demand trends by sector, business wins, and in closing remarks. If you'll please turn to slide three, I'll turn the call over to our CEO, Jeff Vang.

Thank you, Paul. Good afternoon, and thanks to everyone for joining our call today. The third quarter was another period of solid execution for the company. Despite the dynamic market environment, we met or exceeded expectations in the quarter. This is a direct reflection of our purposeful focus on complex and often highly regulated markets and team-wide emphasis on operational execution. Let me highlight a few key accomplishments in the quarter. Total revenue was 720 million, although down year over year, recall that in Q3 2022, we had 74 million in zero margin supply chain premiums. In Q3 2023, supply chain premiums were less than 16 million, down 58 million versus a year ago. Excluding SEP, we grew revenue by high single digits or more in four of our six sectors. The exceptions being semi-cap and advanced computing, which were down as expected. Whether including or excluding SEP, we expanded gross margin both sequentially and year over year, primarily through operational improvements we put in place over the last few quarters. This enabled us to grow non-GAAP operating income an impressive 22% year over year. I want to congratulate the entire team for delivering such a strong set of results, which was key to allowing us to report 57 cents in both GAAP and non-GAAP earnings. This was above the high end of our GAAP guidance range and 10% above the non-GAAP consensus. Finally, over the last few quarters, we've highlighted steps we've taken to return the positive free cash flow. I'm pleased to report that we delivered this for the second quarter in a row, aided largely by reductions in inventory. We've generated over $34 million in free cash flow over the last two quarters. Considering that and our continuing focus, we feel confident we're on a trajectory to achieve greater than $70 million in analyzed free cash flow, which is in line with the targets we provided. Now, let me pass it over to Ruth to share more detail on the September quarter and our guidance for Q4.