Benchmark Electronics, Inc.

Hello, and welcome to the Benchmark Electronics to Report First Quarter 2024 Results Conference. At this time, all parties are in a listen-only mode. Later, you will have an opportunity to ask questions. To ask a question, press star and 1 on your phone keypad. It's star and 1 if you'd like to ask a question. You can remove yourself from the queue by pressing star 2. Please note that this call is being recorded, and I will be standing by should you need any assistance. I would now like to turn the conference over to Paul Manske, Benchmark Investor Relations and Corporate Development. Please begin.

Thanks, everyone, for joining us today for Benchmark's first quarter fiscal year 2024 earnings call. Joining me this afternoon are Jeff Bank, CEO and President, and Arvind Kamal, Interim CFO. After the market closed today, we issued an earnings release pertaining to our financial performance for the first quarter of 2024. and we prepared a presentation that 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 includes 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 first quarter performance, Arvind will then discuss our detailed financial results and provide our second quarter guidance. Jeff will then return to share more insight into demand trends by sector, new business wins, and close with some final remarks. If you will please turn to slide three, I'll turn the call over to our CEO, Jeff Bank.

Thank you, Paul. Good afternoon, and thanks to everyone for joining our call today. The first quarter was another strong performance by the team. best described by controlling what we can control. These results were clear indicators of our continued progress toward our long-term objectives. Despite persistent macro-driven revenue challenges across many of our end markets, we continue to meet or exceed our margin, non-GAAP EPS, and free cash flow objectives in the quarter. Let me step through a few highlights. Total revenue of $676 million was down 3% year-over-year and 2% sequentially. We were pleased with the continued solid performance in A&D and double-digit growth in SEMICAP, despite the lack of industry recovery. However, these positives were offset primarily by weakness in our medical and communications sectors. Our non-GAAP gross margins again exceeded 10%, which reflected a continuation of our multi-quarter trend of year-on-year gross margin expansion. Excluding stock-based compensation, we achieved 4.9% non-GAAP operating margin in Q1, which was up 50 basis points year over year. On a sequential basis, operating margins were down due to seasonally higher payroll taxes and variable expenses. These operating results allowed us to deliver $0.55 in non-GAAP earnings per share in the quarter. We achieved $0.51 of non-GAAP earnings per share when including $0.04 of stock-based compensation expense, which on a like-for-like basis was $0.03 above the high end of our guidance range of $0.42 to $0.48. At the same time, our working capital initiatives put us in a place last year are delivering results. Notably, first quarter inventory was down over $140 million year-over-year, which was a key enabler to us being able to deliver positive free cash flow of $43 million. We have now been free cash flow positive for four consecutive quarters, totaling just north of $200 million over this period. Given this performance and our expectations looking forward, we are raising our free cash flow target for the year from $70 to $80 million to now $80 to $90 million. I'd like to once again say how pleased I am with the team's ability to come together, particularly in this volatile marketplace, and again, consistently deliver results. Now, let me pass it over to Arvind to share more details on the March quarter and guidance for Q2 2024.