Benchmark Electronics (NYSE:BHE) reported first-quarter fiscal 2026 results that came in toward the high end of management’s expectations, driven by growth in Medical and Advanced Computing & Communications (AC&C) and improving momentum in Semiconductor Capital Equipment (Semi-Cap). Executives also raised the company’s full-year revenue growth outlook, citing strengthening demand signals and continued execution on customer-focused initiatives.
Q1 results land near the high end of guidance
President and CEO David Moezidis said the company delivered Q1 revenue of $677 million and non-GAAP EPS of $0.58, with both metrics “coming in towards the higher end of our expectations.” CFO Bryan Schumaker added that revenue was up 7% year-over-year and above the midpoint of prior guidance of $655 million to $695 million, while non-GAAP EPS was at the high end of the prior $0.53 to $0.59 range.
Sector performance: Medical and AC&C grow sharply; Semi-Cap improves sequentially
Schumaker detailed Q1 revenue by sector, noting that Semi-Cap revenue, while “down slightly year-over-year,” rose 12% sequentially as momentum improved through the quarter. Industrial and Aerospace & Defense (A&D) moderated year-over-year, down 3% and 2%, respectively. Medical revenue increased 24% year-over-year and AC&C grew 41% year-over-year.
Moezidis said the quarter included “evidence of improvement across a broad cross-section of our end markets,” highlighting Medical acceleration, Semi-Cap’s return to double-digit sequential growth, and the initial ramp of AI-related wins in AC&C. He also said the company delivered another quarter of “solid bookings performance,” which management views as reinforcing confidence in the pacing of the year.
Cash flow, balance sheet, and capacity investments
Schumaker said Benchmark generated $47 million of operating cash flow and $29 million of free cash flow in Q1, despite investments in inventory and capital equipment to support future growth. As of March 31, the company was $121 million net cash positive with a cash balance of $325 million. Debt included $145 million outstanding on the term loan and $60 million on the revolver, leaving $486 million in available borrowing capacity.
Capital expenditures were approximately $18 million in the quarter. Schumaker said Benchmark’s fourth Precision Technology (PT) building in Penang remains on track to begin operations in Q3, and, given business momentum, full-year 2026 capital spending is expected to track toward the high end of the company’s 2.0% to 2.5% range.
The company also returned capital to shareholders, distributing $6 million in cash dividends and repurchasing $6 million in stock. Schumaker said about $117 million remained under the share repurchase authorization at quarter end.
Working capital efficiency improved as well. Schumaker said the cash conversion cycle was 67 days, a 19-day improvement year-over-year, aided by disciplined inventory management. Inventory days declined 14 days year-over-year and inventory turns improved to 4.8 from 4.0 in the prior-year period.
Q2 outlook calls for margin improvement and EPS growth
For Q2 fiscal 2026, Schumaker guided revenue to a range of $700 million to $740 million, representing 12% year-over-year growth at the midpoint. The company expects non-GAAP gross margin of 10.4% to 10.6% and non-GAAP operating margin of 5.1% to 5.3%.
Benchmark expects non-GAAP diluted EPS of $0.65 to $0.71. Schumaker said GAAP expenses are expected to include about $6.1 million of stock-based compensation and $0.8 million to $1.2 million of non-operating expenses (including amortization, restructuring, and other charges). Interest and other expense is expected to be approximately $3.5 million. The company expects an effective tax rate of 26% to 27% for Q2 and the full year, and a weighted average share count of about 36.3 million.
Management raises full-year revenue growth view; discusses Semi-Cap and AI ramps
Moezidis said Benchmark now expects full-year revenue growth in the 9% to 10% range, up from prior expectations of mid-single-digit growth. He added that the company expects EPS growth to outpace revenue growth as it remains focused on execution and “disciplined expense management.”
On Semi-Cap, Moezidis reiterated that a recovery is becoming more evident. In Q&A with Lake Street Capital Markets analyst Max Michaelis, Moezidis said the Semi-Cap strength is “definitely broad-based,” adding that the company began hearing signals at SEMICON in October that later materialized into orders. In response to a question from Sidoti’s Anja Soderstrom about Semi-Cap growth, Moezidis said Benchmark expects “somewhere around the mid-teens” overall growth in that space.
Moezidis and Schumaker also discussed capacity expansion in Penang. While Moezidis declined to quantify the incremental capacity for Penang 4, he said it positions Benchmark to serve customers in 2026 and for further growth in 2027. Schumaker noted that the PT expansion in Penang is “higher margin,” focused primarily on precision technology Semi-Cap work, while also pointing out that growth in AC&C is “the lower end,” and the two dynamics can offset within the broader portfolio.
On AC&C and AI-related programs, Moezidis said the “AI-related wins” discussed on prior calls have begun to ramp and that visibility is improving. Asked about additional AI use cases, he said the key drivers remain “enterprise AI clusters” and “on-prem cloud infrastructure,” and added that as the company exits the year and enters 2027, “HPC is gonna actually start picking up on its own and contributing nicely as well.” He also said Benchmark was recently named HP Enterprise’s 2026 Manufacturing Partner of the Year, which he described as “a meaningful acknowledgment from a strategic customer.”
In Industrial, Moezidis said the company expects modest growth in 2026, with good performance from transportation and agriculture, while automation and HVAC saw softer conditions. In A&D, he said commercial air continues to perform well, but after two years of double-digit growth the sector is expected to moderate in 2026, primarily due to program timing within Defense. He added that bookings in Defense and Space remain strong and position the sector for a return to growth as programs are expected to ramp later in the year and into 2027.
Addressing supply chain conditions, Moezidis told Soderstrom the company is “starting to see select lead times increasing in pockets,” and noted challenges “as pretty much everybody” is seeing in the memory space. He said Benchmark is working to get in front of the issues and manage the supply chain properly.
In response to a question from Fox Advisors’ Steven Fox about geopolitical conflict and defense demand, Moezidis said that even with immediate resolution, defense could “remain strong” for the next 12 to 24 months due to replenishment needs. He added that from an order and bookings perspective, Benchmark continues to see momentum and said the company is “winning defense programs” and “also winning in space.”
About Benchmark Electronics (NYSE:BHE)
Benchmark Electronics, Inc is a global provider of comprehensive electronics manufacturing services (EMS) and integrated engineering solutions. The company offers a full suite of services that span the entire product lifecycle, from early‐stage design and prototyping to high‐volume production and aftermarket support. Benchmark serves diverse end markets, including industrial automation, medical devices, communications, aerospace and defense, and semiconductor equipment.
At the core of Benchmark’s offering are printed circuit board assemblies (PCBA), system integration, box build assemblies and turnkey manufacturing.
