On Thursday, 19 March 2026, Benchmark Electronics (NYSE:BHE) presented at the Sidoti March Small-Cap Virtual Conference, outlining its strategic focus on complex, regulated sectors and plans for organic growth. The company highlighted its success in reducing legacy sector exposure while facing challenges in operating margin guidance.
Readers are encouraged to refer to the full transcript for a more detailed analysis of Benchmark Electronics’ strategic plans and financial performance.
Paul Mansky, Head of Investor Relations and Corporate Development, Benchmark Electronics: Rattle off the obligatory, you know, today’s remarks may include forward-looking statements subject to risks and uncertainties. Actual results may differ materially. Please see our financial results and SEC filings for additional information.
Anja Söderström, Equity Analyst, Sidoti: Okay, great. We got that sorted out. Welcome to the Sidoti Virtual Investor Conference, and thank you for joining us today. I’m Anja Söderström, equity analyst at Sidoti, and as I mentioned, next up we have Benchmark Electronics. With me today, I have Arvind Kamal, the Vice President of Finance, and Paul Mansky, the Head of Investor Relations and Corporate Development. This will be conducted as a fireside chat. If you have any questions that you would like to squeeze in, you can submit them in the chat box or in the Q&A box at the bottom of your screen, and we’ll try to incorporate them. Welcome Arvind and Paul.
For those who may need a refresher on the company, could you start providing us a brief overview, including the current breakdown by revenue, and by market sector?
Paul Mansky, Head of Investor Relations and Corporate Development, Benchmark Electronics: Absolutely, Anja, and thanks for having us. Always a joy attending this conference. For those that might not be as familiar, Benchmark has been around 40 years. We were born initially as a medical device company, headquartered in Texas. We grew for a very long time, kind of focused on that market and then expanded markets, but we grew inorganically through the majority of our life up until about 10 years ago, when we really started focusing much more on kind of an organic growth, focused on complex, highly regulated opportunities, with a big North America footprint and really bringing that end-to-end capabilities from engineering through precision machining, what we call PT or Precision Technology, to EMS.
As we focused on that in our sectors, we’ve evolved over time, attriting out low margin business, low caliber business to what we have today. Ten years ago, 15 years ago, we were 50% exposed to legacy telco and compute. Today, we have about 20—you know, high 20s% exposure to Semi-Cap. We have roughly 20% exposure between industrial, medical and A&D. On the other end, offsetting the high 20s in Semi-Cap, we have, on the lower end, we have advanced computing and communications, which, unlike traditional PC servers, that really means kind of 5G infrastructure as well as super computing and incrementally so, enterprise and sovereign AI.
Along with that journey, we’ve demonstrated, and I think as Arvind is smiling and certainly he’s proud of, demonstrated 9+ quarters of 10% or better gross margin, while we’ve continued to progress towards our longer term operating margin goal, most recently putting up 5.5% non-GAAP operating margin in the most recent quarter. I’ll go ahead and pause there from an elevator perspective.
Anja Söderström, Equity Analyst, Sidoti: Okay. Thank you, Paul. You mentioned your target operating margin and goal. What are you targeting?
Paul Mansky, Head of Investor Relations and Corporate Development, Benchmark Electronics: Arvind?
Arvind Kamal, Vice President of Finance, Benchmark Electronics: Yeah, from that standpoint, Anja, as Paul just mentioned, we finished Q4 at 5.5%. I think the biggest lever for us is really scale. Scale is a big lever, especially if you look at our earnings to revenue ratio. Behind the scenes, we’ve been focused on centralization of some of our SG&A functions. As we add more revenue, right, it’s just gonna flow to that ops margin line. For Q1, we did guide to a little bit below 5%.
You know, as we see the scale, you know, the upturn in the Semi-Cap cycle, and some of the things that we’re gonna be double-clicking on, whether it’s medical or industrial, we’ll talk a little bit about that here in the call. You know, when we factor those things in, you know, and we guide it to mid-single digits, and we have the opportunity to do a little bit better than that’s gonna drive that leverage, and it’s gonna expand the overall non-GAAP operating margin.
Anja Söderström, Equity Analyst, Sidoti: Okay. Thank you. The company has had some leadership transitions in the recent month and quarters, including a new CEO starting recently. Can you walk through that, and what can investors expect as it relates to the ongoing development of the growth strategy at Benchmark?
Paul Mansky, Head of Investor Relations and Corporate Development, Benchmark Electronics: Yeah, I mean, it’s a fair question. I guess it probably starts with David at the CEO role, which we announced that transition last September, that will be effective as of the end of this current month. David’s not new to Benchmark. He’s been here almost 3 years now, serving as our chief commercial officer, which is not just head of sales, but as the name implies, a much more kind of strategic DNA infusion into operations across the board. Previously, he’d spent about 25 years at Flex, running a business that’s bigger than Benchmark.
Definitely not new to this space and we’re very fortunate to have gotten him on board three years ago, and we’re very fortunate to have him as our CEO now as Jeff moves on to retirement. Underneath that, we brought, you know, we had Bryan Schumaker, our CFO. He has been in that role for about two years now. He’s moved over from an industry steeped in the manufacturing as well. The message is, you know, this isn’t a step function change. It’s a continuation of what we have. Some fresh ideas, certainly. It is a, you know, we were fortunate to be able to reload from an existing, very strong bench. Pun intended.
Anja Söderström, Equity Analyst, Sidoti: Okay, thank you. Something that’s been a hot topic for you and a lot of your peers is the Semi-Cap. Lots of discussions in the market around improving demand dynamics in the industry right now. How do you see Benchmark growth opportunities going forward in this market?
Paul Mansky, Head of Investor Relations and Corporate Development, Benchmark Electronics: Yeah, we’ve done clearly lots of interest in semi-cap right now, you know, given the sound bites from the industry followers of the industry and otherwise. We are coming out of what has been a, you know, extended down cycle in semi-cap that frankly I think surprised everyone. You know, normally they’re 12 months or so, give or take. This one extended into greater than 2 years. Number of reasons driving that probably we could spend the rest of the call talking about. We’ve invested throughout that entire timeframe, continued to invest in our customers and our manufacturing capabilities, et cetera. Historically, we’ve tended to grow faster than the WFE market, and so we get a good return, it being our amongst our highest profile margin businesses within the portfolio.
We get a good return off of that investment, and that’s where we are today. We continue to expand in Penang, as was alluded to on our last earnings call with CapEx 2%-2.5% this year, up from our normal 1.5%-2%. Timely, we think very well-timed to what could be a multi-year upswing within CapEx that started with some increased specificity and tenor around conversations last November, and has continued to build since then.
Anja Söderström, Equity Analyst, Sidoti: Okay, thank you. What differentiates Benchmark versus your competitors?
Paul Mansky, Head of Investor Relations and Corporate Development, Benchmark Electronics: Yeah. Within Semi-Cap specifically, I’d have to say that it comes down to our precision machining capabilities, whereby, you know, we have a lion’s share of our Semi-Cap market is tied directly to Precision Technology, which not a lot of people have. It’s an area that we’ve been investing in very aggressively over the last several years. Now, also within that, given that Precision Technology focus, we tend to be more on the front end of the manufacturing food chain. WFE front end sitting in chamber, which is a very sticky place to be.
We’re thankful to our OEM customers for the opportunity to serve them in that market. I think more broadly, you know, any of our OEM customers can pick up the phone and talk to anybody at the highest level of this organization at any given time. You could probably say that about every one of our sectors, which I think also differentiates us from a lot of our other competitors. We have a maniacal customer focus here at Benchmark, which has served us well, and we’re gonna maintain and build upon that going forward. I think that’ll serve us well in the future as well.
Anja Söderström, Equity Analyst, Sidoti: Okay, thank you. Can you walk us through some of the puts and takes impacting your other various sectors?
Paul Mansky, Head of Investor Relations and Corporate Development, Benchmark Electronics: Arvind, why don’t you tackle that? Why don’t you tackle those?
Arvind Kamal, Vice President of Finance, Benchmark Electronics: Yeah, thanks, Paul. Let me kind of double-click on industrial, medical, and A&D. You know, let me start with industrial. Industrials, I would say, Anja, it’s been a kind of steady eddy for us, you know, predictable in terms of outcome. Industrials with one thing, one dynamic I want to kind of highlight is it’s we have a huge serviceable TAM within industrials. We deal with large companies. You know, if you think of large companies, it’s Honeywell, ABB.