BHE Q1 2026 Earnings Call Summary

Revenue: $677 million, up 7% year-over-year, exceeding the guidance range of $655 million to $695 million.
Earnings Per Share (EPS): Non-GAAP EPS of $0.58, at the higher end of the prior guidance of $0.53 to $0.59.
Gross Margin: Non-GAAP gross margin at 10.3%, a slight improvement year-over-year but down sequentially.
Operating Margin: Non-GAAP operating margin of 4.8%, up 20 basis points year-over-year but down sequentially due to lower revenue and higher variable compensation.
Cash Flow: Generated $47 million in operating cash flow and $29 million in free cash flow.
Net Cash Position: $120 million net cash positive with a cash balance of $325 million.

The company reported strong performance across various sectors, particularly in Medical (24% growth) and AC&C (41% growth).
Semi-Cap showed a return to double-digit sequential growth, indicating improving market conditions.
Continued focus on customer-first initiatives has led to improved execution and program prioritization.
The company is investing in capacity expansion, including the upcoming Penang 4 facility, which is expected to enhance operational efficiency and support future growth.
Recognized as HP Enterprise's 2026 Manufacturing Partner of the Year, reflecting strong customer relationships.

Full-year revenue growth is now expected to be between 9% to 10%, up from previous mid-single-digit expectations.
Q2 2026 revenue guidance is set between $700 million to $740 million, indicating 12% year-over-year growth at the midpoint.
Non-GAAP EPS for Q2 is anticipated to be in the range of $0.65 to $0.71.
Operating margins are expected to improve in the second half of the year as the company leverages operational efficiencies.

There are signs of increasing lead times and supply chain challenges, particularly in the memory space, which could impact production.
The Semi-Cap sector's performance is still recovering, and while growth is expected, it remains contingent on broader market conditions.
The Aerospace and Defense (A&D) sector is expected to moderate in growth due to program timing, although bookings remain strong.

Management confirmed that the strength in Semi-Cap is broad-based across the customer base, not isolated to a few clients.
The Penang 4 facility is expected to contribute higher-margin business, enhancing the overall profitability of the Semi-Cap segment.
There are ongoing discussions about potential impacts from geopolitical tensions, particularly regarding defense program run rates, but management remains optimistic about sustained demand in the sector over the next 12-24 months.
The company is focused on increasing its share of wallet with existing customers while also winning new business, indicating a positive trajectory for future growth.

BHE — Benchmark Electronics, Inc.