Benchmark Electronics Small-Cap Virtual Conference

Thank you, Anja. It is always great to be here at the Sidoti Small-Cap Conference. Appreciate the invitation as always. Just wanted to lay out, just as a reminder, today's remarks may include forward-looking statements subject to risks and uncertainties. Actual results may differ materially. Please see our financial releases and SEC filings for additional information. With that housekeeping out of the way, Anja, happy to turn it over to you.

Yeah, absolutely. Benchmark formed as a spin-out of a medical device company over 40 years ago. As a matter of fact, in January this year, we are going to celebrate our 40th year being listed as a NYSE company, very proudly so. Historically, the company grew primarily through M&A, through a diverse M&A strategy. However, in recent years, and when I say recent, I mean probably the last seven or eight years, we have really focused on identifying core sectors that we want to go after, curating those, building up teams to support those, and extracting the opportunities. That is across the food chain. So that is everything from addressing very complex, highly regulated end markets from design through engineering, through manufacturing, across our global network of manufacturing sites and supply chain capabilities.

So what that's resulted in is a business that just a handful of years ago was about 50% exposed to legacy telco and compute, to now really being attractively balanced in our perspective across a subset of markets, including semiconductor, which is roughly about 30% of our mix. Industrial, medical, Advanced Computing & Communications and A&D, all 20-ish, plus or minus. So a very good balance across sectors that we think that we have structural growth drivers, long-term structural growth drivers behind them, and that we can differentiate. That has allowed us to consistently drive gross and operating margin expansion, even during periods of macroeconomic malaise or flattish revenue, et cetera. That brings us to today, whereby, as you recall, maybe for those that participated, last quarter we did a couple of things. We announced that we had record bookings for the quarter, historical record bookings for the quarter.

Second time in a year we made that statement, while at the same time, we raised our revenue outlook for the year for the third time to greater than $3 billion in 2026, which would be a historical record for Benchmark. Meanwhile, we discussed growing our operating income and earnings at a rate of 1.5 to 2 times the rate of revenue growth. So really starting to see some of the power of the sector focus and the execution leverage that we have in the model. With that, I'll pause. Okay, thank you.

Maybe I'll talk about the top-line drivers, and then I'll hand it over to Arvind to talk about the leverage opportunity. As you look at our top line, we really feel well-positioned across the portfolio. Now, each of those markets, and our participation therein, has its unique personality, as you might imagine. As we think about our 2026 in particular, the two that had the biggest impact as it relates to our increased confidence as we progressed through the year, would be semi-capital equipment, which probably doesn't come as a major surprise to many listening. As well as our participation in Advanced Computing & Communications, excuse me, Advanced Computing & Communications. Within that, specifically, some of our exposure to on-premises AI infrastructure.

And as opposed to some of the hyperscaler AI infrastructure spin that is the majority of the narrative in the market, our approach to that market is to support our OEM customers and their efforts to address demand, growing demand for private AI infrastructure, whether that be sovereign governments, three-letter agencies or enterprises, increasingly so, banks, things of that nature. So those are the two, if I rank order, and they are probably neck and neck, are the two biggest drivers behind our increased confidence as the year has progressed. And we think those demand trends continue into 2027.

Yeah, thanks. Arvind? Thanks, Paul.

I would say on the earnings side, as volume increases, we are seeing the benefits of improved utilization, better mix, operational improvements that we have implemented across the company. That is consistent with the model that we have discussed before, where operating income and EPS can grow 1.5-2x the rate of revenue. And just a little bit of a context around some of the implementation of improvements, we have talked about global procurement, we have talked about global business services as we move the central shared services to that model, and then also IT outsourcing. So that is really what is helping some of that expansion. While we have not explicitly guided 2027, we expect this momentum to continue in the upcoming year.

Yeah. I guess the derivative and exposure for us would be our semi capital equipment business, which, as I mentioned before, is approximately 30% of the mix for us. Very clearly there has been, whether it be memory and now increasingly other semiconductor products are increasingly tight supply out there. That has been an ongoing dynamic that we do not see changing, even amidst a change in the rate of change should it occur from a Hyperscaler CapEx incremental increase, right? Fabs that have broken ground or are soon to break ground, concrete being poured, shells going up, those will be equipped to meet existing demand, not new demand to come, to meet existing demand. So we think that gives us some pretty good long-term visibility into the forecast that we are receiving from our very key semi-cap OEM customers.