BENCHMARK ELECTRONICS (BHE)·Q4 2025 Earnings Summary

Benchmark Electronics Beats Q4 on Margins as AI Ramps, Stock Jumps 4%

February 3, 2026 · by Fintool AI Agent

Benchmark Electronics (NYSE: BHE) delivered a strong Q4 2025, beating both revenue and EPS estimates while achieving its highest operating margin in multiple years. The electronics manufacturing services (EMS) company posted revenue of $704 million (+1.1% vs. consensus) and Non-GAAP EPS of $0.71 (+10.9% vs. consensus), driven by double-digit growth in Medical and Advanced Computing & Communications (AC&C) segments.

The stock jumped 4% to $56.02, hitting a new 52-week high as investors responded positively to margin expansion and management's confidence in 2026 growth driven by enterprise AI program ramps and an earlier-than-expected Semi-Cap recovery. This was also outgoing CEO Jeff Benck's final earnings call before transitioning leadership to President David Moezidis at the end of Q1.

Did Benchmark Electronics Beat Earnings?

Yes — BHE beat on both revenue and EPS.

The operating margin of 5.5% was described as a "multi-year high" by management, reflecting operational efficiency gains implemented throughout 2025.

Beat/Miss History: Benchmark has now beaten EPS estimates for 9 consecutive quarters, demonstrating consistent execution and arguably conservative guidance practices.

What Changed From Last Quarter?

Several meaningful improvements from Q3 2025:

1. Operating Margin Expansion (+70 bps): Q4's 5.5% non-GAAP operating margin vs. 4.8% in Q3 reflects leverage from higher volumes and efficiency initiatives.

2. Revenue Growth Acceleration: Q4 revenue of $704M was up 3.4% Q/Q, marking the strongest sequential growth of 2025 and returning to year-over-year growth for the second consecutive quarter.

3. Working Capital Improvement: Cash conversion cycle hit a multi-year record low of 67 days (vs. 77 days in Q3), with inventory days declining from 75 to 69.

4. Free Cash Flow Generation: Generated $48M of free cash flow in Q4 and $85M for the full year, despite increased capital investments.

What Drove Sector Performance?

Q4 2025 showed divergent performance across sectors, with Medical and AC&C leading growth while Semi-Cap and Industrial declined sequentially:

Key takeaways by sector:

• AC&C (+22% Q/Q): The standout performer, driven by ramp of enterprise AI program wins announced earlier in 2025. Management expects sector momentum to continue into 1H 2026.

• Medical (+14% Q/Q): Demand has "steadily improved through 2H:25 driven by end-market strength and new program ramps." MedTech bookings support longer-term revenue growth.

• Semi-Cap (-8% Q/Q): Sequential decline but management expressed "increased confidence in WFE market improvement in 2026" and expects improved Y/Y performance throughout the year.

What Did Management Guide?

Q1 2026 Guidance:

The guidance implies typical Q1 seasonality with sequential revenue decline of 1-7%. Operating margin is expected to compress 60-80 bps Q/Q, though management noted potential leverage from operating efficiencies as revenue grows through the year.

Full Year 2026 Outlook: Management remains "confident in mid-single-digit growth guidance" with potential for upside as visibility improves. Key drivers:

• Strong 2025 bookings across the enterprise
• Semi-Cap recovery pulling forward to early 2026 vs. prior expectations of back-half inflection
• Continued AI program ramps in AC&C through first half
• Medical expected to deliver double-digit growth for full year
• Industrial positioned for growth later in 2026
• A&D moderating due to defense program timing, but space bookings support 2027 reacceleration

CapEx: Expected to be 2-2.5% of revenue (vs. typical 1.5-2%) to support new program wins and the fourth Penang precision technology building (completion end of Q2, operational Q3).

How Did the Stock React?

BHE shares jumped 4.0% to $56.02 following the earnings release, reaching a new 52-week high:

The stock has nearly doubled from its 52-week low, reflecting improved execution, margin expansion, and growing exposure to AI-driven computing demand.

Capital Allocation Highlights

Management maintained disciplined capital allocation in Q4:

Key capital allocation points:

• Reduced revolving debt by $70M Y/Y
• Share repurchases offset annual dilution
• Increasing capital investment to support new wins, including global precision technology and cleanroom investments for Semi-Cap recovery and US-based liquid cooling infrastructure for AI opportunities

Q&A Highlights

Key themes from the analyst Q&A session:

On Semi-Cap Recovery Timing:

"It took about 60 days for the verbal conversations to become something more meaningful, and now we're sharing that with you, that it's becoming more meaningful... The orders that are being pulled in, we're gonna be working closely with our customers to accelerate those outputs." — David Moezidis, President

Management noted they can respond to Semi-Cap order pull-ins within 1-3 months and have been doing capacity planning with customers since late summer 2024.

On Industrial TAM Opportunity: Industrial represents "one of the greatest opportunities for future upside for the company in terms of addressable market," with participation across HVAC, transportation, agriculture, construction, and building management — spanning mid-cap to large-cap Western European and North American customers.

On Space Applications: Bookings momentum in space applications is expected to "contribute nicely to our A&D sector" with ramps showing results in 2027. Management is "really, really bullish on the possibilities of space."

On Medical Program Wins: Winning in two categories: medical devices and life sciences. Double-digit growth expected for both Q1 and full year 2026, with 2025 bookings positioning for continued momentum into 2027.

On AC&C Visibility: First half looks strong with good visibility as customer AI wins translate to orders. Second half could fill in but management is "not in a position right now to start signaling that" given the project-based nature of these opportunities.

On Gross Margin Drivers: Q4 margin expansion to 10.6% was driven by leverage across plants rather than specific mix factors. Management cautioned that AC&C growth (lower margin sector) could weigh on blended margins as it grows.

CEO Transition

This was CEO Jeff Benck's final earnings call before transitioning out at the end of Q1 2026. David Moezidis (current President) will assume the CEO role.

"As I transition out of the CEO role at the end of this quarter, this will be my last earnings call with all of you. I just wanted to take a moment to express how incredibly proud I am of what we've achieved together over my seven years leading Benchmark... At the end of the quarter, I'll be passing the reins to David, whose capable leadership gives me great confidence that Benchmark's momentum will not only continue but accelerate." — Jeff Benck, CEO

Key Risks and Concerns

1. Tariff Uncertainty: Management flagged "tariffs and retaliatory countermeasures" as a risk factor in their forward-looking statements.

2. Defense Timing: "Program timing may moderate defense growth near-term after years of double-digit performance."

3. Semi-Cap Recovery Timing: While management is confident in 2026 improvement, WFE market recovery timing remains uncertain.

4. Customer Concentration: As with most EMS companies, significant revenue comes from a limited number of large customers.

Immaterial Error Correction

During Q4 2025, management identified immaterial errors related to income tax calculations. Prior year amounts were adjusted to correct errors that had:

• Understated income tax expense by $2.2M
• Overstated deferred tax assets by $7.2M
• Overstated shareholder's equity by $8.7M

Summary: What Matters for Investors

The Good:

• EPS beat of 10.9% driven by margin expansion, not just revenue
• Operating margin at multi-year high of 5.5%
• 9 consecutive quarters of beating estimates
• AI program ramps driving AC&C growth
• Working capital improvement with cash cycle at record low
• Increased confidence in 2026 revenue growth

The Concerns:

• Q1 guidance implies typical seasonal decline
• Semi-Cap and Industrial still soft near-term
• Defense growth may moderate after strong 2025
• Tariff and geopolitical risks

The Bottom Line: Benchmark delivered a clean beat-and-meet quarter with strong execution on margins and working capital. The AI-driven AC&C ramp and Medical strength offset Semi-Cap and Industrial softness. Management is confident in mid-single-digit revenue growth for 2026, with potential upside as Semi-Cap recovery appears to be pulling forward. CEO Jeff Benck transitions out at end of Q1, passing the reins to David Moezidis. With the stock at 52-week highs, investors will be watching for continued evidence of 2026 growth acceleration and sustainable margin improvement.

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Data sourced from Benchmark Electronics Q4 2025 earnings presentation, earnings call transcript, and S&P Global.