Benchmark Electronics Q3 Revenue Rises 19%, FY2026 Sales Seen Above $3 Billion

Benchmark Electronics (NYSE: BHE) reported strong fiscal third-quarter growth and said the midpoint of its fiscal 2026 guidance now implies revenue above $3 billion, which would be a company record. Revenue increased 19% year over year to $811 million, supported by growth in four of its five sectors, while non-GAAP diluted earnings per share rose 35% to $0.84 as margins expanded.

The company said third-quarter revenue and earnings exceeded the high end of its previous guidance ranges. Non-GAAP operating margin increased 70 basis points from a year earlier to 5.5%, and non-GAAP gross margin rose 40 basis points to 10.5%. Benchmark attributed the faster earnings growth to operating leverage and said it remains on track to increase fiscal 2026 EPS at 1.5 to 2 times the rate of revenue growth.

On a GAAP basis, operating income was $30.7 million, representing a 3.8% operating margin. GAAP net income totaled $17.1 million, or $0.47 per diluted share. Non-GAAP net income was $30.7 million.

Growth Broadens Across Sectors

Semiconductor capital equipment was Benchmark’s largest sector in the quarter, generating $241 million of revenue, up 30% year over year. Advanced Computing and Communications posted the fastest growth, with sales climbing 50% to $132 million as on-premises artificial-intelligence infrastructure revenue continued to ramp.

Industrial revenue rose 13% to $172 million, reflecting improved market demand and new program wins, including product transfers. Medical sales increased 9% to $138 million, supported by end-market strength and new program ramps. Aerospace and Defense was the only sector to decline, with revenue slipping 1% to $128 million.

Management said demand is broadening, with Semiconductor Capital Equipment, Advanced Computing and Communications, and Medical remaining strong while Industrial has “turned the corner.” The company also reported continued bookings momentum, driven by new customers and increased business with existing customers.

Benchmark expects Semiconductor Capital Equipment to show continued year-over-year acceleration in the fourth quarter. Advanced Computing and Communications is expected to deliver strong sequential and year-over-year growth as AI infrastructure revenue ramps, while next-generation high-performance computing opportunities are expected to begin contributing in mid-to-late 2027.

The company expects Medical revenue to grow at a double-digit rate in 2026 and said a sizable program with a new customer is scheduled to ramp in the second half of 2027. In Aerospace and Defense, new program ramps are expected to return the sector to growth in 2027.

Cash Generation and Capacity Investment

Benchmark generated $30 million of operating cash flow and $14 million of free cash flow during the quarter while continuing to invest in additional capacity. Its cash conversion cycle improved to 54 days from 77 days a year earlier, helped by lower receivable days and longer payable days, partly offset by higher inventory days.

The company ended the quarter with $291 million of cash, net cash of $133 million and $576 million of available capacity under its revolving credit facilities. Benchmark returned $14 million to investors during the quarter, including $8 million through share repurchases.

Capacity investments include the ramp of the Penang PT 4 facility and an expansion in Thailand expected to be completed in late 2027. Benchmark is also investing in advanced manufacturing capabilities, technology, talent and processes to support higher-value growth and rising AI-related demand.

Fourth-Quarter Outlook

For the fiscal fourth quarter, Benchmark expects net sales of $815 million to $855 million. Non-GAAP gross margin is projected at 10.5% to 10.7%, with non-GAAP operating margin of 5.5% to 5.7%.

The company forecasts GAAP diluted EPS of $0.58 to $0.64 and non-GAAP diluted EPS of $0.85 to $0.91. The outlook assumes an effective tax rate of 25% to 26% and approximately 36.4 million weighted-average diluted shares.

Benchmark cautioned that its outlook remains subject to customer-demand fluctuations, supply-chain constraints, inflation, foreign-exchange movements, high interest rates and geopolitical uncertainty. Trade restrictions, tariffs and retaliatory measures, factory utilization levels, and potential inventory write-downs could also affect results and the company’s ability to execute its plans.