Benchmark Electronics (BHE) 2026 年第 3 季法說會：營收創新高與調升展望

重點摘要

• Benchmark Electronics 公布 2026 年第三季營收創下歷史新高，達 8.11 億美元，年增 19%，超越管理層先前財測的高標。
• Non-GAAP 稀釋後每股盈餘 (EPS) 年增 35% 至 0.84 美元；同時 Non-GAAP 營益率擴增 70 個基點至 5.5%。
• 各業務領域普遍成長：半導體資本設備營收年增 30%、AC&C 成長 50%、工業領域成長 13%，醫療領域則年增 9%。
• 管理層上調第四季與全年展望。目前預期 2026 年營收將突破 30 億美元，相當於約 16% 的年成長率。
• 第四季營收預計為 8.15 億至 8.55 億美元，Non-GAAP 稀釋後 EPS 為 0.85 至 0.91 美元。
• 管理層預計半導體資本設備的成長動能將延續至 2027 年，同時近期贏得的新專案預期將帶動航太與國防業務在明年恢復成長。

核心財務業績

業務與營運表現

半導體資本設備是主要的成長驅動力。在終端市場需求與新專案簽約的支撐下，營收 年增 30%、季增 8%。管理層表示，與客戶的溝通顯示需求可見度已延伸至 2029 年與 2030 年，不過此觀點反映的是客戶預測而非公司的確切財測。Benchmark 預計該部門第四季的年成長率將進一步加速，並延續至 2027 年。

受惠於主要在地端 (on-premise) 產品量產推進，AC&C 營收 年增 50%、季增 4%。Benchmark 擴大了製造版圖以滿足加速的客戶需求，並預期第四季營收將顯著季增。該展望未包含次世代高效能運算 (HPC) 機會的貢獻，管理層目前認為這些機會更有可能在 2027 年中至晚期 開始發揮效益。

工業領域營收 年增 13%、季增 7%。此成長主要反映了先前取得的專案進入量產階段，包含先前討論過的產線轉移 (lift-and-shift) 專案。管理層預計第四季將實現類似的年成長率，全年成長率則落在個位數中高段。

在專案量產的推動下，醫療領域營收 年增 9%、季增 3%。管理層預計全年將實現雙位數成長，並特別強調贏得了一家新醫療器材客戶的重大訂單，這是 Benchmark 在第三季取得的最大單筆新業務訂單。由於醫療專案需要時間來擴產，管理層預期該新訂單將在延伸至 2028 年及未來的更長時間內帶來貢獻。

航太與國防營收 年減 1%，但 季增 15%。管理層將 2026 年的停滯歸因於前兩年均實現約 20% 的年成長後，專案進度的時間排程影響。第二季創紀錄的新增訂單與第三季的新獲訂單，預計將支持 2027 年恢復成長，特別是在國防與太空領域。

Benchmark 表示，公司擁有足夠的產能來支持到 2027 年的成長。其 PT4 廠區已於 2026 年 7 月上線營運，正支援半導體需求。預計泰國新廠建案將於 2027 年底完工。

管理層財務預測

針對 2026 全年，管理層預期營收將 超過 30 億美元，相當於約 16% 的年成長率。資本支出預計仍占 營收的 2% 至 2.5%。

管理層亦重申其 2026 年獲利成長速度為 營收成長率 1.5 至 2 倍 的目標。基於第三季業績與第四季財測中點，公司表示仍有信心達成該目標。

風險與關注領域

• 供應鏈限制依然存在。管理層指出，挑戰始於記憶體，並已擴散至其他品類，尤其是 ASIC 相關的供應。
• Benchmark 正選擇性地與客戶共同投資庫存，以支援需求與專案量產。這可能會增加營運資金需求，儘管公司的長期目標是將庫存週轉率維持在 5 至 5.5 次。
• 次世代 HPC 商業化時程延後，貢獻預期從原先的明年初延至 2027 年中至晚期。
• AC&C 的成長與其他產品組合變動，可能會抵銷部分來自半導體資本設備出貨量增加與營運效率提升所帶來的利潤優勢。
• 航太與國防業務的成長，仍取決於近期獲得的多年期專案開展進度與時程。

分析師問答亮點

管理層將對 2027 年成長的信心歸因於客戶預測、持續的溝通，以及來自 2025 年與 2026 年所獲訂單的專案量產推動。公司表示，全球已有 11 個據點 正在推進量產。

在產能方面，管理層表示目前的製造版圖應能支持到 2027 年的需求。2026 年 7 月啟用的 PT4 廠區增強了 Benchmark 服務半導體資本設備客戶的能力，同時公司繼續評估其全球網路的產能。

關於毛利率，管理層預期隨著新設施與專案擴大規模，毛利效率將進一步提升。較變動的薪酬費用也可能在 2027 年帶來好處，儘管產品組合變化可能會抵銷部分收益。

管理層表示，半導體資本設備的成長反映了整體市場復甦以及市占率提升。在自 2023 年開始的產業放緩期內，Benchmark 仍持續獲得專案，包括來自現有客戶的增量以及新客戶的加入。

完整財報電話會議記錄

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完整財報電話會議逐字稿

管理層陳述

Operator

Hello, everyone. Thank you for joining us, and welcome to the Benchmark Electronics Q3 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. [Operator Instructions] I will now hand the conference over to Paul Mansky, Benchmark Investor Relations.

Paul Mansky

Thank you, Percy, and thank you, everyone, for joining us today for Benchmark's Third Quarter 2026 Earnings Call. With us today are David Moisodis, our President and CEO; and Bryan Schumaker, our CFO.

After the market closed, we issued an earnings release pertaining to our financial performance for the quarter along with the presentation, which we will reference on this call. Both are available under the Investor Relations section of our website.

This call will be webcast live with a replay available approximately hour after we conclude -- the company has provided a reconciliation of our GAAP to non-GAAP measures in the earnings release as well as in the appendix to the presentation.

Please take a moment to review forward-looking statements disclosure on Slide of the presentation. During our call, we will discuss forward-looking information. As a reminder, any of today's remarks, which are not statements of historical fact are forward-looking statements, which involve risks and uncertainties as described in our press releases and SEC filings.

Actual results may differ materially from these statements. Benchmark undertakes no obligation to update any forward-looking statements. For today's call, David will start with highlights from the quarter, followed by Bryan who will provide more detail on our results and our guidance, will then return to David for his perspective on sector trends and closing remarks before opening for Q&A. I'll now refer you to Slide as we turn the call over to our CEO, David Moezidis. David?

David Moezidis

Thank you, Paul. Good afternoon, and thank you for joining us today. I'm pleased to report another strong quarter for Benchmark.

Demand continued to improve across much of our portfolio. Our teams executed well and we delivered record revenue alongside earth that significantly outpaced sales.

Let me quickly recap the quarter. Revenue and EPS both came in above the high end of prior guidance. Revenue of $811 million was a record for Benchmark and increased 19% year-over-year. EPS of $0.84, increased 35%, nearly twice the rate of revenue growth.

Our operating margin improved 70 basis points from the prior year, demonstrating the leverage potential in our model. We also maintained discipline around working capital in support of growth, resulting in a 30% year-over-year improvement in cash cycle days.

Looking ahead, demand continues to improve across most of our markets, supported by healthy bookings activity and strong engagement from our customers.

Given the acceleration we expect to maintain throughout the back half, this gives us the confidence to raise our outlook for the fourth quarter and the full year as we now expect 2026 revenue to exceed to $3 billion.

Let me share a few additional highlights from the quarter shown on Slide Over the last several years, we have transformed our go-to-market approach to engage more effectively with both existing and prospective customers. We are now seeing that translate into growth across a broader portion of the portfolio.

Semi cap and ACMC again delivered significant growth while medical remains on pace to deliver double-digit growth for the year. Industrial has also begun to turn the corner, and it is encouraging to see that progress reflected in the results.

Meanwhile, A&D is performing as expected in the 2026 with recent bookings and program wins positioning the sector to return to growth in 2027. We continue to see healthy bookings momentum across the portfolio.

In Q2, A&D led our bookings performance. In Q3, the strongest contributions came from medical, industrial and semi cap. That is the advantage of a balanced portfolio, different sectors will lead at different times.

But the common thread is we are winning business and converting those wins into growth. Our commitment to customer success is equally evident in our operations.

A recent example involved a key AI infrastructure customer that needed additional capacity on a compressed time line. Our teams moved quickly to expand our manufacturing footprint, support the customers' requirements and successfully execute the ramp.

This is the type of responsiveness and execution that strengthens customer relationships and creates additional opportunities for Benchmark. Financial discipline remains just as important.

Last quarter, we said we intended to grow earnings at 1.5 to 2x the rate of revenue growth in 2026. Based on our Q3 performance and the midpoint of our Q4 guidance, we are well positioned to deliver on that commitment. We are also managing this acceleration in growth while strengthening the balance sheet and generating free cash flow.

At the same time, we will continue investing where we see attractive opportunities. That includes investments in capacity and capabilities, such as PTI and Penang, which is ramping well and our planned building in Thailand, which is expected to be completed in late 2027.

As additional opportunities emerge, whether organic or otherwise, we will continue to invest with discipline and a clear focus on returns. With that, I'll turn the call over to Brian to walk through the financial details for the quarter. Brian?

Bryan Schumaker

Thank you, David, and good afternoon, everyone. Please turn to Slide 6. Revenue for the quarter was $811 million, up 19% year-over-year, and non-GAAP EPS was $0.84, up 35% year-over-year.

Both exceeded the high end of guidance from our last earnings call. As a reminder, our non-GAAP results exclude certain items as detailed in Appendix 1 of this presentation.

For the third quarter, non-GAAP gross margin was 10.5%, improving 40 basis points year-over-year and in line with the prior quarter.

Non-GAAP operating margin was 5.5%, improving 70 basis points year-over-year and 30 basis points sequentially. The improvement reflected favorable mix, higher revenue and expense efficiencies partially offset by higher variable compensation.

Our third quarter non-GAAP effective tax rate was 24.9%. Please turn to Slide 7 for revenue performance by sector.

Semi cap revenue grew 30% year-over-year and 8% sequentially, attributed to strong end market demand and new program wins. Industrial revenue increased 13% year-over-year, primarily due to new program awards from key existing customers.

Sequentially, Industrial revenue grew 7%. We are particularly pleased with that result given the onetime revenue benefit in Q2 that we discussed on our prior earnings call.

Meanwhile, medical revenue grew 9% year-over-year and 3% sequentially, primarily due to program ramps. Within AC&C, revenue grew considerably, up 50% over the prior year and 4% versus the June quarter.

Finally, although A&D was down 1% year-over-year, sequential performance was strong at 15% growth. Please turn to Slide 8 for our trended non-GAAP financials.

In Q3, we delivered year-over-year and sequential improvement in revenue, profitability and earnings, reflecting disciplined execution and favorable mix.

Please refer to Slides 9 and 10 for an update on our balance sheet, cash flow and working capital performance. We continue to improve on our already strong balance sheet and giving us the flexibility to invest in growth at an attractive cost of capital.

We will continue to maintain a disciplined approach to our capital allocation decisions. We ended the quarter with $291 million of cash and $133 million net of debt.

During Q3, we added a $45 million revolver in Malaysia as part of our global cash management initiative, bringing our total available borrowing capacity to $576 million.

In the third quarter, we generated $30 million in operating cash flow and $14 million in free cash flow while continuing to invest strategically in inventory, capacity and capabilities to support future growth.

During the quarter, we returned $14 million to investors through dividend and share repurchases. Capital expenditures were approximately $15 million in Q3, primarily supporting growth initiatives across the business.

For the full year, we continue to expect capital spending to be in the range of 2% to 2.5% of revenue. Turning to working capital. Our cash conversion cycle improved to 54 days, 23 days better year-over-year and 5 days better sequentially.

Our team continued to actively manage the full range of working capital levers. Although individual components can move quarter-to-quarter, disciplined execution across the portfolio drove this improvement.

Please turn to Slide 11 for our fourth quarter guidance. For the fourth quarter of 2026, we are guiding revenue to a range of $815 million to $855 million. This represents 19% year-over-year growth at the midpoint.

For the full year, we expect 16% annual growth, now exceeding $3 billion. We forecast non-GAAP diluted earnings per share in the range of $0.85 to $0.91. We anticipate non-GAAP gross margin of 10.5% to 10.7%, and non-GAAP operating margin of 5.5% to 5.7%.

GAAP expenses are projected to include approximately $7.8 million of stock-based compensation and $2.7 million to $3.2 million of nonoperating expenses, including amortization, restructuring and other charges.

Interest and other expenses are assumed to be approximately $3.8 million. We are starting to see progress on our initiatives to structurally lower our tax rate. For the fourth quarter, we anticipate an effective tax rate in the range of 25% to 26%.

Finally, for the quarter, we project weighted average diluted shares outstanding of approximately 36.4 million. With that, I would like to turn the call back over to David for our outlook by market sector and closing remarks. David?

David Moezidis

Thank you, Brian. Turning to Slide 12. Let me provide some color on the perspective of outlook by sector.

Similar to last quarter, we saw semi-cap demand improved throughout the quarter as the industry continued investing in additional capacity. At this time last year, I had just returned from SEMICON West and shared that we were seeing more tangible support for an industry upturn in 2026, that view has clearly played out across the market and within our business.

Following this year's event, the message has shifted from recovery to durability. Industry participants are now discussing demand visibility extending into 2029 and 2030.

We are seeing that strengthen our customer forecast and have plans underway to grow with our customers. We expect semi cap revenue to accelerate further year-over-year in the fourth quarter, followed by continued growth in 2027.

Industrial delivered another strong quarter, growing 13% year-over-year. We expect that pace to continue in Q4, positioning the sector to deliver mid- to high single-digit growth for the full year compared with our initial expectations for relatively flat performance.

We have remained confident in our industrial strategy and that our sector performance would improve as awards move into production. We are pleased to see this starting to reflect in the results. The demand environment across our industrial end markets appears healthy.

However, the primary driver of our improved outlook is the conversion of prior bookings into revenue, including several lift-and-shift programs we had previously discussed.

With the strong bookings performance we delivered in Q3 and expect to do so in Q4, we like how the Industrial business is positioned today.

In aerospace and defense, I continue to be pleased with the pace and quality of our new wins. A&D bookings reached a company record in the second quarter, followed by another solid performance in Q3. Demand remains robust, particularly within the defense and space subsectors.

We have said throughout the year the approximate 20% annual growth delivered by A&D over the past 2 years with pause in 2026, primarily because of program timing, that continues to be the case. However, as recently awarded programs begin to ramp and given the multiyear nature of these markets, we expect A&D to return to growth in 2027.

Medical continues to perform well. We have executed effectively against new program ramps over the past several quarters and remain on pace to deliver double-digit growth for the year.

That would represent an acceleration from high single-digit growth in 2025. Medical was also one of our strongest bookings contributors in the quarter. That performance included a significant program with a new medical device customer, representing the largest individual piece of new business awarded to Benchmark during Q3.

This is another example of the breadth of new business we are winning across the portfolio and the opportunity we have to build on our medical momentum over time.

Finally, AC &C delivered another outstanding quarter with an impressive 50% year-over-year growth, driven by a major ramp that began earlier this year. This was aided by the manufacturing footprint expansion discussed earlier, which positions us to support a material sequential increase in AC&C revenue in the current quarter.

Our current outlook assumes no contribution from next-generation HPC opportunities, which today appear more likely to begin contributing mid- to late 2027.

Turning to Slide 13. I would like to leave you with a few closing thoughts. As I step back and look at where we are today, what stands out is the accelerating depth and breadth of our customer wins versus just a couple of years ago.

Demand is strengthening, bookings remain healthy, and our teams continue to execute well. That is increasing our confidence in the balance of 2026 and positioning benchmark for continued growth in 2027 as we execute on our many program ramps around the world.

We are also maintaining the operating discipline that has allowed earnings to grow faster than revenue while continuing to generate cash and strengthen the balance sheet. We will continue investing in capabilities where we see attractive returns.

We will also support customers in other ways, including targeted inventory investments when necessary to help meet demand and execute program ramps. Our objective is straightforward. Help our customers succeed, grow profitably and create long-term value for our shareholders. Based on what we are seeing across the business today, I believe Benchmark is well positioned to continue doing exactly that. Before we open up the call for questions, I would like to thank our customers for their trust, our shareholders for their support and our employees around the world for their dedication and execution.

Our performance reflects their efforts, and I appreciate everything they have done to position Benchmark for continued success. Operator, we can now open the call for questions.

Operator

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of David Williams with Needham. David.

分析師問答

David Williams

Good evening, everyone, and thanks for -- and first, let me just offer my congratulations on the strong results here. Clearly, you're seeing a tremendous amount of demand coming through.

And if we kind of think about stability into 2027, and you talked about this a bit in your script. But can you help us kind of work through how you get confident with that growth outside of maybe just your customer forecast? Is it the demand environment? Is it just firming of those customer forecast? Or are there other things maybe that are giving you that increased confidence?

Bryan Schumaker

Yes. It's a good question, David. And I think there is a few elements that kind of leads to that. One, naturally, is the customer forecast. It gives us certain visibility out into 2027 naturally.

The other aspect of it that gives us confidence is we've got a number of ramps that are in progress right now as a result of the bookings that we had not only early in 2026, but the bookings that we had in 2025 as well given ramps take some time to materialize.

The third part of it is that we're having customer conversations quite often and really trying to understand what our customer needs are and what their views are.

And as a result of that, we're leaning in and saying, we're going to continue this momentum, and we see no reason why this momentum doesn't continue for us.

David Williams

Good. I just want to ask maybe about your capacity. And obviously, you have an and Thailand is coming up next year. But if you think about this demand acceleration, do you feel comfortable with your current footprint and your ability to meet this demand? Or do you see constraints may be coming in from a capacity standpoint as this builds?

Bryan Schumaker

No, it's a great question. We feel comfortable we're constantly looking at capacity, not just Penang in Thailand, but we're looking at capacity all around the world.

And we feel comfortable that we've got capacity to take us through 2027. And one of the things that we had done, David, as you may recall, we invested in PT4 and that decision was made in December of 2024, and that factory came online in this past summer.

It was in July, actually, July 2026. And just that in itself has positioned us really, really well, particularly for the semiconductor growth that we're seeing.

David Williams

Okay. Great. And 1 more, if you don't mind me squeezing in. But -- the leverage is clearly coming through the business and getting a lot of benefits. As we kind of move forward here, how much leverage do you think is still left in the business just from kind of the volume, the volume aspect of that? And where are the pieces of execution do you think that are left that can drive that margin incrementally better as you move through '27?

David Moezidis

Yes. So if you look at the top line, the gross margin piece of it, part of it are the major ramps that we have going across the globe, some of that piece of it that are impacting us that we will continue to drive efficiencies as we move out, building the capacity that we have.

From an operating standpoint, I mean, we feel good about where we're at. We talked about the variable comp headwind this year. and we'll have some benefit from that next year, just thinking through that line item. So -- and we got other initiatives going on that will continue to improve that. So we feel good about our leverage and continuing into next year with that $1.5 billion to $2 billion revenue percentage flowing through to the bottom line.

So just putting that in perspective, that's still what we're targeting.

David Williams

Okay. Fantastic.

Bryan Schumaker

Yes. Thanks, David. David, glad to see you on board with coverage.

Operator

The next question comes from the line of Steven Fox with Fox Advisors.

Steven Fox

A couple of questions from me. I guess, first of all, David, you talked about the durability of semi-cap demand into '29, '30 based on what you're hearing.

But what about just ruling it into next year. Do you expect to see more momentum off of the numbers you're posting now? Any changes in mix, pricing, et cetera, that you talked about with semi cap? And then I had a follow-up.

David Moezidis

Stephen, we do -- we see the momentum continuing into 2027. Naturally, some of that momentum is going to be tied to ramps that we've got going on as well.

Even in the semi space, there's ongoing ramps filling in PTI. But that said, we feel really positive about semi.

Steven Fox

And in terms of, I guess, the margins you're looking at continuing to improve sequentially -- as we think about next year, any thoughts on continuing to get operating leverage? I guess from 2 perspectives: one, because you're adding capacity now.

Is there a way to talk about how much sort of margin is being held back by those capacity additions? And then secondly, how maybe your mix could help you next year. So without diving into the numbers, maybe directionally some of the factors that help as you get into the new year.

Bryan Schumaker

Yes, you're right. I mean we do expect continued margin efficiency at the gross margin line into next year as we continue to ramp up the PGI and some of those other ramps. As far as directionally, I mean I can't give you a fixed number, but we do see that flowing through on that line item so and the other contrary to that is, as you see on the AC &C and some of the benefit there.

So with semi-cap going, you've also had some mix items there that can also kind of counterbalance that. So just putting it in perspective, we'll give more guidance in the future on this into the next Q4 call as far as '27 goes, but you do have some of those working against us, too, as you think about margin across the whole portfolio and the growth that we're seeing.

Steven Fox

Okay. And then just off of that, I'm not quite sure I understand followed everything on ACC. So you're talking about a footprint expansion that's going to lead to growth in AC&C, but can you -- I guess, what kind of products are you talking about? Like what's the timing of that look like to start factoring that into our thinking.

David Moezidis

Yes. You're actually seeing some of those benefits already, Stephen. And the products that we're speaking to are the on-prem products that we've discussed in prior calls.

So we're seeing that ramp accelerate and accelerate it so fast that we actually expanded our capacity to meet the customers' demands and we've done that successfully, quite honestly, and we see it continuing -- we see that momentum continuing into '27, as well as core Q4, as I mentioned on the call.

Operator

Your next question comes from the line of Max Millis with Lake Street Capital Markets.

Maxwell Michaelis

Probably just a quick clarification. Last quarter in the presentation, you guys noted late Q4, early 2027, early production this presentation, you're talking about ramping mid to late 2027 and then some of the other comments you've made about ACC. Are these all the same projects you've been talking about? Or is there another opportunity here that was layered in? Just help me clarify that at the talk.

Bryan Schumaker

Yes. Max, the HBC will layer on top of what we're doing and what we've been saying and as I mentioned last quarter as well, we're staying really close to that, and it's a timing thing with our end customer.

And the latest updates that we have is it shifted a bit further out, just to touch and so we thought that we'd provide an update on that given the updates that we have. But at the end of the day, that HVC goes on top of everything else we're already doing.

So we're very encouraged by the fact that it's going to start picking up mid- to late '27. But we'll keep you posted on that.

Maxwell Michaelis

No. And you guys didn't mention anything, I don't think about supply chain issues in the call today. I mean is there anything that your customers have been relating to you guys that you could foresee kind of going into 2027 that you're thinking about?

Bryan Schumaker

Yes. So supply chain issues are there. There's no denying that, right? I've been talking about it for 3 quarters. It started with the memory and then it's now somewhat spilled into some other categories, but mostly the ASIC side of the supplies where we're seeing some of the challenges.

Now that said, we're working very, very closely, Max, with our suppliers as well as our customers to work through the issues. And one of the comments I made in the script was we're making selective investments ahead with our customers with these are customer conversations and joint decisions, so we can position the inventory properly for their business needs.

Maxwell Michaelis

Perfect. Last 1 for me. You talked about semi durability out to 2029. That seems, I mean in terms of visibility, it seems far out. I mean is this a lot -- the market right now in terms of semi, let's call it, is it a lot different than you've seen it historically, just the way customers are behaving in terms of forecast. I mean kind of help me out here.

Bryan Schumaker

Look, I -- as I mentioned, I'm reflecting the optimism and inputs directly from our customers, right? And they speak very openly and publicly on it. There's interviews out there, obviously, in and some of their outlooks that they've provided, they're taking longer orders than perhaps in the past.

So that is different but that's also a positive because it gives them a longer view and that longer view allows them to work closely with us, so we can position the supply chain to meet their needs.

So fundamentally, I strongly believe it's a plus. The durability comes straight from our customer base, words like big and sustaining comes from our customer base. So we listen very closely. I'm very active with the senior executives at all of our customers and what I'm relaying is exactly the dialogues that I've had.

Maxwell Michaelis

Perfect. All right, guys. That's it for me.

Bryan Schumaker

Thanks. Thanks, Max.

Operator

Your next question comes from the line of Anja Soderstrom with Sidoti.

Anja Soderstrom

Last quarter, Mostanad been directed already. But just in medical, what are you seeing there? And actually we think about the sustained demand there?

Bryan Schumaker

Yes. So -- we're actually really positive on medical. And as you may recall, it was summer of 2025 when I got on the call and I said I think the bottom is in for medical, and it certainly has been and it's been climbing sense.

The first part of that climb has been attributed to wins as well as the base customer demand starting to pick up.

So that's been really, really beneficial to the performance that we've seen in medical.

Now as we look forward, we continue to remain positive on medical, and we still have some ramps that are in the process. And as those ramps materialize, we think medical could potentially continue beyond '27 and into '28.

The other thing that was very positive I shared is we won a pretty significant piece of business with a medical device customer. And it's going to take time to ramp. However, once it ramps, I think it will again put us in a really, really good position for Medical, again, looking '28 and beyond for that ramp to materialize as medical takes time.

Anja Soderstrom

Okay. That was helpful. And then how should I think about cash flow and capital allocation priorities?

David Moezidis

Yes. So I mean, as you noted, we noticed we did buy back some more shares this last quarter. We continue to do that with the dividend. We feel great about our cash position right now and where we sit with the free cash flow of $113 million over the last 12 months, and we expect it in Q4, too.

So we're well positioned with where we're at. And again, the cash conversion cycle and what we were able to do there. The one thing is on the inventory, and we'll continue to focus on the 5 turns. It slipped a little bit this quarter.

But again, as we -- with the ramps and everything going on, we expect some of that, but we're going to, again, long-range target the inventory with turns of 5 to 5.5, so...

Anja Soderstrom

Okay. That was all for me.

Operator

Your next question comes from the line of David Williams with Needham.

David Williams

Let me ask a follow-up. And maybe just on that last question there. On the inventory side, it looks like your inventory is up about 16% sequentially, a little higher than what your growth was if we kind of think about that as being maybe relative to the growth that you're preparing for going forward? Or is there anything within that inventory that we should be thinking about in terms of maybe higher pricing that you just haven't been able to recover from customers yet? or anything else that we need to be considering?

Bryan Schumaker

Yes. David, welcome back. What I would tell you is the inventory is lifting as a result of the ramps and the number of bookings that we've had.

I think we looked around the globe, and we have ramps going on at 11 of our sites around the world.

And obviously, that's going to create some inventory lift. But we're staying really, really disciplined with regards to inventory and making sure that we manage it carefully and we watch our turns carefully, and the correlation is tied directly to the ramps.

David Williams

Okay. And just 1 last quick one. On the semi cap side, is there a way to disaggregate maybe the underlying demand versus where you've won share or where you're benefiting outside of just the cyclical demand environment?

Bryan Schumaker

It's a tough question to answer because we've been winning in semiconductor capital equipment since '23 since it was going through, it's a bit of a slowdown.

And during that time, we were winning programs from our customers and positioning ourselves for when the industry turns. And we're fortunate that the industry started turning around January as we started signaling that we saw a turn coming.

But fundamentally, we have on share across the portfolio from our existing customers that have been with us quite some time, and we also added on some new logos along the way.

David Williams

Thanks much, and best luck in the quarter to, appreciate it.

Bryan Schumaker

Thank you, David. Thank you.

Operator

There are no further questions at this time. I will now turn the call back to Paul Mansky, for closing remarks.

Paul Mansky

Thank you, Percy, and thank you, everyone, for participating in Benchmark's Third Quarter 2026 Earnings Call. Between now and our next call, we have a number of planned events. First up, this coming Monday, we'll be at the NYSE to ring the closing bell ahead of our 30th year listed on the exchange.

The following week, we'll be attending the Baird Industrials Conference in Chicago on the 11th. In December, we'll be attending conferences on both the seventh and the eighth, starting with Raymond James TMT and Consumer Conference in New York, followed the next day on the West Coast with wells at their Annual TMT Conference in L.A. rounding that out on January 1, we'll be back in New York on the 29th at the -- excuse me, back in New York on the 11th for the 29th Annual Meet of Growth Conference.

For updates to these and other conferences and events, please refer to the Events section of our website at ir.bench.com. With that, thank you again for your support, and we look forward to speaking with you soon.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.