Benchmark Electronics, Inc. (NYSE:BHE) Q1 2023 Earnings Conference Call May 3, 2023 5:00 PM ET

Company Participants

Jeff Benck - President & CEO

Roop Lakkaraju - EVP & CFO

Paul Mansky - IR

Conference Call Participants

Jaeson Schmidt - Lake Street Capital Markets

Steven Fox - Fox Advisors

Anja Soderstrom - Sidoti & Co.

Operator

Hello, and welcome to the Benchmark Electronics, Inc. First Quarter 2023 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Paul Mansky with Benchmark Electronics. Please go ahead.

Paul Mansky

Thank you, MJ, and thanks everyone for joining us today for Benchmark's first quarter fiscal year 2023 earnings call. Joining me this afternoon are Jeff Benck, CEO and President; and Roop Lakkaraju, CFO. After the market closed today, we issued an earnings release pertaining to our financial performance for the first quarter of 2023. And we have prepared a presentation that we will reference on this call. The press release and the presentation are available online under the Investor Relations section of our website at bench.com. This call is being webcast live and a replay will be available online following the call. The company has provided a reconciliation of our GAAP to non-GAAP measures in the earnings release as well as the appendix in the presentation.

Please take a moment to review the forward-looking statements advice on Slide 2 in the presentation. During our call, we will discuss forward-looking information. As a reminder, any of today's remarks that 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, and most notably due to the global supply chain constraints, macroeconomic conditions, and semi-cap equipment spending. Benchmark undertakes no obligation to update any forward-looking statements.

For today's call, Jeff will begin by providing a summary of our first quarter results. Roop will then discuss our detailed financial results and our second quarter 2023 guidance. Jeff will then return to provide more insight on sector demand trends, business wins, and closing commentary. If you will, please turn to Slide 3.

I'll turn the call over to our CEO, Jeff Benck.

Jeff Benck

Thank you, Paul. Good afternoon, and thanks to everyone for joining our call today. Our first quarter once again demonstrated our ability to continue to grow our business without compromising our margin objectives, even in a less certain macro environment. Total revenue in the quarter was up 9% year-over-year. Both GAAP and non-GAAP gross margins were 9.2%. GAAP operating margin was 3.3%. On a non-GAAP basis, we delivered operating margin of 3.7%. As a reminder, unlike most of our peers, our non-GAAP operating margin includes stock-based compensation, which in the March quarter, equated to approximately 70 basis points. Our first quarter GAAP earnings were $0.35 per share, and our non-GAAP earnings were $0.42, in line with our prior guidance. Supply chain premiums, which we previously disclosed to be zero-margin pass-through revenue, came in at $18 million in the quarter. This was down nearly 70% year-over-year. Excluding the effect of this low margin revenue, we delivered non-GAAP gross margin of 9.5% and non-GAAP operating margin of 3.8%.