Benchmark Electronics Inc. (NYSE:BHE) Q3 2020 Earnings Conference Call - Final Transcript

Oct 28, 2020 • 05:00 pm ET

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Benchmark Electronics Inc. (NYSE:BHE) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Jeffrey W. Benck

without an incredible amount of work from our COVID task force and our entire employee population to maintain stringent protocols to ensure we keep our workplace safe and healthy, which remains a top priority.

Our cash conversion cycle for the quarter improved to 81 days from 84 days in Q2. I also want to thank our supply chain team, who's done an incredible job of managing through many global logistical challenges this year to continue production for our operations in support of our customers. All in all, a solid quarter for Benchmark and my continued thanks to the entire team for their hard work and support of our customers. Please turn to slide four. As I've mentioned previously, our go-to-market team continues to deliver exciting opportunities aligned to our complex and focused services and solutions that utilize the full breadth of the One Benchmark capabilities. And we had another strong quarter of bookings in Q3, where we awarded business that should represent over $200 million of future engineering and manufacturing revenue.

In the medical sector, we were awarded a new program for a lab-free rapid COVID-19 testing device from DnaNudge that has begun production in our Netherlands facility. We are excited to partner with DnaNudge to provide DFX support and high reliability manufacturing for what has turned out to be a very swift product ramp. We also had design and manufacturing process wins with two other companies for a pulmonary treatment device and an optical diagnostic product for renal applications. In the defense vertical, we were awarded new programs for secure communication radio modules that incorporate our design solutions and manufacturing services for electronics that will be deployed in military aircraft.

In industrials, we were awarded the full system box build for a LiDAR application, and we were awarded manufacturing for a new generation of oscilloscopes. In computing, we were awarded a new prototype for a hyperscale computing customer and a new outsourcing award from an existing customer supporting network control and monitoring electronics. Our new business pipeline continues to be strong across our targeted sectors and subsectors, and we remain very encouraged about the prospect for continued wins, where the outsourcing environment for both engineering and manufacturing projects remains favorable.

Now I'll turn the call over to Roop to discuss the third quarter results. Roop?

Executive
Roop K. Lakkaraju

Thank you, Jeff, and good afternoon. I hope everyone and their families continue to stay safe and healthy. Please turn to slide six for our revenue by market sector. Total Benchmark revenue was $526 million in Q3, a 7% increase on a sequential basis. Medical revenues for the third quarter were flat sequentially as expected from moderating demand for products involved in COVID-19 therapies, such as ventilators, x-rays and ultrasound devices.

New product demand is shifting more towards diagnostic devices, such as DnaNudge's diagnostic box, which we were awarded in Q3. Semi-cap revenues were up 14% in the third quarter and up 45% year-over-year from continued strong demand across our semi-cap customers. A&D revenues