Benchmark Q4 2025 Earnings Reveal Space Bookings Offset Defense Moderation.

Benchmark Electronics (BHE) closed out fiscal year 2025 with strong fourth-quarter results, reporting non-GAAP earnings per share (EPS) of $0.71 on $704 million in revenue.

The results exceeded the company’s guidance range, driven by double-digit growth across three key sectors, including Aerospace & Defense (A&D). While the overall financial performance was strong, management provided a nuanced outlook for the A&D sector, signaling a near-term moderation offset by significant long-term growth opportunities in space.

Aerospace & Defense Sector Analysis

Benchmark’s A&D sector delivered a robust performance in the fourth quarter, posting 7% sequential growth and 17% year-over-year growth.

For the full year 2025, the sector’s revenue growth was well into the double digits at 19%. Management noted that commercial air applications remained stable throughout the period, while the defense subsector continued to be strong.

Looking ahead to 2026, the company expects A&D revenue growth to moderate from its recent double-digit trajectory. This change is primarily attributed to program timing within defense applications, according to Incoming Chief Executive Officer David Moezidis.

Space Applications Drive Future Bookings

Despite the near-term slowdown in defense, the company expressed strong confidence in its long-term aerospace and space market position. Management highlighted multiple quarters of bookings momentum across a broad set of space applications.

These new wins, which include complex programs in the space subsector, are expected to bode well for future growth.

Incoming CEO David Moezidis stated, "we are particularly encouraged by our growing opportunities in space, MedTech, and while still a little early, AI-related wins."

He further noted that the strong momentum in space bookings is expected to "really show itself in 2027" as these new programs begin to ramp up production.

Operational and Financial Performance

Benchmark’s total Q4 revenue of $704 million represented 7% year-over-year growth. The company achieved a non-GAAP gross margin of 10.6%, which was above the high end of management's guidance.

This margin performance, coupled with cost discipline, drove the non-GAAP operating margin to 5.5%. Full-year non-GAAP EPS was $2.40, a 5% increase, marking the fifth consecutive year that bottom-line growth outpaced top-line growth.

Other key sectors also showed strong momentum in the quarter:

Advanced Computing & Connectivity (AC&C): Grew 22% sequentially and 27% year-over-year, driven by a sharp rebound in computing and the ramp of previously announced AI-related wins.
Medical (MedTech): Grew 14% sequentially and 23% year-over-year, with double-digit growth expected to continue in 2026.
Semi Cap: Revenue declined in Q4, but management referenced "mounting evidence of it picking up earlier in the year," signaling a potential recovery in the semiconductor capital equipment market in 2026.

Outlook and Capital Strategy

For the first quarter of 2026, Benchmark provided revenue guidance between $655 million and $695 million, representing a 7% year-over-year increase at the midpoint. Non-GAAP EPS is expected to be in the range of $0.53 to $0.59.

The company plans to increase capital expenditures to 2% to 2.5% of revenue in the coming year. This investment is intended to support new business wins and facility expansion, including the addition of a fourth building in Penang, Malaysia.

This new facility is expected to be operational in the third quarter of 2026 and is strategically timed for the anticipated semi cap recovery cycle. Additionally, the company generated $85 million in free cash flow for the year and will maintain its capital return framework, prioritizing cash dividends and share repurchases.

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