Benchmark Electronics will close two manufacturing plants early next year, affecting about 350 full-time workers, the company said in its second quarter earnings report.
The closings of the plants in San Jose and Guaymas, Mexico, are designed to drive operational efficiencies, CEO Jeff Banck said. The plants produce electronics products for 20 customers. Savings from the closures will be realized in the third quarter of 2020.
Overall, the Tempe, Arizona, electronics company had about 20,000 workers as of December. Banck said about 3% of the full time equivalent workforce would be affected by the closures or about 350 people.
Benchmark also reported it finished the second quarter with $602 million in revenue, down 9% from $661 million for the same period last year. Net income was $9 million.
The company saw a decline of 5% year over year in its higher value markets, mainly due to softer demand for its semiconductor capital equipment, formerly called test and instrumentation. That segment was down 41% to $63 million, compared to $106 million last year.
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In that segment, customers have said they believe that 2020 will be better than 2019, said CEO Jeff Benck. “We also believe we’ll see improvement in 2020. I like our strategic position and we believe we’re gaining share. We’re still bullish on our position in this segment,” he said on a conference call.
Medical and Aerospace & Defense were also bright spots, up 7% and 18%, respectively, year over year.
Traditional revenues from computing and telecom segments were down 15%. The company earned 41% of its revenues in all segments from 10 customers.
Benchmark has a slate of new leadership, including Benck, who joined in March. Recently hired were Chief Revenue Officer Rob Crawford and Chief Human Resources Officer Rhonda Turner.
Bench said non-GAAP gross margins were more than 10%, excluding legacy computing contracts, reflecting “potential leverage in our model with an improving portfolio.”
The outlook for third quarter calls for Semi-Cap and Industrials to remain flat, Aerospace & Defense to be up in the high single digits, and Medical to be up in the low single digits. Computing revenues will be down greater than 50%. Overall sales are expected to reach as high as $555 million in the third quarter.
The earnings were reported after markets closed on Wednesday. Benchmark's stock price was $25.80 earlier at the close, up 2% on the day.