Q4 2023 Benchmark Electronics Inc Earnings Call

Participants

Paul Mansky; IR & Corporate Development Officer; Benchmark Electronics, Inc.

Jeff Benck; President, CEO & Director; Benchmark Electronics, Inc.

Roop Lakkaraju; EVP & CFO; Benchmark Electronics, Inc.

Jim Ricchiuti; Analyst; Needham & Company Inc.

Steven Fox; Analyst; Fox Advisors LLC

Jaeson Schmidt; Analyst; Lake Street Capital Markets LLC.

Presentation

Operator

Good afternoon, and welcome to the Benchmark Electronics, Inc. fourth quarter 2023 earnings conference call.
All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Paul Mansky, Investor Relations and Corporate Development of Benchmark. Please go ahead.

Paul Mansky

Thank you, Andrea, and thanks, everyone, for joining us today for Benchmark's Fourth 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 fourth quarter of 2023, and we have prepared a presentation that we will reference on this call. Both are available online under the Investor Relations section of our website at vince.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 in the appendix to the presentation.
Please take a moment to review the forward-looking statements disclosure on Slide 2 in the presentation.
During our call, we will discuss forward-looking statements and 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 and actual results may differ materially from these statements and Spark undertakes no obligation to update any forward-looking statements.
For today's call, Jeff will begin by providing a summary of our fourth quarter group will then discuss our detailed financial results and our first quarter guidance. Jeff will then return to provide more insight into demand trends by sector business wins and then closing remarks. If you will please turn to Slide 3, I will turn the call over to our CEO, Jeff Benck.

Jeff Benck

Thank you, Paul. Good afternoon, and thanks, everyone, for joining our call today. The fourth quarter was another period of solid execution for the company despite some revenue softening, which impacted our top line we met or exceeded all other objectives for the quarter. This directly reflects the company's focus on operational execution.
Let me step through a few highlights. In the quarter. Total revenue of $691 million was down high single digits year over year and mid-single digits sequentially. I will point out that supply chain premiums or SCP. have normalized ending the fourth quarter at slightly below $8 million versus $46 million in the same period last year. Excluding SCP, fourth quarter revenue was down low single digits versus last year.
Despite this challenge, our non-GAAP gross margin exceeded 10%, growing both sequentially and year over year. Coupled with a 9% year-on-year reduction in non-GAAP operating expense in the quarter, we drove operating margin to greater than 5%. As a reminder, this margin includes approximately 50 basis points of stock compensation.
I want to congratulate the entire team for delivering such a strong set of results, which allowed us to report $0.58 in non-GAAP earnings per share above the midpoint of our guidance.
Finally, as we've highlighted over the last few quarters, we've implemented a number of actions to drive free cash flow. I'm pleased to report that we generated $126 million in Q4 and $97 million for the full year, well ahead of our objectives of $70 million to $80 million. This was enabled in a large part by our reduction in inventory.
Considering all the end market obstacles facing us and others, I'm proud of the team's execution in the quarter and throughout 2023.
Now let me pass it over to Roop to share more details on the December quarter, our fiscal year 2023, and guidance for Q1 2024.

Roop Lakkaraju

Thank you, Jeff, and good afternoon. Please turn to slide 6 for our revenue by market sector. As Jeff mentioned, our total revenue was $691 million in Q4. The reconciliation of this and our sector level performance for excludes the effect of SCP can be found in the appendix section section of the presentation materials.
Turning to Slide 7. As we look at our sector performance, our discussion will exclude the effect of SCPIE. Medical revenue for the fourth quarter was down 7% versus the prior year. The decline was due to general softness across the industry, driven by inventory rebalancing and demand normalization post pandemic.
Semi-cap revenue decreased 5% year over year in line with our expectations. A&D. revenue was up 15% year over year due to commercial aerospace remaining strong and the defense sector, benefiting from the ramp of existing programs and broadening of new wins within our customer base.
Industrial's revenue for the fourth quarter increased 8% year over year, driven by strength with existing customers providing energy efficiency solutions.
Advanced Computing increased 3% year over year, aided by our build of subsystems for a new large high-performance computing program that started in Q4 and is expected to continue into first half 2024.
In the next-generation communications sector, revenue was down 31% year over year. Our year-over-year performance was impacted by general softness across the sector due to reductions in capital spending. We expect this dynamic may persist throughout 2024.
Please turn to Slide 8. Our GAAP earnings per share for the quarter was $0.49. For Q4, our non-GAAP gross margin was 10.3%, a 70 basis point increase sequentially and year over year. Gross margin benefited from our mix of revenue and improved operational execution, including the previously announced cost actions taken in the first half due to demand softness.
Sg&a expense was $35.6 million flat sequentially and down 10% versus the prior year due to cost actions taken coupled with lower variable compensation. Non-gaap operating margin was 5.1%, up 40 basis points sequentially and 80 basis points year over year, benefiting from both improved gross margin and operating expense discipline. In Q4 2023, our non-GAAP effective tax rate was 20.6%. For Q4, non-GAAP EPS of $0.58 above the midpoint of our guidance. Non-GAAP ROIC in the fourth quarter was 9.3%.
Please turn to Slide 9 for our revenue comparison by market sector for the full year 2023 versus 2022. Total benchmark revenue for 2023 was $2.8 billion.
Turning to Slide 10. Excluding the effect of SCP, revenue was up 6% year over year. Medical revenues increased 9% from growth with existing customers and new program ramps. Semi-cap revenues decreased 9% in line with our expectations and reflecting better than market performance. A&D sector increased by 6% due to continued strength in commercial aerospace defense programs that continue to ramp and improved supply availability, enabling us to address more of our previously unmet demand.
Industrial's revenues were up 17%, primarily from the continued ramp of our prior wins, notably in energy control systems and building infrastructure programs. Advanced Computing was up 10% on the year, given the timing of our next-generation high-performance computing program deliveries. Next-gen communications revenues were up 16% given first half strength in broadband infrastructure programs.
Please turn to Slide 11. Our GAAP earnings per share for fiscal year 2023 was $1.79. Our GAAP results included restructuring and other one-time costs totaling $9.3 million related to the completion of the more part California closure, rightsizing of certain manufacturing sites and a net gain of $4.6 million from legal settlements.
Both GAAP and non-GAAP gross margin of 9.5% increased 70 basis points due to lower SCP. With that SCP, our gross margin was 9.8%. The gross margin expansion was driven by improved operational efficiencies and the proactive cost reduction actions taken by our manufacturing sites.
Our SG&A was $147 million, down 2% year over year, driven by the cost actions taken coupled with lower variable compensation. Non-gaap operating margin was 4.4%, an increase of 80 basis points, driven by the gross margin expansion. Non-gaap effective tax rate was 20.1% for the year, and our non-GAAP EPS was $2.04.
Please turn to slide 12 for a discussion of the effects of SCP on a trended basis. In Q4, SCP declined to $8 million versus $16 million in Q3 2023 and $46 million in Q4 2022. On a year-over-year basis, SCP. declined by $209 million to $59 million in 2023. Looking into 2024, we expect SCP to be immaterial. As such, beginning in Q1 2024, we will discontinue references to performance excluding SCP.
Please turn to slide 13 for a discussion of our cash conversion cycle performance. Our cash conversion cycle days were 98 during the fourth quarter compared to 105 days in Q3, our inventory decreased sequentially by $42 million. Cash conversion cycle improved by seven days due to improved working capital efficiency and an increase in advanced payments from customers.
Please turn to Slide 14 for an update on liquidity. Free cash flow generation is a critical focus area. To that end, in 2023, we reduced inventory and improved working capital efficiency supported full year free cash flow generation of $97 million, which exceeded our annual goal of $70 million to $80 million per year. In 2024, we again expect to generate $70 million to $80 million.
Our cash balance on December 31st was $283 million, a sequential increase of $22 million. As of December 31, we had $127 million outstanding on our term loan, $205 million outstanding borrowings against our revolver, and $341 million available to borrow under our revolver. Overall debt, net of cash, improved sequentially by $124 million because of the strong free cash flow in Q4 2023.
Please turn to Slide 16 for a discussion of our capital allocation activity. We invested approximately $78 million in capital spending in 2023, including $11 million in Q4, both primarily in support of continued growth in our Mexico facilities and enhanced capabilities in our Precision Technologies business unit.
We expect our CapEx spending in Q1 2024 should be between $10 million and $15 million. On a full year basis, we anticipate 2024 CapEx spend to be in the range of $55 million to $65 million. In Q4, we paid cash dividends of $5.9 million and totaling $23 million for the full year 2023.
Since 2018, we have paid cash dividends totaling $136 million. We did not repurchase any outstanding shares in 2023. As of December 31, we had approximately $155 million remaining in our existing share repurchase authorization. Starting in Q1, we expect to repurchase shares opportunistically while considering market conditions.
Turning to slide 16, for the first quarter 2024, we expect revenue to range from $625 million to $665 million. Our non-GAAP gross margin is expected to be between 9.8% and 10.2%. We expect SG&A expense will range between $34 million and $36 million.
Our non-GAAP operating margin range is forecasted to be 4.5% to 4.7%. As a reminder, this includes approximately 50 basis points of stock-based compensation. Our non-GAAP guidance excludes the impact of $1.2 million in amortization of intangible assets and $3.1 million to $3.5 million of estimated restructuring and other expenses to support incremental steps necessary to proactively manage our cost structure, given current market conditions.
Our non-GAAP diluted earnings per share is expected to be in the range of $0.42 to $0.48. Other expenses net are expected to be approximately $8.5 million. Interest expense is expected to decline sequentially given the reduction in revolver debt. However, over the near term, this will be partially offset by increased foreign exchange headwinds due to the weakening U.S. dollar. We have historically managed our exchange risks through a proactive hedge program, and we will continue to do so.
We expect in Q1 our non-GAAP effective tax rate will be 24%, the weighted average share count of $36 million. Our effective tax rate would be higher in 24 because of our China tax holiday, which expired as of December 31st, 2023. We are applying for another tax holiday, which we hope to receive in 2024 retroactive to the beginning of 2024. Also in 2020 for some of our foreign jurisdictions will be adopting Pillar two, the global minimum tax regulations. On a fiscal year basis, we believe the average 2024 effective tax rate should be approximately 23%.
And with that, I'll turn the call back over to you, Jeff.

Jeff Benck

Thanks. Please turn to Slide 18. Again, our commentary related to demand trends by sector are excluding SCP. Within semi-cap, our fourth quarter performance was up modestly sequentially and in line with our expectations. On a full-year basis, revenue performance was down high single digits. This compared favorably to the overall industry revenue trend, which we believe was down approximately 20%. As mentioned in prior calls, we believe our semi-cap sector likely bottomed in the March quarter of 2023.
However, based on public commentary from many semi-cap OEMs, we don't expect improved demand at the industry level to return over the next few quarters.
This may change in late 2024, but it's too early to make that call looking forward into 2025 and beyond. We continue to believe in the strong secular drivers propelling global semi demand. Adding to this, our government subsidies designed to accelerate the reshoring of wafer production to North America and Europe. Although we won't see the downstream effects for some time. This is just another example of the long-term drivers that serve as the basis of our strong commitment to the sector in support of all these demand drivers and our confidence in our ability to benefit. We have been investing heavily in our capabilities in winning new programs, which we believe positions us well to continue to outperform the market we had a number of new wins in the quarter, including an important next-generation wafer fab equipment program with one of our existing customers in medical.
This past quarter, we did a good job meeting demand as the supply chain continues to improve. Offsetting this with some incremental demand softening later in the quarter, both as a function of end markets and customer focus on inventory levels. As such, while we had expected performance to be down in the quarter, it was down more than anticipated.
For the full year, Medical delivered high single digit growth driven by our ramping program wins and our improved ability to meet demand. Despite the success, we expect the demand environment will challenge our ability to deliver growth in this sector in the first half of 2024.
Looking forward, our new win momentum driven in part by the continued trend toward near shoring bodes well for our future growth. We continued to secure new wins during this past quarter. Importantly, not only are we seeing new program wins with existing U.S. customers. We continue to benefit from the advantage of our end to end offerings, converting engineering engagements into EMS wins. As these wins begin to ramp begin ramping later in 2024 and into 2025, we expect to see growth return to this sector.
Turning to complex industrials, we continue to extend our footprint in key growth markets, including electrification, automation and energy management solutions. One example in Q4 as a program win to manufacture control subsystems going into electric vehicles used primarily in the construction industry. Another key win was for an automated guided vehicle system, specifically designed to address the needs in hospitality and medical sectors. This win again demonstrates the benefit of our broad capabilities as we transitioned a design engagement into a manufacturing win within energy management, we were pleased to win new manufacturing business in Guadalajara with an existing customer, which is part of the nearshoring strategy.
Industrial sector revenue performed slightly better than expected in the fourth quarter, up 8% year on year versus our flat guidance. However, as with medical, the quarter saw some second half softening due to weakening in demand the near term corrections notwithstanding, we are continuing to invest in our industrial sector team, given the large opportunity in front of us and how well we are positioned to grow with this customer set.
Now turning to A&D, we had another strong quarter of revenue performance and new wins in Q4, continuing our momentum in the sector. Commercial Aerospace has remained strong for us since early in 2023, which we believe will continue based on our order load. Meanwhile, within defense, although some component lead times are not yet back to historical levels, they continue to improve. This has us allowed. This has allowed us to more fully meet the continuing increasing demand we're seeing from our customers. At the same time, we continued to secure new wins in the past quarter, notably one for ground vehicle communications and another for imaging systems used at military training sites. This balance of end demand strength, design win momentum and gradually improving supply chain has us positioned for continued growth in 2024.
Within Advanced Computing, revenues were consistent with the guidance provided last quarter, up low single digits year on year, albeit up considerably on a sequential basis. As previously shared after a pause in Q three last quarter, we began delivering upon a new HPC program for a large OEM supporting a national lab, which will likely be completed in the first half of 2024. We are working the HPC opportunities to drive future growth. But given the timing of these projects, coupled with our growth in the first half last year, we currently expect advanced computing revenue to be down for the first half of 2024.
Finally, in next-generation communications, we've been highlighting anticipated challenges at the industry level for a few quarters now the communications sector is seeing broad pressure in capital spending, while at the same time more aggressively managing through their own inventory positions. This has resulted in continued end demand weakening, which we believe will persist for several more quarters. As such, we expect sector revenue to be down materially in the first half and likely for the full year.
In summary, please turn to Slide 19. I couldn't be more pleased by our performance in 2023. Despite the challenging market dynamics, we continued to invest in future growth building on our business with both new logos and expansion wins from existing customers.
We did this while growing non-GAAP gross and operating margins year on year, despite our pace of investment particularly in support of semi cap, we exceeded our free cash flow target range for the year. This was aided by a material reduction in total inventory.
Meanwhile, as compared to 2022, we reduced net debt by almost 60% to less than $48 million. We continue to make progress, but we are not complacent with our success. There is much more for us to do. We made great headway in 2023 towards our target model of full year gross margins of 10% and greater than 5% non-GAAP operating margin. In fact, we achieved these levels in Q4. Our job now is to sustain this gross margin while closely managing our costs during the softening demand environment.
Second, we will continue our efforts on inventory reductions in support of delivering free cash flow.
And then finally, we plan to further reduce our debt and interest expense while returning capital by continuing our dividend program and resuming share repurchases. We look forward to updating you on our progress as we move through the year.
With that, I'll now turn the call over to the operator to conduct our Q&A session.

Question and Answer Session

Operator

(Operator Instructions) Jim Ricchiuti, Needham & Co.
Please go ahead, our DexCom.

Jim Ricchiuti

Good afternoon, Doug. Jeff, I wanted to just focus on two of the which sectors medical and industrial, because I think you're kind of clear on some of the other ones, what you're seeing not entirely clear on where you see medical and industrials going soften and I guess, Midway or so through Q4, do you see that recovering or is this something that maybe persists through the first half of the year?

Jeff Benck

Yes, I think come for both of those we kind of in the on chart 18, we kind of give you some first half guidance. We didn't go out to the full year, just given the dynamic environment but just looking at the first half, we see both of those on being down from, like looking at sequentially where where we ended the second half of last year and medical while supply constraints eased and allowed us to fulfill the demand we saw, we did see some forecasts come down in the fourth quarter that continued in 1Q, and we certainly believe people are paying a lot of attention to inventory. Some of it probably related to that softness. Some we will I will say there's still a lot of outsourcing activity and nearshoring continues.
We're excited about a number of new wins in Mexico for us as medical OEMs look to get closer to point of consumption on the industrial side, again, I would say similar kind of broader, um, it depends a little bit by OEM, but certainly saw broader softness that that looks to persist into the first half. And that's an area where we've done pretty good with wins. We had we had put a resource on that a few years ago, and we still believe we're really well positioned there with some of the activity we're seeing in energy management and and automation and test and measurement.
But in the meantime, again, sort of the softness coupled with people being looking at their own inventory and the channel inventory is putting some headwinds in front of us for the industrial sector.

Jim Ricchiuti

But the softness through the first half in these areas, it's both a combination, but they're both related, but it's not just the any OEMs, some of your OEMs destocking, it's due to a weaker environment in both these areas.

Jeff Benck

Yeah, I think that yes, I think that's a fair assessment. If demand softens, then you say, hey, we've got inventory in the channel, you know, so they're kind of interrelated, although I will say there's just a general sense of I'm not going to carry as much inventory now that we're through the pandemic, but lead times have come down and components I can deliver faster. So I'm going to look carefully at that. But so yes, that's some of what we're seeing in both factors.

Jim Ricchiuti

Can I just check two quick follow ups and I'll jump back into queue. And you may see some progress on gross margins. Can you continue to deliver on these kind of gross margins in this kind of a soft environment? And you alluded to it in your presentation just trying to get a sense of your confidence as to whether you can maintain these kind of margins with this pull-ahead?

Roop Lakkaraju

Hey, Jim, it's Roop. But so maybe I'll start with this. Yes. I think for us, obviously a focus for us has been on getting to that 10% and sustaining that 10%. As we've also said, historically, we'll see kind of that bounce around a little bit quarter to quarter. But based on kind of where we're at and kind of the mix of revenue, the proactive cost actions we've taken, that kind of 10% is where we'd like to be throughout the year. I think depending upon how demand continues to profile and as you know, where the demand comes in within our factories and these sort of things start to come into play. So I think there's an opportunity to do so definitely at that 10%, we've got work to do to sustain that on a longer-term basis.

Jim Ricchiuti

Got a nice progress on inventory. How do we think about that going forward? Should we see that continue to come down over the next couple of quarters?

Jeff Benck

I mean, it's clearly as this is Jeff, again, it's clearly a priority for us. You know, we've kind of demonstrated that a lot of things culminated in Q4 to drive a lot of free cash flow. And inventory was certainly of really a lead there, but it's something we're putting a lot of attention on, as you can imagine, and particularly in a softer environment where we're really looking at that and spending a lot of energy on. We do believe we'll continue to drive this down as we go through '24 and then certainly see a reduction even in the first quarter. So this wasn't like a one-time event, but we the last few quarters we started coming down off of what was the peak and I think first quarter of last year. So com. So anyways, yes, to your point, important.

Operator

Steven Fox, Fox Advisors.

Steven Fox

Hi, good afternoon. A couple of questions from me. Just first on the semi-cap, a slide on the chart on Slide 18, where you're talking about sort of flattish trends you guys outperformed last year pretty pretty dramatically versus the overall market. But if are you still seeing the market down? Are you trying to be conservative in terms of talking about first half for like is there certain programs are you seeing down versus up, et cetera? I guess just doesn't seem to compute fully with how the market might be might be flattening out and you guys have been outperform.

Jeff Benck

And what I would say is, you know, sequentially, I think on that chart 18, we kind of said it's kind of flattish at the level we've been at, which is clearly off up off the bottom that we saw a year ago in the first quarter. But we're just not seeing a dramatic recovery in some of the segments that were legacy that we've been really strong in not and certainly not tools that were near end of life. So the wafer fab equipment, United Capital spending is still being our managed pretty close. And we just aren't seeing that broad semi recovery. I think we've outperformed what's helped us is we've won incremental new tools. We have a ton of NPI activity going on where we're building new tools and that that's helping us certainly outperform. And I look to get more constructive here.
I won't say that we're being conservative because we literally have heard a lot of the major OEMs where we play in most of those, if not all of those at some level they've all kind of said, yes, it's kind of flatter now, I think and we have the potential. I don't know why we wouldn't continue to do better than the market. It's just that with the China restrictions and some of the even some of the CHIPS Act, we're really not going to see the benefit of that till '25 versus moving parts that has a sort of looking at it saying, you know, what do we see for front of us for first half, and it's kind of continuing at the level with it that's really helpful.

Steven Fox

And then just broadly on the other end markets where you're seeing pressure, where do you have sort of the most confidence level or evidence that things could be bottoming out and cyclically in like medical, industrial and comms. I know advanced computing sort of episodic, but like any other three where, yes, you have strong signs of that course scale upcoming size.

Jeff Benck

I mean with -- I guess we've gotten some indication on medical that there may be some again, it's early, but say, hey, to maybe return to normal normal pace with inventory looking at second half, like we might see some are some reflection there where maybe there's like we saw in semi where the first quarter was like we're taking it down and you have that big reaction. So maybe we start seeing in Q4 with medical. Industrial, I still think it's so broad so many different companies.
It's a little harder to look at where the bottom is. And then A&D. has been strong and continued strong. And I guess we said that in the thing I know you didn't ask about that. But certainly that's been a bright spot and we expect that to continue.
Do you want to add anything?

Roop Lakkaraju

Yes. Hey, Steve, this is Roop. I'll just add one thing. I think maybe building off of Jeff's comments. If you think about industrial next gen coms, that's CapEx related and CapEx considerations, I think are weighing on customers' minds and just market in general. I think Medical has an opportunity to that point for that reason to come back a little bit faster, as Jeff just indicated, which is another point to keep in mind.

Jeff Benck

And I'm wondering, with medical, you know, just just maybe an example, we build the simulators right or and components and subsystem for defibrillator and you think about like during the pandemic. No one is going to stadiums, airports, and that was that's where we saw a huge surge back, right? When things opened up, you start seeing demand there. And then people got on a run rate and they said, wow, this is great.
And this is the new normal. And I just think you've seen that modulate a little bit as you kind of caught up with that and people saying, okay, still Carrefour, it's still important not going to go away, but just not, you know, maybe is as crazy upside as there had been.

Steven Fox

That's helpful. And then just if I could squeeze one last one in one year, one of your peers seems to be working toward providing EPS, excluding SBC. And so I mean, you guys make it only with your own ETF approach. I was curious of any chance of you guys changing how you report your EPS comp.

Jeff Benck

Yes, we did notice that the only peer that was kind of aligned with us on on, including on, including the stock-based comp in the non-GAAP results, sort of indicated there was a shift there. So that and we got to assess our current approach and we'll provide an update when we conclude that and we'll look to get back on that. But obviously, peer comparisons are important to us, but we've got to decide what's right for us and and we did we did pick up on that. So so thanks for bringing it up.

Steven Fox

Great. We'll keep doing the math. Thanks.

Operator

Jaeson Schmidt, Lake Street.

Jaeson Schmidt

Again, thanks for taking my questions. I know it's going to vary by segment, but just curious at a high level, if more of the issue is demand for current programs that you've already won, you noted for customers not wanting to hold a lot of inventory anymore or is the bigger issue, new programs that you thought would currently be ramping just getting pushed to the right.

Jeff Benck

I think it's some of both. I mean I've certainly seen your people are watching expenses closely. And I think we've seen some some ramps move to the right. But I really when you consider the bulk of our revenues with existing programs and these are multiyear programs. I think we've just seen that overall demand modulate and yet I don't know that we've actually measured both I'm just giving you a little my gut feel from what we're seeing that, that it's probably I would put it probably lean more tour towards the base business and then some of the new stuff coming in, you know, some is some of that's in flight but not fully ramped yet.
And it's not always the best environment to launch new stuff, but I don't think that stops. I just think that we're seeing that, you know, that folks are being careful about their development expense. And so that has an impact sometimes on timelines.

Jaeson Schmidt

Okay, that's helpful. And then are you seeing any change in attach rates for your design and engineering services just given the changing macro.

Jeff Benck

We almost were almost at 80%, not quite to what the target we'd set. So we have that attach rate's been pretty pretty pretty good and pretty happy with that. Obviously, we have we had a couple of wins we reference even one where we've done the engineering on an AGV product and now it's moving into manufacturing. So that's that we love that the whole product realization and how do we help customers get to market faster with there OEM designs or design that we might help develop or develop the whole thing. And we've got a couple of great proof points there. So still an important metric for us and really hasn't shifted materially from from how we did last quarter. And I don't really see that being a trend or anything Got you.

Jaeson Schmidt

And then just the last one for me. I know it's mix dependent care program dependent, but can you remind us what capacity is for the Mexico facility? And then what current utilization is today?

Roop Lakkaraju

Hey, Jason, that's -- yes, I can give you a general -- We don't give specific utilization and these sort of things. With that said, what I would reinforce is our continued investment in Mexico. As you would imagine, there's been quite a bit of reshoring and with existing OEMs who want to expand new programs in Mexico. And so we've seen the benefit of that. So we've been aggressively investing over the last couple of years in our capacity and availability there and we're seeing that capacity gets used up as we as we've gone over the last few periods and into 24 and 25.

Jeff Benck

That's probably we've seen growth in Mexico, but we've also added compact would continue to add capacity and has been investment areas. So we're not it's not like we're seeing, yes, the fact that we've invested has allowed us to sustain front of that. So we're not quite at capacity by any means.

Operator

This concludes our question-and-answer session. I would like to turn the conference over to Paul Mansky for any closing remarks.

Paul Mansky

Thank you, Andrea, and thank you, everyone, for participating in Benchmark's fourth quarter of 2023 earnings call. Before we go, I'd like to remind listeners we will be attending the Sidoti small-cap Virtual Conference on March 13th. Please remember detective Events section of the IR website at finning.com/investors for updates to the schedule. With that thank you again for your support, and we look forward to speaking with you soon.

Operator

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.