Good afternoon, everyone, and welcome to the Benchmark Electronics, Inc. Q3 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Paul Mansky, Investor Relations and Corporate Development. Sir, please go ahead. Thank you, Jamie, and thanks everyone for joining us today for Benchmark's Q3 fiscal year 2022 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 highlighting our financial performance for the Q3 of 2022, and we have prepared a presentation that we will reference on this call. The press release and presentation are available online under the Investor Relations section of our website at www.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 in the appendix of the presentation. Please take a moment to review the forward-looking statements advice on slide two 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 release and SEC filings. Actual results may differ materially from these statements. Benchmark undertakes no obligation to update any forward-looking statements. For today's call, Jeff will begin by covering a summary of our Q3 results. Roop will then discuss our detailed financial results, including a cash and balance sheet summary and our Q4 2022 guidance. Jeff will then return to provide more insight on sector demand trends, which we'll be discussing in more detail at our November eighth investor and analyst day event. If you'll please turn to slide three, I will turn the call over to Jeff Benck, CEO. Thank you, Paul. Good afternoon, and thanks to everyone for joining our call today. Hopefully by now you've seen our press release and the results for the Q3 2022, which represented continued execution of our revenue and earnings growth strategy. Revenue of $772 million was up nearly $200 million versus the same quarter last year, with five of our six sectors delivering greater than 35% growth. I'm particularly pleased with our performance in advanced computing, next generation communications, and industrial sectors. At the same time, we again delivered earnings growth greater than revenue, with non-GAAP earnings up 46% year-over-year and $0.05 above the midpoint of our guidance. As we've said before, Benchmark is clearly benefiting from two key drivers, our success in capturing new wins over the last several years, which are now ramping in the marketplace, and our existing customer success addressing high growth markets with their innovative products. Roop will share more details on our Q3 results in a minute. Turning to the Q4, we continue to see robust demand across the majority of our market sectors. The midpoint of our guidance positions us to achieve full year revenue growth of around 30% and earnings of $2.11, which would represent year-over-year earnings growth of greater than 55%. We're encouraged by improvements we are seeing in supply chain availability in many commodity areas. However, we still see constraints in some semiconductor families, which continues to limit our production output. I'm proud of the great job our team has done working through these challenges to deliver the results we've provided to you today. We look forward to sharing with you more details on the continued execution of our strategy and longer-term financial targets during our upcoming Analyst Day on November eighth at the NYSE. With that, Roop, over to you. Thank you, Jeff, and good afternoon. Please turn to slide five for our revenue by market sector. Total Benchmark revenue was $772 million in Q3, which is 6% higher sequentially and 35% higher year-over-year. Medical revenues for the Q3 were flat sequentially and increased 41% year-over-year due to growth with existing customers and new program ramps. Semi-cap revenues increased 7% sequentially and increased 39% year-over-year. Demand levels throughout 2022 have remained high for our complex precision machining and large electromechanical assembly services. A&D revenues for the Q3 decreased 4% sequentially and 14% year-over-year due to supply chain constraints with certain programs. Industrials revenue for the Q3 were down 2% sequentially due to material constraints and up 44% year-over-year from demand improvements from energy-related products, building infrastructure, and LiDAR solutions. Turning to our traditional markets, we continue to focus on higher value sub-sectors within compute and telco, such as high-performance computing and next-generation networking, respectively. Computing was up 38% sequentially and 67% year-over-year from the ramp of high-performance computing programs. In the telco sector, revenues were up 20% sequentially and 52% year-over-year from continued demand strength and new ramps for broadband infrastructure. In the Q3, our top 10 customers represented 53% of sales. Please turn to slide six. Our GAAP earnings per share for the quarter was $0.53, which represents 130% growth on a year-over-year basis. Our GAAP results included restructuring and other one-time costs totaling $1.3 million, related to the closure of our previously announced site in Moorpark, California, and other smaller restructuring activities throughout our global network. For Q3, our non-GAAP gross margin of 8.6% is inclusive of supply chain premiums, improved 50 basis points sequentially due to higher revenue, better absorption, and a reduction in supply chain premiums. Our SG&A was $38.7 million, up sequentially due primarily to higher variable compensation and continued investment in IT infrastructure. Non-GAAP operating margin was 3.6%. Excluding the impact of supply chain premiums, our operating margin is 4%. In Q3 2022, our non-GAAP effective tax rate was 19.4%, which is as forecasted. Non-GAAP EPS was $0.57 for the quarter, which is $0.05 higher than the midpoint of our Q3 guidance and 14% higher sequentially. Please turn to slide seven. We have shown the effects of supply chain premiums on a trended basis over the last seven quarters on the slide for comparison. In Q3 2022, we incurred approximately $74 million. Sequentially, this number decreased by $17 million, but on a year-over-year basis, increased to $48 million due to the challenging supply chain environment. The magnitude of these premiums are temporary in nature, and as the supply chain environment requires less premiums to be paid, this cost recovery revenue will decrease. Excluding supply chain premiums, our revenue in the Q3 of 2022 is $698 million, a sequential increase of $61 million or 10% growth, and a year-over-year increase of $152 million or 28% growth. As discussed, gross and operating margins are diluted by this pass-through revenue, while gross profit, operating profit, and EPS are unaffected. Please turn to slide eight. non-GAAP ROIC in the Q3 was 9.8%, a 20 basis point increase sequentially, and a 200 basis point improvement year-over-year. In the period between Q1 2021 to Q3 2022, ROIC has grown by 53% as a result of 53% revenue growth and a 137% operating income growth. Turning to slide nine to review our cash conversion cycle performance. Our cash conversion cycle days were 79 in the Q3, compared to 77 days in Q2, with the increase primarily due to higher inventory days offset by higher customer advance deposit days. Our customer advance deposits grew $38 million sequentially, or 22% higher. Please turn to slide 10 for an update on liquidity and capital resources. We used $31 million of cash in operations and invested $10 million in CapEx. We expect to spend $45 million-$55 million on CapEx in 2022. In Q4, we anticipate generating $15 million-$25 million of cash flow from operations as we consume inventory. As a reminder, the majority of our inventory primarily consists of raw components to support our growing EMS demand. In fiscal year 2023, we expect to generate positive cash flow from operations and free cash flow. Our cash balance was $249 million at September 30. As of September 13th, we had $131 million outstanding on our term loan, $170 million outstanding borrowings against our revolver, and had $280 million available on our revolver. Turning to slide 11 to review our capital allocation activity. In Q3, we paid cash dividends of $5.8 million. As of September 30th, we had approximately $155 million remaining in our existing share repurchase authorization. We'll evaluate share repurchases opportunistically while considering market conditions in the Q4 of 2022. Please turn to slide 12 for a review of our Q4 2022 guidance. We expect revenue to range from $760 million-$800 million, which at the midpoint represents a 23% year-over-year growth. Our revenue range comprehends supply chain premiums of approximately $55 million. We expect that our gross margin will be between 9%-9.2% for Q4 as a result of strong revenue growth and continued improving absorption. SG&A will range between $37.8 million and $40.8 million, or approximately $39 million at the midpoint. Implied in our guidance is 4.1% non-GAAP operating margin for modeling purposes. The guidance provided does exclude the impact of amortization of intangible assets and estimated restructuring and other costs. We expect to incur restructuring and other non-recurring costs in Q4 of approximately $800,000-$1 million. The costs relate to continued activities associated with previously announced site closures. Our non-GAAP diluted earnings per share is expected to be in the range of $0.58-$0.62, or a midpoint of $0.60. Other expenses net is expected to be $5.4 million, which is primarily interest expense. We expect that for Q4, our non-GAAP effective tax rate will be between 18% and 20%. The expected weighted average shares for Q4 are approximately 35.4 million. Finally, from a cash flow perspective, we anticipate generating positive cash from operations in the period. With that, I'll turn the call back to you, Jeff. Thanks, Roop. Please turn to slide 14. Before I go into our sector outlook, I wanted to highlight some wins we secured in the September quarter. Once again, we saw a good balance across our focus sectors, reflecting the diversity of complex projects that we take on to help customers navigate through the product life cycle and accelerate time to market to realize their product vision. In Semicap, we continue to grow existing customers while adding new customers into the portfolio. This past quarter, we secured new manufacturing and engineering wins for wafer surface conditioning, advanced process control, and automated vacuum cure tools. Reflecting on our diversification, I'd like to highlight a recent press release regarding our expanding partnership with Yield Engineering Systems, where we are helping them transfer manufacturing of their flagship product line to Malaysia, as well as providing engineering and manufacturing support for an upcoming wet process system in the Phoenix area. 2022 has been a great year for new program awards in the semi-cap space, and we look forward to converting those to revenue in 2023 and beyond. In medical, we continue to be awarded critical medical device and life science programs with the addition of manufacturing program for a novel ophthalmology ultrasound system that's designed for imaging and biometry of the eye. We also received a manufacturing award for a new automatic external defibrillator. Finally, our medical design team won a project for a unique cardiology treatment platform. In industrials, sustainability is at the core of our own internal initiatives, and we extend that focus to customers who share that vision, particularly in the areas of clean energy efficiency, and automation. In the past quarter, we won a manufacturing program for a power inverter going into an advanced energy storage system. We also extended our relationship with an existing customer who is focused on solutions that accelerate electrification, where we will manufacture industrial drives, power, and control systems. Within engineering, we're partnering with an innovative company to help design autonomous mobile robots for the healthcare, hospitality, and manufacturing industries. In the A&D sector, within aviation, we are also seeing new win momentum, such as a new program where we are designing communication systems for the emerging commercial drone or UAV market. Within defense, we also saw solid growth in the quarter, recording manufacturing wins for aviation radar, artillery pilot controls, and high-speed RF next generation radars. In advanced computing and communications, wins include an LTE, 5G smart coverage solutions and a high-volume, fully automated manufacturing win for an RF filters. Expanding on our HPC business, we won an additional project with a long-time existing computing OEM. Now, turning to slide 15. I'll provide some color on expected demand trends by sector for the Q4. As mentioned, we are cognizant of the recession risk and inflation's potential impact to the broader economy. However, we believe the transformation work we accomplished over the last few years has provided us with greater diversity and stability. Coupled with the minimal exposure to consumer-centric markets, demand indicators across the majority of our sectors remain robust in Q4 and into 2023. In semi-cap, revenues have grown double-digit year-over-year for 12 consecutive quarters. While we expect Q4 to again grow double digits year-over-year, industry demand is expected to soften in the near future given memory market weakness, new China restrictions, and supply constraint rebalancing. Thankfully, the aforementioned strength in new program wins and diversification of our customer base will enable us to help offset this industry-level weakness. Longer term, we remain bullish on the sector given our customer win momentum in the space, strong secular drivers in the form of semiconductor proliferation, and the investment in new domestic manufacturing, aided in part by the CHIPs Act. In our medical sector, we once again delivered strong growth in this business with Q3 improving 41% year-over-year. We certainly could have shipped more, but as one of our most supply chain impacted sectors with long qualification cycles required and any redesigns to provide alternative component selection, we were limited in our ability to meet upside. We expect Q4 performance to be similar to Q3 sequentially, with strong double-digit year-on-year growth. In industrials, September quarter revenue grew over 40% versus the prior year, demonstrating another strong performance. For Q4, we expect industrials to be consistent with the September quarter. We see a good balance between demand for existing products, such as test and measurement devices, and new program ramps in advanced LiDAR applications, energy management systems, and industrial robotics as growth catalysts over the next several quarters. Moving to the A&D sector outlook, Q3 performance was in line with our expectations as here, too, supply chain challenges continue to be acutely felt in the sector. As our recent design wins begin to ramp in the coming quarters, we expect further recovery next year. Within telco, the September quarter once again performed well with 20% sequential and greater than 50% annual growth reported in the period. We continue to be encouraged by the growth prospects supported by ramping broadband infrastructure wins and government programs aimed to enable broadband from anywhere. Finally, in advanced computing, we continue to help build some of the largest and most sophisticated high-performance computing systems in the world, including the current effort underway on a new supercomputer platform that will contribute to the next few quarters' performance in this sector. Let's now turn to slide 16. Back in the fall of 2020, we laid out our midterm model for the company, which we committed to achieving by the time we exit 2022. We've made steady progress on these goals and excluding the effect of pass-through revenue associated with supply chain premiums, I'm pleased to say we met or exceeded each of our targets in Q3. Furthermore, at the midpoint of guidance for Q4, we are poised to exceed our targets for the full year. This would include revenue growth excluding premiums of greater than 20%, with non-GAAP gross margin of 9.6% at the high end of our target range. Operating expenses well within the range and non-GAAP operating margin of 3.9% for the year above the high end of the range. If we were to exclude stock-based compensation like many of our peers, our non-GAAP operating margin for the year is expected to be greater than 4.5%. In summary, if you'll turn to slide 17. Demand among our target sectors continues to be robust, and we are helped by our diversified strategic focus. Our strategy to pick leading companies and partner with them on their innovative products is paying off, positioning us to potentially deliver 56% non-GAAP earnings growth in 2022. Looking forward to 2023, we believe this strategy, our portfolio, and continued pipeline of new customer wins positions us to grow faster than the market. We look forward to sharing more with you at our Analyst Day in a couple of weeks. With that, I'll now turn the call over to the operator to conduct our Q&A session. Ladies and gentlemen, at this time, we will begin that Q&A session. If you'd like to ask a question, you may do so by pressing star and then one on your touch-tone telephones. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. To withdraw your questions at any time, you may press star and two. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. Our first question today comes from Jaeson Schmidt from Lake Street Capital Markets. Please go ahead with your question. Hey, guys. Thanks for taking my questions. Jeff, just want to follow up on your commentary on the semi-cap space. I know you do expect an eventual softening just given the dynamics you outlined, but just curious if you guys are already seeing signs of things slowing down a bit. Yeah. Thanks, Jaeson. Good to have you on the call, and thanks for the question. You know, of course, we've seen a lot of the announcements by not only customers, but others in the space about the predicted trend towards reduced front-end wafer fab equipment spending next year. You know, we're not immune to that. We certainly see it, but we also have had a really strong year of new wins in 2022. In fact, I'd put it up there with one of the top two sectors for new wins. Many of those will start contributing in 2023 and beyond to the continued revenue there. Then also, we're getting more diversified across the set of customers that we think also kinda helps overcome downward pressure. That being said, you know, you see that our Q4 guide is strong. As we look in the next year, you know, we feel like we're pretty well positioned to continue to do well in that segment. We don't, you know, anticipate the kind of growth rates we had been seeing because, you know, the overall industry seems a little bit softer and a little more unsure. Some of that is also the memory side. I will say we're a bit higher biased to logic, so we tend to work more on logic tools, although we do have some memory-related business. That's kinda we're thinking about it. We're still also very long, positive, constructive on the longer secular trend and, you know, think the investments we made are gonna pay big dividends, particularly when you look out over the next few years here. Okay. That's helpful. I know, Jeff, when you joined, a big initiative was kinda really focusing on doing engineering design services besides just manufacturing. I know you guys don't break out kinda your wins based on those categories anymore, but how much of the growth recently do you think is just being able to expand your services at your customers beyond just the underlying demand trends? You know, one thing we track, Jaeson, is the attach rate of wins to, you know, EMS opportunities and making sure that we're not just doing manufacturing, but how do we help, whether it's building or engineering a test system or actually helping complete the product design. I'm pleased to say again in the Q3, we saw over 75% attach rate to those deals, so there's strong contribution there. As you've seen, I mean, our overall business is growing pretty fast. I won't say that there's an outpacing growth in engineering, but both sides are growing and helping in that total number. We haven't typically broken it out, you know, because engineering is still a small part of the total, but it definitely helps with why we're winning and why folks come to us because we're not. You know, we could be more of a one-stop-shop and help them at any point in that product life cycle. We're actually spending more energy on product realization. You know, you might have a concept, and you might help getting it through design. Maybe you gotta redesign to free up alternative parts so that, you know, you help with supply chain. Or maybe it's an end-to-end, and we're really getting participation in all, you know, all three of those kinda areas. We feel pretty good about our engineering business. You know, with the way things are growing, we gotta keep, you know, moving forward and adding to our capabilities. Got it. Just the last one from me, and I'll jump back into queue. How should we think about your traditional markets, the computing and telco? I mean, you've made a strategic focus to kind of focus in on certain programs here, and 2022 is a big step forward from a growth standpoint. Do you view this growth this year more reflective of sort of the underlying demand trends, or is this more simply you guys are just now focused on the right programs? I'm just trying to get a sense on sort of the sustainability of these two segments. We're gonna give more color at the Analyst Day on how we're thinking about that, but maybe I'll just sort of preview a little bit. We really have narrowed our focus on advanced computing to those high-performance computing platforms. We built some of the largest, most sophisticated boards. You talk about water cooling systems and very complex compute mechanisms. You know, even the way we think about it, the margins from that work, the value add that's there, it's no longer that traditional commodity compute business. Same thing when you flip over and look at telco, we're really involved with next generation networking infrastructure. We don't build set-top boxes, for example. We build really sophisticated RF infrastructure. Again, it's, you know, it's a much more meaningful contribution from a margin standpoint and it's such. You know, it's the fact that like this quarter you'll see the traditional markets, what we used to categorize as traditional, are a bigger percent of the total, that really hasn't concerned us because it's not having the drag that it might have back when we were doing that, you know, large, low-margin compute project that we decided not to renew. We really have kinda transformed that. Even the way we articulate it, I think you'll see a shift a bit in the coming year talking about it. But it's good. You know, it's a good question, you know. We definitely feel like we're getting the right programs and that there's some sustainability here. We just might wanna shift a bit, like, how we portray that to you guys. Okay. That's helpful. Thanks a lot, guys. Yep. No worries. Our next question comes from Steven Fox from Fox Advisors. Please go ahead with your question. Hi, good afternoon. First question I had was on the supply chain. I'm just looking at the numbers you provided in terms of the premiums and margins, et cetera. It looks like maybe the supply chain was a little incrementally tougher for you guys. I'm not sure if I'm reading that right. Can you just dig into how it compared to last quarter and, you know, anything that you would call out as easing versus how tough it's gonna be into next year? Then I had a follow-up. Yeah. Steven, thanks for the question. I'll start out on that. Its supply chain premiums came in lower sequentially than the second quarter, which we were happy about. They were still a little bit higher than what we had initially forecasted, which really speaks to, I think, the continued constraints in certain areas of the market. We are seeing some level of improvement in some areas, but there still is some constraints. The other thing I'll mention about these supply chain premiums, you know, these aren't broad-based across all customers of our portfolio. It really is a couple of handfuls of customers who are willing to pay these premiums, and really in certain sectors only. It really isn't broad-based from that perspective. I wouldn't say. I know you said. Let me just add to that. You know, I wouldn't say supply chain is more difficult than what we saw in Q2. In fact, we were pleased with some of the stuff we freed up to get the revenue growth and ship the products we did. While we've seen improvement in a number of categories of components, and you know, as you can imagine, memory is more free now, maybe because softness on the consumer side and such. There still are some critical semiconductors that are gating, you know, that affectionate golden screw term that is still gating us in some areas from, you know, completing critical builds and getting clear to build there. We hope we see continued improvement, but we still, you know, kind of anticipate even through Q4, we're gonna have those areas that no one can get that particular part until the, you know, capacity frees up or the additional capacity comes online. It's something that we'll continue to deal with into 2023. As Roop said, I think directionally, we saw supply chain premiums kind of peak out, and we'll expect that to be a downward trend, and we're guiding it lower again in the Q4. Great. That's really helpful. Just back on the semi-cap market for you guys. With some of the chip curbs that were put in place by the Biden administration, is there any, like, very near-term impact that we should see related to who you're building for, who you're in? How does this affect you directly and maybe indirectly this quarter, next quarter? When you look at the Biden CHIPS Act, I mean, I think that you're not gonna see help like this quarter or next. I mean, obviously they've just done the appropriation of, like, the first tranche of that. You've seen people like Intel say they're gonna move forward on an Ohio fab because they got the investment from the government, or they're gonna do that. You know, when you think about us, we are in, you know, we support the semiconductor capital equipment that once that building comes out of the ground and the foundation is poured and the concrete's in place and the walls are up, then, you know, to build semiconductors, they gotta build. You gotta buy wafer fab equipment, and that's part of what we help with and what we help produce. There is a little bit of a lag, which is why we would say, you know, we probably don't expect huge help from the CHIPS Act, even in the front end of 2023. I think it'll be a little further down the path. That being said, you know, we have continued to win next-generation tools, and we participate across a broad spectrum of technologies in this space. While we have some customers that are, you know, more impacted by memory, let's say, those that are working on sub-5 nanometer, you know, demand on next-generation chips, they're not seeing a weakness, and we're enjoying strong business there that continues to grow. You know, it's a little bit. You know, you gotta go a bit deeper there. We do feel like in general, you know, the renaissance of domestic semiconductor manufacturing. You know, we saw Micron a $100 billion fab in upstate New York. You got TSMC building a ton of fabs here in Arizona. You got Intel building new fabs. Those bode well for our investments and our growth, continued growth long-term in this space. That's helpful. I guess what I was also trying to get at was the near-term impact of, you know, U.S. semiconductor companies being told to stop servicing Chinese customers. Like, is that something that would blow back on you guys in the near term in terms of what you're physically doing in China, or would it just be an indirect impact and maybe you wind up seeing. Yeah. More business in the U.S.? No, that's a good question. I didn't speak to the new U.S. restrictions on. You know, they're pretty broad reaching, and it was pretty sudden, so a lot of our OEM partners are still assessing what does it mean, what does the licensing look like. There is potential risk in the near term, even in the Q4 here. We've comprehended that in our guidance. I guess that speaks to the diversity of our portfolio. But there is potential near-term risk on that as they work through that. I also think there's a bit of a whipsaw going on in the sense that people are like, "Oh, we can't ship to China." Oh, wait, we have a license for the next year, and it's gonna transition. For us also from a production standpoint, we don't manufacture our semiconductor equipment in China, so that's not a risk for us. I might just add that because that's not something we're currently contemplating. It's more if our customer demand shifts because that restriction kicks in. Great. That's all super helpful. Thank you. Sure. Our next question comes from Jim Ricchiuti from Needham & Company. Please go ahead with your question. Hi. Good afternoon. This is actually Chris on for Jim. In the previous quarter, you had mentioned that approximately $200 million of demand was unfulfilled. How is this trending? Is that dollar amount rolling over quarter- to- quarter? Are you finding that the demand is waiting in the queue as it gets pushed out? Thank you. Chris, good to have you on the call. From an unfulfilled demand standpoint, I think Jeff mentioned that, you know, still more than $200 million of unfulfilled demand. Now, we are seeing some movement within there, so it's not the same demand. We did, you know, obviously fulfill some of the prior. It's kind of replenishing itself. Obviously, as we move forward, as we talked about some of the supply chain challenges or constraints, as they ease, that'll help support getting those parts in and being able to increase the production for that unfulfilled demand as we move forward. Some of that's contemplated in our Q4, and we'll consider that in 2023 as well as we look out to 2023. Yeah. One thing, Chris, is it's been surprisingly durable in the sense that, you know, if order's not been fulfilled, we haven't seen it really be all that perishable. I would say it's a small percent that's been perishable, and we saw that trend extend. I think as we continue to grow revenue and fulfill more products, we'll burn down on, you know, that unfulfilled demand. We really haven't seen a significant loss in that, so it has tended to carry forward. You know, we don't really see, you know, a reason that that trend wouldn't continue. Got it. Are you seeing? Certainly our intent is to sell all of it too. Got it. Very helpful. Thank you. Are you seeing any signs that the much-discussed consumer softness in the broader economy is improving availability of components like semiconductors, on your end? How much of the inventory is in connection with products that are substantially complete, but may be waiting on a critical component like a semiconductor? Let me get the front of that, and then I'll let Roop talk about the inventory. That's a good question, though, because I think it's something we should provide them a little more clarity on. I think we are seeing some help in some areas, like I mentioned memory, right? The consumer drop there, the PC drop. We are seeing, you know, some things free up, and I think it'll help. It's funny. It's a question I ask our chief procurement officers, like, "Hey, consumer weakness here, you know, will it help some industrial?" Unfortunately, it's not a perfect help because a lot of what we do is, you know, we tend to be higher mix, lower volume, a lot of custom. If you think about some of the aerospace and defense programs or some of the custom medical equipment we build, they tend to use sometimes very unique components. It's not fully translatable, like, hey, that PC didn't need it, we'll take it. I would say it broadly helps. It also might free up wafer fab capacity that they could shift to the products we need. It's not a like for like. It's not like that component freed up, and we can pop it in our unit. We typically have, you know, a little more unique, you know, unique components that go into the solutions that we build for customers. It's not like they're, you know, broadly, I would say there's some help, but it's not like gonna be a windfall overnight based on that. Maybe you could talk about the. Yeah. Chris, let me touch on the inventory, interesting question that you have there. You know, first of all, let me step back, and in terms of our overall inventory, you know, the vast majority of our inventory is raw components, really in support of our EMS industry. And then obviously we have inventory on the semi-cap side as well, but the majority is on the EMS side. As you think about, you know, the unfulfilled demand that we just talked about on your prior question, we have a lesser amount in our WIP at this point in time than any point in the past, really because if we can build it, the customers want it, and they want it as quickly as possible, right? The inventory is really about the raw materials and waiting for those few components for with that incremental demand so we can fulfill it and get it out the door. Got it. Thank you. Very helpful. One more from me, if I may. In the event of a mild recession, how would you expect that environment to impact the trend of OEMs outsourcing their manufacturing? I think in the past, when there's been a tougher economic environment, I think you find OEMs saying, "What business are we really in? And you know, are we building this product the most efficiently? And, you know, do we need all the headcount we have? And you know, could someone else do a better job at it?" We've typically seen a recessionary environment, you know, be good for the outsourced, the trend in outsourcing. We still, you know, and particularly in A&D and in medical, there's still more than half the market is not outsourced. So a lot of opportunity that will naturally, I believe, grow the way that, compute telco, you know, are predominantly outsourced already. I think a recessionary environment, you know, will cause people to really think hard about that, and whether they would, you know, could do it more cost effectively. The other dynamic going on is folks are looking at what's the most cost-effective way to move material around the world or move products. We still see this move towards nearshoring, you know, whether that's, you know, 60% of our demand is in the US, we don't wanna ship it all from China or maybe we wanna build more, you know, in region or near region. You know, big increase in demand in Mexico, for example, because it's near the U.S. and it's a lot more cost effective to bring product, you know, across the border than you know, putting it on a boat or shipping in air from Asia. That's another trend that I think, you know, that folks will have to look hard at if budgets get tighter. Yeah, Chris, one other thing to add, if you think about the challenge of finding talent, OEMs also have to evaluate whether they can find that talent internally or look for outsourced partners. Whether that's on the technical engineering side or the manufacturing side, that's another, I think, driver for their outsourced focus or outsourcing focus that we continue to see. Got it. Thanks very much, and congrats on the result this quarter. Thanks, Chris. Thanks. Once again, if you would like to ask a question, please press star and one. Our next question comes from Anja Soderstrom from Sidoti. Please go ahead with your question. Hi, thank you for taking my question. I actually had a follow-up on that outsourcing trend question. Roop, you were alluding to it in terms of talents. Would you say the demand is more supply chain driven or engineering driven at this point? Is demand engineering or supply chain driven? Yes. For the outsourcing of your solutions, are customers turning to you more because you have the supply chain relationships or because you have the engineering talents, or which one do you see some more? I think it really is a function of both, Anja. You know, we have customers who are coming to us for design and engineering needs that can't be fulfilled elsewhere. There are others that are coming to us from a manufacturing standpoint because of our global scale and our footprints. The fact that we have a relatively smaller footprint in China. We've got a greater percentage of our footprint in the Americas, whether that's in the U.S. or Mexico. So that manufacturing footprint is really supporting nearshoring and reshoring needs of global OEMs. So I think it really is a function of both. As Jeff mentioned, the other aspect is, you know, we have a focus in terms of attaching engineering with manufacturing and manufacturing with engineering. which we take to market in that way, which also helps support, you know, the desires of the customers. Yeah, I think you're right. Okay. It's really pretty good mix. Okay, thank you. I was curious for the A&D. You said there were certain areas where you saw component shortages. What are those areas? What can we expect in terms of seeing growth in A&D in the coming quarters? The dynamic with A&D, what I would say a little bit is many times, particularly in the defense space, the ultimate customer might be the U.S. government or a defense-related entity. You know, they're just the pace at which they will move to look at getting in front of supply chain constraints, you know. It's not as simple as one of our customers saying, "Sure, just go use this alternative component, it'll be fine." What ends up happening is they say, "Well, we like the component, but now we gotta go back to the three-letter agency, and it's gotta get qualified, and that's a six-month process. Then we'll get back to you, and then we'll see if we can get the funding to go do that, to then place the part on order." It's just more elongated there, and it's not like there's a quick substitution that can happen. I wouldn't point to any particular. It's the same semiconductor constraints that we're kind of seeing in other industries. It's just there. Oh, and this is another one I might add, 'cause Roop talked about it before. Supply chain premiums, they're unheard of in this. Right. Like, no, they say, "No, no, we'll wait. You know, we can deal without that particular device, you know, and we'll wait six months." There's frustration, I would say, in that customer set saying, "Gosh, I wish I could do better," but they're not as, it's just not been as responsive. It's not really the fault of our customers. It's typically the regulations and things they have to go through their steps. Right. to get that to free up. That's why we're seeing that it's just more persistent that those challenges are not being alleviated so much in the A&D space as quickly. Okay, thank you. That was all for me. Thanks, Anja. Thanks, Anja. Ladies and gentlemen, with that will conclude today's question and answer session. I'd like to turn the floor back over to Paul Mansky for any closing remarks. Thank you, Jamie, and thank you everyone for participating in Benchmark's Q3 2022 earnings call. Before we go, I'd like to remind listeners of a couple upcoming events. As mentioned previously, we'll be hosting an investor and analyst day at the NYSE on November 8. We'll be back in New York on December 6 and 7, attending the Raymond James Technology Investors Conference, followed by the Sidoti Small-Cap Virtual Conference on December 8. In January, we look forward to attending the 25th annual Needham Growth Conference taking place from the 10 through the 12. With that, thank you again for joining us today, and we look forward to seeing you at one or more events in the coming weeks and months. Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.