Good day, ladies and gentlemen, and welcome to the Benchmark Electronics Fourth Quarter 2017 Earnings Conference Call. At this time all participants are in a listen only mode. [Operator Instructions] Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, today’s conference is being recorded. I’d now like to introduce your host for today’s conference, Ms. Lisa Weeks, VP of Strategy and Investor Relations. Ma’am, please go ahead.

Thank you, operator, and thanks, everyone, for joining us today for Benchmark’s fourth quarter and full year 2017 earnings call. With me this afternoon, I have Paul Tufano, CEO and President; and Roop Lakkaraju, CFO. Paul will provide introductory comments, and Roop will provide a detailed review of our fourth quarter financial results and first quarter outlook. We will conclude our call with a question-and-answer session. After the market close today, we issued an earnings release highlighting our financial performance for the fourth quarter and 2017, 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. Please take a moment to turn to Slide 2 in the presentation where we will discuss forward-looking statements. During our call, we will discuss forward-looking information. As a reminder, any of today’s remarks that are not statements of historical facts are forward-looking statements, which involve risks and uncertainties described in our press releases and SEC filings. Actual results may differ materially from these statements, and Benchmark undertakes no obligation to update any forward-looking statements. 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. I will now turn the call over to our CEO, Paul Tufano.

Thank you, Lisa, and good afternoon, and thank you for joining our fourth quarter earnings call. I’m extremely pleased by our fourth quarter performance and the progress we have made in 2017. Once again, we met or exceeded our commitment. Our revenue grew 7% year-over-year. This was the first year of revenue growth since 2014. And more importantly, in our high-value markets, three of our four segments achieved or nearly achieved our 10% year-over-year revenue growth goal. With both A&D and Medical approaching 10% with our Test & Instrumentation group exceeding it by 42% year-over-year. If you look at our traditional markets, we had surprisingly strong strength in Computing, which was up 22% year-over-year and 46% in the fourth quarter. This was driven by a surprising strength in legacy storage products. Our gross margins for the full year continue to expand. From the cash cycle days, we did a good job of posting 66 days – cycle days for the full year of 2018, that’s 18 days below the average. And in the fourth quarter, we did 16 cash conversion cycle days, an improvement of 14 days from the year-ago period. Our operating cash flow was $146 million for the full year. This was at the high end of our guidance of $125 million to $150 million provided a year ago at this time. And our return on invested capital was 10.5%, a 210 basis point improvement year-over-year. Turning to the next page, Slide number 5. As we have been saying all year long, revenue growth is essential for us to achieve our financial model objectives and bookings drive revenue growth. I am extremely pleased that in the fourth quarter, we once again able to deliver bookings in excess of $150 million. But just as important as achieving the $150…

Thank you, Paul, and good afternoon, everyone. I’ll start on Slide 14 with a recap of our fourth quarter 2017 financial summary. Revenues of $680 million exceeded our guidance of $590 million to $610 million and we’re up 12% year-over-year and 13% sequentially. This marks the fourth straight quarter of year-over-year revenue growth. The increase in year-over-year revenues was driven by growth in our higher value markets in Computing. Our Q4 non-GAAP operating margin was 4.2%, which was a 10 basis point improvement sequentially from Q3. Non-GAAP EPS of $0.49 was above our guidance of $0.34 to $0.38 as a result of higher-than-expected revenues, improved revenue mix, better absorption and a lower tax rate. Our GAAP loss for the quarter was $1.54 and includes a $98 million tax expense or $1.95 per share related to the effects of the 2017 Tax Reform Act. Our GAAP results also included $3.1 million of restructuring and other costs, $230,000 recovery from the sales inventory that was written down in Q1 due to our customer insolvency. For the quarter, our ROIC was 10.5%, up 60 basis points sequentially and 210 basis points year-over-year. Please turn to Slide 15 for our revenue by market segment. Industrial revenues were up 6% quarter-over-quarter from improved demand across several customers and down 4% year-over-year. Aerospace and Defense revenues for the fourth quarter were up 2% quarter-over-quarter but declined 4% year-over-year from program qualification and demand time delays from certain customers. Medical revenues were up 3% sequentially and 20% year-over-year due to strength with certain customers and program ramps from new and existing customers. Test & Instrumentation revenues were up 8% sequentially in the fourth quarter and increased 46% year-over-year as a result of strong demand in our precision machining area, serving the semi-capital equipment market. Overall, the higher…

Thank you, Roop. In closing, I am extremely pleased by our progress in 2017, and more so, I’m excited by our opportunities in 2018. We’d like to thank all the Benchmark employees for their contributions and hard work this past year. Operator, we’ll now open the line for questions.

[Operator Instructions] Our first question comes from the line of Jim Suva with Citi. Your line is now open.

Thank you very much, Paul. And it’s great to see you and your team there executing. If I understand it correctly, the upside was due to legacy storage, which in turn created pressure on gross margins, and without that, gross margins, would’ve been more healthy. Is that correct? And then my follow-up, when you said legacy storage, I guess I’ve been in this business a really, really long time, are you talking legacy as in enterprise spinning disks legacy or like pay-to-take storage legacy?

Okay, Jim, you’re right in your assumption. We saw the upside in legacy storage. We – as Roop indicated, because those margins are below the corporate average, it did put pressure on our overall reported margins. Now this is enterprise storage. It is not spinning disk, it is more storage substitute and control units.

Great. Okay. And then going forward, with the changes in tax law, whether it be depreciation or spending and such, have you seen any changes in behavior compared to seasonality?

Jim, it’s too early to tell. I think that most people are assessing the impact of the tax law and what that might mean for their businesses, both from an investment and a growth standpoint. So I really can’t answer that question with any color right now.

Got it. Thanks so much for the color and additional details. I appreciate it.

Our next question comes from the line of Mitch Steves with RBC Capital Markets. Your line is now open.

Hey, guys. Thanks for taking my question. So first, I just want to clarify to make sure, the Test & Instrumentation for semi-cap falls into safe to assume that was the recent why it was up 46%?

Yes, that’s predominantly semi-cap equipment.

Right. I mean, and it’s almost entirely aimed at 10% versus the 14% for the total segment?

We are really fortunate to have a wide assortment of the customers in the semi-cap space. Quite honestly, we count most every one of the major players as a customer.

Okay, okay, got it. Kind of following to Jim’s comment about the Computing segment and the storage piece. So is it down sequentially materially because of the timing of the legacy storage shipments? Or is the net of it higher than you guys expected?

So if you look at the fourth quarter we’re computing in total, you could see it’s a massive quarter. I mean, it was a 47% growth, which, quite honestly, is contrary to what that fourth quarter looks like going back two to four years. So given that strength, it is unclear – obviously, on a year-over-year – on a quarter-to-quarter basis, you’d see a natural decline because fourth quarter and first quarter is always down. How much of that fourth quarter strength might possibly have been pull-ahead, we don’t know.

Okay. Got it. Thank you very much.

I’m not showing any further questions in queue at this time. I’d like to turn the call back to Ms. Weeks for any closing remarks.

Yes. Thank you, everyone, for joining our call today. We will be available after this call to answer questions, and have a wonderful day. Thank you.