Throughout the past 18 months, we've rallied through the uncertainty surrounding the pandemic and made decisions to increase our investments in new opportunities, which we believe are starting to bear fruit.
In the second quarter, we estimate that we left approximately $50 million of demand on the table and most of this demand is rolled into future quarters.
Given component constraints, we estimate we may leave $100 million of unfulfilled demand in this quarter, demonstrating the strength of end customer orders.
During the quarter, we also faced disruptions in our Malaysian operations from the ongoing COVID pandemic where government regulations reduced staffing levels to 60% and required our team to replan our workforce and shift patterns through most of the second quarter.
Government restrictions have recently eased, now allowing 80% of the workforce capacity and our leadership team continues to do a phenomenal job managing through reduced staffing and intermittent work stoppages to keep our employees healthy and maximize production.
With improving revenue, our non-GAAP gross margins improved 50 basis points to 8.8%, and non-GAAP operating margins improved 20 basis points to 2.5%.
As a reminder, our non-GAAP operating margins include stock compensation expenses, which were approximately 70 basis points in the second quarter.
Earnings per share of $0.27 was above the midpoint of our guidance, and we had another solid quarter of cash conversion cycle results at 64 days.
High-performance computing will be a key contributor to our growth over the next 12 months.
Total Benchmark revenue was $545 million in Q2, which was at the higher end of our guidance driven by continued strong performance in Semi-Cap and improving revenue in Industrials and Telco.
Semi-cap revenues were up 23% in the second quarter and up 60% year-over-year from continued demand strength from our front-end wafer fab equipment customers where we saw increased demand from each of our top customers.
A&D revenues for the second quarter increased 8% sequentially and 9% year-over-year from continued strong demand in our Defense programs for surveillance vehicles, secure communications and computing and military satellite programs.
Overall, the higher-value markets represented 82% of our second quarter revenue.
Our traditional markets represented 18% of second quarter revenues.
Our top 10 customers represented 46% of sales in the second quarter.
Our GAAP earnings per share for the quarter was $0.20.
Our GAAP results included restructuring and other onetime costs totaling $1.6 million related to restructuring activities.
For Q2, our non-GAAP gross margin was 8.8%.
This is 20 basis points better than the midpoint of our second quarter guidance, driven by higher revenues and a better mix.
On a sequential basis, we were up 50 basis points as a result of our higher revenue, improved productivity and utilization, somewhat offset by higher variable compensation expenses and higher-than-expected U.S. medical costs.
Our SG&A was $34 million, an increase of $3.5 million sequentially due to higher variable compensation expenses and higher U.S. medical costs.
Non-GAAP operating margin was 2.5%.
In Q2 2021, our non-GAAP effective tax rate was 20.3% as a result of the mix of profits between the U.S. and foreign jurisdictions.
Non-GAAP earnings per share was $0.27 for the quarter, which is $0.01 higher than the midpoint of our Q2 guidance and $0.06 sequential improvement.
Non-GAAP ROIC was 7.5%, a 110 basis point increase sequentially and 160 basis point improvement year-over-year.
Our cash conversion cycle days were 64 in the second quarter, an improvement of one day from Q1.
The cash balance was $370 million at June 30, with $135 million available in the U.S.
Our cash balances decreased $30 million sequentially.
We generated $4 million in cash flow from operations in Q2, and our free cash flow was a use of $9 million of cash after capital expenditures.
As of June 30, we had $133 million outstanding on our term loan with no borrowings outstanding on our available revolver.
In Q2, we paid cash dividends of $5.8 million and used $17 million to repurchase 566,600 shares.
As of June 30, we had approximately $174 million remaining in our existing share repurchase authorization.
We expect revenue to range from $555 million to $595 million, which at the midpoint represents a 9% year-over-year improvement.
We expect that our gross margins will be 9% to 9.4% for Q3, and SG&A will range between $34 million and $35 million.
We are still targeting gross margins for the full year to be 9%.
Implied in our guidance is a 3.1% to 3.4% non-GAAP operating margin range for modeling purposes.
We expect to incur restructuring and other nonrecurring costs in Q3 of approximately $800,000 to $1.2 million.
Our non-GAAP diluted earnings per share is expected to be in the range of $0.33 to $0.41 or a midpoint of $0.37.
We expect our capex plans for the year to be between $50 million and $60 million.
We expect -- we estimate that we will generate approximately $80 million to $100 million of cash flow from operations for fiscal year 2021.
Other expenses net is expected to be $2.1 million, which is primarily interest expense related to our outstanding debt.
We expect that for Q3, our non-GAAP effective tax rate will be between 19% and 21% because of the distribution of income around our global network.
The expected weighted average shares for Q3 are approximately $35.7 million.
For the second quarter, we expect revenue to be up sequentially by about $30 million.
After 60% year-over-year growth in Q2, we expect our Semi-Cap sector will remain at Q2 revenue levels as demand still remains robust, but we are constrained in the near term by mechanical sub-tier suppliers.
With this ongoing demand strength and signals from our customers, we are revising our outlook for this sector upward from 20% to greater than 30% revenue growth over 2020 levels.
In A&D, where we grew 8% in Q2, we expect continued growth in third quarter led by increased demand for ruggedized electronics for ground-based military vehicles and secure communication devices.
If there are no further component decommits or design delays, computing could be up over 50% sequentially in the third quarter.
With this demand improvement forecasted in the second half and a tremendous number of new program ramps in Q4, this sector has the potential to achieve greater than 10% growth for this year.
From our second quarter results to the midpoint of our Q3 guide, we're expecting a greater than 30% sequential earnings improvement.
Our target to sustain gross margins at 9% for the full year and our commitment to control our expenses.
On the gross margin line, we are still targeting to achieve 9% for the full year 2021.
With these results, we are still expecting operating cash flows between $80 million and $100 million.
Through the first half of 2021, we repurchased $30 million of stock and may continue to purchase the stock opportunistically as well as continue our recurring quarterly dividend which we raised last quarter as part of our capital allocation plan.

Summary:
Earnings per share of $0.27 was above the midpoint of our guidance, and we had another solid quarter of cash conversion cycle results at 64 days.
Total Benchmark revenue was $545 million in Q2, which was at the higher end of our guidance driven by continued strong performance in Semi-Cap and improving revenue in Industrials and Telco.
Our GAAP earnings per share for the quarter was $0.20.
Non-GAAP earnings per share was $0.27 for the quarter, which is $0.01 higher than the midpoint of our Q2 guidance and $0.06 sequential improvement.
We expect revenue to range from $555 million to $595 million, which at the midpoint represents a 9% year-over-year improvement.
Our non-GAAP diluted earnings per share is expected to be in the range of $0.33 to $0.41 or a midpoint of $0.37.