BENCHMARK ELECTRONICS INC

Previous wording

The financial information and the discussion below should be read in conjunction with other information, including the unaudited condensed consolidated financial statements and Notes thereto in Part I, Item 1 of this quarterly report on Form 10-Q for the quarterly period ended September 30, 2024 (this Report), the consolidated financial statements appearing in the Company’s annual report on Form 10-K for the year ended December 31, 2023 (the 2023 10-K), and Part I, Item 1A, Risk Factors of the 2023 10-K. In this Report, references to Benchmark, the Company or use of the words “we,” “our” and “us” include Benchmark’s subsidiaries unless otherwise noted.

Current wording

The financial information and the discussion below should be read in conjunction with other information, including the unaudited condensed consolidated financial statements and Notes thereto in Part I, Item 1 of this quarterly report on Form 10-Q for the quarterly period ended March 31, 2025 (this Report), the consolidated financial statements and Notes thereto appearing in the Company’s annual report on Form 10-K for the year ended December 31, 2024 (the 2024 10-K), and Part I, Item 1A, Risk Factors of the 2024 10-K. In this Report, references to Benchmark, the Company or use of the words “we,” “our” and “us” include Benchmark’s subsidiaries unless otherwise noted.

Previous wording

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts and may include words such as “anticipate,” “believe,” “intend,” “plan,” “project,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” “could,” “predict,” and similar expressions of the negative or other variations thereof. In particular, statements, express or implied, concerning the Company’s outlook and guidance for quarterly periods or fiscal year 2024 results, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the Company’s business strategy and strategic initiatives, the Company’s repurchases of shares of its common stock, the Company’s expectations regarding restructuring charges, stock-based compensation expense, amortization of intangibles, award of any tax incentives and capital expenditures, and the Company’s intentions concerning the payment of dividends, among others, are forward-looking statements. Although the Company believes these statements are based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions, that are beyond the Company’s ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of the 2023 10-K and in any of the Company’s subsequent reports filed with the Securities and Exchange Commission (the SEC). Events relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including continuing hostilities and tensions, trade restrictions and sanctions, the ability to utilize the Company’s manufacturing facilities at sufficient levels to cover its fixed operating costs, or write-downs or write-offs of obsolete or unsold inventory, may have resulting impacts on the Company’s business, financial condition, results of operations, and the Company’s ability (or inability) to execute on its plans. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes, including the future results of the Company’s operations, may vary materially from those indicated. Undue reliance should not be placed on any forward-looking statements. Forward-looking statements are not guarantees of performance. All forward-looking statements included in this document are based upon information available to the Company as of the date of this document, and the Company assumes no obligation to update.

Current wording

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts and may include words such as “anticipate,” “believe,” “intend,” “plan,” “project,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” “could,” “predict,” and similar expressions of the negative or other variations thereof. In particular, statements, expressed or implied, concerning the Company's outlook and guidance for quarterly periods or fiscal year 2025 results, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the Company’s business strategy and strategic initiatives, the Company’s repurchases of shares of its common stock, the Company’s expectations regarding restructuring charges, stock-based compensation expense, amortization of intangibles, award of any tax incentives and capital expenditures, and the Company’s intentions concerning the payment of dividends, among others, are forward-looking statements. Although the Company believes these statements are based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions, that are beyond the Company’s ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of the 2024 10-K and in any of the Company’s subsequent reports filed with the Securities and Exchange Commission (the SEC). Events relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including continuing hostilities and tensions, trade restrictions and sanctions, tariffs and retaliatory countermeasures, the ability to utilize the Company’s manufacturing facilities at sufficient levels to cover its fixed operating costs, or write-downs or write-offs of obsolete or unsold inventory, may have resulting impacts on the Company’s business, financial condition, results of operations, and the Company’s ability (or inability) to execute on its plans. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes, including the future results of the Company’s operations, may vary materially from those indicated. Undue reliance should not be placed on any forward-looking statements. Forward-looking statements are not guarantees of performance. All forward-looking statements included in this document are based upon information available to the Company as of the date of this document, and the Company assumes no obligation to update.

Previous wording

Benchmark Electronics, Inc. (the Company) is a Texas corporation that provides advanced manufacturing services (electronic manufacturing services (EMS) and precision technology (PT) services), which includes design and engineering services and technology solutions. From initial product concept to volume production, including direct order fulfillment and aftermarket services, we are a trusted integrated services partner to original equipment manufacturers (OEMs). Served markets include: semiconductor capital equipment (semi-cap), complex industrials, medical technologies, commercial aerospace and defense (A&D), and advanced computing and communications (AC&C). The Company has manufacturing operations located in the United States and Mexico (the Americas), Asia and Europe.

Current wording

Benchmark Electronics, Inc. (the Company) is a Texas corporation that provides design engineering and advanced manufacturing services that include both electronic manufacturing services (EMS) and precision technology (PT) services. We support customers throughout their product lifecycle starting from initial product concept through volume production, including the ability to manage direct order fulfillment and provide aftermarket services. We are a trusted partner to our European and U.S. based national and multi-national original equipment manufacturers (OEMs). Served markets include: commercial aerospace and defense (A&D), medical technologies, industrial, semiconductor capital equipment (semi-cap), and advanced computing and communication (AC&C). The Company has manufacturing operations located in the United States and Mexico (the Americas), Asia and Europe.

Previous wording

Manufacturing Services, which include printed circuit board assemblies (PCBAs) using both traditional surface mount technologies and microelectronics, subsystem assembly, system build and integration. System builds and integration often involve building a finished assembly that includes PCBAs, complex subsystem assemblies, mechatronics, displays, mechanicals, and other components. These final products may be configured to order and delivered directly to the end customer across all the industries we serve. Manufacturing services also includes precision technology services comprised of precision machining, advanced metal joining and welding, cleaning, assembly and functional testing primarily for the semi-cap (serving semi-cap customers) and A&D markets.

Current wording

Manufacturing Services, which include printed circuit board assemblies (PCBAs) using both surface mount technologies and microelectronics, along with subsystem assembly to full system build and integration. System build and integration often involve building a finished assembly that includes PCBAs, complex subsystem assemblies, mechatronics, displays, mechanicals, and other components. These final products may be build-to-order or configured-to-order and delivered directly to the end customer across all the industries we serve. Our manufacturing services also include PT services comprised of precision machining, advanced metal joining and welding, cleaning, including complex assembly often completed in clean rooms and functional testing primarily for the semi-cap and A&D markets.

Previous wording

Technology Solutions, which involve developing a library of building blocks or reference designs primarily in defense solutions, surveillance systems, millimeter wave radio frequency (RF) subsystems, and front-end managed connected data collection systems. We often partner with our customers to merge these solutions utilizing our engineering services to provide turnkey product development from requirements through the launch to volume production into our factories. Our building blocks can be utilized across a variety of industries, but we have significant focus and capabilities in the A&D, medical, AC&C, and the complex industrials markets. We have also developed differentiated capabilities in RF. The need to improve size, weight, and power to accommodate high frequency electronics communications is important to customers in the A&D, medical, and AC&C markets.

Current wording

Design & Engineering Services, which include designing for manufacturability, design optimization for our factory processes and supply chain, and test development, concurrent and sustaining engineering, turnkey product design and regulatory services. Our engineering services may be for systems, sub-systems, PCBAs, and components. We have the flexibility and capability to engage anywhere in the customer's design process flow. We provide these services across all the industries we serve. We have the ability to provide complete technology solutions, which involve developing a library of building blocks or reference designs primarily in defense solutions, surveillance systems, millimeter wave radio frequency (RF) subsystems, and front-end managed connected data collection systems. We often partner with our customers to merge these solutions utilizing our engineering services to provide turnkey product development from requirements through the launch to volume production into our factories. Our building blocks can be utilized across a variety of industries, but we have significant focus and capabilities in the A&D, medical technologies, AC&C, and the industrial markets. We have also developed differentiated capabilities in RF. The need to improve size, weight, and power to accommodate high-frequency electronics communications is important to customers in the A&D, medical, and AC&C markets.

Previous wording

We believe our primary source of differentiation and value-add rests with our ability to engage with our customers at any point, from product development through volume production. This is enabled by our highly skilled personnel’s ability to provide leading-edge technical capabilities in engineering services (including full lifecycle), high frequency RF solutions, microelectronics, miniaturization, and manufacturing services (including electronics and complex precision machining). These capabilities are brought to bear across diversified commercial end-markets, many of which are government regulated. To support customers across these sectors, we have strategically invested in geographically diverse manufacturing locations and global supply chain efficiencies.

Current wording

We believe our primary source of differentiation and value-add rests with our ability to engage with our customers at any point, from product development through volume production. This is enabled by our highly skilled personnel’s ability to provide leading-edge technical capabilities in engineering services (including full lifecycle), high-frequency RF solutions, microelectronics, optics, miniaturization, and manufacturing services (including electronics and complex precision machining). These capabilities are brought to bear across diversified commercial end-markets, many of which are government regulated. To support customers across these sectors, we have strategically invested in geographically diverse manufacturing locations and global supply chain capabilities.

Previous wording

In addition, we believe that a strong focus on human capital through the talent we hire and retain is critical to maintaining our competitiveness. Our people-first culture is centered on our five core values, consisting of acting with integrity, valuing inclusion, commitment to customers, promoting ingenuity, and genuine caring for each other, our customers and our communities, and we take pride in our innovative and continuous improvement mindset. We desire to delight our customers and deliver operational and financial performance aligned with our goals. Through our employee engagement and customer satisfaction feedback processes, we continuously solicit and act upon information to improve our company and better support our customers and business processes. We have invested in attracting and developing leadership throughout the organization and are committed to diversity and inclusion in our efforts to develop an innovative and forward-thinking workforce.

Current wording

In addition, we believe that a strong focus on human capital through the talent we hire and retain is critical to maintaining our competitiveness. Our people-first culture is centered on our five core values, consisting of acting with integrity, valuing inclusion, commitment to customers, promoting ingenuity, and genuine caring for each other, our customers and our communities, and we take pride in our innovative and continuous improvement mindset. Our intent is to delight our customers while delivering operational and financial performance aligned with our goals. Through our employee engagement and customer satisfaction feedback processes, we continuously solicit and act upon information to improve our Company and better support our customers and business processes. We have invested in attracting and developing leadership throughout the organization and are committed to investing in an innovative and forward-thinking workforce.

Previous wording

We employ enterprise resource planning (ERP) systems and lean manufacturing principles to manage procurement and manufacturing processes in an efficient and cost-effective manner so that, where possible, components arrive on a just-in-time, as-and-when-needed basis. Because we are a significant purchaser of electronic components and other raw materials, we are generally able to capitalize on the economies of scale associated with our relationships with suppliers to negotiate price discounts, obtain components and other raw materials that are in short supply, and return excess components. Utilizing our agility and expertise in supply chain management and our relationships with suppliers across the supply chain, we strive to help reduce our customers’ cost of goods sold and inventory exposure.

Current wording

We employ enterprise resource planning (ERP) systems and lean/six sigma methodologies to manage procurement and manufacturing processes in an efficient and cost-effective manner so that, where possible, components arrive on a just-in-time, as-and-when-needed basis. Because we are a significant purchaser of electronic components and other raw materials, we are generally able to capitalize on the economies of scale associated with our relationships with suppliers to negotiate price discounts, obtain components and other raw materials that are in short supply, and return excess components. Utilizing our agility and expertise in supply chain management and our relationships with suppliers across the supply chain, we strive to help reduce our customers’ cost of goods sold and inventory exposure.

Previous wording

Sales for the three months ended September 30, 2024 were $657.7 million, a 9% decrease from sales of $719.7 million during the three months ended September 30, 2023. During the third quarter of 2024, sales to customers in our various industry sectors varied from the third quarter of 2023 as follows:

Current wording

Sales for the three months ended March 31, 2025 were $631.8 million, a 6% decreased from sales of $675.6 million during the three months ended March 31, 2024. During the first quarter of 2025, sales to customers in our various industry sectors varied from the first quarter of 2024 as follows:

Previous wording

A&D increased by 2%, and

Current wording

A&D increased by 15%,

Previous wording

Our sales depend on the success of our customers, some of which operate in businesses associated with rapid technological change and consequent product obsolescence. Developments adverse to our major customers or their products, the availability of electronic component supply, or the failure of a major customer to pay for components or services have adversely affected us by not allowing us to fulfill our total customer demand. A substantial percentage of our sales are made to a small number of customers, and the loss of a major customer, if not replaced, would adversely affect us. Sales to our ten largest customers represented 52% of our total sales during both the nine months ended September 30, 2024 and 2023, respectively. After a period of unprecedented global labor and supply disruptions, we have seen a general easing of certain material constraints across commodity categories, with the exception of older technologies where semiconductor original equipment manufacturers are not adding incremental capacity. The lack of capacity regarding these older technologies could constrain our ability to produce the full demand forecasts we are receiving from customers needing those parts. We have experienced a significant reduction of non-cancellable and non-returnable business terms from our suppliers as lead times have improved significantly from previous highs.

Current wording

Our sales depend on the success of our customers, some of which operate in businesses associated with rapid technological change and consequent product obsolescence. Developments adverse to our major customers or their products, the availability of electronic component supply, or the failure of a major customer to pay for components or services have adversely affected us by not allowing us to fulfill our total customer demand. A substantial percentage of our sales are made to a small number of customers, and the loss of a major customer, if not replaced, would adversely affect us. Sales to our ten largest customers represented 54% of our total sales during both the three months ended March 31, 2025 and 2024. After a period of unprecedented global labor and supply disruptions, we have seen a general easing of certain material constraints across commodity categories, with the exception of older technologies where semiconductor OEMs are not adding incremental capacity. The lack of capacity regarding these older technologies could constrain our ability to produce the full demand forecasts we are receiving from customers needing those parts. We have experienced a significant reduction of non-cancellable and non-returnable business terms from our suppliers as lead times have improved significantly from previous highs.

Previous wording

Inflation, interest rates, disruption in the global economy and financial markets, and geopolitical events continue to create uncertainty. However, we are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying values of our assets or liabilities as of the date we filed this Report. These estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions or conditions.

Current wording

Inflation, interest rates, disruption in the global economy and financial markets, geopolitical instability, and government actions related to trade policies, tariffs and immigration continue to create uncertainty. Although we are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying values of our assets or liabilities as of the date we filed this Report, we continue to monitor the current economic environment and its potential impact on our business, results of operations or financial condition, as well as potential impact on our end customers whose demand for our products and services may be adversely impacted as a result of changes in policies by the U.S. or other governments, and closely manage our costs and capital resources so that we can respond appropriately as circumstances change. Our estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions or conditions.

Previous wording

As noted above, sales for the third quarter of 2024 decreased 9% from the third quarter of 2023.

Current wording

As noted above, sales for the first quarter of 2025 decreased 6% from the first quarter of 2024.

Previous wording

Semi-Conductor Capital Equipment. Third quarter of 2024 sales increased 13% to $187.4 million from $165.3 million in the third quarter of 2023. Sales during the first nine months of 2024 increased 10% to $525.2 million from $477.8 million in the same period of 2023. The increases were primarily due to share gains and new customer wins.

Current wording

Semi-Conductor Capital Equipment. First quarter of 2025 sales increased 18% to $195.1 million from $165.9 million in the first quarter of 2024. The increase was primarily due to share gains and new customer wins.

Previous wording

Complex Industrials. Third quarter of 2024 sales decreased 2% to $150.9 million from $153.6 million in the third quarter of 2023. Sales during the first nine months of 2024 decreased 7% to $433.6 million from $464.0 million in the same period of 2023. The decreases were primarily due to reduced demand from certain existing customers partially offset by new program ramps.

Current wording

Industrial. First quarter of 2025 sales decreased 3% to $136.7 million from $141.0 million in the first quarter of 2024. The decrease was primarily due to reduced demand from certain existing customers partially offset by new program ramps.

Previous wording

Aerospace and Defense. Third quarter of 2024 sales increased 2% to $102.0 million from $99.7 million in the third quarter of 2023. Sales during the first nine months of 2024 increased 22% to $316.7 million from $259.3 million in the same period of 2023. The increases were primarily due to increased demand from existing programs and incremental support from new program ramps.

Current wording

Aerospace and Defense. First quarter of 2025 sales increased 15% to $121.9 million from $105.8 million in the first quarter of 2024. The increase was primarily due to increased demand from existing programs and incremental support from new program ramps.

Previous wording

Medical. Third quarter of 2024 sales decreased 28% to $107.1 million from $149.1 million in the third quarter of 2023. Sales during the first nine months of 2024 decreased 23% to $333.4 million from $431.1 million in the same period of 2023. The decreases were primarily due to inventory re-balancing and end-demand weakness impacting medical devices.

Current wording

Medical. First quarter of 2025 sales decreased 10% to $103.6 million from $114.7 million in the first quarter of 2024. The decrease was primarily due to inventory re-balancing and end-demand weakness impacting medical devices.

Previous wording

Our international operations are subject to the risks of doing business abroad. See Part I, Item 1A of our 2023 10-K for factors pertaining to our international sales, fluctuations in foreign currency exchange rates and a discussion of potential adverse effects in operating results associated with the risks of doing business abroad. During the three months ended September 30, 2024 and 2023, 65% and 60%, respectively, of our sales were from international operations. During the nine months ended September 30, 2024 and 2023, 62% and 59%, respectively, of our sales were from international operations.

Current wording

Our international operations are subject to the risks of doing business abroad. See Part I, Item 1A of our 2024 10-K for factors pertaining to our international sales, fluctuations in foreign currency exchange rates and a discussion of potential adverse effects in operating results associated with the risks of doing business abroad. During the three months ended March 31, 2025 and 2024, 66% and 58%, respectively of our sales were from international operations.

Previous wording

Americas. Third quarter of 2024 sales decreased 23% to $306.5 million from $399.4 million in the third quarter of 2023. Sales during the first nine months of 2024 decreased 15% to $1,022.0 million from $1,200.8 million in the same period of 2023. The decreases were primarily due to softness in the semi-cap, medical and AC&C sectors partially offset by increased demand in the complex industrials sector.

Current wording

Americas. First quarter of 2025 sales decreased 24% to $284.3 million from $372.3 million in the first quarter of 2024. The decrease was primarily due to softness in AC&C and semi-cap sectors partially offset by increased demand in the A&D sector.

Previous wording

Asia. Third quarter of 2024 sales increased 5% to $289.9 million from $275.2 million in the third quarter of 2023. The increases was primarily due to an increase in existing customer demand in the semi-cap sector partially offset by decreased demand in the complex industrials and medical sectors. Sales during the first nine months of 2024 decreased 3% to $805.4 million from $830.1 million in the same period of 2023. The decrease was primarily due to a decrease in existing customer demand in complex industrials, medical, A&D and AC&C sectors partially offset by increased demand in the semi-cap sector.

Current wording

Asia. First quarter of 2025 sales increased 10% to $284.0 million from $257.8 million in the first quarter of 2024. The increase was primarily due to an increase in existing customer demand in the semi-cap sector partially offset by decreased demand in the A&D and medical sectors.

Previous wording

Europe. Third quarter of 2024 sales increased 17% to $83.5 million from $71.4 million in the third quarter of 2023. Sales during the first nine months of 2024 increased 12% to $249.9 million from $223.9 million in the same period of 2023. The increases were primarily due to higher demand in the semi-cap and A&D sectors partially offset by a decrease in the complex industrials sector.

Current wording

Europe. First quarter of 2025 sales increased 7% to $86.3 million from $80.5 million in the first quarter of 2024. The increase was primarily due to higher demand in the A&D and industrial sectors partially offset by a decrease in the semi-cap sector.

Previous wording

Europe. Third quarter of 2024 income from operations increased 70% to $6.7 million from $3.9 million in the third quarter of 2023. Income from operations during the first nine months of 2024 increased 44% to $20.1 million from $14.0 million in the same period of 2023. The increases were primarily due to higher revenue and cost control.

Current wording

Europe. First quarter of 2025 income from operations increased 18% to $8.0 million from $6.8 million in the first quarter of 2024. The increase was primarily due to higher revenue and cost control.

Previous wording

Amortization of intangible assets was $1.2 million in the third quarter of 2024 and $1.6 million in the third quarter of 2023. Amortization of intangible assets was $3.6 million in the first nine months of 2024 and $4.8 million in the same period of 2023. The decreases were primarily due to certain intangible assets becoming fully amortized in 2023.

Current wording

Amortization of intangible assets was $1.2 million in both the first quarter of 2025 and 2024.

Previous wording

During the three and nine months ended September 30, 2024, we recognized $0.8 million and $5.6 million, respectively, of restructuring charges and other costs primarily due to capacity and workforce reductions at our sites in the Americas.

Current wording

During the first quarter of 2024, we recognized $3.3 million of restructuring charges and other costs primarily due to capacity and workforce reductions at our sites in the Americas.

Previous wording

We reported net income of $15.4 million, or $0.42 per diluted share, for the third quarter of 2024, compared with net income of $20.4 million, or $0.57 per diluted share, for the third quarter of 2023. We reported net income of $44.9 million, or $1.23 per diluted share, for the first nine months of 2024, compared with net income of $46.8 million, or $1.30 per diluted share, for the first nine months of 2023. The increases were primarily due to the items discussed above.

Current wording

We reported net income of $3.6 million, or $0.10 per diluted share, for the first quarter of 2025, compared with net income of $14.0 million, or $0.38 per diluted share, for the first quarter of 2024. The increase was primarily due to the items discussed above.

Previous wording

We have historically financed our organic growth and operations through funds generated from operations and occasional borrowings under our Credit Agreement (as defined below). Cash, cash equivalents and restricted cash totaled $324.4 million as of September 30, 2024, which included $318.6 million held outside the United States in various foreign subsidiaries.

Current wording

We have historically financed our organic growth and operations through funds generated from operations and occasional borrowings under our credit agreement (as amended, the Credit Agreement), consisting of a term loan facility and a $550.0 million revolving credit facility, both with a maturity date of December 21, 2026. Cash, cash equivalents and restricted cash totaled $355.3 million as of March 31, 2025, which included $344.0 million held outside the United States in various foreign subsidiaries.

Previous wording

Management believes that our existing cash balances, funds generated from operations, and borrowing availability under our revolving credit facility will be sufficient to permit us to meet our liquidity requirements over the next 12 months. Management further believes that our ongoing cash flows from operations and any borrowings we may incur under our revolving credit facility will enable us to meet operating cash requirements in future years. If we consummated significant acquisitions in the future, our capital needs would increase and could possibly result in our need to increase available borrowings under our Credit Agreement or access public or private debt and equity markets. There can be no assurance, however, that we would be successful in raising additional debt or equity on acceptable terms.

Current wording

Management believes that our existing cash balances, funds generated from operations, and borrowing availability under our revolving credit facility will be sufficient to permit us to meet our liquidity requirements over the next 12 months. Management further believes that our ongoing cash flows from operations and any borrowings we may incur under our revolving credit facility will enable us to meet operating cash requirements in future years. If we consummate significant acquisitions in the future, our capital needs would increase and could possibly result in our need to increase available borrowings under our Credit Agreement or access public or private debt and equity markets. There can be no assurance, however, that we would be successful in raising additional debt or equity on acceptable terms.

Previous wording

Cash provided from operating activities was $143.3 million during the first nine months of 2024 and primarily consisted of $44.9 million of net income, adjusted for $34.6 million of depreciation and amortization, $10.7 million of stock-based compensation expense, a $76.5 million decrease in accounts receivable and a $102.5 million decrease in inventories, partially offset by a $59.5 million decrease in advance payments from customers, a $28.1 million decrease in accrued liabilities and a $16.1 million decrease in accounts payable. Working capital was $0.9 billion as of September 30, 2024.

Current wording

Cash provided from operating activities was $31.5 million during the first quarter of 2025, and primarily consisted of $3.6 million of net income, adjusted for $11.8 million of depreciation and amortization, $4.4 million of stock-based compensation expense, a $39.9 million decrease in accounts receivable and a $24.2 million increase in accounts payable, partially offset by a $26.3 million decrease in accrued liabilities, a $15.8 million decrease in advance payments from customers, and a $5.2 million increase in inventories. Working capital was $0.9 billion as of March 31, 2025.

Previous wording

We primarily purchase components only after customer orders or forecasts are received, which mitigates, but does not eliminate, the risk of loss on inventories. Supplies of electronic components and other materials used in operations are subject to industry-wide shortages. In certain instances, suppliers may allocate available quantities to us. When shortages of these components and other material supplies used in operations have occurred, vendors have at times been unable to ship the quantities we need for production, forcing us to delay shipments, which can increase backorders and impact cash flows. Vendors also may increase the costs of components based on the market conditions including these shortages. In certain instances, we request and receive advance payments from customers as prepayments of inventory to meet working capital demands of a contract, offset inventory risks such as inventory purchased in advance of current needs and protect the Company from the failure of other parties to fulfill obligations under a contract. For example, we have been impacted by supply chain constraints, including shortages, longer lead times and increased transit times.

Current wording

We primarily purchase components only after customer orders or forecasts are received, which mitigates, but does not eliminate, the risk of loss on inventories. Supplies of electronic components and other materials used in operations are subject to industry-wide shortages. In certain instances, suppliers may allocate available quantities to us. When shortages of these components and other material supplies used in operations have occurred, vendors have at times been unable to ship the quantities we need for production, forcing us to delay shipments, which can increase backorders and impact cash flows. Vendors also may increase the costs of components based on the market conditions including these shortages. In certain instances, we request and receive advance payments from customers as prepayments of inventory to meet working capital demands of a contract, offset inventory risks such as inventory purchased in advance of current needs and protect the Company from the failure of other parties to fulfill obligations under a contract. For example, we have been impacted by supply chain constraints, including shortages, longer lead times and increased transit times. Furthermore, the U.S. government’s adoption of new approaches to trade policy and imposition of tariffs on certain foreign goods (as well as the possibility of imposing significant, additional tariffs in the future) may make it more difficult or costly for us to procure components and other material supplies and, in turn, may increase the cost to our customers, which may materially and adversely impact demand for our products and services, our results of operations or our financial condition.

Previous wording

Cash used in investing activities was $23.7 million during the first nine months of 2024 primarily due to capital expenditures for property, plant and equipment of $22.6 million and purchased software of $1.7 million. The purchases of property, plant and equipment were primarily for leasehold improvements and machinery and equipment in the Americas and Asia.

Current wording

Cash used in investing activities was $4.1 million during the first quarter of 2025 primarily due to capital expenditures for property, plant and equipment of $3.4 million and purchased software of $0.8 million. The purchases of property, plant and equipment were primarily for leasehold improvements and machinery and equipment in the Americas and Asia.

Previous wording

Cash used in financing activities was $81.2 million during the first nine months of 2024. Borrowings under the Credit Agreement were $455.0 million and principal payments under the Credit Agreement were $507.5 million. In addition, we paid $17.8 million of dividends, $6.2 million for employee taxes paid to settle stock-based awards exercised and $5.1 million of stock repurchases during the first nine months of 2024.

Current wording

Cash used in financing activities was $2.5 million during the first quarter of 2025. Borrowings under the Credit Agreement were $175.0 million and principal payments under the Credit Agreement were $156.6 million. In addition, during the first quarter of 2025, we paid $8.0 million for stock repurchases, $6.7 million for employee taxes in connection with the settlement of stock-based awards and $6.1 million for dividends.

Previous wording

As of September 30, 2024, we had $124.7 million in borrowings outstanding under the term loan facility and $155.0 million outstanding under our revolving credit facility and $4.4 million in letters of credit outstanding under our revolving credit facility. See Note 5 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for more information regarding the terms of our Credit Agreement.

Current wording

As of March 31, 2025, we had $121.4 million in borrowings outstanding under the term loan facility, $155.0 million outstanding under our revolving credit facility and $4.4 million in letters of credit outstanding under our revolving credit facility. See Note 5 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for more information regarding the terms of our Credit Agreement.

Previous wording

The Credit Agreement contains certain financial covenants related to interest coverage and debt leverage, and certain customary affirmative and negative covenants, including restrictions on our ability to incur additional debt and liens, pay dividends, repurchase shares, sell assets and merge or consolidate with other persons. Amounts due under the Credit Agreement could be accelerated upon specified events of default, including a failure to pay amounts due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or insolvency, subject, in some cases, to cure periods. As of September 30, 2024, we were in compliance with all of these covenants and restrictions.

Current wording

The Credit Agreement contains certain financial covenants related to interest coverage and debt leverage, and certain customary affirmative and negative covenants, including restrictions on our ability to incur additional debt and liens, pay dividends, repurchase shares, sell assets, including trade accounts receivable, and merge or consolidate with other persons. Amounts due under the Credit Agreement could be accelerated upon specified events of default, including a failure to pay amounts due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or insolvency, subject, in some cases, to cure periods. As of March 31, 2025, we were in compliance with all of these covenants and restrictions.

Previous wording

During the nine months ended September 30, 2024 and 2023, cash dividends paid totaled $17.8 million and $17.6 million, respectively. On September 9, 2024, the Company declared a quarterly cash dividend of $0.17 per share of the Company’s common stock to shareholders of record as of September 30, 2024. The dividend of $6.1 million was paid on October 11, 2024.

Current wording

During the three months ended March 31, 2025 and 2024, cash dividends paid totaled $6.1 million and $5.9 million, respectively. On March 10, 2025, the Board of Directors declared a quarterly cash dividend of $0.17 per share of the Company’s common stock to shareholders of record as of March 31, 2025. The dividend of $6.1 million was paid on April 11, 2025.

Previous wording

The Board of Directors currently intends to continue paying quarterly dividends. However, the Company’s future dividend policy is subject to the Company’s compliance with applicable law, and depending on, among other things, the Company’s results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in the Company’s debt agreements, and other factors that the Board of Directors may deem relevant. Dividend payments are not mandatory or guaranteed; there can be no assurance that the Company will continue to pay a dividend in the future.

Current wording

The Board of Directors currently intends to continue paying quarterly dividends. However, the Company’s future dividend policy is subject to the Company’s compliance with applicable law, and dependent on, among other things, the Company’s results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in the Company’s debt agreements, and other factors that the Board of Directors may deem relevant. Dividend payments are not mandatory or guaranteed; there can be no assurance that the Company will continue to pay a dividend in the future.

Previous wording

The Company repurchased 0.1 million shares for an aggregate of $5.1 million at an average price of $40.27 per share during the three and nine months ended September 30, 2024 . As of September 30, 2024, the Company had $149.5 million remaining under share repurchase authorizations.

Current wording

The Company repurchased 0.2 million shares for an aggregate of $8.0 million at an average price of $39.48 per share during the three months ended March 31, 2025. As of March 31, 2025, the Company had $141.5 million remaining under share repurchase authorizations. See Note 7 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for more information on the share repurchase authorization.

Previous wording

Management’s discussion and analysis is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. See Note 2 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for a discussion of recently enacted accounting principles. Also, our significant accounting policies are summarized in Note 1 to the consolidated financial statements included in our 2023 10-K. There have been no changes to the items disclosed as critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2023 10-K.

Current wording

Management’s discussion and analysis of financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. See Note 2 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for a discussion of recently enacted accounting principles. Also, our significant accounting policies are summarized in Note 1 to the consolidated financial statements included in our 2024 10-K. There have been no changes to the items disclosed as critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2024 10-K.