BENCHMARK ELECTRONICS INC

Previous 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.

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: aerospace and defense (A&D), medical, 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

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.

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 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, 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

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:

Current wording

Sales for the three months ended June 30, 2025 were $642.3 million, a 4% decrease from sales of $665.9 million during the three months ended June 30, 2024. During the second quarter of 2025, sales to customers in our various industry sectors varied from the second quarter of 2024 as follows:

Previous wording

The overall revenue decrease was primarily due to lower Medical and AC&C revenue, due to general end demand softness. This was partially offset by an increase in Semi-Cap revenue, due to improving demand and new customer wins. See “Results of Operations — Sales” discussion below.

Current wording

The overall revenue decrease was primarily due to lower AC&C revenue, due to general end demand softness. This was partially offset by an increase in Semi-Cap and A&D revenue, due to improving demand and new customer wins. See “Results of Operations — Sales” discussion below.

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 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.

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 53% of our total sales during both the six months ended June 30, 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

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

Current wording

As noted above, sales for the second quarter of 2025 decreased 4% from the second quarter of 2024.

Previous 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.

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 June 30, 2025 and 2024, 64% and 61%, respectively of our sales were from international operations.

Previous 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.

Current wording

Americas. Sales for the three months ended June 30, 2025 decreased 14% to $295.2 million from $343.1 million for the three months ended June 30, 2024. Sales for the six months ended June 30, 2025 decreased 19% to $579.5 million from $715.5 million for the six months ended June 30, 2024. The decreases were primarily due to softness in AC&C and Semi-Cap sectors partially offset by increased demand in the A&D sector.

Previous 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.

Current wording

Europe. Sales for the three months ended June 30, 2025 decreased 3% to $83.4 million from $85.9 million for the three months ended June 30, 2024. The decrease was primarily due to decreased demand in the Semi-Cap sector partially offset by an increase in the A&D sector. Sales for the six months ended June 30, 2025 increased 2% to $169.7 million from $166.4 million for the six months ended June 30, 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

First quarter of 2025 income from operations decreased 54% to $11.8 million from $25.5 million in the first quarter of 2024. The decrease was primarily due to lower sales, as well as increased restructuring expenses and other costs due to settlement of a tax assessment in the Americas.

Current wording

Income from operations for the three months ended June 30, 2025 decreased 25% to $20.5 million from $27.3 million in the three months ended June 30, 2024. Income from operations for the six months ended June 30, 2025 decreased 39% to $32.2 million from $52.8 million in the six months ended June 30, 2024. The decreases were primarily due to lower sales, as well as increased selling, general and administrative expenses primarily due to higher stock based compensation expense and increased restructuring expenses and other costs due to settlement of a tax assessment in the Americas as described below.

Previous wording

Americas. First quarter of 2025 income from operations decreased 144% to a loss of $4.4 million from income of $10.2 million in the first quarter of 2024. The decrease was primarily due to lower revenue, as well as increased restructuring expenses and other costs due to settlement of a tax assessment. See Note 15 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for additional information on the tax assessment.

Current wording

Americas. Income from operations for the three months ended June 30, 2025 decreased 18% to $10.8 million from $13.2 million for the three months ended June 30, 2024. Income from operations for the six months ended June 30, 2025 decreased 73% to $6.3 million from $23.4 million for the six months ended June 30, 2024.The decreases were primarily due to lower revenue, as well as increased restructuring expenses and other costs due to settlement of a tax assessment, partially offset by cost control. See Note 15 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for additional information on the tax assessment.

Previous wording

SG&A expenses increased to $38.8 million in the first quarter of 2025 from $37.3 million in the first quarter of 2024. The increase was primarily due to higher stock based compensation expense, as well as professional services.

Current wording

SG&A expenses increased to $40.6 million for the three months ended June 30, 2025 from $38.0 million for the three months ended June 30, 2024. SG&A expenses increased to $79.4 million for the six months ended June 30, 2025 from $75.4 million for the six months ended June 30, 2024. The increases were primarily due to higher stock based compensation expense, as well as professional services.

Previous wording

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

Current wording

Amortization of intangible assets was $1.2 million for the three months ended June 30, 2025 and 2024. Amortization of intangible assets was $2.4 million for the six months ended June 30, 2025 and 2024.

Previous wording

During the first quarter of 2025, we recognized $1.3 million of restructuring charges and other costs primarily due to capacity and workforce reductions at our sites in the Americas. Additionally, the Company agreed to a $10.1 million settlement related to a tax assessment in the Americas. See Note 15 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for additional information on the tax assessment.

Current wording

During the three and six months ended June 30, 2025, we recognized $1.9 million and $3.3 million, respectively, of restructuring charges and other costs primarily due to capacity and workforce reductions at our sites in the Americas. Additionally, the Company incurred $0.6 million and $10.7 million of settlement costs related to a tax assessment in the Americas for the three and six months ended June 30, 2025, respectively. See Note 15 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for additional information on the tax assessment.

Previous 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.

Current wording

During the three and six months ended June 30, 2024, we recognized $1.5 million and $4.8 million, respectively, of restructuring charges and other costs primarily due to capacity and workforce reductions at our sites in the Americas.

Previous wording

Interest expense decreased to $5.3 million in the first quarter of 2025 from $7.2 million in the first quarter of 2024. The decrease was primarily due to decreased borrowings and a lower interest rate environment.

Current wording

Interest expense decreased to $6.3 million for the three months ended June 30, 2025 from $6.9 million for the three months ended June 30, 2024. Interest expense decreased to $11.6 million for the six months ended June 30, 2025 from $14.2 million for the six months ended June 30, 2024. The decreases were primarily due to decreased borrowings and a lower interest rate environment.

Previous wording

Interest income increased to $2.7 million in the first quarter of 2025 from $2.0 million in the first quarter of 2024. The increase was primarily due to higher cash balances partially offset by a lower interest environment.

Current wording

Interest income increased to $3.1 million for the three months ended June 30, 2025 from $2.5 million for the three months ended June 30, 2024. Interest income increased to $5.9 million for the six months ended June 30, 2025 from $4.5 million for the six months ended June 30, 2024. The increases were primarily due to higher cash balances partially offset by a lower interest environment.

Previous wording

Income tax expense of $4.8 million represented a 56.6% effective tax rate for the first quarter of 2025, compared with $5.1 million in the first quarter of 2024, representing an effective tax rate of 26.7%. The increase in the effective tax rate in 2025 is primarily due to losses generated in a jurisdiction where no tax benefit can be recognized and to the mix of profits in our various jurisdictions.

Current wording

Income tax expense of $15.6 million represented a 94.1% effective tax rate for the three months ended June 30, 2025, compared with $5.0 million for the three months ended June 30, 2024, representing an effective tax rate of 24.3%. Income tax expense of $20.4 million represented a 81.5% effective tax rate for the six months ended June 30, 2025, compared with $10.1 million for the six months ended June 30, 2024, representing an effective tax rate of 25.5%. The increase in the effective tax rate in 2025 is primarily due to the $10.4 million in discrete tax expense recorded in the second quarter for the foreign withholding taxes on repatriated dividends and recognition of deferred tax liabilities on China unremitted earnings, losses generated in a jurisdiction where no tax benefit can be recognized and to the mix of profits in our various jurisdictions.

Previous 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.

Current wording

We reported net income of $1.0 million, or $0.03 per diluted share, for the three months ended June 30, 2025, compared with net income of $15.5 million, or $0.43 per diluted share, for the three months ended June 30, 2024. We reported net income of $4.6 million, or $0.13 per diluted share, for the six months ended June 30, 2025, compared with net income of $29.5 million, or $0.81 per diluted share, for the six months ended June 30, 2024. The decreases were 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 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.

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 and restated, the Credit Agreement), consisting of a term loan facility and a $550.0 million revolving credit facility, both with a maturity date of June 27, 2030. Cash, cash equivalents and restricted cash totaled $264.6 million as of June 30, 2025, which included $227.5 million held outside the United States in various foreign subsidiaries.

Previous 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.

Current wording

Cash provided from operating activities was $28.7 million during the six months ended June 30, 2025, and primarily consisted of $4.6 million of net income, adjusted for $23.8 million of depreciation and amortization, $9.7 million of stock-based compensation expense, a $46.8 million decrease in accounts receivable, a $26.1 million decrease in inventories, partially offset by a $17.7 million decrease in accrued liabilities, a $17.2 million decrease in advance payments from customers and a $20.7 million decrease in income taxes. Working capital was $0.8 billion as of June 30, 2025.

Previous 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.

Current wording

Cash used in investing activities was $16.4 million during the six months ended June 30, 2025 primarily due to capital expenditures for property, plant and equipment of $14.4 million and purchased software of $2.1 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 $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.

Current wording

Cash used in financing activities was $85.4 million during the six months ended June 30, 2025. Borrowings under the Credit Agreement were $398.6 million and principal payments under the Credit Agreement were $446.6 million. In addition, during the six months ended June 30, 2025, we paid $16.0 million for stock repurchases, $6.7 million for employee taxes in connection with the settlement of stock-based awards and $12.3 million for dividends.

Previous 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.

Current wording

On June 27, 2025, the Company entered into a $700 million second amended and restated credit agreement (the Credit Agreement) by and among the Company, certain of its subsidiaries, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer. The Credit Agreement is comprised of a five-year $550 million revolving credit facility and a five-year $150 million term loan facility, both with a maturity date of June 27, 2030. As of June 30, 2025, we had $150 million in borrowings outstanding under the term loan facility, $60.0 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

As of March 31, 2025, we had $390.6 million available for borrowings under the Credit Agreement, subject to compliance with financial covenants as to interest coverage and debt leverage, in addition to other debt covenant restrictions. During the next 12 months, we believe our capital expenditures will approximate $60 million to $70 million, principally for machinery and equipment to help increase our production capacity to support anticipated revenue growth and our ongoing business around the globe.

Current wording

As of June 30, 2025, we had $485.6 million available for borrowings under the Credit Agreement, subject to compliance with financial covenants as to interest coverage and debt leverage, in addition to other debt covenant restrictions. During the next 12 months, we believe our capital expenditures will approximate $60 million to $70 million, principally for machinery and equipment to help increase our production capacity to support anticipated revenue growth and our ongoing business around the globe.

Previous 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.

Current wording

During the six months ended June 30, 2025 and 2024, cash dividends paid totaled $12.3 million and $11.8 million, respectively. On June 9, 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 June 30, 2025. The dividend of $6.1 million was paid on July 11, 2025.

Previous wording

On March 6, 2018, the Board of Directors approved an expanded share repurchase authorization granting the Company authority to repurchase up to $250 million in common stock in addition to the $100 million previously approved on December 7, 2015. On October 26, 2018 and February 19, 2020, the Board of Directors authorized the repurchase of an additional $100 million and $150 million of the Company’s common stock, respectively.

Current wording

On February 19, 2020, the Board of Directors approved an expanded share repurchase authorization granting the Company authority to repurchase up to $150 million in common stock.

Previous 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.

Current wording

The Company repurchased 0.4 million shares for an aggregate of $16.0 million at an average price of $37.43 per share during the six months ended June 30, 2025. As of June 30, 2025, the Company had $133.5 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.