BENCHMARK ELECTRONICS INC

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, 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.

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 expectations that its restructuring activities for its Fremont, California site and old facility in Guadalajara, Mexico will be fully complete in 2025, 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, the continuing U.S. government shutdown and the economic impacts, volatility and uncertainty resulting therefrom, 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…

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Previous wording

Revenue is measured based on the consideration specified in a contract with a customer. Under the majority of our manufacturing contracts with customers, the customer controls all of the work-in-progress as products are being built. Revenues under these contracts are recognized progressively based on the cost-to-cost method. For other manufacturing contracts, the customer does not take control of the product until it is completed. Under these contracts, we recognize revenue upon transfer of control of the product to the customer, which is generally when the goods are shipped. Revenue from design, development and engineering services is recognized over time as the services are performed. As a general matter, we assume no significant obligations after shipment as we typically warrant workmanship only. Therefore, the warranty provisions are generally not significant.

Current wording

Revenue is measured based on the consideration specified in a contract with a customer. Under the majority of our manufacturing contracts with customers, the customer controls all of the work-in-progress as products are being built. Revenues under these contracts are recognized progressively based on the cost-to-cost method. For other manufacturing contracts, the customer does not take control of the product until it is completed. Under these contracts, we recognize revenue upon transfer of control of the product to the customer, which is generally when the goods are shipped. Revenue from design, development and engineering services is recognized over time as the services are performed. As a general matter, we assume no significant obligations after shipment as we typically warrant workmanship only. Therefore, warranty provisions are generally not significant.

Previous 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:

Current wording

Sales for the three months ended September 30, 2025 were $680.7 million, a 3% increase from sales of $657.7 million during the three months ended September 30, 2024. During the third quarter of 2025, sales to customers in our various industry sectors varied from the third quarter of 2024 as follows:

Previous 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.

Current wording

The overall revenue increase was primarily due to higher A&D and Medical revenue due to improving demand and new customer wins. This was partially offset by an decrease in AC&C revenue due to demand weakness. 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 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.

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% and 52% of our total sales during the nine months ended September 30, 2025 and 2024, respectively. After a period of unprecedented global labor and supply disruptions, we continue to see good overall availability of electronic components except for a small portion 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, 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.

Current wording

Inflation, interest rates, disruption in the global economy and financial markets, geopolitical instability, government actions related to trade policies, tariffs and immigration, and a prolonged U.S. government shutdown 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 or the continued U.S. government shutdown, 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 second quarter of 2025 decreased 4% from the second quarter of 2024.

Current wording

As noted above, sales for the third quarter of 2025 increased 3% from the third quarter of 2024.

Previous wording

Semiconductor Capital Equipment. Sales for the three months ended June 30, 2025 increased 11% to $190.4 million from $171.9 million for the three months ended June 30, 2024. Sales for the six months ended June 30, 2025 increased 14% to $385.4 million from $337.8 million for the six months ended June 30, 2024. The increases were primarily due to higher demand and new program wins.

Current wording

Semiconductor Capital Equipment. Sales for the three months ended September 30, 2025 decreased 1% to $185.2 million from $187.4 million for the three months ended September 30, 2024. The decrease was primarily due to lower demand. Sales for the nine months ended September 30, 2025 increased 9% to $570.6 million from $525.2 million for the nine months ended September 30, 2024. The increase was primarily due to higher demand and new program wins.

Previous wording

Industrial. Sales for the three months ended June 30, 2025 and 2024 were $141.6 million and $141.7 million, respectively. Sales for the six months ended June 30, 2025 decreased 2% to $278.4 million from $282.7 million for the six months ended June 30, 2024. The decrease was primarily due to demand softness from certain existing customers partially offset by new program ramps.

Current wording

Industrial. Sales for the three months ended September 30, 2025 increased 1% to $152.4 million from $150.9 million for the three months ended September 30, 2024. The increase was primarily due to new program ramps partially offset by demand softness from certain existing customers. Sales for the nine months ended September 30, 2025 decreased 1% to $430.7 million from $433.6 million for the nine months ended September 30, 2024. The decrease was primarily due to demand softness from certain existing customers partially offset by new program ramps.

Previous wording

Aerospace and Defense. Sales for the three months ended June 30, 2025 increased 16% to $126.3 million from $108.8 million for the three months ended June 30, 2024. Sales for the six months ended June 30, 2025 increased 16% to $248.1 million from $214.7 million for the six months ended June 30, 2024. The increases were primarily due to strong market growth in both commercial aerospace and defense.

Current wording

Aerospace and Defense. Sales for the three months ended September 30, 2025 increased 26% to $128.7 million from $102.0 million for the three months ended September 30, 2024. Sales for the nine months ended September 30, 2025 increased 19% to $376.8 million from $316.7 million for the nine months ended September 30, 2024. The increases were primarily due to strong market growth in both commercial aerospace and defense.

Previous wording

Advanced Computing and Communications. Sales for the three months ended June 30, 2025 decreased 44% to $74.5 million from $131.9 million for the three months ended June 30, 2024. Sales for the six months ended June 30, 2025 decreased 47% to $149.0 million from $280.0 million for the six months ended June 30, 2024. The decreases were primarily due to lower demand coupled with high-performance computing program transitions.

Current wording

Advanced Computing and Communications. Sales for the three months ended September 30, 2025 decreased 20% to $88.2 million from $110.3 million for the three months ended September 30, 2024. Sales for the nine months ended September 30, 2025 decreased 39% to $237.2 million from $390.3 million for the nine months ended September 30, 2024. The decreases were due to lower demand from existing customers.

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 June 30, 2025 and 2024, 64% and 61%, 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 September 30, 2025 and 2024, 56% and 65%, respectively of our sales were from international operations. During the nine months ended September 30, 2025 and 2024, 56% and 62%, respectively, of our sales were from international operations.

Previous 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.

Current wording

Americas. Sales for the three months ended September 30, 2025 increased 1% to $309.0 million from $306.5 million for the three months ended September 30, 2024. The increase was primarily due to higher demand in A&D and Medical sectors partially offset by decreased demand in the AC&C sector. Sales for the nine months ended September 30, 2025 decreased 13% to $888.5 million from $1,022.0 million for the nine months ended September 30, 2024. The decrease was primarily due to softness in AC&C and Semi-Cap sectors partially offset by increased demand in the A&D and Medical sectors.

Previous wording

Asia. Sales for the three months ended June 30, 2025 increased 11% to $287.1 million from $257.7 million for the three months ended June 30, 2024. Sales for the six months ended June 30, 2025 increased 11% to $571.1 million from $515.5 million for the six months ended June 30, 2024. The increases were primarily due to an increase in existing customer demand in the Semi-Cap and industrial sectors partially offset by decreased demand in the Medical and AC&C sectors.

Current wording

Asia. Sales for the three months ended September 30, 2025 increased 6% to $307.3 million from $289.9 million for the three months ended September 30, 2024. Sales for the nine months ended September 30, 2025 increased 9% to $878.4 million from $805.4 million for the nine months ended September 30, 2024. The increases were primarily due to an increase in existing customer demand in the Semi-Cap and Industrial sectors partially offset by decreased demand in the AC&C sector.

Previous 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.

Current wording

Europe. Sales for the three months ended September 30, 2025 increased 3% to $86.3 million from $83.5 million for the three months ended September 30, 2024. Sales for the nine months ended September 30, 2025 increased 2% to $256.0 million from $249.9 million for the nine months ended September 30, 2024. The increases were primarily due to higher demand in the A&D and Medical sectors partially offset by a decrease in the Semi-Cap sector.

Previous wording

Gross profit for the three months ended June 30, 2025 decreased 5% to $64.8 million from $68.0 million for the three months ended June 30, 2024. The decrease was primarily due to lower sales. Gross profit margin decreased to 10.1% for the three months ended June 30, 2025 from 10.2% for the three months ended June 30, 2024.

Current wording

Gross profit for the three months ended September 30, 2025 increased 2% to $67.9 million from $66.7 million for the three months ended September 30, 2024. The increase was primarily due to higher sales. Gross profit margin decreased to 10.0% for the three months ended September 30, 2025 from 10.1% for the three months ended September 30, 2024. The decrease was primarily due to higher cost of sales due to variable compensation.

Previous wording

Gross profit for the six months ended June 30, 2025 decreased 5% to $128.0 million from $135.4 million for the six months ended June 30, 2024. The decrease was primarily due to lower sales. Gross profit margin decreased to 10.0% for the six months ended June 30, 2025 from 10.1% for the six months ended June 30, 2024.

Current wording

Gross profit for the nine months ended September 30, 2025 decreased 3% to $195.9 million from $202.1 million for the nine months ended September 30, 2024. Gross profit margin decreased to 10.0% for the nine months ended September 30, 2025 from 10.1% for the nine months ended September 30, 2024. The decreases were primarily due to lower sales.

Previous 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.

Current wording

Income from operations for the three months ended September 30, 2025 decreased 16% to $23.7 million from $28.1 million in the three months ended September 30, 2024. Income from operations for the nine months ended September 30, 2025 decreased 31% to $55.9 million from $80.9 million in the nine months ended September 30, 2024. The decreases were primarily due to 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. 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.

Current wording

Americas. Income from operations for the three months ended September 30, 2025 increased 45% to $10.7 million from $7.4 million for the three months ended September 30, 2024. The increase was primarily due to higher revenue and cost control. Income from operations for the nine months ended September 30, 2025 decreased 45% to $17.0 million from $30.7 million for the nine months ended September 30, 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, 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. Restructuring expenses are discussed under “—Restructuring Charges and Other Costs” below.

Previous 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.

Current wording

SG&A expenses increased to $41.5 million for the three months ended September 30, 2025 from $36.6 million for the three months ended September 30, 2024. SG&A expenses increased to $120.9 million for the nine months ended September 30, 2025 from $112.0 million for the nine months ended September 30, 2024. The increases were primarily due to variable compensation.

Previous 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.

Current wording

Amortization of intangible assets was $1.2 million for the three months ended September 30, 2025 and 2024. Amortization of intangible assets was $3.6 million for the nine months ended September 30, 2025 and 2024.

Previous 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.

Current wording

Additionally, the Company incurred $0.3 million and $11.0 million of settlement costs related to a tax assessment in the Americas for the three and nine months ended September 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 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.

Current 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.

Previous 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.

Current wording

Interest expense decreased to $4.4 million for the three months ended September 30, 2025 from $6.6 million for the three months ended September 30, 2024. Interest expense decreased to $16.1 million for the nine months ended September 30, 2025 from $20.7 million for the nine months ended September 30, 2024. The decreases were primarily due to decreased borrowings and a lower interest rate environment.

Previous 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.

Current wording

Interest income decreased to $2.0 million for the three months ended September 30, 2025 from $2.8 million for the three months ended September 30, 2024. The decrease was primarily due to a lower interest environment. Interest income increased to $7.8 million for the nine months ended September 30, 2025 from $7.3 million for the nine months ended September 30, 2024. The increase was primarily due to higher cash balances partially offset by a lower interest environment.

Previous wording

Other expense, net decreased to $0.7 million for the three months ended June 30, 2025 from $2.3 million for the three months ended June 30, 2024. Other expense, net decreased to $1.5 million for the six months ended June 30, 2025 from $3.5 million for the six months ended June 30, 2024. The decreases were primarily due to lower foreign currency exchange losses.

Current wording

Other expense, net decreased to $0.6 million for the three months ended September 30, 2025 from $4.0 million for the three months ended September 30, 2024. Other expense, net decreased to $2.1 million for the nine months ended September 30, 2025 from $7.5 million for the nine months ended September 30, 2024. The decreases were primarily due to lower foreign currency exchange losses.

Previous 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.

Current wording

Income tax expense of $26.7 million represented a 58.6% effective tax rate for the nine months ended September 30, 2025, compared with $15.1 million for the nine months ended September 30, 2024, representing an effective tax rate of 25.2%. The increase in the effective tax rate for the nine months ended September 30, 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 $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.

Current wording

We reported net income of $14.3 million, or $0.39 per diluted share, for the three months ended September 30, 2025, compared with net income of $15.4 million, or $0.42 per diluted share, for the three months ended September 30, 2024. We reported net income of $18.9 million, or $0.52 per diluted share, for the nine months ended September 30, 2025, compared with net income of $44.9 million, or $1.23 per diluted share, for the nine months ended September 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 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.

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 $286.1 million as of September 30, 2025, which included $249.2 million held outside the United States in various foreign subsidiaries.

Previous 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.

Current wording

Cash provided from operating activities was $65.3 million during the nine months ended September 30, 2025, and primarily consisted of $18.9 million of net income, adjusted for $35.6 million of depreciation and amortization, $15.1 million of stock-based compensation expense, a $38.7 million decrease in accounts receivable, a $48.5 million decrease in inventories, a $19.6 million increase in accounts payable, partially offset by $31.4 million increase in contract assets, a $20.9 million increase in prepaid expenses and other assets, a $19.4 million decrease in advance payments from customer, a $12.4 million decrease in accrued liabilities, and $25.1 million decreased in income taxes. Working capital was $0.8 billion as of September 30, 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. 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.

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) and effects of a prolonged shutdown of the U.S. government 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 $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.

Current wording

Cash used in investing activities was $22.8 million during the nine months ended September 30, 2025 primarily due to capital expenditures for property, plant and equipment of $25.2 million, purchased software of $2.8 million, partially offset by proceeds from cash received from business divestiture of $5.1 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 $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.

Current wording

Cash used in financing activities was $92.9 million during the nine months ended September 30, 2025. Borrowings under the Credit Agreement were $733.6 million and principal payments under the Credit Agreement were $772.6 million. In addition, during the nine months ended September 30, 2025, we paid $26.0 million for share repurchases, $7.2 million for employee taxes in connection with the settlement of stock-based awards and $18.4 million for dividends.

Previous 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.

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 September 30, 2025, we had $149.1 million in borrowings outstanding under the term loan facility, $70.0 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 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.

Current wording

As of September 30, 2025, we had $475.6 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 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.

Current wording

During the nine months ended September 30, 2025 and 2024, cash dividends paid totaled $18.4 million and $17.8 million, respectively. On September 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 September 30, 2025. The dividend of $6.1 million was paid on October 13, 2025.

Previous 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.

Current wording

The Company repurchased 0.7 million shares for an aggregate of $26.0 million at an average price of $38.06 per share during the nine months ended September 30, 2025. As of September 30, 2025, the Company had $123.5 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.