BHE 10-K & 10-Q changes, risk factors and insider trading

Substantially all of our sales are derived from manufacturing services in which we purchase components specified by our customers. In the past, supply shortages for components and commodity categories used in manufacturing resulted in industry-wide shortages of electronic components and curtailed production of assemblies. In some instances, such components shortages resulted in delayed shipment. Meanwhile, theSimilarly, increased demand in surface mount components has at times caused us to experience component shortages and longer lead times for certain components. AlthoughAny conditions have generally improved, we expect some levelreoccurrence of shortages and delays could occur, or intensify, in future periods. Any such shortages or delays, including due to natural disasters or geopolitical issues or conflicts, could again result in delays in shipments to our customers, which would reduce our revenue, margins and operating cash flow for the periods affected.

Also, component supply shortages and delays in component deliveries, along with other factors such as tariffs, trade disputes or embargoes, inflation, and rising energy and transportation costs, can also result in increased component pricing. We have and may continue to bear the risk of component price increases that occur between periodic re-pricingsrepricings of products during the term of a customer contract. If any shortages or delays in component products persist, the price of certain components may increase further or we may be exposed to quality issues, including the risk of receiving counterfeit parts. Further, we may not be able to secure enough components at reasonable prices or of acceptable quality to build products or provide services in a timely manner in the quantities needed or according to customer specifications. Accordingly, our business, cash flows,flow, results of operations and financial condition could suffer if we lose time-sensitive sales, incur additional freight costs or are unable to pass on price increases and costs related to tariffs to our customers.

computerComputer systems and highhigh-performance performance computecomputer platforms;

medicalMedical devices; and semi-cap equipment.

A substantial percentage of our sales areis madeattributable to a small number of customers, and the loss of a major customer, if not replaced, would adverselyhave affecta us.material adverse effect on our operations. Further, developments adverse to our major customers or their products, or the failure of a major customer to pay for components or services, could have an adverse effect on us. Sales to our ten largest customers represented 50%,51%, 52%50% and 52% of our total sales in 2024,2025, 20232024 and 2022,2023, respectively.

We expect to continue to depend on sales to our largest customers, and any material delay, cancellation or reduction of orders from these customers or other significant customers would have a material adverse effect on our results of operations. In addition, we generate significant accounts receivable in connection with providing services to our customers. If one or more of our customers were to become insolvent or otherwise unable to pay for the services provided by us, our operating results and financial condition would be adversely affected.

changesChanges in their manufacturing strategies; and acquisitions of, or consolidations among, customers.

Due in part to these factors, most of our customers do not commit to firm production schedules for more than one quarter in advance. Our inability to forecast the level of customer orders with certainty makes it difficult to schedule production and maximize utilization of manufacturing capacity and on-hand inventory components and supplies. In the past, we have been required to increase staffing and other expenses, including component parts inventory, in order to meet the anticipated demand of our customers. Anticipated orders from many of our customers have, in the past, failed to materialize or delivery schedules have been deferred as a result of changes in our customers’ business needs, thereby adversely affecting our results of operations due to inefficient use of manufacturing capacity, increasingincreased inventory balances and potential write-downs or write-offs of obsolete or unsold inventory. On other occasions, our customers have required rapid increases in production, which has placed an excessive burden on our resources. Such customer order fluctuations and deferrals have had a material adverse effect on us in the past and may again in the future.

In addition, weWe make significant decisions, including determining the levels of business that we will seek and accept, production schedules, component procurement commitments, personnel needs, capital expenditures and other resource requirements, based on our estimate of customer requirements. The short-term nature of our customers’ commitments and the possibility of rapid changes in demand for their products impede our ability to accurately estimate the future requirements of those customers. This could result in manufacturing inefficiencies and the buildup of component inventories, especially with respect to components ordered from single source suppliers and/or that are under non-cancellable, non-returnable purchase orders, each of which could have a material adverse effect on our gross profits, results of operations, liquidity and financial position.

We structure our agreements with customers to mitigate our risks related to obsolete or unsoldexcess component inventory. However, enforcement of these contracts may result in material expense and delay in payment for inventory. IfSuch customer refusals to pay for obsolete or excess component inventory have had a material adverse effect on us in the past and may again in the future. Thus, if any of our significant customers become unable or unwilling to purchase such inventory, our business may be materially harmed.

burdensDifficulties ofin complyingstaffing and managing foreign operations and attempting to ensure compliance with aour widepolicies, variety of foreign lawsprocedures and laborapplicable practices,laws, including various and changing minimum wage regulations;

Changes that impact the way we operate internallyinternationally could have a negative impact on us and reduce the demand for our foreign manufacturing facilities. Moreover, any regulatory actions by other countries where we operate could also negatively impact our financial performance. In addition, changes in policies by the U.S. (including as a result of the change in presidential administration) or other governments could negatively affect our operating results due to trade wars, changes in duties, tariffs or taxes, currency exchange rate fluctuations, or limitations on currency or fund transfers, as well as government-imposed restrictions on producing certain products in, or shipping them to, specific countries. For example, onbeginning in February 1, 2025, Presidentthe DonaldU.S. J.implemented Trumptariffs announcedon a variety of countries and commodities, including, among others, tariffs on aluminum, steel, copper and derivative products, imports of certain Canadian and Mexican goods, and imports of Chinese goods, universal tariffs on imports from Canada,most Mexicocountries, and China, and President Trump has indicated a desire to impose new or greater restrictions on free trade through significant increases inreciprocal tariffs on importedselect goods.countries. In response, certain countries have imposed, or are considering, retaliatory tariffs on U.S. exports. The ultimateglobal impacttariff oflandscape continues to shift rapidly, with changes impacting businesses around the announcedworld. tariffsIf andwe anyare futureunable tariffsto willfully dependpass on variousthese factors, including if such tariffs are ultimately implemented, the timing of implementation and the amount, scope and nature of such tariffs. If such increased or additional tariffs or other restrictions, quotas, embargoes, or safeguards are placed on goods imported into the U.S., or any related counter-measures are taken by other countries, we may have to raise our prices or increase inventory levels,costs or find new sources of components that we import, and our revenue, gross margins, and results of operations and cash flows may be materially harmed. Also, our current facilities in Mexico operate under the Mexican Maquiladora (IMMEX) program. This program provides for reduced tariffs and eased import regulations. We could be adversely affected by changes in the IMMEX program or our failure to comply with its requirements. Additionally, increasing tariffs and other trade protection measures between the United States and China may affect the cost of our products originating in China as well as the demand for our products manufactured in China in the event our customers reduce operations in China as a result of such tariffs or trade protection measures. These actions could also affect the cost and/or availability of components that we procure from suppliers in China.

Another significant legal risk resulting from our international operations is compliance with the U.S. Foreign Corrupt Practices Act (FCPA). In many foreign countries, particularly in those with developing economies, it may be a local custom that businesses operating in such countries engage in business practices that are prohibited by the FCPA, other U.S. laws and regulations, or similar laws of host countries and related anti-bribery conventions. Although we have implemented policies and procedures designed to comply with the FCPA and similar laws, there can be no assurance that all of our employees, agents, or those companies to which we outsource certain of our business operations,operations will not take actions in violation of our policies. Any such violation, even if prohibited by our policies, could have a material adverse effect on our business.

Start-up costs, the management of labor and equipment resources in connection with the establishment of new programs and new customer relationships, and the need to estimate required resources in advance can adversely affect our gross margins and operating results. These factors are particularly evident in the early stages of the life cycle of new products and new programs or program transfers and in the opening of new facilities. These factors also affect our ability to efficiently use labor and equipment. We are constantly managing a number of new customer transitions or launching new OEM programs with existing customers. If any of these new programs or new customer relationships wereare terminated, our operating results could be harmed, particularly in the short-term. We may not be able to recoup these start-up costs or replace anticipated new program revenues. In addition, the introduction of programs requiring implementation of new competencies, including new process technology within our mechanical operations, could affect our operations and financial results because the deployment of such programs may require us to invest significant resources and capital in facilities, equipment and/or personnel.

We provide services both as a prime contractor and subcontractor for the U.S. government. Consequently, a portion of our financial results depend on our performance under these contracts. Delays, cost overruns or product failures, in connection with one or more contracts, could lead to their termination and negatively impact our results of operations, financial condition or liquidity. We can give no assurance that we will be awarded new contracts to offset the revenuesrevenue lost as a result of such a termination.

U.S. government programs require congressional appropriations, which are typically made for a single fiscal year even though a program may extend over several years. Programs often are only partially funded, and additional funding requires further congressional appropriations. The programs in which we participate compete with other programs for consideration and funding during the budget and appropriations process, which can be impacted by shifting and often competing political priorities. Levels of U.S. federal government spending are difficult to predict and are subject to significant risk. Considerable uncertainty exists regarding how future budget and program decisions will unfold, including the spending priorities of the new U.S. presidential administration and Congress and what challenges budget reductions will present for us and the markets that we serve. Pressures on and uncertainty surrounding the U.S. federal government’s budget, and potential changes in budgetary priorities and defense spending levels, could adversely affect the funding for individual programs. Current U.S. federal government spending levels for defense-related or other programs may not be sustained, and future spending and program authorizations may not increase or may decrease on programs from which we expect to derive a portion of future revenues, or shift to programs in areas where we do not provide services or are less likely to be awarded contracts. The U.S. federal government also conducts periodic reviews of U.S. defense strategies and priorities, which may shift defense or other budgetary priorities, reduce overall U.S. federal government spending or delay contract or task order awards for defense-related or other programs from which we would otherwise expect to derive a portion of our future revenues. A significant decline in overall U.S. federal government spending, including the areas of national security, intelligence and homeland security, a significant shift in U.S. federal government spending priorities, the substantial reduction or elimination of particular defense-related programs or significant delays in contract or task order awards for large programs could adversely affect our business, financial condition and operating results.

Some of our facilities are located in areas that may be impacted by hurricanes, earthquakes, water shortages, tsunamis, floods, typhoons, fires, extreme weather conditions and other natural or manmade disasters. For example, our facilities in Thailand experienced extensive flooding in 2011. Further, there continues to be concern that global climate change is impactingabout the frequency and severity of natural disasters.disasters, with climate change being offered as a potential catalyst. All of our facilities are subject to other potential natural or man-made disasters such as those related to weather events, fires, acts of terrorism or war, breaches of security, theft or espionage, workplace violence and failures of utilities. If such an event was to occur and we did not have an effective business continuity plan in place, our business could be harmed due to the event itself or due to our inability to effectively manage the effects of the particular event, with the impact of the event potentially magnified in areas where we have multiple facilities in close proximity. Our insurance coverage for natural or manmade disasters is limited and is subject to deductibles and coverage limits. This coverage may not be adequate or may not continue to be available at commercially reasonable rates and terms. See “—Operational Risks—We bear the risk of uninsured losses.”

We compete against many providers of electronics manufacturing services. Some of our competitors have substantially greater financial, manufacturing or marketing resources than we do anddo, have more geographically diversified international operations than we do.do and may respond more quickly than us to advancements in technology, such as artificial intelligence. Our primary competitors include Celestica Inc., Flex Ltd., Jabil Inc., Kimball Electronics Inc., Plexus CorporationCorporation, and Sanmina Corporation. In addition, we may in the future encounter competition from other large manufacturers that are selling, or may begin to sell, electronics manufacturing services.

Unanticipated changes in our tax position, the adoption of new tax legislationlegislation, potential tax disputes or exposurefurther todevelopments additionalaffecting our deferred tax liabilitiesassets could adversely affect our financial results.

In addition, as climate change concerns become more prevalent, the U.S. and foreign governments have sought to limit the effects of any such changes. This increasing governmental focus on climate change may result in new environmental regulations that may negatively affect us, our suppliers and our customers. This could cause us to incur additional direct costs or obligations in complying with any new environmental regulations and reporting requirements, as well as increased indirect costs resulting from our customers, suppliers or both incurring additional compliance costs that are passed on to us. These costs may adversely impact our operations and financial condition. Further, the cost of implementing sustainability and/or ESG initiatives, our ability to execute on sustainability and/or ESG targets and objectives as planned, the effectiveness and impact of intended actions, the impact of changing legislation, regulations and directives, and other factors, many of which are beyond the Company’s control, could cause the outcomes, results and achievement of sustainability and/or ESG targets, goals, objectives, commitments and/or the implementation of sustainability and/or ESG initiatives to differ materially than those expressed or implied by the Company. In addition, our adherence to certain reporting standards or mandated compliance to certain requirements could necessitate additional investments that could impact our profitability, including investments to meet new or enhanced requirements and/or stakeholder expectations to reduce or mitigate the effects of greenhouse gas emissions and transition to low-carbon alternatives, driven by policy and regulations, low-carbon technology advancement and shifting consumer sentiment and societal preferences. Policy trends and public sentiment related to “anti-ESG” or “anti-DEI” legislation, policy or stakeholder pressure or activism, particularly in the U.S., may lead to new or conflicting requirements or expectations, resulting in risk of noncompliance, reputational damage, potential enforcement actions or claims.

The market for our manufacturing and engineering services is characterized by rapidly changing technology and continuing process development. We are continually evaluating the advantages and feasibility of new manufacturing processes.processes (including utilization of machine learning and artificial intelligence). We believe that our future success will depend upon our ability to develop and provide manufacturing services that meet our customers’ changing needs. This requires that we maintain technological leadership and successfully anticipate or respond to technological changes in manufacturing processes on a cost-effective and timely basis. Our failure to maintain our technological and manufacturing process expertise could have a material adverse effect on our business.

We are increasingly dependent on digital technologies and services to conduct our business. We use these technologies for internal purposes, including data storage, processing and transmissions, as well as in our interactions with customers and suppliers. Examples of these digital technologies include ERP, shop floor control, test equipment, and other similar business applications, our global infrastructure and networks as well as external systems, analytics, automation, and cloud services. Digital technologies and services are subject to the risk of cyberattacks and, given the nature of such attacks, some incidents can remain undetected for a period of time despite our efforts to monitor, detect and respond to them in a timely manner. In particular, as discussed further below, ourOur operations have been, and may in the future be, subject to ransomware or cyber-extortion attacks, which could significantly disrupt our operations. Generally, such attacks involve restricting access to computer systems or the restriction or theft of vital data including customer supplied data.

Future cybersecurity incidents could result in the misappropriation of confidential information of the Company or that of its customers, employees, business partners or others; litigation and potential liability; enforcement actions and investigations by regulatory authorities; loss of customers and contracts; damage to the Company’s reputation and/or otherwise harm its business. We also expect to incur substantial costs in the future to satisfy customer requirements (including costs arising from the U.S. government’s Cybersecurity Maturity Model Certification program) and to mitigate against cybersecurity attacks as threats are expected to continue to become more persistent and sophisticated. If our systems for protecting against cybersecurity risks prove not to be sufficient, we could be adversely affected by, among other things: loss of or damage to intellectual property, proprietary or confidential information, or customer, supplier, or employee data; interruption of our business operations; andhigher increasedinsurance costs required to prevent, respond to, or mitigate cybersecurity attacks. These risks could harm our reputation and our relationships with customers, suppliers, employees and other third parties, and may result in claims against us. These risks could have a material adverse effect on our business, consolidated results of operations and consolidated financial condition.premiums;

As of December 31, 2024,2025, our total outstanding debt (excluding unamortized debt issuance costs and finance leases) was $257.0$213.1 million, all of which represented borrowings under our credit facility).facility. Our level of indebtedness could have important consequences. For example, it could:

We have recorded intangible assets, including goodwill, in connection with business acquisitions. We are required to assess goodwill and intangible assets for impairment at least on an annual basis and whenever events or circumstances indicate that the carrying value may not be recoverable from estimated future cash flows. A significant and sustained decline in our market capitalization could result in material charges in future periods that could be adverse to our operating results and financial position. As of December 31, 2024,2025, we had $192.1 million in goodwill and $44.4$38.8 million of identifiable intangible assets. See Note 1(i)4 to the consolidated financial statements in Part II, Item 8 of this Report.

changesChanges in tax laws or interpretations of our tax positions in the jurisdictions in which we operate;

Responding to actions by activist shareholders or others can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees. Our ability to execute our strategic plan could also be impaired. In addition, a proxy contest for the election of directors would require us to incur significant fees and expenses, as well as requiringrequire significant time and attention by management and our Board of Directors. Perceived uncertainties as toregarding our future direction also could affect the market price and volatility of our shares of common stock, our ability to attract and retain qualified personnel and business partners and may affect our relationships with vendors, customers or others.

For discussion and analysis regarding our financial condition and results of operations for the year ended December 31, 20232024 as compared to the year ended December 31, 2022,2023, refer to Part II, Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 20232024 filed with the SEC on February 24, 2025, as amended on February 27, 2024.2025. For a discussion of the correction of an immaterial error see Note 1 to the consolidated financial statements in Part II, Item 8 of this report.

Sales for 2025 and 2024 were both $2.7 billion, a 6% decrease from sales of $2.8 billion in 2023.billion. During 2024,2025, sales to customers in our various industry sectors fluctuated from 20232024 as follows:

Industrial decreasedremained by 4%flat

Medical decreasedincreased by 19%7%

Revenue decreasedwas flat year-over-year primarily due to decreasesincreases in medicalA&D, Medical, and Semi-Cap, which were offset by a decrease in AC&C sales, which were partially offset by increases in semi-cap and A&D sales.

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 50%51% and 52%50% of our total sales in 20242025 and in 2023,2024, respectively. Sales to Applied Materials, Inc. and subsidiaries, our largest customer in 20242025 and 20232024 represented 14% and 12% of our total sales in 2024both 2025 and 2023, respectively.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 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. Lead times are also improving from the previous highs that prompted many suppliers to categorize some of their constrained components with non-cancellable and non-returnable business terms. Until recently, these constraints led to last-minute allocations and created inefficiencies in our operations, as well as increased costs to us and our customers.

Sales decreasedremained 6%flat in 2024.2025. The percentages of our sales by market sector were as follows:

Semi-ConductorSemiconductor Capital Equipment. 20242025 sales increased 12%2% to $741.2 million from $723.2 million from $646.3 million in 20232024. The increase was primarily due to increasedhigher demand fromwith existing customers and new customer wins.customers.

Medical.Industrial. 20242025 sales decreasedincreased 19%slightly to $450.7$574.7 million from $556.6 million$573.3 in 20232024. primarilyThe slight increase was due to inventorymixed rebalancing and end-demand weakness within medical devices.demand.

AdvancedMedical. Computing and Communications. 20242025 sales decreasedincreased 30%7% to $474.9$483.9 million from $678.1$450.7 million in 20232024. The increase was primarily due to largehigher high performance computing programs being completed coupleddemand with continuedexisting weakness in communications and the disengagement with a large customer.customers.

Americas. 20242025 sales decreased 17%8% to $1.2 billion from $1.3 billion from $1.6 billion in 20232024 primarily due to decreases in sales in our semi-cap,Semi-Cap, medical, A&DIndustrial, and AC&C sectors.

Asia. 20242025 sales increased 3%7% to $1.1$1.2 billion from $1.1 billion in 20232024 primarily due to increases in existing customer demand of our semi-capA&D, Semi-Cap, and industrialIndustrial sectors.

Europe. 20242025 sales increased 13%4% to $352.5 million from $339.3 million from $299.8 million in 20232024 primarily due to increases in sales in our semi-capA&D, Medical, and A&DIndustrial sectors.

20242025 income from operations declined slightlyto to$76.0 million from $109.4 million from $109.7 million in 2023.2024.

Asia. 20242025 operating income increased 13%slightly to $140.8 million from $140.3 million from $124.3 million in 2023.2024. The increase was primarily due to higher revenue and expense control.revenue.

SG&A expense increased to $159.7 million in 2025 from $149.5 million in 2024 from $147.0 million in 2023.2024. The increase was primarily due to highervariable legal and salary costs.compensation.

Amortization of intangible assets was $4.8 million in 2024both 2025 and $6.0 million in 2023. The decrease was primarily due to certain assets becoming fully amortized in 2023.2024.

Interest expense decreased to $20.2 million in 2025 from $26.9 million in 2024 from $31.9 million in 2023 primarily due to decreased borrowings partially offset byand a higherlower interest rate environment.

Interest income increaseddecreased to $9.6 million in 2025 from $10.2 million in 2024 from $6.3 million in 2023 primarily due to highera lower interest rates.rate environment and lower cash balances in interest-bearing accounts.

Other (Expense) Income,Expense, Net

Other (expense) income,expense, net, was an$3.9 expensemillion in 2025 primarily consisting of losses on accounts receivable sales and foreign exchange losses compared to other expense, net, of $8.8 million in 2024 compared to an expense of $2.8 million in 2023, both primarily consisting of foreign exchange losses.

Income tax expense in 20242025 was $20.6$36.7 million representing an effective tax rate of 24.5%59.6% compared with $16.9$22.8 million of income tax expense in 20232024 representing an effective tax rate of 20.8%.27.1%. The higherincrease in the effective tax rate in 20242025 is primarily due to the result$10.4 million in discrete tax expense recorded in the second quarter for the foreign withholding taxes on repatriated distributions and recognition of deferred tax liabilities on China unremitted earnings, losses generated in jurisdictions where no tax benefit can be recognized and to the mix of profits and losses in our foreignvarious and U.S. jurisdictions with higher overall tax expense in our foreign locations.jurisdictions.

Our operations, and the operations of businesses we acquire, are subject to certain foreign, federal, state and local regulatory requirements relating to environmental, waste management, health and safety matters. We believe we operate in substantial compliance with all applicable requirements, and we seek to ensure that newly acquired businesses comply or will comply substantially with applicable requirements. To date, the costs of compliance and workplace and environmental remediation have not been material to us. However, material costs and liabilities may arise from these requirements or from new, modified or more stringent requirements in the future. In addition, our past, current and future operations, and the operations of businesses we have or may acquire, may give rise to claims of exposure by employees or the public, or to other claims or liabilities relating to environmental, waste management or health and safety concerns.

Cash provided from operating activities was $189.2$124.0 million in 20242025 and primarily consisted of $63.3$24.9 million of net income, adjusted for $46.1$47.6 million of depreciation and amortization, $13.4$17.2 million of stock-based compensation expense, $11.1 million of asset impairment, a $34.0$25.7 million decrease in accounts receivable, and a $127.8$75.2 million decrease in inventories partially offset by a $61.3$28.1 million decrease in advance payments from customers and a $18.3$32.4 million decrease in accounts payable. Working capital was $0.9$0.8 billion as of December 31, 2024.2025.

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 historically 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.

Cash used in investing activities was $32.8$32.7 million in 20242025 primarily due to capital expenditures for property, plant and equipment of $31.3$35.6 million andmillion, purchased software of $1.9$2.9 million partially offset by $2.0$5.1 million of proceeds from business divestiture and $0.8 million in proceeds from the disposal of property, plant and equipment. The purchases of property, plant and equipment were primarily for leasehold improvements and machinery and equipment in the Americas and Asia.

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 assetsassets, 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 December 31, 2024,2025, we were in compliance with all of these covenants and restrictions.

As of December 31, 2024,2025, we had $410.6$480.6 million available for borrowings under the Credit Agreement.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 be approximately $65$60 million to $75$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.

TheSeveral Company has manufacturing operationsjurisdictions in severalwhich ofwe the foreign jurisdictions thatoperate have implementedenacted theOECD/G20 GMTPillar legislation.Two Global Minimum Tax legislation effective January 1, 2024. The impactresulting ofimpacts theon GMT legislation to the Company’s provision forour income taxes,tax provision, net incomeincome, and cash flows isare includedreflected in our annualconsolidated financial statements asfor ofthe year ended December 31, 2024.2025.

See Note 1(t) to the consolidated financial statements in Part II, Item 8 of this Report for a discussion of recently enacted accounting principles.

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 MarchJune 31,30, 2026 (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, 2025 (the 2025 10-K), and Part I, Item 1A, Risk Factors of the 2025 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.

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 2026 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 regarding enterprise AI opportunities, anticipated growth in bookings, and repurchases of shares of its common stock, the Company’s expectations regarding restructuring activity and charges, stock-based compensation expense, amortization of intangibles, award or extension of any tax incentives and capital expenditures, and the Company’s intentions concerning the payment of dividends, the Company’s expectations regarding the impact of inflation, tariffs and trade policies, and the Company’s positions and strategies with respect to ongoing or threatened litigation and expected outcomes, 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 2025 10-K and in any of the Company’s subsequent reports filed with the Securities and Exchange Commission (the SEC). EventsRisks and uncertainties 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 potential of another U.S. government shutdown and the economic impacts, volatility and uncertainty resulting therefrom, geopolitical uncertainties including continuing hostilities and tensions,tensions in the Middle East and elsewhere, 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.

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 technologymetal machining (PTPMM) 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-nationalmultinational original equipment manufacturers (OEMs). Served markets include: advanced computing and communications (AC&C), aerospace and defense (A&D), industrial, medical, industrial,and semiconductor capital equipment (Semi-Cap), and advanced computing and communication (AC&Csemi-cap). The Company has manufacturing operations located in the United States and Mexico (the Americas), Asia and Europe.

Design & Engineering Services include turnkey product design, designing for manufacturability, design optimization for our factory processes and supply chain, test development, concurrent and sustaining engineering, and regulatory services. Our engineering services may be for systems, sub-systems,subsystems, printed circuit boards and assemblies, 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 often partner with our customers to provide turnkey product realization from requirements through the launch to volume production in our factories. We have also developed differentiated capabilities in radio frequency (RF) and optics. The need to improve size, weight and power (SWaP) to accommodate high frequency electronics communications is important to customers in the A&D, medical, and AC&C markets.

A strong focus on human capital,capital—encompassing includingthe talent we hireattract, develop, and retain, retain—is criticalessential to maintainingsustaining our competitiveness.competitiveness and long-term success. Our people-first culture is centeredgrounded onin our five core values, consisting ofvalues: acting with integrity, valuing inclusion, commitment to customers, promoting ingenuity, and demonstrating genuine caring for eachone other,another, our customerscustomers, and the communities we serve. We are committed to fostering an environment where our communities,team members feel engaged, valued, and weempowered taketo pridethrive, inrecognizing ourthat innovativeinclusion and continuousdiverse improvementperspectives mindset.drive innovation, strengthen decision-making, and enhance overall performance. Our intentapproach is centered on delivering exceptional value to delight our customers while deliveringachieving operational and financial performance aligned with our goals.strategic objectives. Through ourongoing employee engagement and customer satisfactionlistening feedback processes,strategies, 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 investingcontinually improving our practices, understanding that we serve our customers best by supporting our people first. We invest in anbuilding innovativea forward-thinking, high-performing workforce by developing leaders at all levels and forward-thinkingsupporting workforce.the personal growth and career aspirations of our employees. These efforts are demonstrated through our executive development program, CLIMB; our general manager readiness program, ASCEND; and our employee mentorship program, Thrive.

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, including conditions affecting the availability of electronic components or the failure of a major customer to pay for components or services, can impact our ability to fulfill 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 50% and 54%53% of our total sales during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

On February 20, 2026, the U.S. Supreme Court issued a ruling striking downinvalidating tariffs imposed under the International Emergency Economic Powers Act, including, among others, tariffs on imports of certain Canadian, Chinese, and Mexican goods, a universal baseline tariff on imports from most countries, and reciprocal tariffs on select countries. TheIn globalMarch 2026, the U.S. Court of International Trade further ruled that importers that paid such tariffs are entitled to refunds. During the second quarter of 2026, U.S. Customs and Border Protection launched a process to administer IEEPA tariff landscaperefund continues to shift rapidly, with changes impacting businessesclaims, and markets around the world.Company submitted claims for qualifying IEEPA tariff refunds. We continue to monitor thedevelopments situation,related includingto anytariffs potentialand refundstrade of such tariffs,policies and evaluate the potential impact on our results of operations.operations Noand potentialfinancial refundscondition. haveFor beenthe three and six months ended June 30, 2026, the Company recorded in the Condensedconsolidated Consolidatedstatement Financialof Statementsincome tariff refunds of $11.8 million as wea cannotreduction reasonablyto estimatecost of sales, reflecting the financialrecovery impact,of butpreviously believeincurred thetariff impactcosts, wouldand notrecorded bea materialcorresponding reduction to thesales Company.for amounts reimbursable to customers. For additional information, refer to Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Sales for the firstsecond quarter of 2026 increased 7%18% from the firstsecond quarter of 2025.

Semiconductor Capital Equipment. Sales for the three months ended MarchJune 31,30, 2026 decreasedincreased 2%17% to $190.7$223.5 million from $195.1$190.4 million for the three months ended MarchJune 31,30, 2025. Sales for the six months ended June 30, 2026 increased 7% to $414.1 million from $385.4 million for the six months ended June 30, 2025. The decreaseincreases waswere primarily due to the timing of customerfavorable demand trends across end markets and ordernew fulfillmentprogram during the quarter.awards.

Industrial. Sales for the three months ended MarchJune 31,30, 2026 decreasedincreased 3%13% to $133.3$160.6 million from $136.7$141.6 million for the three months ended MarchJune 31,30, 2025. Sales for the six months ended June 30, 2026 increased 6% to $293.9 million from $278.4 million for the six months ended June 30, 2025. The decreaseincreases waswere primarily due to increased demand softness from certain existing customers.customers and raw material sales associated with the planned closure of our site in Phoenix, Arizona.

Aerospace and Defense. Sales for the three months ended MarchJune 31,30, 2026 decreased 2%12% to $119.8$111.2 million from $121.9$126.3 million for the three months ended MarchJune 31,30, 2025. Sales for the six months ended June 30, 2026 decreased 7% to $231.0 million from $248.1 million for the six months ended June 30, 2025. The decreasedecreases waswere primarily due to certain programs going end-of-life, partially offset by new program wins.

Medical. Sales for the three months ended MarchJune 31,30, 2026 increased 24%22% to $128.5$133.6 million from $103.6$109.6 million for the three months ended MarchJune 31,30, 2025. Sales for the six months ended June 30, 2026 increased 23% to $262.0 million from $213.2 million for the six months ended June 30, 2025. The increaseincreases waswere primarily due to new program wins and the timing of customer order fulfillment.ramps.

Advanced Computing and Communications. Sales for the three months ended MarchJune 31,30, 2026 increased 41%71% to $105.1$127.1 million from $74.5 million for the three months ended MarchJune 31,30, 2025. Sales for the six months ended June 30, 2026 increased 56% to $232.2 million from $149.0 million for the six months ended June 30, 2025. The increaseincreases waswere primarily due to new program wins.wins in high performance computing, driven primarily by customer investments in data center infrastructure.

Our international operations are subject to the risks of doing business abroad. See Part I, Item 1A of our 2025 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 MarchJune 31,30, 2026 and 2025, 62%63% and 66%,64%, respectively, of our sales were from international operations.

Americas. Sales for the three months ended MarchJune 31,30, 2026 increased 10%15% to $311.3$340.5 million from $284.3$295.2 million for the three months ended MarchJune 31,30, 2025. Sales for the six months ended June 30, 2026 increased 12% to $651.8 million from $579.5 million for the six months ended June 30, 2025. The increaseincreases waswere primarily due to higher demand in AC&CC, and Medical sectors partially offset by decreased demand in the A&DMedical, and Industrial sectors.

Asia. Sales for the three months ended MarchJune 31,30, 2026 increased 7%20% to $303.1$345.5 million from $284.0$287.1 million for the three months ended MarchJune 31,30, 2025. Sales for the six months ended June 30, 2026 increased 14% to $648.6 million from $571.1 million for the six months ended June 30, 2025. The increaseincreases waswere primarily due to an increase in demand for A&D,Industrial, AC&C, Semi-Cap, and IndustrialA&D sectors partially offset by decreased demand in the Semi-Cap sector.sectors.

Europe. Sales for the three months ended MarchJune 31,30, 2026 decreasedincreased 3%10% to $83.3$91.5 million from $86.3$83.4 million for the three months ended MarchJune 31,30, 2025. Sales for the six months ended June 30, 2026 increased 3% to $174.8 million from $169.7 million for the six months ended June 30, 2025. The decreaseincreases waswere primarily due to loweran increase in demand infor theSemi-Cap Industrialand sectorMedical sectors, partially offset by anlower increasedemand in the MedicalIndustrial and Semi-CapA&D sectors.

Gross profit for the three months ended MarchJune 31,30, 2026 increased 10%21% to $69.2$78.4 million from $63.2$64.8 million for the three months ended MarchJune 31,30, 2025. Gross profit margin increased to 10.2%10.4% for the three months ended MarchJune 31,30, 2026 from 10.0%10.1% for the three months ended MarchJune 31,30, 2025. The increases were primarily drivendue byto higher sales volumes,sales, which resulted in improved absorption of fixed manufacturing costs, as well as a more favorable mix.mix of products sold.

Income from operations for the three months ended MarchJune 31,30, 2026 increased 86%48% to $21.9$30.3 million from $11.8$20.5 million in the three months ended MarchJune 31,30, 2025. Income from operations for the six months ended June 30, 2026 increased 62% to $52.1 million from $32.2 million in the six months ended June 30, 2025. The increaseincreases waswere primarily due to higher sales as well as decreased restructuring expenses and other costs in the current period,costs, as the settlement of a tax assessment in the Americas was recorded during the threesix months ended MarchJune 31,30, 2025.

Americas. Income from operations for the three months ended MarchJune 31,30, 2026 increased 277%81% to $7.8$19.5 million from a loss of $4.4$10.8 million for the three months ended MarchJune 31,30, 2025. Income from operations for the six months ended June 30, 2026 increased 331% to $27.4 million from $6.3 million for the six months ended June 30, 2025. The increaseincreases waswere primarily due to higher sales as well as decreased restructuring expenses and other costs in the current period,costs, as the settlement of a tax assessment in the Americas was recorded during the threesix months ended MarchJune 31,30, 2025.

Asia. Income from operations for the three months ended MarchJune 31,30, 2026 increased 8%23% to $41.9$41.7 million from $38.6$33.8 million for the three months ended MarchJune 31,30, 2025. Income from operation for the six months ended June 30, 2026 increased 15% to $83.5 million from $72.5 million for the six months ended June 30, 2025. The increaseincreases waswere primarily due to higher sales.

Europe. Income from operations for the three months ended MarchJune 31,30, 2026 decreasedincreased 6%35% to $7.5$9.0 million from $8.0$6.6 million for the three months ended MarchJune 31,30, 2025. Income from operations for the six months ended June 30, 2026 increased 12% to $16.5 million from $14.7 million for the six months ended June 30, 2025. The decreaseincreases waswere primarily due to lowerhigher sales partially offset by cost control.sales.

Selling, General and Administrative (SG&A) Expenses

SG&A expenses increased to $42.4$46.1 million for the three months ended MarchJune 31,30, 2026 from $38.8$40.6 million for the three months ended MarchJune 31,30, 2025. SG&A expenses increased to $88.5 million for the six months ended June 30, 2026 from $79.4 million for the six months ended June 30, 2025. The increaseincreases waswere primarily due to professional services andhigher variable compensation.

Amortization of intangible assets was $1.2 million for both the three months ended MarchJune 31,30, 2026 and 2025. Amortization of intangible assets was $2.4 for both the six months ended June 30, 2026 and 2025.

During the three and six months ended MarchJune 31,30, 2026, we recognized $3.7$1.1 million and $4.9 million of restructuring charges and other costs which primarily related to a planned closure of our site in Phoenix, Arizona and other smaller activities involving capacity reductions and reductions in workforce in certain facilities across various regions. Phoenix, Arizona operations ceased during the second quarter of 2026 and all related restructuring activity is expected to be substantially complete in 2026. Additionally, the Company recorded a $0.3 million net recovery related to the settlement of tax assessments in the Americas.

During the three and six months ended MarchJune 31,30, 2025, we recognized $1.3$1.9 million and $3.3 million restructuring charges and other costs primarily due to capacity and workforce reductions at our sites in the Americas. Additionally, the Company agreedincurred to a $10.1$0.6 million and $10.7 million of settlement costs related to an indirecta tax assessment in the Americas.Americas for the three and six months ended June 30, 2025, respectively.

Interest expense decreased to $3.6$3.8 million for the three months ended MarchJune 31,30, 2026 from $5.3$6.3 million for the three months ended MarchJune 31,30, 2025. Interest expense decreased to $7.4 million for the six months ended June 30, 2026 from $11.6 million for the six months ended June 30, 2025. The decreasedecreases waswere primarily due to decreased borrowings and a lower interest rate environment.

Interest income decreased to $1.9$2.0 million for the three months ended MarchJune 31,30, 2026 from $2.7$3.1 million for the three months ended MarchJune 31,30, 2025. Interest income decreased to $3.9 million for the six months ended June 30, 2026 from $5.9 million for the six months ended June 30, 2025. The decreasedecreases waswere primarily due to a lower interest environment.environment and lower cash balances in interest-bearing accounts.

Other Expense,Income (Expense), Net

Other expense,income (expense), net increased to $1.7income of $0.2 million for the three months ended MarchJune 31,30, 2026 from $0.8expense of $0.7 million for the three months ended MarchJune 31,30, 2025. Other income (expense), net was flat at expense of $1.5 million for the six months ended June 30, 2026 and 2025. The increase for the three months ended June 30, 2026 was primarily due to higher foreign currency exchange losses.gains.

We reported net income of $13.0$19.9 million, or $0.36$0.55 per diluted share, for the three months ended MarchJune 31,30, 2026, compared with net income of $3.6$1.0 million, or $0.10$0.03 per diluted share, for the three months ended MarchJune 31,30, 2025. We reported net income of $32.9 million, or $0.91 per diluted share, for the six months ended June 30, 2026, compared with net income of $4.6 million, or $0.13 per diluted share, for the six months ended June 30, 2025. The increases were primarily due to the items discussed above.

We have historically financed our organic growth and operations through funds generated from operations and borrowings under our creditCredit agreementAgreement (as amendeddefined and restated, the Credit Agreementbelow), consisting of a $150 million term loan facility and a $550.0$550 million revolving credit facility, both with a maturity date of June 27, 2030. Cash, cash equivalents and restricted cash totaled $325.2$315.2 million as of MarchJune 31,30, 2026, which included $303.8$311.0 million held outside the United States in various foreign subsidiaries.

Cash provided from operating activities was $47.0$81.7 million during the threesix months ended MarchJune 31,30, 2026, and primarily consisted of $13.0$32.9 million of net income, adjusted for $11.9$23.9 million of depreciation and amortization, $5.4$11.6 million of stock-based compensation expense, a $42.3$150.5 million increase in accounts payable, aan $14.2$8.8 million decreaseincrease in accountsadvance receivable,payments from customers, and a $6.4 million decreaseincrease in accrued liabilities partially offset by a $62.7 million increase in inventories, a $61.9 million increase in accounts receivable, a $13.9 million increase in prepaid expenses and other assets, partially offset byand a $25.6 million increase in inventories, a $8.4 million decrease in accrued liabilities, $8.1$13.6 million increase in contract assets and a $4.6 million decrease in advance payments from customer.assets. Working capital was $0.8 billion as of MarchJune 31,30, 2026.

Cash used in investing activities was $16.1$29.1 million during the threesix months ended MarchJune 31,30, 2026 primarily due to capital expenditures for property, plant and equipment of $16.0$28.8 million and purchased software of $2.4 million partially offset by proceeds from the sale of assets held for sale of $2.3 million. The purchases of property, plant and equipment were primarily for leasehold improvementsbuildings and machinery and equipment in the Americas and Asia.

Cash used in financing activities was $25.9$56.2 million during the threesix months ended MarchJune 31,30, 2026. Borrowings under the Credit Agreement were $113.0$271.0 million and principal payments under the Credit Agreement were $118.9$300.9 million. In addition, during the threesix months ended MarchJune 31,30, 2026, we paid $5.8$12.2 million for sharedividends, repurchases, $8.1$8.3 million for employee taxes in connection with the settlement of stock-based awardsawards, and $6.1$5.8 million for dividends.share repurchases.

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 MarchJune 31,30, 2026, we had $147.2$146.3 million in borrowings outstanding under the term loan facility, $60.0$37.0 million outstanding under our revolving credit facility and $4.0 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.

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 MarchJune 31,30, 2026, we were in compliance with all of these covenants and restrictions.

As of MarchJune 31,30, 2026, we had $486.0$509.0 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 $70$80 million to $80$90 million, principally for machinery and equipment to help increase our production capacity to support anticipated revenue growth and our ongoing business around the globe.

During both the threesix months ended MarchJune 31,30, 2026 and 2025, cash dividends paid totaled $6.1$12.2 million.million and $12.3, respectively. On MarchJune 16,8, 2026, 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 MarchJune 31,30, 2026. The dividend of $6.1 million was paid on AprilJuly 10, 2026.

The Company repurchased 0.1 million shares for an aggregate of $5.8 million at an average price of $53.67 per share during the threesix months ended MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, the Company had $116.9 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.

We have certain contractual obligations for operating leases that were summarized in “Contractual Obligations” under Part II, Item 7 in our 2025 10-K. Other than items discussed in Note 5 and Note 6 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report, there have been no material changes to our contractual obligations, outside of the ordinary course of our business, since December 31, 2025.