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 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…

Excerpt shortened here; the source contains the full paragraph.

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 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 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 2025 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 potential of another 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-looking statements are not guarantees of performance. All forward-looking statements included in this document are based upon information available to the…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our customer engagement focuses on three principal areas:

Current wording

Our customer engagement focuses on two principal areas:

Previous wording

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

Current wording

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, 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.

Previous wording

Our core strength lies in our ability to partner with our customers to provide concept-to-production solutions through a tightly integrated and seamless set of design, test, manufacturing, supply chain, and support services. The integration of these product realization services, along with our global manufacturing presence, increases our ability to respond to our customers’ needs by providing accelerated time-to-market and time-to-volume production of high-quality products with an emphasis on complex products serving regulated markets with higher reliability requirements. These capabilities and attributes enable us to build strong strategic relationships with our customers while becoming an integral part of their business.

Current wording

Our core strength lies in our ability to partner with our customers to provide concept-to-production solutions through a tightly integrated and seamless set of design, test, manufacturing, supply chain, and support services. The integration of these product realization services, along with our global manufacturing presence, increases our ability to respond to our customers’ needs by providing accelerated time-to-market and time-to-volume production of high-quality products, with an emphasis on complex products serving regulated markets with high reliability requirements. These capabilities and attributes enable us to build strong strategic relationships with our customers as an integral part of their business.

Previous wording

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

Current wording

Our ability to deliver these integrated solutions is enabled by our highly skilled personnel who provide leading-edge technical capabilities in engineering services (including full life cycle), high frequency RF systems, microelectronics, optics, miniaturization, and manufacturing services (including electronics, complex precision machining, and clean room assembly). To support customers across these sectors, we have strategically invested in geographically diverse manufacturing locations and global supply chain capabilities.

Previous wording

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

Current wording

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

Previous wording

Our customers often face challenges in designing supply chains, demand planning, procuring materials and managing their inventories efficiently due to fluctuations in their customer demand, product design changes, short product life cycles and component price fluctuations.

Current wording

Our customers often face challenges in supply chain design, demand planning, material procurement, and inventory management due to demand variability, product design changes, short product life cycles, and component price fluctuations.

Previous wording

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

Current wording

We employ enterprise resource planning (ERP) systems and lean/six sigma methodologies to efficiently and cost-effectively manage procurement and manufacturing processes. Because we are a significant purchaser of electronic components and other raw materials, we are generally able to capitalize on the economies of scale associated with our relationships with suppliers to negotiate price discounts, obtain components and other raw materials that are in short supply, and return excess components.

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% 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.

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, 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% of our total sales during the three months ended March 31, 2026 and 2025, respectively.

Previous wording

We experience fluctuations in gross profit from period to period. Different programs contribute different gross profits depending on the type of services involved, location of production, size of the program, complexity of the product and level of material costs associated with the various products. Moreover, new programs can contribute relatively less to our gross profit in their early stages when manufacturing volumes are usually lower, resulting in inefficiencies and unabsorbed manufacturing overhead costs. During periods of low production volume, we generally have unabsorbed manufacturing overhead costs and reduced gross profit. Gross profit can also be impacted by higher costs associated with other situations, such as supply chain constraints. In addition, a number of our new program ramps require incremental investment during the launch and ramp phase, which can exert downward pressure on our gross profit.

Current wording

We experience fluctuations in gross profit from period to period. Different programs contribute different gross profits depending on the type of services involved, location of production, size of the program, complexity of the product and level of material costs associated with the various products. Moreover, new programs can contribute relatively less to our gross profit in their early stages when manufacturing volumes are usually lower, resulting in inefficiencies and unabsorbed manufacturing overhead costs. During periods of low production volume, we generally have unabsorbed manufacturing overhead costs and reduced gross profit. Gross profit can also be impacted by higher costs associated with other situations, such as supply chain constraints. This includes supply chain premiums for excess component costs paid to secure available supply resulting in revenue with cost recovery only with no margin. In addition, a number of our new program ramps require incremental investment during the launch and ramp phase, which can exert downward pressure on our gross profit.

Previous 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.

Current wording

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

Previous 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.

Current wording

Industrial. Sales for the three months ended March 31, 2026 decreased 3% to $133.3 million from $136.7 million for the three months ended March 31, 2025. The decrease was primarily due to demand softness from certain 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 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.

Current wording

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 March 31, 2026 and 2025, 62% and 66%, respectively, of our sales were from international operations.

Previous 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.

Current wording

Americas. Sales for the three months ended March 31, 2026 increased 10% to $311.3 million from $284.3 million for the three months ended March 31, 2025. The increase was primarily due to higher demand in AC&C and Medical sectors partially offset by decreased demand in the A&D and Industrial sectors.

Previous 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.

Current wording

Asia. Sales for the three months ended March 31, 2026 increased 7% to $303.1 million from $284.0 million for the three months ended March 31, 2025. The increase was primarily due to an increase in demand for A&D, AC&C, and Industrial sectors partially offset by decreased demand in the Semi-Cap sector.

Previous 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.

Current wording

Gross profit for the three months ended March 31, 2026 increased 10% to $69.2 million from $63.2 million for the three months ended March 31, 2025. Gross profit margin increased to 10.2% for the three months ended March 31, 2026 from 10.0% for the three months ended March 31, 2025. The increases were primarily driven by higher sales volumes, which resulted in improved absorption of fixed manufacturing costs, as well as favorable mix.

Previous 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.

Current wording

Income from operations for the three months ended March 31, 2026 increased 86% to $21.9 million from $11.8 million in the three months ended March 31, 2025. The increase was primarily due to decreased restructuring expenses and other costs in the current period, as the settlement of a tax assessment in the Americas was recorded during the three months ended March 31, 2025.

Previous 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.

Current wording

SG&A expenses increased to $42.4 million for the three months ended March 31, 2026 from $38.8 million for the three months ended March 31, 2025. The increase was primarily due to professional services and variable compensation.

Previous 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.

Current wording

Amortization of intangible assets was $1.2 million for both the three months ended March 31, 2026 and 2025.

Previous wording

During the three and nine months ended September 30, 2025, we recognized $1.2 million and $4.5 million, respectively, of restructuring charges and other costs which primarily related to closures of our site in Fremont, California and our old facility in Guadalajara, Mexico in the Americas, the exit of a business in the Americas, and other smaller activities involving capacity reductions and reductions in workforce in certain facilities across various regions. Fremont, California operations are expected to cease during the three months ending September 30, 2025 and all restructuring activity is expected to be fully complete in 2025 upon the disposition of the facility. Operations at our new facility in Guadalajara, Mexico commenced in 2024 with customer programs continuing to transition into 2025. Operations at our old facility in Guadalajara, Mexico operations are expected to cease during the three months ending September 30, 2025 and all restructuring activity is expected to be fully complete in 2025 upon the disposition of the facility.

Current wording

During the three months ended March 31, 2026, we recognized $3.7 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.

Previous wording

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

Current wording

During the three months ended March 31, 2025, we recognized $1.3 million restructuring charges and other costs primarily due to capacity and workforce reductions at our sites in the Americas. Additionally, the Company agreed to a $10.1 million settlement related to an indirect tax assessment in the Americas.

Previous 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.

Current wording

Interest expense decreased to $3.6 million for the three months ended March 31, 2026 from $5.3 million for the three months ended March 31, 2025. The decrease was primarily due to decreased borrowings and a lower interest rate environment.

Previous 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.

Current wording

Interest income decreased to $1.9 million for the three months ended March 31, 2026 from $2.7 million for the three months ended March 31, 2025. The decrease was primarily due to a lower interest environment.

Previous 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.

Current wording

Other expense, net increased to $1.7 million for the three months ended March 31, 2026 from $0.8 million for the three months ended March 31, 2025. The increase was primarily due to higher foreign currency exchange losses.

Previous wording

Income tax expense of $6.3 million represented a 30.7% effective tax rate for the three months ended September 30, 2025, compared with $5.0 million for the three months ended September 30, 2024, representing an effective tax rate of 24.6%. The increase in the effective tax rate for the three months ended September 30, 2025 is primarily due to a discrete tax expense of $0.8 million related to the exit of a business in the Americas, 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 $5.4 million represented a 29.3% effective tax rate for the three months ended March 31, 2026, compared with $4.8 million for the three months ended March 31, 2025, representing an effective tax rate of 56.6%. The decrease in the effective tax rate for the three months ended March 31, 2026 was primarily due to higher losses incurred during the three months ended March 31, 2025 in a jurisdiction for which no corresponding tax benefit was recognized, which reduced pre-tax income and increased the effective tax rate for that period. Losses in those jurisdictions were higher in the prior-year period primarily due to the settlement of an indirect tax assessment recorded during the period.

Previous 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.

Current wording

We reported net income of $13.0 million, or $0.36 per diluted share, for the three months ended March 31, 2026, compared with net income of $3.6 million, or $0.10 per diluted share, for the three months ended March 31, 2025. The increases 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 $286.1 million as of September 30, 2025, which included $249.2 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 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 $325.2 million as of March 31, 2026, which included $303.8 million held outside the United States in various foreign subsidiaries.

Previous wording

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

Current wording

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

Previous wording

Cash provided from operating activities was $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.

Current wording

Cash provided from operating activities was $47.0 million during the three months ended March 31, 2026, and primarily consisted of $13.0 million of net income, adjusted for $11.9 million of depreciation and amortization, $5.4 million of stock-based compensation expense, a $42.3 million increase in accounts payable, a $14.2 million decrease in accounts receivable, and a $6.4 million decrease in prepaid expenses and other assets, partially offset by a $25.6 million increase in inventories, a $8.4 million decrease in accrued liabilities, $8.1 million increase in contract assets and a $4.6 million decrease in advance payments from customer. Working capital was $0.8 billion as of March 31, 2026.

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) 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.

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 trade policy and imposition of tariffs on certain foreign goods (as well as the possibility of imposing significant, additional tariffs in the future) and geopolitical issues or conflicts 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 $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.

Current wording

Cash used in investing activities was $16.1 million during the three months ended March 31, 2026 primarily due to capital expenditures for property, plant and equipment of $16.0 million and purchased software of $2.3 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 $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.

Current wording

Cash used in financing activities was $25.9 million during the three months ended March 31, 2026. Borrowings under the Credit Agreement were $113.0 million and principal payments under the Credit Agreement were $118.9 million. In addition, during the three months ended March 31, 2026, we paid $5.8 million for share repurchases, $8.1 million for employee taxes in connection with the settlement of stock-based awards and $6.1 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 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.

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 March 31, 2026, we had $147.2 million in borrowings outstanding under the term loan facility, $60.0 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.

Previous 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.

Current wording

As of March 31, 2026, we had $486.0 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 million to $80 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 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.

Current wording

During both the three months ended March 31, 2026 and 2025, cash dividends paid totaled $6.1 million. On March 16, 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 March 31, 2026. The dividend of $6.1 million was paid on April 10, 2026.

Previous 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.

Current wording

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 three months ended March 31, 2026. As of March 31, 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.