BENCHMARK ELECTRONICS INC

(amounts in thousands, except per share data, unless otherwise noted)

Note 1 – Basis of Presentation

Benchmark Electronics, Inc. (the Company) is a Texas corporation that provides advanced manufacturing services, which include design and engineering services and technology solutions. From initial product concept to volume production, including direct order fulfillment and aftermarket services, the Company has been providing integrated services and solutions to original equipment manufacturers (OEMs) since 1979. The Company serves the following market sectors: advanced computing and communications (AC&C), aerospace and defense (A&D), industrial, medical, and semiconductor capital equipment (semi-cap). The Company has manufacturing operations located in the United States and Mexico (the Americas), Asia and Europe.

The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) relating to interim financial statements. The condensed consolidated financial statements reflect all normal and recurring adjustments necessary in the opinion of management for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2025 (the 2025 10-K).

Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (U.S. GAAP) for interim financial statements. However, actual results could differ materially from these estimates.

Note 2 – New Accounting Pronouncements

In December 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-10, Accounting for Government Grants (ASU 2025-10), which adds guidance to Accounting Standards Codification (ASC) Topic 832. It requires business entities to recognize government grants when it is probable that conditions will be met and the grant will be received. It applies to for-profit entities, requiring recognition of income-related grants systematically over related costs and asset-related grants via deferred income or net reduction methods. The guidance is effective for fiscal years beginning after December 15, 2028, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the guidance and its impact to the financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06), which removes references to project stages, and requires capitalization of software costs to begin when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the intended function. The guidance is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the guidance and its impact to the financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (ASU 2024-03), which requires public entities to disclose specified information about certain costs and expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the guidance and its impact to the financial statements.

The Company does not believe that any other recently issued accounting standards will have a material impact on its consolidated financial position, results of operations or cash flows, or will apply to its operations.

Note 3 – Inventories

Inventory costs are summarized as follows:

Note 4 – Goodwill and Other Intangible Assets

Goodwill allocated to the Company’s reportable operating segments follows:

A summary of the Company’s acquired identifiable intangible assets and capitalized purchased software costs follows:

A summary of the components of amortization expense, as presented in the consolidated statements of cash flows, follows:

A summary of the future amortization expense related to the Company’s intangible assets held as of June 30, 2026 for each of the next five years follows (in thousands):

Note 5 – Borrowing Facilities

Long-term debt consists of the following:

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 Guarantors), the lenders party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer (Bank of America). The Credit Agreement is comprised of afive-year $550 million revolving credit facility (the Revolving Credit Facility) and afive-year $150 million term loan facility (the Term Loan Facility), both with a maturity date of June 27, 2030. In addition, the Credit Agreement permits the Company’s Malaysian subsidiary to enter into a term loan facility in the future for an additional principal aggregate amount not to exceed $50 million.

The Credit Agreement amended and restated in its entirety the Company’s previous $681.25 million amended and restated credit agreement, dated as of December 21, 2021, by and among the Company, the Guarantors, the lenders party thereto and Bank of America, as amended by Amendment No. 1, dated as of May 20, 2022, Amendment No. 2, dated as of February 3, 2023, and Amendment No. 3, dated as of May 1, 2023. As part of the debt refinancing transaction, the Company repatriated net dividends of $136.4 million to the United States from its operations in China and Thailand during the quarter ended June 30, 2025. This amount represented gross dividends of $151.6 million, less $15.2 million in withholding taxes paid in those jurisdictions. Such net dividends were used to reduce outstanding borrowings under the Company’s prior revolving credit facility.

The Credit Agreement includes an accordion feature pursuant to which the Company is permitted to add one or more incremental term loans and/or increase commitments under the Revolving Credit Facility in an aggregate amount not exceeding $175 million, subject to the satisfaction of certain conditions and exceptions.

The Revolving Credit Facility is available for general corporate purposes. Principal under the Term Loan Facility amortizes in equal quarterly installments of 0.625% of the initial aggregate term loan advances, beginning on September 30, 2025, through June 30, 2028. Thereafter, quarterly installments will increase to 1.25% of the initial aggregate term loan advances, continuing until the maturity date.

Interest on outstanding borrowings under the Credit Agreement (other than swingline loans) will accrue, at the Company’s option, at (a) Term Secured Overnight Financing Rate (Term SOFR) plus the Applicable Rate (as defined in the Credit Agreement, approximately 1.00% to 2.125% per annum depending on various factors) or (b) for U.S. dollar denominated loans, the base rate (which is the highest of (i) the federal funds rate plus 0.50%, (ii) the Bank of America, N.A. prime rate, (iii) Term SOFR plus 1.00% and (iv)1.00%).

As of June 30, 2026, a portion of the $146.3 million outstanding debt under the Credit Agreement is effectively at a fixed interest rate of 3.965%, plus credit spread, resulting from a $146.3 million notional interest rate swap agreement, which is discussed in Note 13. A commitment fee of 0.15% to 0.30% per annum (based on the debt to EBITDA ratio) on the unused portion of the Revolving Credit Facility is payable quarterly in arrears.

The Credit Agreement is generally secured by a pledge of (a) all the capital stock of the Company’s domestic subsidiaries and 65%of the capital stock of its directly owned foreign subsidiaries, (b) all of the present and future personal property and assets of the

Companyand the Guarantors (including, but not limited to, accounts receivable, inventory, intellectual property and fixed assets of the Company and the Guarantors), in each case, subject to customary exceptions and limitations, and (c) all proceeds and products of the property and assets described in clauses (a) and (b) above.

The Credit Agreement contains certain financial covenants related to interest coverage and debt leverage, and certain customary affirmative and negative covenants, including restrictions on the Company’s ability to incur additional debt and liens, pay dividends, repurchase shares, sell assets and merge or consolidate with other persons. Amounts due under the Credit Agreement may be accelerated upon customary 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 June 30, 2026, the Company was in compliance with all of these covenants and restrictions.

As of June 30, 2026, the Company had $146.3 million in borrowings outstanding under the Term Loan Facility, $37.0 million in borrowings outstanding under the Revolving Credit Facility, and $4.0 million in letters of credit outstanding under the Revolving Credit Facility. As of June 30, 2026, the Company had $509.0 million available for future borrowings under the Revolving Credit Facility subject to compliance with financial covenants as to interest coverage and debt leverage, in addition to other debt covenant restrictions.

Note 6 – Leases

The Company determines if a contract is or contains a lease at inception. The Company leases certain facilities, vehicles and other equipment. The Company’s leases primarily consist of operating leases which expire at various dates through 2036. Variable lease payments are generally expensed as incurred and primarily include certain index-based changes in rent and certain non-lease components, such as maintenance and other services provided by the lessor.

The components of lease expense were as follows:

A summary of cash flow information related to leases follows:

A summary of other information about the Company’s leases follows:

A summary of the Company's future annual minimum lease payments as of June 30, 2026 follows (in thousands):

Note 7 – Common Stock and Stock-Based Awards

Dividends

For the three and six months ended June 30, 2026, cash dividends paid totaled $6.1 million and $12.2 million, respectively. For thethree and six months ended June 30, 2025, cash dividends paid totaled $6.1 million and $12.3 million, respectively.

On June 8, 2026, the Company declared a quarterly cash dividend of $0.17 per share of the Company’s common stock to shareholders of record as of June 30, 2026. The dividend was paid on July 10, 2026.

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

Share Repurchase Authorization

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

Share purchases may be made in the open market, in privately negotiated transactions or block transactions, at the discretion of the Company’s management and as market conditions warrant. Purchases will be funded from available cash and may be commenced, suspended or discontinued at any time without prior notice. Shares repurchased under the program are retired.

The Company didnot repurchase shares during thethree months ended June 30, 2026. The Company repurchased 0.1 million shares during thesix months ended June 30, 2026 for an aggregate of $5.8 million, at an average price of $53.67. As of June 30, 2026, the Company had $116.9 million remaining under share repurchase authorizations.

Stock-Based Compensation

Under the 2019 Omnibus Incentive Compensation Plan (as amended, the 2019 Plan), the Company, upon approval of the Compensation Committee of the Board of Directors, may grant stock options, restricted shares, restricted stock units (both time-based and performance-based) and certain other forms of equity awards, or any combination thereof, to any director, officer, employee or consultant (including any prospective director, officer, employee or consultant) of the Company. Stock options (which have not been awarded since 2015) are granted to employees with an exercise price equal to the market price of the Company’s common stock on the date of grant, generally vest over afour-year period from the date of grant and typically have a term of 10 years. Time-based restricted stock units granted to employees generally vest over athree-year orfour-year period from the date of grant and are subject to continued employment with the Company. Performance-based restricted stock units generally vest over athree-year performance cycle, which includes the year of the grant, and are based upon the Company’s achievement of specified performance metrics. Awards under the 2019 Plan to non-employee directors have historically been in the form of restricted stock units, which vest annually starting on the grant date.

On May 28, 2026, the Company's shareholders approved an amendment to the 2019 Plan to increase the total number of authorized common shares available for grant thereunder by 1.8 million shares. As of June 30, 2026, the Company had 2.9 million common shares available for issuance under the 2019 Plan.

All share-based payments to employees of the Company, including grants of employee stock options (last awarded in 2015), are recognized in the consolidated financial statements based on their grant date fair values. The total compensation costs recognized for stock-based awards were $6.2 million and $11.6 million for thethree and six months ended June 30, 2026, respectively. The total compensation costs recognized for stock-based awards were $5.3 million and $9.7 million for thethree and six months ended June 30, 2025, respectively. The future tax benefit of these stock-based awards as of the grant date was $0.8 million and$1.5 million for the three and six months ended June 30, 2026, respectively. The future tax benefit of these stock-based awards as of the grant date was $0.6 million and $1.0 million for thethree and six months ended June 30, 2025, respectively. The fair value of stock option grants is estimated on the date of grant using the Black-Scholes option pricing model. The fair values of restricted stock units and performance-based restricted stock units are determined based on the closing market price of the Company’s common stock on the date of grant. For performance-based restricted stock units, compensation cost is calculated taking into consideration the probability that the underlying performance goals will be achieved, which is monitored by management throughout the requisite service period. When it becomes probable, based on management’s expectation of the Company’s performance during the measurement period, that more or less than the previous estimate of the awarded shares will vest, an adjustment to compensation cost is recognized as a change in accounting estimate in the period the change is determined.

As of June 30, 2026, the unrecognized compensation costs and remaining weighted-average amortization periods related to stock-based awards were as follows:

(1)Based on the probable achievement of the performance goals identified in each award.

For the six months ended June 30, 2026, no stock options were exercised. The actual tax benefit realized as a result of vesting of share-based awards for thesix months ended June 30, 2026 and 2025 were $4.6 million and $2.6 million, respectively. For the six months ended June 30, 2025, the total intrinsic value of stock options exercised was less than $0.1 million.

For performance-based restricted stock units granted during the six months ended June 30, 2026 and 2025, the number of performance-based restricted stock units that will ultimately be earned will not be determined until the end of the respective performance periods, and may vary from as low as zero to as high as 2 times the target number depending on the level of achievement of certain performance goals. The level of achievement of these goals is based upon the financial results of the Company for the last full calendar year within the performance period. The performance goals consist of certain levels of achievement using the following financial metrics: for the performance-based restricted stock units granted during the six months ended June 30, 2026, revenue and earnings per share, and for the performance-based restricted stock units granted during the six months ended June 30, 2025, revenue, operating income margin, and operating cash flow. If the performance goals are not met based on the Company’s financial results, the applicable performance-based restricted stock units will not vest and will be forfeited. Shares subject to forfeited performance-based restricted stock units will be available for re-issuance under the 2019 Plan.

The following table summarizes the activities related to the Company’s time-based restricted stock units:

The following table summarizes the activities related to the Company’s performance-based restricted stock units:

(1)Represents target number of units that can vest based on the achievement of the performance goals.

Note 8 – Earnings Per Share

Basic earnings per share is computed using the weighted-average number of common shares outstanding. Diluted earnings per share is computed using the weighted-average number of common shares outstanding adjusted for the incremental shares attributed to outstanding stock equivalents. Stock equivalents include common shares issuable upon the exercise of stock options or the vesting of restricted stock units and other equity instruments and are computed using the treasury stock method. Under the treasury stock method, the exercise price of a share and the amount of compensation cost, if any, for future service that the Company has not yet recognized are assumed to be used to repurchase shares in the current period.

The following table sets forth the calculation of the Company’s basic and diluted earnings per share:

Restricted stock units totaling less than 0.1 million common shares for both thethree and six months ended June 30, 2026 were excluded from the computation of diluted earnings per share as their effect would have been anti-dilutive. Restricted stock units totaling less than 0.1 common shares for both thethree and six months ended June 30, 2025 were excluded from the computation of diluted earnings per share as their effect would have been anti-dilutive.

Note 9 – Income Taxes

Income tax expense consists of the following:

The Company’s effective income tax rate was 30.8% and 30.2% for the three and six months ended June 30, 2026, respectively, compared with the U.S. federal statutory income tax rate of 21%. The higher effective tax rates were primarily attributable to losses incurred in certain jurisdictions for which no tax benefit was recognized, the geographic mix of earnings among the jurisdictions in whichthe Company operates, and the impact of the Organization for Economic Co-operation and Development (OECD) Pillar Two Global Minimum Tax. These impacts were partially offset by tax incentives available in certain foreign jurisdictions.

The Company's effective income tax rate was 94.1% and 81.5% for the three and six months ended June 30, 2025, respectively, and differed from the U.S. federal statutory income tax rate of 21% primarily due to a discrete tax expense related to foreign withholding taxes on repatriated dividends and the recognition of deferred tax liabilities associated with unremitted earnings in China, as well as losses incurred in jurisdictions for which no tax benefit was recognized.

The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in Thailand and China. These incentives expire at various dates, unless extended, renewed, or otherwise modified, and are subject to certain conditions with which the Company expects to remain in compliance. Tax incentives in Thailand expire at various dates through December 31, 2031. In the fourth quarter of 2024, the Company was granted a tax incentive in China that applies retroactively from January 1, 2024 through December 31, 2026 and reduces the statutory tax rate from 25% to 15%. The netimpact of these tax incentives reduced foreign income tax expense by approximately $2.8 million (approximately $0.08 per diluted share) and $3.0 million (approximately $0.08 per diluted share) for thesix months ended June 30, 2026 and 2025, respectively.

A summary of the Company’s tax incentives follows:

Determining the consolidated income tax expense, income tax liabilities and deferred tax assets and liabilities involves judgment. The Company calculates and provides for income taxes in each of the tax jurisdictions in which it operates, which requires estimating current tax exposures and making judgments regarding the recoverability of deferred tax assets in each jurisdiction. Actual results may differ from these estimates, which could have a significant impact on operating results in future periods.

Note 10 – Revenue

The Company’s revenues are generated primarily from its manufacturing services, which entails the sale of manufactured products built to customer specifications. The Company also generates revenue from design, development and engineering services, in addition to the sale of other inventory.

Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a manufactured product to a customer. The Company’s contracts with customers are generally short-term in nature. Customers are generally billed when the product is shipped or as services are performed. Under the majority of the Company’s manufacturing contracts with customers, the customer controls all of the work-in-progress as products are being built. Revenues under these contracts are recognized progressively based on the cost-to-cost method. For other manufacturing contracts, the customer does not take control of the product until it is completed. Under these contracts, the Company recognizes revenue upon transfer of control of the product to the customer, which is generally when goods are shipped. Revenue from design, development and engineering services is recognized over time as the services are performed. The Company assumes no significant obligations after shipment as it typically warrants workmanship only. Therefore, warranty provisions are generally not significant.

If the Company records revenue, but does not issue an invoice, a contract asset is recognized. The contract asset is transferred to trade accounts receivable when the entitlement to payment becomes unconditional.

Taxes assessed by governmental authorities that are imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer, are excluded from revenue.

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of sales.

Disaggregation of Revenue

The following tables provide a summary of the Company’s revenue disaggregated by market sector and a reconciliation of the disaggregated revenue to the Company’s revenue by reportable operating segment:

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets and advance payments from customers. During the six months ended June 30, 2026 and 2025,87.9% and 87.3%, respectively, of the Company’s revenue was recognized as products and services that were transferred over time.

Contract assets primarily relate to the Company’s right to consideration for work completed but not billed to the customer as of period end. Contract asset balances are transferred to trade accounts receivable when the rights become unconditional.

A summary of activity related to the Company’s contract assets follows:

As of June 30, 2026 and December 31, 2025, the Company had $124.3 million and $115.5 million, respectively, in advance payments from customers. Of those amounts, $111.4 million and $97.0 million, respectively, were customer deposits and prepayments of inventory and $12.9 million and $18.5 million, respectively, were related to the contractual timing of payments. The advance payments are not considered a significant financing component because they are used to meet working capital demands of a contract, offset inventory risks and protect the Company from the failure of other parties to fulfill obligations under a contract.

Note 11 – Segment and Geographic Information

The Company’s Chief Executive Officer is our Chief Operating Decision Maker (CODM) who evaluates how resources are allocated, assesses performance and makes strategic and operational decisions. The Company currently has manufacturing facilities in the Americas, Asia and Europe to serve its customers. The Company is operated and managed geographically, and management evaluates performance and allocates the Company’s resources on a geographic basis. We provide manufacturing services, design and engineering services, and technology solutions in the Americas, Asia and Europe. Intersegment sales are generally recorded at prices that approximate arm’s length transactions. Operating segments’ measure of profitabilityis based on income from operations. Corporate and intersegment eliminations include (1) corporate expenses not allocated to the Company’sthree reporting segments, which are primarily general and administrative expenses such as corporate employee payroll and benefit costs and corporate facility costs, and (2) income from operations on intersegment sales between reporting segments. Corporate functions include legal, finance, tax, treasury, information technology, risk management, human resources, business development and other administrative functions. The accounting policies for the reportable operating segments are the same as for the Company taken as a whole. The Company has three reportable operating segments: Americas, Asia, and Europe.

Information about the Company’s operating segments follows:

(1)Includes expenses for amortization of intangible assets and restructuring charges and other costs.

(2)Includes corporate expenses for unallocated expenses, amortization of intangible assets, restructuring charges and other costs and elimination of intersegment cost of sales.

Geographic sales information about the Company’s sales is determined based on the destination of the product shipped. Long-lived assets information is determined based on the physical location of the Company’s assets and includes property, plant and equipment, net, operating lease right-of-use assets and other long-term assets, net.

A summary of the Company’s geographic sales and long-lived assets follows:

Note 12 – Accounts Receivable Sale Programs

As of June 30, 2026, in connection with trade accounts receivable sale programs with unaffiliated financial institutions, the Company may elect to sell, at a discount, on an ongoing basis, up to a maximum of $200.0 million of specific accounts receivable at any one time.

During the three months ended June 30, 2026 and 2025, the Company sold $129.7 million and $143.6 million, respectively, of accounts receivable under these programs, and in exchange, the Company received cash proceeds of $129.0 million and $142.7 million, respectively, net of the discount.

During the six months ended June 30, 2026 and 2025, the Company sold $286.9 million and $328.6 million, respectively, of accounts receivable under these programs, and in exchange, the Company received cash proceeds of $285.2 million and $326.5 million, respectively, net of the discount.

The Company recognizes the loss on sale resulting from the discount in other expense, net in its consolidated statements of income.

Note 13 – Financial Instruments

The Company’s financial instruments include cash equivalents, accounts receivable, other receivables, accounts payable, accrued liabilities, long-term debt, interest rate swaps and foreign currency hedges. For cash equivalents, accounts receivable, other receivables, accounts payable and accrued liabilities, the Company believes that the carrying values of its financial instruments approximate the fair values because of their short-term nature. For borrowings under the Credit Agreement in long-term debt, the Company believes that the fair value approximates the carrying value because the interest rates are variable. The Company uses derivative instruments to manage the variability of foreign currency obligations and interest rates. The Company does not enter into derivatives for speculative purposes.

The fair value of the Company’s derivative instruments follows:

Forward Currency Exchange Contracts

The Company utilizes forward currency exchange contracts to manage its foreign currency exposure. The Company enters into forward currency exchange contracts for its operations in Mexico, Europe and Asia. These instruments are designated as cash flow hedges and the changes in fair value of the derivatives are recorded in accumulated other comprehensive loss on the consolidated balance sheets until earnings are affected by the variability of the cash flows. The fair value estimates for the Company’s forward currency exchange contracts are based on Level 2 inputs of the fair value hierarchy, which includes obtaining directly or indirectly observable values from third parties active in the relevant markets. Inputs in the fair value of the foreign currency forward contracts include prevailing forward and spot prices for currencies.

During the three and six months ended June 30, 2026, the Company recorded unrealized losses of $0.9 million ($0.6 million net of tax) and $1.7 million ($1.3 million net of tax), respectively, on its forward currency exchange contracts in other comprehensive income and transferred unrealized gains of $1.3 million and $2.6 million, respectively, to cost of sales.

During the three and six months ended June 30, 2025, the Company recorded unrealized gains of $4.6 million ($3.4 million net of tax) and $7.0 million ($5.3 million net of tax), respectively, on its forward currency exchange contracts in other comprehensive income and transferred unrealized losses of $0.3 million and $1.2 million, respectively, to cost of sales.

At times, the Company enters into forward currency exchange contracts that have not been designated as accounting hedges and, therefore, changes in fair value are recorded in other expense, net in the consolidated statements of income.

Interest Rate Swap Agreement

The Company entered into an interest rate swap agreement on August 1, 2025 to hedge a portion of its interest rate exposure on outstanding borrowings under the Credit Agreement. The Company’s previous interest rate swap agreement was terminated effective August 1, 2025. Under the interest rate swap agreement, the Company receives variable rate interest payments based on the one-month

Term SOFR rate and pays fixed rate interest payments based on a 3.965% fixed interest rate. The effect of the swap is to convert a portion of the floating rate interest expense to fixed interest rate expense. Based on the terms of the interest rate swap agreement and the underlying borrowings outstanding under the Credit Agreement, the interest rate swap agreement was determined to be highly effective, and thus qualifies and has been designated as a cash flow hedge. As such, changes in the fair value of the interest rate swap agreement are recorded in accumulated other comprehensive loss on the consolidated balance sheets until earnings are affected by the variability of cash flows. The fair value estimates for the Company’s interest rate swap agreement were based on Level 2 inputs of the fair value hierarchy, as the Company obtains the valuation from a third party active in relevant markets. The valuation of the interest rate swap agreement is primarily measured through various pricing models and discounted cash flow analysis that incorporate observable market parameters, such as interest rate yield curves and volatility.

As of June 30, 2026, the notional amount of the interest rate swap agreement was $146.3 million.

During the three and six months ended June 30, 2026, the Company recorded unrealized gains of $1.2 million ($0.9 million net of tax) and $2.3 million ($1.8 million net of tax), respectively, on the interest rate swap agreement in other comprehensive income (loss).

During the three and six months ended June 30, 2025, the Company recorded unrealized losses of $0.8 million ($0.5 million net of tax) and $2.1 million ($1.6 million net of tax), respectively, on the Company's previous interest rate swap agreement in other comprehensive income (loss).

Note 14 – Accumulated Other Comprehensive Loss

A summary of the changes in accumulated other comprehensive loss follows:

See Note 13 for further discussion about the Company’s derivative instruments.

Note 15 – Contingencies

On December 31, 2025, the Company’s subsidiaries Benchmark Electronics Phoenix, Inc. and Benchmark electronics Tijuana S. de R.L. C.V. (Claimants) commenced an arbitration action against CommScope Holding Company, Inc., CommScope, Inc., CommScope, LLC, ARRIS Technology, Inc. and their affiliated entities (Respondents). The Claimants contend that Respondents are liable for excess and obsolete inventory for electronic components procured at Respondents’ request and for their benefit under the parties’ manufacturing services agreement. Efforts to settle the dispute amicably were unsuccessful and demand was made for payment for the excess and obsolete inventory the Claimants procured on Respondents’ behalf pursuant to the parties' manufacturing services agreement, plus carrying charges, prejudgment and post judgment interest, interim, preliminary or provisional remedies, declaratory relief, and costs. Respondents filed their answer and a counterclaim for breach of contract on January 14, 2026 and Claimants filed a motion to dismiss Respondents’ counterclaim on February 2, 2026. On March 30, 2026, Respondents agreed to dismiss their counterclaim voluntarily. The dispute is in its initial legal stages and the parties have just commenced discovery. The nature and extent of any potential recoveries, counterclaims, defenses or set offs are unknown at this time. While the Company is unable to provide any assurances as to the ultimate outcome of this matter, the Claimants intend to vigorously prosecute their claims against the Respondents.

The Company is involved in various legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

Note 16 – Restructuring Charges and Other Costs

The Company has undertaken initiatives to restructure its business operations to improve utilization and realize cost savings. These initiatives have included changing the number and location of production facilities, largely to align capacity and infrastructure with current and anticipated customer demand. This alignment includes transferring programs from higher cost geographies to lower cost geographies. The Company’s restructuring process entails moving production between facilities, reducing staff levels, realigning business processes, reorganizing management and other activities.

During the six months ended June 30, 2026, the Company recognized $4.9 million of restructuring charges, 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 a tax assessment in the Americas.

During the six months ended June 30, 2025, the Company recognized $3.3 million of restructuring charges, which primarily related to capacity and workforce reductions at its sites in the Americas. Additionally, the Company agreed to a $10.7 million settlement related to tax assessments in the Americas.

Accrued restructuring costs are included in accrued liabilities on the consolidated balance sheets.

The components of restructuring charges were as follows:

The changes in the Company’s accrued restructuring costs were as follows: