Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto in Part II, Item 8 of this Report. You should also bear in mind the Risk Factors set forth in Part I, Item 1A, of this Report, any of which could materially and adversely affect the Company’s business, operating results, financial condition and the actual results of the matters addressed by the forward-looking statements contained in the following discussion.
For discussion and analysis regarding our financial condition and results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023, refer to Part II, Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 24, 2025, as amended on February 27, 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.
2025 OVERVIEW
Sales for 2025 and 2024 were both $2.7 billion. During 2025, sales to customers in our various industry sectors fluctuated from 2024 as follows:
Semi-Cap increased by 2%
Industrial remained flat
Medical increased by 7%
A&D increased by 19%
AC&C decreased by 27%
Revenue was flat year-over-year primarily due to increases in A&D, Medical, and Semi-Cap, which were offset by a decrease in AC&C 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 51% and 50% of our total sales in 2025 and in 2024, respectively. Sales to Applied Materials, Inc. and subsidiaries, our largest customer in 2025 and 2024 represented 14% of our total sales in both 2025 and 2024. After a period of unprecedented global labor and supply disruptions, we have seen a general easing of certain material constraints across commodity categories, with the exception of older technologies where semiconductor 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.
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.
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.
RESULTS OF OPERATIONS
The financial information and the discussion below should be read in conjunction with the consolidated financial statements and notes thereto in Part II, Item 8 of this Report. The following table presents the percentage relationship that certain items in our consolidated statements of income bear to sales for the periods indicated:
Year Ended
December 31,
Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Amortization of intangible assets
Restructuring charges and other costs
Income from operations
Other expense, net
Income before income taxes
Income tax expense
Net income
2025 Compared With 2024
Sales
Sales remained flat in 2025. The percentages of our sales by market sector were as follows:
Year Ended
December 31,
Semi-Cap
Industrial
Medical
Total net sales
Semiconductor Capital Equipment. 2025 sales increased 2% to $741.2 million from $723.2 million in 2024. The increase was primarily due to higher demand with existing customers.
Industrial. 2025 sales increased slightly to $574.7 million from $573.3 in 2024. The slight increase was due to mixed demand.
Medical. 2025 sales increased 7% to $483.9 million from $450.7 million in 2024. The increase was primarily due to higher demand with existing customers.
Aerospace and Defense. 2025 sales increased 19% to $514.4 million from $434.0 million in 2024. The increase was primarily due to strong market growth in both commercial aerospace and defense.
Advanced Computing and Communications. 2025 sales decreased 27% to $344.9 million from $474.9 million in 2024. The decrease was due to lower demand from existing customers.
Our international operations are subject to the risks of doing business abroad. See Part I, Item 1A of this Report for risk factors pertaining to 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 2025 and 2024, 64% and 62%, respectively, of our sales were from international operations.
Sales by geographical segment were as follows:
Year Ended
December 31,
(in thousands)
Sales:
Americas
Asia
Europe
Elimination of intersegment sales
Total sales
Americas. 2025 sales decreased 8% to $1.2 billion from $1.3 billion in 2024 primarily due to decreases in sales in our Semi-Cap, Industrial, and AC&C sectors.
Asia. 2025 sales increased 7% to $1.2 billion from $1.1 billion in 2024 primarily due to increases in existing customer demand of our A&D, Semi-Cap, and Industrial sectors.
Europe. 2025 sales increased 4% to $352.5 million from $339.3 million in 2024 primarily due to increases in sales in our A&D, Medical, and Industrial sectors.
Gross Profit
Gross profit of $270.1 million in 2025 compared to $270.0 million in 2024 was relatively consistent. Gross profit margin was 10.2% in both 2025 and 2024.
Income from Operations
2025 income from operations declined to $76.0 million from $109.4 million in 2024.
Income from operations by reportable segment was as follows:
Year Ended
December 31,
(in thousands)
Income from operations:
Americas
Asia
Europe
Corporate and intersegment eliminations
Total income from operations
Americas. 2025 operating income decreased 38% to $24.8 million from $40.2 million in 2024. The decrease was primarily due to increased restructuring charges and other costs due to settlement of an indirect tax assessment as well as an impairment charge, partially offset by cost control. See Note 15 and Note 16 to the consolidated financial statements in Part II, Item 8 of this Report for additional information on the tax assessment and impairment charge, respectively. Restructuring expenses are discussed under “Restructuring Charges and Other Costs” below.
Asia. 2025 operating income increased slightly to $140.8 million from $140.3 million in 2024. The increase was primarily due to higher revenue.
Europe. 2025 operating income increased 36% to $35.8 million from $26.3 million in 2024. The increase was primarily due to higher revenue and expense control.
Selling, General and Administrative (SG&A) Expenses
SG&A expense increased to $159.7 million in 2025 from $149.5 million in 2024. The increase was primarily due to variable compensation.
Amortization of Intangible Assets
Amortization of intangible assets was $4.8 million in both 2025 and 2024.
Restructuring Charges and Other Costs
During 2025, we recognized $7.4 million 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 ceased during the third quarter of 2025 and all restructuring activity was fully complete as of December 31, 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 ceased during the third quarter of 2025 and all restructuring activity is expected to be fully complete in 2026.
Additionally, the Company agreed to an $11.0 million settlement related to an indirect tax assessment in the Americas for the year ended December 31, 2025. See Note 15 to the consolidated financial statements in Part II, Item 8 of this Report.
During the year ended December 31, 2025, the Company identified an impairment triggering event related to the performance of a manufacturing site in the Americas. In connection with that analysis, the Company assessed the facility and equipment assets used in that manufacturing site using valuation information from third parties and recorded $11.1 million of impairment charges as a result of that assessment. The asset impairment charges are included in the restructuring charges and other costs line item on the consolidated statements of income as of December 31, 2025.
During 2024, we recognized $6.3 million of restructuring charges primarily due to capacity and workforce reductions at our sites in the Americas.
See Note 16 to the consolidated financial statements in Part II, Item 8 of this Report for additional information on our restructuring charges.
Interest Expense
Interest expense decreased to $20.2 million in 2025 from $26.9 million in 2024 primarily due to decreased borrowings and a lower interest rate environment.
Interest Income
Interest income decreased to $9.6 million in 2025 from $10.2 million in 2024 primarily due to a lower interest rate environment and lower cash balances in interest-bearing accounts.
Other Expense, Net
Other expense, net, was $3.9 million 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 primarily consisting of foreign exchange losses.
Income Tax Expense
Income tax expense in 2025 was $36.7 million representing an effective tax rate of 59.6% compared with $22.8 million of income tax expense in 2024 representing an effective tax rate of 27.1%. The increase in the effective tax rate in 2025 is primarily due to the $10.4 million in discrete tax expense recorded in the second quarter for the foreign withholding taxes on repatriated 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 in our various jurisdictions.
The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in Thailand and China that expire at various dates, unless extended or otherwise renegotiated, and are subject to certain conditions with which the Company expects to comply. The tax incentives in Thailand will expire on December 31, 2030. The tax incentive in China will expire on December 31, 2026. There is no guarantee of being awarded these tax incentives in the future. In the fourth quarter of 2024, the Company was awarded the China tax holiday retroactive to January 1, 2024 through December 31, 2026. The tax holiday reduces the China tax rate from 25% to 15%. See Note 8 to the consolidated financial statements in Part II, Item 8 of this Report.
Net Income
We reported net income of $24.9 million, or $0.68 per diluted share, for 2025, compared with net income of $61.1 million, or $1.66 per diluted share, for 2024. The decrease of $36.2 million in 2025 is primarily the result of items discussed above.
LIQUIDITY AND CAPITAL RESOURCES
We have historically financed our organic growth and operations through funds generated from operations borrowings under our Credit Agreement (as defined below). Cash and cash equivalents and restricted cash totaled $322.4 million at December 31, 2025 and $328.0 million at December 31, 2024, of which $288.9 million and $304.9 million, respectively, was held outside the United States in various foreign subsidiaries.
Our operations 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.
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 consummated 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.
2025 Cash Flows
Cash provided from operating activities was $124.0 million in 2025 and primarily consisted of $24.9 million of net income, adjusted for $47.6 million of depreciation and amortization, $17.2 million of stock-based compensation expense, $11.1 million of asset impairment, a $25.7 million decrease in accounts receivable, and a $75.2 million decrease in inventories partially offset by a $28.1 million decrease in advance payments from customers and a $32.4 million decrease in accounts payable. Working capital was $0.8 billion as of December 31, 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 $32.7 million in 2025 primarily due to capital expenditures for property, plant and equipment of $35.6 million, purchased software of $2.9 million partially offset by $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.
Cash used in financing activities was $105.9 million in 2025. Borrowings under the Credit Agreement were $891.1 million and principal payments under the Credit Agreement were $936.0 million. In addition, we paid $24.4 million of dividends during 2025 and $7.3 million for employee taxes paid to settle stock-based awards exercised during the year. We also completed $26.8 million in common stock share repurchases.
Credit Agreement
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 December 31, 2025, we had $148.1 million in borrowings outstanding under the term loan facility and $65.0 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 consolidated financial statements in Part II, Item 8 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 December 31, 2025, we were in compliance with all of these covenants and restrictions.
As of December 31, 2025, we had $480.6 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 be approximately $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.
Share Repurchase Authorization
On February 19, 2020, the Board approved an expanded share repurchase authorization, allowing the Company 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.
During 2025, the Company repurchased 0.7 million shares for an aggregate of $26.8 million, at an average price of $38.22 per share. As of December 31, 2025, the Company had $122.7 million remaining under share its repurchase authorization.
Dividends
During 2025, 2024 and 2023, cash dividends paid totaled $24.4 million, $23.9 million and $23.5 million, respectively. On December 15, 2025, the Company announced that 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 December 31, 2025. The dividend of $6.1 million was paid on January 13, 2026.
The Board of Directors currently intends to continue paying quarterly dividends. However, the Company’s future dividend policy is subject to the Company’s compliance with applicable law, and depending 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; there can be no assurance that the Company will continue to pay a dividend in the future.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements in Part II, Item 8 of this Report, which have been prepared in accordance with accounting principles generally accepted in the United States. Our significant accounting policies are summarized in Note 1 to the consolidated financial statements in Part II, Item 8 of this Report. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, inventories, revenue recognition, income taxes, long-lived assets, stock-based compensation and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Revenue Recognition
Our revenue is recognized when a contract exists and when, or as, we satisfy a performance obligation by transferring control of a product or service to the customer. A contract exists when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. For the Company, the arrangement with the customer is generally documented through a master agreement which outlines the general terms and conditions of the arrangement and a specific purchase commitment from the customer.
Our performance obligations are satisfied over time as work progresses or at a point in time. The determination of how our performance obligations are satisfied requires judgment and is assessed on a contract by contract basis. Under the majority of our contracts, our performance obligations are satisfied over time as work progresses since the customer controls all of the work-in-progress as products are being built. For these contracts, the selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We use a cost-based input measurement of progress because it best represents the transfer of assets to the customer. For our other contracts, revenue is recognized upon transfer of control of the product or service, which is generally upon shipment or delivery depending on the terms of the underlying contract. Revenue from design, development and engineering services is generally recognized over time as the services are performed.
Generally, there are no subjective customer acceptance requirements or further obligations related to goods or services provided. Our contracts with customers do not allow for a general right of return.
Income Taxes
We account for income taxes using the asset‑and‑liability method, recognizing deferred tax assets and liabilities for the future tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the periods in which the related temporary differences reverse. Our income tax provision reflects management’s judgment regarding tax positions, taxable income forecasts, and the realizability of deferred tax assets.
We assess the realizability of deferred tax assets each reporting period and record a valuation allowance when it is more likely than not that some portion will not be realized. In evaluating the need for a valuation allowance, we consider both positive and negative evidence, with greater weight given to objectively verifiable indicators such as recent earnings trends in the relevant jurisdictions, the expected timing and amount of future reversals of temporary differences, forecasts of future taxable income, and feasible tax‑planning strategies. As of December 31, 2025, our valuation allowance was approximately $26.9 million, primarily related to deferred tax assets from certain foreign operations. Changes in actual or expected operating performance—whether due to improved profitability, changes in business activity, acquisitions, or adverse economic conditions—may result in adjustments to the valuation allowance and corresponding effects on income tax expense.
Several jurisdictions in which we operate have enacted OECD/G20 Pillar Two Global Minimum Tax legislation effective January 1, 2024. The resulting impacts on our income tax provision, net income, and cash flows are reflected in our consolidated financial statements for the year ended December 31, 2025.
We also evaluate exposures related to uncertain tax positions and record reserves when required. We believe our tax positions are appropriately supported and that our reserves for uncertain tax positions are adequate. We are subject to examination by tax authorities in the United States and foreign jurisdictions, and such examinations may involve complex issues requiring judgment.
Impairment of Long-Lived Assets and Goodwill
Long-lived assets, such as property, plant, and equipment and purchased intangible assets, subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount that the carrying amount of the asset exceeds the fair value of the asset.
Goodwill is tested for impairment on an annual basis, at a minimum, and whenever events and circumstances indicate that the carrying amount may be impaired. Circumstances that may lead to impairment include unforeseen decreases in future performance or industry demand or the restructuring of our operations as a result of a change in our business strategy. We perform a qualitative assessment to determine if goodwill is potentially impaired. If the qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we elect not to perform a qualitative assessment, then we would be required to perform a quantitative impairment test for goodwill. This process involves determining the fair values of the reporting units and comparing those fair values to the carrying values, including goodwill, of the reporting units. An impairment loss would be recognized to the extent that the carrying amount exceeds the fair value. For purposes of performing our goodwill impairment assessment, our reporting units are the same as our operating segments as defined in Note 13 to the consolidated financial statements in Part II, Item 8 of this Report. As of December 31, 2025 and 2024, we had $154.0 million of goodwill related to our Americas reporting unit and $38.1 million of goodwill related to our Asia reporting unit.
Based on our qualitative assessments of goodwill as of December 31, 2025 and 2024, we concluded that it was more likely than not that the fair value of our Americas and Asia reporting units were greater than their carrying amounts, and therefore no further testing was required.
Changes in economic and operating conditions that occur after the annual impairment analysis or an interim impairment analysis, and that impact these assumptions, may result in a future goodwill impairment charge.
Recently Enacted Accounting Principles
See Note 1 to the consolidated financial statements in Part II, Item 8 of this Report for a discussion of recently enacted accounting principles.
CONTRACTUAL OBLIGATIONS
We have certain contractual obligations that extend beyond 2025 under lease obligations and debt arrangements. Non-cancellable purchase commitments do not typically extend beyond normal lead-times of 4 to 20 weeks; however, some electronic component manufacturers in the past had lead-times in excess of 52 weeks. Most purchase orders beyond this time frame are normally cancellable; however, during the recent constrained supply chain environment some manufacturers looked to limit their liability by adding non-cancellable, non-renewable (NCNR) terms. We do not use off-balance sheet financing techniques and we have not guaranteed the obligations of any entity that is not one of our wholly owned subsidiaries.
A summary of our operating lease obligations as of December 31, 2025 can be found in Note 6 to the consolidated financial statements in Part II, Item 8 of this Report.
A summary of our long-term debt obligations as of December 31, 2025 can be found in Note 5 to the consolidated financial statements in Part II, Item 8 of this Report.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk
Our international sales comprise a significant portion of our business. We are exposed to risks associated with operating internationally, including:
Foreign currency exchange risk;
Import and export duties, taxes, tariffs and regulatory changes;
Inflationary economies or currencies; and
Economic and political instability.
Additionally, some of our operations are in developing countries. Certain events, including natural disasters, can impact the infrastructure of a developing country more severely than they would impact the infrastructure of a developed country. A developing country can also take longer to recover from such events, which could lead to delays in our ability to resume full operations.
We transact business in various foreign countries and are subject to foreign currency fluctuation risks. We use natural hedging and forward contracts to economically hedge transactional exposure primarily associated with trade accounts receivable, other receivables and trade accounts payable that are denominated in a currency other than the functional currency of the respective operating entity. We do not use derivative financial instruments for speculative purposes. Certain forward currency exchange contracts in place as of December 31, 2025 have not been designated as accounting hedges and, therefore, changes in fair value are recorded within our consolidated statement of income in Part II, Item 8 of this Report.
The Company enters into forward currency exchange contracts designated as cash flow hedges of forecasted foreign currency expenses. Changes in the fair value of the derivatives are recorded in accumulated other comprehensive loss on the consolidated balance sheet until earnings are affected by the variability of the cash flows.
Our sales are substantially denominated in U.S. dollars. Our foreign currency cash flows are generated in certain European and Asian countries and Mexico.
We are also exposed to market risk for changes in interest rates on our financial instruments, a portion of which relates to our invested cash balances. We do not use derivative financial instruments in our investing activities. We place cash and cash equivalents and investments with various major financial institutions. We protect our invested principal funds by limiting default risk, market risk and reinvestment risk. We mitigate default risk by generally investing in investment grade securities.
We are also exposed to interest rate risk on borrowings under our Credit Agreement. As of December 31, 2025, we had $148.1 million outstanding on the floating rate term loan facility, and we have an interest rate swap agreement with a notional amount of $148.1 million. Under this swap agreement, we receive variable rate interest rate payments and pay fixed rate interest payments. The effect of this swap is to convert our floating rate interest expense to fixed interest rate expense. The interest rate swap is designated as a cash flow hedge.
For additional information, see Note 12 to the consolidated financial statements in Part II, Item 8 of this Report.
Item 8. Financial St atements and Supplementary Data
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated B alance Sheets
December 31,
(in thousands, except par value)
Assets
Current assets:
Cash and cash equivalents
Restricted cash
Accounts receivable, net of allowance for doubtful accounts of
$ 438 and $ 241 , respectively
Contract assets
Inventories
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Operating lease right-of-use assets
Goodwill
Deferred income taxes
Other long-term assets
Total assets
Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt
Accounts payable
Advance payments from customers
Income taxes payable
Accrued liabilities
Total current liabilities
Long-term debt, net of current installments
Operating lease liabilities
Other long-term liabilities
Deferred income taxes
Total liabilities
Shareholders’ equity:
Preferred stock, $ 0.10 par value; 5,000 shares authorized,
none issued
Common stock, $ 0.10 par value; 145,000 shares authorized;
issued and outstanding – 35,669 and 35,992 , respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total shareholders’ equity
Total liabilities and shareholders’ equity
See accompanying notes to the consolidated financial statements.
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statemen ts of Income
Year Ended December 31,
(in thousands, except per share data)
Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Amortization of intangible assets
Restructuring charges and other costs
Income from operations
Interest expense
Interest income
Other expense, net
Income before income taxes
Income tax expense
Net income
Earnings per share:
Basic
Diluted
Weighted-average number of shares outstanding:
Basic
Diluted
See accompanying notes to the consolidated financial statements.
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Year Ended December 31,
(in thousands)
Net income
Other comprehensive income (loss):
Foreign currency translation adjustments
Unrealized gain (loss) on derivatives, net of tax
Other
Total other comprehensive income (loss)
Comprehensive income
See accompanying notes to the consolidated financial statements.
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity
(in thousands)
Shares
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders'
Equity
Balances, December 31, 2022
Net income
Other comprehensive income
Dividends declared
Stock-based compensation expense
Stock options exercised
Vesting of restricted stock units
Shares withheld for taxes
Balances, December 31, 2023
Net income
Other comprehensive loss
Dividends declared
Shares repurchased and retired
Stock-based compensation expense
Stock options exercised
Vesting of restricted stock units
Shares withheld for taxes
Balances, December 31, 2024
Net income
Other comprehensive income
Dividends declared
Derecognition of subsidiary equity due to divestiture
Shares repurchased and retired
Stock-based compensation expense
Stock options exercised
Vesting of restricted stock units
Shares withheld for taxes
Balances, December 31, 2025
See accompanying notes to the consolidated financial statements.
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statem ents of Cash Flows
Year Ended December 31,
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation
Amortization
Stock-based compensation expense
Provision for doubtful accounts
Deferred income taxes
Asset impairments
Loss (gain) on the sale of property, plant and equipment
Gain on business divestiture
Changes in operating assets and liabilities:
Accounts receivable
Contract assets
Inventories
Prepaid expenses and other assets
Accounts payable
Advance payments from customers
Accrued liabilities
Operating leases
Income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Additions to property, plant and equipment
Additions to capitalized purchased software
Cash received from business divestiture
Proceeds from the disposal of property, plant and equipment
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Borrowings under credit agreement
Principal payments on credit agreement
Dividends paid
Employee taxes paid with shares withheld
Proceeds from stock options exercised
Debt issuance costs
Principal payments on finance leases
Share repurchases
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net (decrease) increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of the year
Cash, cash equivalents and restricted cash at the end of the year
Supplemental cash flow information:
Interest paid
Non-cash investing activities:
Unpaid purchases of property, plant and equipment at the end of the year
Unpaid purchases of capitalized purchased software costs at the end of the year
See accompanying notes to the consolidated financial statements.
BENCHMARK ELECTRONICS, INC.
Notes to the Consolidated Financial Statements
(Amounts in thousands, except per share data, unless otherwise noted)
Note 1—Summary of Significant Accounting Policies
Business
Benchmark Electronics, Inc. (Benchmark or 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.
Immaterial Correction of an Error
During the fourth quarter of fiscal 2025, we identified immaterial errors related to our income tax calculation. We evaluated the effects of these errors and concluded that they were not material to any previously issued annual or interim financial statements. Accordingly, prior year amounts presented herein for 2024 have been adjusted to correct the immaterial error, which as of December 31, 2024 and for the year then ended (i) understated income tax expense by $ 2.2 million, income tax receivable by $ 2.2 million, current taxes payable by less than $ 0.1 million, deferred tax liabilities by $ 3.7 million, and (ii) overstated deferred tax assets by $ 7.2 million. Prior year amounts presented herein for 2023 have been adjusted to correct the immaterial error, which as of December 31, 2023 and for the year then ended (i) understated income tax receivable by $ 3.2 million, current taxes payable by $ 1.0 million, deferred tax liabilities by $ 2.5 million, and (ii) overstated income tax expense by $ 4.6 million and deferred tax assets by $ 6.3 million. Opening retained earnings for the period ended December 31, 2023 were overstated by $ 11.2 million. See Note 8 for additional information.
Principles of Consolidation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and include the financial statements of Benchmark Electronics, Inc. and its wholly owned and majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid debt instruments with an original maturity at the date of purchase of three months or less to be cash equivalents. Cash equival ents of $ 100.6 million and $ 144.2 million at December 31, 2025 and 2024 , respectively, consisted primarily of money-market funds and time deposits with an initial term of less than three months. Restricted cash primarily represents cash received from customers to settle invoices sold under trade accounts receivable sale program purchase agreements that is contractually required to be set aside until the cash is remitted to the purchaser.
Allowance for Doubtful Accounts
Accounts receivable are recorded net of allowances for amounts not expected to be collected. In estimating the allowance, management considers a specific customer’s financial condition, payment history, current conditions, and various information or disclosures by the customer or other publicly available information. Accounts receivable are charged against the allowance after all reasonable efforts to collect the full amount (including litigation, where appropriate) have been exhausted.
The following table summarizes the activity of the Company’s allowance for doubtful accounts:
(in thousands)
Balance as of
the Beginning
of the Year
Charges to
Operations
Deductions
Balance as of
the End
of the Year
Year ended December 31, 2025:
Allowance for doubtful accounts (1)
Year ended December 31, 2024:
Allowance for doubtful accounts (1)
Year ended December 31, 2023:
Allowance for doubtful accounts (1)
Deductions in the allowance for doubtful accounts represent write-offs, net of recoveries, of amounts determined to be uncollectible.
Inventories
Inventories are stated at the lower of cost (first-in, first-out method) and net realizable value. Costs included in inventories consist of materials, labor and overhead. The carrying amounts of inventories are adjusted for excess and obsolete inventory. Evaluation of excess inventory includes considering factors such as anticipated usage, inventory turnover, inventory levels and product demand levels. Evaluation for obsolete inventory includes considering factors such as the age of on-hand inventory, reduction in value due to damage and design changes. The Company also takes into consideration whether customer agreements specify for the customer to pay for such inventory.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which include 5 to 40 years for buildings and building improvements, 2 to 15 years for machinery and equipment, 2 to 12 years for furniture and fixtures and 2 to 8 years for vehicles. Leasehold improvements are amortized using the straight-line method over the shorter of the useful life of the improvement or the remainder of the lease term.
Leases
Lease assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using the Company’s incremental borrowing rate unless the implicit rate is readily determinable. Our incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment. Lease assets also include any upfront lease payments made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the consolidated statement of income. Management elected the short-term lease recognition exemption for all of the Company’s leases that qualify, in addition to the practical expedient, to not separate lease and non-lease components.
Goodwill and Other Intangible Assets
Goodwill represents the excess of purchase price over fair value of net assets acquired. Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but instead are assessed for impairment at least annually.
Other assets, net, primarily consist of acquired identifiable intangible assets and capitalized purchased software costs. Intangible assets, including those acquired in a business combination, with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values. Customer relationships are amortized on a straight-line basis over a period of 10 to 14 years. Capitalized purchased software costs are amortized on a straight-line basis over the estimated useful life of the related software, which ranges from 2 to 14 years . Technology licenses are amortized over their estimated useful lives in proportion to the economic benefits consumed.
Impairment of Long-Lived Assets and Goodwill
Long-lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or estimated fair value less costs to sell and are no longer depreciated.
The Company evaluates goodwill for impairment on an annual basis, during the fourth quarter, and whenever events and changes in circumstances suggest that the carrying amount may be impaired. Circumstances that may lead to the impairment of goodwill include unforeseen decreases in future performance or industry demand or the restructuring of our operations as a result of a change in our business strategy. A qualitative assessment is allowed to determine if goodwill is potentially impaired. Based on this qualitative assessment, if the Company determines that it is more likely than not that the reporting unit’s fair value is less than its carrying value, then it performs a quantitative assessment, otherwise no further analysis is required. In connection with its annual qualitative goodwill impairment assessments as of December 31, 2025 and 2024 , the Company concluded that goodwill was not impaired.
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 shares outstanding adjusted for the incremental shares attributed to outstanding stock equivalents. Stock equivalents include common shares issuable upon the exercise of stock options, 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 basic and diluted earnings per share:
Year Ended
December 31,
(in thousands, except per share data)
Net income
Denominator for basic earnings per share
Incremental common shares attributable to outstanding restricted stock units
Incremental common shares attributable to exercise of dilutive options
Denominator for diluted earnings per share
Earnings per share:
Basic
Diluted
There were no anti-dilutive stock options excluded from the computation of diluted earnings per share in 2025, 2024 and 2023. Restricted s tock units totaling less than 0.1 million common share equivalents for 2025 and 2024 were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. There were no anti-dilutive restricted stock units in 2023 .
Revenue Recognition
The Company recognizes revenue as the customer takes control of the manufactured products built to customer specifications. 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. Revenue under these contracts is 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 the goods are shipped. Revenue from design, development and engineering services is generally recognized over time as the services are performed.
The Company’s performance obligations generally have an expected duration of one year or less. The Company applies the practical expedient related to short-term performance obligations and does not disclose information about remaining performance obligations that have original expected durations of one year or less or any significant financing components in the contracts.
The Company recognizes the incremental costs, if any, of obtaining contracts as an expense when incurred since the amortization period of the assets that the Company otherwise would have recognized is one year or less.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce its deferred tax assets to the amounts that are more likely than not to be realized in the future. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in assessing the need for a valuation allowance.
The Company recognizes tax benefits from uncertain tax positions only if (based on the technical merits of the position) it is more likely than not the tax positions will be sustained on examination by the tax authority. The tax benefits recognized in the financial statements from such positions are measured based on the largest amount that is more than 50 % likely to be realized upon ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense.
The Company recognizes the tax impact of global intangible low-taxed income (GILTI) in U.S. taxable income as a period cost.
Stock-Based Compensation
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 $ 17.2 million, $ 13.4 million and $ 15.3 million for 2025, 2024 and 2023, respectively. The future tax benefit of these stock-based awards as of the grant date was $ 2.5 million, $ 3.0 million and $ 3.5 million for 2025, 2024 and 2023, 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 December 31, 2025, the unrecognized compensation costs and remaining weighted-average amortization periods related to stock-based awards were as follows:
(in thousands)
Time-
Based Restricted
Stock Units
Performance-
Based Restricted
Stock Units (1)
Unrecognized compensation cost
Remaining weighted-average amortization period
1.7 years
2.1 years
Based on the probable achievement of the performance goals identified in each award.
The total cash received as a result of stock option exercises in 2025, 2024 and 2023 was less than $ 0.1 million, $ 0.5 million and $ 0.1 million, respectively. The actual tax benefit realized as a result of stock option exercises and the vesting of other share-based awards during 2025, 2024 and 2023 was $ 3.3 million, $ 3.7 million and $ 2.7 million, respectively. For 2025, 2024 and 2023, the total intrinsic value of stock options exercised was less than $ 0.1 million, $ 0.3 million and $ 0.1 million, respectively.
The Company awarded performance-based restricted stock units to employees during 2025, 2024 and 2023. The number of performance-based restricted stock units that will ultimately be earned will not be determined until the end of the corresponding performance periods and may vary from as low as zero to as high as 2.5 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: revenue, operating income margin, and return on invested capital. 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 become available for issuance under the Company’s 2019 Omnibus Incentive Compensation Plan (the 2019 Plan).
Use of Estimates
Management of the Company 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 consolidated financial statements in accordance with U.S. GAAP. However, actual results could differ materially from these estimates. On an ongoing basis, management evaluates these estimates, including those related to accounts receivable, inventories, income taxes, long-lived assets, leases, goodwill, stock-based compensation expense, contingencies and litigation. Actual results could differ from those estimates.
Fair Values of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
A three-tier fair value hierarchy of inputs is employed to determine fair value measurements as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2 inputs are observable prices that are not quoted on active exchanges, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; and model-derived valuations in which inputs are observable or in which significant value drivers are observable; and
Level 3 inputs are unobservable inputs employed for measuring the fair value of assets or liabilities.
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.
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 facility in long-term debt, the Company believes that the fair value approximates the carrying value because the interest rates are variable. As of December 31, 2025 , the fair value estimates for the Company's interest rate swap agreement and foreign currency hedges were based on Level 2 inputs of the fair value hierarchy. See Note 12.
Foreign Currency
For foreign subsidiaries of the Company using the local currency as their functional currency, assets and liabilities are translated at exchange rates in effect at the balance sheet date and income and expenses are translated at average exchange rates. The effects of these translation adjustments are recognized in other comprehensive income (loss). Exchange gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in other (expense) income, net. For 2025, 2024 and 2023, the Company recognized a loss of $ 1.3 million, a loss of $ 5.2 million and a loss of $ 3.4 million, respectively. These amounts include the gain (loss) recognized due to forward currency exchange contracts.
Derivative Instruments
All derivative instruments are recorded on the balance sheet at fair value. The Company uses derivative instruments to manage the variability of foreign currency obligations and interest rates. The Company does not enter into derivative arrangements for speculative purposes. Generally, if a derivative instrument is designated as a cash flow hedge, the change in fair value of the derivative is recognized in other comprehensive income (loss) to the extent the derivative is effective and recognized in the consolidated statement of income when the hedged item affects earnings. Changes in the fair value of derivatives that are not designated as cash flow hedges are recognized in the consolidated statement of income. Cash receipts and cash payments related to derivative instruments are recorded in the same category as the cash flows from the items being hedged on the consolidated statement of cash flows.
Government Assistance Programs and Incentives
The operation of our business is impacted by various government programs, incentives, and other arrangements. Government incentives are recorded in our consolidated financial statements in accordance with their purpose as a reduction of expense or an offset to the related capital asset. The benefit is generally recognized when all conditions attached to the incentive have been met or are expected to be met and there is reasonable assurance of their receipt. The Company records capital-related incentives as a reduction to property, plant and equipment, net on the consolidated balance sheets and recognizes a reduction to depreciation expense over the useful life of the related acquired asset. The Company records operating grants as a reduction to expense in the same line item on the consolidated statements of operations as the expenditure for which the grant is intended to compensate.
For 2025, 2024 and 2023 , the Company recognized government incentives of $ 2.1 million, $ 2.3 million and $ 1.7 million, respectively.
For 2025, $ 0.5 million was recorded to selling, general and administrative expenses, $ 0.4 million was recorded to cost of sales, and $ 0.3 million was recorded as a reduction to depreciation expense , of which the substantial majority reduced cost of sales. For 2024, $ 0.5 million was recorded to selling, general and administrative expenses, $ 0.1 million was recorded to cost of sales, and $ 0.1 million
was recorded as a reduction to depreciation expense, of which the substantial majority reduced cost of sales . For 2023, $ 0.6 million was recorded to selling, general and administrative expenses and $ 1.1 million was recorded to cost of sales.
As of December 31, 2025 and 2024, the Company had government incentives of $ 2.9 million and $ 1.7 million, respectively, recognized in income tax receivable related to capital-related incentives.
Concentrations of Business Risk
Substantially all of the Company’s sales are derived from manufacturing services in which the Company purchases components specified by its customers. The Company uses numerous suppliers of electronic components and other materials for its operations. Some components used by the Company have been subject to industry-wide shortages, and suppliers have been forced to allocate available quantities among their customers. The Company’s inability to obtain needed components during periods of allocation could cause delays in manufacturing and could adversely affect the results of operations.
New Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Improvements to Income Tax Disclosures (Topic 740) (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company adopted the guidance for the year ended December 31, 2025 on a prospective basis in Note 8. The adoption of ASU 2023-09 did not have a material impact to the Company's financial statements or financial position.
The Company has determined that other recently issued accounting standards will either not have a material impact on its consolidated financial position, results of operations or cash flows, or will not apply to its operations.
Not Yet Adopted
In December 2025, the FASB issued ASU 2025-10, Accounting for Government Grants (ASU 2025-10), which adds guidance to 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.
Note 2—Inventories
Inventory costs are summarized as follows:
December 31,
December 31,
(in thousands)
Raw materials
Work in process
Finished goods
Total inventories
Note 3—Property, Plant and Equipment
Property, plant and equipment consists of the following:
December 31,
(in thousands)
Land
Buildings and building improvements
Machinery and equipment
Furniture and fixtures
Vehicles
Leasehold improvements
Construction in progress
Total property and equipment, at cost
Less: accumulated depreciation
Total property, plant and equipment, net
Note 4—Goodwill and Other Intangible Assets
Goodwill allocated to the Company’s reportable operating segments follows:
(in thousands)
Americas
Asia
Total
Goodwill as of December 31, 2025 and December 31, 2024
A summary of the Company's acquired identifiable intangible assets and capitalized purchased software costs follows:
(in thousands)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Customer relationships
Capitalized purchased software costs
Technology licenses
Trade names and trademarks
Other
Total intangible assets as of December 31, 2025
(in thousands)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Customer relationships
Capitalized purchased software costs
Technology licenses
Trade names and trademarks
Other
Total intangible assets as of December 31, 2024
During 2025, 2024 and 2023, additions to capitalized purchased software costs were $ 2.9 m illion, $ 1.9 million and $ 4.3 million, respectively.
A summary of the components of amortization expense, as presented in the consolidated statements of cash flows, follows:
Year Ended
December 31,
(in thousands)
Amortization of intangible assets
Amortization of capitalized purchased software costs
Amortization of debt costs
Total amortization expense
A summary of the future amortization expense related to the Company's intangible assets held as of December 31, 2025 for each of the next five years follows (in thousands):
Year ending December 31,
Amortization
Expense
Note 5—Borrowing Facilities
A summary of the Company’s long-term debt outstanding follows:
December 31,
(in thousands)
Revolving credit facility
Term loan
Less: unamortized debt issuance costs
Total long-term debt, including current installments
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 a five-year $ 550 million revolving credit facility (the Revolving Credit Facility) and a five-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 distributions of $ 136.4 million to the United States from its operations in China and Thailand. This amount represents gross distributions of $ 151.6 million, less $ 15.2 million in withholding taxes paid in those jurisdictions. See Note 8 for further discussion about the repatriated distributions and impact on income tax expense. Such net distributions 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 will amortize 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 December 31, 2025 , the $ 148.1 million outstanding debt under the Credit Agreement is effectively at a fixed interest rate of 3.965 % as a result of a $ 148.1 million notional interest rate swap contract, which is discussed in Note 12. 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 or substantially all other personal property of Benchmark and its domestic subsidiaries (including, but not limited to, accounts receivable, contract assets, inventory, intellectual property and fixed assets of Benchmark and its domestic subsidiaries), in each case, subject to customary exceptions and limitations, and (c) all proceeds and products of the property and assets described in (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 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, 2025, the Company was in compliance with all of these covenants and restrictions.
As of December 31, 2025, the Company had $ 148.1 million in borrowings outstanding under the Term Loan Facility, $ 65.0 million in borrowings outstanding under the Revolving Credit Facility and $ 4.4 million in letters of credit outstanding under the Revolving Credit Facility. As of December 31, 2025, the Company had $ 480.6 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.
As of December 31, 2025 , the Company's long-term debt matures as follows: $ 3.8 million in 2026, $ 3.8 million in 2027, $ 5.6 million in 2028, $ 7.5 million in 2029, and $ 192.5 million in 2030. The Company has no maturities after 2030.
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:
Year Ended
December 31,
(in thousands)
Finance lease costs:
Amortization of right-of-use assets (included in depreciation expense)
Interest on lease liabilities
Operating lease costs
Short-term lease costs
Variable lease costs
Total lease costs
A summary of cash flow information related to leases follows:
Year Ended
December 31,
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases
Operating cash flows used for finance leases
Financing cash flows used for finance leases
Right-of-use assets obtained in exchange for new operating lease liabilities
A summary of other information about our leases follows:
December 31,
December 31,
(dollars in thousands)
Operating lease right-of-use assets
Finance lease liabilities, current (included in current installments of long-term debt)
Operating lease liabilities, current (included in accrued liabilities)
Operating lease liabilities, noncurrent
Weighted average remaining lease term – finance leases
0.9 yrs
Weighted average remaining lease term – operating leases
8.4 yrs
8.9 yrs
Weighted average discount rate – finance leases
Weighted average discount rate – operating leases
A summary of the Company's future annual minimum lease payments as of December 31, 2025 follows (in thousands):
Year ending December 31,
Operating
Leases
2030 and thereafter
Total minimum lease payments
Less: imputed interest
Total present value of lease liabilities
As of December 31, 2025 , the Company had no significant lease commitments that had not yet commenced.
Note 7—Common Stock and Stock-Based Awards
Dividends
The Company began declaring and paying quarterly dividends during the first quarter of 2018. The Company declared dividends per share of common stock of $ 0.165 in 2023 and the first and second quarters of 2024, and $ 0.17 in the third and fourth quarters of 2024 and every quarter of 2025. D uring 2025, 2024 and 2023, cash dividends paid totaled $ 24.4 million, $ 23.9 million and $ 23.5 million, respectively. In July 2024, the Board of Directors approved a quarterly dividend increase, raising the quarterly dividend from $ 0.165 to $ 0.17 per common share. On December 15, 2025, the Company announced that 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 December 31, 2025. The dividend of $ 6.1 million was paid on January 13, 2026.
The Board of Directors currently intends to continue paying 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 approved an expanded share repurchase authorization, allowing the Company to buy back another $ 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.
During 2025, the Company repurchased 0.7 million shares for an aggregate of $ 26.8 million, at an average price of $ 38.22 per share. During 2024, the Company repurchased 0.1 million shares for an aggregate of $ 5.1 million, at an average price of $ 40.27 . The Company did no t repurchase shares in 2023. As of December 31, 2025, the Company had $ 122.7 million remaining under share its repurchase authorization.
Stock-Based Compensation
Under the 2019 Plan, the Company, upon approval of the Human Capital and 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 a three-year or four-year period from the date of grant and typically have a term of 10 years. Time-based restricted stock units granted prior to 2024 to employees generally vest over a four-year period from the date of grant and are generally subject to continued employment with the Company. Beginning in 2024, time-based restricted stock units granted to employees generally vest over a three-year period from the date of grant and are generally subject to continued employment with the Company. Performance-based restricted stock units generally vest over a three-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. As of December 31, 2025, the Company had 1.3 million common shares available for issuance under the 2019 Plan.
The following table summarizes the activities related to the Company's stock options:
(in thousands, except per share data and years)
Number of
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic
Value
Outstanding as of December 31, 2022
Exercised
Forfeited or expired
Outstanding as of December 31, 2023
Exercised
Forfeited or expired
Outstanding as of December 31, 2024
Exercised
Forfeited or expired
Outstanding and exercisable as of December 31, 2025
The following table summarizes the activities related to the Company’s time-based restricted stock units:
(in thousands, except per share data)
Number of
Units
Weighted-
Average
Grant Date
Fair Value
Non-vested awards outstanding as of December 31, 2022
Granted
Vested
Forfeited
Non-vested awards outstanding as of December 31, 2023
Granted
Vested
Forfeited
Non-vested awards outstanding as of December 31, 2024
Granted
Vested
Forfeited
Non-vested awards outstanding as of December 31, 2025
The following table summarizes the activities related to the Company’s performance-based restricted stock units:
(in thousands, except per share data)
Number of
Units
Weighted-
Average
Grant Date
Fair Value
Non-vested awards outstanding as of December 31, 2022
Granted (1)
Vested
Forfeited
Non-vested awards outstanding as of December 31, 2023
Granted (1)
Vested
Forfeited
Non-vested awards outstanding as of December 31, 2024
Granted (1)
Vested
Forfeited
Non-vested awards outstanding as of December 31, 2025
Represents target number of awards that can vest based on the achievement of the performance goals.
Note 8—Income Taxes
Income tax expense (benefit) consisted of the following:
Year Ended December 31,
(in thousands)
Current:
U.S. Federal
State and local
Foreign
Total current taxes
Deferred:
U.S. Federal
State and local
Foreign
Total deferred taxes
Total income tax expense
Income (loss) before income taxes consisted of the following:
Year Ended December 31,
(in thousands)
United States
Foreign
Total income before income taxes
Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income (loss) before income taxes, as presented in conformity with ASU 2023-09 as follows:
Year Ended December 31,
(in thousands)
Tax at statutory rate
State and local income taxes, net of federal effect (1)
Domestic federal tax effects
Cross-border tax laws
GILTI and other foreign income inclusion
Refund relating to foreign income taxes deemed paid with repatriated distributions
Tax credits
R&D tax credits
Non-taxable and non-deductible items
Non-deductible officer compensation
Changes in valuation allowances
Changes in tax laws or rates enacted in the current period
Other
Foreign tax effects
China
Tax incentives
Statutory income tax rate differential
Withholding tax (2)
Other
Malaysia
Statutory income tax rate differential
Other
Mexico
Statutory income tax rate differential
Foreign exchange
Inflation adjustments
Capital Gains Tax
Non-deductible customs penalties
Other non-deductible expenses
Changes in valuation allowances
Other
Netherlands
Statutory tax rate difference
Foreign exchange
Other
Thailand
Tax incentives
Withholding tax (3)
Other
Other foreign jurisdictions
Worldwide changes in unrecognized tax benefits
Total income tax expense
(1) The states that contribute to the majority (greater than 50%) of the tax effect in this category include California and New Hampshire for 2025.
(2) Includes current expense of $ 5,019 ( 8.2 %) for withholding tax paid on repatriated distributions during 2025 and deferred expense of $ 2,723 ( 4.4 %) for withholding tax accrued on undistributed earnings.
(3) Represents current expense for withholding tax paid on repatriated distributions during 2025.
Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income (loss) before income taxes, as presented prior to the adoption of ASU 2023-09 are as follows:
Year Ended December 31,
(in thousands)
Tax at statutory rate
State taxes, net of federal tax effect
Effect of foreign operations and tax incentives
Permanent differences
Change in valuation allowance
Global minimum tax
GILTI and other foreign income inclusion
Stock-based compensation
Non-deductible compensation
Change in uncertain tax benefit reserve
Other
Total income tax expense
Certain jurisdictions in which the Company operates has enacted legislation implementing the Organization for Economic Cooperation and Development's (OECD) Pillar Two global minimum tax framework, effective for the Company beginning in 2024. The Company evaluated the impact of enacted legislation and reflected appropriate accruals in its consolidated financial statements. The impact was not material to the Company's financial statements for the year ended December 31, 2025, primarily due to withholding taxes incurred on distributions during the year. For the year-ended December 31, 2024, the Company recorded approximately $ 1.0 million of incremental income tax expense related to enacted Pillar Two legislation.
During 2025, 2024 and 2023, the Company repatriated $ 182.5 million, $ 55.0 million and $ 70.0 million, respectively, of foreign earnings to the United States. As of December 31, 2025, the Company has approximately $ 633.1 million in cumulative undistributed foreign earnings related to its foreign subsidiaries. These earnings would not be subject to U.S. federal income tax if distributed to the United States. A certain amount of earnings from specific foreign subsidiaries are permanently reinvested, and certain foreign earnings from other specific foreign subsidiaries are considered to be non-permanently reinvested and are available for immediate distribution to the United States. In 2025, the Company changed its assertion with respect to unremitted earnings in China after determining that current and projected cash balances in China exceeded the levels required to fund local business activities. As a result, management changed its assertion with respect to remaining unremitted earnings from China to consider them now available for distribution and has accrued $ 3.6 million of deferred tax liabilities in relation to these undistributed earnings in China. The Company estimates that it has approximately $ 10.4 million of unrecognized deferred tax liabilities related to any remaining undistributed permanently reinvested foreign earnings that have not already been subject to applicable foreign income tax or local withholding tax on distributions.
Cash paid for income taxes (net of refunds) were as follows:
Year Ended December 31,
(in thousands)
US Federal
State and local
Foreign
China
Malaysia
Thailand
Other foreign
Total Foreign
Total income taxes paid, net
The amount of cash income taxes paid by the Company during the years ended December 31, 2024 and 2023 was $ 46.7 million and $ 37.7 million, respectively.
The tax effects of temporary differences that give rise to significant portions of the Company's deferred tax assets and liabilities were as follows:
December 31,
(in thousands)
Deferred tax assets:
Inventory
Accruals and allowances
Stock-based compensation
Operating lease liabilities
Net operating loss carryforwards
Research and other tax credit carryforwards
Capitalized research and development
Foreign currency and derivatives
Interest carryforward
Other
Total gross deferred tax assets
Less: valuation allowance
Total net deferred assets
Deferred tax liabilities
Property, plant and equipment
Operating lease right-of-use assets
Intangible assets
Foreign withholding taxes
Revenue recognition (ASC 606)
Other
Total gross deferred tax liabilities
Total net deferred tax assets
The net deferred tax assets are classified as follows:
Long-term assets
Long-term liabilities
Total net deferred tax assets
All of the Company's deferred tax assets and liabilities are classified as long-term on the consolidated balance sheets as of December 31, 2025 and 2024. Deferred tax assets and liabilities are offset for each tax jurisdiction and presented as a single net long-term amount on the consolidated balance sheet.
Changes to U.S. tax law enacted on July 4, 2025, allow for immediate expensing of domestic research and experimentation expenses, accelerated depreciation on eligible capital expenditures, and other tax law changes impacting 2025 with certain changes effective in 2026. These changes are reflected in our results for the year ended December 31, 2025.
As of December 31, 2025, the Company has $ 27.2 million of U.S. state operating loss carryforwards expiring from 2029 - 2045 , and $ 0.5 million with no expiration. Foreign operating loss carryforwards total $ 84.6 million expiring through 2035 , plus $ 13.0 million with indefinite lives. Use of all loss carryforwards is limited to the income in their respective jurisdictions. The Company also has $ 0.5 million of state tax credits expiring beginning in 2034 , $ 8.6 million of federal R&D credits expiring from 2039 - 2045 , and $ 13.7 million of Section 163(j) interest carryforwards with no expiration.
The net change in the Company's valuation allowance for 2025, 2024 and 2023 was a $ 0.7 million increase, $ 7.7 million increase, and a $ 0.2 million decrease, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company maintains a partial valuation allowance of $ 1.5 million, on certain of its U.S. state deferred tax assets relating to operating loss and credit carryforwards, and a full valuatio n of $ 25.4 million on the C ompany's foreign operating loss carryforwards. For all remaining deferred tax assets, as of December 31, 2025, based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in Thailand and China that expire at various dates, unless extended or otherwise renegotiated and are subject to certain conditions with which the Company expects to comply. The tax incentives in Thailand will expire on December 31, 2030 . The tax incentives in China will expire on December 31, 2026 . In the fourth quarter of 2024, the Company was awarded a China tax holiday retroactive to January 1, 2024 through December 31, 2026. The tax holiday reduces the statutory tax rate from 25 % to 15 %. The net impact of the current tax incentives was to lower income tax expense for 2025, 2024, and 2023 by approximately $ 7.6 million (approximately $ 0.21 per diluted share), $ 5.8 million (approximately $ 0.16 per diluted share) and $ 6.3 million (approximately $ 0.17 per diluted share), respectively, as follows:
Year Ended
December 31,
(in thousands)
Thailand
China
Total tax incentives
The Company must determine whether it is “more-likely-than-not” that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured to determine the amount of benefit to recognize in the consolidated financial statements. As of December 31, 2025 , the total amount of the reserve for uncertain tax benefits, including interest and penalties, was $ 13.9 million.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:
December 31,
(in thousands)
Balances as of the beginning of the year
Additions related to current year tax positions
Additions related to prior year tax positions
Decreases related to prior year tax positions
Decreases related to lapse of statutes
Balances as of the end of the year
During 2025, there were increases of current year tax positions due to a new reserve related to foreign income taxes deemed paid with distributions and the current year federal research and development credit generated. There were also increases of prior year tax positions due to the completion of an R&D Study that resulted in an increase in the overall R&D Credit generated for prior years. During 2024, there were decreases of prior year tax positions due to settlements of tax examinations. During 2023 , there were no uncertain tax position changes.
The reserves are classified as either a reduction to income tax receivable or deferred tax assets on the consolidated balance sheet because the underlying uncertain tax positions relate to amounts that would otherwise decrease tax refunds or deferred tax assets. The Company records interest expense and penalties accrued in relation to uncertain tax benefits as a component of current income tax expense. As of December 31, 2025 , the Company did no t have any accrued interest on unrecognized tax benefits included in the reserves.
The Company is currently under IRS examination for the 2018 tax year. Other than for 2018, tax years prior to 2022 are generally not subject to examination by the IRS. For state tax returns, the Company is generally not subject to income tax examinations for tax years prior to 2021. With respect to jurisdictions outside the U.S., the Company is generally not subject to tax examination for tax years prior to 2015.
Note 9 – 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, the 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:
Year Ended December 31, 2025
(in thousands)
Americas
Asia
Europe
Total
Market sector:
Semi-Cap
Industrial
Medical
External revenue
Elimination of intersegment sales
Segment revenue
Year Ended December 31, 2024
(in thousands)
Americas
Asia
Europe
Total
Market sector:
Semi-Cap
Industrial
Medical
External revenue
Elimination of intersegment sales
Segment revenue
Year Ended December 31, 2023
(in thousands)
Americas
Asia
Europe
Total
Market sector:
Semi-Cap
Industrial
Medical
External revenue
Elimination of intersegment sales
Segment revenue
The timing of revenue recognition, billings and cash collections result in billed accounts receivable, contract assets and advance payments from customers. During 2025, 2024 and 2023, 88.2 % , 86.8 % and 87.9 % , respectively, of the Company’s revenue was recognized as products and services 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:
Year Ended
December 31,
(in thousands)
Balance as of the beginning of the year
Revenue recognized
Amounts collected or invoiced
Balance as of the end of the period
As of December 31, 2025 and 2024, the Company had $ 115.5 million and $ 143.6 million, respectively, in advance payments from customers. Of those amounts $ 97.0 million and $ 132.5 million, respectively, were related to both customer deposits and prepayments of inventory and $ 18.5 million and $ 11.1 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 10—Segment, Geographic Information and Major Customer
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 profitability is based on income from operations. Corporate and intersegment eliminations include (1) corporate expenses not allocated to the Company’s three 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:
Year Ended December 31, 2025
(in thousands)
Americas
Asia
Europe
Total
Sales from external customers
Intersegment sales
Reconciliation of sales
Elimination of intersegment sales
Sales
Less:
Cost of sales
Selling, general and administrative expenses
Other (1)
Segment income from operations
Reconciliation of income before income taxes
Other - corporate and eliminations (2)
Interest expense
Interest income
Other expense, net
Income before income taxes
(in thousands)
Americas
Asia
Europe
Total
Sales from external customers
Intersegment sales
Reconciliation of sales
Elimination of intersegment sales
Sales
Less:
Cost of sales
Selling, general and administrative expenses
Other (1)
Segment income from operations
Reconciliation of income before income taxes
Other - corporate and eliminations (2)
Interest expense
Interest income
Other expense, net
Income before income taxes
(in thousands)
Americas
Asia
Europe
Total
Sales from external customers
Intersegment sales
Reconciliation of sales
Elimination of intersegment sales
Sales
Less:
Cost of sales
Selling, general and administrative expenses
Other (1)
Segment income from operations
Reconciliation of income before income taxes
Other - corporate and eliminations (2)
Interest expense
Interest income
Other (expense) income, net
Income before income taxes
(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 and restructuring charges and other costs and elimination of intersegment cost of sales.
Year Ended
December 31,
(in thousands)
Depreciation and amortization:
Americas
Asia
Europe
Corporate
Total depreciation and amortization
Capital expenditures:
Americas
Asia
Europe
Corporate
Total capital expenditures
December 31,
December 31,
(in thousands)
Assets:
Americas
Asia
Europe
Corporate
Total assets
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 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:
Year Ended
December 31,
(in thousands)
Geographic sales:
United States
Singapore
Other Asia
Europe
Other
Total sales
December 31,
December 31,
(in thousands)
Long-lived assets:
United States
Asia
Europe
Other
Total long-lived assets
The Company’s customers operate in industries that are, to a varying extent, subject to rapid technological change, vigorous competition and short product life cycles. Developments adverse to the electronics industry, the Company’s customers or their products could impact the Company’s overall credit risk.
The Company extends credit based on evaluation of its customers’ financial condition and generally does not require collateral or other security from its customers and would incur a loss equal to the carrying value of the accounts receivable if its customer failed to perform according to the terms of the credit arrangement.
Sales to the Company's ten largest customers represented 51 % , 50 % and 52 % of our consolidated sales for 2025, 2024 and 2023, respectively.
The Company had sales to the following customer that exceeded 10 % of the Company's consolidated sales:
Year Ended December 31,
Applied Materials, Inc. and subsidiaries
Sales attributable to this customer were reported in the Americas and Asia operating segments.
As of December 31, 2025 and 2024 the Company had one customer whose gross accounts receivable exceeded 10 % of consolidated gross accounts receivable. This customer represented 10 % and 12 % of consolidated gross accounts receivable as of December 31, 2025 and 2024 , respectively.
Note 11—Accounts Receivable Sale Program
As of December 31, 2025, in connection with a trade accounts receivable sale program 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 2025, 2024 and 2023 , the Company sold $ 627.4 million, $ 600.0 million and $ 565.4 million, respectively, of accounts receivable under this program, and in exchange, the Company received cash proceeds of $ 623.6 million, $ 595.9 million and $ 560.9 million, respectively, net of the discount. The Company recognizes the loss on sale resulting from the discount in other (expense) income, net in its consolidated statements of income.
Note 12—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 facility 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 Company utilizes forward currency exchange contracts to manage its foreign currency exposure. 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 sheet until earnings are affected by the variability of the cash flows. During 2025, the Company recorded an unrealized gain of $ 7.3 million ($ 5.5 million net of tax) on the forward currency exchange contracts in other comprehensive income (loss) and transferred unrealized gains of $ 0.3 million to cost of sales. During 2024 , the Company recorded an unrealized loss of $ 6.4 million ($ 4.8 million net of tax) on the forward currency exchange contracts in other comprehensive income (loss) and transferred unrealized gains of $ 0.6 million to cost of sales. During 2023 , the Company recorded an unrealized gain of $ 2.3 million ($ 1.7 million net of tax) on the forward currency exchange contracts in other comprehensive income (loss) and transferred unrealized gains of $ 3.1 million to cost of sales. The Company also has forward currency exchange contracts in place as of December 31, 2025 that have not been designated as accounting hedges and, therefore, changes in fair value are recorded in other (expense) income, net in the consolidated statements of income.
As of December 31, 2025, the fair value estimates for the Company ’ s forward currency exchange contracts were 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. The Company enters into forward currency exchange contracts for its operations in Mexico, Europe and Asia.
The Company utilizes an interest rate swap agreement to hedge a portion of its interest rate exposure on outstanding borrowings under the Credit Agreement. The Company entered into an interest rate swap agreement on August 1, 2025 and as of December 31, 2025, the notional amount of this interest rate swap agreement was $ 148.1 million. Under the interest rate swap agreement, the Company receives variable rate interest payments based on the one-month SOFR rate and pays fixed rate interest payments. The fixed interest rate for the contract is 3.965 % . The effect of the swap is to convert the floating rate interest expense to fixed interest rate expense. Based on the terms of the interest rate swap contract and the underlying borrowings outstanding under the Credit Agreement, the interest rate contract 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 are recorded in accumulated other comprehensive loss on the consolidated balance sheet until earnings are affected by the variability of cash flows. As of December 31, 2024 , the notional amount of the Company's previous interest rate swap agreement was $ 123 million and the fixed interest rate for the contract was 4.039 % .
During 2025, the Company recorded an unrealized loss of $ 2.3 million ($ 1.8 million net of tax) on interest rate swaps in other comprehensive income (loss). During 2024, the Company recorded an unrealized gain of $ 2.3 million ($ 1.8 million net of tax) on the previous interest rate swap in other comprehensive income (loss). During 2023 , the Company recorded an unrealized loss of $ 3.1 million ($ 2.3 million net of tax) on the previous interest rate swap in other comprehensive income (loss). See Note 13.
As of December 31, 2025 and 2024, the fair value estimates for the Company’s respective interest rate swap agreements were based on Level 2 inputs of the fair value hierarchy, as the Company obtained the valuation from a third party active in relevant markets. The valuation of the interest rate swap agreements 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.
The fair values of the Company’s derivative instruments were as follows:
December 31,
December 31,
(in thousands)
Balance Sheet Location
Derivatives designated as hedging instruments:
Forward currency exchange contracts
Other long-term assets
Forward currency exchange contracts
Other long-term liabilities
Interest rate swap agreement
Other long-term liabilities
Financial instruments that subject the Company to credit risk consist of cash and cash equivalents, restricted cash and trade accounts receivable. The Company maintains cash and cash equivalents with recognized financial institutions. One of the most significant credit risks is the ultimate realization of accounts receivable. This risk is mitigated by (i) sales generally are to well established companies, (ii) performing ongoing credit evaluation of customers, and (iii) engaging in frequent contact with customers, thus enabling management to monitor current changes in their business operations and respond accordingly. Management believes its allowance for doubtful accounts is adequate as of December 31, 2025 . Concentrations of credit risk related to trade accounts receivable resulting from sales to major customers are discussed in Note 10.
Note 13—Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss by component were as follows:
(in thousands)
Foreign
Currency
Translation
Adjustments
Derivative
Instruments,
Net of Tax
Other
Total
Balances, December 31, 2022
Other comprehensive gain (loss) before reclassifications
Amounts reclassified from accumulated
other comprehensive loss
Total other comprehensive income (loss)
Balances, December 31, 2023
Other comprehensive gain (loss) before reclassifications
Amounts reclassified from accumulated
other comprehensive loss
Total other comprehensive income (loss)
Balances, December 31, 2024
Other comprehensive gain (loss) before reclassifications
Amounts reclassified from accumulated
other comprehensive loss
Total other comprehensive income (loss)
Balances, December 31, 2025
See Note 12 for further discussion about the Company’s derivative instruments.
Note 14—Employee Benefit Plans
The Company has defined contribution plans qualified under Section 401(k) of the Internal Revenue Code for the benefit of all its U.S. employees. The Company’s contributions to the plans are based on employee contributions and compensation. During 2025, 2024 and 2023, the Company made contributions to the U.S. plans of approximately $ 6.7 million, $ 7.0 million and $ 7.3 million, respectively. The Company also has defined contribution plans for certain of its international employees primarily dictated by the customs of the regions in which it operates. During 2025, 2024 and 2023 the Company made contributions to the international plans of approximately $ 0.3 million, $ 0.3 million, and $ 0.1 million, respectively.
Note 15—Contingencies
On January 7, 2025, our Guadalajara subsidiary Benchmark Electronics de Mexico S. de R.L. de C.V. (Benchmark Guadalajara) received a tax assessment from the Jalisco, Mexico office of customs and taxing authorities (Servicio de Administracion Tributaria (SAT)) asserting that Benchmark Guadalajara owed approximately $ 12.0 million in import duties, customs penalties, fees and surcharges relating to goods imported by Benchmark Guadalajara into Mexico in the first quarter of 2016. Benchmark Guadalajara challenged the findings in the tax assessment by taking an administrative appeal with the SAT on February 19, 2025. In April 2025, Benchmark Guadalajara and SAT reached an agreement to reduce the amount levied in the tax assessment to approximately $ 10.1 million, and the Company accrued the expected settlement during the first quarter of 2025. Additionally, $ 0.6 million and $ 0.3 million of other related costs were incurred in connection with the matter during the second and third quarters of 2025, respectively. Benchmark Guadalajara plans to continue pursuing all available reimbursement opportunities pertaining to the assessment such as recoverable value add taxes.
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, 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. This dispute is in its initial legal stages. No discovery has been conducted, and thus 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 2025, 2024 and 2023, the Company recognized $ 7.4 million, $ 6.3 million and $ 7.3 million of restructuring charges. In 2025, these charges 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 ceased during the third quarter of 2025 and all restructuring activity was fully complete as of December 31, 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 ceased during the third quarter of 2025 and all restructuring activity is expected to be fully complete in 2026. Additionally, the Company agreed to an $ 11.0 million settlement related to an indirect tax assessment in the Americas for the year ended December 31, 2025. See Note 15 for further information on the tax assessment.
In 2024, these changes primarily related to capacity and workforce reductions at its sites in the Americas. In 2023, these charges primarily related to the previously announced closure of its site in Moorpark, California in the Americas, and other smaller activities involving capacity reductions and reductions in workforce in certain facilities across various regions. Moorpark, California operations ceased as of March 31, 2023 with restructuring activity substantially complete by the end 2023.
Accrued restructuring costs are included in accrued liabilities on the consolidated balance sheet.
The following table summarizes the 2025 activity in accrued restructuring costs:
(in thousands)
Balances as of
December 31,
Restructuring
Charges
Cash
Payments
Non-Cash
Activity
Balances as of
December 31,
Severance costs
Lease facility costs
Other exit costs
Total accrued restructuring costs
The components of restructuring charges during 2025 were as follows:
Year Ended December 31, 2025
(in thousands)
Americas
Asia
Europe
Total
Severance costs
Lease facility costs
Other exit costs
Total restructuring charges
The following table summarizes the 2024 activity in accrued restructuring costs:
(in thousands)
Balances as of
December 31,
Restructuring
Charges
Cash
Payments
Non-Cash
Activity
Balances as of
December 31,
Severance costs
Lease facility costs
Other exit costs
Total accrued restructuring costs
The components of restructuring charges during 2024 were as follows:
Year Ended December 31, 2024
(in thousands)
Americas
Asia
Europe
Total
Severance costs
Lease facility costs
Other exit costs
Total restructuring charges
The following table summarizes the 2023 activity in accrued restructuring costs:
(in thousands)
Balances as of
December 31,
Restructuring
Charges
Cash
Payments
Non-Cash
Activity
Balances as of
December 31,
Severance costs
Lease facility costs
Other exit costs
Total accrued restructuring costs
The components of restructuring charges during 2023 were as follows:
Year Ended December 31, 2023
(in thousands)
Americas
Asia
Europe
Total
Severance costs
Lease facility costs
Other exit costs
Total restructuring charges
During the year ended December 31, 2025, the Company identified an impairment triggering event related the performance of a manufacturing site in the Americas. In connection with that analysis, the Company assessed the facility and equipment assets used in that manufacturing site using valuation information from third parties and recorded $ 11.1 million of impairment charges as a result of that assessment. The asset impairment charges are included in the restructuring charges and other costs line item on the consolidated statements of income as of December 31, 2025.
During the year ended December 31, 2023, the Company made the decision to no longer continue certain manufacturing capabilities in the Americas. In connection with that decision, the Company assessed the facility and equipment assets used in those manufacturing capabilities and recorded $ 1.1 million of impairment charges a s a result of that assessment. The asset impairment charges are included in restructuring charges and other costs in the consolidated statement of income for 2023.
Report of Independent Regist ered Public Accounting Firm
To the Shareholders and Board of Directors
Benchmark Electronics, Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Benchmark Electronics, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of income tax expense
As discussed in Notes 1 and 8 to the consolidated financial statements, the Company has recorded income tax expense of $36.7 million for the year ended December 31, 2025. The Company serves international markets and is subject to income taxes in the United States and foreign jurisdictions, which affect the Company’s income tax expense. Income tax expense is an estimate based on the Company’s understanding of current enacted tax laws and tax rates of each tax jurisdiction.
We identified the evaluation of income tax expense as a critical audit matter. Complex auditor judgment was required in evaluating the Company’s interpretation and application of tax laws and the related impacts to income tax expense. There is complexity in the evaluation of the U.S. income tax expense due to the impact of U.S. tax reform on multinational operations such as the U.S. tax on global intangible low-taxed income (GILTI) and foreign tax credits. There is also complexity in evaluating the impact of changing foreign tax laws on income tax expense.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s income tax expense process. This included controls over the identification of changes to tax laws in the jurisdictions in which the Company operates and the Company’s evaluation of the determination of GILTI and foreign tax credits. We involved tax professionals with specialized skills and knowledge who assisted in evaluating the application of the relevant tax laws and regulations in the determination of the Company’s tax expense. In addition, we evaluated the Company’s methodology used in the determination of GILTI and foreign tax credits.
/s/ KPMG LLP
We have served as the Company’s auditor since 1986.
Phoenix, Arizona
February 23, 2026
Management’s Report
Benchmark’s management has prepared and is responsible for the consolidated financial statements and related financial data contained in this Report. The consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles and necessarily include certain amounts based upon management’s best estimates and judgments. The financial information contained elsewhere in this Report is consistent with that in the consolidated financial statements.
The Company maintains internal accounting control systems that are adequate to prepare financial records and to provide reasonable assurance that the assets are safeguarded from loss or unauthorized use. We believe these systems are effective, and the cost of the systems does not exceed the benefits obtained.
The Audit Committee of the Board of Directors, composed exclusively of independent, outside directors, has reviewed all financial data included in this Report and recommended to the full Board the inclusion of the audited financial statements contained in the Report. The committee meets periodically with the Company’s management and independent registered public accountants on financial reporting matters. The independent registered public accountants have complete access to the Audit Committee and may meet with the committee, without management present, to discuss their audit results and opinions on the quality of financial reporting.
The role of independent registered public accountants is to render a professional, independent opinion on management’s financial statements to the extent required by the standards of the Public Company Accounting Oversight Board (United States). Benchmark’s responsibility is to conduct its affairs according to the highest standards of personal and corporate conduct.
