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What changed in BENCHMARK ELECTRONICS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BENCHMARK ELECTRONICS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+311 added−299 removedSource: 10-K (2025-02-24) vs 10-K (2024-02-27)

Top changes in BENCHMARK ELECTRONICS INC's 2024 10-K

311 paragraphs added · 299 removed · 254 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

173 edited+43 added−29 removed159 unchanged
Biggest changeThese international operations are subject to a number of risks, including: • public health crises, such as the COVID pandemic, which can result in varying impacts to our business, employees, customers, suppliers, vendors and partners internationally; • difficulties in staffing and managing foreign operations; • coordinating communications and logistics across geographic distances and multiple time zones; • less flexible employee relationships, which complicate meeting demand fluctuations and can be difficult and expensive to terminate; • political and economic instability (including acts of terrorism, outbreaks of war, ongoing conflicts, such as between Russia and Ukraine and in Israel and Gaza, and trade restrictions and tariffs), which could impact our ability to ship and/or receive product; • changes in foreign or domestic government policies, regulatory requirements and laws, which could impact our business; • longer customer payment cycles and difficulty collecting accounts receivable; • export controls, import duties, tariffs, and trade restrictions (including quotas and border taxes); • governmental restrictions on the transfer of funds; • risk of governmental expropriation of our property; 18 • burdens of complying with a wide variety of foreign laws and labor practices, including various and changing minimum wage regulations; • high inflation and fluctuations in currency exchange rates, which could affect foreign taxes due, component costs, local payroll, utility and other expenses; and • inability to utilize net operating losses incurred by our foreign operations which would increase our overall effective tax rate.
Biggest changeThese international operations are subject to a number of risks, including: • public health crises, such as that experienced with the COVID pandemic, which can result in varying impacts to our business, employees, customers, suppliers, vendors and partners internationally; • difficulties in staffing and managing foreign operations; • implementation of tariffs on exports from the countries in which we build products; • coordinating communications and logistics across geographic distances and multiple time zones; • less flexible employee relationships, which complicate meeting demand fluctuations and can be difficult and expensive to terminate; • political and economic instability (including acts of terrorism, outbreaks of war, ongoing conflicts, such as between Russia and Ukraine, in Israel and Gaza, and escalating tensions, such as between China and Taiwan as well as China and the U.S., and trade restrictions and tariffs), which could impact our ability to ship and/or receive product or, in the case of tariffs, increase our costs if we are unsuccessful in passing these tariffs on to customers; • changes in foreign or domestic government policies, regulatory requirements and laws, which could impact our business; • longer customer payment cycles and difficulty collecting accounts receivable; 17 • export controls, import duties, customs audits, tariffs, and trade restrictions (including quotas and border taxes); • governmental restrictions on the transfer of funds; • risk of governmental expropriation or seizure of our property; • burdens of complying with a wide variety of foreign laws and labor practices, including various and changing minimum wage regulations; • high inflation and fluctuations in currency exchange rates, which could affect foreign taxes due, component costs, local payroll, utility and other expenses; and • inability to utilize net operating losses incurred by our foreign operations which would increase our overall effective tax rate.
Item 1. Business This Annual Report on Form 10-K (Report) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act).
Item 1. Business This Annual Report on Form 10-K (Report) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act).
In addition to strength in manufacturing complex high-density PCBAs, complex mechanical systems, and full systems integration, we offer customers specialized and tailored advanced design solutions, including technology building blocks and engineering services. We provide this engineering expertise through our design centers in the Americas, Asia, and Europe.
In addition to our strength in manufacturing complex high-density PCBAs, complex mechanical systems, and full systems integration, we offer customers specialized and tailored advanced design solutions, including technology building blocks and engineering services. We provide this engineering expertise through our design centers in the Americas, Asia, and Europe.
Services We Provide Through the Benchmark network, we offer a wide range of design, engineering, automation, test, manufacturing, and fulfillment solutions that support our customers’ products from initial concept and design through prototyping, design validation, testing, ramp-to-volume production, worldwide distribution, and aftermarket support. With our balanced footprint, we have the ability to serve global and regional customers.
Services We Provide Through the Benchmark network, we offer a wide range of design, engineering, manufacturing, automation, test, and fulfillment solutions that support our customers’ products from initial concept and design through prototyping, design validation, testing, ramp-to-volume production, worldwide distribution, and aftermarket support. With our balanced footprint, we have the ability to serve global and regional customers.
Mastering emerging technologies, coupled with an understanding of potential failure mechanisms, positions us to exceed customer expectations and maintain our technological diversity. Precision Technology Services ( Precision Machining and Complex Vertically Integrated Assemblies) In addition to traditional EMS, we offer complex precision technology (PT) services including full electromechanical assembly and test services.
Mastering emerging technologies, coupled with an understanding of potential failure mechanisms, positions us to exceed customer expectations and maintain our technological diversity. Precision Technology Services ( Precision Machining and Complex Vertically Integrated Assemblies) In addition to traditional EMS, we offer complex PT services including full electromechanical assembly and test services.
These factors include: • the volume of customer orders relative to our capacity; • customer introduction and market acceptance of new products; • changes in demand for customer products; • seasonality in demand for customer products; • pricing and other competitive pressures; • the timing of our expenditures in anticipation of future orders; • our effectiveness in managing manufacturing processes; • changes in cost and availability of labor and components, including due to recent labor and supply constraints and inflation; • changes in our product mix; • changes in tax laws in the jurisdictions in which we operate; • changes in tariffs, trade agreements and other trade protection measures; • fluctuations in currency exchange rates; • changes in political and economic conditions; • disruptions caused by computer malfunctions or cybersecurity incidents; and • local factors and events that may affect our production volume, such as local holidays, pandemics or natural disasters.
These factors include: • the volume of customer orders relative to our capacity; • customer introduction and market acceptance of new products; • changes in demand for customer products; • seasonality in demand for customer products; • pricing and other competitive pressures; • the timing of our expenditures in anticipation of future orders; • our effectiveness in managing manufacturing processes; • changes in cost and availability of labor and components, including due to recent labor and supply constraints and inflation; • changes in our product mix; • changes in tax laws in the jurisdictions in which we operate; • changes in tariffs, trade agreements and other trade protection measures; • fluctuations in currency exchange rates; 25 • changes in political and economic conditions; • disruptions caused by computer malfunctions or cybersecurity incidents; and • local factors and events that may affect our production volume, such as local holidays, pandemics or natural disasters.
Our projections of results and successful integration of acquired operations into our network involve risks, including: • integration and management of the operations; • as noted above, demand can vary, and our projections of results may be wrong due to deferred or reduced demand; • retention of key personnel; • integration of purchasing operations and information systems; • retention of the customer base of acquired businesses; • management of an increasingly larger and more geographically disparate business; 27 • the possibility that past transactions or practices may lead to future commercial or regulatory risks; • diversion of management’s attention from other ongoing business concerns; and • inadequate internal control over financial reporting and our ability to bring such controls into compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner.
Our projections of results and successful integration of acquired operations into our network involve risks, including: • integration and management of the operations; • as noted above, demand can vary, and our projections of results may be wrong due to deferred or reduced demand; • retention of key personnel; • integration of purchasing operations and information systems; • retention of the customer base of acquired businesses; • management of an increasingly larger and more geographically disparate business; • the possibility that past transactions or practices may lead to future commercial or regulatory risks; • diversion of management’s attention from other ongoing business concerns; and • inadequate internal control over financial reporting and our ability to bring such controls into compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner.
For example, it could: • increase our vulnerability to general adverse economic and industry conditions; • impair our ability to obtain additional debt or equity financing in the future for working capital, capital expenditures, acquisitions or other purposes; • require us to dedicate a material portion of our cash flows from operations to the payment of principal and interest on our indebtedness, thereby reducing the availability of our cash flows to fund working capital needs, capital expenditures, acquisitions and other purposes; • expose us to the risk of increased interest rates since the term loan has a variable rate; • limit our flexibility in planning for, or reacting to, changes in our business or industry; • place us at a disadvantage compared to our competitors that have less debt; and • make it more difficult for us to satisfy our debt obligations.
For example, it could: • increase our vulnerability to general adverse economic and industry conditions; • impair our ability to obtain additional debt or equity financing in the future for working capital, capital expenditures, acquisitions or other purposes; • require us to dedicate a material portion of our cash flows from operations to the payment of principal and interest on our indebtedness, thereby reducing the availability of our cash flows to fund working capital needs, capital expenditures, acquisitions and other purposes; 24 • expose us to the risk of increased interest rates since the term loan has a variable rate; • limit our flexibility in planning for, or reacting to, changes in our business or industry; • place us at a disadvantage compared to our competitors that have less debt; and • make it more difficult for us to satisfy our debt obligations.
Events relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including continuing hostilities and tensions, trade restrictions and sanctions, the ability to utilize the Company’s manufacturing facilities at sufficient levels to cover its fixed operating costs, or write-downs or write-offs of obsolete or unsold inventory, may have resulting impacts on the Company’s business, financial condition, results of operations, and the Company’s ability (or inability) to execute on its plans.
Events relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations, high interest rates, geopolitical uncertainties including continuing hostilities and tensions, trade restrictions and sanctions, tariffs, the ability to utilize the Company’s manufacturing facilities at sufficient levels to cover its fixed operating costs, or write-downs or write-offs of obsolete or unsold inventory, may have resulting impacts on the Company’s business, financial condition, results of operations, and the Company’s ability (or inability) to execute on its plans.
Although we have experienced component shortages and longer lead times for various components, we continually strive to reduce the impact of component shortages by working with customers to reschedule deliveries and with suppliers to provide the needed components using just-in-time inventory programs, or by working with OEMs on qualifying alternative components or completing redesigns to eliminate the constrained part, or purchasing components at higher prices from distributors rather than directly from manufacturers.
Although in the past we have experienced component shortages and longer lead times for various components, we continually strive to reduce the impact of component shortages by working with customers to reschedule deliveries and with suppliers to provide the needed components using just-in-time inventory programs, or by working with OEMs on qualifying alternative components or completing redesigns to eliminate the constrained part, or purchasing components at higher prices from distributors rather than directly from manufacturers.
This is enabled by our highly skilled personnel’s ability to provide leading-edge technical capabilities in engineering services (including full lifecycle), high frequency RF solutions, microelectronics, miniaturization, and manufacturing services (including electronics and complex precision machining). These capabilities are brought to bear across diversified commercial end-markets, many of which are government regulated.
This is enabled by our highly skilled personnel’s ability to provide leading-edge technical capabilities in engineering services (including full lifecycle), high frequency RF solutions, microelectronics, optics, miniaturization, and manufacturing services (including electronics and complex precision machining). These capabilities are brought to bear across diversified commercial end-markets, many of which are government regulated.
If one or more of our customers were to become insolvent or otherwise unable to pay for the services provided by us, our operating results and financial condition would be adversely affected. 16 Most of our customers do not commit to long-term production schedules, which makes it difficult for us to schedule production and achieve maximum efficiency of our manufacturing capacity.
If one or more of our customers were to become insolvent or otherwise unable to pay for the services provided by us, our operating results and financial condition would be adversely affected. Most of our customers do not commit to long-term production schedules, which makes it difficult for us to schedule production and achieve maximum efficiency of our manufacturing capacity.
We are compliant with and/or hold the following accreditations, certifications and registrations by geographic region: Americas Asia Europe ISO 13485:2016 – Medical √ √ √ FDA/QSR Compliant – Medical √ √ ISO 14971:2019 – Medical Risk Management √ MedAccred √ √ AS9100:2016 – Aerospace √ √ √ ITAR (International Traffic and Arms) √ √ Nadcap (National Aerospace and Defense Association Program) √ FAA Approved Parts Manufacturer – Aviation √ IATF 16949:2016 – Automotive √ TL9000 – Telecommunications √ ANSI ESD S20:20-2014 √ √ √ ISO 9001:2015 – Quality √ √ √ ISO 14001:2015 – Environmental √ √ √ ISO 45001:2018 – Occupational Health and Safety √ √ √ Design and Engineering Services and Technology Solutions We endeavor to add value to customers through coordination and integration from concept, design, prototype and other engineering services in support of our customers’ go-to-market and product life cycle requirements.
We are compliant with and/or hold the following accreditations, certifications and registrations by geographic region: Americas Asia Europe ISO 13485:2016 – Medical √ √ √ FDA/QSR Compliant – Medical √ √ √ ISO 14971:2019 – Medical Risk Management √ MedAccred √ √ AS9100:2016 – Aerospace √ √ √ ITAR (International Traffic and Arms) √ √ Nadcap (National Aerospace and Defense Association Program) √ FAA Approved Parts Manufacturer – Aviation √ IATF 16949:2016 – Automotive √ TL9000 – Telecommunications √ ANSI ESD S20:20-2021 √ √ √ ISO 9001:2015 – Quality √ √ √ ISO 14001:2015 – Environmental √ √ √ ISO 45001:2018 – Occupational Health and Safety √ √ √ Design and Engineering Services and Technology Solutions We endeavor to add value to customers through coordination and integration from concept, design, prototype and other engineering services in support of our customers’ go-to-market and product life cycle requirements.
Even if our customers are responsible for the defects, they may not, or may not have resources to, assume responsibility for any costs or liabilities arising from these defects, which could expose us to additional liability claims. Technology Risks If we are unable to maintain our technological and manufacturing process expertise, our business could be adversely affected.
Even if our customers are responsible for the defects, they may not, or may not have resources to, assume responsibility for any costs or liabilities arising from these defects, which could expose us to additional liability claims. 23 Technology Risks If we are unable to maintain our technological and manufacturing process expertise, our business could be adversely affected.
Benchmark Precision Technologies’ capabilities go well beyond the typical machine shop in that they can design and engineer a prototype, transition it to an accelerated manufacturing protocol (AMP) center to prepare for full volume production, and then shift it to any of Benchmark’s global manufacturing facilities. • Precision Technologies Group .
Benchmark Precision Technologies’ capabilities go well beyond the typical machine shop in that they can design and engineer a prototype, transition it to an accelerated manufacturing protocol center to prepare for full volume production, and then shift it to any of Benchmark’s global manufacturing facilities. • Precision Technologies Group .
For additional information, see “Risk Factors—Compliance or the failure to comply with environmental and climate change regulations could cause us significant expense” in Part I, Item 1A of this Report. 14 Available Information Our website may be viewed at https://www.bench.com .
For additional information, see “Risk Factors—Compliance or the failure to comply with environmental and climate change regulations could cause us significant expense” in Part I, Item 1A of this Report. Available Information Our website may be viewed at https://www.bench.com .
Such laws and regulations could also restrict our ability to modify or expand our facilities, could require us to acquire costly equipment, or could impose other significant expenditures. In addition, our operations may give rise to claims of property contamination or human exposure to hazardous chemicals or conditions. Our worldwide operations are subject to local laws and regulations.
Such laws and regulations could also restrict our ability to modify or expand our facilities, could require us to acquire costly equipment, or could impose other significant expenditures. In addition, our operations may give rise to claims of property contamination or human exposure to hazardous chemicals or conditions. 22 Our worldwide operations are subject to local laws and regulations.
In addition, we may in the future encounter competition from other large electronic manufacturers that are selling, or may begin to sell, electronics manufacturing services. We also face competition from the manufacturing operations of our current and future customers, who are continually evaluating the merits of manufacturing products internally against the advantages of outsourcing to EMS providers.
In addition, we may in the future encounter competition from other large manufacturers that are selling, or may begin to sell, electronics manufacturing services. We also face competition from the manufacturing operations of our current and future customers, who are continually evaluating the merits of manufacturing products internally against the advantages of outsourcing to EMS providers.
Some European countries also often have mandatory legal provisions regarding terms of employment, severance compensation and other conditions of employment that are more restrictive than U.S. laws. We have never experienced a strike or similar work stoppage, and we believe that our employee and labor relations are strong.
Some countries also often have mandatory legal provisions regarding terms of employment, severance compensation and other conditions of employment that are more restrictive than U.S. laws. We have never experienced a strike or similar work stoppage, and we believe that our employee and labor relations are strong.
Any such violation, even if prohibited by our policies, could have a material adverse effect on our business. Start-up costs and inefficiencies related to new or transferred programs can adversely affect our operating results and such costs may not be recoverable if the new programs or transferred programs are cancelled.
Any such violation, even if prohibited by our policies, could have a material adverse effect on our business. 18 Start-up costs and inefficiencies related to new or transferred programs can adversely affect our operating results and such costs may not be recoverable if the new programs or transferred programs are cancelled.
We create for our customers specifications, designs and quick-turn prototypes, which are then validated and ramped into volume manufacturing. 6 • Custom Test and Automation Equipment Design and Build Services. We provide our customers with a comprehensive range of custom circuit and functional test equipment, process automation and replication solutions.
We create for our customers specifications, designs and quick-turn prototypes, which are then validated and ramped into volume manufacturing. 6 • Custom Test and Automation Equipment Design and Manufacturing Services. We provide our customers with a comprehensive range of custom circuit and functional test equipment, process automation and replication solutions.
These selection processes are typically lengthy and can require us to dedicate significant development expenditures and scarce engineering resources in pursuit of a single customer opportunity. Failure to obtain a particular design win may prevent us from obtaining design wins in subsequent generations of a particular product.
These selection processes are typically lengthy and may require us to dedicate significant development expenditures and scarce engineering resources in pursuit of a single customer opportunity. Failure to obtain a particular design win may prevent us from obtaining design wins in subsequent generations of a particular product.
Moreover, there can be no assurance that the amounts we spend to develop new products or solutions to compete for a government contract will be recovered since we may not be awarded the contract. Our business may be adversely impacted by climate change or natural disasters.
Moreover, there can be no assurance that the amounts we spend to develop new products or solutions to compete for a government contract will be recovered since we may not be awarded the contract. Our business may be adversely impacted by climate change or natural or manmade disasters.
See Note 1(i) to the consolidated financial statements in Part II, Item 8 of this Report. 25 We may be exposed to interest rate fluctuations. We have exposure to interest rate risk on our outstanding borrowings under our variable rate credit agreement.
See Note 1(i) to the consolidated financial statements in Part II, Item 8 of this Report. We may be exposed to interest rate fluctuations. We have exposure to interest rate risk on our outstanding borrowings under our variable rate credit agreement.
When our customers are adversely affected by these factors, we may be similarly affected. The loss of a major customer would adversely affect us. 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.
When our customers are adversely affected by these factors, we may be similarly affected. 15 The loss of a major customer would adversely affect us. 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.
To accomplish this, we rely on our business development executives, account managers, site program managers and general management teams to respond with speed and flexibility to address frequently changing customer design specifications and production requirements.
To accomplish this, we rely on our business development executives, global account managers, site program managers and general management teams to respond with speed and flexibility to address frequently changing customer design specifications and production requirements.
We support all of our service offerings with supply chain management systems, superior quality program management, and integrated information technology systems. Our comprehensive service offerings enable us to provide a complete solution for our customers’ outsourcing requirements.
We support all our service offerings with supply chain management systems, superior quality program management, and integrated information technology systems. Our comprehensive service offerings enable us to provide a complete solution for our customers’ outsourcing requirements.
Our inability to do so could have an adverse effect on us. 21 We may be affected by consolidation in the electronics industry, which could create increased pricing and competitive pressures on our business.
Our inability to do so could have an adverse effect on us. We may be affected by consolidation in the electronics industry, which could create increased pricing and competitive pressures on our business.
These services are available at many of our manufacturing locations and allow us to offer customers the flexibility to move quickly from design and initial product introduction to production and distribution.
These services are available at many of our manufacturing locations worldwide and allow us to offer customers the flexibility to move quickly from design and initial product introduction to production and distribution.
Introducing programs requiring implementation of new competencies, including new process technology within our mechanical operations, could affect our operations and financial results. The introduction of programs requiring implementation of new competencies, including new process technology within our mechanical operations, presents challenges in addition to opportunities.
Introducing programs requiring implementation of new competencies, including new process technology within our mechanical operations, could affect our operations and financial results. The introduction of programs requiring implementation of new competencies, including new process technology within our mechanical and electrical operations, presents challenges in addition to opportunities.
We make available free of charge through our internet website our filings with the Securities and Exchange Commission (SEC), including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the SEC.
We make available free of charge through our internet website our filings with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the SEC.
This could cause us to incur additional direct costs or obligations in complying with any new environmental regulations and reporting requirements, as well as increased indirect costs resulting from our customers, suppliers or both incurring additional compliance costs that get passed on to us. These costs may adversely impact our operations and financial condition.
This could cause us to incur additional direct costs or obligations in complying with any new environmental regulations and reporting requirements, as well as increased indirect costs resulting from our customers, suppliers or both incurring additional compliance costs that are passed on to us. These costs may adversely impact our operations and financial condition.
We focus on caring for our customers and responding to their feedback as appropriate to continue to improve our offerings and delivery. • Deliver Complete Manufacturing Solutions Globally . OEMs increasingly require a wide range of specialized design engineering and manufacturing services from EMS providers to reduce costs and accelerate their time-to-market and time-to-volume production.
We focus on caring for our customers and responding to their feedback to continue to improve our offerings and delivery. • Deliver Complete Manufacturing Solutions Globally . OEMs increasingly require a wide range of specialized design engineering and manufacturing services from EMS providers to reduce costs and accelerate their time-to-market and time-to-volume production.
The Pillar Two model rules adopt a global corporate minimum tax of 15% for multinational enterprises with average revenue in excess of €750 million per their consolidated global financial statements. The Council of the European Union has adopted the Pillar Two model rules and has directed European Union (EU)member states to implement legislation enacting the Pillar Two model rules.
The Pillar Two model rules adopt a global minimum tax (GMT) of 15% for multinational enterprises with average revenue in excess of €750 million per their consolidated global financial statements. The Council of the European Union has adopted the Pillar Two model rules and has directed European Union (EU) member states to implement legislation enacting the Pillar Two model rules.
Although the Company believes these statements are based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions, that are beyond the Company’s ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of this Annual Report on Form 10-K for the year ended December 31, 2023 (the Report) and in any of the Company’s subsequent reports filed with the Securities and Exchange Commission.
Although the Company believes these statements are based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions, that are beyond the Company’s ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of this Annual Report on Form 10-K for the year ended December 31, 2024 (the Report) and in any of the Company’s subsequent reports filed with the Securities and Exchange Commission (SEC).
Perceived uncertainties as to our future direction also could affect the market price and volatility of our common shares, our ability to attract and retain qualified personnel and business partners and may affect our relationships with vendors, customers or others. Item 1B. Unresolve d Staff Comments None.
Perceived uncertainties as to our future direction also could affect the market price and volatility of our shares of common stock, our ability to attract and retain qualified personnel and business partners and may affect our relationships with vendors, customers or others. 27 Item 1B. Unresolve d Staff Comments None.
To support customers across these sectors, we have strategically invested in geographically diverse manufacturing locations and global supply chain efficiencies. In addition, we believe that a strong focus on human capital through the talent we hire and retain is critical to maintaining our competitiveness.
To support customers across these sectors, we have strategically invested in geographically diverse manufacturing locations and global supply chain capabilities. In addition, we believe that a strong focus on human capital through the talent we hire and retain is critical to maintaining our competitiveness.
We are committed to ensuring that proper working conditions exist for the safety of our employees, such as the implementation of 6S and visual management practices, developing, implementing and continuously improving our Occupational Health and Safety Management System, and providing appropriate education, reporting and controls.
We are committed to ensuring that proper working conditions exist for the safety of our employees, such as the implementation of 6S lean management concepts and visual management practices, developing, implementing and continuously improving our Occupational Health and Safety Management System, and providing appropriate education, reporting and controls.
Benchmark does not directly source tin, tantalum, tungsten or gold (3TG) from mines, smelters or refiners, and is in most cases several or more levels removed from these supply chain participants. 11 Benchmark therefore expects our suppliers to: • utilize responsible sourcing practices per the Benchmark Conflict Minerals policy and to purge all high-risk smelters from their supply chain. • preferentially source 3TG from smelters and refiners validated as being conflict free and do not directly or indirectly benefit or finance armed groups in any Covered Country. • fully-comply with the Conflict Minerals Law and provide all necessary Conflict Minerals (3TG) declarations. • have a credible, robust conflict minerals program (3TG) which should include: a written conflict minerals policy, communication of requirements to suppliers, CM data collection using the RMI CMRT template, a professional analysis and risk assessment with corrective action on the basis of the CMRTs collected from the suppliers. • pass these requirements through their supply chain and determine the 3TG sources (Smelters or Refiners – SORs). • for suppliers representing the top 90% of our global corporate materials spend (our yearly corporate sample), provide their most recent RMI CMRT form, complete and accurate in the latest version with robust comments where appropriate, during our active yearly CM data collection campaign.
Benchmark does not directly source 3TG from mines, smelters or refiners, and is in most cases several or more levels removed from these supply chain participants. 11 Benchmark therefore expects our suppliers to: • utilize responsible sourcing practices per the Benchmark Conflict Minerals policy and endeavor to purge all high-risk smelters from their supply chain. • preferentially source 3TG from smelters and refiners validated as being conflict free and do not directly or indirectly benefit or finance armed groups in any Covered Country. • fully-comply with the Conflict Minerals Law and provide all necessary Conflict Minerals (3TG) declarations. • have a credible, robust conflict minerals program (3TG) which should include: a written conflict minerals policy, communication of requirements to suppliers, CM data collection using the Responsible Minerals Initiative’s Conflict Minerals Reporting Template (RMI CMRT), a professional analysis and risk assessment with corrective action on the basis of the CMRTs collected from the suppliers. • pass these requirements through their supply chain and determine the 3TG sources (Smelters or Refiners – SORs). • for suppliers representing the top 90% of our global corporate materials spend (our yearly corporate sample), provide their most recent RMI CMRT form, complete and accurate in the latest version with robust comments where appropriate, during our active yearly CM data collection campaign.
To meet this goal, we have implemented the following strategies: • Focus on More Complex Products for Customers . EMS providers serve a wide range of OEMs in different industries, offering scalable electronics assembly as a service. The EMS industry product scope ranges from easy-to-assemble, low-cost, high-volume products targeted for the consumer market to complicated, state-of-the-art, mission-critical products.
To meet this goal, we have implemented the following strategies: • Focus on More Complex Products for Customers. EMS providers serve a wide range of OEMs in different industries, offering scalable electronics assembly as a service. The scope of services for the EMS industry range from easy-to-assemble, low-cost, high-volume products targeted for the consumer market to complicated, state-of-the-art, mission-critical products.
In addition, increased costs of our suppliers or customers could be passed along to us, and we may not be able to increase our product prices enough to offset them. Moreover, any increase in our product prices may reduce our future customer orders and profitability.
In addition, increased costs of our suppliers or partners could be passed along to us, and we may not be able to increase our product prices enough to offset them. Moreover, any increase in our product prices may reduce our future customer orders and profitability.
Outsourcing rates fluctuate periodically, and not all industries we serve outsource at the same rate. Historically, the computing and telecommunications markets have been early to adopt the outsourcing model and are currently the most fully penetrated. This compares to the traditionally lower level of outsourcing within our other served markets in medical, complex industrials, A&D and semi-cap.
Outsourcing rates fluctuate periodically, and not all industries we serve outsource at the same rate. Historically, the computing and telecommunications markets have been early to adopt the outsourcing model and are currently the most fully penetrated. This compares to the traditionally lower level of outsourcing within our other served markets in medical, industrial, A&D and semi-cap.
To facilitate open and honest communication, our whistleblower Helpline includes local phone numbers in each global location, together with language support, which allows reporters to “Speak Up!” in over 150 native languages. In addition, team members access our web portal to report concerns, ask questions, or quickly access ethics and compliance policies.
To facilitate open and honest communication, our 24/7 whistleblower Helpline includes local phone numbers in each global location, together with language support, which allows reporters to “Speak Up!” in over 150 native languages. In addition, team members can access our web portal to report concerns, ask questions, or quickly access ethics and compliance policies.
Further, the price of our common shares may experience volatility in response to fluctuating quarterly results. 26 Provisions in our governing documents and state law may make it harder for others to obtain control of the Company.
Further, the price of our shares of common stock may experience volatility in response to fluctuating quarterly results. Provisions in our governing documents and state law may make it harder for others to obtain control of the Company.
Benchmark also supports Rule 13p-1 under the Securities Exchange Act (Conflict Minerals Law) and efforts to avoid sourcing conflict minerals (tin, tantalum, tungsten, and gold or other derivatives) that directly or indirectly finance or benefit armed groups in the Democratic Republic of Congo (DRC) and in adjoining countries (Covered Countries).
Benchmark also supports Rule 13p-1 under the Exchange Act (Conflict Minerals Law) and efforts to avoid sourcing conflict minerals (CM) (tin, tantalum, tungsten, and gold or other derivatives (3TG)) that directly or indirectly finance or benefit armed groups in the Democratic Republic of Congo (DRC) and in adjoining countries (Covered Countries).
Further, the cost of implementing our sustainability and/or Environmental, Social and Governance (“ESG”) initiatives, our ability to execute on our sustainability and/or ESG targets and objectives as planned, the effectiveness and impact of intended actions, the impact of changing legislation, regulations and directives, and other factors, many of which are beyond the Company’s control, could cause the outcomes, results and achievement of our sustainability and/or ESG targets, goals, objectives, commitments and/or the implementation of our sustainability and/or ESG initiatives to differ materially than those expressed or implied by the Company.
Further, the cost of implementing sustainability and/or ESG initiatives, our ability to execute on sustainability and/or ESG targets and objectives as planned, the effectiveness and impact of intended actions, the impact of changing legislation, regulations and directives, and other factors, many of which are beyond the Company’s control, could cause the outcomes, results and achievement of sustainability and/or ESG targets, goals, objectives, commitments and/or the implementation of sustainability and/or ESG initiatives to differ materially than those expressed or implied by the Company.
Our materials strategy focuses on leveraging our procurement volume company-wide while providing local execution for maximum flexibility. We employ a full complement of electronic data interchange transactions with our suppliers to coordinate forecasts, orders, reschedules, and inventory and component lead times.
Our materials strategy focuses on leveraging our procurement volume companywide while providing local execution for maximum flexibility. We employ a full complement of electronic data interchange transactions with our suppliers to coordinate forecasts, orders, reschedules, and inventory and component lead times.
All reports we file with the SEC are also available free of charge via EDGAR through the SEC’s website at https://www.sec.gov . 15 Item 1A .
All reports we file with the SEC are also available free of charge via EDGAR through the SEC’s website at https://www.sec.gov . 14 Item 1A .
In addition, in recent years, ODMs that provide design and manufacturing services to OEMs, have significantly increased their share of outsourced manufacturing services provided to OEMs in several markets, such as notebook and desktop computers, personal computer motherboards, and consumer electronic products.
In addition, in recent years, ODMs that provide design and manufacturing services to OEMs, have significantly increased their share of outsourced manufacturing services provided to OEMs in several markets, such as notebook and desktop computers, personal computer motherboards, mobile handsets and other consumer electronic products.
These final products may be configured to order and delivered directly to the end customer across all the industries we serve.
These final products may be build-to-order or configured-to-order and delivered directly to the end customer across all the industries we serve.
Further, developments adverse to our major customers or their products, or the failure of a major customer to pay for components or services, could have an adverse effect on us. Sales to our ten largest customers represented 52%, 52% and 47% of our total sales in 2023, 2022 and 2021, respectively.
Further, developments adverse to our major customers or their products, or the failure of a major customer to pay for components or services, could have an adverse effect on us. Sales to our ten largest customers represented 50%, 52% and 52% of our total sales in 2024, 2023 and 2022, respectively.
We avoid these lower-value market sector opportunities and focus on lower-volume manufacturing, high complexity opportunities with customers, specifically within the A&D, semi-cap, medical, and complex industrials markets, which are often in highly regulated industries that have been increasingly outsourcing value-added services to their EMS providers.
We avoid these lower-value market sector opportunities and focus on low to medium -volume, high complexity manufacturing opportunities with customers, specifically within the A&D, semi-cap, medical and industrial markets, which are often in highly regulated industries that have been increasingly outsourcing value-added services to their EMS providers.
By leveraging our advanced technology and engineering solutions, our customers can focus their efforts on branding and go-to-market, while relying on a trusted partner to deliver products faster and more efficiently. • Maintain and Develop Close, Long-Term Relationships with our Customers .
By leveraging our advanced technology building blocks and engineering solutions, our customers can focus their efforts on branding and go-to-market, while relying on us as a trusted partner to deliver products faster and more efficiently. • Maintain and Develop Close, Long-Term Relationships with our Customers .
Any of the following risk factors 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. Operational Risks Shortages or price increases of components specified by our customers have in the past delayed, and are expected to continue delaying, shipments and may adversely affect our profitability.
Any of the following risk factors 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. Operational Risks Shortages or price increases of components specified by our customers have in the past delayed, and could continue to delay, shipments, which may adversely affect our profitability.
We employ enterprise resource planning (ERP) systems and lean manufacturing principles to manage procurement and manufacturing processes in an efficient and cost-effective manner so that, where possible, components arrive on a just-in-time, as-and-when-needed basis.
We employ enterprise resource planning (ERP) systems and lean/six sigma methodologies to manage procurement and manufacturing processes in an efficient and cost-effective manner so that, where possible, components arrive on a just-in-time, as-and-when-needed basis.
We have also developed differentiated capabilities in RF. The need to improve size, weight, and power (SWaP) to accommodate high frequency electronics communications is important to customers in the A&D, medical, and next-generation communications markets.
We have also developed differentiated capabilities in RF. The need to improve size, weight, and power (SWaP) to accommodate high frequency electronics communications is important to customers in the A&D, medical, and AC&C markets.
Any delay in the upgrade of our information systems could disrupt our operations and cause unanticipated increases in our costs. We are currently upgrading our information technology (IT) infrastructure and ERP system, which we anticipate taking several years.
Any delay in the upgrade of our information systems could disrupt our operations and cause unanticipated increases in our costs. We are currently upgrading our IT infrastructure and ERP system, which we anticipate will take several years.
Our customer engagement focuses on three principal areas: • Manufacturing Services , which include printed circuit board assemblies (PCBAs) using both traditional surface mount technologies (SMT) and microelectronics, subsystem assembly, system build and integration. System builds and integration often involve building a finished assembly that includes PCBAs, complex subsystem assemblies, mechatronics, displays, mechanicals, and other components.
Our customer engagement focuses on three principal areas: • Manufacturing Services , which include printed circuit board assemblies (PCBAs) using both surface mount technologies (SMT) and microelectronics, along with subsystem assembly to full system build and integration. System build and integration often involve building a finished assembly that includes PCBAs, complex subsystem assemblies, mechatronics, displays, mechanicals, and other components.
Changes that impact the way we operate internally could have a negative impact on us and reduce the demand for our foreign manufacturing facilities. Moreover, any regulatory actions by other countries where we operate could also negatively impact our financial performance.
Changes that impact the way we operate internally could have a negative impact on us and reduce the demand for our foreign manufacturing facilities. Moreover, any regulatory actions by other countries where we operate could also negatively impact our financial performance. In addition, changes in policies by the U.S.
Any suppliers not willing to comply with these requirements shall be reviewed by global procurement with regard to future business and sourcing declarations. This conflict minerals policy encourages our suppliers to respect and protect human rights throughout the world. Human Capital Management Our employees are an indispensable contributor to our success.
Any suppliers not willing to comply with these requirements shall be reviewed by global procurement with regard to future business and sourcing declarations. This conflict minerals policy encourages our suppliers to respect and protect human rights throughout the world. Human Capital Management Our employees are the driving force behind our success.
Within each of our targeted sectors, we believe there is a general trend toward higher complexity, additional outsourcing, and elongated product life cycles. • Lead with Design & Engineering Services and Leverage Advanced Technology Solutions.
Within each of our targeted sectors, we believe there is a general trend toward increased complexity, additional outsourcing, re-shoring of capacity and elongated product life cycles. • Lead with Design & Engineering Services and Leverage Advanced Technology Solutions.
The potential impact, if any, to our provision for income taxes, net income, and cash flows could be materially impacted by the implementation of the Pillar Two model rules in our international locations. Any litigation, even where a claim is without merit, could result in substantial costs and diversion of resources.
The potential impact to our provision for income taxes, net income, and cash flows could be materially impacted by the implementation of the GMT in our international locations. Any litigation, even where a claim is without merit, could result in substantial costs and diversion of resources.
A significant and sustained decline in our market capitalization could result in material charges in future periods that could be adverse to our operating results and financial position. As of December 31, 2023, we had $192.1 million in goodwill and $51.0 million of identifiable intangible assets.
A significant and sustained decline in our market capitalization could result in material charges in future periods that could be adverse to our operating results and financial position. As of December 31, 2024, we had $192.1 million in goodwill and $44.4 million of identifiable intangible assets.
Uncertainty over the erosion of global consumer confidence, geopolitical events, such as ongoing conflict between Russia and Ukraine and conflicts in Israel and Gaza, global pandemics, the availability and cost of credit, concerns about volatile energy costs, declining asset values, continued inflation, rising interest rates, and the stability and solvency of financial institutions, financial markets, businesses, and sovereign nations can slow global economic growth and result in recessionary conditions.
Uncertainty over the erosion of global consumer confidence, geopolitical events, such as ongoing conflict between Russia and Ukraine, conflicts in Israel and Gaza, and escalating tensions between China and Taiwan as well as China and the U.S., global pandemics, the availability and cost of credit, concerns about volatile energy costs, declining asset values, continued inflation, high interest rates, and the stability and solvency of financial institutions, financial markets, businesses, and sovereign nations can slow global economic growth and result in recessionary conditions.
Accordingly, our business, cash flows, results of operations and financial condition could suffer if we lose time-sensitive sales, incur additional freight costs or are unable to pass on price increases to our customers due to such component shortages or delays. We are dependent on the success of our customers and the markets in which they operate.
Accordingly, our business, cash flows, results of operations and financial condition could suffer if we lose time-sensitive sales, incur additional freight costs or are unable to pass on price increases and costs related tariffs to our customers. We are dependent on the success of our customers and the markets in which they operate.
In particular, statements, expressed or implied, concerning the Company’s outlook and guidance for first quarter and fiscal year 2024 results, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the Company’s business strategy and strategic initiatives, the Company’s repurchases of shares of its common stock, the Company’s expectations regarding restructuring charges and amortization of intangibles, and the Company’s intentions concerning the payment of dividends, among others, are forward-looking statements.
(the Company) for first quarter and fiscal year 2025 results, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the Company’s business strategy and strategic initiatives, the Company’s repurchases of shares of its common stock, the Company’s expectations regarding restructuring charges and amortization of intangibles, and the Company’s intentions concerning the payment of dividends, among others, are forward-looking statements.
Our information systems include a proprietary software stack that controls serialization, production and quality data for all of our facilities around the world using state-of-the-art equipment and control techniques to provide high quality product with superior traceability throughout the product lifecycle.
Our ERP systems provide product and production information to our supply chain management, engineering change management and floor control systems. Our information systems include a proprietary software stack that controls serialization, production and quality data for all our facilities around the world using state-of-the-art equipment and control techniques to provide high quality product with superior traceability throughout the product lifecycle.
We provide our customers with a comprehensive set of PCBA manufacturing technologies and solutions, which include: ▪ Surface Mount Technology ▪ Substrate Technology; Rigid Epoxy, Flex, Ceramic, Glass, Rigid-Flex; ▪ Plated Through Hole Technology; ▪ Pin-in-Paste Technology; ▪ Hybrid RoHS Soldering Processes; ▪ Wafer-Level CSP (WLCSP); ▪ Flip Chip; ▪ Chip-on-Board and Wire-Bonding; ▪ In-Circuit Test; ▪ Microelectronics ▪ Mixed SMT and Microelectronics Assembly ▪ Inspection and Test Solutions ▪ Automated Optical Inspection (2D & 3D) ▪ Automated X-ray Inspection ▪ Flying Probe ▪ Boundary Scan Test ▪ In-Circuit Test ▪ Board Level Functional Testing ▪ Device/System Integration Functional Test ▪ Electrical Safety Test ▪ Microelectronics Test; and ▪ Vibration, ESS, HASS and HALT 4 We also provide specialized solutions in support of our customers’ components, products and systems, which include: ▪ Conformal Coating and Potting; ▪ Underfill and Encapsulation; ▪ Ultrasonic Welding; ▪ Automation Solutions; ▪ Complex Final Assembly; ▪ Configure | Build to Order; ▪ Fluidics Assembly; ▪ Splicing and Connectorization for Optical Applications; ▪ Hybrid Optical/Electrical Printed Circuit Board Assembly and Testing; and ▪ Sub-Micron Alignment of Optical Sub-Assemblies. • Component Engineering Services .
Our comprehensive set of PCBA manufacturing technologies and solutions, include: ▪ Surface Mount Technology ▪ Substrate Technology; Rigid Epoxy, Flex, Ceramic, Glass, Rigid-Flex ▪ Pin-in-Paste Technology ▪ Conformal Coating and Potting ▪ RoHS Soldering Processes ▪ Wafer-Level CSP (WLCSP) ▪ Microelectronics ▪ Mixed SMT and Microelectronics Assembly ▪ Flip Chip ▪ Chip-on-Board and Wire-Bonding ▪ Inspection and Test Solutions ▪ Automated Optical Inspection (2D & 3D) ▪ Automated X-ray Inspection ▪ Flying Probe ▪ Boundary Scan Test ▪ In-Circuit Test ▪ Board Level Functional Testing ▪ Device/System Integration Functional Test ▪ Electrical Safety Test ▪ Microelectronics Test and Tune; and ▪ Vibration, ESS, HASS and HALT 4 We also provide specialized solutions in support of our customers’ components, products and systems, which include: ▪ Conformal Coating and Potting; ▪ Underfill and Encapsulation; ▪ Ultrasonic Welding; ▪ Automation Solutions; ▪ Fluidics Assembly; ▪ Precision Alignment for Optical Applications; ▪ Water cooled systems assembly and test; ▪ Hybrid Optical/Electrical Printed Circuit Board Assembly and Testing; and ▪ Sub-Micron Alignment of Optical Sub-Assemblies. • Component Engineering Services .
Our taxes could increase if certain tax holidays or incentives were retracted, or if they were not renewed upon expiration, such as the non-renewal of our tax holiday in Malaysia that expired as of March 31, 2021, for which the Company is applying for an extension, or tax rates applicable to us in such jurisdictions were otherwise increased.
Our taxes could increase if certain tax holidays or incentives were retracted, or if they were not renewed upon expiration, such as the non-renewal of our tax holiday in Malaysia that expired as of March 31, 2021, for which the Company intends to apply for additional extensions, or tax rates applicable to us in such jurisdictions were otherwise increased.
We often partner with our customers to merge these solutions utilizing our engineering services to provide turnkey product development from requirements through the launch to volume production into our factories. Our building blocks can be utilized across a variety of industries, but we have significant focus and capabilities in the A&D, medical, next-generation communications, and the complex industrials markets.
We often partner with our customers 1 to merge these solutions utilizing our engineering services to provide turnkey product development from requirements through the launch to volume production into our factories. Our building blocks can be utilized across a variety of industries, but we have significant focus and capabilities in the A&D, medical, AC&C, and the industrial markets.
As of December 31, 2023, our total outstanding debt (excluding unamortized debt issuance costs and finance leases) was $332.1 million, all of which represented borrowings under our credit facility). Our level of indebtedness could have important consequences.
As of December 31, 2024, our total outstanding debt (excluding unamortized debt issuance costs and finance leases) was $257.0 million, all of which represented borrowings under our credit facility). Our level of indebtedness could have important consequences.
Our 2022 Sustainability Report highlights the work we are doing across the globe and within the four tenets of our ESG strategy – Environmental Responsibility, Our People, Governance and Our Community. 9 Environmental Responsibility Benchmark’s commitment to environmental responsibility is an ESG focus that starts at the corporate level with meaningful goal setting followed by purposeful action.
Our 2024 Sustainability Report is expected to highlight the work we are doing across the globe and within the four tenets of our ESG strategy – Environmental Responsibility, Our People, Governance and Our Community. 9 Environmental Responsibility Benchmark’s commitment to environmental responsibility starts at the corporate level with meaningful goal setting followed by purposeful action.
As of December 31, 2023, we employed approximately 12,703 people, approximately 306 of whom were engaged in design and development engineering. Additionally, our contractor workforce included approximately 850 people. None of our domestic employees are represented by a labor union. In certain international locations, our employees are represented by labor unions and by works councils.
As of December 31, 2024, we employed approximately 11,700 people, approximately 306 of whom were engaged in design and development engineering. Additionally, our contractor workforce included approximately 821 people. None of our domestic employees are represented by a labor union. In certain international locations, our employees are represented by labor unions and by works councils.
Our engineering services may be for systems, sub-systems, printed circuit boards and assemblies, and components. We have the flexibility and capability to engage anywhere in the customer's design process flow.
Our engineering services may be for systems, sub-systems, printed circuit boards and assemblies, and components. We have the flexibility and capability to engage anywhere in the customer's design process flow. We provide these services across all the industries we serve.
Consequently, references to 2023 relate to the calendar year ended December 31, 2023; references to 2022 relate to the calendar year ended December 31, 2022, etc. General Benchmark Electronics, Inc. (the Company) is a Texas corporation that provides advanced manufacturing services (electronic manufacturing services (EMS) and precision technology (PT) services), which includes design and engineering services and technology solutions.
Consequently, references to 2024 relate to the calendar year ended December 31, 2024; references to 2023 relate to the calendar year ended December 31, 2023, etc. General Benchmark Electronics, Inc. (Benchmark or the Company) is a Texas corporation that provides design engineering and advanced manufacturing services that include both electronic manufacturing services (EMS) and precision technology (PT) services.
The EcoVadis methodology evaluates criteria across four themes: environment, labor and human rights, ethics and sustainable procurement. In 2023, Benchmark was again awarded the EcoVadis Silver Medal-Sustainability rating, placing it in the top 11% of EcoVadis rated companies.
The EcoVadis methodology evaluates criteria across four themes: environment, labor and human rights, ethics and sustainable procurement. In 2024, Benchmark was awarded the EcoVadis Bronze Medal-Sustainability rating, placing it in the top 35% of EcoVadis rated companies.
The Benchmark sites in Thailand received numerous awards and recognition for their health and safety programs from both the Thai government and public organizations.
The Benchmark sites in Thailand also continue to receive numerous awards and recognition for their health and safety programs from both the Thai government and public organizations.
If we do not meet one or more of these challenges, our operations and financial results could be adversely affected. 20 Customer relationships with start-up or emerging companies may present more risks than with established companies. Customer relationships with start-up or emerging companies present special risks because these companies do not have an extensive product history.
If we do not meet one or more of these challenges, our operations and financial results could be adversely affected. Customer relationships with start-up or emerging companies may present more risks than with established companies.
For additional information, see “Risk Factors—Shortages or price increases of components specified by our customers have in the past delayed, and are expected to continue delaying shipments and may adversely affect our profitability” in Part I, Item 1A of this Report.
For additional information, see “Risk Factors—Shortages or price increases of components specified by our customers have in the past delayed and could adversely affect our profitability” in Part I, Item 1A of this Report.
In the advanced computing and next-generation communications markets, we focus on customers with more complex requirements (high performance computing and next-generation broadband solutions) as compared to more commoditized offerings within the broader computing and telecommunications markets.
In the AC&C markets, we focus on customers with more complex requirements (high performance computing, water cooled systems and next-generation broadband solutions) as compared to more commoditized offerings within the broader computing and telecommunications markets.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

13 edited+3 added−3 removed9 unchanged
Biggest changeTo ensure security awareness throughout the Company, we conduct employee training on multiple topics, and also conduct simulated phishing campaign tests. Regular communications remind all employees of how to be vigilant against cyberattacks. We have also recently implemented a third-party cybersecurity risk management program that continuously monitors key suppliers and customers' cybersecurity scores.
Biggest changeRegular communications remind all employees of how to be vigilant against cyberattacks. We have also recently implemented a third-party cybersecurity risk management program that continuously monitors key suppliers and customers' cybersecurity scores. 28 The Company’s protective technologies include firewall and email protection against malware and phishing campaigns, and information system access management solutions such as multifactor authentication (MFA).
Our security program leverages Company and third-party security professionals and services to achieve an appropriate level of security and resilience that is reviewed periodically by an information technology (IT) steering committee that includes senior officers such as the CEO, CFO, Chief Legal Officer, CIO, Chief Operating Officer and Chief Technology Officer, and the efficacy of these programs is also reviewed quarterly with the Audit Committee of the Company’s Board of Directors.
Our security program leverages Company and third-party security professionals and services to achieve an appropriate level of security and resilience that is reviewed periodically by an IT steering committee that includes senior officers such as the CEO, CFO, Chief Legal Officer, CIO, CISO, Chief Operating Officer and Chief Technology Officer, and the efficacy of these programs is also reviewed quarterly with the Audit Committee of the Company’s Board of Directors.
The CISO reports to the Chief Information Officer (CIO), provides periodic reports to the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), and reports quarterly to the Audit Committee of the Board of Directors, which oversees risks from cybersecurity threats, regarding the Company’s cybersecurity risk profile and mitigation activities.
The CISO reports to the Chief Information Officer (CIO), provides periodic reports to the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), and reports quarterly to the Audit Committee of the Board of Directors, which oversees the Company’s cybersecurity risk profile, including risks from cybersecurity threats, and mitigation activities.
As discussed further below, our operations have been, and may in the future be, subject to ransomware or cyber-extortion attacks, which could significantly disrupt our operations. Generally, such attacks involve restricting access to electronic and computer systems or the restriction or theft of vital data including customer supplied data.
Our operations have been, and may in the future be, subject to ransomware or cyber-extortion attacks, which could significantly disrupt our operations. Generally, such attacks involve restricting access to electronic and computer systems or the restriction or theft of vital data including customer supplied data.
A universe of key risks is updated annually, with key risks rated by and discussed with corporate and site-level executives, as well as our Board of Directors, which oversees the Company's ERM process. As a result of the annual risk assessment, the enterprise’s top risks are identified, with action plans developed to address each risk.
A universe of key risks is updated annually, with key risks rated by and discussed with corporate and site-level executives, as well as the Audit Committee, which oversees the Company's ERM process. As a result of the annual risk assessment, the enterprise’s top risks are identified, with action plans developed to address each risk.
Results of the annual enterprise risk assessment are presented to and discussed with the Board of Directors at least annually. One of the key risks evaluated annually is cybersecurity.
Results of the annual enterprise risk assessment are presented to and discussed with the Audit Committee at least annually. One of the key risks evaluated annually is cybersecurity.
In addition, he was responsible for cybersecurity in previous roles prior to joining the Company, including during his time at DigitalGlobe, a satellite imagery provider to the U.S. Government, as well as other global high tech manufacturing companies. 28 The Company has an Enterprise Risk Management (ERM) process, with an annual risk assessment performed.
In addition, he was responsible for cybersecurity in previous roles prior to joining the Company, including during his time at Rogers Corporation, a global high tech manufacturing company, as well as other global manufacturing companies. The Company has an Enterprise Risk Management (ERM) process, with an annual risk assessment performed.
The CISO also served as a member of the Department of Defense as a civilian in charge of cybersecurity for an Army acquisition command, overseeing the cybersecurity for approximately 320 programs of record. The Company's CIO has been responsible for Global IT, including overseeing cybersecurity since joining the Company in 2017.
The CISO also served as a member of the Department of Defense as a civilian in charge of cybersecurity for an Army acquisition command, overseeing the cybersecurity for approximately 320 programs of record. The Company’s CIO has been and continues to be responsible for Global IT, including overseeing cybersecurity and its digital strategy.
The security monitoring and detection tools we utilize leverage Endpoint Detection and Response (EDR) and Security Incident and Event Management (SIEM) augmented with threat intelligence information from multiple sources. We have further enhanced the security posture of the Company by implementing data security technologies and measures to reduce the impact of attempts to steal data.
We augment these protective technologies with security monitoring and detection capabilities to limit the impact of cybersecurity incidents. The security monitoring and detection tools we utilize leverage Endpoint Detection and Response (EDR) and Security Incident and Event Management (SIEM) augmented with threat intelligence information from multiple sources.
These technologies are tested regularly by both internal resources and external experts that evaluate the technology and identify vulnerabilities for mitigation and/or remediation.
We have further enhanced the security posture of the Company by implementing data security technologies and measures to reduce the impact of attempts to steal or destroy data. These technologies are tested regularly by both internal resources and external experts that evaluate the technology and identify vulnerabilities for mitigation and/or remediation.
We regularly conduct a review of our data management practices to ensure the proper retention, protection and storage of data, and to apply new technology-based tools to better manage the protection of customer data.
We regularly conduct a review of our data management practices to ensure the proper retention, protection and storage of data, and to apply new technology-based tools to better manage the protection of customer data. Our information security policies and practices, which includes disaster recovery, are designed to deliver resilience and comply with several regulatory requirements including DFARS/NIST 800-171 controls.
We have also recently implemented a third-party cybersecurity risk management program that continuously monitors cybersecurity scores of key suppliers and customers. Despite the systems and processes we have in place to monitor, detect, mitigate and remediate potential vulnerabilities, in the past, we have experienced cyberattacks, and attempted breaches, including phishing emails and other targeted attacks.
Despite the systems and processes we have in place to monitor, detect, mitigate and remediate potential vulnerabilities, in the past, we have experienced cyberattacks, and attempted breaches, including phishing emails and other targeted attacks, and there can be no guarantees that such attacks will not occur in the future.
Our information security policies and practices, including our Information Technology Disaster Recovery Plan, are designed to comply with several regulatory requirements including DFARS/NIST 800-171 controls, and for our defense customers, we are undergoing certification to the U.S. Cybersecurity Maturity Model Certification (CMMC) program and performed a CMMC self-assessment with the assistance of a qualified third-party inspector.
For our defense customers, we are undergoing certification to the U.S. Cybersecurity Maturity Model Certification (CMMC) program and performed a CMMC self-assessment with the assistance of a qualified third-party inspector. To ensure security awareness throughout the Company, we conduct employee training on multiple topics, and also conduct simulated phishing campaign tests.
Removed
The Company’s protective technologies include firewall and email protection against malware and phishing campaigns, and information system access management solutions such as multifactor authentication (MFA). We augment these protective technologies with security monitoring and detection capabilities to limit the impact of cybersecurity incidents.
Added
We have also recently implemented a third-party cybersecurity risk management program that continuously monitors cybersecurity scores of key suppliers and customers.
Removed
In the fourth quarter of fiscal year 2019, a ransomware incident encrypted information on our systems and disrupted customer and employee access to our systems and services, which resulted in the Company incurring costs relating to this event, including costs to retain third party consultants and forensic experts to assist with the restoration and remediation of systems and, with the assistance of law enforcement, to investigate the attack.
Added
As of the date of this filing, we are not aware of any risks from cybersecurity threats, including any previous cybersecurity incidents since the ransomware incident in the fourth quarter of fiscal 2019 described under “Our operations are subject to cyberattacks that could have a material adverse effect on our business” in Part I, Item 1A of this Report, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Removed
As a result of this cybersecurity incident, we experienced increased expenditures for our IT infrastructure, systems and network. This ransomware incident also adversely affected our operations and the Company’s fourth quarter 2019 revenue. See Note 18 to the consolidated financial statements in Part II, Item 8 of this Report for additional information. 29
Added
This statement does not guarantee that future incidents or threats will not have a material impact or that we are not currently the subject of an undetected incident or threat that may have such an impact.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeA summary of the approximate square footage of each of our principal manufacturing facilities by country follows: Square (in thousands) Footage Americas: United States: Alabama 200 Arizona 234 California 310 Minnesota 481 New Hampshire 153 Texas 45 Mexico 838 Asia: China 326 Malaysia 436 Thailand 756 Europe: Netherlands 159 Romania 222 Total square footage 4,160 Our principal manufacturing facilities consist of 1.9 million square feet in facilities that we own, with the remaining 2.3 million square feet in leased facilities whose terms expire between 2024 and 2036.
Biggest changeA summary of the approximate square footage of each of our principal manufacturing facilities by country follows: Square (in thousands) Footage Americas: United States: Alabama 200 Arizona 234 California 310 Minnesota 497 New Hampshire 161 Texas 45 Mexico 813 Asia: China 326 Malaysia 436 Thailand 661 Europe: Netherlands 170 Romania 222 Total square footage 4,075 Our principal manufacturing facilities consist of 1.8 million square feet in facilities that we own, with the remaining 2.3 million square feet in leased facilities the terms of which expire between 2025 and 2036.
We currently lease our corporate headquarters in Tempe, Arizona. This lease consists of approximately 64,000 square feet. We lease other facilities with a total of 26,700 square feet dedicated to engineering, sales and procurement services. We believe our facilities are suitable for their intended uses and are sufficient to meet our expected needs for the foreseeable future.
We currently lease our corporate headquarters in Tempe, Arizona. This lease consists of approximately 64,000 square feet. We lease other facilities with a total of 69,600 square feet dedicated to engineering, sales and procurement services. We believe our facilities are suitable for their intended uses and are sufficient to meet our expected needs for the foreseeable future. 29

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeItem 3. Legal Proceedings We are involved in various legal actions arising in the ordinary course of business. Information about our legal proceedings is included in Note 16 to the consolidated financial statements in Part II, Item 8 of this Report and is incorporated by reference herein.
Biggest changeItem 3. Legal Proceedings We are involved in various legal actions arising in the ordinary course of business. Information about our legal proceedings is included in Note 15 to the consolidated financial statements in Part II, Item 8 of this Report and is incorporated by reference herein.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−1 removed2 unchanged
Biggest changeIssuer Purchases of Equity Securities The following table provides information about the Company’s repurchase activity during the quarter ended December 31, 2023 related to its equity securities that are registered pursuant to Section 12 of the Exchange Act: (d) (c) Maximum Total Number (or Number of Approximate Shares (or Units) Dollar Value) of (a) Purchased as Shares (or Units) Total (b) Part of Publicly that May Yet Be Number of Average Price Announced Purchased Under Shares (or Units) Paid per Share Plans or the Plans or (amounts in millions, except per share data) Purchased (or Unit) Programs Programs (1) October 1 to 31, 2023 — $ — — $ 154.6 November 1 to 31, 2023 — — — 154.6 December 1 to 31, 2023 — — — 154.6 Total — $ — — $ 154.6 The Company did not repurchase shares in 2023.
Biggest changeIssuer Purchases of Equity Securities The following table provides information about the Company’s repurchase activity during the quarter ended December 31, 2024 related to its equity securities that are registered pursuant to Section 12 of the Exchange Act: (d) (c) Maximum Total Number (or Number of Approximate Shares (or Units) Dollar Value) of (a) Purchased as Shares (or Units) Total (b) Part of Publicly that May Yet Be Number of Average Price Announced Purchased Under Shares (or Units) Paid per Share Plans or the Plans or (amounts in millions, except per share data) Purchased (or Unit) Programs Programs (1) October 1 to 31, 2024 — $ — — $ 149.5 November 1 to 30, 2024 — — — 149.5 December 1 to 31, 2024 — — — 149.5 Total — — — 149.5 (1) On February 19, 2020, the Board of Directors approved a share repurchase authorization granting the Company authority to repurchase up to $150 million in common stock.
The graph assumes that $100 was invested on December 31, 2018 in our common shares and in each of the two indices, and that dividends, if any, were reinvested.
The graph assumes that $100 was invested on December 31, 2019 in our common shares and in each of the two indices, and that dividends, if any, were reinvested.
There were approximately 500 record holders of our common shares as of February 22, 2024. Because many of our common shares are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders.
There were approximately 500 record holders of our common shares as of February 21, 2025. Because many of our common shares are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders.
As of December 31, 2023, the Company had 154.6 million remaining under the share repurchase authorization. 31 Performance Graph The following graph compares the cumulative total shareholder return on our common shares for the five‑year period commencing December 31, 2018 and ending December 31, 2023, with the cumulative total return of the Standard & Poor’s 500 Stock Index (which does not include Benchmark), and the Peer Group Index, which is composed of Celestica Inc., Flex Ltd., Jabil Inc., Plexus Corp and Sanmina Corporation.
As of December 31, 2024, the Company had $149.5 million remaining under the share repurchase authorization. 31 Performance Graph The following graph compares the cumulative total shareholder return on our common shares for the five‑year period commencing December 31, 2019 and ending December 31, 2024, with the cumulative total return of the Standard & Poor’s 500 Stock Index (which does not include Benchmark), and the Peer Group Index, which is composed of Celestica Inc., Flex Ltd., Jabil Inc., Kimball Electronics Inc., Plexus Corp and Sanmina Corporation.
Item 5. Market for Registrant’s Common Equity, Related S tockholder Matters and Issuer Purchases of Equity Securities Our common shares are listed on the New York Stock Exchange under the symbol “BHE.” The last reported sale price of our common shares on February 22, 2024, as reported by the New York Stock Exchange, was $29.62.
Item 5. Market for Registrant’s Common Equity, Related S tockholder Matters and Issuer Purchases of Equity Securities Our common shares are listed on the New York Stock Exchange under the symbol “BHE.” The last reported sale price of our common shares on February 21, 2025, as reported by the New York Stock Exchange, was $41.13.
During 2023, cash dividends paid totaled $23.5 million. The Board of Directors currently intends to continue paying quarterly dividends.
Dividends In the third quarter of 2024, we increased the quarterly dividend from $0.165 to $0.17. During 2024, cash dividends paid totaled $23.9 million. The Board of Directors currently intends to continue paying quarterly dividends.
Since 2018, the Company has repurchased a total of 15.7 million common shares for an aggregate of $408.5 million at an average price of $26.06 per share.
During 2024, the Company repurchased a total of 0.1 million shares for an aggregate of $5.1 million at an average price of $40.27 per share.
Base Year December 31, December 31, 2018 2019 2020 2021 2022 2023 Benchmark Electronics, Inc. $ 100.00 $ 162.23 $ 127.53 $ 127.95 $ 126.02 $ 130.50 Peer Group 100.00 154.16 177.30 227.52 248.78 380.85 S&P 500 100.00 128.88 149.83 190.13 153.16 190.27 Item 6. [Reserved] 32
December 31, 2019 2020 2021 2022 2023 2024 Benchmark Electronics, Inc. $ 100.00 $ 80.94 $ 83.10 $ 84.06 $ 89.35 $ 149.30 Peer Group 100.00 111.91 147.89 161.06 246.91 375.27 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 Item 6. [Reserved] 32
Removed
Dividends We began declaring and paying quarterly dividends of $0.15 per share during the first quarter of 2018. In the first quarter of 2020, we increased the quarterly dividend from $0.15 to $0.16 per share and in the second quarter of 2021, we increased the quarterly dividend from $0.16 to $0.165 per share.
Added
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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

53 edited+10 added−12 removed54 unchanged
Biggest changeDuring 2023, sales to customers in our various industry sectors fluctuated from 2022 as follows: • Complex Industrials increased by 1% • A&D increased by 4% • Medical decreased by 6% • Semi-Cap decreased by 11% • Advanced Computing increased by 9% • Next-Generation Communications increased by 6% The overall revenue decrease was primarily due to lower semi-cap revenue, as a result of lower demand from existing customers, and lower medical revenue, as a result of general softness across the industry and lower demand from existing customers, which were mostly offset by an increase in A&D revenue, as a result of strength in both defense and commercial aerospace and improved supply availability, and an increase in next-generation communications revenue, as a result of growth in broadband infrastructure programs.
Biggest changeDuring 2024, sales to customers in our various industry sectors fluctuated from 2023 as follows: • Semi-Cap increased by 12% • Industrial decreased by 4% • Medical decreased by 19% • A&D increased by 20% • AC&C decreased by 30% Revenue decreased year-over-year primarily due to decreases in medical and AC&C sales, which were partially offset by increases in semi-cap and A&D sales.
The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in Thailand, China and Malaysia 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 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.
Restructuring Charges and Other Costs During 2023, we recognized $7.3 million of restructuring charges primarily due to expenses associated with announced site closures or exits, reductions in work force and other restructuring activities primarily in the Americas. During 2023, we made the decision to no longer continue certain manufacturing capabilities in the Americas.
During 2023, we recognized $7.3 million of restructuring charges primarily due to expenses associated with announced site closures or exits, reductions in work force and other restructuring activities primarily in the Americas. During 2023, we made the decision to no longer continue certain manufacturing capabilities in the Americas.
Working capital was $0.9 billion as of December 31, 2023. 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.
Working capital was $0.9 billion as of December 31, 2024. 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.
Under the terms of the Amended and Restated Credit Agreement, in addition to the $131.3 million term loan facility, we have a $250.0 million five-year revolving credit facility to be used for general corporate purposes, both with a maturity date of December 21, 2026. 38 On May 20, 2022, the Company entered into Amendment No. 1 (the Amendment) to the Amended and Restated Credit Agreement (as amended, the Credit Agreement).
Under the terms of the Amended and Restated Credit Agreement, in addition to the $131.3 million term loan facility, we have a $250.0 million five-year revolving credit facility to be used for general corporate purposes, both with a maturity date of December 21, 2026. 37 On May 20, 2022, the Company entered into Amendment No. 1 (the Amendment) to the Amended and Restated Credit Agreement (as amended, the Credit Agreement).
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, 2023, we were in compliance with all of these covenants and restrictions.
Amounts due under the Credit Agreement could be accelerated upon specified events of default, including a failure to pay amounts due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or insolvency, subject, in some cases, to cure periods. As of December 31, 2024, we were in compliance with all of these covenants and restrictions.
A summary of our long-term debt obligations as of December 31, 2023 can be found in Note 5 to the consolidated financial statements in Part II, Item 8 of this Report. U.S. federal income tax on deemed mandatory repatriation is payable over four years pursuant to the U.S. Tax Reform.
A summary of our long-term debt obligations as of December 31, 2024 can be found in Note 5 to the consolidated financial statements in Part II, Item 8 of this Report. U.S. federal income tax on deemed mandatory repatriation is payable over four years pursuant to the U.S. Tax Reform.
The Pillar Two model rules adopt a global corporate minimum tax of 15% for multinational enterprises with average revenue in excess of €750 million on their global consolidated financial statements. The Council of the European Union has adopted the Pillar Two model rules and has directed EU member states to implement legislation enacting the Pillar Two model rules.
The Pillar Two model rules adopt a global minimum tax (GMT) of 15% for multinational enterprises with average revenue in excess of €750 million on their global consolidated financial statements. The Council of the European Union has adopted the Pillar Two model rules and has directed EU member states to implement legislation enacting the Pillar Two model rules.
You should also bear in mind the Risk Factors set forth in Part I, Item 1A, 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.
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.
Based on our qualitative assessments of goodwill as of December 31, 2023 and 2022, 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.
Based on our qualitative assessments of goodwill as of December 31, 2024 and 2023, 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.
A summary of our operating lease obligations as of December 31, 2023 can be found in Note 6 to the consolidated financial statements in Part II, Item 8 of this Report.
A summary of our operating lease obligations as of December 31, 2024 can be found in Note 6 to the consolidated financial statements in Part II, Item 8 of this Report.
As of December 31, 2023 and 2022, 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.
As of December 31, 2024 and 2023, 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.
Most purchase orders beyond this time frame are normally cancellable; however, as a result of the recent constrained environment some manufacturers have 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.
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.
For discussion and analysis regarding our financial condition and results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021, refer to Part II, Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 24, 2023. 2023 OVERVIEW Sales for 2023 were $2.8 billion, a 2% decrease from sales of $2.9 billion in 2022.
For discussion and analysis regarding our financial condition and results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022, refer to Part II, Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 27, 2024. 2024 OVERVIEW Sales for 2024 were $2.7 billion, a 6% decrease from sales of $2.8 billion in 2023.
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 52% of our total sales in 2023 and in 2022.
A substantial percentage of our sales are made to a small number of customers, and the loss of a major customer, if not replaced, would adversely affect us. Sales to our ten largest customers represented 50% and 52% of our total sales in 2024 and in 2023, respectively.
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, 2023 2022 Sales 100.0% 100.0% Cost of sales 90.5% 91.2% Gross profit 9.5% 8.8% Selling, general and administrative expenses 5.1% 5.2% Amortization of intangible assets 0.2% 0.2% Restructuring charges and other costs 0.3% 0.3% Income from operations 3.9% 3.1% Other expense, net (1.0)% (0.1)% Income before income taxes 2.9% 3.0% Income tax expense 0.6% 0.6% Net income 2.3% 2.4% 2023 Compared With 2022 Sales As noted above, sales decreased 2% in 2023.
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, 2024 2023 Sales 100.0 % 100.0 % Cost of sales 89.8 90.5 Gross profit 10.2 9.5 Selling, general and administrative expenses 5.6 5.1 Amortization of intangible assets 0.2 0.2 Restructuring charges and other costs 0.3 0.3 Income from operations 4.1 3.9 Other expense, net (0.9 ) (1.0 ) Income before income taxes 3.2 2.9 Income tax expense 0.8 0.6 Net income 2.4 % 2.3 % 2024 Compared With 2023 Sales Sales decreased 6% in 2024.
See Note 8 to the consolidated financial statements in Part II, Item 8 of this Report. 42
See Note 8 to the consolidated financial statements in Part II, Item 8 of this Report. 41
Recently Enacted Accounting Principles See Note 1(s) to the consolidated financial statements in Part II, Item 8 of this Report for a discussion of recently enacted accounting principles. 41 CONTRACTUAL OBLIGATIONS We have certain contractual obligations that extend beyond 2023 under lease obligations and debt arrangements.
Recently Enacted Accounting Principles See Note 1(t) to the consolidated financial statements in Part II, Item 8 of this Report for a discussion of recently enacted accounting principles. 40 CONTRACTUAL OBLIGATIONS We have certain contractual obligations that extend beyond 2024 under lease obligations and debt arrangements.
As of December 31, 2023, our valuation allowance was $18.5 million and primarily relates to the deferred tax assets of our foreign locations. Differences in our future operating results as compared to the estimates utilized in the determination of the valuation allowance against our deferred tax assets could result in adjustments to the respective valuation allowances in future periods.
As of December 31, 2024, our valuation allowance was $26.7 million and primarily relates to the deferred tax assets of our foreign locations. 39 Differences in our future operating results as compared to the estimates utilized in the determination of the valuation allowance against our deferred tax assets could result in adjustments to the respective valuation allowances in future periods.
Non-cancellable purchase commitments do not typically extend beyond normal lead-times of 4 to 20 weeks; however, some electronic component manufacturers now have lead-times in excess of 52 weeks.
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.
Many countries, including non-EU member states, have implemented laws based on the Pillar Two model rules to be effective as of January 1, 2024. 40 The Company has manufacturing operations in several of the foreign jurisdictions that have implemented the Pillar Two model rules.
Many countries, including non-EU member states, have implemented GMT legislation based on the Pillar Two model rules that were effective as of January 1, 2024. The Company has manufacturing operations in several of the foreign jurisdictions that have implemented the GMT legislation.
Sales to Applied Materials, Inc. and subsidiaries, our largest customer in 2023 and 2022 represented 12% and 15% of our total sales in 2023 and 2022, respectively.
Sales to Applied Materials, Inc. and subsidiaries, our largest customer in 2024 and 2023 represented 14% and 12% of our total sales in 2024 and 2023, respectively.
The decrease of $3.9 million in 2023 is primarily the result of items discussed above. 37 LIQUIDITY AND CAPITAL RESOURCES We have historically financed our organic growth and operations through funds generated from operations and occasional borrowings under our Credit Agreement (as defined below).
The decrease of $1.0 million in 2024 is primarily the result of items discussed above. 36 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).
As of December 31, 2023, we had $340.6 million available for borrowings under the Credit Agreement. During the next 12 months, we believe our capital expenditures will approximate $60 million to $70 million, principally for machinery and equipment to help increase our production capacity to support anticipated revenue growth and our ongoing business around the globe.
As of December 31, 2024, we had $410.6 million available for borrowings under the Credit Agreement. During the next 12 months, we believe our capital expenditures will be approximately $65 million to $75 million, principally for machinery and equipment to help increase our production capacity to support anticipated revenue growth and our ongoing business around the globe.
As of December 31, 2023, we had $127.1 million in borrowings outstanding under the term loan facility and $205.0 million outstanding under our revolving credit facility and $4.4 million in letters of credit outstanding under our revolving credit facility.
As of December 31, 2024, we had $123.0 million in borrowings outstanding under the term loan facility and $135.0 million outstanding under our revolving credit facility and $4.4 million in letters of credit outstanding under our revolving credit facility.
During 2023 and 2022, 58% and 61%, respectively, of our sales were from international operations.
During 2024 and 2023, 62% and 58%, respectively, of our sales were from international operations.
Cash and cash equivalents and restricted cash totaled $283.2 million at December 31, 2023 and $207.4 million at December 31, 2022, of which $269.6 million and $167.7 million, respectively, was held outside the United States in various foreign subsidiaries.
Cash and cash equivalents and restricted cash totaled $328.0 million at December 31, 2024 and $283.2 million at December 31, 2023, of which $304.9 million and $269.6 million, respectively, was held outside the United States in various foreign subsidiaries.
In most tax jurisdictions, the passage of time without examination will result in the expiration of applicable statutes of limitations, thereby precluding the taxing authority from examining the relevant tax period(s). We believe that we have adequately provided for our tax liabilities.
During the course of such examinations, disputes may occur as to matters of fact and/or law. In most tax jurisdictions, the passage of time without examination will result in the expiration of applicable statutes of limitations, thereby precluding the taxing authority from examining the relevant tax period(s). We believe that we have adequately provided for our tax liabilities.
There can be no assurance, however, that we would be successful in raising additional debt or equity on acceptable terms. 2023 Cash Flows Cash provided from operating activities was $174.3 million in 2023 and primarily consisted of $64.3 million of net income, adjusted for $45.4 million of depreciation and amortization, $15.3 million of stock-based compensation expense, a $42.1 million decrease in accounts receivable, and a $45.1 million decrease in inventories partially offset by a $35.3 million decrease in accounts payable.
There can be no assurance, however, that we would be successful in raising additional debt or equity on acceptable terms. 2024 Cash Flows Cash provided from operating activities was $189.2 million in 2024 and primarily consisted of $63.3 million of net income, adjusted for $46.1 million of depreciation and amortization, $13.4 million of stock-based compensation expense, a $34.0 million decrease in accounts receivable, and a $127.8 million decrease in inventories partially offset by a $61.3 million decrease in advance payments from customers and a $18.3 million decrease in accounts payable.
On October 26, 2018 and February 19, 2020, the Board of Directors authorized the repurchase of an additional $100 million and $150 million of the Company’s common stock, respectively. 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.
Subsequently, on February 19, 2020, the Board approved an additional 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.
During 2022, we recognized $5.7 million of restructuring charges primarily due to expenses associated with announced site closures or exits, reductions in workforce and other restructuring activities primarily in the Americas.
During 2024, we recognized $6.3 million of restructuring charges primarily related to capacity and workforce reductions at our sites in the Americas. During 2023, we recognized $7.3 million of restructuring charges primarily due to expenses associated with announced site closures or exits, reductions in work force and other restructuring activities primarily in the Americas.
The higher effective tax rate in 2023 is the result of the mix of profits in our foreign and U.S. jurisdictions and higher tax rates for our locations in Asia.
The higher effective tax rate in 2024 is the result of the mix of profits and losses in our foreign and U.S. jurisdictions with higher overall tax expense in our foreign locations.
Gross Profit Gross profit increased 6% to $271.1 million in 2023 from $255.2 million in 2022 primarily due to our mix of revenue and expense discipline. Gross profit margin increased to 9.5% in 2023 from 8.8% in 2022 primarily due to improved operational efficiencies and the proactive cost reduction actions taken by our manufacturing sites.
Gross Profit Gross profit of $270.0 million in 2024 compared to $271.1 million in 2023 was relatively consistent. Gross profit margin increased to 10.2% in 2024 from 9.5% in 2023 primarily due to improved operational efficiencies and the proactive cost reduction actions taken by our manufacturing sites.
Asia. 2023 sales decreased 16% to $1.1 billion from $1.3 billion in 2022 primarily due to a decrease in existing customer demand of our semi-cap and medical sectors. Europe. 2023 sales increased 6% to $299.8 million from $284.1 million in 2022 primarily due to an increase in sales in our semi-cap and A&D sectors.
Asia. 2024 sales increased 3% to $1.1 billion from $1.1 billion in 2023 primarily due to increases in existing customer demand of our semi-cap and industrial sectors. Europe. 2024 sales increased 13% to $339.3 million from $299.8 million in 2023 primarily due to increases in sales in our semi-cap and A&D sectors.
The purchases of property, plant and equipment were primarily for machinery and equipment in the Americas. Cash used in financing activities was $23.6 million in 2023. Borrowings under the Credit Agreement were $749.5 million and principal payments under the Credit Agreement were $743.6 million.
The purchases of property, plant and equipment were primarily for machinery and equipment in the Americas and Asia. Cash used in financing activities was $109.1 million in 2024. Borrowings under the Credit Agreement were $600.0 million and principal payments under the Credit Agreement were $674.1 million.
There is no guarantee of being awarded these tax incentives in the future. See Note 8 to the consolidated financial statements in Part II, Item 8 of this Report. Net Income We reported net income of $64.3 million, or $1.79 per diluted share, for 2023, compared with net income of $68.2 million, or $1.91 per diluted share, for 2022.
See Note 8 to the consolidated financial statements in Part II, Item 8 of this Report. Net Income We reported net income of $63.3 million, or $1.72 per diluted share, for 2024, compared with net income of $64.3 million, or $1.79 per diluted share, for 2023.
Dividend payments are not mandatory or guaranteed; there can be no assurance that the Company will continue to pay a dividend in the future. 39 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.
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.
The increase was primarily due to higher revenue and expense control. Asia. 2023 operating income decreased 8% to $124.3 million from $134.6 million in 2022. The decrease was primarily due to lower revenue partially offset by expense control. Europe. 2023 operating income increased 3% to $17.4 million from $16.9 million in 2022.
The decrease was primarily due to lower revenue. Asia. 2024 operating income increased 13% to $140.3 million from $124.3 million in 2023. The increase was primarily due to higher revenue and expense control. 35 Europe. 2024 operating income increased 51% to $26.3 million from $17.4 million in 2023. The increase was primarily due to higher revenue and expense control.
Income from operations by reportable segment was as follows: Year Ended December 31, (in thousands) 2023 2022 Income from operations: Americas $ 63,484 $ 55,202 Asia 124,279 134,649 Europe 17,380 16,889 Corporate and intersegment eliminations (95,479 ) (116,671 ) Total income from operations $ 109,664 $ 90,069 35 Americas. 2023 operating income increased 15% to $63.5 million from $55.2 million in 2022.
Income from operations by reportable segment was as follows: Year Ended December 31, (in thousands) 2024 2023 Income from operations: Americas $ 40,215 $ 63,484 Asia 140,308 124,279 Europe 26,268 17,380 Corporate and intersegment eliminations (97,380 ) (95,479 ) Total income from operations $ 109,411 $ 109,664 Americas. 2024 operating income decreased 37% to $40.2 million from $63.5 million in 2023.
Purchases will be funded from available cash and may be commenced, suspended or discontinued at any time without prior notice. Shares repurchased under the program are retired. The Company did not repurchase shares in 2023. As of December 31, 2023, the Company had $154.6 million remaining under the share repurchase authorization.
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 2024, the Company repurchased 0.1 million shares for an aggregate of $5.1 million, at an average price of $40.27 per share.
Other (Expense) Income, Net Other expense, net, was $2.8 million in 2023 primarily consisting of foreign exchange losses.
Interest Income Interest income increased to $10.2 million in 2024 from $6.3 million in 2023 primarily due to higher interest rates. Other (Expense) Income, Net Other (expense) income, net, was an expense of $8.8 million in 2024 compared to an expense of $2.8 million in 2023, both primarily consisting of foreign exchange losses.
Additionally, during 2022, the Company agreed to $3.3 million in legal settlements. See Note 17 to the consolidated financial statements in Part II, Item 8 of this Report for additional information on our restructuring charges.
The asset impairment charges are included in restructuring charges and other costs in the consolidated statement of income. 33 See Note 16 to the consolidated financial statements in Part II, Item 8 of this Report for additional information on our restructuring charges.
Sales by geographical segment were as follows: Year Ended December 31, (in thousands) 2023 2022 Sales: Americas $ 1,611,783 $ 1,475,929 Asia 1,055,938 1,251,475 Europe 299,835 284,103 Elimination of intersegment sales (128,580 ) (125,176 ) Total sales $ 2,838,976 $ 2,886,331 Americas. 2023 sales increased 9% to $1.6 billion from $1.5 billion in 2022 primarily due to increases in sales in our advanced computing, complex industrials and next-generation communications sectors.
Sales by geographical segment were as follows: Year Ended December 31, (in thousands) 2024 2023 Sales: Americas $ 1,330,361 $ 1,611,783 Asia 1,091,149 1,055,938 Europe 339,337 299,835 Elimination of intersegment sales (104,742 ) (128,580 ) Total sales $ 2,656,105 $ 2,838,976 Americas. 2024 sales decreased 17% to $1.3 billion from $1.6 billion in 2023 primarily due to decreases in sales in our semi-cap, medical, A&D and AC&C sectors.
In addition, we paid $23.5 million of dividends during 2023 and $5.8 million for employee taxes paid to settle stock-based awards exercised during the year. Credit Agreement On December 21, 2021, the Company amended and restated the Company’s prior $650 million credit agreement by entering into a $381 million amended and restated credit agreement (the Amended and Restated Credit Agreement).
Credit Agreement On December 21, 2021, the Company amended and restated the Company’s prior $650 million credit agreement by entering into a $381 million amended and restated credit agreement (the Amended and Restated Credit Agreement).
Dividends During 2023, 2022 and 2021, cash dividends paid totaled $23.5 million, $23.2 million and $23.3 million, respectively. On December 13, 2023, the Company declared a quarterly cash dividend of $0.165 per share of the Company’s common stock to shareholders of record as of December 29, 2023. The dividend of $5.9 million was paid on January 12, 2024.
On December 9, 2024, 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, 2024. The dividend of $6.1 million was paid on January 14, 2025. The Board of Directors currently intends to continue paying quarterly dividends.
Other income, net, was $5.4 million in 2022 primarily consisting of gain on litigation settlements, partially offset by foreign exchange losses. 36 Income Tax Expense Income tax expense in 2023 was $16.9 million representing an effective tax rate of 20.8% compared with $16.1 million of income tax expense in 2022 representing an effective tax rate of 19.1%.
Income Tax Expense Income tax expense in 2024 was $20.6 million representing an effective tax rate of 24.5% compared with $16.9 million of income tax expense in 2023 representing an effective tax rate of 20.8%.
The percentages of our sales by market sector were as follows: Year Ended December 31, 2023 2022 Complex Industrials 21% 21% A&D 13% 12% Medical 20% 21% Semi-Cap 23% 25% Advanced Computing 12% 10% Next-Generation Communications 11% 11% Total 100% 100% Complex Industrials. 2023 sales increased 1% to $596.5 million from $593.6 in 2022 as a result of strength with existing customers.
The percentages of our sales by market sector were as follows: Year Ended December 31, 2024 2023 Semi-Cap 27 % 23 % Industrial 22 21 Medical 17 20 A&D 16 13 AC&C 18 23 Total net sales 100 % 100 % Semi-Conductor Capital Equipment. 2024 sales increased 12% to $723.2 million from $646.3 million in 2023 primarily due to increased demand from existing customers and new customer wins.
Amortization of Intangible Assets Amortization of intangible assets was $6.0 million in 2023 and $6.4 million in 2022. The decrease was primarily due to certain assets becoming fully amortized in 2023.
The decrease was primarily due to certain assets becoming fully amortized in 2023. Restructuring Charges and Other Costs During 2024, we recognized $6.3 million of restructuring charges primarily due to capacity and workforce reductions at our sites in the Americas.
The increase was primarily due to higher revenue and expense control. Selling, General and Administrative (SG&A) Expenses SG&A expense decreased to $147.0 million in 2023 from $150.2 million in 2022. The decrease was primarily due to cost actions taken, coupled with lower variable compensation expense.
Selling, General and Administrative (SG&A) Expenses SG&A expense increased to $149.5 million in 2024 from $147.0 million in 2023. The increase was primarily due to higher legal and salary costs. Amortization of Intangible Assets Amortization of intangible assets was $4.8 million in 2024 and $6.0 million in 2023.
We are subject to examination by tax authorities for different periods in various U.S. and foreign tax jurisdictions. During the course of such examinations, disputes may occur as to matters of fact and/or law.
The impact of the GMT legislation to the Company’s provision for income taxes, net income and cash flows is included in our annual financial statements as of December 31, 2024. We are subject to examination by tax authorities for different periods in various U.S. and foreign tax jurisdictions.
For example, we have been impacted by supply chain constraints, including shortages, longer lead times and increased transit times. Cash used in investing activities was $77.1 million in 2023 primarily due to capital expenditures for property, plant and equipment of $73.5 million and purchased software of $4.3 million.
Cash used in investing activities was $32.8 million in 2024 primarily due to capital expenditures for property, plant and equipment of $31.3 million and purchased software of $1.9 million partially offset by $2.0 million in proceeds from the disposal of property, plant and equipment.
During 2022, we also incurred a $2.0 million loss on assets held for sale related to certain manufacturing capabilities in the Americas that the Company made the decision in 2021 to no longer continue and a gain on assets held for sale of $2.4 million related to the sale of the Angleton, Texas facility.
During 2023, we made the decision to no longer offer certain manufacturing capabilities in the Americas. In connection with that decision, we assessed the facility and equipment assets used in those manufacturing capabilities and recorded $1.1 million of impairment charges as a result of that assessment.
Additionally, during 2022, the Company agreed to $3.3 million in legal settlements. See Note 17 to the consolidated financial statements in Part II, Item 8 of this Report for additional information on our restructuring charges. Inflation, interest rates, disruption in the global economy and financial markets, and geopolitical events continue to create uncertainty.
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 $26.9 million in 2024 from $31.9 million in 2023 primarily due to decreased borrowings partially offset by a higher interest rate environment.
Removed
During 2023, we recognized $7.3 million of restructuring charges primarily related to the previously announced closure of our site in Moorpark, California in the Americas, and other smaller activities involving capacity reductions and reductions in workforce in certain facilities across various regions.
Added
Inflation, interest rates, disruption in the global economy and financial markets, geopolitical events, tariffs and trade restrictions continue to create uncertainty.
Removed
Moorpark, California operations ceased as of March 31, 2023 with restructuring activity substantially completed in 2023. 33 During 2022, we recognized $5.7 million of restructuring charges primarily due to expenses associated with announced site closures or exits, reductions in workforce and other restructuring activities primarily in the Americas.
Added
Industrial. 2024 sales decreased 4% to $573.3 million from $596.5 in 2023 as a result of lower demand with existing customers, partially offset by new program ramps. Medical. 2024 sales decreased 19% to $450.7 million from $556.6 million in 2023 primarily due to inventory rebalancing and end-demand weakness within medical devices.
Removed
Aerospace and Defense. 2023 sales increased 4% to $361.5 million from $347.6 million in 2022 primarily due to strength in both defense and commercial aerospace and improved supply availability.
Added
Aerospace and Defense. 2024 sales increased 20% to $434.0 million from $361.5 million in 2023 primarily due to demand growth in Space, continued demand in Commercial Aerospace and broad-based strength from existing programs as well as new program wins in Defense. 34 Advanced Computing and Communications. 2024 sales decreased 30% to $474.9 million from $678.1 million in 2023 primarily due to large high performance computing programs being completed coupled with continued weakness in communications and the disengagement with a large customer.
Removed
Medical. 2023 sales decreased 6% to $556.6 million from $592.9 million in 2022 primarily due to general softness across the industry resulting in lower demand from existing customers. 34 Semi-Conductor Capital Equipment. 2023 sales decreased 11% to $646.3 million from $722.1 million in 2022 primarily due to slower overall market recovery.
Added
Income from Operations 2024 income from operations declined slightly to $109.4 million from $109.7 million in 2023.
Removed
Advanced Computing. 2023 sales increased 9% to $337.7 million from $310.5 million in 2022 primarily due to the contribution from multiple high performance computing programs completed during the period. Next-Generation Communications. 2023 sales increased 6% to $340.4 million from $319.6 million in 2022 primarily due to growth in broadband infrastructure programs.
Added
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%.
Removed
Income from Operations 2023 income from operations increased 22% to $109.7 million from $90.1 million in 2022. The increase was primarily due to improved gross margin and cost actions taken to reduce selling, general and administrative (SG&A) expenses.
Added
For example, we have historically been impacted by supply chain constraints, including shortages, longer lead times and increased transit times.
Removed
During 2022, we also incurred a $2.0 million loss on assets held for sale related to certain manufacturing capabilities in the Americas that the Company made the decision in 2021 to no longer continue and a gain on assets held for sale of $2.4 million related to the sale of the Angleton, Texas facility.
Added
In addition, we paid $23.9 million of dividends during 2024 and $6.3 million for employee taxes paid to settle stock-based awards exercised during the year. We also completed $5.1 million in common stock share repurchases.
Removed
Interest Expense Interest expense increased to $31.9 million in 2023 from $12.9 million in 2022 primarily due to additional borrowings to support our operations as well as the higher interest rate environment. Interest Income Interest income increased to $6.3 million in 2023 from $1.7 million in 2022 primarily due to higher interest rates.
Added
On October 26, 2018, the Board of Directors authorized the Company to repurchase up to $100 million in common stock. Subsequently, on October 26, 2018, the Board of Directors approved an additional share repurchase authorization, allowing the Company to repurchase up to $100 million in common stock.
Removed
The tax incentives in China expired on December 31, 2023 and the tax incentives in Malaysia expired on March 31, 2021. The Company has applied for a continuation of the Malaysia tax holiday, which will extend the tax incentive period for five to ten years if approved. The Company will also apply for a China tax holiday in 2024.
Added
As of December 31, 2024, the Company had $149.5 million remaining under share its repurchase authorization. 38 Dividends During 2024, 2023 and 2022, cash dividends paid totaled $23.9 million, $23.5 million and $23.2 million, respectively.
Removed
The Board of Directors currently intends to continue paying quarterly dividends.
Added
Dividend payments are not mandatory or guaranteed; there can be no assurance that the Company will continue to pay a dividend in the future.
Removed
The Company is still in the process of assessing the potential impact of the Pillar Two model rules on the Company’s provision for income taxes, net income and cash flows for the calendar year of 2024 and future years.
Removed
The potential impact, if any, of the Pillar Two model rules to the Company’s provision for income taxes, net income and cash flows is currently not known or reasonably estimable. The Company expects to be in a position to report the potential impact, if any, in its interim financial statements for the quarterly period ending March 31, 2024.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed5 unchanged
Biggest changeAs of December 31, 2023, we had $127.1 million outstanding on the floating rate term loan facility, and we have an interest rate swap agreement with a notional amount of $127.1 million. Under this swap agreement, we receive variable rate interest rate payments and pay fixed rate interest payments.
Biggest changeAs of December 31, 2024, we had $123.0 million outstanding on the floating rate term loan facility, and we have an interest rate swap agreement with a notional amount of $123.0 million. Under this swap agreement, we receive variable rate interest rate payments and pay fixed rate interest payments.
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 and regulatory changes; • Inflationary economies or currencies; and • Economic and political instability.
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.
We do not use derivative financial instruments for speculative purposes. Certain forward currency exchange contracts in place as of December 31, 2023 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.
We do not use derivative financial instruments for speculative purposes. Certain forward currency exchange contracts in place as of December 31, 2024 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 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 10 to the consolidated financial statements in Part II, Item 8 of this Report.
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. 42

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