UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________________ to________________
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction |
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(I.R.S. Employer |
of incorporation or organization) |
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Identification No.) |
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(Zip Code) |
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(Address of principal executive offices) |
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(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
☐ |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
As of October 29, 2024, there were
TABLE OF CONTENTS
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Page |
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PART I—FINANCIAL INFORMATION |
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Item 1. |
1 |
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1 |
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2 |
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3 |
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4 |
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5 |
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6 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 |
Item 3. |
31 |
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Item 4. |
32 |
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PART II—OTHER INFORMATION |
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Item 1. |
33 |
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Item 1A. |
33 |
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Item 2. |
33 |
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Item 5. |
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Item 6. |
34 |
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35 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
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September 30, |
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December 31, |
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(in thousands, except par value) |
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2024 |
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2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net of allowance for doubtful accounts of |
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Contract assets |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets |
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Goodwill |
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Deferred income taxes |
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Other long-term assets |
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Total assets |
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$ |
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$ |
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Liabilities and Shareholders’ Equity |
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Current liabilities: |
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Current installments of long-term debt |
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$ |
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$ |
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Accounts payable |
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Advance payments from customers |
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Income taxes payable |
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Accrued liabilities |
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Total current liabilities |
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Long-term debt, net of current installments |
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Operating lease liabilities |
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Other long-term liabilities |
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Shareholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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See the accompanying notes to the unaudited condensed consolidated financial statements.
1
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(unaudited)
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Three Months Ended |
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Nine Months Ended |
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(in thousands, except per share data) |
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2024 |
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2023 |
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2024 |
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2023 |
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Sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Amortization of intangible assets |
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Restructuring charges and other costs |
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Income from operations |
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Interest expense |
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( |
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( |
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( |
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Interest income |
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Other (expense) income, net |
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( |
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( |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted-average number of shares outstanding: |
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Basic |
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Diluted |
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See the accompanying notes to the unaudited condensed consolidated financial statements.
2
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
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Three Months Ended |
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Nine Months Ended |
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(in thousands) |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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( |
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( |
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Unrealized (loss) gain on derivatives, net of tax |
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( |
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( |
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( |
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Other |
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( |
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Total other comprehensive (loss) income |
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( |
) |
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( |
) |
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( |
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See the accompanying notes to the unaudited condensed consolidated financial statements.
3
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
(unaudited)
(in thousands) |
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Shares |
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Common |
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Additional |
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Retained |
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Accumulated |
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Total |
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Balances, December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Dividends declared |
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— |
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— |
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— |
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( |
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— |
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( |
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Shares repurchased and retired |
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( |
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( |
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( |
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( |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Stock options exercised |
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— |
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— |
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Vesting of restricted stock units |
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( |
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— |
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— |
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— |
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Shares withheld for taxes |
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( |
) |
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( |
) |
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( |
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— |
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— |
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( |
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Balances, September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Balances, June 30, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Dividends declared |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Shares repurchased and retired |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
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— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Stock options exercised |
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— |
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— |
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— |
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— |
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Vesting of restricted stock units |
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( |
) |
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— |
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— |
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— |
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Shares withheld for taxes |
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( |
) |
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— |
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( |
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— |
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— |
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( |
) |
Balances, September 30, 2024 |
|
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|
$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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(in thousands) |
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Shares |
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Common |
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Additional |
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Retained |
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Accumulated |
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Total |
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Balances, December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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Dividends declared |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Stock options exercised |
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— |
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— |
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Vesting of restricted stock units |
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( |
) |
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— |
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— |
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— |
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Shares withheld for taxes |
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( |
) |
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( |
) |
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( |
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— |
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— |
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( |
) |
Balances, September 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Balances, June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Dividends declared |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Vesting of restricted stock units |
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( |
) |
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— |
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— |
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— |
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Shares withheld for taxes |
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( |
) |
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( |
) |
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( |
) |
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— |
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— |
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( |
) |
Balances, September 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
|
See the accompanying notes to the unaudited condensed consolidated financial statements.
4
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
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Nine Months Ended |
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(in thousands) |
|
2024 |
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2023 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash from operating activities: |
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Depreciation |
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Amortization |
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Stock-based compensation expense |
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Provision for doubtful accounts |
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Deferred income taxes |
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( |
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( |
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Asset impairments |
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Gain on the sale of property, plant and equipment |
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( |
) |
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( |
) |
Changes in operating assets and liabilities: |
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Accounts receivable |
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Contract assets |
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( |
) |
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( |
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Inventories |
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Prepaid expenses and other assets |
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( |
) |
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( |
) |
Accounts payable |
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( |
) |
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( |
) |
Advance payments from customers |
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( |
) |
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( |
) |
Accrued liabilities |
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( |
) |
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( |
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Operating leases |
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Income taxes |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Additions to property, plant and equipment |
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( |
) |
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( |
) |
Additions to capitalized purchased software |
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( |
) |
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( |
) |
Proceeds from the disposal of property, plant and equipment |
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Other, net |
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( |
) |
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( |
) |
Net cash used in investing activities |
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( |
) |
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( |
) |
Cash flows from financing activities: |
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Borrowings under credit agreement |
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Principal payments on credit agreement |
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( |
) |
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( |
) |
Dividends paid |
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( |
) |
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|
( |
) |
Employee taxes paid with shares withheld |
|
|
( |
) |
|
|
( |
) |
Proceeds from stock options exercised |
|
|
|
|
|
|
||
Debt issuance costs |
|
|
|
|
|
( |
) |
|
Principal payments on finance leases |
|
|
( |
) |
|
|
( |
) |
Share repurchases |
|
|
( |
) |
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
( |
) |
|
|
|
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
|
|
|
( |
) |
|
Net increase in cash, cash equivalents and restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at the beginning of the year |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at the end of the period |
|
$ |
|
|
$ |
|
See the accompanying notes to the unaudited condensed consolidated financial statements.
5
BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(amounts in thousands, except per share data, unless otherwise noted)
(unaudited)
Note 1 – Basis of Presentation
Benchmark Electronics, Inc. (the Company) is a Texas corporation that provides advanced manufacturing services, which include design and engineering services and technology solutions. From initial product concept to volume production, including direct order fulfillment and aftermarket services, the Company has been providing integrated services and solutions to original equipment manufacturers (OEMs) since 1979. The Company serves the following market sectors: complex industrials, aerospace and defense (A&D), medical technologies, semiconductor capital equipment (semi-cap), and advanced computing and communications (AC&C). The Company has manufacturing operations located in the United States and Mexico (the Americas), Asia and Europe.
The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) relating to interim financial statements. The condensed consolidated financial statements reflect all normal and recurring adjustments necessary in the opinion of management for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2023 (the 2023 10-K).
Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (U.S. GAAP) for interim financial statements. However, actual results could differ materially from these estimates.
Note 2 – New Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740) (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the guidance and its impact to the financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires public entities disclose information about their reportable segments’ oversight and significant expenses on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is required to adopt the guidance for its 2024 annual report filed on Form 10-K. The Company is currently evaluating the impact of these amendments on its disclosures. Upon adoption, this ASU is not expected to have a material impact to the Company’s financial statements or financial position.
Note 3 – Inventories
Inventory costs are summarized as follows:
|
|
September 30, |
|
|
December 31, |
|
||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total inventories |
|
$ |
|
|
$ |
|
6
Note 4 – Goodwill and Other Intangible Assets
Goodwill allocated to the Company’s reportable operating segments follows:
(in thousands) |
|
Americas |
|
|
Asia |
|
|
Total |
|
|||
Goodwill as of September 30, 2024 and December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
A summary of the Company’s acquired identifiable intangible assets and capitalized purchased software costs follows:
(in thousands) |
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|||
Customer relationships |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Capitalized purchased software costs |
|
|
|
|
|
( |
) |
|
|
|
||
Technology licenses |
|
|
|
|
|
( |
) |
|
|
|
||
Trade names and trademarks |
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
( |
) |
|
|
|
||
Total intangible assets as of September 30, 2024 |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
(in thousands) |
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|||
Customer relationships |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Capitalized purchased software costs |
|
|
|
|
|
( |
) |
|
|
|
||
Technology licenses |
|
|
|
|
|
( |
) |
|
|
|
||
Trade names and trademarks |
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
( |
) |
|
|
|
||
Total intangible assets as of December 31, 2023 |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
A summary of the components of amortization expense, as presented in the consolidated statements of cash flows, follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(in thousands) |
|
2024 |
|
|