Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The financial information and the discussion below should be read in conjunction with other information, including the unaudited condensed consolidated financial statements and Notes thereto in Part I, Item 1 of this quarterly report on Form 10-Q for the quarterly period ended September 30, 2025 (this Report), the consolidated financial statements and Notes thereto appearing in the Company's annual report on Form 10-K for the year ended December 31, 2024 (the 2024 10-K), and Part I, Item 1A, Risk Factors of the 2024 10-K. In this Report, references to Benchmark, the Company or use of the words "we," "our" and "us" include Benchmark's subsidiaries unless otherwise noted.

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts and may include words such as "anticipate," "believe," "intend," "plan," "project," "forecast," "strategy," "position," "continue," "estimate," "expect," "may," "will," "could," "predict," and similar expressions of the negative or other variations thereof. In particular, statements, expressed or implied, concerning the Company's outlook and guidance for quarterly periods or fiscal year 2025 results, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the Company's business strategy and strategic initiatives, the Company's expectations that its restructuring activities for its Fremont, California site and old facility in Guadalajara, Mexico will be fully complete in 2025, the Company's repurchases of shares of its common stock, the Company's expectations regarding restructuring charges, stock-based compensation expense, amortization of intangibles, award of any tax incentives and capital expenditures, and the Company's intentions concerning the payment of dividends, among others, are forward-looking statements. Although the Company believes these statements are based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions, that are beyond the Company's ability to control or predict, relating to operations, markets and the business environment generally, including those discussed under Part I, Item 1A of the 2024 10-K and in any of the Company's subsequent reports filed with the Securities and Exchange Commission (the SEC). Events relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations and high interest rates, the continuing U.S. government shutdown and the economic impacts, volatility and uncertainty resulting therefrom, geopolitical uncertainties including continuing hostilities and tensions, trade restrictions and sanctions, tariffs and retaliatory countermeasures, the ability to utilize the Company's manufacturing facilities at sufficient levels to cover its fixed operating costs, or write-downs or write-offs of obsolete or unsold inventory, may have resulting impacts on the Company's business, financial condition, results of operations, and the Company's ability (or inability) to execute on its plans. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes, including the future results of the Company's operations, may vary materially from those indicated. Undue reliance should not be placed on any forward-looking statements. Forward-looking statements are not guarantees of performance. All forward-looking statements included in this document are based upon information available to the Company as of the date of this document, and the Company assumes no obligation to update.

OVERVIEW

Benchmark Electronics, Inc. (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. We support customers throughout their product lifecycle starting from initial product concept through volume production, including the ability to manage direct order fulfillment and provide aftermarket services. We are a trusted partner to our European and U.S. based national and multi-national original equipment manufacturers (OEMs). Served markets include: aerospace and defense (A&D), medical, industrial, semiconductor capital equipment (Semi-Cap), and advanced computing and communication (AC&C). The Company has manufacturing operations located in the United States and Mexico (the Americas), Asia and Europe.

Our customer engagement focuses on three principal areas:

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

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

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

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

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

We recognize manufacturing services revenue as the customer takes control of the manufactured products built to customer specifications. We also generate revenue from our design, development and engineering services, in addition to the sale of other inventory.

Revenue is measured based on the consideration specified in a contract with a customer. Under the majority of our manufacturing contracts with customers, the customer controls all of the work-in-progress as products are being built. Revenues under these contracts are recognized progressively based on the cost-to-cost method. For other manufacturing contracts, the customer does not take control of the product until it is completed. Under these contracts, we recognize revenue upon transfer of control of the product to the customer, which is generally when the goods are shipped. Revenue from design, development and engineering services is recognized over time as the services are performed. As a general matter, we assume no significant obligations after shipment as we typically warrant workmanship only. Therefore, warranty provisions are generally not significant.

Third Quarter of 2025 Highlights

Sales for the three months ended September 30, 2025 were $680.7 million, a 3% increase from sales of $657.7 million during the three months ended September 30, 2024. During the third quarter of 2025, sales to customers in our various industry sectors varied from the third quarter of 2024 as follows:

 Semi-Cap decreased by 1%

 Industrial increased by 1%

 A&D increased by 26%

 Medical increased by 18%

 AC&C decreased by 20%

The overall revenue increase was primarily due to higher A&D and Medical revenue due to improving demand and new customer wins. This was partially offset by an decrease in AC&C revenue due to demand weakness. See "Results of Operations - Sales" discussion below.

Impact of Certain Factors on Results

Our sales depend on the success of our customers, some of which operate in businesses associated with rapid technological change and consequent product obsolescence. Developments adverse to our major customers or their products, the availability of electronic component supply, or the failure of a major customer to pay for components or services have adversely affected us by not allowing us to fulfill our total customer demand. A substantial percentage of our sales are made to a small number of customers, and the loss of a major customer, if not replaced, would adversely affect us. Sales to our ten largest customers represented 53% and 52% of our total sales during the nine months ended September 30, 2025 and 2024, respectively. After a period of unprecedented global labor and supply disruptions, we continue to see good overall availability of electronic components except for a small portion of older technologies where semiconductor OEMs are not adding incremental capacity. The lack of capacity regarding these older technologies could constrain our ability to produce the full demand forecasts we are receiving from customers needing those parts. We have experienced a significant reduction of non-cancellable and non-returnable business terms from our suppliers as lead times have improved significantly from previous highs.

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

Inflation, interest rates, disruption in the global economy and financial markets, geopolitical instability, government actions related to trade policies, tariffs and immigration, and a prolonged U.S. government shutdown continue to create uncertainty. Although we are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying values of our assets or liabilities as of the date we filed this Report, we continue to monitor the current economic environment and its potential impact on our business, results of operations or financial condition, as well as potential impact on our end customers whose demand for our products and services may be adversely impacted as a result of changes in policies by the U.S. or other governments or the continued U.S. government shutdown, and closely manage our costs and capital resources so that we can respond appropriately as circumstances change. Our estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions or conditions.

RESULTS OF OPERATIONS

The following table presents the percentage relationship that certain items in our condensed consolidated statements of income bear to sales for the periods indicated.

Sales

As noted above, sales for the third quarter of 2025 increased 3% from the third quarter of 2024.

Sales are analyzed by management by market sector and by geographic segment, which reflect our reportable segments. Our global business development strategy is based on our targeted market sectors. Management measures operational performance and allocates resources on a geographic segment basis.

Sales by market sector were as follows:

Semiconductor Capital Equipment. Sales for the three months ended September 30, 2025 decreased 1% to $185.2 million from $187.4 million for the three months ended September 30, 2024. The decrease was primarily due to lower demand. Sales for the nine months ended September 30, 2025 increased 9% to $570.6 million from $525.2 million for the nine months ended September 30, 2024. The increase was primarily due to higher demand and new program wins.

Industrial.Sales for the three months ended September 30, 2025 increased 1% to $152.4 million from $150.9 million for the three months ended September 30, 2024. The increase was primarily due to new program ramps partially offset by demand softness from certain existing customers. Sales for the nine months ended September 30, 2025 decreased 1% to $430.7 million from $433.6 million for the nine months ended September 30, 2024. The decrease was primarily due to demand softness from certain existing customers partially offset by new program ramps.

Aerospace and Defense.Sales for the three months ended September 30, 2025 increased 26% to $128.7 million from $102.0 million for the three months ended September 30, 2024. Sales for the nine months ended September 30, 2025 increased 19% to $376.8 million from $316.7 million for the nine months ended September 30, 2024. The increases were primarily due to strong market growth in both commercial aerospace and defense.

Medical.Sales for the three months ended September 30, 2025 increased 18% to $126.3 million from $107.1 million for the three months ended September 30, 2024. Sales for the nine months ended September 30, 2025 increased 2% to $339.5 million from $333.4 million for the nine months ended September 30, 2024. The increases were primarily due to new program wins and the fulfillment of orders that had previously been pushed out.

Advanced Computing and Communications. Sales for the three months ended September 30, 2025 decreased 20% to $88.2 million from $110.3 million for the three months ended September 30, 2024. Sales for the nine months ended September 30, 2025 decreased 39% to $237.2 million from $390.3 million for the nine months ended September 30, 2024. The decreases were due to lower demand from existing customers.

Our international operations are subject to the risks of doing business abroad. See Part I, Item 1A of our 2024 10-K for factors pertaining to our international sales, fluctuations in foreign currency exchange rates and a discussion of potential adverse effects in operating results associated with the risks of doing business abroad. During the three months ended September 30, 2025 and 2024, 56% and 65%, respectively of our sales were from international operations. During the nine months ended September 30, 2025 and 2024, 56% and 62%, respectively, of our sales were from international operations.

Sales by geographic segment were as follows:

Americas.Sales for the three months ended September 30, 2025 increased 1% to $309.0 million from $306.5 million for the three months ended September 30, 2024. The increase was primarily due to higher demand in A&D and Medical sectors partially offset by decreased demand in the AC&C sector. Sales for the nine months ended September 30, 2025 decreased 13% to $888.5 million from $1,022.0 million for the nine months ended September 30, 2024. The decrease was primarily due to softness in AC&C and Semi-Cap sectors partially offset by increased demand in the A&D and Medical sectors.

Asia. Sales for the three months ended September 30, 2025 increased 6% to $307.3 million from $289.9 million for the three months ended September 30, 2024. Sales for the nine months ended September 30, 2025 increased 9% to $878.4 million from $805.4 million for the nine months ended September 30, 2024. The increases were primarily due to an increase in existing customer demand in the Semi-Cap and Industrial sectors partially offset by decreased demand in the AC&C sector.

Europe.Sales for the three months ended September 30, 2025 increased 3% to $86.3 million from $83.5 million for the three months ended September 30, 2024. Sales for the nine months ended September 30, 2025 increased 2% to $256.0 million from $249.9 million for the nine months ended September 30, 2024. The increases were primarily due to higher demand in the A&D and Medical sectors partially offset by a decrease in the Semi-Cap sector.

Gross Profit

Gross profit for the three months ended September 30, 2025 increased 2% to $67.9 million from $66.7 million for the three months ended September 30, 2024. The increase was primarily due to higher sales. Gross profit margin decreased to 10.0% for the three months ended September 30, 2025 from 10.1% for the three months ended September 30, 2024. The decrease was primarily due to higher cost of sales due to variable compensation.

Gross profit for the nine months ended September 30, 2025 decreased 3% to $195.9 million from $202.1 million for the nine months ended September 30, 2024. Gross profit margin decreased to 10.0% for the nine months ended September 30, 2025 from 10.1% for the nine months ended September 30, 2024. The decreases were primarily due to lower sales.

Income from Operations

Income from operations for the three months ended September 30, 2025 decreased 16% to $23.7 million from $28.1 million in the three months ended September 30, 2024. Income from operations for the nine months ended September 30, 2025 decreased 31% to $55.9 million from $80.9 million in the nine months ended September 30, 2024. The decreases were primarily due to increased selling, general and administrative expenses primarily due to higher stock based compensation expense and increased restructuring expenses and other costs due to settlement of a tax assessment in the Americas as described below.

Income from operations by reportable segment was as follows:

Americas.Income from operations for the three months ended September 30, 2025 increased 45% to $10.7 million from $7.4 million for the three months ended September 30, 2024. The increase was primarily due to higher revenue and cost control. Income from operations for the nine months ended September 30, 2025 decreased 45% to $17.0 million from $30.7 million for the nine months ended September 30, 2024. The decrease was primarily due to lower revenue, as well as increased restructuring expenses and other costs due to settlement of a tax assessment, partially offset by cost control. See Note 15 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for additional information on the tax assessment. Restructuring expenses are discussed under "-Restructuring Charges and Other Costs" below.

Asia.Income from operations for the three months ended September 30, 2025 decreased 1% to $37.2 million from $37.3 million for the three months ended September 30, 2024. The slight decrease was primarily related to higher operating costs partially offset by higher revenue. Income from operations for the nine months ended September 30, 2025 increased 6% to $109.6 million from $103.3 million for the nine months ended September 30, 2024. The increase was primarily due to higher revenue and cost control.

Europe.Income from operations for the three months ended September 30, 2025 increased 34% to $9.0 million from $6.7 million for the three months ended September 30, 2024. Income from operations for the nine months ended September 30, 2025 increased 17% to $23.6 million from $20.1 million for the nine months ended September 30, 2024. The increases were primarily due to higher revenue and cost control.

Selling, General and Administrative Expenses

SG&A expenses increased to $41.5 million for the three months ended September 30, 2025 from $36.6 million for the three months ended September 30, 2024. SG&A expenses increased to $120.9 million for the nine months ended September 30, 2025 from $112.0 million for the nine months ended September 30, 2024. The increases were primarily due to variable compensation.

Amortization of Intangible Assets

Amortization of intangible assets was $1.2 million for the three months ended September 30, 2025 and 2024. Amortization of intangible assets was $3.6 million for the nine months ended September 30, 2025 and 2024.

Restructuring Charges and Other Costs

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

Additionally, the Company incurred $0.3 million and $11.0 million of settlement costs related to a tax assessment in the Americas for the three and nine months ended September 30, 2025, respectively. See Note 15 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for additional information on the tax assessment.

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

See Note 16 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for additional information on our restructuring charges and other costs.

Interest Expense

Interest expense decreased to $4.4 million for the three months ended September 30, 2025 from $6.6 million for the three months ended September 30, 2024. Interest expense decreased to $16.1 million for the nine months ended September 30, 2025 from $20.7 million for the nine months ended September 30, 2024. The decreases were primarily due to decreased borrowings and a lower interest rate environment.

Interest Income

Interest income decreased to $2.0 million for the three months ended September 30, 2025 from $2.8 million for the three months ended September 30, 2024. The decrease was primarily due to a lower interest environment. Interest income increased to $7.8 million for the nine months ended September 30, 2025 from $7.3 million for the nine months ended September 30, 2024. The increase was primarily due to higher cash balances partially offset by a lower interest environment.

Other Expense, Net

Other expense, net decreased to $0.6 million for the three months ended September 30, 2025 from $4.0 million for the three months ended September 30, 2024. Other expense, net decreased to $2.1 million for the nine months ended September 30, 2025 from $7.5 million for the nine months ended September 30, 2024. The decreases were primarily due to lower foreign currency exchange losses.

Income Tax Expense

Income tax expense of $6.3 million represented a 30.7% effective tax rate for the three months ended September 30, 2025, compared with $5.0 million for the three months ended September 30, 2024, representing an effective tax rate of 24.6%. The increase in the effective tax rate for the three months ended September 30, 2025 is primarily due to a discrete tax expense of $0.8 million related to the exit of a business in the Americas, losses generated in a jurisdiction where no tax benefit can be recognized, and to the mix of profits in our various jurisdictions.

Income tax expense of $26.7 million represented a 58.6% effective tax rate for the nine months ended September 30, 2025, compared with $15.1 million for the nine months ended September 30, 2024, representing an effective tax rate of 25.2%. The increase in the effective tax rate for the nine months ended September 30, 2025 is primarily due to the $10.4 million in discrete tax expense recorded in the second quarter for the foreign withholding taxes on repatriated dividends and recognition of deferred tax liabilities on China unremitted earnings, losses generated in a jurisdiction where no tax benefit can be recognized and to the mix of profits in our various jurisdictions.

Net Income

We reported net income of $14.3 million, or $0.39 per diluted share, for the three months ended September 30, 2025, compared with net income of $15.4 million, or $0.42 per diluted share, for the three months ended September 30, 2024. We reported net income of $18.9 million, or $0.52 per diluted share, for the nine months ended September 30, 2025, compared with net income of $44.9 million, or $1.23 per diluted share, for the nine months ended September 30, 2024. The decreases were primarily due to the items discussed above.

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 amended and restated, the Credit Agreement), consisting of a term loan facility and a $550.0 million revolving credit facility, both with a maturity date of June 27, 2030. Cash, cash equivalents and restricted cash totaled $286.1 million as of September 30, 2025, which included $249.2 million held outside the United States in various foreign subsidiaries.

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

Cash Flows

Cash provided from operating activities was $65.3 million during the nine months ended September 30, 2025, and primarily consisted of $18.9 million of net income, adjusted for $35.6 million of depreciation and amortization, $15.1 million of stock-based compensation expense, a $38.7 million decrease in accounts receivable, a $48.5 million decrease in inventories, a $19.6 million increase in accounts payable, partially offset by $31.4 million increase in contract assets, a $20.9 million increase in prepaid expenses and other assets, a $19.4 million decrease in advance payments from customer, a $12.4 million decrease in accrued liabilities, and $25.1 million decreased in income taxes. Working capital was $0.8 billion as of September 30, 2025.

We primarily purchase components only after customer orders or forecasts are received, which mitigates, but does not eliminate, the risk of loss on inventories. Supplies of electronic components and other materials used in operations are subject to industry-wide shortages. In certain instances, suppliers may allocate available quantities to us. When shortages of these components and other material supplies used in operations have occurred, vendors have at times been unable to ship the quantities we need for production, forcing us to delay shipments, which can increase backorders and impact cash flows. Vendors also may increase the costs of components based on the market conditions including these shortages. In certain instances, we request and receive advance payments from customers as prepayments of inventory to meet working capital demands of a contract, offset inventory risks such as inventory purchased in advance of current needs and protect the Company from the failure of other parties to fulfill obligations under a contract. For example, we have been impacted by supply chain constraints, including shortages, longer lead times and increased transit times. Furthermore, the U.S. government's adoption of new approaches to trade policy and imposition of tariffs on certain foreign goods (as well as the possibility of imposing significant, additional tariffs in the future) and effects of a prolonged shutdown of the U.S. government may make it more difficult or costly for us to procure components and other material supplies and, in turn, may increase the cost to our customers, which may materially and adversely impact demand for our products and services, our results of operations or our financial condition.

Cash used in investing activities was $22.8 million during the nine months ended September 30, 2025 primarily due to capital expenditures for property, plant and equipment of $25.2 million, purchased software of $2.8 million, partially offset by proceeds from cash received from business divestiture of $5.1 million. The purchases of property, plant and equipment were primarily for leasehold improvements and machinery and equipment in the Americas and Asia.

Cash used in financing activities was $92.9 million during the nine months ended September 30, 2025. Borrowings under the Credit Agreement were $733.6 million and principal payments under the Credit Agreement were $772.6 million. In addition, during the nine months ended September 30, 2025, we paid $26.0 million for share repurchases, $7.2 million for employee taxes in connection with the settlement of stock-based awards and $18.4 million for dividends.

Credit Agreement

On June 27, 2025, the Company entered into a $700 million second amended and restated credit agreement (the Credit Agreement) by and among the Company, certain of its subsidiaries, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer. The Credit Agreement is comprised of a five-year $550 million revolving credit facility and a five-year $150 million term loan facility, both with a maturity date of June 27, 2030. As of September 30, 2025, we had $149.1 million in borrowings outstanding under the term loan facility, $70.0 million outstanding under our revolving credit facility and $4.4 million in letters of credit outstanding under our revolving credit facility. See Note 5 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for more information regarding the terms of our Credit Agreement.

The Credit Agreement contains certain financial covenants related to interest coverage and debt leverage, and certain customary affirmative and negative covenants, including restrictions on our ability to incur additional debt and liens, pay dividends, repurchase shares, sell assets, including trade accounts receivable, and merge or consolidate with other persons. Amounts due under the Credit Agreement could be accelerated upon specified events of default, including a failure to pay amounts due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or insolvency, subject, in some cases, to cure periods. As of September 30, 2025, we were in compliance with all of these covenants and restrictions.

As of September 30, 2025, we had $475.6 million available for borrowings under the Credit Agreement, subject to compliance with financial covenants as to interest coverage and debt leverage, in addition to other debt covenant restrictions. During the next 12 months, we believe our capital expenditures will approximate $60 million to $70 million, principally for machinery and equipment to help increase our production capacity to support anticipated revenue growth and our ongoing business around the globe.

Dividends

During the nine months ended September 30, 2025 and 2024, cash dividends paid totaled $18.4 million and $17.8 million, respectively. On September 9, 2025, the Board of Directors declared a quarterly cash dividend of $0.17 per share of the Company's common stock to shareholders of record as of September 30, 2025. The dividend of $6.1 million was paid on October 13, 2025.

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

Share Repurchase Authorization

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

The Company repurchased 0.7 million shares for an aggregate of $26.0 million at an average price of $38.06 per share during the nine months ended September 30, 2025. As of September 30, 2025, the Company had $123.5 million remaining under share repurchase authorizations. See Note 7 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for more information on the share repurchase authorization.

CONTRACTUAL OBLIGATIONS

We have certain contractual obligations for operating leases that were summarized in "Contractual Obligations" under Part II, Item 7 in our 2024 10-K. Other than items discussed in Note 5 and Note 6 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report, there have been no material changes to our contractual obligations, outside of the ordinary course of our business, since December 31, 2024.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES AND RECENTLY ENACTED ACCOUNTING PRINCIPLES

Management's discussion and analysis of financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. See Note 2 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report for a discussion of recently enacted accounting principles. Also, our significant accounting policies are summarized in Note 1 to the consolidated financial statements included in our 2024 10-K. There have been no changes to the items disclosed as critical accounting estimates in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our 2024 10-K.