Quarterly Report for Quarter Ending September 30, 2026 (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, 2026 (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, 2025 (the 2025 10-K), and Part I, Item 1A, Risk Factors of the 2025 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 2026 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 regarding enterprise artificial intelligence (AI) opportunities, anticipated growth in bookings, and repurchases of shares of its common stock, the Company's expectations regarding restructuring activity and charges, stock-based compensation expense, amortization of intangibles, award or extension of any tax incentives and capital expenditures, the Company's intentions concerning the payment of dividends, the Company's expectations regarding the impact of inflation, tariffs and trade policies, and the Company's positions and strategies with respect to ongoing or threatened litigation and expected outcomes, 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 2025 10-K and in any of the Company's subsequent reports filed with the Securities and Exchange Commission (the SEC). Risks and uncertainties 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 in the Middle East and elsewhere, 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 including obsolete or unsold inventory that is the subject of current litigation as described in this Report, 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 metal machining (PMM) 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 multinational original equipment manufacturers (OEMs). Served markets include: advanced computing and communications (AC&C), aerospace and defense (A&D), industrial, medical, and semiconductor capital equipment (semi-cap). The Company has manufacturing operations located in the United States and Mexico (the Americas), Asia and Europe.

Our customer engagement focuses on two 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 high reliability requirements. These capabilities and attributes enable us to build strong strategic relationships with our customers as an integral part of their business.

Our ability to deliver these integrated solutions is enabled by our highly skilled personnel who provide leading-edge technical capabilities in engineering services (including full life cycle), high frequency RF systems, microelectronics, optics, miniaturization, and manufacturing services (including electronics, complex precision machining, and clean room assembly). To support customers across these sectors, we have strategically invested in geographically diverse manufacturing locations and global supply chain capabilities.

A strong focus on human capital-encompassing the talent we attract, develop, and retain-is essential to sustaining our competitiveness and long-term success. Our people-first culture is grounded in our five core values: acting with integrity, valuing inclusion, commitment to customers, promoting ingenuity, and demonstrating genuine caring for one another, our customers, and the communities we serve. We are committed to fostering an environment where our team members feel engaged, valued, and empowered to thrive, recognizing that inclusion and diverse perspectives drive innovation, strengthen decision-making, and enhance overall performance. Our approach is centered on delivering exceptional value to our customers while achieving operational and financial performance aligned with our strategic objectives. Through ongoing employee engagement and customer listening strategies, we are committed to continually improving our practices, understanding that we serve our customers best by supporting our people first. We invest in building a forward-thinking, high-performing workforce by developing leaders at all levels and supporting the personal growth and career aspirations of our employees. These efforts are demonstrated through our executive development program, CLIMB; our general manager readiness program, ASCEND and self-guided leadership journeys for aspiring, new, mid-level, and senior-level leaders.

Our customers often face challenges in supply chain design, demand planning, material procurement, and inventory management due to demand variability, product design changes, short product life cycles, and component price fluctuations.

We employ enterprise resource planning (ERP) systems and lean/six sigma methodologies to efficiently and cost-effectively manage procurement and manufacturing processes. 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.

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.

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, including conditions affecting the availability of electronic components or the failure of a major customer to pay for components or services, can impact our ability to fulfill 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 50% and 53% of our total sales during the nine months ended September 30, 2026 and 2025, respectively.

Industry supply conditions have reflected varying demand dynamics across end markets and component categories, including periods of imbalance across certain technologies, notably in the memory market. While supply conditions have improved in certain areas compared to prior periods, supply availability and pricing conditions continue to vary across the broader market.

We experience fluctuations in gross profit margin from period to period. Different programs contribute different gross profit margins 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 margin in their early stages due to lower manufacturing volumes, which can result in inefficiencies and unabsorbed manufacturing overhead costs, as well as incremental investments required during the launch and ramp phases. During periods of low production volume, we generally have unabsorbed manufacturing overhead costs and reduced gross profit margin. Gross profit margin can also be impacted by higher costs associated with other situations, such as supply chain constraints. This includes supply chain premiums for excess component costs paid to secure available supply resulting in revenue with cost recovery only with no margin.

Inflation, interest rates, disruption in the global economy and financial markets, geopolitical events, tariffs and trade restrictions continue to create uncertainty. However, we are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of the date we filed this Report. These estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions or conditions.

On February 20, 2026, the U.S. Supreme Court issued a ruling invalidating tariffs imposed under the International Emergency Economic Powers Act (IEEPA), including, among others, tariffs on imports of certain Canadian, Chinese, and Mexican goods, a universal baseline tariff on imports from most countries, and reciprocal tariffs on select countries. In March 2026, the U.S. Court of International Trade further ruled that importers that paid such tariffs are entitled to refunds. During the second quarter of 2026, U.S. Customs and Border Protection launched a process to administer IEEPA tariff refund claims, and the Company submitted claims for qualifying IEEPA tariff refunds. We continue to monitor developments related to tariffs and trade policies and evaluate the potential impact on our results of operations and financial condition. For the nine months ended September 30, 2026, the Company recorded in the consolidated statement of income tariff refunds of $11.8 million as a reduction to cost of sales, reflecting the recovery of previously incurred tariff costs, and recorded a corresponding reduction to sales for amounts reimbursable to customers. For additional information, refer to Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, certain statements of income data expressed as a percentage of net sales:

Sales

Sales for the three and nine months ended September 30, 2026 increased 19% and 15%, respectively, compared to the corresponding periods in 2025.

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, 2026 increased 30% to $240.7 million from $185.2 million for the three months ended September 30, 2025. Sales for the nine months ended September 30, 2026 increased 15% to $654.8 million from $570.6 million for the nine months ended September 30, 2025. The increases were primarily attributed to strong end-market demand and new program wins.

Industrial. Sales for the three months ended September 30, 2026 increased 13% to $171.6 million from $152.4 million for the three months ended September 30, 2025. Sales for the nine months ended September 30, 2026 increased 8% to $465.5 million from $430.7 million for the nine months ended September 30, 2025. The increases were primarily due to new program awards from key existing customers.

Aerospace and Defense. Sales for the three months ended September 30, 2026 decreased 1% to $127.9 million from $128.7 million for the three months ended September 30, 2025. Sales for the nine months ended September 30, 2026 decreased 5% to $358.9 million from $376.8 million for the nine months ended September 30, 2025. The decreases primarily reflect the wind-down of certain programs, partially offset by new program wins.

Medical. Sales for the three months ended September 30, 2026 increased 9% to $138.2 million from $126.3 million for the three months ended September 30, 2025. Sales for the nine months ended September 30, 2026 increased 18% to $400.2 million from $339.5 million for the nine months ended September 30, 2025. The increases were primarily due to program ramps.

Advanced Computing and Communications. Sales for the three months ended September 30, 2026 increased 50% to $132.5 million from $88.2 million for the three months ended September 30, 2025. Sales for the nine months ended September 30, 2026 increased 54% to $364.7 million from $237.2 million for the nine months ended September 30, 2025. The increases were primarily due to program wins in the high performance computing market, supported by continued investment in data center infrastructure.

Our international operations are subject to the risks of doing business abroad. See Part I, Item 1A of our 2025 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, 2026 and 2025, 66% and 56%, respectively, of our sales were from international operations. During the nine months ended September 30, 2026 and 2025, 64% and 56%, respectively, of our sales were from international operations.

Sales by geographic segment were as follows:

Americas. Sales for the three months ended September 30, 2026 increased 20% to $369.4 million from $309.0 million for the three months ended September 30, 2025. Sales for the nine months ended September 30, 2026 increased 15% to $1,021.2 million from $888.5 million for the nine months ended September 30, 2025. The increases were primarily due to higher demand in AC&C, Medical, and Industrial sectors.

Asia. Sales for the three months ended September 30, 2026 increased 22% to $375.3 million from $307.3 million for the three months ended September 30, 2025. Sales for the nine months ended September 30, 2026 increased 17% to $1,023.9 million from $878.4 million for the nine months ended September 30, 2025. The increases were primarily due to an increase in demand for Industrial, AC&C, and Semi-Cap sectors.

Europe. Sales for the three months ended September 30, 2026 increased 4% to $89.4 million from $86.3 million for the three months ended September 30, 2025. Sales for the nine months ended September 30, 2026 increased 3% to $264.2 million from $256.0 million for the nine months ended September 30, 2025. The increases were primarily due to an increase in demand for Semi-Cap and Medical sectors, partially offset by lower demand in the Industrial sector.

Gross Profit

Gross profit for the three months ended September 30, 2026 increased 24% to $84.4 million from $67.9 million for the three months ended September 30, 2025. Gross profit margin increased to 10.4% for the three months ended September 30, 2026 from 10.0% for the three months ended September 30, 2025. The increases were primarily due to stronger revenue, resulting in enhanced manufacturing cost leverage, and a higher-margin product mix.

Gross profit for the nine months ended September 30, 2026 increased 18% to $232.1 million from $195.9 million for the nine months ended September 30, 2025. Gross profit margin increased to 10.3% for the nine months ended September 30, 2026 from 10.0% for the nine months ended September 30, 2025. The increases were primarily due to higher production volumes due to increased sales, which resulted in improved absorption of fixed manufacturing costs, along with a more favorable mix of products sold.

Income from Operations

Income from operations for the three months ended September 30, 2026 increased 30% to $30.7 million from $23.7 million in the three months ended September 30, 2025. Income from operations for the nine months ended September 30, 2026 increased 48% to $82.8 million from $55.9 million in the nine months ended September 30, 2025. The increases were primarily due to higher sales and gross profit as well as decreased restructuring expenses and other costs, as a charge relating to the settlement of a tax assessment in the Americas was recorded during the nine months ended September 30, 2025, partially offset by increased selling, general and administrative (SG&A) expenses.

Income from operations by reportable segment was as follows:

Americas. Income from operations for the three months ended September 30, 2026 increased 123% to $23.9 million from $10.7 million for the three months ended September 30, 2025. Income from operations for the nine months ended September 30, 2026 increased 201% to $51.3 million from $17.0 million for the nine months ended September 30, 2025. The increases were primarily due to higher sales and lower restructuring charges and other costs, as a charge relating to the settlement of a tax assessment in the Americas was recorded during the nine months ended September 30, 2025.

Asia. Income from operations for the three months ended September 30, 2026 increased 17% to $43.4 million from $37.2 million for the three months ended September 30, 2025. Income from operations for the nine months ended September 30, 2026 increased 16% to $126.9 million from $109.6 million for the nine months ended September 30, 2025. The increases were primarily due to higher sales.

Europe. Income from operations for the three months ended September 30, 2026 decreased 6% to $8.5 million from $9.0 million for the three months ended September 30, 2025. The decrease was primarily due to higher cost of sales due to product mix. Income from operations for the nine months ended September 30, 2026 increased 5% to $24.9 million from $23.6 million for the nine months ended September 30, 2025. The increase was primarily due to higher sales.

Selling, General and Administrative (SG&A) Expenses

SG&A expenses increased to $50.4 million for the three months ended September 30, 2026 from $41.5 million for the three months ended September 30, 2025. SG&A expenses increased to $138.9 million for the nine months ended September 30, 2026 from $120.9 million for the nine months ended September 30, 2025. The increases were primarily driven by higher variable compensation and stock-based compensation expense.

Amortization of Intangible Assets

Amortization of intangible assets was $1.2 million for both the three months ended September 30, 2026 and 2025. Amortization of intangible assets was $3.6 million for both the nine months ended September 30, 2026 and 2025.

Restructuring Charges and Other Costs

During the three and nine months ended September 30, 2026, we recognized $2.2 million and $7.0 million of restructuring charges which primarily related to a planned closure of our site in Phoenix, Arizona and other smaller activities involving capacity reductions and reductions in workforce in certain facilities across various regions. Phoenix, Arizona operations ceased during the second quarter of 2026 and all related restructuring activity is expected to be substantially complete in 2026. Additionally, the Company recorded a $0.3 million net recovery related to the settlement of tax assessments in the Americas for the nine months ended September 30, 2026.

During the three and nine months ended September 30, 2025, we recognized $1.2 million and $4.5 million of restructuring charges primarily related to closures of our site in Fremont, California and our prior 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. 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 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 $3.4 million for the three months ended September 30, 2026 from $4.4 million for the three months ended September 30, 2025. Interest expense decreased to $10.8 million for the nine months ended September 30, 2026 from $16.1 million for the nine months ended September 30, 2025. The decreases were primarily due to decreased borrowings and lower short-term borrowing rates applicable to the Credit Agreement.

Interest Income

Interest income was $2.0 million for both the three months ended September 30, 2026 and 2025. Interest income decreased to $5.8 million for the nine months ended September 30, 2026 from $7.8 million for the nine months ended September 30, 2025 primarily due to lower short-term interest rates earned on cash balances and lower cash balances in interest-bearing accounts.

Other Expense, Net

Other expense, net increased to $2.4 million for the three months ended September 30, 2026 from $0.6 million for the three months ended September 30, 2025. Other expense, net increased to $3.8 million for the nine months ended September 30, 2026 from $2.1 million for the nine months ended September 30, 2025. The increases were primarily due to higher foreign currency exchange losses.

Income Tax Expense

Income tax expense was $9.7 million for the three months ended September 30, 2026, resulting in an effective tax rate of 36.1%, compared with income tax expense of $6.3 million and an effective tax rate of 30.7% for the three months ended September 30, 2025. Income tax expense was $23.9 million for the nine months ended September 30, 2026, resulting in an effective tax rate of 32.4%, compared with income tax expense of $26.7 million and an effective tax rate of 58.6% for the nine months ended September 30, 2025. The effective tax rates were primarily impacted by losses incurred in certain jurisdictions for which no tax benefit was recognized and the geographic mix of earnings among the jurisdictions in which the Company operates. The 2026 effective tax rates were also negatively impacted by the Organization for Economic Co-operation and Development (OECD) Pillar Two Global Minimum Tax. These impacts were partially offset by tax incentives available in certain foreign jurisdictions. The decrease in the effective tax rate for the nine months ended September 30, 2026 compared to the prior-year period was also attributable to discrete tax expense recorded in the second quarter of 2025 related to foreign withholding taxes on repatriated dividends and the recognition of deferred tax liabilities associated with unremitted earnings in China.

Net Income

We reported net income of $17.1 million, or $0.47 per diluted share, for the three months ended September 30, 2026, compared with net income of $14.3 million, or $0.39 per diluted share, for the three months ended September 30, 2025. We reported net income of $50.1 million, or $1.38 per diluted share, for the nine months ended September 30, 2026, compared with net income of $18.9 million, or $0.52 per diluted share, for the nine months ended September 30, 2025. The increases 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 borrowings under our borrowing facilities, consisting of a $150 million term loan facility, a $550 million revolving credit facility, and a $45 million revolving credit facility through our Malaysian subsidiary, each with a maturity date of June 27, 2030. Cash, cash equivalents and restricted cash totaled $290.7 million as of September 30, 2026, which included $255.8 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 facilities 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 facilities will enable us to meet operating cash requirements in future years. From time to time, we may pursue strategic opportunities, including acquisitions, or experience changes in working capital or capital investment requirements, which could increase our capital needs and may 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 by operating activities was $111.6 million during the nine months ended September 30, 2026, and primarily consisted of $50.1 million of net income, adjusted for $36.0 million of depreciation and amortization, $21.2 million of stock-based compensation expense, a $260.5 million increase in accounts payable, a $12.6 million increase in accrued liabilities, and an $8.2 million increase in advance payments from customers, partially offset by a $152.3 million increase in inventories, a $46.0 million increase in accounts receivable, a $38.7 million increase in contract assets, a $24.4 million increase in prepaid expenses and other assets, and a $15.6 million increase to income taxes. Working capital was $0.8 billion as of September 30, 2026.

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 trade policy and imposition of tariffs on certain foreign goods (as well as the possibility of imposing significant, additional tariffs in the future) and geopolitical issues or conflicts 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 $44.4 million during the nine months ended September 30, 2026 primarily due to capital expenditures for property, plant and equipment of $43.3 million, and purchased software of $3.4 million, partially offset by proceeds from the sale of assets held for sale of $2.3 million. The purchases of property, plant and equipment were primarily for buildings and machinery and equipment in the Americas and Asia.

Cash used in financing activities was $94.8 million during the nine months ended September 30, 2026. Borrowings under our borrowing facilities were $457.0 million and principal payments under our borrowing facilities were $509.8 million. In addition, during the nine months ended September 30, 2026, we paid $18.3 million for dividends, $14.3 million for share repurchases, and $9.1 million for employee taxes in connection with the settlement of stock-based awards.

Borrowing Facilities

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 (the Revolving Credit Facility) and a five-year $150 million term loan facility (the Term Loan Facility), both with a maturity date of June 27, 2030. On September 2, 2026, the Company's Malaysian subsidiary entered into a separate credit agreement for a $45 million revolving credit facility (the Malaysia Facility and, together with the Revolving Credit Facility, the Revolving Borrowing Facilities) that matures on June 27, 2030. As of September 30, 2026, we had $145.3 million in borrowings outstanding under the Term Loan Facility, $15.0 million in borrowings outstanding under the Malaysia Facility, and $4.0 million in letters of credit outstanding under the 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 borrowing facilities.

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, 2026, we were in compliance with all of these covenants and restrictions.

As of September 30, 2026, the Company had an aggregate of $576.0 million available for future borrowings under the Revolving Borrowing Facilities subject to compliance with financial covenants as to interest coverage and debt leverage, in addition to other debt covenant restrictions, as applicable. During the next 12 months, we believe our capital expenditures will approximate $85 million to $90 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, 2026 and 2025, cash dividends paid totaled $18.3 million and $18.4 million, respectively. On September 8, 2026, 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, 2026. The dividend of $6.1 million was paid on October 13, 2026.

The Board of Directors currently intends to continue paying quarterly dividends. However, the Company's future dividend policy is subject to the Company's compliance with applicable law, and 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 0.2 million shares for an aggregate of $14.3 million at an average price of $63.50 per share during the nine months ended September 30, 2026. As of September 30, 2026, the Company had $108.4 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 that were summarized in "Contractual Obligations" under Part II, Item 7 in our 2025 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, 2025.

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 2025 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 2025 10-K.