Benchmark Electronics (BHE) risk factors, FY2024 10-K

Operational Risks

1. 01Shortages or price increases of components specified by our customers have in the past delayed, and could continue to delay, shipments, which may adversely affect our profitability
2. 02We are dependent on the success of our customers and the markets in which they operate. When our customers or the markets in which they operate experience declines or grow at a significantly slower pace than anticipated, we may be adversely affected
3. 03The loss of a major customer would adversely affect us
4. 04Most of our customers do not commit to long-term production schedules, which makes it difficult for us to schedule production and achieve maximum efficiency of our manufacturing capacity
5. 05acquisitions of, or consolidations among, customers
6. 06Winning business is subject to lengthy, competitive bid selection processes that often require us to incur significant expense, from which we may ultimately generate no revenue
7. 07Our customers may cancel their orders, change production quantities, delay production or change their sourcing strategies
8. 08We may encounter significant delays or defaults in payments owed to us by customers for products we have manufactured or components we have produced that are unique to particular customers
9. 09Our international operations are subject to certain risks
10. 10inability to utilize net operating losses incurred by our foreign operations which would increase our overall effective tax rate
11. 11Start-up costs and inefficiencies related to new or transferred programs can adversely affect our operating results and such costs may not be recoverable if the new programs or transferred programs are cancelled
12. 12Our financial results depend, in part, on our ability to perform on our U.S. government contracts, which are subject to uncertain levels of funding, timing and termination
13. 13Our business may be adversely impacted by climate change or natural or manmade disasters
14. 14We bear the risk of uninsured losses
15. 15Energy price increases may negatively impact our results of operations
16. 16Introducing programs requiring implementation of new competencies, including new process technology within our mechanical operations, could affect our operations and financial results
17. 17Customer relationships with start-up or emerging companies may present more risks than with established companies
18. 18We face risks arising from the restructuring of our operations

Industry Risks

1. 19We operate in a highly competitive industry; if we are not able to compete effectively in the EMS industry, our business could be adversely affected
2. 20We may be affected by consolidation in the electronics industry, which could create increased pricing and competitive pressures on our business

Regulatory, Compliance and Litigation Risks

1. 21Government contracts are subject to significant regulation, including rules related to bidding, billing, kickbacks and false claims, and any non-compliance could subject us to fines and penalties or debarment
2. 22Regulatory, legislative or self-regulatory/standard developments regarding privacy and data security matters could adversely affect our ability to conduct our business
3. 23Unanticipated changes in our tax position, the adoption of new tax legislation or exposure to additional tax liabilities could adversely affect our financial results
4. 24Based on current and future tax policy in Washington D.C., our effective tax rates and overall cash taxes may change in the future and could have an impact on our financial results
5. 25Any litigation, even where a claim is without merit, could result in substantial costs and diversion of resources
6. 26Compliance or the failure to comply with environmental and climate change regulations could cause us significant expense
7. 27These directives affect the worldwide electronics and electronics components industries as a whole. If we or our customers fail to comply with such laws and regulations, we could incur liabilities and fines and our operations could be suspended
8. 28If our manufacturing processes and services do not comply with applicable regulatory requirements, or if we manufacture products containing design or manufacturing defects, demand for our services may decline and we may be subject to liability claims

Technology Risks

1. 29If we are unable to maintain our technological and manufacturing process expertise, our business could be adversely affected
2. 30Our operations are subject to cyberattacks that could have a material adverse effect on our business
3. 31We monitor our systems for cyber threats and have processes in place to detect, mitigate and remediate vulnerabilities. Nevertheless, we have experienced cyberattacks and attempted breaches, including phishing emails and other targeted attacks
4. 32Any delay in the upgrade of our information systems could disrupt our operations and cause unanticipated increases in our costs

Financial Risks

1. 33Our level of indebtedness may limit our flexibility in operating our business and reacting to changes in our business or industry, or prevent us from making payments on our debt or obtaining additional financing
2. 34make it more difficult for us to satisfy our debt obligations
3. 35We are exposed to intangible asset risk; our goodwill may become impaired
4. 36We may be exposed to interest rate fluctuations

Risks Related to the Ownership of Our Common Shares

1. 37Our quarterly results may vary significantly depending on various factors, many of which are beyond our control
2. 38local factors and events that may affect our production volume, such as local holidays, pandemics or natural disasters
3. 39Certain provisions of our governing documents and the Texas Business Organizations Code may delay, inhibit or prevent someone from gaining control of the Company through a tender offer, business combination, proxy contest or some other method, even if shareholders might consider such a development beneficial
4. 40We are exposed to general economic and market conditions that could have a material adverse impact on our business, operating results and financial condition
5. 41The acquisition, integration and operation of acquired businesses may disrupt our business and create additional expenses, and we may not achieve the anticipated benefits of the acquisitions
6. 42inadequate internal control over financial reporting and our ability to bring such controls into compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner
7. 43Our success will continue to depend to a significant extent on our workforce and our key personnel
8. 44Our business or stock price could be negatively affected by the actions of activist shareholders or others