Benchmark Electronics (BHE) risk factors, FY2025 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 profitability27% rewritten
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 affected57% rewritten
3. 03These markets are subject to rapid technological change, vigorous competition, product life variability and consequent product obsolescence. When our customers are adversely affected by these factors, we may be similarly affectedNew
4. 04The loss of a major customer would adversely affect us48% rewritten
5. 05Most 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
6. 06Acquisitions of, or consolidations among, customers
7. 07Winning 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
8. 08Our customers may cancel their orders, change production quantities, delay production or change their sourcing strategies80% rewritten
9. 09When global labor and supply disruptions and increased demand for electronics in general have occurred, we coordinated with customers to enhance our procurement of components to solidify our supply chain and inventory of component parts, which caused our inventory balances to increaseNew
10. 10We 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 customers55% rewritten
11. 11Our international operations are subject to certain risks55% rewritten
12. 12High inflation and fluctuations in currency exchange rates, which could affect foreign taxes due, component costs, local payroll, utility and other expensesNew
13. 13Start-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 cancelled30% rewritten
14. 14Our 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 termination32% rewritten
15. 15Our business may be adversely impacted by climate change or natural or manmade disasters
16. 16We bear the risk of uninsured losses
17. 17Energy price increases may negatively impact our results of operations
18. 18Customer relationships with start-up or emerging companies may present more risks than with established companies
19. 19We face risks arising from the restructuring of our operations

Industry Risks

1. 20We 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. 21We 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. 22Government 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. 23Regulatory, legislative or self-regulatory/standard developments regarding privacy and data security matters could adversely affect our ability to conduct our business
3. 24Unanticipated changes in our tax position, the adoption of new tax legislation, potential tax disputes or further developments affecting our deferred tax assets could adversely affect our financial resultsNew
4. 25Many of the countries in which we operate provide tax holidays or other tax incentives intended to attract and retain business. While we have historically benefited from such incentives, our taxes could increase if these incentives are modified, retracted, or not renewed upon their expirationNew
5. 26Our effective tax rate and overall tax position may also be affected by any change in the interpretation and application of the tax laws applicable to U.S.-based multinationals, including any with respect to any new or existing guidance or legislative actions in the United StatesNew
6. 27Any litigation, even where a claim is without merit, could result in substantial costs and diversion of resources
7. 28Compliance or the failure to comply with environmental and climate change regulations could cause us significant expense
8. 29These 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
9. 30If 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. 31If we are unable to maintain our technological and manufacturing process expertise, our business could be adversely affected
2. 32Our operations are subject to cyberattacks that could have a material adverse effect on our business
3. 33We 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 attacks34% rewritten
4. 34Any delay in the upgrade of our information systems could disrupt our operations and cause unanticipated increases in our costs

Financial Risks

1. 35Our 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. 36Make it more difficult for us to satisfy our debt obligations
3. 37We are exposed to intangible asset risk; our goodwill may become impaired26% rewritten
4. 38We may be exposed to interest rate fluctuations

Risks Related to the Ownership of Our Common Shares

1. 39Our quarterly results may vary significantly depending on various factors, many of which are beyond our control
2. 40Local factors and events that may affect our production volume, such as local holidays, pandemics or natural disasters
3. 41Certain 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. 42We are exposed to general economic and market conditions that could have a material adverse impact on our business, operating results and financial condition
5. 43The 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. 44Inadequate 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. 45Our success will continue to depend to a significant extent on our workforce and our key personnel
8. 46Our business or stock price could be negatively affected by the actions of activist shareholders or others