PREFORMED LINE PRODUCTS CO [PLPC] Filings

10-Q 1 plpc-20240930.htm 10-Q plpc-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal quarter ended September 30, 2024

☐ 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 0-31164

Preformed Line Products Company

(Exact name of registrant as specified in its charter)


Ohio						34-0676895
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)


660 Beta Drive Mayfield Village, Ohio						44143
(Address of Principal Executive Office)						(Zip Code)


(440) 461‑5200
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, $2 par value per share	PLPC	NASDAQ

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller Reporting Company

☐

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 ☒

The number of shares outstanding as of October 18, 2024: 4,897,596.

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Page

Part I – Financial Information

Item 1.

Financial Statements

Item 2.

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

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Part II – Other Information

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PREFORMED LINE PRODUCTS COMPANY

CONSOLIDATED BALANCE SHEETS


	September 30, 2024		December 31, 2023
(Thousands of dollars, except share and per share data)	(Unaudited)
ASSETS
Cash, cash equivalents and restricted cash	$	47,498	$	53,607
Accounts receivable, net	110,888		106,892
Inventories, net	142,726		148,814
Prepaid expenses	13,053		8,246
Other current assets	6,479		7,256
TOTAL CURRENT ASSETS	320,644		324,815
Property, plant and equipment, net	201,194		207,892
Operating lease, right-of-use assets	10,742		11,671
Goodwill	28,672		29,497
Other intangible assets, net	10,983		12,981
Deferred income taxes	9,502		7,109
Other assets	10,216		9,186
TOTAL ASSETS	$	591,953	$	603,151
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade accounts payable	$	42,426	$	37,788
Notes payable to banks	8,006		6,968
Operating lease liabilities, current	1,611		1,671
Current portion of long-term debt	2,618		6,486
Accrued compensation and other benefits	29,499		28,018
Accrued expenses and other liabilities	26,229		27,414
Dividends payable	1,257		1,300
Income taxes payable	2,353		1,672
TOTAL CURRENT LIABILITIES	113,999		111,317
Long-term debt, less current portion	24,582		48,796
Operating lease liabilities, noncurrent	6,992		7,892
Deferred income taxes	2,837		3,536
Other noncurrent liabilities	14,556		15,454
SHAREHOLDERS' EQUITY
Common shares – $2 par value per share, 15,000,000 shares authorized, 4,897,450 and 4,908,413 issued and outstanding, at September 30, 2024 and December 31, 2023	13,715		13,607
Common shares issued to rabbi trust, 222,741 and 243,118 shares at September 30, 2024 and December 31, 2023, respectively	(9,557)		(10,183)
Deferred compensation liability	9,557		10,183
Paid-in capital	63,108		60,958
Retained earnings	543,743		520,154
Treasury shares, at cost, 1,959,512 and 1,894,419 shares at September 30, 2024 and December 31, 2023, respectively	(126,503)		(118,249)
Accumulated other comprehensive loss	(65,092)		(60,306)
TOTAL PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS' EQUITY	428,971		416,164
Noncontrolling interest	16		(8)
TOTAL SHAREHOLDERS' EQUITY	428,987		416,156
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	591,953	$	603,151

See notes to consolidated financial statements (unaudited).

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PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED INCOME

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
(Thousands of dollars, except per share data)
Net sales	$	146,973	$	160,438	$	426,597	$	524,076
Cost of products sold	101,195		106,301		292,415		337,328
GROSS PROFIT	45,778		54,137		134,182		186,748
Costs and expenses
Selling	12,318		12,732		36,146		38,133
General and administrative	16,414		17,794		48,272		54,624
Research and engineering	5,545		5,840		16,334		16,793
Other operating expense (income), net	1,109		(2,307)		186		(10)
	35,386		34,059		100,938		109,540
OPERATING INCOME	10,392		20,078		33,244		77,208
Other income (expense)
Interest income	538		478		1,856		1,201
Interest expense	(564)		(998)		(1,840)		(3,198)
Other income, net	64		18		189		165
	38		(502)		205		(1,832)
INCOME BEFORE INCOME TAXES	10,430		19,576		33,449		75,376
Income tax expense	2,734		4,431		6,783		18,348
NET INCOME	$	7,696	$	15,145	$	26,666	$	57,028
Net income attributable to noncontrolling interests	(16)		(15)		(24)		(28)
NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS	$	7,680	$	15,130	$	26,642	$	57,000
AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING:
Basic	4,904		4,906		4,911		4,929
Diluted	4,977		4,990		4,959		5,006
EARNINGS PER SHARE OF COMMON STOCK ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS:
Basic	$	1.57	$	3.08	$	5.42	$	11.56
Diluted	$	1.54	$	3.03	$	5.37	$	11.39

See notes to consolidated financial statements (unaudited).

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PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

(Thousands of dollars)
Net income	$	7,696	$	15,145	$	26,666	$	57,028
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	7,483		(6,934)		(5,053)		(711)
Recognized net actuarial gain	89		89		267		267
Other comprehensive income (loss), net of tax	7,572		(6,845)		(4,786)		(444)
Comprehensive income attributable to noncontrolling interests	(16)		(15)		(24)		(28)
COMPREHENSIVE INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS	$	15,252	$	8,285	$	21,856	$	56,556

See notes to consolidated financial statements (unaudited).

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PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED CASH FLOWS

(UNAUDITED)


	Nine Months Ended September 30,
	2024		2023
(Thousands of dollars)
OPERATING ACTIVITIES
Net income	$	26,666	$	57,028
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	15,982		13,602
Deferred income taxes	(3,012)		(2,837)
Share-based compensation expense	1,949		4,090
Gain on sale of property and equipment	(1,939)		(2,457)
Other, net	999		6,218
Changes in operating assets and liabilities	2,768		12,710
NET CASH PROVIDED BY OPERATING ACTIVITIES	43,413		88,354
INVESTING ACTIVITIES
Capital expenditures	(11,220)		(27,118)
Proceeds from the sale of property and equipment	3,493		2,506
Acquisition of businesses, net of cash	-		(12,089)
NET CASH USED IN INVESTING ACTIVITIES	(7,727)		(36,701)
FINANCING ACTIVITIES
Proceeds (payments) of notes payable to banks	914		(6,792)
Proceeds from long-term debt	94,023		131,716
Payments of long-term debt	(122,075)		(150,965)
Dividends paid	(3,097)		(3,126)
Proceeds from issuance of common shares	160		2,020
Purchase of common shares for treasury	(113)		(728)
Purchase of common shares for treasury from related parties	(8,141)		(17,671)
Other	(2,473)		-
NET CASH USED IN FINANCING ACTIVITIES	(40,802)		(45,546)
Effects of exchange rate changes on cash, cash equivalents and restricted cash	(993)		390
Net decrease in cash, cash equivalents and restricted cash	(6,109)		6,497
Cash, cash equivalents and restricted cash at beginning of year	53,607		37,239
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	47,498	$	43,736

See notes to consolidated financial statements (unaudited).

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PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY


													Accumulated Other Comprehensive Income (Loss)
(In thousands, except share and per share data)	Common Shares		Common Shares Issued to Rabbi Trust		Deferred Compensation Liability		Paid in Capital		Retained Earnings		Treasury Shares		Cumulative Translation Adjustment		Unrecognized Pension Benefit Cost		Total Preformed Line Products Company Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2023	$	13,607	$	(10,183)	$	10,183	$	60,958	$	520,154	$	(118,249)	$	(55,828)	$	(4,478)	$	416,164	$	(8)	$	416,156
Net income									9,596								9,596		7		9,603
Foreign currency translation adjustment													(6,565)				(6,565)				(6,565)
Pension adjustment, net of tax															89		89				89
Total comprehensive income																	3,120		7		3,127
Share-based compensation							383										383				383
Purchase of 42,731 common shares											(5,452)						(5,452)				(5,452)
Issuance of 52,354 common shares	104						67										171				171
Common shares distributed from rabbi trust of 4,477, net			(31)		31												—				—
Cash dividends declared – $0.20 per share									(1,017)								(1,017)				(1,017)
Balance at March 31, 2024	$	13,711	$	(10,214)	$	10,214	$	61,408	$	528,733	$	(123,701)	$	(62,393)	$	(4,389)	$	413,369	$	(1)	$	413,368
Net income									9,366								9,366		1		9,367
Foreign currency translation adjustment													(5,971)				(5,971)				(5,971)
Pension adjustment, net of tax															89		89				89
Total comprehensive income																	3,484		1		3,485
Share-based compensation							934										934				934
Purchase of 4,540 common shares											(568)						(568)				(568)
Issuance of 146 common shares	-						19										19				19
Common shares issued to rabbi trust of 146, net			(19)		19												—				—
Cash dividends declared – $0.20 per share									(1,020)								(1,020)				(1,020)
Balance at June 30, 2024	$	13,711	$	(10,233)	$	10,233	$	62,361	$	537,079	$	(124,269)	$	(68,364)	$	(4,300)	$	416,218	$	—	$	416,218
Net income									7,680								7,680		16		7,696
Foreign currency translation adjustment													7,483				7,483				7,483
Pension adjustment, net of tax															89		89				89
Total comprehensive income																	15,252		16		15,268
Share-based compensation							632										632				632
Purchase of 17,822 common shares											(2,234)						(2,234)				(2,234)
Issuance of 1,776 common shares	4						115										119				119
Common shares distributed from rabbi trust of 16,046, net			676		(676)												—				—
Cash dividends declared – $0.20 per share									(1,016)								(1,016)				(1,016)
Balance at September 30, 2024	$	13,715	$	(9,557)	$	9,557	$	63,108	$	543,743	$	(126,503)	$	(60,881)	$	(4,211)	$	428,971	$	16	$	428,987

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PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY


													Accumulated Other Comprehensive Income (Loss)
(In thousands, except share and per share data)	Common Shares		Common Shares Issued to Rabbi Trust		Deferred Compensation Liability		Paid in Capital		Retained Earnings		Treasury Shares		Cumulative Translation Adjustment		Unrecognized Pension Benefit Cost		Total Preformed Line Products Company Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2022	$	13,351	$	(10,261)	$	10,261	$	53,646	$	460,930	$	(99,303)	$	(65,495)	$	(4,492)	$	358,637	$	(13)	$	358,624
Net income									21,398								21,398		21		21,419
Foreign currency translation adjustment													3,922				3,922				3,922
Pension adjustment, net of tax															89		89				89
Total comprehensive income																	25,409		21		25,430
Share-based compensation							1,066										1,066				1,066
Purchase of 41,573 common shares											(3,740)						(3,740)				(3,740)
Issuance of 72,477 common shares	140						244										384				384
Common shares distributed from rabbi trust of 3,541, net			185		(185)												—				—
Cash dividends declared – $0.20 per share									(1,050)								(1,050)				(1,050)
Balance at March 31, 2023	$	13,491	$	(10,076)	$	10,076	$	54,956	$	481,278	$	(103,043)	$	(61,573)	$	(4,403)	$	380,706	$	8	$	380,714
Net income									20,472								20,472		(8)		20,464
Foreign currency translation adjustment													2,301				2,301				2,301
Pension adjustment, net of tax															89		89				89
Total comprehensive income																	22,862		(8)		22,854
Share-based compensation							1,725										1,725				1,725
Purchase of 40,078 common shares											(6,100)						(6,100)				(6,100)
Issuance of 9,655 common shares	18						262										280				280
Common shares distributed from rabbi trust of 502, net			37		(37)												—				—
Cash dividends declared – $0.20 per share									(1,024)								(1,024)				(1,024)
Balance at June 30, 2023	$	13,509	$	(10,039)	$	10,039	$	56,943	$	500,726	$	(109,143)	$	(59,272)	$	(4,314)	$	398,449	$	-	$	398,449
Net income									15,130								15,130		15		15,145
Foreign currency translation adjustment													(6,934)				(6,934)				(6,934)
Pension adjustment, net of tax															89		89				89
Total comprehensive income																	8,285		15		8,300
Share-based compensation							1,299										1,299				1,299
Purchase of 50,717 common shares											(8,559)						(8,559)				(8,559)
Issuance of 26,285 common shares	50						1,306										1,356				1,356
Common shares distributed from rabbi trust of 185, net			(30)		30												—				—
Cash dividends declared – $0.20 per share									(1,018)								(1,018)				(1,018)
Balance at September 30, 2023	$	13,559	$	(10,069)	$	10,069	$	59,548	$	514,838	$	(117,702)	$	(66,206)	$	(4,225)	$	399,813	$	15	$	399,828

See notes to consolidated financial statements (unaudited).

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PREFORMED LINE PRODUCTS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Tables in thousands of dollars, except share and per share data, unless specifically noted)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements of Preformed Line Products Company and subsidiaries (the “Company” or “PLPC”) have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. This Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Form 10-K for the year ended December 31, 2023 filed on March 8, 2024 with the Securities and Exchange Commission. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from these estimates. In the opinion of management, these consolidated financial statements contain all estimates and adjustments, consisting of normal recurring accruals, required to fairly present the financial position, results of operations, and cash flows for the interim periods. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full-year ending December 31, 2024.

Noncontrolling interests are presented in the Company’s consolidated financial statements as if parent company investors (controlling interests) and other minority investors (noncontrolling interests) in partially-owned subsidiaries have similar economic interests in a single entity. As a result, investments in noncontrolling interests are reported as equity in the Company’s consolidated financial statements. Additionally, the Company’s consolidated financial statements include 100% of a controlled subsidiary’s earnings, rather than only its share. Transactions between the parent company and noncontrolling interests are reported in equity as transactions between stockholders, provided that these transactions do not create a change in control.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recently Adopted or Issued Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU enhances reportable segment disclosures on both an annual and interim basis primarily in regards to the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within the reported measure(s) of segment profit or loss. In addition, the ASU requires disclosure, by segment, of other items included in the reported measure(s) of segment profit or loss, including qualitative information describing the composition, nature and type of each item. The ASU also expands disclosure requirements related to the CODM, including how the reported measure(s) of segment profit or loss are used to assess segment performance and allocate resources, the method used to allocate overhead for significant segment expenses and others. Lastly, all current required annual segment reporting disclosures under Topic 280 are now effective for interim periods. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this ASU and expects the standard will only impact its segment disclosures with no material impact to the consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU enhances income tax disclosures by providing information to better assess how an entity's operations, related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This ASU requires additional disclosures to the annual effective tax rate reconciliation including specific categories and further disaggregated reconciling items that meet the quantitative threshold. Additionally, the ASU requires disclosures relating to income tax expense and payments made to federal, state, local and foreign jurisdictions. This ASU is effective for fiscal years and interim periods beginning after December 15, 2024. The Company is evaluating the impact of adopting this ASU and expects the standard will only impact its income tax disclosures with no material impact to the consolidated financial statements.

NOTE 2 – REVENUE

Revenue Recognition

Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the

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goods or services and is primarily based on shipping terms. Sales are measured as the amount of consideration the Company expects to receive in exchange for transferring products.

Disaggregated Revenue

The Company’s revenues by segment and product type are as follows:


	Three Months Ended September 30, 2024
Product Type	PLP-USA	The Americas	EMEA	Asia-Pacific	Consolidated
Energy	61%	79%	71%	78%	70%
Communications	32%	18%	24%	3%	23%
Special Industries	7%	3%	5%	19%	7%
Total	100%	100%	100%	100%	100%

	Three Months Ended September 30, 2023
Product Type	PLP-USA	The Americas	EMEA	Asia-Pacific	Consolidated
Energy	68%	80%	60%	75%	69%
Communications	28%	18%	35%	3%	23%
Special Industries	4%	2%	5%	22%	8%
Total	100%	100%	100%	100%	100%

	Nine Months Ended September 30, 2024
Product Type	PLP-USA	The Americas	EMEA	Asia-Pacific	Consolidated
Energy	64%	78%	71%	77%	71%
Communications	30%	20%	24%	3%	22%
Special Industries	6%	2%	5%	20%	7%
Total	100%	100%	100%	100%	100%

	Nine Months Ended September 30, 2023
Product Type	PLP-USA	The Americas	EMEA	Asia-Pacific	Consolidated
Energy	62%	73%	44%	72%	61%
Communications	34%	25%	52%	3%	32%
Special Industries	4%	2%	4%	25%	7%
Total	100%	100%	100%	100%	100%

Credit Losses for Receivables

The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required payments. The Company uses a current expected credit loss model in order to immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments, mainly trade receivables. Additionally, the allowance is based upon identified delinquent accounts, customer payment patterns and other analyses of historical data trends. Receivable balances are written off against an allowance for credit losses after a final determination has been made. The change in the allowance for credit losses includes expense and net write-offs, which are identified in the following table:


	Nine Months Ended September 30,
	2024		2023
Allowance for credit losses, beginning of period	$	8,260	$	5,021
(Reductions) additions charged to costs and expenses	(1,165)		1,349
Write-offs	(209)		(21)
Foreign exchange and other	(203)		(17)
Allowance for credit losses, end of period	$	6,683	$	6,332

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NOTE 3 – INVENTORIES, NET

Inventories, net

Inventory is carried at lower of cost or net realizable value. The components of inventory are as follows:


	September 30, 2024		December 31, 2023
Raw materials	$	90,653	$	98,708
Work-in-process	13,927		14,397
Finished products	49,335		46,250
Inventories, net of excess and obsolete inventory reserve	153,915		159,355
Excess of current cost over LIFO cost	(11,189)		(10,541)
Inventories at LIFO cost	$	142,726	$	148,814

Costs for inventories of certain material, mainly in the U.S., are determined using the Last-In First-Out ("LIFO") method and totaled approximately $48.8 million at September 30, 2024 and $60.1 million at December 31, 2023. An actual valuation of inventories under the LIFO method can be made only at the end of the year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs. Because these estimates are subject to change and may be different than the actual inventory levels and costs at the end of the year, interim results are subject to the final year-end LIFO inventory valuation. During the three-month periods ended September 30, 2024 and 2023, the net change in LIFO inventories resulted in expense of $0.2 million and $0.6 million, respectively, to Cost of products sold. During the nine-month periods ended September 30, 2024 and 2023, the net change in LIFO inventories resulted in expense of $0.6 million and of $1.7 million, respectively, to Cost of products sold. The Company’s reserves for slow moving and obsolete inventory were $18.6 million at September 30, 2024 and $17.6 million at December 31, 2023.

NOTE 4 – PROPERTY AND EQUIPMENT, NET

Major classes of property, plant and equipment are stated at cost and were as follows:


	September 30, 2024		December 31, 2023
Land and improvements	$	21,267	$	21,374
Buildings and improvements	127,834		129,369
Machinery, equipment and aircraft	253,850		238,868
Construction in progress	14,721		22,619
Property, plant and equipment, gross	417,672		412,230
Less accumulated depreciation	(216,478)		(204,338)
Property, plant and equipment, net	$	201,194	$	207,892

NOTE 5 – CONTINGENT LIABILITIES

The Company can be party to a variety of pending legal proceedings and claims arising in the normal course of business, including, but not limited to, litigation relating to employment, workers’ compensation, product liability, environmental and intellectual property. The Company has liability insurance to cover many of these claims.

Although the outcomes of these matters are not predictable with certainty, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the event the Company determines that a loss is not probable, but is reasonably possible, and the likelihood to develop what the Company believes to be a reasonable range of potential loss exists, the Company will include disclosure related to such matters. To the extent that there is a reasonable possibility the losses could exceed amounts already accrued, the Company will adjust the accrual in the period in which the determination is made, disclose an estimate of the additional loss or range of loss and if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.

In November 2016, the Company and its subsidiaries Helix Uniformed Ltd. (“Helix”) and Preformed Line Products (Canada) Limited (“PLPC Canada”), were each named, jointly and severally, with each of SNC-Lavalin ATP, Inc. (“SNC ATP”), HD Supply Canada Inc., by its trade names HD Supply Power Solutions and HD Supply Utilities (“HD Supply”), and Anixter Power Solutions Canada Inc. (the corporate successor to HD Supply, “Anixter”) and, together with the Company, PLPC Canada, Helix, SNC ATP and HD

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Supply (the “Defendants”), in a complaint filed by Altalink, L.P. (the “Plaintiff”) in the Court of Queen’s Bench of Alberta in Alberta, Canada in November 2016 (the “Complaint”).

The Complaint stated that the Plaintiff engaged SNC ATP to design, engineer, procure and construct numerous power distribution and transmission facilities in Alberta (the “Projects”) and that through SNC ATP and HD Supply (now Anixter), spacer dampers manufactured by Helix were procured and installed in the Projects. The Complaint alleged that the spacer dampers have and may continue to become loose, open and detach from the conductors, resulting in damage and potential injury and a failure to perform the intended function of providing spacing and damping to the Projects. The Plaintiff was seeking damages jointly and severally from the Defendants representing the costs of monitoring and replacing the spacer dampers and remediating property damage, due to alleged defects in the design and construction of, and supply of materials for, the Projects by SNC ATP and HD Supply/Anixter and in the design of the spacer dampers by Helix.

On September 26, 2023, the Defendants and the Plaintiff entered into a settlement agreement which dismissed the action against all Defendants with prejudice. Net of insurance, the total settlement amount paid by the Company in the fourth quarter of 2023 was $4.3 million Canadian dollars ($3.2 million US dollars). The settlement reflects the Company’s desire to eliminate the burden, expense, distraction and further uncertainties of litigation, and the settlement does not constitute an admission of liability, wrongdoing or fault by the Company and its subsidiaries.

The Company is not a party to any pending legal proceedings that the Company believes would, individually or in the aggregate, have a material adverse effect on its financial condition, results of operations or cash flow. As of September 30, 2024 and December 31, 2023, there were zero reserves for known global legal matters.

NOTE 6 – PENSION PLANS

The Company uses a December 31 measurement date for the Preformed Line Products Company Employees’ Retirement Plan (the “U.S. Plan”). Net periodic pension expense for the U.S. Plan for the three and nine month periods ended September 30, 2024 and 2023, respectively, follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Interest cost	$	387	$	392	$	1,162	$	1,178
Expected return on plan assets	(485)		(501)		(1,456)		(1,502)
Recognized net actuarial loss	117		117		351		349
Net periodic pension expense	$	19	$	8	$	57	$	25

There were no contributions to the U.S. Plan during the nine months ended September 30, 2024 and 2023. The Company is evaluating whether to make additional contributions to the U.S. Plan during 2024. In August 2023, the Board of Directors of the Company approved a resolution to terminate the U.S. Plan and certain administrative actions have been undertaken to proceed with the termination. Components of pension expense are included in Other income, net in the Consolidated Statements of Income.

NOTE 7 – ACCUMULATED OTHER COMPREHENSIVE INCOME (“AOCI”)

The following tables set forth the total changes in AOCI by component, net of tax:


	Three Months Ended September 30, 2024						Three Months Ended September 30, 2023
	Unrecognized Benefit Cost		Cumulative Translation Adjustment		Total		Unrecognized Benefit Cost		Cumulative Translation Adjustment		Total
Balance at June 30	$	(4,300)	$	(68,364)	$	(72,664)	$	(4,314)	$	(59,272)	$	(63,586)
Other comprehensive income before reclassifications:
Foreign currency translation adjustment	—		7,483		7,483		—		(6,934)		(6,934)

Amounts reclassified from AOCI:
Amortization of defined benefit pension actuarial gain (a)	89		—		89		89		—		89
Net current period other comprehensive income (loss)	89		7,483		7,572		89		(6,934)		(6,845)
Balance at September 30	$	(4,211)	$	(60,881)	$	(65,092)	$	(4,225)	$	(66,206)	$	(70,431)

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	Nine Months Ended September 30, 2024						Nine Months Ended September 30, 2023
	Unrecognized Benefit Cost		Cumulative Translation Adjustment		Total		Unrecognized Benefit Cost		Cumulative Translation Adjustment		Total
Balance at January 1	$	(4,478)	$	(55,828)	$	(60,306)	$	(4,492)	$	(65,495)	$	(69,987)
Other comprehensive income before reclassifications:
Foreign currency translation adjustment	—		(5,053)		(5,053)		—		(711)		(711)

Amounts reclassified from AOCI:
Amortization of defined benefit pension actuarial gain (a)	267		—		267		267		—		267
Net current period other comprehensive income (loss)	267		(5,053)		(4,786)		267		(711)		(444)
Balance at September 30	$	(4,211)	$	(60,881)	$	(65,092)	$	(4,225)	$	(66,206)	$	(70,431)

(a)This AOCI component is included in the computation of net periodic pension expense as noted in Note 6 – Pension Plans.

NOTE 8 – DEBT AND CREDIT ARRANGEMENTS

The Company maintains a credit facility (the "Facility") with a capacity of $90.0 million that expires March 2, 2026. The interest rate for U.S. borrowing is defined as the Secured Overnight Financing Rate (“SOFR”) plus 1.125% unless the Company’s funded debt to Earnings before Interest, Taxes and Depreciation ratio exceeds 2.25 to 1, at which point the SOFR spread becomes 1.500%. At September 30, 2024, the Company had utilized $12.7 million with $77.2 million available on the Facility. There were no long-term outstanding letters of credit on the Facility as of September 30, 2024. Our bank debt to equity percentage was 8.2%. The Facility contains, among other provisions, requirements for maintaining levels of net worth and profitability. At September 30, 2024, the Company was in compliance with these covenants.

On January 19, 2021, the Company received funding for a term loan from PNC Equipment Finance, LLC in the principal amount of $20.5 million for the full amount of the purchase price for a new corporate aircraft. The term of the loan is 120 months at a fixed interest rate of 2.744%. The loan is payable in 119 equal monthly installments, which commenced on March 1, 2021 with a final payment of any outstanding principal and accrued interest due and payable on the final monthly payment date. Of the $13.2 million outstanding on this debt facility at September 30, 2024, $2.1 million was classified as current. The loan is secured by the aircraft.

The Company has other borrowing facilities at certain of its foreign subsidiaries, which consist of overdraft lines, working capital credit lines, and facilities for the issuance of letters of credit and short-term borrowing needs. At September 30, 2024, and December 31, 2023, $9.3 million and $13.3 million were outstanding, of which $8.6 million and $11.4 million were classified as current, respectively. These facilities support commitments made in the ordinary course of business.

The Company's Asia-Pacific segment had $0.1 million and $0.2 million in restricted cash used to secure bank guarantees at September 30, 2024 and December 31, 2023, respectively. The restricted cash is shown on the Company’s Consolidated Balance Sheets in Cash, cash equivalents and restricted cash.

NOTE 9 – INCOME TAXES

For the three-month period ended September 30, 2024 and 2023, the Company’s effective tax rate was 26% and 23%, respectively. The higher effective tax rate for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to limitations on the deductibility of compensation and a lower excess tax benefit on share-based compensation which was partially offset by the favorable impact from the mix of earned income in certain foreign jurisdictions.

For the nine-month period ended September 30, 2024 and 2023, the Company’s effective tax rate was 20% and 24%, respectively. The lower effective tax rate for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to the favorable impact from discrete benefits recorded as a result of amending prior year federal tax returns and an increase in excess tax benefits on share-based compensation in relation to overall lower pre-tax book income.

The Company provides valuation allowances against deferred tax assets when it is more likely than not that some portion or all of its deferred tax assets will not be realized. During the period ended September 30, 2024, the Company did not record any additional valuation allowances in various jurisdictions on its deferred tax assets.

For the nine-month periods ending September 30, 2024 and 2023, the Company did not record any new uncertain tax positions.

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NOTE 10 – COMPUTATION OF EARNINGS PER SHARE

Basic earnings per share were computed by dividing net income by the weighted-average number of common shares outstanding for each respective period. Diluted earnings per share were calculated by dividing net income by the weighted-average of all potentially dilutive common shares that were outstanding during the periods presented.

The calculation of basic and diluted earnings per share for the three and nine months ended September 30, was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator
Net income	$	7,680	$	15,130	$	26,642	$	57,000

Denominator
Determination of shares (in thousands)
Weighted-average common shares outstanding	4,904		4,906		4,911		4,929
Dilutive effect – share-based awards	73		84		48		77
Diluted weighted-average common shares outstanding	4,977		4,990		4,959		5,006

Earnings per common share
Basic	$	1.57	$	3.08	$	5.42	$	11.56
Diluted	$	1.54	$	3.03	$	5.37	$	11.39

For the three and nine months ended September 30, 2024 and 2023, there were zero share-based awards excluded from the calculation of diluted earnings per share as there was no anti-dilutive effect .

NOTE 11 – GOODWILL AND OTHER INTANGIBLES

The Company’s finite and indefinite-lived intangible assets consist of the following:


	September 30, 2024				December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Finite-lived intangible assets
Patents	$	4,806	$	(4,806)	$	4,806	$	(4,806)
Land use rights	679		(129)		1,109		(307)
Trademark	1,959		(1,699)		1,988		(1,682)
Technology	7,081		(4,095)		7,104		(3,738)
Customer relationships	18,627		(11,440)		19,240		(10,733)
	$	33,152	$	(22,169)	$	34,247	$	(21,266)
Indefinite-lived intangible assets
Goodwill	$	28,672			$	29,497

The Company’s measurement date for its annual impairment test for goodwill is October 1st of each year. The Company performs additional interim impairment assessments as circumstances warrant. There were no indicators of impairment noted for the period ending September 30, 2024.

The Company may use both quantitative and qualitative approaches when testing goodwill for impairment. For selected reporting units where the qualitative approach is utilized, a qualitative evaluation of events and circumstances impacting the reporting unit is performed to determine if it is more likely than not that the fair value of the reporting unit exceeds its carrying amount. If that determination is made, no further evaluation is necessary. Otherwise, the Company performs a quantitative impairment test on the reporting unit.

For the quantitative approach, the Company uses a combination of the income approach, which uses a discounted cash flow methodology, and the market approach, which uses comparable market multiples in computing fair value by reporting unit. The Company then compares the fair value of the reporting unit with its carrying value to assess if goodwill has been impaired. The fair value estimates are subjective and sensitive to significant assumptions, such as revenue growth rates, operating margins, the weighted

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average cost of capital, and estimated market multiples, of which are affected by expectations of future market or economic conditions. The Company believes that the methodologies, significant assumptions, and weightings used are reasonable and result in appropriate fair values of the reporting units.

The Company’s only intangible asset with an indefinite life is goodwill. The Company’s goodwill is not deductible for tax purposes. Changes in the carrying amount of goodwill by reporting unit are shown in the following table:


	PLP-USA		The Americas		EMEA		Asia-Pacific		Total

Balance at January 1, 2024	$	3,078	$	10,582	$	15,837	$	—	$	29,497
Currency translation	—		(826)		1		—		(825)
Balance at September 30, 2024	$	3,078	$	9,756	$	15,838	$	—	$	28,672

NOTE 12 – FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. The Company measures and records certain assets and liabilities at fair value. A fair value hierarchy is used for those assets and liabilities measured at fair value that distinguishes between assumptions based on market data (observable inputs), and the Company’s assumptions (unobservable inputs). The hierarchy consists of the following three levels: (Level 1 Inputs) quoted market prices in active markets for identical assets or liabilities; (Level 2 Inputs) observable market-based inputs or unobservable inputs that are corroborated by market data; and (Level 3 Inputs) unobservable inputs that are not corroborated by market data.

The following table summarizes the Company’s assets and liabilities, recorded and measured at fair value, in the Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023:


Description	Balance as of September 30, 2024		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Foreign currency forward contracts	$	95	$	—	$	95	$	—
Total assets	$	95	$	—	$	95	$	—

Liabilities:
Foreign currency forward contracts	$	4	$	—	$	4	$	—
Supplemental profit sharing plan	9,087		—		9,087		—
Total liabilities	$	9,091	$	—	$	9,091	$	—


Description	Balance as of December 31, 2023		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Foreign currency forward contracts	$	158	$	—	$	158	$	—
Total assets	$	158	$	—	$	158	$	—

Liabilities:
Foreign currency forward contracts	$	—	$	—	$	—	$	—
Supplemental profit sharing plan	8,222		—		8,222		—
Total liabilities	$	8,222	$	—	$	8,222	$	—

The Company operates internationally and enters into intercompany transactions denominated in foreign currencies. Consequently, the Company is subject to market risk arising from exchange rate movements between the dates foreign currency transactions occur and

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the dates they are settled. The Company currently uses foreign currency forward contracts to reduce the risk related to some of these transactions. These contracts usually have maturities of 90 days or less and generally require an exchange of foreign currencies for U.S. dollars at maturity at rates stated in the contracts. These contracts are not designated as hedging instruments under U.S. GAAP. Accordingly, the changes in the fair value of the foreign currency forward contracts are recognized in each accounting period in Other operating expense, net on the Consolidated Statements of Income together with the transaction gain or loss from the related balance sheet position. For the three and nine months ended September 30, 2024, the Company recognized net losses of zero and $0.2 million, respectively, on foreign currency forward contracts. For the three and nine months ended September 30, 2023, the Company recognized net losses of $0.5 million and $0.9 million, respectively, on foreign currency forward contracts.

The Company has a non-qualified supplemental profit sharing plan for its executives (the "Supplemental Profit Sharing Plan"). The liability for the unfunded Supplemental Profit Sharing Plan was $9.1 million at September 30, 2024 and $8.2 million at December 31, 2023. These amounts are recorded within Other noncurrent liabilities on the Company’s Consolidated Balance Sheets. The Supplemental Profit Sharing Plan allows participants the ability to hypothetically invest their proportionate award into various investment options, which primarily includes mutual funds. The Company credits earnings, gains and losses to the participants’ deferred compensation account balances based on the investments selected by the participants. The Company measures the fair value of the Supplemental Profit Sharing Plan liability using the market values of the participants’ underlying investment accounts.

The carrying value of the Company’s current financial instruments, which include cash, cash equivalents and restricted cash, accounts receivable, accounts payable and short-term debt, approximates fair value because of the short-term maturity of these instruments.

At September 30, 2024 and December 31, 2023, the fair value of the Company’s long-term debt was estimated using discounted cash flows analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements that are considered to be Level 2 inputs. Based on the analysis performed, the fair value and the carrying value of the Company’s long-term debt are as follows:


	September 30, 2024				December 31, 2023
	Fair Value		Carrying Value		Fair Value		Carrying Value
Long-term debt and related current maturities	$	23,984	$	27,200	$	51,786	$	55,282

NOTE 13 – SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated by the CODM, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance.

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The following tables present a summary of the Company’s reportable operating segments for the three and nine months ended September 30, 2024 and 2023. Financial results for the PLP-USA segment include the elimination of all segments’ intercompany profit in inventory.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net sales
PLP-USA	$	65,554	$	81,727	$	196,191	$	275,882
The Americas	19,852		22,790