Preformed Line Products Earnings 2020-09-30

Preformed Line Products Earnings 2020-09-30

PLPC 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

plpc-10q_20200930.htm

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 quarterly period ended September 30, 2020

☐	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)

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.

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 common shares outstanding as of October 26, 2020: 4,914,543.

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

Title of each class		Trading Symbol		Name of exchange on which registered
Common stock, par value $2.00 per share		PLPC		NASDAQ

Table of Contents

		Page

Part I - Financial Information

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	34

Part II - Other Information

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	36

SIGNATURES		37

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PREFORMED LINE PRODUCTS COMPANY

CONSOLIDATED BALANCE SHEETS

	September 30, 2020			December 31, 2019
(Thousands of dollars, except share and per share data)	(Unaudited)
ASSETS
Cash and cash equivalents	$	41,248		$	38,929
Accounts receivable, less allowances of $3,536 ($3,849 in 2019)		96,712			83,517
Inventories - net		94,315			95,718
Prepaids		8,336			6,921
Prepaid taxes		2,794			2,601
Other current assets		2,517			4,289
TOTAL CURRENT ASSETS		245,922			231,975
Property, plant and equipment - net		134,440			124,018
Operating lease, right-of-use assets		12,762			12,453
Intangibles - net		13,926			15,116
Goodwill		27,689			27,840
Deferred income taxes		6,515			7,564
Other assets		10,787			14,605
TOTAL ASSETS	$	452,041		$	433,571
LIABILITIES AND SHAREHOLDERS’ EQUITY
Trade accounts payable	$	30,299		$	28,282
Notes payable to banks		15,582			8,696
Operating lease liabilities, current		2,214			2,062
Current portion of long-term debt		7,198			3,354
Accrued compensation and amounts withheld from employees		17,764			11,817
Accrued expenses and other liabilities		14,931			16,718
Accrued profit-sharing and other benefits		6,484			7,213
Dividends payable		1,256			1,173
Income taxes payable		2,467			1,758
TOTAL CURRENT LIABILITIES		98,195			81,073
Long-term debt, less current portion		45,220			53,722
Unfunded pension obligation		4,384			5,278
Operating lease liabilities, non-current		8,528			8,246
Deferred income taxes		2,890			3,116
Other noncurrent liabilities		13,246			13,568
SHAREHOLDERS’ EQUITY
Shareholders’ equity:
Common shares - $2 par value per share, 15,000,000 shares authorized, 4,914,543 and 4,992,979 issued and outstanding, at September 30, 2020 and December 31, 2019, respectively		13,013			12,848
Common shares issued to rabbi trust, 265,508 and 267,641 shares at September 30, 2020 and December 31, 2019, respectively		(10,940	)		(10,981	)
Deferred compensation liability		10,940			10,981
Paid-in capital		42,047			38,854
Retained earnings		377,384			353,292
Treasury shares, at cost, 1,592,027 and 1,431,235 shares at September 30, 2020 and December 31, 2019, respectively		(87,320	)		(79,106	)
Accumulated other comprehensive loss		(65,549	)		(57,353	)
TOTAL PREFORMED LINE PRODUCTS, COMPANY SHAREHOLDERS’ EQUITY		279,575			268,535
Noncontrolling interest		3			33
TOTAL SHAREHOLDERS’ EQUITY		279,578			268,568
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	452,041		$	433,571

See notes to consolidated financial statements (unaudited).

PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED INCOME

(UNAUDITED)

	Three Months Ended September 30						Nine Months Ended September 30
	2020			2019			2020			2019
(Amounts in thousands of dollars, except earnings per share data)
Net sales	$	127,463		$	119,217		$	347,944		$	331,212
Cost of products sold		82,549			79,874			230,554			226,798
GROSS PROFIT		44,914			39,343			117,390			104,414
Costs and expenses
Selling		8,884			9,410			26,228			26,868
General and administrative		14,037			13,275			39,903			38,486
Research and engineering		4,541			4,240			12,950			12,809
Other operating expense - net		562			775			1,969			1,447
		28,024			27,700			81,050			79,610
OPERATING INCOME		16,890			11,643			36,340			24,804
Other income (expense)
Interest income		36			211			226			613
Interest expense		(504	)		(735	)		(1,932	)		(1,688	)
Other income (expense) - net		998			138			1,775			306
		530			(386	)		69			(769	)
INCOME BEFORE INCOME TAXES		17,420			11,257			36,409			24,035
Income tax expense		4,458			3,213			9,306			6,302
NET INCOME	$	12,962		$	8,044		$	27,103		$	17,733
Net income (loss) attributable to noncontrolling interests		(8	)		(93	)		30			(54	)
NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS	$	12,954		$	7,951		$	27,133		$	17,679
AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING:
Basic		4,917			5,024			4,963			5,039
Diluted		5,011			5,119			4,998			5,077
EARNINGS PER SHARE OF COMMON STOCK ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS:
Basic	$	2.63		$	1.58		$	5.47		$	3.51
Diluted	$	2.59		$	1.55		$	5.43		$	3.48

See notes to consolidated financial statements (unaudited).

PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	Three Months Ended September 30						Nine Months Ended September 30
	2020			2019			2020			2019
(Thousands of dollars)
Net income	$	12,962		$	8,044		$	27,103		$	17,733
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment		2,949			(5,897	)		(8,460	)		(3,444	)
Recognized net actuarial gain (net of tax provision of $23 and $32 for the three months ended September 30, 2020 and 2019, respectively). Recognized net actuarial gain (net of tax provision of $84 and $95 for the nine months ended September 30, 2020 and 2019, respectively).		75			108			264			294
Other comprehensive (income) loss, net of tax		3,024			(5,789	)		(8,196	)		(3,150	)
Comprehensive (income) loss attributable to noncontrolling interests		(8	)		(93	)		30			(54	)
Comprehensive income attributable to Preformed Line Products Company shareholders	$	15,978		$	2,162		$	18,937		$	14,529

See notes to consolidated financial statements (unaudited).

PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30
	2020			2019
(Thousands of dollars)
OPERATING ACTIVITIES
Net income	$	27,103		$	17,733
Adjustments to reconcile net income to net cash provided by (used in) operations:
Depreciation and amortization		10,080			9,844
Provision for accounts receivable allowances		1,374			1,327
Provision for inventory reserves		1,718			1,288
Deferred income taxes		1,064			(1,503	)
Share-based compensation expense		3,046			3,344
Gain (loss) on sale of property and equipment		15			(47	)
Other - net		(9	)		(35	)
Changes in operating assets and liabilities
Accounts receivable		(17,620	)		(12,865	)
Inventories		(27	)		(6,891	)
Trade accounts payable and accrued liabilities		9,555			11,591
Income taxes - net		864			1,880
Contributions to company pension plan		(330	)		0
Other - net		(3,276	)		(4,997	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		33,557			20,669
INVESTING ACTIVITIES
Capital expenditures		(24,219	)		(21,950	)
Proceeds from the sale of property and equipment		0			48
Purchase of marketable securities		0			(496	)
Proceeds from marketable securities		0			2,309
Purchase of company owned life insurance policy		0			(2,309	)
Acquisition, net of cash acquired		0			(18,894	)
NET CASH USED IN INVESTING ACTIVITIES		(24,219	)		(41,292	)
FINANCING ACTIVITIES
Increase (decrease) in notes payable to banks		8,642			(1,478	)
Proceeds from long-term debt		68,789			70,730
Payments of long-term debt		(72,693	)		(41,578	)
Dividends paid		(3,188	)		(3,226	)
Proceeds from issuance of common shares

Price	53.62	EPS	5
Shares	5	P/E	12
MCap	274	P/FCF	13
Net Debt	14	EBIT	31
TEV	289	TEV/EBIT	9
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-10-30
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10-Q	2020-03-31	Filed 2020-05-01
10-K	2019-12-31	Filed 2020-03-06
10-Q	2019-09-30	Filed 2019-11-01
10-Q	2019-06-30	Filed 2019-08-02
10-Q	2019-03-31	Filed 2019-05-03
10-K	2018-12-31	Filed 2019-03-08
10-Q	2018-09-30	Filed 2018-11-08
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10-K	2017-12-31	Filed 2018-03-09
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10-K	2016-12-31	Filed 2017-03-10
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10-Q	2016-03-31	Filed 2016-05-06
10-K	2015-12-31	Filed 2016-03-11
10-Q	2015-09-30	Filed 2015-11-09
10-Q	2015-06-30	Filed 2015-08-06
10-Q	2015-03-31	Filed 2015-05-05
10-K	2014-12-31	Filed 2015-03-12
10-Q	2014-09-30	Filed 2014-11-07
10-Q	2014-06-30	Filed 2014-08-08
10-Q	2014-03-31	Filed 2014-05-02
10-K	2013-12-31	Filed 2014-03-14
10-Q	2013-09-30	Filed 2013-11-07
10-Q	2013-06-30	Filed 2013-08-09
10-Q	2013-03-31	Filed 2013-05-03
10-K	2012-12-31	Filed 2013-03-15
10-Q	2012-09-30	Filed 2012-11-08
10-Q	2012-06-30	Filed 2012-08-09
10-Q	2012-03-31	Filed 2012-05-08
10-K	2011-12-31	Filed 2012-03-14
10-Q	2011-09-30	Filed 2011-11-07
10-Q	2011-06-30	Filed 2011-08-09
10-Q	2011-03-31	Filed 2011-05-06
10-K	2010-12-31	Filed 2011-03-11
10-Q	2010-09-30	Filed 2010-11-05
10-Q	2010-06-30	Filed 2010-08-05
10-Q	2010-03-31	Filed 2010-05-06
10-K	2009-12-31	Filed 2010-03-15

8-K	2020-10-30
8-K	2020-10-28
8-K	2020-08-06
8-K	2020-05-05
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8-K	2020-04-13
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8-K	2018-12-31
8-K	2018-11-19
8-K	2018-11-08
8-K	2018-08-03
8-K	2018-05-08
8-K	2018-05-04
8-K	2018-03-09

EX-31.1	plpc-ex311_10.htm
EX-31.2	plpc-ex312_8.htm
EX-32.1	plpc-ex321_7.htm
EX-32.2	plpc-ex322_6.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company