# Preformed Line Products Co: Form 10-Q for the period ended Sep 30, 2023

- Company: [Preformed Line Products Co](/companies/plpc.md) (CIK 80035)
- Form: 10-Q
- Filed: 2023-11-02
- Accepted by EDGAR: Nov 2, 2023, 15:34 ET
- Period: 2023-09-30
- Accession: 0000950170-23-058114
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/80035/000095017023058114/plpc-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/80035/000095017023058114/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $160.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $524.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $106.3m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $337.3m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $54.1m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $186.7m | us-gaap:GrossProfit |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $20.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $77.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $998.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $3.2m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $4.4m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $18.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $15.1m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $57.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $3.03 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $11.39 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $3.08 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $11.56 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 4,990,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 5,006,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $88.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $27.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $3.1m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $728.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Current assets | at 2023-09-30 | $338.2m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $606.6m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $135.8m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2023-09-30 | $45.3m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $6.7m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-09-30 | $399.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 37,459 characters.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the readers of our financial statements better understand our results of operations, financial condition and present business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and related notes included elsewhere in this report.

OVERVIEW

Preformed Line Products Company (the “Company”, “PLPC”, “we”, “us”, or “our”) was incorporated in Ohio in 1947. We are an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information (data communication), and other similar industries. Our primary products support, protect, connect, terminate, and secure cables and wires. We provide helical solutions, connectors, fiber optic and copper splice closures, solar hardware mounting applications, and electric vehicle charging station foundations. We also provide aerial drone inspection services for utility assets including transmission and distribution power lines, substations, and generation facilities. We are respected around the world for quality, dependability and market-leading customer service. Our goal is to continue to achieve profitable growth as a leader in the research, innovation, development, manufacturing, and marketing of technically advanced products and services related to energy, communications and cable systems and to take advantage of this leadership position to sell additional quality products in familiar markets. We have sales and manufacturing operations in 20 different countries.

We report our segments in four geographic regions: PLP-USA (including corporate), The Americas (includes operations in North and South America, excluding PLP-USA), EMEA (Europe, Middle East & Africa) and Asia-Pacific, in accordance with accounting standards codified in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 280, “Segment Reporting”. Each segment distributes a full range of our primary products. Our PLP-USA segment is comprised of our U.S. operations manufacturing our traditional products primarily supporting our domestic energy, telecommunications, solar framing products and inspection services. Our other three segments, The Americas, EMEA and Asia-Pacific, support our energy, telecommunications, data communication, solar and other products in each respective geographical region.

The segment managers responsible for each region report directly to the Company’s Chief Executive Officer, who is the chief operating decision maker, and are accountable for the financial results and performance of their entire segment for which they are responsible. The business components within each segment are managed to maximize the results of the entire operating segment and the Company rather than the results of any individual business component of the segment.

We evaluate segment performance and allocate resources based on several factors primarily based on sales and net income.

PREFACE

The following discussion describes our results of operations for the three and nine months ended September 30, 2023 and 2022. Our consolidated financial statements are prepared in conformity with United States ("U.S.") generally accepted accounting principles ("GAAP"). Our discussions of the financial results include non-GAAP measures (e.g., foreign currency impact) to provide additional information concerning our financial results and provide information that we believe is useful to the readers of our financial statements in the assessment of our performance and operating trends.

Net sales of $160.4 million for the three months ended September 30, 2023, was a decrease of $5.0 million year-over-year and net sales of $524.1 million for the nine months ended September 30, 2023, was an increase of $57.0 million year-over-year. In the three and nine months ended September 30, 2023, the inflationary headwinds we experienced related to raw materials, specifically plastic resins, aluminum and sand (grit), have partially subsided. Costs related to shipping and freight have similarly fallen from their 2022 peak. The decreases in these underlying costs along with the impacts of our previous price increases have benefited gross margins. For PLP-USA, our largest business segment, we saw a year-over-year benefit for the three and nine month periods ended September 30, 2023 of $5.9 million and $14.3 million, respectively related to the reduction in these costs. Given the uncertainties in the macro-economic environment, we cannot determine if these trends will continue. If inflationary pressures increase again, it may require further price adjustments to maintain profit margin and any price increases may have a negative effect on demand.

Our consolidated financial statements are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. PLPC’s foreign currency exchange losses were primarily related to translating into U.S. dollars its foreign currency denominated loans, trade receivables and royalty receivables from its foreign subsidiaries at the September 30, 2023 exchange rates. The fluctuations of foreign currencies during the three and nine months ended September 30, 2023 had a favorable impact on net sales of $1.4 million and an unfavorable impact on net sales of $5.6 million, respectively. The fluctuations on foreign currencies during the three and nine months ended September 30, 2023 had an unfavorable impact on net income of $0.1 million and $0.7 million, respectively. On a reportable segment basis, the impact of foreign currency translation on net sales and net income for the three and nine months ended September 30, 2023 and 2022, was as follows:

| (Thousands of dollars) | Foreign Currency Translation Impact Three Months Ended September 30, 2023 Net Sales | Net Income | Nine Months Ended September 30, 2023 Net Sales | Net Income |
| --- | ---: | ---: | ---: | ---: |
| The Americas | $71 | $— | $(2,366) | $(242) |
| EMEA | 1,870 | 44 | (276) | (174) |
| Asia-Pacific | (494) | (150) | (2,967) | (265) |
| Total | $1,447 | $(106) | $(5,609) | $(681) |

As shown in our strong financial results, we believe our business portfolio and our financial position are sound and strategically well-positioned. We remain focused on assessing our global market opportunities and overall manufacturing capacity in conjunction with the requirements of local manufacturing in the markets that we serve. The growth in PLP-USA net sales required additional investment within our PLP-USA facilities, both in the form of operational capacity as well as increased warehouse space. These investments in our U.S. operations allow us to further enhance the service we provide to our U.S. customers. If necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, increase sales volume and deliver value to our customers. We have continued to invest in the business to expand into new markets for the Company, evaluate strategic mergers and acquisitions, improve efficiency, develop new products and increase our capacity. Our liquidity remains strong, and we currently have a bank debt to equity percentage of 15.7%. We can borrow needed funds at a competitive interest rate under our credit facility.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2023 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2022

The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the three months ended September 30, 2023 and 2022. The Company’s past operating results are not necessarily indicative of future operating results.

| (Thousands of dollars) | Three Months Ended September 30, 2023 |  | 2022 |  | Change |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net sales | $160,438 | 100.0% | $165,402 | 100.0% | $(4,964) |
| Cost of products sold | 106,301 | 66.3 | 107,109 | 64.8 | (808) |
| **GROSS PROFIT** | 54,137 | 33.7 | 58,293 | 35.2 | (4,156) |
| Costs and expenses | 34,059 | 21.2 | 40,919 | 24.7 | (6,860) |
| **OPERATING INCOME** | 20,078 | 12.5 | 17,374 | 10.5 | 2,704 |
| Other (expense) income, net | (502) | (0.3) | 222 | 0.1 | (724) |
| **INCOME BEFORE INCOME TAXES** | 19,576 | 12.2 | 17,596 | 10.6 | 1,980 |
| Income taxes | 4,431 | 2.8 | 5,707 | 3.5 | (1,276) |
| **NET INCOME** | 15,145 | 9.4 | 11,889 | 7.2 | 3,256 |
| Net (income) attributable to noncontrolling interests | (15) | (0.0) | (2) | (0.0) | (13) |
| **NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS** | $15,130 | 9.4% | $11,887 | 7.2% | $3,243 |

*Net sales.* In 2023, net sales were $160.4 million, a decrease of $5.0 million, or 3%, compared to 2022. Excluding the effect of currency translation, net sales decreased 4% as summarized in the following table:

| (Thousands of dollars) Net sales | Three Months Ended September 30, 2023 | 2022 | Change | Change Due to Currency Translation | Change Excluding Currency% Translation | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $81,727 | $88,960 | $(7,233) | $— | $(7,233) | (8)% |
| The Americas | 22,790 | 23,780 | (989) | 71 | (1,060) | (4) |
| EMEA | 28,798 | 31,139 | (2,341) | 1,870 | (4,211) | (14) |
| Asia-Pacific | 27,124 | 21,524 | 5,600 | (494) | 6,094 | 28 |
| Consolidated | $160,438 | $165,402 | $(4,964) | $1,447 | $(6,411) | (4)% |

22

The decrease in PLP-USA net sales of $7.2 million, or 8%, was primarily due to volume decreases in communication sales, partially offset by the impact from previously enacted price increases. International net sales for the three months ended September 30, 2023 were favorably affected by $1.4 million when local currencies were converted to U.S. dollars. The following discussion of changes in net sales excludes the effect of currency translation. The Americas net sales of $22.8 million decreased $1.1 million, or 4%, primarily due to volume decreases within communications sales and energy products, partially offset by contributions from the October 2022 Delta acquisition. EMEA net sales of $28.8 million decreased $4.2 million, or 14%, primarily due to volume decreases in communication sales. Asia-Pacific net sales of $27.1 million increased $6.1 million, or 28%, primarily due to volume increases in energy products.

*Gross profit.* Gross profit of $54.1 million for 2023 decreased $4.2 million, or 7%, compared to 2022. Excluding the effect of currency translation, gross profit decreased $4.6 million, or 8%, as summarized in the following table:

| (Thousands of dollars) Gross profit | Three Months Ended September 30, 2023 | 2022 | Change | Change Due to Currency Translation | Change Excluding Currency% Translation | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $30,672 | $34,547 | $(3,875) | $— | $(3,875) | (11)% |
| The Americas | 8,053 | 10,124 | (2,070) | 189 | (2,259) | (22) |
| EMEA | 7,434 | 7,445 | (10) | 454 | (464) | (6) |
| Asia-Pacific | 7,977 | 6,178 | 1,800 | (192) | 1,992 | 32 |
| Consolidated | $54,137 | $58,293 | $(4,156) | $451 | $(4,607) | (8)% |

PLP-USA gross profit of $30.7 million decreased by $3.9 million, or 11%, compared to the same period in 2022, primarily due to lower sales volumes, partially offset by previously enacted price increases and lower material costs. International gross profit for the period ended September 30, 2023 was favorably impacted by $0.5 million when local currencies were translated to U.S. dollars. The following discussion of gross profit changes excludes the effects of currency translation. The Americas gross profit decreased $2.3 million, or 22%, which was primarily the result of higher manufacturing and material costs. EMEA gross profit decreased $0.5 million, or 6%, primarily due to the lower sales volumes. Asia-Pacific’s gross profit increased $2.0 million, or 32%, which was primarily driven by the incremental margins on the increased sales volume and lower manufacturing costs.

*Costs and expenses.* Costs and expenses of $34.1 million for the three months ended September 30, 2023 decreased $7.0 million, or 17%, when compared to 2022. Excluding the effect of currency translation, costs and expenses decreased $7.5 million, or 18%, as summarized in the following table:

| (Thousands of dollars) Costs and expenses | Three Months Ended September 30, 2023 | 2022 | Change | Change Due to Currency Translation | Change Excluding Currency% Translation | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $19,205 | $20,106 | $(901) | $— | $(901) | (4)% |
| The Americas | 5,873 | 3,238 | 2,635 | 41 | 2,594 | 80 |
| EMEA | 5,742 | 6,022 | (280) | 373 | (653) | (11) |
| Asia-Pacific | 3,238 | 11,553 | (8,315) | 1 | (8,316) | (72) |
| Consolidated | $34,059 | $40,919 | $(6,861) | $415 | $(7,276) | (18)% |

PLP-USA costs and expenses of $19.0 million decreased $1.1 million, or 5% year-over-year. PLP-USA’s decrease was primarily attributable to lower professional services costs, partially offset by higher salary-related and employee benefit costs. International costs and expenses for the three months ended September 30, 2023 were unfavorably impacted by $0.4 million when local currencies were translated to U.S. dollars. The following discussion of costs and expenses excludes the effect of currency translation. The Americas costs and expenses of $5.9 million increased $2.6 million primarily due to a one-time legal settlement and an increase in salary-related expenses. EMEA costs and expenses of $5.7 million decreased by $0.7 million primarily due to lower professional services, travel and sales related costs. Asia-Pacific costs and expenses of $3.2 million decreased $8.3 million primarily due to a one-time $6.5 million goodwill impairment charge recorded in 2022 that did not recur, and a one-time $2.5 million gain on the sale of plant and equipment during the third quarter of 2023.

*Other (expense) income, net.* Other expense, net of $0.5 million for the three months ended September 30, 2023 was unfavorable by $0.7 million when compared to Other income, net of $0.2 million for the three months ended September 30, 2022. The unfavorable movement was primarily due to increased interest expense.

*Income taxes.* Income taxes for the three months ended September 30, 2023 and 2022 were $4.4 million and $5.7 million based on pre-tax income of $19.6 million and $17.5 million, respectively. The tax rate for the three months ended September 30, 2023 and 2022 was 23% and 33%, respectively. The effective tax rate for the three months ended September 30, 2023 was lower than the effective tax rate for the same period in 2022 mainly due to the favorable impact from the mix of taxable income in certain foreign jurisdictions, which in the third quarter of 2022 included a non-deductible goodwill impairment charge of $6.5 million in the Asia-Pacific region and was partially offset by the release of the valuation allowance on deferred tax assets for the Company’s Australian subsidiary of approximately $1.4 million, as well as the favorable impact related to the excess tax benefit associated with stock compensation activity.

*Net income.* As a result of the preceding items, net income for the three months ended September 30, 2023 was $15.1 million, compared to $11.9 million for 2022. Excluding the effect of currency translation, net income increased $3.4 million as summarized in the following table. In all regions, the increase in net income was primarily due to increases in operating income described above, partially offset by higher interest expense:

| (Thousands of dollars) Net income (loss) | Three Months Ended September 30, 2023 | 2022 | Change | Change Due to Currency Translation | Change Excluding Currency% Translation | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $9,080 | $10,834 | $(1,754) | $— | $(1,754) | (16)% |
| The Americas | 1,411 | 5,450 | (4,039) | - | (4,039) | (74) |
| EMEA | 1,137 | 1,187 | (50) | 44 | (94) | (8) |
| Asia-Pacific | 3,502 | (5,584) | 9,086 | (150) | 9,236 | \>100 |
| Consolidated | $15,130 | $11,887 | $3,244 | $(106) | $3,350 | 28% |

NINE MONTHS ENDED SEPTEMBER 30, 2023 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2022

The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the nine months ended September 30, 2023 and 2022. The Company’s past operating results are not necessarily indicative of future operating results.

| (Thousands of dollars) | Nine Months Ended September 30, 2023 |  | 2022 |  | Change |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net sales | $524,076 | 100.0% | $467,097 | 100.0% | $56,979 |
| Cost of products sold | 337,328 | 64.4 | 314,147 | 67.3 | 23,181 |
| **GROSS PROFIT** | 186,748 | 35.6 | 152,950 | 32.7 | 33,798 |
| Costs and expenses | 109,540 | 20.9 | 108,176 | 23.2 | 1,364 |
| **OPERATING INCOME** | 77,208 | 14.7 | 44,774 | 9.6 | 32,434 |
| Other (expense) income, net | (1,832) | (0.3) | 4,727 | 1.0 | (6,559) |
| **INCOME BEFORE INCOME TAXES** | 75,376 | 14.4 | 49,501 | 10.6 | 25,875 |
| Income taxes | 18,348 | 3.5 | 11,590 | 2.5 | 6,758 |
| **NET INCOME** | 57,028 | 10.9 | 37,911 | 8.1 | 19,117 |
| Net (income) attributable to noncontrolling interests | (28) | (0.0) | (27) | (0.0) | (1) |
| **NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS** | $57,000 | 10.9% | $37,884 | 8.1% | $19,116 |

*Net sales.* Net sales were $524.1 million for the nine months ended September 30, 2023, an increase of $57.0 million, or 12%, compared to 2022. Excluding the effect of currency translation, net sales increased 13% as summarized in the following table:

| (Thousands of dollars) Net sales | Nine Months Ended September 30, 2023 | 2022 | Change | Change Due to Currency Translation | Change Excluding Currency% Translation | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $275,882 | $248,307 | $27,575 | $— | $27,575 | 11% |
| The Americas | 66,852 | 65,179 | 1,673 | (2,366) | 4,039 | 6 |
| EMEA | 105,138 | 91,456 | 13,682 | (276) | 13,958 | 15 |
| Asia-Pacific | 76,205 | 62,155 | 14,049 | (2,967) | 17,016 | 27 |
| Consolidated | $524,076 | $467,097 | $56,979 | $(5,609) | $62,588 | 13% |

The increase in PLP-USA net sales of $27.6 million, or 11%, was primarily due to a volume increase in energy products as well as the impact from previously enacted price increases. International net sales for the nine months ended September 30, 2023 were unfavorably affected by $5.6 million when local currencies were converted to U.S. dollars. The following discussion of changes in net sales excludes the effect of currency translation. The Americas net sales of $66.9 million increased $4.0 million, or 6%, primarily due to the volume increases from the October 2022 acquisition of Delta partially offset by volume decreases in communication product sales. EMEA net sales of $105.1 million increased $14.0 million, or 15%, primarily due to volume increases in communication and energy product sales primarily in the first half of 2023. Asia-Pacific net sales of $76.2 million increased $17.0 million, or 27%, primarily due to volume increases in energy product and special industries sales.

*Gross profit.* Gross profit of $186.7 million for 2023 increased $33.8 million, or 22%, compared to 2022. Excluding the effect of currency translation, gross profit increased $35.5 million, or 23%, as summarized in the following table:

| (Thousands of dollars) Gross profit | Nine Months Ended September 30, 2023 | 2022 | Change | Change Due to Currency Translation | Change Excluding Currency% Translation | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $114,012 | $90,751 | $23,261 | $— | $23,261 | 26% |
| The Americas | 24,239 | 23,456 | 783 | (454) | 1,237 | 5 |
| EMEA | 26,199 | 21,777 | 4,423 | (274) | 4,697 | 22 |
| Asia-Pacific | 22,298 | 16,966 | 5,332 | (946) | 6,278 | 37 |
| Consolidated | $186,748 | $152,950 | $33,798 | $(1,674) | $35,472 | 23% |

PLP-USA gross profit of $114.0 million increased by $23.3 million, or 26%, compared to the same period in 2022, primarily due to the incremental margins from the increased sales volumes and tailwinds from operational efficiencies, price increases and lower material costs. International gross profit for the period ended September 30, 2023 was unfavorably impacted by $1.7 million when local currencies were translated to U.S. dollars. The following discussion of gross profit changes excludes the effects of currency translation. The Americas gross profit increased $1.2 million, or 5%, which was primarily the result of the incremental margin from the increased sales volumes, and contributions from the October 2022 Delta acquisition. EMEA gross profit increased $4.7 million, or 22%, primarily due to the incremental margins from the increased sales volumes, lower material costs and the non-recurring charges recorded in 2022 related to the exit of our Russia operations. Asia-Pacific’s gross profit increased $6.3 million, or 37%, which was primarily driven by the incremental margins on the increased sales volume, lower material costs, and operational efficiencies.

*Costs and expenses.* Costs and expenses of $109.5 million for the nine months ended September 30, 2023 increased $1.4 million, or 1%, when compared to 2022. Excluding the effect of currency translation, costs and expenses increased $2.4 million, or 2%, as summarized in the following table:

| (Thousands of dollars) Costs and expenses | Nine Months Ended September 30, 2023 | 2022 | Change | Change Due to Currency Translation | Change Excluding Currency% Translation | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $59,570 | $53,556 | $6,014 | $— | $6,014 | 11% |
| The Americas | 16,331 | 12,499 | 3,832 | (428) | 4,260 | 34 |
| EMEA | 19,255 | 19,251 | 3 | (41) | 44 | 0 |
| Asia-Pacific | 14,385 | 22,870 | (8,485) | (578) | (7,907) | (35) |
| Consolidated | $109,540 | $108,176 | $1,364 | $(1,047) | $2,411 | 2% |

PLP-USA costs and expenses of $59.6 million increased $6.0 million, or 11% year-over-year. PLP-USA’s increase was primarily attributable to increased salary-related, sales, employee benefit and insurance costs, partially offset by lower professional services. International costs and expenses for the nine months ended September 30, 2023 were favorably impacted by $1.0 million when local currencies were translated to U.S. dollars. The following discussion of costs and expenses excludes the effect of currency translation. The Americas costs and expenses of $16.3 million increased $4.3 million primarily due to a one-time legal settlement and an increase in salary-related expenses. EMEA costs and expenses of $19.3 million was flat, as increases in salary-related expenses and professional services were offset by decreases in travel and marketing-related costs. Asia-Pacific costs and expenses of $14.4 million decreased $7.9 million primarily due to a one-time $6.5 million goodwill impairment charge recorded in 2022 that did not recur and a one-time $2.5 million gain on the sale of plant and equipment during the third quarter of 2023.

*Other (expense) income, net.* Other expense, net of $1.8 million for the nine months ended September 30, 2023 was unfavorable by $6.6 million when compared to Other income, net of $4.7 million for the nine months ended September 30, 2022. The unfavorable movement was primarily due to a nonrecurring gain of $4.4 million that was recorded in March 2022 related to a settlement of a Company-owned life insurance policy, and higher interest expense for the nine months ended September 30, 2023.

*Income taxes.* Income taxes for the nine months ended September 30, 2023 and 2022 were $18.3 million and $11.5 million based on pre-tax income of $75.3 million and $49.5 million, respectively. The tax rate for the nine months ended September 30, 2023, and 2022 was 24% and 23%, respectively. This change is not significant and was primarily due to the limitation on the deductibility of executive compensation partially offset by the favorable impact related to the excess tax benefit associated with stock compensation activity.

*Net income.* As a result of the preceding items, net income for the nine months ended September 30, 2023 was $57.0 million, compared to $37.9 million for 2022. Excluding the effect of currency translation, net income increased $19.8 million as summarized in the following table. In all regions, the increase in net income was primarily due to increases in operating income described above, partially offset by higher interest expense and higher tax expense:

| (Thousands of dollars) Net income (loss) | Nine Months Ended September 30, 2023 | 2022 | Change | Change Due to Currency Translation | Change Excluding Currency% Translation | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| PLP-USA | $40,761 | $34,460 | $6,301 | $— | $6,301 | 18% |
| The Americas | 6,050 | 8,016 | (1,966) | (242) | (1,724) | (22) |
| EMEA | 4,675 | 1,738 | 2,936 | (174) | 3,110 | \>100 |
| Asia-Pacific | 5,514 | (6,330) | 11,845 | (265) | 12,110 | \>100 |
| Consolidated | $57,000 | $37,884 | $19,116 | $(681) | $19,797 | 52% |

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our critical accounting policies are consistent with the information set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Form 10-K for the year ended December 31, 2022 filed on March 3, 2023 with the Securities and Exchange Commission and are, therefore, not presented herein.

WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES

#### Management Assessment of Liquidity

We measure liquidity on the basis of our ability to meet short-term and long-term operating needs, repay debt, fund additional investments, including acquisitions, and make dividend payments to shareholders. Significant factors affecting the management of liquidity are cash flows from operating activities, capital expenditures, cash dividends, business acquisitions and access to bank lines of credit.

Our investments include expenditures required for equipment and facilities as well as expenditures in support of our strategic initiatives. During the first nine months of 2023, we used cash of $27.1 million for capital expenditures and $12.1 million for a business acquisition. We ended the first nine months of 2023 with $43.7 million of cash, cash equivalents and restricted cash (collectively, “Cash”). Our Cash is held in various locations throughout the world. At September 30, 2023, the majority of our Cash was held outside the U.S. We expect most accumulated non-U.S. Cash balances will remain outside of the U.S. and that we will meet U.S. liquidity needs through future operating cash flows, use of U.S. Cash balances, external borrowings, or some combination of these sources. We complete comprehensive reviews of our significant customers and their creditworthiness by analyzing financial statements for customers where we have identified a measure of increased risk. We closely monitor payments and developments which may signal possible customer credit issues. We currently have not identified any potential material impact on our liquidity from customer credit issues.

Total debt, including notes payable, at September 30, 2023 was $62.8 million. At September 30, 2023, our unused availability under our credit facility (the "Facility") was $60.0 million and our bank debt to equity percentage was 15.7%. The Facility contains, among other provisions, requirements for maintaining levels of net worth and profitability. At September 30, 2023, the Company was in compliance with these covenants.

Our Asia-Pacific segment had $0.2 million in restricted cash for both periods ended September 30, 2023 and December 31, 2022. The restricted cash was used to secure bank debt and is included in Cash, cash equivalents and restricted cash on the Consolidated Balance Sheets.

On January 19, 2021, the Company purchased a new aircraft for $20.5 million and received funding for a term loan from PNC Equipment Finance, LLC for the full amount of the purchase price. 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 $15.2 million outstanding on this debt facility at September 30, 2023, $2.1 million was classified as current. The loan is secured by the aircraft.

We expect that our major source of funding for 2023 and beyond will be our operating cash flows, our existing Cash as well as our Facility agreement. Except for current earnings in certain jurisdictions, our operating income is deemed to be indefinitely reinvested in foreign jurisdictions. We currently do not intend nor foresee a need to repatriate these funds. We believe our future operating cash flows will be more than sufficient to cover debt repayments, other contractual obligations, capital expenditures and dividends for the next 12 months and thereafter for the foreseeable future. In addition, we believe our borrowing capacity provides substantial financial resources, if needed, to supplement funding of capital expenditures and/or acquisitions. We also believe that we can further expand our borrowing capacity, if necessary; however, we do not believe we would increase our debt to a level that would have a material adverse impact upon results of operations or financial condition.

#### Sources and Uses of Cash

Net cash provided by operating activities for the nine months ended September 30, 2023 was $88.4 million compared to $9.2 million provided by operating activities in the comparable prior year nine-month period. The $79.2 million increase was primarily a result of increases in net income and changes in operating assets and liabilities.

Net cash used in investing activities for the nine months ended September 30, 2023 was $36.7 million compared to $28.1 million in the comparable prior year nine-month period. The $8.6 million change was primarily a result of an increase in capital expenditures and decreases in proceeds from the settlement of a Company-owned life insurance policy in 2022 that did not recur.

Net cash used in financing activities for the nine months ended September 30, 2023 was $45.5 million compared to cash provided by financing activities of $14.6 million in the comparable prior year nine-month period. The $60.2 million change was primarily the result of an increase in payments on long-term debt, share repurchases, and notes payable.

We have commitments under operating leases primarily for office and manufacturing space, motor vehicles, office and computer equipment and finance leases primarily for equipment. At September 30, 2023, we had $1.6 million of current operating lease liabilities and $7.9 million of noncurrent operating lease liabilities. Total liabilities related to finance lease obligations were less than $1.0 million at September 30, 2023.

As of September 30, 2023, the Company had total outstanding guarantees of $13.9 million. Additionally, certain domestic and foreign customers require the Company to issue letters of credit or performance bonds as a condition of placing an order. As of September 30, 2023, the Company had total outstanding letters of credit of $1.0 million.

The Company has 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, 2023 and December 31, 2022, $17.6 million and $26.1 million was outstanding, of which $15.5 million and $19.1 million were classified as current, respectively. These facilities support commitments made in the ordinary course of business.

FORWARD LOOKING STATEMENTS

Cautionary Statement for “Safe Harbor” Purposes Under The Private Securities Litigation Reform Act of 1995

This Form 10-Q and other documents we file with the SEC contain forward-looking statements regarding the Company’s and management’s beliefs and expectations. As a general matter, forward-looking statements are those focused upon future plans, objectives or performance (as opposed to historical items) and include statements of anticipated events or trends and expectations and beliefs relating to matters not historical in nature. Such forward-looking statements are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the Company’s control. Such uncertainties and factors could cause the Company’s actual results to differ materially from those matters expressed in or implied by such forward-looking statements.

The following factors, among others, could affect the Company’s future performance and cause the Company’s actual results to differ materially from those expressed or implied by forward-looking statements made in this report:

- The overall demand for cable anchoring and control hardware for electrical transmission and distribution lines on a worldwide basis, which has a slow growth rate in mature markets such as the U.S., Canada, Australia and Western Europe and may grow slowly or experience prolonged delay in developing regions despite expanding power needs;
- The potential impact of global economic conditions, including the impact of inflation and rising interest rates, on the Company’s ongoing profitability and future growth opportunities in the Company’s core markets in the U.S. and other foreign countries, which may experience continued or further instability due to political and economic conditions, social unrest, acts of war, military conflict (including the ongoing conflict between Russia and Ukraine), international hostilities or the perception that hostilities may be imminent, terrorism, changes in diplomatic and trade relationships and public health concerns (including viral outbreaks such as COVID-19);
- The ability of the Company’s customers to raise funds needed to build the infrastructure projects their customers require;
- Technological developments that affect longer-term trends for communication lines, such as wireless communication;
- The decreasing demand for product supporting copper-based infrastructure due to the introduction of products using new technologies or adoption of new industry standards;
- The Company’s success at continuing to develop proprietary technology and maintaining high quality products and customer service to meet or exceed new industry performance standards and individual customer expectations;
- The Company’s success in strengthening and retaining relationships with the Company’s customers, growing sales at targeted accounts and expanding geographically;
- The extent to which the Company is successful at expanding the Company’s product line or production facilities into new areas or implementing efficiency measures at existing facilities;
- The effects of fluctuation in currency exchange rates upon the Company’s foreign subsidiaries’ operations and reported results from international operations, together with non-currency risks of investing in and conducting significant operations in foreign countries, including those relating to political, social, economic and regulatory factors;
- The Company’s ability to identify, complete, obtain funding for and integrate acquisitions for profitable growth;
- The potential impact of consolidation, deregulation and bankruptcy among the Company’s suppliers, competitors and customers and of any legal or regulatory claims;
- The relative degree of competitive and customer price pressure on the Company’s products;
- The cost, availability and quality of raw materials required for the manufacture of products and any tariffs that may be associated with the purchase of these products. The Company’s supply chain could continue to be disrupted by the COVID-19 pandemic which could have a material, adverse effect on the ability to secure raw materials and supplies;
- Strikes, labor disruptions and other fluctuations in labor costs;
- Changes in significant government regulations affecting environmental compliance or other litigation matters;
- Security breaches or other disruptions to the Company’s information technology structure;
- The telecommunication market’s continued deployment of Fiber-to-the-Premises;
- The effects of the U.S. Inflation Reduction Act which could affect our U.S. federal corporate income tax rate and the tax credits we could receive from foreign income;
- The impact of any failure to timely implement and maintain adequate financial, information technology and management processes and controls and procedures; and
- Those factors described under the heading “Risk Factors” in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 which was filed on March 3, 2023.

## Market risk

As filed, 2,182 characters.

The Company operates manufacturing facilities and offices around the world and uses fixed and floating rate debt to finance the Company’s global operations. As a result, the Company is subject to business risks inherent in non-U.S. activities, including political and economic uncertainty, import and export limitations and market risk related to changes in interest rates and foreign currency exchange rates. The Company believes that the political and economic risks related to the Company’s international operations are mitigated due to the geographic diversity in which the Company’s international operations are located.

Effective July 1, 2018, Argentina was designated as a highly inflationary economy as the projected three-year cumulative inflation rate exceeded 100%. As such, beginning July 1, 2018, the functional currency for the Company’s Argentina subsidiary became the U.S. dollar. Revenue from operations in Argentina represented less than 1% of total consolidated net sales for the nine-month periods ended September 30, 2023 and 2022.

As of September 30, 2023, the Company had $0.2 million in assets and $0.1 million in liabilities related to foreign currency forward exchange contracts outstanding. The Company does not hold derivatives for trading purposes.

The Company’s primary currency rate exposures are related to foreign denominated debt, intercompany debt, foreign denominated receivables and payables and cash and short-term investments. A hypothetical 10% change in currency rates would have an impact on fair values on such instruments of $6.4 million and a $2.6 million impact on income before income taxes at September 30, 2023.

The Company is exposed to market risk, including changes in interest rates and foreign exchange rates since we conduct business in a variety of foreign currencies. The Company is subject to interest rate risk on its variable rate revolving credit facilities, which consisted of long-term borrowings of $31.9 million at September 30, 2023. A 100-basis point increase in the interest rate would have resulted in an increase in interest expense of approximately $0.2 million for the nine months ended September 30, 2023.

## Controls and procedures

As filed, 756 characters.

### Evaluation of Disclosure Controls and Procedures

The Company’s Principal Executive Officer and Principal Accounting Officer have concluded that the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended, were effective as of September 30, 2023.

### Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f)) of the Securities and Exchange Act of 1934, as amended, during the nine-month period ended September 30, 2023 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

## Risk factors

As filed, 505 characters.

There were no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 3, 2023. In addition, the impact of COVID-19 and ongoing conflict between Russia and Ukraine could potentially exacerbate other risks discussed, any of which could have a material adverse effect on the Company. The situation continues to change, and additional impacts may arise that the Company is not aware of currently.

Filed Nov 2, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-058114. Last ingested by Listed: Oct 30, 2026, 16:27 ET. No prices; not investment advice.