PREFORMED LINE PRODUCTS CO

Previous wording

The following discussion describes our results of operations for the three months ended March 31, 2025 and 2024. 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.

Current wording

The following discussion describes our results of operations for the three and six months ended June 30, 2025 and 2024. 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.

Previous wording

Net sales of $148.5 million increased $7.6 million for the three months ended March 31, 2025 year-over-year, mainly due to an increase in energy and communication sales for the quarter. While inflationary pressures have subsided, recently enacted tariffs or other trade matters may give rise to further inflationary pressures, which may require further price adjustments to maintain profit margin, and any price increases may have a negative effect on demand. While our significant domestic manufacturing footprint provides a competitive advantage in the current high tariff environment, raw materials imports, particularly steel and aluminum, will be most impacted.

Current wording

Net sales of $169.6 million increased $30.9 million for the three months ended June 30, 2025 year-over-year and net sales of $318.1 million increased $38.5 million for the six months ended June 30, 2025 year-over-year, mainly due to an increase in energy and communication sales for the quarter. While our significant domestic manufacturing footprint provides a competitive advantage in the current high tariff environment, raw materials imports, particularly steel and aluminum, continue to be most impacted. While we continue to manage trade matters proactively, further tariff increases may give rise to inflationary pressures, which may require further price adjustments to maintain profit margin, and any price increases may have a negative effect on demand.

Previous wording

Our 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 gains or (losses) were primarily related to translating into U.S. dollars its foreign currency denominated loans, trade receivables and payables from its foreign subsidiaries at the March 31, 2025 exchange rates. The fluctuations of foreign currencies during the three months ended March 31, 2025 and March 31, 2024 had an unfavorable impact on net sales of $4.4 million andfavorable impact of $0.7 million, respectively. The effect of currency translation had an unfavorable impact of$0.2 million and a de minimis impact on net income during the three months ended March 31, 2025 and 2024, respectively. On a reportable segment basis, the impact of foreign currency translation on net sales and net income for the three months ended March 31, 2025, was as follows:

Current wording

Our financial statements are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. The fluctuations of foreign currencies during the three and six months ended June 30, 2025 had an unfavorable impact on net sales of $0.5 million and $4.9 million, respectively. The fluctuations on foreign currencies had a de minimis impact on net income for the three-month period ended June 30, 2025 and an unfavorable impact on net income of $0.3 million, for the six-month period ended June 30, 2025. The fluctuations of foreign currencies during the three and six months ended June 30, 2024 had an unfavorable impact on net sales of $1.1 million and $0.3 million, respectively. The fluctuations on foreign currencies during the three and six months ended June 30, 2024 had a de minimis impact on net income. On a reportable segment basis, the impact of foreign currency translation on net sales and net income for the three and six months ended June 30, 2025, was as follows:

Previous wording

While uncertainty remains in the global economy due to tariffs and trade matters, we believe our business portfolio, including our significant U.S. manufacturing footprint 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. As necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, including tariff-related impacts, increase sales volume and deliver value to our customers. Period cost containment continues to be a priority for the Company in 2025, and we continue to monitor and control discretionary spending where necessary. 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. As of March 31, 2025, our liquidity remains strong with our bank debt to equity percentage at 8.0%. We can borrow needed funds at a competitive interest rate under the Facility.

Current wording

While uncertainty remains in the global economy due to tariffs and trade matters, we believe our business portfolio, including our significant U.S. manufacturing footprint, as well as 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. As necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, including tariff-related impacts, increase sales volume and deliver value to our customers. Period cost containment continues to be a priority for the Company in 2025, and we continue to monitor and control discretionary spending where necessary. 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. As of June 30, 2025, our liquidity remains strong with our bank debt to equity percentage at 7.9%. We can borrow needed funds at a competitive interest rate under the Facility.

Previous wording

Net sales. In 2025, net sales were $148.5 million, an increase of $7.6 million, or 5%, compared to 2024. Excluding the effect of currency translation, net sales increased 9% as summarized in the following table:

Current wording

Net sales. In 2025, net sales were $169.6 million, an increase of $30.9 million, or 22%, compared to 2024. Excluding the effect of currency translation, net sales increased 23% as summarized in the following table:

Previous wording

The increase in PLP-USA net sales of $3.3 million, or 5%, was primarily due to higher volumes in communications sales. International net sales for the three months ended March 31, 2025 were unfavorably affected by $4.4 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 $22.3 million increased $7.1 million, or 39%, primarily due to higher volumes in energy product sales, partially offset by lower communications sales. EMEA net sales of $30.0 million increased $1.8 million, or 6%, primarily due to higher volume in energy product sales. Asia-Pacific net sales of $22.3 million decreased $0.1 million, or 1%, primarily due to lower volumes in energy product sales.

Current wording

The increase in PLP-USA net sales of $19.4 million, or 32%, was primarily due to higher volumes in energy and communications sales. International net sales for the three months ended June 30, 2025 were unfavorably affected by $0.5 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 $28.5 million increased $8.8 million, or 40%, primarily due to higher volumes in energy product sales and an increase in communications sales due to the acquisition of JAP Telecom in May 2025. EMEA net sales of $31.9 million decreased $1.7 million, or 5%, primarily due to lower volume in communications product sales, partially offset by an increase in special industry sales. Asia-Pacific net sales of $29.9 million increased $4.9 million, or 20%, primarily due to higher volumes in energy product sales.

Previous wording

Gross profit. Gross profit of $48.7 million for 2025 increased $4.5 million, or 10%, compared to 2024. Excluding the effect of currency translation, gross profit increased $5.9 million, or 13%, as summarized in the following table:

Current wording

Gross profit. Gross profit of $55.4 million for 2025 increased $11.1 million, or 25%, compared to 2024. Excluding the effect of currency translation, gross profit increased $11.3 million, or 26%, as summarized in the following table:

Previous wording

Excluding intercompany transactions, PLP-USA costs and expenses increased $0.8 million, or 4% year-over-year primarily due to higher selling costs and personnel costs. International costs and expenses for the three months ended March 31, 2025 were favorably impacted by $0.9 million when local currencies were translated to U.S. dollars and unfavorably impacted by intercompany transactions with PLP-USA. The following discussion of costs and expenses excludes the effect of currency translation and intercompany transactions. The Americas costs and expenses of $5.5 million increased $0.4 million primarily due to increased selling costs. EMEA costs and expenses of $7.4 million increased by $0.9 million primarily due to increased selling, general, and administrative costs. Asia-Pacific costs and expenses of $5.5 million increased $1.8 million primarily due to a gain on the sale of capital assets in the first quarter of 2024 that did not recur.

Current wording

Excluding intercompany transactions, PLP-USA costs and expenses increased $2.2 million, or 13% year-over-year, primarily due to higher selling costs and personnel costs. International costs and expenses for the three months ended June 30, 2025 were nominally impacted when local currencies were translated to U.S. dollars and unfavorably impacted by intercompany transactions with PLP-USA. The following discussion of costs and expenses excludes the effect of currency translation and intercompany transactions. The Americas costs and expenses of $6.7 million increased $1.5 million primarily due to an increase in selling, general, and administrative and the impact of foreign currency remeasurement. EMEA costs and expenses of $8.0 million increased by $1.8 million primarily due to a recovery of bad debt in the second quarter of 2024 that did not recur. Asia-Pacific costs and expenses of $6.2 million decreased $0.2 million primarily due to a reduction in selling costs.

Previous wording

Income taxes. Income taxes for the three months ended March 31, 2025 and 2024 were $2.1 million and $2.3 million based on pre-tax income of $13.7 million and $11.9 million, respectively. The tax rate for the three months ended March 31, 2025 and 2024 was 16% and 19%, respectively. The effective tax rate for the three months ended March 31, 2025 was lower than the effective tax rate for the same period in 2024 mainly due to the favorable impact from the increase in excess tax benefits on share-based compensation, the decrease of nondeductible compensation, and a favorable impact from the mix of earned income in certain foreign jurisdictions.

Current wording

Income taxes. Income taxes for the three months ended June 30, 2025 and 2024 were $4.6 million and $1.8 million based on pre-tax income of $17.3 million and $11.2 million, respectively. The tax rate for the three months ended June 30, 2025 and 2024 was 27% and 16%, respectively. The effective tax rate for the three months ended June 30, 2025 was higher than the effective tax rate for the same period in 2024 mainly due to the unfavorable impact from certain adjustments including nondeductible compensation and non-recurring rate benefits received in 2024 from amending prior year returns, partially offset by a favorable impact from the mix of earned income in certain foreign jurisdictions.

Previous wording

Net income. As a result of the preceding items, net income for the three months ended March 31, 2025 was $11.5 million, compared to $9.6 million for 2024. Excluding the effect of currency translation, net income increased $2.0 million as summarized in the following table. The increase in net income was due to increases in operating income described above as well as lower interest expense and lower tax expense:

Current wording

Net income. As a result of the preceding items, net income for the three months ended June 30, 2025 was $12.7 million, compared to $9.4 million for 2024. Excluding the effect of currency translation, net income increased $3.4 million as summarized in the following table. The increase in net income was due to increases in operating income described above as well as lower interest expense, partially offset by higher tax expense:

Previous wording

PLP-USA gross profit of $26.8 million increased by $2.1 million, or 9%, compared to the same period in 2024, primarily due to higher sales volumes and favorable product mix. International gross profit for the period ended March 31, 2025 was unfavorably impacted by $1.3 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 $3.1 million, or 63%, which was primarily the result of higher sales volume and enhanced fixed cost leverage. EMEA gross profit increased $0.6 million, or 8%, primarily due to higher sales volumes and favorable product mix. Asia-Pacific gross profit decreased $0.1 million, or 1%, which was primarily driven by lower sales volumes and unfavorable product mix.

Current wording

PLP-USA gross profit of $54.9 million increased by $9.5 million, or 21%, compared to the same period in 2024, primarily due to higher sales volumes and favorable product mix, partially offset by higher tariff and manufacturing costs. International gross profit for the period ended June 30, 2025 was unfavorably impacted by $1.5 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 increased $5.5 million, or 47%, which was primarily the result of higher sales volumes and favorable product mix. EMEA gross profit increased $0.3 million, or 2%, primarily due to favorable product mix. Asia-Pacific gross profit increased $1.9 million, or 14%, which was primarily driven by higher sales volume and favorable product mix.

Previous wording

Costs and expenses. Costs and expenses of $35.5 million for the three months ended March 31, 2025 increased $3.0 million, or 9%, when compared to 2024. Excluding the effect of currency translation, costs and expenses increased $3.8 million, or 12%, as summarized in the following table:

Current wording

Costs and expenses. Costs and expenses of $73.8 million for the six months ended June 30, 2025 increased $8.3 million, or 13%, when compared to 2024. Excluding the effect of currency translation and intercompany transactions, costs and expenses increased $9.2 million, or 14%, as summarized in the following table:

Previous wording

Other Income, net. Other income, net of $0.5 million for the three months ended March 31, 2025 was favorable by $0.2 million when compared to Other income, net for the three months ended March 31, 2024 of $0.3 million. The favorable movement was due to lower interest expense from reduced debt balances and a government incentive received in the first quarter of 2025 related to our new facility in China, offset by lower interest income for the three months ended March 31, 2025.

Current wording

Other income, net. Other income, net of $0.7 million for the six months ended June 30, 2025 was favorable by $0.5 million when compared to Other income, net for the six months ended June 30, 2024 of $0.2 million. The favorable movement was due to lower interest expense from reduced debt balances and a government incentive received in the first quarter of 2025 related to our facility in China, partially offset by lower interest income for the six months ended June 30, 2025.

Previous wording

Our investments include expenditures required for equipment and facilities as well as expenditures in support of our strategic initiatives. During the first three months of 2025, we used cash of $11.0 million for capital expenditures. We ended the first three months of 2025 with $54.8 million of cash, cash equivalents and restricted cash (collectively, “Cash”). Our Cash is held in various locations throughout the world. At March 31, 2025, 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.

Current wording

Our investments include expenditures required for equipment and facilities as well as expenditures in support of our strategic initiatives. During the first six months of 2025, we used cash of $19.4 million for capital expenditures. We ended the first six months of 2025 with $66.9 million of cash, cash equivalents and restricted cash (collectively, “Cash”). Our Cash is held in various locations throughout the world. At June 30, 2025, 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.

Previous wording

Total debt, including notes payable, at March 31, 2025 was $34.9 million. The Company maintains a credit facility (the "Facility") with a capacity of $90.0 million. On March 14, 2025, the Company amended the Facility to extend the maturity date from March 2, 2026 to June 30, 2028. In addition, the amendment increased the amount of unsecured borrowings that the Company is permitted to incur outside of the Facility from $40.0 million to $60.0 million and included APRESA – PLP Spain, S.A. as an additional borrower

Current wording

Total debt, including notes payable, at June 30, 2025 was $36.2 million. The Company maintained a credit facility (the "Facility") with a capacity of $90.0 million. On March 14, 2025, the Company amended the Facility to extend the maturity date from March 2, 2026 to June 30, 2028. In addition, the amendment increased the amount of unsecured borrowings that the Company is permitted to incur outside of the Facility from $40.0 million to $60.0 million and included PLP Spain as an additional borrower.

Previous wording

At March 31, 2025, our unused availability under the Facility was $82.5 million and our bank debt to equity percentage was 8.0%. The Facility contains, among other provisions, requirements for maintaining levels of net worth and profitability. At March 31, 2025, the Company was in compliance with these covenants.

Current wording

At June 30, 2025, our unused availability under the Facility was $79.6 million and our bank debt to equity percentage was 7.9%. The Facility contains, among other provisions, requirements for maintaining levels of net worth and profitability. At June 30, 2025, the Company was in compliance with these covenants.

Previous wording

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. As of March 31, 2025, $12.1 million was outstanding on this debt facility, of which $2.1 million was classified as current. The aircraft has been pledged as collateral against the loan.

Current wording

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. As of June 30, 2025, $11.6 million was outstanding on this debt facility, of which $2.1 million was classified as current. The aircraft has been pledged as collateral against the loan.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2025 was $5.7 million compared to $5.8 million in the comparable prior year three-month period. The $0.1 million decrease was primarily a result of changes in operating assets and liabilities offset by an increase in net income.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2025 was $32.6 million compared to $34.0 million in the comparable prior year six-month period. The $1.4 million decrease was primarily a result of changes in operating assets and liabilities offset by an increase in net income.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025 was $9.7 million compared to $0.7 million in the comparable prior year three-month period. The $9.0 million change was primarily a result of an increase in capital expenditures during the current period, primarily related to the acquisition of new land and a building in Spain.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 was $22.2 million compared to $4.3 million in the comparable prior year six-month period. The $17.9 million change was primarily a result of the acquisition of JAP Telecom in May 2025 and an increase in capital expenditures, primarily related to the acquisition of new land and a building in Spain and the construction of a new manufacturing plant in Poland.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2025 was less than $0.1 million compared to $11.7 million in the comparable prior year three-month period. The $11.7 million change was primarily the result of a reduction in long-term debt.

Current wording

Net cash used in financing activities for the six months ended June 30, 2025 was $4.8 million compared to $33.5 million in the comparable prior year six-month period. The $28.7 million change was primarily the result of a reduction in net payments of long-term debt.

Previous wording

We have commitments under operating leases primarily for office and manufacturing space, transportation equipment, office and computer equipment and finance leases primarily for equipment. At March 31, 2025, we had $1.8 million of current operating lease liabilities and $6.5 million of noncurrent operating lease liabilities. Total liabilities related to finance lease obligations were less than $0.6 million at March 31, 2025.

Current wording

We have commitments under operating leases primarily for office and manufacturing space, transportation equipment, office and computer equipment and finance leases primarily for equipment. At June 30, 2025, we had $1.8 million of current operating lease liabilities and $6.7 million of noncurrent operating lease liabilities. Total liabilities related to finance lease obligations were less than $0.7 million at June 30, 2025.

Previous wording

As of March 31, 2025, the Company had total outstanding guarantees of $14.2 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 March 31, 2025, the Company had total outstanding letters of credit of $1.2 million.

Current wording

As of June 30, 2025, the Company had total outstanding guarantees of $14.6 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 June 30, 2025, the Company had total outstanding letters of credit of $2.9 million.

Previous wording

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 March 31, 2025, and December 31, 2024, $15.3 million and $8.8 million was outstanding, of which $7.2 million and $8.2 million were classified as current, respectively. These facilities support commitments made in the ordinary course of business.

Current wording

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 June 30, 2025, and December 31, 2024, $14.2 million and $8.8 million was outstanding, of which $6.3 million and $8.2 million were classified as current, respectively. These facilities support commitments made in the ordinary course of business.

Previous wording

•The potential impact of global economic conditions, including the impact of inflation, recently enacted tariffs, 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 Russian-Ukrainian and Israeli-Palestinian conflicts), 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);

Current wording

•The potential impact of global economic conditions, including the impact of inflation, recently enacted tariffs and related economic uncertainty, 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 Russian-Ukrainian, Israeli-Palestinian and Iranian conflicts), 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);

Previous wording

•Changes and uncertainty in significant government regulations, including those affecting environmental compliance or regulatory or third-party litigation matters;

Current wording

•Changes and uncertainty in significant government regulations and funding priorities, including those affecting environmental compliance or regulatory or third-party litigation matters;