PREFORMED LINE PRODUCTS CO 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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, manufacture, 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 Executive Chairman, 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 gross sales and income before income taxes. PREFACE The following discussion describes our results of operations for the three and nine months ended September 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. Net sales of $178.1 million increased $31.1 million for the three months ended September 30, 2025 year-over-year and net sales of $496.2 million increased $69.6 million for the nine months ended September 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. Additionally, PLP-USA LIFO inventory valuation costs have accelerated due to tariffs, resulting in charges of $3.8 million and $6.2 million for the three-month and nine-month periods ending September 30, 2025. These amounts exclude cash-tax savings generated from lower pre-tax book income. 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. 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 nine months ended September 30, 2025 had a favorable impact on net sales of $1.9 million and an unfavorable impact of $3.0 million, respectively. The fluctuations on foreign currencies had a favorable impact of $0.3 million on net income for the three months ended September 30, 2025 and a de minimis impact on net income for the nine months ended September 30, 2025. The fluctuations of foreign currencies during the three and nine months ended September 30, 2024 had an unfavorable impact on net sales of $0.8 million and $1.1 million, respectively. The fluctuations on foreign currencies during the three and nine months ended September 30, 2024 had an unfavorable impact on net income of $0.1 million and $0.2 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, 2025, was as follows: 23 Foreign Currency Translation Impact Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025 (Thousands of dollars) Net Sales Net Income Net Sales Net Income The Americas $ 166 $ 3 $ (5,103) $ (288) EMEA 2,040 111 3,121 192 Asia-Pacific (294) 143 (1,034) 102 Total $ 1,912 $ 257 $ (3,016) $ 6 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 September 30, 2025, our liquidity remains strong with our bank debt to equity percentage at 8.3%. We can borrow needed funds at a competitive interest rate under the Facility. RESULTS OF OPERATIONS 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, 2025 and 2024. The Company’s past operating results are not necessarily indicative of future operating results. Three Months Ended September 30, (Thousands of dollars) 2025 2024 Change Net sales $ 178,087 100.0 % $ 146,973 100.0 % $ 31,114 Cost of products sold 125,238 70.3 101,195 68.9 24,043 GROSS PROFIT 52,849 29.7 45,778 31.1 7,071 Costs and expenses 39,717 22.3 35,386 24.1 4,331 OPERATING INCOME 13,132 7.4 10,392 7.1 2,740 Other (expense) income, net (10,776) (6.1) 38 — (10,814) INCOME BEFORE INCOME TAXES 2,356 1.3 10,430 7.1 (8,074) Income tax (benefit) expense (263) (0.1) 2,734 1.9 (2,997) NET INCOME 2,619 1.5 7,696 5.2 (5,077) Net expense (income) attributable to noncontrolling interests 7 0.0 (16) 0.0 23 NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS $ 2,626 1.5 % $ 7,680 5.2 % $ (5,054) Net sales. In 2025, net sales were $178.1 million, an increase of $31.1 million, or 21%, compared to 2024. Excluding the effect of currency translation, net sales increased 20% as summarized in the following table: Three Months Ended September 30, (Thousands of dollars) 2025 2024 Change Change Due to Currency Translation Change Excluding Currency Translation % Change Net sales PLP-USA $ 80,817 $ 65,554 $ 15,263 $ — $ 15,263 23 % The Americas 29,332 19,852 9,480 166 9,314 47 % EMEA 38,073 32,937 5,136 2,040 3,096 9 % Asia-Pacific 29,865 28,630 1,235 (294) 1,529 5 % Consolidated $ 178,087 $ 146,973 $ 31,114 $ 1,912 $ 29,202 20 % 24 The increase in PLP-USA net sales of $15.3 million, or 23%, was primarily due to higher volumes in energy and communications sales. International net sales for the three months ended September 30, 2025 were favorably affected by $1.9 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 $29.3 million increased $9.3 million, or 47%, 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 $38.1 million increased $3.1 million, or 9%, primarily due to higher volumes in energy product sales and special industry sales. Asia-Pacific net sales of $29.9 million increased $1.5 million, or 5%, primarily due to higher volumes in special industry sales. Gross profit. Gross profit of $52.8 million for 2025 increased $7.1 million, or 15%, compared to 2024. Excluding the effect of currency translation, gross profit increased $6.5 million, or 14%, as summarized in the following table: Three Months Ended September 30, (Thousands of dollars) 2025 2024 Change Change Due to Currency Translation Change Excluding Currency Translation % Change Gross profit PLP-USA $ 23,674 $ 21,383 $ 2,291 $ — $ 2,291 11 % The Americas 9,063 6,770 2,293 60 2,233 33 % EMEA 12,410 9,327 3,083 619 2,464 26 % Asia-Pacific 7,702 8,298 (596) (67) (529) (6) % Consolidated $ 52,849 $ 45,778 $ 7,071 $ 612 $ 6,459 14 % PLP-USA gross profit of $23.7 million increased by $2.3 million, or 11%, compared to the same period in 2024, primarily due to higher sales volumes, partially offset by higher tariff and manufacturing costs, including LIFO valuation costs. International gross profit for the period ended September 30, 2025 was favorably impacted by $0.6 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 $2.2 million, or 33%, which was primarily the result of higher sales volumes. EMEA gross profit increased $2.5 million, or 26%, primarily due to higher sales volumes and favorable product mix. Asia-Pacific gross profit decreased $0.5 million, or 6%, which was primarily driven by higher inventory adjustments. Costs and expenses. Costs and expenses of $39.7 million for the three months ended September 30, 2025 increased $4.3 million, or 12%, when compared to 2024. Excluding the effect of currency translation and intercompany transactions, costs and expenses increased $3.9 million, or 11%, as summarized in the following table: Three Months Ended September 30, (Thousands of dollars) 2025 2024 Change Change Due to Currency Translation Change Due to Intercompany Transactions Change Excluding Currency and Intercompany Transactions % Change Costs and expenses PLP-USA $ 16,264 $ 17,357 $ (1,093) $ — $ (3,615) $ 2,522 15 % The Americas 7,474 4,981 2,493 59 1,311 1,123 23 % EMEA 8,272 7,223 1,049 426 490 133 2 % Asia-Pacific 7,707 5,825 1,882 (11) 1,814 79 1 % Consolidated $ 39,717 $ 35,386 $ 4,331 $ 474 $ — $ 3,857 11 % Excluding intercompany transactions, PLP-USA costs and expenses increased $2.5 million, or 15% year-over-year, primarily due to higher selling costs and personnel costs. International costs and expenses for the three months ended September 30, 2025 were unfavorably 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 $7.5 million increased $1.1 million primarily due to an increase in selling, general, and administrative costs. EMEA costs and expenses of $8.3 million increased by $0.1 million primarily due to an increase in personnel costs. Asia-Pacific costs and expenses of $7.7 million increased $0.1 million primarily due to an increase in personnel costs and engineering costs. Other Expense, net. Other expense, net of $10.8 million for the three months ended September 30, 2025 was unfavorable by $10.8 million when compared to the nominal Other income, net for the three months ended September 30, 2024. The unfavorable movement was mainly due to an $11.7 million pension termination charge recorded, partially offset by government incentives received in 2025 related to our facility in China. 25 Income taxes. Income taxes for the three months ended September 30, 2025 and 2024 were $(0.3) million and $2.7 million based on pre-tax income of $2.4 million and $10.4 million, respectively. The tax rate for the three months ended September 30, 2025 and 2024 was (11)% and 26%, respectively. The lower effective tax rates for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was due the decrease in income before income taxes attributable to the pension termination charges recorded in the third quarter of 2025 and a discrete tax benefit recorded related to the release of amounts in OCI attributed to the pension termination. Net income. As a result of the preceding items, net income for the three months ended September 30, 2025 was $2.6 million, compared to $7.7 million for 2024. Excluding the effect of currency translation, net income decreased $5.3 million as summarized in the following table. The decrease in net income was due to the pension termination charge recorded in the third quarter of 2025, offset by increases in operating income described above: Three Months Ended September 30, (Thousands of dollars) 2025 2024 Change Change Due to Currency Translation Change Excluding Currency Translation % Change Net income (loss) PLP-USA $ (1,684) $ 3,059 $ (4,743) $ — $ (4,743) (155) % The Americas 1,455 1,574 (119) 3 (122) (8) % EMEA 2,987 1,337 1,650 111 1,539 115 % Asia-Pacific (132) 1,710 (1,842) 143 (1,985) (116) % Consolidated $ 2,626 $ 7,680 $ (5,054) $ 257 $ (5,311) (69) % NINE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2024 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, 2025 and 2024. The Company’s past operating results are not necessarily indicative of future operating results. Nine Months Ended September 30, (Thousands of dollars) 2025 2024 Change Net sales $ 496,229 100.0 % $ 426,597 100.0 % $ 69,632 Cost of products sold 339,310 68.4 292,415 68.5 46,895 GROSS PROFIT 156,919 31.6 134,182 31.5 22,737 Costs and expenses 113,533 22.9 100,938 23.7 12,595 OPERATING INCOME 43,386 8.7 33,244 7.8 10,142 Other (expense) income, net (10,053) (2.0) 205 — (10,258) INCOME BEFORE INCOME TAXES 33,333 6.7 33,449 7.8 (116) Income tax (benefit) expense 6,461 1.3 6,783 1.6 (322) NET INCOME 26,872 5.4 26,666 6.3 206 Net income attributable to noncontrolling interests (24) (0.0) (24) (0.0) — NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS $ 26,848 5.4 % $ 26,642 6.2 % $ 206 26 Net sales . In 2025, net sales were $496.2 million, an increase of $69.6 million, or 16%, compared to 2024. Excluding the effect of currency translation, net sales increased 17% as summarized in the following table: Nine Months Ended September 30, (Thousands of dollars) 2025 2024 Change Change Due to Currency Translation Change Excluding Currency Translation % Change Net sales PLP-USA $ 234,113 $ 196,191 $ 37,922 $ — $ 37,922 19 % The Americas 80,118 60,026 20,092 (5,103) 25,195 42 % EMEA 99,977 93,630 6,347 3,121 3,226 3 % Asia-Pacific 82,021 76,750 5,271 (1,034) 6,305 8 % Consolidated $ 496,229 $ 426,597 $ 69,632 $ (3,016) $ 72,648 17 % The increase in PLP-USA net sales of $37.9 million, or 19%, was primarily due to higher volumes in energy and communications product sales. International net sales for the nine months ended September 30, 2025 were unfavorably affected by $3.0 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 $80.1 million increased $25.2 million, or 42%, primarily due to an increase in energy product sales and an increase in communications sales due to the acquisition of JAP Telecom in May 2025. EMEA net sales of $100.0 million increased $3.2 million, or 3% primarily due to higher volume in energy product and special industry sales. Asia-Pacific net sales of $82.0 million increased $6.3 million, or 8%, primarily due to volume increases in energy product and special industries sales. Gross profit. Gross profit of $156.9 million for 2025 increased $22.7 million, or 17%, compared to 2024. Excluding the effect of currency translation, gross profit increased $23.6 million, or 18%, as summarized in the following table: Nine Months Ended September 30, (Thousands of dollars) 2025 2024 Change Change Due to Currency Translation Change Excluding Currency Translation % Change Gross profit PLP-USA $ 78,575 $ 66,821 $ 11,754 $ — $ 11,754 18 % The Americas 24,573 18,448 6,125 (1,580) 7,705 42 % EMEA 30,798 27,009 3,789 976 2,813 10 % Asia-Pacific 22,973 21,904 1,069 (299) 1,368 6 % Consolidated $ 156,919 $ 134,182 $ 22,737 $ (903) $ 23,640 18 % PLP-USA gross profit of $78.6 million increased by $11.8 million, or 18%, 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, including LIFO valuation costs. International gross profit for the period ended September 30, 2025 was unfavorably impacted by $0.9 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 $7.7 million, or 42%, which was primarily the result of higher sales volumes. EMEA gross profit increased $2.8 million, or 10%, primarily due to higher sales volume and favorable product mix. Asia-Pacific gross profit increased $1.4 million, or 6%, which was primarily driven by higher sales volume. 27 Costs and expenses. Costs and expenses of $113.5 million for the nine months ended September 30, 2025 increased $12.6 million, or 12%, when compared to 2024. Excluding the effect of currency translation and intercompany transactions, costs and expenses increased $13.0 million, or 13%, as summarized in the following table: Nine Months Ended September 30, (Thousands of dollars) 2025 2024 Change Change Due to Currency Translation Change Due to Intercompany Transactions Change Excluding Currency and Intercompany Transactions % Change Costs and expenses PLP-USA $ 50,832 $ 52,460 $ (1,628) $ — $ (7,169) $ 5,541 11 % The Americas 19,697 14,344 5,353 (957) 3,232 3,078 21 % EMEA 23,572 18,743 4,829 664 1,390 2,775 15 % Asia-Pacific 19,432 15,391 4,041 (132) 2,547 1,626 11 % Consolidated $ 113,533 $ 100,938 $ 12,595 $ (425) $ — $ 13,020 13 % PLP-USA costs and expenses of $50.8 million increased $5.5 million, or 11% year-over-year. PLP-USA’s increase was primarily attributable to higher selling costs and personnel costs. International costs and expenses for the nine months ended September 30, 2025 were favorably impacted by $0.4 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 $19.7 million increased $3.1 million primarily due to an increase in personnel costs and the impact of foreign currency remeasurement. EMEA costs and expenses of $23.6 million increased by $2.8 million primarily due to higher personnel cost and a recovery of bad debt in the second quarter of 2024 that did not recur. Asia-Pacific costs and expenses of $19.4 million increased $1.6 million primarily due to a gain on the sale of capital assets in the first quarter of 2024 that did not recur. Other Expense, net. Other expense, net of $10.1 million for the nine months ended September 30, 2025 was unfavorable by $10.3 million when compared to Other income, net for the nine months ended September 30, 2024 of $0.2 million. The unfavorable movement was mainly due to an $11.7 million pension termination charge recorded in the third quarter of 2025, offset by government incentives received in 2025 related to our facility in China. Income taxes. Income taxes for the nine months ended September 30, 2025 and 2024 were $6.5 million and $6.8 million based on pre-tax income of $33.3 million and $33.4 million, respectively. The tax rate for the nine months ended September 30, 2025 and 2024 was 19% and 20%, respectively. The effective tax rate for the nine months ended September 30, 2025 was lower than the effective tax rate for the same period in 2024 mainly due to a discrete tax benefit recorded in the third quarter related to the release of amounts in OCI attributed to the pension termination, partially offset by increased foreign withholding taxes in the same period in 2024. Net income. As a result of the preceding items, net income for the nine months ended September 30, 2025 was $26.8 million, compared to $26.6 million for 2024. Excluding the effect of currency translation, net income increased $0.2 million as summarized in the following table. The increase in net income was due to increases in operating income described above, offset by the pension termination charge recorded in the third quarter of 2025. Nine Months Ended September 30, (Thousands of dollars) 2025 2024 Change Change Due to Currency Translation Change Excluding Currency Translation % Change Net income (loss) PLP-USA $ 14,497 $ 11,719 $ 2,778 $ — $ 2,778 24 % The Americas 4,153 4,268 (115) (288) 173 4 % EMEA 5,542 5,893 (352) 192 (544) (9) % Asia-Pacific 2,656 4,761 (2,105) 102 (2,207) (46) % Consolidated $ 26,848 $ 26,642 $ 206 $ 6 $ 200 1 % 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, 2024 filed on March 13, 2025 with the Securities and Exchange Commission and are, therefore, not presented herein. 28 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 2025, we used cash of $30.0 million for capital expenditures, mainly related to new facilities in the EMEA region. We ended the first nine months of 2025 with $72.9 million of cash, cash equivalents and restricted cash (collectively, “Cash”). Our Cash is held in various locations throughout the world. At September 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. Total debt, including notes payable, at September 30, 2025 was $38.9 million. The Company maintained a credit facility (the "Facility") with a capacity of $60.0 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. On July 30, 2025, the Company amended the Facility again to reduce the borrowing capacity from $90.0 million to $60.0 million as well as increase the permitted indebtedness limit secured by mortgages, security interests or other liens from $35.0 million to $55.0 million. There were no other material changes to the Facility. At September 30, 2025, our unused availability under the Facility was $52.1 million and our bank debt to equity percentage was 8.3%. The Facility contains, among other provisions, requirements for maintaining levels of net worth and profitability. At September 30, 2025, 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. As of September 30, 2025, $11.1 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. On July 16, 2025, PLP Poland (Belos) S.A. ("PLP Poland"), a subsidiary of the Company, entered into a non-revolving investment loan with Bank Polska Kasa Opieki Spolka Akcynja ("Bank Pekao S.A") to finance the construction of a new manufacturing plant for an amount up to PLN100.3 million ($27.6 million). The maturity date of the loan is January 31, 2035 and is payable in annual installments in the amounts of PLN5.3 million ($1.5 million) in 2026, PLN9.0 million ($2.6 million) in 2027, PLN9.6 million ($2.6 million) in 2028 through 2034, and PLN18.8 million ($5.3 million) in 2035. The loan bears interest at the one month Warsaw Interbank Offered Rate ("WIBOR") plus 1.0% unless the Company does not meet the covenants as set forth in the Facility with PNC, at which point the WIBOR spread becomes 1.5%. The current manufacturing plant owned by PLP Poland, the plant under construction and all fixed assets within the plants are pledged as collateral against the loan. The loan also is guaranteed by the Company. Our Asia-Pacific segment had $0.1 million in restricted cash for the periods ended September 30, 2025 and December 31, 2024, respectively. The restricted cash was used to secure bank guarantees and is included in Cash, cash equivalents and restricted cash on the Consolidated Balance Sheets. We expect that our major source of funding for 2025 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, 2025 was $51.5 million compared to $43.4 million in the comparable prior year nine-month period. The $8.1 million increase was primarily a result of the net favorable movement in non-cash items of $22.9 million, including the pension termination, offset by changes in operating assets and liabilities. 29 Net cash used in investing activities for the nine months ended September 30, 2025 was $33.2 million compared to $7.7 million in the comparable prior year nine-month period. The $25.5 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. Net cash used in financing activities for the nine months ended September 30, 2025 was $7.3 million compared to $40.8 million in the comparable prior year nine-month period. The $33.5 million change was primarily the result of a reduction in net payments of long-term debt. 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 September 30, 2025, we had $1.8 million of current operating lease liabilities and $6.2 million of noncurrent operating lease liabilities. Total liabilities related to finance lease obligations were approximately $0.7 million at September 30, 2025. As of September 30, 2025, the Company had total outstanding guarantees of $14.7 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, 2025, the Company had total outstanding letters of credit of $3.5 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, 2025, and December 31, 2024, $19.9 million and $8.8 million was outstanding, of which $5.5 million and $8.2 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. Any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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. Use of words such “anticipates,” “believes,” “may,” “should,” “will,” “would,” “could,” “plans,” “projects,” “expects,” “estimates,” “predicts,” “targets,” “forecasts,” “intends,” “contemplates,” and similar words may identify forward-looking statements. 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 United States (“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, recently enacted or future 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 (such as the 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); • 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; 30 • 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, trade 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 or components of these products. The Company’s supply chain could face disruptions and constraints from such tariffs, inflationary pressures and ongoing wars and military conflicts, 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 and uncertainty in significant government regulations and funding priorities, including those affecting environmental compliance or regulatory or third-party 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 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, 2024 which was filed on March 13, 2025.