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Item 1. Business

2023-03-03 compared with 2022-03-04 · 126 added, 103 removed, 219 unchanged (51% of the section changed)

Preformed Line Products Company together with its subsidiaries (the “Company”) is an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead, ground-mounted and underground networks for the energy, telecommunication, cable operators, information (data communication) and other similar industries.

Preformed Line Products Company together with its subsidiaries (the “Company”

or "PLP") is an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead, ground-mounted and underground networks for energy, telecommunication, cable, data communication and other similar industries.

The Company’s primary products support, protect, connect, terminate and secure cables and wires.

The Company also provides solar hardware systems and mounting hardware for a variety of solar power applications.

The Company’s 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.

The Company provides formed wire solutions, connectors, fiber optic and copper splice closures, solar hardware mounting applications, and electric vehicle charging station foundations.

The Company’s 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 primarily related to the energy and communications markets.

The Company serves a worldwide market through strategically located domestic and international manufacturing facilities.

Each of the Company’s domestic and international manufacturing facilities have obtained an International Organization of Standardization (“ISO”) 9001:2015 Certified Management System Certificate.

Each of the Company’s domestic and international manufacturing facilities have obtained or are actively seeking an International Organization of Standardization (“ISO”) 9001:2015 Certified Management System Certificate.

The ISO 9001:2015 certified management system is a globally recognized certified quality standard for manufacturing and assists the Company in marketing its products throughout the world.

The Company’s customers include public and private energy utilities and communication companies, cable operators, financial institutions, governmental agencies, contractors and subcontractors, distributors and value-added resellers.

The Company’s customers include public and private energy utilities and communication companies, cable operators, governmental agencies, contractors and subcontractors, distributors and value-added resellers.

The Company is not dependent on a single customer or small group of customers.

No single customer accounts for more than 10% of the Company's consolidated revenues.

The Company has one customer accounting for 12.5% of the Company's consolidated revenues.

The Company’s products include:

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Special Industries Products

Energy Products are used to support, protect, terminate and secure both power conductor and fiber communication cables and to control cable dynamics (e.g., vibration).

- Solar Framing and Electric Vehicle Products

- Inspection Services

Energy Products are used for supporting, protecting, terminating and splicing transmission and distribution lines as well as bolted, welded, and compressed connectors for substations.

PLP offers a full array of products for OPGW (Optical Ground Wire) and ADSS (All Dielectric Self Supporting) fiber optic cables, which are commonly used to monitor and control power networks.

Formed wire products are the mainstay of PLP’s product offering and such products enjoy an almost universal acceptance in the Company’s markets.

Formed wire products are based on the principle of forming a variety of stiff wire materials into a helical (spiral) shape.

Advantages of using the Company’s helical formed wire products are that they are economical, dependable and easy to use.

The Company introduced formed wire products to the power industry over 70 years ago and such products enjoy an almost universal acceptance in the Company’s markets.

Related products include hardware for supporting and protecting transmission conductors, spacers, spacer-dampers, stockbridge dampers, corona suppression devices and various compression fittings for dead-end applications.

The advantages of using the Company’s helical formed wire products are that they are economical, dependable and easy to use.

Additional energy product offerings include a wide array of string hardware products, polymer insulators, wildlife protection, substation fittings and motion control devices like spacer dampers.

Energy products were approximately 59%, 61% and 66% of the Company’s revenues in 2022, 2021 and 2020, respectively.

Communications Products , including protective closures, are used to protect fixed line communication networks, such as fiber optic cable or copper cable, from moisture, environmental hazards and other potential contaminants.

The protective closures also support Fiber-to-the-Premises ("FTTP") applications by carrying fiber optic technology into homes and businesses.

In addition to closures, the Company supplies the communication industry with formed wire products to hold, support, protect and terminate the copper wires and cables and the fiber optic cables used by that industry to transfer voice, video or data signals.

Communications Products include rugged outside plant (OSP) closures to protect and support wireline and wireless networks, such as fiber optic cable or copper cable, from moisture, environmental hazards and other potential contaminants.

The precision engineered OSP closures support many FTTx (Fiber-to-the-X), 4G/5G applications and are deployed at various points in the network—deadend, middle-mile and last-mile—but primarily are used in modern FTTH (Fiber-to-the-Home) applications.

In addition to the OSP closures, the Company supplies demarcation related products that include wall boxes, pre-terminated cabinets, wall plates and passive components that are typically deployed at residences, businesses or MDUs (Multi-dwelling units).

The Company supplies formed wire products, utility pole line hardware, motion control products and cable storage devices used to hold, support, protect and terminate various cable types that are used to transfer voice, video or data signals.

These communications products serve all segments of the telecommunications industry including but not limited to network operators, broadband service providers, wireless internet service providers, enterprise networks, governmental agencies, educational institutions, and electric utilities deploying fiber optics.

Communications products were approximately 33%, 30% and 24% of the Company’s revenues in 2022, 2021 and 2020, respectively.

Special Industries Products include hardware assemblies, pole line hardware, resale products, underground connectors, solar hardware systems, guy markers, tree guards, fiber optic cable markers, pedestal markers and urethane products.

They are used by energy, renewable energy, communications, cable and special industries (i.e., metal building, tower and antenna industries, the agriculture and arborist industries, and marine systems industry) for various applications and are defined as products that complement the Company’s core line offerings.

Special Industries Products include hardware assemblies, pole line hardware, plastic products, cable dynamics/vibration solutions, interior/exterior connectors, tools, and urethane solutions.

They are used by energy, renewable energy, communications, cable and other industries for specialized applications.

Also included in Special Industries is the Inspection Services group which provides safe and reliable drone inspection services for utility assets, including transmission and distribution power lines, substations, generation facilities, and communications assets as well as solar framing and electric vehicle (EV) offerings which include mounting solutions for photovoltaic solar applications, including commercial, industrial, government, utility, and residential applications as well as

pre-fabricated, precision-engineered EV charging station foundations.

Special industries products were approximately 8%, 9% and 10% of the Company’s revenues in 2022, 2021 and 2020, respectively.

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Sources of supply of raw materials are not significantly different internationally.

See Note M in the Notes to Consolidated Financial Statements for information and financial data relating to the Company’s international operations that represent reportable segments.

See Note 15 in the Notes to Consolidated Financial Statements for information and financial data relating to the Company’s international operations that represent reportable segments.

Sales and Marketing

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representatives, as well as key direct accounts and distributors who also buy and resell the Company’s products.

The manufacturer’s representatives are independent organizations that represent the Company as well as other complimentary product lines.

The manufacturers' representatives are independent organizations that represent the Company as well as other complementary product lines.

These organizations are paid a commission based on the sales amount they generate.

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The Company’s research and development activities have resulted in numerous patents being issued to the Company (see “Patents and Trademarks”

Early in its history, the Company recognized the need to understand the performance of its products and the needs of its customers.

To that end, the Company developed a 38,000 square foot Research and Engineering Center located at its corporate headquarters in Mayfield Village, Ohio.

To understand the performance of its products, and enhance the goals of ensuring quality and exceeding customer expectations, the Company has a 38,000-square-foot Research and Engineering Center located at its corporate headquarters in Mayfield Village, Ohio.

Using the Research and Engineering Center, engineers and technicians simulate a wide range of external conditions encountered by the Company’s products to ensure quality, durability and performance.

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In addition to testing, the work performed at the Company’s Research and Development Center continues to fuel product development efforts.

For example, the Company estimates that approximately 17.9% of 2021 revenues were attributed to products developed by the Company in the past five years.

In addition, the Company’s position in the industry is further reinforced by its long-standing leadership role in many key international technical organizations which are charged with the responsibility of establishing industry-wide specifications and performance criteria, including IEEE (Institute of Electrical and Electronics Engineers), CIGRE (Counsiel Internationale des Grands Reseaux Electriques a Haute Tension), and IEC (International Electromechanical Commission).

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As of December 31, 2022, the Company had obtained U.S.

registration on 32 trademarks and 4 trademark application remained pending.

registration on 30 trademarks, and 2 trademark applications remained pending.

International registrations amounted to 264 registrations in 38 countries, with 24 pending international registrations.

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This high level of customer service and customer responsiveness is a hallmark of the Company.

The Company’s 30 sales and manufacturing locations ensure close support and proximity to customers worldwide.

The Company’s domestic and international sales and manufacturing locations ensure close support and proximity to customers worldwide.

Domestically, there are several competitors for formed wire products.

Although it has other competitors in many of the countries where it has plants, the Company has leveraged its expertise and is very strong in the global market.

Although it has other competitors in many of the countries where it has operations, the Company has leveraged its expertise and is very strong in the global market.

The Company believes that it is the world’s largest manufacturer of formed wire products for energy and communications markets.

However, the Company’s formed wire products compete against other pole line hardware products manufactured by other companies.

The fiber optic closure market is one of the most competitive product areas for the Company, with the Company competing against, among others, CommScope and Corning.

There are a number of primary competitors and several smaller niche competitors that compete at all levels in the marketplace.

The Company believes that it is one of four leading suppliers of fiber optic closures.

The OSP closure market is one of the most competitive product areas for the Company, with a number of primary competitors and several smaller niche competitors that compete at all levels in the marketplace.

The Company believes that it is one of four leading suppliers of OSP closures.

Sources and Availability of Raw Materials

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The Company believes there are multiple sources of supply for these products.

The Company relies on sole source manufacturers for certain raw materials used in production.

The current state of economic uncertainty presents a risk that existing suppliers could go out of business or be unable to meet customer demand.

However, there are other potential sources available for these materials, and the Company believes that it could relocate the tooling and processes to other manufacturers if necessary.

Raw material costs increased throughout 2021, partially as a result of supply chain constraints.

The Company expects prices on metals and plastics to continue to increase throughout 2022.

Throughout 2021, the Company experienced significant raw material and transportation cost inflation that negatively affected its earnings.

To offset these increased costs, the Company implemented several price increases in the U.S.

and internationally in 2021.

Due to the large volume in the Company's backlog, tailwinds from these increases are expected in 2022, however, continued cost inflation in these areas may require further price adjustments in future periods to maintain profit margin.

The Company has expanded its supply chain but, in limited circumstances, does rely on sole source manufacturers for certain raw materials.

This reliance presents a risk that existing suppliers could go out of business or be unable to meet customer demand.

there are other potential sources available for these materials, and the Company believes that it could relocate the tooling and processes to other manufacturers if necessary.

Throughout 2022, the Company experienced some raw material and transportation cost inflation that negatively affected its earnings.

To offset these increased costs, the Company implemented price increases in the U.S.

and internationally.

Due to the large volume in the Company's backlog, tailwinds from these increases are expected in 2023;

however, continued cost inflation in these areas may require further price adjustments in future periods to maintain profit margin.

Any price increases could have a negative effect on demand.

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As a result, the Company does not have a wide variation in sales from quarter to quarter.

Environmental, Social and Governance Matters

Environmental, Social and Governance Matters (ESG)

The Company is subject to extensive and changing federal, state, and local environmental laws, including laws and regulations that (i) relate to air and water quality, (ii) impose limitations on the discharge of pollutants into the environment, (iii) establish standards for the treatment, storage and disposal of toxic and hazardous waste, and (iv) require proper storage, handling, packaging, labeling, and transporting of products and components classified as hazardous materials.

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however, such events could make it difficult for the Company to deliver products and services to its customers and cause it to incur substantial expense.

The Company is committed to supporting environmental, social and governance ("ESG") initiatives and to its efforts to being a responsible and sustainable contributor to the environment, its employees, and the communities in which it operates.

The Company is committed to supporting ESG initiatives and to its efforts to being a responsible and sustainable contributor to the environment, its employees, and the communities in which it operates.

The Company is committed to reducing harmful air emissions, improving gas, electric and water usage efficiency while implementing alternative energy sources.

The Company’s locations are also focused on efforts to reduce its waste, water and energy consumption through the implementation of such programs as pollution prevention, recycling waste materials in both manufacturing and office facilities, reducing solid waste disposal, reducing harmful air emissions, and implementing alternative energy sources.

An example of this commitment is through solar power installations at some of the Company’s locations around the globe which are currently generating 1.4 megawatts of power.

An example of this commitment is through solar power installations at some of the Company’s locations around the globe, including a new solar carport with multiple EV charging stations at the Company’s corporate headquarters.

The Company has also installed more efficient LED lighting at many of its operations to further reduce energy usage.

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Environmental Management Systems Certification.

The Company has adopted several policies, including the Code of Conduct, which stresses the importance of adhering to the laws and contributing to society.

In addition to monitoring and managing compliance with environmental regulations, the Company is also committed to sustainability and environmental protection initiatives.

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The Company is also committed to partnering with its customers to develop innovative products, technologies, and services that meet their needs while mitigating risk to the environment and natural resources.

This is evident through the Company’s commitment to supporting fiber-optic connectivity, which is more energy efficient than copper cable.

Additionally, the Company's product offerings further enhance global climate sustainability by bolstering grid reliability and efficiency, strengthening resilience to climate events, enabling transitions to renewable energy and upgrading aging infrastructure.

The Company also quickly provides repair products to customers in the event of emergencies or natural disasters such as hurricanes, tornadoes, earthquakes, floods or ice storms.

PLP is a trusted supplier when natural disasters occur.

The Company has always supported numerous charitable organizations and promotes community involvement.

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The Company’s goal is to create a work environment that enables employees to perform in an environment where they feel respected and valued.

As a global company with employees in over 20 countries, the Company values its broad diversity of cultures, ethnicities, races, languages, religions, sexual and gender orientations and is committed to cultivating a diverse, open and inclusive work environment.

Workplace satisfaction is a key to attracting and retaining employees.

As a global company with employees in 20 countries, the Company values its broad diversity of cultures, ethnicities, races, languages, religions, sexual and gender orientations and is committed to cultivating a diverse, open and inclusive work environment.

Workplace satisfaction is key to attracting and retaining employees.

The Company has built a culture where integrity and honesty guide the decision-making process, while promoting a culture of learning and talent development through tuition reimbursement, training, wellness programs, flexible benefits, and competitive compensation.

The Company has also adopted several policies, including the Code of Conduct, which stresses the importance of adhering to laws and contributing to society.

The Company has always had safety as a core value and promotes a health and safety culture that engages and empowers its employees to take responsibility for the health and safety of themselves and their co-workers.

Further, throughout the COVID-19 pandemic, the Company has been successful with proactive measures to protect the health and safety of its employees and to maintain business continuity.

The Company has established several safety protocols in its production and office areas, including, but not limited to, schedule rotations, face coverings, barriers, physical distance requirements, enhanced cleaning procedures, body temperature monitoring, vaccination clinics and employer-sponsored COVID-19 testing.

The Company continues to assess all challenges related to COVID-19 and regularly updates its employees.

For more information on the risks related to the Company’s human capital resources, see Item 1A –

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Available Information

The Company maintains an Internet site at http://www.preformed.com, on which the Company makes available, free of charge, the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC.

The Company maintains an Internet site at http://www.plp.com, on which the Company makes available, free of charge, the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC.

The Company’s SEC reports can be accessed through the investor relations section of its Internet site.

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The Company’s business, operating results, financial condition and cash flows may be affected by a number of factors including, but not limited to those discussed below.

Any of these factors could cause the Company’s actual results to vary material from recent results of future anticipated results.

Any of these factors could cause the Company’s actual results to vary material from recent results or future anticipated results.

Industry and Economic Risks

Due to the Company’s dependency on the energy and telecommunication industries, the Company is susceptible to negative trends relating to those industries that could adversely affect the Company’s operating results.

The Company’s sales to the energy and telecommunication industries represent a substantial portion of the Company’s historical sales.

Due to the Company’s dependency on the energy and communication industries, the Company is susceptible to negative trends relating to those industries that could adversely affect the Company’s operating results.

The Company’s sales to the energy and communication industries represent a substantial portion of the Company’s historical sales.

The concentration of revenue in such industries is expected to continue into the foreseeable future.

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As a result, some customers may significantly reduce or delay their spending or may not continue as going concerns, which could have a material adverse effect on the Company’s business, operating results and financial condition.

In addition, the Company may incur exit-related costs and impairments of goodwill, definite and indefinite-lived intangible assets and property, fixtures and equipment as the Company makes corresponding changes to its business to reflect these changes and uncertainties in the Company’s industries and customer demand, and these costs and impairments could have a significant negative impact on the Company’s operating results for the period in which they are incurred.

In addition, the Company has incurred and may in the future incur exit-related costs and impairments of goodwill, definite and indefinite-lived intangible assets and property, fixtures and equipment as the Company makes corresponding changes to its business to reflect these changes and uncertainties in the Company’s industries and customer demand, and these costs and impairments could have a significant negative impact on the Company’s operating results for the period in which they are incurred.

Consolidation presents an additional risk to the Company in that merged customers will rely on relationships with a source other than the Company.

Consolidation may also increase the pressure on suppliers, such as the Company, to sell product at lower prices.

The intense competition in the Company’s markets, particularly telecommunication, may lead to a reduction in sales and earnings.

The intense competition in the Company’s markets, particularly communication, may lead to a reduction in sales and earnings.

The markets in which the Company operates are highly competitive.

The level of intensity of competition may increase in the foreseeable future due to anticipated growth in the telecommunication and data communication industries.

The Company’s competitors in the telecommunication and data communication markets are larger companies with significant influence over the distribution network.

The level of intensity of competition may increase in the foreseeable future due to anticipated growth in the telecommunication and data communication industries and potential new entrants into the market.

The Company’s current competitors in the telecommunication and data communication markets are larger companies with significant influence over the distribution network.

The Company may not be able to compete successfully against its competitors, many of which may have access to greater financial resources than the Company.

In addition, the pace of technological development in the telecommunication market is rapid and these advances (i.e., wireless, fiber optic network infrastructure, etc.) may adversely affect the Company’s ability to compete in this market.

In addition, the pace of technological development in the telecommunication market is rapid and these advances (i.e., wireless, fiber optic network infrastructure, etc.) and the ability of the Company’s larger competitors or new providers to adapt more efficiently may adversely affect the Company’s ability to compete in this market.

If the Company is unable to continue to compete effectively, its sales and margins could decline and its business, financial condition and results of operations would be adversely affected.

Competitors’

introduction of products embodying new technologies or the emergence of new industry standards can render existing products or products under development obsolete or unmarketable and result in lost sales.

The energy and telecommunication industries are characterized by rapid technological change.

The energy and communication industries are characterized by rapid technological change.

Satellite, wireless and other communication technologies currently being deployed may represent a threat to copper, coaxial and fiber optic-based systems by reducing the need for wire-line networks.

Future advances or further development of these or other new technologies may have a material adverse effect on the Company’s business, operating results and financial condition as a result of lost sales.

Price increases or decreased or delayed availability of raw materials could result in lower earnings.

Future advances or further development of these or other new technologies can render existing products or products under development obsolete or unmarketable, which may have a material adverse effect on the Company’s business, operating results and financial condition as a result of lost sales.

Price increases or delayed or decreased availability of raw materials could result in lower earnings.

The Company’s cost of sales may be materially adversely affected by increases in the market prices of the raw materials used in the Company’s manufacturing processes.

During 2021, the Company implemented several price increases in the U.S.

and internationally to mitigate rising material costs.

This may have impacted or could continue to impact the Company's demand for its products.

Over the past few years, the Company has experienced inflationary pressures that have impacted its profit margins, primarily due to raw materials increases (specifically, plastic resins, aluminum, petroleum and sand (grit)), coupled with increased freight costs.

The impact of the COVID-19 pandemic and recent inflation, which is expected to continue, has disrupted and may continue to disrupt the global supply chain and could have a material, adverse effect on the ability to secure raw materials and supplies.

The Company has implemented price increases in the U.S.

and internationally to mitigate rising material costs, and additional increases may be needed in the future to maintain profit margins.

This may have impacted or could continue to impact the demand for the Company’s products.

The Company may not be able to pass on further price increases in raw materials to the Company’s customers through increases in product prices.

As a result, the Company’s operating results could be adversely affected.

In addition, any decrease or delay in the availability of these materials or interruptions generally in the global supply chain could slow production and delivery to the Company’s customers.

In limited circumstances, the Company relies on sole source suppliers for certain materials and may face challenges or delays in establishing an alternative source.

As a result of these factors, the Company’s operating results could be adversely affected.

The Company’s international operations subject the Company to additional business risks that may have a material adverse effect on the Company’s business, operating results and financial condition.

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Due to its international sales, the Company is subject to the risks of conducting business internationally, including unexpected changes in, or impositions of, legislative or regulatory requirements, which could materially adversely affect U.S.

dollar sales or operating expenses, tariffs and other barriers and restrictions, potentially longer payment cycles, greater difficulty in accounts

receivable collection, reduced or limited protection of intellectual property rights, potentially adverse taxes and the burdens of complying with a variety of international laws and communications standards.

The Company is subject to foreign currency volatility, which could materially impact the Company’s operating results, including the impact of hyper-inflationary conditions in certain economies, particularly where exchange controls limit or eliminate the Company’s ability to convert from local currency.

The Company is also subject to general geopolitical risks, such as political and economic instability, social unrest, acts of war, military conflict, international hostilities or the perception that hostilities may be imminent, terrorism and changes in diplomatic and trade relationships, including any retaliatory measures, sanctions or tariffs imposed in response to any acts of war or military conflicts in connection with its international operations.

dollar sales or operating expenses, tariffs and other barriers and restrictions, potentially longer payment cycles, greater difficulty in accounts receivable collection, reduced or limited protection of intellectual property rights, potentially adverse taxes and the burdens of complying with a variety of international laws and communications standards.

For example, the Company is subject to antitrust and tax requirements, anti-boycott regulations, import/export/customs regulations and other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act.

Any new regulatory or trade initiatives could impact the Company’s operations in certain countries.

Failure to comply with any such legal requirements could subject the Company to monetary liabilities and other sanctions, which could harm its business, results of operations and financial condition.

The Company is also subject to foreign currency volatility, which could materially impact the Company’s operating results, including the impact of hyper-inflationary conditions in certain economies, particularly where exchange controls limit or eliminate the Company’s ability to convert from local currency.

The Company’s operations are also exposed to general geopolitical risks, such as political and economic instability, social unrest, acts of war, military conflict, international hostilities or the perception that hostilities may be imminent, terrorism and changes in diplomatic and trade relationships, including any retaliatory measures, sanctions or tariffs imposed in response to any acts of war or military conflicts in connection with its international operations.

Any such disruption could cause delays in the production and distribution of the Company’s products and the loss of sales and customers.

Moreover, these types of events could negatively impact consumer spending or the economy in the impacted regions or depending upon the severity, globally.

These risks of conducting business internationally may have a material adverse effect on the Company’s business, operating results and financial condition.

Additionally, in 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union (“Brexit”).

Continued uncertainty relating to Brexit could adversely impact the Company.

The United Kingdom formally exited the European Union on January 31, 2020 and had a transition period that ended on December 31, 2020.

Since January 1, 2021, the European Union –

United Kingdom Trade and Cooperative Agreement has provisionally been in effect and entered into force on May 21, 2021.

Due to the lack of comparable precedent, the ultimate effect of Brexit and the trade and cooperative agreement are difficult to predict and could continue to have a further adverse impact on global economic conditions, the stability of global financial markets and global market liquidity, including effects on the discontinuation, reform or replacement of LIBOR as a reference interest rate included under the Company’s credit facility.

Any of these factors could depress economic activity or lead to long-term volatility in the currency markets which could adversely impact the Company’s business, financial condition and results of operations.

The Company's financial results could be adversely affected by the change in interest rates.

Moreover, these types of events could negatively impact consumer spending or the economy in the impacted regions or depending upon the severity, globally, or lead to long-term volatility in the currency markets.

These risks of conducting business internationally and instability in global economic conditions may have a material adverse effect on the Company’s business, operating results and financial condition.

The Company's financial condition and results could be adversely affected by its level of debt and changes in interest rates.

Any period of interest rate increases may adversely affect the Company’s profitability.

As of December 31, 2021, 38% of the Company's indebtedness bears interest at rates that float with the market.

A higher level of floating rate debt would increase the exposure to changes in interest rates.

Additionally, the interest rates on some of the Company’s debt is tied to LIBOR.

The use of LIBOR is expected to be phased out by June 2023.

The uncertainty regarding the transition from LIBOR to another reference rate or rates could have adverse impacts on the Company’s available debt that currently uses LIBOR as a reference rate, and ultimately, adversely affect our financial condition and results of operations.

The COVID-19 pandemic may continue to have a material adverse effect on the Company’s business, operating results and financial condition.

The Company is subject to public health concerns, including viral outbreaks such as the COVID-19 pandemic.

Worldwide economic conditions have been significantly impacted by COVID-19 and the effects could continue to have an adverse effect on the Company’s operations and businesses as government authorities could continue to impose mandatory closures, work-from-home orders and social distancing protocols along with other unknown potential restrictions.

In addition, a higher level of floating rate debt would increase the exposure to changes in interest rates.

As of December 31, 2022, the Company’s total debt, including notes payable, was $89.5 million and the unused availability under its credit facility (the "Facility") was $43.3 million.

On March 2, 2022, the Company amended the Facility to change the index used to determine the interest rate from LIBOR to the Bloomberg Short Term Bank Yield Index (“BSBY”).

The interest rate is defined as BSBY plus 1.125% unless the Company’s funded debt to Earnings before Interest, Taxes and Depreciation ratio exceeds 2.25 to 1, at which point the BSBY spread becomes 1.500%.

The amendment also allowed the Company to change its rate from BSBY to the Secured Overnight Financing Rate (“SOFR”) at the Company’s discretion.

On August 31, 2022, the Company amended the Facility and elected to change its rate from BSBY to SOFR, all other terms remain the same.

The Facility agreement also contains, among other provisions, requirements for maintaining levels of net worth and profitability.

These covenants may restrict the Company’s operations and prevent it from pursuing opportunities that would otherwise be in the Company’s best interest for long-term growth.

Natural disasters, severe weather, public health concerns, epidemics or pandemics could, and the COVID-19 pandemic may continue to, have a material adverse effect on the Company’s business, operating results and financial condition.

Natural disasters, severe weather and the effects of climate change, including increased frequency and severity of storms, floods, fires, fog, mist, freezing conditions, sea-level rise and other climate-related events, and other catastrophic events could disrupt our operations, cause damage to our business operations, our suppliers or our customers and could have an adverse effect on the Company’s operations, business and financial condition.

Extreme weather conditions could also limit the availability of our resources, increase the costs of our products or could cause the installation of our products and systems to be delayed or canceled.

Further, legislative and regulatory responses to climate change initiatives could require the Company to incur increased costs and make additional and significant capital investments in the Company’s business.

The Company also is subject to public health concerns, including viral outbreaks such as the COVID-19 pandemic.

Worldwide economic conditions have been significantly impacted by COVID-19 and the effects could continue to have an adverse effect on the Company’s operations and businesses as government authorities could continue to impose restrictions to manage it, including mandatory closures, work-from-home orders and social distancing protocols.

COVID-19 has disrupted and could continue to disrupt the global supply chain, which could have a material, adverse effect on the Company’s ability to secure raw materials and supplies and could result in increased costs and the loss of sales and customers.

The impact of COVID-19 could potentially exacerbate all the risks discussed and lead to the creation of new risks, any of which could have a material adverse effect on the Company’s business, operating results and financial condition.

The impact of COVID-19 or any other viral outbreak or health pandemic could potentially exacerbate all the risks discussed and lead to the creation of new risks, any of which could have a material adverse effect on the Company’s business, operating results and financial condition.

The duration and scope of the COVID-19 pandemic cannot be predicted, and therefore, any anticipated negative financial impact to the Company’s operating results cannot be reasonably estimated.

Business and Operations Risks

The Company’s business will suffer if the Company fails to develop and successfully introduce new and enhanced products that meet the changing needs of the Company’s customers.

The Company’s ability to anticipate changes in technology and industry standards and to successfully develop and introduce new products on a timely basis is a significant factor in the Company’s ability to grow and remain competitive.

The Company’s business will suffer if the Company fails to offer quality products and a high level of customer service, as well as develop and successfully introduce new and enhanced products that meet the changing needs of the Company’s customers.

The Company’s reputation and sales rely on its ability to continue to offer high quality products with timely delivery, accompanied by a high level of customer service, particularly in cases of emergency.

If changes in the availability of materials or delays in the supply chain or transportation industry, among other factors, negatively impact the Company’s ability to meet customer expectations, its sales and profits may suffer.

Further, the Company’s ability to anticipate changes in technology and industry standards and to successfully develop and introduce new products on a timely basis is a significant factor in the Company’s ability to grow and remain competitive.

New product development often requires long-term forecasting of market trends, development and implementation of new designs and processes and a substantial capital commitment.

The trend toward consolidation of the energy, telecommunication and data communication industries may require the Company to quickly adapt to rapidly changing market conditions and customer requirements.

In addition, as the Company expands its offerings in new areas, its success with these products and services will depend on its ability to offer quality, reliability and other competitive advantages.

Any failure by the Company to anticipate or respond in a cost-effective and timely manner to technological developments or changes in industry standards or customer requirements, or any significant delays in product development or introduction or any failure of new products to be widely accepted by the Company’s customers, could have a material adverse effect on the Company’s business, operating results and financial condition as a result of reduced net sales.

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The Company expects to continue a strategy of identifying and acquiring businesses with complementary products.

In connection with this growth strategy, the Company faces certain risks and uncertainties in addition to the risks faced in the Company’s day-to-day operations, including the risks pertaining to integrating acquired businesses, realizing the benefits of acquired technology, utilizing new personnel and operating in new jurisdictions.

In connection with this growth strategy, the Company faces certain risks and uncertainties in addition to the risks faced in the Company’s day-to-day operations, including the risks pertaining to integrating acquired businesses, realizing the benefits of acquired technology, expanding exposure to unknown liabilities, utilizing and retaining new personnel and operating in new jurisdictions.

The process of identifying, negotiating and integrating acquisitions can divert substantial time and attention of management and impose unexpected costs.

In addition, the Company may incur debt to finance future acquisitions, and the Company may issue securities in connection with future acquisitions that may dilute the holdings of current and future shareholders.

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Any failure to successfully complete acquisitions or to successfully integrate such strategic acquisitions could have a material adverse effect on the Company’s business, operating results and financial condition.

The Company may have interruptions in or lose business due to the uncertainty of the global economy, specifically related to the lack of available funding for the Company’s customers.

The Company may have interruptions in or lose business due to the uncertainty of the global economy, including due to the lack of available funding for the Company’s customers.

The demand for the Company’s products is significantly affected by the amount of discretionary business and consumer spending, each of which is impacted by the continued uncertainty of the global economy.

The Company’s operations could be adversely affected by global economic conditions such as recession, political or social unrest, economic instability, acts of war, military conflict, international hostilities or the perception that hostilities may be imminent, terrorism and changes in diplomatic and trade relationships, including any retaliatory measures, sanctions or tariffs imposed in response to any acts of war or military conflicts, public health concerns or otherwise.

The liquidity and financial position of the Company’s customers could also impact their ability to pay in full and/or on a timely basis.

This lack of funding could have a negative impact on the Company’s operating results and financial condition.

The Company’s operations have been affected and could continue to be adversely affected by global economic conditions such as recession, political or social unrest, economic instability, inflation, rising interest rates, acts of war, military conflict, international hostilities or the perception that hostilities may be imminent, terrorism and changes in diplomatic and trade relationships, including any retaliatory measures, sanctions or tariffs imposed in response to any acts of war or military conflicts, public health concerns or otherwise.

If these conditions adversely impact the liquidity and financial position of the Company’s customers, their demand for the Company’s products could decrease and their ability to pay in full and/or on a timely basis may also be impacted.

A decline in demand for the Company’s products and/or lack of funding to fulfill payment terms could have a negative impact on the Company’s operating results and financial condition.

The Company employs information technology systems to support its business, and any material breach, interruption or failure may adversely impact the Company’s business.

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Additionally, the Company collects and stores certain data, including proprietary business information, and may have access to confidential or personal information in certain of its businesses that is subject to privacy and security laws, regulations and customer-imposed controls.

Despite the Company’s cybersecurity measures and oversight of such matters by the Board of Directors, which are continuously reviewed and upgraded, the Company’s information technology networks and infrastructure and protected data may still be vulnerable to damage, disruptions or shutdowns due to attack by hackers or breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, service providers including cloud services, natural disasters or other catastrophic events.

employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, service providers including cloud services, natural disasters or other catastrophic events.

It is possible for such vulnerabilities to remain undetected for an extended period, up to and including several years.

Any such events could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to the Company’s reputation, which could adversely affect the Company’s business.

In addition, the Company is subject to various data privacy laws in the many jurisdictions in which it operates, which are rapidly changing and require extensive compliance efforts.

Any events that compromise the Company’s systems or failures to comply with applicable privacy laws could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to the Company’s reputation, which could adversely affect the Company’s business.

The Company’s stock price is subject to volatility.

The stock market in general is highly volatile.

As a result, the market price of the Company’s common shares is similarly volatile and could be subject to wide fluctuations in response to a number of factors, some of which may be beyond the Company’s control.

These factors include actual or anticipated fluctuations in the Company’s operating results, changes in or its ability to achieve estimates of its operating results by analysts, investors or management, analysts’

recommendations regarding its stock or its competitors’

stock, sales of substantial amounts of its common shares by shareholders, actions or announcements by the Company or its competitors, the maintenance and growth of the value of the Company’s brands, litigation, legislation or other regulatory developments affecting the Company or its industry, widespread/pandemic illness, natural disasters, cyber-attacks, terrorist acts, war or other calamities and changes in general market and economic conditions.

Legal, Tax and Regulatory Risks

The Company may be adversely impacted by laws, regulation, and litigation.

The Company is subject to various laws and regulation.

The Company may be adversely impacted by laws, regulations, and litigation.

The Company is subject to various laws and regulations in the many jurisdictions in which it operates.

For example, extensive environmental regulations related to air and water quality, the discharge of pollutants, climate change, the handling of toxic waste and the handling and transport of products and components classified as hazardous impact its daily operations.

The introduction of new laws or regulations, or changes in existing laws or regulations, could increase the costs of doing business.

Various employment and labor laws and regulations govern the Company’s relationships with its employees throughout the world and affect operating costs.

These laws and regulations relate to matters including employment discrimination, minimum wage requirements, overtime, unemployment tax rates, workers’

compensation rates, working conditions, immigration status, tax reporting and other wage and benefit requirements.

The introduction of new laws or regulations, or changes in existing laws or regulations, including minimum wage increases, mandated benefits or other requirements that impose additional obligations on the Company, could increase the costs of doing business.

It is difficult to predict what impact, if any, changes in federal policy, including environmental and tax policies will have on our industry, the economy as a whole, consumer confidence and spending.

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If the Company is required to pay substantial damages and expenses as a result of these or other types of lawsuits, the Company’s business and results of operations would be adversely affected.

Regardless of whether any claims against the Company are valid or whether it is liable, claims may be expensive to defend,

may cause reputational harm (particularly where any claims relate to significant harm to persons and property) and may divert time and money away from the Company’s operations.

Regardless of whether any claims against the Company are valid or whether it is liable, claims may be expensive to defend, may cause reputational harm (particularly where any claims relate to significant harm to persons and property) and may divert time and money away from the Company’s operations.

Insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters.

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Others, including its competitors may independently develop similar technology, duplicate or design around the Company’s intellectual property, and in such cases, it could not assert its intellectual property rights against such parties.

The Company may also be subject to costly litigation in the event its technology infringes upon or otherwise violate a third party’s proprietary rights.

The Company may also be subject to costly litigation in the event its technology infringes upon or otherwise violates a third party’s proprietary rights.

Any claim from third parties may result in a limitation on its ability to use the intellectual property subject to these claims or the requirement to pay a licensing fee or royalty.

The Company may be forced to litigate to enforce or determine the scope and enforceability of its intellectual property rights, trade secrets and know-how, which is expensive, could cause a diversion of resources and may not prove successful, especially in countries where such rights are more difficult to enforce.

resources and may not prove successful, especially in countries where such rights are more difficult to enforce.

The loss of intellectual property protection or the inability to obtain third party intellectual property could harm its business and ability to compete.

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The Company’s effective tax rates could be affected by numerous factors, including but not limited to, intercompany transactions, the relative amount of its foreign earnings, including earnings being lower than anticipated in jurisdictions where the Company has lower statutory rates and higher than anticipated in jurisdictions where the Company has higher statutory rates, losses incurred in jurisdictions for which the Company is not able to realize the related tax benefit, changes in foreign currency exchange rates, changes in its deferred tax assets and liabilities and any related valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations.

In addition, many countries are actively pursuing changes to their tax laws applicable to corporate multinationals such as the proposed U.S.

Build Back Better Plan, which potentially could raise the U.S.

corporate tax rate.

In addition, many countries are actively pursuing changes to their tax laws applicable to corporate multinationals such as 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.

Additionally, due to the COVID-19 pandemic, foreign governments facilitated economic stimulus by enacting new tax legislation throughout 2022.

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The Company does not have any unresolved staff comments.

The Company currently owns or leases 40 facilities, which together contain approximately 2.6 million square feet of manufacturing, warehouse, research and development, sales and office space worldwide.

The Company currently owns or leases various facilities, which together contain approximately 2.6 million square feet of manufacturing, warehouse, research and development, sales and office space worldwide.

Most of the Company’s international facilities contain space for offices, research and engineering (R&E), warehousing and manufacturing with manufacturing using a majority of the space.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business