What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-13 compared with 2024-03-08 · 116 added, 1151 removed, 159 unchanged (89% of the section changed)

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Our other three segments, The Americas, EMEA and Asia-Pacific, support our energy, telecommunications, data communication, solar and other products in each respective geographical region.

The segment managers responsible for each region report directly to the Company’s Chief Executive Officer, who is the chief operating decision maker, and are accountable for the financial results and performance of their entire segment for which they are responsible.

The 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 sales and net income.

We evaluate segment performance and allocate resources based on several factors primarily based on gross sales and income before income taxes.

MARKET OVERVIEW

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There has also been a historical lack of commitment by developed countries to upgrade and strengthen their electrical grids and communication networks despite the growing need.

More recently, increasing commodity prices, inflation, rising interest rates, transportation costs, and foreign currency fluctuations have led to a challenging operating environment.

While these factors generally moderated in 2023, they may continue to provide inherent uncertainty going forward, the COVID-19 pandemic and other large scale environmental events have placed a renewed focus on key infrastructure priorities around the world, including bolstering grid reliability, strengthening grid resilience to climate events, upgrading aging infrastructure, enhancing communication networks and transitioning to renewable energy.

More recently, increasing commodity prices, inflation, tariffs, rising interest rates, transportation costs, and foreign currency fluctuations have led to a challenging operating environment.

While these factors generally moderated in 2024, they may continue to provide inherent uncertainty going forward.

The increasing need for power generation and efficient communication systems has highlighted the need for bolstering grid reliability, strengthening grid resilience to climate events, upgrading aging infrastructure, enhancing communication networks and transitioning to new sources of energy.

Our focused portfolio is well-positioned to respond to these priorities.

Strong domestic demand in 2023 drove record net sales, in our core energy and communications markets, primarily in the first half of the year.

We believe that our leadership position in these and other markets and the ability to deliver reliable products quickly will position us for continued growth as transmission grids and communication networks are enhanced, upgraded and extended.

Our international business is mainly concentrated in the energy and communications markets.

We believe that our leadership position in the domestic energy and communications markets and the ability to deliver reliable products quickly will position us for continued growth as transmission grids and communication networks are enhanced, upgraded and extended.

Our international business is also mainly concentrated in the energy and communications markets.

Historically, our international sales were primarily related to the medium voltage distribution segment of the energy market but have grown through acquisition and new product development to include a significant contribution from the transmission and telecommunications markets.

We believe that we are well positioned to supply the needs of the world’s diverse energy and communication markets as a result of our focused portfolio, strategic operational footprint, including expansion from recent acquisitions and product designs and technologies.

We believe that we are well positioned to supply the needs of the world’s diverse energy and communication markets as a result of our focused portfolio and strategic operational footprint, including expansion from recent acquisitions and product designs and technologies.

The following discussion describes our results of operations for the years ended December 31, 2024, 2023 and 2022.

For additional discussion of our results of operations for the year ended December 31, 2022, see our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 3, 2023.

Our consolidated financial statements are prepared in conformity with U.S.

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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.

Overall customer demand remained strong, predominantly in the first half of the year and contributed to record net sales revenue of $669.7 million for the year ended December 31, 2023.

During the twelve months ending December 31, 2023, the inflationary headwinds we experienced related to raw materials, specifically plastic resins, aluminum and sand (grit), have generally subsided.

Net sales of $593.7 million for the year ended December 31, 2024 decreased $76.0 million year-over-year, mainly due to the continued inventory destocking occurring primarily in the U.S.

The inflationary headwinds we experienced in 2022 and early 2023 related to raw materials, specifically plastic resins, aluminum and sand (grit), have generally subsided.

Costs related to shipping and freight have similarly fallen from their 2022 peak.

The decreases in these underlying costs along with the impacts of our previous price increases have benefited gross margins.

For PLP-USA, our largest business segment, we saw a year-over-year benefit for the twelve-month period ended December 31, 2023 of $19.7 million related to the reduction in these costs.

Given the uncertainties in the macro-economic environment, we cannot determine if these trends will continue.

If inflationary pressures increase again, it may require further price adjustments to maintain profit margin and any price increases may have a negative effect on demand.

Decreases in these underlying costs along with the impacts of our previous price increases benefited gross margins in 2023 and have not meaningfully impacted the results during the twelve months ending December 31, 2024.

If inflationary pressures persist or new tariffs are sustained, it 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.

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dollars its foreign currency denominated loans, trade receivables and payables from its foreign subsidiaries at the December 2024 year-end exchange rates.

The fluctuations of foreign currencies during the years ended December 31, 2023 and December 31, 2022 had a favorable impact on net sales of $0.4 million and an unfavorable impact of $24.2 million, respectively.

The effect of currency translation had a unfavorable impact on net income in the year ended December 31, 2023 of $0.2 million and a favorable impact of $0.3 million in the year ended December 31, 2022.

The fluctuations of foreign currencies during the years ended December 31, 2024 and December 31, 2023 had an unfavorable impact on net sales of $4.2 million and a favorable impact of $0.4 million, respectively.

The effect of currency translation had an unfavorable impact on net income in the year ended December 31, 2024 of $0.7 million and an unfavorable impact of $0.2 million in the year ended December 31, 2023.

On a reportable segment basis, the impact of foreign currency translation on net sales and net income for the years ended December 31, 2024 and 2023, respectively, was as follows:

Foreign Currency Translation Impact

Net Income (Loss)

Net Sales Net Income

(Thousands of dollars) 2024 2023 2024 2023

As shown in our strong financial results, we believe our business portfolio and our financial position are sound and strategically well-positioned.

The Americas $ (5,005) $ 1,771 $ (803) $ 166

EMEA 1,738 1,696 128 (101)

Asia-Pacific (903) (3,042) (52) (278)

Total $ (4,170) $ 425 $ (727) $ (213)

Although customer destocking efforts in the PLP-USA communications and energy markets have impacted our 2024 results, we believe our business portfolio and our financial position are sound and strategically well-positioned.

While PLP-USA sales results were down compared to the period ended December 31, 2023, our international segments had sales amounts comparable with prior year, showing our international footprint provides cyclical benefits.

Our cash generation remains strong as evidenced through a significant reduction in debt levels.

We remain focused on assessing our global market opportunities and overall manufacturing capacity in conjunction with the requirements of local manufacturing in the markets that we serve.

The growth in PLP-USA net sales required additional investment within our PLP-USA facilities, both in the form of operational capacity as well as increased warehouse space.

These investments in our U.S.

operations will allow us to further enhance the service we provide to our U.S.

customers and reduce our lead times.

Additionally, our continued commitment to manufacturing in the USA positions us well for Build America, Buy America requirements of the Broadband Equity, Access, and Deployment Program.

Our continued commitment to manufacturing in the U.S.

positions us well for Build America, Buy America requirements of the Broadband Equity, Access, and Deployment Program.

If necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, increase sales volume and deliver value to our customers.

We have continued to invest in the business to expand into new markets for the Company, evaluate strategic mergers and acquisitions, improve efficiency, develop new products and increase our capacity.

Our liquidity remains strong and we currently have a bank debt to equity percentage of 15.0%.

Period cost containment has been a priority for the Company in 2024, shown through a reduction in costs and expenses of approximately 8%.

Our liquidity remains strong with our bank debt to equity percentage at 6.8%.

We can borrow needed funds at a competitive interest rate under our credit facility.

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Year Ended December 31,

(Thousands of dollars)

(Thousands of dollars) 2024 2023 Change

Net sales $ 593,714 100.0 % $ 669,679 100.0 % $ (75,965)

Cost of products sold 403,903 68.0 434,831 64.9 (30,928)

GROSS PROFIT 189,811 32.0 234,848 35.1 (45,037)

Costs and expenses 139,054 23.4 150,694 22.5 (11,640)

OPERATING INCOME 50,757 8.5 84,154 12.6 (33,397)

Other (expense) income, net

Other income (expense), net 13 0.0 (1,810) (0.3) 1,823

INCOME BEFORE INCOME TAXES 50,770 8.6 82,344 12.3 (31,574)

Income taxes 13,659 2.3 19,007 2.8 (5,348)

NET INCOME 37,111 6.3 63,337 9.5 (26,226)

Net income attributable to noncontrolling interests (17) (0.0) (5) (0.0) (12)

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2024 RESULTS OF OPERATIONS COMPARED TO 2023

In 2023, net sales were $669.7 million, an increase of $32.7 million, or 5.1%, compared to 2022.

Excluding the effect of currency translation, net sales increased 5.1% as summarized in the following table:

In 2024, net sales were $593.7 million, a decrease of $76.0 million, or 11%, compared to 2023.

Excluding the effect of currency translation, net sales decreased 11% as summarized in the following table:

Year Ended December 31,

(Thousands of dollars)

The increase in PLP-USA net sales of $5.3 million, or 1.6%, was primarily due to a volume increase in energy product sales, combined with previously enacted price increases, partially offset by lower volume in communication sales, particularly in the second half of the year as a result of customer inventory destocking.

International net sales for the year ended December 31, 2023 were favorably affected by $0.4 million when local currencies were converted to U.S.

(Thousands of dollars) 2024 2023 Change Change

Translation Change

Translation %

PLP-USA $ 266,704 $ 345,613 $ (78,909) $ — $ (78,909) (23) %

The Americas 90,280 86,059 4,221 (5,005) 9,226 11

EMEA 128,241 135,080 (6,839) 1,738 (8,577) (6)

Asia-Pacific 108,489 102,927 5,562 (903) 6,465 6

Consolidated $ 593,714 $ 669,679 $ (75,965) $ (4,170) $ (71,795) (11) %

The decrease in PLP-USA net sales of $78.9 million, or 23%, was primarily due to lower volumes in communications and energy product sales due to customer destocking efforts.

International net sales for the year ended December 31, 2024 were unfavorably affected by $4.2 million when local currencies were converted to U.S.

The following discussion of changes in net sales excludes the effect of currency translation.

The Americas net sales of $86.1 million decreased $0.9 million, or 1.1%, primarily due to volume decreases within communications sales, partially offset by increases in energy product sales resulting from the contributions of the 2022 Delta acquisition.

EMEA net sales of $135.1 million increased $10.7 million, or 8.7%, primarily due to volume increases in energy product and communication sales in the region.

The Americas net sales of $90.3 million increased $9.2 million, or 11%, primarily due to higher volumes in energy product sales, partially offset by lower communication sales.

EMEA net sales of $128.2 million decreased $8.6 million, or 6%, primarily due to lower volume in communications sales, partially offset by increased volumes in energy product sales.

Asia-Pacific net sales of $108.5 million increased $6.5 million, or 6%, primarily due to volume increases in energy product sales.

Gross Profit.

Gross profit of $234.8 million for 2023 increased $19.7 million, or 9.1%, compared to 2022.

Excluding the effect of currency translation, gross profit increased $19.6 million, or 9.1%, as summarized in the following table:

Gross profit of $189.8 million for 2024 decreased $45.0 million, or 19%, compared to 2023.

Excluding the effect of currency translation, gross profit decreased $43.5 million, or 19%, as summarized in the following table:

Year Ended December 31,

(Thousands of dollars)

PLP-USA gross profit of $139.0 million increased by $9.8 million, or 7.6%, compared to 2022, primarily due to increased sales volume combined with previously enacted price increases and lower material costs, partially offset by higher depreciation charges.

The impact on International gross profit for the year ended December 31, 2023, when local currencies were translated to U.S.

dollars was de minimis.

(Thousands of dollars) 2024 2023 Change Change

Translation Change

Translation %

PLP-USA $ 92,969 $ 138,961 $ (45,992) $ — $ (45,992) (33) %

The Americas 28,608 30,005 (1,397) (1,807) 410 1

EMEA 36,796 36,372 424 462 (38) —

Asia-Pacific 31,438 29,510 1,928 (224) 2,152 7

Consolidated $ 189,811 $ 234,848 $ (45,037) $ (1,569) $ (43,468) (19) %

PLP-USA gross profit of $93.0 million decreased by $46.0 million, or 33%, compared to the same period in 2023, primarily due to lower sales volumes and unfavorable product mix.

International gross profit for the period ended December 31, 2024 was unfavorably impacted by $1.6 million when local currencies were translated to U.S.

The following discussion of gross profit changes excludes the effects of currency translation.

The Americas gross profit

decreased $2.2 million, or 7.0%, which was primarily due to higher manufacturing and depreciation costs.

EMEA gross profit increased $6.7 million or 22.8%, primarily due to incremental margins on the increased sales volume.

Asia-Pacific’s gross profit increased $5.3 million, or 21.2%, which was primarily driven by the incremental margins on the increased sales volume.

The Americas gross profit increased $0.4 million, or 1%, which was primarily the result of higher sales volumes, offset by increased depreciation expense and freight costs.

EMEA gross profit decreased nominally, which was primarily driven by decreased sales volumes offset by favorable product mix and favorable resolution of a warranty claim.

Asia-Pacific gross profit increased $2.2 million, or 7%, which was primarily driven by favorable product mix.

Costs and expenses.

Costs and expenses of $150.7 million for the year ended December 31, 2023 increased $4.9 million, or 3.3%, when compared to 2022.

Excluding the effect of currency translation, costs and expenses increased $4.6 million, or 3.1%, as summarized in the following table:

Costs and expenses of $139.1 million for the year ended December 31, 2024 decreased $11.6 million, or 8%, when compared to 2023.

Excluding the effect of currency translation, costs and expenses decreased $10.9 million, or 7%, as summarized in the following table:

Year Ended December 31,

(Thousands of dollars)

(Thousands of dollars) 2024 2023 Change Change

Translation Change

Translation %

Costs and expenses

PLP-USA costs and expenses of $79.3 million increased $5.3 million, or 7.2% year-over-year.

PLP-USA’s increase was primarily attributable to increased salary-related, insurance and depreciation costs, partially offset by lower professional services costs.

PLP’s costs and expenses for the year ended December 31, 2023 were unfavorably impacted by $0.3 million when local currencies were translated to U.S.

The following discussions of costs and expenses exclude the effect of currency translation.

The Americas costs and expenses of $22.7 million increased $5.4 million primarily due to a one-time legal settlement, as disclosed in Note 4, higher personnel and sales-related expenses and the impact of the devaluation of the Argentina Peso.

EMEA costs and expenses of $28.2 million increased by $1.9 million primarily due to an increase in salary-related and bad debt expenses.

Asia-Pacific costs and expenses of $20.5 million decreased $8.1 million, primarily due to a one-time $6.5 million goodwill impairment charge recorded in 2022 that did not recur and a one-time $2.5 million gain on the sale of plant and equipment in 2023.

PLP-USA $ 72,593 $ 79,289 $ (6,696) $ — $ (6,696) (8) %

The Americas 18,655 22,724 (4,069) (799) (3,270) (14)

EMEA 26,090 28,193 (2,103) 257 (2,360) (8)

Asia-Pacific 21,716 20,488 1,228 (158) 1,386 7

Consolidated $ 139,054 $ 150,694 $ (11,640) $ (700) $ (10,940) (7) %

PLP-USA costs and expenses of $72.6 million decreased $6.7 million, or 8% year-over-year.

PLP-USA’s decrease was primarily attributable to lower selling costs and lower personnel and professional services costs, primarily as a result of cost containment efforts.

International costs and expenses for the year ended December 31, 2024 had a favorable impact by $0.7 million when local currencies were translated to U.S.

The following discussion of costs and expenses excludes the effect of currency translation.

The Americas costs and expenses of $18.7 million decreased $3.3 million primarily due to a legal settlement in the third quarter of 2023 and the impact of foreign currency remeasurement.

EMEA costs and expenses of $26.1 million decreased by $2.4 million primarily due to lower personnel costs and bad debt expenses.

Asia-Pacific costs and expenses of $21.7 million increased $1.4 million primarily due to the net impact of the sale of capital assets year over year and foreign currency remeasurement.

Other (expense) income, net .

Other expense, net of $(1.8) million for the year ended December 31, 2023 was unfavorable by $(6.1) million when compared to Other income, net for the year ended December 31, 2022 of $4.3 million.

The increase in expense was primarily due to a nonrecurring gain of $4.4 million that was recorded in March 2022 related to a settlement of a Company-owned life insurance policy and higher interest expense for the twelve-months ended December 31, 2023.

Other income, net as of the year ended December 31, 2024 was favorable by $1.8 million when compared to Other expense, net for the year ended December 31, 2024 of $1.8 million.

The favorable movement was due to higher interest income earned on cash balances in certain international jurisdictions and lower interest expense from reduced debt balances for the year ended December 31, 2024.

Income taxes.

Income taxes for the years ended December 31, 2023 and 2022 were $19.0 million and $19.3 million, respectively, based on pre-tax income of $82.3 million and $73.7 million, respectively.

Income taxes for the years ended December 31, 2024 and 2023 were $13.7 million and $19.0 million based on pre-tax income of $50.8 million and $82.3 million, respectively.

The effective tax rate for the years ended December 31, 2024 and 2023 was 26.9% and 23.1%, respectively.

Our effective tax rate was affected by recurring items, such as tax rates in foreign jurisdictions, which differ from the U.S.

federal statutory income tax rate, and the relative amount of income earned in those jurisdictions where such earnings are permanently reinvested.

It is also affected by discrete items that may occur in any given period but are not consistent from year to year.

Our effective tax rate increased primarily due to the limitations on the deductibility of compensation and the unfavorable impact from the mix of income earned in jurisdictions with a higher tax rate than the U.S.

This was partially offset by a favorable impact from increase in excess tax benefit on share-based compensation.

The following items had the most significant impact on the difference between our statutory U.S.

federal income tax rate of 21.0%:

A $2.0 million, or 4.0%, net increase resulting from Non-deductible officers' compensation.

A $1.6 million, or 3.2%, net increase resulting from earnings in jurisdictions with higher tax rates than the U.S.

federal statutory rate where such earnings are permanently reinvested.

A $1.6 million, or 3.2%, net decrease resulting from generation of foreign tax credits.

A $1.2 million, or 2.4%, net decrease resulting from other stock compensation.

A $1.2 million, or 2.3%, net increase resulting from the inclusion of Global Intangible Low-Taxed Income.

A $1.8 million, or 2.2%, net increase resulting from earnings in various U.S.

A $3.7 million, or 4.5%, net decrease resulting from generation of foreign tax credits.

A $3.0 million, or 3.6%, net increase resulting from the inclusion of Global Intangible Low-Taxed Income.

A $1.8 million, or 2.2%, net increase resulting from earnings in various U.S States.

A $1.7 million, or 2.0%, net increase resulting from earnings in jurisdictions with higher tax rates than the U.S.

federal statutory rate where such earnings are permanently reinvested.

A $2.1 million, or 2.9%, net increase resulting from a valuation allowance recorded in certain international jurisdictions.

A $2.0 million, or 2.7%, net increase resulting from a goodwill impairment charge as discussed in Note 12 of the Notes to the Consolidated Financial Statements.

A $1.8 million, or 2.4%, net decrease resulting from earnings in jurisdictions with lower tax rates than the U.S.

federal statutory rate where such earnings are permanently reinvested.

As a result of the preceding items, net income for the year ended December 31, 2024 was $37.1 million, compared to $63.3 million for 2023.

Excluding the effect of currency translation, net income increased $9.2 million as summarized in the following table.

Excluding the effect of currency translation, net income decreased $25.5 million as summarized in the following table.

Year Ended December 31,

(Thousands of dollars)

(Thousands of dollars) 2024 2023 Change Change

Translation Change

Translation %

Net income (loss)

PLP-USA $ 13,940 $ 45,392 $ (31,452) $ — $ (31,452) (69) %

The Americas 8,951 5,755 3,196 (803) 3,999 69

EMEA 7,762 5,796 1,966 128 1,838 32

Asia-Pacific 6,441 6,389 52 (52) 104 2

Consolidated $ 37,094 $ 63,332 $ (26,238) $ (727) $ (25,511) (40) %

WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES

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At December 31, 2024, our unused availability under our credit facility (the "Facility") was $82.8 million and our bank debt to equity percentage was 6.8%.

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

The Facility contains,

among other provisions, requirements for maintaining levels of net worth and profitability.

At December 31, 2024, the Company was in compliance with these covenants.

Our Asia-Pacific segment had $0.2 million in restricted cash for both years ended December 31, 2023 and 2022.

Our Asia-Pacific segment had $0.1 million and $0.2 million in restricted cash for the years ended December 31, 2024 and 2023.

The restricted cash was used to secure bank debt and is included in Cash, cash equivalents and restricted cash on the balance sheet.

We sold our corporate aircraft in December of 2020, thereby eliminating the balance due on the previous loan which was secured by the corporate aircraft.

The proceeds of the sale were used to pay off the debt associated with the former aircraft.

On January 19, 2021, the Company received funding for a term loan in the amount of $20.5 million to fund the purchase of a new corporate aircraft, which replaces the Company's previously-owned aircraft that was sold in December 2020.

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.

At December 31, 2024, the outstanding balance on the term loan was $12.6 million, of which $2.1 million was classified as current.

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We expect that our major source of funding for 2025 and beyond will be our operating cash flows, our existing cash and cash equivalents as well as our Facility agreement.

The Facility agreement has an expiration date of March 2, 2026.

The Company expects to extend the maturity date of the Facility over the coming year.

Except for current earnings in certain jurisdictions, our operating income is deemed to be indefinitely reinvested in foreign jurisdictions.

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Net Cash provided by operating activities for the years ended December 31, 2024 and 2023 was $67.5 million and $107.6 million, respectively.

The $81.5 million increase was primarily a result of an increase in cash from working capital and an increase in net income.

Net Cash used in investing activities of $44.8 million for the year ended December 31, 2023 represents a decrease of $2.0 million when compared to Cash used in investing activities for the year ended December 31, 2022.

The decreased use of Cash was primarily related to a decrease in capital expenditures and acquisitions of businesses, partially offset by one-time cash proceeds related to a life insurance settlement in 2022.

Net Cash used in financing activities for the year ended December 31, 2023 was $48.9 million compared to cash provided by financing activities of $22.5 million for the year ended December 31, 2022.

The year-over-year change in cash was mainly due to payments of notes payable and long-term debt, as well as an increase in the repurchase of shares during the year.

The $40.1 million decrease was primarily a result of a decrease in net income and decrease in cash from working capital.

Net Cash used in investing activities for the years ended December 31, 2024 and 2023 was $12.4 million and $44.8 million, respectively.

The $32.4 million decrease was primarily a result of decreases in acquisition activity and capital expenditures during the current period.

Net Cash used in financing activities for the years ended December 31, 2024 and 2023 was $47.8 million and $48.9 million, respectively.

The year-over-year change was primarily the result of decreased share repurchases offset by increased 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 capital leases, primarily for equipment.

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The Company has other 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 December 31, 2023, and December 31, 2022, $13.3 million and $26.1 million was outstanding, of which $11.4 million and $19.1 million were classified as current, respectively.

At December 31, 2024, and December 31, 2023, $8.8 million and $13.3 million were outstanding, of which $8.2 million and $11.4 million were classified as current, respectively.

These facilities support commitments made in the ordinary course of business.

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Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products.

All revenue is recognized when the Company satisfies the performance obligations under the contract and control of the product is transferred to the customer, primarily based on shipping terms.

All revenue is recognized when the

Company satisfies the performance obligations under the contract and control of the product is transferred to the customer, primarily based on shipping terms.

Revenue for shipping and handling charges are recognized at the time the products are shipped to, delivered to or picked up by the customer.

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The discount rate of 5.77% at December 31, 2024 reflects an analysis of yield curves as of the end of the year and the schedule of expected cash needs of the plan.

The 2024 expected long-term return on plan assets of 6.25% reflects the plan’s historical returns and represents our best estimate of the likely future returns on the plan’s asset mix.

The 2025 expected long-term return on plan assets o f 4.75% reflects the plan’s historical returns and represents our best estimate of the likely future returns on the plan’s asset mix.

We believe the assumptions used in recording obligations under the plans are reasonable based on prior experience, market conditions and the advice of plan actuaries.

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In addition, an increase in the expected long-term return on plan assets would decrease the net periodic pension cost, while a decrease in expected long-term return on plan assets would increase the net periodic pension cost.

Quantitative and Qualitat ive Disclosures About Market Risk

The Company operates manufacturing facilities and offices around the world and uses fixed and floating rate debt to finance the Company's global operations.

As a result, the Company is subject to business risks inherent in non-U.S.

activities, including political and economic uncertainty, import and export limitations and market risk related to changes in interest rates and foreign currency exchange rates.

The Company believes that the political and economic risks related to the Company's international operations are mitigated due to the geographic diversity in which the Company's international operations are located.

Effective July 1, 2018, Argentina was designated as a highly inflationary economy as the projected three-year cumulative inflation rate exceeded 100%.

As such, beginning July 1, 2018, the functional currency for the Company’s Argentina subsidiary became the U.S.

Revenue from operations in Argentina represented less than 1% of total consolidated net sales for the years ended December 31, 2023, 2022 and 2021.

As of December 31, 2023, the Company had $0.2 million in foreign currency forward exchange assets and no foreign currency forward exchange liabilities outstanding.

The Company does not hold derivatives for trading purposes.

The Company's primary currency rate exposures are related to foreign denominated debt, intercompany debt, forward exchange contracts, foreign denominated receivables and payables and cash and short-term investments.

A hypothetical 10% change in currency rates would have a favorable/unfavorable impact on fair values on such instruments of approximately $6.5 million and on income before tax of $2.3 million.

The Company is exposed to market risk, including changes in interest rates.

The Company is subject to interest rate risk on its variable rate revolving credit facilities and term notes, which consisted of long-term borrowings of $55.3 million at December 31, 2023.

A 100 basis point increase in the interest rate would have resulted in an increase in interest expense of approximately $0.4 million for the year ended December 31, 2023.

Included in the Company’s accounting for the defined benefit pension plan (“Plan”) are assumptions on future discount rates and the expected return on Plan assets.

The Company considers current market conditions, including changes in interest rates and Plan asset investment returns.

Actuarial assumptions may differ materially from actual results due to changing market, demographic and economic conditions or higher or lower withdrawal rates.

These differences may result in a significant impact to the amount of net pension expense or income recorded in the future.

A discount rate is used to determine the present value of future payments.

In general, a pension liability increases as the discount rate decreases and decreases as the discount rate increases.

The discount rate used to determine the future benefit obligation was 5.34% and 5.55% at December 31, 2023 and 2022, respectively.

The discount rate is a significant factor in determining the amounts reported.

A 50 basis point change in the discount rate of 5.34% used at December 31, 2023 would have a $1.9 million effect on the Plan’s projected benefit obligation.

The Company developed the expected return on Plan assets by considering various factors which include targeted asset allocation percentages, historical returns, and expected future returns.

The Company assumed an expected rate of return of 7.00% for the year ended December 31, 2023 and 6.50% for the year ended December 31, 2022.

A 50 basis point change in the expected rate of return would have a $0.2 million effect on the Plan’s subsequent year’s net periodic pension cost.

Financial Statemen ts and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Preformed Line Products Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Preformed Line Products Company (the Company) as of December 31, 2023 and 2022, the related statements of consolidated income, comprehensive income, cash flows and shareholders' equity for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 8, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Quantitative Impairment Assessment of Goodwill

Description of the Matter

At December 31, 2023, the Company’s goodwill was $29.5 million.

As discussed in Note 12 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level or more frequently if impairment indicators arise.

Goodwill is tested for impairment utilizing a combination of the income approach, which uses a discounted cash flow methodology, and the market approach, which uses comparable company market multiples, to estimate the fair value of each reporting unit.

Auditing management’s quantitative goodwill impairment assessment for one reporting unit was complex and highly judgmental due to the significant estimation required to determine the fair value of the reporting unit.

In particular, the fair value estimate was sensitive to significant assumptions, such as revenue growth rates and operating margins, which are affected by expectations of future market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment process.

This included controls over management’s review of the significant assumptions underlying the fair value determination described above.

To test the estimated fair value of the Company’s reporting unit, we performed audit procedures that included, among others, assessing the methodologies used, testing the significant assumptions described above, and testing the underlying data used by the Company in its analysis.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions.

We also utilized our internal valuation specialists to review the methodology and certain assumptions.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2008.

Cleveland, Ohio

March 8, 2024

PREFORMED LINE PRODUCTS COMPANY

CONSOLIDATED B ALANCE SHEETS

(Thousands of dollars, except share and per share data)

Cash, cash equivalents and restricted cash

Accounts receivable, net

Inventories, net

Prepaid expenses

Other current assets

TOTAL CURRENT ASSETS

Property, plant and equipment, net

Operating lease, right-of-use assets

Other intangible assets, net

Deferred income taxes

LIABILITIES AND SHAREHOLDERS' EQUITY

Trade accounts payable

Notes payable to banks

Operating lease liabilities, current

Current portion of long-term debt

Accrued compensation

Accrued expenses and other liabilities

Accrued profit-sharing and other benefits

Dividends payable

Income taxes payable

TOTAL CURRENT LIABILITIES

Long-term debt, less current portion

Operating lease liabilities, non-current

Deferred income taxes

Other noncurrent liabilities

SHAREHOLDERS' EQUITY

Common shares – $ 2 par value per share, 15,000,000 shares authorized, 4,908,413 and 4,917,020 issued and outstanding, at December 31, 2023 and December 31, 2022, respectively

Common shares issued to rabbi trust, 243,118 and 245,386 shares at December 31, 2023 and December 31, 2022, respectively

Deferred compensation liability

Paid-in capital

Retained earnings

Treasury shares, at cost, 1,894,419 and 1,758,901 shares at December 31, 2023 and December 31, 2022, respectively

Accumulated other comprehensive loss

TOTAL PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS' EQUITY

Noncontrolling interest

TOTAL SHAREHOLDERS' EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

See notes to consolidated financial statements.

PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CON SOLIDATED INCOME

Year Ended December 31,

(In thousands, except per share data)

Cost of products sold

Costs and expenses

General and administrative

Research and engineering

Goodwill impairment

Other operating expense, net

OPERATING INCOME

Other income (expense)

Interest income

Interest expense

Other income, net

INCOME BEFORE INCOME TAXES

Income tax expense

Net (income) loss attributable to noncontrolling interests

NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS

AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING:

EARNINGS PER SHARE OF COMMON STOCK ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS:

See notes to consolidated financial statements.

PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED C OMPREHENSIVE INCOME

Year Ended December 31,

(Thousands of dollars)

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment

Pension adjustment, net of tax

Other comprehensive income (loss), net of tax

Comprehensive (income) loss attributable to noncontrolling interests

Comprehensive income attributable to Preformed Line Products Company shareholders

See notes to consolidated financial statements.

PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSO LIDATED CASH FLOWS

Year Ended December 31,

(Thousands of dollars)

OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by operations:

Depreciation and amortization

Provision for accounts receivable allowances

Provision for inventory reserves

Deferred income taxes

Share-based compensation expense

Goodwill impairment

Gain from company owned life insurance policy

Loss on exit of business

Gain on sale of property and equipment

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses

Trade accounts payable and accrued liabilities

Accrued income and other taxes

Contributions to company pension plan

NET CASH PROVIDED BY OPERATING ACTIVITIES

INVESTING ACTIVITIES

Capital expenditures

Proceeds from the sale of property and equipment

Proceeds from company owned life insurance policy

Acquisition of businesses, net of cash

NET CASH USED IN INVESTING ACTIVITIES

FINANCING ACTIVITIES

(Payments) Proceeds of notes payable to banks

Proceeds from long-term debt

Payments of long-term debt

Dividends paid

Proceeds from issuance of common shares

Purchase of common shares for treasury

Purchase of common shares for treasury from related parties

NET CASH (USED IN) PROVIDED BY FINANCING

Effects of exchange rate changes on cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of year

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR (1)

(1) Non-cash investing and financing activities:

The Company purchased a new corporate aircraft during the year ended December 31, 2021 with a term loan in the principal amount of $ 20.5 million.

For further information regarding this transaction, refer to Note 7 of the Notes to the Consolidated Financial Statements.

See notes to consolidated financial statements.

PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDAT ED SHAREHOLDERS' EQUITY

Accumulated Other

Comprehensive Income

Common Shares

Compensation Liability

Total Preformed Line Products Company Equity

Noncontrolling Interests

(In thousands, except share and per share data)

Balance at January 1, 2021

Foreign currency translation

Pension adjustment, net of tax

Total comprehensive income

Share-based compensation

Purchase of 73,460 common shares

Issuance of 78,730 common shares

Common shares distributed from rabbi

trust of 22,370 , net

Cash dividends declared - $ 0.80 per

Balance at December 31, 2021

Foreign currency translation

Pension adjustment, net of tax

Total comprehensive income

Share-based compensation

Purchase of 73,514 common shares

Issuance of 83,391 common shares

Common shares contributed to rabbi

trust of 2,248 , net

Cash dividends declared - $ 0.80 per

Balance at December 31, 2022

Foreign currency translation

Pension adjustment, net of tax

Total comprehensive income

Share-based compensation

Purchase of 135,518 common shares

Issuance of 126,911 common shares

Common shares distributed from rabbi

trust of 2,268 , net

Cash dividends declared - $ 0.80 per

Balance at December 31, 2023

See notes to consolidated financial statements.

PREFORMED LINE PRODUCTS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tables in thousands of dollars, except share and per share data, unless specifically noted)

Note 1 – Significant Accounting Policies

Nature of Operations

Preformed Line Products Company and subsidiaries (the “Company”) is a designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, data communication and other similar industries.

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

The Company provides helical solutions, connectors, fiber optic and copper splice closures, solar framing applications, and electric vehicle charging station foundations.

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

The Company serves its worldwide markets through strategically located domestic and international manufacturing facilities .

Principles of Consolidation and Noncontrolling Interests

The accompanying consolidated financial statements, including the accounts of the Company and its wholly-owned subsidiaries for which it has a controlling interest, were prepared in accordance with accounting principles generally accepted in the United States of America ("U.S.

GAAP") and include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries over which the Company exercises control.

Intercompany transactions and balances are eliminated in consolidation.

Noncontrolling interests are presented in the Company’s Consolidated Financial Statements as if parent company investors (controlling interests) and other minority investors (noncontrolling interests) in partially owned subsidiaries have similar economic interests in a single entity.

As a result, investments in noncontrolling interests are reported as equity in our Consolidated Financial Statements.

Additionally, the Company’s Consolidated Financial Statements include 100 % of a controlled subsidiary’s earnings, rather than only our share.

Transactions between the parent company and noncontrolling interests are reported in equity as transactions between stockholders, provided that these transactions do not create a change in control.

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash (“Cash”) are stated at fair value and consist of highly liquid investments with original maturities of three months or less at the time of acquisition.

Restricted cash, which is not material, is included in Cash, cash equivalents and restricted cash on the Company’s Consolidated Balance Sheets .

Accounts Receivable Allowances

The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required payments.

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Board ("ASC") 326 “Financial Instruments – Credit Losses", the Company uses a current expected credit loss model in order to immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments, mainly trade receivables.

Additionally, the allowance is based upon identified delinquent accounts, customer payment patterns and other analyses of historical data trends.

The Company also maintains an allowance for future sales credits related to sales recorded during the year.

The estimated allowance is based on historical sales credits issued in the subsequent year related to the prior year and any significant, preapproved open return good authorizations as of the balance sheet date.

The Company uses the last-in, first-out (“LIFO”) method of determining cost for the majority of its material portion of inventories in PLP-USA.

All other inventories are determined by the first-in, first-out (“FIFO”) or average cost methods.

Inventories are carried at lower of cost or net realizable value.

Reserves are maintained for estimated obsolescence or excess inventory based on past usage and future demand.

Fair Value of Financial Instruments

FASB ASC 825, “Disclosures about Fair Value of Financial Instruments,” requires disclosures of the fair value of financial instruments.

The estimated fair value of financial instruments was principally based on market prices where such prices were available, and when unavailable, fair values were estimated based on market prices of similar instruments.

Property, Plant and Equipment and Depreciation

Property, plant, and equipment is recorded at cost less accumulated depreciation or amortization.

Property under finance lease agreements is carried at the present value of lease payments over the lease term less accumulated amortization.

Depreciation is based on the estimated service lives of depreciable assets and is calculated using the straight-line method.

Fully depreciated assets are retained in property and accumulated depreciation accounts until they are removed from service.

The estimated useful lives for assets purchased new are:

land improvements, ten years ;

buildings, forty years ;

building improvements, five to forty years ;

machinery and equipment, three to ten years ;

and aircraft, fifteen years .

Appropriate reductions in estimated useful lives are made for property, plant and equipment purchased in connection with an acquisition of a business or in a used condition when purchased.

Long-Lived Assets

The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the carrying value of the assets are impaired and the undiscounted future cash flows estimated to be generated by such assets are less than the carrying value.

The Company’s cash flows are based on historical results adjusted to reflect the Company’s best estimate of future market and operating conditions.

The net carrying value of assets not recoverable is then reduced to fair value.

The estimate of fair value represents the Company’s best estimate based on industry trends and reference to market rates and transactions.

The Company did not record an impairment to long-lived assets during the years ended December 31, 2023 and 2022, other than in the divestiture of the Russian operations during 2022, which is disclosed in Note 18.

Goodwill and Other Intangibles

In accordance with ASC 805, “Business Combinations,” the Company uses the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition.

The excess costs of acquired businesses over the fair values of the assets acquired and liabilities assumed are recognized as goodwill.

Goodwill and other intangible assets are generally recorded as a result of a business acquisition.

Goodwill represents the excess of purchase price over the fair value of the tangible and identifiable net assets acquired during a business combination and is not subject to amortization but is subject to annual impairment testing.

Goodwill is reviewed for impairment annually on October 1 or more frequently when changes in circumstances indicate the carrying amount may be impaired.

Such events or changes may include, but are not limited to, a significant deterioration in overall economic conditions, changes in the business climate of the Company's industry, overall performance indicators, a decline in the Company's market capitalization, business reorganization or restructuring or disposal of all or part of a reporting unit.

Goodwill is tested for impairment at the reporting unit level, and is based on the net assets for each reporting unit, including goodwill and intangible assets.

The Company’s reporting units are equivalent to the reportable operating segments, except for the Americas segment which has two reporting units (Canada and Other Americas).

Goodwill is assigned to each reporting unit, as this represents the lowest level that constitutes a business and is the level at which management regularly reviews the operating results.

Intangible assets with definite lives, consisting primarily of purchased cust omer relationships, patents, technology, customer backlogs, trademarks and land use rights, are generally amortized over periods from two years to ninety-nine years .

The Company has no indefinite lived intangible assets other than goodwill.

The Company’s intangible assets with finite lives are generally amortized over the period in which the economic benefits of the intangibles are consumed, using either a projected cash flo w basis method or the straight-line method.

The straight-line method is used in circumstances in which it better reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise expire compared to using a projected cash flow basis method.

An evaluation of the remaining useful life of intangible assets with a determinable life is performed on a periodic basis and when events and circumstances warrant an evaluation.

The Company assesses intangible assets with a determinable life for impairment when the carrying amount may not be recoverable, consistent with its policy for assessing other long-lived assets.

The Company did no t record an impairment to intangible assets with finite lives during the years ended December 31, 2023 and 2022.

The Company may use both quantitative and qualitative approaches when testing goodwill for impairment.

A qualitative analysis is performed by assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales and gross profit margins, discount rates and other relevant qualitative factors.

These trends and factors are compared to, and based on, the assumptions used in the most recent quantitative analysis performed for each reporting unit to determine if it is more likely than not that the fair value of the reporting unit exceeds its carrying amount.

If that determination is made, no further evaluation is necessary.

Otherwise, the Company performs a quantitative impairment test on the reporting unit.

For the quantitative approach, the Company uses a combination of the income approach, which uses a discounted cash flow methodology, and the market approach, which uses comparable market multiples, in computing fair value by reporting unit.

The Company then compares the fair value of the reporting unit with its carrying value to assess if goodwill has been impaired.

The fair value estimates are subjective and sensitive to significant assumptions, such as future cash flows, revenue growth rates, operating

margins, the weighted-average cost of capital ("WACC"), and estimated market multiples, of which are affected by expectations of future market or economic conditions.

The future cash flows are based on the Company’s long-term operating plan and a terminal value was used to estimate the reporting unit’s cash flows beyond the period covered by the operating plan.

The WACC is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise.

The Company believes that the methodologies, significant assumptions, and weightings used are reasonable and result in appropriate fair values of the reporting units.

Impairment assessments inherently involve management judgments regarding a number of assumptions such as those described above.

Due to the multiple variables inherent in arriving at the estimates of the reporting unit's fair value, differences in assumptions could have an effect on the estimated fair value of a reporting unit and could result in goodwill impairment charges in a future period.

Revenue Recognition

Net sales include products and shipping and handling charges, net of estimates for product returns.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products.

All revenue is recognized when the Company satisfies the performance obligations under the contract and control of the product is transferred to the customer, primarily based on shipping terms.

Revenue for shipping and handling charges are recognized at the time the products are shipped to, delivered to or picked up by the customer.

Payment terms vary by the type and location of the customer and the products offered but are generally short-term in nature.

The Company estimates product returns based on historical return rates.

Research and Development

Research and development costs for new products are expensed as incurred and totaled $ 5.2 million in 2023 , $ 4.5 million in 2022 and $ 3.3 million in 2021 .

Income taxes are computed in accordance with the provisions of FASB ASC 740, “Income taxes” and includes U.S.

(federal and state) and foreign income taxes.

In the Consolidated Financial Statements, the benefits of a consolidated return have been reflected where such returns have or could be filed based on the entities and jurisdictions included in the financial statements.

Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in the Consolidated Financial Statements.

Deferred tax liabilities and assets are determined based on the differences between the book and tax basis of particular assets and liabilities and operating loss carryforwards using tax rates in effect for the years in which the differences are expected to reverse.

Deferred tax assets are recognized to the extent that the Company believes these assets are more likely than not to be realized.

In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations.

If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

Uncertain tax positions are recorded in accordance with ASC 740 on the basis of a two-step process whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Deferred Tax Assets

Deferred taxes are recognized at currently enacted tax rates for temporary differences between the financial reporting and income tax basis of assets and liabilities and operating loss and tax credit carryforwards.

We establish a valuation allowance to record our deferred tax assets at an amount that is more-likely-than-not to be realized.

In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of their recorded amount, an adjustment to the valuation allowance would increase income in the period such determination was made.

Likewise, should we determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the valuation allowance would be charged to expense in the period such determination was made.

Uncertain Tax Positions

We identify tax positions taken on the federal, state, local and foreign income tax returns filed or to be filed.

A tax position can include:

a reduction in taxable income reported in a previously filed tax return or expected to be reported on a future tax return that

impacts the measurement of current or deferred income tax assets or liabilities in the period being reported;

a decision not to file a tax return;

an allocation or a shift of income between jurisdictions;

the characterization of income or a decision to exclude reporting taxable income in a tax return;

or a decision to classify a transaction, entity or other position in a tax return as tax exempt.

We determine whether a tax position is an uncertain or a routine business transaction tax position that is more-likely-than-not to be sustained at the full amount upon examination.

Under ASC 740, “Tax Benefits from Uncertain Tax Positions” that reduce our current or future income tax liability are reported in our financial statements only to the extent that each benefit is recognized and measured under a two-step approach.

The first step requires us to assess whether each tax position based on its technical merits and facts and circumstances as of the reporting date, is more-likely-than-not to be sustained upon examination.

The second step measures the amount of tax benefit that we would recognize in the financial statements based on a cumulative probability approach.

A tax position that meets the more-likely-than-not threshold that is not highly certain is measured based on the largest amount of benefit that is greater than 50 % likely of being realized upon ultimate settlement with the tax authority, assuming that the tax authority has examined the position and has full knowledge of all relevant information.

Advertising costs are expensed as incurred and totaled $ 2.4 million in 2023, $ 2.7 million in 2022 and $ 1.5 million in 2021 .

Foreign Currency Translation

Asset and liability accounts are translated into U.S.

dollars using exchange rates in effect at the date of the Consolidated Balance Sheet.

The translation adjustments are recorded in Accumulated other comprehensive income (loss).

Revenues and expenses are translated at weighted average exchange rates in effect during the period.

Transaction gains and losses arising from exchange rate changes on transactions denominated in a currency other than the functional currency are included in income and expensed as incurred.

Aggregate transaction losses, including hedge activity, was $ 3.2 million for the year ended December 31, 2023, $ 0.4 million for the year ended December 31, 2022 and $ 1.0 million for the year ended December 31, 2021 .

Upon sale or substantially complete liquidation of an investment in a foreign entity, the cumulative translation adjustment for that entity is reclassified from Accumulated other comprehensive loss to earnings.

Effective July 1, 2018, Argentina was designated as a highly inflationary economy as the projected three-year cumulative inflation rate exceeded 100 %.

As such, beginning July 1, 2018, the functional currency for the Company’s Argentina subsidiary became the U.S.

Revenue from operations in Argentina was less than 1 % of total consolidated net sales for the years ended December 31, 2023, 2022 and 2021 .

Use of Estimates

The preparation of financial statements in accordance with U.S.

GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

The Company's consolidated financial statements include amounts that are based on management's best estimates and judgments.

Actual results could differ from these estimates.

Certain prior year amounts have been reclassified to conform to current year presentation.

Business Combinations

Upon acquisition of a business, the Company uses the income, market or cost approach (or a combination thereof) for the valuation as appropriate.

The valuation inputs in these models and analyses are based on market participant assumptions.

Market participants are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or liability.

The Company uses a discounted cash flow model to measure the fair value of intangible assets.

The significant assumptions used to estimate the fair value of the intangible assets include discount rates and certain assumptions that form the basis of future cash flows (such as revenue growth rates, attrition rates, and royalty rates).

These assumptions relate to the future performance of the acquired businesses, are forward-looking and could be affected by future economic and market conditions.

Fair value estimates are based on a series of judgments about future events and uncertainties and rely heavily on estimates and assumptions.

Management values property, plant and equipment using the cost approach supported where available by observable market data, which includes consideration of obsolescence.

Acquired inventories are marked to fair value.

For certain items, the carrying value is determined to be a reasonable approximation of fair value based on information available to the Company.

Derivative Financial Instruments

The Company operates internationally and enters into intercompany transactions denominated in foreign currencies.

Consequently, the Company is subject to market risk arising from exchange rate movements between the dates foreign currency transactions occur and the dates they are settled.

The Company currently uses foreign currency forward contracts to reduce the risk related to some of these transactions.

These contracts usually have maturities of 90 days or less and generally require an exchange of foreign currencies for U.S.

dollars at maturity at rates stated in the contracts.

These contracts are not designated as hedging instruments under U.S.

Accordingly, the changes in the fair value of the foreign currency forward contracts are recognized in each accounting period in “Other operating expense, net” on the Consolidated Statements of Income together with the transaction gain or loss from the related balance sheet position.

The Company records the contracts at fair value in the Consolidated Balance Sheets.

The Company does not hold derivatives for trading purposes.

Recently Adopted or Issued Accounting Pronouncements

The Company considers the applicability and impact of all Accounting Standards Updates ("ASU").

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Liabilities from Contracts with Customers.” This ASU requires an acquiring entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

The ASU was effective for fiscal years and interim periods beginning after December 15, 2022, with early adoption permitted.

The adoption of this new standard did not have a material impact on the consolidated financial statements and related disclosures.

In November 2023, the FASB issued Accounting Standards Update No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” This ASU enhances reportable segment disclosures on both an annual and interim basis primarily in regards to the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within the reported measure(s) of segment profit or loss.

In addition, the ASU requires disclosure, by segment, of other items included in the reported measure(s) of segment profit or loss, including qualitative information describing the composition, nature and type of each item.

The ASU also expands disclosure requirements related to the CODM, including how the reported measure(s) of segment profit or loss are used to assess segment performance and allocate resources, the method used to allocate overhead for significant segment expenses and others.

Lastly, all current required annual segment reporting disclosures under Topic 280 are now effective for interim periods.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The company is evaluating the impact of adopting this ASU.

In December 2023, the FASB issued Accounting Standards Update No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” This ASU enhances income tax disclosures by providing information to better assess how an entity's operations, related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows.

This ASU requires additional disclosures to the annual effective tax rate reconciliation including specific categories and further disaggregated reconciling items that meet the quantitative threshold.

Additionally, the ASU requires disclosures relating to income tax expense and payments made to federal, state, local and foreign jurisdictions.

This ASU is effective for fiscal years and interim periods beginning after December 15, 2024.

The Company is evaluating the impact of adopting this ASU.

Note 2 – Inventories, Net

Inventories, net

Raw materials

Work-in-process

Finished products

Inventories, net of excess and obsolete inventory reserve

Excess of current cost over LIFO cost

Inventories at LIFO cost

Costs for inventories of certain material, mainly in the U.S., are determined using the LIFO method and totaled approximately $ 60.1 million and $ 68.3 million at December 31, 2023 and 2022, respectively.

The net change in LIFO inventories for December 31, 2023 and 2022 resulted in a benefit of $ 2.6 million and a charge of $ 3.7 million to Cost of products sold, respectively.

The Company’s reserves for slow-moving and obsolete inventory at December 31, 2023 and 2022 were $ 17.6 million and $ 10.8 million, respectively.

Note 3 – Property and Equipment, Net

Major classes of property, plant and equipment are as follows:

Land and improvements

Buildings and improvements

Machinery, equipment and aircraft

Construction in progress

Property, plant and equipment, gross

Less accumulated depreciation

Property, plant and equipment, net

Depreciation of property and equipment was $ 17.0 million in 2023 , $ 14.3 million in 2022 and $ 13.6 million in 2021 .

Note 4 – Contingent Liabilities

The Company can be party to a variety of pending legal proceedings and claims arising in the normal course of business, including, but not limited to, litigation relating to employment, workers’ compensation, product liability, environmental and intellectual property.

The Company has liability insurance to cover many of these claims.

Although the outcomes of these matters are not predictable with certainty, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

In the event the Company determines that a loss is not probable, but is reasonably possible, and the likelihood to develop what the Company believes to be a reasonable range of potential loss exists, the Company will include disclosure related to such matters.

To the extent that there is a reasonable possibility the losses could exceed amounts already accrued, the Company will adjust the accrual in the period in which the determination is made, disclose an estimate of the additional loss or range of loss and if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.

In November 2016, the Company and its subsidiaries Helix Uniformed Ltd.

(“Helix”) and Preformed Line Products (Canada) Limited (“PLPC Canada”), were each named, jointly and severally, with each of SNC-Lavalin ATP, Inc.

(“SNC ATP”), HD Supply Canada Inc., by its trade names HD Supply Power Solutions and HD Supply Utilities (“HD Supply”), and Anixter Power Solutions Canada Inc.

(the corporate successor to HD Supply, “Anixter”) and, together with the Company, PLPC Canada, Helix, SNC ATP and HD Supply (the “Defendants”), in a complaint filed by Altalink, L.P.

(the “Plaintiff”) in the Court of Queen’s Bench of Alberta in Alberta, Canada in November 2016 (the “Complaint”).

The Complaint stated that the Plaintiff engaged SNC ATP to design, engineer, procure and construct numerous power distribution and transmission facilities in Alberta (the “Projects”) and that through SNC ATP and HD Supply (now Anixter), spacer dampers manufactured by Helix were procured and installed in the Projects.

The Complaint alleged that the spacer dampers have and may continue to become loose, open and detach from the conductors, resulting in damage and potential injury and a failure to perform the intended function of providing spacing and damping to the Project.

The Plaintiff was seeking an estimated $ 56.0 million Canadian dollars in damages jointly and severally from the Defendants, representing the costs of monitoring and replacing the spacer dampers and remediating property damage, due to alleged defects in the design and construction of, and supply of materials for, the Projects by SNC ATP and HD Supply/Anixter and in the design of the spacer dampers by Helix.

On September 26, 2023, the Defendants and the Plaintiff entered into a settlement agreement which dismisses the action against all Defendants with prejudice.

Net of insurance, the total settlement amount required to be paid by the Company is $ 4.3 million Canadian dollars ($ 3.2 million US dollars), of which $ 2.5 million Canadian dollars ($ 1.8 million US dollars) was previously recorded and $ 1.8 million Canadian dollars ($ 1.4 million US dollars) was recorded in the third quarter in General and administrative expense.

The settlement reflects the Company’s desire to eliminate the burden, expense, distraction and further uncertainties of litigation, and settlement does not constitute an admission of liability, wrongdoing or fault by the Company and its subsidiaries .

The settlement amount was paid during the fourth quarter of 2023.

The Company is not a party to any other pending legal proceedings that the Company believes would, individually or in the aggregate, have a material adverse effect on its financial condition, results of operations or cash flow.

For the years ended December 31, 2023 and 2022, reserves for global legal matters were zero and $ 1.8 million, respectively.

Note 5 – Pension Plans

The Company maintains a noncontributory defined benefit pension plan covering eligible U.S.

employees (the "U.S.

Plan") and a defined contribution plan to provide retirement benefits for employees as well as other foreign defined benefit plans.

These plans are maintained and contributions are made in accordance with the Employee Retirement Income Security Act of 1974 ("ERISA"), local statutory law or as determined by the Board of Directors.

The plans generally provide benefits based upon years of service and compensation.

The Company also established arrangements for certain key employees, which provide for supplemental retirement benefits.

The Company's plans are funded except for a U.S.

non-qualified plan for certain key employees and certain foreign plans.

Within the U.S., hourly employees of the Company who meet specific requirements as to age and length and date of service are covered by the U.S.

On December 12, 2012, the Company approved a freeze on further benefit accruals under the U.S.

Plan and notified the participants of the freeze on December 19, 2012.

Beginning February 1, 2013, participants ceased earning additional benefits under the U.S.

Plan and no new participants entered the U.S.

The Company uses a December 31 measurement date for its Plan.

In August 2023, the Board of Directors of the Company approved a resolution to terminate the U.S.

Plan and preliminary administrative actions have been undertaken to proceed with the termination.

During the fourth quarter of 2023, the Company made a $ 1.5 million contribution to the U.S.

A summary of the U.S.

Plan follows for the year ended December 31:

Interest cost

Expected return on plan assets

Recognized net actuarial loss

Net periodic pension cost (benefit)

Components of net pension cost (benefit), other than service cost, are included in other income, net in the Consolidated Statement of Income.

The following tables set forth the changes in benefit obligations, the change in plan assets, the funded status, and amounts recognized in the consolidated financial statements for the U.S.

Plan at December 31:

Projected benefit obligation at beginning of the year

Interest cost

Actuarial loss (gain)

Benefits paid

Projected benefit obligation at end of year

Fair value of plan assets at beginning of the year

Actual return on plan assets

Employer contributions

Benefits paid

Fair value of plan assets at end of the year

Pension asset

In 2023, in accordance with ASC 715-20, the Company recognized the over-funded status of the U.S.

Plan as a non-current asset.

The amount recognized in Accumulated other comprehensive loss related to the U.S.

Plan at December 31 is comprised of the following:

Balance at January 1

Reclassification adjustments:

Pre-tax amortized net actuarial loss

Adjustment to recognize (loss) gain on pension asset:

Pre-tax (loss) gain

Balance at December 31

The 2023 pre-tax pension loss of $ 0.7 million was the result of a decrease in the discount rate to 5.34 % from 5.55 % in 2022.

There were no changes in the mortality rate used this year, and as a result, no mortality gain or loss for the last two years.

There is no prior service cost to be amortized in the future.

Plan had assets in excess of accumulated benefit obligations as follows:

Accumulated benefit obligation

Fair market value of assets

Weighted-average assumptions used to determine benefit obligations at December 31:

Discount rate

Rate of compensation increase

Weighted-average assumptions used to determine net periodic benefit cost at December 31:

Discount rate

Rate of compensation increase

Expected long-term return on plan assets

The net periodic pension cost for 2023 was based on a long-term asset rate-of-return of 7.00 %.

This rate is based upon management’s estimate of future long-term rates of return on similar assets and is consistent with historical returns on such assets.

At December 31, 2023 and 2022, the Plan’s pooled investment funds were measured at fair value using the net asset value ("NAV").

The NAV is based on the value of the assets owned by the plan, less liabilities.

These pooled assets are not quoted on an active exchange.

The fair value of the Plan assets at December 31, 2023 and 2022 was $ 31.9 million and $ 29.6 milli on, respectively.

Plan weighted-average asset allocations at December 31, 2023 and 2022, by asset category, are as follows:

at December 31

Asset category

Equity securities

Debt securities

Cash and equivalents

Management seeks to maximize the long-term total return of financial assets consistent with the fiduciary standards of ERISA.

The ability to achieve these returns is dependent upon the need to accept moderate risk to achieve long-term capital appreciation.

In recognition of the expected returns and volatility from financial assets, U.S.

Plan assets are invested in the following ranges with the target allocation noted below.

The Company reassesses the target allocations periodically:

Cash Equivalents

Investment in these markets is projected to provide performance consistent with expected long-term returns with appropriate diversification.

The Company's policy is to fund amounts deductible for federal income tax purposes.

Plan is not terminated, the benefits expected to be paid out of the U.S.

Plan assets in each of the next five years and the aggregate benefits expected to be paid for the subsequent five years are as follows:

Pension Benefits

Other Benefit Plans

The Company also provides retirement benefits through various defined contribution plans including PLP-USA’s Profit Sharing Plan.

Expense for these defined contribution plans w as $ 6.6 million in 2023, $ 6.3 million in 2022, and $ 5.8 million in 2021.

The Company also provides retirement benefits through the Supplemental Profit Sharing Plan.

To the extent an employee’s award under PLP-USA’s Profit Sharing Plan exceeds the maximum allowable contribution permitted under existing tax laws, the excess is accrued for (but not funded) under a non-qualified Supplemental Profit Sharing Plan.

The Supplemental Profit Sharing Plan allows participant s the ability to hypothetically invest their proportionate award into various investment options, which primarily includes mutual funds.

The benefit (expense) for the Supplemental Profit Sharing Plan for the year ended December 31, 2023, 2022 and 2021 was ($ 0.9 ) million, $ 1.3 million, and ($ 0.9 ) million, respectively.

The Supplemental Profit Sharing Plan unfunded status for the years ended Decem ber 31, 2023 and 2022 was $ 8.2 million and $ 7.3 million, respectively, and is included in Other noncurrent liabilities .

The Company also has established nonqualified foreign defined benefit plans, which provide post-employment benefits based on years of service.

For the periods ending December 31, 2023 and 2022, the Company's benefit obligations related to these unfunded programs were $ 2.9 million and $ 2.1 million, respectively.

During 2023, 2022 and 2021, the Company recorded benefit costs relating to these programs of $ 0.6 million, $ 0.2 million, and $ 0.3 million, respectively.

Note 6 – Accumulated Other Comprehensive Income (“AOCI”)

The following tables set forth the total changes in AOCI by component, net of tax:

Year Ended December 31, 2023

Year Ended December 31, 2022

Balance at January 1

Other comprehensive income before reclassifications:

Gain on foreign currency translation adjustment

(Loss) gain on pension asset

Amounts reclassified from AOCI:

Amortization of defined benefit pension actuarial

Net current period other comprehensive income (loss)

Balance at December 31

(a) This AOCI component is included in the computation of net periodic pension income (costs) as noted in Note 5 – Pension Plans.

Note 7 – Debt and Credit Arrangements

Short-term debt

Notes payable to banks

Thailand Bhat denominated at 3.94 %

Thailand Bhat denominated at 2.00 %

France Euro denominated at 6.37 %

Brazil Real denominated at 5.40 %

Brazil Real denominated at 15.09 %

China Yuan Renminbi denominated at 4.50 %

Argentina Peso denominated at 37.00 %

Vietnam Dong denominated at 7.30 %

Indonesia U.S.

Dollar denominated at 6.82 %

Current portion of long-term debt

Dollar denominated at 2.74 %

Czech Republic Koruna denominated at 3.00 %

Indonesia U.S.

Dollar denominated at 3.50 %

Czech Republic Koruna denominated at 3.69 %

Czech Republic Koruna denominated at 1.60 %

Total short-term debt

Long-term debt, including current portion

Dollar denominated at 6.62 %, due 2026

Dollar denominated at 2.74 %, due 2031

Brazilian Real denominated at 8.30 % due 2025

Poland Zloty denominated at 6.97 % due 2026

Australian Dollar denominated at 4.06 %, due 2026

Austria Euro denominated at 4.90 % due 2026

Indonesia U.S.

Dollar denominated at 3.50 % due 2024

New Zealand Dollar denominated at 5.78 % due 2026

Czech Republic Koruna denominated at 3.00 % due 2025

Czech Republic Koruna denominated at 3.69 % due 2031

Czech Republic Koruna denominated at 1.60 % due 2026

Total long-term debt

Less current portion

Total long-term debt, less current portion

The Company maintains a credit facility (the "Facility") with a capacity of $ 90.0 million that expires March 2, 2026 .

The interest rate is defined as the Secured Overnight Financing Rate (“SOFR”) 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 SOFR spread becomes 1.500 %.

At December 31, 2023, the Company had utilized $ 34.3 million with $ 55.7 million available on the Facility.

There were no long-term outstanding letters of credit as of December 31, 2023.

Our bank debt to equity percentage was 15.0 %.

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

At December 31, 2023, 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.

The term of the loan is 120 months at a fixed interest rate of 2.744 %.

The loan is payable in 119 equal monthly installments , which commenced on March 1, 2021 with a final payment of any outstanding principal and accrued interest due and payable on the final monthly payment date.

Of the $ 14.7 million outstanding on this debt facility at December 31, 2023, $ 2.1 million was classified as current.

The loan is secured by the aircraft.

At December 31, 2023, and December 31, 2022, $ 13.3 million and $ 26.1 million was outstanding, of which $ 11.4 million and $ 19.1 million were classified as current, respectively.

These facilities support commitments made in the ordinary course of business.

The Company’s Asia-Pacific segment had $ 0.2 million in restricted cash used to secure bank debt as of December 31, 2023, and 2022, respectively.

The restricted cash is shown on the Company’s Consolidated Balance Sheets in Cash, cash equivalents and restricted cash.

Aggregate maturities of long-term debt during the next five years are as follows:

$ 4.3 million for 2024, $ 1.2 million for 2025, $ 34.4 million for 2026, $ 0 for 2027, $ 0 for 2028, and $ 19.7 million thereafter.

Interest paid was $ 3.8 million in 2023, $ 3.1 million in 2022, and $ 1.6 mil lion in 2021.

Guarantees and Letters of Credit

The Company has provided financial guarantees for uncompleted work and financial commitments.

The terms of these guarantees v ary with end dates ranging from the current year through the completion of such transactions.

The guarantees would typically be triggered in the event of non-performance.

As of December 31, 2023, the Company had total outstanding guarantees of $ 14.1 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 December 31, 2023, the Company had total outstanding letters of credit of $ 1.0 million.

Note 8 – Leases

The Company regularly enters into leases in the normal course of business.

As of December 31, 2023 , the leases in effect were related to land, buildings, vehicles, office equipment and other production equipment under operating leases with lease terms of up to 99 years .

Some of the Company's leases include one or more renewal options, the exercise of which is generally at the Company's discretion.

In addition, certain lease arrangements may be terminated prior to their original expiration date at the Company’s discretion.

The Company evaluates renewal and termination options at the lease commencement date to determine if the Company is reasonably certain to exercise the option on the basis of economic factors.

The weighted average remaining lease term for the Company’s operating and financing leases as of December 31, 2023 was 16.9 and 2.8 years, respectively.

Lease expense is recognized for these leases on a straight-line basis over the lease term with variable lease payments recognized in the period those payments are incurred.

The components of operating and finance lease costs are recognized in Costs and expenses and Interest expense, respectively, on the Company’s Consolidated Statements of Income .

The Company’s operating and finance lease costs for the years ended December 31 were as follows:

Year Ended December 31,

Components of lease expense:

Operating lease cost

Finance lease cost:

Amortization of right-of-use assets

Interest on lease liabilities

Total lease cost

The discount rate implicit within each lease is often not determinable and, therefore, the Company establishes the discount rate based on its incremental borrowing rate.

The incremental borrowing rate for the Company’s leases is determined based on lease term and currency in which lease payments are made.

The weighted average discount rate used to measure the Company’s operating and finance lease liabilities as of December 31, 2023 was 5.28 % and 3.84 %, respectively.

The weighted average discount rate used to measure the Company’s operating and finance lease liabilities as of December 31, 2022 was 4.73 % and 3.92 %, respectively.

Future maturities of the Company’s lease liabilities as of December 31, 2023 are as follows:

Year Ended December 31, 2023

Operating Leases

Finance Leases

2028 and thereafter

Total lease payments

Less amount of lease payment representing interest

Total present value of lease payments

Amounts recognized as finance lease obligations are reported in Accrued expense and other liabilities and Other noncurrent liabilities in the Consolidated Balance Sheets.

The Company received sublease income of $ 0.5 million and $ 1.1 million for the years ended December 31, 2023 and 2022, respectively.

Supplemental cash flow information related to leases for the years ended December 31, 2023 and 2022 was as follows:

Year Ended December 31,

Supplemental cash flow information

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

Operating cash flows for finance leases

Financing cash flows for finance leases

Note 9 – Income Taxes

Income before income taxes was derived from the following sources:

United States

Total income before income taxes

The components of income taxes for the years ended December 31 are as follows:

State and local

The differences between the provision for income taxes at the U.S.

federal statutory rate and the tax shown in the Statements of Consolidated Income for the years ended December 31 are summarized as follows:

Federal tax at statutory rate

State and local taxes, net of federal benefit

Global intangible low-taxed income

tax rate variances

Non-deductible officers' compensation

Valuation allowance

Non-deductible Goodwill Impairment

Uncertain tax positions

Other Life Insurance Proceeds

federal permanent items

Other stock compensation

Foreign tax credits

Effective income tax rate

Income tax expense for the periods ended December 31, 2023, 2022, and 2021 was $ 19.0 million, $ 19.3 million, and $ 13.2 million, respectively.

The decrease in the effective tax rate from 2022 to 2023 was primarily due to the favorable impact related to increased stock compensation activity and valuation allowances recorded in 2022 that did not recur.

This was offset by the unfavorable impact from the mix of income earned in jurisdictions with a higher tax rate than the U.S.

It is also affected by discrete items in 2022 that did not recur including the non-deductible goodwill impairment in the Asia-Pacific region and a non-taxable benefit related to the proceeds from a settlement of a Company-owned life insurance policy.

Deferred Income Tax Assets and Liabilities

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of our deferred tax assets and liabilities were as follows:

Deferred tax assets:

Benefit plan reserves

Research and development capitalization

Inventory valuation reserves

Net operating loss carryforwards

Accrued compensation and benefits

Allowance for credit losses

Foreign tax credit

Other accrued expenses

Unrealized foreign exchange

Gross deferred tax assets

Valuation allowance

Net deferred tax assets

Deferred tax liabilities:

Depreciation and other basis differences

Deferred tax liabilities

Net deferred tax assets

Change in net deferred tax assets:

Ordinary movement

Deferred tax balances from business acquisitions

Items of other comprehensive loss

Currency translation

Total change in net deferred tax assets

As of December 31, 2023, various international subsidiaries had gross net operating losses totaling $ 8.1 million, resulting in deferred tax assets of $ 1.9 million.

Of the international net operating losses, $ 0.5 million carryforward indefinitely, while the remainder, if not utilized, will expire between 2026 and 2033 .

It is more likely than not that certain net operating loss carryforwards will not be realized;

therefore, we have recorded a valuation allowance of $ 1.3 million against them.

The net operating loss carryforwards are subject to various annual limitations under the tax laws of the different jurisdictions.

The Company considers earnings in our non-U.S.

subsidiaries to be permanently reinvested and therefore did not record any associated deferred income taxes on such earnings.

Accordingly, the Company intends to continue to invest approximately $ 137.3 million of such earnings, as well as our capital in these subsidiaries, indefinitely outside of the U.S.

Unrecognized Income Tax Benefits

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits related to uncertain tax positions, excluding interest and penalties, for the year ended December 31:

Balance at January 1

Additions for tax positions of prior years

Settlements with tax authorities

Expiration of statutes of limitations

Balance at December 31

The decrease in unrecognized tax benefits was related to a settlement with foreign tax authorities.

The Company records accrued interest as well as penalties related to unrecognized tax benefits as part of the provision for income taxes.

The accrued interest and penalties related to the gross unrecognized tax benefits, excluded from above, was de minimis in all years presented.

Preformed Line Products Company and its subsidiaries file income tax return in the United States and various countries around the world.

With few exceptions, the Company is no longer subject to United States federal examinations by tax authorities for years before 2019 and foreign, state, and local examinations by authorities for years before 2017.

Note 10 – Share-Based Compensation

2016 Incentive Plan

The Company maintains an equity award program to provide the Company a competitive advantage in attracting, retaining, and motivating officers, employees and directors and to provide an incentive to those individuals to increase shareholder value through long-term incentives directly linked to the Company’s performance.

The Preformed Line Products Company 2016 Incentive Plan (the “Incentive Plan”) was put in place upon approval by the Company’s Shareholders at the 2016 Annual Meeting of Shareholders on May 10, 2016.

Under the Incentive Plan, certain employees, officers, and directors will be eligible to receive awards of options and restricted stock units (RSUs) .

The total number of Company common shares reserved for awards under the Incentive Plan is 1,000,000 of which 900,000 common shares have been reserved for RSUs and 100,000 common shares have been reserved for share options.

As of December 31, 2023, 70,000 options and 507,912 RSUs have been granted under the Incentive Plan.

The Incentive Plan expires on May 10, 2026 .

Restricted Share Units

For the regular annual grants, a portion of the RSUs is subject to time-based cliff vesting and a portion is subject to vesting based upon the Company’s performance over a set period for all participants except the CEO.

All of the CEO’s regular annual RSUs are subject to vesting based upon the Company’s performance over a set-year period.

The RSUs are offered at no cost to the employees, however, the participant must remain employed with the Company until the restrictions on the RSUs lapse.

The fair value of RSUs is based on the market price of a common share on the grant date.

Dividends declared are accrued.

A summary of the RSUs for the year ended December 31, 2023 is as follows:

Restricted Share Awards

Weighted-Average

Nonvested as of January 1, 2023

Nonvested as of December 31, 2023

(1) Nonvested, performance-based RSUs are reflected above at the maximum performance achievement level.

For time-based RSUs, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award in General and administrative expense in the accompanying Statements of Consolidated Income.

Annual compensation expense related to the time-based RSUs for the years ended December 31, 2023, 2022 and 2021 was $ 0.9 million, $ 0.7 million, and $ 0.5 million, respectively.

As of December 31, 2023, there was $ 0.9 million of total unrecognized compensation cost related to time-based RSUs that is expected to be recognized over the weighted-average remaining period of approximately 1.7 years.

For the performance-based RSUs, the number of RSUs in which the participants will vest depends on the Company’s level of performance measured by growth in pre-tax income and sales growth over a requisite performance period.

Depending on the extent to which the performance criteria are satisfied under the Incentive Plan, the participants are eligible to earn common shares over the vesting period.

Performance-based compensation expense for the years ended December 31, 2023, 2022 and 2021 was $ 3.8 million, $ 3.6 million, and $ 3.4 million, respectively.

As of December 31, 2023, the remaining performance-based RSUs compensation expense of $ 4.4 million at maximum performance achievement level is expected to be recognized over a period of approximately 1.7 years.

The excess tax benefits from service and performance-based RSUs wa s $ 2.6 million, $ 0.3 million, and $ 0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

This represents the reduction in income taxes otherwise payable during the period attributable to the actual gross tax benefits in excess of the expected tax benefits for restricted shares vested in the current period.

In the event of a Change in Control (as defined in the Incentive Plan), vesting of the RSUs will be accelerated and all restrictions will lapse.

Nonvested performance-based awards are based on a maximum target potential payout.

Actual shares awarded at the end of the performance period may be less than the maximum potential payout level depending on achievement of performance-based award objectives.

To satisfy the vesting of its RSUs, the Company has reserved new shares from its authorized but unissued shares.

Any additional granted awards will also be issued from the Company’s authorized but unissued shares.

Deferred Compensation Plan

The Company maintains a trust, commonly referred to as a rabbi trust, in connection with the Company’s deferred compensation plan.

This plan allows for two deferrals.

First, Directors make elective deferrals of Director fees payable and held in the rabbi trust.

The deferred compensation plan allows the Directors to elect to receive Director fees in common shares of the Company at a later date instead of fees paid each quarter in cash.

Second, this plan allows certain Company employees to defer restricted shares or RSUs for future distribution in the form of common shares.

Assets of the rabbi trust are consolidated, and the value of the Company’s stock held in the rabbi trust is classified in Shareholders’ equity and generally accounted for in a manner similar to treasury stock.

The Company recognizes the original amount of the deferred compensation (fair value of the deferred stock award at the date of grant) as the basis for recognition in common shares issued to the rabbi trust.

Changes in the fair value of amounts owed to certain employees or Directors are not recognized as the Company’s deferred compensation plan does not permit diversification and must be settled by the delivery of a fixed number of the Company’s common shares.

As of December 31, 2023, 243,118 shares have been deferred and are being held by the rabbi trust.

Share Option Awards

The Incentive Plan permits the grant of 100,000 options to buy common shares of the Company to certain employees at not less than fair market value of the shares on the date of grant.

Options issued to date under the Incentive Plan vest 50 % after one year following

the date of the grant, 75 % after two years, and 100 % after three years and expire from five to ten years from the date of grant.

Shares issued as a result of stock option exercises will be funded with the issuance of new shares.

The Company utilizes the Black-Scholes option pricing model for estimating fair values of options.

The Black-Scholes model requires assumptions regarding the volatility of the Company’s stock, the expected life of the stock award and the Company’s dividend yield.

The Company utilizes historical data in determining these assumptions.

The risk-free rate for periods within the contractual life of the option is based on the U.S.

zero coupon Treasury yield in effect at the time of grant.

Forfeitures have been estimated to be zero .

There were no options granted during the year ended December 31, 2023 and 26,500 and 3,000 options granted in the years ended December 31, 2022 and 2021, respectively .

The fair values for the stock options granted were estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Risk-free interest rate

Dividend yield

Expected life (years)

Expected volatility

Activity in the Company’s Incentive Plan for the year ended December 31, 2023 was as follows:

Exercise Price

Remaining Contractual

Outstanding at January 1, 2023

Outstanding (vested and expected to vest) at December 31, 2023

Exercisable at December 31, 2023

There were 37,800 , 13,150 , and 7,000 stock options exercised during the years ended December 31, 2023, 2022 and 2021, respectively.

The total intrinsic value of stock options exercised was $ 3.5 million, $ 0.3 million, and $ 0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Cash received for the exercise of stock options during the year ended December 31, 2023 and 2022 was $ 2.2 million and $ 0.8 million, respectively.

The Company recorded compensation expense related to the stock options currently vested of $ 0.3 million, $ 0.3 million and $ 0.2 million during the years ended December 31, 2023, 2022 and 2021, respectively.

The total compensation cost related to nonvested awards not yet recognized at December 31, 2023 is expected to be $ 0.2 million over a weighted-average period of approximately 1.5 years.

The excess tax benefits from share-based awards for the year ended December 31, 2023 was $ 2.4 million.

The excess tax benefits from share-based awards for each of the years ended December 31, 2022 and 2021 was less than $ 0.1 million.

This represents the reduction in income taxes otherwise payable during the period attributable to the actual gross tax benefits in excess of the expected tax benefits for options exercised in the current period.

Note 11 – Computation of Earnings Per Share

Basic earnings per share were computed by dividing net income by the weighted-average number of common shares outstanding for each respective period.

Diluted earnings per share were calculated by dividing net income by the weighted-average of all potentially dilutive common shares that were outstanding during the years presented.

The calculation of basic and diluted earnings per share for the year ended December 31 was as follows:

Determination of shares (in thousands)

Weighted-average common shares outstanding

Dilutive effect – share-based awards

Diluted weighted-average common shares outstanding

Earnings per common share

For the year ended December 31, 2023, 2022 and 2021, zero , 31,500 , and 13,000 stock options, respectively, were excluded from the calculation of diluted earnings per share as the effect would have been anti-dilutive.

Note 12 – Goodwill and Other Intangibles

The Company’s finite and indefinite-lived intangible assets consist of the following:

December 31, 2023

December 31, 2022

Gross Carrying

Finite-lived intangible assets

Land use rights

Customer relationships

Indefinite-lived intangible assets

The aggregate amortization expense for other intangibles with finite lives, ranging from 1 to 67 years, for the years ended December 31, 2023, 2022 and 2021 wa s $ 1.8 , $ 2.2 million, and $ 1.9 million, respectively.

Amortization expense is estimated to be $ 1.8 million for 2024, $ 1.6 million for 2025, and $ 1.5 million for 2026, 2027 and 2028.

The weighted-average remaining amortization period is approximately 11.8 years.

The weighted-average remaining amortization period by intangible asset class;

land use rights, 52.8 years;

trademark, 14.3 years;

technology, 7.1 years and customer relationships, 9.8 years.

The Company may use both quantitative and qualitative approaches when testing goodwill for impairment.

For selected reporting units where the qualitative approach is utilized, a qualitative evaluation of events and circumstances impacting the reporting unit is performed to determine if it is more likely than not that the fair value of the reporting unit exceeds its carrying amount.

determination is made, no further evaluation is necessary.

Otherwise, the Company performs a quantitative impairment test on the reporting unit.

The Company then compares the fair value of the reporting unit with its carrying value to assess if goodwill has been impaired.

The fair value estimates are subjective and sensitive to significant assumptions, such as revenue growth rates, operating margins, the WACC, and estimated market multiples, of which are affected by expectations of future market or economic conditions.

The Company believes that the methodologies, significant assumptions, and weightings used are reasonable and result in appropriate fair values of the reporting units.

There were no impairment charges recorded in 2023.

Based on the interim impairment assessment performed as of September 30, 2022, the Asia-Pacific reporting unit’s carrying value exceeded its fair value by more than the carrying amount of goodwill, which was caused by both a reduction in forecasted results and an increase in the weighted average cost of capital due to rising interest rates.

As a result, the Company recognized a non-cash impairment charge of $ 6.5 million as of September 30, 2022.

This charge was identified separately in the consolidated income statement and impacted income from operations.

Total combined goodwill for the remaining reporting units was $ 29.5 million as shown in the following table:

Balance at January 1, 2022

Currency translation

Balance at December 31, 2022

Currency translation

Balance at December 31, 2023

Impairment assessments inherently involve management judgments regarding a number of assumptions such as those described above.

The Company’s only intangible asset with an indefinite life is goodwill.

The Company’s goodwill is not deductible for tax purposes.

Note 13 – Fair Value of Financial Assets and Liabilities

The Company measures and records certain assets and liabilities at fair value.

A fair value hierarchy is used for those assets and liabilities measured at fair value that distinguishes between assumptions based on market data (observable inputs), and the Company’s assumptions (unobservable inputs).

The hierarchy consists of the following three levels:

Level 1 Inputs – Quoted market prices in active markets for identical assets or liabilities.

Level 2 Inputs – Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3 Inputs – Unobservable inputs that are not corroborated by market data.

The following table summarizes the Company’s assets and liabilities, recorded and measured at fair value, in the consolidated balance sheets as of December 31, 2023 and 2022:

Balance as of

December 31, 2023

Quoted Prices in Active Markets for Identical Assets or Liabilities

Significant Other Observable Inputs

Significant Unobservable Inputs

Foreign currency forward contracts

Supplemental profit sharing plan

Total Liabilities

Balance as of

December 31, 2022

Quoted Prices in Active Markets for Identical Assets or Liabilities

Significant Other Observable Inputs

Significant Unobservable Inputs

Foreign currency forward contracts

Supplemental profit sharing plan

Total Liabilities

The Company operates internationally and enters into intercompany transactions denominated in foreign currencies.

Consequently, the Company is subject to market risk arising from exchange rate movements between the dates foreign currency transactions occur and the dates they are settled.

The Company currently uses foreign currency forward contracts to reduce the risk related to some of these transactions.

These contracts usually have maturities of 90 days or less and generally require an exchange of foreign currencies for U.S.

dollars at maturity at rates stated in the contracts.

These contracts are not designated as hedging instruments under U.S.

Accordingly, the changes in the fair value of the foreign currency forward contracts are recognized in each accounting period in “Other operating expense - net” on the Consolidated Statements of Income together with the transaction gain or loss from the related balance sheet position.

For the twelve months ended December 31, 2023 and 2022, the Company recognized net los ses of $ 0.7 million and $ 0.1 mi llion, respectively, on foreign currency forward contracts.

The gains and losses on foreign currency forward contracts are recorded in Other operating expense, net on the Company’s Statement of Consolidated Income.

The Company has a non-q ualified Supplemental Profit Sharing Plan for its executives.

The liability for this unfunded Supplemental Profit Sharing Plan was $ 8.2 million at December 31, 2023 and $ 7.3 million at December 31, 2022.

These amounts are recorded within Other noncurrent liabilities on the Company’s Consolidated Balance Sheets.

The Supplemental Profit Sharing Plan allows participants the ability to hypothetically inve st their proportionate award into various investment options, which primarily includes mutual funds.

The Company credits earnings, gains and losses to the participants’ deferred compensation account balances based on the investments selected by the participants.

The Company measures the fair value of the Supplemental Profit Sharing Plan liability using the market values of the participants’ underlying investment accounts.

The carrying value of the Company’s current financial instruments, which include cash, cash equivalents and restricted cash, accounts receivable, accounts payable and short-term debt, approximates fair value because of the short-term maturity of these instruments.

At December 31, 2023, the fair value of the Company’s long-term debt was estimated using discounted cash flows analysis, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements that are considered to be Level 2 inputs .

Based on the analysis performed, the fair value and the carrying value of the Company’s long-term debt are as follows:

December 31, 2023

December 31, 2022

Carrying Value

Long-term debt and related current maturities

Note 14 – Revenue

Revenue recognition

Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers.

Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services and is primarily based on shipping terms.

Sales are measured as the amount of consideration the Company expects to receive in exchange for transferring products.

Net sales include products and shipping and handling charges, net of estimates for product returns.

The Company estimates product returns based on historical return rates.

Revenue for shipping and handling charges are recognized at the time the products are shipped to, delivered to or picked up by the customer.

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of goods sold.

Payment terms vary by the type and location of the customer and the products or services offered.

Generally, the time between when revenue is recognized, and payment is due is not significant.

Sales, value added, and other taxes collected concurrent with revenue are excluded from sales.

PLP records reductions to sales for returns, and customer and distributor incentives, primarily comprised of rebates, at the time of the initial sale.

Rebates are estimated based on sales terms, historical experience, trend analysis, and projected market conditions in the various markets served.

Sales commissions are expensed when the amortization period is less than a year and are generally not capitalized as they are typically earned at the completion of the contract when the customer is invoiced or when the customer pays PLP.

Sales of products and services varies by segment and are discussed in Note 15, "Segment Information".

Disaggregated revenue

The following table presents the Company’s revenues disaggregated by segment and product type:

Year Ended December 31, 2023

Communications

Special Industries

Year Ended December 31, 2022

Communications

Special Industries

Credit losses for receivables

The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required payments.

The Company uses a current expected credit loss model in order to immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments, mainly trade receivables.

Additionally, the allowance is based upon identified delinquent accounts, customer payment patterns and other analyses of historical data trends.

Receivable balances are written off against an allowance for credit losses after a final determination has been made.

The change in the allowance for credit losses includes expense and net write-offs, which are identified in the following table:

Allowance for credit losses, beginning of period

Additions charged to costs and expenses

Foreign exchange and other

Allowance for credit losses, end of period

Note 15 – Segment Information

The Company reports its segments in four geographic regions:

PLP-USA, The Americas, EMEA (Europe, Middle East & Africa) and Asia-Pacific in accordance with accounting standards codified in FASB ASC 280, “Segment Reporting”.

Each segment distributes a full range of the Company’s primary products.

The PLP-USA segment is comprised of U.S.

operations manufacturing the Company’s traditional products primarily supporting domestic energy, telecommunications and solar products.

The other three segments, The Americas, EMEA and Asia-Pacific support the Company’s energy, telecommunications, data communication and solar products in each respective geographical region.

The segment managers responsible for each region report directly to the Company’s Chief Executive Officer, who is the chief operating decision maker and are accountable for the financial results and performance of their entire segment for which they are responsible.

The business components within each segment are managed to maximize the results of the entire company rather than the results of any individual business component of the segment.

The amount of each segment’s performance reported to the chief operating decision maker is for purposes of making decisions about allocating resources to the segment and assessing its performance.

The Company evaluates segment performance and allocates resources based on several factors primarily based on sales and income from continuing operations, net of tax.

The accounting policies of the operating segments are the same as those described in Note 1.

We have one customer accounting for 11.6 % of the Company’s consolidated revenue.

In certain circumstances, PLP-USA performs all manufacturing and shipping activity to US-based entities on behalf of EMEA, where the sales order is recorded.

These sales and related profits have been reclassified for segment purposes only from EMEA to PLP-USA.

The following table presents a summary of the Company’s reportable segments for the years ended December 31, 2023, 2022 and 2021.

Financial results for the PLP-USA segment include the elimination of all segments’ intercompany profits in inventory.

Year Ended December 31,

Total net sales

Intersegment sales

Total intersegment sales

Interest income

Total interest income

Interest expense

Total interest expense

Total income taxes

Net income attributable to Preformed Line Products Company shareholders

Total net income

Expenditure for long-lived assets

Total expenditures for long-lived assets

Depreciation and amortization

Total depreciation and amortization

As of December 31,

Identifiable assets

Long-lived assets

Total long-lived assets

Note 16 – Related Party Transactions

The Company’s Czech Republic subsidiary leases a factory at its Prostějov, Czech Republic location from a company currently owned by two current employees.

During each of the years ended December 31, 2023, 2022 and 2021, the Company paid $ 0.3 million in lease expenses.

The lease term is for 10 years from its original effective date of April 1, 2019.

During each year of the years ended December 31, 2023, 2022 and 2021, the Company paid app roximately $ 0.2 million, $ 0.1 million and $ 0.1 million, respectively, in legal fees to Baker & Hostetler LLP, of which Steven Kestner, a member of our Board of Directors, is a Partner.

On October 28, 2020, the Board of the Directors of the Company approved the appointment of David C.

Sunkle to serve on its Board of Directors effective upon his retirement at December 31, 2020 for a term commencing January 1, 2021 and ending in 2024.

In addition, Mr.

Sunkle has a consulting agreement with the Company that expires on December 31, 2025 .

Note 17 – Acquisitions of Businesses

Acquisition of Pilot Plastics

On February 1, 2023, the Company acquired substantially all of the assets of Pilot Plastics, headquartered in Akron, Ohio.

Pilot Plastics is an injection molding manufacturer and the acquisition expanded the Company's injection molding capabilities and further enhanced the Company's domestic manufacturing footprint.

The purchase price was approximatel y $ 13.8 million, net of cash as of the closing date.

The purchase price is subject to a holdback of approximately $ 1.7 million.

To fund the Pilot Plastics acquisition, the Company borrowed on the Facility.

The acquisition of Pilot Plastics is accounted for using the acquisition method of accounting, which requires the assets acquired and liabilities assumed to be recognized at their respective fair values on the acquisition date.

The process of estimating the fair values

of certain tangible assets, and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates.

The table below summarizes the fair values of the assets acquired and liabilities assumed on the acquisition date, inclusive of the preliminary measurement period adjustments recorded as of December 31, 2023, which were not material.

The measurement period remains open and future adjustments are not expected to have a material impact to the Consolidated Statements of Income.

Adjusted Preliminary Allocation

Accounts receivable

Property, plant and equipment and other assets

Accounts payable

Other current liabilities

Total identifiable net assets

Total consideration, net of cash received

Due to the consideration transferred equaling the fair value of the assets acquired, no residual goodwill was recognized.

From the date of the acquisition through December 31, 2023, the Company’s consolidated financial statements included Pilot Plastics sales of approximatel y $ 6.7 milli on and are reported in the PLP-USA segment.

Acquisition of Delta Conectores , S.A.

On October 3, 2022, the Company acquired Delta Conectores, S.A.

("Delta"), a Mexico entity headquartered in Aguascalientes, Mexico, from its shareholders.

Delta designs and manufactures substation connector systems and accessory hardware for high voltage AC systems in Mexico.

The acquisition of Delta expanded the Company's operational and technical capabilities in the region while supporting its overall substation strategy.

The purchase price was $ 3.3 million, net of cash received, subject to a holdback of $ 0.6 million.

The acquisition of Delta has been accounted for using the acquisition method of accounting, which requires the assets acquired and liabilities assumed to be recognized at their respective fair values on the acquisition date.

The process of estimating the fair values of certain tangible assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates.

The fair value of t he identifiable net assets acquired was $ 2.9 million.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Delta.

The goodwill recognized of $ 0.4 million is not deductible for tax purposes.

All measurement period adjustments were completed within a year from the acquisition date, and such adjustments did not have a material impact on the Company's results of operations and financial position.

Acquisition of Holplast, s.r.o.

On March 1, 2022, the Company acquired all issued and outstanding shares of Holplast, s.r.o (“Holplast”), an entity headquartered in Prostějov , Czech Republic, from its shareholder.

Holplast specializes in injection molding and the acquisition expanded the Company’s operational capabilities in the region and strengthens the Company’s position in the global communications market.

The purchase price was approximately $ 5.3 million with a holdback of $ 0.8 million, inclusive of cash and debt.

The acquisition of Holplast has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date.

The process of estimating the fair values of certain tangible assets, identifiable intangible assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates.

During the measurement period, opening balance sheet adjustments were made to finalize the fair value estimates based on the final valuations received, which are summarized in the table below.

Final Allocation

Accounts receivable

Prepaid expenses and other current assets

Property, plant and equipment and other assets

Accounts payable

Other current liabilities

Other non-current liabilities

Total identifiable net assets

Total consideration, net of cash received

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Holplast.

Other non-current liabilities assumed is mainly comprised of long-term debt totaling approximately $ 1.1 million at a rate of 3.21 % with terms expiring between May 2023 and December 2030 .

The goodwill recognized of $ 2.5 million is not deductible for tax purposes.

Acquisition of Maxxweld Conectores Electricos Ltda.

On January 4, 2022, the Company acquired Maxxweld Conectores Eletricos Ltda.

("Maxxweld"), a Brazilian entity headquartered in Curitiba, Brazil, from its shareholders.

Maxxweld designs and manufactures substation connector systems and accessory hardware for high voltage AC systems.

The acquisition of Maxxweld expands and strengthens the Company's operational and technical capabilities in the region while supporting its overall substation strategy.

The purchase price was approximately $ 11.2 million, net of cash received, as of the closing date.

The purchase price is subject to a holdback of approximately $ 1.8 million.

The acquisition of Maxxweld has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date.

During the measurement period, opening balance sheet adjustments were made to finalize the fair value estimates based on the final valuations received, which are summarized in the table below.

Final Allocation

Accounts receivable

Prepaid expenses and other current assets

Equipment and other assets

Other intangible assets

Accounts payable

Other current liabilities

Other non-current liabilities

Total identifiable net assets

Total consideration, net of cash received

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Maxxweld.

As a result of the acquisition, goodwill of $ 5.1 million recognized is not deductible for tax purposes.

Other intangible assets of $ 4.4 million include customer relationships, tradenames and backlog.

The preliminary estimated fair values of the customer relationships, trademarks and backlog were $ 4.0 million, $ 0.2 million and $ 0.2 million, respectively, were determined using either the relief-from-royalty model or the multi-period excess earnings model, which are discounted cash flow models that rely on the Company's estimates.

These estimates require judgment of future revenue growth rates, future margins, and the applicable weighted-average cost of capital used to discount those estimated cash flows.

The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise.

The estimated useful lives for customer relationships, trademarks and backlog were 15 years, 20 years, and 1 year, respectively.

See Note 12 for additional information about goodwill and other intangible assets.

Note 18 – Exit of Russian Operations

Due to the ongoing conflict in Ukraine and overt hostilities shown by Russia in the conflict, the Company decided to exit its Russian operations in March 2022, which was completed during the third quarter of 2022.

The Russian operations did not have a material impact to the consolidated financial statements with net sales of $ 0.3 million for the twelve months ended December 31, 2022, and $ 1.0 million for the twelve months ended December 31, 2021, respectively.

As a result of the decision to exit operations, net charges of approximately $ 1.0 million were recorded for the twelve months ended December 31, 2022, mainly as a result of asset impairments and one-time termination benefits.

These impacts were included in Cost of products sold, General and administrative expense, or Other income, net, as appropriate.

In Note 15 – Segment Information, these charges are recorded in the EMEA segment.

Changes in and Disagreements with Acco untants on Accounting and Financial Disclosure

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 7. Management’s Discussion and Analysis