PREFORMED LINE PRODUCTS CO 10-Q

ITEM 1. FINANCIAL STATEMENTS PREFORMED LINE PRODUCTS COMPANY CONSOLIDATED BALANCE SHEETS March 31, 2025 December 31, 2024 (Thousands of dollars, except share and per share data) (Unaudited) ASSETS Cash, cash equivalents and restricted cash $ 54,835 $ 57,244 Accounts receivable, net 118,504 111,402 Inventories, net 135,098 129,913 Prepaid expenses 12,261 11,720 Other current assets 6,024 5,514 TOTAL CURRENT ASSETS 326,722 315,793 Property, plant and equipment, net 203,083 195,086 Operating lease, right-of-use assets 10,138 10,117 Goodwill 27,746 26,685 Other intangible assets, net 9,736 9,656 Deferred income taxes 6,284 6,546 Other assets 8,742 9,994 TOTAL ASSETS $ 592,451 $ 573,877 LIABILITIES AND SHAREHOLDERS' EQUITY Trade accounts payable $ 45,252 $ 41,951 Notes payable to banks 5,845 7,782 Operating lease liabilities, current 1,751 1,588 Current portion of long-term debt 3,378 2,430 Accrued compensation and other benefits 20,788 25,904 Accrued expenses and other liabilities 26,608 25,503 Dividends payable 1,146 1,293 Income taxes payable 1,149 1,962 TOTAL CURRENT LIABILITIES 105,917 108,413 Long-term debt, less current portion 25,682 18,357 Operating lease liabilities, noncurrent 6,455 6,538 Deferred income taxes 3,017 3,766 Other noncurrent liabilities 15,559 14,479 SHAREHOLDERS' EQUITY Common shares – $ 2 par value per share, 15,000,000 shares authorized, 4,940,131 and 4,913,621 issued and outstanding, at March 31, 2025 and December 31, 2024 13,820 13,752 Common shares issued to rabbi trust, 223,034 and 222,887 shares at March 31, 2025 and December 31, 2024, respectively ( 9,594 ) ( 9,575 ) Deferred compensation liability 9,594 9,575 Paid-in capital 62,205 65,093 Retained earnings 563,678 553,179 Treasury shares, at cost, 1,969,354 and 1,961,772 shares at March 31, 2025 and December 31, 2024, respectively ( 127,812 ) ( 126,800 ) Accumulated other comprehensive loss ( 76,115 ) ( 82,909 ) TOTAL PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS' EQUITY 435,776 422,315 Noncontrolling interest 45 9 TOTAL SHAREHOLDERS' EQUITY 435,821 422,324 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 592,451 $ 573,877 See notes to consolidated financial statements (unaudited). 3 PREFORMED LINE PRODUCTS COMPANY STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED) Three Months Ended March 31, 2025 2024 (Thousands, except per share data) Net sales $ 148,541 $ 140,904 Cost of products sold 99,870 96,773 GROSS PROFIT 48,671 44,131 Costs and expenses Selling 12,181 11,900 General and administrative 17,626 16,608 Research and engineering 5,479 5,431 Other operating expense (income), net 255 ( 1,367 ) 35,541 32,572 OPERATING INCOME 13,130 11,559 Other income (expense) Interest income 510 972 Interest expense ( 376 ) ( 708 ) Other income, net 407 35 541 299 INCOME BEFORE INCOME TAXES 13,671 11,858 Income tax expense 2,118 2,255 NET INCOME $ 11,553 $ 9,603 Net income attributable to noncontrolling interests ( 36 ) ( 7 ) NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS $ 11,517 $ 9,596 AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING: Basic 4,928 4,915 Diluted 4,950 4,944 EARNINGS PER SHARE OF COMMON STOCK ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS: Basic $ 2.34 $ 1.95 Diluted $ 2.33 $ 1.94 See notes to consolidated financial statements (unaudited). 4 PREFORMED LINE PRODUCTS COMPANY STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended March 31, 2025 2024 (Thousands of dollars) Net income $ 11,553 $ 9,603 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 6,671 ( 6,565 ) Pension adjustment, net of tax 123 89 Other comprehensive income (loss), net of tax 6,794 ( 6,476 ) Comprehensive income attributable to noncontrolling interests ( 36 ) ( 7 ) COMPREHENSIVE INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS $ 18,311 $ 3,120 See notes to consolidated financial statements (unaudited). 5 PREFORMED LINE PRODUCTS COMPANY STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED) Three Months Ended March 31, 2025 2024 (Thousands of dollars) OPERATING ACTIVITIES Net income $ 11,553 $ 9,603 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 5,397 5,414 Deferred income taxes ( 479 ) ( 386 ) Share-based compensation expense 892 383 Gain on sale of property and equipment ( 37 ) ( 1,843 ) Other, net ( 228 ) 1,230 Changes in operating assets and liabilities ( 11,443 ) ( 8,648 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 5,655 5,753 INVESTING ACTIVITIES Capital expenditures ( 10,976 ) ( 3,918 ) Proceeds from the sale of property and equipment 91 3,237 Proceeds from sale of investments 1,679 — Purchases of investments ( 451 ) — NET CASH USED IN INVESTING ACTIVITIES ( 9,657 ) ( 681 ) FINANCING ACTIVITIES Payments of notes payable to banks ( 1,966 ) ( 5,307 ) Proceeds from long-term debt 8,628 33,232 Payments of long-term debt ( 777 ) ( 33,069 ) Dividends paid ( 1,164 ) ( 1,130 ) Proceeds from issuance of common shares 68 60 Stock incentive plan payments ( 3,799 ) — Purchase of common shares for treasury ( 131 ) — Purchase of common shares for treasury from related parties ( 881 ) ( 5,452 ) NET CASH USED IN FINANCING ACTIVITIES ( 22 ) ( 11,666 ) Effects of exchange rate changes on cash, cash equivalents and restricted cash 1,615 ( 1,154 ) Net decrease in cash, cash equivalents and restricted cash ( 2,409 ) ( 7,748 ) Cash, cash equivalents and restricted cash at beginning of year 57,244 53,607 CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 54,835 $ 45,859 See notes to consolidated financial statements (unaudited). 6 PREFORMED LINE PRODUCTS COMPANY STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY Accumulated Other Comprehensive Income (Loss) (In thousands, except share and per share data) Common Shares Common Shares Issued to Rabbi Trust Deferred Compensation Liability Paid in Capital Retained Earnings Treasury Shares Cumulative Translation Adjustment Unrecognized Pension Benefit Cost Total Preformed Line Products Company Equity Noncontrolling Interests Total Equity Balance at December 31, 2024 $ 13,752 $ ( 9,575 ) $ 9,575 $ 65,093 $ 553,179 $ ( 126,800 ) $ ( 77,536 ) $ ( 5,373 ) $ 422,315 $ 9 $ 422,324 Net income 11,517 11,517 36 11,553 Foreign currency translation adjustment 6,671 6,671 6,671 Pension adjustment, net of tax 123 123 123 Total comprehensive income 18,311 36 18,347 Purchase of 860 common shares ( 131 ) ( 131 ) ( 131 ) Stock incentive plan activity 68 ( 2,888 ) ( 881 ) ( 3,701 ) ( 3,701 ) Common shares issued to rabbi trust of 147 , net ( 19 ) 19 — — Cash dividends declared – $ 0.20 per share ( 1,018 ) ( 1,018 ) ( 1,018 ) Balance at March 31, 2025 $ 13,820 $ ( 9,594 ) $ 9,594 $ 62,205 $ 563,678 $ ( 127,812 ) $ ( 70,865 ) $ ( 5,250 ) $ 435,776 $ 45 $ 435,821 Accumulated Other Comprehensive Income (Loss) Common Shares Common Shares Issued to Rabbi Trust Deferred Compensation Liability Paid in Capital Retained Earnings Treasury Shares Cumulative Translation Adjustment Unrecognized Pension Benefit Cost Total Preformed Line Products Company Equity Noncontrolling Interests Total Equity Balance at December 31, 2023 $ 13,607 $ ( 10,183 ) $ 10,183 $ 60,958 $ 520,154 $ ( 118,249 ) $ ( 55,828 ) $ ( 4,478 ) $ 416,164 $ ( 8 ) $ 416,156 Net income 9,596 9,596 7 9,603 Foreign currency translation adjustment ( 6,565 ) ( 6,565 ) ( 6,565 ) Pension adjustment, net of tax 89 89 89 Total comprehensive income 3,120 7 3,127 Stock incentive plan activity 104 450 ( 5,452 ) ( 4,898 ) ( 4,898 ) Common shares distributed from rabbi trust of 4,477 , net ( 31 ) 31 — — Cash dividends declared – $ 0.20 per share ( 1,017 ) ( 1,017 ) ( 1,017 ) Balance at March 31, 2024 $ 13,711 $ ( 10,214 ) $ 10,214 $ 61,408 $ 528,733 $ ( 123,701 ) $ ( 62,393 ) $ ( 4,389 ) $ 413,369 $ ( 1 ) $ 413,368 See notes to consolidated financial statements (unaudited). 7 PREFORMED LINE PRODUCTS COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Tables in thousands of dollars, except share and per share data, unless specifically noted) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements of Preformed Line Products Company and subsidiaries (the “Company” or “PLPC”) have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. This Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Form 10-K for the year ended December 31, 2024 filed on March 13, 2025 with the Securities and Exchange Commission. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from these estimates. In the opinion of management, these consolidated financial statements contain all estimates and adjustments, consisting of normal recurring accruals, required to fairly present the financial position, results of operations, and cash flows for the interim periods. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full-year ending December 31, 2025. 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 the Company’s consolidated financial statements. Additionally, the Company’s consolidated financial statements include 100 % of a controlled subsidiary’s earnings, rather than only its 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. Certain prior year amounts have been reclassified to conform to the current year presentation. Recently Adopted or Issued Accounting Pronouncements Adopted In November 2023, the FASB issued Accounting Standards Update ("ASU") 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 was effective for the Company's 2024 fiscal year and interim periods beginning with the quarter ended March 31, 2025. The adoption of this new standard did not have a material impact on the consolidated financial statements, other than the updated segment disclosures included within Note 13, "Segment Information". Not Yet Adopted 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 beginning after December 15, 2024. The Company is evaluating the impact of adopting this ASU and expects the standard will only impact its income tax disclosures with no material impact to the consolidated financial statements. In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU improves disclosures about a public business entity’s expenses and addresses requests from investors for more detailed information about the types of expenses commonly presented in expense captions. Coupled with recent standards that enhanced the disaggregation of revenue and income tax information, the disaggregated expense information required by the amendments in this ASU will enable investors to better understand the major components of an entity’s income statement. This ASU is effective for annual reporting 8 periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of adopting this ASU. NOTE 2 - 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. Disaggregated Revenue The Company’s revenues by segment and product type are as follows: Three Months Ended March 31, 2025 Product Type PLP-USA The Americas EMEA Asia-Pacific Consolidated Energy 60 % 84 % 75 % 76 % 69 % Communications 35 % 15 % 22 % 3 % 25 % Special Industries 5 % 1 % 3 % 21 % 6 % Total 100 % 100 % 100 % 100 % 100 % Three Months Ended March 31, 2024 Product Type PLP-USA The Americas EMEA Asia-Pacific Consolidated Energy 67 % 74 % 70 % 76 % 70 % Communications 28 % 25 % 24 % 3 % 23 % Special Industries 5 % 1 % 6 % 21 % 7 % Total 100 % 100 % 100 % 100 % 100 % 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: Three Months Ended March 31, 2025 2024 Allowance for credit losses, beginning of period $ 6,958 $ 8,260 (Reductions) additions charged to costs and expenses ( 67 ) 66 Write-offs — ( 6 ) Foreign exchange and other 13 ( 131 ) Allowance for credit losses, end of period $ 6,904 $ 8,189 9 NOTE 3 - INVENTORIES, NET Inventories, net Inventory is carried at lower of cost or net realizable value. The components of inventory are as follows: March 31, 2025 December 31, 2024 Raw materials $ 74,990 $ 75,138 Work-in-process 15,475 12,225 Finished products 55,379 52,792 Inventories, net of excess and obsolete inventory reserve 145,844 140,155 Excess of current cost over LIFO cost ( 10,746 ) ( 10,242 ) Inventories at LIFO cost $ 135,098 $ 129,913 Costs for inventories of certain material, mainly in the U.S., are determined using the Last-In First-Out ("LIFO") method and totaled approximately $ 42.4 million at March 31, 2025 and $ 46.5 million at December 31, 2024. An actual valuation of inventories under the LIFO method can be made only at the end of the year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs. Because these estimates are subject to change and may be different than the actual inventory levels and costs at the end of the year, interim results are subject to the final year-end LIFO inventory valuation. During the three-month periods ended March 31, 2025 and 2024, the net change in LIFO inventories resulted in an expense of $ 0.5 million and $ 0.2 million, respectively, to Cost of products sold. The Company’s reserves for excess and obsolete inventory were $ 16.6 million at March 31, 2025 and $ 17.7 million at December 31, 2024. NOTE 4 - PROPERTY AND EQUIPMENT, NET Major classes of property, plant and equipment are as follows: March 31, 2025 December 31, 2024 Land and improvements $ 25,927 $ 20,204 Buildings and improvements 128,288 125,076 Machinery, equipment and aircraft 259,943 252,759 Construction in progress 9,557 10,884 Property, plant and equipment, gross 423,715 408,923 Less accumulated depreciation ( 220,632 ) ( 213,837 ) Property, plant and equipment, net $ 203,083 $ 195,086 NOTE 5 - CONTINGENT AND OTHER 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. The Company is not a party to any 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. As of March 31, 2025 and December 31, 2024, there were zero reserves for known global legal matters. As of March 31, 2025 and December 31, 2024, the Company has included $ 9.3 million and $ 6.7 million, respectively, of advanced payments by customers for future projects in Accrued expenses and other liabilities on the Consolidated Balance Sheet. 10 NOTE 6 - PENSION PLANS The Company uses a December 31 measurement date for the Preformed Line Products Company Employees’ Retirement Plan (the “U.S. Plan”). Net periodic pension expense for the U.S. Plan for the three-month periods ended March 31, 2025 and 2024, respectively, follows: Three Months Ended March 31, 2025 2024 Interest cost $ 395 $ 387 Expected return on plan assets ( 351 ) ( 485 ) Recognized net actuarial loss 161 117 Net periodic pension expense $ 205 $ 19 There were no contributions to the U.S. Plan during the three months ended March 31, 2025 and 2024. The Company is evaluating whether to make additional contributions to the U.S. Plan during 2025. In August 2023, the Board of Directors of the Company approved a resolution to terminate the U.S. Plan and certain administrative actions have been undertaken to proceed with the termination. Components of pension expense are included in Other income, net in the Consolidated Statements of Income. NOTE 7 - ACCUMULATED OTHER COMPREHENSIVE INCOME ("AOCI") The following tables set forth the total changes in AOCI by component, net of tax: Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 Unrecognized Benefit Cost Cumulative Translation Adjustment Total Unrecognized Benefit Cost Cumulative Translation Adjustment Total Balance at January 1 $ ( 5,373 ) $ ( 77,536 ) $ ( 82,909 ) $ ( 4,478 ) $ ( 55,828 ) $ ( 60,306 ) Other comprehensive income before reclassifications: Foreign currency translation adjustment — 6,671 6,671 — ( 6,565 ) ( 6,565 ) Amounts reclassified from AOCI: Amortization of defined benefit pension actuarial loss (a) 123 — 123 89 — 89 Net current period other comprehensive income (loss) 123 6,671 6,794 89 ( 6,565 ) ( 6,476 ) Balance at March 31 $ ( 5,250 ) $ ( 70,865 ) $ ( 76,115 ) $ ( 4,389 ) $ ( 62,393 ) $ ( 66,782 ) (a) This AOCI component is included in the computation of net periodic pension expense as noted in Note 6 – Pension Plans. NOTE 8 - DEBT AND CREDIT ARRANGEMENTS The Company maintains a credit facility (the "Facility") with a capacity of $ 90.0 million. On March 14, 2025, the Company amended the Facility to extend the maturity date from March 2, 2026 to June 30, 2028. In addition, the amendment increased the amount of unsecured borrowings that the Company is permitted to incur outside of the Facility from $ 40.0 million to $ 60.0 million and included APRESA – PLP Spain, S.A. as an additional borrower. The interest rate for U.S. borrowing is defined as the Secured Overnight Financing Rate (“SOFR”) plus 1.225 % 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 1.600 %. At March 31, 2025, the Company had utilized $ 7.5 million with $ 82.5 million available on the Facility. There were no long-term outstanding letters of credit on the Facility as of March 31, 2025. Our bank debt to equity percentage was 8.0 %. The Facility contains, among other provisions, requirements for maintaining levels of net worth and profitability. At March 31, 2025, the Company was in compliance with these covenants. 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 $ 12.1 million outstanding on this debt facility at March 31, 2025, $ 2.1 million was classified as current. The aircraft has been pledged as collateral against the loan. 11 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 March 31, 2025, and December 31, 2024, $ 15.3 million and $ 8.8 million were outstanding, of which $ 7.2 million and $ 8.2 million were classified as current, respectively. These facilities support commitments made in the ordinary course of business. The Company's Asia-Pacific segment had $ 0.1 million in restricted cash used to secure bank guarantees at March 31, 2025 and December 31, 2024. The restricted cash is shown on the Company’s Consolidated Balance Sheets in Cash, cash equivalents and restricted cash. NOTE 9 - INCOME TAXES For the three-month period ended March 31, 2025 and 2024, the Company’s effective tax rate was 16 % and 19 %, respectively. The lower effective tax rate for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily due to the favorable impact from the increase in excess tax benefits on share-based compensation, the decrease of nondeductible compensation, and favorable impact from the mix of earned income in certain foreign jurisdictions. The Company provides valuation allowances against deferred tax assets when it is more likely than not that some portion or all of its deferred tax assets will not be realized. During the period ended March 31, 2025, the Company did not record any additional valuation allowances in various jurisdictions on its deferred tax assets. For the three-month periods ending March 31, 2025 and 2024, the Company did not record any new uncertain tax positions. NOTE 10 - 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 periods presented. The calculation of basic and diluted earnings per share for the three months ended March 31, was as follows: Three Months Ended March 31, 2025 2024 Numerator Net income $ 11,517 $ 9,596 Denominator Determination of shares (in thousands) Weighted-average common shares outstanding 4,928 4,915 Dilutive effect – share-based awards 22 29 Diluted weighted-average common shares outstanding 4,950 4,944 Earnings per common share Basic $ 2.34 $ 1.95 Diluted $ 2.33 $ 1.94 For the three months ended March 31, 2025 and 2024, there were 7,500 and zero share-based awards, respectively, excluded from the calculation of diluted earnings per share as the effect would have been anti-dilutive. 12 NOTE 11 - GOODWILL AND OTHER INTANGIBLES The Company’s finite and indefinite-lived intangible assets consist of the following: March 31, 2025 December 31, 2024 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Finite-lived intangible assets Patents $ 4,806 $ ( 4,806 ) $ 4,806 $ ( 4,806 ) Land use rights 679 ( 132 ) 637 ( 122 ) Trademark 1,924 ( 1,694 ) 1,910 ( 1,685 ) Technology 6,777 ( 4,151 ) 6,582 ( 3,933 ) Customer relationships 17,882 ( 11,549 ) 17,399 ( 11,132 ) $ 32,068 $ ( 22,332 ) $ 31,334 $ ( 21,678 ) Indefinite-lived intangible assets Goodwill $ 27,746 $ 26,685 The Company’s measurement date for its annual impairment test for goodwill is October 1st of each year. The Company performs additional interim impairment assessments as circumstances warrant. There were no indicators of impairment noted for the period ending March 31, 2025. 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. 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 revenue growth rates, operating margins, the weighted average cost of capital, 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. The Company’s only intangible asset with an indefinite life is goodwill. The Company’s goodwill is not deductible for tax purposes. Changes in the carrying amount of goodwill by reporting unit are shown in the following table: PLP-USA The Americas EMEA Asia-Pacific Total Balance at January 1, 2025 $ 3,078 $ 8,858 $ 14,749 $ — $ 26,685 Currency translation — 387 674 — 1,061 Balance at March 31, 2025 $ 3,078 $ 9,245 $ 15,423 $ — $ 27,746 NOTE 12 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. 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; and (Level 3 Inputs) unobservable inputs that are not corroborated by market data. 13 The following table summarizes the Company’s assets and liabilities, recorded and measured at fair value, in the Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024: Description Balance as of March 31, 2025 Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Foreign currency forward contracts $ — $ — $ — $ — Fixed income investments — — — — Total assets $ — $ — $ — $ — Liabilities: Foreign currency forward contracts $ 5 $ — $ 5 $ — Supplemental profit sharing plan 9,462 — 9,462 — Total liabilities $ 9,467 $ — $ 9,467 $ — Description Balance as of December 31, 2024 Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Foreign currency forward contracts $ 65 $ — $ 65 $ — Fixed income investments 1,142 1,142 — — Total assets $ 1,207 $ 1,142 $ 65 $ — Liabilities: Foreign currency forward contracts $ 71 $ — $ 71 $ — Supplemental profit sharing plan 9,031 — 9,031 — Total liabilities $ 9,102 $ — $ 9,102 $ — 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. GAAP. Accordingly, the changes in the fair value of the foreign currency forward contracts are recognized in each accounting period in Other operating expense (income), net on the Consolidated Statements of Income together with the transaction gain or loss from the related balance sheet position. For the three months ended March 31, 2025, and 2024, the Company recognized a net gain of $ 0.1 million and a net loss of $ 0.2 million, respectively, on foreign currency forward contracts. The Company has a non-qualified supplemental profit sharing plan for its executives (the "Supplemental Profit Sharing Plan"). The liability for the unfunded Supplemental Profit Sharing Plan was $ 9.5 million at March 31, 2025 and $ 9.0 million at December 31, 2024. 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 invest 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 Company had zero fixed income investments as of March 31, 2025. The Company’s fixed income investments as of December 31, 2024 of $ 1.1 million are recorded in Other assets on the Consolidated Balance Sheet and are valued using the closing price on the active market on which the securities are traded. There were no unrealized gains on the fixed income investments for the periods ended March 31, 2025 and 2024. 14 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 March 31, 2025 and December 31, 2024, the fair value of the Company’s long-term debt was estimated using discounted cash flows analyses, 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: March 31, 2025 December 31, 2024 Fair Value Carrying Value Fair Value Carrying Value Long-term debt and related current maturities $ 25,848 $ 29,060 $ 17,474 $ 20,787 NOTE 13 - 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 special industries products. The other three segments, The Americas, EMEA and Asia-Pacific, support the Company’s energy, telecommunications, data communication and special industries products in each respective geographical region. The segment managers responsible for each region report directly to the Company’s Executive Chairman, who is the CODM, 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 CODM 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 gross sales and income before income taxes. The CODM uses both gross sales and income before income taxes for each segment predominantly in the annual budget and forecasting process as well as monitoring actual results. The CODM considers forecast-to-actual and actual to prior period variances for both measures when making decisions about the allocation of operating and capital resources to each segment. The CODM also uses segment sales and income before income taxes for the performance of each segment by comparing the results of each segment with one another and in determining the incentive compensation of certain employees. The following tables present a summary of the Company’s reportable segments for the three months ended March 31, 2025 and 2024. Financial results for the PLP-USA segment include the elimination of all segments’ intercompany profit in inventory. Three Months Ended March 31, 2025 PLP-USA The Americas EMEA Asia-Pacific Total Gross sales $ 76,420 $ 24,458 $ 31,577 $ 25,005 $ 157,460 Intersegment sales ( 2,414 ) ( 2,179 ) ( 1,584 ) ( 2,742 ) ( 8,919 ) Net sales 74,006 22,279 29,993 22,263 148,541 Less: Cost of products sold 47,168 15,192 21,116 16,394 99,870 Gross profit 26,838 7,087 8,877 5,869 48,671 Costs and expenses 17,154 5,488 7,350 5,549 35,541 Operating income 9,684 1,599 1,527 320 13,130 Interest income 79 338 55 38 510 Interest expense ( 85 ) ( 7 ) ( 151 ) ( 133 ) ( 376 ) Other (expense) income, net ( 199 ) 31 22 553 407 Income before income taxes 9,479 1,961 1,453 778 13,671 Income tax expense 1,042 565 229 282 2,118 Total noncontrolling interest — — ( 36 ) — ( 36 ) Total net income attributable to Preformed Line Products Company shareholders $ 8,437 $ 1,396 $ 1,188 $ 496 $ 11,517 15 Three Months Ended March 31, 2024 PLP-USA The Americas EMEA Asia-Pacific Total Gross sales $ 73,083 $ 20,825 $ 30,028 $ 26,919 $ 150,855 Intersegment sales ( 2,346 ) ( 2,467 ) ( 1,374 ) ( 3,764 ) ( 9,951 ) Net sales 70,737 18,358 28,654 23,155 140,904 Less: Cost of products sold 46,041 13,393 20,336 17,003 96,773 Gross profit 24,696 4,965 8,318 6,152 44,131 Costs and expenses 18,164 4,721 6,129 3,558 32,572 Operating income 6,532 244 2,189 2,594 11,559 Interest income — 915 37 20 972 Interest expense ( 433 ) ( 11 ) ( 157 ) ( 107 ) ( 708 ) Other (expense) income, net ( 10 ) 18 26 1 35 Income before income taxes 6,089 1,166 2,095 2,508 11,858 Income tax expense 772 269 509 705 2,255 Total noncontrolling interest — — ( 7 ) — ( 7 ) Total net income attributable to Preformed Line Products Company shareholders $ 5,317 $ 897 $ 1,579 $ 1,803 $ 9,596 Three Months Ended March 31, 2025 2024 Expenditure for long-lived assets PLP-USA $ 702 $ 2,293 The Americas 1,082 705 EMEA 8,757 768 Asia-Pacific 435 152 Total expenditure for long-lived assets $ 10,976 $ 3,918 Depreciation and amortization PLP-USA $ 3,099 $ 2,785 The Americas 805 1,371 EMEA 905 875 Asia-Pacific 751 761 Total depreciation and amortization $ 5,560 $ 5,792 March 31, 2025 December 31, 2024 Identifiable assets PLP-USA $ 243,401 $ 245,388 The Americas 108,370 103,456 EMEA 141,811 125,013 Asia-Pacific 98,869 100,020 Total identifiable assets $ 592,451 $ 573,877 Long-lived assets PLP-USA $ 117,245 $ 119,114 The Americas 21,374 20,446 EMEA 30,215 21,243 Asia-Pacific 34,249 34,283 Total long-lived assets $ 203,083 $ 195,086 16 NOTE 14 - ACQUISITION OF BUSINESSES Subsequent Event - Acquisition of JAP Telecom On May 1, 2025, the Company acquired all issued and outstanding shares of J.A.P. Industria De Materiais Para Telefonia Ltda., (JAP Telecom) an entity headquartered in Pedreira, Brazil. JAP Telecom is a leading Brazilian designer, manufacturer, and supplier of connectivity solutions for the South American telecommunications infrastructure market with a product portfolio including fiber optic splice closures, connectivity devices, and infrastructure accessories tailored to the specific needs of the local market. JAP Telecom's annual sales for the year ending December 31, 2024 were approximately $ 4.6 million (R$ 26.1 million). The acquisition expands the Company's operational capabilities in the region and strengthens the Company's position in the global communications market. The purchase price was approximately $ 5.8 million (R$ 33.0 million), net of cash as of the closing date. 17