Preformed Line Products(PLPC) - 2024 Q4 - Annual Report

Financial Performance - Net sales for the year ended December 31, 2024, were $593.7 million, a decrease of $76.0 million or 11% year-over-year, primarily due to inventory destocking in U.S. markets [133]. - Gross profit for 2024 was $189.8 million, down $45.0 million or 19% compared to 2023, with PLP-USA gross profit decreasing by 33% due to lower sales volumes [139]. - Net income for the year ended December 31, 2024, was $37.1 million, down from $63.3 million in 2023, reflecting a decrease of $26.2 million or 40% [144]. - Total costs and expenses for the year ended December 31, 2024, were $139.1 million, a decrease of $11.6 million or 8% compared to 2023 [141]. Segment Performance - The Americas segment reported net sales of $90.3 million, an increase of $9.2 million or 11%, driven by higher energy product sales [138]. - EMEA segment net sales decreased by $8.6 million or 6%, primarily due to lower communication sales [138]. - Asia-Pacific segment net sales increased by $6.5 million or 6%, mainly due to volume increases in energy product sales [138]. - PLP-USA segment reported costs and expenses of $72.6 million, a decrease of $6.7 million or 8% year-over-year, primarily due to lower selling and personnel costs [141]. - The Americas segment's costs and expenses decreased by $3.3 million to $18.7 million, mainly due to a legal settlement in Q3 2023 [141]. - EMEA segment costs and expenses decreased by $2.4 million to $26.1 million, primarily due to lower personnel costs and bad debt expenses [141]. - Asia-Pacific segment costs increased by $1.4 million to $21.7 million, attributed to the net impact of capital asset sales and foreign currency remeasurement [141]. Debt and Liquidity - The company experienced a consolidated decrease in debt of $33.7 million as of December 31, 2024, attributed to improved cash conversion and reduced capital expenditure needs [135]. - The company's liquidity remains strong, with a bank debt to equity percentage of 6.8% [135]. - Total debt at December 31, 2024, was $28.6 million, with unused availability under the credit facility amounting to $82.8 million [150]. - Cash and cash equivalents at December 31, 2024, totaled $57.2 million, with the majority held outside the U.S. [147]. Costs and Expenses - Costs and expenses were reduced by approximately 8% in 2024, reflecting the company's focus on cost containment [135]. - Other income, net for the year ended December 31, 2024, was favorable by $1.8 million due to higher interest income and lower interest expenses [142]. - The effective tax rate increased to 26.9% in 2024 from 23.1% in 2023, primarily due to limitations on deductibility of compensation and unfavorable income mix [143]. Currency and Interest Rate Risks - Foreign currency translation had an unfavorable impact on net sales of $4.2 million in 2024, compared to a favorable impact of $0.4 million in 2023 [134]. - A hypothetical 10% change in currency rates would impact fair values of foreign currency instruments by approximately $6.9 million and income before tax by $3.0 million [176]. - The company had $7.2 million in long-term borrowings as of December 31, 2024, exposing it to interest rate risk on variable rate credit facilities [177]. - A 100 basis point increase in interest rates would increase interest expense by approximately $0.1 million for the year ended December 31, 2024 [177]. Pension Plan and Actuarial Assumptions - As of December 31, 2024, the discount rate for the pension plan was 5.77%, up from 5.34% in 2023, indicating a significant change in the present value of future payments [179]. - The expected long-term return on plan assets for 2025 is estimated at 4.75%, down from 6.25% in 2024, reflecting a shift in market conditions [180]. - A 50 basis point change in the discount rate of 5.77% would result in a $1.7 million change in the plan's projected benefit obligation [179]. - Actuarial assumptions for the pension plan are reviewed annually, and changes in these assumptions can significantly impact net pension expense or income recorded in the future [178]. Strategic Initiatives - The company continues to invest in expanding into new markets, evaluating strategic mergers and acquisitions, and developing new products [135]. - The company believes that political and economic risks related to its international operations are mitigated due to geographic diversity [173]. - Revenue from operations in Argentina represented less than 1% of total consolidated net sales for the years ended December 31, 2024, 2023, and 2022, indicating minimal exposure to the Argentine market [174]. - The company had $0.1 million in foreign currency forward exchange assets and liabilities outstanding as of December 31, 2024, with no derivatives held for trading purposes [175].