Preformed Line Products(PLPC) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section details the company's unaudited consolidated financial statements, management's discussion, market risk disclosures, and internal controls ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes Consolidated Balance Sheets This section provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and equity Consolidated Balance Sheets (Thousands of dollars) | Metric | June 30, 2025 (Thousands of dollars) | December 31, 2024 (Thousands of dollars) | | :-------------------------------- | :------------------------------------- | :--------------------------------------- | | Total Current Assets | 353,166 | 315,793 | | Total Assets | 631,461 | 573,877 | | Total Current Liabilities | 114,771 | 108,413 | | Total Shareholders' Equity | 460,776 | 422,324 | Statements of Consolidated Income This section details the company's financial performance over specific periods, including net sales, gross profit, operating income, and net income Statements of Consolidated Income (Thousands of dollars) | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :-------------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net sales | 169,601 | 138,720 | 318,142 | 279,625 | | GROSS PROFIT | 55,399 | 44,273 | 104,070 | 88,405 | | OPERATING INCOME | 17,124 | 11,292 | 30,254 | 22,851 | | NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS | 12,705 | 9,366 | 24,222 | 18,962 | | Diluted EPS | 2.56 | 1.89 | 4.89 | 3.83 | Statements of Consolidated Comprehensive Income This section presents the company's comprehensive income, including net income and other comprehensive income items like foreign currency translation adjustments Statements of Consolidated Comprehensive Income (Thousands of dollars) | Metric | Three Months Ended June 30, 2025 (Thousands of dollars) | Three Months Ended June 30, 2024 (Thousands of dollars) | Six Months Ended June 30, 2025 (Thousands of dollars) | Six Months Ended June 30, 2024 (Thousands of dollars) | | :---------------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :----------------------------------------------------- | :----------------------------------------------------- | | Net income | 12,700 | 9,367 | 24,253 | 18,970 | | Foreign currency translation adjustment | 13,681 | (5,971) | 20,352 | (12,536) | | COMPREHENSIVE INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS | 26,509 | 3,484 | 44,820 | 6,604 | Statements of Consolidated Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Statements of Consolidated Cash Flows (Thousands of dollars) | Metric | Six Months Ended June 30, 2025 (Thousands of dollars) | Six Months Ended June 30, 2024 (Thousands of dollars) | | :-------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | NET CASH PROVIDED BY OPERATING ACTIVITIES | 32,583 | 34,047 | | NET CASH USED IN INVESTING ACTIVITIES | (22,209) | (4,281) | | NET CASH USED IN FINANCING ACTIVITIES | (4,790) | (33,504) | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | 66,908 | 47,424 | Statements of Consolidated Shareholders' Equity This section details changes in the company's shareholders' equity, including retained earnings and accumulated other comprehensive income Statements of Consolidated Shareholders' Equity (Thousands of dollars) | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :---------------------------------------------------- | :-------------------------- | :---------------------------- | | Total Preformed Line Products Company Equity | 460,736 | 422,315 | | Retained Earnings | 575,368 | 553,179 | | Accumulated Other Comprehensive Loss | (62,311) | (82,909) | Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering various accounting policies and financial items NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES This note outlines the fundamental accounting principles and policies used in preparing the consolidated financial statements - Financial statements are prepared in accordance with U.S. GAAP for interim financial information[24] - Adopted ASU No. 2023-07 (Segment Reporting) effective March 31, 2025, with no material impact on consolidated financial statements other than updated segment disclosures[28] - Evaluating ASU No. 2023-09 (Income Tax Disclosures) and ASU No. 2024-03 (Expense Disaggregation Disclosures), expecting no material impact to consolidated financial statements[29][30] - Assessing the impact of the One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, on consolidated financial statements[32] NOTE 2 - REVENUE This note describes the company's revenue recognition policies and provides a breakdown of revenue by product type and credit loss allowances - Revenue is recognized when control of promised goods or services transfers to customers, primarily based on shipping terms[33] Consolidated Revenue by Product Type (Three Months Ended June 30, 2025) | Product Type | Consolidated | | :------------- | :----------- | | Energy | 70% | | Communications | 22% | | Special Industries | 8% | Allowance for Credit Losses (Six Months Ended June 30) | Metric | 2025 (Thousands of dollars) | 2024 (Thousands of dollars) | | :------------------------------------ | :-------------------------- | :-------------------------- | | Allowance for credit losses, beginning of period | 6,958 | 8,260 | | Additions (reductions) charged to costs and expenses | 296 | (1,409) | | Allowance for credit losses, end of period | 7,163 | 6,323 | NOTE 3 - INVENTORIES, NET This note details the composition of inventories, including raw materials, work-in-process, and finished products, along with LIFO cost and reserve information Inventories, Net (Thousands of dollars) | Component | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Raw materials | 86,143 | 75,138 | | Work-in-process | 16,911 | 12,225 | | Finished products | 52,956 | 52,792 | | Inventories, net of excess and obsolete inventory reserve | 156,010 | 140,155 | | Inventories at LIFO cost | 143,369 | 129,913 | - Net change in LIFO inventories resulted in an expense of $1.9 million for the three months ended June 30, 2025, and $2.4 million for the six months ended June 30, 2025, to Cost of products sold[36] - Reserves for slow moving and obsolete inventory were $17.5 million at June 30, 2025, and $17.7 million at December 31, 2024[36] NOTE 4 - PROPERTY AND EQUIPMENT, NET This note provides a breakdown of the company's property, plant, and equipment, including land, buildings, machinery, and construction in progress Property, Plant and Equipment, Net (Thousands of dollars) | Component | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Land and improvements | 27,141 | 20,204 | | Buildings and improvements | 130,899 | 125,076 | | Machinery, equipment and aircraft | 267,767 | 252,759 | | Construction in progress | 15,422 | 10,884 | | Property, plant and equipment, net | 211,923 | 195,086 | NOTE 5 - CONTINGENT AND OTHER LIABILITIES This note discusses potential liabilities, including legal proceedings and customer advanced payments, and the company's related financial positions - The Company is not a party to any pending legal proceedings that would have a material adverse effect on its financial condition, results of operations or cash flow[39] - Zero reserves for known global legal matters as of June 30, 2025, and December 31, 2024[39] - Advanced payments by customers for future projects were $8.1 million at June 30, 2025, up from $6.7 million at December 31, 2024[40] NOTE 6 - PENSION PLANS This note details the company's pension plan expenses and the ongoing termination of its U.S. Plan, including estimated charges Net Periodic Pension Expense (Thousands of dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net periodic pension expense | 204 | 19 | 409 | 38 | - The Company is terminating its U.S. Plan, settling $13.1 million in lump-sum payments in July 2025[42] - Estimates a non-cash pre-tax charge of $8.5 million to $9.5 million in Q3 2025 associated with the U.S. Plan termination[42] NOTE 7 - ACCUMULATED OTHER COMPREHENSIVE INCOME ("AOCI") This note presents the balance and changes in accumulated other comprehensive income, primarily driven by foreign currency translation adjustments AOCI Balance and Changes (Thousands of dollars) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Balance at June 30 (Total AOCI) | (62,311) | (72,664) | | Foreign currency translation adjustment (Six Months Ended June 30, 2025) | 20,352 | (12,536) | NOTE 8 - DEBT AND CREDIT ARRANGEMENTS This note outlines the company's debt structure, including amendments to its credit facility and new investment loans for manufacturing expansion - Credit facility with PNC Bank amended on March 14, 2025, extending maturity to June 30, 2028, and increasing unsecured borrowing limit to $60.0 million[46] - Subsequent event (July 30, 2025): Credit facility borrowing capacity reduced from $90.0 million to $60.0 million, and secured indebtedness limit increased from $35.0 million to $55.0 million[51] - PLP Poland entered into a non-revolving investment loan of up to PLN100.3 million ($27.4 million) to finance a new manufacturing plant, maturing January 31, 2035[52] - Bank debt to equity percentage was 7.9% at June 30, 2025[47] NOTE 9 - INCOME TAXES This note provides details on the company's effective tax rates and the factors influencing changes in tax expense Effective Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30, | 27% | 16% | | Six Months Ended June 30, | 22% | 18% | - Higher effective tax rates in 2025 due to unfavorable impact from nondeductible compensation and non-recurring rate benefits received in 2024, partially offset by a favorable mix of earned income in certain foreign jurisdictions[54] NOTE 10 - COMPUTATION OF EARNINGS PER SHARE This note presents the basic and diluted earnings per share calculations for various reporting periods Earnings Per Share (EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $2.58 | $1.91 | $4.91 | $3.86 | | Diluted EPS | $2.56 | $1.89 | $4.89 | $3.83 | NOTE 11 - GOODWILL AND OTHER INTANGIBLES This note details the company's goodwill by reporting unit and discusses changes and impairment assessments Goodwill by Reporting Unit (Thousands of dollars) | Segment | January 1, 2025 | June 30, 2025 | | :------------- | :-------------- | :------------ | | PLP-USA | 3,078 | 3,078 | | The Americas | 8,858 | 9,714 | | EMEA | 14,749 | 16,726 | | Asia-Pacific | — | — | | Total | 26,685 | 29,518 | - Goodwill increased to $29,518k at June 30, 2025, from $26,685k at December 31, 2024, primarily due to currency translation[57][60] - No indicators of impairment were noted for goodwill for the period ending June 30, 2025[57] NOTE 12 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES This note discusses the fair value measurements of financial assets and liabilities, including the unfunded Supplemental Profit Sharing Plan and foreign currency contracts - The liability for the unfunded Supplemental Profit Sharing Plan was $10.1 million at June 30, 2025, up from $9.0 million at December 31, 2024[64] - The Company uses foreign currency forward contracts to reduce market risk from exchange rate movements, recognizing net gains of $0.1 million for the six months ended June 30, 2025[63] Fair Value vs. Carrying Value of Long-Term Debt (Thousands of dollars) | Metric | June 30, 2025 Fair Value | June 30, 2025 Carrying Value | December 31, 2024 Fair Value | December 31, 2024 Carrying Value | | :----------------------------------- | :----------------------- | :----------------------------- | :--------------------------- | :----------------------------- | | Long-term debt and related current maturities | 28,638 | 31,806 | 17,474 | 20,787 | NOTE 13 - SEGMENT INFORMATION This note provides a breakdown of net sales and long-lived asset expenditures by the company's geographic operating segments Net Sales by Segment (Three Months Ended June 30, 2025, Thousands of dollars) | Segment | Net Sales | | :------------ | :-------- | | PLP-USA | 79,290 | | The Americas | 28,508 | | EMEA | 31,910 | | Asia-Pacific | 29,893 | | Total | 169,601 | Net Sales by Segment (Six Months Ended June 30, 2025, Thousands of dollars) | Segment | Net Sales | | :------------ | :-------- | | PLP-USA | 153,296 | | The Americas | 50,787 | | EMEA | 61,903 | | Asia-Pacific | 52,156 | | Total | 318,142 | Total Expenditure for Long-Lived Assets (Thousands of dollars) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------ | :----------------------------- | :----------------------------- | | PLP-USA | 2,914 | 4,504 | | The Americas | 1,799 | 1,082 | | EMEA | 13,499 | 1,507 | | Asia-Pacific | 1,142 | 553 | | Total | 19,354 | 7,646 | NOTE 14 - ACQUISITION OF BUSINESSES This note details the acquisition of JAP Telecom, a Brazilian connectivity solutions provider, and its contribution to sales - On May 1, 2025, the Company acquired JAP Telecom, a Brazilian connectivity solutions provider, for approximately $5.3 million (net of cash)[77] - The acquisition expands the Company's operational capabilities in South America and strengthens its position in the global communications market[77] - JAP Telecom contributed approximately $1.0 million in sales to The Americas segment from the acquisition date through June 30, 2025[79] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on financial condition and results of operations, analyzing sales, profit, expenses, taxes, liquidity, and capital OVERVIEW This section provides an overview of the company's business, product portfolio, and segment reporting structure - Preformed Line Products Company is an international designer and manufacturer of products and systems for energy, telecommunication, cable operators, and data communication industries[81] - The company's product portfolio includes helical solutions, connectors, fiber optic and copper splice closures, solar hardware, electric vehicle charging station foundations, and aerial drone inspection services[81] - Segments are reported in four geographic regions: PLP-USA, The Americas, EMEA, and Asia-Pacific, with segment performance evaluated based on gross sales and income before income taxes[82][84] PREFACE This section highlights key financial performance indicators, including net sales growth and the impact of foreign currency fluctuations, while emphasizing strong liquidity - Net sales increased by $30.9 million (22%) for the three months ended June 30, 2025, and $38.5 million (14%) for the six months ended June 30, 2025, year-over-year, mainly driven by energy and communication sales[86] - Foreign currency fluctuations had an unfavorable impact on net sales of $0.5 million for Q2 2025 and $4.9 million for H1 2025[87] - The company maintains strong liquidity with a bank debt to equity percentage of 7.9% and focuses on assessing global market opportunities, manufacturing capacity, and cost containment[88] RESULTS OF OPERATIONS (Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024) This section analyzes the company's financial performance for the three months ended June 30, 2025, compared to the prior year, focusing on key income statement components Net sales This subsection details net sales performance by segment for the three months ended June 30, highlighting growth drivers and currency impacts Net Sales by Segment (Three Months Ended June 30) | Segment | 2025 ($k) | 2024 ($k) | Change ($k) | % Change | Change Excluding Currency Translation ($k) | % Change Excluding Currency Translation | | :------------ | :-------- | :-------- | :---------- | :------- | :---------------------------------------- | :-------------------------------------- | | PLP-USA | 79,290 | 59,900 | 19,390 | 32% | 19,390 | 32% | | The Americas | 28,508 | 21,815 | 6,693 | 31% | 8,758 | 40% | | EMEA | 31,910 | 32,039 | (129) | (0%) | (1,650) | (5%) | | Asia-Pacific | 29,893 | 24,966 | 4,927 | 20% | 4,916 | 20% | | Consolidated | 169,601 | 138,720 | 30,881 | 22% | 31,414 | 23% | - PLP-USA net sales increased 32% primarily due to higher volumes in energy and communications sales[92] - The Americas net sales increased 40% (excluding currency) due to higher volumes in energy product sales and the acquisition of JAP Telecom[92] Gross profit This subsection analyzes gross profit performance by segment for the three months ended June 30, attributing changes to sales volumes, product mix, and costs Gross Profit by Segment (Three Months Ended June 30) | Segment | 2025 ($k) | 2024 ($k) | Change ($k) | % Change | Change Excluding Currency Translation ($k) | % Change Excluding Currency Translation | | :------------ | :-------- | :-------- | :---------- | :------- | :---------------------------------------- | :-------------------------------------- | | PLP-USA | 28,062 | 20,743 | 7,319 | 35% | 7,319 | 35% | | The Americas | 8,424 | 6,712 | 1,712 | 25% | 2,326 | 35% | | EMEA | 9,511 | 9,364 | 147 | 2% | (291) | (3%) | | Asia-Pacific | 9,402 | 7,454 | 1,948 | 26% | 1,971 | 26% | | Consolidated | 55,399 | 44,273 | 11,126 | 25% | 11,325 | 26% | - PLP-USA gross profit increased 35% due to higher sales volumes and favorable product mix, partially offset by higher tariff and manufacturing costs[93] Costs and expenses This subsection examines changes in operating costs and expenses by segment for the three months ended June 30, identifying key drivers such as personnel and selling costs Costs and Expenses by Segment (Three Months Ended June 30) | Segment | 2025 ($k) | 2024 ($k) | Change ($k) | % Change | Change Excluding Currency & Intercompany ($k) | % Change Excluding Currency & Intercompany | | :------------ | :-------- | :-------- | :---------- | :------- | :-------------------------------------------- | :----------------------------------------- | | PLP-USA | 17,413 | 16,939 | 474 | 3% | 2,230 | 13% | | The Americas | 6,736 | 4,644 | 2,092 | 45% | 1,523 | 33% | | EMEA | 7,950 | 5,388 | 2,562 | 48% | 1,781 | 33% | | Asia-Pacific | 6,176 | 6,010 | 166 | 3% | (204) | (3%) | | Consolidated | 38,275 | 32,981 | 5,294 | 16% | 5,330 | 16% | - PLP-USA costs and expenses increased 13% (excluding intercompany) primarily due to higher selling and personnel costs[94] - EMEA costs and expenses increased 33% (excluding currency and intercompany) primarily due to a recovery of bad debt in Q2 2024 that did not recur[94] Other Income (Expense), net This subsection discusses the net change in other income and expense for the three months ended June 30, primarily driven by interest expense - Other income, net, was $0.2 million for Q2 2025, a favorable change of $0.3 million compared to an expense of $0.1 million in Q2 2024, mainly due to lower interest expense from reduced debt balances[95] Income taxes This subsection analyzes income tax expense and effective tax rates for the three months ended June 30, explaining the factors contributing to rate changes - Income tax expense for Q2 2025 was $4.6 million (27% effective tax rate) compared to $1.8 million (16% effective tax rate) in Q2 2024[96] - The higher effective tax rate in 2025 was mainly due to unfavorable adjustments including nondeductible compensation and non-recurring rate benefits in 2024, partially offset by a favorable mix of earned income in foreign jurisdictions[96] Net income This subsection presents net income by segment for the three months ended June 30, highlighting the drivers of consolidated net income changes Net Income by Segment (Three Months Ended June 30) | Segment | 2025 ($k) | 2024 ($k) | Change ($k) | % Change | Change Excluding Currency Translation ($k) | % Change Excluding Currency Translation | | :------------ | :-------- | :-------- | :---------- | :------- | :---------------------------------------- | :-------------------------------------- | | PLP-USA | 7,745 | 3,345 | 4,400 | 132% | 4,400 | 132% | | The Americas | 1,302 | 1,796 | (494) | (28%) | (410) | (23%) | | EMEA | 1,367 | 2,975 | (1,608) | (54%) | (1,659) | (56%) | | Asia-Pacific | 2,291 | 1,250 | 1,041 | 83% | 1,035 | 83% | | Consolidated | 12,705 | 9,366 | 3,339 | 36% | 3,366 | 36% | - Consolidated net income increased by $3.3 million (36% excluding currency translation) to $12.7 million, driven by higher operating income and lower interest expense, partially offset by higher tax expense[97] RESULTS OF OPERATIONS (Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024) This section analyzes the company's financial performance for the six months ended June 30, 2025, compared to the prior year, focusing on key income statement components Net sales This subsection details net sales performance by segment for the six months ended June 30, highlighting growth drivers and currency impacts Net Sales by Segment (Six Months Ended June 30) | Segment | 2025 ($k) | 2024 ($k) | Change ($k) | % Change | Change Excluding Currency Translation ($k) | % Change Excluding Currency Translation | | :------------ | :-------- | :-------- | :---------- | :------- | :---------------------------------------- | :-------------------------------------- | | PLP-USA | 153,296 | 130,637 | 22,659 | 17% | 22,659 | 17% | | The Americas | 50,787 | 40,173 | 10,614 | 26% | 15,884 | 40% | | EMEA | 61,903 | 60,693 | 1,210 | 2% | 129 | 0% | | Asia-Pacific | 52,156 | 48,122 | 4,034 | 8% | 4,774 | 10% | | Consolidated | 318,142 | 279,625 | 38,517 | 14% | 43,446 | 16% | - PLP-USA net sales increased 17% primarily due to higher volumes in energy and communications product sales[100] - The Americas net sales increased 40% (excluding currency) primarily due to an increase in energy product sales[100] Gross profit This subsection analyzes gross profit performance by segment for the six months ended June 30, attributing changes to sales volumes, product mix, and costs Gross Profit by Segment (Six Months Ended June 30) | Segment | 2025 ($k) | 2024 ($k) | Change ($k) | % Change | Change Excluding Currency Translation ($k) | % Change Excluding Currency Translation | | :------------ | :-------- | :-------- | :---------- | :------- | :---------------------------------------- | :-------------------------------------- | | PLP-USA | 54,900 | 45,439 | 9,461 | 21% | 9,461 | 21% | | The Americas | 15,511 | 11,678 | 3,833 | 33% | 5,473 | 47% | | EMEA | 18,388 | 17,682 | 706 | 4% | 349 | 2% | | Asia-Pacific | 15,271 | 13,606 | 1,665 | 12% | 1,896 | 14% | | Consolidated | 104,070 | 88,405 | 15,665 | 18% | 17,179 | 19% | - PLP-USA gross profit increased 21% due to higher sales volumes and favorable product mix, partially offset by higher tariff and manufacturing costs[101] - The Americas gross profit increased 47% (excluding currency) due to higher sales volumes and favorable product mix[101] Costs and expenses This subsection examines changes in operating costs and expenses by segment for the six months ended June 30, identifying key drivers such as personnel costs and bad debt recovery Costs and Expenses by Segment (Six Months Ended June 30) | Segment | 2025 ($k) | 2024 ($k) | Change ($k) | % Change | Change Excluding Currency & Intercompany ($k) | % Change Excluding Currency & Intercompany | | :------------ | :-------- | :-------- | :---------- | :------- | :-------------------------------------------- | :----------------------------------------- | | PLP-USA | 34,567 | 35,102 | (535) | (2%) | 3,018 | 9% | | The Americas | 12,224 | 9,364 | 2,860 | 31% | 1,955 | 21% | | EMEA | 15,300 | 11,519 | 3,781 | 33% | 2,644 | 23% | | Asia-Pacific | 11,725 | 9,569 | 2,156 | 23% | 1,545 | 16% | | Consolidated | 73,816 | 65,554 | 8,262 | 13% | 9,162 | 14% | - PLP-USA costs and expenses increased 9% (excluding intercompany) primarily due to higher selling and personnel costs[102] - EMEA costs and expenses increased 23% (excluding currency and intercompany) due to higher personnel costs and the non-recurrence of a bad debt recovery in 2024[102] Other income, net This subsection discusses the net change in other income for the six months ended June 30, primarily driven by lower interest expense and a government incentive - Other income, net, was $0.7 million for H1 2025, a favorable change of $0.5 million compared to $0.2 million in H1 2024, driven by lower interest expense and a government incentive in China, partially offset by lower interest income[103] Income taxes This subsection analyzes income tax expense and effective tax rates for the six months ended June 30, explaining the factors contributing to rate changes - Income tax expense for H1 2025 was $6.7 million (22% effective tax rate) compared to $4.0 million (18% effective tax rate) in H1 2024[104] - The higher effective tax rate in 2025 was mainly due to unfavorable adjustments including nondeductible compensation and non-recurring rate benefits in 2024, partially offset by a favorable mix of earned income in foreign jurisdictions[104] Net income This subsection presents net income by segment for the six months ended June 30, highlighting the drivers of consolidated net income changes Net Income by Segment (Six Months Ended June 30) | Segment | 2025 ($k) | 2024 ($k) | Change ($k) | % Change | Change Excluding Currency Translation ($k) | % Change Excluding Currency Translation | | :------------ | :-------- | :-------- | :---------- | :------- | :---------------------------------------- | :-------------------------------------- | | PLP-USA | 16,182 | 8,661 | 7,521 | 87% | 7,521 | 87% | | The Americas | 2,698 | 2,693 | 5 | 0% | 295 | 11% | | EMEA | 2,555 | 4,555 | (2,000) | (44%) | (2,081) | (46%) | | Asia-Pacific | 2,787 | 3,053 | (266) | (9%) | (225) | (7%) | | Consolidated | 24,222 | 18,962 | 5,260 | 28% | 5,510 | 29% | - Consolidated net income increased by $5.3 million (29% excluding currency translation) to $24.2 million, driven by higher operating income, partially offset by lower interest income and higher tax expense[105] APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES This section confirms that critical accounting policies remain consistent with the prior annual report and are not reiterated in this interim report - Critical accounting policies are consistent with those set forth in the Company's Form 10-K for the year ended December 31, 2024, and are not presented in this interim report[106] WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES This section assesses the company's working capital, liquidity position, and capital resources, including cash, debt, and credit facility details Management Assessment of Liquidity This subsection provides management's evaluation of the company's liquidity, including cash balances, total debt, and available credit facility capacity - Cash, cash equivalents and restricted cash totaled $66.9 million at June 30, 2025[108] - Total debt, including notes payable, was $36.2 million at June 30, 2025[109] - The credit facility with PNC Bank had a capacity of $90.0 million at June 30, 2025, with $79.6 million unused availability, and a bank debt to equity percentage of 7.9%[109][111] - Subsequent to June 30, 2025, the credit facility's borrowing capacity was reduced to $60.0 million, and the secured indebtedness limit increased to $55.0 million[110] - PLP Poland secured a new non-revolving investment loan of up to $27.4 million for a new manufacturing plant[114] Sources and Uses of Cash This subsection summarizes the company's cash flow activities from operations, investing, and financing for the six months ended June 30 Net Cash Flow Activities (Six Months Ended June 30, Thousands of dollars) | Activity | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Net cash provided by operating activities | 32,600 | 34,000 | | Net cash used in investing activities | (22,200) | (4,300) | | Net cash used in financing activities | (4,800) | (33,500) | - The $17.9 million increase in cash used in investing activities was primarily due to the acquisition of JAP Telecom and increased capital expenditures for new land/building in Spain and a manufacturing plant in Poland[117] - The $28.7 million decrease in cash used in financing activities was primarily a result of a reduction in net payments of long-term debt[118] - Total outstanding guarantees were $14.6 million and total outstanding letters of credit were $2.9 million at June 30, 2025[120] FORWARD LOOKING STATEMENTS This section cautions that forward-looking statements are subject to uncertainties and risks, including global economic conditions, tariffs, and technological changes - Forward-looking statements are subject to uncertainties and factors that could cause actual results to differ materially, including global economic conditions, tariffs, and geopolitical conflicts[122][123] - Key factors include demand for cable anchoring and control hardware, impact of inflation and rising interest rates, customer funding ability, technological developments (e.g., wireless communication), and decreasing demand for copper-based infrastructure[123] - Other risks include the ability to develop proprietary technology, strengthen customer relationships, expand product lines, currency exchange rate fluctuations, and integrate acquisitions[128] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section confirms no material changes in market risk exposure since December 31, 2024, acknowledging risks from non-U.S. activities, interest rates, and currency fluctuations - No material changes in the Company's disclosed exposure to market risk since December 31, 2024[125] - 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[124] ITEM 4. CONTROLS AND PROCEDURES This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by management - The Company's Principal Executive Officer and Principal Accounting Officer concluded that disclosure controls and procedures were effective as of June 30, 2025[126] Changes in Internal Control over Financial Reporting This section reports that no material changes occurred in the company's internal control over financial reporting during the period - No material changes in the Company's internal control over financial reporting occurred during the six-month period ended June 30, 2025[127] PART II – OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits ITEM 1. LEGAL PROCEEDINGS This section refers to Note 5 of the Notes to the Consolidated Financial Statements for information regarding the company's current legal proceedings - Information regarding the Company's current legal proceedings is presented in Note 5 of the Notes to the Consolidated Financial Statements[129] ITEM 1A. RISK FACTORS This section confirms no material changes to previously disclosed risk factors but notes potential exacerbation from escalating tariffs - No material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[130] - Escalating tariffs between the U.S. and other countries could potentially exacerbate other risks[130] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details the common share repurchase plan, including authorization for additional repurchases and shares bought back - On November 1, 2023, the Board authorized a plan to repurchase up to an additional 212,952 common shares, resulting in a total of 250,000 shares available for repurchase[131] Common Share Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share ($) | Maximum Number of Shares that may yet be Purchased | | :----- | :------------------------------- | :------------------------------- | :------------------------------------------------- | | April | — | — | 171,915 | | May | 14,473 | 137.11 | 157,442 | | June | 2,555 | 143.27 | 154,887 | | Total | 17,028 | | | ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities[133] ITEM 4. MINE SAFETY DISCLOSURES This section indicates that there are no mine safety disclosures to report - No mine safety disclosures[134] ITEM 5. OTHER INFORMATION This section reports a subsequent event where the company amended its credit facility, reducing borrowing capacity and increasing secured indebtedness limits - On July 30, 2025, the Company amended its credit facility, reducing borrowing capacity from $90.0 million to $60.0 million[135] - The amendment also increased the indebtedness limit secured by mortgages, security interests or other liens from $35.0 million to $55.0 million[135] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including credit facility amendments, loan agreements, and required certifications - Exhibits include Joinder and Amendment No. 9 to the Credit Facility and Fifteenth Amended and Restated Line of Credit Note, both dated July 30, 2025[136] - Also includes the Investment Loan Agreement for PLP Poland (Belos) S.A. dated July 16, 2025[136] - Certifications of the Principal Executive Officer and Principal Accounting Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed/furnished[136] SIGNATURES This section contains the required signatures of the Principal Executive Officer and Chief Financial Officer, certifying the Form 10-Q's accuracy - The report was signed by Robert G. Ruhlman, Executive Chairman (principal executive officer), and Andrew S. Klaus, Chief Financial Officer (principal financial and accounting officer), on July 31, 2025[140]