Preformed Line Products(US:PLPC)2022-05-06 17:04Financial Performance - Net sales for the three months ended March 31, 2022, were $138.2 million, an increase of $20.7 million or 18% year-over-year [91]. - Gross profit for the same period was $41.9 million, representing a gross margin of 30.4%, down from 34.2% in the prior year [95]. - Operating income decreased to $9.5 million, or 6.8% of net sales, compared to $10.8 million, or 9.2% of net sales, in the previous year [95]. - Net income attributable to Preformed Line Products Company was $12.3 million, an increase of $5.1 million or 71% year-over-year [95]. - Net income for the three months ended March 31, 2022, was $12.3 million, an increase of $5.1 million or 74% compared to $7.2 million in the same period in 2021 [102]. - Other income for the three months ended March 31, 2022, was $4.7 million, significantly up from $0.2 million in the same period in 2021, primarily due to a gain from a life insurance policy settlement [99]. Segment Performance - The Americas segment reported net sales of $19.0 million, a 9% increase primarily due to contributions from the acquisition of Maxxweld [95]. - EMEA segment net sales increased by 24% to $27.5 million, driven by a volume increase in energy product sales [95]. - Asia-Pacific segment net sales decreased by 18% to $15.9 million, primarily due to a volume decrease in energy products related to COVID-19 disruptions [95]. Costs and Expenses - Costs and expenses for the three months ended March 31, 2022, were $32.5 million, an increase of $3.1 million or 10% compared to the same period in 2021 [98]. - Income tax expense for the three months ended March 31, 2022, was $1.8 million, with an effective tax rate of 13%, down from 32% in the same period in 2021 [100]. Cash Flow and Debt - Cash used in operating activities for the three months ended March 31, 2022, was $5.2 million, a decrease of $18.8 million compared to the prior year [111]. - Total debt at March 31, 2022, was $78.1 million, with unused availability under the credit facility at $56.4 million [107]. - Cash provided by financing activities for the three months ended March 31, 2022, was $15.1 million, compared to cash used in financing activities of $20.5 million in the same period in 2021 [113]. - Capital expenditures for the first three months of 2022 were $8.0 million, with $13.0 million used for acquisitions [105]. - The Company expects to meet U.S. liquidity needs through future operating cash flows and existing cash balances [108]. - The Company had total outstanding guarantees of $9.6 million and letters of credit of $0.9 million as of March 31, 2022 [115]. Market Conditions and Risks - The overall demand for cable anchoring and control hardware is experiencing slow growth in mature markets such as the U.S., Canada, Australia, and Western Europe, with potential delays in developing regions despite increasing power needs [117]. - The Company is subject to business risks related to political and economic uncertainty, import and export limitations, and market risk from changes in interest rates and foreign currency exchange rates [118]. - The impact of COVID-19 could potentially exacerbate other risks discussed, which could have a material impact on the Company [123]. - The Company is exposed to market risks, including changes in interest rates and foreign exchange rates, due to operations in various foreign currencies [122]. Foreign Currency Impact - The company experienced a $2.5 million unfavorable impact on net sales due to foreign currency fluctuations during the three months ended March 31, 2022 [93]. - A hypothetical 10% change in currency rates would have a favorable/unfavorable impact of $4.8 million on fair values of foreign currency instruments and a $0.1 million impact on income before income taxes as of March 31, 2022 [121]. - The Company had $0.4 million in assets related to foreign currency forward exchange contracts outstanding as of March 31, 2022 [120]. - The Company had long-term borrowings of $63.9 million at March 31, 2022, and a 100 basis point increase in interest rates would have resulted in an increase in interest expense of approximately $0.3 million for the three months ended March 31, 2022 [122]. Strategic Initiatives - The company plans to invest in expanding operational capacity and warehouse space in the U.S. to enhance service to customers starting in late 2022 [91]. - The Company is focused on maintaining high-quality products and customer service to meet or exceed new industry performance standards and customer expectations [117]. - The Company aims to strengthen and retain relationships with customers and expand geographically [117].