Preformed Line Products Company (NASDAQ: PLPC) today reported financial results for its third quarter of 2024.
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Net sales in the third quarter of 2024 were $147.0 million compared to $160.4 million in the third quarter of 2023, an 8% decrease. The decrease in sales is primarily related to a continuation of the slowdown in spending in the communications end market. Foreign currency translation reduced third quarter 2024 net sales by $0.8 million.
Net income for the quarter ended September30, 2024, was $7.7 million, or $1.54 per diluted share, compared to $15.1 million, or $3.03 per diluted share, for the comparable period in 2023. The third quarter of 2024 net income was impacted by decreased gross profit from lower sales levels, similar to our first half 2024 results, partially offset by lower period expenses from our cost containment initiatives, lower net interest expense and reduced income tax expense. Gross profit as a percentage of net sales was 31.2% for the third quarter of 2024, largely consistent with the second quarter of 2024.
Net sales decreased 19% to$426.6 million for the first nine months of 2024 compared to $524.1 million for the first nine months of 2023. The year-over-year decline in sales is due primarily to the slowdown in spending and inventory destocking within the communications end market. Currency translation rates reduced net sales by $1.1 million for the nine months ended September 30, 2024.
Net income for the nine months ended September 30, 2024 was $26.6 million, or $5.37 per diluted share, compared to $57.0 million, or $11.39 per diluted share, for the comparable period in 2023. YTD September 30, 2024 net income was impacted by decreased gross profit resulting from the decrease in sales which was partially offset by lower period expenses, lower net interest expense and reduced income tax expense.
Rob Ruhlman, Executive Chairman, said, “The decline in net sales continues, albeit at a slower pace, primarily related to the softness in the communications end market, caused primarily by a reduction in deployment due to higher borrowing costs and continued inventory destocking to re-align customer inventory levels with current manufacturing lead times. The slower pace of the net sales decline and an increase in order backlog are indicators that we may be nearing the final stages of inventory destocking. Our gross margin percentage has been consistent throughout 2024 aided by our cost reduction activities implemented in 2023. We remain optimistic about the prospects of the markets that we serve and will continue our investment in new product development, streamlining our manufacturing operations and expanding our customer service portfolio. These actions, along with our continued strong liquidity, will allow us to take advantage of favorable market conditions when they return. Our current focus is unchanged: provide our customers with the high-quality products and timely service they have come to expect from PLP.”
FORWARD-LOOKING STATEMENTS
This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding the Company, including those statements regarding the Company’s and management’s beliefs and expectations concerning the Company’s future performance or anticipated financial results, among others. Except for historical information, the matters discussed in this release are forward-looking statements that involve risks and uncertainties which may cause results to differ materially from those set forth in those statements. Among other things, factors that could cause actual results to differ materially from those expressed in such forward-looking statements include the uncertainty in global business conditions and the economy due to factors such as inflation, rising interest rates, labor disruptions, military conflict, political instability, exchange rates and lingering effects of COVID-19, the strength of demand and availability of funding for the Company’s products and the mix of products sold, the relative degree of competitive and customer price pressure on the Company’s products, the cost, availability and quality of raw materials required for the manufacture of products, opportunities for business growth through acquisitions and the ability to successfully integrate any acquired businesses, changes in regulations and tax rates, security breaches, litigation and claims and the Company’s ability to continue to develop proprietary technology and maintain high-quality products and customer service to meet or exceed new industry performance standards and individual customer expectations, and other factors described under the headings “Forward-Looking Statements” and “Risk Factors” in the Company’s 2023 Annual Report on Form 10-K filed with the SEC on March8, 2024 and subsequent filings with the SEC. The Annual Report on Form 10-K and the Company’s other filings with the SEC can be found on the SEC’s website at http://www.sec.gov. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
ABOUT PLP
PLP protects the world’s most critical connections by creating stronger and more reliable networks. The company’s precision-engineered solutions are trusted by energy and communications providers worldwide to perform better and last longer. With locations in 20 countries, PLP works as a united global corporation, delivering high-quality products and unparalleled service to customers around the world.
PREFORMED LINE PRODUCTS COMPANY
STATEMENTS OF CONSOLIDATED INCOME
Three Months Ended September30, Nine Months Ended September30,
2024 2023 2024 2023
(Thousandsofdollars,exceptpersharedata)
Net sales $ 146,973 $ 160,438 $ 426,597 $ 524,076
Cost of products sold 101,195 106,301 292,415 337,328
GROSS PROFIT 45,778 54,137 134,182 186,748
Costs and expenses
Selling 12,318 12,732 36,146 38,133
General and administrative 16,414 17,794 48,272 54,624
Research and engineering 5,545 5,840 16,334 16,793
Other operating expense, net 1,109 (2,307) 186 (10)
35,386 34,059 100,938 109,540
OPERATING INCOME 10,392 20,078 33,244 77,208
Other (expense) income
Interest income 538 478 1,856 1,201
Interest expense (564) (998) (1,840) (3,198)
Other income, net 64 18 189 165
38 (502) 205 (1,832)
INCOME BEFORE INCOME TAXES 10,430 19,576 33,449 75,376
Income tax expense 2,734 4,431 6,783 18,348
NET INCOME $ 7,696 $ 15,145 $ 26,666 $ 57,028
Net income attributable to noncontrolling interests (16) (15) (24) (28)
NET INCOME ATTRIBUTABLE TO PREFORMED LINE $ 7,680 $ 15,130 $ 26,642 $ 57,000
PRODUCTS COMPANY SHAREHOLDERS
AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING:
Basic 4,904 4,906 4,911 4,929
Diluted 4,977 4,990 4,959 5,006
EARNINGS PER SHARE OF COMMON STOCK
ATTRIBUTABLE TO PREFORMED LINE PRODUCTS
COMPANY SHAREHOLDERS:
Basic $ 1.57 $ 3.08 $ 5.42 $ 11.56
Diluted $ 1.54 $ 3.03 $ 5.37 $ 11.39
Cash dividends declared per share $ 0.20 $ 0.20 $ 0.60 $ 0.60
PREFORMED LINE PRODUCTS COMPANY
CONSOLIDATED BALANCE SHEETS
September30, 2024 December31, 2023
(Thousandsofdollars,exceptshareandpersharedata) (Unaudited)
ASSETS
Cash, cash equivalents and restricted cash $ 47,498 $ 53,607
Accounts receivable, net 110,888 106,892
Inventories, net 142,726 148,814
Prepaid expenses 13,053 8,246
Other current assets 6,479 7,256
TOTAL CURRENT ASSETS 320,644 324,815
Property, plant and equipment, net 201,194 207,892
Goodwill 28,672 29,497
Other intangible assets, net 10,983 12,981
Deferred income taxes 9,502 7,109
Other assets 20,958 20,857
TOTAL ASSETS $ 591,953 $ 603,151
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade accounts payable $ 42,426 $ 37,788
Notes payable to banks 8,006 6,968
Current portion of long-term debt 2,618 6,486
Accrued compensation and other benefits 29,499 28,018
Accrued expenses and other liabilities 31,450 32,057
TOTAL CURRENT LIABILITIES 113,999 111,317
Long-term debt, less current portion 24,582 48,796
Other noncurrent liabilities and deferred income taxes 24,385 26,882
SHAREHOLDERS' EQUITY
Common shares - $2 par value per share, 15,000,000 shares authorized, 13,715 13,607
4,897,450 and 4,908,413 issued and outstanding, at September 30, 2024 and
December 31, 2023
Common shares issued to rabbi trust, 222,741 and 243,118 shares at September 30, (9,557) (10,183)
2024 and December 31, 2023, respectively
Deferred compensation liability 9,557 10,183
Paid-in capital 63,108 60,958
Retained earnings 543,743 520,154
Treasury shares, at cost, 1,959,512 and 1,894,419 shares at September 30, 2024 (126,503) (118,249)
and December 31, 2023, respectively
Accumulated other comprehensive loss (65,092) (60,306)
TOTAL PREFORMED LINE PRODUCTS COMPANY 428,971 416,164
SHAREHOLDERS' EQUITY
Noncontrolling interest 16 (8)
TOTAL SHAREHOLDERS' EQUITY 428,987 416,156
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 591,953 $ 603,151
See notes to consolidated financial statements (unaudited).
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SOURCE Preformed Line Products
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