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PLPC - Preformed Line Products Co.
$122.53
-0.06(-0.05%)6:31:12 PM 3/23/2023
Preformed Line Products Company, together with its subsidiaries, designs and manufactures products and systems used in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operator, information, and other industries. It offers formed wire products to support, protect, terminate, and secure power conductor and communication cables, as well as to control cable dynamics; and hardware products to support and protect transmission conductors, spacers, spacer-dampers, stockbridge dampers, corona suppression devices, and various compression fittings for dead-end applications. The company also provides protective closures and splice cases to protect fixed line communication networks, such as copper cable or fiber optic cable from moisture, environmental hazards, and other contaminants; and data communication cabinets, hardware assemblies, pole line hardware, resale products, underground connectors, solar hardware systems, guy markers, tree guards, fiber optic cable markers, pedestal markers, and urethane products that are used by energy, renewable energy, communications, cable, and special industries for various applications. It serves public and private energy utilities and communication companies, cable operators, financial institutions, governmental agencies, contractors and subcontractors, distributors, and value-added resellers in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. The company markets its products through a direct sales force, as well as through manufacturing representatives. Preformed Line Products Company was founded in 1947 and is headquartered in Mayfield Village, Ohio.

Financials

Quarterly financials
(USD)Dec 2022Q/Q
Revenue169.9MM+3%
Gross Profit62.2MM+7%
Cost Of Revenue107.7MM+1%
Operating Income24.6MM+42%
Operating Expenses37.6MM-
Net Income16.5MM+39%
G&A19.6MM+12%
Marketing12.1MM+8%
Amortization800K+60%
Interest Expense1.1MM+32%

Revenue Breakdowns

The above Revenue Breakdowns and below Management Discussion contents are extracted from this specific SEC Edgar 10-K/10-Q filling. The process is fully automated and without human validation. Although we make every effort getting the relevant information, please be advised that We make no representation or warranties of any kind about completeness, accuracy, reliability, suitability or availability of the information exacted from Edgar 10-K/10-Q filings.

Highlights of Management DIscussion and Risk Factors in 10-K/10-Q filling

Positive
1.
Our goal is to continue to achieve profitable growth as a leader in the research, innovation, development, manufacture, and marketing of technically advanced products and services related to energy, communications and cable systems and to take advantage of this leadership position to sell additional quality products in familiar markets.
2.
Our focused portfolio is well-positioned to respond to these priorities.
3.
Strong domestic demand in 2022 drove record net sales, in both of our core energy and communications markets.
4.
We believe that our leadership position in these and other markets and the ability to deliver reliable products quickly will position us for continued growth as transmission grids and communication networks are enhanced, upgraded and extended.
5.
We believe that we are well positioned to supply the needs of the world’s diverse energy and communication markets as a result of our focused portfolio, strategic operational footprint, including expansion from recent acquisitions and product designs and technologies.
6.
Overall customer demand remained strong and contributed to record net sales revenue of $637.0 million for the year ended December 31, 2022.
7.
Despite the challenges noted in our operating environment, we believe our business portfolio and our financial position are sound and strategically well-positioned.
8.
We are respected around the world for quality, dependability and market-leading customer service.
9.
Our financial position remains strong and our current ratio at December 31, 2022 and 2021 was 2.8 to 1 and 2.6 to 1, respectively.
10.
We expect growth in our communications business from opportunities with low deployment of fixed line and wireless telecommunications services and those areas with low broadband penetration rates as a percentage of the total population.
11.
These investments in our U.S. operations will allow us to further enhance the service we provide to our U.S. customers in 2023.
12.
Our liquidity remains strong and we currently have a bank debt to equity percentage of 25.0%.
13.
The Americas net income of $11.4 million increased mainly as a result of an increase in operating income.
14.
International net income for the year ended December 31, 2022 was favorably affected by approximately $0.3 million when local currencies were converted to U.S. dollars.
15.
EMEA net sales of $122.7 million increased $41.9 million, or 44%, primarily due to volume increases in communication product sales in the region.
16.
Asia-Pacific’s gross profit increased $2.6 million, or 11% when compared to the year ended December 31, 2021, primarily due to cost containment measures.
17.
The Americas gross profit increased $8.6 million, or 37%, which was primarily the result of the year-over-year increase in net sales volume of $16.8 million, generally as a result of the 2022 acquisitions in the region.
18.
PLP’s costs and expenses for the year ended December 31, 2022 were favorably impacted by $6.2 million when local currencies were translated to U.S. dollars.
19.
The effect of currency translation had a favorable impact on net income in the year ended December 31, 2022 of $0.3 million and a favorable impact of $0.4 million in the year ended December 31, 2021.
20.
In 2022, net sales were 637.0 million, an increase of $119.6 million, or 23%, compared to 2021.
21.
While these factors are likely to continue to provide inherent uncertainty going forward, the COVID-19 pandemic and other large scale environmental events have placed a renewed focus on key infrastructure priorities around the world, including bolstering grid reliability, strengthening grid resilience to climate events, upgrading aging infrastructure, enhancing communication networks and transitioning to renewable energy.
22.
The Americas net sales of $85.2 million increased $16.8 million, or 24%, primarily due to contributions from the 2022 Maxxweld and Delta acquisitions.
23.
We are continuing to actively monitor the impact of COVID-19 on current and future periods and actively manage costs and our liquidity position to provide additional flexibility while still supporting our customers and their specific needs.
24.
Gross profit of $215.2 million for 2022 increased $48.9 million, or 29%, compared to 2021.
25.
In addition, we believe our borrowing capacity provides substantial financial resources, if needed, to supplement funding of capital expenditures and/or acquisitions.
26.
We have continued to invest in the business to expand into new markets for the Company, evaluate strategic mergers and acquisitions, improve efficiency, develop new products and increase our capacity.
27.
If necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, increase sales volume and deliver value to our customers.
28.
EMEA gross profit remained relatively flat, increasing by $2.0 million or 7% year-over-year, primarily due to increased sales volume of $41.9 million, partially offset by higher operating costs and the impacts from the exit of our Russia operations.
29.
We also believe that we can further expand our borrowing capacity, if necessary; however, we do not believe we would increase our debt to a level that would have a material adverse impact upon results of operations or financial condition.
Negative
1.
More recently, increasing commodity prices, inflation, rising interest rates, transportation costs, and foreign currency fluctuations coupled with the varying degrees of recovery from the COVID-19 pandemic throughout the global economy has led to a challenging operating environment.
2.
While the ongoing COVID-19 pandemic has not had a material effect on our overall results, it has continued to create challenges in countries that have significant or changing outbreak mitigation strategies, namely, countries in our Asia-Pacific business segment, which led to project postponements and continued to impact results in this segment.
3.
International net sales for the year ended December 31, 2022 were unfavorably affected by $24.2 million when local currencies were converted to U.S. dollars.
4.
Asia-Pacific net income decreased $3.6 million mainly as a result of a goodwill impairment charge partially offset by cost containment measures.
5.
There has also been a historical lack of commitment by developed countries to upgrade and strengthen their electrical grids and communication networks despite the growing need.
6.
As discussed elsewhere in this report, the continuing effects of COVID-19 could negatively impact the Company’s business and results of operations.
7.
However, we have also experienced some inflationary pressures that has impacted our profit margins.
8.
EMEA net income decreased $1.1 million mainly as a result of a decrease in operating income.
9.
If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
10.
International gross profit for the year ended December 31, 2022 was unfavorably impacted by $5.7 million when local currencies were translated to U.S. dollars.
11.
Due to the large volume in our order backlog, we expect tailwinds from these increases into 2023; however, continued cost inflation in these areas may require further price adjustments to maintain profit margin and any price increases may have a negative effect on demand.
12.
If the impact of market conditions deteriorates from those projected by management, additional inventory reserves may be necessary.
13.
In addition, the impact of COVID-19 and new variants could potentially exacerbate other risks discussed, including inflationary impacts and supply chain disruptions, any of which could have a material adverse effect on the Company.
14.
As a result, 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.
15.
Currency had an unfavorable impact of $1.1 million on Cash when translating foreign denominated financial statements to U.S. dollars.
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