CLEVELAND, Nov. 1, 2022
/PRNewswire/ -- Preformed Line Products Company (NASDAQ:
PLPC) today reported financial results for its third quarter
ended September 30, 2022.
Q3 2022 Highlights:
- Second consecutive record of quarterly net sales; increased 22%
from comparable 2021 period
- Net income of $11.9 million, an
increase of 11% from Q3 2021
- Results include a non-cash goodwill impairment charge of
$6.5 million for the Asia-Pacific region. Excluding the impairment
charge, net income was $18.4 million,
an increase of 72% from Q3 2021 and a quarterly record.
- Diluted EPS of $2.36, an increase
of 10% from comparable 2021 period
Net sales for the third quarter of 2022 were $165.4 million, an increase of 22%, compared to
$135.4 million in the third quarter
of 2021. Currency translation rates had an unfavorable impact on
2022 third quarter net sales of $8.2
million.
The Company posted net income for the third quarter of 2022 of
$11.9 million, or $2.36 per diluted share, compared to $10.7 million, or $2.15 per diluted share, in the third quarter of
2021. Third quarter 2022 net income benefited from the 22% increase
in net sales with gross margin expansion from 31.9% in Q3 2021 to
35.2% in Q3 2022 from operational efficiencies and the previously
announced price increases mitigating the impact of inflation on
commodity prices and freight. Due to the lack of recovery
post COVID-19 for the Asia-Pacific
region coupled with the rise in interest rates, PLP recorded an
impairment charge for goodwill within the region. The result
was a non-cash charge to operating earnings of $6.5 million in September 2022. Without
this charge, net income would have set a new quarterly record of
$18.4 million. Currency
translation rates had a favorable effect on net income of
$0.5 million.
Net sales increased 21% to $467.1
million for the first nine months of 2022 compared to
$386.0 million for the first nine
months of 2021. Currency translation rates had an unfavorable
impact on net sales of $16.2 million
for the nine months ended September 30,
2022.
Net income for the nine months ended September 30, 2022 was $37.9 million, or $7.60 per diluted share, compared to $26.8 million or $5.40 per diluted share, for the comparable
period in 2021. YTD September 30,
2022 net income benefited from the 21% YTD increase in net
sales with consistent gross margins. YTD net income was
reduced by $6.5 million for the
Asia-Pacific goodwill impairment
charge, partially offset by the $4.4
million non-taxable gain from life insurance benefits.
Currency translation rates had a favorable effect on net income of
$0.4 million.
Rob Ruhlman, Chairman and Chief
Executive Officer, said, "PLP delivered another record quarter of
operating performance. Our primary end markets of energy
distribution and communications remain strong, especially in the
U.S. We continue to record impressive gains in net sales, the
third quarter of 2022 being a new record besting the previous
record quarterly net sales set just last quarter. We are
disappointed however that an impairment charge was required for
goodwill in the Asia-Pacific
region. Our business in that region was more severely
impacted by COVID-19 and the ensuing economic downturn than any
other region. Further pressuring the goodwill impairment
calculation was the recent rise in interest rates resulting in a
higher weighted average cost of capital rate. We remain
committed to the Asia-Pacific
region and the strong customer and vendor relationships that have
been cultivated over several decades. Customer satisfaction
remains our primary goal – accomplished by providing high-quality
products and services that meet or exceed expectations."
NON-GAAP MEASURES
In addition to the results provided in accordance with GAAP,
this press release includes a non-GAAP measure, which presents net
income on an adjusted basis. Adjusted net income excludes the
effect of the goodwill impairment charge in the Asia-Pacific region on net income and is
calculated by adding the goodwill impairment charge of $6.5 million to net income. The Company's
management believes that this non-GAAP measure is useful to
investors in evaluating the performance of the Company's business
over time and relative to competitors. Further, the Company's
management believes it enhances investors' understanding of the
Company's results by isolating the effect of unusual or infrequent
items that management does not believe are indicative of the
Company's ordinary results of operations. Adjusted net income
should not be considered a substitute for net income as computed in
accordance with GAAP, and it is not necessarily standardized or
comparable to similarly titled measures used by other
companies.
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 business conditions and economy due to COVID-19
including the severity and duration of business disruption caused
by the pandemic, the strength of the economy and demand 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, the impact of global
economic conditions (such as the impact of inflation, rising
interest rates, social unrest, acts of war, military conflict
(including the ongoing conflict between Russia and Ukraine), international hostilities, terrorism
and changes in diplomatic and trade relationships) on profitability
and future growth opportunities; the Company's ability to identify,
complete, obtain funding for and integrate acquisitions for
profitable growth; 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 2021 Annual Report on Form 10-K filed
with the SEC on March 4, 2022 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 over 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
|
CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December 31,
|
(Thousands of
dollars, except share and per share data)
|
2022
|
|
2021
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Cash, cash equivalents
and restricted cash
|
$
30,949
|
|
$
36,406
|
Accounts receivable,
less allowances of $5,677 ($3,744 in 2021)
|
122,936
|
|
98,203
|
Inventories,
net
|
134,582
|
|
114,507
|
Prepaid
expenses
|
16,447
|
|
19,778
|
Other current
assets
|
3,251
|
|
3,217
|
|
|
TOTAL CURRENT
ASSETS
|
308,165
|
|
272,111
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
159,884
|
|
149,774
|
Goodwill
|
|
26,347
|
|
28,194
|
Other intangible
assets, net
|
13,718
|
|
12,039
|
Deferred income
taxes
|
5,904
|
|
3,839
|
Other assets
|
16,696
|
|
23,061
|
|
|
TOTAL
ASSETS
|
$
530,714
|
|
$
489,018
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Trade accounts
payable
|
$
48,124
|
|
$
42,376
|
Notes payable to
banks
|
17,917
|
|
16,423
|
Current portion of
long-term debt
|
3,183
|
|
3,116
|
Accrued compensation
and other benefits
|
28,431
|
|
21,703
|
Accrued expenses and
other liabilities
|
22,807
|
|
21,917
|
|
|
TOTAL CURRENT
LIABILITIES
|
120,462
|
|
105,535
|
|
|
|
|
|
|
Long-term debt, less
current portion
|
55,944
|
|
40,048
|
Other noncurrent
liabilities and deferred income taxes
|
23,301
|
|
27,335
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common shares - $2 par
value, 15,000,000 shares authorized, 4,919,841 and
|
|
|
|
|
4,907,143 issued and outstanding, as of September 30, 2022 and
December 31, 2021, respectively
|
13,316
|
|
13,185
|
|
Common shares issued to
rabbi trust, 245,386 and 243,138 shares at
|
|
|
|
|
September 30, 2022 and
December 31, 2021, respectively
|
(10,261)
|
|
(10,102)
|
|
Deferred compensation
liability
|
10,261
|
|
10,102
|
|
Paid-in
capital
|
51,749
|
|
47,814
|
|
Retained
earnings
|
445,460
|
|
410,673
|
|
Treasury shares, at
cost, 1,741,727 and 1,685,387 shares at
|
|
|
|
|
September 30, 2022 and
December 31, 2021, respectively
|
(97,771)
|
|
(93,836)
|
|
Accumulated other
comprehensive loss
|
(81,757)
|
|
(61,719)
|
|
|
TOTAL PREFORMED LINE
PRODUCTS COMPANY SHAREHOLDERS' EQUITY
|
330,997
|
|
316,117
|
|
Noncontrolling
interest
|
10
|
|
(17)
|
|
|
TOTAL SHAREHOLDERS'
EQUITY
|
331,007
|
|
316,100
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
$
530,714
|
|
$
489,018
|
|
|
|
PREFORMED LINE
PRODUCTS COMPANY
|
STATEMENTS OF
CONSOLIDATED OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Thousands of
dollars, except earnings per share data)
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
165,402
|
|
$
135,380
|
|
$
467,097
|
|
$
385,971
|
|
Cost of products
sold
|
|
107,109
|
|
92,217
|
|
314,147
|
|
259,577
|
|
GROSS
PROFIT
|
|
58,293
|
|
43,163
|
|
152,950
|
|
126,394
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
Selling
|
|
11,245
|
|
10,142
|
|
33,573
|
|
29,842
|
|
General and
administrative
|
|
17,467
|
|
14,741
|
|
50,724
|
|
42,905
|
|
Goodwill
impairment
|
|
6,529
|
|
-
|
|
6,529
|
|
-
|
|
Research and
engineering
|
|
4,741
|
|
4,861
|
|
14,878
|
|
14,235
|
|
Other operating
expense, net
|
|
937
|
|
341
|
|
2,472
|
|
2,828
|
|
|
|
40,919
|
|
30,085
|
|
108,176
|
|
89,810
|
|
OPERATING
INCOME
|
|
17,374
|
|
13,078
|
|
44,774
|
|
36,584
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
143
|
|
30
|
|
359
|
|
77
|
|
Interest
expense
|
|
(819)
|
|
(559)
|
|
(2,129)
|
|
(1,479)
|
|
Other income,
net
|
|
898
|
|
1,251
|
|
6,497
|
|
1,749
|
|
|
|
222
|
|
722
|
|
4,727
|
|
347
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
17,596
|
|
13,800
|
|
49,501
|
|
36,931
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
5,707
|
|
3,097
|
|
11,590
|
|
10,161
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
$
11,889
|
|
$
10,703
|
|
$
37,911
|
|
$
26,770
|
|
Net income attributable
to noncontrolling interests
|
|
(2)
|
|
5
|
|
(27)
|
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
ATTRIBUTABLE TO PREFORMED
|
|
|
|
|
|
|
|
|
|
LINE PRODUCTS
COMPANY SHAREHOLDERS
|
|
$
11,887
|
|
$
10,708
|
|
$
37,884
|
|
$
26,755
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF
SHARES OF COMMON STOCK
|
|
|
|
|
|
|
|
|
|
OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
4,937
|
|
4,900
|
|
4,935
|
|
4,909
|
|
Diluted
|
|
5,036
|
|
4,975
|
|
4,983
|
|
4,950
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE
OF COMMON STOCK
|
|
|
|
|
|
|
|
|
|
ATTRIBUTABLE TO
PREFORMED LINE PRODUCTS
|
|
|
|
|
|
|
|
|
|
COMPANY
SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
2.41
|
|
$
2.19
|
|
$
7.68
|
|
$
5.45
|
|
Diluted
|
|
$
2.36
|
|
$
2.15
|
|
$
7.60
|
|
$
5.40
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share
|
|
$
0.20
|
|
$
0.20
|
|
$
0.60
|
|
$
0.60
|
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SOURCE Preformed Line Products