PR Newswire | Oct 28, 2021 04:15PM EDT

Financial Results

10/28 15:15 CDT

Preformed Line Products Announces Third Quarter And First Nine Months Of 2021 Financial Results CLEVELAND, Oct. 28, 2021

CLEVELAND, Oct. 28, 2021 /PRNewswire/ -- Preformed Line Products Company (NASDAQ: PLPC) today reported financial results for its third quarter ended September 30, 2021.

Net sales for the third quarter of 2021 were $135.4 million, an increase of 6.2%, compared to $127.5 million in the third quarter of 2020. Currency translation rates had a favorable impact on 2021 third quarter net sales of $2.0 million.

The Company posted net income for the third quarter of 2021 of $10.7 million, or $2.15 per diluted share, compared to $13.0 million, or $2.59 per diluted share, in the third quarter of 2020. Net income in the third quarter of 2021 was impacted by the decrease in gross profit due to the continued increase in raw material prices and transportation costs. PLP-USA announced a price increase effective June 1, 2021, but due to its elevated order backlog, the price increase had only a moderate effect in offsetting the increased costs incurred during the third quarter of 2021. Also contributing to the reduction of net income for the third quarter of 2021 was increased employee compensation expense and warranty expense. Currency translation rates had a favorable effect on net income of $0.2 million for the quarter ended September 30, 2021.

Net sales increased 11.0% to $386.0 million for the first nine months of 2021 compared to $347.9 million in the first nine months of 2020. Currency translation rates had a favorable impact of $10.0 million for the first nine months of 2021.

Net income for the nine months ended September 30, 2021 was $26.8 million, or $5.40 per diluted share, compared to $27.1 million, or $5.43 per diluted share, for the comparable period in 2020. Net income for the nine months ended September 30, 2021 benefited from the increase in margin from the higher sales base which more than offset the significant increases in raw material prices and transportation costs not yet mitigated by the announced price increase. In connection with the increase in business activity, increased selling, general and administrative, research and engineering expenses as well as warranty expense resulted in a net reduction of net income of $0.3 million for the first nine months of 2021 versus the same period in 2020. Currency translation rates had a favorable effect on net income of $0.5 million for the nine months ended September 30, 2021.

Rob Ruhlman, Chairman and Chief Executive Officer, said, "The inflation on raw material commodities as well as the significant increase in transportation costs have created additional challenges for us to navigate in 2021. Due to the significance and continuation of these inflationary increases, PLP-USA announced a second price increase effective October 15, 2021. While cost inflation has negatively affected our earnings, we expect both 2021 price increases will more substantially mitigate the earnings impact in Q4 2021 and beyond. That said, continued cost inflation may offset these gains and require further price adjustments. PLP-USA continues to lead the net sales increase driven by growth in the communications product family. Our geographic diversification continues to de-risk our business model during these challenging economic times including the headwinds seen in the Asia-Pacific region from the deferral of infrastructure projects due to COVID-19. While the extent to which COVID-19 will impact our future operations is unknown, we will continue to focus on the safety and well-being of our employees, their families, our customers and our valued suppliers while continuing to provide the high-quality products and services our customers expect."

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, 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 2020 Annual Report on Form 10-K filed with the SEC on March 5, 2021 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 COMPANYSTATEMENTS OF CONSOLIDATED OPERATIONS

(In thousands, except per share data) Three Months Ended Nine Months Ended September 30 September 30

2021 2020 2021 2020

Net sales $ 135,380 $ 127,463 $ 385,971 $ 347,944

Cost of products sold 92,217 82,549 259,577 230,554

GROSS PROFIT 43,163 44,914 126,394 117,390

Costs and expenses

Selling 10,142 8,884 29,842 26,228

General and administrative 14,741 14,037 42,905 39,903

Research and engineering 4,861 4,541 14,235 12,950

Other operating expense - net 341 562 2,828 1,969

30,085 28,024 89,810 81,050

OPERATING INCOME 13,078 16,890 36,584 36,340

Other income (expense)

Interest income 30 36 77 226

Interest expense (559) (504) (1,479) (1,932)

Other income - net 1,251 998 1,749 1,775

722 530 347 69

INCOME BEFORE INCOME TAXES 13,800 17,420 36,931 36,409

Income taxes 3,097 4,458 10,161 9,306

NET INCOME $ 10,703 $ 12,962 $ 26,770 $ 27,103

Less: Net loss (gain) attributable

to noncontrolling interests 5 (8) (15) 30

NET INCOME ATTRIBUTABLE TO PREFORMED

LINE PRODUCTS COMPANY SHAREHOLDERS $ 10,708 $ 12,954 $ 26,755 $ 27,133

AVERAGE NUMBER OF SHARES

OF COMMON STOCK OUTSTANDING:

Basic 4,900 4,917 4,909 4,963

Diluted 4,975 5,011 4,950 4,998

EARNINGS PER SHARE OF COMMON STOCK

ATTRIBUTABLE TO PREFORMED LINE

PRODUCTS COMPANY SHAREHOLDERS:

Basic $ 2.19 $ 2.63 $ 5.45 $ 5.47

Diluted $ 2.15 $ 2.59 $ 5.40 $ 5.43

Cash dividends declared per share $ 0.20 $ 0.20 $ 0.60 $ 0.60

PREFORMED LINE PRODUCTS COMPANYCONSOLIDATED BALANCE SHEETS

September 30, December 31,

(Thousands of dollars, except share and per share data) 2021 2020

ASSETS

Cash and cash equivalents $ 38,326 $ 45,175

Accounts receivable, less allowances of $3,758 ($3,464 in 2020) 108,034 92,686

Inventories - net 108,603 97,537

Prepaids 13,050 17,660

Other current assets 3,390 3,256

TOTAL CURRENT ASSETS 271,403 256,314

Property, plant and equipment - net 148,097 125,965

Goodwill 28,695 29,508

Other intangibles - net 12,939 14,443

Deferred income taxes 8,948 10,863

Other assets 23,511 23,994

TOTAL ASSETS $ 493,593 $ 461,087

LIABILITIES AND SHAREHOLDERS' EQUITY

Trade accounts payable $ 38,501 $ 31,646

Notes payable to banks 17,697 17,428

Current portion of long-term debt 3,114 5,216

Accrued compensation 21,933 14,736

Accrued expenses and other liabilities 33,111 34,748

TOTAL CURRENT LIABILITIES 114,356 103,774

Long-term debt, less current portion 42,424 33,333

Other noncurrent liabilities and deferred income taxes 28,017 31,911

SHAREHOLDERS' EQUITY

Shareholders' equity:

Common shares - $2 par value, 15,000,000 shares authorized,

4,899,945 and 4,902,233 issued and outstanding,

as of September 30, 2021 and December 31, 2020, respectively 13,171 13,028

Common shares issued to rabbi trust, 243,138 and 265,508 shares at

September 30, 2021 and December 31, 2020, respectively (10,102) (10,940)

Deferred Compensation Liability 10,102 10,940

Paid-in capital 46,956 43,134

Retained earnings 402,720 379,035

Treasury shares, at cost, 1,685,387 and 1,611,927 shares at

September 30, 2021 and December 31, 2020, respectively (93,836) (88,568)

Accumulated other comprehensive loss (60,221) (54,551)

TOTAL PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS' EQUITY 308,790 292,078

Noncontrolling interest 6 (9)

TOTAL SHAREHOLDERS' EQUITY 308,796 292,069

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 493,593 $ 461,087

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SOURCE Preformed Line Products