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Exhibit 99.1
PREFORMED LINE PRODUCTS ANNOUNCES THIRD QUARTER AND FIRST NINE MONTHS 2022 FINANCIAL RESULTS
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:
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.
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PREFORMED LINE PRODUCTS COMPANY | |||||
CONSOLIDATED BALANCE SHEETS | |||||
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| September 30, |
| December 31, |
(Thousands of dollars, except share and per share data) | 2022 |
| 2021 | ||
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ASSETS |
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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 | ||
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| TOTAL CURRENT ASSETS | 308,165 |
| 272,111 |
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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 | ||
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| TOTAL ASSETS | $ 530,714 |
| $ 489,018 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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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 | ||
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| TOTAL CURRENT LIABILITIES | 120,462 |
| 105,535 |
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Long-term debt, less current portion | 55,944 |
| 40,048 | ||
Other noncurrent liabilities and deferred income taxes | 23,301 |
| 27,335 | ||
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SHAREHOLDERS' EQUITY |
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Shareholders' equity: |
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| Common shares - $2 par value, 15,000,000 shares authorized, 4,919,841 and |
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| 4,907,143 issued and outstanding, as of September 30, 2022 and December 31, 2021, respectively | 13,316 |
| 13,185 | |
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| Common shares issued to rabbi trust, 245,386 and 243,138 shares at |
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| September 30, 2022 and December 31, 2021, respectively | (10,261) |
| (10,102) | |
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| Deferred compensation liability | 10,261 |
| 10,102 | |
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| Paid-in capital | 51,749 |
| 47,814 | |
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| Retained earnings | 445,460 |
| 410,673 | |
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| Treasury shares, at cost, 1,741,727 and 1,685,387 shares at |
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| September 30, 2022 and December 31, 2021, respectively | (97,771) |
| (93,836) | |
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| Accumulated other comprehensive loss | (81,757) |
| (61,719) | |
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| TOTAL PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS' EQUITY | 330,997 |
| 316,117 |
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| Noncontrolling interest | 10 |
| (17) | |
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| TOTAL SHAREHOLDERS' EQUITY | 331,007 |
| 316,100 |
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| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 530,714 |
| $ 489,018 |
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PREFORMED LINE PRODUCTS COMPANY | |||||||||
STATEMENTS OF CONSOLIDATED OPERATIONS | |||||||||
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| (Thousands of dollars, except earnings per share data) |
| Three Months Ended September 30 |
| Nine Months Ended September 30 | ||||
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| 2022 |
| 2021 |
| 2022 |
| 2021 |
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| Net sales |
| $ 165,402 |
| $ 135,380 |
| $ 467,097 |
| $ 385,971 |
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| Cost of products sold |
| 107,109 |
| 92,217 |
| 314,147 |
| 259,577 |
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| GROSS PROFIT |
| 58,293 |
| 43,163 |
| 152,950 |
| 126,394 |
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| Costs and expenses |
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| Selling |
| 11,245 |
| 10,142 |
| 33,573 |
| 29,842 |
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| General and administrative |
| 17,467 |
| 14,741 |
| 50,724 |
| 42,905 |
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| Goodwill impairment |
| 6,529 |
| - |
| 6,529 |
| - |
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| Research and engineering |
| 4,741 |
| 4,861 |
| 14,878 |
| 14,235 |
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| Other operating expense, net |
| 937 |
| 341 |
| 2,472 |
| 2,828 |
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| 40,919 |
| 30,085 |
| 108,176 |
| 89,810 |
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| OPERATING INCOME |
| 17,374 |
| 13,078 |
| 44,774 |
| 36,584 |
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| Other income (expense) |
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| Interest income |
| 143 |
| 30 |
| 359 |
| 77 |
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| Interest expense |
| (819) |
| (559) |
| (2,129) |
| (1,479) |
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| Other income, net |
| 898 |
| 1,251 |
| 6,497 |
| 1,749 |
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| 222 |
| 722 |
| 4,727 |
| 347 |
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| INCOME BEFORE INCOME TAXES |
| 17,596 |
| 13,800 |
| 49,501 |
| 36,931 |
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| Income tax expense |
| 5,707 |
| 3,097 |
| 11,590 |
| 10,161 |
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| NET INCOME |
| $ 11,889 |
| $ 10,703 |
| $ 37,911 |
| $ 26,770 |
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| Net income attributable to noncontrolling interests |
| (2) |
| 5 |
| (27) |
| (15) |
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| NET INCOME ATTRIBUTABLE TO PREFORMED |
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| LINE PRODUCTS COMPANY SHAREHOLDERS |
| $ 11,887 |
| $ 10,708 |
| $ 37,884 |
| $ 26,755 |
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| AVERAGE NUMBER OF SHARES OF COMMON STOCK |
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| OUTSTANDING: |
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| Basic |
| 4,937 |
| 4,900 |
| 4,935 |
| 4,909 |
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| Diluted |
| 5,036 |
| 4,975 |
| 4,983 |
| 4,950 |
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| EARNINGS PER SHARE OF COMMON STOCK |
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| ATTRIBUTABLE TO PREFORMED LINE PRODUCTS |
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| COMPANY SHAREHOLDERS: |
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| Basic |
| $ 2.41 |
| $ 2.19 |
| $ 7.68 |
| $ 5.45 |
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| Diluted |
| $ 2.36 |
| $ 2.15 |
| $ 7.60 |
| $ 5.40 |
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| Cash dividends declared per share |
| $ 0.20 |
| $ 0.20 |
| $ 0.60 |
| $ 0.60 |
CONTACT: MEDIA, JOSH NELSON, MANAGER, MARKETING COMMUNICATIONS, +1 440 473 9120, JOSH.NELSON@PLP.COM; INVESTOR RELATIONS, ANDREW S. KLAUS, CHIEF FINANCIAL OFFICER, +1 440 473 9246, ANDY.KLAUS@PLP.COM
