CLEVELAND, Oct. 30, 2024 -- Preformed Line Products Company (NASDAQ: PLPC) today reported financial results for its third quarter of 2024.
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 September 30, 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 March 8, 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 | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
(Thousands of dollars, except per share data) | |||||||
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 | |||
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 | |||||||
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 | ||||
September 30, 2024 | December 31, 2023 | |||
(Thousands of dollars, except share and per share data) | (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 | ||
Common shares issued to rabbi trust, 222,741 and 243,118 shares at September 30, | (9,557) | (10,183) | ||
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) | ||
Accumulated other comprehensive loss | (65,092) | (60,306) | ||
TOTAL PREFORMED LINE PRODUCTS COMPANY | 428,971 | 416,164 | ||
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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