PLPC Preformed Line Products Co - 10-K

Item 1A. Risk Factors

The Company’s business, operating results, financial condition and cash flows may be affected by a number of factors including, but not limited to those discussed below. Any of these factors could cause the Company’s actual results to vary materially from recent results or future anticipated results.

Industry and Economic Risks

Due to the Company’s dependency on the energy and communication industries, the Company is susceptible to negative trends relating to those industries that could adversely affect the Company’s operating results.

The Company’s sales to the energy and communication industries represent a substantial portion of the Company’s historical sales. The concentration of revenue in such industries is expected to continue into the foreseeable future. Demand for products to these

industries depends primarily on capital spending by customers for constructing, rebuilding, maintaining or upgrading their systems. The amount of capital spending and, therefore, the Company’s sales and profitability are affected by a variety of factors, including general economic conditions, access by customers to financing, government regulation, demand for energy and cable services, energy prices, technological factors and the ability of our customers to utilize available inventory. As a result, some customers may significantly reduce or delay their spending or may not continue as going concerns, which could have a material adverse effect on the Company’s business, operating results and financial condition. In addition, as the Company adjusts its business to reflect such changes and uncertainties in the Company’s industries and customer demand, the Company has incurred and may in the future incur exit-related costs and impairments of goodwill, definite lived intangible assets and property, fixtures and equipment. These costs and impairments could have a significant negative impact on the Company’s operating results for the period in which they are incurred. Consolidation presents an additional risk to the Company in that merged customers will rely on relationships with a source other than the Company. Consolidation may also increase the pressure on suppliers, such as the Company, to sell product at lower prices.

The intense competition in the Company’s markets, particularly communication, may lead to a reduction in sales and earnings.

The markets in which the Company operates are highly competitive. The level of intensity of competition may increase in the foreseeable future due to anticipated growth in the telecommunication and data communication industries and potential new entrants into the market. The Company’s current competitors in the telecommunication and data communication markets are larger companies with significant influence over the distribution network. The Company may not be able to compete successfully against its competitors, many of which may have access to greater financial resources than the Company. In addition, the pace of technological development in the telecommunication market is rapid and these advances (i.e., wireless or fiber optic network infrastructure) and the ability of the Company’s larger competitors or new providers to adapt more efficiently may adversely affect the Company’s ability to compete in the telecommunications market. If the Company is unable to continue to compete effectively, its sales and margins could decline and its business, financial condition and results of operations would be adversely affected.

Competitors’ introduction of products embodying new technologies or the emergence of new industry standards can render existing products or products under development obsolete or unmarketable and result in lost sales.

The energy and communication industries are characterized by rapid change in technology and customer requirements. Low Earth Orbit (LEO) Satellite communication, 5G, wireless and other communication technologies currently being deployed may represent a threat to copper, coaxial and fiber optic-based systems by reducing the need and desire for wire-line networks. Future advances or further development of these or other new technologies can render existing products or products under development obsolete or unmarketable, which may have a material adverse effect on the Company’s business, operating results and financial condition as a result of lost sales.

Price increases or delayed or decreased availability of raw materials could result in lower earnings.

The Company’s cost of sales may be adversely affected by increases in the market prices of the raw materials used in the Company’s manufacturing processes. The Company has experienced, and is expected to continue to experience, a high tariff environment and inflationary pressures that have impacted its profit margins, primarily due to tariffs on raw materials (specifically, steel and aluminum). While tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in 2025 were ruled to be illegal in February 2026 by the U.S. Supreme Court, the steel and aluminum tariffs remain in place and additional tariffs have been and may continue to be established. The Company has implemented price increases in the U.S. and internationally to mitigate rising material and tariff costs, and additional increases may be needed in the future to maintain profit margins. Price increases could impact the demand for the Company’s products. The Company may not be able to pass on further price increases in raw materials to the Company’s customers through increases in product prices. Further, to the extent amounts are refunded for previously paid tariffs that impacted the Company, it is unknown how such refunds would be processed or the timeline for doing so and whether any such amounts would be recovered by the Company. In addition, any decrease or delay in the availability of these materials or interruptions generally in the global supply chain could slow production and delivery to the Company’s customers. In limited circumstances, the Company relies on sole source suppliers for certain materials and may face challenges or delays in establishing an alternative source. As a result of these factors, the Company’s operating results and financial condition could be adversely affected.

The Company’s international operations subject the Company to additional business risks that may have a material adverse effect on the Company’s business, operating results and financial condition.

International sales account for a substantial portion of the Company’s net sales (53%, 55%, and 48% in 2025, 2024 and 2023, respectively). Due to its international sales, the Company is subject to the risks of conducting business internationally, including unexpected changes in, or impositions of, legislative or regulatory requirements, which could materially adversely affect U.S. dollar sales or operating expenses, tariffs and other barriers and restrictions, potentially longer payment cycles, greater difficulty in accounts receivable collection, reduced or limited protection of intellectual property rights, potentially adverse taxes and the burdens of complying with a variety of international laws and communications standards, including implementing appropriate internal controls. For example, the Company is subject to antitrust and tax requirements, anti-boycott regulations, import/export/customs regulations and

other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act. Any new regulatory or trade initiatives, including tariffs, could impact the Company’s operations in certain countries. Failure to comply with any such legal requirements could subject the Company to monetary liabilities and other sanctions, which could harm its business, results of operations and financial condition.

The Company is also subject to foreign currency volatility, which could materially impact the Company’s operating results, including the impact of hyper-inflationary conditions in certain economies, particularly where exchange controls limit or eliminate the Company’s ability to convert from local currency. The Company’s operations are also exposed to general geopolitical risks, such as political and economic instability, social unrest, acts of war, military conflict, international hostilities or the perception that hostilities may be imminent, terrorism and changes in diplomatic and trade relationships, including any retaliatory measures, sanctions or tariffs imposed in response to any acts of war or military conflicts in connection with its operations. Any such disruption could cause delays in the production and distribution of the Company’s products and the loss of sales and customers, particularly in regions where the Company maintains manufacturing operations or relies on cross border sourcing. Moreover, these types of events could negatively impact consumer spending or the economy in the impacted regions or depending upon the severity, globally, or lead to long-term volatility in the currency markets. These risks of conducting business internationally and the instability in global economic conditions may have a material adverse effect on the Company’s business, operating results and financial condition.

The Company's financial condition and results could be adversely affected by its level of debt and changes in interest rates.

Any period of interest rate increases may adversely affect the Company’s profitability. In addition, a higher level of floating rate debt would increase the exposure to changes in interest rates. As of December 31, 2025, the Company’s total debt, including notes payable, was $39.5 million and the unused availability under its credit facility (the "Facility") was $52.0 million. The interest rate for the Facility is defined as the Secured Overnight Financing Rate (“SOFR”) plus 1.225% unless the Company’s funded debt to Earnings before Interest, Taxes and Depreciation ratio exceeds 3.00 to 1, at which point the SOFR spread becomes 1.600%. The Facility agreement also contains, among other provisions, requirements for maintaining levels of net worth and profitability. These covenants may restrict the Company’s operations and prevent it from pursuing opportunities that would otherwise be in the Company’s best interest for long-term growth. The Facility is currently scheduled to expire on June 30, 2028. Our ability to make scheduled payments on our debt obligations or enter into a new or extended credit facility depends upon our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to financial, business and other factors, many of which are beyond our control. If we are unable to timely make such payments, establish an extended term for our repayment obligations or establish a new credit facility for future borrowing, our financial condition, operations, liquidity and business prospects would be adversely affected.

Natural disasters, severe weather, climate change concerns, public health concerns, epidemics or pandemics could have a material adverse effect on the Company’s business, operating results and financial condition.

Natural disasters, severe weather and the effects of climate change, including increased frequency and severity of storms, floods, fires, fog, mist, freezing conditions, sea-level rise and other climate-related events, and other catastrophic events could disrupt our operations, cause damage to our business operations, our suppliers or our customers; and have an adverse effect on the Company’s operations, business and financial condition. Extreme weather conditions could also limit the availability of our resources, increase the costs of our products or cause the installation of our products and systems to be delayed or canceled. Further, legislative and regulatory responses to climate change initiatives could require the Company to incur increased costs, such as costs incurred to purchase carbon offsets or otherwise pay for the Company’s emissions, and make additional and significant capital investments in the Company’s business.

The Company also is subject to public health concerns, including viral outbreaks such as the COVID-19 pandemic. As with the disruption experienced with the COVID-19 pandemic, any future viral outbreak or health pandemic could disrupt the global supply chain, which could have a material adverse effect on the Company’s ability to secure raw materials and supplies and could result in increased costs and the loss of sales and customers. The impact of any viral outbreak or health pandemic could potentially exacerbate all the risks discussed and lead to the creation of new risks, any of which could have a material adverse effect on the Company’s business, operating results and financial condition. The duration and scope of any future viral outbreak or health pandemic cannot be predicted, and therefore, any anticipated negative financial impact to the Company’s operating results cannot be reasonably estimated.

Business, Operations and Human Capital Risks

The Company’s business could suffer if the Company fails to offer quality products and a high level of customer service, as well as develop and successfully introduce new and enhanced products that meet the changing needs of the Company’s customers.

The Company’s reputation and sales rely on its ability to continue to offer high quality products with timely delivery, accompanied by a high level of customer service, particularly in cases of emergency. If changes in the availability of materials or delays in the supply chain or transportation industry or advances in the products and level of customer service offered by competitors, among other factors, negatively impact the Company’s ability to meet customer expectations, its sales and profits may suffer. The

Company’s ability to anticipate changes in technology and industry standards and to successfully develop and introduce new products on a timely basis is a significant factor in the Company’s ability to grow and remain competitive. New product development often requires long-term forecasting of market trends, development and implementation of new designs and processes and a substantial capital commitment. The trend toward consolidation of the energy, telecommunications and data communication industries may require the Company to quickly adapt to rapidly changing market conditions and customer requirements. In addition, as the Company expands its offerings in new areas, its success with these products and services will depend on its ability to offer quality, reliability and other competitive advantages. Any failure by the Company to anticipate or respond in a cost-effective and timely manner to technological developments or changes in industry standards or customer requirements, or any significant delays in product development or introduction or any failure of new products to be widely accepted by the Company’s customers, could have a material adverse effect on the Company’s business, operating results and financial condition as a result of reduced net sales.

The Company may not be able to successfully integrate businesses that it may acquire in the future or complete acquisitions on satisfactory terms, which could have a material adverse effect on the Company’s business, operating results and financial condition.

A portion of the Company’s growth in sales and earnings has been generated from acquisitions. The Company expects to continue a strategy of identifying and acquiring businesses with complementary products. In connection with this growth strategy, the Company faces certain risks and uncertainties in addition to the risks faced in the Company’s day-to-day operations, including the risks pertaining to integrating acquired businesses (including integrating the acquired businesses’ internal controls and procedures into our existing control structure), realizing the benefits of acquired technology, expanding exposure to unknown liabilities, utilizing and retaining new personnel and operating in new jurisdictions. Further, internal controls over financial reporting of acquired businesses may not meet required U.S. public company standards. The process of identifying, negotiating and integrating acquisitions can divert substantial time and attention of management and impose unexpected costs. In addition, the Company may incur debt to finance future acquisitions, and the Company may issue securities in connection with future acquisitions that may dilute the holdings of current and future shareholders. Covenant restrictions relating to additional indebtedness could restrict the Company’s ability to pay dividends, fund capital expenditures, consummate additional acquisitions and significantly increase the Company’s interest expense. Any failure to successfully complete acquisitions or to successfully integrate such strategic acquisitions could have a material adverse effect on the Company’s business, operating results and financial condition.

The Company may have interruptions in or lose business due to the uncertainty of the global economy, including due to the lack of available funding for the Company’s customers.

The demand for the Company’s products is significantly affected by the amount of discretionary business and consumer spending, each of which is impacted by the continued uncertainty of the global economy. The Company’s operations have been affected by and could continue to be adversely affected by global economic conditions such as recession, political or social unrest, economic instability, inflation, rising interest rates, tariffs and other trade restrictions, acts of war, military conflict, international hostilities or the perception that hostilities may be imminent, terrorism and changes in diplomatic and trade relationships, including any retaliatory measures, sanctions or tariffs imposed in response to any acts of war or military conflicts, public health concerns or otherwise. If these conditions adversely impact the liquidity and financial position of the Company’s customers, their demand for the Company’s products could decrease and their ability to pay in full and/or on a timely basis may also be impacted. A decline in demand for the Company’s products and/or lack of funding to fulfill payment terms could have a negative impact on the Company’s operating results and financial condition.

The Company employs information technology systems to support its business, and any material breach, interruption or failure may adversely impact the Company’s business.

The Company employs information technology systems to support its business. Security breaches and other disruptions to the Company’s information technology infrastructure have interfered and, in the future, could interfere with the Company’s operations and could also compromise information belonging to the Company and its customers, suppliers and employees, exposing the Company to liability which could adversely impact the Company’s business and reputation. In the ordinary course of business, the Company relies on information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities. Further, artificial intelligence tools are increasingly being used in our industry, and we are evaluating the use of such tools throughout our company. There are risks involved in developing and using artificial intelligence tools in our operations. Additionally, the Company collects and stores certain data, including proprietary business information, and has access to confidential or personal information in certain of its businesses that is subject to privacy and security laws, regulations and customer-imposed controls. Despite the Company’s cybersecurity measures and oversight of such matters by the Audit Committee and the Board of Directors, which are continuously reviewed and upgraded, the Company’s information technology networks and infrastructure and protected data are still vulnerable to damage, disruptions or shutdowns due to attack by hackers or breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, service providers including cloud services, natural disasters or other catastrophic events. Use of artificial intelligence may increase these vulnerabilities, as well. It is possible for such vulnerabilities to remain undetected for an

extended period, up to and including several years. In addition, the Company is subject to various data privacy laws in the many jurisdictions in which it operates, which are rapidly changing and require extensive compliance efforts. Any events that compromise the Company’s systems or any failures to comply with applicable privacy laws could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to the Company’s reputation, which could adversely affect the Company’s business.

The Company depends on maintaining a skilled workforce, and any interruption in the workforce could negatively impact the Company’s operating results and financial condition.

The Company’s ability to sustain and grow its business requires a commitment to hire, retain and develop a highly skilled and diverse management team and workforce. Failure to ensure that the Company has the depth and breadth of personnel with the necessary skill set and experience, failure to compete within and outside the Company’s markets to attract and retain employees, the loss of key employees or interruptions in the Company's workforce, including unionization efforts and changes in labor relations, could impede the Company’s ability to deliver its growth objectives and execute its strategy. Labor shortages or increased labor-related costs have directly affected our results and, if they are significant or sustained, could adversely affect our results of operations and financial condition. Additionally, the health of the Company's employees is critical, and workplace safety is the Company's top priority.

The Company continues to develop and invest in human capital through continuing education, work-related certifications, and talent and performance management systems. These efforts directly impact the Company’s ability to deliver its growth objectives and execute its strategy, though the Company remains susceptible to interruptions in the workforce that could affect the Company’s operating results and financial condition.

A material disruption or unforeseen difficulties with any of our manufacturing facilities could negatively impact our operating results and financial condition.

The Company operates 26 manufacturing facilities domestically and internationally to strategically serve its worldwide markets. Equipment failures, operational interruptions, natural disasters and other unanticipated disruptions may decrease our ability to manufacture our products in a timely manner at our anticipated cost. Interruptions in our production due to such a disruption may lead to decreasing sales and necessitate capital expenditures, therefore negatively impacting our operating results and financial condition.

The Company may also face unforeseen difficulties if we decide to build, lease, expand, redesign, relocate or consolidate facilities. Despite planning, a real estate project may entail uncertainties regarding cost, timeliness, personnel and materials, and any of these variables may negatively impact the Company’s operating results and financial condition.

The Company’s stock price is subject to volatility.

The stock market in general is highly volatile. As a result, the market price of the Company’s common shares is similarly volatile and could be subject to wide fluctuations in response to a number of factors, some of which may be beyond the Company’s control. These factors include, among others, actual or anticipated fluctuations in the Company’s operating results; changes in, or the inability to, achieve estimates of, its operating results by analysts, investors or management; analysts’ recommendations regarding its stock or its competitors’ stock; sales of substantial amounts of its common shares by shareholders; actions or announcements by the Company or its competitors; the maintenance and growth of the value of the Company’s brands; litigation; legislation or other regulatory developments affecting the Company or its industry; widespread illness or pandemics; natural disasters; cyber-attacks; terrorist acts; war or other calamities and changes in general market and economic conditions.

Legal, Tax and Regulatory Risks

The Company may be adversely impacted by laws, regulations, and litigation.

The Company is subject to various laws and regulations in the many jurisdictions in which it operates. For example, extensive environmental regulations related to air and water quality, the discharge of pollutants, climate change, the handling of toxic waste and the handling and transport of products and components classified as hazardous impact its daily operations. Various employment and labor laws and regulations govern the Company’s relationships with its employees throughout the world and affect operating costs. These laws and regulations relate to matters including employment discrimination, minimum wage requirements, overtime, unemployment tax rates, workers’ compensation rates, working conditions, immigration status, tax reporting and other wage and benefit requirements. The introduction of new laws or regulations, or changes in existing laws or regulations, including minimum wage increases, mandated benefits, climate change-related disclosures or other requirements that impose additional obligations on the Company, have increased and could further increase the costs of doing business.

The Trump administration has called for significant changes to U.S. trade, healthcare, immigration and government regulatory policy and has implemented policy changes at a rapid pace. Changes to U.S. policy implemented by the U.S. Congress, the Trump administration or any new administration have impacted among other things, the U.S. and global economy, international trade

relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. As such policy changes continue to be made, face legal challenges and court rulings, uncertainty remains as to how those changes will further impact our business and the business of our competitors over the long term, and the extent to which we will benefit from them or be negatively affected by them. For example, President Trump imposed tariffs on foreign countries under the International Emergency Economic Powers Act (IEEPA) in 2025. In February 2026, the U.S. Supreme Court held that the IEEPA does not authorize the President to impose tariffs, therefore striking the tariffs that President Trump imposed pursuant to the IEEPA. Such developments underscore the pace of change and the potential for legal challenges and implementation uncertainty affecting the regulatory environment in which we operate. It is difficult to predict what continued impact changes in federal policy, including environmental, immigration, trade and tax policies, will have on our industry, the economy as a whole, consumer confidence and spending. As a result, the nature, timing and impact on our business of potential changes to the current legal and regulatory frameworks are uncertain.

At any given time, the Company may also be subject to litigation or claims related to its products, suppliers, customers, employees, shareholders, distributors, sales representatives, intellectual property or acquisitions, among other things, the disposition of which may have an adverse effect upon the Company’s business, financial condition, or results of operation. The outcome of litigation is difficult to assess or quantify. Lawsuits can result in the payment of substantial damages by defendants. If the Company is required to pay substantial damages and expenses as a result of these or other types of lawsuits, the Company’s business and results of operations would be adversely affected. Regardless of whether any claims against the Company are valid or whether it is liable, claims may be expensive to defend, may cause reputational harm (particularly where any claims relate to significant harm to persons and property) and may divert time and money away from the Company’s operations. Insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters. An unfavorable judgment or other liability in excess of the Company’s insurance coverage or financial statement accruals for any claims could adversely affect the Company’s business and operating results.

The Company may not be able to successfully manage its intellectual property and may be subject to infringement claims.

The Company relies on a combination of contractual rights and patent, trademark, copyright and trade secret laws to establish and protect its proprietary technology. Third parties have challenged and in the future may challenge, invalidate, circumvent, infringe or misappropriate the Company’s intellectual property, or such intellectual property may not be sufficient to permit the Company to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly redesign efforts, discontinuance of certain product offerings or other competitive harm. Others, including its competitors may independently develop similar technology, duplicate or design around the Company’s intellectual property, and in such cases, the Company could not assert its intellectual property rights against such parties. The Company may also be subject to costly litigation in the event its technology infringes upon or otherwise violates a third party’s proprietary rights. Any claim from third parties may result in a limitation on its ability to use the intellectual property subject to these claims or the requirement to pay a licensing fee or royalty. The Company may be forced to litigate to enforce or determine the scope and enforceability of its intellectual property rights, trade secrets and know-how, which is expensive, could cause a diversion of resources and may not prove successful, especially in countries where such rights are more difficult to enforce. The loss of intellectual property protection or the inability to obtain third party intellectual property could harm its business and ability to compete.

Tax matters, including changes in tax rates, disagreements with taxing authorities and imposition of new taxes could impact the Company’s operating results and financial condition.

The Company is subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating the provision and accruals for these taxes. There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. The Company’s effective tax rates could be affected by numerous factors, including but not limited to, intercompany transactions, the relative amount of its foreign earnings, including earnings being lower than anticipated in jurisdictions where the Company has lower statutory rates and higher than anticipated in jurisdictions where the Company has higher statutory rates, losses incurred in jurisdictions for which the Company is not able to realize the related tax benefit, changes in foreign currency exchange rates, changes in its deferred tax assets and liabilities and any related valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations. In addition, many countries are actively pursuing changes to their tax laws applicable to corporate multinationals, which could affect our U.S. federal corporate income tax rate and the tax credits we could receive from foreign income. These future changes could materially affect the Company’s financial position and results of operations.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the readers of our financial statements better understand our results of operations, financial condition and present business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements and related notes included elsewhere in this report.

OVERVIEW

Preformed Line Products Company (the “Company”, “PLPC”, “we”, “us”, or “our”) was incorporated in Ohio in 1947. We are an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information (data communication), and other similar industries. Our primary products support, protect, connect, terminate, and secure cables and wires. We provide helical solutions, string hardware, connectors, insulators, fiber optic and copper splice closures, solar hardware mounting applications, and electric vehicle charging station foundations. We also provide aerial drone inspection services for utility assets including transmission and distribution power lines, substations, and generation facilities. We are respected around the world for quality, dependability and market-leading customer service. 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. We have sales and manufacturing operations in 20 different countries.

We report our segments in four geographic regions: PLP-USA (including corporate), The Americas (includes operations in North and South America, excluding PLP-USA), EMEA (Europe, Middle East & Africa) and Asia-Pacific, in accordance with accounting standards codified in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 280, “Segment Reporting”. Each segment distributes a full range of our primary products. Our PLP-USA segment is comprised of our U.S. operations manufacturing our traditional products primarily supporting our domestic energy, telecommunications, solar framing products and inspection services. Our other three segments, The Americas, EMEA and Asia-Pacific, support our energy, telecommunications, data communication, solar and other products in each respective geographical region.

The segment managers responsible for each region report directly to the Company’s Executive Chairman, who is the chief operating decision maker, and are accountable for the financial results and performance of their entire segment for which they are responsible. The business components within each segment are managed to maximize the results of the entire operating segment and the Company rather than the results of any individual business component of the segment.

We evaluate segment performance and allocate resources based on several factors primarily based on gross sales and income before income taxes.

MARKET OVERVIEW

Our business continues to be concentrated in the energy and communications markets. We sit at the intersection of various economic and social megatrends impacting our markets, both domestically and internationally. The digitalization and electrification megatrends, which are increasing the need for power generation, have highlighted the need for bolstering grid reliability, strengthening grid resilience, and upgrading aging infrastructure. The continuing need for high-speed and efficient communication systems has led to further investment in network build-outs. Our focused portfolio is well-positioned to respond to these trends and priorities. While our markets remain robust, increasing commodity prices, inflation, tariffs, rising interest rates, transportation costs, and foreign currency fluctuations have led to a challenging operating environment. Although some of these pressures have shown periods of moderation, they may continue to provide inherent uncertainty going forward.

We believe that our leadership position in the domestic energy and communications markets and the ability to deliver reliable products quickly will position us for continued growth as transmission grids, distribution lines, and substation projects, as well as communication networks, are enhanced, upgraded and extended.

Our international business is also mainly concentrated in the energy and communications markets. Historically, our international sales were primarily related to the medium voltage distribution segment of the energy market but have grown through acquisition and new product development to include a significant contribution from the transmission, substation and telecommunications markets.

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 and strategic operational footprint, including expansion from recent acquisitions, investment in new manufacturing facilities and product designs and technologies.

PREFACE

The following discussion describes our results of operations for the years ended December 31, 2025 and 2024. For additional discussion of our results of operations for the year ended December 31, 2023, see our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 8, 2024. Our consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). Our discussions of the financial results include non-GAAP measures (e.g., foreign currency impact) to provide additional information concerning our financial results and provide information that we believe is useful to the readers of our financial statements in the assessment of our performance and operating trends.

Net sales of $669.3 million for the year ended December 31, 2025 increased $75.6 million year-over-year, mainly due to an increase in energy and communication sales for the year. The 2025 sales amount is among the highest annual sales amount in the Company's history, falling just behind the sales recorded in the year-ended December 31, 2023 of $669.7 million. Additionally, the Company's backlog increased approximately 22% to $232.8 million, further showing the strength of our core markets. As of December 31, 2025, our liquidity remains strong with our bank debt to equity percentage at 8.3%. We can borrow needed funds at a competitive interest rate under our credit facility. Our strong liquidity also allowed us to increase our quarterly dividend by 5% to $0.21 per share in the fourth quarter of 2025, the first such increase since the Company's shares began trading on NASDAQ stock exchange in 2001.

Notwithstanding the Company's positive momentum and strong core markets, the high tariff environment, especially on raw material imports, particularly steel and aluminum, continue to be impactful. In 2025, the Company incurred tariff costs of approximately of $15.1 million. Additionally, PLP-USA's LIFO inventory valuation costs have accelerated due to tariffs, resulting in pre-tax charges of $9.0 million for the year ended December 31, 2025. While we remain steadfast in our commitment to U.S. manufacturing, we continue to manage trade matters proactively. Further tariff increases may give rise to inflationary pressures, which may require further price adjustments to maintain profit margin, and any price increases may have a negative effect on demand. The tariffs outlook remains uncertain, particularly following the February 2026 U.S. Supreme Court ruling that set aside unlawfully imposed tariffs, and the Company is unable to predict the upcoming effects of tariffs that remain in effect (including on steel and aluminum) or may be newly enacted, as well as any refunds that may be available.

While uncertainty remains in the global economy due to tariffs and trade matters, we believe our business portfolio, including our significant U.S. manufacturing footprint, as well as our financial position, are sound and strategically well-positioned. We remain focused on assessing our global market opportunities and overall manufacturing capacity in conjunction with the requirements of local manufacturing in the markets that we serve. As necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, including tariff-related impacts, increase sales volume and deliver value to our customers. We closely monitor developments in trade policy and actively evaluate strategies to mitigate the impact of tariffs, including sourcing alternatives and optimizing our supply chain. 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.

Our financial statements are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. The fluctuations of foreign currencies during the years ended December 31, 2025 and December 31, 2024 had a favorable impact on net sales of $1.4 million and an unfavorable impact of $4.2 million, respectively. The effect of currency translation had a favorable impact on net income in the year ended December 31, 2025 of $0.1 million and an unfavorable impact of $0.7 million in the year ended December 31, 2024. On a reportable segment basis, the impact of foreign currency translation on net sales and net income for the years ended December 31, 2025 and 2024, respectively, was as follows:

Foreign Currency Translation Impact

Net Sales

Net Income

(Thousands of dollars)

The Americas

EMEA

Asia-Pacific

Total

The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the years ended December 31, 2025 and 2024. The Company’s past operating results are not necessarily indicative of future operating results.

Year Ended December 31,

(Thousands of dollars)

Change

Net sales

Cost of products sold

GROSS PROFIT

Costs and expenses

OPERATING INCOME

Other (expense) income, net

INCOME BEFORE INCOME TAXES

Income tax expense

NET INCOME

Net income attributable to noncontrolling interests

NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS

2025 RESULTS OF OPERATIONS COMPARED TO 2024

Net sales. In 2025, net sales were $669.3 million, an increase of $75.6 million, or 13%, compared to 2024. Excluding the effect of currency translation, net sales increased 13% as summarized in the following table:

Year Ended December 31,

(Thousands of dollars)

Change

Change

Due to

Currency

Translation

Change

Excluding

Currency

Translation

Change

Net sales

PLP-USA

The Americas

EMEA

Asia-Pacific

Consolidated

The increase in PLP-USA net sales of $45.9 million, or 17%, was primarily due to higher volumes in communications and energy product sales. International net sales for the year ended December 31, 2025 were favorably affected by $1.4 million when local currencies were converted to U.S. dollars. The following discussion of changes in net sales excludes the effect of currency translation. The Americas net sales of $108.8 million increased $22.0 million, or 24%, primarily due to an increase in energy product sales and an increase in communications sales due to the acquisition of JAP Telecom in May 2025. EMEA net sales of $133.1 million decreased $0.8 million, or 1%, primarily due to lower volume in communications sales, partially offset by increased volumes in energy product sales. Asia-Pacific net sales of $114.8 million increased $7.1 million, or 7%, primarily due to volume increases in energy product sales and special industry sales.

Gross Profit. Gross profit of $208.5 million for 2025 increased $18.7 million, or 10%, compared to 2024. Excluding the effect of currency translation, gross profit increased $18.6 million, or 10%, as summarized in the following table:

Year Ended December 31,

(Thousands of dollars)

Change

Change

Due to

Currency

Translation

Change

Excluding

Currency

Translation

Change

Gross profit

PLP-USA

The Americas

EMEA

Asia-Pacific

Consolidated

PLP-USA gross profit of $105.9 million increased by $12.9 million, or 14%, compared to the same period in 2024, primarily due to higher sales volumes and favorable product mix benefited by price increases enacted in 2025, partially offset by higher tariff and manufacturing costs, including LIFO valuation costs. International gross profit for the period ended December 31, 2025 was favorably impacted by $0.2 million when local currencies were translated to U.S. dollars. The following discussion of gross profit changes excludes the effects of currency translation. The Americas gross profit increased $4.3 million, or 15%, which was primarily the result of higher sales volumes, offset by unfavorable product mix. EMEA gross profit increased $0.9 million, or 3%, due to favorable product mix. Asia-Pacific gross profit increased $0.5 million, or 1%, which was primarily driven by higher sales volume, partially offset by higher inventory reserves.

Costs and expenses. Costs and expenses of $153.4 million for the year ended December 31, 2025 increased $14.4 million, or 10%, when compared to 2024. Excluding the effect of currency translation, costs and expenses increased $13.8 million, or 10%, as summarized in the following table:

Year Ended December 31,

(Thousands of dollars)

Change

Change

Due to

Currency

Translation

Change Due to Intercompany Transactions

Change Excluding

Currency

and Intercompany Transactions

Change

Costs and expenses

PLP-USA

The Americas

EMEA

Asia-Pacific

Consolidated

PLP-USA costs and expenses of $69.9 million increased $6.2 million, or 9% year-over-year. PLP-USA’s increase was primarily attributable to personnel costs supporting strategic market growth in core product offerings in both energy and communications, primarily for sales, sales support and engineering resources, as well as higher selling and professional service costs. International costs and expenses for the year ended December 31, 2025 had a unfavorable impact by $0.6 million when local currencies were translated to U.S. dollars and was unfavorably impacted by intercompany transactions with PLP-USA. The following discussion of costs and expenses excludes the effect of currency translation and intercompany transactions. The Americas costs and expenses of $25.6 million increased $4.0 million primarily due to the acquisition of JAP Telecom in May 2025, an increase in personnel costs and the impact of foreign currency remeasurement. EMEA costs and expenses of $32.0 million increased by $2.8 million primarily due to higher personnel and facility costs and a recovery of bad debt in the second quarter of 2024 that did not recur. Asia-Pacific costs and expenses of $25.9 million increased $0.8 million primarily due to a gain on the sale of capital assets in the first quarter of 2024 that did not recur, offset by a recovery of bad debt.

Other (expense) income, net . Other expense, net as of the year ended December 31, 2025 was unfavorable by $9.5 million when compared to the nominal Other income, net for the year ended December 31, 2024. The unfavorable movement was mainly due to the $11.7 million U.S. Plan termination charge recorded in the third quarter of 2025, partially offset by government incentives received in 2025 related to our facility in China.

Income taxes. Income taxes for the years ended December 31, 2025 and 2024 were $10.3 million and $13.7 million based on pre-tax income of $45.6 million and $50.8 million, respectively. The effective tax rate for the years ended December 31, 2025 and 2024 was 22.6% and 26.9%, respectively. The decrease in the effective tax rate from 2024 to 2025 was primarily due to the impact of

the U.S. Plan termination and a reduction in the unfavorable impact from the mix of income earned in jurisdictions with a higher tax rate than the U.S. This was partially offset by an unfavorable impact from the decrease in certain tax credits. The following items had the most significant impact on the difference between our statutory U.S. federal income tax rate of 21.0%:

1. A $1.7 million, or 3.8%, net increase resulting from non-deductible officers' compensation

2. A $1.6 million, or 3.5%, net increase resulting from an increase in withholding taxes and from earnings in jurisdictions with higher tax rates than the U.S. federal statutory rate where such earnings are permanently reinvested.

3. A $1.4 million, or 3.1%, net decrease resulting from the U.S. pension plan termination charge.

4. A $1.2 million, or 2.6%, net decrease resulting from excess tax benefits from executive compensation in the form of restricted stock units (or "RSUs").

5. A $0.7 million, or 1.5%, net decrease resulting from the generation of foreign tax credits.

1. A $2.0 million, or 4.0%, net increase resulting from non-deductible officers' compensation.

2. A $1.6 million, or 3.2%, net increase resulting from earnings in jurisdictions with higher tax rates than the U.S. federal statutory rate where such earnings are permanently reinvested.

3. A $1.6 million, or 3.2%, net decrease resulting from generation of foreign tax credits.

4. A $1.2 million, or 2.4%, net decrease resulting from excess tax benefits from RSUs.

5. A $1.2 million, or 2.3%, net increase resulting from the inclusion of Global Intangible Low-Taxed Income.

Net income. As a result of the preceding items, net income for the year ended December 31, 2025 was $35.3 million, compared to $37.1 million for 2024. Excluding the effect of currency translation, net income decreased $1.9 million as summarized in the following table and was primarily due to the U.S. Plan termination charged recorded in 2025.

Year Ended December 31,

(Thousands of dollars)

Change

Change

Due to

Currency

Translation

Change

Excluding

Currency

Translation

Change

Net income (loss)

PLP-USA

The Americas

EMEA

Asia-Pacific

Consolidated

WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES

Management Assessment of Liquidity

We measure liquidity on the basis of our ability to meet short-term and long-term operating needs, fund additional investments, including acquisitions, and make dividend payments to shareholders. Significant factors affecting the management of liquidity are cash flows from operating activities, capital expenditures, cash dividends, business acquisitions and access to bank lines of credit.

Our investments include expenditures required for equipment and facilities as well as expenditures in support of our strategic initiatives. In 2025, we used cash of $40.1 million for capital expenditures, of which $24.8 million relates to the construction of the new Poland facility and purchase of the new Spain facility. At December 31, 2025, we had $83.4 million of cash, cash equivalents and restricted cash (collectively “Cash”). Our Cash is held in various locations throughout the world. At December 31, 2025, the majority of our cash is held outside the U.S.

We expect the majority of accumulated non-U.S. cash balances will remain outside of the U.S. and that we will meet U.S. liquidity needs through future cash flows, use of U.S. cash balances, external borrowings, or some combination of these sources.

We complete comprehensive reviews of our significant customers and their creditworthiness by analyzing financial statements for customers where we have identified a measure of increased risk. We closely monitor payments and developments that may signal possible customer credit issues. We currently have not identified any potential material impact on our liquidity from customer credit issues.

Total debt, including notes payable, at December 31, 2025 was $39.5 million. At December 31, 2025, our unused availability under our credit facility (the "Facility") was $52.0 million and our bank debt to equity percentage was 8.3%. The Facility contains, among other provisions, requirements for maintaining levels of net worth and profitability. At December 31, 2025, the Company was in compliance with these covenants.

Our Asia-Pacific segment had $0.1 million in restricted cash for the years ended December 31, 2025 and 2024. The restricted cash was used to secure bank debt and is included in Cash, cash equivalents and restricted cash on the balance sheet.

On January 19, 2021, the Company received funding for a term loan from PNC Equipment Finance, LLC in the principal amount of $20.5 million for the full amount of the purchase price for a new corporate aircraft. At December 31, 2025, the outstanding balance on the term loan was $10.6 million, of which $2.1 million was classified as current. See Note 7 in the Notes to Consolidated Financial Statements for more information.

On July 16, 2025, PLP Poland, a subsidiary of the Company, entered into a non-revolving investment loan with Bank Pekao S.A to finance the construction of a new manufacturing plant for an amount up to PLN100.3 million ($27.9 million). The maturity date of the loan is January 31, 2035 and is payable in annual installments in the amounts of PLN5.3 million ($1.5 million) in 2026, PLN9.0 million ($2.5 million) in 2027, PLN9.6 million ($2.7 million) in 2028 through 2034, and PLN18.8 million ($5.0 million) in 2035. As of December 31, 2025, the outstanding balance on the investment loan was $12.6 million, of which $1.9 million is classified as current. See Note 7 in the Notes to Consolidated Financial Statements for more information.

We expect that our major source of funding for 2026 and beyond will be our operating cash flows, our existing cash and cash equivalents as well as our Facility agreement. The Facility agreement has an expiration date of June 30, 2028. Except for current earnings in certain jurisdictions, our operating income is deemed to be indefinitely reinvested in foreign jurisdictions. We currently do not intend nor foresee a need to repatriate these funds. We believe our future operating cash flows will be more than sufficient to cover debt repayments, other contractual obligations, capital expenditures and dividends for the next 12 months and thereafter for the foreseeable future. In addition, we believe our borrowing capacity provides substantial financial resources, if needed, to supplement funding of capital expenditures and/or acquisitions. 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.

Sources and Uses of Cash

Net Cash provided by operating activities for the years ended December 31, 2025 and 2024 was $73.5 million and $67.5 million, respectively. The $6.0 million increase was primarily a result of the net favorable movement in non-cash items of $13.8 million, including the U.S. pension plan termination, offset by changes in operating assets and liabilities.

Net Cash used in investing activities for the years ended December 31, 2025 and 2024 was $43.4 million and $12.4 million, respectively. The $31.0 million change was primarily a result of the acquisition of JAP Telecom in May of 2025 and an increase in capital expenditures, primarily related to the acquisition of new land and a building in Spain and the construction of a new manufacturing plant in Poland.

Net Cash used in financing activities for the years ended December 31, 2025 and 2024 was $9.2 million and $47.8 million, respectively. The $38.6 million change was primarily the result of a reduction in net payments of long-term debt.

We have commitments under operating leases primarily for office and manufacturing space, transportation equipment, office and computer equipment and capital leases, primarily for equipment. See Note 8 in the Notes to Consolidated Financial Statements for more information.

As of December 31, 2025, the Company had total outstanding guarantees of $14.1 million. Additionally, certain domestic and foreign customers require the Company to issue letters of credit or performance bonds as a condition of placing an order. As of December 31, 2025, the Company had total outstanding letters of credit of $3.1 million.

The Company has other borrowing facilities at certain of its foreign subsidiaries, which consist of overdraft lines, working capital credit lines, and facilities for the issuance of letters of credit and short-term borrowing needs. At December 31, 2025, and December 31, 2024, $20.9 million and $8.8 million were outstanding, of which $4.6 million and $8.2 million were classified as current, respectively. These facilities support commitments made in the ordinary course of business.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those that are reflective of significant judgment and uncertainties, and potentially may result in materially different outcomes under different assumptions and conditions.

Revenue Recognition

Net sales include products and shipping and handling charges, net of estimates for product returns. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. All revenue is recognized when the Company satisfies the performance obligations under the contract and control of the product is transferred to the customer, primarily based on shipping terms. Revenue for shipping and handling charges are recognized at the time the products are shipped to, delivered to or picked up by the customer. The Company estimates product returns based on historical return rates.

Allowance for Credit Losses

We maintain an allowance for credit losses for estimated losses resulting from the inability of our customers to make required payments. We record estimated allowances for uncollectible accounts receivable based upon the number of days the accounts are past due, the current business environment, and specific information such as bankruptcy or liquidity issues of customers. 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.

Excess and Obsolescence Reserves

We provide excess and obsolescence reserves to state inventories at the lower of cost or estimated net realizable value. We identify inventory items that have had no usage or are in excess of the usages over the historical 12 to 24 months. A management team with representatives from marketing, manufacturing, engineering and finance reviews these inventory items, determines the disposition of the inventory and assesses the net realizable value based on their knowledge of the product and market conditions. These conditions include, among other things, future demand for product, product utility, unique customer order patterns or unique raw material purchase patterns, changes in customer and quality issues. If the impact of market conditions deteriorates from those projected by management, additional inventory reserves may be necessary.

Impairment of Long-Lived Assets

We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets are impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying value of those items. Our cash flows are based on historical results adjusted to reflect the best estimate of future market and operating conditions. The net carrying value of assets not recoverable is then reduced to fair value. The estimates of fair value represent the best estimate based on industry trends and reference to market rates and transactions.

Goodwill

Goodwill is reviewed for impairment annually on October 1 or more frequently when changes in circumstances indicate the carrying amount may be impaired. We may use both quantitative and qualitative approaches when testing goodwill for impairment. For selected reporting units where the qualitative approach is utilized, a qualitative evaluation of events and circumstances impacting the reporting unit is performed to determine if it is more likely than not that the fair value of the reporting unit exceeds its carrying amount. If that determination is made, no further evaluation is necessary. Otherwise, the Company performs a quantitative impairment test on the reporting unit.

For the quantitative approach, the Company uses a combination of the income approach, which uses a discounted cash flow methodology, and the market approach, which uses comparable market multiples, in computing fair value by reporting unit. The Company then compares the fair value of the reporting unit with its carrying value to assess if goodwill has been impaired. The fair value estimates are subjective and sensitive to significant assumptions, such as revenue growth rates, operating margins, the weighted-average cost of capital, and estimated market multiples, of which are affected by expectations of future market or economic conditions. The Company believes that the methodologies, significant assumptions, and weightings used are reasonable and result in appropriate fair values of the reporting units.

Impairment assessments inherently involve management judgments regarding a number of assumptions. Due to the multiple variables inherent in arriving at the estimates of the reporting unit's fair value, differences in assumptions could have an effect on the estimated fair value of a reporting unit and could result in goodwill impairment charges in a future period.

Deferred Tax Assets

Deferred taxes are recognized at currently enacted tax rates for temporary differences between the financial reporting and income tax basis of assets and liabilities and operating loss and tax credit carryforwards. We establish a valuation allowance to record our deferred tax assets at an amount that is more-likely-than-not to be realized. In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of their recorded amount, an adjustment to the valuation allowance would increase income in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the valuation allowance would be charged to expense in the period such determination was made.

Pension Obligations

For the remaining international pension plans, we record obligations and expenses related to a pension benefit plan based on actuarial valuations, which include key assumptions on discount rates, expected returns on plan assets and compensation increases. These actuarial assumptions are reviewed annually and modified as appropriate. The effect of modifications is generally recorded or amortized over future periods. We believe the assumptions used in recording obligations under the plans are reasonable based on prior experience, market conditions and the advice of plan actuaries. However, an increase in the discount rate would decrease the plan obligations and the net periodic benefit cost, while a decrease in the discount rate would increase the plan obligations and the net periodic benefit cost. In addition, an increase in the expected long-term return on plan assets would decrease the net periodic pension cost, while a decrease in expected long-term return on plan assets would increase the net periodic pension cost.