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Item 2 — Management's Discussion and Analysis
Preformed Line Products Company · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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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 unaudited 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.
PREFACE
The following discussion describes our results of operations for the three and six months ended June 30, 2026 and 2025. Our consolidated financial statements are prepared in conformity with United States ("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 $212.7 million increased $43.1 million for the three months ended June 30, 2026 year-over-year and net sales of $389.0 million increased $70.8 million for the six months ended June 30, 2026 year-over-year, mainly due to an increase in energy and, to a lesser extent, communication sales, led by PLP-USA. While these sales amounts are the highest in the Company's history, tariffs, especially Section 232 tariffs, and geopolitical developments continue to present headwinds related to raw material imports and commodity prices, impacting essential inputs like steel, aluminum and plastic resins. While we continue to manage trade matters and commodity prices proactively, further tariff increases or geopolitical events 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. Please see Note 5 of the Notes to the Consolidated Financial Statements for further considerations on tariffs and refund process as a result of the February 2026 Supreme Court ruling.
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 three and six months ended June 30, 2026 had a favorable impact on net sales of $6.0 million and $13.2 million, respectively. The fluctuations on foreign currencies had a favorable impact of $0.5 million and $0.7 million on net income for the three and six months ended June 30, 2026. The fluctuations of foreign currencies during the three and six months ended June 30, 2025 had an unfavorable impact on net sales of $0.5 million and $4.9 million, respectively. The fluctuations on foreign currencies during the three and six months ended June 30, 2025 had a de minimis impact and unfavorable impact of $0.3 million on net income, respectively. On a reportable segment basis, the impact of foreign currency translation on net sales and net income for the three and six months ended June 30, 2026, was as follows:
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Foreign Currency Translation Impact
Three Months Ended June 30, 2026 Six Months Ended June 30, 2026
(Thousands of dollars) Net Sales Net Income Net Sales Net Income
The Americas $ 2,713 $ 236 $ 4,975 $ 308
EMEA 1,608 196 4,792 189
Asia-Pacific 1,647 103 3,397 156
Total $ 5,968 $ 535 $ 13,164 $ 653
While uncertainty remains in the global economy due to trade matters and geopolitical instability, we believe our business portfolio, which is focused on key megatrends impacting both the power and telecommunications markets, as well as our significant U.S. manufacturing footprint, and 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 impacts, increase sales volume and deliver value to our customers. We closely monitor developments in trade policy and geo-political instability and actively evaluate strategies to mitigate the impact of tariffs or supply chain constraints, including sourcing alternatives, where needed. 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. As of June 30, 2026, our liquidity remains strong with our bank debt to equity percentage at 8.6%. We can borrow needed funds at a competitive interest rate under the Facility.
RESULTS OF OPERATIONS
The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the three months ended June 30, 2026 and 2025. The Company’s past operating results are not necessarily indicative of future operating results.
Three Months Ended June 30,
(Thousands of dollars) 2026 2025 Change
Net sales $ 212,681 100.0 % $ 169,601 100.0 % $ 43,080
Cost of products sold 139,669 65.7 114,202 67.3 25,467
GROSS PROFIT 73,012 34.3 55,399 32.7 17,613
Costs and expenses 45,110 21.2 38,275 22.6 6,835
OPERATING INCOME 27,902 13.1 17,124 10.1 10,778
Other income, net 544 0.3 182 0.1 362
INCOME BEFORE INCOME TAXES 28,446 13.4 17,306 10.2 11,140
Income tax expense 6,938 3.3 4,606 2.7 2,332
NET INCOME 21,508 10.1 12,700 7.5 8,808
Net expense (income) attributable to noncontrolling interests — 0.0 5 0.0 (5)
NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS $ 21,508 10.1 % $ 12,705 7.5 % $ 8,803
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Net sales. In 2026, net sales were $212.7 million, an increase of $43.1 million, or 25%, compared to 2025. Excluding the effect of currency translation, net sales increased 22% as summarized in the following table:
Three Months Ended June 30,
(Thousands of dollars) 2026 2025 Change Change Due to Currency Translation Change Excluding Currency Translation % Change
Net sales
PLP-USA $ 104,304 $ 79,290 $ 25,014 $ — $ 25,014 32 %
The Americas 33,982 28,508 5,474 2,713 2,761 10 %
EMEA 41,676 31,910 9,766 1,608 8,158 26 %
Asia-Pacific 32,719 29,893 2,826 1,647 1,179 4 %
Consolidated $ 212,681 $ 169,601 $ 43,080 $ 5,968 $ 37,112 22 %
The increase in PLP-USA net sales of $25.0 million, or 32%, was primarily due to higher volumes in energy sales, and to a lesser extent, communications sales. International net sales for the three months ended June 30, 2026 were favorably affected by $6.0 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 $34.0 million increased $2.8 million, or 10%, primarily due to higher volumes in energy sales mainly due to the acquisition of Delta Star in May 2026. EMEA net sales of $41.7 million increased $8.2 million primarily due to higher volumes in energy sales. Asia-Pacific net sales of $32.7 million increased $1.2 million, or 4%, primarily due to higher volumes in energy sales and special industry sales.
Gross profit. Gross profit of $73.0 million for 2026 increased $17.6 million, or 32%, compared to 2025. Excluding the effect of currency translation, gross profit increased $15.7 million, or 28%, as summarized in the following table:
Three Months Ended June 30,
(Thousands of dollars) 2026 2025 Change Change Due to Currency Translation Change Excluding Currency Translation % Change
Gross profit
PLP-USA $ 39,237 $ 28,062 $ 11,175 $ — $ 11,175 40 %
The Americas 10,853 8,424 2,429 871 1,558 18 %
EMEA 13,531 9,511 4,020 573 3,447 36 %
Asia-Pacific 9,391 9,402 (11) 427 (438) (5) %
Consolidated $ 73,012 $ 55,399 $ 17,613 $ 1,871 $ 15,742 28 %
PLP-USA gross profit of $39.2 million increased by $11.2 million, or 40%, compared to the same period in 2025, primarily due to higher sales volumes, favorable product mix and the benefit of price increases enacted in 2025, partially offset by increased material, tariff and manufacturing costs. International gross profit for the period ended June 30, 2026 was favorably impacted by $1.9 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 $1.6 million, or 18%, which was primarily the result of favorable product mix. EMEA gross profit increased $3.4 million, or 36%, primarily due to higher sales volumes and favorable product mix. Asia-Pacific gross profit decreased $0.4 million, or 5%, which was primarily driven by increased material costs.
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Costs and expenses. Costs and expenses of $45.1 million for the three months ended June 30, 2026 increased $6.8 million, or 18%, when compared to 2025. Excluding the effect of currency translation and intercompany transactions, costs and expenses increased $5.8 million, or 15%, as summarized in the following table:
Three Months Ended June 30,
(Thousands of dollars) 2026 2025 Change Change Due to Currency Translation Change Due to Intercompany Transactions Change Excluding Currency and Intercompany Transactions % Change
Costs and expenses
PLP-USA $ 22,993 $ 17,413 $ 5,580 $ — $ 1,103 $ 4,477 26 %
The Americas 7,157 6,736 421 522 (607) 506 8 %
EMEA 8,575 7,950 625 278 (475) 822 10 %
Asia-Pacific 6,385 6,176 209 239 (21) (9) — %
Consolidated $ 45,110 $ 38,275 $ 6,835 $ 1,039 $ — $ 5,796 15 %
Excluding intercompany transactions, PLP-USA costs and expenses increased $4.5 million, or 26% year-over-year, primarily due to increased selling and personnel costs supporting strategic market growth initiatives in core product offerings in both energy and communications. International costs and expenses for the three months ended June 30, 2026 were unfavorably impacted when local currencies were translated to U.S. dollars and favorably 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 $7.2 million increased $0.5 million primarily due to increases in personnel costs and selling costs. EMEA costs and expenses of $8.6 million increased by $0.8 million primarily due to increases in personnel and selling costs. Asia-Pacific costs and expenses of $6.4 million had a de minimis change.
Other Income, net. Other income, net of $0.5 million for the three months ended June 30, 2026 was favorable by $0.3 million when compared to $0.2 million of Other income, net for the three months ended June 30, 2025. The favorable movement was mainly due to an increase in interest income.
Income taxes. Income taxes for the three months ended June 30, 2026 and 2025 were $6.9 million and $4.6 million based on pre-tax income of $28.4 million and $17.3 million, respectively. The tax rate for the three months ended June 30, 2026 and 2025 was 24% and 27%, respectively. The lower effective tax rate for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was mainly due to the impact from certain nondeductible compensation adjustments in Q2 2025.
Net income. As a result of the preceding items, net income for the three months ended June 30, 2026 was $21.5 million, compared to $12.7 million for 2025. Excluding the effect of currency translation, net income increased $8.3 million as summarized in the following table. The increase in net income was due to increases in operating income as described above
Three Months Ended June 30,
(Thousands of dollars) 2026 2025 Change Change Due to Currency Translation Change Excluding Currency Translation % Change
Net income (loss)
PLP-USA $ 12,652 $ 7,745 $ 4,907 $ — $ 4,907 63 %
The Americas 3,167 1,302 1,865 236 1,629 125 %
EMEA 3,411 1,367 2,044 196 1,848 135 %
Asia-Pacific 2,278 2,291 (13) 103 (116) (5) %
Consolidated $ 21,508 $ 12,705 $ 8,803 $ 535 $ 8,268 65 %
SIX MONTHS ENDED JUNE 30, 2026 COMPARED TO SIX MONTHS ENDED JUNE 30, 2025
The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the six months ended June 30, 2026 and 2025. The Company’s past operating results are not necessarily indicative of future operating
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results.
Six Months Ended June 30,
(Thousands of dollars) 2026 2025 Change
Net sales $ 388,959 100.0 % $ 318,142 100.0 % $ 70,817
Cost of products sold 260,727 67.0 214,072 67.3 46,655
GROSS PROFIT 128,232 33.0 104,070 32.7 24,162
Costs and expenses 86,614 22.3 73,816 23.2 12,798
OPERATING INCOME 41,618 10.7 30,254 9.5 11,364
Other income, net 1,158 0.3 723 0.2 435
INCOME BEFORE INCOME TAXES 42,776 11.0 30,977 9.7 11,799
Income tax expense 10,719 2.8 6,724 2.1 3,995
NET INCOME 32,057 8.2 24,253 7.6 7,804
Net income attributable to noncontrolling interests (25) (0.0) (31) (0.0) 6
NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS $ 32,032 8.2 % $ 24,222 7.6 % $ 7,810
Net sales. In 2026, net sales were $389.0 million, an increase of $70.8 million, or 22%, compared to 2025. Excluding the effect of currency translation, net sales increased 18% as summarized in the following table:
Six Months Ended June 30,
(Thousands of dollars) 2026 2025 Change Change Due to Currency Translation Change Excluding Currency Translation % Change
Net sales
PLP-USA $ 197,617 $ 153,296 $ 44,321 $ — $ 44,321 29 %
The Americas 59,044 50,787 8,257 4,975 3,282 6 %
EMEA 74,966 61,903 13,063 4,792 8,271 13 %
Asia-Pacific 57,332 52,156 5,176 3,397 1,779 3 %
Consolidated $ 388,959 $ 318,142 $ 70,817 $ 13,164 $ 57,653 18 %
The increase in PLP-USA net sales of $44.3 million, or 29%, was primarily due to higher volumes in energy sales, and to a lesser extent, communications product sales. International net sales for the six months ended June 30, 2026 were favorably affected by $13.2 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 $59.0 million increased $3.3 million, or 6%, primarily due to an increase in communications sales due to the acquisition of JAP Telecom in May 2025 and, to a lesser extent, an increase in energy sales primarily related to the acquisition of Delta Star. EMEA net sales of $75.0 million increased $8.3 million, or 13% primarily due to higher volume in energy product sales. Asia-Pacific net sales of $57.3 million increased $1.8 million, or 3%, primarily due to volume increases in energy product and special industries sales.
Gross profit. Gross profit of $128.2 million for 2026 increased $24.2 million, or 23%, compared to 2025. Excluding the effect of currency translation, gross profit increased $20.3 million, or 20%, as summarized in the following table:
Six Months Ended June 30,
(Thousands of dollars) 2026 2025 Change Change Due to Currency Translation Change Excluding Currency Translation % Change
Gross profit
PLP-USA $ 71,768 $ 54,900 $ 16,868 $ — $ 16,868 31 %
The Americas 17,674 15,511 2,163 1,518 645 4 %
EMEA 22,646 18,388 4,258 1,467 2,791 15 %
Asia-Pacific 16,144 15,271 873 848 25 — %
Consolidated $ 128,232 $ 104,070 $ 24,162 $ 3,833 $ 20,329 20 %
PLP-USA gross profit of $71.8 million increased by $16.9 million, or 31%, compared to the same period in 2025, primarily due to higher sales volumes and the benefit of price increases enacted in 2025, partially offset by material, tariff and manufacturing costs.
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International gross profit for the period ended June 30, 2026 was favorably impacted by $3.8 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 $0.6 million, or 4%, which was primarily the result of higher sales volumes. EMEA gross profit increased $2.8 million, or 15%, primarily due to higher sales volume and favorable product mix. Asia-Pacific gross profit had a de minimis increase, primarily from higher sales volume, offset by increased material costs.
Costs and expenses. Costs and expenses of $86.6 million for the six months ended June 30, 2026 increased $12.8 million, or 17%, when compared to 2025. Excluding the effect of currency translation and intercompany transactions, costs and expenses increased $10.1 million, or 14%, as summarized in the following table:
Six Months Ended June 30,
(Thousands of dollars) 2026 2025 Change Change Due to Currency Translation Change Due to Intercompany Transactions Change Excluding Currency and Intercompany Transactions % Change
Costs and expenses
PLP-USA $ 44,888 $ 34,567 $ 10,321 $ — $ 2,800 $ 7,521 22 %
The Americas 13,059 12,224 835 1,053 (1,673) 1,455 12 %
EMEA 16,449 15,300 1,149 1,044 (969) 1,074 7 %
Asia-Pacific 12,218 11,725 493 554 (158) 97 1 %
Consolidated $ 86,614 $ 73,816 $ 12,798 $ 2,651 $ — $ 10,147 14 %
PLP-USA costs and expenses of $44.9 million increased $7.5 million, or 22% year-over-year. PLP-USA’s increase was primarily attributable to higher personnel and selling costs. International costs and expenses for the six months ended June 30, 2026 were unfavorably impacted by $2.7 million when local currencies were translated to U.S. dollars and favorably 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 $13.1 million increased $1.5 million primarily due to an increase in personnel and selling costs. EMEA costs and expenses of $16.4 million increased by $1.1 million primarily due to higher personnel cost and facility costs. Asia-Pacific costs and expenses of $12.2 million increased $0.1 million primarily due to an increase in personnel costs.
Other Income, net. Other income, net of $1.2 million for the six months ended June 30, 2026 was favorable by $0.5 million when compared to Other income, net for the six months ended June 30, 2025 of $0.7 million. The favorable movement was mainly due to an increase in interest income.
Income taxes. Income taxes for the six months ended June 30, 2026 and 2025 were $10.7 million and $6.7 million based on pre-tax income of $42.8 million and $31.0 million, respectively. The tax rate for the six months ended June 30, 2026 and 2025 was 25% and 22%, respectively. The effective tax rate for the six months ended June 30, 2026 was higher than the effective tax rate for the same period in 2025 mainly due to a reduction in the net benefit related to incentive compensation and a valuation allowance recorded on deferred tax assets related to the Company's French subsidiary.
Net income. As a result of the preceding items, net income for the six months ended June 30, 2026 was $32.0 million, compared to $24.2 million for 2025. Excluding the effect of currency translation, net income increased $7.2 million as summarized in the following table. The increase in net income was due to increases in operating income as described above:
Six Months Ended June 30,
(Thousands of dollars) 2026 2025 Change Change Due to Currency Translation Change Excluding Currency Translation % Change
Net income (loss)
PLP-USA $ 22,375 $ 16,182 $ 6,193 $ — $ 6,193 38 %
The Americas 3,849 2,698 1,151 308 843 31 %
EMEA 2,879 2,555 324 189 135 5 %
Asia-Pacific 2,929 2,787 142 156 (14) (1) %
Consolidated $ 32,032 $ 24,222 $ 7,810 $ 653 $ 7,157 30 %
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APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our critical accounting policies are consistent with the information set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Form 10-K for the year ended December 31, 2025 filed on March 5, 2026 with the Securities and Exchange Commission and are, therefore, not presented herein.
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, repay debt, 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. During the first six months of 2026, we used cash of $17.0 million for capital expenditures, mainly related to new facilities in the EMEA region. We ended the first six months of 2026 with $76.2 million of cash, cash equivalents and restricted cash (collectively, “Cash”). Our Cash is held in various locations throughout the world. At June 30, 2026, the majority of our Cash was held outside the U.S. We expect most accumulated non-U.S. Cash balances will remain outside of the U.S. and that we will meet U.S. liquidity needs through future operating 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 which 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 June 30, 2026 was $42.8 million. The Company maintained a credit facility (the "Facility") with PNC Bank, National Association ("PNC") with a capacity of $60.0 million and a maturity date of June 30, 2028. The interest rate 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%. At June 30, 2026, the Company had utilized $6.7 million with $53.3 million available on the Facility. There were no long-term outstanding letters of credit on the Facility as of June 30, 2026. Our bank debt to equity percentage was 8.6%. The Facility contains, among other provisions, requirements for maintaining levels of net worth and profitability. At June 30, 2026, the Company was in compliance with these covenants.
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. As of June 30, 2026, $9.6 million was outstanding on this debt facility, of which $2.1 million was classified as current. The aircraft has been pledged as collateral against the loan.
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 June 30, 2026 and December 31, 2025, $26.5 million and $20.9 million were outstanding, of which $4.8 million and $4.6 million were classified as current, respectively. Of the $26.5 million outstanding at June 30, 2026, $17.7 million is attributable to the Poland subsidiary and $7.1 million is attributable to the Spain subsidiary. These facilities support commitments made in the ordinary course of business.
On July 16, 2025, PLP Poland (Belos) S.A. ("PLP Poland"), a subsidiary of the Company, entered into a non-revolving investment loan with Bank Polska Kasa Opieki Spółka Akcyjna ("Bank Pekao S.A") to finance the construction of a new manufacturing plant for an amount up to PLN100.3 million ($26.7 million) with a maturity date of January 31, 2035.
On June 30, 2026, PLP Poland amended its non-revolving investment loan agreement with Bank Pekao S.A. to defer the start of annual repayments from June 30, 2026 to January 31, 2027. Following the amendment, PLP Poland will make annual installments in the amounts of PLN9.0 million ($2.4 million) in 2027, PLN9.6 million ($2.6 million) in 2028, PLN9.8 million ($2.6 million) annually from 2029 through 2034, and PLN22.9 million ($6.1 million) in 2035.
The loan bears interest at the one month Warsaw Interbank Offered Rate ("WIBOR") plus 1.0% unless the Company does not meet the covenants as set forth in the Facility with PNC, at which point the WIBOR spread becomes 1.5%. The current manufacturing plant owned by PLP Poland, the plant under construction and all fixed assets within the plants are pledged as collateral against the loan. The loan also is guaranteed by the Company.
On July 28, 2026, in connection with the acquisition of a facility and related land in Canada (the "Property"), PLP Canada entered into a Term Loan Agreement (the "Term Loan") with Citibank N.A. providing for borrowings of approximately CAD15.0 million (approximately $10.7 million). The proceeds of the Term Loan were used to refinance a portion of the Company's cash investment in the acquisition of the Property.
The Term Loan bears interest at a variable rate equal to the Canadian Overnight Repo Rate Average ("CORRA") plus 1.25% per annum and matures on July 28, 2029. Principal payments are due in annual installments of approximately CAD0.8 million
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(approximately $0.5 million) in each of 2027 and 2028, with the remaining principal balance of approximately CAD13.4 million (approximately $9.7 million) due at maturity in 2029.
The Term Loan contains a negative covenant that restricts PLP Canada from pledging, mortgaging, or otherwise using the acquired property as collateral for any other indebtedness without the prior written consent of the lender. The Term Loan also contains, among other provisions, requirements for maintaining levels of net worth and profitability.
The Company's Asia-Pacific segment had $0.3 million and $0.1 million in restricted cash used to secure bank guarantees at June 30, 2026 and December 31, 2025, respectively. The restricted cash is shown on the Company’s Consolidated Balance Sheets in Cash, cash equivalents and restricted cash.
We expect that our major source of funding for 2026 and beyond will be our operating cash flows, our existing Cash as well as our Facility agreement. 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 six months ended June 30, 2026 was $31.3 million compared to $32.6 million in the comparable prior year six-month period. The $1.3 million decrease was primarily a result of the increase in net income, the net favorable movement in non-cash items, including share based compensation and depreciation and amortization, offset by changes in operating assets and liabilities.
Net cash used in investing activities for the six months ended June 30, 2026 was $25.9 million compared to $22.2 million in the comparable prior year six-month period. The $3.7 million change was primarily a result of the acquisition of Delta Star in May 2026 and lower net proceeds from investments, partially offset by a decrease in capital expenditures.
Net cash used in financing activities for the six months ended June 30, 2026 was $13.0 million compared to $4.8 million in the comparable prior year six-month period. The $8.2 million change was primarily the result of share repurchases from related parties and a reduction in proceeds from long term debt.
We have commitments under operating leases primarily for office and manufacturing space, transportation equipment, office and computer equipment and finance leases primarily for equipment. At June 30, 2026, we had $1.9 million of current operating lease liabilities and $6.8 million of noncurrent operating lease liabilities. Total liabilities related to finance lease obligations were approximately $0.6 million at June 30, 2026.
As of June 30, 2026, the Company had total outstanding guarantees of $13.8 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 June 30, 2026, the Company had total outstanding letters of credit of $3.6 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 June 30, 2026, and December 31, 2025, $26.5 million and $20.9 million were outstanding, of which $4.8 million and $4.6 million were classified as current, respectively. Of the $26.5 million outstanding at June 30, 2026, $17.7 million is attributable to the Poland subsidiary and $7.1 million is attributable to the Spain subsidiary. These facilities support commitments made in the ordinary course of business.
FORWARD LOOKING STATEMENTS
Cautionary Statement for “Safe Harbor” Purposes Under The Private Securities Litigation Reform Act of 1995
This Form 10-Q and other documents we file with the SEC contain forward-looking statements regarding the Company’s and management’s beliefs and expectations. Any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. As a general matter, forward-looking statements are those focused upon future plans, objectives or performance (as opposed to historical items) and include statements of anticipated events or trends and expectations and beliefs relating to matters not historical in nature. Use of words such as “anticipates,” “believes,” “may,” “should,” “will,” “would,” “could,” “plans,” “projects,” “expects,” “estimates,” “predicts,” “targets,” “forecasts,” “intends,” “contemplates,” and similar words may identify forward-looking statements. Such forward-looking statements are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the Company’s control. Such uncertainties and factors could cause the Company’s actual results to differ materially from those matters expressed in or implied by such forward-looking statements.
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The following factors, among others, could affect the Company’s future performance and cause the Company’s actual results to differ materially from those expressed or implied by forward-looking statements made in this report:
•The overall demand for cable anchoring and control hardware for electrical transmission and distribution lines on a worldwide basis, which, historically, has a slow growth rate in mature markets such as the United States (“U.S.”), Canada, Australia and Western Europe and may grow slowly or experience prolonged delay in developing regions despite expanding power needs;
•The impact of global economic conditions, including the impact of inflation, previously enacted or future tariffs and related economic uncertainty (including the outcome of legal challenges and refunds), and rising interest rates, on the Company’s ongoing profitability and future growth opportunities in the Company’s core markets in the U.S. and other foreign countries, which may experience continued or further instability due to political and economic conditions, social unrest, acts of war, military conflict (such as the Russian-Ukrainian, Israeli-Palestinian and Iranian conflicts), international hostilities or the perception that hostilities may be imminent, terrorism, changes in diplomatic and trade relationships and public health concerns (including viral outbreaks such as COVID-19);
•The ability of the Company’s customers to raise funds needed to build the infrastructure projects their customers require;
•Technological developments that affect longer-term trends for communication lines, such as wireless communication;
•The decreasing demand for product supporting copper-based infrastructure due to the introduction of products using new technologies or adoption of new industry standards;
•The Company’s success at continuing to develop proprietary technology and maintaining high quality products and customer service to meet or exceed new industry performance standards and individual customer expectations;
•The Company’s success in strengthening and retaining relationships with the Company’s customers, growing sales at targeted accounts and expanding geographically;
•The extent to which the Company is successful at expanding the Company’s product line or production facilities into new areas or implementing efficiency measures at existing facilities;
•The effects of fluctuation in currency exchange rates upon the Company’s foreign subsidiaries’ operations and reported results from international operations, together with non-currency risks of investing in and conducting significant operations in foreign countries, including those relating to political, social, economic, trade and regulatory factors;
•The Company’s ability to identify, complete, obtain funding for and integrate acquisitions for profitable growth;
•The potential impact of consolidation, deregulation and bankruptcy among the Company’s suppliers, competitors and customers and of any legal or regulatory claims;
•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 any tariffs that have been, and in the future may be, associated with the purchase of these products or components of these products. The Company’s supply chain has faced and could continue to face disruptions and constraints from such tariffs, inflationary pressures and ongoing wars and military conflicts, which could have a material, adverse effect on the ability to secure raw materials and supplies and customer demand;
•Strikes, labor disruptions and other fluctuations in labor costs;
•Changes and uncertainty in significant government regulations and funding priorities, including those affecting environmental compliance or other regulatory matters, or third-party litigation matters;
•Security breaches or other disruptions to the Company’s information technology structure;
•The telecommunication market’s continued deployment of Fiber-to-the-Premises;
•The impact of any failure to timely implement and maintain adequate financial, information technology and management processes and controls and procedures; and
•Those factors described under the heading “Risk Factors” in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 which was filed on March 5, 2026.
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