PREFORMED LINE PRODUCTS CO - Quarter Report: 2021 September (Form 10-Q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-31164

Preformed Line Products Company

(Exact Name of Registrant as Specified in Its Charter)


Ohio		34-0676895
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

660 Beta Drive Mayfield Village, Ohio		44143
(Address of Principal Executive Office)		(Zip Code)

(440) 461-5200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of common shares outstanding as of October 25, 2021: 4,899,945.

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common stock, par value $2.00 per share	PLPC	NASDAQ

Table of Contents


		Page

Part I - Financial Information

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32

Part II - Other Information

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	34

Item 6.	Exhibits	34

SIGNATURES		35

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PREFORMED LINE PRODUCTS COMPANY

CONSOLIDATED BALANCE SHEETS


	September 30, 2021			December 31, 2020
(Thousands of dollars, except share and per share data)	(Unaudited)
ASSETS
Cash and cash equivalents	$	38,326		$	45,175
Accounts receivable, less allowances of $3,758 ($3,464 in 2020)		108,034			92,686
Inventories - net		108,603			97,537
Prepaid tax expense		2,754			2,371
Other prepaid expenses		10,296			15,289
Other current assets		3,390			3,256
TOTAL CURRENT ASSETS		271,403			256,314
Property, plant and equipment - net		148,097			125,965
Operating lease, right-of-use assets		12,872			13,139
Goodwill		28,695			29,508
Other intangible assets - net		12,939			14,443
Deferred income taxes		8,948			10,863
Other assets		10,639			10,855
TOTAL ASSETS	$	493,593		$	461,087
LIABILITIES AND SHAREHOLDERS’ EQUITY
Trade accounts payable	$	38,501		$	31,646
Notes payable to banks		17,697			17,428
Operating lease liabilities, current		2,100			2,240
Current portion of long-term debt		3,114			5,216
Accrued compensation		21,933			14,736
Accrued expenses and other liabilities		22,055			17,508
Accrued profit-sharing and other benefits		6,871			8,252
Dividends payable		1,261			1,292
Income taxes payable		824			5,456
TOTAL CURRENT LIABILITIES		114,356			103,774
Long-term debt, less current portion		42,424			33,333
Pension obligation		4,923			5,826
Operating lease liabilities, non-current		8,654			8,743
Deferred income taxes		2,687			2,921
Other noncurrent liabilities		11,753			14,421
SHAREHOLDERS’ EQUITY
Shareholders’ equity:
Common shares - $2 par value per share, 15,000,000 shares authorized, 4,899,945 and 4,902,233 issued and outstanding, at September 30, 2021 and December 31, 2020, respectively		13,171			13,028
Common shares issued to rabbi trust, 243,138 and 265,508 shares at September 30, 2021 and December 31, 2020, respectively		(10,102	)		(10,940	)
Deferred compensation liability		10,102			10,940
Paid-in capital		46,956			43,134
Retained earnings		402,720			379,035
Treasury shares, at cost, 1,685,387 and 1,611,927 shares at September 30, 2021 and December 31, 2020, respectively		(93,836	)		(88,568	)
Accumulated other comprehensive loss		(60,221	)		(54,551	)
TOTAL PREFORMED LINE PRODUCTS, COMPANY SHAREHOLDERS’ EQUITY		308,790			292,078
Noncontrolling interest		6			(9	)
TOTAL SHAREHOLDERS’ EQUITY		308,796			292,069
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	493,593		$	461,087

See notes to consolidated financial statements (unaudited).

PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED INCOME

(UNAUDITED)


	Three Months Ended September 30						Nine Months Ended September 30
	2021			2020			2021			2020
(Amounts in thousands of dollars, except earnings per share data)
Net sales	$	135,380		$	127,463		$	385,971		$	347,944
Cost of products sold		92,217			82,549			259,577			230,554
GROSS PROFIT		43,163			44,914			126,394			117,390
Costs and expenses
Selling		10,142			8,884			29,842			26,228
General and administrative		14,741			14,037			42,905			39,903
Research and engineering		4,861			4,541			14,235			12,950
Other operating expense - net		341			562			2,828			1,969
		30,085			28,024			89,810			81,050
OPERATING INCOME		13,078			16,890			36,584			36,340
Other income (expense)
Interest income		30			36			77			226
Interest expense		(559	)		(504	)		(1,479	)		(1,932	)
Other income - net		1,251			998			1,749			1,775
		722			530			347			69
INCOME BEFORE INCOME TAXES		13,800			17,420			36,931			36,409
Income tax expense		3,097			4,458			10,161			9,306
NET INCOME	$	10,703		$	12,962		$	26,770		$	27,103
Net loss (gain) attributable to noncontrolling interests		5			(8	)		(15	)		30
NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS	$	10,708		$	12,954		$	26,755		$	27,133
AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING:
Basic		4,900			4,917			4,909			4,963
Diluted		4,975			5,011			4,950			4,998
EARNINGS PER SHARE OF COMMON STOCK ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS:
Basic	$	2.19		$	2.63		$	5.45		$	5.47
Diluted	$	2.15		$	2.59		$	5.40		$	5.43

See notes to consolidated financial statements (unaudited).

PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended September 30						Nine Months Ended September 30
	2021			2020			2021			2020
(Thousands of dollars)
Net income	$	10,703		$	12,962		$	26,770		$	27,103
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment		(5,504	)		2,949			(6,022	)		(8,460	)
Recognized net actuarial gain (net of tax provision of $39 and $23 for the three months ended September 30, 2021 and 2020, respectively). Recognized net actuarial gain (net of tax provision of $109 and $84 for the nine months ended September 30, 2021 and 2020).		125			75			352			264
Other comprehensive (loss) gain, net of tax		(5,379	)		3,024			(5,670	)		(8,196	)
Comprehensive loss (gain) attributable to noncontrolling interests		5			(8	)		(15	)		30

Comprehensive income attributable to Preformed Line Products Company shareholders	$	5,329		$	15,978		$	21,085		$	18,937

See notes to consolidated financial statements (unaudited).

PREFORMED LINE PRODUCTS COMPANY

STATEMENTS OF CONSOLIDATED CASH FLOWS

(UNAUDITED)


	Nine Months Ended September 30
	2021			2020
(Thousands of dollars)
OPERATING ACTIVITIES
Net income	$	26,770		$	27,103
Adjustments to net cash provided by (used in) operations:
Depreciation and amortization		10,555			10,080
Provision for accounts receivable allowances		1,948			1,374
Provision for inventory reserves		572			1,718
Deferred income taxes		687			1,064
Share-based compensation expense		3,291			3,046
(Loss) gain on sale of property and equipment		(42	)		15
Other - net		318			(9	)
Changes in operating assets and liabilities
Accounts receivable		(19,482	)		(17,620	)
Inventories		(14,702	)		(27	)
Prepaid expenses		3,981			(3,265	)
Trade accounts payable and accrued liabilities		15,584			9,555
Accrued income and other taxes		(4,605	)		864
Contributions to company pension plan		0			(330	)
Other - net		(789	)		(11	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		24,086			33,557
INVESTING ACTIVITIES (1)
Capital expenditures		(12,605	)		(24,219	)
Proceeds from the sale of property and equipment		32			0
NET CASH USED IN INVESTING ACTIVITIES		(12,573	)		(24,219	)
FINANCING ACTIVITIES(1)
Increase in notes payable to banks		1,510			8,642
Proceeds from long-term debt		68,975			68,789
Payments of long-term debt		(81,630	)		(72,693	)
Dividends paid		(3,094	)		(3,188	)
Proceeds from issuance of common shares		394			174
Purchase of common shares for treasury		(176	)		(5,832	)
Purchase of common shares for treasury from related parties		(5,091	)		(2,378	)
NET CASH USED IN FINANCING ACTIVITIES		(19,112	)		(6,486	)
Effects of exchange rate changes on cash and cash equivalents		750			(867	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(6,849	)		1,985
Cash, cash equivalents and restricted cash at beginning of year		45,175			39,263
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	38,326		$	41,248

(1) Non-cash investing and financing activities: The Company purchased a new corporate aircraft during the nine-month period ended September 30, 2021 with a term loan in the principal amount of $20.5 million. For further information regarding this transaction, refer to Note P, “Debt Arrangements.”

See notes to consolidated financial statements (unaudited).

PREFORMED LINE PRODUCTS COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In thousands, except share and per share data, unless specifically noted)

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Preformed Line Products Company and subsidiaries (the “Company” or “PLPC”) have been prepared in accordance with United States of America (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from these estimates. In the opinion of management, these consolidated financial statements contain all estimates and adjustments, consisting of normal recurring accruals, required to fairly present the financial position, results of operations, and cash flows for the interim periods. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the full-year ending December 31, 2021.

Noncontrolling interests are presented in the Company’s consolidated financial statements as if parent company investors (controlling interests) and other minority investors (noncontrolling interests) in partially-owned subsidiaries have similar economic interests in a single entity. As a result, investments in noncontrolling interests are reported as equity in the Company’s consolidated financial statements. Additionally, the Company’s consolidated financial statements include 100% of a controlled subsidiary’s earnings, rather than only its share. Transactions between the parent company and noncontrolling interests are reported in equity as transactions between stockholders, provided that these transactions do not create a change in control.

The Consolidated Balance Sheet at December 31, 2020 has been derived from the audited consolidated financial statements but does not include all of the information and notes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes to consolidated financial statements included in the Company’s 2020 Annual Report on Form 10-K filed on March 5, 2021 with the Securities and Exchange Commission.

NOTE B – REVENUE

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.

Disaggregated revenue

The Company’s revenues by segment and product type are as follows:


	Three Months Ended September 30, 2021
Product Type	PLP-USA			The Americas			EMEA			Asia-Pacific			Consolidated
Energy		59	%		64	%		52	%		70	%		60	%
Communications		36			33			42			3			31
Special Industries		5			3			6			27			9
Total		100	%		100	%		100	%		100	%		100	%

	Three Months Ended September 30, 2020
Product Type	PLP-USA			The Americas			EMEA			Asia-Pacific			Consolidated
Energy		60	%		80	%		59	%		60	%		63	%
Communications		34			16			35			4			25
Special Industries		6			4			6			36			12
Total		100	%		100	%		100	%		100	%		100	%


	Nine Months Ended September 30, 2021
Product Type	PLP-USA			The Americas			EMEA			Asia-Pacific			Consolidated
Energy		59	%		68	%		54	%		70	%		61	%
Communications		36			28			40			3			30
Special Industries		5			4			6			27			9
Total		100	%		100	%		100	%		100	%		100	%


	Nine Months Ended September 30, 2020
Product Type	PLP-USA			The Americas			EMEA			Asia-Pacific			Consolidated
Energy		63	%		78	%		58	%		69	%		66	%
Communications		31			17			35			4			24
Special Industries		6			5			7			27			10
Total		100	%		100	%		100	%		100	%		100	%

Credit losses for receivables

The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required payments. The Company uses a current expected credit loss model in order to immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments, mainly trade receivables. Additionally, the allowance is based upon identified delinquent accounts, customer payment patterns and other analyses of historical data trends. Receivable balances are written off against an allowance for credit losses after a final determination has been made.

Accounts receivable are net of an allowance for credit losses of $3,758 and $3,464 at September 30, 2021 and December 31, 2020, respectively. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.

NOTE C – OTHER FINANCIAL STATEMENT INFORMATION

Inventories – net


	September 30, 2021			December 31, 2020
Raw materials	$	67,033		$	53,947
Work-in-process		9,692			9,272
Finished Goods		39,934			38,801
		116,659			102,020
Excess of current cost over LIFO cost		(8,056	)		(4,483	)
Net Inventory	$	108,603		$	97,537

Cost of inventories for certain material is determined using the last-in-first-out (LIFO) method and totaled approximately $34.5 million at September 30, 2021 and $32.0 million at December 31, 2020. An actual valuation of inventories under the LIFO method can be made only at the end of the year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs. Because these estimates are subject to change and may be different than the actual inventory levels and costs at the end of the year, interim results are subject to the final year-end LIFO inventory valuation. During the three and nine months ended September 30, 2021, the net change in LIFO inventories resulted in expense of $1.8 million and $3.6 million, respectively, to Income before income taxes. During the three and nine months ended September 30, 2020, the net change in LIFO inventories resulted $.1 million of income and $.1 million of expense, respectively, to Income before income taxes.

Property, plant and equipment—net

Major classes of Property, plant and equipment are stated at cost and were as follows:


	September 30, 2021			December 31, 2020
Land and improvements	$	21,253		$	22,132
Buildings and improvements		99,628			97,909
Machinery, equipment and aircraft		204,904			176,377
Construction in progress		8,462			9,563
		334,247			305,981
Less accumulated depreciation		(186,150	)		(180,016	)
	$	148,097		$	125,965

Legal proceedings

The Company can be party to a variety of pending legal proceedings and claims arising in the normal course of business, including, but not limited to, litigation relating to employment, workers’ compensation, product liability, environmental and intellectual property. The Company has liability insurance to cover many of these claims.

Although the outcomes of these matters are not predictable with certainty, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the event the Company determines that a loss is not probable, but is reasonably possible, and the likelihood to develop what the Company believes to be a reasonable range of potential loss exists, the Company will include disclosure related to such matters. To the extent that there is a reasonable possibility the losses could exceed amounts already accrued, the Company will adjust the accrual in the period in which the determination is made, disclose an estimate of the additional loss or range of loss and if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made. As of September 30, 2021 and December 31, 2020, the Company has accrued approximately $2.2 million, representing its best estimate for losses to be incurred on a variety of global legal matters.

The Company and its subsidiaries Helix Uniformed Ltd. (“Helix”) and Preformed Line Products (Canada) Limited (“PLPC Canada”), were each named, jointly and severally, with each of SNC-Lavalin ATP, Inc. (“SNC ATP”), HD Supply Canada Inc., by its trade names HD Supply Power Solutions and HD Supply Utilities (“HD Supply”), and Anixter Power Solutions Canada Inc. (the corporate successor to HD Supply), “Anixter” and, together with the Company, PLPC Canada, Helix, SNC ATP and HD Supply, the (“Defendants”) in a complaint filed by Altalink, L.P. (the “Plaintiff”) in the Court of Queen’s Bench of Alberta in Alberta, Canada in November 2016 (the “Complaint”).

The Complaint states that Plaintiff engaged SNC ATP to design, engineer, procure and construct numerous power distribution and transmission facilities in Alberta (the “Projects”) and that through SNC ATP and HD Supply (now Anixter), spacer dampers manufactured by Helix were procured and installed in the Projects. The Complaint alleges that the spacer dampers have and may continue to become loose, open and detach from the conductors, resulting in damage and potential injury and a failure to perform the intended function of providing spacing and damping to the Project. The Plaintiffs are seeking an estimated $56.0 million Canadian dollars in damages jointly and severally from the Defendants, representing the costs of monitoring and replacing the spacer dampers and remediating property damage, due to alleged defects in the design and construction of, and supply of materials for, the Projects by SNC ATP and HD Supply/Anixter and in the design of the spacer dampers by Helix.

The Company believes the claims against it are without merit and intends to vigorously defend against such claims. The Company is unable to predict the outcome of this case, however, it has recorded a reserve for the low end of the range for potential loss associated with this matter. If this matter is concluded in a manner adverse to the Company, it could have a material effect on the Company’s financial results.

The Company is not a party to any other pending legal proceedings that the Company believes would, individually or in the aggregate, have a material adverse effect on its financial condition, results of operations or cash flows.

NOTE D – SHAREHOLDERS EQUITY

The following table reflects the changes in shareholders equity for the nine months ended September 30, 2021 and 2020:



																			Accumulated Other Comprehensive Income (Loss)
		Common Shares		Common Shares Issued to Rabbi Trust			Deferred Compensation Liability			Paid in Capital			Retained Earnings			Treasury Shares			Cumulative Translation Adjustment			Unrecognized Pension Benefit Cost			Total Preformed Line Products Company Equity			Noncontrolling Interests			Total Equity
	(In thousands, except share and per share data)
Balance at December 31, 2020		$	13,028	$	(10,940	)	$	10,940		$	43,134		$	379,035		$	(88,568	)	$	(47,847	)	$	(6,704	)	$	292,078		$	(9	)	$	292,069
Net income (loss)														7,179												7,179			(2	)		7,177
Foreign currency translation adjustment																				(4,829	)					(4,829	)					(4,829	)
Recognized net actuarial gain, net of tax provision of $35																							114			114						114
Total comprehensive income																										2,464			(2	)		2,462
Share-based compensation											1,034			(40	)											994						994
Purchase of 52,590 common shares																	(3,678	)								(3,678	)					(3,678	)
Issuance of 63,316 common shares			127								270															397						397
Common shares distributed from rabbi trust of 3,727, net					120			(120	)																	0						0
Cash dividends declared - $.20 per share											(116	)		(990	)											(1,106	)					(1,106	)
Balance at March 31, 2021		$	13,155	$	(10,820	)	$	10,820		$	44,322		$	385,184		$	(92,246	)	$	(52,676	)	$	(6,590	)	$	291,149		$	(11	)	$	291,138
Net income (loss)														8,869												8,869			22			8,891
Foreign currency translation adjustment																				4,311						4,311						4,311
Recognized net actuarial gain, net of tax provision of $35																							113			113						113
Total comprehensive income																										13,293			22			13,315
Share-based compensation											893			(40	)											853						853
Purchase of 13,800 common shares																	(1,046	)								(1,046	)					(1,046	)
Issuance of 7,400 common shares			15								349															364						364
Common shares issued to rabbi trust of 400, net					(30	)		30																		0						0
Cash dividends declared - $.20 per share														(981	)											(981	)					(981	)
Balance at June 30, 2021		$	13,170	$	(10,850	)	$	10,850		$	45,564		$	393,032		$	(93,292	)	$	(48,365	)	$	(6,477	)	$	303,632		$	11		$	303,643
Net income														10,708												10,708			(5	)		10,703
Foreign currency translation adjustment																				(5,504	)					(5,504	)					(5,504	)
Recognized net actuarial gain, net of tax provision of $39																							125			125						125
Total comprehensive income																										5,329			(5	)		5,324
Share-based compensation											1,364			(40	)											1,324						1,324
Purchase of 7,070 common shares																	(544	)								(544	)					(544	)
Issuance of 456 common shares			1								28															29						29
Common shares distributed from rabbi trust of 19,043, net					748			(748	)																	0						0
Cash dividends declared - $.20 per share														(980	)											(980	)					(980	)
Balance at September 30, 2021		$	13,171	$	(10,102	)	$	10,102		$	46,956		$	402,720		$	(93,836	)	$	(53,869	)	$	(6,352	)	$	308,790		$	6		$	308,796


																			Accumulated Other Comprehensive Income (Loss)
		Common Shares		Common Shares Issued to Rabbi Trust			Deferred Compensation Liability			Paid in Capital			Retained Earnings			Treasury Shares			Cumulative Translation Adjustment			Unrecognized Pension Benefit Cost			Total Preformed Line Products Company Equity			Noncontrolling Interests			Total Equity
	(In thousands, except share and per share data)
Balance at December 31, 2019		$	12,848	$	(10,981	)	$	10,981		$	38,854		$	353,292		$	(79,106	)	$	(51,682	)	$	(5,671	)	$	268,535		$	33		$	268,568
Net income (loss)														3,698												3,698			(45	)		3,653
Foreign currency translation adjustment																				(16,881	)					(16,881	)					(16,881	)
Recognized net actuarial gain, net of tax provision of $31																							98			98						98
Total comprehensive income																										(13,085	)		(45	)		(13,130	)
Share-based compensation											976			(43	)											933						933
Purchase of 75,246 common shares																	(3,980	)								(3,980	)					(3,980	)
Issuance of 77,381 common shares			155																							155						155
Common shares distributed from rabbi trust of 3,358, net					101			(101	)																	0						0
Cash dividends declared - $.20 per share											(83	)		(963	)											(1,046	)					(1,046	)
Balance at March 31, 2020		$	13,003	$	(10,880	)	$	10,880		$	39,747		$	355,984		$	(83,086	)	$	(68,563	)	$	(5,573	)	$	251,512		$	(12	)	$	251,500
Net income														10,481												10,481			7			10,488
Foreign currency translation adjustment																				5,472						5,472						5,472
Recognized net actuarial gain, net of tax provision of $31																							91			91						91
Total comprehensive income																										16,044			7			16,051
Share-based compensation											612			(26	)											586						586
Purchase of 29,724 common shares																	(3,011	)								(3,011	)					(3,011	)
Issuance of 525 common shares											26															26						26
Common shares distributed from rabbi trust of 525, net					(30	)		30																		0						0
Cash dividends declared - $.20 per share														(996	)											(996	)					(996	)
Balance at June 30, 2020		$	13,003	$	(10,910	)	$	10,910		$	40,385		$	365,443		$	(86,097	)	$	(63,091	)	$	(5,482	)	$	264,161		$	(5	)	$	264,156
Net income														12,954												12,954			8			12,962
Foreign currency translation adjustment																				2,949						2,949						2,949
Recognized net actuarial gain, net of tax provision of $23																							75			75						75
Total comprehensive income																										15,978			8			15,986
Share-based compensation											1,458															1,458						1,458
Purchase of 24,335 common shares																	(1,223	)								(1,223	)					(1,223	)
Issuance of 622 common shares			10								204															214						214
Common shares distributed from rabbi trust of 622, net					(30	)		30																		0						0
Cash dividends declared - $.20 per share														(1,013	)											(1,013	)					(1,013	)
Balance at September 30, 2020		$	13,013	$	(10,940	)	$	10,940		$	42,047		$	377,384		$	(87,320	)	$	(60,142	)	$	(5,407	)	$	279,575		$	3		$	279,578

NOTE E – PENSION PLANS

The Company uses a December 31 measurement date for the Preformed Line Products Company Employees’ Retirement Plan (the “Plan”). Net periodic pension cost for this plan included the following components:


	Three Months Ended September 30						Nine Months Ended September 30
	2021			2020			2021			2020
Service cost	$	0		$	0		$	0		$	0
Interest cost		289			325			853			976
Expected return on plan assets		(585	)		(563	)		(1,757	)		(1,688	)
Recognized net actuarial loss		163			98			461			348
Net periodic pension benefit	$	(133	)	$	(140	)	$	(443	)	$	(364	)

There were no contributions to the Plan during the nine months ended September 30, 2021. The Company does not plan to contribute additional funds to the Plan during the remainder of 2021.

NOTE F – ACCUMULATED OTHER COMPREHENSIVE INCOME (“AOCI”)

The following tables set forth the total changes in AOCI by component, net of tax:


	Three Months Ended September 30, 2021									Three Months Ended September 30, 2020
	Unrecognized pension benefit cost			Currency Translation Adjustment			Total			Unrecognized pension benefit cost			Currency Translation Adjustment			Total
Balance at July 1	$	(6,477	)	$	(48,365	)	$	(54,842	)	$	(5,482	)	$	(63,091	)	$	(68,573	)
Other comprehensive income before reclassifications:
(Loss) Gain on foreign currency translation adjustment		0			(5,504	)		(5,504	)		0			2,949			2,949
Amounts reclassified from AOCI:
Amortization of defined benefit pension actuarial gain (a)		125			0			125			75			0			75
Net current period other comprehensive income (loss)		125			(5,504	)		(5,379	)		75			2,949			3,024
Balance at September 30	$	(6,352	)	$	(53,869	)	$	(60,221	)	$	(5,407	)	$	(60,142	)	$	(65,549	)


	Nine Months Ended September 30, 2021									Nine Months Ended September 30, 2020
	Defined benefit pension plan activity			Currency Translation Adjustment			Total			Defined benefit pension plan activity			Currency Translation Adjustment			Total
Balance at January 1	$	(6,704	)	$	(47,847	)	$	(54,551	)	$	(5,671	)	$	(51,682	)	$	(57,353	)
Other comprehensive loss before reclassifications:
Loss on foreign currency translation adjustment		0			(6,022	)		(6,022	)		0			(8,460	)		(8,460	)
Amounts reclassified from AOCI:
Amortization of defined benefit pension actuarial gain (a)		352			0			352			264			0			264
Net current period other comprehensive income (loss)		352			(6,022	)		(5,670	)		264			(8,460	)		(8,196	)
Balance at September 30	$	(6,352	)	$	(53,869	)	$	(60,221	)	$	(5,407	)	$	(60,142	)	$	(65,549	)

(a)

This AOCI component is included in the computation of net periodic pension costs. See Note E "Pension Plans" for additional information regarding the Plan.

NOTE G – COMPUTATION OF EARNINGS PER SHARE

Basic earnings per share were computed by dividing Net income by the weighted-average number of common shares outstanding for each respective period. Diluted earnings per share were calculated by dividing Net income by the weighted-average of all potentially dilutive common stock that was outstanding during the periods presented.

The calculation of basic and diluted earnings per share for the three and nine-month periods ended September 30, 2021 and 2020 was as follows:


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
Numerator
Net income	$	10,708	$	12,954	$	26,755	$	27,133
Denominator
Determination of shares
Weighted-average common shares outstanding		4,900		4,917		4,909		4,963
Dilutive effect - share-based awards		75		94		41		35
Diluted weighted-average common shares outstanding		4,975		5,011		4,950		4,998
Earnings per common share
Basic	$	2.19	$	2.63	$	5.45	$	5.47
Diluted	$	2.15	$	2.59	$	5.40	$	5.43

For both the three and nine-month periods ended September 30, 2021, 13,000 stock options were excluded from the calculation of diluted earnings per share as the effect would have been anti-dilutive. For the three and nine-month periods ended September 30, 2020, 45,500 and 35,364 stock options, respectively, were excluded from the calculation of diluted earnings per share as the effect would have been anti-dilutive.

NOTE H – GOODWILL AND OTHER INTANGIBLES

The Company’s finite and indefinite-lived intangible assets consist of the following:


	September 30, 2021					December 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Finite-lived intangible assets
Patents	$	4,813	$	(4,806	)	$	4,806	$	(4,806	)
Land use rights		1,324		(451	)		1,286		(396	)
Trademarks		1,857		(1,528	)		1,756		(1,474	)
Technology		7,453		(2,749	)		7,673		(2,402	)
Customer relationships		16,148		(9,122	)		16,441		(8,441	)
	$	31,595	$	(18,656	)	$	31,962	$	(17,519	)
Indefinite-lived intangible assets
Goodwill	$	28,695				$	29,508

The aggregate amortization expense for other intangibles with finite lives for the three and nine-month periods ended September 30, 2021 was $.5 million and $1.4 million, respectively. The aggregate amortization expense for other intangibles with finite lives for the three and nine-month periods ended September 30, 2020 was $.5 million and $1.3 million, respectively. Amortization expense is estimated to be $.4 million for the remainder of 2021, $1.7 million for 2022 and 2023, $1.6 million for 2024 and $1.4 million for 2025. The combined weighted-average remaining amortization period is approximately 11.9 years. The weighted-average remaining amortization period by intangible asset class is as follows: patents, 0 years; land use rights, 54.8 years; trademarks, 6.4 years; technology, 9.3 years; and customer relationships, 8.8 years.

The Company’s measurement date for its annual impairment test for goodwill is October 1st of each year. The Company performs additional interim impairment assessments as circumstances warrant. The Company performs its annual impairment test for goodwill utilizing a discounted cash flow methodology, market comparables, and an overall market capitalization reasonableness test in computing fair value by reporting unit. The Company then compares the fair value of the reporting unit to its carrying value to assess if goodwill has been impaired. Based on the assumptions as to growth, discount rates and the weighting used for each respective valuation methodology, results of the valuations could be significantly different. However, the Company believes that the methodologies and weightings used are reasonable and result in appropriate fair values of the reporting units. The Company’s valuation method uses Level 3 inputs under the fair value hierarchy.

Given the continued decline in the Company’s results in the Asia Pacific region and the uncertainty surrounding COVID-19 including the lingering impacts of the Delta variant, the Company concluded that an indicator of impairment was present and conducted an interim impairment review of its goodwill in the Asia-Pacific reporting unit as of September 30, 2021. The Company reassessed its previous forecasts for this reporting unit which expected increased sales levels in the second half of 2021. However, actual results were lower than forecast due to extended lockdowns and the postponing of projects. The interim impairment assessment was performed utilizing the same methodologies as the annual assessments discussed above and included revised projections, which are subject to various risks and uncertainties, including forecasted revenues, expenses and cash flows. Based on the interim impairment assessment, the Asia-Pacific reporting unit’s fair value exceeded its carrying value by approximately 10% (15% as of October 1, 2020). While the interim test did not indicate an impairment charge was warranted, the reporting unit continues to be at risk of impairment in the future if there is a continued negative impact on the long-term outlook resulting from the continued effects of the COVID-19 pandemic or other factors such as a postponement of government capital spending. Total goodwill associated with this reporting unit was $7.4 million at September 30, 2021. No indicators of impairment were identified for the Company's other reporting units.

The Company’s only intangible asset with an indefinite life is goodwill. The changes in the carrying amount of goodwill, by segment, for the nine months ended September 30, 2021 are as follows:


	USA		The Americas		EMEA			Asia-Pacific			Total
Balance at January 1, 2021	$	3,078	$	4,251	$	14,449		$	7,730		$	29,508
Currency translation		0		43		(558	)		(298	)		(813	)
Balance at September 30, 2021	$	3,078	$	4,294	$	13,891		$	7,432		$	28,695

NOTE I – SHARE-BASED COMPENSATION

Long Term Incentive Plan of 2008 and 2016 Incentive Plan

The Company maintains an equity award program to give the Company a competitive advantage in attracting, retaining, and motivating officers, employees and directors and to provide an incentive to those individuals to increase shareholder value through long-term incentives directly linked to the Company’s performance. Under the Preformed Line Products Company Long Term Incentive Plan of 2008 (the “LTIP”), certain employees, officers, and directors were eligible to receive awards of options, restricted shares and restricted share units (RSUs). The total number of Company common shares reserved for awards under the LTIP was 900,000, of which 800,000 common shares were reserved for RSUs and 100,000 common shares have been reserved for share options. The LTIP was terminated and replaced with the Preformed Line Products Company 2016 Incentive Plan (the “Incentive Plan”) in May 2016 upon approval by the Company’s Shareholders at the 2016 Annual Meeting of Shareholders on May 10, 2016. No further awards will be made under the LTIP and previously granted awards remain outstanding in accordance with their terms. Under the Incentive Plan, certain employees, officers, and directors will be eligible to receive awards of options, restricted shares and RSUs. The total number of Company common shares reserved for awards under the Incentive Plan is 1,000,000 of which 900,000 common shares have been reserved for restricted share awards and 100,000 common shares have been reserved for share options. The Incentive Plan expires on May 10, 2026.

Restricted Share Units

For the regular annual grants, a portion of the RSUs is subject to time-based cliff vesting and a portion is subject to vesting based upon the Company’s performance over a set period for all participants except the CEO. All of the CEO’s regular annual RSUs are subject to vesting based upon the Company’s performance over a set-year period.

The RSUs are offered at no cost to the employees. The fair value of RSUs is based on the market price of a common share on the grant date and the shares underlying the awards are not issued until they vest. Dividends declared are accrued in cash.

A summary of the RSUs outstanding under the LTIP for the nine months ended September 30, 2021 is as follows:


	Restricted Share Units
	Performance and Service Required (1)			Service Required		Total Restricted Share Units			Weighted-Average Grant-Date Fair Value
Nonvested as of January 1, 2021		183,777			15,786		199,563		$	60.33
Granted		51,308			12,285		63,593			71.84
Vested		(56,973	)		0		(56,973	)		73.86
Forfeited		0			0		0			0.00
Nonvested as of September 30, 2021		178,112			28,071		206,183		$	60.49

(1)

Nonvested, performance-based RSUs are reflected above at the maximum performance achievement level.

For time-based RSUs, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award in General and Administrative Expense in the accompanying Statements of Consolidated Income. Compensation expense related to the time-based RSUs for the three and nine-month periods ended September 30, 2021 was $.1 million and $.4 million, respectively. Compensation expense related to the time-based RSUs for the three and nine-month periods ended September 30, 2020 was $.1 million and $.3 million, respectively. As of September 30, 2021, there was $.9 million of total unrecognized compensation cost related to time-based RSUs that is expected to be recognized over the weighted-average remaining period of approximately 2.0 years.

For the performance-based RSUs, the number of RSUs in which the participants will vest depends on the Company’s level of performance measured by growth in either operating or pre-tax income and sales growth over a requisite performance period. Depending on the extent to which the performance criterions are satisfied under the LTIP and the Incentive Plan, the participants are eligible to earn common shares over the vesting period. Performance-based compensation expense for the three and nine-month periods ended September 30, 2021 was $1.2 million and $2.6 million, respectively. Performance-based compensation expense for the three and nine-month periods ended September 30, 2020 was $1.2 million and $2.6 million, respectively. As of September 30, 2021, the remaining compensation expense of $4.7 million for outstanding performance-based RSUs is expected to be recognized over the weighted-average period of approximately 1.8 years.

In the event of a Change in Control (as defined in the LTIP and the Incentive Plan), vesting of the RSUs will be accelerated and all restrictions will lapse. Unvested performance-based awards will vest on a target potential payout.

To satisfy the vesting of its RSU awards, the Company has reserved new shares from its authorized but unissued shares. Any additional awards granted will also be issued from the Company’s authorized but unissued shares.

Share Option Awards

The LTIP permitted and now the Incentive Plan permits the grant of 100,000 options to buy common shares of the Company to certain employees at not less than fair market value of the shares on the date of grant. Options issued to date under the LTIP and the Incentive Plan vest 50% after one year following the date of the grant, 75% after two years, and 100% after three years, and expire from five to ten years from the date of grant. Shares issued as a result of stock option exercises will be funded with the issuance of new shares.

The Company utilizes the Black-Scholes option pricing model for estimating fair values of options. The Black-Scholes model requires assumptions regarding the volatility of the Company’s stock, the expected life of the stock award and the Company’s dividend yield. The Company utilizes historical data in determining these assumptions. The risk-free rate for periods within the contractual life of the option is based on the U.S. zero coupon Treasury yield in effect at the time of grant.

There were 3,000 options granted during the nine-month period ended September 30, 2021 and 25,500 options granted during the nine-month period ended September 30, 2020.

Stock option activity under the Company’s LTIP for nine months ended September 30, 2021 was as follows:


	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (000's)
Outstanding at January 1, 2021		50,950		$	54.81
Granted		3,000		$	69.89
Exercised		(7,000	)	$	47.66
Forfeited		0
Outstanding (vested and expected to vest) at September 30, 2021		46,950		$	56.84		6.7	$	465
Exercisable at September 30, 2021		27,450		$	58.91		5.2	$	234

There were option exercises for 7,000 shares during the nine-month period ended September 30, 2021. During the nine-month period ended September 30, 2020, 3,750 stock options were exercised.

For the three and nine-month periods ended September 30, 2021, the Company recorded compensation expense related to the stock options currently vested of less than $.1 million and $.1 million, respectively. For both the three and nine-month periods ended September 30, 2020, the Company also recorded compensation expense related to the stock options currently vested of less than $.1 million and $.1 million, respectively. The total compensation cost related to nonvested awards not yet recognized at September 30, 2021 is expected to be $.3 million over a weighted-average period of approximately 1.8 years.

Deferred Compensation Plan

The Company maintains a trust, commonly referred to as a rabbi trust, in connection with the Company’s deferred compensation plan. This plan allows for two deferrals. First, Directors make elective deferrals of Director fees payable and held in the rabbi trust. The deferred compensation plan allows the Directors to elect to receive Director fees in common shares of the Company at a later date instead of fees paid each quarter in cash. Second, this plan allows certain Company employees to defer restricted shares or RSUs for future distribution in the form of common shares. Assets of the rabbi trust are consolidated, and the value of the Company’s common shares held in the rabbi trust is classified in Shareholders’ equity and generally accounted for in a manner similar to treasury stock. The Company recognizes the original amount of the deferred compensation (fair value of the deferred stock award at the date of grant) as the basis for recognition in common shares issued to the rabbi trust. Changes in the fair value of amounts owed to certain employees or Directors are not recognized as the Company’s deferred compensation plan does not permit diversification and must be settled by the delivery of a fixed number of the Company’s common shares. As of September 30, 2021, 243,138 shares have been deferred and are being held in the rabbi trust.

NOTE J – FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The Company measures and records certain assets and liabilities at fair value. A fair value hierarchy is used for those assets and liabilities measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of the following three levels:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 Inputs other than Level 1 inputs that are either directly or indirectly observable, which may include:

Quoted prices for similar assets in active markets;

Quoted prices for identical or similar assets or liabilities in inactive markets;

Inputs other than quoted prices that are observable for the asset or liability; and

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 Inputs to the valuation methodology are unobservable and developed using estimates and assumptions developed by the Company which reflect those that a market participant would use.

The following table summarizes the Company’s assets and liabilities, recorded and measured at fair value, on the Company’s Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020:


Description	Balance as of September 30, 2021		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Foreign currency forward contracts	$	475	$	0	$	475	$	0
Total Assets	$	475	$	0	$	475	$	0

Liabilities:
Supplemental profit sharing plan	$	7,167	$	0	$	7,167	$	0
Foreign currency forward contracts		170		0		170		0
Total Liabilities	$	7,337	$	0	$	7,337	$	0


Description	Balance as of December 31, 2020		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Foreign currency forward contracts	$	359	$	0	$	359	$	0
Total Assets	$	359	$	0	$	359	$	0

Liabilities:
Supplemental profit sharing plan	$	7,143	$	0	$	7,143	$	0
Foreign currency forward contracts		56		0		56		0
Total Liabilities	$	7,199	$	0	$	7,199	$	0

The Company operates internationally and enters into intercompany transactions denominated in foreign currencies. Consequently, the Company is subject to market risk arising from exchange rate movements between the dates when foreign currency transactions occur and the dates they are settled. The Company currently uses foreign currency forward contracts to reduce the risk related to some of these transactions. These contracts usually have maturities of 90 days or less and generally require an exchange of foreign currencies for U.S. dollars at maturity at rates stated in the contracts. These contracts are not designated as hedging instruments under U.S. GAAP. Accordingly, the changes in the fair value of the foreign currency forward contracts are recognized in each accounting period in “Other operating expense - net” on the Consolidated Statements of Income together with the transaction gain or loss from the related balance sheet position. For the three and nine-month periods ended September 30, 2021, the Company recognized a net gain of $.3 million and a net loss of $.7 million, respectively, on foreign currency forward contracts. For the three and nine-month periods ended September 30, 2020, the Company recognized net gains of $.1 million and $1.0 million, respectively, on foreign currency forward contracts.

The Company has a non-qualified Supplemental Profit Sharing Plan for its executives and directors. The liability for this unfunded Supplemental Profit Sharing Plan was $7.2 million and $7.1 million at September 30, 2021 and December 31, 2020, respectively. These amounts are recorded within Other noncurrent liabilities on the Company’s Consolidated Balance Sheets. The Supplemental Profit Sharing Plan allows participants the ability to hypothetically invest their proportionate award into various investment options, which primarily include mutual funds. The Company credits earnings, gains and losses to the participants’ deferred compensation account balances based on the investments selected by the participants. The Company measures the fair value of the Supplemental Profit Sharing Plan liability using the market values of the participants’ underlying investment accounts.

NOTE K – RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

On January 1, 2021, the Company adopted Account Standards Update (ASU) 2019-12, Income Taxes (ASC 740) – Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The adoption of ASU 2019-12 did not result in any material adjustments

NOTE L – NEW ACCOUNTING STANDARDS TO BE ADOPTED

In March 2020, the FASB issued Accounting Standards Update ("ASU" No. 2020-04), Reference Rate Reform (“Topic 848”). Certain amendments were provided for in ASU No. 2021-01, Reference Rate Reform (Topic 848) Scope, which was issued in January 2021. ASU 2020-04 provides temporary optional guidance to ease the financial reporting burden associated with the expected market transition from the London Inter-Bank Offer Rate ("LIBOR") to alternative reference rates. This guidance is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2022. The Company is currently assessing which of its various contracts will require an update for a new reference rate and will determine the timing for implementation of this guidance after completing that analysis.

NOTE M – BUSINESS SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance.

The following tables present a summary of the Company’s reportable operating segments for the three and nine months ended September 30, 2021 and 2020. Financial results for the PLP-USA segment include the elimination of all segments’ intercompany profit in inventory.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021			2020
Net sales
PLP-USA	$	66,891	$	53,027	$	185,208		$	153,595
The Americas		18,084		19,914		54,230			54,641
EMEA		26,619		27,034		77,452			68,441
Asia-Pacific		23,786		27,488		69,081			71,267
Total net sales	$	135,380	$	127,463	$	385,971		$	347,944
Intersegment sales
PLP-USA	$	2,947	$	2,786	$	9,112		$	7,787
The Americas		2,556		3,029		7,178			7,706
EMEA		564		892		2,496			2,513
Asia-Pacific		6,533		4,176		14,997			10,180
Total intersegment sales	$	12,600	$	10,883	$	33,783		$	28,186
Income taxes
PLP-USA	$	1,362	$	2,020	$	6,221		$	4,891
The Americas		1,108		875		2,376			2,321
EMEA		512		1,205		1,366			1,735
Asia-Pacific		115		358		198			359
Total income taxes	$	3,097	$	4,458	$	10,161		$	9,306
Net income attributable to Preformed Line Products Company shareholders
PLP-USA	$	6,688	$	6,753	$	18,583		$	16,439
The Americas		2,474		1,908		5,627			4,598
EMEA		697		2,912		2,935			5,495
Asia-Pacific		849		1,381		(390	)		601
Total net income attributable to Preformed Line Products Company shareholders	$	10,708	$	12,954	$	26,755		$	27,133


	September 30, 2021		December 31, 2020
Assets
PLP-USA	$	173,886	$	137,689
The Americas		79,055		75,438
EMEA		107,331		106,922
Asia-Pacific		133,321		141,038
Total identifiable assets	$	493,593	$	461,087

NOTE N – INCOME TAXES

The Company’s effective tax rate was 22% and 26% for the three-month periods ended September 30, 2021 and 2020, respectively. The decrease is primarily related to favorable movement in permanent items including executive retirement compensation. This favorable movement in permanent items also reduced the effective tax rate approximately 3% from the three months ended June 30, 2021. For the nine months ended September 30, 2021 and 2020, the company’s effective tax rate was 28% and 26%, respectively. The increase was due to increased earnings in higher tax jurisdictions.

The Company provides valuation allowances against deferred tax assets when it is more likely than not that some portion or all of its deferred tax assets will not be realized. No significant changes to the valuation allowances were reflected for the three and nine-month periods ended September 30, 2021.

There were no changes to the balances of unrecognized tax benefits on December 31, 2020 and during the nine months ended September 30, 2021.

NOTE O – PRODUCT WARRANTY RESERVE

The Company records an accrual for estimated warranty costs to Costs of products sold in the Statements of Consolidated Income. These amounts are recorded in Accrued expenses and other liabilities on the Company’s Consolidated Balance Sheets. The Company records and accounts for its warranty reserve based on specific claim incidents. Should the Company become aware of a specific potential warranty claim for which liability is probable and reasonably estimable, a specific charge is recorded and accounted for accordingly. Adjustments are made quarterly to the accruals as claim information changes.

The following is a rollforward of the product warranty reserve:


	Nine Months Ended September 30
	2021			2020
Beginning of period balance	$	1,282		$	1,309
Additions charged to income		1,760			247
Warranty usage		(244	)		(37	)
Currency translation		(61	)		(76	)
End of period balance	$	2,737		$	1,443

NOTE P – DEBT ARRANGEMENTS

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 to fund the purchase of a corporate aircraft. In September 2020, the Company made a deposit of $6.8 million toward the purchase of the aircraft which was subsequently refunded in January 2021 and the full amount of the $20.5 million purchase price was drawn on the loan. The aircraft replaces the Company’s previously owned aircraft, which was sold in December 2020. The proceeds of the sale were used to pay off the debt associated with the previously-owned aircraft. The term of the new loan is 120 months at a fixed interest rate of 2.744%. The loan is payable in 119 equal monthly installments, which commenced on March 1, 2021 with a final payment of any outstanding principal and accrued interest due and payable on the final monthly payment date. Of the $19.3 million outstanding on this debt facility at September 30, 2021, $2.1 million was classified as current. The loan is secured by the aircraft.

On April 17, 2020, the Company extended the term on its $65 million credit facility from June 30, 2021 to June 30, 2024 and added its Austrian subsidiary as a borrower on the facility. All other terms remain the same, including the interest rate at LIBOR plus 1.125% unless the Company’s funded debt to Earnings before Interest, Taxes and Depreciation ratio exceeds 2.25 to 1, at which point the LIBOR spread becomes 1.500%. At September 30, 2021, the U.S. borrowed $3.8 million on the facility with a term expiring June 30, 2024. At September 30, 2021, the Company’s Polish subsidiary had borrowed $6.3 million U.S. dollars at a rate of 1.125% plus the Warsaw Interbank Offer Rate with a term expiring June 30, 2024. At September 30, 2021, the Company’s Australian subsidiary had borrowed $3.1 million U.S. dollars, also with a term expiring June 30, 2024. At September 30, 2021, the Company’s Austrian subsidiary had borrowed $1.2 million U.S. dollars with a term expiring June 30, 2024. At September 30, 2021, the interest rates on the U.S., Polish,

Australian and Austrian line of credit agreement were 1.205%, 1.315%, 1.145% and 1.216%, respectively. Under the credit facility, at September 30, 2021, the Company had utilized $14.4 million with $50.6 million available under the line of credit, net of long-term outstanding letters of credit of $.1 million. The line of credit agreement contains, among other provisions, requirements for maintaining levels of net worth and profitability. At September 30, 2021, the Company was in compliance with these covenants.

On April 25, 2019, the Company borrowed $8.0 million U.S. dollars on behalf of its Indonesian subsidiary at a rate of 3.501% with a term expiring on April 30, 2024. At September 30, 2021, $6.1 million was outstanding on this debt facility, of which $.8 million is classified as current.

On August 16, 2021, the Company’s New Zealand subsidiary borrowed $3.8 million U.S. dollars at a rate of 3.150% with a term expiring on August 26, 2026. Of the $3.7 million outstanding on this debt facility at September 30, 2021, $.2 million is classified as current. This loan is secured by the Company’s New Zealand subsidiary’s land and building.

For the periods ended September 30, 2021 and December 31, 2020, the Company’s Asia-Pacific segment had $.2 million and $.6 million, respectively, in restricted cash used to secure bank debt. The restricted cash is shown on the Company’s Consolidated Balance Sheets in Cash and cash equivalents.

NOTE Q – LEASES

The Company regularly enters into leases in the normal course of business. As of September 30, 2021, the leases in effect were related to land, buildings, vehicles, office equipment and other production equipment under operating leases with lease terms of up to 99 years. The Company often has the option to renew lease terms for buildings and other assets. The exercise of lease renewal options are generally at the Company’s sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at the Company’s discretion. The Company evaluates renewal and termination options at the lease commencement date to determine if the Company is reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for the Company’s operating and financing leases as of September 30, 2021 was 18.03 and 3.21 years, respectively.

Lease expense is recognized for these leases on a straight-line basis over the lease term with variable lease payments recognized in the period those payments are incurred. The components of operating and finance lease costs are recognized in Costs and expenses and Interest expense, respectively, on the Company’s Consolidated Statements of Income. The Company’s operating and finance lease costs for the nine months ended September 30, 2021 and 2020 were as follows:


	Nine Months Ended
	September 30, 2021		September 30, 2020
Components of lease expense
Operating lease cost	$	2,187	$	2,193

Finance lease cost
Amortization of right-of-use assets		321		47
Interest on lease liabilities		11		6
Total lease cost	$	2,519	$	2,246

The discount rate implicit within each lease is often not determinable and, therefore, the Company establishes the discount rate based on its incremental borrowing rate. The incremental borrowing rate for the Company’s leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral. The weighted average discount rate used to measure the Company’s operating and finance lease liabilities as of September 30, 2021 was 4.74% and 1.51%, respectively.

Future maturities of the Company’s lease liabilities as of September 30, 2021 are as follows:


	Operating Leases		Finance Leases
2021	$	683	$	93
2022		2,405		242
2023		1,740		150
2024		1,021		102
2025 and thereafter		10,760		104
Total lease payments		16,609		691
Less amount of lease payments representing interest		5,855		8
Total present value of lease payments	$	10,754	$	683

The total minimum sublease rentals under noncancelable subleases to be received through 2023 is $1.9 million.

Supplemental cash flow information related to leases for the nine-month period ended September 30, 2021 was as follows:


	September 30, 2021		September 30, 2020
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,195	$	2,094
Operating cash flows from finance leases		11		6
Financing cash flows from finance leases		317		87

NOTE R – RELATED PARTY TRANSACTIONS

On January 4, 2021, the Company purchased 1,160 shares of the Company from a retired Officer at a price per share of $66.01, which was calculated from a 30-day average market price in connection with the vesting of equity awards. The Audit Committee of the Board of Directors approved this transaction.

On February 3, 2021, the Company purchased 29,676 shares of the Company from current and retired Officers at a price per share of $69.19, which was calculated from a 30-day average market price in connection with the vesting of equity awards. The Audit Committee of the Board of Directors approved this transaction.

On March 10, 2021, the Company purchased 19,497 shares of the Company from current Officers at a price per share of $71.10, which was calculated from a 30-day average market price in connection with the vesting of equity awards. The Audit Committee of the Board of Directors approved this transaction.

On March 15, 2021, the Company purchased 2,257 shares of the Company from a current employee at a price per share of $71.91, which was calculated from a 30-day average market price in connection with the vesting of equity awards. The Audit Committee of the Board of Directors approved this transaction.

On June 9, 2021, the Company purchased 1,500 shares of the Company from a current employee at a price per share of $74.09, which was calculated from a 30-day average market price in connection with the vesting of equity awards. The Audit Committee of the Board of Directors approved this transaction.

On June 15, 2021, the Company purchased 10,000 shares of the Company from a current Officer at a price per share of $75.87, which was calculated from a 30-day average market price in connection with the vesting of equity awards. The Audit Committee of the Board of Directors approved this transaction.

On July 1, 2021, the Company purchased 7,070 shares of the Company from a retired officer at a price per share of $76.87, which was calculated from a 30-day average market price in connection with the vesting of equity awards. The Audit Committee of the Board of Directors approved this transaction.

ITEM 2. 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 consolidated 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.

The MD&A is organized as follows:



Overview



Preface



Results of Operations



Application of Critical Accounting Policies and Estimates



Working Capital, Liquidity and Capital Resources



Recently Adopted Accounting Pronouncements



New Accounting Standards to be Adopted

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 also provide solar hardware systems, mounting hardware for a variety of solar power applications, and fiber optic and copper splice closures. PLPC is 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, manufacturing, 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 30 sales and manufacturing operations in 22 different countries.

We report our segments in four geographic regions: PLP-USA (including corporate), The Americas (includes operations in North and South America without 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, communications and special industries products. Our other three segments, The Americas, EMEA and Asia-Pacific, support our energy, communications and special industries products in each respective geographical region.

The segment managers responsible for each region report directly to the Company’s Chief Executive Officer, 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 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 sales and net income.

PREFACE

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 consolidated financial statements in the assessment of our performance and operating trends.

The following discussion describes our results of operations for the three and nine-month periods ended September 30, 2021. The first quarter of 2020 saw the initial global outbreak of a novel strain of coronavirus (“COVID-19”), which created significant global economic disruption. While the outbreak did not have a material impact on our results, it has continued to create challenges for us in countries that have significant outbreak mitigation strategies, namely countries in our Asia-Pacific business segment.

During the quarter ended September 30, 2021, the resurgence of COVID-19 and the Delta variant has resulted in extended lockdowns and temporary project postponements, primarily in our Asia Pacific segment, which continued to impact results in this segment. There

have been some restrictions to the supply of products since the pandemic began and, during the quarters ended June 30, 2021 and September 30, 2021, we experienced significant raw material and transportation cost inflation that negatively affected our earnings. To offset these increased costs, we implemented an initial price increase in June 2021, but due to our order backlog, these price increases had a moderate effect in offsetting increased costs during the third quarter. A second price increase was implemented in October 2021 to further mitigate cost inflation. Continued cost inflation in these areas through the remainder of 2021 may require further price adjustments going forward to maintain profit margin, and any price increases may have a negative effect on demand.

We may experience other potential inflationary pressures globally and restrictions on operations may continue or expand to other regions, however, we believe that our global supply chain currently remains strong.

Due to the continued uncertainty created by COVID-19, restrictions on our operations, the operations of our customers and the global supply chain, we are continuing to actively monitor the impact of COVID-19 on current and future periods and actively manage costs and our liquidity position to provide additional flexibility while still supporting our customers and their specific needs.

While we expect that the COVID-19 outbreak will continue to bring uncertainty to our business, the businesses of our customers and the global economy, we cannot predict the duration or scope of the COVID-19 pandemic or the magnitude of its impact on our business and results of operations. In addition, the impact of COVID-19 could potentially exacerbate other risks discussed, any of which could have a material adverse effect on the Company. We continue to assess all challenges related to COVID-19 and plan accordingly. The extent of any future impact is dependent upon several factors including those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on March 5, 2021.

Our consolidated financial statements are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. As foreign currencies strengthen against the U.S. dollar, our sales and costs increase as the foreign currency-denominated financial statements translate into more U.S. dollars, and, conversely, when foreign currencies weaken, our sales and costs decrease upon translation into U.S. dollars. The fluctuations of foreign currencies during the three and nine months ended September 30, 2021 had a $2.0 million and $10.0 million favorable effect, respectively, on net sales when compared to the same period in 2020. There were favorable effects of $.2 million and $.5 million on net income for the three and nine-month periods ended September 30, 2021, respectively, as compared to the same period in 2020. On a reportable segment basis, the impact of foreign currency on net sales and net income for the three and nine-month periods ended September 30, 2021 was as follows:


	Foreign Currency Translation Impact
(Thousands of dollars)	Net Sales					Net Income
	Three Months		Nine Months			Three Months		Nine Months

The Americas	$	381	$	(625	)	$	72	$	176
EMEA		993		5,781			90		377
Asia-Pacific		663		4,839			29		(40	)
Total	$	2,037	$	9,995		$	191	$	513

The operating results for the three months ended September 30, 2021 are compared to the same period in 2020. Net sales for the three months ended September 30, 2021 of $135.4 million increased $7.9 million, or 6%, compared to 2020. As a percentage of net sales, gross profit decreased to 31.9% in 2021 from 35.2% in 2020. Gross profit for the three-month periods ended September 30, 2021 and 2020 was $43.2 million and $44.9 million, respectively. Excluding the favorable impact of foreign currency translation, gross profit decreased $2.5 million, or 5%, compared to 2020. Costs and expenses of $30.1 million increased $2.1 million compared to 2020 and included an unfavorable impact from currency translation of $.5 million. Operating income for the three months ended September 30, 2021 was $13.1 million, a decrease of $3.8 million compared to 2020. Net income for the three months ended September 30, 2021 of $10.7 million decreased $13.0 million compared to the three months ended September 30, 2020. The effect of currency translation had favorable impacts of $.2 million on both operating income and net income.

The operating results for the nine months ended September 30, 2021 are compared to the same period in 2020. Net sales for the nine months ended September 30, 2021 of $386.0 million increased $38.0 million, or 11%, compared to 2020. As a percentage of net sales, gross profit decreased to 32.7% in 2021 from 33.7% in 2020. Gross profit for the nine-month periods ended September 30, 2021 and 2020 was $126.4 million and $117.4 million, respectively. Excluding the favorable impact of foreign currency translation, gross profit increased $5.8 million, or 5%, compared to 2020. Costs and expenses of $89.8 million increased $8.8 million compared to 2020 and included an unfavorable impact from currency translation of $2.5 million. Operating income for the nine months ended September 30, 2021 was $36.6 million, an increase of $.2 million compared to 2020. Net income for the nine months ended September 30, 2021 of $26.8 million decreased $.3 million compared to the nine months ended September 30, 2020. The effect of currency translation had favorable impacts of $.7 million and $.4 million on operating income and net income, respectively.

The following table reflects the impact of foreign currency fluctuations on operating income for the three and nine months ended September 30, 2021 and 2020:


	Foreign Currency Impact
	Three Months Ended September 30						Nine Months Ended September 30
(Thousands of dollars)	2021			2020			2021			2020
Operating income	$	13,078		$	16,890		$	36,584		$	36,340
Translation gain		(245	)		0			(714	)		0
Transaction (gain) loss		(50	)		314			124			1,702
Net loss (gain) on forward currency contracts		(198	)		(136	)		740			(1,039	)
Operating income excluding currency impact	$	12,585		$	17,068		$	36,734		$	37,003

Despite the constant changes in the current global economy, and aside from the uncertainty created by the COVID-19 outbreak, we believe our business fundamentals and our financial position are sound and we are strategically well-positioned. We remain focused on assessing our business structure, global facilities and overall capacity in conjunction with the requirements of local manufacturing in the markets that we serve. The growth in PLP-USA net sales will require additional investment to be made within our PLP-USA facilities, both in the form of operational capacity as well as increased warehouse space. These investments in our U.S. operations will allow us to further enhance the service we provide to our U.S. customers beginning in late 2022. If necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, increase sales volumes and deliver value to our customers. We have continued to invest in the business to expand into new markets for the Company, improve efficiency, develop new products, increase our capacity and become an even stronger supplier to our customers. We currently have a bank debt to equity ratio of 20.5% and have the continued ability borrow needed funds at a competitive interest rate under our credit facility.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2021 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2020

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 September 30, 2021 and 2020. The Company’s past operating results are not necessarily indicative of future operating results.


	Three Months Ended September 30
(Thousands of dollars)	2021				2020						Change
Net sales	$	135,380	100.0%		$	127,463		100.0%			$	7,917
Cost of products sold		92,217		68.1		82,549			64.8			9,668
GROSS PROFIT		43,163		31.9		44,914			35.2			(1,751	)
Costs and expenses		30,085		22.2		28,024			22.0			2,061
OPERATING INCOME		13,078		9.7		16,890			13.3			(3,812	)
Other income, net		722		0.5		530			0.4			192
INCOME BEFORE INCOME TAXES		13,800		10.2		17,420			13.7			(3,620	)
Income tax expense		3,097		2.3		4,458			3.5			(1,361	)
NET INCOME		10,703		7.9		12,962			10.2			(2,259	)
Net loss (gain) attributable to noncontrolling interests		5		0.0		(8	)		(0.0	)		13
NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS	$	10,708	7.9%		$	12,954		10.2%			$	(2,246	)

Net sales. Net sales were $135.4 million for the three months ended September 30, 2021, an increase of $7.9 million, or 6%, from the three months ended September 30, 2020. Excluding the favorable effect of currency translation, net sales for the three months ended September 30, 2021 increased $5.9 million compared to the same period in 2020, or 5%, as summarized in the following table:


	Three Months Ended September 30
(Thousands of dollars)	2021		2020		Change			Change Due to Currency Translation		Change Excluding Currency Translation			% change
Net sales
PLP-USA	$	66,891	$	53,027	$	13,864		$	0	$	13,864			26	%
The Americas		18,084		19,914		(1,830	)		381		(2,211	)		(11	)
EMEA		26,619		27,034		(415	)		993		(1,408	)		(5	)
Asia-Pacific		23,786		27,488		(3,702	)		663		(4,365	)		(16	)
Consolidated	$	135,380	$	127,463	$	7,917		$	2,037	$	5,880			5	%

The year-over-year increase in PLP-USA net sales of $13.9 million, or 26%, was primarily due to a volume increase in communication product sales. International net sales for the three months ended September 30, 2021 experienced a favorable impact of $2.0 million when local currencies were converted to U.S. dollars. The following discussion of net sales excludes the effect of currency translation. The Americas net sales of $18.1 million decreased $2.2 million, or 11%, primarily due to a volume decrease in energy product sales. EMEA net sales of $26.6 million decreased $1.4 million, or 5%, primarily due to a volume decrease in energy product sales within the region. Asia-Pacific net sales of $23.8 million decreased $4.4 million, or 16%, compared to 2020 primarily due to a volume decrease in special industries products, partially resulting from the continuing effects of the disruption to the region's economy caused by the COVID-19 pandemic.

Gross profit. Gross profit was $43.2 million and $44.9 million for the three-month periods ended September 30, 2021 and 2020, respectively. Excluding the favorable effect of currency translation, gross profit decreased $2.5 million, or 5%, as summarized in the following table:


	Three Months Ended September 30
(Thousands of dollars)	2021		2020		Change			Change Due to Currency Translation		Change Excluding Currency Translation			% change
Gross profit
PLP-USA	$	22,589	$	21,613	$	976		$	0	$	976			5	%
The Americas		6,283		6,535		(252	)		130		(382	)		(6	)
EMEA		7,522		10,021		(2,499	)		352		(2,851	)		(28	)
Asia-Pacific		6,769		6,745		24			236		(212	)		(3	)
Consolidated	$	43,163	$	44,914	$	(1,751	)	$	718	$	(2,469	)		(5	)%

PLP-USA gross profit of $22.6 million increased $1.0 million compared to the same period in 2020 mainly as a result of increased sales volume of $13.9 million, offset by the negative impact of rising commodity prices, freight costs, inflation and an increase in warranty costs. Incremental price increases were enacted in the PLP-USA region in June and October of 2021 to further mitigate the ongoing inflation and commodity price increases. International gross profit for the three months ended September 30, 2021 was favorably impacted by $.7 million when local currencies were translated to U.S. dollars. The following discussion of gross profit excludes the effects of currency translation. The Americas gross profit decrease of $.4 million was primarily the result of a year-over-year sales decrease in the region combined with an unfavorable shift in sales product mix. EMEA’s gross profit decreased $2.9 million, mainly due to margin pressure associated with rising commodity prices, freight costs and inflation. Asia-Pacific’s gross profit decrease was the result of a year-over-year reduction in sales of $4.4 million combined with commodity price increases, partially mitigated by ongoing cost containment initiatives to offset the continued negative effects of the COVID-19 pandemic.

Costs and expenses. Costs and expenses of $30.1 million for the three months ended September 30, 2021 increased $2.1 million, or 7%. Excluding the unfavorable effect of currency translation, costs and expenses increased $1.6 million, or 6%, as summarized in the following table:


	Three Months Ended September 30
(Thousands of dollars)	2021		2020		Change			Change Due to Currency Translation		Change Excluding Currency Translation			% change
Costs and expenses
PLP-USA	$	14,506	$	12,872	$	1,634		$	0	$	1,634			13	%
The Americas		3,607		3,707		(100	)		49		(149	)		(4	)
EMEA		6,299		5,863		436			225		211			4
Asia-Pacific		5,673		5,582		91			199		(108	)		(2	)
Consolidated	$	30,085	$	28,024	$	2,061		$	473	$	1,588			6	%

PLP-USA costs and expenses of $14.5 million for the three months ended September 30, 2021 increased when compared to the same period in 2020 due to increases in commissions expense and professional fees combined with net year-over-year unfavorable transactional foreign currency losses. On a consolidated basis, costs and expenses for the three months ended September 30, 2021 were unfavorably impacted by $.5 million when local currencies were translated to U.S. dollars. The following discussion of costs and expenses excludes the effect of currency translation. The Americas costs and expenses of $3.6 million were relatively flat when compared to the three-month period ended September 30, 2021. EMEA costs and expenses of $6.3 million increased $.2 million mainly due to higher personnel-related expenses. Asia-Pacific costs and expenses were relatively flat year-over-year.

Other income, net. Other income, net for the three-month periods ended September 30, 2021 and 2020 was $.7 million and $.5 million, respectively. Other income, net for the three-month period ended September 30, 2021 includes a pre-tax recovery of approximately $1.0 million related to a recent Brazilian Supreme Court decision that granted the Company the right to recover, through offset of federal tax liabilities, certain tax over-payments collected by the Brazilian government. For the three-month period ended September 30, 2020, the Company recorded $.7 million of non-recurring COVID-19 subsidies received by various subsidiaries around the world.

Income taxes. Income taxes for the three months ended September 30, 2021 and 2020 were $3.1 million and $4.5 million, respectively, based on pre-tax income of $13.8 million and $17.3 million, respectively. The effective tax rate for the three-month periods ended September 30, 2021 and 2020 was 22% and 26%, respectively. The decrease in the effective tax rate is primarily related to favorable movement in permanent items including executive retirement compensation.

Net income. As a result of the preceding items, net income for the three months ended September 30, 2021 was $10.7 million, compared to $13.0 million for the three months ended September 30, 2020, a decrease of $2.2 million as summarized in the following table:


	Three Months Ended September 30
(Thousands of dollars)	2021		2020		Change			Change Due to Currency Translation		Change Excluding Currency Translation			% change
Net income
PLP-USA	$	6,688	$	6,753	$	(65	)	$	0	$	(65	)		(1	)	%
The Americas		2,474		1,908		566			72		494			26
EMEA		697		2,912		(2,215	)		90		(2,305	)		(79	)
Asia-Pacific		849		1,381		(532	)		29		(561	)		(41	)
Consolidated	$	10,708	$	12,954	$	(2,246	)	$	191	$	(2,437	)		(19	)	%

PLP-USA’s net income for the three months ended September 30, 2021 decreased $.1 million compared to the same period in 2020, primarily due to an decrease in operating income of $.7 million combined with an increase in net other expense of $.1 million, partially offset by a decrease in income tax expense of $.7 million. The following discussion of net income excludes the effect of currency translation. The Americas net income increased $.5 million mainly as a result of a pre-tax recovery in Brazil of $1.0 million. EMEA net income decreased $2.3 million mainly as a result of a $3.0 million decrease in operating income, partially offset by a decrease in income tax expense of $.7 million. Asia-Pacific net income decreased $.6 largely due to a decrease in operating income of $.1 million combined with an increase of other expense, net of $.8 million, which was due to non-recurring subsidy income recorded during the three months ended September 30, 2020. A decrease in income tax expense of $.3 million partially offset the negative impacts on net income.

NINE MONTHS ENDED SEPTEMBER 30, 2021 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2020

The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the nine months ended September 30, 2021 and 2020. The Company’s past operating results are not necessarily indicative of future operating results.


	Nine Months Ended September 30
(Thousands of dollars)	2021					2020				Change
Net sales	$	385,971		100.0	%	$	347,944	100.0	%	$	38,027
Cost of products sold		259,577		67.3			230,554	66.3			29,023
GROSS PROFIT		126,394		32.7			117,390	33.7			9,004
Costs and expenses		89,810		23.3			81,050	23.3			8,760
OPERATING INCOME		36,584		9.5			36,340	10.4			244
Other income, net		347		0.1			69	0.0			278
INCOME BEFORE INCOME TAXES		36,931		9.6			36,409	10.5			522
Income tax expense		10,161		2.6			9,306	2.7			855
NET INCOME	$	26,770		6.9		$	27,103	7.8		$	(333	)
Net (gain) loss attributable to noncontrolling interests		(15	)	(0.0	)		30	0.0			(45	)
NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS	$	26,755		6.9	%	$	27,133	7.8	%	$	(378	)

Net sales. Net sales were $386.0 million for the nine months ended September 30, 2021, an increase of $38.0 million, or 11%, from the nine months ended September 30, 2020. Excluding the favorable effect of currency translation, net sales for the nine months ended September 30, 2021 increased $28.0 million compared to the same period in 2020, or 8%, as summarized in the following table:


	Nine Months Ended September 30
(Thousands of dollars)	2021		2020		Change			Change Due to Currency Translation			Change Excluding Currency Translation			% change
Net sales
PLP-USA	$	185,208	$	153,595	$	31,613		$	0			31,613			21	%
The Americas		54,230		54,641		(411	)		(625	)		214			0
EMEA		77,452		68,441		9,011			5,781			3,230			5
Asia-Pacific		69,081		71,267		(2,186	)		4,839			(7,025	)		(10	)
Consolidated	$	385,971	$	347,944	$	38,027		$	9,995		$	28,032			8	%

The year-over-year increase in PLP-USA net sales of $31.6 million, or 21%, was primarily due to a volume increase in communication product sales. International net sales for the nine months ended September 30, 2021 experienced a favorable impact of $10.0 million when local currencies were converted to U.S. dollars. The following discussion of net sales excludes the net effect of currency translation. The Americas net sales of $54.2 million increased $.2 million, primarily due to a volume increase in communication product sales, partially offset by decreases in energy product sales. EMEA net sales of $77.5 million increased $3.2 million, or 5%, primarily due to a volume increase in communication product sales within the region. Asia-Pacific net sales of $69.1 million decreased $7.0 million, or 10%, compared to 2020 primarily due to a year-over-year volume decrease across all product lines, partially resulting from the continuing effects of the disruption to the region's economy caused by the COVID-19 pandemic.

Gross profit. Gross profit was $126.4 million and $117.4 million for the nine-month periods ended September 30, 2021 and 2020, respectively. Excluding the favorable effect of currency translation, gross profit increased $5.8 million, or 5%, as summarized in the following table:


	Nine Months Ended September 30
(Thousands of dollars)	2021		2020		Change		Change Due to Currency Translation			Change Excluding Currency Translation			% change
Gross profit
PLP-USA	$	66,493	$	59,379	$	7,114	$	0		$	7,114			12	%
The Americas		17,719		17,658		61		(52	)		113			1
EMEA		23,981		23,621		360		1,933			(1,573	)		(7	)
Asia-Pacific		18,201		16,732		1,469		1,338			131			1
Consolidated	$	126,394	$	117,390	$	9,004	$	3,219		$	5,785			5	%

PLP-USA gross profit of $66.5 million increased $7.1 million compared to the same period in 2020 as a result of increased sales volume of $31.6 million combined with a product sales mix shift to higher margin product and continued cost containment within labor and manufacturing expense, partially offset by commodity price increases and inflation. International gross profit for the nine months ended September 30, 2021 was favorably impacted by $3.2 million when local currencies were translated to U.S. dollars. The following discussion of gross profit excludes the effects of currency translation. The Americas gross profit increase of $.1 million was largely the result of a product margin improvement in the region due to sales product mix. EMEA’s gross profit decreased $1.6 million, primarily as a result an increase in sales of $3.2 million and a shift to higher sales volume in higher margin communication products. Despite the year-over-year decrease in sales, Asia-Pacific’s gross profit remained relatively flat, partially as a result of continued cost containment measures to mitigate the ongoing effects of COVID-19.

Costs and expenses. Costs and expenses of $89.8 million for the nine months ended September 30, 2021 increased $8.8 million, or 11%. Excluding the unfavorable effect of currency translation, costs and expenses increased $6.3 million, or 8%, as summarized in the following table:


	Nine Months Ended September 30
(Thousands of dollars)	2021		2020		Change		Change Due to Currency Translation			Change Excluding Currency Translation		% change
Costs and expenses
PLP-USA	$	41,649	$	38,193	$	3,456	$	0		$	3,456		9	%
The Americas		10,652		10,419		233		(258	)		491		5
EMEA		19,549		16,420		3,129		1,413			1,716		10
Asia-Pacific		17,960		16,018		1,942		1,351			591		4
Consolidated	$	89,810	$	81,050	$	8,760	$	2,506		$	6,254		8	%

PLP-USA costs and expenses of $41.6 million for the nine months ended September 30, 2021 increased $3.5 million when compared to the same period in 2020 mainly due to increased commission expenses and higher personnel-related costs. On a consolidated basis, costs and expenses for the nine months ended September 30, 2021 were unfavorably impacted by $2.5 million when local currencies were translated to U.S. dollars. The following discussion of costs and expenses excludes the effect of currency translation. The Americas costs and expenses of $10.7 million increased $.5 million for the nine months ended September 30, 2021 compared to the same period in 2020 primarily due to higher net transactional foreign currency losses. EMEA costs and expenses of $19.5 million increased $1.7 million mainly due to higher personnel-related expenses, which were partially offset by a decrease in foreign currency net transactional gains and lower travel and entertainment expenses. Asia-Pacific saw an increase of $.6 million primarily due to increases in personnel related costs.

Other income, net. Other income, net for the nine-month periods ended September 30, 2021 and 2020 was $.5 million and $.1 million, respectively. Other income, net for the nine-month period ended September 30, 2021 includes a pre-tax recovery of approximately $1.0 million related to a recent Brazilian Supreme Court decision that granted the Company the right to recover, through offset of federal tax liabilities, certain tax overpayments collected by the Brazilian government. For the nine-month period ended September 30, 2020, the Company recorded $.8 million of non-recurring COVID-19 subsidies received by various subsidiaries around the world.

Income taxes. Income taxes for the nine months ended September 30, 2021 and 2020 were $10.2 million and $9.0 million, respectively, based on pre-tax income of $36.9 million and $36.4 million, respectively. The effective tax rate for the nine months ended September 30, 2021 and 2020 was 28% and 26%, respectively. The increase in the effective tax rate was due increased earnings in higher tax jurisdictions.

On January 1, 2021, the Company adopted Accounting Standards Update (ASU) 2019-12, Income Taxes ("ASC 740") – Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The adoption of ASU 2019-12 did not result in any material adjustments.

Net income. As a result of the preceding items, net income for the nine months ended September 30, 2021 was $26.8 million, compared to $27.1 million for the nine months ended September 30, 2020, a decrease of $.4 million as summarized in the following table:


	Nine Months Ended September 30
(Thousands of dollars)	2021			2020		Change			Change Due to Currency Translation			Change Excluding Currency Translation			% change
Net income
PLP-USA	$	18,583		$	16,439	$	2,144		$	0		$	2,144			13	%
The Americas		5,627			4,598		1,029			176			853			19
EMEA		2,935			5,495		(2,560	)		377			(2,937	)		(53	)
Asia-Pacific		(390	)		601		(991	)		(40	)		(951	)		158
Consolidated	$	26,755		$	27,133	$	(378	)	$	513		$	(891	)		(3	)%

PLP-USA’s net income for the nine months ended September 30, 2021 increased $2.1 million, or 13%, compared to the same period in 2020, primarily due to an increase in operating income of $3.7 million, partially offset by an increase in other expense, net of $.3 million combined with an increase in income tax expense of $1.3 million. The following discussion of net income excludes the effect of currency translation. The Americas net income increased $.9 million, mainly as a result of a pre-tax recovery of approximately $1.0 million in Brazil. EMEA net income decreased $2.9 million as a result of a $3.3 million decrease in operating income combined with a $.1 million increase in other operating expense, net, of $.1 million, partially offset by $.5 million year-over-year decrease in income tax expense. Asia-Pacific net income decreased $1.0 million mainly due to a $.5 million decrease in operating expense combined with an increase in other expense, net of $.7 million, partially offset by a decrease in income tax expense of $.2 million.

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, 2020 filed on March 5, 2021 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 nine months of 2021, we used cash of $12.6 million for capital expenditures. We ended the first nine months of 2021 with $38.3 million of cash, cash equivalents and restricted cash (collectively, “Cash”). Our Cash is held in various locations throughout the world. At September 30, 2021, the majority of our Cash was held outside the United States (“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 September 30, 2021 was $63.2 million. At September 30, 2021, our unused availability under our line of credit was $50.6 million and our bank debt to equity percentage was 20.5%. On April 17, 2020, we further extended the term on the line of credit to June 30, 2024. All other terms remain the same, including the interest rate at LIBOR plus 1.125% unless our funded debt to Earnings before Interest, Taxes and Depreciation ratio exceeds 2.25 to 1, at which point the LIBOR spread becomes 1.500%. The line of credit agreement contains, among other provisions, requirements for maintaining levels of net worth and funded debt-to-earnings before interest, taxes, depreciation and amortization along with an interest coverage ratio. The net worth and profitability requirements are calculated based on the line of credit agreement. At September 30, 2021 and December 31, 2020, we were in compliance with these covenants.

We expect that our major source of funding for 2021 and beyond will be our operating cash flows and our existing Cash as well as our line of credit agreement. We earn a significant amount of our operating income outside the U.S., which, except for current earnings in certain jurisdictions, is deemed to be indefinitely reinvested in foreign jurisdictions.

As we cannot predict the duration or scope of the continuing COVID-19 pandemic and its impact on our customers and suppliers, the negative financial impact to our financial results and liquidity cannot be reasonably estimated but could be material. We are actively managing the business to maintain cash flow and a favorable liquidity position. We believe that our future cash flows, together with these factors, will be more than sufficient to cover debt repayments, other contractual obligations, capital expenditures and dividends for the next twelve 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 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

Cash decreased $2.9 million compared to the same period in 2020. Net Cash provided by operating activities was $24.1 million. The most significant net investing and financing uses of Cash in the nine months ended September 30, 2021 were payments of long-term debt of $81.6 million, capital expenditures of $12.6 million, share repurchases of $5.3 million and dividends paid of $3.1 million, partially offset by net debt and notes payable proceeds of $70.5 million. Currency had a positive $.8 million impact on Cash when translating foreign denominated financial statements to U.S. dollars.

Net Cash provided from operating activities for the nine months ended September 30, 2021 was $24.1 million compared to $33.6 million in the comparable prior year nine-month period. The $9.5 million decrease was primarily a result of an increase in Cash used by operating assets (net of operating liabilities) of $9.2 million, which included the $6.5 million deposit on the new corporate aircraft that was paid in the fourth quarter of 2020 and fully refunded in 2021, combined with a decrease in net income of $.3 million.

Net Cash used in investing activities of $12.6 million for the nine months ended September 30, 2021 decreased $11.6 million when compared to Cash used in investing activities in the nine months ended September 30, 2020 of $24.2 million. The change was primarily related to a year-over-year decrease in capital expenditures.

Cash used in financing activities for the nine months ended September 30, 2021 was $19.1 million compared to $6.5 million during the nine months ended September 30, 2020. The $12.6 million increase was primarily the result of a net increase in net debt payments, net of borrowings in 2021 compared to 2020 of $15.9 million, partially offset by a decrease in net share repurchases and issuances of $3.2 million.

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 Q of the Notes to the Consolidated Financial Statements for more information.

As of September 30, 2021, the Company had total outstanding guarantees of $8.7 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 September 30, 2021, the Company had total outstanding letters of credit of $3.2 million.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

See Note K of the Notes to the Consolidated Financial Statements

NEW ACCOUNTING STANDARDS TO BE ADOPTED

See Note L of the Notes to the Consolidated Financial Statements

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. 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. 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.

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 has a slow growth rate in mature markets such as the U.S., Canada, Australia and Western Europe and may grow slowly or experience prolonged delay in developing regions despite expanding power needs;



The potential impact of global economic conditions 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, terrorism, changes in diplomatic and trade relationships and public health concerns (including viral outbreaks such as COVID-19). The COVID-19 pandemic has significantly impacted worldwide economic conditions and has and will continue to have an adverse effect on the Company’s operations and businesses as government authorities impose mandatory closures, work-from-home orders and social distancing protocols along with other unknown potential restrictions. The duration and scope of the COVID-19 pandemic cannot be predicted, and therefore, any anticipated negative financial impact to the Company’s operating results cannot be reasonably estimated;



The ability of the Company’s customers to raise funds needed to build the infrastructure their customers require;



Technological developments that affect longer-term trends for communication lines, such as enhancements to 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, particularly in light of recent price increases;



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 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 may be associated with the purchase of these products. The Company’s supply chain has and could continue to be disrupted by the COVID-19 pandemic which could have a material, adverse effect on the ability to secure raw materials and supplies;



Strikes, labor disruptions and other fluctuations in labor costs;



Changes in significant government regulations affecting environmental compliances or other litigation matters;



Security breaches, malicious computer viruses or other disruptions to the Company’s information technology structure or on the economy as a whole;



The telecommunication market’s continued deployment of Fiber-to-the-Premises;



The effects of the possible enactment of the Made in America Tax Plan which could increase the U.S. federal corporate income tax rates on U.S. income and, also, reduce tax credits from foreign sourced income; 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, 2020 which was filed on March 5, 2021. The impact of COVID-19 could potentially exacerbate other risks discussed, any of which could have a material impact on the Company. The situation continues to change and additional impacts may arise that the Company is not aware of currently.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company operates manufacturing facilities and offices around the world and uses fixed and floating rate debt to finance the Company’s global operations. As a result, the Company is subject to business risks inherent in non-U.S. activities, including political and economic uncertainty, import and export limitations and market risk related to changes in interest rates and foreign currency exchange rates. The Company believes that the political and economic risks related to the Company’s international operations are mitigated due to the geographic diversity in which the Company’s international operations are located.

Effective July 1, 2018, Argentina was designated as a highly inflationary economy as the projected three-year cumulative inflation rate exceeded 100%. As such, beginning July 1, 2018, the functional currency for the Company’s Argentina subsidiary became the U.S. dollar. Revenue from operations in Argentina represented less than 1% of total consolidated net sales for both nine-month periods ended September 30, 2021 and 2020.

As of September 30, 2021, the Company had $.3 million in net foreign currency forward exchange contracts outstanding. The Company does not hold derivatives for trading purposes.

The Company’s primary currency rate exposures are related to foreign denominated debt, intercompany debt, foreign denominated receivables and payables and cash and short-term investments. A hypothetical 10% change in currency rates would have a favorable/unfavorable impact on fair values on such instruments of $5.2 million and a $1.2 million favorable/unfavorable impact on income before at September 30, 2021.

The Company is exposed to market risk, including changes in interest rates and foreign exchange rates since we conduct business in a variety of foreign currencies. The Company is subject to interest rate risk on its variable rate revolving credit facilities and term notes, which consisted of long-term borrowings, which includes the current portion, of $45.5 million at September 30, 2021. A 100 basis point increase in the interest rate would have resulted in an increase in interest expense of approximately $.6 million for the nine months ended September 30, 2021.

As discussed elsewhere in this report, the outbreak of COVID-19 could negatively impact the Company’s business and results of operations. Since we cannot predict the duration or scope of the COVID-19 pandemic, the potential negative financial impact to the Company’s results cannot be reasonably estimated but could be material.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s Principal Executive Officer and Principal Accounting Officer have concluded that the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended, were effective as of September 30, 2021.

Changes in Internal Control over Financial Reporting

There were no other changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f)) of the Securities and Exchange Act of 1934, as amended, during the three-month period ended September 30, 2021 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is and may in the future be party to a variety of pending legal proceedings and claims arising in the normal course of business, including, but not limited to, litigation relating to employment, workers’ compensation, product liability, environmental and intellectual property. The Company has liability insurance to cover many of these claims.

The Company and its subsidiaries, Helix Uniformed Ltd. (“Helix”) and Preformed Line Products (Canada) Limited (“PLPC Canada”), were each named, jointly and severally, with each of SNC-Lavalin ATP, Inc. (“SNC ATP”), HD Supply Canada Inc., by its trade names HD Supply Power Solutions and HD Supply Utilities (“HD Supply”), and Anixter Power Solutions Canada Inc. (the corporate successor to HD Supply), “Anixter” and, together with the Company, PLPC Canada, Helix, SNC ATP and HD Supply, the (“Defendants”) in a complaint filed by Altalink, L.P. (the “Plaintiff”) in the Court of Queen’s Bench of Alberta in Alberta, Canada in November 2016 (the “Complaint”).

ITEM 1A. RISK FACTORS

There were no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 5, 2021. In addition, the impact of COVID-19 could potentially exacerbate other risks discussed, any of which could have a material adverse effect on the Company. The situation continues to change and additional impacts may arise that the Company is not aware of currently.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 28, 2021, the Board of Directors authorized a plan to repurchase up to an additional 191,163 of Preformed Line Products Company common shares, resulting in a total of 250,000 shares available for repurchase with no expiration date. The following table reflects repurchases for the three-month period ended September 30, 2021:


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that may yet be Purchased under the Plans or Programs
July		7,070	$	76.87		7,070		242,930
August		0		0.00		7,070		242,930
September		0		0.00		7,070		242,930
Total		7,070

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS




31.1		Certifications of the Principal Executive Officer, Robert G. Ruhlman, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2		Certifications of the Principal Accounting Officer, Andrew S. Klaus, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1		Certifications of the Principal Executive Officer, Robert G. Ruhlman, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished.

32.2		Certifications of the Principal Accounting Officer, Andrew S. Klaus, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished.

101.INS		Inline XBRL Instance Document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data (embedded with the Inline XBRL document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


October 29, 2021		/s/ Robert G. Ruhlman
		Robert G. Ruhlman
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)

October 29, 2021		/s/ Andrew S. Klaus
		Andrew S. Klaus
		Chief Financial Officer
		(Principal Accounting Officer)