PREFORMED LINE PRODUCTS CO (PLPC)

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 financial statements better understand our results of operations, financial condition and present business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and related notes included elsewhere in this report.

OVERVIEW

Preformed Line Products Company (the “Company”, “PLPC”, “we”, “us”, or “our”) was incorporated in Ohio in 1947. We are an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information (data communication), and other similar industries. Our primary products support, protect, connect, terminate, and secure cables and wires. We provide helical solutions, string hardware, connectors, insulators, fiber optic and copper splice closures, solar hardware mounting applications, and electric vehicle charging station foundations. We also provide aerial drone inspection services for utility assets including transmission and distribution power lines, substations, and generation facilities. We are respected around the world for quality, dependability and market-leading customer service. Our goal is to continue to achieve profitable growth as a leader in the research, innovation, development, manufacture, and marketing of technically advanced products and services related to energy, communications and cable systems and to take advantage of this leadership position to sell additional quality products in familiar markets. We have sales and manufacturing operations in 20 different countries.

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

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

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

PREFACE

The following discussion describes our results of operations for the three and six months ended June 30, 2026 and 2025. Our consolidated financial statements are prepared in conformity with United States ("U.S.") generally accepted accounting principles ("GAAP"). Our discussions of the financial results include non-GAAP measures (e.g., foreign currency impact) to provide additional information concerning our financial results and provide information that we believe is useful to the readers of our financial statements in the assessment of our performance and operating trends.

Net sales of $212.7 million increased $43.1 million for the three months ended June 30, 2026 year-over-year and net sales of $389.0 million increased $70.8 million for the six months ended June 30, 2026 year-over-year, mainly due to an increase in energy and, to a lesser extent, communication sales, led by PLP-USA. While these sales amounts are the highest in the Company's history, tariffs, especially Section 232 tariffs, and geopolitical developments continue to present headwinds related to raw material imports and commodity prices, impacting essential inputs like steel, aluminum and plastic resins. While we continue to manage trade matters and commodity prices proactively, further tariff increases or geopolitical events may give rise to inflationary pressures, which may require further price adjustments to maintain profit margin, and any price increases may have a negative effect on demand. Please see Note 5 of the Notes to the Consolidated Financial Statements for further considerations on tariffs and refund process as a result of the February 2026 Supreme Court ruling.

Our financial statements are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. The fluctuations of foreign currencies during the three and six months ended June 30, 2026 had a favorable impact on net sales of $6.0 million and $13.2 million, respectively. The fluctuations on foreign currencies had a favorable impact of $0.5 million and $0.7 million on net income for the three and six months ended June 30, 2026. The fluctuations of foreign currencies during the three and six months ended June 30, 2025 had an unfavorable impact on net sales of $0.5 million and $4.9 million, respectively. The fluctuations on foreign currencies during the three and six months ended June 30, 2025 had a de minimis impact and unfavorable impact of $0.3 million on net income, respectively. On a reportable segment basis, the impact of foreign currency translation on net sales and net income for the three and six months ended June 30, 2026, was as follows:

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While uncertainty remains in the global economy due to trade matters and geopolitical instability, we believe our business portfolio, which is focused on key megatrends impacting both the power and telecommunications markets, as well as our significant U.S. manufacturing footprint, and financial position, are sound and strategically well-positioned. We remain focused on assessing our global market opportunities and overall manufacturing capacity in conjunction with the requirements of local manufacturing in the markets that we serve. As necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, including tariff impacts, increase sales volume and deliver value to our customers. We closely monitor developments in trade policy and geo-political instability and actively evaluate strategies to mitigate the impact of tariffs or supply chain constraints, including sourcing alternatives, where needed. We have continued to invest in the business to expand into new markets for the Company, evaluate strategic mergers and acquisitions, improve efficiency, develop new products and increase our capacity. As of June 30, 2026, our liquidity remains strong with our bank debt to equity percentage at 8.6%. We can borrow needed funds at a competitive interest rate under the Facility.

RESULTS OF OPERATIONS

The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the three months ended June 30, 2026 and 2025. The Company’s past operating results are not necessarily indicative of future operating results.

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Net sales. In 2026, net sales were $212.7 million, an increase of $43.1 million, or 25%, compared to 2025. Excluding the effect of currency translation, net sales increased 22% as summarized in the following table:

The increase in PLP-USA net sales of $25.0 million, or 32%, was primarily due to higher volumes in energy sales, and to a lesser extent, communications sales. International net sales for the three months ended June 30, 2026 were favorably affected by $6.0 million when local currencies were converted to U.S. dollars. The following discussion of changes in net sales excludes the effect of currency translation. The Americas net sales of $34.0 million increased $2.8 million, or 10%, primarily due to higher volumes in energy sales mainly due to the acquisition of Delta Star in May 2026. EMEA net sales of $41.7 million increased $8.2 million primarily due to higher volumes in energy sales. Asia-Pacific net sales of $32.7 million increased $1.2 million, or 4%, primarily due to higher volumes in energy sales and special industry sales.

Gross profit. Gross profit of $73.0 million for 2026 increased $17.6 million, or 32%, compared to 2025. Excluding the effect of currency translation, gross profit increased $15.7 million, or 28%, as summarized in the following table:

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

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

OVERVIEW

Preformed Line Products Company (the “Company”, “PLPC”, “we”, “us”, or “our”) was incorporated in Ohio in 1947. We are an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information (data communication), and other similar industries. Our primary products support, protect, connect, terminate, and secure cables and wires. We provide helical solutions, string hardware, connectors, insulators, fiber optic and copper splice closures, solar hardware mounting applications, and electric vehicle charging station foundations. We also provide aerial drone inspection services for utility assets including transmission and distribution power lines, substations, and generation facilities. We are respected around the world for quality, dependability and market-leading customer service. Our goal is to continue to achieve profitable growth as a leader in the research, innovation, development, manufacture, and marketing of technically advanced products and services related to energy, communications and cable systems and to take advantage of this leadership position to sell additional quality products in familiar markets. We have sales and manufacturing operations in 20 different countries.

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

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

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

MARKET OVERVIEW

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

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

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

We believe that we are well positioned to supply the needs of the world’s diverse energy and communication markets as a result of our focused portfolio and strategic operational footprint, including expansion from recent acquisitions, investment in new manufacturing facilities and product designs and technologies.

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PREFACE

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

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

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

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

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

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

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2025 RESULTS OF OPERATIONS COMPARED TO 2024

Net sales. In 2025, net sales were $669.3 million, an increase of $75.6 million, or 13%, compared to

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