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Shares of Preformed Line Products Company PLPC have gained 22.4% since reporting earnings for the fourth quarter of 2024. This compares with the S&P 500 index’s 2.7% growth over the same time frame. Over the past month, the stock has risen 8.7% against the S&P 500’s 7.3% decline.
Strong Q4 Performance Amid Market Challenges
For the fourth quarter of 2024, Preformed Line Products reported net sales of $167.1 million, reflecting a 15% increase from $145.6 million in the same quarter last year. The company also saw a 65% surge in diluted earnings per share (EPS) to $2.13, up from $1.29 in the fourth quarter of 2023. Gross profit as a percentage of net sales improved by 30 basis points to 33.3%, driven by higher sales volumes and a favorable product mix.
Despite the robust quarterly results, 2024 revenue fell 11% year over year to $593.7 million from $669.7 million in 2023. This decline was attributed primarily to a slowdown in U.S. energy and communications end-market spending, inventory de-stocking, and delays in Broadband Equity, Access, and Deployment Program stimulus funding. Consequently, full-year diluted EPS dropped 41% to $7.50 from $12.68 in 2023.
Preformed Line Products Company Price, Consensus and EPS Surprise
Preformed Line Products Company price-consensus-eps-surprise-chart | Preformed Line Products Company Quote
Other Key Business Metrics
Operating income for the fourth quarter was $17.5 million, more than doubling from $6.9 million a year earlier. This improvement was driven by strong revenue growth and lower operating expenses. The company’s free cash flow stood at $20.6 million in the fourth quarter of 2024, representing a 197% free cash flow conversion of net income. For the full year, the free cash flow amounted to $56.2 million, helping the company reduce its total debt by $33.7 million.
From a geographic perspective, U.S. sales were affected by ongoing customer inventory reductions, while international markets provided some stability. The energy segment, which represents the largest share of PLPC’s business, saw a 12% year-over-year sales increase in the fourth quarter of 2024. The communications segment followed with an 18% rise, reflecting improved market conditions after a prolonged de-stocking phase.
Management Commentary
Rob Ruhlman, executive chairman, noted that the strong fourth-quarter performance suggests the company is approaching the end of inventory de-stocking in its primary end markets. He acknowledged the challenges faced throughout 2024 but expressed confidence in the company's ability to navigate industry fluctuations.