PLPC is 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. PLPC’s products include formed wire and related hardware products, protective closures, data communication cabinets, plastic products and other products. The Company’s primary products support, protect, connect, terminate and secure cables and wires. It also provides solar hardware systems and mounting hardware for a variety of solar power applications.
The markets that PLPC operates in are highly competitive. The principal methods of competition within those markets are price, performance, and service.
|1. 3M Company||MMM||68.67 Billion|
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|3. General Cable Corp.||BGC||2.51 Billion|
|4. Corning Inc.||GLW||33.01 Billion|
telecommunications, Environmental Technologies, Specialty Materials and Life Sciences. The telecommunications segment produces optical fiber and cable, and hardware and equipment products for the worldwide telecommunications industry. The telecommunications segment represented 26% of Corning’s sales for 2010.
Overall, PLPC is a strong competitor within the markets that it operates. They believe they are the world’s largest manufacturer of formed wire products for energy and communications markets. They believe they maintain a strong market share position in protective closures. The fiber optic closure market is one of the most competitive product areas for PLPC with a number of primary competitors and several smaller niche competitors that compete at all levels in the marketplace. However, they believe that they are one of four leading suppliers of fiber optic closures.
Medium - Since PLPC operates in multiple segments, they experience different competition in each segment. They primary experience three points of competition: price, performance, and service. There are a number of primary competitors and several smaller niche competitors that compete at all levels in the marketplace. Domestically, there are several competitors for formed wire products. Although, it has other competitors in many of the countries where it has plants, the formed wire products compete against other pole line hardware products manufactured by other companies. The Company’s data communication competitors range from assemblers of low cost, low quality components, to well-established multinational corporations.
Medieum - PLPC has nearly 100 domestic and international patents, many of which are on core products. It would be difficult for a new entrant to enter the market and reach a scale that adversely affects Preformed Line Products core business.
Low - Because the product is quentesential to its users and few alternatives exist to substitute their product the threat of substitutes is low.
Low - No customer accounts for more than 10% of revenues. If PLPC were to lose a customer it would not have a material impact on revenues and because of PLPC competitive advantages it is unlikely for its customers to pursue competitors.
Low - Few of Preformed's raw material needs are serviced by sole supplier's. The limited numbers of sole supplier’s do not offer a unique product that PLPC could not receive from alternative suppliers.
Below is a chart that summarizes some of the key executives and officers at Preformed Line Products Company. Along with their name, included is age, positions held at PLPC, year they started as officer, and total compensation. 
Preformed Line Products Company has a variety of raw materials that they use in their products. These include galvanized wire, stainless steel, aluminum covered steel wire, aluminum re-draw rod, plastic resins, glass-filled plastic compounds, neoprene rubbers and aluminum castings. In addition they also use a few other products like fasteners, packaging materials and communications cable. The costs of these raw materials influence the prices of PLPC's products. However it is difficult for them to pass on cost increases into their prices. This means if their is an increase in the raw material prices then the company's profitability may take a hit. In an effort to stabilize some of their costs they use contracts for most plastic resins, and wire and re-draw rod. Another way they control their costs is by using numerous different supplies for some of their products. However they rely solely on one manufacturer other certain raw materials which poses a risk of increasing costs and affecting profitability also. Overall they competitively price their products, and in order to maintain high profitability they use contracts and a variety of supplies for certain raw materials. 
PLPC distributes its products on a worldwide basis. Their international and domestic operations are very similar in nature, they sell the same types of products to similar customers and face comparable competition. Their three primary regions of operation are Asia-Pacific region, Europe, Middle East and Africa region, and Americas region. They have wholly- own operations in Australia, Brazil, Canada, China, Great Britain, Indonesia, Malaysia, Mexico, New Zealand, Poland, South Africa, Spain and Thailand. Additionally they export to other markets that they don't have a standing presence in including Bangladesh, Philippines, South Korea, Bolivia, Colombia, Ecuador, Guyana, Surinam, Venezuela, Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Neth. Antilles, St. Lucia, St. Vincent, Trinidad & Tobago, British Virgin Islands, Anquilla, Barbados, Cayman Islands, Dominican Republic, Bahamas, Aruba, Jamaica, Bermuda, and Antiqua. Overall they have many manufacturing facilities all over the globe, and to cover the areas where they lack this physical presence they use a network of qualified representatives, distributors, and export houses. 
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PLP has operations in fourteen countries divided into three geographic regions, of which PLP has a total of sixteen factories.
Profitability is driven by: 1) Margins, 2) Turnover and 3) Leverage.
The overall trend has been very constant for the past eight years. Margins, turnover and leverage have all finished near their recent highs with have helped profitability the last couple of years.
The company is expecting geographical expansion and further penetration of their product line to continue sustain their profitability going forward.
Note on ROCE: ROCE was able to outperform ROA because leverage has increased after the company’s acquisitions.
Margins have fluctuated little since 2003. This is a very impressive feat considering the recent global recession. This shows that that their product is in high demand and they have a reasonable amount of pricing power. Their entire industry is growing (especially in emerging markets) which allows them to keep a steady profit margin while at the same time growing revenues.
The company's turnover has been generally increasing over the past 10 years. Total asset turnover has increased from 1.1 in 2011 to 1.3 in 2010. Fixed Assets has been fueling the majority of this move. Fixed Asset Turnover has increased from 3.3 in 2002 to 4.7 in 2010. Current assets have also benefited a little - increasing to 2.2 from 2.1.
PLPC, as measured by their Cash Conversion Cycle, has been becoming more efficient over the years. In 2002, PLPC required 142 days of short term financing this has now shrunk to 125 days. The major driver of CCC has been their Days Inventory and Days Receivables. Both of these metrics have been decreasing except for a slight up-tick in 2009. This is easily explainable by the recession - people bought less goods thus increasing inventory and took longer to pay down debt thus increasing receivables. Days Accounts Payable has been steadily increasing from 27 in 2002 to 33 in 2010. This means PLPC is better using their suppliers for short term financing.
Solvency Looking at the chart on the right, you can see that PLPC's solvency position has not fluctuated very much over the last 10 years. The heat map gives you an idea of how the metrics have trended overtime. Although the solvency metrics have trended downwards in recent years, they are still well within safe operating limits.
Leverage The company has become more leveraged in recent years. You can see this in Asset to Equity increasing from 1.3 to 1.41, Liabilities to Assets increasing from .23 to .29 and Liabilities to Equity increasing from .3 to .41. The leverage ratios are still very low and in two cases lower than one - this signifies a very stable company and they are not at risk of default.
The company's dividend yield is 1.1% compared to .95% to 2.2% for its competitors. Generally, their profitably ranks 3rd compared with all of its competitors. PLPC's ROA is 8.8% compared to 15% for GLW and 14.5% for MMM. The reason for their lower profitability is that they sell to the utility market while GLW and MMM sells to a more specialized product base.
Solvency and Liquidity
PLPC's solvency is third compared to its competitors. Regardless of the absolute numbers, they are solvent and they don't have to worry about short term payments. They are also less leveraged than the majority of their peers.
PLPC is relatively undervalued compared to its competitors. The most likely reason for this is that they do not have any analysts covering the company. The company can also be considered more risky because they are a small cap company and only have a limited product line. If the company was covered by more analysts and the revenue stream was part of a larger company then they would probably be valued higher.