Company: PLPC
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0001628280-25-012640
Chunk: 67

Company: PREFORMED LINE PRODUCTS CO
Filing Date: 2025-03-13
Form: 10-K
Item: Item 8
Chunk 67
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 well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

 Quantitative Impairment Assessment of GoodwillDescription of the MatterAt December 31, 2024, the Company’s goodwill was $26.7 million. As discussed in Note 1 and Note 12 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level or more frequently if impairment indicators arise. Goodwill is tested for impairment utilizing a combination of the income approach, which uses a discounted cash flow methodology, and the market approach, which uses comparable company market multiples, to estimate the fair value of each reporting unit.Auditing management’s quantitative goodwill impairment assessment was complex due to the use of valuation methodologies to determine the fair value of a reporting unit. The fair value estimate is impacted by assumptions, such as revenue growth rates and operating margins, which are affected by expectations of future market or economic conditions.

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How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment process. This included controls over management’s review of the significant assumptions underlying the fair value determination described above.To test the estimated fair value of the Company’s reporting unit, we performed audit procedures that included, among others, assessing the valuation methodologies used, testing the  assumptions, and testing the completeness and accuracy of underlying data used by the Company in its analysis. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions. We involved our internal valuation specialists to review the valuation methodologies and certain assumptions. We also assessed the appropriateness of the disclosures in the consolidated financial statements.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2008.