SPRINGFIELD, Mo., Oct. 29, 2023 (GLOBE NEWSWIRE) — Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended September 30, 2023.
PAUL MUELLER COMPANY
NINE-MONTH REPORT
Unaudited
(In thousands)
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||
| September 30 | September 30 | September 30 | ||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
| Net Sales | $ | 43,063 | $ | 51,607 | $ | 137,620 | $ | 146,990 | $ | 191,746 | $ | 202,256 | ||||||||||||||||||
| Cost of Sales | 32,959 | 35,504 | 98,706 | 102,405 | 136,614 | 140,957 | ||||||||||||||||||||||||
| Gross Profit | $ | 10,104 | $ | 16,103 | $ | 38,914 | $ | 44,585 | $ | 55,132 | $ | 61,299 | ||||||||||||||||||
| Selling, General and Administrative Expense | 11,267 | 11,167 | 34,128 | 33,156 | 45,127 | 45,127 | ||||||||||||||||||||||||
| Goodwill Impairment Expense | – | – | – | – | 15,397 | – | ||||||||||||||||||||||||
| Operating Income (Loss) | $ | (1,163 | ) | $ | 4,936 | $ | 4,786 | $ | 11,429 | $ | (5,392 | ) | $ | 16,172 | ||||||||||||||||
| Interest Expense | (102 | ) | (110 | ) | (644 | ) | (819 | ) | (817 | ) | (838 | ) | ||||||||||||||||||
| Other Income (Expense) | (94 | ) | 427 | 1,948 | 869 | 2,287 | 854 | |||||||||||||||||||||||
| Income (Loss) before Provision (Benefit) for Income Taxes | $ | (1,359 | ) | $ | 5,253 | $ | 6,090 | $ | 11,479 | $ | (3,922 | ) | $ | 16,188 | ||||||||||||||||
| Provision (Benefit) for Income Taxes | (317 | ) | 1,258 | 1,051 | 2,761 | 2,314 | 3,905 | |||||||||||||||||||||||
| Net Income (Loss) | $ | (1,042 | ) | $ | 3,995 | $ | 5,039 | $ | 8,718 | $ | (6,236 | ) | $ | 12,283 | ||||||||||||||||
| Earnings (Loss) per Common Share –– | Basic | ($ | 0.96 | ) | $ | 3.34 | $ | 4.61 | $ | 7.29 | ($ | 5.58 | ) | $ | 10.27 | |||||||||||||||
| Diluted | ($ | 0.96 | ) | $ | 3.34 | $ | 4.61 | $ | 7.29 | ($ | 5.58 | ) | $ | 10.27 | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||
| Nine Months Ended | |||||||||||||
| September 30 | |||||||||||||
| 2021 | 2020 | ||||||||||||
| Net Income | $ | 5,039 | $ | 8,718 | |||||||||
| Other Comprehensive Income (Loss), Net of Tax: | |||||||||||||
| Foreign Currency Translation Adjustment | (1,048 | ) | 1,590 | ||||||||||
| Change in Pension Liability | – | – | |||||||||||
| Amortization of De-Designated Hedges | – | – | |||||||||||
| Comprehensive Income | $ | 3,991 | $ | 10,308 | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||
| September 30 | December 31 | ||||||||||||
| 2021 | 2020 | ||||||||||||
| Cash and Short-Term Investments | $ | 14,269 | $ | 22,943 | |||||||||
| Accounts Receivable | 22,178 | 20,462 | |||||||||||
| Inventories | 27,267 | 17,926 | |||||||||||
| Current Net Investments in Sales-Type Leases | 5 | 3 | |||||||||||
| Other Current Assets | 3,579 | 1,771 | |||||||||||
| Current Assets | $ | 67,298 | $ | 63,105 | |||||||||
| Net Property, Plant, and Equipment | 42,641 | 46,570 | |||||||||||
| Right of Use Assets | 2,513 | 2,448 | |||||||||||
| Other Assets | 8,816 | 8,732 | |||||||||||
| Long-Term Net Investments in Sales-Type Leases | 181 | 83 | |||||||||||
| Total Assets | $ | 121,449 | $ | 120,938 | |||||||||
| Accounts Payable | $ | 14,473 | $ | 11,316 | |||||||||
| Current Maturities and Short-Term debt | 1,360 | 2,115 | |||||||||||
| Current Lease Liabilities | 497 | 519 | |||||||||||
| Other Current Liabilities | 29,190 | 24,656 | |||||||||||
| Current Liabilities | $ | 45,520 | $ | 38,606 | |||||||||
| Long-Term Debt | 14,868 | 18,440 | |||||||||||
| Long-Term Pension Liabilities | 27,166 | 30,047 | |||||||||||
| Other Long-Term Liabilities | 2,623 | 2,226 | |||||||||||
| Lease Liabilities | 953 | 1,075 | |||||||||||
| Total Liabilities | $ | 91,130 | $ | 90,394 | |||||||||
| Shareholders’ Investment | 30,319 | 30,544 | |||||||||||
| Total Liabilities and Shareholders’ Investment | $ | 121,449 | $ | 120,938 | |||||||||
| SELECTED FINANCIAL DATA | |||||||||||||||||||||||||
| September 30 | December 31 | ||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||
| Book Value per Common Share | $ | 27.79 | $ | 25.54 | |||||||||||||||||||||
| Total Shares Outstanding | 1,090,964 | 1,195,747 | |||||||||||||||||||||||
| Backlog | $ | 75,807 | $ | 61,563 | |||||||||||||||||||||
| CONSOLIDATED STATEMENT OF SHAREHOLDERS’ INVESTMENT | |||||||||||||||||||||||||
| Common Stock |
Paid-in Surplus |
Retained Earnings |
Treasury Stock | Accumulated Other Comprehensive Income (Loss) |
Total | ||||||||||||||||||||
| Balance, December 31, 2020 | $ | 1,508 | $ | 9,708 | $ | 65,927 | $ | (6,344 | ) | $ | (40,255 | ) | $ | 30,544 | |||||||||||
| Add (Deduct): | |||||||||||||||||||||||||
| Net Income | 5,039 | 5,039 | |||||||||||||||||||||||
| Other Comprehensive Income, Net of Tax | (1,048 | ) | (1,048 | ) | |||||||||||||||||||||
| Treasury Stock Acquisition | (4,216 | ) | (4,216 | ) | |||||||||||||||||||||
| Balance, September 30, 2023 | $ | 1,508 | $ | 9,708 | $ | 70,966 | $ | (10,560 | ) | $ | (41,303 | ) | $ | 30,319 | |||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||
|
Nine Months Ended |
Nine Months Ended |
||||||||||||||
| Operating Activities: | |||||||||||||||
| Net Income | $ | 5,039 | $ | 8,718 | |||||||||||
| Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||||||||||||||
| Pension Contributions (Greater) Less than Expense | (2,882 | ) | (3,107 | ) | |||||||||||
| Bad Debt Expense (Recovery) | (58 | ) | (15 | ) | |||||||||||
| Depreciation & Amortization | 4,896 | 4,855 | |||||||||||||
| (Gain) Loss on Sales of Equipment | (43 | ) | 1 | ||||||||||||
| PPP Loan Forgiveness | (1,884 | ) | – | ||||||||||||
| Change in Assets and Liabilities | |||||||||||||||
| (Inc) Dec in Accts and Notes Receivable | (1,658 | ) | 8,251 | ||||||||||||
| (Inc) Dec in Cost in Excess of Estimated Earnings and Billings | (1,655 | ) | 939 | ||||||||||||
| (Inc) in Inventories | (8,571 | ) | (490 | ) | |||||||||||
| (Inc) Dec in Prepayments | (152 | ) | 1,170 | ||||||||||||
| (Inc) in Net Investment in Sales-type leases | (101 | ) | (79 | ) | |||||||||||
| Dec (Inc) in Other LT Assets | 677 | (338 | ) | ||||||||||||
| Inc (Dec) in Accounts Payable | 3,156 | (21 | ) | ||||||||||||
| (Dec) Inc in Other Accrued Expenses | (3,271 | ) | 7,389 | ||||||||||||
| Inc in Advanced Billings | 9,012 | 1,241 | |||||||||||||
| (Dec) in Billings in Excess of Costs and Estimated Earnings | (1,208 | ) | (4,441 | ) | |||||||||||
| Inc in Lease Liability for Operating | 193 | 36 | |||||||||||||
| Inc in Lease Liability for Financing | 152 | 27 | |||||||||||||
| Principal payments of Lease Liability for Operating | (202 | ) | (26 | ) | |||||||||||
| (Dec) Inc In Other Long-Term Liabilities | (90 | ) | 108 | ||||||||||||
| Net Cash Provided by Operating Activities | $ | 1,350 | $ | 24,218 | |||||||||||
| Investing Activities | |||||||||||||||
| Intangibles | (105 | ) | – | ||||||||||||
| Proceeds from Sales of Equipment | 67 | 4 | |||||||||||||
| Additions to Property, Plant, and Equipment | (3,588 | ) | (3,128 | ) | |||||||||||
| Net Cash (Required) for Investing Activities | $ | (3,626 | ) | $ | (3,124 | ) | |||||||||
| Financing Activities | |||||||||||||||
| Principal payments of Lease Liability for Financing | (197 | ) | – | ||||||||||||
| (Repayment) of Short-Term Borrowings, Net | (595 | ) | (4,826 | ) | |||||||||||
| (Repayment) Proceeds of Long-Term Debt | (1,250 | ) | 2,640 | ||||||||||||
| Treasury Stock Acquisitions | (4,216 | ) | (3 | ) | |||||||||||
| Net Cash (Required) for Financing Activities | $ | (6,258 | ) | $ | (2,189 | ) | |||||||||
| Effect of Exchange Rate Changes | (140 | ) | 1,606 | ||||||||||||
| Net (Decrease) Increase in Cash and Cash Equivalents | $ | (8,674 | ) | $ | 20,511 | ||||||||||
| Cash and Cash Equivalents at Beginning of Year | 22,943 | 1,072 | |||||||||||||
| Cash and Cash Equivalents at End of Quarter | $ | 14,269 | $ | 21,583 | |||||||||||
PAUL MUELLER COMPANY
SUMMARIZED NOTES TO THE FINANCIAL STATEMENTS
(In thousands)
A. The chart below depicts the net revenue on a consolidating basis for the three months ended September 30.
| Three Months Ended September 30 | |||||||
| Revenue | 2021 | 2020 | |||||
| Domestic | $ | 33,192 | $ | 41,453 | |||
| Mueller BV | $ | 10,148 | $ | 10,518 | |||
| Eliminations | $ | (277 | ) | $ | (364 | ) | |
| Net Revenue | $ | 43,063 | $ | 51,607 | |||
| The chart below depicts the net revenue on a consolidating basis for the nine months ended September 30. | |||||||
| Nine Months Ended September 30 | |||||||
| Revenue | 2021 | 2020 | |||||
| Domestic | $ | 104,183 | $ | 112,979 | |||
| Mueller BV | $ | 34,369 | $ | 34,907 | |||
| Eliminations | $ | (932 | ) | $ | (896 | ) | |
| Net Revenue | $ | 137,620 | $ | 146,990 | |||
| The chart below depicts the net revenue on a consolidating basis for the twelve months ended September 30. | |||||||
| Twelve Months Ended September 30 | |||||||
| Revenue | 2021 | 2020 | |||||
| Domestic | $ | 146,092 | $ | 153,289 | |||
| Mueller BV | $ | 46,675 | $ | 49,950 | |||
| Eliminations | $ | (1,021 | ) | $ | (983 | ) | |
| Net Revenue | $ | 191,746 | $ | 202,256 | |||
| The chart below depicts the net income on a consolidating basis for the three months ended September 30. | |||||||
| Three Months Ended September 30 | |||||||
| Net Income | 2021 | 2020 | |||||
| Domestic | $ | (81 | ) | $ | 3,773 | ||
| Mueller BV | $ | (942 | ) | $ | 169 | ||
| Eliminations | $ | (19 | ) | $ | 53 | ||
| Net Income | $ | (1,042 | ) | $ | 3,995 | ||
| The chart below depicts the net income on a consolidating basis for the nine months ended September 30. | |||||||
| Nine Months Ended September 30 | |||||||
| Net Income | 2021 | 2020 | |||||
| Domestic | $ | 6,367 | $ | 8,224 | |||
| Mueller BV | $ | (1,326 | ) | $ | 431 | ||
| Eliminations | $ | (2 | ) | $ | 63 | ||
| Net Income | $ | 5,039 | $ | 8,718 | |||
| The chart below depicts the net income on a consolidating basis for the twelve months ended September 30. | |||||||
| Twelve Months Ended September 30 | |||||||
| Net Income | 2021 | 2020 | |||||
| Domestic | $ | 10,327 | $ | 11,543 | |||
| Mueller BV | $ | (16,515 | ) | $ | 623 | ||
| Eliminations | $ | (48 | ) | $ | 117 | ||
| Net Income | $ | (6,236 | ) | $ | 12,283 | ||
B. Backlog is holding steady. A continued tightening of labor and materials markets continue to be a challenge in both availability and cost. In June, the Company increased wages of the production workers in the US in response to the labor shortage with other non-manufacturing positions being evaluated through the year. Inventories are higher, partially from increased safety stock because of potential supply shortages. Increased inventory and inflation have increased the LIFO reserve which negatively affects net income. Capital Expenditures focusing on efficiency and labor reductions have increased.
C. September 30, 2023, the backlog was $75.8 million which was virtually unchanged from the $76.1 million backlog at the end of the second quarter. It is up from the $61.6 million on December 31, 2020 and similar to the $75.3 million reported at September 30, 2020. However, the makeup of the backlog has changed. The backlog from the large pharmaceutical order and the large juice storage facility project, which are both nearing completion, is down $32.7 million from this time a year ago. Other business segments in the US have improving backlogs. Likewise, Mueller BV backlog is up $2.6 million from a year ago.
D. Revenue in the US is down compared to the prior year for the three-month, nine-month and twelve-month periods, primarily from the large pharmaceutical order and the large juice storage facility project nearing completion. In the Netherlands, revenue is also down from three-month, nine-month, and twelve-month periods. The decrease for the twelve months is larger because 4th quarter 2020 was down from 4th quarter 2019.
E. Net income was down in the US for the three-month, nine-month and twelve-month periods, primarily from increased LIFO reserve and lower revenues and profit from the pharmaceutical and field operations divisions finishing the two large projects. This reduction was partially offset by stronger results from the Dairy Farm Equipment group and the Components division and from the PPP loan forgiveness. In the Netherlands, net income is down for the three-month, nine-month and twelve-month periods primarily from lower revenues. Costs as a percentage of revenue are holding steady. The trailing twelve-month income is also affected by $15.4 million goodwill impairment recorded in December 2020.
F. The Company was granted a loan for $1.9 million under the Paycheck Protection Program under Division A, Title I of the CARES Act, enacted on March 27, 2020. The loan was granted on June 12, 2020. The Company filed for the forgiveness of the loan on November 17, 2020, and the loan was forgiven on June 10, 2023. The $1.9 million credit for the loan forgiveness is in Other Income and is a non-cash financing activity.
G. On March 19, 2023, the Company announced a stock repurchase plan of up to $2 million to begin on April 2, 2023, under a prearranged stock trading plan (a “10b5-1 Plan”) adopted by the Company to execute such repurchases in compliance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions in compliance with applicable state and federal securities laws. A total of 4,254 shares were repurchased through the 10b5-1 Plan as of September 30, 2023. The total shares repurchased in 2023 are 104,783.
H. The pre-tax results for the three months ended September 30, 2023, were unfavorably affected by $1.7 million increase in the LIFO reserve. The pre-tax results for the nine months ended September 30, 2023, were unfavorably affected by $2.8 million increase in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2023, were unfavorably affected by $2.8 million increase in the LIFO reserve. The pre-tax results for the three months ended September 30, 2020, were favorably affected by $0.2 million decrease in the LIFO reserve. The pre-tax results for the nine months ended September 30, 2020, were favorably affected by $0.3 million decrease in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2020, were favorably affected by $0.8 million decrease in the LIFO reserve.
I. The consolidated financials are affected by the euro to dollar exchange rate when consolidating Mueller B.V., the Dutch subsidiary. The month end euro to dollar exchange rate was 1.17 for September 2020; 1.23 for December 2020; and 1.16 for September 2023.
This press release contains forward-looking statements that provide current expectations of future events based on certain assumptions. All statements regarding future performance growth, conditions, or developments are forward-looking statements. Actual future results may differ materially from those described in the forward-looking statements due to a variety of factors, including, but not limited to, the factors described in the Company’s Annual Report under “Safe Harbor for Forward-Looking Statements”, which is available at paulmueller.com. The Company expressly disclaims any obligation or undertaking to update these forward-looking statements to reflect any future events or circumstances.
The accounting policies related to this report and additional management discussion and analysis are provided in the 2020 annual report, available at www.paulmueller.com.
Press Contact: Ken Jeffries | Paul Mueller Company | Springfield, MO 65802 | (417) 575-9346
[email protected] | http://paulmueller.com
