SPRINGFIELD, Mo., July 29, 2016 (GLOBE NEWSWIRE) — Paul Mueller Company (OTC:MUEL) today announced earnings for the quarter ended June 30, 2016.
| PAUL MUELLER COMPANY | ||||||||||||||||||||||||||||||
| SIX-MONTH REPORT | ||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||||||||||
| (In thousands) | Three Months Ended | Six Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| June 30 | June 30 | June 30 | ||||||||||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||
| Net Sales | $ | 45,524 | $ | 49,710 | $ | 86,685 | $ | 94,353 | $ | 170,927 | $ | 196,228 | ||||||||||||||||||
| Cost of Sales | 32,720 | 34,692 | 61,565 | 67,133 | 120,794 | 143,943 | ||||||||||||||||||||||||
| Gross Profit | $ | 12,804 | $ | 15,018 | $ | 25,120 | $ | 27,220 | $ | 50,133 | $ | 52,285 | ||||||||||||||||||
| Selling, General and Administrative Expense | 11,856 | 10,214 | 22,721 | 20,028 | 41,728 | 41,298 | ||||||||||||||||||||||||
| Operating Income | $ | 948 | $ | 4,804 | $ | 2,399 | $ | 7,192 | $ | 8,405 | $ | 10,987 | ||||||||||||||||||
| Interest Expense | (63 | ) | (100 | ) | (99 | ) | (221 | ) | (240 | ) | (629 | ) | ||||||||||||||||||
| Other Income (Expense) | (63 | ) | (317 | ) | (111 | ) | (326 | ) | (8 | ) | (450 | ) | ||||||||||||||||||
| Income before Provision for Income Taxes | $ | 822 | $ | 4,387 | $ | 2,189 | $ | 6,645 | $ | 8,157 | $ | 9,908 | ||||||||||||||||||
| Provision (Benefit) for Income Taxes | 60 | 1,360 | 516 | 2,012 | 2,513 | 2,988 | ||||||||||||||||||||||||
| Net Income | $ | 762 | $ | 3,027 | $ | 1,673 | $ | 4,633 | $ | 5,644 | $ | 6,920 | ||||||||||||||||||
| Earnings per Common Share –– | Basic | $ | 0.63 | $ | 2.45 | $ | 1.37 | $ | 3.76 | $ | 4.59 | $ | 5.62 | |||||||||||||||||
| Diluted | $ | 0.63 | $ | 2.45 | $ | 1.37 | $ | 3.74 | $ | 4.59 | $ | 5.60 | ||||||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||||||||||||||||
| Six Months Ended | ||||||||||||||||||||||||||||||
| June 30 | ||||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||||
| Net Income | $ | 1,673 | $ | 4,633 | ||||||||||||||||||||||||||
| Other Comprehensive Income, Net of Tax: | ||||||||||||||||||||||||||||||
| Foreign Currency Translation Adjustment | 554 | (2,510 | ) | |||||||||||||||||||||||||||
| Change in Pension Liability | 1,000 | – | ||||||||||||||||||||||||||||
| Amortization of De-Designated Hedges | 10 | (6 | ) | |||||||||||||||||||||||||||
| Comprehensive Income | $ | 3,237 | $ | 2,117 | ||||||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||||||||||||||||||
| June 30 | December 31 | |||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||||
| Accounts Receivable | $ | 24,654 | $ | 22,587 | ||||||||||||||||||||||||||
| Inventories | 30,372 | 31,941 | ||||||||||||||||||||||||||||
| Other Current Assets | 2,035 | 8,312 | ||||||||||||||||||||||||||||
| Current Assets | $ | 57,061 | $ | 62,840 | ||||||||||||||||||||||||||
| Net Property, Plant, and Equipment | 35,931 | 35,718 | ||||||||||||||||||||||||||||
| Other Assets | 25,804 | 20,038 | ||||||||||||||||||||||||||||
| Total Assets | $ | 118,796 | $ | 118,596 | ||||||||||||||||||||||||||
| Accounts Payable | $ | 11,621 | $ | 11,672 | ||||||||||||||||||||||||||
| Current Maturities and Short-Term debt | 14,152 | 10,868 | ||||||||||||||||||||||||||||
| Other Current Liabilities | 22,285 | 25,775 | ||||||||||||||||||||||||||||
| Current Liabilities | $ | 48,058 | $ | 48,315 | ||||||||||||||||||||||||||
| Long-Term Debt | 4,837 | 5,003 | ||||||||||||||||||||||||||||
| Long-Term Pension Liabilities | 30,815 | 32,527 | ||||||||||||||||||||||||||||
| Other Long-Term Liabilities | 969 | 1,004 | ||||||||||||||||||||||||||||
| Total Liabilities | 84,679 | 86,849 | ||||||||||||||||||||||||||||
| Shareholders’ Investment | 34,117 | 31,747 | ||||||||||||||||||||||||||||
| Total Liabilities and Shareholders’ Investment | $ | 118,796 | $ | 118,596 | ||||||||||||||||||||||||||
| SELECTED FINANCIAL DATA | ||||||||||||||||||||||||||||||
| June 30 | December 31 | |||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||||
| Book Value per Common Share | $ | 28.23 | $ | 25.66 | ||||||||||||||||||||||||||
| Total Shares Outstanding | 1,208,460 | 1,237,220 | ||||||||||||||||||||||||||||
| Backlog | $ | 56,869 | $ | 58,385 | ||||||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF SHAREHOLDERS’ INVESTMENT | ||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) |
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| Common Stock |
Paid-in Surplus |
Retained Earnings |
Treasury Stock |
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| Total | ||||||||||||||||||||||||||||||
| Balance, December 31, 2015 | $ | 1,508 | $ | 9,708 | $ | 63,863 | $ | (5,114 | ) | $ | (38,218 | ) | $ | 31,747 | ||||||||||||||||
| Add (Deduct): | ||||||||||||||||||||||||||||||
| Net Income | 1,673 | 1,673 | ||||||||||||||||||||||||||||
| Other Comprehensive Income, Net of Tax | 1,564 | 1,564 | ||||||||||||||||||||||||||||
| Treasury Stock Acquisition | (867 | ) | (867 | ) | ||||||||||||||||||||||||||
| Deferred Compensation | ||||||||||||||||||||||||||||||
| Balance, June 30, 2016 | $ | 1,508 | $ | 9,708 | $ | 65,536 | $ | (5,981 | ) | $ | (36,654 | ) | $ | 34,117 | ||||||||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2016 |
Six Months Ended June 30, 2015 |
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| Operating Activities: | ||||||||||||||||||||||||||||||
| Net Income | $ | 1,673 | $ | 4,633 | ||||||||||||||||||||||||||
| Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||||||||||||||||||||||||
| Pension Contributions (Greater) Less than Expense | (713 | ) | (71 | ) | ||||||||||||||||||||||||||
| Bad Debt Expense (Recovery) | 12 | 36 | ||||||||||||||||||||||||||||
| Depreciation & Amortization | 3,008 | 2,782 | ||||||||||||||||||||||||||||
| (Gain) Loss on Sales of Equipment | (12 | ) | (27 | ) | ||||||||||||||||||||||||||
| Other | (43 | ) | (44 | ) | ||||||||||||||||||||||||||
| Change in Assets and Liabilities | ||||||||||||||||||||||||||||||
| (Inc) Dec in Accts and Notes Receivable | (1,861 | ) | (602 | ) | ||||||||||||||||||||||||||
| (Inc) Dec in Cost in Excess of Estimated Earnings and Billings | (38 | ) | 115 | |||||||||||||||||||||||||||
| (Inc) Dec in Inventories | 1,831 | (7,799 | ) | |||||||||||||||||||||||||||
| (Inc) Dec in Prepayments | 811 | 530 | ||||||||||||||||||||||||||||
| (Inc) Dec Other Assets | – | 405 | ||||||||||||||||||||||||||||
| Inc (Dec) in Accounts Payable | (339 | ) | 6,283 | |||||||||||||||||||||||||||
| Inc (Dec) Other Accrued Expenses | (759 | ) | 628 | |||||||||||||||||||||||||||
| Inc (Dec) Advanced Billings | (2,440 | ) | 2,658 | |||||||||||||||||||||||||||
| Inc (Dec) in Billings in Excess of Costs and Estimated Earnings | (367 | ) | (177 | ) | ||||||||||||||||||||||||||
| Inc (Dec) In Other Long-Term Liabilities | (485 | ) | (182 | ) | ||||||||||||||||||||||||||
| Net Cash Provided by Operating Activities | $ | 278 | $ | 9,168 | ||||||||||||||||||||||||||
| Investing Activities | ||||||||||||||||||||||||||||||
| Proceeds from Sales of Equipment | 27 | 45 | ||||||||||||||||||||||||||||
| Additions to Property and Equipment | (2,708 | ) | (7,179 | ) | ||||||||||||||||||||||||||
| Net Cash Required for Investing Activities | $ | (2,681 | ) | $ | (7,134 | ) | ||||||||||||||||||||||||
| Financing Activities | ||||||||||||||||||||||||||||||
| Proceeds (Repayment) of Short-Term Borrowings, Net | 3,182 | (5,911 | ) | |||||||||||||||||||||||||||
| (Repayment) Proceeds of Long-Term Debt | (208 | ) | 2,902 | |||||||||||||||||||||||||||
| Treasury Stock Acquisitions | (867 | ) | (5 | ) | ||||||||||||||||||||||||||
| Net Cash Provided (Required) for Financing Activities | $ | 2,107 | $ | (3,014 | ) | |||||||||||||||||||||||||
| Effect of Exchange Rate Changes | 16 | (119 | ) | |||||||||||||||||||||||||||
| Net (Decrease) in Cash and Cash Equivalents | $ | (280 | ) | $ | (1,099 | ) | ||||||||||||||||||||||||
| Cash and Cash Equivalents at Beginning of Year | 545 | 1,402 | ||||||||||||||||||||||||||||
| Cash and Cash Equivalents at End of Quarter | $ | 265 | $ | 303 | ||||||||||||||||||||||||||
PAUL MUELLER COMPANY
SUMMARIZED NOTES TO THE FINANCIAL STATEMENTS
(1) Results of Operations (in thousands):
A. The chart below depicts the net revenue on a consolidating basis for the three months ended June 30.
| Three Months Ended June 30 | ||||||
| Revenue | 2016 | 2015 | ||||
| Domestic | $ | 27,815 | $ | 32,506 | ||
| Mueller BV | $ | 18,021 | $ | 17,892 | ||
| Eliminations | $ | (312 | ) | $ | (688 | ) |
| Net Revenue | $ | 45,524 | $ | 49,710 | ||
The chart below depicts the net revenue on a consolidating basis for the six months ended June 30.
| Six Months Ended June 30 | ||||||
| Revenue | 2016 | 2015 | ||||
| Domestic | $ | 54,672 | $ | 62,476 | ||
| Mueller BV | $ | 32,589 | $ | 33,396 | ||
| Eliminations | $ | (576 | ) | $ | (1,519 | ) |
| Net Revenue | $ | 86,685 | $ | 94,353 | ||
The chart below depicts the net revenue on a consolidating basis for the twelve months ended June 30.
| Twelve Months Ended June 30 | ||||||
| Revenue | 2016 | 2015 | ||||
| Domestic | $ | 109,576 | $ | 131,584 | ||
| Mueller BV | $ | 62,771 | $ | 67,904 | ||
| Eliminations | $ | (1,420 | ) | $ | (3,260 | ) |
| Net Revenue | $ | 170,927 | $ | 196,228 | ||
The chart below depicts the net income on a consolidating basis for the three months ended June 30.
| Three Months Ended June 30 | ||||||
| Net Income | 2016 | 2015 | ||||
| Domestic | $ | (637 | ) | $ | 1,298 | |
| Mueller BV | $ | 1,351 | $ | 1,747 | ||
| Eliminations | $ | 48 | $ | (18 | ) | |
| Net Income | $ | 762 | $ | 3,027 | ||
The chart below depicts the net income on a consolidating basis for the six months ended June 30.
| Six Months Ended June 30 | ||||||
| Net Income | 2016 | 2015 | ||||
| Domestic | $ | 11 | $ | 1,768 | ||
| Mueller BV | $ | 1,580 | $ | 2,939 | ||
| Eliminations | $ | 82 | $ | (74 | ) | |
| Net Income | $ | 1,673 | $ | 4,633 | ||
The chart below depicts the net income on a consolidating basis for the twelve months ended June 30.
| Twelve Months Ended June 30 | ||||||
| Net Income | 2016 | 2015 | ||||
| Domestic | $ | 2,829 | $ | 1,962 | ||
| Mueller BV | $ | 2,712 | $ | 5,132 | ||
| Eliminations | $ | 103 | $ | (174 | ) | |
| Net Income | $ | 5,644 | $ | 6,920 | ||
B. Second quarter results were negatively affected by two events which we described in our 2015 annual report.
First, we plan on spending approximately $2 million this year repairing the roof over the main building in Springfield. During the second quarter we incurred $312,000 of expense due to this project.
Second, we are currently offering lump sum pension settlements, paid from the assets of the plans, to participants who are no longer employed by the company as of May 6, 2016, but who have not yet begun receiving their benefit. These eligible participants have until August 5th to make an election. The payments will be made late in the third quarter. The eligible participants represent about a quarter of the obligations of the plans and we expect about 50% of those to elect the settlement. There will be a non-cash effect on the earnings of the Company caused by pension deficits now recorded in accumulated other comprehensive income moving through net income. If 50% participation is achieved, pretax income will be reduced $5.5 million.
As of June 30th, 49 participants representing lump sum payments of $2.7 million have already elected to participate. The effect of these elections reduced pretax income by $1.0 million for the second quarter. Elections made after June 30th will affect the third quarter results.
C. The pretax results for the three and six months ended June 30, 2016, were unfavorably affected by a $1,000,000 increase in the LIFO reserve. The pre-tax results for the twelve months ended June 30, 2016, were favorably affected by a $50,000 decrease in the LIFO reserve. The pre-tax results for the twelve months ended June 30, 2015, were unfavorably affected by a $1,016,000 increase in the LIFO reserve.
D. On March 18, 2016, the Company announced a repurchase program of up to $3 million of the Company’s common stock. The stock repurchases may be made from time to time in the open market, in compliance with a Rule 10b5-1 share repurchase plan adopted by the Company, or in privately negotiated transactions in compliance with applicable state and federal securities laws. The timing and amounts of any repurchases will be based on market conditions and other factors including price, regulatory requirements, and capital availability. The program does not require the repurchase of any minimum number of shares and may be suspended, modified, or discontinued at any time, without prior notice. As of June 30, 2016, the Company has repurchased 28,760 shares at a total cost of $867,000.
E. The Company’s subsidiary, Mueller Field Operations, Inc. was involved in an accident involving a field fabricated tank on September 14, 2014. A $2.9 million pre-tax reserve was established for the full contract value of the original order and certain insurance deductibles. The Company completed the fabrication of the new tank which is now in operation with $0.5 million recognized into pretax income in the fourth quarter in 2015. All efforts to recover insurance related to this claim have been resolved except for ongoing litigation with the manufacturer’s error and omissions carrier.
F. 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 1.11 for June, 2015; 1.09 for December, 2015 and 1.11 for June, 2016, respectively.
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 on page 30 of the Company’s 2015 Annual Report, 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 2015 annual report, available at www.paulmueller.com.
CONTACT: Press Contact: Jay Holden | Paul Mueller Company | Springfield, MO 65802 | (417) 575-9422 [email protected] | http://paulmueller.com