SPRINGFIELD, Mo., March 16, 2018 (GLOBE NEWSWIRE) — Paul Mueller Company (OTC:MUEL) today announced earnings for the quarter ended December 31, 2017.
| PAUL MUELLER COMPANY | ||||||||||||||||||||||||||||||
| TWELVE-MONTH REPORT | ||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||
| December 31 | December 31 | |||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||||
| Net Sales | $ | 42,445 | $ | 37,220 | $ | 167,957 | $ | 168,021 | ||||||||||||||||||||||
| Cost of Sales | 29,762 | 28,609 | 118,987 | 123,291 | ||||||||||||||||||||||||||
| Gross Profit | $ | 12,683 | $ | 8,611 | $ | 48,970 | $ | 44,730 | ||||||||||||||||||||||
| Selling, General and Administrative Expense | 11,568 | 9,122 | 43,110 | 47,888 | ||||||||||||||||||||||||||
| Operating Income (Loss) | $ | 1,115 | $ | (511 | ) | $ | 5,860 | $ | (3,158 | ) | ||||||||||||||||||||
| Interest Expense | (82 | ) | (109 | ) | (330 | ) | (294 | ) | ||||||||||||||||||||||
| Other Income (Expense) | (1,620 | ) | 369 | (2,183 | ) | 209 | ||||||||||||||||||||||||
| Income (Loss) before Provision (Benefit) for Income Taxes | $ | (587 | ) | $ | (251 | ) | $ | 3,347 | $ | (3,243 | ) | |||||||||||||||||||
| Provision (Benefit) for Income Taxes | 4,055 | 504 | 5,673 | (962 | ) | |||||||||||||||||||||||||
| Net Income (Loss) | $ | (4,642 | ) | $ | (755 | ) | $ | (2,326 | ) | $ | (2,281 | ) | ||||||||||||||||||
| Earnings (Loss) per Common Share –– | Basic | ($3.88 | ) | ($0.63 | ) | ($1.94 | ) | ($1.88 | ) | |||||||||||||||||||||
| Diluted | ($3.88 | ) | ($0.63 | ) | ($1.94 | ) | ($1.88 | ) | ||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||||||||||||||||
| Twelve Months Ended | ||||||||||||||||||||||||||||||
| December 31 | ||||||||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||||||||
| Net Income (Loss) | $ | (2,326 | ) | $ | (2,281 | ) | ||||||||||||||||||||||||
| Other Comprehensive Income (Loss), Net of Tax: | ||||||||||||||||||||||||||||||
| Foreign Currency Translation Adjustment | 4,061 | (1,146 | ) | |||||||||||||||||||||||||||
| Change in Pension Liability | (4,121 | ) | 3,238 | |||||||||||||||||||||||||||
| Amortization of De-Designated Hedges | 3 | 21 | ||||||||||||||||||||||||||||
| Comprehensive Income (Loss) | $ | (2,383 | ) | $ | (168 | ) | ||||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||||||||||||||||||
| December 31 | December 31 | |||||||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||||||||
| Cash and Short-Term Investments | $ | 6,571 | $ | 357 | ||||||||||||||||||||||||||
| Accounts Receivable | 22,680 | 18,084 | ||||||||||||||||||||||||||||
| Inventories | 31,080 | 24,126 | ||||||||||||||||||||||||||||
| Other Current Assets | 2,519 | 2,156 | ||||||||||||||||||||||||||||
| Current Assets | $ | 62,850 | $ | 44,723 | ||||||||||||||||||||||||||
| Net Property, Plant, and Equipment | 51,586 | 33,545 | ||||||||||||||||||||||||||||
| Other Assets | 25,458 | 26,397 | ||||||||||||||||||||||||||||
| Total Assets | $ | 139,894 | $ | 104,665 | ||||||||||||||||||||||||||
| Accounts Payable | $ | 14,242 | $ | 8,165 | ||||||||||||||||||||||||||
| Current Maturities and Short-Term debt | 4,021 | 8,243 | ||||||||||||||||||||||||||||
| Other Current Liabilities | 31,966 | 20,777 | ||||||||||||||||||||||||||||
| Current Liabilities | $ | 50,229 | $ | 37,185 | ||||||||||||||||||||||||||
| Long-Term Debt | 23,562 | 4,558 | ||||||||||||||||||||||||||||
| Long-Term Pension Liabilities | 34,766 | 31,628 | ||||||||||||||||||||||||||||
| Other Long-Term Liabilities | 3,356 | 828 | ||||||||||||||||||||||||||||
| Total Liabilities | 111,913 | 74,199 | ||||||||||||||||||||||||||||
| Shareholders’ Investment | 27,981 | 30,466 | ||||||||||||||||||||||||||||
| Total Liabilities and Shareholders’ Investment | $ | 139,894 | $ | 104,665 | ||||||||||||||||||||||||||
| SELECTED FINANCIAL DATA | ||||||||||||||||||||||||||||||
| December 31 | December 31 | |||||||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||||||||
| Book Value per Common Share | $ | 23.39 | $ | 25.39 | ||||||||||||||||||||||||||
| Total Shares Outstanding | 1,196,261 | 1,200,021 | ||||||||||||||||||||||||||||
| Backlog | $ | 94,043 | $ | 44,241 | ||||||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF SHAREHOLDERS’ INVESTMENT | ||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) |
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| Common Stock | Paid-in Surplus | Retained Earnings | Treasury Stock | |||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||
| Balance, December 31, 2016 | $ | 1,508 | $ | 9,708 | $ | 61,582 | $ | (6,227 | ) | $ | (36,105 | ) | $ | 30,466 | ||||||||||||||||
| Add (Deduct): | ||||||||||||||||||||||||||||||
| Net Income (Loss) | (2,326 | ) | (2,326 | ) | ||||||||||||||||||||||||||
| Other Comprehensive Income, Net of Tax | (57 | ) | (57 | ) | ||||||||||||||||||||||||||
| Treasury Stock Acquisition | (102 | ) | (102 | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2017 | $ | 1,508 | $ | 9,708 | $ | 59,256 | $ | (6,329 | ) | $ | (36,162 | ) | $ | 27,981 | ||||||||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||||||||||||||||||||||
| Twelve Months Ended December 31, 2017 |
Twelve Months Ended December 31, 2016 |
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| Operating Activities: |
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| Net Income (Loss) | $ | (2,326 | ) | $ | (2,281 | ) | ||||||||||||||||||||||||
| Adjustment to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: | ||||||||||||||||||||||||||||||
| Pension Contributions (Greater) Less than Expense | (984 | ) | 2,339 | |||||||||||||||||||||||||||
| Bad Debt Expense (Recovery) | 28 | (330 | ) | |||||||||||||||||||||||||||
| Depreciation & Amortization | 5,747 | 6,179 | ||||||||||||||||||||||||||||
| Deferred Tax (Benefit) Expense | 5,389 | (1,256 | ) | |||||||||||||||||||||||||||
| (Gain) Loss on Sales of Equipment | (46 | ) | (22 | ) | ||||||||||||||||||||||||||
| Other | (20 | ) | (89 | ) | ||||||||||||||||||||||||||
| Change in Assets and Liabilities | ||||||||||||||||||||||||||||||
| (Inc) Dec in Accts and Notes Receivable | (4,405 | ) | 4,491 | |||||||||||||||||||||||||||
| Dec (Inc) in Cost in Excess of Estimated Earnings and Billings | 97 | (121 | ) | |||||||||||||||||||||||||||
| (Inc) Dec in Inventories | (6,953 | ) | 7,361 | |||||||||||||||||||||||||||
| (Inc) Dec in Prepayments | (375 | ) | 285 | |||||||||||||||||||||||||||
| (Inc) Dec Other Assets | 23 | 1 | ||||||||||||||||||||||||||||
| (Inc) Dec in Deferred Taxes | (1,315 | ) | 1,893 | |||||||||||||||||||||||||||
| Inc (Dec) in Accounts Payable | 5,797 | (1,937 | ) | |||||||||||||||||||||||||||
| Inc (Dec) Other Accrued Expenses | 5,119 | (2,469 | ) | |||||||||||||||||||||||||||
| Inc (Dec) Advanced Billings | 5,444 | (1,920 | ) | |||||||||||||||||||||||||||
| Inc (Dec) in Billings in Excess of Costs and Estimated Earnings | 674 | (1,507 | ) | |||||||||||||||||||||||||||
| Inc (Dec) In Long Term Liabilities | 394 | 94 | ||||||||||||||||||||||||||||
| Net Cash Provided by Operating Activities | $ | 12,288 | $ | 10,711 | ||||||||||||||||||||||||||
| Investing Activities | ||||||||||||||||||||||||||||||
| Proceeds from Sales of Equipment | 172 | 65 | ||||||||||||||||||||||||||||
| Additions to Property, Plant, and Equipment | (23,750 | ) | (4,284 | ) | ||||||||||||||||||||||||||
| Acquisition of DEG Engineering GmbH | – | (2,606 | ) | |||||||||||||||||||||||||||
| Net Cash (Required) for Investing Activities | $ | (23,578 | ) | $ | (6,825 | ) | ||||||||||||||||||||||||
| Financing Activities | ||||||||||||||||||||||||||||||
| (Repayment) of Short-Term Borrowings, Net | (4,747 | ) | (2,448 | ) | ||||||||||||||||||||||||||
| Proceeds (Repayment) of Long-Term Debt | 19,004 | (414 | ) | |||||||||||||||||||||||||||
| Treasury Stock Acquisitions | (102 | ) | (1,113 | ) | ||||||||||||||||||||||||||
| Net Cash Provided (Required) for Financing Activities | $ | 14,155 | $ | (3,975 | ) | |||||||||||||||||||||||||
| Effect of Exchange Rate Changes | 3,349 | (99 | ) | |||||||||||||||||||||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | $ | 6,214 | $ | (188 | ) | |||||||||||||||||||||||||
| Cash and Cash Equivalents at Beginning of Year | 357 | 545 | ||||||||||||||||||||||||||||
| Cash and Cash Equivalents at End of Year | $ | 6,571 | $ | 357 | ||||||||||||||||||||||||||
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 December 31.
| Three Months Ended December 31 | |||||||
| Revenue | 2017 | 2016 | |||||
| Domestic | $30,926 | $25,262 | |||||
| Mueller BV | $11,607 | $12,160 | |||||
| Eliminations | ($88 | ) | ($202 | ) | |||
| Net Revenue | $42,445 | $37,220 | |||||
| The chart below depicts the net revenue on a consolidating basis for the twelve months ended December 31. | |||||||
| Twelve Months Ended December 31 | |||||||
| Revenue | 2017 | 2016 | |||||
| Domestic | $120,307 | $111,029 | |||||
| Mueller BV | $48,162 | $58,101 | |||||
| Eliminations | ($512 | ) | ($1,109 | ) | |||
| Net Revenue | $167,957 | $168,021 | |||||
| The chart below depicts the net income on a consolidating basis for the three months ended December 31. | |||||||
| Three Months Ended December 31 | |||||||
| Net Income | 2017 | 2016 | |||||
| Domestic | ($2,994 | ) | ($722 | ) | |||
| Mueller BV | ($1,748 | ) | ($87 | ) | |||
| Eliminations | $100 | $54 | |||||
| Net Income | ($4,642 | ) | ($755 | ) | |||
| The chart below depicts the net income on a consolidating basis for the twelve months ended December 31. | |||||||
| Twelve Months Ended December 31 | |||||||
| Net Income | 2017 | 2016 | |||||
| Domestic | ($143 | ) | ($3,955 | ) | |||
| Mueller BV | ($2,350 | ) | $1,555 | ||||
| Eliminations | $167 | $119 | |||||
| Net Income | ($2,326 | ) | ($2,281 | ) | |||
B. Revenue ($168 million) and the net loss ($2.3 million) were nearly unchanged for 2017 as compared to 2016. While the year-over-year results are similar, there were large changes in performance throughout the company, the backlog more than doubled, and a significant consolidation of operations is underway in the Netherlands.
Net income in 2017 was reduced by approximately $4.2 million due to the recent tax reform in the United States and by $2 million in non-recurring costs related to the consolidation in the Netherlands, such as severance, loss on sale of assets, and lease terminations. The 2016 result was similarly reduced by $4.2 million due to the settlement of part of the company’s pension plans in the United States.
Excluding these effects, earnings before tax in the United States would have been $6.1 million, an increase of $4.9 million over 2016. In the Netherlands, earnings before tax would have been a loss of $0.9 million, a decrease of $3.0 million compared to 2016.
C. Backlog increased during the fourth quarter from $90 million to $94 million. For 2017, the backlog increased 96% in the United States and 181% in The Netherlands for an overall increase of 113%. Backlog in the United States increased in nearly all the product lines led by increases in BioPharm, Dairy Farm Equipment, and PyroPure. Dairy Farm Equipment continues to experience strong market conditions in Canada. In response, we have further increased production in our new milk cooler production line in Springfield and have begun to ship coolers for Canada from our Lichtenvoorde facility.
D. The decrease in performance in The Netherlands was related to lower sales of dairy farm products and $2 million in non-recurring costs. Regulation of the farms has moved from a milk quota system to a phosphate quota system regulating animal waste on the farms. After a period of regulatory uncertainty, farmers are beginning to understand how they can trade phosphate quotas when the size of their farms change. Milk cooler backlog at the beginning of 2018 is 40% higher than a year earlier. The remainder of the backlog increase came from heat transfer products sold by DEG Engineering, the German subsidiary acquired in 2016.
E. Tax expense of approximately $4.2 million was recognized in December due to new United States federal tax legislation under the Tax Cuts and Jobs Act (TCJA) enacted in December 2017. This includes a $0.9 million transition tax expense estimate and $3.3 million tax expense due to the revaluation of the deferred tax asset due to a decrease in the tax rate. In certain cases, the Company has recorded for 2017 a reasonable estimate of the effects of the TCJA, and accordingly such amounts are provisional. Final adjustments, if necessary, will be determined in 2018 and recorded as a measurement period adjustment through 2018 tax expense.
F. On March 2, 2018, the final inspections were conducted on the new facility in Groenlo, The Netherlands, and management accepted possession from the construction company. For the past 9 months Mueller BV has been offering settlements to coworkers who have chosen not to move to the new location, replacing some of them with staff in the Groenlo area. The new facility is expected to start production on April 9th.
G. The pre-tax results for the three months ended December 31, 2017, were unfavorably affected by a $221,000 increase in the LIFO reserve. The pre-tax results for the twelve months ended December 31, 2017, were unfavorably affected by a $697,000 increase in the LIFO reserve. The pre-tax results for the three months ended December 31, 2016, were favorably affected by a $500,000 decrease in the LIFO reserve. The pre-tax results for the twelve months ended December 31, 2016, were unfavorably affected by a $500,000 increase in the LIFO reserve.
H. The Company completed the lump sum pension payments to participants who elected to take the settlement. These payments, paid from the assets of the plans, were available for participants who were no longer employed by the company as of May 6, 2016, but who had not yet begun receiving their benefit. The eligible participants represented about a quarter of the obligations of the plans and just over 50% of those eligible elected the settlement. The payments, totaling $13.8 million to 218 participants, were made on or about September 26, 2016. The results for twelve months ended December 31, 2016 contained a negative noncash effect on the pre-tax earnings of the Company of $6.7 million ($4.2 million net of tax).
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 1.05 for December 2016 and 1.20 for December 2017 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 29 of the Company’s 2017 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 2017 annual report, available at www.paulmueller.com.
Press Contact: Jay Holden | Paul Mueller Company | Springfield, MO 65802 | (417) 575-9422
[email protected] | http://paulmueller.com