Paul Mueller Company Announces Its Third Quarter Earnings of 2018

SPRINGFIELD, Mo., Oct. 26, 2018 (GLOBE NEWSWIRE) — Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended September 30, 2018.

   
  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  
                2018       2017       2018       2017       2018       2017    
                                     
  Net Sales         $   46,809     $   48,271     $   155,592     $   125,512     $   198,037     $   162,732    
  Cost of Sales             34,276         34,274         116,318         89,225         146,080         117,834    
    Gross Profit     $   12,533     $   13,997     $   39,274     $   36,287     $   51,957     $   44,898    
  Selling, General and Administrative Expense       11,027         10,903         34,981         32,070         46,742         41,237    
    Operating Income      $   1,506     $   3,094     $   4,293     $   4,217     $   5,215     $   3,661    
  Interest Expense           (182 )       (137 )       (733 )       (248 )       (815 )       (357 )  
  Other Income (Expense)         (14 )       20         28         (35 )       (1,399 )       379    
  Income before Provision (Benefit) for Income Taxes   $   1,310     $   2,977     $   3,588     $   3,934     $   3,001     $   3,683    
  Provision (Benefit) for Income Taxes         486         1,171         809         1,618         4,864         2,122    
  Net Income (Loss)     $   824     $   1,806     $   2,779     $   2,316     $   (1,863 )   $   1,561    
                                     
  Earnings per Common Share  –– Basic   $ 0.69     $ 1.51     $ 2.32     $ 1.94     ($ 1.56 )   $ 1.30    
          Diluted   $ 0.69     $ 1.51     $ 2.32     $ 1.94     ($ 1.56 )   $ 1.30    
                                     
  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  
                                     
                      Nine Months Ended          
                      September 30          
                        2018       2017            
                                     
        Net Income            $   2,779     $   2,316            
        Other Comprehensive Income (Loss), Net of Tax:                      
        Foreign Currency Translation Adjustment           (1,140 )       3,448            
        Change in Pension Liability               –         –            
        Amortization of De-Designated Hedges           –         3            
                                     
        Comprehensive Income        $   1,639     $   5,767            
                                     
  CONSOLIDATED BALANCE SHEETS  
                                     
                      September 30   December 31          
                        2018       2017            
                                     
        Cash and Short-Term Investments           $   680     $   6,571            
        Accounts Receivable               33,925         22,680            
        Inventories                 29,625         31,080            
        Other Current Assets               2,010         2,519            
        Current Assets   $   66,240     $   62,850            
                                     
        Net Property, Plant, and Equipment       51,930         51,586            
        Other Assets       24,863         25,458            
        Total Assets   $   143,033     $   139,894            
                                     
        Accounts Payable           $   15,376     $   14,242            
        Current Maturities and Short-Term debt               13,380         4,021            
        Other Current Liabilities               27,955         31,966            
        Current Liabilities   $   56,711     $   50,229            
                                     
        Long-Term Debt       22,162         23,562            
        Long-Term Pension Liabilities               31,142         34,766            
        Other Long-Term Liabilities       3,401         3,356            
        Total Liabilities               113,416         111,913            
        Shareholders’ Investment       29,617         27,981            
        Total Liabilities and Shareholders’ Investment   $   143,033     $   139,894            
                                     
                           
                                     
                                     
                                     
  SELECTED FINANCIAL DATA  
                                     
                          September 30   December 31      
                            2018       2017        
          Book Value per Common Share           $ 24.76     $ 23.39        
          Total Shares Outstanding               1,196,187         1,196,261        
          Backlog               $   78,286     $   94,043        
                                     
   CONSOLIDATED STATEMENT OF SHAREHOLDERS’ INVESTMENT   
                              Accumulated
Other Comprehensive Income (Loss)
     
                                   
               Common Stock    Paid-in Surplus   Retained
Earnings
  Treasury Stock        
                        Total  
  Balance, December 31, 2017     $   1,508     $   9,708     $   59,256     $   (6,329 )   $   (36,162 )   $   27,981    
  Add (Deduct):                                
    Net Income                 2,779                 2,779    
    Other Comprehensive Income, Net of Tax                       (1,140 )       (1,140 )  
    Treasury Stock Acquisition                      (3 )           (3 )  
  Balance, September 30, 2018     $   1,508     $   9,708     $   62,035     $   (6,332 )   $   (37,302 )   $   29,617    
                                     
                                     
   CONSOLIDATED STATEMENT OF CASH FLOWS  
                          Nine Months
Ended
September 30, 2018
  Nine Months
Ended
September 30, 2017
     
                                 
                                 
                                 
        Operating Activities:                  
                           
        Net Income       $   2,779     $   2,316        
                           
        Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities:              
        Pension Contributions (Greater) Less than Expense           (3,625 )       (2,023 )      
        Bad Debt Expense (Recovery)           (24 )       78        
        Depreciation & Amortization           4,568         4,361        
        (Gain) Loss on Sales of Equipment           (162 )       (55 )      
        Other           –         (20 )      
        Change in Assets and Liabilities                  
        (Inc) Dec in Accts and Notes Receivable           (11,127 )       (4,064 )      
        (Inc) Dec in Cost in Excess of Estimated Earnings and Billings           50         166        
        (Inc) Dec in Inventories           1,456         (1,569 )      
        (Inc) Dec in Prepayments           459         (2,342 )      
        (Inc) Dec Other LT Assets           (3 )       (358 )      
        Inc (Dec) in Accounts Payable           1,133         3,323        
        Inc (Dec) Other Accrued Expenses           (247 )       3,354        
        Inc (Dec) Advanced Billings           (2,993 )       2,778        
        Inc (Dec) in Billings in Excess of Costs and Estimated Earnings           (770 )       4,096        
        Inc (Dec) In Other Liabilities           44         21        
          Net Cash (Required) Provided by Operating Activities       $   (8,462 )   $   10,062        
                           
        Investing Activities                  
        Proceeds from Sales of Equipment           172         164        
        Additions to Property and Equipment           (4,856 )       (12,730 )      
          Net Cash (Required) for Investing Activities       $   (4,684 )   $   (12,566 )      
                           
        Financing Activities                  
        Proceeds (Repayment) of Short-Term Borrowings, Net           9,360         (3,867 )      
        (Repayment) Proceeds of Long-Term Debt           (576 )       13,010        
        Treasury Stock Acquisitions           (3 )       (102 )      
          Net Cash Provided for Financing Activities       $   8,781     $   9,041        
                           
        Effect of Exchange Rate Changes            (1,526 )       (355 )      
                           
        Net (Decrease) Increase in Cash and Cash Equivalents       $   (5,891 )   $   6,182        
                           
        Cash and Cash Equivalents at Beginning of Year         6,571       357        
                           
        Cash and Cash Equivalents at End of Quarter       $   680     $   6,539        
                                     

 

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 2018   2017  
Domestic $33,197   $34,898  
Mueller BV $14,107   $13,541  
Eliminations ($495 ) ($168 )
Net Revenue $46,809   $48,271  
     
The chart below depicts the net revenue on a consolidating basis for the nine months ended September 30.
     
Nine Months Ended September 30
Revenue 2018   2017  
Domestic $105,902   $89,381  
Mueller BV $50,611   $36,555  
Eliminations ($921 ) ($424 )
Net Revenue $155,592   $125,512  
     
The chart below depicts the net revenue on a consolidating basis for the twelve months ended September 30.
     
Twelve Months Ended September 30
Revenue 2018   2017  
Domestic $136,828   $114,643  
Mueller BV $62,217   $48,715  
Eliminations ($1,008 ) ($626 )
Net Revenue $198,037   $162,732  
     
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 2018   2017  
Domestic $1,574   $2,002  
Mueller BV ($740 ) ($191 )
Eliminations ($10 ) ($5 )
Net Income $824   $1,806  
     
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 2018   2017  
Domestic $3,689   $2,851  
Mueller BV ($931 ) ($602 )
Eliminations $21   $67  
Net Income $2,779   $2,316  
     
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 2018   2017  
Domestic $695   $2,129  
Mueller BV ($2,680 ) ($689 )
Eliminations $122   $121  
Net Income ($1,863 ) $1,561  

B. Beginning with these results, incentive pay based on company profitability will be shown as an SG&A expense. Prior to this, some of the expense was in Other Income (Expense). Prior results have been restated for comparative purposes.

C. Revenue for the 3rd quarter was flat to last year when excluding the tank trailer division that was discontinued in 2017. Earnings for the quarter were down $1.0 million. Domestically, earnings were down $0.4 million but were flat when the tank trailer division and the effects of LIFO are excluded. Mueller BV earnings are down $0.6 million impacted by less than planned efficiencies from consolidated production in the new facility. 

D. Year-to-date revenue has increased $30 million (24%) over last year. Domestically, the year-to-date revenue increase was led by the pharmaceutical segment with a combined increase of $15.8 million (169%) from our BioPharm and PyroPure business units.

Mueller BV year-to-date revenue has increased $14.1 million (38.5%) primarily from stronger dairy farm equipment orders and completion of a large heat transfer order to India.

In the US, year-to-date earnings are up $0.8 million with approximately half coming from higher earnings, primarily driven by the strong pharmaceutical market, and half from the lower domestic tax rate. When excluding the effects of LIFO, domestic earnings are up $2.2 million. Year-to-date earnings for Mueller BV are unfavorable by $0.3 million.

E. As of September 30, 2018, Mueller BV was out of compliance of the minimum EBITDA covenant on its Note Payable secured by the new building, fixed assets, accounts receivable, inventory and insurance proceeds. On October 19 2018, a waiver was obtained from the lender for the violation of the September 30, 2018 covenant test. Mueller BV has made the lender aware that recent financial performance will make it difficult for Mueller BV to comply with the December 31, 2018 test of the same covenant. Management and the bank continue discussing options going forward.

F. Backlog is at $78.3 million; down from the $94.0 million at the end of 2017. Domestic backlog has decreased by $9.4 million to $60.8 million. Backlog in The Netherlands is at $18.3; down $6.6 million.

G. Tax expense of approximately $4.2 million was recognized in December, 2017 due to new United States federal tax legislation under the Tax Cuts and Jobs Act (TCJA). 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 recorded for 2017 a reasonable estimate of the effects of the TCJA, and accordingly such amounts are provisional. In September 2018, tax expense was increased by $0.2 million to finalize the transition tax for 2017.

H. The pre-tax results for the three months ended September 30, 2018, were unfavorably affected by $242,000 increase in the LIFO reserve. The pre-tax results for the nine months ended September 30, 2018, were unfavorably affected by a $2.2 million increase in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2018, were unfavorably affected by a $2.4 million increase in the LIFO reserve. The pre-tax results for the three months ended September 30, 2017, were not affected by LIFO reserve. The pre-tax results for the nine months ended September 30, 2017, were unfavorably affected by a $0.5 million increase in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2017, were favorably affected by a $24,000 decrease in the LIFO reserve.

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 1.18 for September 2017; 1.20 for December 2017; 1.16 for September 2018.

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
jholden@paulmueller.com | http://paulmueller.com

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