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) |
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| 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 |
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| 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
[email protected] | http://paulmueller.com