SPRINGFIELD, Mo., Oct. 28, 2016 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC:MUEL) today announced earnings for the quarter ended September 30, 2016.
The Company has made progress on important initiatives previously discussed in the 2015 annual report. Of note, the Company successfully completed a lump sum offer to some of its pension participants which had a $6.7 million noncash negative effect on pretax earnings.
| PAUL MUELLER COMPANY | |||||||||||||||||||||||||||
| NINE-MONTH REPORT | |||||||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||||||||
| (In thousands) | Three Months Ended | Nine Months Ended | Twelve Months Ended | ||||||||||||||||||||||||
| September 30 | September 30 | September 30 | |||||||||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
| Net Sales | $ | 44,116 | $ | 40,102 | $ | 130,801 | $ | 134,456 | $ | 174,940 | $ | 185,011 | |||||||||||||||
| Cost of Sales | 33,117 | 27,133 | 94,682 | 94,266 | 126,778 | 131,551 | |||||||||||||||||||||
| Gross Profit | $ | 10,999 | $ | 12,969 | $ | 36,119 | $ | 40,190 | $ | 48,162 | $ | 53,460 | |||||||||||||||
| Selling, General and Administrative Expense | 16,045 | 10,295 | 38,766 | 30,324 | 47,477 | 41,606 | |||||||||||||||||||||
| Operating Income | $ | (5,046 | ) | $ | 2,674 | $ | (2,647 | ) | $ | 9,866 | $ | 685 | $ | 11,854 | |||||||||||||
| Interest Expense | (86 | ) | (80 | ) | (185 | ) | (301 | ) | (246 | ) | (528 | ) | |||||||||||||||
| Other Income (Expense) | (49 | ) | 17 | (160 | ) | (309 | ) | (74 | ) | (441 | ) | ||||||||||||||||
| Income before Provision for Income Taxes | $ | (5,181 | ) | $ | 2,611 | $ | (2,992 | ) | $ | 9,256 | $ | 365 | $ | 10,885 | |||||||||||||
| Provision (Benefit) for Income Taxes | (1,982 | ) | 318 | (1,466 | ) | 2,330 | 213 | 2,973 | |||||||||||||||||||
| Net Income | $ | (3,199 | ) | $ | 2,293 | $ | (1,526 | ) | $ | 6,926 | $ | 152 | $ | 7,912 | |||||||||||||
| Earnings per Common Share –– | Basic | $ | (2.66 | ) | $ | 1.85 | $ | (1.26 | ) | $ | 5.61 | $ | 0.12 | $ | 6.41 | ||||||||||||
| Diluted | $ | (2.66 | ) | $ | 1.85 | $ | (1.26 | ) | $ | 5.60 | $ | 0.12 | $ | 6.39 | |||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||||||
| September 30 | |||||||||||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||||||||||
| Net Income (Loss) | $ | (1,526 | ) | $ | 6,926 | ||||||||||||||||||||||
| Other Comprehensive Income, Net of Tax: | |||||||||||||||||||||||||||
| Foreign Currency Translation Adjustment | 754 | (2,108 | ) | ||||||||||||||||||||||||
| Change in Pension Liability | (1,478 | ) | - | ||||||||||||||||||||||||
| Amortization of De-Designated Hedges | 15 | (1 | ) | ||||||||||||||||||||||||
| Comprehensive Income | $ | (2,235 | ) | $ | 4,817 | ||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||||||
| September 30 | December 31 | ||||||||||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||||||||||
| Accounts Receivable | $ | 24,128 | $ | 22,587 | |||||||||||||||||||||||
| Inventories | 26,040 | 31,941 | |||||||||||||||||||||||||
| Other Current Assets | 5,310 | 8,312 | |||||||||||||||||||||||||
| Current Assets | $ | 55,478 | $ | 62,840 | |||||||||||||||||||||||
| Net Property, Plant, and Equipment | 35,781 | 35,718 | |||||||||||||||||||||||||
| Other Assets | 25,841 | 20,038 | |||||||||||||||||||||||||
| Total Assets | $ | 117,100 | $ | 118,596 | |||||||||||||||||||||||
| Accounts Payable | $ | 11,722 | $ | 11,672 | |||||||||||||||||||||||
| Current Maturities and Short-Term Debt | 13,016 | 10,868 | |||||||||||||||||||||||||
| Other Current Liabilities | 19,060 | 25,775 | |||||||||||||||||||||||||
| Current Liabilities | $ | 43,798 | $ | 48,315 | |||||||||||||||||||||||
| Long-Term Debt | 4,753 | 5,003 | |||||||||||||||||||||||||
| Long-Term Pension Liabilities | 39,138 | 32,527 | |||||||||||||||||||||||||
| Other Long-Term Liabilities | 950 | 1,004 | |||||||||||||||||||||||||
| Total Liabilities | 88,639 | 86,849 | |||||||||||||||||||||||||
| Shareholders' Investment | 28,461 | 31,747 | |||||||||||||||||||||||||
| Total Liabilities and Shareholders' Investment | $ | 117,100 | $ | 118,596 | |||||||||||||||||||||||
| SELECTED FINANCIAL DATA | |||||||||||||||||||||||||||
| September 30 | December 31 | ||||||||||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||||||||||
| Book Value per Common Share | $ | 23.67 | $ | 25.66 | |||||||||||||||||||||||
| Total Shares Outstanding | 1,202,212 | 1,237,220 | |||||||||||||||||||||||||
| Backlog | $ | 45,166 | $ | 58,385 | |||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT | |||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||
| Common Stock | Paid-in Surplus | Retained Earnings | Treasury Stock | ||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||
| Balance, December 31, 2015 | $ | 1,508 | $ | 9,708 | $ | 63,863 | $ | (5,114 | ) | $ | (38,218 | ) | $ | 31,747 | |||||||||||||
| Add (Deduct): | |||||||||||||||||||||||||||
| Net Income | (1,526 | ) | (1,526 | ) | |||||||||||||||||||||||
| Other Comprehensive Income, Net of Tax | (709 | ) | (709 | ) | |||||||||||||||||||||||
| Treasury Stock Acquisition | (1,051 | ) | (1,051 | ) | |||||||||||||||||||||||
| Deferred Compensation | |||||||||||||||||||||||||||
| Balance, September 30, 2016 | $ | 1,508 | $ | 9,708 | $ | 62,337 | $ | (6,165 | ) | $ | (38,927 | ) | $ | 28,461 | |||||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||||||||||||||
| Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||||||||||||||||||||||
| Operating Activities: | |||||||||||||||||||||||||||
| Net Income | $ | (1,526 | ) | $ | 6,926 | ||||||||||||||||||||||
| Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||||||||||||||||||||||||||
| Pension Contributions (Greater) Less than Expense | 5,132 | (621 | ) | ||||||||||||||||||||||||
| Bad Debt Expense (Recovery) | 12 | 36 | |||||||||||||||||||||||||
| Depreciation & Amortization | 4,545 | 4,094 | |||||||||||||||||||||||||
| Deferred Tax (Benefit) Expense | - | (596 | ) | ||||||||||||||||||||||||
| (Gain) Loss on Sales of Equipment | (20 | ) | 48 | ||||||||||||||||||||||||
| Other | (66 | ) | (65 | ) | |||||||||||||||||||||||
| Change in Assets and Liabilities | |||||||||||||||||||||||||||
| (Inc) Dec in Accts and Notes Receivable | (1,532 | ) | (3,335 | ) | |||||||||||||||||||||||
| (Inc) Dec in Cost in Excess of Estimated Earnings and Billings | (521 | ) | (1 | ) | |||||||||||||||||||||||
| (Inc) Dec in Inventories | 6,301 | (8,827 | ) | ||||||||||||||||||||||||
| (Inc) Dec in Prepayments | (1,907 | ) | 1,844 | ||||||||||||||||||||||||
| (Inc) Dec Other Assets | (1 | ) | (1,691 | ) | |||||||||||||||||||||||
| Inc (Dec) in Accounts Payable | 136 | 4,285 | |||||||||||||||||||||||||
| Inc (Dec) Other Accrued Expenses | (1,304 | ) | (2,736 | ) | |||||||||||||||||||||||
| Inc (Dec) Advanced Billings | (4,095 | ) | 6,091 | ||||||||||||||||||||||||
| Inc (Dec) in Billings in Excess of Costs and Estimated Earnings | (1,616 | ) | 241 | ||||||||||||||||||||||||
| Inc (Dec) in Other Liabilities | (478 | ) | (176 | ) | |||||||||||||||||||||||
| Net Cash Provided by Operating Activities | $ | 3,060 | $ | 5,517 | |||||||||||||||||||||||
| Investing Activities | |||||||||||||||||||||||||||
| Proceeds from Sales of Equipment | 61 | 48 | |||||||||||||||||||||||||
| Additions to Property and Equipment | (3,859 | ) | (6,483 | ) | |||||||||||||||||||||||
| Net Cash Required for Investing Activities | $ | (3,798 | ) | $ | (6,435 | ) | |||||||||||||||||||||
| Financing Activities | |||||||||||||||||||||||||||
| Proceeds (Repayment) of Short-Term Borrowings, Net | 1,983 | (5,444 | ) | ||||||||||||||||||||||||
| (Repayment) Proceeds of Long-Term Debt | (311 | ) | 5,526 | ||||||||||||||||||||||||
| Treasury Stock Acquisitions | (1,051 | ) | (5 | ) | |||||||||||||||||||||||
| Net Cash Provided for Financing Activities | $ | 621 | $ | 77 | |||||||||||||||||||||||
| Effect of Exchange Rate Changes | (77 | ) | 18 | ||||||||||||||||||||||||
| Net (Decrease) in Cash and Cash Equivalents | $ | (194 | ) | $ | (823 | ) | |||||||||||||||||||||
| Cash and Cash Equivalents at Beginning of Year | 545 | 1,402 | |||||||||||||||||||||||||
| Cash and Cash Equivalents at End of Quarter | $ | 351 | $ | 579 | |||||||||||||||||||||||
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 September 30.
| Three Months Ended September 30 | ||||||
| Revenue | 2016 | 2015 | ||||
| Domestic | $ | 31,095 | $ | 28,308 | ||
| Mueller BV | $ | 13,352 | $ | 12,201 | ||
| Eliminations | $ | (331 | ) | $ | (407 | ) |
| Net Revenue | $ | 44,116 | $ | 40,102 | ||
The chart below depicts the net revenue on a consolidating basis for the nine months ended September 30.
| Nine Months Ended September 30 | ||||||
| Revenue | 2016 | 2015 | ||||
| Domestic | $ | 85,767 | $ | 90,784 | ||
| Mueller BV | $ | 45,941 | $ | 45,597 | ||
| Eliminations | $ | (907 | ) | $ | (1,925 | ) |
| Net Revenue | $ | 130,801 | $ | 134,456 | ||
The chart below depicts the net revenue on a consolidating basis for the twelve months ended September 30.
| Twelve Months Ended September 30 | ||||||
| Revenue | 2016 | 2015 | ||||
| Domestic | $ | 112,364 | $ | 124,756 | ||
| Mueller BV | $ | 63,921 | $ | 63,245 | ||
| Eliminations | $ | (1,345 | ) | $ | (2,990 | ) |
| Net Revenue | $ | 174,940 | $ | 185,011 | ||
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 | 2016 | 2015 | ||||
| Domestic | $ | (3,244 | ) | $ | 1,471 | |
| Mueller BV | $ | 62 | $ | 825 | ||
| Eliminations | $ | (17 | ) | $ | (3 | ) |
| Net Income | $ | (3,199 | ) | $ | 2,293 | |
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 | 2016 | 2015 | ||||
| Domestic | $ | (3,233 | ) | $ | 3,239 | |
| Mueller BV | $ | 1,642 | $ | 3,764 | ||
| Eliminations | $ | 65 | $ | (77 | ) | |
| Net Income | $ | (1,526 | ) | $ | 6,926 | |
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 | 2016 | 2015 | ||||
| Domestic | $ | (1,886 | ) | $ | 3,165 | |
| Mueller BV | $ | 1,948 | $ | 4,933 | ||
| Eliminations | $ | 90 | $ | (186 | ) | |
| Net Income | $ | 152 | $ | 7,912 | ||
B. Third quarter results were negatively affected by two events which we described in previous communications including our 2015 annual report.
First, we began significant roof repairs on our Springfield, Missouri, facilities. The portion to be completed this year was estimated to cost approximately $2.0 million. During the third quarter, we incurred $620,000 of expense for a YTD total of $932,000.
Second, we 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. These eligible participants had until August 5th to make an election. 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.
This settlement had a negative noncash effect on the pretax earnings of the Company of $6.72 million caused by pension deficits, previously recorded in accumulated other comprehensive income, moving through net income. $1 million of this amount was booked in the second quarter based on participants who had already elected to participate by June 30th with the remaining $5.72 million booked in the third quarter.
In addition to this $6.72 million reduction in long-term pension liability, a reduction in discount rates increased the liability by approximately $13.5 million. Finally, cash contributions into the plans during 2016 are expected to be $4.1 million.
C. The pretax results for the three months ended September 30, 2016, were not affected by LIFO reserve. The pretax results for the nine months ended September 30, 2016, were unfavorably affected by a $1,000,000 increase in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2016, were unfavorably affected by a $450,000 increase in the LIFO reserve. The pretax results for the three and nine months ended September 30, 2015, were favorably affected by a $500,000 decrease in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2015, were unfavorably affected by a $16,000 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 September 30, 2016, the Company has repurchased 35,008 shares at a total cost of $1,051,000.
E. 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 1.12 for September, 2015; 1.09 for December, 2015, and 1.12 for September, 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.