SPRINGFIELD, Mo., July 27, 2018 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended June 30, 2018.
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 | |||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Net Sales | $ | 62,705 | $ | 39,630 | $ | 108,783 | $ | 77,241 | $ | 199,499 | $ | 158,577 | |||||||||
| Cost of Sales | 48,240 | 27,934 | 82,042 | 54,951 | 146,078 | 116,677 | |||||||||||||||
| Gross Profit | $ | 14,465 | $ | 11,696 | $ | 26,741 | $ | 22,290 | $ | 53,421 | $ | 41,900 | |||||||||
| Selling, General and Administrative Expense | 11,895 | 10,532 | 23,317 | 21,015 | 45,412 | 46,182 | |||||||||||||||
| Operating Income (Loss) | $ | 2,570 | $ | 1,164 | $ | 3,424 | $ | 1,275 | $ | 8,009 | $ | (4,282 | ) | ||||||||
| Interest Expense | (205 | ) | (61 | ) | (551 | ) | (111 | ) | (770 | ) | (306 | ) | |||||||||
| Other Income (Expense) | (643 | ) | (117 | ) | (595 | ) | (207 | ) | (2,571 | ) | 113 | ||||||||||
| Income (Loss) before Provision (Benefit) for Income Taxes | $ | 1,722 | $ | 986 | $ | 2,278 | $ | 957 | $ | 4,668 | $ | (4,475 | ) | ||||||||
| Provision (Benefit) for Income Taxes | 149 | 333 | 323 | 447 | 5,549 | (1,031 | ) | ||||||||||||||
| Net Income (Loss) | $ | 1,573 | $ | 653 | $ | 1,955 | $ | 510 | $ | (881 | ) | $ | (3,444 | ) | |||||||
| Earnings per Common Share –– | Basic | $ | 1.31 | $ | 0.55 | $ | 1.63 | $ | 0.43 | $ | (0.74 | ) | $ | (2.87 | ) | ||||||
| Diluted | $ | 1.31 | $ | 0.55 | $ | 1.63 | $ | 0.43 | $ | (0.74 | ) | $ | (2.87 | ) | |||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||
| Six Months Ended | ||||||
| June 30 | ||||||
| 2018 | 2017 | |||||
| Net Income | $ | 1,955 | $ | 510 | ||
| Other Comprehensive Income, Net of Tax: | ||||||
| Foreign Currency Translation Adjustment | (814 | ) | 2,477 | |||
| Change in Pension Liability | - | - | ||||
| Amortization of De-Designated Hedges | - | 3 | ||||
| Comprehensive Income | $ | 1,141 | $ | 2,990 | ||
| CONSOLIDATED BALANCE SHEETS | |||||
| June 30 | December 31 | ||||
| 2018 | 2017 | ||||
| Cash and Short-Term Investments | $ | 788 | $ | 6,571 | |
| Accounts Receivable | 33,261 | 22,680 | |||
| Inventories | 31,500 | 31,080 | |||
| Other Current Assets | 4,387 | 2,519 | |||
| Current Assets | $ | 69,936 | $ | 62,850 | |
| Net Property, Plant, and Equipment | 52,539 | 51,586 | |||
| Other Assets | 25,030 | 25,458 | |||
| Total Assets | $ | 147,505 | $ | 139,894 | |
| Accounts Payable | $ | 18,925 | $ | 14,242 | |
| Current Maturities and Short-Term Debt | 13,891 | 4,021 | |||
| Other Current Liabilities | 26,803 | 31,966 | |||
| Current Liabilities | $ | 59,619 | $ | 50,229 | |
| Long-Term Debt | 24,674 | 23,562 | |||
| Long-Term Pension Liabilities | 30,925 | 34,766 | |||
| Other Long-Term Liabilities | 3,167 | 3,356 | |||
| Total Liabilities | $ | 118,385 | $ | 111,913 | |
| Shareholders' Investment | 29,120 | 27,981 | |||
| Total Liabilities and Shareholders' Investment | $ | 147,505 | $ | 139,894 | |
| SELECTED FINANCIAL DATA | |||||
| June 30 | December 31 | ||||
| 2018 | 2017 | ||||
| Book Value per Common Share | $ | 24.34 | $ | 23.39 | |
| Total Shares Outstanding | 1,196,216 | 1,196,261 | |||
| Backlog | $ | 81,465 | $ | 94,043 | |
| CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT | ||||||||||||||||
| Common Stock | Paid-in Surplus | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||
| Balance, December 31, 2017 | $ | 1,508 | $ | 9,708 | $ | 59,256 | $ | (6,329 | ) | $ | (36,162 | ) | $ | 27,981 | ||
| Add (Deduct): | ||||||||||||||||
| Net Income | 1,955 | 1,955 | ||||||||||||||
| Other Comprehensive Income, Net of Tax | (814 | ) | (814 | ) | ||||||||||||
| Treasury Stock Acquisition | (2 | ) | (2 | ) | ||||||||||||
| Deferred Compensation | ||||||||||||||||
| Balance, June 30, 2018 | $ | 1,508 | $ | 9,708 | $ | 61,211 | $ | (6,331 | ) | $ | (36,976 | ) | $ | 29,120 | ||
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||||
| Operating Activities: | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||||||||||
| Net Income | $ | 1,955 | $ | 510 | ||||||||
| Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||||||
| Pension Contributions (Greater) Less than Expense | (3,841 | ) | (969 | ) | ||||||||
| Bad Debt Expense (Recovery) | (20 | ) | 73 | |||||||||
| Depreciation & Amortization | 2,928 | 2,878 | ||||||||||
| (Gain) Loss on Sales of Equipment | (156 | ) | (59 | ) | ||||||||
| Other | - | (19 | ) | |||||||||
| Change in Assets and Liabilities | ||||||||||||
| (Inc) Dec in Accts and Notes Receivable | (10,503 | ) | (3,491 | ) | ||||||||
| (Inc) Dec in Cost in Excess of Estimated Earnings and Billings | (54 | ) | 126 | |||||||||
| (Inc) Dec in Inventories | (422 | ) | (3,261 | ) | ||||||||
| (Inc) Dec in Prepayments | (1,814 | ) | (619 | ) | ||||||||
| (Inc) Dec Other Assets | (3 | ) | (314 | ) | ||||||||
| Inc (Dec) in Accounts Payable | 6,220 | 2,124 | ||||||||||
| Inc (Dec) Other Accrued Expenses | (1,363 | ) | 2,368 | |||||||||
| Inc (Dec) Advanced Billings | (4,687 | ) | 3,545 | |||||||||
| Inc (Dec) in Billings in Excess of Costs and Estimated Earnings | (648 | ) | (66 | ) | ||||||||
| Inc (Dec) in Other Long-Term Liabilities | (190 | ) | 19 | |||||||||
| Net Cash (Required) Provided by Operating Activities | $ | (12,598 | ) | $ | 2,845 | |||||||
| Investing Activities | ||||||||||||
| Proceeds from Sales of Equipment | 161 | 139 | ||||||||||
| Additions to Property and Equipment | (3,840 | ) | (7,168 | ) | ||||||||
| Net Cash (Required) for Investing Activities | $ | (3,679 | ) | $ | (7,029 | ) | ||||||
| Financing Activities | ||||||||||||
| Proceeds (Repayment) of Short-Term Borrowings, Net | 9,869 | (1,456 | ) | |||||||||
| Proceeds of Long-Term Debt | 1,768 | 6,097 | ||||||||||
| Treasury Stock Acquisitions | (2 | ) | (102 | ) | ||||||||
| Net Cash Provided for Financing Activities | $ | 11,635 | $ | 4,539 | ||||||||
| Effect of Exchange Rate Changes | (1,141 | ) | (137 | ) | ||||||||
| Net (Decrease) Increase in Cash and Cash Equivalents | $ | (5,783 | ) | $ | 218 | |||||||
| Cash and Cash Equivalents at Beginning of Year | 6,571 | 357 | ||||||||||
| Cash and Cash Equivalents at End of Quarter | $ | 788 | $ | 575 | ||||||||
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 | 2018 | 2017 | ||||
| Domestic | $ | 40,073 | $ | 27,065 | ||
| Mueller BV | $ | 22,896 | $ | 12,761 | ||
| Eliminations | $ | (264 | ) | $ | (196 | ) |
| Net Revenue | $ | 62,705 | $ | 39,630 | ||
The chart below depicts the net revenue on a consolidating basis for the six months ended June 30.
| Six Months Ended June 30 | ||||||
| Revenue | 2018 | 2017 | ||||
| Domestic | $ | 72,705 | $ | 54,484 | ||
| Mueller BV | $ | 36,504 | $ | 23,014 | ||
| Eliminations | $ | (426 | ) | $ | (257 | ) |
| Net Revenue | $ | 108,783 | $ | 77,241 | ||
The chart below depicts the net revenue on a consolidating basis for the twelve months ended June 30.
| Twelve Months Ended June 30 | ||||||
| Revenue | 2018 | 2017 | ||||
| Domestic | $ | 138,528 | $ | 110,841 | ||
| Mueller BV | $ | 61,651 | $ | 48,526 | ||
| Eliminations | $ | (680 | ) | $ | (790 | ) |
| Net Revenue | $ | 199,499 | $ | 158,577 | ||
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 | 2018 | 2017 | ||
| Domestic | $ | 1,261 | $ | 325 |
| Mueller BV | $ | 309 | $ | 313 |
| Eliminations | $ | 3 | $ | 15 |
| Net Income | $ | 1,573 | $ | 653 |
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 | 2018 | 2017 | ||||
| Domestic | $ | 2,115 | $ | 851 | ||
| Mueller BV | $ | (191 | ) | $ | (411 | ) |
| Eliminations | $ | 31 | $ | 70 | ||
| Net Income | $ | 1,955 | $ | 510 | ||
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 | 2018 | 2017 | ||||
| Domestic | $ | 1,121 | $ | (3,115 | ) | |
| Mueller BV | $ | (2,131 | ) | $ | (436 | ) |
| Eliminations | $ | 129 | $ | 107 | ||
| Net Income | $ | (881 | ) | $ | (3,444 | ) |
| B. | Revenue for the 2nd quarter of $62.7 million was up $23.1 million (36.8%) over the 2nd quarter of 2017. Revenue for the trailing six months of $108.8 million was up $31.5 million (40.8%) over the six months ending June 30, 2017. Revenue for the trailing 12 months of $199.5 million was up $40.9 million (25.8%) over the 12 months ending June 30, 2017. Domestically, the year-to-date revenue increase was led by the pharmaceutical group with an increase of $13.4 million as many orders shipped including the large pharmaceutical order that was being worked on for most of 2017. Other contributors to the year-to-date revenue increase were PyroPure ($3.2 million) and Components ($2.6 million). Mueller BV year-to-date revenue increased $13.5 million (58.6%) primarily from stronger dairy farm equipment orders and completion of a large heat transfer order to India. | ||
| C. | In the US, year-to-date earnings were diminished by the increase in the LIFO reserve as discussed on the next page. Increased inventories from the increased production and higher steel prices caused the LIFO increase. Net income at Mueller BV was impacted by less than planned efficiencies as production ramped up in the new facility. Net income for the 2nd quarter was $1.6 million compared to $0.7 million for the 2nd quarter of 2017. When excluding the LIFO reserve, 2nd quarter earnings in 2018 would have been $2.3 million. Net income for the trailing six months was $2.0 million compared to $0.5 million for the six months ending June 30, 2017. Net loss for the trailing twelve months was $0.9 million. These twelve-month results were impacted by a pre-tax increase in the LIFO reserve of $2.2 million; one-time tax expense from the new tax legislation of $4.2 million; and approximately $2.0 million in non-reoccurring costs related to the consolidation in The Netherlands. The net loss of $3.4 million for the twelve months ending June 30, 2017, was affected by the $5.7 million in settlement charges from the lump sum pension payments that were recorded in the second half of 2016. | ||
| D. | As of June 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 July 24, 2018, a waiver was obtained from the lender for the violation of the June 30, 2018, covenant test. In the process of requesting this waiver, the Company made a new loan of €1.7 million to Mueller BV. Mueller BV has made the lender aware that recent financial performance will make it difficult for Mueller BV to comply with the September 30, 2018, test of the same covenant. Mueller BV expects to be in compliance with this covenant on December 31, 2018. | ||
| E. | Even with the strong revenue for the first half of the year, backlog is still at $81.5 million; down from the $94 million at the end of 2017. Domestic backlog has decreased by $7.3 million to $62.9 million. Backlog in The Netherlands is at $20.3; down $4.6 million. | ||
| F. | 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. | ||
| G. | The pre-tax results for the three months ended June 30, 2018, were unfavorably affected by a $1.4 million increase in the LIFO reserve. The pre-tax results for the six months ended June 30, 2018, were unfavorably affected by a $1.9 million increase in the LIFO reserve. The pre-tax results for the twelve months ended June 30, 2018, were unfavorably affected by a $2.2 million increase in the LIFO reserve. The pre-tax results for the three and six months ended June 30, 2017, were unfavorably affected by a $0.5 million increase in the LIFO reserve. The pre-tax results for the twelve months ended June 30, 2017, were favorably affected by a $24,000 decrease 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 of which $5.7 million is in the trailing twelve-month results ended June 30, 2017. | ||
| 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 1.14 for June, 2017; 1.20 for December, 2017; and 1.17 for June, 2018, 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
jholden@paulmueller.com | http://paulmueller.com