SPRINGFIELD, Mo., April 26, 2019 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended March 31, 2019.

PAUL MUELLER COMPANY
THREE-MONTH REPORT
Unaudited

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 March 31.

The chart below depicts the net revenue on a consolidating basis for the twelve months ended March 31.

The chart below depicts the net income on a consolidating basis for the three months ended March 31.

The chart below depicts the net income on a consolidating basis for the twelve months ended March 31.

B. Backlog fell during the first quarter to $89.9 million on March 31, 2019 from $97.4 million on December 31, 2018. The reduction in backlog was due primarily to the Dairy Farm Equipment product line in the United States which has worked through the unusually large backlog of equipment sold into Canada. Backlog in The Netherlands fell slightly to $13.0 million on March 31, 2019 from the $13.8 million on December 31, 2018.

C. Revenue for the first quarter of 2019 was down by $4.2 million compared to the first quarter of 2018. The drop was related primarily to the pharmaceutical business in the United States which has experienced a slow period between two large orders. This product line completed a large order in 2018 for an insulin producer and is currently engaged in the design and planning work to begin manufacturing, later this year, of a large order which has been secured from a vaccine producer. Revenue in The Netherlands is up by $1.1 million. 

D. Net income for the first quarter of 2019 was down by $1.1 million compared to the first quarter of 2018. The drop was related to the slow period discussed above for the pharmaceutical business and the dairy farm business in the United States experiencing lower order entry and lower shipments of the highest margin products during the seasonally slow time of the year with difficult weather conditions. Net income in The Netherlands improved by $0.5 million to $6 thousand with some improvement in the market for dairy farm products and the shipment of a large order for a heat exchanger.

E. 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 included 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.   

F. Mueller B.V. was in violation of certain financial covenants in its bank borrowing facility as of December 31, 2018. On March 4, 2019, the Company loaned Mueller B.V. $3.4 million in subordinated debt. This amount plus an additional $1.1 million of subordinated debt loaned to Mueller B.V. in November 2018 was used to pay down the variable rate note payable by $4.5 million on March 8, 2019. Mueller B.V. also agreed to reduce their capacity of the revolving credit facility from $8.0 million to $6.8 million and to complete an independent review of the business and real estate valuation acceptable to the lender. In return, the lender waived the loan covenant violations as of December 31, 2018 and future violations of these covenants through March 31, 2020.

G. A total of $6.6 million has been loaned to Mueller B.V. by the Company in the trailing twelve months through March 31, 2019.  This lending and the first quarter domestic loss of $1.1 million has resulted in the Company requesting an amendment to the bank borrowing facility in the United States to accommodate its lending to Mueller B.V. On, April 25, 2019, the lender provided an amendment excluding, from the fixed charge coverage ratio calculation, $2 million of the March 4th loan to Mueller B.V. described in F. above.

H. The pre-tax results for the three months ended March 31, 2019, were unfavorably affected by a $0.7 million increase in the LIFO reserve. The pre-tax results for the twelve months ended March 31, 2019, were unfavorably affected by a $2.2 million increase in the LIFO reserve. The pre-tax results for the three months ended March 31, 2018, were unfavorably affected by a $0.6 million increase in the LIFO reserve. The pre-tax results for the twelve months ended March 31, 2018, were unfavorably affected by a $1.3 million increase in the LIFO reserve. 

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 1.23 for March, 2018; 1.14 for December, 2018 and 1.12 for March, 2019, 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 31 of the Company’s 2018 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 2018 annual report, available at www.paulmueller.com.

Press Contact: Ken Jeffries | Paul Mueller Company | Springfield, MO 65802 | (417) 575-9346
kjeffries@paulmueller.com | http://paulmueller.com