SPRINGFIELD, Mo., July 26, 2019 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended June 30, 2019.

PAUL MUELLER COMPANY
SIX-MONTH REPORT
Unaudited
(In thousands)
CONSOLIDATED STATEMENTS OF INCOME
              
   Three Months Ended Six Months Ended Twelve Months Ended
   June 30 June 30 June 30
    2019   2018   2019   2018   2019   2018 
              
Net Sales $  54,061  $  62,705  $  95,943  $  108,783  $  188,370  $  199,499 
Cost of Sales    38,940     48,240     70,766     82,042     138,984     146,078 
Gross Profit $  15,121  $  14,465  $  25,177  $  26,741  $  49,386  $  53,421 
Selling, General and Administrative Expense    10,997     12,409     22,496     24,074     45,559     46,738 
Operating Income (Loss) $  4,124  $  2,056  $  2,681  $  2,667  $  3,827  $  6,683 
Interest Expense    (187)    (205)    (595)    (551)    (964)    (770)
Other Income (Expense)    8     (129)    285     162     341     (1,245)
Income (Loss) before Provision (Benefit) for Income Taxes$  3,945  $  1,722  $  2,371  $  2,278  $  3,204  $  4,668 
Provision (Benefit) for Income Taxes    981     149     487     323     636     5,549 
Net Income (Loss) $  2,964  $  1,573  $  1,884  $  1,955  $  2,568  $  (881)
              
Earnings per Common Share  ––Basic $2.48  $1.31  $1.58  $1.63  $2.15  $(0.74)
 Diluted $2.48  $1.31  $1.58  $1.63  $2.15  $(0.74)

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
     
  Six Months Ended
  June 30
   2019   2018 
     
Net Income $  1,884  $  1,955 
Other Comprehensive Income, Net of Tax:    
Foreign Currency Translation Adjustment  12   (814)
Change in Pension Liability    -      -  
Amortization of De-Designated Hedges    -      -  
Comprehensive Income  $  1,896  $  1,141 


CONSOLIDATED BALANCE SHEETS
     
  June 30 December 31
   2019   2018 
     
Cash and Short-Term Investments $  897  $  715 
Accounts Receivable    34,867     27,533 
Inventories    25,238     26,678 
Other Current Assets    2,096     2,066 
Current Assets $  63,098  $  56,992 
     
Net Property, Plant, and Equipment    49,198     50,699 
Other Assets    23,457     22,497 
Total Assets $  135,753  $  130,188 
     
Accounts Payable $  13,732  $  11,177 
Current Maturities and Short-Term Debt    9,277     10,332 
Other Current Liabilities    33,989     26,131 
Current Liabilities $  56,998  $  47,640 
     
Long-Term Debt    16,223     21,478 
Long-Term Pension Liabilities    30,841     32,081 
Other Long-Term Liabilities    2,167     1,361 
Total Liabilities $  106,229  $  102,560 
Shareholders' Investment    29,524     27,628 
Total Liabilities and Shareholders' Investment $  135,753  $  130,188 
     


SELECTED FINANCIAL DATA
     
  June 30 December 31
   2019   2018 
Book Value per Common Share $24.68  $23.10 
Total Shares Outstanding    1,196,187     1,196,187 
Backlog $  100,693  $  97,354 


 CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT 
   Common
Stock 
 Paid-in Surplus Retained
Earnings
 Treasury Stock Accumulated
Other
Comprehensive
Income (Loss)
 Total
Balance, December 31, 2018 $  1,508  $  9,708  $  61,895  $  (6,332) $  (39,151) $  27,628 
Add (Deduct):            
Net Income      1,884         1,884 
Other Comprehensive Income, Net of Tax          12     12 
Treasury Stock Acquisition               - 
Balance, June 30, 2019 $  1,508  $  9,708  $  63,779  $  (6,332) $  (39,139) $  29,524 



 CONSOLIDATED STATEMENT OF CASH FLOWS
  Six Months
Ended
June 30, 2019
 Six Months
Ended
June 30,2018
Operating Activities:    
     
Net Income $  1,884  $  1,955 
     
Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities:    
Pension Contributions (Greater) Less than Expense    (1,241)    (3,841)
Bad Debt Expense (Recovery)    (242)    (20)
Depreciation & Amortization    3,275     2,928 
(Gain) Loss on Sales of Equipment    (17)    (156)
Change in Assets and Liabilities    
(Inc) Dec in Accts and Notes Receivable    (7,053)    (10,503)
(Inc) Dec in Cost in Excess of Estimated Earnings and Billings    251     (54)
(Inc) Dec in Inventories    1,440     (422)
(Inc) Dec in Prepayments    (280)    (1,814)
(Inc) Dec Other Assets    (78)    (3)
Inc (Dec) in Accounts Payable    2,555     6,220 
Inc (Dec) Other Accrued Expenses    (2,478)    (1,363)
Inc (Dec) Advanced Billings    3,965     (4,687)
Inc (Dec) in Billings in Excess of Costs and Estimated Earnings    6,371     (648)
Inc (Dec) in Other Long-Term Liabilities    (135)    (190)
Net Cash Provided (Required) by Operating Activities $  8,217  $  (12,598)
     
Investing Activities    
Proceeds from Sales of Equipment    31     161 
Additions to Property and Equipment    (1,768)    (3,840)
Net Cash (Required) for Investing Activities $  (1,737) $  (3,679)
     
Financing Activities    
(Repayment) Proceeds of Short-Term Borrowings, Net    (1,055)    9,869 
(Repayment) Proceeds of Long-Term Debt    (5,210)    1,768 
Treasury Stock Acquisitions    -     (2)
Net Cash (Required) Provided for Financing Activities $  (6,265) $  11,635 
     
Effect of Exchange Rate Changes     (33)    (1,141)
     
Net Increase (Decrease) in Cash and Cash Equivalents $  182  $  (5,783)
     
Cash and Cash Equivalents at Beginning of Year  715   6,571 
     
Cash and Cash Equivalents at End of Quarter $  897  $  788 
     


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 2019  2018 
Domestic$40,110 $40,073 
Mueller BV$14,419 $22,896 
Eliminations$(468)$(264)
Net Revenue$54,061 $62,705 

The chart below depicts the net revenue on a consolidating basis for the six months ended June 30.

Six Months Ended June 30
Revenue 2019  2018 
Domestic$68,022 $72,705 
Mueller BV$29,082 $36,504 
Eliminations$(1,161)$(426)
Net Revenue$95,943 $108,783 

The chart below depicts the net revenue on a consolidating basis for the twelve months ended June 30.

Twelve Months Ended June 30
Revenue 2019  2018 
Domestic$132,407 $138,528 
Mueller BV$57,919 $61,651 
Eliminations$(1,956)$(680)
Net Revenue$188,370 $199,499 

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 2019  2018 
Domestic$2,878 $1,261 
Mueller BV$83 $309 
Eliminations$3 $3 
Net Income$2,964 $1,573 

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 2019  2018 
Domestic$1,822 $2,115 
Mueller BV$88 $(191)
Eliminations$(26)$31 
Net Income$1,884 $1,955 

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 2019  2018 
Domestic$4,393 $1,121 
Mueller BV$(1,804)$(2,131)
Eliminations$(21)$129 
Net Income$2,568 $(881)

B. Backlog rose during the first half of 2019 to $100.7 million on June 30, 2019 from $97.4 million on December 31, 2018. The increase was additional orders in the strong pharmaceutical market offset by the reduction in backlog in 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 to $10.8 million on March 31, 2019 from the $13.8 million on December 31, 2018, due to weaker demand in the Dutch market.

C. Revenue for the second quarter of 2019 was down by $8.6 million compared to the second quarter of 2018. Revenues were flat in the US and the drop was related primarily to a large heat transfer order that Mueller B.V. shipped in the second quarter of last year.  

D. Net income for the second quarter of 2019 was up $1.4 million compared to the second quarter of 2018. In the US, Net Income was up $1.6 million, primarily from the $1.3 million (net of tax) positive change in the effect of LIFO explained in footnote H. Mueller B.V. profits were down slightly for the quarter compared to 2018.  However, their expense control measures are beginning to work as profits were only down $0.2 million on $8.5 million in less revenue. 

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.  The independent business review was finished and reviewed with the bank.  Management and the bank are currently discussing a path forward.

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. All covenants were met as of June 30, 2019.

H. The pre-tax results for the three months ended June 30, 2019, were favorably affected by a $0.4 million decrease in the LIFO reserve. The pre-tax results for the six months ended June 30, 2019, were unfavorably affected by a $0.4 million increase in the LIFO reserve. The pre-tax results for the twelve months ended June 30, 2019, were unfavorably affected by a $0.5 increase in the LIFO reserve. 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.  

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 1.17 for June, 2018; 1.14 for December, 2018; and 1.14 for June, 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 in the Company’s Annual Report under “Safe Harbor for Forward-Looking Statements”, 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