SPRINGFIELD, Mo., Oct. 25, 2019 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended September 30, 2019.

 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       
       2019 2018 2019 2018 2019 2018       
                         
 Net Sales   $45,968 $46,809 $141,911 $155,592 $187,529 $198,037       
 Cost of Sales   33,117 34,276 103,883 116,318 137,825 146,080       
   Gross Profit  $12,851 $12,533 $38,028 $39,274 $49,704 $51,957       
 Selling, General and Administrative Expense 11,205 11,098 33,701 35,172 45,666 47,015       
   Operating Income  $1,646 $1,435 $4,327 $4,102 $4,038 $4,942       
 Interest Expense  (213(182(808(733(995) (815      
 Other Income (Expense)  81 57 366 219 365 (1,126      
 Income before Provision (Benefit) for Income Taxes $1,514 $1,310 $3,885 $3,588 $3,408 $3,001       
 Provision (Benefit) for Income Taxes 374 486 861 809 524 4,864       
 Net Income (Loss)  $1,140 $824 $3,024 $2,779 $2,884 $(1,863)       
                         
 Earnings per Common Share ––Basic $0.95 $0.69 $2.53 $2.32 $2.41 ($1.56      
     Diluted $0.95 $0.69 $2.53 $2.32 $2.41 ($1.56      
                         
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME       
                         
           Nine Months Ended           
           September 30           
           2019 2018           
                         
    Net Income     $3,024 $2,779           
    Other Comprehensive Income (Loss), Net of Tax:                 
    Foreign Currency Translation Adjustment   (1,216(1,140          
                         
    Comprehensive Income   $1,808 $1,639           
                         
 CONSOLIDATED BALANCE SHEETS       
                         
           September 30 December 31           
           2019 2018           
                         
    Cash and Short-Term Investments     $993 $715           
    Accounts Receivable     25,426 27,533           
    Inventories      27,224 26,678           
    Other Current Assets     2,889 2,066           
      Current Assets $56,532 $56,992           
                         
    Net Property, Plant, and Equipment 46,866 50,699           
    Other Assets 22,901 22,497           
      Total Assets $126,299 $130,188           
                         
    Accounts Payable     $13,188 $11,177           
    Current Maturities and Short-Term debt   2,641 10,332           
    Other Current Liabilities     34,110 26,131           
      Current Liabilities $49,939 $47,640           
                         
    Long-Term Debt 15,403 21,478          
    Long-Term Pension Liabilities     29,451 32,081           
    Other Long-Term Liabilities 2,070 1,361           
      Total Liabilities     96,863 102,560           
    Shareholders' Investment 29,436 27,628           
      Total Liabilities and Shareholders' Investment $126,299 $130,188           
                         
                    
                         
                         
                         
 SELECTED FINANCIAL DATA       
                         
             September 30 December 31         
             2019 2018         
     Book Value per Common Share     $24.61 $23.10         
     Total Shares Outstanding     1,196,187 1,196,187         
     Backlog       $86,426 $97,354         
                         
  CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT        
               Accumulated Other Comprehensive Income (Loss)         
                        
       Common Stock Paid-in Surplus Retained Earnings Treasury Stock          
            Total       
 Balance, December 31, 2018  $1,508 $9,708 $61,895 $(6,332$(39,151$27,628       
 Add (Deduct):                     
  Net Income      3,024     3,024       
  Other Comprehensive Income, Net of Tax         (1,216(1,216      
 Balance, September 30, 2019  $1,508 $9,708 $64,919 $(6,332$(40,367$29,436       
                         
                         
  CONSOLIDATED STATEMENT OF CASH FLOWS       
             Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018         
                       
                       
                       
    Operating Activities:               
                    
      Net Income   $3,024 $2,779         
                    
      Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities:             
      Pension Contributions (Greater) Less than Expense   (2,631(3,625        
      Bad Debt Expense (Recovery)   (210(24        
      Depreciation & Amortization   4,919 4,568         
      (Gain) Loss on Sales of Equipment   (18(162        
      Change in Assets and Liabilities               
      (Inc) Dec in Accts and Notes Receivable   2,426 (11,127        
      (Inc) Dec in Cost in Excess of Estimated Earnings and Billings   (18050         
      (Inc) Dec in Inventories   (5461,456         
      (Inc) Dec in Prepayments   (643459         
      (Inc) Dec in Intangibles   (118-         
      (Inc) Dec Other LT Assets   (48(3        
      Inc (Dec) in Accounts Payable   2,012 1,133         
      Inc (Dec) Other Accrued Expenses   (948(247        
      Inc (Dec) Advanced Billings   7,295 (2,993        
      Inc (Dec) in Billings in Excess of Costs and Estimated Earnings   1,633 (770        
      Inc (Dec) In Other Liabilities   (19844         
      Net Cash Provided (Required) by Operating Activities   $15,769 $(8,462        
                    
    Investing Activities               
      Proceeds from Sales of Equipment   31 172         
      Additions to Property and Equipment   (1,062(4,856        
      Net Cash (Required) for Investing Activities   $(1,031$(4,684        
                    
    Financing Activities               
      (Repayment) Proceeds of Short-Term Borrowings, Net   (7,6929,360         
      (Repayment) Proceeds of Long-Term Debt   (5,553(576        
      Treasury Stock Acquisitions   - (3        
      Net Cash (Required) Provided for Financing Activities   $(13,245$8,781        
                    
    Effect of Exchange Rate Changes    (1,215(1,526        
                    
    Net Increase (Decrease) in Cash and Cash Equivalents   $278 $(5,891        
                    
    Cash and Cash Equivalents at Beginning of Year   715 6,571         
                    
    Cash and Cash Equivalents at End of Quarter   $993 $680         
                         

 

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
Revenue20192018
Domestic$36,168$33,197
Mueller BV$10,310$14,107
Eliminations($510)($495)
Net Revenue$45,968$46,809

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

Nine Months Ended September 30
Revenue20192018
Domestic$104,190$105,902
Mueller BV$39,393$50,611
Eliminations($1,672)($921)
Net Revenue$141,911$155,592

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

Twelve Months Ended September 30
Revenue20192018
Domestic$135,378$136,828
Mueller BV$54,123$62,217
Eliminations($1,972)($1,008)
Net Revenue$187,529$198,037

The chart below depicts the net income on a consolidating basis for the three months ended September 30.

Three Months Ended September 30
Net Income20192018
Domestic$2,273$1,574
Mueller BV($1,085)($740)
Eliminations($48)($10)
Net Income$1,140$824

The chart below depicts the net income on a consolidating basis for the nine months ended September 30.

Nine Months Ended September 30
Net Income20192018
Domestic$4,093$3,689
Mueller BV($997)($931)
Eliminations($72)$21
Net Income$3,024$2,779

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

Twelve Months Ended September 30
Net Income20192018
Domestic$5,090$695
Mueller BV($2,149)($2,680)
Eliminations($57)$122
Net Income$2,884($1,863)


B. Backlog fell during the first nine months of 2019 to $86.4 million on September 30, 2019 from $97.4 million on December 31, 2018. This is down from the peak of $100.7 million on June 30, 2019 as we began working through the large backlog from the strong pharmaceutical market.  In addition, the unusually large backlog in the Dairy Farm Equipment product line in which we entered 2019 has been reduced from the slowdown in the strong Canadian market and continued softness in the US market.  Backlog in The Netherlands fell to $12.7 million on September 30, 2019 from the $13.8 million on December 31, 2018, due to weaker demand in the Dutch market.  The Dutch farmer is facing uncertainty from new nitrogen-based emission limits.
  
C.Revenue for the third quarter of 2019 was down by $0.8 million compared to the third quarter of 2018. Revenues in the US were up $3.0 million, but down $3.8 million in The Netherlands.
  
 For the nine months ending September 30th, revenue was down $13.7 million. The US revenue was down $1.7 million and Mueller BV revenue was down $11.2 million primarily from a large heat transfer order that shipped in the second quarter of 2018.
  
D.Net income for the third quarter of 2019 was up $0.3 million compared to the third quarter of 2018. In the US, net income was up $0.7 million, driven by a strong showing from our Food and Dairy product line partially offset by the slowing Dairy Farm Equipment market. Mueller B.V. profits were down slightly for the quarter compared to 2018.
  
E.Net income for the nine months ending September 30, 2019 was up $0.2 million over the same period in 2018.  US net income was up $0.4 million, primarily from the Food and Dairy product line profit improvement and the positive effect of LIFO as described in footnote I.  These improvements were partially offset by the soft Dairy Farm Equipment results and the timing of recognition of revenue and profits on large pharmaceutical orders. Mueller B.V. expense control measures are showing results as profits were only down $0.1 million on $11.2 million in less revenue.
  
F.Tax expense of approximately $4.2 million was recognized in December 2017 due to new US 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. 
  
G.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. 
  
H.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 US 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, $2.0 million of the March 4th loan to Mueller B.V. described in G. above. All domestic covenants were met as of September 30, 2019.
  
I.The pre-tax results for the three months ended September 30, 2019, were unfavorably affected by $0.8 million increase in the LIFO reserve.  The pre-tax results for the nine months ended September 30, 2019, were unfavorably affected by $0.4 million increase in the LIFO reserve.  The pre-tax results for the twelve months ended September 30, 2019, were unfavorably affected by $0.3 million increase in the LIFO reserve.  The pre-tax results for the three months ended September 30, 2018, were unfavorably affected by $0.2 million 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. 
  
J.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 1.16 for September 2018; 1.14 for December 2018; and 1.10 for September 2019.

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