Paul Mueller Company Announces Its Third Quarter Earnings of 2023


SPRINGFIELD, Mo., Oct. 27, 2023 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended September 30, 2023.

 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
       2023 2022 2023 2022 2023 2022
                  
 Net Sales    $ 57,088 $ 45,766 $ 173,370 $ 132,518 $ 232,372 $ 179,511
 Cost of Sales    38,948 34,801 119,881 102,204 169,963 139,665
 Gross Profit   $ 18,140 $ 10,965 $ 53,489 $ 30,314 $ 62,409 $ 39,846
 Selling, General and Administrative Expense 11,245 9,695 36,546 30,332 41,225 40,088
 Operating Income (Loss)  $ 6,895 $ 1,270 $ 16,943 $ (18) $ 21,184 $ (242)
 Interest Expense   (82) (105) (259) (610) (346) (708)
 Other Income    477 38 1,810 176 2,749 2,956
 Income (Loss) before Provision (Benefit) for Income Taxes     $ 7,290 $ 1,203 $ 18,494 $ (452) $ 23,587 $ 2,006
 Provision (Benefit) for Income Taxes 1,786 223 4,510 (161) 5,703 335
 Net Income (Loss)  $ 5,504 $ 980 $ 13,984 $ (291) $ 17,884 $ 1,671
                  
 Earnings (Loss) per Common Share -Basic and Diluted $5.07 $0.90 $12.88 ($0.27) $16.47 $1.54
                  
                  
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                  
           Nine Months Ended    
           September 30    
           2023 2022    
                  
    Net Income (Loss)     $ 13,984 $ (291)    
    Other Comprehensive Income (Loss), Net of Tax:          
    Foreign Currency Translation Adjustment   (275) (3,292)    
    Comprehensive Income (Loss)   $ 13,709 $ (3,583)    
                  
 CONSOLIDATED BALANCE SHEETS
                  
           September 30 December 31    
           2023 2022    
                  
    Cash and Short-Term Investments     $ 41,527 $ 38,176    
    Accounts Receivable     24,126 20,580    
    Inventories (FIFO)     51,042 48,515    
    LIFO Reserve      (22,233) (21,691)    
    Inventories (LIFO)     28,809 26,824    
    Current Net Investments in Sales-Type Leases   25 24    
    Other Current Assets     3,721 3,156    
    Current Assets $ 98,208 $ 88,760    
                  
    Net Property, Plant, and Equipment 40,689 41,511    
    Right of Use Assets 2,147 2,304    
    Other Assets 5,283 5,041    
    Long-Term Net Investments in Sales-Type Leases 391 312    
    Total Assets $ 146,718 $ 137,928    
                  
    Accounts Payable     $ 11,654 $ 11,802    
    Current Maturities and Short-Term debt   624 628    
    Current Lease Liabilities     376 448    
    Advance Billings      36,551 41,288    
    Pension Liabilities     9,972 11,558    
    Other Current Liabilities     22,023 20,062    
    Current Liabilities $ 81,200 $ 85,786    
                  
    Long-Term Debt 8,824 9,349     
    Long-Term Pension Liabilities     236 236    
    Other Long-Term Liabilities 2,537 1,737    
    Lease Liabilities 643 762    
    Total Liabilities     $ 93,440 $ 97,870    
    Shareholders' Investment 53,278 40,058    
    Total Liabilities and Shareholders' Investment $ 146,718 $ 137,928    
                  
             
                  
                  
                  
 SELECTED FINANCIAL DATA
                  
             September 30 December 31  
             2023 2022  
     Book Value per Common Share     $49.07 $36.90  
     Total Shares Outstanding     1,085,711 1,085,711  
     Backlog       $ 99,441 $ 132,829  
                  
  CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
                  
                  
       Common
Stock
 Paid-in Surplus Retained
Earnings
 Treasury Stock Accumulated Other
Comprehensive
Income (Loss)
 Total 
                  
 Balance, December 31, 2022  $ 1,508 $ 9,708 $ 75,721 $ (10,787) $ (36,092) $ 40,058
 Add (Deduct):               
  Net Income      13,984     13,984
  Other Comprehensive Income (Loss), Net of Tax        (275) (275)
  Dividends, $.45 per Common Share     (489)     (489)
  Treasury Stock Acquisition            -
 Balance, September 30, 2023  $ 1,508 $ 9,708 $ 89,216 $ (10,787) $ (36,367) $ 53,278
                  
                  
 CONSOLIDATED STATEMENT OF CASH FLOWS
             Nine Months
Ended
September 30, 
2023
 Nine Months
Ended
September 30, 
2022
  
                  
                  
    Operating Activities:        
             
    Net Income (Loss)   $ 13,984 $ (291)  
             
    Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities:      
    Pension Contributions (Greater) Less than Expense   (1,586) (2,950)  
    Bad Debt Expense (Recovery)   112 (1)  
    Depreciation & Amortization   4,718 4,549  
    (Gain) on Sales of Equipment   (48) (4)  
    Change in Assets and Liabilities        
    (Inc) Dec in Accts and Notes Receivable   (3,658) 5,266  
    (Inc) in Cost in Excess of Estimated Earnings and Billings   (109) -  
    (Inc) in Inventories   (1,985) (7,358)  
    (Inc) in Prepayments   (456) (2,742)  
    (Inc) in Net Investment in Sales-type leases     (80) (86)  
    Dec in Other LT Assets   373 218  
    (Dec) in Accounts Payable   (148) (3,284)  
    Inc (Dec) in Accrued Income Tax       3,519 (1)  
    Inc in Other Accrued Expenses   5,515 1,468  
    (Dec) Inc in Advanced Billings   (4,737) 15,494  
    (Dec) Inc in Billings in Excess of Costs and Estimated Earnings   (7,073) 7,554  
    Inc in Lease Liability for Operating      - 220  
    Inc in Lease Liability for Financing       130 -  
    Principal payments of Lease Liability for Operating    (163) (231)  
    Inc (Dec) In Other Long-Term Liabilities   197 (175)  
    Net Cash Provided by Operating Activities   $ 8,505 $ 17,646  
             
    Investing Activities        
    Intangibles   (62) -  
    Proceeds from Sales of Equipment   83 11  
    Additions to Property, Plant, and Equipment   (4,351) (5,838)  
    Net Cash (Required) for Investing Activities   $ (4,330) $ (5,827)  
             
    Financing Activities        
    Principal payments of Lease Liability for Financing   (146) (144)  
    (Repayment) of Short-Term Borrowings, Net   - -  
    (Repayment) of Long-Term Debt   (479) (957)  
    Dividends Paid       (489) (489)  
    Treasury Stock Acquisitions   - (38)  
    Net Cash (Required) for Financing Activities   $ (1,114) $ (1,628)  
             
    Effect of Exchange Rate Changes   290 (601)  
             
    Net Increase in Cash and Cash Equivalents   $ 3,351 $ 9,590  
             
    Cash and Cash Equivalents at Beginning of Year   38,176 11,281  
             
    Cash and Cash Equivalents at End of Quarter   $ 41,527 $ 20,871  
                  

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 
Revenue 2023  2022  
Domestic$46,044 $35,464  
Mueller BV$11,366 $10,316  
Eliminations($322) ($14)  
Net Revenue$57,088 $45,766  
    
The chart below depicts the net revenue on a consolidating basis for the nine months ended September 30.    
    
Nine Months Ended September 30 
Revenue 2023  2022  
Domestic$139,924 $97,895  
Mueller BV$34,743 $35,354  
Eliminations($1,297) ($731)  
Net Revenue$173,370 $132,518  
    
The chart below depicts the net revenue on a consolidating basis for the twelve months ended September 30. 
    
Twelve Months Ended September 30 
Revenue 2023  2022  
Domestic$187,222 $130,791  
Mueller BV$46,745 $49,805  
Eliminations($1,595) ($1,085)  
Net Revenue$232,372 $179,511  
    
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 2023  2022  
Domestic$5,078 $1,308  
Mueller BV$426 ($333)  
Eliminations$0 $5  
Net Income$5,504 $980  
    
The chart below depicts the net income (loss) on a consolidating basis for the nine months ended September 30. 
    
Nine Months Ended September 30 
Net Income 2023  2022  
Domestic$14,233 $658  
Mueller BV($234) ($955)  
Eliminations($15) $6  
Net Income (Loss)$13,984 ($291)  
    
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 2023  2022  
Domestic$18,092 $1,619  
Mueller BV($182) $6  
Eliminations($26) $46  
Net Income$17,884 $1,671  
    

B. Key headlines for the quarter:

  • In the US, the Company continues to perform well against a strong backlog which has contributed to excellent results for the first nine months of the year.
  • In April, 2023, Mueller B.V. announced organizational changes aimed to improve earnings which can be seen in recent results. The Net Loss for the 1st Quarter of 2023 was $(770) thousand. The YTD Net Loss as of September 30, 2023 is $(234) thousand, a $536 thousand improvement.
  • The standard plan termination of the Company’s two domestic pension plans is progressing well with an anticipated completion before December 31, 2023.

C. September 30, 2023 backlog is $99.4 million compared to $139.2 million at September 30, 2022. Although down from the previous year, the backlog is still healthy from a historical perspective. The September 30th backlog in the U.S. is $90.3 million as compared to $130.4 million at September 30, 2022. The reduction in U.S. backlog occurred primarily in the pharmaceutical activities of the Company. In the Netherlands, the backlog is $9.7 million at September 30, 2023 compared to $9.4 million September 20, 2022.

D. Revenue is up from the previous year by $11.3 million, $40.9 million and $52.9 million on a three-month, nine-month and twelve-month basis. Most every business segment in the U.S. has an increase led by the pharmaceutical and food and beverage groups. In the Netherlands, revenue is up $1.0 million for the quarter and down for the nine-month and twelve-month periods compared to last year.

Net Income is up from the previous year by $4.5 million, $14.3 million and $16.2 million on a three-month, nine-month and twelve-month basis. This improvement is partially driven by the US operations where the 2023 profits are less negatively affected by the change in the LIFO reserve as outlined in footnote F. However, the greater impact has been an increased focus on improving margins. Gross profit in the US (excluding the effects of LIFO) as a percentage of revenue is 30.2% as September 30, 2023. This compares to 21.2% for the first nine months of 2022. This improved margin coupled with the $42.0 million increase in revenue has led to the excellent results for the first nine months.

E. The Company has pension plans covering domestic employees represented by a bargaining unit (Contract Plan) and employees not represented by a bargaining unit (Noncontract Plan). The participants discontinued accruing benefits in these plans in 2011. On November 1, 2022, and December 1, 2022, the Company announced that it had initiated a standard plan termination of the Contract Plan and Noncontract Plan, respectively. The Company applied to the IRS for its approval of the terminations on December 15, 2022. The Company gave notice of intent to terminate to the PBGC for the Contract Plan on June 27, 2023 and the Noncontract Plan on July 14, 2023. The Company has received no questions from the PBGC and on September 28, 2023, the Company received a favorable determination letter from the IRS.

In September, plan termination election packets were mailed to current employees and former employees who are vested but are not receiving pension payments. The Company plans to complete the termination by the end of 2023, culminating in the affected participants receiving either a lump sum payment or a monthly annuity payment provided by an insurance company. Participants have until October 31st to make their election.

The underfunded status of the two plans combined as of December 31, 2022, was $11.8 million. These terminations will require approximately this amount of cash from the Company, adjusted for any further changes to the plans’ funded status. The terminations will end future requirements for Company contributions to the plans, which have averaged $4.2 million per year in the previous three years. The Company expects to complete the terminations in late 2023 at which time the accumulated actuarial losses will be recognized as a non-cash reduction of pretax earnings. The accumulated actuarial loss related to these plans was $44,874,302 as of December 31, 2022.

F. The pre-tax results for the three months ended September 30, 2023, were unfavorably affected by $0.3 million increase in the LIFO reserve. The pre-tax results for the nine months ended September 30, 2023, were unfavorably affected by $0.5 million increase in the LIFO reserve. The pre-tax results for the twelve month ended September 30, 2023 were unfavorably affected by $0.9 million increase in the LIFO reserve. The pre-tax results for the three months ended September 30, 2022, were unfavorably affected by $0.9 million increase in the LIFO reserve. The pre-tax results for the nine months ended September 30, 2022, were unfavorably affected by $4.5 million increase in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2022, were unfavorably affected by $5.6 million increase in the LIFO reserve.

G. 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 .98 for September 2022; 1.07 for December 2022; and 1.06 for September 2023.

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 2022 annual report, available at
www.paulmueller.com.

Press Contact: Ken Jeffries | Paul Mueller Company | Springfield, MO 65802 | (417) 575-9346

kjeffries@paulmueller.com | https://paulmueller.com