Paul Mueller Company Announces Its Second Quarter Earnings of 2021

Friday, 30. July 2021 22:07

SPRINGFIELD, Mo., July 30, 2021 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended June 30, 2021.

  
 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
       2021 2020 2021 2020 2021 2020
                  
 Net Sales    $49,278 $53,223 $94,557 $95,383 $200,290 $196,617
 Cost of Sales   33,909 36,602 65,747 66,901 139,159 138,570
         Gross Profit  $15,369 $16,621 $28,810 $28,482 $61,131 $58,047
 Selling, General and Administrative Expense 11,553 11,484 22,861 21,989 45,027 45,165
 Goodwill Impairment Expense  - - - - 15,397 -
         Operating Income  $3,816 $5,137 $5,949 $6,493 $707 $12,882
 Interest Expense  (91) (94) (542) (709) (825) (941)
 Other Income   2,004 5 2,042 442 2,808 508
 Income before Provision for Income Taxes $5,729 $5,048 $7,449 $6,226 $2,690 $12,449
 Provision for Income Taxes  949 1,200 1,368 1,503 3,889 3,021
 Net Income (Loss)  $4,780 $3,848 $6,081 $4,723 $(1,199) $9,428
                  
 Earnings (Loss) per Common Share ––Basic $4.38 $3.22 $5.56 $3.95 ($1.05) $7.88
     Diluted $4.38 $3.22 $5.56 $3.95 ($1.05) $7.88
                  

 


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
           
        Six Months Ended
        June 30
        2021 2020
           
 Net Income     $6,081 $4,723
 Other Comprehensive Income, Net of Tax:      
 Foreign Currency Translation Adjustment   (847) 16
 Comprehensive Income   $5,234 $4,739
           
CONSOLIDATED BALANCE SHEETS
           
        June 30 December 31
        2021 2020
           
 Cash and Short-Term Investments     $11,601 $22,943
 Accounts Receivable      25,124 20,462
 Inventories      24,743 17,926
 Current Net Investments in Sales-Type Leases   4 3
 Other Current Assets      2,581 1,771
         Current Assets $64,053 $63,105
           
 Net Property, Plant, and Equipment 44,034 46,570
 Right of Use Assets 2,343 2,448
 Other Assets 8,737 8,732
 Long-Term Net Investments in Sales-Type Leases 119 83
         Total Assets $119,286 $120,938
           
 Accounts Payable      $12,073 $11,316
 Current Maturities and Short-Term Debt     1,390 2,115
 Current Lease Liabilities     482 519
 Other Current Liabilities     26,556 24,656
         Current Liabilities $40,501 $38,606
           
 Long-Term Debt 15,509 18,440 
 Long-Term Pension Liabilities     28,126 30,047
 Other Long-Term Liabilities 2,680 2,226
 Lease Liabilities 886 1,075
         Total Liabilities      $87,702 $90,394
 Shareholders' Investment 31,584 30,544
         Total Liabilities and Shareholders' Investment $119,286 $120,938



SELECTED FINANCIAL DATA
            
         June 30 December 31
         2021 2020
 Book Value per Common Share     $28.94 $25.54
 Total Shares Outstanding     1,091,464 1,195,747
 Backlog       $76,118 $61,563

 


  CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
               Accumulated  
               Other  
        Common Paid-in Retained  Treasury Comprehensive  
       Stock Surplus Earnings Stock  Income (Loss) Total 
 Balance, December 31, 2020  $1,508 $9,708 $65,927 $(6,344) $(40,255) $30,544
 Add (Deduct):             
  Net Income      6,081     6,081
  Other Comprehensive Income, Net of Tax         (847) (847)
  Treasury Stock Acquisition        (4,194)   (4,194)
 Balance, June 30, 2021  $1,508 $9,708 $72,008 $(10,538) $(41,102) $31,584

 


 CONSOLIDATED STATEMENT OF CASH FLOWS
          Six Months Six Months 
           Ended  Ended 
          June 30, 2021 June 30, 2020
             
 Operating Activities:      
        
  Net Income   $6,081 $4,723
        
  Adjustment to Reconcile Net Income to Net Cash (Required) Provided by Operating Activities:  
 Pension Contributions (Greater) Less than Expense   (1,921) (2,142)
 Bad Debt (Recovery)   (44) (26)
 Depreciation & Amortization   3,277 3,192
 (Gain) Loss on Sales of Equipment   (18) 1
 PPP Loan Forgiveness   (1,884) -
 Change in Assets and Liabilities      
 (Inc) Dec in Accts and Notes Receivable   (4,618) 6,514
 (Inc) Dec in Cost in Excess of Estimated Earnings and Billings   (824) 1,229
 (Inc) in Inventories   (5,947) (1,345)
 Dec in Prepayments   14 755
 (Inc) in Net Investment in Sales-type leases   (37) (41)
 Dec in Other Assets   611 71
 Inc in Accounts Payable   757 1,382
 (Dec) Inc in Other Accrued Expenses   (4,061) 5,169
 Inc in Advanced Billings   7,944 5,366
 (Dec) in Billings in Excess of Costs and Estimated Earnings   (1,982) (4,480)
 Inc in Lease Liability for Operating       51 -
 Inc in Lease Liability for Financing       43 -
 Principal payments of Lease Liability for Operating     (137) (25)
 (Dec) Inc in Other Long-Term Liabilities   (47) 66
 Net Cash (Required) Provided by Operating Activities   $(2,742) $20,409
        
 Investing Activities      
 Proceeds from Sales of Equipment   24 3
 Additions to Property, Plant, and Equipment   (2,188) (824)
 Net Cash (Required) for Investing Activities   $ (2,164) $ (821)
        
 Financing Activities      
 Principal payments of Lease Liability for Financing   (136) -
 (Repayment) Proceeds of Short-Term Borrowings, Net   (610) (4,875)
 (Repayment) Proceeds of Long-Term Debt   (843) 2,758
 Treasury Stock Acquisitions   (4,194) (3)
 Net Cash (Required) for Financing Activities   $(5,783) $(2,120)
        
 Effect of Exchange Rate Changes    (653) 14
        
 Net (Decrease) Increase in Cash and Cash Equivalents   $(11,342) $17,482
        
 Cash and Cash Equivalents at Beginning of Year   22,943 1,072
        
 Cash and Cash Equivalents at End of Quarter   $11,601 $18,554
             

 


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 2021  2020 
Domestic$37,494 $41,902 
Mueller BV$12,194 $11,587 
Eliminations($410)($266)
Net Revenue$49,278 $53,223 

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

Six Months Ended June 30
Revenue 2021  2020 
Domestic$70,991 $71,526 
Mueller BV$24,221 $24,389 
Eliminations($655)($532)
Net Revenue$94,557 $95,383 

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

Twelve Months Ended June 30
Revenue 2021  2020 
Domestic$154,353 $148,004 
Mueller BV$47,045 $49,743 
Eliminations($1,108)($1,130)
Net Revenue$200,290 $196,617 

 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 2021  2020 
Domestic$4,766 $3,526 
Mueller BV$11 $316 
Eliminations$3 $6 
Net Income$4,780 $3,848 

 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 2021  2020 
Domestic$6,448 $4,452 
Mueller BV($383)$262 
Eliminations$16 $9 
Net Income$6,081 $4,723 

 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 2021  2020 
Domestic$14,180 $10,042 
Mueller BV($15,403)($631)
Eliminations$24 $17 
Net Income($1,199)$9,428 

 

B.   We have continued to have positive results in the first half of 2021. Backlog across most business segments has been strengthening. However, a spike in COVID-19 cases, particularly in southwest Missouri, the location of our headquarters is concerning. A continued tightening of labor and materials markets will also pose a challenge for the remainder of 2021. Although we are once again implementing remote work for some office staff and physical separation in our locations due to the COVID-19 spike in our area and facilities, our facilities are operating.

C.   June 30, 2021, the backlog was $76.1 million compared to $61.6 million on December 31, 2020. However, when comparing the current backlog to the June 30, 2020 backlog, it has dropped 13% from $87.5 million. Although this is a reduction of $11.4 million, the backlog has fallen $40.3 million from the large pharmaceutical order and Mueller Field Operations (MFO) large juice storage facility project, both nearing completion.   Excluding these two jobs, backlog in the US is $60.0 million, which is up $26.8 million from a low of $33.2 million on June 30, 2020, during the height of the COVID-19 slowdown. The backlog is stronger across all business segments in the US. Likewise, Mueller BV backlog is stronger across all business segments and is up $2.0 million from a year ago.

D.   Revenue for the three months is down 7.4% from a year ago, primarily from MFO’s substantial revenue for the quarter a year ago from its large project. Revenue in the US for the trailing twelve months is up 4.3%, driven by the same large project. In the Netherlands, revenue is up slightly from the year before for three months, primarily from the slight weakening of the dollar against the euro and down 5.4% for the trailing twelve months as Europe is recovering more slowly from the effects of COVID-19.

E.   The Company was granted a loan for $1.9 million under the Paycheck Protection Program under Division A, Title I of the CARES Act, enacted on March 27, 2020. The loan, which was in the form of a note dated June 12, 2020, issued to the Company, matures on June 11, 2025, and bears interest at a rate of 1% per annum, with a deferral of payments for the first six months. The note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent, utilities, and maintains its payroll levels. The Company filed for the forgiveness of the loan on November 17, 2020, and the loan was forgiven on June 10, 2021. The $1.9 million credit for the loan forgiveness is in Other Income and is a non-cash financing activity.

F.   Net income for the three months was $4.8 million, which improved by $0.9 million over the second quarter of last year. Net income in the US was favorable $1.2 million driven by the $1.9 million PPP loan forgiveness, but partially offset by a $0.3 million negative impact from LIFO. Operationally, the most significant contributors to the improvement in the US are the rebound of the Dairy Farm Equipment (DFE) segment and strong results from our Components business unit. However, these results were reduced from less profit from reduced revenue as the large pharmaceutical, and large juice storage facility jobs wind down. In the Netherlands, net income is down $0.3 million primarily from slightly lower margins and effects of change in the exchange rate.

Net income for the trailing twelve months is a $1.2 million loss. However, when the $15.4 million goodwill impairment for the Mueller BV acquisition is excluded, net income would be $14.2 million. This is a $4.8 million (51%) improvement over the previous trailing twelve months’ net income even after absorbing a $1.0 million after-tax negative impact from the LIFO reserve. The pharmaceutical groups, DFE, Components, and MFO all show good year-over-year improvement. In the Netherlands, net income would be break-even when excluding the goodwill impairment. This is an improvement from the $0.6 million loss in the prior twelve months, even with lower revenue.

In June, the Company increased wages of the production workers in the US in response to the shortage of qualified workers and the labor shortage in general. Many of the non-manufacturing hourly wages were adjusted in July, and salaried positions are also under review. The estimated annual impact of these changes on net income will be a negative $2.0-2.5 million, with half of this amount impacting 2021 results.

G.   On March 19, 2021, the Company announced a stock repurchase plan of up to $2 million to begin on April 2, 2021, under a prearranged stock trading plan (a “10b5-1 Plan”) adopted by the Company to execute such repurchases in compliance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions in compliance with applicable state and federal securities laws. A total of 4,254 shares were repurchased through the 10b5-1 Plan during the second quarter. The total shares repurchased in 2021 are 104,283.

H.   The pre-tax results for the three months ended June 30, 2021, were unfavorably affected by a $0.3 million increase in the LIFO reserve. The pre-tax results for the six months ended June 30, 2021, were unfavorably impacted by a $1.1 million increase in the LIFO reserve. The pre-tax results for the twelve months ended June 30, 2021, were unfavorably affected by a $0.9 million increase in the LIFO reserve. The pre-tax results for the three and six months ended June 30, 2020, were favorably impacted by $0.1 million decreases in the LIFO reserve. The pre-tax results for the twelve months ended June 30, 2020, were favorably affected by a $0.5 million reduction in the LIFO reserve.

I.   The consolidated financials are affected by the euro to the dollar exchange rate when consolidating Mueller B.V., the Dutch subsidiary. The month-end euro to dollar exchange rate was 1.12 for June 2020, 1.23 for December 2020, and 1.19 for June 2021.

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 2020 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 


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