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CST: 23/08/2019 09:08:21   

Paul Mueller Company Announces Its First Quarter Earnings of 2019

118 Days ago

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

(In thousands)
CONSOLIDATED STATEMENTS OF INCOME
                 
  Three Months Ended     Twelve Months Ended
  March 31     March 31
  2019   2018   2019   2018
                   
Net Sales $ 41,882     $ 46,078     $ 197,014     $ 176,424  
Cost of Sales   31,826       33,802       148,284       125,772  
Gross Profit $ 10,056     $ 12,276     $ 48,730     $ 50,652  
Selling, General and Administrative Expense   11,499       11,608       47,028       44,902  
Operating Income (Loss) $ (1,443 )   $ 668     $ 1,702     $ 5,750  
Interest Expense   (408 )     (346 )     (982 )     (626 )
Other Income (Expense)   277       234       261       (1,192 )
Income (Loss) before Provision (Benefit) for Income Taxes $ (1,574 )   $ 556     $ 981     $ 3,932  
Provision (Benefit) for Income Taxes   (494 )     174       (196 )     5,733  
Net Income (Loss) $ (1,080 )   $ 382     $ 1,177     $ (1,801 )
                             
Earnings (Loss) per Common Share  ––                            
Basic $ (0.90 )   $ 0.32     $ 0.98   $ (1.51 )
Diluted $ (0.90 )   $ 0.32     $ 0.98   $ (1.51 )
                             


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
       
  Three Months Ended
  March 31
  2019   2018
       
Net Income (Loss) $ (1,080 )   $ 382
Other Comprehensive Income, Net of Tax:      
Foreign Currency Translation Adjustment   (631 )     727
Amortization of De-Designated Hedges   -       -
       
Comprehensive Income (Loss) $ (1,711 )   $ 1,109
       
CONSOLIDATED BALANCE SHEETS
       
  March 31   December 31
  2019   2018
       
Cash and Short-Term Investments $ 846     $ 715
Accounts Receivable   28,136       27,533
Inventories   30,754       26,678
Other Current Assets   3,240       2,066
Current Assets $ 62,976     $ 56,992
       
Net Property, Plant, and Equipment   49,089       50,699
Other Assets   23,365       22,497
Total Assets $ 135,430     $ 130,188
       
Accounts Payable $ 14,631     $ 11,177
Current Maturities and Short-Term debt   7,131       10,332
Other Current Liabilities   37,729       26,131
Current Liabilities $ 59,491     $ 47,640
       
Long-Term Debt   16,324       21,478
Long-Term Pension Liabilities   31,483       32,081
Other Long-Term Liabilities   2,215       1,361
Total Liabilities $ 109,513     $ 102,560
Shareholders' Investment   25,917       27,628
Total Liabilities and Shareholders' Investment $ 135,430     $ 130,188
             


SELECTED FINANCIAL DATA
         
  March 31 December 31
  2019 2018
Book Value per Common Share $ 21.67   $ 23.10  
Total Shares Outstanding     1,196,187       1,196,187  
Backlog $   89,946   $   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 (Loss)         (1,080 )               (1,080 )
Other Comprehensive Income, Net of Tax                     (631 )   (631 )
Treasury Stock Acquisition                            
Balance,  March 31, 2019 $ 1,508   $ 9,708   $ 60,815     $ (6,332 )   $ (39,782 )   $ 25,917  
                                   


CONSOLIDATED STATEMENT OF CASH FLOWS
 
  Three Months Ended March 31, 2019   Three Months Ended March 31, 2018
Operating Activities:      
       
Net Income (Loss) $ (1,080 )   $ 382  
       
Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities:      
Pension Contributions (Greater) Less than Expense   (598 )     (4,058 )
Bad Debt Expense (Recovery)   (181 )     5  
Depreciation & Amortization   1,615       1,329  
(Gain) Loss on Sales of Equipment   (18 )     (152 )
Change in Assets and Liabilities      
(Inc) Dec in Accts and Notes Receivable   (418 )     (4,748 )
(Inc) Dec in Cost in Excess of Estimated Earnings and Billings   (43 )     (53 )
(Inc) Dec in Inventories   (4,076 )     (3,865 )
(Inc) Dec in Prepayments   (1,131 )     (474 )
(Inc) Dec Other Assets   (178 )     (1 )
Inc (Dec) in Accounts Payable   3,455       3,084  
Inc (Dec) Other Accrued Expenses   (739 )     (3,859 )
Inc (Dec) Advanced Billings   12,375       3,804  
Inc (Dec) in Billings in Excess of Costs and Estimated Earnings   (39 )     1,096  
Inc (Dec) In Other Liabilities   (70 )     51  
Net Cash Provided (Required) by Operating Activities $ 8,874     $ (7,459 )
       
Investing Activities      
Proceeds from Sales of Equipment   27       152  
Additions to Property and Equipment   (2 )     (7,452 )
Net Cash Provided (Required) for Investing Activities $ 25     $ (7,300 )
       
Financing Activities      
Proceeds (Repayment) of Short-Term Borrowings, Net   (3,202 )     5,488  
Proceeds (Repayment) of Long-Term Debt   (4,868 )     4,569  
Treasury Stock Acquisitions   -       (2 )
Net Cash (Required) Provided for Financing Activities $ (8,070 )   $ 10,055  
       
Effect of Exchange Rate Changes   (698 )     399  
       
Net Increase (Decrease) in Cash and Cash Equivalents $ 131     $ (4,305 )
       
Cash and Cash Equivalents at Beginning of Year   715       6,571  
       
Cash and Cash Equivalents at End of Quarter $ 846     $ 2,266  
               

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.

Three Months Ended March 31
Revenue   2019     2018  
Domestic $   27,912   $   32,633  
Mueller BV $   14,663   $   13,608  
Eliminations $   (693 ) $   (163 )
Net Revenue $   41,882   $   46,078  
             

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

Twelve Months Ended March 31
Revenue   2019     2018  
Domestic $   132,369   $   125,521  
Mueller BV $   66,396   $   51,516  
Eliminations $   (1,751 ) $   (613 )
Net Revenue $   197,014   $   176,424  
             

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

Three Months Ended March 31
Net Income   2019     2018  
Domestic $ (1,056 ) $ 854  
Mueller BV $ 6   $ (497 )
Eliminations $ (30 ) $ 25  
Net Income $ (1,080 ) $ 382  
             

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

Twelve Months Ended March 31
Net Income   2019     2018  
Domestic $ 2,776   $ 184  
Mueller BV $ (1,580 ) $ (2,121 )
Eliminations $ (19 ) $ 136  
Net Income $ 1,177   $ (1,801 )
             

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

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