U.S. markets open in 7 hours 25 minutes
  • S&P Futures

    4,220.25
    +10.25 (+0.24%)
     
  • Dow Futures

    33,338.00
    +78.00 (+0.23%)
     
  • Nasdaq Futures

    13,438.50
    +46.50 (+0.35%)
     
  • Russell 2000 Futures

    1,974.10
    +4.60 (+0.23%)
     
  • Crude Oil

    91.83
    -0.10 (-0.11%)
     
  • Gold

    1,801.40
    -12.30 (-0.68%)
     
  • Silver

    20.46
    -0.28 (-1.36%)
     
  • EUR/USD

    1.0283
    -0.0019 (-0.19%)
     
  • 10-Yr Bond

    2.7860
    0.0000 (0.00%)
     
  • Vix

    19.74
    -2.03 (-9.32%)
     
  • GBP/USD

    1.2190
    -0.0028 (-0.23%)
     
  • USD/JPY

    133.1650
    +0.2920 (+0.22%)
     
  • BTC-USD

    24,566.70
    +1,650.05 (+7.20%)
     
  • CMC Crypto 200

    578.49
    +47.27 (+8.90%)
     
  • FTSE 100

    7,507.11
    +18.96 (+0.25%)
     
  • Nikkei 225

    27,819.33
    -180.63 (-0.65%)
     

Paul Mueller Company Announces Its Second Quarter Earnings of 2022

  • Oops!
    Something went wrong.
    Please try again later.
·11 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
Paul Mueller Company
Paul Mueller Company

SPRINGFIELD, Mo., July 29, 2022 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended June 30, 2022.

 

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

 

 

 

2022

 

2021

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

45,977

 

$

49,278

 

$

86,752

 

$

94,557

 

$

176,808

 

$

200,290

Cost of Sales

 

35,542

 

33,909

 

67,403

 

65,747

 

137,823

 

139,159

Gross Profit

 

$

10,435

 

$

15,369

 

$

19,349

 

$

28,810

 

$

38,985

 

$

61,131

Selling, General and Administrative Expense

 

10,397

 

11,553

 

20,637

 

22,861

 

41,660

 

45,027

Goodwill Impairment Expense

 

-

 

-

 

-

 

-

 

-

 

15,397

Operating Income (Loss)

 

$

38

 

$

3,816

 

$

(1,288)

 

$

5,949

 

$

(2,675)

 

$

707

Interest Expense

 

(117)

 

(91)

 

(505)

 

(542)

 

(705)

 

(825)

PPP Loan Forgiveness

 

-

 

-

 

-

 

-

 

1,884

 

-

Other Income (Expense)

 

(126)

 

2,004

 

138

 

2,042

 

940

 

2,808

Income (Loss) before Provision (Benefit) for Income Taxes

 

$

(205)

 

$

5,729

 

$

(1,655)

 

$

7,449

 

$

(556)

 

$

2,690

Provision (Benefit) for Income Taxes

 

(56)

 

949

 

(384)

 

1,368

 

(205)

 

3,889

Net Income (Loss)

 

$

(149)

 

$

4,780

 

$

(1,271)

 

$

6,081

 

$

(351)

 

$

(1,199)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) per Common Share ––

Basic

 

$

(0.14)

 

$

4.38

 

$

(1.17)

 

$

5.56

 

$

(0.32)

 

$

(1.05)

 

Diluted

 

$

(0.14)

 

$

4.38

 

$

(1.17)

 

$

5.56

 

$

(0.32)

 

$

(1.05)

 


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30

 

 

2022

 

2021

 

 

 

 

 

Net Income (Loss)

 

$

(1,271)

 

$

6,081

Other Comprehensive Income, Net of Tax:

 

 

 

 

Foreign Currency Translation Adjustment

 

(2,292)

 

(847)

Comprehensive Income (Loss)

 

$

(3,563)

 

$

5,234

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

June 30

 

December 31

 

 

2022

 

2021

 

 

 

 

 

Cash and Short-Term Investments

 

$

16,090

 

$

11,281

Accounts Receivable

 

21,446

 

25,774

Inventories (FIFO)

 

56,534

 

43,309

LIFO Reserve

 

(20,402)

 

(16,855)

Inventories (LIFO)

 

36,132

 

26,454

Current Net Investments in Sales-Type Leases

 

21

 

23

Other Current Assets

 

3,214

 

1,814

Current Assets

 

$

76,903

 

$

65,346

 

 

 

 

 

Net Property, Plant, and Equipment

 

39,321

 

41,250

Right of Use Assets

 

2,208

 

2,526

Other Assets

 

7,414

 

7,003

Long-Term Net Investments in Sales-Type Leases

 

191

 

164

Total Assets

 

$

126,037

 

$

116,289

 

 

 

 

 

Accounts Payable

 

$

14,029

 

$

14,470

Current Maturities and Short-Term Debt

 

1,240

 

1,330

Current Lease Liabilities

 

420

 

483

Advance Billings

 

34,039

 

18,595

Other Current Liabilities

 

10,502

 

9,096

Current Liabilities

 

$ 60,230

 

$ 43,974

 

 

 

 

 

Long-Term Debt

 

12,762

 

14,241

Long-Term Pension Liabilities

 

16,585

 

18,036

Other Long-Term Liabilities

 

2,328

 

1,848

Lease Liabilities

 

766

 

897

Total Liabilities

 

$

92,671

 

$

78,996

Shareholders' Investment

 

33,366

 

37,293

Total Liabilities and Shareholders' Investment

 

$

126,037

 

$

116,289

 

 

 

 

 


 

SELECTED FINANCIAL DATA

 

 

 

 

 

 

 

June 30

 

December 31

 

 

2022

 

2021

Book Value per Common Share

 

$

30.73

 

$

34.32

Total Shares Outstanding

 

1,085,711

 

1,086,661

Backlog

 

$

141,719

 

$

78,357

 

 

 

 

 


CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Other

 

 

 

 

Common

 

 

 

Retained

 

 

 

Comprehensive

 

 

 

 

Stock

 

Paid-in Surplus

 

Earnings

 

Treasury Stock

 

Income (Loss)

 

Total

Balance, December 31, 2021

 

$

1,508

 

$

9,708

 

$

72,764

 

$

(10,749)

 

$

(35,938)

 

$

37,293

Add (Deduct):

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

 

 

 

 

(1,271)

 

 

 

 

 

(1,271)

Other Comprehensive Income (Loss), Net of Tax

 

 

 

 

 

 

 

 

 

(2,292)

 

(2,292)

Dividends, $.15 per Common Share

 

 

 

 

 

(326)

 

 

 

 

 

(326)

Treasury Stock Acquisition

 

 

 

 

 

 

 

(38)

 

 

 

(38)

Balance, June 30, 2022

 

$

1,508

 

$

9,708

 

$

71,167

 

$

(10,787)

 

$

(38,230)

 

$

33,366

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

 

 

 

Six Months
Ended
June 30, 2022

 

Six Months
Ended
June 30,2021

 

 

 

 

 

Operating Activities:

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

(1,271)

 

$

6,081

 

 

 

 

 

Adjustment to Reconcile Net Income to Net Cash Provided (Required) by Operating Activities:

 

 

Pension Contributions (Greater) Less than Expense

 

(1,451)

 

(1,921)

Bad Debt Expense (Recovery)

 

15

 

(44)

Depreciation & Amortization

 

3,028

 

3,277

(Gain) Loss on Sales of Equipment

 

(3)

 

(18)

PPP Loan Forgiveness

 

-

 

(1,884)

Change in Assets and Liabilities

 

 

 

 

Dec (Inc) in Accts and Notes Receivable

 

4,313

 

(4,618)

(Inc) in Cost in Excess of Estimated Earnings and Billings

 

-

 

(824)

(Inc) in Inventories

 

(8,925)

 

(5,947)

(Inc) Dec in Prepayments

 

(1,400)

 

14

(Inc) in Net Investment in Sales-type leases

 

(25)

 

(37)

Dec in Other Assets

 

251

 

611

(Dec) Inc in Accounts Payable

 

(441)

 

757

(Dec) in Accrued Income Tax

 

(1)

 

-

Inc (Dec) in Other Accrued Expenses

 

1,689

 

(4,061)

Inc in Advanced Billings

 

15,444

 

7,944

(Dec) in Billings in Excess of Costs and Estimated Earnings

 

(281)

 

(1,982)

Inc in Lease Liability for Operating

 

238

 

51

Inc in Lease Liability for Financing

 

-

 

43

Principal payments of Lease Liability for Operating

 

(218)

 

(137)

(Dec) Inc in Other Long-Term Liabilities

 

(108)

 

(47)

Net Cash Provided (Required) by Operating Activities

 

$

10,854

 

$

(2,742)

 

 

 

 

 

Investing Activities

 

 

 

 

Proceeds from Sales of Equipment

 

3

 

24

Additions to Property, Plant, and Equipment

 

(3,828)

 

(2,188)

Net Cash (Required) for Investing Activities

 

$

(3,825)

 

$

(2,164)

 

 

 

 

 

Financing Activities

 

 

 

 

Principal payments of Lease Liability for Financing

 

(106)

 

(136)

(Repayment) Proceeds of Short-Term Borrowings, Net

 

-

 

(610)

(Repayment) Proceeds of Long-Term Debt

 

(760)

 

(843)

Dividends Paid

 

(326)

 

-

Treasury Stock Acquisitions

 

(38)

 

(4,194)

Net Cash (Required) for Financing Activities

 

$

(1,230)

 

$

(5,783)

 

 

 

 

 

Effect of Exchange Rate Changes

 

(990)

 

(653)

 

 

 

 

 

Net Increase (Decrease) in Cash and Cash Equivalents

 

$

4,809

 

$

(11,342)

 

 

 

 

 

Cash and Cash Equivalents at Beginning of Year

 

11,281

 

22,943

 

 

 

 

 

Cash and Cash Equivalents at End of Quarter

 

$

16,090

 

$

11,601

 

 

 

 

 

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

 

2022

 

 

2021

 

Domestic

$

34,315

 

$

37,494

 

Mueller BV

$

12,058

 

$

12,194

 

Eliminations

$

(396

)

$

(410

)

Net Revenue

$

45,977

 

$

49,278

 

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

 

 

 

Six Months Ended June 30

Revenue

 

2022

 

 

2021

 

Domestic

$

62,431

 

$

70,991

 

Mueller BV

$

25,038

 

$

24,221

 

Eliminations

$

(717

)

$

(655

)

Net Revenue

$

86,752

 

$

94,557

 

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

 

 

 

Twelve Months Ended June 30

Revenue

 

2022

 

 

2021

 

Domestic

$

128,519

 

$

154,353

 

Mueller BV

$

49,637

 

$

47,045

 

Eliminations

$

(1,348

)

$

(1,108

)

Net Revenue

$

176,808

 

$

200,290

 

The chart below depicts the net income (loss) on a consolidating basis for the three months ended June 30.

 

 

 

Three Months Ended June 30

Net Income

 

2022

 

 

2021

 

Domestic

$

237

 

$

4,766

 

Mueller BV

$

(386

)

$

11

 

Eliminations

$

0

 

$

3

 

Net Income (Loss)

$

(149

)

$

4,780

 

 

 

 

The chart below depicts the net income (loss) on a consolidating basis for the six months ended June 30.

 

 

 

Six Months Ended June 30

Net Income

 

2022

 

 

2021

 

Domestic

$

(650

)

$

6,448

 

Mueller BV

$

(622

)

$

(383

)

Eliminations

$

1

 

$

16

 

Net Income (Loss)

$

(1,271

)

$

6,081

 

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

Twelve Months Ended June 30

Net Income

 

2022

 

 

2021

 

Domestic

$

230

 

$

14,180

 

Mueller BV

$

(604

)

$

(15,403

)

Eliminations

$

23

 

$

24

 

Net Loss

$

(351

)

$

(1,199

)

B.   Key headlines for the quarter,

  • Backlog increased during the quarter to $141.7 million.

  • Cash has increased $4.8 million in the first six months. Advanced deposits from customers grew $15.4 million in line with the increased backlog. Inventories increased ($8.9 million) to support the backlog as did capital expenditures ($3.8 million).      

  • Revenue and profits for the first half of the year were lower than expected as the Company worked through the older backlog that was not adequately priced for the current inflation. Production has been slowed by the shortage or delay of key components.

  • The Company’s results have been negatively affected by an increase in the LIFO reserve. Pre-tax earnings were reduced by $3.5 million year-to-date and $6.4 million for trailing twelve months. This increase in the reserve is due to inflation, and an increase in inventory to produce the larger backlog.     

  • The Company has aggressively marketed referral and bonus programs to attract new workers with some success as new workers are needed for the large backlog.

  • Farmer unrest which started in the Netherlands and has spread to other parts of the EU poses a challenge for Mueller BV.

C. The following comparisons exclude Mueller Field Operations (MFO) which was sold on December 31, 2021. June 30, 2022 backlog is $141.7 million compared to $78.4 million at December 31, 2021 and $76.1 million at June 30, 2021. Most business unit backlogs are higher led by the pharmaceutical groups. Orders entered for the first six months of 2022 were $148.4 million compared to $98.9 for the first six months of 2021. Most of these orders have been priced to account for inflation which should allow for better margins in the second half of 2022.

On July 5, 2022, the Dutch government passed new emission standards that require a 50% reduction in emission of pollutants by 2030. This includes nitrogen oxide and ammonia produced by cow waste. Farmers in the Netherlands are protesting across the country as they feel these new standards will force many farmers to reduce their herds and put many out of business. Approximately 40,000 farmers gathered in protest with many driving their tractors to block food distribution centers and to block or slow traffic. Farmers in other EU countries had similar protests in support of their Dutch counterparts.

The current backlog, sales pipeline, and farms already granted permits before these rules were considered may minimize the impact to the Company for the remainder of the year. However, the current uncertainty may cause farmers to delay capital expenditures on new milk storage equipment until the path forward is decided regarding the new regulations.

D. Revenue is down from last year at three months, six months and twelve months primarily in the US operations. The reduction in revenue is due primarily to the sale of MFO and lower pharmaceutical revenue since the end, in early 2021, of the last significant pharmaceutical project. There is another large pharmaceutical project in the backlog that should increase revenue in the second half of 2022 into 2023. In the Netherlands, revenue strengthened slightly but was diminished on the consolidated statements by the strengthening dollar.

E. Similar to revenue, net income is down at three months, six months and twelve months. In the US, the unfavorable variance is primarily from lower earnings from the pharmaceutical groups and a negative effect from the increase in the LIFO reserve. The prior period results also included the $1.9 million pre-tax profit from the PPP loan forgiveness. On a positive note, the Heat Transfer and the Components groups have collectively grown pre-tax earnings by $3.3 million for the trailing twelve months.

In the Netherlands, margins are slightly down. The results for the period ending June 30, 2021 were negatively affected by $15.4 million due to the impairment of goodwill related to the 2008 acquisition of the Dutch subsidiaries.

F.  The pre-tax results for the three months ended June 30, 2022, were unfavorably affected by a $1.5 million increase in the LIFO reserve. The pre-tax results for the six months ended June 30, 2022, were unfavorably affected by a $3.5 million increase in the LIFO reserve. The pre-tax results for the twelve months ended June 30, 2022, were unfavorably affected by a $6.4 million increase in the LIFO reserve. 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.

G. 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 1.19 for June 2021, 1.13 for December 2021, and 1.04 for June 2022.

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 2021 annual report, available at
www.paulmueller.com.

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

kjeffries@paulmueller.comhttps://paulmueller.com