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Paul Mueller Company Announces Its Third Quarter Earnings of 2020

Paul Mueller Company
·10 min read

SPRINGFIELD, Mo., Oct. 30, 2020 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended September 30, 2020.

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

2020

2019

2020

2019

2020

2019

Net Sales

$ 51,607

$ 45,968

$ 146,990

$ 141,911

$ 202,256

$ 187,529

Cost of Sales

35,504

33,117

102,405

103,883

140,957

137,825

Gross Profit

$ 16,103

$ 12,851

$ 44,585

$ 38,028

$ 61,299

$ 49,704

Selling, General and Administrative Expense

11,167

11,205

33,156

33,701

45,127

45,666

Operating Income

$ 4,936

$ 1,646

$ 11,429

$ 4,327

$ 16,172

$ 4,038

Interest Expense

(110)

(213)

(819)

(808)

(838)

(995)

Other Income

427

81

869

366

854

365

Income before Provision for Income Taxes

$ 5,253

$ 1,514

$ 11,479

$ 3,885

$ 16,188

$ 3,408

Provision for Income Taxes

1,258

374

2,761

861

3,905

524

Net Income

$ 3,995

$ 1,140

$ 8,718

$ 3,024

$ 12,283

$ 2,884

Earnings per Common Share ––

Basic

$3.34

$0.95

$7.29

$2.53

$10.27

$2.41

Diluted

$3.34

$0.95

$7.29

$2.53

$10.27

$2.41

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Nine Months Ended

September 30

2020

2019

Net Income

$ 8,718

$ 3,024

Other Comprehensive Income (Loss), Net of Tax:

Foreign Currency Translation Adjustment

1,590

(1,216)

Comprehensive Income

$ 10,308

$ 1,808

CONSOLIDATED BALANCE SHEETS

September 30

December 31

2020

2019

Cash and Short-Term Investments

$ 21,583

$ 1,072

Accounts Receivable

20,273

28,509

Inventories

21,042

20,552

Current Net Investments in Sales-Type Leases

56

47

Other Current Assets

1,654

3,763

Current Assets

$ 64,608

$ 53,943

Net Property, Plant, and Equipment

45,668

47,406

Right of Use Assets

1,459

1,421

Other Assets

23,477

21,355

Long-Term Net Investments in Sales-Type Leases

840

769

Total Assets

$ 136,052

$ 124,894

Accounts Payable

$ 10,513

$ 10,534

Current Maturities and Short-Term debt

1,370

6,208

Current Lease Liabilities

466

485

Other Current Liabilities

31,209

27,021

Current Liabilities

$ 43,558

$ 44,248

Long-Term Debt

18,805

15,334

Long-Term Pension Liabilities

27,288

30,395

Other Long-Term Liabilities

2,688

1,566

Lease Liabilities

993

936

Total Liabilities

$ 93,332

$ 92,479

Shareholders' Investment

42,720

32,415

Total Liabilities and Shareholders' Investment

$ 136,052

$ 124,894

SELECTED FINANCIAL DATA

September 30

December 31

2020

2019

Book Value per Common Share

$35.73

$27.11

Total Shares Outstanding

1,195,747

1,195,866

Backlog

$ 75,287

$ 79,791

CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT

Accumulated Other Comprehensive Income (Loss)

Common Stock

Paid-in Surplus

Retained Earnings

Treasury Stock

Total

Balance, December 31, 2019

$ 1,508

$ 9,708

$ 68,484

$ (6,341)

$ (40,944)

$ 32,415

Add (Deduct):

Net Income

8,718

8,718

Other Comprehensive Income, Net of Tax

1,590

1,590

Treasury Stock Acquisition

(3)

(3)

Balance, September 30, 2020

$ 1,508

$ 9,708

$ 77,202

$ (6,344)

$ (39,354)

$ 42,720

CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended
September 30, 2020

Nine Months Ended
September 30, 2019

Operating Activities:

Net Income

$ 8,718

$ 3,024

Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities:

Pension Contributions (Greater) Less than Expense

(3,107)

(2,631)

Bad Debt Expense (Recovery)

(15)

(210)

Depreciation & Amortization

4,855

4,919

Loss (Gain) on Sales of Equipment

1

(18)

Change in Assets and Liabilities

Dec in Accts and Notes Receivable

8,251

2,426

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

939

(180)

(Inc) in Inventories

(490)

(546)

Dec (Inc) in Prepayments

1,170

(643)

(Inc) in Net Investment in Sales-type leases

(79)

-

Dec (Inc) in Intangibles

-

(118)

(Inc) in Other LT Assets

(338)

(48)

(Dec) Inc in Accounts Payable

(21)

2,012

Inc (Dec) in Other Accrued Expenses

7,389

(948)

Inc in Advanced Billings

1,241

7,295

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

(4,441)

1,633

Inc in Lease Liability for operating

36

-

Inc in Lease Liability for financing

27

-

Inc (Dec) In Other Liabilities

108

(198)

Net Cash Provided by Operating Activities

$ 24,244

$ 15,769

Investing Activities

Proceeds from Sales of Equipment

4

31

Additions to Property, Plant, and Equipment

(3,128)

(1,062)

Net Cash (Required) for Investing Activities

$ (3,124)

$ (1,031)

Financing Activities

(Repayment) of principal portion of lease liability for operating

(26)

-

(Repayment) of Short-Term Borrowings, Net

(4,826)

(7,692)

Proceeds (Repayment) of Long-Term Debt

2,640

(5,553)

Treasury Stock Acquisitions

(3)

-

Net Cash (Required) for Financing Activities

$ (2,215)

$ (13,245)

Effect of Exchange Rate Changes

1,606

(1,215)

Net Increase in Cash and Cash Equivalents

$ 20,511

$ 278

Cash and Cash Equivalents at Beginning of Year

1,072

715

Cash and Cash Equivalents at End of Quarter

$ 21,583

$ 993


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

2020

2019

Domestic

$41,453

$36,168

Mueller BV

$10,518

$10,310

Eliminations

($364

)

($510

)

Net Revenue

$51,607

$45,968


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

Nine Months Ended September 30

Revenue

2020

2019

Domestic

$112,979

$104,190

Mueller BV

$34,907

$39,393

Eliminations

($896

)

($1,672

)

Net Revenue

$146,990

$141,911

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

Twelve Months Ended September 30

Revenue

2020

2019

Domestic

$153,289

$135,378

Mueller BV

$49,950

$54,123

Eliminations

($983

)

($1,972

)

Net Revenue

$202,256

$187,529

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

2020

2019

Domestic

$3,773

$2,273

Mueller BV

$169

($1,085

)

Eliminations

$53

($48

)

Net Income

$3,995

$1,140

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

Nine Months Ended September 30

Net Income

2020

2019

Domestic

$8,224

$4,093

Mueller BV

$431

($997

)

Eliminations

$63

($72

)

Net Income

$8,718

$3,024

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

2020

2019

Domestic

$11,543

$5,090

Mueller BV

$623

($2,149

)

Eliminations

$117

($57

)

Net Income

$12,283

$2,884

B.

The strong beginning of the year backlog in the U.S. and reduced spending has mitigated the initial financial impact of the pandemic resulting in strong earnings for the first nine months. However, the uncertainty in the economy has slowed order entry as well as the increase in COVID-19 cases in the US and Europe is causing concern as countries begin to lock back down. Looking forward, we face the uncertainty of lower pharmaceutical and field backlog, the increasing risk of COVID-19 related disruptions, and increased costs after the aggressive cost-cutting during the beginning of the pandemic.

C.

September 30, 2020 backlog was $75.3 million which is $4.5 million lower than the $79.8 million at December 31, 2019. In the U.S., backlog is $64.2 million which is down $5.5 million from December 31, 2019. Two thirds of the U.S. backlog is in the Pharmaceutical groups and Mueller Field Operations which is working on the large juice storage facility. Mueller BV backlog has been relatively flat but still at recent historic lows.

D.

Revenue for the three, nine and twelve months are higher in the US driven by the large pharmaceutical backlog in the U.S. that went into production in mid-2019. Mueller Field Operations showed increased revenue from the previous year’s quarter from a large juice facility project. Dairy Farm Equipment revenues showed signs of rebounding with a 25% increase in quarterly revenue from the second quarter. In The Netherlands, the business conditions continue to be soft with trailing revenues flat to last year for the quarter but down to last year at nine and twelve months. However, The Netherlands continues to save in expenses.

Net Income was favorable from the prior year at three, nine and twelve month trailing results. In the US, pharmaceutical and field operations work continue to drive overall profitability and the dairy farm equipment segment experienced its best quarterly results in over a year. In the Netherlands, better margins and expense savings are more than offsetting the reduced revenue.

E.

September 30, 2020, total debt was $20.2 million compared to $21.5 million as of December 31, 2019. Cash and cash equivalents were $21.6 million at September 30, 2020 compared to $1.1 million at December 31, 2019. Advanced Billings for the Company which is a liability representing deposits received from customers on large projects was $10.1 million at September 30th compared to $8.9 million at December 31, 2019.

All bank covenants were in compliance as of September 30, 2020.

F.

The pre-tax results for the three months ended September 30, 2020, were favorably affected by $0.2 million decrease in the LIFO reserve. The pre-tax results for the nine months ended September 30, 2020, were favorably affected by $0.3 million decrease in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2020, were favorably affected by $0.8 million decrease in the LIFO reserve. The pre-tax results for the three months ended September 30, 2019, were unfavorably affected by $0.1 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.

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 1.10 for September 2019; 1.12 for December 2019; and 1.17 for September 2020.

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 2019 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