Paul Mueller Company Announces Its Second Quarter Earnings of 2021

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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07/30/2021 20:07

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