Paul Mueller Company Announces Its Second Quarter Earnings of 2021

·12 min read

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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