SPRINGFIELD, Mo., July 28, 2023 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended June 30, 2023.
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 |
|
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Sales |
$ |
59,931 |
|
$ |
45,977 |
|
|
$ |
116,282 |
|
$ |
86,752 |
|
|
$ |
221,050 |
|
$ |
176,808 |
|
| Cost of Sales |
41,379 |
|
35,542 |
|
|
80,933 |
|
67,403 |
|
|
165,816 |
|
137,823 |
|
| Gross Profit |
$ |
18,552 |
|
$ |
10,435 |
|
|
$ |
35,349 |
|
$ |
19,349 |
|
|
$ |
55,234 |
|
$ |
38,985 |
|
| Selling, General and Administrative Expense |
12,714 |
|
10,397 |
|
|
25,301 |
|
20,637 |
|
|
39,675 |
|
41,660 |
|
| Operating Income (Loss) |
$ |
5,838 |
|
$ |
38 |
|
|
$ |
10,048 |
|
$ |
(1,288 |
) |
|
$ |
15,559 |
|
$ |
(2,675 |
) |
| Interest Expense |
|
(80 |
) |
|
(117 |
) |
|
|
(177 |
) |
|
(505 |
) |
|
|
(369 |
) |
|
(705 |
) |
| PPP Loan Forgiveness |
- |
|
- |
|
|
- |
|
- |
|
|
- |
|
1,884 |
|
| Other Income (Expense) |
613 |
|
|
(126 |
) |
|
1,333 |
|
138 |
|
|
2,310 |
|
940 |
|
| Income (Loss) before Provision (Benefit) for Income Taxes |
$ |
6,371 |
|
$ |
(205 |
) |
|
$ |
11,204 |
|
$ |
(1,655 |
) |
|
$ |
17,500 |
|
$ |
(556 |
) |
| Provision (Benefit) for Income Taxes |
1,558 |
|
|
(56 |
) |
|
2,724 |
|
|
(384 |
) |
|
4,140 |
|
|
(205 |
) |
| Net Income (Loss) |
$ |
4,813 |
|
$ |
(149 |
) |
|
$ |
8,480 |
|
$ |
(1,271 |
) |
|
$ |
13,360 |
|
$ |
(351 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings (Loss) per Common Share ––Basic and Diluted |
$ |
4.43 |
|
($0.14 |
) |
|
$ |
7.81 |
|
($1.17 |
) |
|
$ |
12.31 |
|
($0.32 |
) |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30 |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
| Net Income (Loss) |
$ |
8,480 |
|
$ |
(1,271 |
) |
| Other Comprehensive Income (Loss), Net of Tax: |
|
|
|
|
| Foreign Currency Translation Adjustment |
441 |
|
|
(2,292 |
) |
| Comprehensive Income (Loss) |
$ |
8,921 |
|
$ |
(3,563 |
) |
| CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
June 30 |
|
December 31 |
|
2023 |
|
2022 |
|
|
|
|
| Cash and Short-Term Investments |
$ |
38,907 |
|
$ |
38,176 |
|
| Accounts Receivable |
24,453 |
|
|
20,580 |
|
| Inventories (FIFO) |
52,198 |
|
|
48,515 |
|
| LIFO Reserve |
|
(21,930 |
) |
|
(21,691 |
) |
| Inventories (LIFO) |
30,268 |
|
|
26,824 |
|
| Current Net Investments in Sales-Type Leases |
25 |
|
|
24 |
|
| Other Current Assets |
3,799 |
|
|
3,156 |
|
| Current Assets |
$ |
97,452 |
|
$ |
88,760 |
|
|
|
|
|
|
|
| Net Property, Plant, and Equipment |
41,572 |
|
|
41,511 |
|
| Right of Use Assets |
2,455 |
|
|
2,304 |
|
| Other Assets |
5,385 |
|
|
5,041 |
|
| Long-Term Net Investments in Sales-Type Leases |
380 |
|
|
312 |
|
| Total Assets |
$ |
147,244 |
|
$ |
137,928 |
|
|
|
|
|
|
|
| Accounts Payable |
$ |
13,132 |
|
$ |
11,802 |
|
| Current Maturities and Short-Term Debt |
636 |
|
|
628 |
|
| Current Lease Liabilities |
433 |
|
|
448 |
|
| Advance Billings |
36,641 |
|
|
41,288 |
|
| Pension Liabilities |
10,740 |
|
|
11,558 |
|
| Other Current Liabilities |
23,965 |
|
|
20,062 |
|
| Current Liabilities |
$ |
85,547 |
|
$ |
85,786 |
|
|
|
|
|
|
|
| Long-Term Debt |
9,145 |
|
|
9,349 |
|
| Long-Term Pension Liabilities |
236 |
|
|
236 |
|
| Other Long-Term Liabilities |
2,965 |
|
|
1,737 |
|
| Lease Liabilities |
698 |
|
|
762 |
|
| Total Liabilities |
$ |
98,591 |
|
$ |
97,870 |
|
| Shareholders' Investment |
48,653 |
|
|
40,058 |
|
| Total Liabilities and Shareholders' Investment |
$ |
147,244 |
|
$ |
137,928 |
|
| SELECTED FINANCIAL DATA |
|
|
|
|
|
June 30 |
|
December 31 |
|
2023 |
|
2022 |
| Book Value per Common Share |
$ |
44.81 |
|
$ |
36.90 |
| Total Shares Outstanding |
1,085,711 |
|
1,085,711 |
| Backlog |
$ |
106,016 |
|
$ |
132,829 |
| CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT |
|
|
Common
Stock |
|
Paid-in Surplus |
|
Retained
Earnings |
|
Treasury Stock |
|
Accumulated
Other
Comprehensive
Income (Loss) |
|
|
Total |
|
| Balance, December 31, 2022 |
$ |
1,508 |
|
$ |
9,708 |
|
$ |
75,721 |
|
$ |
(10,787 |
) |
$ |
(36,092 |
) |
$ |
40,058 |
|
| Add (Deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
8,480 |
|
|
|
|
|
|
8,480 |
|
|
Other Comprehensive Income, Net of Tax |
|
|
|
|
|
|
|
|
441 |
|
|
441 |
|
|
Dividends, $.30 per Common Share |
|
|
|
|
|
(326 |
) |
|
|
|
|
|
(3260 |
) |
|
Treasury Stock Acquisition |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, June 30, 2023 |
$ |
1,508 |
|
$ |
9,708 |
|
$ |
83,875 |
|
$ |
(10,787 |
) |
$ |
(35,651 |
) |
$ |
4,653 |
|
| CONSOLIDATED STATEMENT OF CASH FLOWS |
|
|
Six Months
Ended
June 30, 2023 |
|
Six Months
Ended
June 30, 2022 |
| Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income (Loss) |
$ |
8,480 |
|
$ |
(1,271 |
) |
|
|
|
|
|
|
|
| Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities: |
|
|
|
|
|
|
| Pension Contributions (Greater) Less than Expense |
|
(818 |
) |
|
(1,451 |
) |
| Bad Debt (Recovery) Expense |
|
(19 |
) |
|
15 |
|
| Depreciation & Amortization |
|
3,027 |
|
|
3,028 |
|
| (Gain) on Sales of Equipment |
|
(33 |
) |
|
(3 |
) |
| Change in Assets and Liabilities |
|
|
|
|
|
|
| (Inc) Dec in Accts and Notes Receivable |
|
(3,854 |
) |
|
4,313 |
|
| (Inc) in Inventories |
|
(3,444 |
) |
|
(8,925 |
) |
| (Inc) in Prepayments |
|
(643 |
) |
|
(1,400 |
) |
| (Inc) in Net Investment in Sales-type leases |
|
(69 |
) |
|
(25 |
) |
| Dec in Other Assets |
|
307 |
|
|
251 |
|
| Inc (Dec) in Accounts Payable |
|
1,330 |
|
|
(441 |
) |
| Inc (Dec) in Accrued Income Tax |
|
1,911 |
|
|
(1 |
) |
| Inc in Other Accrued Expenses |
|
4,919 |
|
|
1,689 |
|
| (Dec) Inc in Advanced Billings |
|
(4,647 |
) |
|
15,444 |
|
| (Dec) in Billings in Excess of Costs and Estimated Earnings |
|
(2,927 |
) |
|
(281 |
) |
| Inc in Lease Liability for Operating |
|
- |
|
|
238 |
|
| Inc in Lease Liability for Financing |
|
133 |
|
|
- |
|
| Principal payments of Lease Liability for Operating |
|
(137 |
) |
|
(218 |
) |
| Inc (Dec) in Other Long-Term Liabilities |
|
607 |
|
|
(108 |
) |
| Net Cash Provided by Operating Activities |
$ |
4,123 |
|
$ |
10,854 |
|
|
|
|
|
|
|
|
| Investing Activities |
|
|
|
|
|
|
| Intangibles |
|
(62 |
) |
|
- |
|
| Proceeds from Sales of Equipment |
|
67 |
|
|
3 |
|
| Additions to Property, Plant, and Equipment |
|
(3,190 |
) |
|
(3,828 |
) |
| Net Cash (Required) for Investing Activities |
$ |
(3,185 |
) |
$ |
(3,825 |
) |
|
|
|
|
|
|
|
| Financing Activities |
|
|
|
|
|
|
| Principal payments of Lease Liability for Financing |
|
(98 |
) |
|
(106 |
) |
| (Repayment) Proceeds of Short-Term Borrowings, Net |
|
- |
|
|
- |
|
| (Repayment) of Long-Term Debt |
|
(318 |
) |
|
(760 |
) |
| Dividends Paid |
|
(326 |
) |
|
(326 |
) |
| Treasury Stock Acquisitions |
|
- |
|
|
(38 |
) |
| Net Cash (Required) for Financing Activities |
$ |
(742 |
) |
$ |
(1,230 |
) |
|
|
|
|
|
|
|
| Effect of Exchange Rate Changes |
|
535 |
|
|
(990 |
) |
|
|
|
|
|
|
|
| Net Increase in Cash and Cash Equivalents |
$ |
731 |
|
$ |
4,809 |
|
|
|
|
|
|
|
|
| Cash and Cash Equivalents at Beginning of Year |
|
38,176 |
|
|
11,281 |
|
|
|
|
|
|
|
|
| Cash and Cash Equivalents at End of Quarter |
$ |
38,907 |
|
$ |
16,090 |
|
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 |
2023 |
|
2022 |
|
| Domestic |
$48,295 |
|
$34,315 |
|
| Mueller BV |
$12,073 |
|
$12,058 |
|
| Eliminations |
($437 |
) |
($396 |
) |
| Net Revenue |
$59,931 |
|
$45,977 |
|
The chart below depicts the net revenue on a consolidating basis for the six months ended June 30.
| Six Months Ended June 30 |
| Revenue |
2023 |
|
2022 |
|
| Domestic |
$93,880 |
|
$62,431 |
|
| Mueller BV |
$23,377 |
|
$25,038 |
|
| Eliminations |
($975 |
) |
($717 |
) |
| Net Revenue |
$116,282 |
|
$86,752 |
|
The chart below depicts the net revenue on a consolidating basis for the twelve months ended June 30.
| Twelve Months Ended June 30 |
| Revenue |
2023 |
|
2022 |
|
| Domestic |
$176,642 |
|
$128,519 |
|
| Mueller BV |
$45,695 |
|
$49,637 |
|
| Eliminations |
($1,287 |
) |
($1,348 |
) |
| Net Revenue |
$221,050 |
|
$176,808 |
|
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 |
2023 |
|
2022 |
|
| Domestic |
$4,705 |
|
$237 |
|
| Mueller BV |
$110 |
|
($386 |
) |
| Eliminations |
($2 |
) |
$0 |
|
| Net Income (Loss) |
$4,813 |
|
($149 |
) |
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 |
2023 |
|
2022 |
|
| Domestic |
$9,155 |
|
($650 |
) |
| Mueller BV |
($660 |
) |
($622 |
) |
| Eliminations |
($15 |
) |
$1 |
|
| Net Income (Loss) |
$8,480 |
|
($1,271 |
) |
The chart below depicts the net income (loss) on a consolidating basis for the twelve months ended June 30.
| Twelve Months Ended June 30 |
| Net Income |
2023 |
|
2022 |
|
| Domestic |
$14,322 |
|
$230 |
|
| Mueller BV |
($941 |
) |
($604 |
) |
| Eliminations |
($21 |
) |
$23 |
|
| Net Income Loss |
$13,360 |
|
($351 |
) |
B. Key headlines for the quarter:
- In the US, the Company has performed well against a strong backlog which has contributed to excellent results for the first six months of the year.
- After Mueller B.V. announced organizational changes aimed to improve future results, Earnings Before Tax for May and June were improved with the second quarter of 2023 showing a profit of $110,000 compared to a $386,000 loss the year before.
- The standard plan terminations of the Company’s two domestic pension plans are moving forward. The Company is awaiting responses from the Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (PBGC).
C. June 30, 2023 backlog is $106.0 million compared to $141.7 million at June 30, 2022. The majority of this backlog is in the U.S. where the backlog is $98.7 million at June 30, 2023 compared to $131.0 million at June 30, 2022. The $32.3 million reduction in U.S. backlog is mainly from the BioPharm division working through a large pharmaceutical project with its backlog reduced $27.9 million year over year. In the Netherlands, the backlog is $7.7 million at June 30, 2023 versus $11.0 million June 20, 2022. Part of this shortfall is from the shutdown of DEG.
D. Revenue is up from the previous year by $13.9 million, $29.5 million and $44.2 million on a three-month, six-month and twelve-month basis. Most every business segment in the U.S. has an increase led by the pharmaceutical, food and beverage, and component groups. In the Netherlands, revenue is flat for the quarter and down for the six-month and twelve-month periods compared to last year. The shortfall is primarily from milk tanks sold to Great Britain and Ireland, serving beer tanks and the shutdown of DEG.
Net Income is up from the previous year by $5.0 million, $9.8 million and $13.7 million on a three-month, six-month and twelve-month basis. This improvement is partially driven by the US operations where profits were less negatively affected by the change in the LIFO reserve as outlined in footnote F. However, the greater impact has been an increased focus on improving margins. Gross profit in the US (excluding the effects of LIFO) as a percentage of revenue is 29.8% as June 30, 2023. This compares to 20.9% for the first six months of 2022. This improved margin coupled with the $31.4 million increase in revenue has led to the excellent results for the first six months.
E. The Company has pension plans covering domestic employees represented by a bargaining unit (Contract Plan) and employees not represented by a bargaining unit (Noncontract Plan). The participants discontinued accruing benefits in these plans in 2011. On November 1, 2022, and December 1, 2022, the Company announced that it had initiated a standard plan termination of the Contract Plan and Noncontract Plan, respectively. The Company applied to the IRS for its approval of the terminations on December 15, 2022. The Company gave notice of intent to terminate to the PBGC for the Contract Plan on June 27, 2023 and the Noncontract Plan on July 14, 2023. Assuming no questions or concerns from the PBGC, the Company has until the end of February 2024 to terminate the plans. The Company is still waiting on a response from the IRS. The Company is still hopeful to complete the termination process by the end of 2023, culminating in the affected participants receiving either a lump sum payment or a monthly annuity payment provided by an insurance company.
The underfunded status of the two plans combined as of December 31, 2022, was $11.8 million. These terminations will require approximately this amount of cash from the Company, adjusted for any further changes to the plans’ funded status. The terminations will end future requirements for Company contributions to the plans, which have averaged $4.2 million per year in the previous three years. The Company expects to complete the terminations in late 2023 or early 2024, at which time the accumulated actuarial losses will be recognized as a non-cash reduction of pretax earnings. The accumulated actuarial loss related to these plans is $44,874,302 as of December 31, 2022.
F. The pre-tax results for the three months ended June 30, 2023, were unfavorably affected by a $0.4 million increase in the LIFO reserve. The pre-tax results for the six months ended June 30, 2023, were unfavorably affected by a $0.2 million increase in the LIFO reserve. The pre-tax results for the twelve months ended June 30, 2023, were unfavorably affected by a $1.5 million increase in the LIFO reserve. 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.
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 1.04 for June 2022, 1.07 for December 2022, and 1.09 for June 2023.
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 2022 annual report, available at www.paulmueller.com.
Press Contact: Ken Jeffries | Paul Mueller Company | Springfield, MO 65802 | (417) 575-9346
kjeffries@paulmueller.com | https://paulmueller.com
