Paul Mueller Company Announces Its Second Quarter Earnings of 2023


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 Sales41,379 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 Expense12,714 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 Taxes1,558  (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 Adjustment441  (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 Receivable24,453  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 Leases25  24 
Other Current Assets3,799  3,156 
Current Assets$97,452 $88,760 
      
Net Property, Plant, and Equipment41,572  41,511 
Right of Use Assets2,455  2,304 
Other Assets5,385  5,041 
Long-Term Net Investments in Sales-Type Leases380  312 
Total Assets$147,244 $137,928 
      
Accounts Payable$13,132 $11,802 
Current Maturities and Short-Term Debt636  628 
Current Lease Liabilities433  448 
Advance Billings36,641  41,288 
Pension Liabilities10,740  11,558 
Other Current Liabilities23,965  20,062 
Current Liabilities$85,547 $85,786 
      
Long-Term Debt9,145  9,349 
Long-Term Pension Liabilities236  236 
Other Long-Term Liabilities2,965  1,737 
Lease Liabilities698  762 
Total Liabilities$98,591 $97,870 
Shareholders' Investment48,653  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 Outstanding1,085,711 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
Revenue2023 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
Revenue2023 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
Revenue2023 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 Income2023 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 Income2023 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 Income2023 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



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