Paul Mueller Company Announces Its Third Quarter Earnings of 2021

Rhea-AI Summary

Paul Mueller Company (OTC: MUEL) reported a net loss of $1,042 for Q3 2021, down from a profit of $3,995 in Q3 2020. Net sales for Q3 2021 were $43,063, a decline from $51,607 in the previous year. The gross profit also fell to $10,104 from $16,103. For the nine months ending September 30, 2021, net sales were $137,620, down from $146,990 in 2020. The backlog stood at $75.8 million, a slight increase from $61.6 million year-over-year. Contributing factors include reduced revenue from key projects and increased costs due to labor and materials constraints.

Positive

• Backlog increased to $75.8 million from $61.6 million year-over-year.
• Strong performance from Dairy Farm Equipment group and Components division.

Negative

• Q3 2021 net loss of $1,042 compared to profit of $3,995 in Q3 2020.
• Q3 net sales declined to $43,063 from $51,607 in 2020.
• Increased LIFO reserve negatively impacted pre-tax results by $1.7 million in Q3 2021.
• Revenue decline due to large pharmaceutical project nearing completion.

SPRINGFIELD, Mo., Oct. 29, 2021 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended September 30, 2021.

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
								2021				2020				2021				2020				2021				2020
Net Sales							$	43,063			$	51,607			$	137,620			$	146,990			$	191,746			$	202,256
Cost of Sales								32,959				35,504				98,706				102,405				136,614				140,957
Gross Profit							$	10,104			$	16,103			$	38,914			$	44,585			$	55,132			$	61,299
Selling, General and Administrative Expense								11,267				11,167				34,128				33,156				45,127				45,127
Goodwill Impairment Expense								-				-				-				-				15,397				-
Operating Income (Loss)							$	(1,163	)		$	4,936			$	4,786			$	11,429			$	(5,392	)		$	16,172
Interest Expense								(102	)			(110	)			(644	)			(819	)			(817	)			(838	)
Other Income (Expense)								(94	)			427				1,948				869				2,287				854
Income (Loss) before Provision (Benefit) for Income Taxes							$	(1,359	)		$	5,253			$	6,090			$	11,479			$	(3,922	)		$	16,188
Provision (Benefit) for Income Taxes								(317	)			1,258				1,051				2,761				2,314				3,905
Net Income (Loss)							$	(1,042	)		$	3,995			$	5,039			$	8,718			$	(6,236	)		$	12,283
Earnings (Loss) per Common Share ––	Basic						($	0.96	)		$	3.34			$	4.61			$	7.29			($	5.58	)		$	10.27
	Diluted						($	0.96	)		$	3.34			$	4.61			$	7.29			($	5.58	)		$	10.27

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
							Nine Months Ended
							September 30
								2021				2020
Net Income							$	5,039			$	8,718
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation Adjustment								(1,048	)			1,590
Change in Pension Liability								-				-
Amortization of De-Designated Hedges								-				-
Comprehensive Income							$	3,991			$	10,308
CONSOLIDATED BALANCE SHEETS
							September 30				December 31
								2021				2020
Cash and Short-Term Investments							$	14,269			$	22,943
Accounts Receivable								22,178				20,462
Inventories								27,267				17,926
Current Net Investments in Sales-Type Leases								5				3
Other Current Assets								3,579				1,771
Current Assets							$	67,298			$	63,105
Net Property, Plant, and Equipment								42,641				46,570
Right of Use Assets								2,513				2,448
Other Assets								8,816				8,732
Long-Term Net Investments in Sales-Type Leases								181				83
Total Assets							$	121,449			$	120,938
Accounts Payable							$	14,473			$	11,316
Current Maturities and Short-Term debt								1,360				2,115
Current Lease Liabilities								497				519
Other Current Liabilities								29,190				24,656
Current Liabilities							$	45,520			$	38,606
Long-Term Debt								14,868				18,440
Long-Term Pension Liabilities								27,166				30,047
Other Long-Term Liabilities								2,623				2,226
Lease Liabilities								953				1,075
Total Liabilities							$	91,130			$	90,394
Shareholders' Investment								30,319				30,544
Total Liabilities and Shareholders' Investment							$	121,449			$	120,938

SELECTED FINANCIAL DATA
													September 30						December 31
																2021				2020
	Book Value per Common Share														$	27.79			$	25.54
	Total Shares Outstanding															1,090,964				1,195,747
	Backlog														$	75,807			$	61,563
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
			Common Stock				Paid-in Surplus				Retained Earnings					Treasury Stock				Accumulated Other Comprehensive Income (Loss)				Total
Balance, December 31, 2020			$	1,508			$	9,708			$	65,927			$	(6,344	)		$	(40,255	)		$	30,544
Add (Deduct):
	Net Income										5,039													5,039
	Other Comprehensive Income, Net of Tax																			(1,048	)			(1,048	)
	Treasury Stock Acquisition															(4,216	)							(4,216	)
Balance, September 30, 2021			$	1,508			$	9,708			$	70,966			$	(10,560	)		$	(41,303	)		$	30,319

 

CONSOLIDATED STATEMENT OF CASH FLOWS
										Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020
Operating Activities:
Net Income									$	5,039			$	8,718
Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities:
Pension Contributions (Greater) Less than Expense										(2,882	)			(3,107	)
Bad Debt Expense (Recovery)										(58	)			(15	)
Depreciation & Amortization										4,896				4,855
(Gain) Loss on Sales of Equipment										(43	)			1
PPP Loan Forgiveness										(1,884	)			-
Change in Assets and Liabilities
(Inc) Dec in Accts and Notes Receivable										(1,658	)			8,251
(Inc) Dec in Cost in Excess of Estimated Earnings and Billings										(1,655	)			939
(Inc) in Inventories										(8,571	)			(490	)
(Inc) Dec in Prepayments										(152	)			1,170
(Inc) in Net Investment in Sales-type leases										(101	)			(79	)
Dec (Inc) in Other LT Assets										677				(338	)
Inc (Dec) in Accounts Payable										3,156				(21	)
(Dec) Inc in Other Accrued Expenses										(3,271	)			7,389
Inc in Advanced Billings										9,012				1,241
(Dec) in Billings in Excess of Costs and Estimated Earnings										(1,208	)			(4,441	)
Inc in Lease Liability for Operating										193				36
Inc in Lease Liability for Financing										152				27
Principal payments of Lease Liability for Operating										(202	)			(26	)
(Dec) Inc In Other Long-Term Liabilities										(90	)			108
Net Cash Provided by Operating Activities									$	1,350			$	24,218
Investing Activities
Intangibles										(105	)			-
Proceeds from Sales of Equipment										67				4
Additions to Property, Plant, and Equipment										(3,588	)			(3,128	)
Net Cash (Required) for Investing Activities									$	(3,626	)		$	(3,124	)
Financing Activities
Principal payments of Lease Liability for Financing										(197	)			-
(Repayment) of Short-Term Borrowings, Net										(595	)			(4,826	)
(Repayment) Proceeds of Long-Term Debt										(1,250	)			2,640
Treasury Stock Acquisitions										(4,216	)			(3	)
Net Cash (Required) for Financing Activities									$	(6,258	)		$	(2,189	)
Effect of Exchange Rate Changes										(140	)			1,606
Net (Decrease) Increase in Cash and Cash Equivalents									$	(8,674	)		$	20,511
Cash and Cash Equivalents at Beginning of Year										22,943				1,072
Cash and Cash Equivalents at End of Quarter									$	14,269			$	21,583

 

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		2021			2020
Domestic	$	33,192		$	41,453
Mueller BV	$	10,148		$	10,518
Eliminations	$	(277	)	$	(364	)
Net Revenue	$	43,063		$	51,607
The chart below depicts the net revenue on a consolidating basis for the nine months ended September 30.
Nine Months Ended September 30
Revenue		2021			2020
Domestic	$	104,183		$	112,979
Mueller BV	$	34,369		$	34,907
Eliminations	$	(932	)	$	(896	)
Net Revenue	$	137,620		$	146,990
The chart below depicts the net revenue on a consolidating basis for the twelve months ended September 30.
Twelve Months Ended September 30
Revenue		2021			2020
Domestic	$	146,092		$	153,289
Mueller BV	$	46,675		$	49,950
Eliminations	$	(1,021	)	$	(983	)
Net Revenue	$	191,746		$	202,256
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		2021			2020
Domestic	$	(81	)	$	3,773
Mueller BV	$	(942	)	$	169
Eliminations	$	(19	)	$	53
Net Income	$	(1,042	)	$	3,995
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		2021			2020
Domestic	$	6,367		$	8,224
Mueller BV	$	(1,326	)	$	431
Eliminations	$	(2	)	$	63
Net Income	$	5,039		$	8,718
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		2021			2020
Domestic	$	10,327		$	11,543
Mueller BV	$	(16,515	)	$	623
Eliminations	$	(48	)	$	117
Net Income	$	(6,236	)	$	12,283

B. Backlog is holding steady. A continued tightening of labor and materials markets continue to be a challenge in both availability and cost. In June, the Company increased wages of the production workers in the US in response to the labor shortage with other non-manufacturing positions being evaluated through the year. Inventories are higher, partially from increased safety stock because of potential supply shortages. Increased inventory and inflation have increased the LIFO reserve which negatively affects net income. Capital Expenditures focusing on efficiency and labor reductions have increased.

C. September 30, 2021, the backlog was $75.8 million which was virtually unchanged from the $76.1 million backlog at the end of the second quarter. It is up from the $61.6 million on December 31, 2020 and similar to the $75.3 million reported at September 30, 2020. However, the makeup of the backlog has changed. The backlog from the large pharmaceutical order and the large juice storage facility project, which are both nearing completion, is down $32.7 million from this time a year ago. Other business segments in the US have improving backlogs. Likewise, Mueller BV backlog is up $2.6 million from a year ago.

D. Revenue in the US is down compared to the prior year for the three-month, nine-month and twelve-month periods, primarily from the large pharmaceutical order and the large juice storage facility project nearing completion. In the Netherlands, revenue is also down from three-month, nine-month, and twelve-month periods. The decrease for the twelve months is larger because 4^th quarter 2020 was down from 4^th quarter 2019.

E. Net income was down in the US for the three-month, nine-month and twelve-month periods, primarily from increased LIFO reserve and lower revenues and profit from the pharmaceutical and field operations divisions finishing the two large projects. This reduction was partially offset by stronger results from the Dairy Farm Equipment group and the Components division and from the PPP loan forgiveness. In the Netherlands, net income is down for the three-month, nine-month and twelve-month periods primarily from lower revenues. Costs as a percentage of revenue are holding steady. The trailing twelve-month income is also affected by $15.4 million goodwill impairment recorded in December 2020.

F. 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 was granted on June 12, 2020. 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.

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 as of September 30, 2021. The total shares repurchased in 2021 are 104,783.

H. The pre-tax results for the three months ended September 30, 2021, were unfavorably affected by $1.7 million increase in the LIFO reserve. The pre-tax results for the nine months ended September 30, 2021, were unfavorably affected by $2.8 million increase in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2021, were unfavorably affected by $2.8 million increase in the LIFO reserve. 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.

I. 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 1.17 for September 2020; 1.23 for December 2020; and 1.16 for September 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

FAQ

What were Paul Mueller Company's earnings for Q3 2021?

Paul Mueller Company reported a net loss of $1,042 for Q3 2021.

How did net sales for Paul Mueller Company perform in Q3 2021?

Net sales were $43,063 for Q3 2021, down from $51,607 in Q3 2020.

What is the backlog for Paul Mueller Company as of September 30, 2021?

The backlog stood at $75.8 million, up from $61.6 million year-over-year.

What factors contributed to the revenue decline for Paul Mueller Company?

Revenue declined mainly due to a large pharmaceutical project and juice storage facility nearing completion.

How did the increased LIFO reserve affect Paul Mueller Company's financial results?

The increased LIFO reserve negatively impacted pre-tax results by $1.7 million for Q3 2021.