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