Paul Mueller Company Announces Its Fourth Quarter Earnings of 2016

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| Source: Paul Mueller Company

SPRINGFIELD, Mo., March 17, 2017 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC:MUEL) today announced earnings for the quarter ended December 31, 2016.

 PAUL MUELLER COMPANY  
 TWELVE-MONTH REPORT  
                   
 CONSOLIDATED STATEMENTS OF INCOME  
                   
 (In thousands)  Three Months Ended Twelve Months Ended    
       December 31 December 31    
        2016   2015   2016   2015      
                   
 Net Sales    $  37,220  $  44,140  $  168,021  $  178,595      
 Cost of Sales       28,609     32,096     123,291     126,362      
   Gross Profit  $  8,611  $  12,044  $  44,730  $  52,233      
 Selling, General and Administrative Expense    9,122     8,712     47,888     39,035      
   Operating Income (Loss)  $  (511) $  3,332  $  (3,158) $  13,198      
 Interest Expense      (109)    (60)    (294)    (362)     
 Other Income (Expense)     369     86     209     (223)     
 Income (Loss) before Provision (Benefit) for Income Taxes $  (251) $  3,358  $  (3,243) $  12,613      
 Provision (Benefit) for Income Taxes     504     1,680     (962)    4,009      
 Net Income (Loss)  $  (755) $  1,678  $  (2,281) $  8,604      
                   
 Earnings (Loss) per Common Share  ––  Basic $(0.63) $1.36  $(1.88) $6.97      
       Diluted $(0.63) $1.36  $(1.88) $6.95      
                   
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  
                   
           Twelve Months Ended     
           December 31     
            2016   2015      
                   
    Net Income (Loss)     $  (2,281) $  8,604      
    Other Comprehensive Income (Loss), Net of Tax:           
    Foreign Currency Translation Adjustment      (1,146)    (2,774)     
    Change in Pension Liability        3,238     1,744      
    Amortization of De-Designated Hedges      21     26      
                   
    Comprehensive Income (Loss)   $  (168) $  7,600      
                   
 CONSOLIDATED BALANCE SHEETS  
                   
           December 31 December 31     
            2016   2015      
                   
    Accounts Receivable     $  18,083  $  22,587      
    Inventories         24,126     31,941      
    Other Current Assets        2,514     3,057      
      Current Assets $  44,723  $  57,585      
                   
    Net Property, Plant, and Equipment    33,545     35,718      
    Other Assets    26,397     25,293      
      Total Assets $  104,665  $  118,596      
                   
    Accounts Payable     $  8,165  $  11,672      
    Current Maturities and Short-Term debt        8,243     10,868      
    Other Current Liabilities        20,777     25,775      
      Current Liabilities $  37,185  $  48,315      
                   
    Long-Term Debt    4,558     5,003      
    Long-Term Pension Liabilities        31,628     32,527      
    Other Long-Term Liabilities    828     1,004      
      Total Liabilities        74,199     86,849      
    Shareholders' Investment    30,466     31,747      
      Total Liabilities and Shareholders' Investment $  104,665  $  118,596      
  
 SELECTED FINANCIAL DATA 
                   
             December 31 December 31   
              2016   2015    
     Book Value per Common Share     $25.39  $25.66    
     Total Shares Outstanding        1,200,021     1,237,220    
     Backlog       $  44,241  $  58,385    
                   
  CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT  
                   
                   
                   
        Common Stock  Paid-in Surplus Retained Earnings Treasury Stock Accumulated
Other Comprehensive
Income (Loss)
 Total 
 Balance, December 31, 2015  $  1,508  $  9,708  $  63,863  $  (5,114) $  (38,218) $  31,747  
 Add (Deduct):                
  Net Income (Loss)         (2,281)        (2,281) 
  Other Comprehensive Income, Net of Tax            2,113     2,113  
  Treasury Stock Acquisition            (1,113)      (1,113) 
 Balance,  December 31, 2016  $  1,508  $  9,708  $  61,582  $  (6,227) $  (36,105) $  30,466  
                   
                   
  CONSOLIDATED STATEMENT OF CASH FLOWS 
                   
                   
                   
             Twelve Months
Ended
December 31, 2016
 Twelve Months
Ended
December 31, 2015
   
    Operating Activities:         
              
      Net Income (Loss)    $  (2,281) $  8,604    
              
      Adjustment to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:       
      Pension Contributions (Greater) Less than Expense      2,339     (1,734)   
      Bad Debt Expense (Recovery)      (469)    102    
      Depreciation & Amortization      6,179     5,665    
      Deferred Tax (Benefit) Expense          (1,256)    2,462    
      Deferred Tax Valuation Allowance - Change        -     (7)   
      (Gain) Loss on Sales of Equipment      (22)    22    
      Other      (89)    (83)   
      Change in Assets and Liabilities         
       (Inc) Dec in Accts and Notes Receivable      4,630     (112)   
       (Inc) Dec in Cost in Excess of Estimated Earnings and Billings      (121)    (30)   
       (Inc) Dec in Inventories      7,361     (6,769)   
       (Inc) Dec in Prepayments      285     868    
       (Inc) Dec Other Assets       1     408    
       (Inc) Dec in Deferred Taxes          1,893     905    
       Inc (Dec) in Accounts Payable      (1,937)    3,466    
       Inc (Dec) Other Accrued Expenses      (2,469)    (5,326)   
       Inc (Dec) Advanced Billings      (1,920)    5,441    
       Inc (Dec) in Billings in Excess of Costs and Estimated Earnings      (1,507)    1,952    
       Inc (Dec) In Long Term Liabilities      94     (156)   
         Net Cash Provided by Operating Activities   $  10,711  $  15,678    
              
    Investing Activities         
      Proceeds from Sales of Equipment      65     79    
      Additions to Property and Equipment      (4,284)    (8,767)   
      Acquisition of DEG Engineering GmbH          (2,606)    -    
         Net Cash (Required) for Investing Activities   $  (6,825) $  (8,688)   
              
    Financing Activities         
      (Repayment) of Short-Term Borrowings, Net      (2,448)    (8,624)   
      (Repayment) Proceeds of Long-Term Debt      (414)    379    
      Treasury Stock Acquisitions      (1,113)    (5)   
         Net Cash (Required) for Financing Activities   $  (3,975) $  (8,250)   
              
    Effect of Exchange Rate Changes       (99)    403    
              
    Net (Decrease) in Cash and Cash Equivalents   $  (188) $  (857)   
              
    Cash and Cash Equivalents at Beginning of Year      545     1,402    
              
    Cash and Cash Equivalents at End of Year   $  357  $  545    

 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 December 31.

Three Months Ended December 31 
Revenue 2016  2015  
Domestic$25,263 $26,597  
Mueller BV$12,160 $17,980  
Eliminations$(203)$(437) 
Net Revenue$37,220 $44,140  

The chart below depicts the net revenue on a consolidating basis for the twelve months ended December 31.

Twelve Months Ended December 31 
Revenue 2016  2015  
Domestic$111,029 $117,381  
Mueller BV$58,101 $63,577  
Eliminations$(1,109)$(2,363) 
Net Revenue$168,021 $178,595  

The chart below depicts the net income on a consolidating basis for the three months ended December 31.

Three Months Ended December 31 
Net Income 2016  2015  
Domestic$(724)$1,346  
Mueller BV$(84)$307  
Eliminations$53 $25  
Net Income$(755)$1,678  

The chart below depicts the net income on a consolidating basis for the twelve months ended December 31.

Twelve Months Ended December 31 
Net Income 2016  2015  
Domestic$(3,955)$4,586  
Mueller BV$1,555 $4,071  
Eliminations$119 $(53) 
Net Income$(2,281)$8,604  

B. Our 2016 results were negatively affected by two events which we described in previous communications including our 2015 annual report.  

First, we began significant roof repairs on our Springfield, Missouri facilities.  The portion to be completed this year was estimated to cost approximately $2.0 million.  During the fourth quarter, we incurred $729,000 of expense for a YTD total of $1,661,000.

Second, we completed the lump sum pension payments to participants who elected to take the settlement.  These payments, paid from the assets of the plans, were available for participants who were no longer employed by the company as of May 6, 2016, but who had not yet begun receiving their benefit.  The eligible participants represented about a quarter of the obligations of the plans and just over 50% of those eligible elected the settlement.  The payments, totaling $13.8 million to 218 participants, were made on or about September 26, 2016.  This settlement had a negative noncash effect on the pretax earnings of the Company of $6.72 million caused by pension deficits, previously recorded in accumulated other comprehensive income, moving through net income. 

C. The pre-tax results for the three months ended December 31, 2016, were favorably affected by a $500,000 decrease in the LIFO reserve.  The pre-tax results for the twelve months ended December 31, 2016, were unfavorably affected by a $500,000 increase in the LIFO reserve.  The pre-tax results for the three months ended December 31, 2015, were favorably affected by a $550,000 decrease in the LIFO reserve.  The pre-tax results for the twelve months ended December 31, 2015, were favorably affected by a $1,050,000 decrease in the LIFO reserve.

D. On March 18, 2016, the Company announced a repurchase program of up to $3 million of the Company’s common stock. The stock repurchases may be made from time to time in the open market, in compliance with a Rule 10b5-1 share repurchase plan adopted by the Company, or in privately negotiated transactions in compliance with applicable state and federal securities laws. The timing and amounts of any repurchases will be based on market conditions and other factors including price, regulatory requirements, and capital availability. The program does not require the repurchase of any minimum number of shares and may be suspended, modified, or discontinued at any time, without prior notice.  As of December 31, 2016, the Company has repurchased 37,199 shares at a total cost of $1,113,000. 

E. On March 17, 2017, the Company announced plans to build a new facility in Groenlo, a town in the east-central portion of The Netherlands. The new facility will be located 10 kilometers (approximately 6 miles) from one of Paul Mueller Company’s current Dutch manufacturing facilities in Lichtenvoorde.

Groenlo was chosen because of its close proximity to the current Lichtenvoorde location, easing the transition for the majority of the production employees. Working together in one location, employees can better develop common goals and address customer needs.

The new facility will consolidate four locations the Company currently operates in The Netherlands, including the Lichtenvoorde location. The €20 million ($21 million) project is expected to have a positive return based on reducing the costs of operating four separate facilities, the rent paid on three of the facilities, and the sale of the primary manufacturing location in Lichtenvoorde. It will also combine the companies acquired in 2008 into one location creating a stronger culture and improving collaboration and efficiencies.

Pending final approval of construction plans and loan documents, construction should start in the summer of 2017 with a completion date projected to be in the summer of 2018. 

F. During 2016, Mueller B.V. acquired the remaining 51% of DEG Engineering GmbH, a German engineering company, for $263,000 in cash, the forgiveness of a $2,152,000 payable owed to Mueller B.V. from DEG Engineering GmbH, and $96,000 in other considerations. The DEG Engineering GmbH acquisition included brand assets and patents useful in growing Mueller B.V. industrial and heat transfer business segments in international markets.

G. The Company was in violation of the fixed charge coverage covenant on its domestic bank borrowing facility at December 31, 2016. Subsequent to year end a waiver was obtained from the lender for the covenant violations as of December 31, 2016.

H. 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 1.09 for December, 2015 and 1.05 for December, 2016, respectively.                                   

(2) Summary of Accounting Policies:

Principles of Consolidation and Lines of Business–The financial statements include the accounts of Paul Mueller Company and its wholly owned subsidiaries: Mueller Transportation, Inc.; Mueller Field Operations, Inc.; and Mueller B.V. and its subsidiaries (collectively “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. The Company provides manufactured equipment and components for the food, dairy, beverage, transportation, chemical, pharmaceutical, and other industries, as well as the dairy farm market. The Company also provides field fabrication, service and repair, and construction services in these industries.

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 on page 30 of the Company’s 2016 Annual Report, 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.

For all other relevant accounting policies and management discussion and analysis, please see the 2016 annual report, which is available at www.paulmueller.com

Press Contact: 
Jay Holden
Paul Mueller Company
Springfield, MO 65802 
(417) 575-9422
jholden@paulmueller.com
http://paulmueller.com