Paul Mueller Company Announces Its Second Quarter Earnings of 2020

SPRINGFIELD, Mo., July 31, 2020 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended June 30, 2020.

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.

The chart below depicts the net revenue on a consolidating basis for the six months ended June 30.

The chart below depicts the net revenue on a consolidating basis for the twelve months ended June 30.

The chart below depicts the net income on a consolidating basis for the three months ended June 30.

The chart below depicts the net income on a consolidating basis for the six months ended June 30.

The chart below depicts the net income on a consolidating basis for the twelve months ended June 30.

B. The COVID-19 pandemic continues to be a challenge. The strong beginning of the year backlog in the U.S. and reduced spending has partially mitigated the initial financial impact of the pandemic resulting in strong earnings for the first six months.  However, the uncertainty in the economy has slowed order entry creating excess capacity.    

C. June 30, 2020 backlog was $87.5 million which is $7.8 million higher than the $79.8 million at December 31, 2019.  In the U.S., backlog is $77.8 million which is up $8.2 million (12%) from December 31, 2019.  However, 75% of the U.S. backlog is in the Pharmaceutical groups and Mueller Field Operations which received a large order for a juice storage facility.  When you remove the backlog related to the juice facility project, total U.S. June 30^th backlog is down 25% from December 31, 2019.  Mueller BV backlog has been relatively flat but still at recent historic lows.

In the U.S., the Company has furloughed some employees and have had the majority of the employees working reduced schedules of 24-32 hours a week since May to keep the employees working while stretching out the workload and maintaining customer delivery dates.  With the lower revenue, Mueller BV head count (FTE’s) has been reduced by 49 (18%) since the beginning of the year.  Capital Expenditures, major renovations and maintenance projects have been temporarily put on hold to conserve cash.  On June 19^th, the Company received a $1.88 million Payroll Protection Program loan to facilitate keeping its employees employed.  The loan is up to five years at 1% interest.   

D. Revenue for the three months and six months are relatively flat to the previous year with U.S. revenue increases offsetting the decreases in The Netherlands.  The trailing twelve months revenue increase is driven by the large pharmaceutical backlog in the U.S. that went into production in mid-2019.  This backlog in the pharmaceutical segment led to an increase in second quarter revenue over the last year’s second quarter by 46%.  Mueller Field Operations showed increased revenue from the previous year’s quarter from large projects including a large juice facility project.  These increases offset a 43% decrease in Dairy Farm Equipment revenue quarter over quarter.  In The Netherlands, the business conditions continue to be soft with trailing revenues down compared to last year at three-month, six-month and twelve months.  However, The Netherlands continues to save in expenses.

Net Income was favorable from the prior year at three-month, six-month and twelve-month trailing results. Similar to the revenue variance explanations for the U.S., increased profitable pharmaceutical and field operations work more than offset the weak dairy farm segment.  In the Netherlands, better margins and expense savings are more than offsetting the reduced revenue.

E. As of June 30, 2020, total debt was $19.6 million compared to $21.5 million as of December 31, 2019.  Cash and cash equivalents were $18.6 million at June 30, 2020 compared to $1.1 million at December 31, 2019.  Advanced Billings for the Company which is a liability representing deposits received from customers on large projects was $14.2 million at June 30^th compared to $8.9 million at December 31, 2019.

As of June 30^th, Mueller BV had its first test of its loan covenants since it violated certain covenants as of December 31, 2018.  On March 4, 2019, the Company loaned Mueller BV funds to pay down the existing loan and in return Mueller BV received adjustments to the covenant requirements and a waiver of all financial covenants until being tested again on June 30, 2020.  As of June 30, both Mueller BV and the Company were in compliance of all financial covenant requirements.

F. The pre-tax results for the three and six months ended June 30, 2020, were favorably affected by $0.1 million decrease in the LIFO reserve.  The pre-tax results for the twelve months ended June 30, 2020 were favorably affected by $0.5 million decrease in the LIFO reserve.  The pre-tax results for the three months ended June 30, 2019, were favorably affected by a $0.4 million decrease in the LIFO reserve. The pre-tax results for the six months ended June 30, 2019, were unfavorably affected by a $0.4 million increase in the LIFO reserve. The pre-tax results for the twelve months ended June 30, 2019, were unfavorably affected by a $0.5 million increase in the LIFO reserve. 

G. 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 1.14 for June, 2019; 1.12 for December, 2019; and 1.12 for June, 2020, respectively.

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 2019 annual report, available at
www.paulmueller.com. 

Press Contact: Ken Jeffries | Paul Mueller Company | Springfield, MO 65802 | (417) 575-9346

[email protected] | http://paulmueller.com