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Paul Mueller Company Announces Its Third Quarter Earnings of 2017

SPRINGFIELD, Miss., Oct. 27, 2017 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC:MUEL) today announced earnings for the quarter ended September 30, 2017.

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
2017
2016 2017
2016
2017
2016
Net Sales
$48,271 $44,116 $125,512 $130,801 $162,732 $174,940
Cost of Sales
34,274 33,117 89,225 94,682 117,834 126,778
Gross Profit
$13,997 $10,999 $36,287 $36,119 $44,898 $48,162
Selling, General and Administrative Expense 10,527 16,045 31,542 38,766 40,664 47,477
Operating Income (Loss)
$3,470 $(5,046) $4,745 $(2,647) $4,234 $685
Interest Expense
(137) (86) (248) (185) (357) (246)
Other Income (Expense)
(356) (49) (563) (160) (194) (74)
Income (Loss) before Provision (Benefit) for Income Taxes $2,977 $(5,181) $3,934 $(2,992) $3,683 $365
Provision (Benefit) for Income Taxes
1,171 (1,982) 1,618 (1,466) 2,122 213
Net Income (Loss)
$1,806 $(3,199) $2,316 $(1,526) $1,561 $152
Earnings per Common Share ––Basic $1.51 ($2.66) $1.94 ($1.26) $1.30 $0.12
Diluted $1.51 ($2.66) $1.94 ($1.26) $1.30 $0.12
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Nine Months Ended
September 30
2017
2016
Net Income (Loss) $2,316 $(1,526)
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation Adjustment 3,448 754
Change in Pension Liability - (1,478)
Amortization of De-Designated Hedges 3 15
Comprehensive Income (Loss) $5,767 $(2,235)
CONSOLIDATED BALANCE SHEETS
September 30 December 31
2017
2016
Cash and Short-Term Investments $6,539 $357
Accounts Receivable 23,196 18,083
Inventories 27,446 24,126
Other Current Assets 4,180 2,157
Current Assets $61,361 $44,723
Net Property, Plant, and Equipment 45,409 33,545
Other Assets 29,951 26,397
Total Assets $136,721 $104,665
Accounts Payable $12,352 $8,165
Current Maturities and Short-Term Debt 5,506 8,243
Other Current Liabilities 32,235 20,777
Current Liabilities $50,093 $37,185
Long-Term Debt 18,028 4,558
Long-Term Pension Liabilities 29,606 31,628
Other Long-Term Liabilities 2,863 828
Total Liabilities 100,590 74,199
Shareholders' Investment 36,131 30,466
Total Liabilities and Shareholders' Investment $136,721 $104,665
SELECTED FINANCIAL DATA
September 30 December 31
2017
2016
Book Value per Common Share $30.20 $25.39
Total Shares Outstanding 1,196,261 1,200,021
Backlog $89,995 $44,241
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
Common Stock Paid-in Surplus Retained Earnings Treasury Stock Accumulated
Other
Comprehensive
Income (Loss)
Total
Balance, December 31, 2016 $1,508 $9,708 $61,582 $(6,227) $(36,105) $30,466
Add (Deduct):
Net Income
2,316 2,316
Other Comprehensive Income, Net of Tax 3,451 3,451
Treasury Stock Acquisition (102) (102)
Balance, September 30, 2017 $1,508 $9,708 $63,898 $(6,329) $(32,654) $36,131
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months
Ended
September 30,
2017
Nine Months
Ended
September 30,
2016
Operating Activities:
Net Income (Loss) $2,316 $(1,526)
Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities:
Pension Contributions (Greater) Less than Expense (2,023) 5,132
Bad Debt Expense (Recovery) 78 12
Depreciation & Amortization 4,361 4,545
(Gain) Loss on Sales of Equipment (55) (20)
Other (20) (66)
Change in Assets and Liabilities
(Inc) Dec in Accts and Notes Receivable (4,064) (1,532)
(Inc) Dec in Cost in Excess of Estimated Earnings and Billings 166 (521)
(Inc) Dec in Inventories (1,569) 6,301
(Inc) Dec in Prepayments (2,342) (1,907)
(Inc) Dec Other Assets (358) (1)
Inc (Dec) in Accounts Payable 3,323 136
Inc (Dec) Other Accrued Expenses 3,354 (1,304)
Inc (Dec) Advanced Billings 2,778 (4,095)
Inc (Dec) in Billings in Excess of Costs and Estimated Earnings 4,096 (1,616)
Inc (Dec) In Other Liabilities 21 (478)
Net Cash Provided by Operating Activities $10,062 $3,060
Investing Activities
Proceeds from Sales of Equipment 164 61
Additions to Property and Equipment (12,730) (3,859)
Net Cash Required for Investing Activities $(12,566) $(3,798)
Financing Activities
Proceeds (Repayment) of Short-Term Borrowings, Net (3,867) 1,983
(Repayment) Proceeds of Long-Term Debt 13,010 (311)
Treasury Stock Acquisitions (102) (1,051)
Net Cash Provided for Financing Activities $9,041 $621
Effect of Exchange Rate Changes (355) (77)
Net Increase (Decrease) in Cash and Cash Equivalents $6,182 $(194)
Cash and Cash Equivalents at Beginning of Year 357 545
Cash and Cash Equivalents at End of Quarter $6,539 $351


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
Revenue2017 2016
Domestic$34,898 $31,095
Mueller BV$13,541 $13,352
Eliminations($168)($331)
Net Revenue$48,271 $44,116
The chart below depicts the net revenue on a consolidating basis for the nine months ended September 30.
Nine Months Ended September 30
Revenue2017 2016
Domestic$89,381 $85,767
Mueller BV$36,555 $45,941
Eliminations($424)($907)
Net Revenue$125,512 $130,801
The chart below depicts the net revenue on a consolidating basis for the twelve months ended September 30.
Twelve Months Ended September 30
Revenue2017 2016
Domestic$114,643 $112,364
Mueller BV$48,715 $63,921
Eliminations($626)($1,345)
Net Revenue$162,732 $174,940
The chart below depicts the net income on a consolidating basis for the three months ended September 30.
Three Months Ended September 30
Net Income2017 2016
Domestic$2,002 ($3,244)
Mueller BV($191)$62
Eliminations($5)($17)
Net Income$1,806 ($3,199)
The chart below depicts the net income on a consolidating basis for the nine months ended September 30.
Nine Months Ended September 30
Net Income2017 2016
Domestic$2,851 ($3,233)
Mueller BV($602)$1,642
Eliminations$67 $65
Net Income$2,316 ($1,526)
The chart below depicts the net income on a consolidating basis for the twelve months ended September 30.
Twelve Months Ended September 30
Net Income2017 2016
Domestic$2,129 ($1,886)
Mueller BV($689)$1,948
Eliminations$121 $90
Net Income$1,561 $152

B. Backlog increased during the third quarter from $80 million to $90 million, which is more than twice the backlog at the beginning of 2017. Among the significant orders in backlog are a series of related pharmaceutical orders, most of which were entered in the first quarter of 2017, and which contributed to revenue beginning in the third quarter of 2017 and expected to continue contributing to revenue through the second quarter of 2018. There is also unusually high backlog for dairy farm products to be delivered in the United States and Canada, which is expected to sustain the current high revenue for this group through, at least, the second quarter of 2018.

The slow market for dairy farm related products in The Netherlands is the primary cause of the loss recorded by Mueller BV, the company's Dutch subsidiary. Dutch dairy farmers face regulatory uncertainty related to a switch from a milk quota system to new regulations controlling animal waste. The situation is expected to improve only when details of the implementation are clarified.

On a brighter note, due to the efforts of DEG, Mueller BV's recent acquisition, this group is working with €6 million in backlog for heat transfer products, which is expected to contribute to revenue in the first half of 2018. In the meantime, the construction project in Groenlo is proceeding smoothly and, after some higher transition costs, is expected to generate cost savings and operational improvements when complete in the summer of 2018. As of September 30, 2017, the long-term debt of $18.0 million includes $13.2 million related to the construction project in Groenlo.

C. The pre-tax results for the nine months ended September 30, 2017, were unfavorably affected by a $476,000 increase in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2017, were favorably affected by a $24,000 decrease in the LIFO reserve. The pre-tax results for the nine months ended September 30, 2016, were unfavorably affected by a $1,000,000 increase in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2016, were unfavorably affected by a $450,000 increase in the LIFO reserve.

D. The Company 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. The results for the nine and twelve months ended September 30, 2016 contained a negative noncash effect on the pre-tax earnings of the Company of $6.72 million.

E. 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 1.12 for September 2016; 1.05 for December 2016; 1.18 for September 2017, 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 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.

The accounting policies related to this report and additional management discussion and analysis are provided in the 2016 annual report, available at www.paulmueller.com.

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

Source:Paul Mueller Company