Paul Mueller Company Announces Its Third Quarter Earnings of 2023

SPRINGFIELD, Mo., Oct. 27, 2023 (GLOBE NEWSWIRE) -- Paul Mueller Company (OTC: MUEL) today announced earnings for the quarter ended September 30, 2023.

	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
							2023		2022		2023		2022		2023		2022
	Net Sales						$ 57,088		$ 45,766		$ 173,370		$ 132,518		$ 232,372		$ 179,511
	Cost of Sales						38,948		34,801		119,881		102,204		169,963		139,665
	Gross Profit						$ 18,140		$ 10,965		$ 53,489		$ 30,314		$ 62,409		$ 39,846
	Selling, General and Administrative Expense						11,245		9,695		36,546		30,332		41,225		40,088
	Operating Income (Loss)						$ 6,895		$ 1,270		$ 16,943		$ (18)		$ 21,184		$ (242)
	Interest Expense						(82)		(105)		(259)		(610)		(346)		(708)
	Other Income						477		38		1,810		176		2,749		2,956
	Income (Loss) before Provision (Benefit) for Income Taxes						$ 7,290		$ 1,203		$ 18,494		$ (452)		$ 23,587		$ 2,006
	Provision (Benefit) for Income Taxes						1,786		223		4,510		(161)		5,703		335
	Net Income (Loss)						$ 5,504		$ 980		$ 13,984		$ (291)		$ 17,884		$ 1,671
	Earnings (Loss) per Common Share -				Basic and Diluted		$5.07		$0.90		$12.88		($0.27)		$16.47		$1.54
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
											Nine Months Ended
											September 30
											2023		2022
				Net Income (Loss)							$ 13,984		$ (291)
				Other Comprehensive Income (Loss), Net of Tax:
				Foreign Currency Translation Adjustment							(275)		(3,292)
				Comprehensive Income (Loss)							$ 13,709		$ (3,583)
	CONSOLIDATED BALANCE SHEETS
											September 30		December 31
											2023		2022
				Cash and Short-Term Investments							$ 41,527		$ 38,176
				Accounts Receivable							24,126		20,580
				Inventories (FIFO)							51,042		48,515
				LIFO Reserve							(22,233)		(21,691)
				Inventories (LIFO)							28,809		26,824
				Current Net Investments in Sales-Type Leases							25		24
				Other Current Assets							3,721		3,156
				Current Assets							$ 98,208		$ 88,760
				Net Property, Plant, and Equipment							40,689		41,511
				Right of Use Assets							2,147		2,304
				Other Assets							5,283		5,041
				Long-Term Net Investments in Sales-Type Leases							391		312
				Total Assets							$ 146,718		$ 137,928
				Accounts Payable							$ 11,654		$ 11,802
				Current Maturities and Short-Term debt							624		628
				Current Lease Liabilities							376		448
				Advance Billings							36,551		41,288
				Pension Liabilities							9,972		11,558
				Other Current Liabilities							22,023		20,062
				Current Liabilities							$ 81,200		$ 85,786
				Long-Term Debt							8,824		9,349
				Long-Term Pension Liabilities							236		236
				Other Long-Term Liabilities							2,537		1,737
				Lease Liabilities							643		762
				Total Liabilities							$ 93,440		$ 97,870
				Shareholders' Investment							53,278		40,058
				Total Liabilities and Shareholders' Investment							$ 146,718		$ 137,928
	SELECTED FINANCIAL DATA
													September 30		December 31
													2023		2022
					Book Value per Common Share								$49.07		$36.90
					Total Shares Outstanding								1,085,711		1,085,711
					Backlog								$ 99,441		$ 132,829
	CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
							Common Stock		Paid-in Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total
	Balance, December 31, 2022						$ 1,508		$ 9,708		$ 75,721		$ (10,787)		$ (36,092)		$ 40,058
	Add (Deduct):
		Net Income									13,984						13,984
		Other Comprehensive Income (Loss), Net of Tax													(275)		(275)
		Dividends, $.45 per Common Share									(489)						(489)
		Treasury Stock Acquisition															-
	Balance, September 30, 2023						$ 1,508		$ 9,708		$ 89,216		$ (10,787)		$ (36,367)		$ 53,278
	CONSOLIDATED STATEMENT OF CASH FLOWS
													Nine Months Ended September 30,  2023		Nine Months Ended September 30,  2022
				Operating Activities:
				Net Income (Loss)									$ 13,984		$ (291)
				Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities:
				Pension Contributions (Greater) Less than Expense									(1,586)		(2,950)
				Bad Debt Expense (Recovery)									112		(1)
				Depreciation & Amortization									4,718		4,549
				(Gain) on Sales of Equipment									(48)		(4)
				Change in Assets and Liabilities
				(Inc) Dec in Accts and Notes Receivable									(3,658)		5,266
				(Inc) in Cost in Excess of Estimated Earnings and Billings									(109)		-
				(Inc) in Inventories									(1,985)		(7,358)
				(Inc) in Prepayments									(456)		(2,742)
				(Inc) in Net Investment in Sales-type leases									(80)		(86)
				Dec in Other LT Assets									373		218
				(Dec) in Accounts Payable									(148)		(3,284)
				Inc (Dec) in Accrued Income Tax									3,519		(1)
				Inc in Other Accrued Expenses									5,515		1,468
				(Dec) Inc in Advanced Billings									(4,737)		15,494
				(Dec) Inc in Billings in Excess of Costs and Estimated Earnings									(7,073)		7,554
				Inc in Lease Liability for Operating									-		220
				Inc in Lease Liability for Financing									130		-
				Principal payments of Lease Liability for Operating									(163)		(231)
				Inc (Dec) In Other Long-Term Liabilities									197		(175)
				Net Cash Provided by Operating Activities									$ 8,505		$ 17,646
				Investing Activities
				Intangibles									(62)		-
				Proceeds from Sales of Equipment									83		11
				Additions to Property, Plant, and Equipment									(4,351)		(5,838)
				Net Cash (Required) for Investing Activities									$ (4,330)		$ (5,827)
				Financing Activities
				Principal payments of Lease Liability for Financing									(146)		(144)
				(Repayment) of Short-Term Borrowings, Net									-		-
				(Repayment) of Long-Term Debt									(479)		(957)
				Dividends Paid									(489)		(489)
				Treasury Stock Acquisitions									-		(38)
				Net Cash (Required) for Financing Activities									$ (1,114)		$ (1,628)
				Effect of Exchange Rate Changes									290		(601)
				Net Increase in Cash and Cash Equivalents									$ 3,351		$ 9,590
				Cash and Cash Equivalents at Beginning of Year									38,176		11,281
				Cash and Cash Equivalents at End of Quarter									$ 41,527		$ 20,871

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		2023			2022
Domestic	$46,044			$35,464
Mueller BV	$11,366			$10,316
Eliminations	($322)			($14)
Net Revenue	$57,088			$45,766
The chart below depicts the net revenue on a consolidating basis for the nine months ended September 30.
Nine Months Ended September 30
Revenue		2023			2022
Domestic	$139,924			$97,895
Mueller BV	$34,743			$35,354
Eliminations	($1,297)			($731)
Net Revenue	$173,370			$132,518
The chart below depicts the net revenue on a consolidating basis for the twelve months ended September 30.
Twelve Months Ended September 30
Revenue		2023			2022
Domestic	$187,222			$130,791
Mueller BV	$46,745			$49,805
Eliminations	($1,595)			($1,085)
Net Revenue	$232,372			$179,511
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		2023			2022
Domestic	$5,078			$1,308
Mueller BV	$426			($333)
Eliminations	$0			$5
Net Income	$5,504			$980
The chart below depicts the net income (loss) on a consolidating basis for the nine months ended September 30.
Nine Months Ended September 30
Net Income		2023			2022
Domestic	$14,233			$658
Mueller BV	($234)			($955)
Eliminations	($15)			$6
Net Income (Loss)	$13,984			($291)
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		2023			2022
Domestic	$18,092			$1,619
Mueller BV	($182)			$6
Eliminations	($26)			$46
Net Income	$17,884			$1,671

B. Key headlines for the quarter:

• In the US, the Company continues to perform well against a strong backlog which has contributed to excellent results for the first nine months of the year.
  
• In April, 2023, Mueller B.V. announced organizational changes aimed to improve earnings which can be seen in recent results. The Net Loss for the 1^st Quarter of 2023 was $(770) thousand. The YTD Net Loss as of September 30, 2023 is $(234) thousand, a $536 thousand improvement.
• The standard plan termination of the Company’s two domestic pension plans is progressing well with an anticipated completion before December 31, 2023.
  

C. September 30, 2023 backlog is $99.4 million compared to $139.2 million at September 30, 2022. Although down from the previous year, the backlog is still healthy from a historical perspective. The September 30^th backlog in the U.S. is $90.3 million as compared to $130.4 million at September 30, 2022. The reduction in U.S. backlog occurred primarily in the pharmaceutical activities of the Company. In the Netherlands, the backlog is $9.7 million at September 30, 2023 compared to $9.4 million September 20, 2022.

D. Revenue is up from the previous year by $11.3 million, $40.9 million and $52.9 million on a three-month, nine-month and twelve-month basis. Most every business segment in the U.S. has an increase led by the pharmaceutical and food and beverage groups. In the Netherlands, revenue is up $1.0 million for the quarter and down for the nine-month and twelve-month periods compared to last year.

Net Income is up from the previous year by $4.5 million, $14.3 million and $16.2 million on a three-month, nine-month and twelve-month basis. This improvement is partially driven by the US operations where the 2023 profits are less negatively affected by the change in the LIFO reserve as outlined in footnote F. However, the greater impact has been an increased focus on improving margins. Gross profit in the US (excluding the effects of LIFO) as a percentage of revenue is 30.2% as September 30, 2023. This compares to 21.2% for the first nine months of 2022. This improved margin coupled with the $42.0 million increase in revenue has led to the excellent results for the first nine months.

E. The Company has pension plans covering domestic employees represented by a bargaining unit (Contract Plan) and employees not represented by a bargaining unit (Noncontract Plan). The participants discontinued accruing benefits in these plans in 2011. On November 1, 2022, and December 1, 2022, the Company announced that it had initiated a standard plan termination of the Contract Plan and Noncontract Plan, respectively. The Company applied to the IRS for its approval of the terminations on December 15, 2022. The Company gave notice of intent to terminate to the PBGC for the Contract Plan on June 27, 2023 and the Noncontract Plan on July 14, 2023. The Company has received no questions from the PBGC and on September 28, 2023, the Company received a favorable determination letter from the IRS.

In September, plan termination election packets were mailed to current employees and former employees who are vested but are not receiving pension payments. The Company plans to complete the termination by the end of 2023, culminating in the affected participants receiving either a lump sum payment or a monthly annuity payment provided by an insurance company. Participants have until October 31^st to make their election.

The underfunded status of the two plans combined as of December 31, 2022, was $11.8 million. These terminations will require approximately this amount of cash from the Company, adjusted for any further changes to the plans’ funded status. The terminations will end future requirements for Company contributions to the plans, which have averaged $4.2 million per year in the previous three years. The Company expects to complete the terminations in late 2023 at which time the accumulated actuarial losses will be recognized as a non-cash reduction of pretax earnings. The accumulated actuarial loss related to these plans was $44,874,302 as of December 31, 2022.

F. The pre-tax results for the three months ended September 30, 2023, were unfavorably affected by $0.3 million increase in the LIFO reserve. The pre-tax results for the nine months ended September 30, 2023, were unfavorably affected by $0.5 million increase in the LIFO reserve. The pre-tax results for the twelve month ended September 30, 2023 were unfavorably affected by $0.9 million increase in the LIFO reserve. The pre-tax results for the three months ended September 30, 2022, were unfavorably affected by $0.9 million increase in the LIFO reserve. The pre-tax results for the nine months ended September 30, 2022, were unfavorably affected by $4.5 million increase in the LIFO reserve. The pre-tax results for the twelve months ended September 30, 2022, were unfavorably affected by $5.6 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 .98 for September 2022; 1.07 for December 2022; and 1.06 for September 2023.

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 2022 annual report, available at
www.paulmueller.com.

Press Contact: Ken Jeffries | Paul Mueller Company | Springfield, MO 65802 | [phone]

[e-mail] | https://paulmueller.com