Paul Mueller Company Announces Its Third Quarter Earnings of 2024

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

2024

2023

2024

2023

2024

2023

Net Sales

$

62,085

$

57,088

$

178,111

$

173,370

$

233,897

$

232,372

Cost of Sales

41,028

38,948

121,459

119,881

160,203

169,963

        Gross Profit

$

21,057

$

18,140

$

56,652

$

53,489

$

73,694

$

62,409

Selling, General and Administrative Expense

12,238

11,245

34,013

36,546

85,736

41,225

        Operating Income (Loss)

$

8,819

$

6,895

$

22,639

$

16,943

$

(12,042

)

$

21,184

Interest Expense

¹

(83

)

(82

)

(256

)

(259

)

(347

)

(346

)

Other Income

¹

840

477

1,885

1,810

2,741

2,749

Income (Loss) before Provision (Benefit) for Income Taxes

$

9,576

$

7,290

$

24,268

$

18,494

$

(9,648

)

$

23,587

Provision (Benefit) for Income Taxes

2,297

1,786

5,736

4,510

(4,306

)

5,703

Net Income (Loss)

$

7,279

$

5,504

$

18,532

$

13,984

$

(5,342

)

$

17,884

Earnings (Loss) per Common Share - Basic and Diluted

$

7.77

$

5.07

$

18.79

$

12.88

$

(5.28

)

$

16.47

1. The elimination of intercompany interest was incorrect in the 2nd Quarter release causing interest income and interest expense to be overstated by the same amount, however, net income was still correct. For this financial presentation, the error was corrected as of June 30th so the three-month, nine-month and twelve-month interest income and expense would be presented correctly.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Nine Months Ended

September 30

2024

2023

Net Income

$

18,532

$

13,984

Other Comprehensive Income (Loss), Net of Tax:

Foreign Currency Translation Adjustment

526

(275

)

Comprehensive Income

$

19,058

$

13,709

CONSOLIDATED BALANCE SHEETS

September 30

December 31

2024

2023

Cash and Cash Equivalents

²

$

16,030

$

5,894

Marketable Securities

²

15,070

28,031

Accounts Receivable

31,363

25,166

Inventories (FIFO)

45,450

45,910

LIFO Reserve

(21,461

)

(21,774

)

Inventories (LIFO)

23,989

24,136

Current Net Investments in Sales-Type Leases

35

27

Other Current Assets

6,262

3,537

        Current Assets

$

92,749

$

86,791

Net Property, Plant, and Equipment

45,890

42,011

Right of Use Assets

2,271

2,421

Other Assets

2,409

2,590

Long-Term Net Investments in Sales-Type Leases

604

456

        Total Assets

$

143,923

$

134,269

Accounts Payable

$

13,003

$

11,041

Current Maturities and Short-Term Debt

648

640

Current Lease Liabilities

344

402

Advance Billings

22,696

27,383

Pension Liabilities

32

32

Other Current Liabilities

25,989

19,599

        Current Liabilities

$

62,712

$

59,097

Long-Term Debt

8,500

8,880

Long-Term Pension Liabilities

209

233

Other Long-Term Liabilities

1,677

1,768

Lease Liabilities

759

775

        Total Liabilities

$

73,857

$

70,753

Shareholders' Investment

70,066

63,516

        Total Liabilities and Shareholders' Investment

$

143,923

$

134,269

2. Has been restated to move money market accounts out of marketable securities into cash equivalents.

SELECTED FINANCIAL DATA

September 30

December 31

2024

2023

Book Value per Common Share

$

74.79

$

58.50

Total Shares Outstanding

936,837

1,085,711

Backlog

$

171,505

$

97,350

 CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT

Accumulated Other Comprehensive Income (Loss)

Common Stock

Paid-in Surplus

Treasury Stock

Retained Earnings

Total

Balance, December 31, 2023

$

1,508

$

9,708

$

67,181

$

(10,787

)

$

(4,094

)

$

63,516

Add (Deduct):

Net Income

18,532

18,532

Other Comprehensive Income (Loss), Net of Tax

526

526

Dividends, $.45 per Common Share

(594

)

(594

)

Treasury Stock Acquisition

(11,910

)

(11,910

)

Other

(4

)

(4

)

Balance, September 30, 2024

$

1,508

$

9,708

$

85,115

$

(22,697

)

$

(3,568

)

$

70,066

 CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended

September 30, 2024

Nine Months Ended

September 30, 2023

Operating Activities:

  Net Income

$

18,532

$

13,984

  Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities:

    Pension Contributions (Greater) Less than Expense

(25

)

(1,586

)

    Bad Debt Expense (Recovery)

-

112

    Depreciation & Amortization

5,177

4,718

    (Gain) on Sales of Equipment

(104

)

(48

)

    (Gain) on Disposal of Equipment

(389

)

-

  Change in Assets and Liabilities

     (Inc) in Accts and Notes Receivable

(6,197

)

(3,658

)

     (Inc) in Cost in Excess of Estimated Earnings and Billings

-

(109

)

     Dec (Inc) in Inventories

738

(1,985

)

     (Inc) in Prepayments

(2,724

)

(456

)

     (Inc) in Net Investment in Sales-type leases

(353

)

(80

)

     Dec in Other LT Assets

1,036

373

     Inc (Dec) in Accounts Payable

1,962

(148

)

     (Dec) Inc in Accrued Income Tax

(1,063

)

3,519

     Inc in Other Accrued Expenses

1,606

5,515

     (Dec) in Advanced Billings

(4,686

)

(4,737

)

     Inc(Dec) in Billings in Excess of Costs and Estimated Earnings

5,842

(7,073

)

     Inc in Lease Liability for Operating

169

-

     Inc in Lease Liability for Financing

-

130

     Principal payments of Lease Liability for Operating

(188

)

(163

)

     (Dec) in Long Term Deferred Tax Liabilities

(85

)

-

     (Dec) Inc in Other Long-Term Liabilities

(119

)

197

        Net Cash Provided by Operating Activities

$

19,129

$

8,505

Investing Activities

     Intangibles

-

(62

)

Purchases of Marketable Securities

²

(16,442

)

(23,464

)

Proceeds from Sales of Marketable Securities

²

29,403

18,130

     Proceeds from Sales of Equipment

131

83

     Additions to Property, Plant, and Equipment

(8,637

)

(4,351

)

       Net Cash (Required) for Investing Activities

$

4,455

$

(9,664

)

Financing Activities

     Principal payments of Lease Liability for Financing

(149

)

(146

)

     (Repayment) of Short-Term Borrowings, Net

(1,637

)

-

     Proceeds of Short-Term Borrowings, Net

1,637

-

     (Repayment) of Long-Term Debt

(1,152

)

(479

)

     Dividends Paid

(594

)

(489

)

     Treasury Stock Acquisitions

(11,910

)

-

       Net Cash Provided by (Required for) Financing Activities

$

(13,805

)

$

(1,114

)

Effect of Exchange Rate Changes

357

290

Net Increase in Cash and Cash Equivalents ²

$

10,136

$

(1,983

)

Cash and Cash Equivalents at Beginning of Year ²

5,894

3,468

Cash and Cash Equivalents at End of Quarter ²

$

16,030

$

1,485

2. Has been restated to move money market accounts out of marketable securities into cash equivalents.   

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

2024

2023

Domestic

$

52,560

$

46,044

Mueller BV

$

10,087

$

11,366

Eliminations

$

(562

)

$

(322

)

Net Revenue

$

62,085

$

57,088

Nine Months Ended September 30

Revenue

2024

2023

Domestic

$

144,267

$

139,924

Mueller BV

$

35,076

$

34,743

Eliminations

$

(1,232

)

$

(1,297

)

Net Revenue

$

178,111

$

173,370

Twelve Months Ended September 30

Revenue

2024

2023

Domestic

$

187,349

$

187,222

Mueller BV

$

48,043

$

46,745

Eliminations

$

(1,495

)

$

(1,595

)

Net Revenue

$

233,897

$

232,372

Three Months Ended September 30

Net Income

2024

2023

Domestic

$

7,365

$

5,078

Mueller BV

$

(84

)

$

426

Eliminations

$

(2

)

$

-

Net Income (Loss)

$

7,279

$

5,504

Nine Months Ended September 30

Net Income

2024

2023

Domestic

$

17,440

$

14,233

Mueller BV

$

1,064

$

(234

)

Eliminations

$

28

$

(15

)

Net Income (Loss)

$

18,532

$

13,984

Twelve Months Ended September 30

Net Income

2024

2023

Domestic

$

(8,121

)

$

18,092

Mueller BV

$

2,775

$

(182

)

Eliminations

$

4

$

(26

)

Net Income (Loss)

$

(5,342

)

$

17,884

B.

September 30, 2024 backlog is $171.5 million compared to $97.4 million at September 30, 2023. The majority of this backlog is in the U.S. where the backlog is $165.3 million at September 30, 2024 compared to $90.3 million at September 30, 2023. The $75.0 million increase in U.S. backlog is primarily from the pharmaceutical divisions. In the Netherlands, the backlog is $6.9 million on September 30, 2024 versus $9.7 million on September 30, 2023.  

C.

Compared to last year, revenue is up $5.0 million (8.8%) on a three-month basis; up $4.7 million (2.7%) on a nine-month basis; and flat for the trailing twelve months. In the U.S., revenues show a similar pattern with increased revenue from the pharmaceutical and food and beverage divisions driving the increase. In the Netherlands business continues to improve with revenue down for the quarter but up on the 9-month and 12-month timeframes.

Net Income is up $1.8 million for three-months; $4.5 million for nine months but down $23.2 million before removing the pension settlement charges incurred in December 2023. In the Netherlands, earnings continue to improve following the business restructuring in the spring of 2023. Efficiencies achieved from the restructuring along with strategic price increases have led to the improved earnings.

We manage our business in the U.S. looking at earnings before tax (EBT) and excluding the effects of LIFO and non-reoccurring events such as the pension settlement. This non-GAAP adjusted EBT (as shown in the table on the next page) shows improved results from a strong 2023 performance in all three timeframes. This improvement comes primarily from the pharmaceutical and food and beverage divisions.

Results Ending September 30th

Three Months Ended September 30

Nine Months Ended September 30

Twelve Months Ended September 30

(In Thousands)

2024

2023

2024

2023

2024

2023

Domestic Net Income

$

7,365

$

5,078

$

17,440

$

14,233

$

(8,121

)

$

18,092

Income Tax Expense

$

2,321

$

1,595

$

5,391

$

4,468

$

(3,834

)

$

5,634

Domestic EBT - GAAP

$

9,686

$

6,673

$

22,831

$

18,701

$

(11,955

)

$

23,726

LIFO Adjustment

$

151

$

302

$

(312

)

$

541

$

(770

)

$

925

Pension Adjustment

$

-

$

-

$

-

$

-

$

41,774

$

-

Domestic EBT - Non-GAAP

$

9,837

$

6,975

$

22,519

$

19,242

$

29,049

$

24,651

D.

Due to recent record backlogs, on July 26, 2024, the Company announced a facility expansion of just over 100,000 square feet at a cost of $22 million. On August 26, 2024, the Company had a ground-breaking ceremony with the Missouri governor, Mike Parsons, and other dignitaries present. On October 16, 2024, site preparation began.  Building completion date is scheduled for the end of 2025.

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 1.06 at September 2023; 1.10 at December 2023 and 1.12 for September 2024, respectively.