Paul Mueller Co. (OTC: MUEL) swung to a net loss in 2020.
Company officials cited a $14.4 million goodwill impairment charge related to its 2008 acquisition of European subsidiary Mueller BV, according to a news release.
"Net income, before the goodwill impairment, was $12.8 million on revenue of $201.1
million, showing improved results in the United States and the Netherlands," President and CEO David Moore said in the company's annual report to shareholders. "These results were achieved in a year with the uncertainty of COVID-19 and with the lowest starting backlog since 2017. Our co-workers rose to this challenge."
Moore added the impairment charge was due, in part, to cover cumulative losses of $4.6 million posted between 2017 and 2020 by the European subsidiary. According to Investopedia.com, companies typically enact these earnings charges when “the asset associated with the goodwill can no longer demonstrate financial results that were expected from it at the time of its purchase.”
Mueller Co.'s 2020 net income, including the impairment charge, fell 139% to a $2.6 million loss, according to the release.
Also last year, Mueller Co. announced and subsequently called off a $6.6 million deal to sell its Mueller Field Operations Inc. unit to management. Moore previously said officials found "it was in all of our interests for the companies to continue supporting one another in the current structure.”
As of Dec. 31, Mueller Co.'s assets were $120.9 million and its backlog was $61.6 million, according to the release. In conjunction with the earnings release, Mueller Co. announced its board of directors approved a $2 million share repurchase agreement slated to be conducted between April and the end of September.
Mueller Co.'s over-the-counter stock traded as high as $52 per share yesterday, compared with a 52-week range of $18 to $53 per share.
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