Mueller Industries, Inc. Reports Third Quarter Results

Oct 19, 2010, 07:00 ET from Mueller Industries, Inc.

MEMPHIS, Tenn., Oct. 19 /PRNewswire-FirstCall/ --

Quarterly and Year-to-Date Earnings

Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller's net income in the third quarter was $18.9 million, or 50 cents per diluted share, on net sales of $507.2 million.  This compares with net income of $18.7 million, or 50 cents per diluted share, on net sales of $419.9 million in the third quarter of 2009.

Year-to-date, the Company earned $68.4 million, or $1.81 per diluted share, which includes an insurance settlement gain of 59 cents per diluted share. This compares with net income of $22.2 million, or 59 cents per diluted share, for the same period of 2009.  Net sales for the first nine months of 2010 were $1.53 billion compared with net sales of $1.11 billion for the same period a year ago.  

Financial and Operating Highlights

Regarding the third quarter of 2010, Mr. Karp said:

  • "Our Plumbing & Refrigeration segment posted operating earnings of $11.5 million on net sales of $282.7 million compared with operating earnings of $16.0 million on net sales of $240.9 million in the third quarter of 2009.  The benefit of slightly higher shipments was offset by lower margins.
  • "Our OEM segment posted operating earnings of $23.0 million during the third quarter of 2010 on net sales of $229.0 million, which compared with operating earnings of $16.5 million on net sales of $181.6 million for the same period in 2009.  Operating income improved in most product lines on better volumes.
  • "The Comex average price of copper was $3.30 per pound in the third quarter of 2010, which compares with $2.67 per pound in the third quarter of 2009.  Higher selling prices due to rising raw material values accounted for approximately $57 million of the increase in net sales primarily in the Plumbing & Refrigeration segment.  Approximately $20 million of the increase in net sales was attributable to increased unit volume primarily in the OEM segment.
  • "Mueller ended the quarter with $400.1 million in cash, or $10.57 per share.  
  • "Total stockholders' equity was $777.0 million which equates to a book value per share of $20.54.
  • "Mueller's current ratio remains excellent at 4.4 to 1 and our working capital is $699.0 million.  Leverage is conservative with a ratio of debt to total capitalization at 18.4 percent."

Business Outlook

Regarding the outlook, Mr. Karp said, "Housing starts continue to stagnate at near the lowest levels of the past 50 years.  However, we believe starts are unlikely to decline further.  Also, the drop in non-residential construction appears to be bottoming out.  We expect to see improving business conditions in 2011, although the recovery in our industry will probably be uneven.  We are encouraged by Mueller's solid performance in 2010 and we are well prepared for an upturn in the economy."

Mueller Industries, Inc. is a leading manufacturer of copper tube and fittings; brass and copper alloy rod, bar and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; plastic fittings and valves; refrigeration valves and fittings; and fabricated tubular products.  Mueller's operations are located throughout the United States and in Canada, Mexico, Great Britain, and China.  Mueller's business is importantly linked to (1) the construction of new homes; (2) the improvement and reconditioning of existing homes and structures; and (3) the commercial construction market which includes office buildings, factories, hotels, hospitals, etc.  

*********************

Statements in this release that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties. These include economic and currency conditions, continued availability of raw materials and energy, market demand, pricing, competitive and technological factors, and the availability of financing, among others, as set forth in the Company's SEC filings. The words "outlook," "estimate," "project," "intend," "expect," "believe," "target," and similar expressions are intended to identify forward-looking statements. The reader should not place undue reliance on forward-looking statements, which speak only as of the date of this report. The Company has no obligation to publicly update or revise any forward-looking statements to reflect events after the date of this report.

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

For the Quarter Ended

For the Nine Months Ended

September 25,

September 26,

September 25,

September 26,

2010

2009

2010

2009

(Unaudited)

(Unaudited)

Net sales

$       507,240

$       419,890

$    1,532,896

$    1,114,248

Cost of goods sold

437,597

354,039

1,317,290

954,775

Depreciation and amortization

9,934

10,441

30,372

31,276

Selling, general, and administrative expense

28,810

27,593

99,601

89,067

Insurance settlement

12

-

(21,284)

-

Operating income

30,887

27,817

106,917

39,130

Interest expense

(3,072)

(2,435)

(8,568)

(7,553)

Other income (expense), net

30

(324)

(2,348)

688

Income before income taxes

27,845

25,058

96,001

32,265

Income tax expense

(9,098)

(6,246)

(26,418)

(9,796)

Consolidated net income

18,747

18,812

69,583

22,469

Less net loss (income) attributable to noncontrolling interest

162

(146)

(1,158)

(267)

Net income attributable to Mueller Industries, Inc.

$         18,909

$         18,666

$         68,425

$         22,202

Weighted average shares

for basic earnings per share

37,710

37,474

37,657

37,253

Effect of dilutive stock-based awards

92

72

77

89

Adjusted weighted average shares

for diluted earnings per share

37,802

37,546

37,734

37,342

Basic earnings per share

$             0.50

$             0.50

$             1.82

$             0.60

Diluted earnings per share

$             0.50

$             0.50

$             1.81

$             0.59

Dividends per share

$             0.10

$             0.10

$             0.30

$             0.30

Summary Segment Data:

Net sales:

Plumbing & Refrigeration Segment

$       282,735

$       240,878

$       825,114

$       661,035

OEM Segment

228,981

181,621

718,965

459,898

Elimination of intersegment sales

(4,476)

(2,609)

(11,183)

(6,685)

Net sales

$       507,240

$       419,890

$    1,532,896

$    1,114,248

Operating income:

Plumbing & Refrigeration Segment

$         11,511

$         15,986

$         71,710

$         38,199

OEM Segment

22,994

16,530

56,057

18,315

Unallocated expenses

(3,618)

(4,699)

(20,850)

(17,384)

Operating income

$         30,887

$         27,817

$       106,917

$         39,130

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

September 25,

December 26,

2010

2009

(Unaudited)

ASSETS

Cash and cash equivalents

$       400,116

$      346,001

Accounts receivable, net

278,891

228,739

Inventories

190,243

191,262

Other current assets

34,631

42,841

Total current assets

903,881

808,843

Property, plant, and equipment, net

235,079

250,395

Other assets

123,781

120,903

$    1,262,741

$   1,180,141

LIABILITIES AND EQUITY

Current portion of debt

$         23,437

$        24,325

Accounts payable

80,140

73,837

Other current liabilities

101,395

85,208

Total current liabilities

204,972

183,370

Long-term debt, less current portion

158,226

158,226

Pension and postretirement liabilities

43,589

44,320

Environmental reserves

25,671

23,268

Deferred income taxes

25,283

31,128

Other noncurrent liabilities

891

887

Total liabilities

458,632

441,199

Total Mueller Industries, Inc. stockholders' equity

777,025

713,167

Noncontrolling interest

27,084

25,775

Total equity

804,109

738,942

$    1,262,741

$   1,180,141

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For the Nine Months Ended

September 25,

September 26,

2010

2009

(Unaudited)

Operating activities:

Consolidated net income

$         69,583

$         22,469

Reconciliation of consolidated net income

to net cash provided by operating activities:

Depreciation and amortization

30,550

31,440

Stock-based compensation expense

2,185

1,892

Insurance settlement

(21,284)

-

Insurance proceeds - noncapital related

5,561

-

Loss on disposal of properties

252

975

Deferred income taxes

(8,386)

(2,012)

Income tax benefit from exercise of stock options

(89)

(189)

Gain on early retirement of debt

-

(128)

Changes in assets and liabilities:

Receivables

(50,810)

(3,030)

Inventories

2,800

35,339

Other assets

6,158

4,152

Current liabilities

21,562

(6,229)

Other liabilities

2,839

(337)

Other, net

(225)

17

Net cash provided by operating activities

60,696

84,359

Investing activities:

Capital expenditures

(14,210)

(11,002)

Business acquired

(2,021)

-

Insurance proceeds for property and equipment

17,703

-

Net withdrawals from restricted cash balances

1,649

12,806

Proceeds from sales of properties

26

611

Net cash provided by investing activities

3,147

2,415

Financing activities:

Dividends paid

(11,300)

(11,186)

Repayment of debt by joint venture, net

(1,097)

(11,813)

Repayments of long-term debt

-

(370)

Dividends paid to noncontrolling interest

-

(1,449)

Acquisition of treasury stock

(85)

(416)

Issuance of shares under incentive stock option plans

from treasury

2,463

8,678

Income tax benefit from exercise of stock options

89

189

Net cash used in financing activities

(9,930)

(16,367)

Effect of exchange rate changes on cash

202

4,607

Increase in cash and cash equivalents

54,115

75,014

Cash and cash equivalents at the beginning of the period

346,001

278,860

Cash and cash equivalents at the end of the period

$       400,116

$       353,874

MUELLER INDUSTRIES, INC.

RECONCILIATION OF NET INCOME AS REPORTED

TO NET INCOME BEFORE INSURANCE SETTLEMENT

(In thousands, except per share data)

Earnings without insurance settlement is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  

Excluding the insurance settlement is useful as it measures the operating results that are the outcome of daily operating decisions made

in the normal course of business.  The insurance settlement resulted from reimbursement for losses claimed as a result of

a fire at our U.K. subsidiary in November 2008, the results of which are not impacted by daily operations and are not expected to recur

in future periods.  Reconciliation of earnings without insurance settlement to net income as reported is as follows:

For the Nine Months Ended September 25, 2010

Pro forma

Impact of

Without

As

Insurance

Insurance

Reported

Settlement

Settlement

(Unaudited)

Operating income

$                106,917

$                (21,284)

$                  85,633

Interest expense

(8,568)

-

(8,568)

Other income, net

(2,348)

-

(2,348)

Income before income taxes

96,001

(21,284)

74,717

Income tax expense (Note A)

(26,418)

(1,090)

(27,508)

Consolidated net income

69,583

(22,374)

47,209

Less net income attributable to noncontrolling interest

(1,158)

-

(1,158)

Net income attributable to Mueller Industries, Inc.

$                  68,425

$                (22,374)

$                  46,051

Diluted earnings per share

$                      1.81

$                    (0.59)

$                      1.22

(A) Realization of this insurance settlement resulted in a tax benefit primarily from the utilization of U.K. net operating losses that were previously reserved.

SOURCE Mueller Industries, Inc.