Mueller Industries, Inc. Reports Third Quarter 2017 Earnings
MEMPHIS, Tenn., October 24, 2017 -- Mueller Industries, Inc. (NYSE: MLI) announced today operating income of $37.6 million for the third quarter of 2017, compared with $37.5 million in the same quarter last year. Net income for the period was $22.3 million, or 39 cents per diluted share, on net sales of $550.4 million. This compares with net income of $26.0 million, or 45 cents per diluted share, on net sales of $506.6 million in the same quarter of 2016.
Financial and Operating Highlights for the third quarter of 2017:
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• |
The average price of copper was 34 percent (73 cents per pound) higher compared with the same period of 2016. |
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• |
The increase in net sales was primarily attributable to higher selling prices, offset by the absence of $28.3 million of sales recorded by MXR, a business the Company exited in June 2017. |
|
• |
Interest expense for the quarter was $5.2 million compared with $1.8 million in the same quarter of 2016. The increase was primarily due to interest on the Company’s 6% Subordinated Debentures. |
|
• |
During the quarter, the Company paid down $100.0 million of debt. |
|
• |
At quarter-end, cash totaled $106.3 million. |
Regarding the outlook, Greg Christopher, Mueller CEO, said, “Demand in most of our businesses was solid in the third quarter despite the disruption natural disasters caused in key U.S. markets. We expect this positive trend to continue.”
In addition, Mr. Christopher commented, “Our third quarter volume and operating income were significantly affected by challenges we face in our U.S. copper tube operations as we carry out major capital investment projects. Production disruptions and higher spending related to the ongoing projects, as well as lower spreads due to the rapid rise in copper prices, reduced earnings in our U.S. copper tube businesses by approximately $10.0 million compared to the third quarter of 2016.
“These capital projects are aimed at improving quality, conversion costs, yield and capacity. We believe the challenges that have affected us all year reached a crest in the third quarter. We are confident that we will make progress in ironing out the major issues by year-end and anticipate that we will begin realizing the benefits in 2018.”
Mueller Industries, Inc. is an industrial manufacturer that specializes in copper and copper alloy manufacturing while also producing goods made from aluminum, steel, and plastics. It is headquartered in Memphis, Tennessee and comprises a network of operations in the United States, Canada, Mexico, Great Britain, South Korea, and China. Its products include tubing, fittings, valves, vessels, and related items for plumbing and HVACR related piping systems, as well as rod, forgings, extrusions, and various components for OEM applications. Products are distributed into sectors such as building construction, appliance, defense, energy, and automotive.
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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,” “encourage,” “anticipate,” “appear,” 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.
CONTACT
Jeffrey A. Martin
(901) 753-3226
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
For the Quarter Ended |
|
For the Nine Months Ended |
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|
(In thousands, except per share data) |
September 30, 2017 |
|
October 1, 2016 |
|
September 30, 2017 |
|
October 1, 2016 |
||||||||
|
|
|
|
|
|
|
|
|
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Net sales |
$ |
550,363 |
|
|
$ |
506,584 |
|
|
$ |
1,742,549 |
|
|
$ |
1,583,464 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Cost of goods sold |
471,262 |
|
424,668 |
|
1,484,000 |
|
1,327,370 |
||||||||
|
Depreciation and amortization |
8,266 |
|
9,016 |
|
25,216 |
|
26,997 |
||||||||
|
Selling, general, and administrative expense |
33,276 |
|
32,413 |
|
102,953 |
|
102,707 |
||||||||
|
Asset impairments |
— |
|
|
3,000 |
|
|
411 |
|
|
3,000 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
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Operating income |
37,559 |
|
37,487 |
|
129,969 |
|
123,390 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Interest expense |
(5,237 |
) |
|
(1,830 |
) |
|
(14,210 |
) |
|
(5,370 |
) |
||||
|
Other (expense) income, net |
(458 |
) |
|
120 |
|
|
324 |
|
|
880 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Income before income taxes |
31,864 |
|
35,777 |
|
|
116,083 |
|
118,900 |
|
||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Income tax expense |
(8,716 |
) |
|
(10,837 |
) |
|
(33,295 |
) |
|
(38,963 |
) |
||||
|
(Loss) income from unconsolidated affiliates, net of tax |
(394 |
) |
|
1,122 |
|
|
(1,746 |
) |
|
3,049 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Consolidated net income |
22,754 |
|
|
26,062 |
|
|
81,042 |
|
|
82,986 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Net income attributable to noncontrolling interests |
(496 |
) |
|
(84 |
) |
|
(1,164 |
) |
|
(581 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Net income attributable to Mueller Industries, Inc. |
$ |
22,258 |
|
|
$ |
25,978 |
|
|
$ |
79,878 |
|
|
$ |
82,405 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average shares for basic earnings per share |
56,987 |
|
56,631 |
|
56,891 |
|
56,536 |
||||||||
|
Effect of dilutive stock-based awards |
456 |
|
586 |
|
542 |
|
589 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted weighted average shares for diluted earnings per share |
57,443 |
|
57,217 |
|
57,433 |
|
57,125 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Basic earnings per share |
$ |
0.39 |
|
|
$ |
0.46 |
|
|
$ |
1.40 |
|
|
$ |
1.46 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Diluted earnings per share |
$ |
0.39 |
|
|
$ |
0.45 |
|
|
$ |
1.39 |
|
|
$ |
1.44 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Dividends per share |
$ |
0.100 |
|
|
$ |
0.100 |
|
|
$ |
8.300 |
|
|
$ |
0.275 |
|
|
|
|
|
|
|
|
|
|
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Summary Segment Data: |
|
|
|
|
|
|
|
||||||||
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|
|
|
|
|
|
|
|
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Net sales: |
|
|
|
|
|
|
|
||||||||
|
Piping Systems Segment |
$ |
384,078 |
|
|
$ |
351,557 |
|
|
$ |
1,205,697 |
|
|
$ |
1,109,109 |
|
|
Industrial Metals Segment |
147,578 |
|
131,350 |
|
451,919 |
|
393,608 |
||||||||
|
Climate Segment |
32,488 |
|
30,003 |
|
103,403 |
|
92,068 |
||||||||
|
Elimination of intersegment sales |
(13,781 |
) |
|
(6,326 |
) |
|
(18,470 |
) |
|
(11,321 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Net sales |
$ |
550,363 |
|
|
$ |
506,584 |
|
|
$ |
1,742,549 |
|
|
$ |
1,583,464 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating income: |
|
|
|
|
|
|
|
||||||||
|
Piping Systems Segment |
$ |
20,724 |
|
|
$ |
24,138 |
|
|
$ |
85,672 |
|
|
$ |
88,256 |
|
|
Industrial Metals Segment |
23,045 |
|
18,749 |
|
60,475 |
|
55,785 |
||||||||
|
Climate Segment |
5,429 |
|
4,824 |
|
17,155 |
|
14,540 |
||||||||
|
Unallocated expenses |
(11,639 |
) |
|
(10,224 |
) |
|
(33,333 |
) |
|
(35,191 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Operating income |
$ |
37,559 |
|
|
$ |
37,487 |
|
|
$ |
129,969 |
|
|
$ |
123,390 |
|
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
(In thousands) |
September 30, 2017 |
|
December 31, 2016 |
||||
|
ASSETS |
|
|
|
||||
|
Cash and cash equivalents |
$ |
106,344 |
|
|
$ |
351,317 |
|
|
Accounts receivable, net |
276,678 |
|
256,291 |
||||
|
Inventories |
284,114 |
|
242,013 |
||||
|
Other current assets |
25,692 |
|
44,702 |
||||
|
|
|
|
|
||||
|
Total current assets |
692,828 |
|
894,323 |
||||
|
|
|
|
|
||||
|
Property, plant, and equipment, net |
283,845 |
|
295,231 |
||||
|
Other assets |
272,551 |
|
257,922 |
||||
|
|
|
|
|
||||
|
|
$ |
1,249,224 |
|
|
$ |
1,447,476 |
|
|
|
|
|
|
||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
|
Current portion of debt |
$ |
14,450 |
|
|
$ |
13,655 |
|
|
Accounts payable |
125,032 |
|
103,175 |
||||
|
Other current liabilities |
105,677 |
|
102,162 |
||||
|
|
|
|
|
||||
|
Total current liabilities |
245,159 |
|
218,992 |
||||
|
|
|
|
|
||||
|
Long-term debt |
388,818 |
|
213,709 |
||||
|
Pension and postretirement liabilities |
31,877 |
|
31,273 |
||||
|
Environmental reserves |
21,365 |
|
21,208 |
||||
|
Deferred income taxes |
19,963 |
|
19,573 |
||||
|
Other noncurrent liabilities |
12,005 |
|
6,284 |
||||
|
|
|
|
|
||||
|
Total liabilities |
719,187 |
|
511,039 |
||||
|
|
|
|
|
||||
|
Total Mueller Industries, Inc. stockholders’ equity |
516,903 |
|
|
898,684 |
|||
|
Noncontrolling interests |
13,134 |
|
|
37,753 |
|||
|
|
|
|
|
||||
|
Total equity |
530,037 |
|
|
936,437 |
|||
|
|
|
|
|
||||
|
|
$ |
1,249,224 |
|
|
$ |
1,447,476 |
|
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For the Nine Months Ended |
||||||
|
(In thousands) |
September 30, 2017 |
|
October 1, 2016 |
||||
|
|
|
|
|
||||
|
Cash flows from operating activities |
|
|
|
||||
|
Consolidated net income |
$ |
81,042 |
|
|
$ |
82,986 |
|
|
Reconciliation of consolidated net income to net cash provided by operating activities: |
|
|
|
||||
|
Depreciation and amortization |
25,439 |
|
|
27,267 |
|
||
|
Stock-based compensation expense |
5,555 |
|
|
4,553 |
|
||
|
Loss (income) from unconsolidated affiliates |
1,746 |
|
|
(3,049 |
) |
||
|
Gain on sale of business |
(1,491 |
) |
|
— |
|
||
|
Gain on disposals of properties |
(26 |
) |
|
(747 |
) |
||
|
Gain on sales of securities |
(611 |
) |
|
— |
|
||
|
Impairment charges |
411 |
|
|
3,000 |
|
||
|
Deferred income taxes |
624 |
|
|
6,491 |
|
||
|
Changes in assets and liabilities, net of businesses acquired and sold: |
|
|
|
||||
|
Receivables |
(33,359 |
) |
|
(45,780 |
) |
||
|
Inventories |
(40,920 |
) |
|
(914 |
) |
||
|
Other assets |
(3,372 |
) |
|
14,428 |
|
||
|
Current liabilities |
20,967 |
|
|
(15,998 |
) |
||
|
Other liabilities |
(1,498 |
) |
|
(2,101 |
) |
||
|
Other, net |
(973 |
) |
|
450 |
|
||
|
|
|
|
|
||||
|
Net cash provided by operating activities |
53,534 |
|
|
70,586 |
|
||
|
|
|
|
|
||||
|
Cash flows from investing activities |
|
|
|
||||
|
Capital expenditures |
(17,297 |
) |
|
(15,632 |
) |
||
|
Acquisition of businesses, net of cash acquired |
(18,396 |
) |
|
(20,533 |
) |
||
|
Proceeds from sale of business, net of cash sold |
17,483 |
|
|
— |
|
||
|
Net withdrawals from restricted cash balances |
5,197 |
|
|
1,177 |
|
||
|
Investment in unconsolidated affiliates |
(3,317 |
) |
|
— |
|
||
|
Proceeds from sales of properties |
11,732 |
|
|
5,301 |
|
||
|
Proceeds from sales of securities |
1,787 |
|
|
— |
|
||
|
|
|
|
|
||||
|
Net cash used in investing activities |
(2,811 |
) |
|
(29,687 |
) |
||
|
|
|
|
|
||||
|
Cash flows from financing activities |
|
|
|
||||
|
Dividends paid to stockholders of Mueller Industries, Inc. |
(191,241 |
) |
|
(15,555 |
) |
||
|
Dividends paid to noncontrolling interests |
(2,909 |
) |
|
(3,765 |
) |
||
|
Issuance of long-term debt |
— |
|
|
2,000 |
|
||
|
(Repayment) issuance of debt by consolidated joint ventures, net |
(3,451 |
) |
|
5,006 |
|
||
|
Net cash used to settle stock-based awards |
(1,644 |
) |
|
(1,356 |
) |
||
|
Repayments of long-term debt |
(100,917 |
) |
|
(769 |
) |
||
|
|
|
|
|
||||
|
Net cash used in financing activities |
(300,162 |
) |
|
(14,439 |
) |
||
|
|
|
|
|
||||
|
Effect of exchange rate changes on cash |
4,466 |
|
|
(3,511 |
) |
||
|
|
|
|
|
||||
|
(Decrease) increase in cash and cash equivalents |
(244,973 |
) |
|
22,949 |
|
||
|
Cash and cash equivalents at the beginning of the period |
351,317 |
|
|
274,844 |
|
||
|
|
|
|
|
||||
|
Cash and cash equivalents at the end of the period |
$ |
106,344 |
|
|
$ |
297,793 |
|
Released October 24, 2017