Mueller Industries, Inc. Reports Second Quarter 2017 Earnings

MEMPHIS, Tenn., July 25, 2017 -- Mueller Industries, Inc. (NYSE: MLI) announced today operating income of $46.8 million for the second quarter of 2017, compared with $44.4 million in the same quarter last year. Net income for the period was $27.6 million, or 48 cents per diluted share, on net sales of $614.3 million. This compares with net income of $27.8 million, or 49 cents per diluted share, on net sales of $544.1 million in the same quarter of 2016. The increase in net sales was primarily attributable to higher selling prices and higher overall unit volumes.

Financial and Operating Highlights for the second quarter of 2017:

The average price of copper was 21 percent (45 cents per pound) higher compared with the same period of 2016.

During the quarter, Mueller sold its 50.5% share of the MXR China tube mill. The gain from the sale was more than offset by one-time expenses related to startup costs at the Cedar City, Utah tube mill and the press relocation to the Fulton, Mississippi tube mill.

 

Interest expense for the quarter was $6.4 million compared with $1.7 million in the same quarter of 2016. The increase was primarily due to interest on the Company’s 6% Subordinated Debentures distributed on March 9, 2017 as part of a special dividend.

 

At quarter end, cash totaled $167.6 million.

 

Regarding the outlook, Greg Christopher, Mueller CEO, said, “Business conditions in the markets we serve are on track with our expectations for 2017. Construction activity in the U.S. continues to provide steady demand for many of our products, and improvement in industrial demand after several years of softness is encouraging.”

In addition, Mr. Christopher commented, “On May 31, 2017, we acquired the PexCor and HeatLink companies, which support our strategy to grow in the area of pressure plastic piping systems. Further, on June 21, 2017, we made a strategic decision to exit our joint venture in China after years of mediocre performance and increasingly challenging business conditions. We believe that reallocating cash and resources to other initiatives, such as the plastic acquisition and our new mills in Bahrain and Utah, will provide better returns in the future.” 

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 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

For the Quarter Ended

 

For the Six Months Ended

(In thousands, except per share data)

July 1, 2017

 

July 2, 2016

 

July 1, 2017

 

July 2, 2016

 

 

 

 

 

 

 

 

Net sales

$

614,266

 

 

$

544,071

 

 

$

1,192,186

 

 

$

1,076,880

 

 

 

 

 

 

 

 

 

Cost of goods sold

524,311

 

456,060

 

1,012,738

 

902,702

Depreciation and amortization

8,595

 

9,061

 

16,950

 

17,981

Selling, general, and administrative expense

34,557

 

34,514

 

70,088

 

70,294

 

 

 

 

 

 

 

 

Operating income

46,803

 

44,436

 

92,410

 

85,903

 

 

 

 

 

 

 

 

Interest expense

(6,442

)

 

(1,692

)

 

(8,973

)

 

(3,540

)

Other income, net

231

 

 

515

 

 

782

 

 

760

 

 

 

 

 

 

 

 

 

Income before income taxes

40,592

 

43,259

 

 

84,219

 

83,123

 

 

 

 

 

 

 

 

 

Income tax expense

(12,650

)

 

(14,005

)

 

(24,579

)

 

(28,126

)

(Loss) income from unconsolidated affiliates, net of tax

(109

)

 

(995

)

 

(1,352

)

 

1,927

 

 

 

 

 

 

 

 

 

Consolidated net income

27,833

 

 

28,259

 

 

58,288

 

 

56,924

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

(200

)

 

(462

)

 

(668

)

 

(497

)

 

 

 

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

$

27,633

 

 

$

27,797

 

 

$

57,620

 

 

$

56,427

 

 

 

 

 

 

 

 

 

Weighted average shares for basic earnings per share

56,906

 

56,511

 

56,843

 

56,489

Effect of dilutive stock-based awards

511

 

418

 

585

 

456

 

 

 

 

 

 

 

 

Adjusted weighted average shares for diluted earnings per share

57,417

 

56,929

 

57,428

 

56,945

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.49

 

 

$

0.49

 

 

$

1.01

 

 

$

1.00

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

0.48

 

 

$

0.49

 

 

$

1.00

 

 

$

0.99

 

 

 

 

 

 

 

 

 

Dividends per share

$

0.100

 

 

$

0.100

 

 

$

8.200

 

 

$

0.175

 

 

 

 

 

 

 

 

 

Summary Segment Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

    Piping Systems Segment

$

422,844

 

 

$

388,662

 

 

$

821,619

 

 

$

757,552

 

    Industrial Metals Segment

154,504

 

127,737

 

304,341

 

262,258

    Climate Segment

36,636

 

31,359

 

70,915

 

62,065

    Elimination of intersegment sales

282

 

 

(3,687

)

 

(4,689

)

 

(4,995

)

 

 

 

 

 

 

 

 

Net sales

$

614,266

 

 

$

544,071

 

 

$

1,192,186

 

 

$

1,076,880

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

    Piping Systems Segment

$

34,582

 

 

$

32,959

 

 

$

64,948

 

 

$

64,118

 

    Industrial Metals Segment

16,764

 

17,124

 

37,430

 

37,036

    Climate Segment

6,116

 

5,837

 

11,726

 

9,716

    Unallocated expenses

(10,659

)

 

(11,484

)

 

(21,694

)

 

(24,967

)

 

 

 

 

 

 

 

 

Operating income

$

46,803

 

 

$

44,436

 

 

$

92,410

 

 

$

85,903

 

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(In thousands)

July 1,
 2017

 

December 31, 2016

ASSETS

 

 

 

Cash and cash equivalents

$

167,555

 

 

$

351,317

 

Accounts receivable, net

287,829

 

256,291

Inventories

252,799

 

242,013

Other current assets

35,568

 

44,702

 

 

 

 

    Total current assets

743,751

 

894,323

 

 

 

 

Property, plant, and equipment, net

284,594

 

295,231

Other assets

268,919

 

257,922

 

 

 

 

 

$

1,297,264

 

 

$

1,447,476

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current portion of debt

$

14,583

 

 

$

13,655

 

Accounts payable

105,880

 

103,175

Other current liabilities

98,735

 

102,162

 

 

 

 

    Total current liabilities

219,198

 

218,992

 

 

 

 

Long-term debt

489,043

 

213,709

Pension and postretirement liabilities

31,616

 

31,273

Environmental reserves

20,859

 

21,208

Deferred income taxes

19,351

 

19,573

Other noncurrent liabilities

11,191

 

6,284

 

 

 

 

    Total liabilities

791,258

 

511,039

 

 

 

 

Total Mueller Industries, Inc. stockholders’ equity

493,371

 

 

898,684

Noncontrolling interests

12,635

 

 

37,753

 

 

 

 

    Total equity

506,006

 

 

936,437

 

 

 

 

 

$

1,297,264

 

 

$

1,447,476

 

 

 

 

 

 

 

 

 

 

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

For the Six Months Ended

 (In thousands)

July 1, 2017

 

July 2, 2016

 

 

 

 

Cash flows from operating activities

 

 

 

Consolidated net income

$

58,288

 

 

$

56,924

 

Reconciliation of consolidated net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

17,093

 

 

18,162

 

Stock-based compensation expense

3,692

 

 

2,874

 

Loss (income) from unconsolidated affiliates

1,352

 

 

(1,927

)

Gain on sale of business

(1,631

)

 

 

Loss (gain) on disposals of assets

81

 

 

(555

)

Gain on sales of securities

(611

)

 

 

Impairment charges

411

 

 

 

Deferred income taxes

3

 

 

3,548

 

Income tax benefit from exercise of stock options

 

 

(186

)

Changes in assets and liabilities, net of businesses acquired and sold:

 

 

 

Receivables

(47,108

)

 

(52,334

)

Inventories

(10,874

)

 

1,176

 

Other assets

(4,723

)

 

17,009

 

Current liabilities

(1,262

)

 

(1,314

)

Other liabilities

(1,086

)

 

(1,440

)

Other, net

(1,078

)

 

(72

)

 

 

 

 

Net cash provided by operating activities

12,547

 

 

41,865

 

 

 

 

 

Cash flows from investing activities

 

 

 

Capital expenditures

(11,908

)

 

(10,248

)

Acquisition of businesses, net of cash acquired

(18,419

)

 

(20,533

)

Proceeds from sale of business, net of cash sold

17,483

 

 

 

Net withdrawals from restricted cash balances

4,650

 

 

1,508

 

Investment in unconsolidated affiliates

(1,617

)

 

 

Proceeds from sales of assets

1,363

 

 

1,482

 

Proceeds from sales of securities

1,787

 

 

 

 

 

 

 

Net cash used in investing activities

(6,661

)

 

(27,791

)

 

 

 

 

Cash flows from financing activities

 

 

 

Dividends paid to stockholders of Mueller Industries, Inc.

(185,539

)

 

(9,887

)

Dividends paid to noncontrolling interests

(2,909

)

 

 

Issuance of long-term debt

 

 

2,000

 

(Repayment) issuance of debt by consolidated joint ventures, net

(3,320

)

 

4,426

 

Net cash (used) received to settle stock-based awards

(785

)

 

326

 

Repayments of long-term debt

(611

)

 

(500

)

Income tax benefit from exercise of stock options

 

 

186

 

 

 

 

 

Net cash used in financing activities

(193,164

)

 

(3,449

)

 

 

 

 

Effect of exchange rate changes on cash

3,516

 

 

(2,308

)

 

 

 

 

(Decrease) increase in cash and cash equivalents

(183,762

)

 

8,317

 

Cash and cash equivalents at the beginning of the period

351,317

 

 

274,844

 

 

 

 

 

Cash and cash equivalents at the end of the period

$

167,555

 

 

$

283,161