Mueller Industries, Inc. Reports Third Quarter 2015 Earnings
MEMPHIS, Tenn., October 20, 2015 -- Mueller Industries, Inc. (NYSE: MLI) announced today net income of $17.8 million, or 31 cents per diluted share, for the third quarter of 2015. This compares to net income of $23.8 million, or 42 cents per diluted share, during the third quarter of 2014. Net sales for the third quarter of 2015 were $535.2 million compared with $602.8 million for the same quarter of the prior year.
Both revenues and earnings in the third quarter of 2015 were impacted by lower copper prices and lower unit volume in the OEM Segment. The average price of copper was $2.40 per pound in the third quarter of 2015 compared to $3.16 per pound in the third quarter of 2014. During the third quarter of 2015, copper declined $0.37 per pound, or 49 percent of the year-over-year decline.
The sharp decline of copper in the quarter put pressure on margins of our FIFO accounting businesses. OEM volumes in the US continued to be impacted by soft demand in the industrial segment and increased import competition due to the stronger dollar. OEM volumes in China were impacted by slowing demand due to general domestic economic conditions.
Financial and Operating Highlights for the third quarter of 2015:
|
- |
The impact of the copper decline represented $63.3 million of the $67.6 million reduction in net sales and $13.5 million in lower gross margins. |
|
- |
The effective tax rate for the quarter reflects a benefit of $4.2 million related to a reduction to the Company's deferred tax liabilities. |
|
- |
The rationalization of the UK copper tube business acquired in 2014 was completed during the quarter. All associated impairments and redundancy expenses are now complete. |
|
- |
During the quarter we completed the acquisition of Great Lakes Copper and invested in a joint venture that acquired Tecumseh Products Company for a total cash investment of $137.4 million. |
|
- |
The Company recognized $2.2 million in expenses related to transaction costs linked to the investment in Tecumseh Products Company in the final week of the quarter. |
|
- |
Cash provided from operations in the quarter was $78.3 million with the quarter end cash totaling $220.7 million, or $3.86 per share. |
|
- |
Debt to total capitalization was 20.5 percent and the current ratio was 3.6 to 1. |
Regarding the outlook, Greg Christopher, Mueller's CEO, said "Construction remains positive in both residential and non-residential segments and we expect this trend to continue. However, uncertainty in the industrial sectors looks to continue into the next few quarters." He adds, "We have completed the rationalizations of our Yorkshire and Howell acquisitions and we are pleased with their continuing improvement. Our balance sheet remains solid and cash remains strong after investing $173.3 million in acquisitions and $22.5 million in capital improvements year-to-date 2015."
Mueller Industries, Inc. is a 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, 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.
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.
CONTACT
Jeffrey A. Martin
(901)753-3226
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
|
For the Quarter Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
(In thousands, except per share data) |
|
September 26, 2015 |
|
|
September 27, 2014 |
|
|
September 26, 2015 |
|
|
September 27, 2014 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net sales |
|
$ |
535,184 |
|
|
$ |
602,820 |
|
|
$ |
1,628,019 |
|
|
$ |
1,826,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
467,167 |
|
|
|
521,278 |
|
|
|
1,398,366 |
|
|
|
1,574,830 |
|
|
Depreciation and amortization |
|
|
8,749 |
|
|
|
8,952 |
|
|
|
24,790 |
|
|
|
25,651 |
|
|
Selling, general, and administrative expense |
|
|
32,241 |
|
|
|
34,004 |
|
|
|
98,492 |
|
|
|
100,512 |
|
|
Gain on sale of assets |
|
|
— |
|
|
|
— |
|
|
|
(15,376 |
) |
|
|
(1,417 |
) |
|
Severance |
|
|
— |
|
|
|
860 |
|
|
|
3,442 |
|
|
|
3,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
27,027 |
|
|
|
37,726 |
|
|
|
118,305 |
|
|
|
124,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(1,682 |
) |
|
|
(1,430 |
) |
|
|
(5,977 |
) |
|
|
(3,913 |
) |
|
Other income, net |
|
|
164 |
|
|
|
225 |
|
|
|
534 |
|
|
|
440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
25,509 |
|
|
|
36,521 |
|
|
|
112,862 |
|
|
|
120,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(5,223 |
) |
|
|
(12,199 |
) |
|
|
(36,374 |
) |
|
|
(36,279 |
) |
|
Income/(loss) from unconsolidated subsidiary, net of tax |
|
|
(2,191 |
) |
|
|
— |
|
|
|
(2,191 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
|
18,095 |
|
|
|
24,322 |
|
|
|
74,297 |
|
|
|
84,485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interest |
|
|
(295 |
) |
|
|
(499 |
) |
|
|
(868 |
) |
|
|
(911 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Mueller Industries, Inc. |
|
$ |
17,800 |
|
|
$ |
23,823 |
|
|
$ |
73,429 |
|
|
$ |
83,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares for basic earnings per share |
|
|
56,375 |
|
|
|
56,107 |
|
|
|
56,272 |
|
|
|
55,999 |
|
|
Effect of dilutive stock-based awards |
|
|
598 |
|
|
|
637 |
|
|
|
690 |
|
|
|
746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average shares for diluted earnings per share |
|
|
56,973 |
|
|
|
56,744 |
|
|
|
56,962 |
|
|
|
56,745 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.32 |
|
|
$ |
0.42 |
|
|
$ |
1.30 |
|
|
$ |
1.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.31 |
|
|
$ |
0.42 |
|
|
$ |
1.29 |
|
|
$ |
1.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share |
|
$ |
0.075 |
|
|
$ |
0.075 |
|
|
$ |
0.225 |
|
|
$ |
0.225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Segment Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumbing & Refrigeration Segment |
|
$ |
325,022 |
|
|
$ |
357,843 |
|
|
$ |
957,375 |
|
|
$ |
1,093,060 |
|
|
OEM Segment |
|
|
212,596 |
|
|
|
247,883 |
|
|
|
678,293 |
|
|
|
743,322 |
|
|
Elimination of intersegment sales |
|
|
(2,434 |
) |
|
|
(2,906 |
) |
|
|
(7,649 |
) |
|
|
(9,497 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
535,184 |
|
|
$ |
602,820 |
|
|
$ |
1,628,019 |
|
|
$ |
1,826,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumbing & Refrigeration Segment |
|
$ |
19,559 |
|
|
$ |
20,156 |
|
|
$ |
75,033 |
|
|
$ |
76,371 |
|
|
OEM Segment |
|
|
13,278 |
|
|
|
23,977 |
|
|
|
62,627 |
|
|
|
68,479 |
|
|
Unallocated expenses |
|
|
(5,810 |
) |
|
|
(6,407 |
) |
|
|
(19,355 |
) |
|
|
(20,613 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
27,027 |
|
|
$ |
37,726 |
|
|
$ |
118,305 |
|
|
$ |
124,237 |
|
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
(In thousands) |
|
September 26, 2015 |
|
|
December 27, 2014 |
|
||
|
ASSETS |
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
220,745 |
|
|
$ |
352,134 |
|
|
Accounts receivable, net |
|
|
299,417 |
|
|
|
275,065 |
|
|
Inventories |
|
|
250,799 |
|
|
|
256,585 |
|
|
Other current assets |
|
|
54,538 |
|
|
|
57,429 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
825,499 |
|
|
|
941,213 |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net |
|
|
270,655 |
|
|
|
245,910 |
|
|
Other assets |
|
|
277,372 |
|
|
|
140,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,373,526 |
|
|
$ |
1,328,096 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
|
Current portion of debt |
|
$ |
13,756 |
|
|
$ |
36,194 |
|
|
Accounts payable |
|
|
113,597 |
|
|
|
100,735 |
|
|
Other current liabilities |
|
|
102,188 |
|
|
|
101,140 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
229,541 |
|
|
|
238,069 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
204,500 |
|
|
|
205,250 |
|
|
Pension and postretirement liabilities |
|
|
44,024 |
|
|
|
41,556 |
|
|
Environmental reserves |
|
|
21,566 |
|
|
|
21,842 |
|
|
Deferred income taxes |
|
|
22,142 |
|
|
|
24,556 |
|
|
Other noncurrent liabilities |
|
|
3,570 |
|
|
|
1,389 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
525,343 |
|
|
|
532,662 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Mueller Industries, Inc. stockholders’ equity |
|
|
815,433 |
|
|
|
762,150 |
|
|
Noncontrolling interest |
|
|
32,750 |
|
|
|
33,284 |
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
848,183 |
|
|
|
795,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,373,526 |
|
|
$ |
1,328,096 |
|
|
|
|
|
|
|
|
|
|
|
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
For the Nine Months Ended |
|
|||||
|
(In thousands) |
|
September 26, 2015 |
|
|
September 27, 2014 |
|
||
|
|
|
|
|
|
||||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
$ |
74,297 |
|
|
$ |
84,485 |
|
|
Reconciliation of consolidated
net income to net cash |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
25,132 |
|
|
|
25,888 |
|
|
Stock-based compensation expense |
|
|
4,611 |
|
|
|
4,957 |
|
|
Equity in losses of unconsolidated subsidiary |
|
|
2,191 |
|
|
|
— |
|
|
Gain on disposal of assets |
|
|
(14,875 |
) |
|
|
(1,146 |
) |
|
Impairment charges |
|
|
570 |
|
|
|
— |
|
|
Deferred income taxes |
|
|
(8,262 |
) |
|
|
(6,908 |
) |
|
Income tax benefit from exercise of stock options |
|
|
(953 |
) |
|
|
(829 |
) |
|
Changes in assets and liabilities, net of businesses acquired: |
|
|
|
|
|
|
|
|
|
Receivables |
|
|
5,249 |
|
|
|
(62,854 |
) |
|
Inventories |
|
|
29,901 |
|
|
|
(14,868 |
) |
|
Other assets |
|
|
4,302 |
|
|
|
(15,272 |
) |
|
Current liabilities |
|
|
(27,580 |
) |
|
|
(8,675 |
) |
|
Other liabilities |
|
|
740 |
|
|
|
(797 |
) |
|
Other, net |
|
|
145 |
|
|
|
223 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
95,468 |
|
|
|
4,204 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(22,502 |
) |
|
|
(28,406 |
) |
|
Businesses acquired, net of cash acquired |
|
|
(107,405 |
) |
|
|
(30,137 |
) |
|
Net withdrawals from restricted cash balances |
|
|
1,822 |
|
|
|
2,507 |
|
|
Investment in unconsolidated subsidiary |
|
|
(65,900 |
) |
|
|
— |
|
|
Proceeds from the sales of assets |
|
|
5,521 |
|
|
|
4,920 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(188,464 |
) |
|
|
(51,116 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Dividends paid to stockholders of Mueller Industries, Inc. |
|
|
(12,669 |
) |
|
|
(12,606 |
) |
|
Issuance of debt by Mueller Europe, Limited, net |
|
|
— |
|
|
|
12,008 |
|
|
Repayment of debt by joint venture, net |
|
|
(21,597 |
) |
|
|
(3,170 |
) |
|
Net cash used to settle stock-based awards |
|
|
(718 |
) |
|
|
(887 |
) |
|
Repurchase of common stock |
|
|
— |
|
|
|
(58 |
) |
|
Repayments of long-term debt |
|
|
(750 |
) |
|
|
(800 |
) |
|
Income tax benefit from exercise of stock options |
|
|
953 |
|
|
|
829 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(34,781 |
) |
|
|
(4,684 |
) |
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
(3,612 |
) |
|
|
(346 |
) |
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents |
|
|
(131,389 |
) |
|
|
(51,942 |
) |
|
Cash and cash equivalents at the beginning of the period |
|
|
352,134 |
|
|
|
311,800 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
|
$ |
220,745 |
|
|
$ |
259,858 |
|
|
|
|
|
|
|
|
|
|
|
Released October 20, 2015