Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2014 Earnings
MEMPHIS, Tenn., February 3, 2015-- Mueller Industries, Inc. (NYSE: MLI) announced today that net income for the fourth quarter ending December 27, 2014 was $18.0 million, or 32 cents per diluted share. This compares with net income of $15.4 million, or 27 cents per diluted share in the fourth quarter of 2013.
During the fourth quarter of 2014, the Company recognized gains on the sale of its ABS plastic pipe equipment and the sale of its U.K. based import distribution business totaling $4.8 million; offset by severance charges of $4.2 million related to the ongoing reorganization of the Yorkshire Copper Tube business acquired in early 2014.
For the 2014 fiscal year, net income was $101.6 million, or $ 1.79 per diluted share, on net sales of $2.4 billion. This compares with net income of $172.6 million, or $3.06 per diluted share, on net sales of $2.2 billion for 2013. In both 2014 and 2013 net income includes several unusual items. Excluding these unusual items*, fiscal year 2014 net income was $103.3 million, or $1.82 per diluted share, compared to $86.4 million, or $1.53 per diluted share in 2013, a 19 percent increase.
Financial and Operating Highlights:
|
● |
Unit volume increases, offset by decreases in copper prices, drove the increase in net sales for both the fourth quarter and the full year. |
|
● |
Volume increased 18.9 percent for the quarter and 14.9 percent for the year compared to the same periods in 2013. Our acquired businesses contributed 5.8 percent and 8.6 percent of the unit volume increases, respectively. |
|
● |
The average price of copper for 2014 was $3.12 or 22 cents per pound lower than 2013. For the fourth quarter the average price of copper was $2.99 or 30 cents per pound lower than the same period the year prior. |
|
● |
For the 2014 fiscal year, cash generated from operations was $90.6 million. The Company ended the year with $352.1 million of cash on hand or $6.19 per share. |
|
● |
Debt to total capitalization was 23 percent at year-end and the current ratio was 4.0 to 1. |
Regarding the outlook, Greg Christopher, Mueller’s CEO said, “We are pleased with the continued improvement in our business performance. Unit volumes improved in all four quarters in 2014 versus the prior year and continue to rise with the gradual improvement of the markets we serve. We are encouraged by the market trend and anticipate continued strengthening in 2015.”
* See schedule of unusual items attached to this release.
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 that 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,” “encourage,” “anticipate,” 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
(Unaudited)
|
|
|
For the Quarter Ended |
|
|
For the Year Ended |
|
||||||||||
|
(In thousands, except per share data) |
|
December 27, 2014 |
|
|
December 28, 2013 |
|
|
December 27, 2014 |
|
|
December 28, 2013 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net sales |
|
$ |
537,342 |
|
|
$ |
487,715 |
|
|
$ |
2,364,227 |
|
|
$ |
2,158,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
468,889 |
|
|
|
421,812 |
|
|
|
2,043,719 |
|
|
|
1,862,089 |
|
|
Depreciation and amortization |
|
|
8,084 |
|
|
|
8,030 |
|
|
|
33,735 |
|
|
|
32,394 |
|
|
Selling, general, and administrative expense |
|
|
31,228 |
|
|
|
35,836 |
|
|
|
131,740 |
|
|
|
134,914 |
|
|
Gain on sale of assets |
|
|
(4,842 |
) |
|
|
— |
|
|
|
(6,259 |
) |
|
|
(39,765 |
) |
|
Severance |
|
|
4,224 |
|
|
|
— |
|
|
|
7,296 |
|
|
|
— |
|
|
Impairment charges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,304 |
|
|
Insurance settlements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(106,332 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
29,759 |
|
|
|
22,037 |
|
|
|
153,996 |
|
|
|
270,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(1,827 |
) |
|
|
(1,050 |
) |
|
|
(5,740 |
) |
|
|
(3,990 |
) |
|
Other (expense) income, net |
|
|
(683 |
) |
|
|
127 |
|
|
|
(243 |
) |
|
|
4,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
27,249 |
|
|
|
21,114 |
|
|
|
148,013 |
|
|
|
271,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(9,200 |
) |
|
|
(6,094 |
) |
|
|
(45,479 |
) |
|
|
(98,109 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
|
18,049 |
|
|
|
15,020 |
|
|
|
102,534 |
|
|
|
173,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (income) loss attributable to noncontrolling interest |
|
|
(62 |
) |
|
|
364 |
|
|
|
(974 |
) |
|
|
(689 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Mueller Industries, Inc. |
|
$ |
17,987 |
|
|
$ |
15,384 |
|
|
$ |
101,560 |
|
|
$ |
172,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares for basic earnings per share |
|
|
56,169 |
|
|
|
55,854 |
|
|
|
56,042 |
|
|
|
55,742 |
|
|
Effect of dilutive stock-based awards |
|
|
668 |
|
|
|
760 |
|
|
|
726 |
|
|
|
742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average shares for diluted earnings per share |
|
|
56,837 |
|
|
|
56,614 |
|
|
|
56,768 |
|
|
|
56,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.32 |
|
|
$ |
0.28 |
|
|
$ |
1.81 |
|
|
$ |
3.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.32 |
|
|
$ |
0.27 |
|
|
$ |
1.79 |
|
|
$ |
3.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share |
|
$ |
0.0750 |
|
|
$ |
0.0625 |
|
|
$ |
0.3000 |
|
|
$ |
0.2500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Segment Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumbing & Refrigeration Segment |
|
$ |
323,641 |
|
|
$ |
283,197 |
|
|
$ |
1,416,701 |
|
|
$ |
1,225,306 |
|
|
OEM Segment |
|
|
216,592 |
|
|
|
206,557 |
|
|
|
959,914 |
|
|
|
947,784 |
|
|
Elimination of intersegment sales |
|
|
(2,891 |
) |
|
|
(2,039 |
) |
|
|
(12,388 |
) |
|
|
(14,549 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
537,342 |
|
|
$ |
487,715 |
|
|
$ |
2,364,227 |
|
|
$ |
2,158,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumbing & Refrigeration Segment |
|
$ |
16,859 |
|
|
$ |
12,438 |
|
|
$ |
93,230 |
|
|
$ |
219,146 |
|
|
OEM Segment |
|
|
17,235 |
|
|
|
15,432 |
|
|
|
85,714 |
|
|
|
76,631 |
|
|
Unallocated expenses |
|
|
(4,335 |
) |
|
|
(5,833 |
) |
|
|
(24,948 |
) |
|
|
(24,840 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
29,759 |
|
|
$ |
22,037 |
|
|
$ |
153,996 |
|
|
$ |
270,937 |
|
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
(In thousands) |
|
December 27, 2014 |
|
|
December 28, 2013 |
|
||
|
ASSETS |
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
352,134 |
|
|
$ |
311,800 |
|
|
Accounts receivable, net |
|
|
275,065 |
|
|
|
271,847 |
|
|
Inventories |
|
|
256,585 |
|
|
|
251,716 |
|
|
Other current assets |
|
|
57,429 |
|
|
|
39,354 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
941,213 |
|
|
|
874,717 |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net |
|
|
245,910 |
|
|
|
244,457 |
|
|
Other assets |
|
|
140,973 |
|
|
|
128,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,328,096 |
|
|
$ |
1,247,767 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
|
Current portion of debt |
|
$ |
36,194 |
|
|
$ |
29,083 |
|
|
Accounts payable |
|
|
100,735 |
|
|
|
80,897 |
|
|
Other current liabilities |
|
|
101,140 |
|
|
|
109,276 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
238,069 |
|
|
|
219,256 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
205,250 |
|
|
|
206,250 |
|
|
Pension and postretirement liabilities |
|
|
41,556 |
|
|
|
27,426 |
|
|
Environmental reserves |
|
|
21,842 |
|
|
|
22,144 |
|
|
Deferred income taxes |
|
|
24,556 |
|
|
|
35,975 |
|
|
Other noncurrent liabilities |
|
|
1,389 |
|
|
|
849 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
532,662 |
|
|
|
511,900 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Mueller Industries, Inc. stockholders’ equity |
|
|
762,150 |
|
|
|
703,405 |
|
|
Noncontrolling interest |
|
|
33,284 |
|
|
|
32,462 |
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
795,434 |
|
|
|
735,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,328,096 |
|
|
$ |
1,247,767 |
|
|
|
|
|
|
|
|
|
|
|
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
For the Year Ended |
|
|||||
|
(In thousands) |
|
December 27, 2014 |
|
|
December 28, 2013 |
|
||
|
|
|
|
|
|
||||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
$ |
102,534 |
|
|
$ |
173,289 |
|
|
Reconciliation of consolidated net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
34,076 |
|
|
|
32,693 |
|
|
Stock-based compensation expense |
|
|
6,265 |
|
|
|
5,704 |
|
|
Insurance settlements |
|
|
— |
|
|
|
(106,332 |
) |
|
Insurance proceeds – noncapital related |
|
|
— |
|
|
|
32,395 |
|
|
Gain on disposal of assets |
|
|
(5,405 |
) |
|
|
(42,300 |
) |
|
Impairment charges |
|
|
— |
|
|
|
4,304 |
|
|
Deferred income taxes |
|
|
(6,495 |
) |
|
|
19,213 |
|
|
Income tax benefit from exercise of stock options |
|
|
(837 |
) |
|
|
(719 |
) |
|
Changes in assets and liabilities, net of business acquired: |
|
|
|
|
|
|
|
|
|
Receivables |
|
|
(21,932 |
) |
|
|
19,110 |
|
|
Inventories |
|
|
1,381 |
|
|
|
5,963 |
|
|
Other assets |
|
|
(23,652 |
) |
|
|
562 |
|
|
Current liabilities |
|
|
5,849 |
|
|
|
(14,139 |
) |
|
Other liabilities |
|
|
(2,223 |
) |
|
|
(1,935 |
) |
|
Other, net |
|
|
1,044 |
|
|
|
705 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
90,605 |
|
|
|
128,513 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(39,173 |
) |
|
|
(41,349 |
) |
|
Acquisition of business, net of cash acquired |
|
|
(30,137 |
) |
|
|
(55,276 |
) |
|
Proceeds from sale of assets, net of cash transferred |
|
|
33,788 |
|
|
|
65,147 |
|
|
Insurance proceeds for property and equipment |
|
|
— |
|
|
|
29,910 |
|
|
Net deposits into restricted cash balances |
|
|
(2,902 |
) |
|
|
(1,417 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(38,424 |
) |
|
|
(2,985 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Dividends paid to stockholders of Mueller Industries, Inc. |
|
|
(16,819 |
) |
|
|
(13,941 |
) |
|
Debt issuance cost |
|
|
— |
|
|
|
(50 |
) |
|
Issuance of debt by joint venture, net |
|
|
7,258 |
|
|
|
857 |
|
|
Net cash used to settle stock-based awards |
|
|
(719 |
) |
|
|
(228 |
) |
|
Repurchase of common stock |
|
|
(58 |
) |
|
|
— |
|
|
Repayments of long-term debt |
|
|
(1,050 |
) |
|
|
(1,000 |
) |
|
Income tax benefit from exercise of stock options |
|
|
837 |
|
|
|
719 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(10,551 |
) |
|
|
(13,643 |
) |
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
(1,296 |
) |
|
|
981 |
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents |
|
|
40,334 |
|
|
|
112,866 |
|
|
Cash and cash equivalents at the beginning of the period |
|
|
311,800 |
|
|
|
198,934 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
|
$ |
352,134 |
|
|
$ |
311,800 |
|
|
|
|
|
|
|
|
|
|
|
MUELLER INDUSTRIES, INC.
Reconciliation of Net Income as Reported to Pro Forma Without Unusual Items
(Unaudited)
Earnings attributable to normal operations without the unusual items noted below is a measurement not derived in accordance with generally accepted accounting principles (GAAP). Excluding these items is useful, as it measures the operating results that are the outcome of daily operating decisions made in the normal course of business. Reconciliation of earnings attributable to normal operations without the unusual items to net income as reported is as follows:
|
|
|
For the Year Ended December 27, 2014 |
|
|||||||||||||
|
|
|
|
|
|
|
Impact of |
|
|
|
|
||||||
|
(In thousands, except per share data) |
|
As Reported |
|
|
Yorkshire Copper Tube Severance |
|
|
Gain on Sale of Assets |
|
|
Pro forma |
|
||||
|
Operating income |
|
$ |
153,996 |
|
|
$ |
7,296 |
|
|
$ |
(6,259 |
) |
|
$ |
155,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(5,740 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,740 |
) |
|
Other expense, net |
|
|
(243 |
) |
|
|
— |
|
|
|
— |
|
|
|
(243 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
148,013 |
|
|
|
7,296 |
|
|
|
(6,259 |
) |
|
|
149,050 |
|
|
Income tax expense |
|
|
(45,479 |
) |
|
|
(1,563 |
) |
|
|
2,266 |
|
|
|
(44,776 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
|
102,534 |
|
|
|
5,733 |
|
|
|
(3,993 |
) |
|
|
104,274 |
|
|
Net income attributable to non-controlling interest |
|
|
(974 |
) |
|
|
— |
|
|
|
— |
|
|
|
(974 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Mueller Industries, Inc. |
|
$ |
101,560 |
|
|
$ |
5,733 |
|
|
$ |
(3,993 |
) |
|
$ |
103,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
1.79 |
|
|
$ |
0.10 |
|
|
$ |
(0.07 |
) |
|
$ |
1.82 |
|
|
|
|
For the Year Ended December 28, 2013 |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
Impact of |
|
|
|
|
|
|||||||||||||
|
(In thousands, except per share data) |
|
As Reported |
|
|
Insurance Settlement |
|
|
Gain on Plastic Sale |
|
|
Impairments |
|
|
Other |
|
|
Pro forma |
|
||||||
|
Operating income |
|
$ |
270,937 |
|
|
$ |
(106,332 |
) |
|
$ |
(39,765 |
) |
|
$ |
4,304 |
|
|
$ |
2,290 |
|
|
$ |
131,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(3,990 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,990 |
) |
|
Other income, net |
|
|
4,451 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,000 |
) |
|
|
1,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
271,398 |
|
|
|
(106,332 |
) |
|
|
(39,765 |
) |
|
|
4,304 |
|
|
|
(710 |
) |
|
|
128,895 |
|
|
Income tax expense |
|
|
(98,109 |
) |
|
|
40,723 |
|
|
|
16,845 |
|
|
|
(1,719 |
) |
|
|
481 |
|
|
|
(41,779 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
|
173,289 |
|
|
|
(65,609 |
) |
|
|
(22,920 |
) |
|
|
2,585 |
|
|
|
(229 |
) |
|
|
87,116 |
|
|
Net income attributable to non-controlling interest |
|
|
(689 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(689 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Mueller Industries, Inc. |
|
$ |
172,600 |
|
|
$ |
(65,609 |
) |
|
$ |
(22,920 |
) |
|
$ |
2,585 |
|
|
$ |
(229 |
) |
|
$ |
86,427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
3.06 |
|
|
$ |
(1.16 |
) |
|
$ |
(0.41 |
) |
|
$ |
0.05 |
|
|
$ |
(0.01 |
) |
|
$ |
1.53 |
|
Released February 3, 2015