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