Mueller Industries, Inc. Reports Third Quarter 2014 Earnings

MEMPHIS, Tenn., October 21, 2014 -- Mueller Industries, Inc. (NYSE: MLI) announced today net income of $23.8 million, or 42 cents per diluted share, for the third quarter of 2014.  This compares with net income of $19.5 million, or 35 cents per diluted share, earned from normal operations in the third quarter of 2013.  During the third quarter of 2013, the Company reported an additional after-tax net gain of $20.3 million, or 36 cents per diluted share, related to non-recurring items. 

Net sales for the third quarter were $602.8 million compared with $528.9 million for the same quarter in 2013.  The growth in net sales was driven by unit volume increases of 16.6 percent, of which two thirds came from acquisitions; partially offset by the decline in copper values year-over-year.

Financial highlights for the quarter:

-  

Results include $1.1 million of severance and other charges related to the ongoing reorganization of the acquired Yorkshire Copper Tube business.

 

-  

Quarter ending cash totaled $259.9 million equal to $4.57 per share.

 

-  

Stockholders’ equity was $774.6 million equal to a book value per share of $13.62.

 

-  

Debt to total capitalization was 23.1 percent and the current ratio was 4.0 to 1.

Regarding the outlook, Greg Christopher, CEO said, “In the third quarter, continued signs of increased activity in the private non-residential construction segment are encouraging.  This is a welcome development as past experience shows that once this segment gains momentum, it tends to persist. 

“Furthermore the residential segment of our business continues to idle along while improving at a modest pace, with housing starts likely to remain under one million units in 2014.  A ramp-up in starts will accompany further gains in the U.S. economy.”

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,” 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 27, 2014

 

 

September 28, 2013

 

 

September 27, 2014

 

 

September 28, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

602,820

 

 

$

528,854

 

 

$

1,826,885

 

 

$

1,670,826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

521,278

 

 

 

456,302

 

 

 

1,574,830

 

 

 

1,440,277

 

Depreciation and amortization

 

 

8,952

 

 

 

7,882

 

 

 

25,651

 

 

 

24,364

 

Selling, general, and administrative expense

 

 

34,864

 

 

 

32,921

 

 

 

102,167

 

 

 

99,078

 

Gain on sale of plastic fittings manufacturing assets

 

 

 

 

 

(39,765

)

 

 

 

 

 

(39,765

)

Impairment charges

 

 

 

 

 

4,304

 

 

 

 

 

 

4,304

 

Insurance settlements

 

 

 

 

 

 

 

 

 

 

 

(106,332

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Operating income

 

 

37,726

 

 

 

67,210

 

 

 

124,237

 

 

 

248,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,430

)

 

 

(1,243

)

 

 

(3,913

)

 

 

(2,940

)

Other income, net

 

 

225

 

 

 

842

 

 

 

440

 

 

 

4,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Income before income taxes

 

 

36,521

 

 

 

66,809

 

 

 

120,764

 

 

 

250,284

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(12,199

)

 

 

(26,816

)

 

 

(36,279

)

 

 

(92,015

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Consolidated net income

 

 

24,322

 

 

 

39,993

 

 

 

84,485

 

 

 

158,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interest

 

 

(499

)

 

 

(129

)

 

 

(911

)

 

 

(1,053

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Net income attributable to Mueller Industries, Inc.

 

$

23,823

 

 

$

39,864

 

 

$

83,574

 

 

$

157,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares for basic earnings per share

 

 

56,107

 

 

 

55,787

 

 

 

55,999

 

 

 

55,704

 

Effect of dilutive stock-based awards

 

 

637

 

 

 

723

 

 

 

746

 

 

 

737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted weighted average shares for diluted earnings per share

 

 

56,744

 

 

 

56,510

 

 

 

56,745

 

 

 

56,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.42

 

 

$

0.71

 

 

$

1.49

 

 

$

2.82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.42

 

 

$

0.71

 

 

$

1.47

 

 

$

2.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.075

 

 

$

0.0625

 

 

$

0.225

 

 

$

0.1875

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Segment Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Plumbing & Refrigeration Segment

 

$

357,843

 

 

$

301,622

 

 

$

1,093,060

 

 

$

942,109

 

    OEM Segment

 

 

247,883

 

 

 

230,396

 

 

 

743,322

 

 

 

741,227

 

    Elimination of intersegment sales

 

 

(2,906

)

 

 

(3,164

)

 

 

(9,497

)

 

 

(12,510

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

602,820

 

 

$

528,854

 

 

$

1,826,885

 

 

$

1,670,826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Plumbing & Refrigeration Segment

 

$

20,156

 

 

$

54,271

 

 

$

76,371

 

 

$

206,708

 

    OEM Segment

 

 

23,977

 

 

 

19,937

 

 

 

68,479

 

 

 

61,199

 

    Unallocated expenses

 

 

(6,407

)

 

 

(6,998

)

 

 

(20,613

)

 

 

(19,007

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

37,726

 

 

$

67,210

 

 

$

124,237

 

 

$

248,900

 

 

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(In thousands)

 

September 27, 2014

 

 

December 28, 2013

 

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

259,858

 

 

$

311,800

 

Accounts receivable, net

 

 

332,508

 

 

 

271,847

 

Inventories

 

 

282,493

 

 

 

251,716

 

Other current assets

 

 

49,319

 

 

 

39,354

 

 

 

 

 

 

 

 

 

 

    Total current assets

 

 

924,178

 

 

 

874,717

 

 

 

 

 

 

 

 

 

 

Property, plant, and equipment, net

 

 

246,169

 

 

 

244,457

 

Other assets

 

 

157,389

 

 

 

128,593

 

 

 

 

 

 

 

 

 

 

 

 

$

1,327,736

 

 

$

1,247,767

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current portion of debt

 

$

37,207

 

 

$

29,083

 

Accounts payable

 

 

92,342

 

 

 

80,897

 

Other current liabilities

 

 

103,774

 

 

 

109,276

 

 

 

 

 

 

 

 

 

 

    Total current liabilities

 

 

233,323

 

 

 

219,256

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

205,500

 

 

 

206,250

 

Pension and postretirement liabilities

 

 

25,860

 

 

 

27,426

 

Environmental reserves

 

 

21,557

 

 

 

22,144

 

Deferred income taxes

 

 

33,342

 

 

 

35,975

 

Other noncurrent liabilities

 

 

581

 

 

 

849

 

 

 

 

 

 

 

 

 

 

    Total liabilities

 

 

520,163

 

 

 

511,900

 

 

 

 

 

 

 

 

 

 

Total Mueller Industries, Inc. stockholders’ equity

 

 

774,562

 

 

 

703,405

 

Noncontrolling interest

 

 

33,011

 

 

 

32,462

 

 

 

 

 

 

 

 

 

 

    Total equity

 

 

807,573

 

 

 

735,867

 

 

 

 

 

 

 

 

 

 

 

 

$

1,327,736

 

 

$

1,247,767

 

 

 

 

 

 

 

 

 

 

 


MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For the Nine Months Ended

 

 (In thousands)

 

September 27, 2014

 

 

September 28, 2013

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

  Consolidated net income

 

$

84,485

 

 

$

158,269

 

  Reconciliation of consolidated net income to net cash

    provided by operating activities:

 

 

 

 

 

 

 

 

      Depreciation and amortization

 

 

25,888

 

 

 

24,583

 

      Stock-based compensation expense

 

 

4,957

 

 

 

4,560

 

      Insurance settlements

 

 

 

 

 

(106,332

)

      Insurance proceeds – noncapital related

 

 

 

 

 

32,395

 

      Gain on sale of plastic fittings manufacturing assets

 

 

 

 

 

(39,765

)

      Gain on disposal of properties

 

 

(1,146

)

 

 

(3,316

)

      Impairment charges

 

 

 

 

 

4,304

 

      Deferred income taxes

 

 

(6,908

)

 

 

14,152

 

      Income tax benefit from exercise of stock options

 

 

(829

)

 

 

(670

)

      Changes in assets and liabilities, net of business acquired:

 

 

 

 

 

 

 

 

        Receivables

 

 

(62,854

)

 

 

(38,370

)

        Inventories

 

 

(14,868

)

 

 

(4,566

)

        Other assets

 

 

(15,272

)

 

 

4,886

 

        Current liabilities

 

 

(8,675

)

 

 

19,649

 

        Other liabilities

 

 

(797

)

 

 

(297

)

        Other, net

 

 

223

 

 

 

508

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

4,204

 

 

 

69,990

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

  Capital expenditures

 

 

(28,406

)

 

 

(33,402

)

  Acquisition of business

 

 

(30,137

)

 

 

 

  Insurance proceeds for property and equipment

 

 

 

 

 

29,910

 

  Net withdrawals from (deposits into) restricted cash balances

 

 

2,507

 

 

 

(2,473

)

  Proceeds from the sales of assets

 

 

4,920

 

 

 

64,966

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by investing activities

 

 

(51,116

)

 

 

59,001

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

  Dividends paid to stockholders of Mueller Industries, Inc.

 

 

(12,606

)

 

 

(10,449

)

  Debt issuance cost

 

 

 

 

 

(50

)

  Issuance of debt by Mueller Europe, Limited, net

 

 

12,008

 

 

 

 

  (Repayment) issuance of debt by joint venture, net

 

 

(3,170

)

 

 

4,940

 

  Net cash used to settle stock-based awards

 

 

(887

)

 

 

(337

)

  Repurchase of common stock

 

 

(58

)

 

 

 

  Repayments of long-term debt

 

 

(800

)

 

 

(750

)

  Income tax benefit from exercise of stock options

 

 

829

 

 

 

670

 

 

 

 

 

 

 

 

 

 

Net cash used in financing activities

 

 

(4,684

)

 

 

(5,976

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

(346

)

 

 

228

 

 

 

 

 

 

 

 

 

 

(Decrease) increase in cash and cash equivalents

 

 

(51,942

)

 

 

123,243

 

Cash and cash equivalents at the beginning of the period

 

 

311,800

 

 

 

198,934

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the period

 

$

259,858

 

 

$

322,177

 

 

 

 

 

 

 

 

 

 

 

 

MUELLER INDUSTRIES, INC.

Reconciliation of Net Income as Reported to Pro Forma Without Gain on Sale of

Plastic Fittings Manufacturing Assets and Impairment Charges

(Unaudited)

 

Earnings attributable to normal operations without the gain on sale of plastic fittings manufacturing assets and impairment charges is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  Excluding the gain on sale of plastic fittings manufacturing assets and impairment charges 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 gain on sale of plastic fittings manufacturing assets and impairment charges to net income as reported is as follows:

 

 

 

 

For the Quarter Ended September 28, 2013

 

 

 

 

 

 

Impact of

 

 

 

 

(In thousands, except per share data)

 

As Reported

 

 

Gain on Sale of
Plastic Fittings
Manufacturing
Assets

 

 

Impairment
Charges

 

 

Pro Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

67,210

 

 

$

39,765

 

 

$

(4,304

)

 

$

31,749

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,243

)

 

 

 

 

 

 

 

 

(1,243

)

Other income, net

 

 

842

 

 

 

 

 

 

 

 

 

842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Income before income taxes

 

 

66,809

 

 

 

39,765

 

 

 

(4,304

)

 

 

31,348

 

Income tax expense

 

 

(26,816

)

 

 

(16,845

)

 

 

1,719

 

 

 

(11,690

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Consolidated net income

 

 

39,993

 

 

 

22,920

 

 

 

(2,585

)

 

 

19,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interest

 

 

(129

)

 

 

 

 

 

 

 

 

(129

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Net income attributable to Mueller Industries, Inc.

 

$

39,864

 

 

$

22,920

 

 

$

(2,585

)

 

$

19,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.71

 

 

$

0.41

 

 

$

(0.05

)

 

$

0.35