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 |
|
|
Impairment |
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Released October 21, 2014