Mueller Industries, Inc. Reports Second Quarter 2014 Earnings

MEMPHIS, Tenn., July 22, 2014 -- Mueller Industries, Inc. (NYSE: MLI) announced today net income of $35.0 million, or 62 cents per diluted share, for the second quarter of 2014.  This compares with net income from normal operations in the second quarter of 2013 of $25.5 million, or 45 cents per diluted share.  During the second quarter of 2013, the Company also recognized an after-tax gain of $65.6 million, or $1.17 per diluted share, on the settlement of an insurance claim.  Diluted earnings per share for 2013 have been adjusted to reflect a 2-for-1 stock split that was effected during the first quarter of 2014.

Net sales for the second quarter were $649.7 million compared with $582.3 million for the same quarter of the prior year representing an increase of 11.6 percent.  Sales were positively impacted by a 15.9 percent increase in unit volumes, partially offset by a 4.6 percent reduction in copper prices in the second quarter of 2014 compared with the same period of the prior year.  Copper prices averaged $3.10 per pound in the second quarter of 2014 compared with $3.25 per pound in the same period of 2013.

Financial highlights for the second quarter of 2014:

-  

Acquired businesses contributed 10.8 percent of the overall 15.9 percent increase in unit volumes.

 

-  

The effective tax rate for the quarter reflects a reduction in valuation allowances previously recorded against certain state tax credits.

 

-  

Results include $2.4 million of severance and other charges related to the U.K. copper tube business acquired in the first quarter of 2014.

 

-  

Quarter end cash totaled $242.2 million equal to $4.27 per share.

 

-  

Stockholders’ equity was $760.8 million, which equates to a book value per share of $13.42.

 

-  

Debt to total capitalization ratio was 25.1 percent and the current ratio was 3.5 to 1.

Regarding the outlook, Greg Christopher, CEO said, “Despite the lack of supportive market conditions, we are pleased with how our businesses continue to improve.  Although there are fluctuations in building construction metrics the overall direction seems to be improving and we anticipate the same will continue into the second half of the year.” 

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 Six Months Ended

 

(In thousands, except per share data)

 

June 28,

2014

 

 

June 29,

2013

 

 

June 28,

2014

 

 

June 29,

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

649,691

 

 

$

582,282

 

 

$

1,224,065

 

 

$

1,141,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

557,775

 

 

 

501,125

 

 

 

1,053,552

 

 

 

983,975

 

Depreciation and amortization

 

 

8,592

 

 

 

8,328

 

 

 

16,699

 

 

 

16,482

 

Selling, general, and administrative expense

 

 

35,120

 

 

 

34,814

 

 

 

67,303

 

 

 

66,157

 

Insurance settlement

 

 

 

 

 

(106,332

)

 

 

 

 

 

(106,332

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

48,204

 

 

 

144,347

 

 

 

86,511

 

 

 

181,690

 

Interest expense

 

 

(1,457

)

 

 

(1,101

)

 

 

(2,483

)

 

 

(1,697

)

Other income, net

 

 

127

 

 

 

319

 

 

 

215

 

 

 

3,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

46,874

 

 

 

143,565

 

 

 

84,243

 

 

 

183,475

 

Income tax expense

 

 

(11,665

)

 

 

(51,723

)

 

 

(24,080

)

 

 

(65,199

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net income

 

 

35,209

 

 

 

91,842

 

 

 

60,163

 

 

 

118,276

 

Net income attributable to

  noncontrolling interest

 

 

(164

)

 

 

(692

)

 

 

(412

)

 

 

(924

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to

  Mueller Industries, Inc.

 

$

35,045

 

 

$

91,150

 

 

$

59,751

 

 

$

117,352

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares for basic

  earnings per share

 

 

55,973

 

 

 

55,681

 

 

 

55,946

 

 

 

55,663

 

Effect of dilutive stock-based awards

 

 

747

 

 

 

740

 

 

 

800

 

 

 

744

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted weighted average shares for diluted

  earnings per share

 

 

56,720

 

 

 

56,421

 

 

 

56,746

 

 

 

56,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.63

 

 

$

1.64

 

 

$

1.07

 

 

$

2.11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.62

 

 

$

1.62

 

 

$

1.05

 

 

$

2.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.075

 

 

$

0.0625

 

 

$

0.150

 

 

$

0.125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Segment Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Plumbing & Refrigeration Segment

 

$

397,190

 

 

$

328,673

 

 

$

735,217

 

 

$

640,487

 

    OEM Segment

 

 

255,409

 

 

 

257,044

 

 

 

495,439

 

 

 

510,831

 

    Elimination of intersegment sales

 

 

(2,908

)

 

 

(3,435

)

 

 

(6,591

)

 

 

(9,346

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

649,691

 

 

$

582,282

 

 

$

1,224,065

 

 

$

1,141,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Plumbing & Refrigeration Segment

 

$

32,330

 

 

$

129,810

 

 

$

56,215

 

 

$

152,437

 

    OEM Segment

 

 

23,216

 

 

 

20,939

 

 

 

44,502

 

 

 

41,262

 

    Unallocated expenses

 

 

(7,342

)

 

 

(6,402

)

 

 

(14,206

)

 

 

(12,009

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

48,204

 

 

$

144,347

 

 

$

86,511

 

 

$

181,690

 

 


MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(In thousands)

 

June 28,

2014

 

 

December 28, 2013

 

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

242,199

 

 

$

311,800

 

Accounts receivable, net

 

 

367,299

 

 

 

271,847

 

Inventories

 

 

291,138

 

 

 

251,716

 

Other current assets

 

 

45,410

 

 

 

39,354

 

 

 

 

 

 

 

 

 

 

    Total current assets

 

 

946,046

 

 

 

874,717

 

 

 

 

 

 

 

 

 

 

Property, plant, and equipment, net

 

 

245,441

 

 

 

244,457

 

Other assets

 

 

158,371

 

 

 

128,593

 

 

 

 

 

 

 

 

 

 

 

 

$

1,349,858

 

 

$

1,247,767

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current portion of debt

 

$

60,328

 

 

$

29,083

 

Accounts payable

 

 

101,671

 

 

 

80,897

 

Other current liabilities

 

 

106,154

 

 

 

109,276

 

 

 

 

 

 

 

 

 

 

    Total current liabilities

 

 

268,153

 

 

 

219,256

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

205,750

 

 

 

206,250

 

Pension and postretirement liabilities

 

 

26,818

 

 

 

27,426

 

Environmental reserves

 

 

21,661

 

 

 

22,144

 

Deferred income taxes

 

 

33,226

 

 

 

35,975

 

Other noncurrent liabilities

 

 

1,306

 

 

 

849

 

 

 

 

 

 

 

 

 

 

    Total liabilities

 

 

556,914

 

 

 

511,900

 

 

 

 

 

 

 

 

 

 

Total Mueller Industries, Inc. stockholders’ equity

 

 

760,823

 

 

 

703,405

 

Noncontrolling interest

 

 

32,121

 

 

 

32,462

 

 

 

 

 

 

 

 

 

 

    Total equity

 

 

792,944

 

 

 

735,867

 

 

 

 

 

 

 

 

 

 

 

 

$

1,349,858

 

 

$

1,247,767

 

 

 

 

 

 

 

 

 

 

 


MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For the Six Months Ended

 

 (In thousands)

 

June 28,

2014

 

 

June 29,

2013

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Consolidated net income

 

$

60,163

 

 

$

118,276

 

Reconciliation of consolidated net income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

      Depreciation and amortization

 

 

16,840

 

 

 

16,649

 

      Stock-based compensation expense

 

 

3,526

 

 

 

3,326

 

      Insurance settlement

 

 

 

 

 

(106,332

)

      Insurance proceeds – noncapital related

 

 

 

 

 

32,395

 

      Gain on disposal of properties

 

 

(1,225

)

 

 

(2,984

)

      Deferred income taxes

 

 

(6,523

)

 

 

12,468

 

      Income tax benefit from exercise of stock options

 

 

(316

)

 

 

(95

)

      Changes in assets and liabilities, net of business acquired

 

 

 

 

 

 

 

 

        Receivables

 

 

(100,413

)

 

 

(35,095

)

        Inventories

 

 

(20,619

)

 

 

4,705

 

        Other assets

 

 

(8,886

)

 

 

(306

)

        Current liabilities

 

 

7,373

 

 

 

6,150

 

        Other liabilities

 

 

(893

)

 

 

(423

)

        Other, net

 

 

92

 

 

 

420

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

 

 

(50,881

)

 

 

49,154

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(18,833

)

 

 

(21,687

)

Business acquired, net of cash acquired

 

 

(30,137

)

 

 

 

Insurance proceeds for property and equipment

 

 

 

 

 

29,910

 

Net withdrawals from (deposits into) restricted cash balances

 

 

1,815

 

 

 

(4,721

)

Proceeds from the sales of properties

 

 

4,874

 

 

 

3,016

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by investing activities

 

 

(42,281

)

 

 

6,518

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Repayments of long-term debt

 

 

(500

)

 

 

(500

)

Dividends paid to stockholders of Mueller Industries, Inc.

 

 

(8,394

)

 

 

(6,960

)

Debt issuance cost

 

 

 

 

 

(50

)

Issuance of debt

 

 

22,635

 

 

 

 

Issuance (repayment) of debt by joint venture, net

 

 

8,903

 

 

 

15,544

 

Net cash received to settle stock-based awards

 

 

296

 

 

 

260

 

Repurchase of common stock

 

 

(58

)

 

 

 

Income tax benefit from exercise of stock options

 

 

316

 

 

 

95

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

23,198

 

 

 

8,389

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

363

 

 

 

(1,328

)

 

 

 

 

 

 

 

 

 

(Decrease) increase in cash and cash equivalents

 

 

(69,601

)

 

 

62,733

 

Cash and cash equivalents at the beginning of the period

 

 

311,800

 

 

 

198,934

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the period

 

$

242,199

 

 

$

261,667

 

 

 

 

 

 

 

 

 

 

 


 

 

MUELLER INDUSTRIES, INC.

Reconciliation of Net Income as Reported to Pro forma Without Insurance Settlement

(Unaudited)

 

Earnings attributable to normal operations without the insurance settlement is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  Excluding the insurance settlement is useful as it measures the operating results that are the outcome of daily operating decisions made in the normal course of business.  The insurance settlement was related to a 2011 claim at the Company's Wynne, Arkansas, manufacturing operations.  Reconciliation of earnings attributable to normal operations without the insurance settlement to net income as reported is as follows:

 

 

 

For the Quarter Ended

June 29, 2013

 

(In thousands, except per share data)

 

As

Reported

 

 

Impact of

Insurance

Settlement

 

 

Pro forma

Without

Insurance

Settlement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

144,347

 

 

$

106,332

 

 

$

38,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,101

)

 

 

 

 

 

(1,101

)

Other income, net

 

 

319

 

 

 

 

 

 

319

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

143,565

 

 

 

106,332

 

 

 

37,233

 

Income tax expense

 

 

(51,723

)

 

 

(40,723

)

 

 

(11,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net income

 

 

91,842

 

 

 

65,609

 

 

 

26,233

 

Net income attributable to noncontrolling interest

 

 

(692

)

 

 

 

 

 

(692

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

 

$

91,150

 

 

$

65,609

 

 

$

25,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

1.62

 

 

$

1.17

 

 

$

0.45