Mueller Industries, Inc. Reports Third Quarter 2013 Earnings
MEMPHIS, Tenn., October 22, 2013 -- Mueller Industries, Inc. (NYSE: MLI) announced today that Mueller’s net income attributable to normal operations in the third quarter of 2013 was $19.5 million, or 69 cents per diluted share. This compares with net income of $15.5 million, or 41 cents per diluted share, for the same period of 2012.
In addition, during the third quarter of 2013, the Company recognized an after-tax gain of $22.9 million (or 81 cents per diluted share) on the sale of its Schedule 40 pressure plastics fittings business along with the sale of certain other plastic fittings manufacturing assets. Also during the third quarter of 2013, the Company recognized an after-tax asset impairment charge of $2.6 million (or 9 cents per diluted share) primarily related to real property associated with the aforementioned plastics sale transaction. Including these non-recurring items, the Company’s net income in the third quarter of 2013 was $39.9 million, or $1.41 per diluted share.
Net sales for the third quarter of 2013 were $528.9 million compared with $514.2 million in the third quarter of 2012. The increase in net sales was principally due to a 6.6 percent overall increase in unit volumes offset somewhat by lower copper costs that impacted the selling prices of the Company’s products. Copper prices decreased to an average of $3.23 per pound in the third quarter of 2013 compared with $3.53 per pound in the third quarter of 2012.
Excluding the aforementioned non-recurring items, the Plumbing & Refrigeration and OEM segments reported an increase in third quarter income from normal operations of $1.1 million and $5.6 million, respectively, compared to the same period in 2012 due notably to the improvement in volumes.
At the end of the third quarter of 2013, the Company’s net book value per share was $23.41, of which $11.40 per share was cash. The Company ended the quarter with $322.2 million of cash on hand and a current ratio of 3.8 to 1.
Regarding the outlook, Greg Christopher, Mueller’s CEO said, “Mueller’s businesses perform best when unit volumes increase. This is because, once our fixed costs are covered, each added increment of volume tends to generate higher margins. This was well illustrated by our results for the quarter just ended. We are on track to increase volumes as the construction industry improves.
“In addition, subsequent to the end of the third quarter of 2013, Mueller closed on the acquisition of Howell Metal Company and entered into a definitive agreement to acquire KME’s Yorkshire Copper Tube business, subject to regulatory approval in the United Kingdom. Howell manufactures copper tube and linesets for U.S. distribution while Yorkshire Copper Tube produces European standard copper distribution tubes. These acquisitions complement our strategy to grow and strengthen our core businesses.”
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,” “pro forma,” 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 28, 2013 |
|
|
September 29, 2012 |
|
|
September 28, 2013 |
|
|
September 29, 2012 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net sales |
|
$ |
528,854 |
|
|
$ |
514,165 |
|
|
$ |
1,670,826 |
|
|
$ |
1,685,932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
456,302 |
|
|
|
449,718 |
|
|
|
1,440,277 |
|
|
|
1,465,744 |
|
|
Depreciation and amortization |
|
|
7,882 |
|
|
|
7,870 |
|
|
|
24,364 |
|
|
|
23,318 |
|
|
Selling, general, and administrative expense |
|
|
32,921 |
|
|
|
32,120 |
|
|
|
99,078 |
|
|
|
97,209 |
|
|
Gain on sale of plastic fittings manufacturing assets |
|
|
(39,765 |
) |
|
|
— |
|
|
|
(39,765 |
) |
|
|
— |
|
|
Impairment charges |
|
|
4,304 |
|
|
|
— |
|
|
|
4,304 |
|
|
|
— |
|
|
Insurance settlements |
|
|
— |
|
|
|
— |
|
|
|
(106,332 |
) |
|
|
(1,500 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
67,210 |
|
|
|
24,457 |
|
|
|
248,900 |
|
|
|
101,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(1,243 |
) |
|
|
(353 |
) |
|
|
(2,940 |
) |
|
|
(5,711 |
) |
|
Other income, net |
|
|
842 |
|
|
|
219 |
|
|
|
4,324 |
|
|
|
963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
66,809 |
|
|
|
24,323 |
|
|
|
250,284 |
|
|
|
96,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(26,816 |
) |
|
|
(8,753 |
) |
|
|
(92,015 |
) |
|
|
(29,486 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
|
39,993 |
|
|
|
15,570 |
|
|
|
158,269 |
|
|
|
66,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interest |
|
|
(129 |
) |
|
|
(59 |
) |
|
|
(1,053 |
) |
|
|
(900 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Mueller Industries, Inc. |
|
$ |
39,864 |
|
|
$ |
15,511 |
|
|
$ |
157,216 |
|
|
$ |
66,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares for basic earnings per share |
|
|
27,894 |
|
|
|
37,505 |
|
|
|
27,852 |
|
|
|
37,849 |
|
|
Effect of dilutive stock-based awards |
|
|
361 |
|
|
|
452 |
|
|
|
369 |
|
|
|
444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average shares for diluted earnings per share |
|
|
28,255 |
|
|
|
37,957 |
|
|
|
28,221 |
|
|
|
38,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
1.43 |
|
|
$ |
0.41 |
|
|
$ |
5.64 |
|
|
$ |
1.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
1.41 |
|
|
$ |
0.41 |
|
|
$ |
5.57 |
|
|
$ |
1.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share |
|
$ |
0.125 |
|
|
$ |
0.10 |
|
|
$ |
0.375 |
|
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Segment Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumbing & Refrigeration Segment |
|
$ |
301,622 |
|
|
$ |
297,913 |
|
|
$ |
942,109 |
|
|
$ |
944,955 |
|
|
OEM Segment |
|
|
230,396 |
|
|
|
221,468 |
|
|
|
741,227 |
|
|
|
760,995 |
|
|
Elimination of intersegment sales |
|
|
(3,164 |
) |
|
|
(5,216 |
) |
|
|
(12,510 |
) |
|
|
(20,018 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
528,854 |
|
|
$ |
514,165 |
|
|
$ |
1,670,826 |
|
|
$ |
1,685,932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumbing & Refrigeration Segment |
|
$ |
54,271 |
|
|
$ |
17,593 |
|
|
$ |
206,708 |
|
|
$ |
68,456 |
|
|
OEM Segment |
|
|
19,937 |
|
|
|
14,421 |
|
|
|
61,199 |
|
|
|
54,203 |
|
|
Unallocated expenses |
|
|
(6,998 |
) |
|
|
(7,557 |
) |
|
|
(19,007 |
) |
|
|
(21,498 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
67,210 |
|
|
$ |
24,457 |
|
|
$ |
248,900 |
|
|
$ |
101,161 |
|
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
(In thousands) |
|
September 28, 2013 |
|
|
December 29, 2012 |
|
||
|
ASSETS |
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
322,177 |
|
|
$ |
198,934 |
|
|
Accounts receivable, net |
|
|
312,919 |
|
|
|
271,093 |
|
|
Inventories |
|
|
234,081 |
|
|
|
229,434 |
|
|
Other current assets |
|
|
55,166 |
|
|
|
47,733 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
924,343 |
|
|
|
747,194 |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net |
|
|
222,751 |
|
|
|
233,263 |
|
|
Other assets |
|
|
113,527 |
|
|
|
123,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,260,621 |
|
|
$ |
1,104,155 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
|
Current portion of debt |
|
$ |
33,036 |
|
|
$ |
27,570 |
|
|
Accounts payable |
|
|
76,725 |
|
|
|
87,574 |
|
|
Other current liabilities |
|
|
134,411 |
|
|
|
143,552 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
244,172 |
|
|
|
258,696 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
206,550 |
|
|
|
207,300 |
|
|
Pension and postretirement liabilities |
|
|
52,205 |
|
|
|
55,019 |
|
|
Environmental reserves |
|
|
22,435 |
|
|
|
22,597 |
|
|
Deferred income taxes |
|
|
39,698 |
|
|
|
20,910 |
|
|
Other noncurrent liabilities |
|
|
1,141 |
|
|
|
1,667 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
566,201 |
|
|
|
566,189 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Mueller Industries, Inc. stockholders’ equity |
|
|
661,749 |
|
|
|
506,908 |
|
|
Noncontrolling interest |
|
|
32,671 |
|
|
|
31,058 |
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
694,420 |
|
|
|
537,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,260,621 |
|
|
$ |
1,104,155 |
|
|
|
|
|
|
|
|
|
|
|
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
For the Nine Months Ended |
|
|||||
|
(In thousands) |
|
September 28, 2013 |
|
|
September 29, 2012 |
|
||
|
|
|
|
|
|
||||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
$ |
158,269 |
|
|
$ |
66,927 |
|
|
Reconciliation of consolidated net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
24,583 |
|
|
|
23,713 |
|
|
Stock-based compensation expense |
|
|
4,560 |
|
|
|
3,042 |
|
|
Insurance settlements |
|
|
(106,332 |
) |
|
|
(1,500 |
) |
|
Insurance proceeds – noncapital related |
|
|
32,395 |
|
|
|
14,250 |
|
|
Gain on sale of plastic fittings manufacturing assets |
|
|
(39,765 |
) |
|
|
— |
|
|
(Gain) loss on disposal of properties |
|
|
(3,316 |
) |
|
|
175 |
|
|
Impairment charges |
|
|
4,304 |
|
|
|
— |
|
|
Deferred income taxes |
|
|
14,152 |
|
|
|
2,319 |
|
|
Income tax benefit from exercise of stock options |
|
|
(670 |
) |
|
|
(517 |
) |
|
Changes in assets and liabilities, net of business acquired: |
|
|
|
|
|
|
|
|
|
Receivables |
|
|
(38,370 |
) |
|
|
(15,779 |
) |
|
Inventories |
|
|
(4,566 |
) |
|
|
585 |
|
|
Other assets |
|
|
4,886 |
|
|
|
(8,434 |
) |
|
Current liabilities |
|
|
19,649 |
|
|
|
(21,120 |
) |
|
Other liabilities |
|
|
(297 |
) |
|
|
7,834 |
|
|
Other, net |
|
|
508 |
|
|
|
1,271 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
69,990 |
|
|
|
72,766 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(33,402 |
) |
|
|
(43,841 |
) |
|
Acquisition of business |
|
|
— |
|
|
|
(11,503 |
) |
|
Insurance proceeds for property and equipment |
|
|
29,910 |
|
|
|
42,250 |
|
|
Net (deposits into) withdrawals from restricted cash balances |
|
|
(2,473 |
) |
|
|
6,908 |
|
|
Proceeds from the sales of assets |
|
|
64,966 |
|
|
|
502 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
59,001 |
|
|
|
(5,684 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Dividends paid to stockholders of Mueller Industries, Inc. |
|
|
(10,449 |
) |
|
|
(11,415 |
) |
|
Debt issuance cost |
|
|
(50 |
) |
|
|
— |
|
|
Issuance of long-term debt |
|
|
— |
|
|
|
200,000 |
|
|
Issuance (repayment) of debt by joint venture, net |
|
|
4,940 |
|
|
|
(28,955 |
) |
|
Net cash used to settle stock-based awards |
|
|
(337 |
) |
|
|
(740 |
) |
|
Repurchase of common stock |
|
|
— |
|
|
|
(427,448 |
) |
|
Repayments of long-term debt |
|
|
(750 |
) |
|
|
(148,926 |
) |
|
Income tax benefit from exercise of stock options |
|
|
670 |
|
|
|
517 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(5,976 |
) |
|
|
(416,967 |
) |
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
228 |
|
|
|
1,478 |
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
|
123,243 |
|
|
|
(348,407 |
) |
|
Cash and cash equivalents at the beginning of the period |
|
|
198,934 |
|
|
|
514,162 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
|
$ |
322,177 |
|
|
$ |
165,755 |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
1.41 |
|
|
$ |
0.81 |
|
|
$ |
(0.09 |
) |
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Released October 22, 2013