Mueller Industries, Inc. Reports Second Quarter 2013 Earnings
MEMPHIS, Tenn., July 23, 2013 -- Mueller Industries, Inc. (NYSE: MLI) announced today that Mueller’s net income attributable to normal operations in the second quarter of 2013 was $25.5 million, or 90 cents per diluted share. This compares with net income of $17.9 million, or 47 cents per diluted share, for the same period of 2012. In addition, during the second quarter of 2013, the Company recognized an after-tax gain of $65.6 million (or $2.33 per diluted share) on the settlement of an insurance claim pertaining to the 2011 fire at its Wynne, Arkansas manufacturing operations. Including this non-recurring gain, the Company’s net income in the second quarter of 2013 was $91.2 million, or $3.23 per diluted share.
Net sales for the second quarter of 2013 were $582.3 million compared with $594.1 million in the second quarter of 2012. The decrease in net sales was principally due to lower copper costs that impacted the selling prices of the Company’s products. Copper prices decreased to an average of $3.25 per pound in the second quarter of 2013 versus $3.54 per pound in the second quarter of 2012.
Diluted earnings per share from normal operations increased 43 cents in the second quarter of 2013 compared with the same period in 2012, of which, 23 cents was attributable to the reduction in the Company’s outstanding common shares. The Company repurchased 10.4 million of its common shares in September 2012. The remaining 20 cent per diluted share increase was attributable to improved performance of the Company’s reportable segments. The OEM segment posted operating earnings of $20.9 million, an increase of $5.8 million over the same period in 2012. Excluding the aforementioned insurance gain, the Plumbing & Refrigeration segment posted earnings from normal operations of $25.9 million, an increase of $3.3 million over the same period in 2012.
At the end of the second quarter of 2013, cash totaled $261.7 million equal to $9.30 per share and the Company’s current ratio was 3.5 to 1.
Regarding the outlook, Greg Christopher, CEO said, “The residential construction market continues to gain momentum, although its progress on a month-to-month basis remains bumpy. Housing starts totaled 780,000 units in 2012, and are projected to increase by 20 percent in 2013 and by still another 20 percent in 2014. Despite these gains, many housing market metrics have a long way to go before reaching their pre-recession peaks.
“The non-residential construction market remains relatively flat. This is no surprise as it historically has lagged a recovering economy by about a year. The non-residential market is important to Mueller and we expect to fully participate in its recovery.”
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 29, 2013 |
|
|
June 30, 2012 |
|
|
June 29, 2013 |
|
|
June 30, 2012 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net sales |
|
$ |
582,282 |
|
|
$ |
594,099 |
|
|
$ |
1,141,972 |
|
|
$ |
1,171,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
501,125 |
|
|
|
522,851 |
|
|
|
983,975 |
|
|
|
1,016,026 |
|
|
Depreciation and amortization |
|
|
8,328 |
|
|
|
7,919 |
|
|
|
16,482 |
|
|
|
15,448 |
|
|
Selling, general, and administrative expense |
|
|
34,814 |
|
|
|
33,487 |
|
|
|
66,157 |
|
|
|
65,089 |
|
|
Insurance settlement |
|
|
(106,332 |
) |
|
|
— |
|
|
|
(106,332 |
) |
|
|
(1,500 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
144,347 |
|
|
|
29,842 |
|
|
|
181,690 |
|
|
|
76,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(1,101 |
) |
|
|
(2,721 |
) |
|
|
(1,697 |
) |
|
|
(5,358 |
) |
|
Other income, net |
|
|
319 |
|
|
|
490 |
|
|
|
3,482 |
|
|
|
744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
143,565 |
|
|
|
27,611 |
|
|
|
183,475 |
|
|
|
72,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(51,723 |
) |
|
|
(9,071 |
) |
|
|
(65,199 |
) |
|
|
(20,733 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
|
91,842 |
|
|
|
18,540 |
|
|
|
118,276 |
|
|
|
51,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interest |
|
|
(692 |
) |
|
|
(623 |
) |
|
|
(924 |
) |
|
|
(841 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Mueller Industries, Inc. |
|
$ |
91,150 |
|
|
$ |
17,917 |
|
|
$ |
117,352 |
|
|
$ |
50,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares for basic |
|
|
27,840 |
|
|
|
38,029 |
|
|
|
27,831 |
|
|
|
38,021 |
|
|
Effect of dilutive stock-based awards |
|
|
370 |
|
|
|
436 |
|
|
|
372 |
|
|
|
440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average shares for diluted |
|
|
28,210 |
|
|
|
38,465 |
|
|
|
28,203 |
|
|
|
38,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
3.27 |
|
|
$ |
0.47 |
|
|
$ |
4.22 |
|
|
$ |
1.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
3.23 |
|
|
$ |
0.47 |
|
|
$ |
4.16 |
|
|
$ |
1.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share |
|
$ |
0.125 |
|
|
$ |
0.10 |
|
|
$ |
0.25 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Segment Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumbing & Refrigeration Segment |
|
$ |
328,673 |
|
|
$ |
331,688 |
|
|
$ |
640,487 |
|
|
$ |
647,042 |
|
|
OEM Segment |
|
|
257,044 |
|
|
|
268,551 |
|
|
|
510,831 |
|
|
|
539,527 |
|
|
Elimination of intersegment sales |
|
|
(3,435 |
) |
|
|
(6,140 |
) |
|
|
(9,346 |
) |
|
|
(14,802 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
582,282 |
|
|
$ |
594,099 |
|
|
$ |
1,141,972 |
|
|
$ |
1,171,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumbing & Refrigeration Segment |
|
$ |
129,810 |
|
|
$ |
22,605 |
|
|
$ |
152,437 |
|
|
$ |
50,863 |
|
|
OEM Segment |
|
|
20,939 |
|
|
|
15,057 |
|
|
|
41,262 |
|
|
|
39,782 |
|
|
Unallocated expenses |
|
|
(6,402 |
) |
|
|
(7,820 |
) |
|
|
(12,009 |
) |
|
|
(13,941 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
144,347 |
|
|
$ |
29,842 |
|
|
$ |
181,690 |
|
|
$ |
76,704 |
|
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
(In thousands) |
|
June 29, 2013 |
|
|
December 29, 2012 |
|
||
|
ASSETS |
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
261,667 |
|
|
$ |
198,934 |
|
|
Accounts receivable, net |
|
|
305,706 |
|
|
|
271,093 |
|
|
Inventories |
|
|
222,825 |
|
|
|
229,434 |
|
|
Other current assets |
|
|
58,108 |
|
|
|
47,733 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
848,306 |
|
|
|
747,194 |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net |
|
|
238,141 |
|
|
|
233,263 |
|
|
Other assets |
|
|
123,428 |
|
|
|
123,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,209,875 |
|
|
$ |
1,104,155 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
|
Current portion of debt |
|
$ |
43,753 |
|
|
$ |
27,570 |
|
|
Accounts payable |
|
|
76,713 |
|
|
|
87,574 |
|
|
Other current liabilities |
|
|
119,867 |
|
|
|
143,552 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
240,333 |
|
|
|
258,696 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
206,800 |
|
|
|
207,300 |
|
|
Pension and postretirement liabilities |
|
|
52,206 |
|
|
|
55,019 |
|
|
Environmental reserves |
|
|
22,642 |
|
|
|
22,597 |
|
|
Deferred income taxes |
|
|
37,147 |
|
|
|
20,910 |
|
|
Other noncurrent liabilities |
|
|
1,104 |
|
|
|
1,667 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
560,232 |
|
|
|
566,189 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Mueller Industries, Inc. stockholders’ equity |
|
|
617,158 |
|
|
|
506,908 |
|
|
Noncontrolling interest |
|
|
32,485 |
|
|
|
31,058 |
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
649,643 |
|
|
|
537,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,209,875 |
|
|
$ |
1,104,155 |
|
|
|
|
|
|
|
|
|
|
|
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
For the Six Months Ended |
|
|||||
|
(In thousands) |
|
June 29, 2013 |
|
|
June 30, 2012 |
|
||
|
|
|
|
|
|
||||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
$ |
118,276 |
|
|
$ |
51,357 |
|
|
Reconciliation of consolidated net income to net cash |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
16,649 |
|
|
|
15,843 |
|
|
Stock-based compensation expense |
|
|
3,326 |
|
|
|
2,061 |
|
|
Insurance settlement |
|
|
(106,332 |
) |
|
|
(1,500 |
) |
|
Insurance proceeds – noncapital related |
|
|
32,395 |
|
|
|
9,000 |
|
|
(Gain) loss on disposal of properties |
|
|
(2,984 |
) |
|
|
106 |
|
|
Deferred income taxes |
|
|
12,468 |
|
|
|
(2,930 |
) |
|
Income tax benefit from exercise of stock options |
|
|
(95 |
) |
|
|
(83 |
) |
|
Changes in assets and liabilities |
|
|
|
|
|
|
|
|
|
Receivables |
|
|
(35,095 |
) |
|
|
(55,826 |
) |
|
Inventories |
|
|
4,705 |
|
|
|
(9,055 |
) |
|
Other assets |
|
|
(306 |
) |
|
|
(1,371 |
) |
|
Current liabilities |
|
|
6,150 |
|
|
|
9,121 |
|
|
Other liabilities |
|
|
(423 |
) |
|
|
285 |
|
|
Other, net |
|
|
420 |
|
|
|
270 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
49,154 |
|
|
|
17,278 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(21,687 |
) |
|
|
(23,433 |
) |
|
Insurance proceeds for property and equipment |
|
|
29,910 |
|
|
|
32,500 |
|
|
Net (deposits into) withdrawals from restricted cash balances |
|
|
(4,721 |
) |
|
|
4,368 |
|
|
Proceeds from the sales of properties |
|
|
3,016 |
|
|
|
175 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities |
|
|
6,518 |
|
|
|
13,610 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Repayments of long-term debt |
|
|
(500 |
) |
|
|
(148,676 |
) |
|
Dividends paid to stockholders of Mueller Industries, Inc. |
|
|
(6,960 |
) |
|
|
(7,605 |
) |
|
Debt issuance cost |
|
|
(50 |
) |
|
|
— |
|
|
Issuance (repayment) of debt by joint venture, net |
|
|
15,544 |
|
|
|
(15,842 |
) |
|
Net cash received to settle stock-based awards |
|
|
260 |
|
|
|
187 |
|
|
Income tax benefit from exercise of stock options |
|
|
95 |
|
|
|
83 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
8,389 |
|
|
|
(171,853 |
) |
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
(1,328 |
) |
|
|
483 |
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
|
62,733 |
|
|
|
(140,482 |
) |
|
Cash and cash equivalents at the beginning of the period |
|
|
198,934 |
|
|
|
514,162 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
|
$ |
261,667 |
|
|
$ |
373,680 |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
Impact of |
|
|
Pro forma |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
3.23 |
|
|
$ |
2.33 |
|
|
$ |
0.90 |
|
Released July 23, 2013