Mueller Industries, Inc. Reports Second Quarter 2019 Earnings

COLLIERVILLE, Tenn.--(BUSINESS WIRE)-- Mueller Industries, Inc. (NYSE: MLI) announced today second quarter operating income of $51.5 million, compared with $51.9 million in the same quarter of 2018.

Net income was $28.0 million, or 50 cents per diluted share, on $666.4 million in net sales, compared with net income of $33.2 million, or 58 cents per diluted share, on $662.8 million in net sales for the same quarter of 2018.

Financial and Operating Highlights:

  • We recorded a $5.3 million loss on our investment in Tecumseh Products Co. in the second quarter of 2019, which narrowed significantly from the first quarter of 2019. On an as adjusted basis, excluding the loss, diluted earnings per share would have been 58 cents in the second quarter.
  • Consolidated net sales, as well as earnings in our FIFO businesses, were negatively impacted by the decline in copper during the quarter. Copper declined 22 cents per pound during the quarter and was, on average, 10 percent lower in the second quarter of 2019 compared with the second quarter of 2018.
  • Weaker demand from certain export markets and our industrial customer base impacted shipments in both the Piping Systems and Industrial Metals segments.
  • Cash generated from operations was $88.7 million in the second quarter and debt repayments totaled $82.5 million. Quarter-end cash on hand was $91.4 million, debt to total capitalization was 44 percent, and the current ratio was 3.2 to 1.

Regarding the quarter and the outlook, Greg Christopher, Mueller CEO said, “Considering the impact of softness in our export and industrial end-markets, as well as the negative effect of copper this quarter, these are healthy results. Demand in our businesses remains steady.”

He added, “Once again, charges taken for Tecumseh reduced our net income, but Tecumseh's results for the quarter improved over our first quarter, a trend we believe will continue.”

Mueller Industries, Inc. is an industrial manufacturer that specializes in copper and copper alloy manufacturing while also producing goods made from aluminum, steel, and plastics. It is headquartered in Collierville, Tennessee and comprises a network of operations in the United States, Canada, Mexico, Great Britain, South Korea, the Middle East, and China. Its products include tubing, fittings, valves, vessels, and related items for plumbing and HVACR related piping systems, as well as rod, forgings, extrusions, and various components for OEM applications. Products are distributed into sectors such as building construction, appliance, defense, energy, and automotive.

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,” “encourage,” “anticipate,” “appear,” 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.

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, 2019

 

June 30, 2018

 

June 29, 2019

 

June 30, 2018

 

 

 

 

 

 

 

 

 

Net sales

 

$

666,394

 

 

$

662,773

 

 

$

1,278,175

 

 

$

1,302,833

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

563,948

 

 

563,820

 

 

1,075,341

 

 

1,109,490

 

Depreciation and amortization

 

10,478

 

 

9,006

 

 

21,033

 

 

18,462

 

Selling, general, and administrative expense

 

40,446

 

 

38,428

 

 

81,099

 

 

72,485

 

(Gain) loss on sale of assets

 

 

 

(409

)

 

 

 

3,060

 

 

 

 

 

 

 

 

 

 

Operating income

 

51,522

 

 

51,928

 

 

100,702

 

 

99,336

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(7,033

)

 

(6,073

)

 

(13,987

)

 

(11,982

)

Other income, net

 

462

 

 

586

 

 

290

 

 

1,146

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

44,951

 

 

46,441

 

 

87,005

 

 

88,500

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(10,432

)

 

(12,411

)

 

(19,978

)

 

(19,806

)

Loss from unconsolidated affiliates, net of foreign tax

 

(5,843

)

 

(148

)

 

(21,212

)

 

(10,468

)

 

 

 

 

 

 

 

 

 

Consolidated net income

 

28,676

 

 

33,882

 

 

45,815

 

 

58,226

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(690

)

 

(700

)

 

(2,106

)

 

(916

)

 

 

 

 

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

 

$

27,986

 

 

$

33,182

 

 

$

43,709

 

 

$

57,310

 

 

 

 

 

 

 

 

 

 

Weighted average shares for basic earnings per share

 

55,753

 

 

56,797

 

 

55,741

 

 

56,848

 

Effect of dilutive stock-based awards

 

561

 

 

514

 

 

543

 

 

516

 

 

 

 

 

 

 

 

 

 

Adjusted weighted average shares for diluted earnings per share

 

56,314

 

 

57,311

 

 

56,284

 

 

57,364

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.50

 

 

$

0.58

 

 

$

0.78

 

 

$

1.01

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.50

 

 

$

0.58

 

 

$

0.78

 

 

$

1.00

 

 

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.10

 

 

$

0.10

 

 

$

0.20

 

 

$

0.20

 

 

 

 

 

 

 

 

 

 

Summary Segment Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

Piping Systems Segment

 

$

425,865

 

 

$

453,183

 

 

$

802,357

 

 

$

884,147

 

Industrial Metals Segment

 

147,719

 

 

175,891

 

 

298,594

 

 

353,223

 

Climate Segment

 

96,081

 

 

39,172

 

 

185,915

 

 

75,235

 

Elimination of intersegment sales

 

(3,271

)

 

(5,473

)

 

(8,691

)

 

(9,772

)

 

 

 

 

 

 

 

 

 

Net sales

 

$

666,394

 

 

$

662,773

 

 

$

1,278,175

 

 

$

1,302,833

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

Piping Systems Segment

 

$

35,896

 

 

$

42,019

 

 

$

64,145

 

 

$

74,968

 

Industrial Metals Segment

 

14,911

 

 

16,093

 

 

34,098

 

 

38,726

 

Climate Segment

 

13,035

 

 

5,347

 

 

25,421

 

 

10,894

 

Unallocated expenses

 

(12,320

)

 

(11,531

)

 

(22,962

)

 

(25,252

)

 

 

 

 

 

 

 

 

 

Operating income

 

$

51,522

 

 

$

51,928

 

 

$

100,702

 

 

$

99,336

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

June 29,
2019

 

December 29,

2018

ASSETS

 

 

 

 

Cash and cash equivalents

 

$

91,440

 

$

72,616

Accounts receivable, net

 

316,806

 

273,417

Inventories

 

300,391

 

329,795

Other current assets

 

25,867

 

26,790

 

 

 

 

 

Total current assets

 

734,504

 

702,618

 

 

 

 

 

Property, plant, and equipment, net

 

365,025

 

370,633

Operating lease right-of-use assets

 

28,590

 

Other assets

 

288,949

 

296,298

 

 

 

 

 

 

 

$

1,417,068

 

$

1,369,549

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current portion of debt

 

$

2,891

 

$

7,101

Accounts payable

 

106,055

 

103,754

Current portion of operating lease liabilities

 

4,754

 

Other current liabilities

 

113,054

 

121,946

 

 

 

 

 

Total current liabilities

 

226,754

 

232,801

 

 

 

 

 

Long-term debt

 

479,276

 

489,597

Pension and postretirement liabilities

 

28,099

 

29,055

Environmental reserves

 

19,904

 

20,009

Deferred income taxes

 

18,595

 

16,615

Noncurrent operating lease liabilities

 

24,491

 

Other noncurrent liabilities

 

15,587

 

18,212

 

 

 

 

 

Total liabilities

 

812,706

 

806,289

 

 

 

 

 

Total Mueller Industries, Inc. stockholders’ equity

 

588,271

 

548,356

Noncontrolling interests

 

16,091

 

14,904

 

 

 

 

 

Total equity

 

604,362

 

563,260

 

 

 

 

 

 

 

$

1,417,068

 

$

1,369,549

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

For the Six Months Ended

(In thousands)

 

June 29, 2019

 

June 30, 2018

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

Consolidated net income

 

$

45,815

 

 

$

58,226

 

Reconciliation of consolidated net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

21,192

 

 

18,622

 

Stock-based compensation expense

 

4,302

 

 

3,906

 

Loss from unconsolidated affiliates

 

21,212

 

 

10,468

 

(Gain) loss on disposals of properties

 

(37

)

 

2,646

 

Deferred income tax benefit

 

(67

)

 

(1,260

)

Changes in assets and liabilities, net of effects of business acquired:

 

 

 

 

Receivables

 

(42,145

)

 

(90,345

)

Inventories

 

30,080

 

 

33,357

 

Other assets

 

(4,617

)

 

12,405

 

Current liabilities

 

(9,735

)

 

(11,566

)

Other liabilities

 

(1,485

)

 

(1,361

)

Other, net

 

(532

)

 

1,121

 

 

 

 

 

 

Net cash provided by operating activities

 

63,983

 

 

36,219

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

(13,034

)

 

(10,882

)

Acquisition of business, net of cash acquired

 

3,465

 

 

(12,467

)

Investments in unconsolidated affiliates

 

(10,500

)

 

(609

)

Proceeds from sales of properties

 

351

 

 

11,376

 

 

 

 

 

 

Net cash used in investing activities

 

(19,718

)

 

(12,582

)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Dividends paid to stockholders of Mueller Industries, Inc.

 

(11,151

)

 

(11,360

)

Repurchase of common stock

 

(1,763

)

 

(6,575

)

Issuance of long-term debt

 

100,638

 

 

193,247

 

Repayments of long-term debt

 

(110,914

)

 

(37,107

)

Repayment of debt by consolidated joint ventures, net

 

(4,132

)

 

(3,100

)

Net cash (used) received to settle stock-based awards

 

(127

)

 

103

 

Dividends paid to noncontrolling interests

 

 

 

(592

)

 

 

 

 

 

Net cash (used in) provided by financing activities

 

(27,449

)

 

134,616

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

118

 

 

(368

)

 

 

 

 

 

Increase in cash, cash equivalents, and restricted cash

 

16,934

 

 

157,885

 

Cash, cash equivalents, and restricted cash at the beginning of the period

 

77,138

 

 

126,563

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash at the end of the period

 

$

94,072

 

 

$

284,448

 

MUELLER INDUSTRIES, INC.

Reconciliation of Net Income as Reported to Non-GAAP Financial Measures Without Loss (Gain) from the Unconsolidated Affiliate Tecumseh Products

(Unaudited)

Earnings attributable to normal operations without the loss (gain) from Tecumseh Products (Tecumseh) is a measurement not derived in accordance with generally accepted accounting principles (GAAP). Excluding the loss (gain) 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 loss (gain) from Tecumseh to net income as reported is as follows:
 

(In thousands, except per share data)

 

For the Quarter Ended June 29, 2019

 

 

As Reported

(GAAP)

 

Loss from

Tecumseh

 

As Adjusted

(Non-GAAP)

 

 

 

 

 

 

 

Income before income taxes

 

$

44,951

 

 

$

 

 

$

44,951

 

 

 

 

 

 

 

 

Income tax expense

 

(10,432

)

 

(377

)

 

(10,809

)

Loss from unconsolidated affiliates, net of foreign tax

 

(5,843

)

 

5,256

 

 

(587

)

 

 

 

 

 

 

 

Consolidated net income

 

28,676

 

 

4,879

 

 

33,555

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(690

)

 

 

 

(690

)

 

 

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

 

$

27,986

 

 

$

4,879

 

 

$

32,865

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.50

 

 

 

 

$

0.58

 

 

 

 

 

 

 

 

(In thousands, except per share data)

 

For the Quarter Ended June 30, 2018

 

 

As Reported

(GAAP)

 

Gain from

Tecumseh

 

As Adjusted

(Non-GAAP)

 

 

 

 

 

 

 

Income before income taxes

 

$

46,441

 

 

$

 

 

$

46,441

 

 

 

 

 

 

 

 

Income tax expense

 

(12,411

)

 

231

 

 

(12,180

)

Loss from unconsolidated affiliates, net of foreign tax

 

(148

)

 

(235

)

 

(383

)

 

 

 

 

 

 

 

Consolidated net income

 

33,882

 

 

(4

)

 

33,878

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(700

)

 

 

 

(700

)

 

 

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

 

$

33,182

 

 

$

(4

)

 

$

33,178

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.58

 

 

 

 

$

0.58

 

 

Jeffrey A. Martin
(901) 753-3226

Source: Mueller Industries, Inc.