Mueller Industries, Inc. Reports First Quarter 2019 Earnings
COLLIERVILLE, Tenn.--(BUSINESS WIRE)-- Mueller Industries, Inc. (NYSE: MLI) announced today first quarter operating income of $49.2 million, compared with $47.4 million in the same quarter of 2018.
Due to losses on the Company's equity investments in unconsolidated affiliates and an increase in its effective tax rate, the Company reported lower net income for the first quarter of 2019 compared to the prior year quarter. Net income was $15.7 million, or 28 cents per diluted share, on $611.8 million in net sales, compared with net income of $24.1 million, or 42 cents per diluted share, on $640.1 million in net sales for the same quarter of 2018.
Financial and Operating Highlights:
- The net sales decline was due to lower selling prices and sales volumes in our Piping Systems and Industrial Metals segments. Copper prices, which largely influence these segments, were 11 percent lower in the first quarter of 2019 compared to the first quarter of 2018.
- The acquisition of ATCO was a primary driver of growth in the Climate Segment sales, but also contributed to the overall increase in SG&A expenses.
- We recorded a $14.6 million loss on our investment in Tecumseh Products Co. This includes $5.0 million in legal settlements and charges related to ongoing restructuring activities.
- The effective tax rate for the quarter was 23 percent compared to 18 percent in the prior year quarter.
- At quarter-end, the Company had $97.6 million in cash, a current ratio of 3.6 to 1, and debt to total capitalization of 49 percent.
Regarding the quarter and the outlook, Greg Christopher, Mueller CEO said, “Weakness in the Middle East resulted in lower export shipments by our Piping Systems segment, and a slow start to the year for U.S. industrial production impacted shipments in our Industrial Metals segment. Concerning Tecumseh, while the results are disappointing, Tecumseh is implementing a restructuring plan in 2019 to improve operations.”
He added, “Our outlook remains consistent with our 2018 year end expectations.”
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.
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MUELLER INDUSTRIES, INC. |
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| For the Quarter Ended | ||||||||||||
| (In thousands, except per share data) |
March 30, 2019 |
March 31, 2018 |
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| Net sales | $ | 611,781 | $ | 640,060 | ||||||||
| Cost of goods sold | 511,393 | 545,670 | ||||||||||
| Depreciation and amortization | 10,555 | 9,456 | ||||||||||
| Selling, general, and administrative expense | 40,653 | 34,057 | ||||||||||
| Asset impairment | — | 3,469 | ||||||||||
| Operating income | 49,180 | 47,408 | ||||||||||
| Interest expense | (6,954 | ) | (5,909 | ) | ||||||||
| Other (expense) income, net | (172 | ) | 560 | |||||||||
| Income before income taxes | 42,054 | 42,059 | ||||||||||
| Income tax expense | (9,546 | ) | (7,395 | ) | ||||||||
| Loss from unconsolidated affiliates, net of foreign tax | (15,369 | ) | (10,320 | ) | ||||||||
| Consolidated net income | 17,139 | 24,344 | ||||||||||
| Net income attributable to noncontrolling interests | (1,416 | ) | (216 | ) | ||||||||
| Net income attributable to Mueller Industries, Inc. | $ | 15,723 | $ | 24,128 | ||||||||
| Weighted average shares for basic earnings per share | 55,728 | 56,900 | ||||||||||
| Effect of dilutive stock-based awards | 526 | 517 | ||||||||||
| Adjusted weighted average shares for diluted earnings per share | 56,254 | 57,417 | ||||||||||
| Basic earnings per share | $ | 0.28 | $ | 0.42 | ||||||||
| Diluted earnings per share | $ | 0.28 | $ | 0.42 | ||||||||
| Dividends per share | $ | 0.10 | $ | 0.10 | ||||||||
| Summary Segment Data: | ||||||||||||
| Net sales: | ||||||||||||
| Piping Systems Segment | $ | 376,492 | $ | 430,964 | ||||||||
| Industrial Metals Segment | 150,875 | 177,332 | ||||||||||
| Climate Segment | 89,834 | 36,063 | ||||||||||
| Elimination of intersegment sales | (5,420 | ) | (4,299 | ) | ||||||||
| Net sales | $ | 611,781 | $ | 640,060 | ||||||||
| Operating income: | ||||||||||||
| Piping Systems Segment | $ | 28,249 | $ | 32,949 | ||||||||
| Industrial Metals Segment | 19,187 | 22,633 | ||||||||||
| Climate Segment | 12,386 | 5,547 | ||||||||||
| Unallocated expenses | (10,642 | ) | (13,721 | ) | ||||||||
| Operating income | $ | 49,180 | $ | 47,408 | ||||||||
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MUELLER INDUSTRIES, INC. |
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| (In thousands) |
March 30, 2019 |
December 29, 2018 |
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| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 97,596 | $ | 72,616 | ||||||
| Accounts receivable, net | 309,765 | 273,417 | ||||||||
| Inventories | 344,850 | 329,795 | ||||||||
| Other current assets | 32,322 | 26,790 | ||||||||
| Total current assets | 784,533 | 702,618 | ||||||||
| Property, plant, and equipment, net | 369,710 | 370,633 | ||||||||
| Operating lease right-of-use assets | 29,515 | — | ||||||||
| Other assets | 291,295 | 296,298 | ||||||||
| $ | 1,475,053 | $ | 1,369,549 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current portion of debt | $ | 5,001 | $ | 7,101 | ||||||
| Accounts payable | 107,301 | 103,754 | ||||||||
| Current portion of operating lease liabilities | 4,737 | — | ||||||||
| Other current liabilities | 103,490 | 121,946 | ||||||||
| Total current liabilities | 220,529 | 232,801 | ||||||||
| Long-term debt | 559,836 | 489,597 | ||||||||
| Pension and postretirement liabilities | 28,375 | 29,055 | ||||||||
| Environmental reserves | 20,025 | 20,009 | ||||||||
| Deferred income taxes | 18,940 | 16,615 | ||||||||
| Noncurrent operating lease liabilities | 25,437 | — | ||||||||
| Other noncurrent liabilities | 19,989 | 18,212 | ||||||||
| Total liabilities | 893,131 | 806,289 | ||||||||
| Total Mueller Industries, Inc. stockholders’ equity | 565,398 | 548,356 | ||||||||
| Noncontrolling interests | 16,524 | 14,904 | ||||||||
| Total equity | 581,922 | 563,260 | ||||||||
| $ | 1,475,053 | $ | 1,369,549 | |||||||
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MUELLER INDUSTRIES, INC. |
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| For the Quarter Ended | ||||||||||||
| (In thousands) |
March 30, 2019 |
March 31, 2018 |
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| Cash flows from operating activities | ||||||||||||
| Consolidated net income | $ | 17,139 | $ | 24,344 | ||||||||
| Reconciliation of consolidated net income to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | 10,635 | 9,536 | ||||||||||
| Stock-based compensation expense | 2,007 | 1,912 | ||||||||||
| Loss from unconsolidated affiliates | 15,369 | 10,320 | ||||||||||
| Loss (gain) on disposals of properties | 37 | (676 | ) | |||||||||
| Impairment charge | — | 3,469 | ||||||||||
| Deferred income tax benefit | (225 | ) | (940 | ) | ||||||||
| Changes in assets and liabilities, net of effects of business acquired: | ||||||||||||
| Receivables | (34,067 | ) | (72,843 | ) | ||||||||
| Inventories | (13,335 | ) | 3,504 | |||||||||
| Other assets | (7,530 | ) | 20,967 | |||||||||
| Current liabilities | (15,885 | ) | (23,898 | ) | ||||||||
| Other liabilities | 741 | (1,845 | ) | |||||||||
| Other, net | 441 | (365 | ) | |||||||||
| Net cash used in operating activities | (24,673 | ) | (26,515 | ) | ||||||||
| Cash flows from investing activities | ||||||||||||
| Capital expenditures | (6,834 | ) | (5,517 | ) | ||||||||
| Acquisition of business, net of cash acquired | — | (12,466 | ) | |||||||||
| Investments in unconsolidated affiliates | (8,000 | ) | (609 | ) | ||||||||
| Proceeds from sales of properties | 4 | 708 | ||||||||||
| Net cash used in investing activities | (14,830 | ) | (17,884 | ) | ||||||||
| Cash flows from financing activities | ||||||||||||
| Dividends paid to stockholders of Mueller Industries, Inc. | (5,574 | ) | (5,679 | ) | ||||||||
| Repurchase of common stock | (1,763 | ) | (6,575 | ) | ||||||||
| Issuance of long-term debt | 100,557 | 41,754 | ||||||||||
| Repayments of long-term debt | (30,472 | ) | (15,903 | ) | ||||||||
| Repayment of debt by consolidated joint ventures, net | (2,121 | ) | (3,342 | ) | ||||||||
| Net cash (used) received to settle stock-based awards | (175 | ) | 50 | |||||||||
| Net cash provided by financing activities | 60,452 | 10,305 | ||||||||||
| Effect of exchange rate changes on cash | 919 | 1,289 | ||||||||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | 21,868 | (32,805 | ) | |||||||||
| 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 | $ | 99,006 | $ | 93,758 | ||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190423005187/en/
Jeffrey A. Martin
(901) 753-3226
Source: Mueller Industries, Inc.
Released April 23, 2019