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.

 
 
 
 
 

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 
        For the Quarter Ended
(In thousands, except per share data)

March 30,

2019

   

March 31,

2018

 
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  
 
 
 
 
 
 

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

 
(In thousands)        

March 30,

2019

   

December 29,

2018

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
 
 
 
 
 
 

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
        For the Quarter Ended
(In thousands)

March 30,

2019

   

March 31,

2018

 
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  
 
 
 
 

Jeffrey A. Martin
(901) 753-3226

Source: Mueller Industries, Inc.