Mueller Industries, Inc. Reports Third Quarter 2018 Earnings
MEMPHIS, Tenn.--(BUSINESS WIRE)-- Mueller Industries, Inc. (NYSE: MLI) announced today third quarter operating income of $33.7 million, compared with $37.5 million in the same quarter of 2017.
Net income for the period was $20.3 million, or 35 cents per diluted share, on $646.0 million in net sales, compared with net income of $22.3 million, or 39 cents per diluted share, on $550.4 million in net sales for the same quarter of 2017.
Higher unit sales volume in our core metal businesses, as well as contributions from acquisitions, led to the higher net sales reported.
Financial and Operating Highlights for the third quarter of 2018 include:
- The average price of copper declined 36 cents per pound during the third quarter of 2018, resulting in a meaningful negative impact on margins. In contrast, the average price of copper rose 31 cents per pound during the third quarter of 2017, which benefited margins during that period.
- We recognized $2.3 million of nonrecurring charges in the third quarter of 2018 related to purchase accounting adjustments for recently acquired businesses.
- We posted $2.7 million of gains in the third quarter of 2018 from the sale of properties.
- We recorded a $3.1 million loss on the Company’s equity investments in unconsolidated affiliates.
- The effective tax rate for the quarter of 12.3 percent reflects an adjustment to true-up the transition tax on foreign earnings under the 2017 tax act. The annual effective tax rate for 2018 is expected to be approximately 22 percent.
- During the quarter, the Company generated $86.3 million in cash from operations and ended the quarter with a current ratio of 3.1 to 1.
Regarding the outlook, Greg Christopher, Mueller CEO said, “Our businesses’ performance was good in the third quarter, although reported earnings were impacted by movements in copper prices. On a LIFO basis, our businesses outperformed 2017 by most metrics, and cash generated from operations was solid. Volume in our mill businesses was strong, led by the recovery of market share in our U.S. copper tube businesses as we benefit from the completion of our modernization investments. As we continue to operate the new equipment more effectively, we expect to recognize the secondary rationalization benefits and achieve our targeted cost improvements.
The economic outlook for most of our markets and businesses remains solid.”
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 Memphis, 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. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
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| For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||
| (In thousands, except per share data) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | ||||||||||||||||
| Net sales | $ | 645,958 | $ | 550,363 | $ | 1,948,791 | $ | 1,742,549 | ||||||||||||
| Cost of goods sold | 566,956 | 471,262 | 1,676,446 | 1,484,000 | ||||||||||||||||
| Depreciation and amortization | 10,619 | 8,266 | 29,081 | 25,216 | ||||||||||||||||
| Selling, general, and administrative expense | 38,889 | 33,214 | 112,077 | 104,676 | ||||||||||||||||
| Asset impairments | — | — | — | 411 | ||||||||||||||||
| (Gain) loss on sale of assets | (2,691 | ) | 140 | (334 | ) | (1,491 | ) | |||||||||||||
| Insurance recovery | (1,486 | ) | — | (1,486 | ) | — | ||||||||||||||
| Operating income | 33,671 | 37,481 | 133,007 | 129,737 | ||||||||||||||||
| Interest expense | (6,746 | ) | (5,237 | ) | (18,728 | ) | (14,210 | ) | ||||||||||||
| Other income (expense), net | 411 | (380 | ) | 1,557 | 556 | |||||||||||||||
| Income before income taxes | 27,336 | 31,864 | 115,836 | 116,083 | ||||||||||||||||
| Income tax expense | (3,373 | ) | (8,716 | ) | (23,179 | ) | (33,295 | ) | ||||||||||||
| Loss from unconsolidated affiliates, net of foreign tax | (3,100 | ) | (394 | ) | (13,568 | ) | (1,746 | ) | ||||||||||||
| Consolidated net income | 20,863 | 22,754 | 79,089 | 81,042 | ||||||||||||||||
| Net income attributable to noncontrolling interests | (571 | ) | (496 | ) | (1,487 | ) | (1,164 | ) | ||||||||||||
| Net income attributable to Mueller Industries, Inc. | $ | 20,292 | $ | 22,258 | $ | 77,602 | $ | 79,878 | ||||||||||||
| Weighted average shares for basic earnings per share | 56,877 | 56,987 | 56,858 | 56,891 | ||||||||||||||||
| Effect of dilutive stock-based awards | 540 | 456 | 524 | 542 | ||||||||||||||||
| Adjusted weighted average shares for diluted earnings per share | 57,417 | 57,443 | 57,382 | 57,433 | ||||||||||||||||
| Basic earnings per share | $ | 0.36 | $ | 0.39 | $ | 1.36 | $ | 1.40 | ||||||||||||
| Diluted earnings per share | $ | 0.35 | $ | 0.39 | $ | 1.35 | $ | 1.39 | ||||||||||||
| Dividends per share | $ | 0.10 | $ | 0.10 | $ | 0.30 | $ | 8.30 | ||||||||||||
| Summary Segment Data: | ||||||||||||||||||||
| Net sales: | ||||||||||||||||||||
| Piping Systems Segment | $ | 410,525 | $ | 384,078 | $ | 1,294,672 | $ | 1,205,697 | ||||||||||||
| Industrial Metals Segment | 158,709 | 147,578 | 511,932 | 451,919 | ||||||||||||||||
| Climate Segment | 81,619 | 32,488 | 156,854 | 103,403 | ||||||||||||||||
| Elimination of intersegment sales | (4,895 | ) | (13,781 | ) | (14,667 | ) | (18,470 | ) | ||||||||||||
| Net sales | $ | 645,958 | $ | 550,363 | $ | 1,948,791 | $ | 1,742,549 | ||||||||||||
| Operating income: | ||||||||||||||||||||
| Piping Systems Segment | $ | 25,408 | $ | 20,941 | $ | 100,376 | $ | 86,323 | ||||||||||||
| Industrial Metals Segment | 15,111 | 22,698 | 53,837 | 59,434 | ||||||||||||||||
| Climate Segment | 5,774 | 5,429 | 16,668 | 17,155 | ||||||||||||||||
| Unallocated expenses | (12,622 | ) | (11,587 | ) | (37,874 | ) | (33,175 | ) | ||||||||||||
| Operating income | $ | 33,671 | $ | 37,481 | $ | 133,007 | $ | 129,737 | ||||||||||||
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MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
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| (In thousands) |
September 29, 2018 |
December 30, 2017 | ||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 104,735 | $ | 120,269 | ||||
| Accounts receivable, net | 308,231 | 244,795 | ||||||
| Inventories | 313,396 | 327,901 | ||||||
| Other current assets | 34,842 | 46,150 | ||||||
| Total current assets | 761,204 | 739,115 | ||||||
| Property, plant, and equipment, net | 360,655 | 304,321 | ||||||
| Other assets | 299,884 | 276,737 | ||||||
| $ | 1,421,743 | $ | 1,320,173 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current portion of debt | $ | 9,254 | $ | 16,480 | ||||
| Accounts payable | 121,412 | 102,503 | ||||||
| Other current liabilities | 113,617 | 123,269 | ||||||
| Total current liabilities | 244,283 | 242,252 | ||||||
| Long-term debt | 510,032 | 448,592 | ||||||
| Pension and postretirement liabilities | 26,844 | 28,713 | ||||||
| Environmental reserves | 21,339 | 23,699 | ||||||
| Deferred income taxes | 17,299 | 19,403 | ||||||
| Other noncurrent liabilities | 18,538 | 21,486 | ||||||
| Total liabilities | 838,335 | 784,145 | ||||||
| Total Mueller Industries, Inc. stockholders’ equity | 568,986 | 522,111 | ||||||
| Noncontrolling interests | 14,422 | 13,917 | ||||||
| Total equity | 583,408 | 536,028 | ||||||
| $ | 1,421,743 | $ | 1,320,173 | |||||
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MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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| For the Nine Months Ended | ||||||||||
| (In thousands) | September 29, 2018 | September 30, 2017 | ||||||||
| Cash flows from operating activities | ||||||||||
| Consolidated net income | $ | 79,089 | $ | 81,042 | ||||||
| Reconciliation of consolidated net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 29,320 | 25,439 | ||||||||
| Stock-based compensation expense | 5,953 | 5,555 | ||||||||
| Loss from unconsolidated affiliates | 13,568 | 1,746 | ||||||||
| Gain on sale of business | — | (1,491 | ) | |||||||
| Gain on disposals of properties | (247 | ) | (26 | ) | ||||||
| Gain on sales of securities | — | (611 | ) | |||||||
| Impairment charge | — | 411 | ||||||||
| Insurance recovery | (1,486 | ) | — | |||||||
| Deferred income taxes | (1,502 | ) | 624 | |||||||
| Changes in assets and liabilities, net of effects of businesses acquired and sold: | ||||||||||
| Receivables | (42,201 | ) | (33,359 | ) | ||||||
| Inventories | 48,716 | (40,920 | ) | |||||||
| Other assets | 11,250 | (3,372 | ) | |||||||
| Current liabilities | (7,947 | ) | 20,967 | |||||||
| Other liabilities | (13,862 | ) | (1,498 | ) | ||||||
| Other, net | 1,864 | (965 | ) | |||||||
| Net cash provided by operating activities | 122,515 | 53,542 | ||||||||
| Cash flows from investing activities | ||||||||||
| Capital expenditures | (16,685 | ) | (17,297 | ) | ||||||
| Acquisition of businesses, net of cash acquired | (167,677 | ) | (18,396 | ) | ||||||
| Proceeds from sale of business, net of cash sold | — | 17,483 | ||||||||
| Investments in unconsolidated affiliates | (609 | ) | (3,317 | ) | ||||||
| Proceeds from sales of properties | 18,693 | 11,732 | ||||||||
| Proceeds from sales of securities | — | 1,787 | ||||||||
| Net cash used in investing activities | (166,278 | ) | (8,008 | ) | ||||||
| Cash flows from financing activities | ||||||||||
| Dividends paid to stockholders of Mueller Industries, Inc. | (17,051 | ) | (191,241 | ) | ||||||
| Repurchase of common stock | (6,575 | ) | — | |||||||
| Issuance of long-term debt | 194,131 | — | ||||||||
| Repayments of long-term debt | (139,518 | ) | (100,917 | ) | ||||||
| Repayment of debt by consolidated joint ventures, net | (2,978 | ) | (3,451 | ) | ||||||
| Net cash used to settle stock-based awards | (726 | ) | (1,644 | ) | ||||||
| Dividends paid to noncontrolling interests | (592 | ) | (2,909 | ) | ||||||
| Net cash provided by (used in) financing activities | 26,691 | (300,162 | ) | |||||||
| Effect of exchange rate changes on cash | (442 | ) | 4,466 | |||||||
| Decrease in cash, cash equivalents, and restricted cash | (17,514 | ) | (250,162 | ) | ||||||
| Cash, cash equivalents, and restricted cash at the beginning of the period | 126,563 | 360,469 | ||||||||
| Cash, cash equivalents, and restricted cash at the end of the period | $ | 109,049 | $ | 110,307 | ||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20181023005258/en/
Mueller Industries, Inc.
Jeffrey A. Martin, 901-753-3226
Source: Mueller Industries, Inc.
Released October 23, 2018