Mueller Industries, Inc. Reports First Quarter 2018 Earnings
MEMPHIS, Tenn.--(BUSINESS WIRE)-- Mueller Industries, Inc. (NYSE: MLI) announced today operating income of $47.4 million for the first quarter of 2018, compared with $45.6 million in the same quarter last year. On an adjusted basis, excluding non-cash impairment charges, operating income was up 11.7 percent over 2017, $50.9 million versus $45.6 million respectively.
Net income for the period was $24.1 million, or 42 cents per diluted share, on $640.1 million in net sales, compared with net income of $30.0 million, or 52 cents per diluted share, on $577.9 million in net sales for the same quarter of 2017.
Financial and Operating Highlights for the first quarter of 2018:
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EPS was affected by:
- A $3.5 million pre-tax asset impairment charge.
- $5.3 million in net losses from our investment in Tecumseh Products Co. This includes a $2.4 million charge recorded to increase reserves for certain legal contingencies.
- $3.2 million in additional interest expense over the same period in 2017 due to the issuance of debentures in March of 2017.
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Net sales were impacted by:
- Higher selling prices, as a result of higher copper prices, the average price of copper was 18.5 percent (49 cents per pound) higher compared with the same period of 2017.
- A 6.4 percent increase in overall unit volume in the Company’s U.S. copper and brass businesses as our mills are beginning to operate more effectively.
- The absence of $26.0 million of net sales recorded in the first quarter of 2017 by MXR, a business the Company exited in June 2017.
- On March 31, 2018, the Company acquired Die-Mold Tool Limited, a manufacturer of plastic PEX fittings and plastic injection tooling, for approximately $12.5 million.
- The Company repurchased 250 thousand shares of its common stock at a cost of approximately $6.6 million.
- The effective tax rate of 17.6 percent reflects the impact of the new tax law and a $3.9 million benefit related to our investment in Tecumseh.
- At quarter end, the Company had $91.6 million of cash, a current ratio of 3.6 to 1, and debt to total capitalization of 46.9 percent.
Our outlook remains consistent with our most recent annual report. Greg Christopher, Mueller CEO, adds, “Our first quarter results were largely achieved because of improvement in our U.S. Brass Rod and Copper Tube mills, as the benefits of overcoming the operational challenges that plagued us in 2017 are realized. We are also pleased to complete the acquisition of Die-Mold. Their current capabilities and products will complement our PEX pipe manufacturing platform, as well as strengthen our bench in the pressure plastics arena.
"Tecumseh continues to be on a path of correction but heavy lifting remains to execute our restructuring plan. We will continue to monitor and review all alternatives.”
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, 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 | ||||||||
| (In thousands, except per share data) |
March 31, 2018 |
April 1, 2017 |
||||||
| Net sales | $ | 640,060 | $ | 577,920 | ||||
| Cost of goods sold | 545,670 | 488,427 | ||||||
| Depreciation and amortization | 9,456 | 8,355 | ||||||
| Selling, general, and administrative expense | 34,057 | 35,574 | ||||||
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Asset impairment |
3,469 | — | ||||||
| Operating income | 47,408 | 45,564 | ||||||
| Interest expense | (5,909 | ) | (2,531 | ) | ||||
| Other income, net | 560 | 594 | ||||||
| Income before income taxes | 42,059 | 43,627 | ||||||
| Income tax expense | (7,395 | ) | (11,929 | ) | ||||
| Loss from unconsolidated affiliates, net of tax | (10,320 | ) | (1,243 | ) | ||||
| Consolidated net income | 24,344 | 30,455 | ||||||
| Net income attributable to noncontrolling interests | (216 | ) | (468 | ) | ||||
| Net income attributable to Mueller Industries, Inc. | $ | 24,128 | $ | 29,987 | ||||
| Weighted average shares for basic earnings per share | 56,900 | 56,780 | ||||||
| Effect of dilutive stock-based awards | 517 | 658 | ||||||
| Adjusted weighted average shares for diluted earnings per share | 57,417 | 57,438 | ||||||
| Basic earnings per share | $ | 0.42 | $ | 0.53 | ||||
| Diluted earnings per share | $ | 0.42 | $ | 0.52 | ||||
| Dividends per share | $ | 0.100 | $ | 8.100 | ||||
| Summary Segment Data: | ||||||||
| Net sales: | ||||||||
| Piping Systems Segment | $ | 430,964 | $ | 398,775 | ||||
| Industrial Metals Segment | 177,332 | 149,837 | ||||||
| Climate Segment | 36,063 | 34,279 | ||||||
| Elimination of intersegment sales | (4,299 | ) | (4,971 | ) | ||||
| Net sales | $ | 640,060 | $ | 577,920 | ||||
| Operating income: | ||||||||
| Piping Systems Segment | $ | 32,949 | $ | 30,590 | ||||
| Industrial Metals Segment | 22,633 | 20,347 | ||||||
| Climate Segment | 5,547 | 5,610 | ||||||
| Unallocated expenses | (13,721 | ) | (10,983 | ) | ||||
| Operating income | $ | 47,408 | $ | 45,564 | ||||
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MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
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| (In thousands) |
March 31, 2018 |
December 30, 2017 |
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| ASSETS | ||||||||
| Cash and cash equivalents | $ | 91,573 | $ | 120,269 | ||||
| Accounts receivable, net | 321,756 | 244,795 | ||||||
| Inventories | 329,231 | 327,901 | ||||||
| Other current assets | 20,267 | 46,150 | ||||||
| Total current assets | 762,827 | 739,115 | ||||||
| Property, plant, and equipment, net | 300,074 | 304,321 | ||||||
| Other assets | 273,943 | 276,737 | ||||||
| $ | 1,336,844 | $ | 1,320,173 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current portion of debt | $ | 9,087 | $ | 16,480 | ||||
| Accounts payable | 115,425 | 102,503 | ||||||
| Other current liabilities | 88,812 | 123,269 | ||||||
| Total current liabilities | 213,324 | 242,252 | ||||||
| Long-term debt | 478,778 | 448,592 | ||||||
| Pension and postretirement liabilities | 28,149 | 28,713 | ||||||
| Environmental reserves | 23,091 | 23,699 | ||||||
| Deferred income taxes | 18,807 | 19,403 | ||||||
| Other noncurrent liabilities | 21,630 | 21,486 | ||||||
| Total liabilities | 783,779 | 784,145 | ||||||
| Total Mueller Industries, Inc. stockholders’ equity | 538,755 | 522,111 | ||||||
| Noncontrolling interests | 14,310 | 13,917 | ||||||
| Total equity | 553,065 | 536,028 | ||||||
| $ | 1,336,844 | $ | 1,320,173 | |||||
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MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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| For the Quarter Ended | |||||||||
| (In thousands) |
March 31, 2018 |
April 1, 2017 |
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| Cash flows from operating activities | |||||||||
| Consolidated net income | $ | 24,344 | $ | 30,455 | |||||
| Reconciliation of consolidated net income to net cash used in operating activities: | |||||||||
| Depreciation and amortization | 9,536 | 8,419 | |||||||
| Stock-based compensation expense | 1,912 | 1,736 | |||||||
| Loss from unconsolidated affiliates | 10,320 | 1,243 | |||||||
| Gain on disposals of properties | (676 | ) | (16 | ) | |||||
| Gain on sales of securities | — | (254 | ) | ||||||
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Impairment charge |
3,469 | — | |||||||
| Deferred income taxes | (940 | ) | (80 | ) | |||||
| Changes in assets and liabilities: | |||||||||
| Receivables | (72,843 | ) | (53,756 | ) | |||||
| Inventories | 3,504 | (6,991 | ) | ||||||
| Other assets | 20,967 | 1,205 | |||||||
| Current liabilities | (23,898 | ) | 8,215 | ||||||
| Other liabilities | (1,845 | ) | (668 | ) | |||||
| Other, net | (365 | ) | (930 | ) | |||||
| Net cash used in operating activities | (26,515 | ) | (11,422 | ) | |||||
| Cash flows from investing activities | |||||||||
| Capital expenditures | (5,517 | ) | (7,345 | ) | |||||
| Acquisition of businesses, net of cash acquired | (12,466 | ) | — | ||||||
| Investment in unconsolidated affiliates | (609 | ) | — | ||||||
| Proceeds from sales of properties | 708 | 192 | |||||||
| Proceeds from sales of securities | — | 1,444 | |||||||
| Net cash used in investing activities | (17,884 | ) | (5,709 | ) | |||||
| Cash flows from financing activities | |||||||||
| Dividends paid to stockholders of Mueller Industries, Inc. | (5,679 | ) | (179,848 | ) | |||||
| Repurchase of common stock | (6,575 | ) | — | ||||||
| Issuance of long-term debt | 41,754 | — | |||||||
| Repayments of long-term debt | (15,903 | ) | (306 | ) | |||||
| Repayment of debt by consolidated joint ventures, net | (3,342 | ) | (7,367 | ) | |||||
| Net cash received (used) to settle stock-based awards | 50 | (870 | ) | ||||||
| Net cash provided by (used in) financing activities | 10,305 | (188,391 | ) | ||||||
| Effect of exchange rate changes on cash | 1,289 | 2,499 | |||||||
| Decrease in cash, cash equivalents, and restricted cash | (32,805 | ) | (203,023 | ) | |||||
| 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 | $ | 93,758 | $ | 157,446 | |||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180424005329/en/
Mueller Industries, Inc.
Jeffrey A. Martin, 901-753-3226
Source: Mueller Industries, Inc.
Released April 24, 2018