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:

  • 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.
  • 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.

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 
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

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  
       

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
(In thousands)

March 31,

2018

 

December 30,

2017

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
   

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
For the Quarter Ended
(In thousands) March 31,
2018
  April 1,
2017
 
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 )

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  

Mueller Industries, Inc.
Jeffrey A. Martin, 901-753-3226

Source: Mueller Industries, Inc.