Mueller Industries, Inc. Reports Forty-Four Percent Increase in Second Quarter 2011 Earnings

MEMPHIS, Tenn., July 26, 2011 /PRNewswire/ -- Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller's net income in the second quarter of 2011 was $22.3 million, or 59 cents per diluted share.  This compares with net income of $15.6 million, or 41 cents per diluted share, for the same period of 2010.  Net sales for the second quarter of 2011 were $652.9 million compared with $540.4 million in the second quarter of 2010.  

For the first half of 2011, net income was $62.9 million, or $1.65 per diluted share, on net sales of $1.34 billion.  This compares with net income of $49.5 million, or $1.31 per diluted share, on net sales of $1.03 billion for the first half of 2010.  The year-to-date results of both 2011 and 2010 include unusual items in net income.  For the 2011 period, income of 18 cents per diluted share was included, resulting from the favorable settlement of a legal action.  And, in 2010, income of 58 cents per diluted share was included in net income, resulting from an insurance claim.  Excluding these unusual items, Mueller's net income for the first half of 2011 was $56.1 million, or $1.47 per diluted share, compared with $27.6 million, or 73 cents per diluted share, for the first half of 2010.

Financial and Operating Highlights

Regarding the second quarter of 2011, Mr. Karp said:

    --  "Our Plumbing & Refrigeration segment posted operating earnings of $24.8
        million on net sales of $347.1 million which compares with prior year
        earnings of $19.7 million on net sales of $285.7 million. Improved
        results were due to better spreads.
    --  "Our OEM segment posted operating earnings of $18.8 million during the
        second quarter of 2011 on net sales of $314.1 million, which compares
        with operating earnings of $16.9 million on net sales of $257.8 million
        for the same period in 2010.
    --  "Our financial condition remains strong. We ended the quarter with
        $345.0 million in cash equal to $9.11 per share. In preparation for a
        major maintenance program at our Fulton, Mississippi, copper tube mill,
        we increased inventory by more than 15 million pounds to ensure
        uninterrupted supply for our customers; accordingly, we used in excess
        of $60 million cash to fund this temporary bulge in inventory
        quantities.
    --  "Total stockholders' equity was $854.3 million.
    --  "Our current ratio was 4.4 to 1, and our financial leverage is
        conservative with a debt to total capitalization ratio of 19 percent.
    --  "The Comex average price of copper was $4.16 per pound in the second
        quarter of 2011, which compares with $3.19 in the second quarter of
        2010. Higher selling prices due to rising material values accounted for
        approximately $90 million of the increase in net sales primarily in the
        Plumbing & Refrigeration segment."


Business Outlook

Regarding the outlook, Mr. Karp said, "The construction industry continues to struggle in the face of high unemployment, foreclosures, and a weak economic recovery.  Nonetheless, we believe we are at or near the cyclical lows.  We are well prepared to ramp-up production when the recovery gains momentum.  Mueller's performance in the first half was gratifying."

Mueller Industries, Inc. is a leading manufacturer of copper tube and fittings; brass and copper alloy rod, bar and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; plastic fittings and valves; refrigeration valves and fittings; and fabricated tubular products.  Mueller's operations are located throughout the United States and in Canada, Mexico, Great Britain, and China. Mueller's business is importantly linked to:  (1) the construction of new homes; (2) the improvement and reconditioning of existing homes and structures; and (3) the commercial construction market that includes office buildings, factories, hotels, hospitals, etc.


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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," 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

(In thousands, except per share data)





                               For the Quarter Ended  For the Six Months Ended

                               July 2,    June 26,    July 2,      June 26,

                               2011       2010        2011         2010

                               (Unaudited)            (Unaudited)



Net sales                      $ 652,923  $ 540,388   $ 1,340,604  $ 1,025,656



Cost of goods sold             573,877    466,645     1,163,751    879,693

Depreciation and amortization  9,166      10,090      18,865       20,438

Selling, general, and
administrative expense         33,330     33,468      68,699       70,791

Litigation settlement          -          -           (10,500)     -

Insurance settlement           -          1,210       -            (21,296)



Operating income               36,550     28,975      99,789       76,030



Interest expense               (2,834)    (2,964)     (6,182)      (5,496)

Other income (expense), net    264        (2,518)     1,323        (2,378)



Income before income taxes     33,980     23,493      94,930       68,156



Income tax expense             (11,249)   (7,456)     (31,657)     (17,320)



Consolidated net income        22,731     16,037      63,273       50,836



Net income attributable to
noncontrolling interest        (400)      (479)       (355)        (1,320)



Net income attributable to
Mueller Industries, Inc.       $ 22,331   $ 15,558    $ 62,918     $ 49,516



Weighted average shares

for basic earnings per share   37,737     37,674      37,730       37,631

Effect of dilutive stock-based
awards                         356        43          309          69



Adjusted weighted average
shares

for diluted earnings per share 38,093     37,717      38,039       37,700



Basic earnings per share       $ 0.59     $ 0.41      $ 1.67       $ 1.32



Diluted earnings per share     $ 0.59     $ 0.41      $ 1.65       $ 1.31



Dividends per share            $ 0.10     $ 0.10      $ 0.20       $ 0.20



Summary Segment Data:

Net sales:

Plumbing & Refrigeration
Segment                        $ 347,069  $ 285,717   $ 727,658    $ 542,379

OEM Segment                    314,086    257,780     633,422      489,984

Elimination of intersegment
sales                          (8,232)    (3,109)     (20,476)     (6,707)



Net sales                      $ 652,923  $ 540,388   $ 1,340,604  $ 1,025,656



Operating income:

Plumbing & Refrigeration
Segment                        $ 24,790   $ 19,740    $ 54,473     $ 60,199

OEM Segment                    18,816     16,932      48,462       33,063

Unallocated expenses           (7,056)    (7,697)     (3,146)      (17,232)



Operating income               $ 36,550   $ 28,975    $ 99,789     $ 76,030






MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)







                                                    July 2,      December 25,

                                                    2011         2010

                                                    (Unaudited)

ASSETS

Cash and cash equivalents                           $ 345,039    $ 394,139

Accounts receivable, net                            327,381      269,258

Inventories                                         296,999      209,892

Other current assets                                47,144       39,025



Total current assets                                1,016,563    912,314



Property, plant, and equipment, net                 223,234      229,498

Other assets                                        118,747      117,184



                                                    $ 1,358,544  $ 1,258,996







LIABILITIES AND STOCKHOLDERS' EQUITY

Current portion of debt                             $ 50,582     $ 32,020

Accounts payable                                    86,574       67,849

Other current liabilities                           94,496       95,258



Total current liabilities                           231,652      195,127



Long-term debt                                      156,976      158,226

Pension and postretirement liabilities              40,558       40,939

Environmental reserves                              23,232       23,902

Deferred income taxes                               21,813       24,081

Other noncurrent liabilities                        1,877        824



Total liabilities                                   476,108      443,099



Total Mueller Industries, Inc. stockholders' equity 854,305      788,736

Noncontrolling interest                             28,131       27,161



Total equity                                        882,436      815,897



                                                    $ 1,358,544  $ 1,258,996






MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



                                                     For the Six Months Ended

                                                     July 2,    June 26,

                                                     2011       2010

                                                     (Unaudited)

Operating activities:

Consolidated net income                              $ 63,273   $ 50,836

Reconciliation of net income to net cash (used in)

 provided by operating activities:

  Depreciation and amortization                      18,999     20,554

  Stock-based compensation expense                   1,712      1,435

  (Gain) loss on disposal of properties              (275)      164

  Insurance settlement                               -          (21,296)

  Insurance proceeds - noncapital related            -          5,561

  Deferred income taxes                              (2,549)    (4,370)

  Income tax benefit from exercise of stock options  (90)       (88)

  Changes in assets and liabilities, net of business
  acquired:

  Receivables                                        (55,010)   (60,819)

  Inventories                                        (78,966)   4,796

  Other assets                                       (4,398)    6,979

  Current liabilities                                17,199     26,129

  Other liabilities                                  768        2,870

  Other, net                                         433        (363)



Net cash (used in) provided by operating activities  (38,904)   32,388



Investing activities:

Capital expenditures                                 (8,743)    (9,286)

Acquisition of business                              (6,882)    -

Insurance proceeds                                   -          17,703

Proceeds from sales of properties                    151        23

Net (deposits into) withdrawals from restricted cash
balances                                             (3,877)    11



Net cash (used in) provided by investing activities  (19,351)   8,451



Financing activities:

Dividends paid                                       (7,546)    (7,529)

Debt issuance costs                                  (1,942)    -

Issuance of shares under stock-based incentive plans

 from treasury                                       1,335      2,465

Income tax benefit from exercise of stock options    90         88

Acquisition of treasury stock                        (743)      (75)

Repayments of long-term debt                         (250)      -

Issuance of debt by joint venture, net               16,498     16,431



Net cash provided by financing activities            7,442      11,380



Effect of exchange rate changes on cash              1,713      (1,065)



(Decrease) increase in cash and cash equivalents     (49,100)   51,154



Cash and cash equivalents at the beginning of the
period                                               394,139    346,001



Cash and cash equivalents at the end of the period   $ 345,039  $ 397,155






MUELLER INDUSTRIES, INC.

RECONCILIATION OF NET INCOME AS REPORTED

TO NET INCOME BEFORE LITIGATION SETTLEMENT AND INSURANCE SETTLEMENT

(In thousands, except per share data)



Earnings without the litigation settlement in 2011 and without the
insurance settlement in 2010 is a measurement not derived in accordance
with generally accepted accounting principles (GAAP). Excluding the
litigation settlement and insurance settlement is useful as it measures
the operating results that are the outcome of daily operating decisions
made in the normal course of business. The litigation settlement resulted
from the collection of proceeds from the lawsuit against Peter Berkman,
Jeffrey Berkman, and Homewerks Worldwide LLC. The insurance settlement
resulted from the final settlement for losses claimed as a result of a
fire at our U.K. subsidiary in November 2008, the results of which are
not impacted by daily operations and are not expected to recur in future
periods. Reconciliations of earnings without the litigation settlement
and insurance settlement to net income as reported are as follows:

                                   For the Six Months Ended July 2, 2011

                                                         Pro forma

                                             Impact of   Without

                                   As        Litigation  Litigation

                                   Reported  Settlement  Settlement

                                   (Unaudited)



Operating income                   $ 99,789  $ (10,500)  $ 89,289



Interest expense                   (6,182)   -           (6,182)

Other income, net                  1,323     -           1,323



Income before income taxes         94,930    (10,500)    84,430

Income tax expense                 (31,657)  3,675       (27,982)



Consolidated net income            63,273    (6,825)     56,448



Net income attributable to
noncontrolling interest            (355)     -           (355)



Net income attributable to Mueller
Industries, Inc.                   $ 62,918  $ (6,825)   $ 56,093





Diluted earnings per share         $ 1.65    $ (0.18)    $ 1.47





                                   For the Six Months Ended June 26, 2010

                                                         Pro forma

                                             Impact of   Without

                                   As        Insurance   Insurance

                                   Reported  Settlement  Settlement

                                   (Unaudited)



Operating income                   $ 76,030  $ (21,296)  $ 54,734



Interest expense                   (5,496)   -           (5,496)

Other expense, net                 (2,378)   -           (2,378)



Income before income taxes         68,156    (21,296)    46,860

Income tax expense (Note A)        (17,320)  (618)       (17,938)



Consolidated net income            50,836    (21,914)    28,922



Net income attributable to
noncontrolling interest            (1,320)   -           (1,320)



Net income attributable to Mueller
Industries, Inc.                   $ 49,516  $ (21,914)  $ 27,602





Diluted earnings per share         $ 1.31    $ (0.58)    $ 0.73





(A) Realization of this insurance settlement resulted in a tax benefit
primarily from the utilization of U.K. net operating losses that were
previously reserved.





SOURCE Mueller Industries, Inc.