Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2010 Results

MEMPHIS, Tenn., Feb. 1, 2011 /PRNewswire/ -- Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller's net income in the fourth quarter was $17.7 million, or 47 cents per diluted share, on net sales of $526.9 million.  This compares with a net loss of $17.5 million, or a loss of 47 cents per diluted share, on net sales of $433.0 million in the fourth quarter of 2009.  The fourth quarter of 2009 included non-cash impairment charges of 74 cents per diluted share primarily related to goodwill.    

For the fiscal year ended December 25, 2010, Mueller earned $86.2 million, or $2.28 per diluted share, which includes insurance settlement gains of $23.3 million, or 62 cents per diluted share.  For fiscal 2009, the Company earned $4.7 million, or 12 cents per diluted share.  Net sales for 2010 were $2.06 billion compared with $1.55 billion in 2009.  

Financial and Operating Highlights

Regarding the fourth quarter and 2010 results, Mr. Karp said:

    --  "The increase in net sales in 2010 was largely due to the higher average
        cost of copper. The Comex average price of copper was $3.93 per pound in
        the fourth quarter of 2010, which compares with $3.03 per pound in the
        fourth quarter of 2009. Higher selling prices due to rising raw material
        values accounted for approximately $358 million of the increase in net
        sales primarily in the Plumbing & Refrigeration segment. Approximately
        $116 million of the increase in net sales was attributable to increased
        unit volume primarily in the OEM segment.


    --  "For the full year, our Plumbing & Refrigeration segment posted net
        sales of $1.12 billion and generated operating earnings of $83.7
        million, which includes insurance settlement gains of $22.7 million.
        This compares with operating earnings of $27.0 million on net sales of
        $892.1 million in 2009. For the fourth quarter of 2010, operating income
        was $12.0 million on net sales of $290.5 million, which compares with an
        operating loss of $11.2 million on net sales of $231.0 million in the
        fourth quarter of 2009. The fourth quarter of 2009 included non-cash
        impairment charges totaling $19.5 million that reduced operating
        earnings.


    --  "Our OEM segment posted operating earnings of $80.1 million during 2010
        on net sales of $958.9 million, which compares with operating earnings
        of $28.7 million on net sales of $664.1 million for 2009. For the fourth
        quarter of 2010, operating income was $24.1 million on net sales of
        $239.9 million, which compares with operating income of $10.4 million on
        net sales of $204.2 million in the fourth quarter of 2009. The fourth
        quarter of 2009 included non-cash impairment charges totaling $10.3
        million that reduced operating earnings.


    --  "Our current ratio was 4.7 to 1 and our working capital was $717.2
        million, of which almost $400 million was cash on hand, equal to $10.41
        per share.


    --  "As of year end, our financial leverage was modest with a debt to total
        capitalization ratio of 18.9 percent.


    --  "Stockholders' equity was $788.7 million which equates to a book value
        of $20.84 per share.


    --  "Capital expenditures during 2010 totaled $18.7 million. We expect to
        increase our funding of capital expenditures in 2011 due to operating
        improvement opportunities."


Business Outlook for 2011

Regarding the outlook for 2011, Mr. Karp said, "Overall, we are positive about Mueller's business outlook for 2011.  We have weathered two difficult years and have remained solidly profitable while gaining in financial strength.

"We do not underestimate the challenges.  We recognize that the residential construction industry continues to struggle, as job growth remains sluggish while home prices have declined.  However, on the positive side, the U.S. economy is growing again, mortgage rates are low, and consumer confidence has improved.  On balance, we believe housing starts will commence rising in 2011.

"The private non-residential construction sector, which includes offices, industrial and retail projects, declined by almost 25 percent in 2010 and over 15 percent in 2009.  This market is likely at or near a bottom, and we anticipate better times ahead.  All in all, we expect that most of the conditions that affect our businesses will gradually improve as 2011 progresses."

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 which includes office buildings, factories, hotels, hospitals, etc.


*****************************





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 OPERATIONS

(In thousands, except per share data)





                         For the Quarter Ended       For the Year Ended

                         December 25,  December 26,  December 25,  December 26,

                         2010          2009          2010          2009

                         (Unaudited)                 (Unaudited)



Net sales                $ 526,901     $ 432,977     $ 2,059,797   $ 1,547,225



Cost of goods sold       457,521       372,247       1,774,811     1,327,022

Depreciation and
amortization             9,992         10,292        40,364        41,568

Selling, general, and
administrative expense   31,610        27,593        131,211       116,660

Insurance settlements    (1,452)       -             (22,736)      -

Impairment charges       -             29,755        -             29,755



Operating income (loss)  29,230        (6,910)       136,147       32,220



Interest expense         (3,079)       (2,410)       (11,647)      (9,963)

Other (expense) income,
net                      (302)         184           (2,650)       872



Income (loss) before
income taxes             25,849        (9,136)       121,850       23,129

Income tax expense       (7,897)       (7,996)       (34,315)      (17,792)



Consolidated net income
(loss)                   17,952        (17,132)      87,535        5,337



Less net income
attributable to
noncontrolling interest  (206)         (395)         (1,364)       (662)



Net income (loss)
attributable to Mueller
Industries, Inc.         $ 17,746      $ (17,527)    $ 86,171      $ 4,675







Weighted average shares

for basic earnings
(loss) per share         37,717        37,584        37,672        37,336

Effect of dilutive stock
options                  157           -             97            88



Adjusted weighted
average shares

for diluted earnings
(loss) per share         37,874        37,584        37,769        37,424





Basic earnings (loss)
per share                $ 0.47        $ (0.47)      $ 2.29        $ 0.13





Diluted earnings (loss)
per share                $ 0.47        $ (0.47)      $ 2.28        $ 0.12





Dividends per share      $ 0.10        $ 0.10        $ 0.40        $ 0.40





Summary Segment Data:

Net sales:

Plumbing & Refrigeration
segment                  $ 290,500     $ 231,036     $ 1,115,614   $ 892,071

OEM segment              239,890       204,190       958,855       664,088

Elimination of
intersegment sales       (3,489)       (2,249)       (14,672)      (8,934)



Net sales                $ 526,901     $ 432,977     $ 2,059,797   $ 1,547,225



Operating income (loss):

Plumbing & Refrigeration
segment                  $ 11,957      $ (11,156)    $ 83,667      $ 27,043

OEM segment              24,060        10,410        80,117        28,725

Unallocated expenses     (6,787)       (6,164)       (27,637)      (23,548)



Operating income (loss)  $ 29,230      $ (6,910)     $ 136,147     $ 32,220






MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)







                                                    December 25,  December 26,

                                                    2010          2009

                                                    (Unaudited)

ASSETS

Cash and cash equivalents                           $ 394,139     $ 346,001

Accounts receivable, net                            269,258       228,739

Inventories                                         209,892       191,262

Other current assets                                39,025        42,841

Total current assets                                912,314       808,843



Property, plant, and equipment, net                 229,498       250,395

Other assets                                        117,184       120,903



                                                    $ 1,258,996   $ 1,180,141







LIABILITIES AND STOCKHOLDERS' EQUITY

Current portion of long-term debt                   $ 32,020      $ 24,325

Accounts payable                                    67,849        73,837

Other current liabilities                           95,258        85,208

Total current liabilities                           195,127       183,370



Long-term debt                                      158,226       158,226

Pension and postretirement liabilities              40,939        44,320

Environmental reserves                              23,902        23,268

Deferred income taxes                               24,081        31,128

Other noncurrent liabilities                        824           887



Total liabilities                                   443,099       441,199



Total Mueller Industries, Inc. stockholders' equity 788,736       713,167

Noncontrolling interest                             27,161        25,775



Total equity                                        815,897       738,942



                                                    $ 1,258,996   $ 1,180,141






MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



                                                     For the Year Ended

                                                     December 25,  December 26,

                                                     2010          2009

                                                     (Unaudited)

Operating activities:

Consolidated net income                              $ 87,535      $ 5,337

Reconciliation of consolidated net income

 to net cash provided by operating activities:

  Depreciation and amortization                      40,652        41,758

  Stock-based compensation expense                   2,877         2,633

  Insurance settlements                              (22,736)      -

  Insurance proceeds - noncapital related            5,561         7,338

  Loss on disposal of properties                     756           683

  Deferred income taxes                              (6,627)       (2,554)

  Income tax benefit from exercise of stock options  (145)         (203)

  Impairment charges                                 -             29,755

  Gain on early retirement of debt                   -             (128)

  Changes in assets and liabilities, net of business
  acquired:

               Receivables                           (41,731)      (6,482)

               Inventories                           (17,248)      22,699

               Other assets                          2,974         (505)

               Current liabilities                   4,913         (21,161)

               Other liabilities                     (623)         (1,808)

               Other, net                            199           26



Net cash provided by operating activities            56,357        77,388



Investing activities:

Capital expenditures                                 (18,678)      (13,942)

Business acquired                                    (2,021)       -

Insurance proceeds for property and equipment        18,798        -

Net (deposits in) withdrawals from restricted cash
balances                                             (156)         7,013

Proceeds from sales of properties                    71            611



Net cash used in investing activities                (1,986)       (6,318)



Financing activities:

Dividends paid                                       (15,074)      (14,944)

Repayment of debt by joint venture, net              6,848         131

Repayments of long-term debt                         -             (370)

Dividends paid to noncontrolling interest            (741)         (1,449)

Acquisition of treasury stock                        (418)         (870)

Issuance of shares under incentive stock option
plans

 from treasury                                       2,846         9,145

Income tax benefit from exercise of stock options    145           203



Net cash used in financing activities                (6,394)       (8,154)



Effect of exchange rate changes on cash              161           4,225



Increase in cash and cash equivalents                48,138        67,141



Cash and cash equivalents at the beginning of the
period                                               346,001       278,860



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






MUELLER INDUSTRIES, INC.

RECONCILIATION OF NET INCOME (LOSS) AS REPORTED TO NET INCOME

BEFORE INSURANCE SETTLEMENT AND IMPAIRMENT CHARGES

(In thousands, except per share data)



Earnings without insurance settlement and impairment charges is a
measurement not derived in accordance with generally accepted accounting
principles (GAAP). Excluding the insurance settlement and impairment
charges is useful as it measures the operating results that are the
outcome of daily operating decisions made in the normal course of
business. The insurance settlement resulted from reimbursement for losses
claimed as a result of a fire at our Fulton, Mississippi copper tube mill
in July 2009, the results of which are not impacted by daily operations
and are not expected to recur in future periods. Impairments reflect the
impact of long-term decisions and investments that were made in prior
periods. Reconciliation of earnings without insurance settlement and
impairment charges to net income as reported is as follows:







                                   For the Quarter Ended December 25, 2010

                                                           Pro forma

                                               Impact of   Without

                                   As          Insurance   Insurance

                                   Reported    Settlement  Settlement

                                   (Unaudited)



Operating income                   $ 29,230    $ (1,452)   $ 27,778



Interest expense                   (3,079)     -           (3,079)

Other expense, net                 (302)       -           (302)



Income before income taxes         25,849      (1,452)     24,397

Income tax expense                 (7,897)     555         (7,342)



Consolidated net income            17,952      (897)       17,055



Less net income attributable to
noncontrolling interest            (206)       -           (206)



Net income attributable to Mueller
Industries, Inc.                   $ 17,746    $ (897)     $ 16,849



Diluted earnings per share         $ 0.47      $ (0.02)    $ 0.45











                                   For the Quarter Ended December 26, 2009

                                                           Pro forma

                                               Impact of   Without

                                   As          Impairment  Impairment

                                   Reported    Charges     Charges

                                   (Unaudited)



Operating (loss) income            $ (6,910)   $ 29,755    $ 22,845



Interest expense                   (2,410)     -           (2,410)

Other income, net                  184         -           184



(Loss) income before income taxes  (9,136)     29,755      20,619

Income tax expense                 (7,996)     (1,807)     (9,803)



Consolidated net (loss) income     (17,132)    27,948      10,816



Less net income attributable to
noncontrolling interest            (395)       -           (395)



Net (loss) income attributable to
Mueller Industries, Inc.           $ (17,527)  $ 27,948    $ 10,421



Diluted (loss) earnings per share  $ (0.47)    $ 0.74      $ 0.27






MUELLER INDUSTRIES, INC.

RECONCILIATION OF NET INCOME AS REPORTED TO NET INCOME

BEFORE INSURANCE SETTLEMENTS AND IMPAIRMENT CHARGES

(In thousands, except per share data)



Earnings without insurance settlements and impairment charges is a
measurement not derived in accordance with generally accepted accounting
principles (GAAP). Excluding the insurance settlements and impairment
charges is useful as it measures the operating results that are the
outcome of daily operating decisions made in the normal course of
business. The insurance settlements resulted from reimbursement for losses
claimed as a result of fires at our U.K. copper tube mill in November
2008, and our Fulton, Mississippi copper tube mill in July 2009, the
results of which are not impacted by daily operations and are not expected
to recur in future periods. Impairments reflect the impact of long-term
decisions and investments that were made in prior periods. Reconciliation
of earnings without insurance settlements and impairment charges to net
income as reported is as follows:





                                   For the Year Ended December 25, 2010

                                                               Pro forma

                                              Impact of        Without

                                   As         Insurance        Insurance

                                   Reported   Settlements (A)  Settlements

                                   (Unaudited)



Operating income                   $ 136,147  $ (22,736)       $ 113,411



Interest expense                   (11,647)   -                (11,647)

Other expense, net                 (2,650)    -                (2,650)



Income before income taxes         121,850    (22,736)         99,114

Income tax expense                 (34,315)   (535)            (34,850)



Consolidated net income            87,535     (23,271)         64,264



Less net income attributable to
noncontrolling interest            (1,364)    -                (1,364)



Net income attributable to Mueller
Industries, Inc.                   $ 86,171   $ (23,271)       $ 62,900



Diluted earnings per share         $ 2.28     $ (0.62)         $ 1.66



(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.










                                   For the Year Ended December 26, 2009

                                                         Pro forma

                                             Impact of   Without

                                   As        Impairment  Impairment

                                   Reported  Charges     Charges

                                   (Unaudited)



Operating income                   $ 32,220  $ 29,755    $ 61,975



Interest expense                   (9,963)   -           (9,963)

Other expense, net                 872       -           872



Income before income taxes         23,129    29,755      52,884

Income tax expense                 (17,792)  (1,807)     (19,599)



Consolidated net income            5,337     27,948      33,285



Less net income attributable to
noncontrolling interest            (662)     -           (662)



Net income attributable to Mueller
Industries, Inc.                   $ 4,675   $ 27,948    $ 32,623



Diluted earnings per share         $ 0.12    $ 0.75      $ 0.87





SOURCE Mueller Industries, Inc.