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.
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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 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.
Released February 1, 2011