Mueller Industries, Inc. Reports Third Quarter Results
MEMPHIS, Tenn., Oct. 19 /PRNewswire-FirstCall/ --
Quarterly and Year-to-Date Earnings
Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller's net income in the third quarter was $18.9 million, or 50 cents per diluted share, on net sales of $507.2 million. This compares with net income of $18.7 million, or 50 cents per diluted share, on net sales of $419.9 million in the third quarter of 2009.
Year-to-date, the Company earned $68.4 million, or $1.81 per diluted share, which includes an insurance settlement gain of 59 cents per diluted share. This compares with net income of $22.2 million, or 59 cents per diluted share, for the same period of 2009. Net sales for the first nine months of 2010 were $1.53 billion compared with net sales of $1.11 billion for the same period a year ago.
Financial and Operating Highlights
Regarding the third quarter of 2010, Mr. Karp said:
-- "Our Plumbing & Refrigeration segment posted operating earnings of $11.5
million on net sales of $282.7 million compared with operating earnings
of $16.0 million on net sales of $240.9 million in the third quarter of
2009. The benefit of slightly higher shipments was offset by lower
margins.
-- "Our OEM segment posted operating earnings of $23.0 million during the
third quarter of 2010 on net sales of $229.0 million, which compared
with operating earnings of $16.5 million on net sales of $181.6 million
for the same period in 2009. Operating income improved in most product
lines on better volumes.
-- "The Comex average price of copper was $3.30 per pound in the third
quarter of 2010, which compares with $2.67 per pound in the third
quarter of 2009. Higher selling prices due to rising raw material values
accounted for approximately $57 million of the increase in net sales
primarily in the Plumbing & Refrigeration segment. Approximately $20
million of the increase in net sales was attributable to increased unit
volume primarily in the OEM segment.
-- "Mueller ended the quarter with $400.1 million in cash, or $10.57 per
share.
-- "Total stockholders' equity was $777.0 million which equates to a book
value per share of $20.54.
-- "Mueller's current ratio remains excellent at 4.4 to 1 and our working
capital is $699.0 million. Leverage is conservative with a ratio of debt
to total capitalization at 18.4 percent."
Business Outlook
Regarding the outlook, Mr. Karp said, "Housing starts continue to stagnate at near the lowest levels of the past 50 years. However, we believe starts are unlikely to decline further. Also, the drop in non-residential construction appears to be bottoming out. We expect to see improving business conditions in 2011, although the recovery in our industry will probably be uneven. We are encouraged by Mueller's solid performance in 2010 and we are well prepared for an upturn in the economy."
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 INCOME
(In thousands, except per share data)
For the Quarter Ended For the Nine Months Ended
September 25, September 26, September 25, September 26,
2010 2009 2010 2009
(Unaudited) (Unaudited)
Net sales $ 507,240 $ 419,890 $ 1,532,896 $ 1,114,248
Cost of goods sold 437,597 354,039 1,317,290 954,775
Depreciation and
amortization 9,934 10,441 30,372 31,276
Selling, general,
and administrative
expense 28,810 27,593 99,601 89,067
Insurance
settlement 12 - (21,284) -
Operating income 30,887 27,817 106,917 39,130
Interest expense (3,072) (2,435) (8,568) (7,553)
Other income
(expense), net 30 (324) (2,348) 688
Income before
income taxes 27,845 25,058 96,001 32,265
Income tax expense (9,098) (6,246) (26,418) (9,796)
Consolidated net
income 18,747 18,812 69,583 22,469
Less net loss
(income)
attributable to
noncontrolling
interest 162 (146) (1,158) (267)
Net income
attributable to
Mueller Industries,
Inc. $ 18,909 $ 18,666 $ 68,425 $ 22,202
Weighted average
shares
for basic earnings
per share 37,710 37,474 37,657 37,253
Effect of dilutive
stock-based awards 92 72 77 89
Adjusted weighted
average shares
for diluted
earnings per share 37,802 37,546 37,734 37,342
Basic earnings per
share $ 0.50 $ 0.50 $ 1.82 $ 0.60
Diluted earnings
per share $ 0.50 $ 0.50 $ 1.81 $ 0.59
Dividends per share $ 0.10 $ 0.10 $ 0.30 $ 0.30
Summary Segment
Data:
Net sales:
Plumbing &
Refrigeration
Segment $ 282,735 $ 240,878 $ 825,114 $ 661,035
OEM Segment 228,981 181,621 718,965 459,898
Elimination of
intersegment sales (4,476) (2,609) (11,183) (6,685)
Net sales $ 507,240 $ 419,890 $ 1,532,896 $ 1,114,248
Operating income:
Plumbing &
Refrigeration
Segment $ 11,511 $ 15,986 $ 71,710 $ 38,199
OEM Segment 22,994 16,530 56,057 18,315
Unallocated
expenses (3,618) (4,699) (20,850) (17,384)
Operating income $ 30,887 $ 27,817 $ 106,917 $ 39,130
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 25, December 26,
2010 2009
(Unaudited)
ASSETS
Cash and cash equivalents $ 400,116 $ 346,001
Accounts receivable, net 278,891 228,739
Inventories 190,243 191,262
Other current assets 34,631 42,841
Total current assets 903,881 808,843
Property, plant, and equipment, net 235,079 250,395
Other assets 123,781 120,903
$ 1,262,741 $ 1,180,141
LIABILITIES AND EQUITY
Current portion of debt $ 23,437 $ 24,325
Accounts payable 80,140 73,837
Other current liabilities 101,395 85,208
Total current liabilities 204,972 183,370
Long-term debt, less current portion 158,226 158,226
Pension and postretirement liabilities 43,589 44,320
Environmental reserves 25,671 23,268
Deferred income taxes 25,283 31,128
Other noncurrent liabilities 891 887
Total liabilities 458,632 441,199
Total Mueller Industries, Inc. stockholders'
equity 777,025 713,167
Noncontrolling interest 27,084 25,775
Total equity 804,109 738,942
$ 1,262,741 $ 1,180,141
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Nine Months Ended
September 25, September 26,
2010 2009
(Unaudited)
Operating activities:
Consolidated net income $ 69,583 $ 22,469
Reconciliation of consolidated net income
to net cash provided by operating activities:
Depreciation and amortization 30,550 31,440
Stock-based compensation expense 2,185 1,892
Insurance settlement (21,284) -
Insurance proceeds - noncapital related 5,561 -
Loss on disposal of properties 252 975
Deferred income taxes (8,386) (2,012)
Income tax benefit from exercise of stock
options (89) (189)
Gain on early retirement of debt - (128)
Changes in assets and liabilities:
Receivables (50,810) (3,030)
Inventories 2,800 35,339
Other assets 6,158 4,152
Current liabilities 21,562 (6,229)
Other liabilities 2,839 (337)
Other, net (225) 17
Net cash provided by operating activities 60,696 84,359
Investing activities:
Capital expenditures (14,210) (11,002)
Business acquired (2,021) -
Insurance proceeds for property and equipment 17,703 -
Net withdrawals from restricted cash balances 1,649 12,806
Proceeds from sales of properties 26 611
Net cash provided by investing activities 3,147 2,415
Financing activities:
Dividends paid (11,300) (11,186)
Repayment of debt by joint venture, net (1,097) (11,813)
Repayments of long-term debt - (370)
Dividends paid to noncontrolling interest - (1,449)
Acquisition of treasury stock (85) (416)
Issuance of shares under incentive stock option
plans
from treasury 2,463 8,678
Income tax benefit from exercise of stock options 89 189
Net cash used in financing activities (9,930) (16,367)
Effect of exchange rate changes on cash 202 4,607
Increase in cash and cash equivalents 54,115 75,014
Cash and cash equivalents at the beginning of the
period 346,001 278,860
Cash and cash equivalents at the end of the
period $ 400,116 $ 353,874
MUELLER INDUSTRIES, INC.
RECONCILIATION OF NET INCOME AS REPORTED
TO NET INCOME BEFORE INSURANCE SETTLEMENT
(In thousands, except per share data)
Earnings without insurance settlement is a measurement not derived in
accordance with generally accepted accounting principles (GAAP).
Excluding the 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 insurance settlement resulted from
reimbursement 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. Reconciliation of earnings without insurance settlement to
net income as reported is as follows:
For the Nine Months Ended September 25, 2010
Pro forma
Impact of Without
As Insurance Insurance
Reported Settlement Settlement
(Unaudited)
Operating income $ 106,917 $ (21,284) $ 85,633
Interest expense (8,568) - (8,568)
Other income, net (2,348) - (2,348)
Income before income taxes 96,001 (21,284) 74,717
Income tax expense (Note A) (26,418) (1,090) (27,508)
Consolidated net income 69,583 (22,374) 47,209
Less net income attributable to
noncontrolling interest (1,158) - (1,158)
Net income attributable to
Mueller Industries, Inc. $ 68,425 $ (22,374) $ 46,051
Diluted earnings per share $ 1.81 $ (0.59) $ 1.22
(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.
Released October 19, 2010