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.
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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 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