Mueller Industries, Inc. Reports Second Quarter 2010 Earnings
MEMPHIS, Tenn., July 20 /PRNewswire-FirstCall/ -- Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller's net income in the second quarter of 2010 was $15.6 million, or 41 cents per diluted share. This compares with net income of $6.0 million, or 16 cents per diluted share, for the same period of 2009. Net sales for the second quarter of 2010 were $540.4 million compared with $367.8 million in 2009. For the first half of 2010, net income was $49.5 million, or $1.31 per diluted share, on net sales of $1.03 billion. This compares with net income of $3.5 million, or 9 cents per diluted share, on net sales of $694.4 million for the first half of 2009.
Net sales of the Company's core product lines increased substantially due to the higher market values of copper and brass, the Company's principal raw materials, which are largely passed through to customers. In the second quarter of 2010, the Comex average price of copper was 48 percent higher than in the second quarter of 2009.
Financial and Operating Highlights
Regarding the second quarter of 2010, Mr. Karp said:
-- "Our Plumbing & Refrigeration segment posted operating earnings of $19.7 million on net sales of $285.7 million which compares with prior year earnings of $11.9 million on net sales of $229.8 million. Improved results were due to better spreads partially offset by lower unit shipments. -- "Our OEM segment posted operating earnings of $16.9 million during the second quarter of 2010 on net sales of $257.8 million, which compares with operating earnings of $8.1 million on net sales of $139.9 million for the same period in 2009. Much of the improvement was due to higher unit shipments. -- "Our financial condition remains strong. We ended the quarter with $397.2 million in cash equal to $10.53 per share. -- "Total stockholders' equity was $755.4 million which equates to a book value of $20.03 per share. -- "Our current ratio remains solid at 4.0 to 1, and our financial leverage is conservative with a debt to total capitalization ratio of 20.3 percent. -- "The Comex average price of copper was $3.19 per pound in the second quarter of 2010, which compares with $2.15 in the second quarter of 2009. Higher selling prices due to rising material values accounted for approximately $111 million of the increase in net sales primarily in the Plumbing & Refrigeration segment. Approximately $50 million of the increase in net sales was attributable to increased unit volume primarily in the OEM segment. -- "We recognized a charge of $2.5 million for environmental matters related to Eureka Mills, a non-operating site. "
Business Outlook
Regarding the outlook, Mr. Karp said, "Uncertainty seems to be the underlying theme. Looming foreclosures, weak jobs reports, an environment of higher taxes, and rising federal deficits are causing widespread anxiety. However, we believe Mueller's financial strength and industry leadership positions us to pursue opportunities as they arise."
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 June 26, June 27, June 26, June 27, 2010 2009 2010 2009 (Unaudited) (Unaudited) Net sales $ 540,388 $ 367,800 $ 1,025,656 $ 694,358 Cost of goods sold 466,645 313,353 879,693 600,736 Depreciation and amortization 10,090 10,355 20,438 20,835 Selling, general, and administrative expense 33,468 30,316 70,791 61,474 Insurance settlement 1,210 - (21,296) - Operating income 28,975 13,776 76,030 11,313 Interest expense (2,964) (2,482) (5,496) (5,118) Other (expense) income, net (2,518) 385 (2,378) 1,012 Income before income taxes 23,493 11,679 68,156 7,207 Income tax expense (7,456) (5,512) (17,320) (3,550) Consolidated net income 16,037 6,167 50,836 3,657 Less: net income attributable to noncontrolling interest (479) (139) (1,320) (121) Net income attributable to Mueller Industries, Inc. $ 15,558 $ 6,028 $ 49,516 $ 3,536 Weighted average shares for basic earnings per share 37,674 37,143 37,631 37,143 Effect of dilutive stock-based awards 43 120 69 97 Adjusted weighted average shares for diluted earnings per share 37,717 37,263 37,700 37,240 Basic earnings per share $ 0.41 $ 0.16 $ 1.32 $ 0.10 Diluted earnings per share $ 0.41 $ 0.16 $ 1.31 $ 0.09 Dividends per share $ 0.10 $ 0.10 $ 0.20 $ 0.20 Summary Segment Data: Net sales: Plumbing & Refrigeration Segment $ 285,717 $ 229,763 $ 542,379 $ 420,156 OEM Segment 257,780 139,885 489,984 278,277 Elimination of intersegment sales (3,109) (1,848) (6,707) (4,075) Net sales $ 540,388 $ 367,800 $ 1,025,656 $ 694,358 Operating income: Plumbing & Refrigeration Segment $ 19,740 $ 11,882 $ 60,199 $ 22,213 OEM Segment 16,932 8,052 33,063 1,786 Unallocated expenses (7,697) (6,158) (17,232) (12,686) Operating income $ 28,975 $ 13,776 $ 76,030 $ 11,313
MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) June 26, December 26, 2010 2009 (Unaudited) ASSETS Cash and cash equivalents $ 397,155 $ 346,001 Accounts receivable, net 286,578 228,739 Inventories 185,054 191,262 Other current assets 35,181 42,841 Total current assets 903,968 808,843 Property, plant, and equipment, net 237,743 250,395 Other assets 122,491 120,903 $ 1,264,202 $ 1,180,141 LIABILITIES AND EQUITY Current portion of debt $ 40,765 $ 24,325 Accounts payable 98,336 73,837 Other current liabilities 86,453 85,208 Total current liabilities 225,554 183,370 Long-term debt, less current portion 158,226 158,226 Pension and postretirement liabilities 43,082 44,320 Environmental reserves 25,630 23,268 Deferred income taxes 28,364 31,128 Other noncurrent liabilities 860 887 Total liabilities 481,716 441,199 Total Mueller Industries, Inc. stockholders' equity 755,436 713,167 Noncontrolling interest 27,050 25,775 Total equity 782,486 738,942 $ 1,264,202 $ 1,180,141
MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Six Months Ended June 26, June 27, 2010 2009 (Unaudited) Operating activities: Consolidated net income $ 50,836 $ 3,657 Reconciliation of consolidated net income to net cash provided by operating activities: Depreciation and amortization 20,554 20,946 Stock-based compensation expense 1,435 1,220 Insurance settlement (21,296) - Insurance proceeds - noncapital related 5,561 - Loss on disposal of properties 164 260 Deferred income taxes (4,370) (136) Income tax benefit from exercise of stock options (88) - Gain on early retirement of debt - (128) Changes in assets and liabilities: Receivables (60,819) 16,831 Inventories 4,796 45,209 Other assets 6,979 1,059 Current liabilities 26,129 (21,741) Other liabilities 2,870 (546) Other, net (363) (101) Net cash provided by operating activities 32,388 66,530 Investing activities: Capital expenditures (9,286) (8,725) Insurance proceeds for property and equipment 17,703 - Net withdrawals from restricted cash balances 11 13,039 Proceeds from sales of properties 23 606 Net cash provided by investing activities 8,451 4,920 Financing activities: Dividends paid (7,529) (7,428) Issuance (repayment) of debt by joint venture, net 16,431 (14,567) Repayments of long-term debt - (370) Dividends paid to noncontrolling interest - (1,449) Acquisition of treasury stock (75) - Issuance of shares under incentive stock option plans from treasury 2,465 - Income tax benefit from exercise of stock options 88 - Net cash provided by (used in) financing activities 11,380 (23,814) Effect of exchange rate changes on cash (1,065) 7,463 Increase in cash and cash equivalents 51,154 55,099 Cash and cash equivalents at the beginning of the period 346,001 278,860 Cash and cash equivalents at the end of the period $ 397,155 $ 333,959
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 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 income, 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 Less 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.
Released July 20, 2010