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