Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2009 Results
MEMPHIS, Tenn., Feb. 2 /PRNewswire-FirstCall/ -- Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller recognized non-cash impairment charges that, in aggregate, decreased pre-tax income by $29.8 million, and net income by 74 cents per diluted share for the fourth quarter of 2009. Primarily, the impairment charges reduce the carrying value of goodwill. The impairment charges resulted in a net loss for the fourth quarter of 2009 of $17.5 million, or 47 cents per diluted share. Without the impairment charges, the Company's net earnings for the fourth quarter would have been $10.4 million, or 28 cents per diluted share.
For the fiscal year ended December 26, 2009, Mueller earned $4.7 million, or 12 cents per diluted share. For fiscal 2008, the Company earned $80.8 million, or $2.17 per diluted share. Net sales for 2009 were $1.55 billion compared with $2.56 billion in 2008.
Financial and Operating Highlights
Mr. Karp said:
-- "The decrease in net sales in 2009 was primarily due to lower unit
shipments as well as the lower average cost of copper, the Company's
principal raw material, which is generally passed through to customers
by changes in selling prices.
-- "For the full year, our Plumbing & Refrigeration segment posted
operating earnings of $27.0 million on net sales of $892.1 million,
which compares with operating earnings of $106.8 million on net sales of
$1.40 billion in 2008. During the fourth quarter of 2009, non-cash
impairment charges totaling $19.5 million reduced operating earnings.
-- "Our OEM segment posted operating earnings of $28.7 million during 2009
on net sales of $664.1 million, which compares with operating earnings
of $45.3 million on net sales of $1.18 billion for 2008. During the
fourth quarter of 2009, non-cash impairment charges totaling $10.3
million reduced operating earnings.
-- "Cash provided by operating activities was $77.4 million in 2009
compared with $180.9 million during 2008. Our focus on cash flow
continues to be a bedrock characteristic of our management.
-- "Our current ratio was 4.4 to 1 and our working capital was $625.5
million, of which $346.0 million was cash on hand, equal to $9.19 per
share.
-- "As of year end, our financial leverage was modest with a debt to total
capitalization ratio of less than 20 percent. Our financial position is
strong. If we repaid all outstanding indebtedness, we would still have
in excess of $150 million in cash.
-- "Stockholders' equity was $713.2 million which equates to a book value
per share of $18.94.
-- "Capital expenditures during 2009 totaled $13.9 million. Capital
expenditures will likely rise in 2010."
Business Outlook for 2010
Regarding the outlook for 2010, Mr. Karp said, "The recovery of the U.S. economy appears to be well underway. We believe the residential construction sector has hit bottom and is moving up, after almost four years of deep declines. We expect the recovery in residential construction to be modest due to the continuing high rates of unemployment, the impact of mounting foreclosures, the tightening of lending terms and the phase out of governmental stimulus spending. Even so, housing starts are likely to rise more than 20 percent in 2010 to 700,000 units, up from the extraordinarily low 550,000 units started in 2009.
"The private non-residential construction sector, which includes offices, industrial and retail projects, declined by over 20 percent in 2009, and the outlook is for a further decline in 2010, with recovery commencing in 2011. Most of the other markets Mueller sells to will likely improve in 2010, in pace with the overall economy. We expect business conditions will strengthen and improve as the year 2010 progresses.
"Our strategy for 2010 is to maintain and enhance our operational excellence. We will continue to promptly adjust our operations to the on-going flow of business. We are committed to making the capital investments that advance our strong competitive position in our marketplace. Acquisitions have helped our Company grow over the past 20 years. We are keenly interested in acquisitions that would expand our product lines and make us a more valuable resource for our customers."
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 OPERATIONS
(In thousands, except per share data)
For the Quarter Ended For the Year Ended
--------------------- ------------------
December 26, December 27, December 26, December 27,
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited)
Net sales $432,977 $435,373 $1,547,225 $2,558,448
Cost of goods sold 372,247 371,648 1,327,022 2,233,123
Depreciation and
amortization 10,292 10,828 41,568 44,345
Selling, general, and
administrative
expense 27,593 28,301 116,660 136,884
Impairment charge 29,755 18,000 29,755 18,000
------ ------ ------ ------
Operating (loss)
income (6,910) 6,596 32,220 126,096
Interest expense (2,410) (3,295) (9,963) (19,050)
Other income, net 184 4,793 872 13,896
--- ----- --- ------
(Loss) income before
income taxes (9,136) 8,094 23,129 120,942
Income tax expense (7,996) (340) (17,792) (38,332)
------ ---- ------- -------
Consolidated net
(loss) income (17,132) 7,754 5,337 82,610
Less: net (income)
loss attributable to
noncontrolling
interest (395) 20 (662) (1,796)
---- -- ---- ------
Net (loss) income
attributable to
Mueller Industries,
Inc. $(17,527) $7,774 $4,675 $80,814
======== ====== ====== =======
Weighted average shares
for basic (loss)
earnings per share 37,584 37,142 37,336 37,123
Effect of dilutive
stock options - 28 88 186
--- --- --- ---
Adjusted weighted
average shares for
diluted (loss)
earnings per share 37,584 37,170 37,424 37,309
------ ------ ------ ------
Basic (loss) earnings
per share $(0.47) $0.21 $0.13 $2.18
====== ===== ===== =====
Diluted (loss)
earnings per share $(0.47) $0.21 $0.12 $2.17
====== ===== ===== =====
Dividends per share $0.10 $0.10 $0.40 $0.40
===== ===== ===== =====
Summary Segment Data:
---------------------
Net sales:
Plumbing &
Refrigeration
segment $231,036 $241,069 $892,071 $1,400,682
OEM segment 204,190 197,227 664,088 1,176,892
Elimination of
intersegment sales (2,249) (2,923) (8,934) (19,126)
------ ------ ------ -------
Net sales $432,977 $435,373 $1,547,225 $2,558,448
======== ======== ========== ==========
Operating (loss) income:
Plumbing &
Refrigeration
segment $(11,156) $20,882 $27,043 $106,785
OEM segment 10,410 (9,902) 28,725 45,278
Unallocated
expenses (6,164) (4,384) (23,548) (25,967)
------ ------ ------- -------
Operating
(loss) income $(6,910) $6,596 $32,220 $126,096
======= ====== ======= ========
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 26, December 27,
2009 2008
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $346,001 $278,860
Accounts receivable, net 228,739 219,035
Inventories 191,262 210,609
Other current assets 42,841 46,322
------ ------
Total current assets 808,843 754,826
Property, plant, and equipment, net 250,395 276,927
Other assets 120,903 151,160
------- -------
$1,180,141 $1,182,913
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $24,325 $24,184
Accounts payable 73,837 63,732
Other current liabilities 85,208 113,668
------ -------
Total current liabilities 183,370 201,584
Long-term debt 158,226 158,726
Pension and postretirement liabilities 44,320 38,452
Environmental reserves 23,268 23,248
Deferred income taxes 31,128 33,940
Other noncurrent liabilities 887 1,698
--- -----
Total liabilities 441,199 457,648
Total Mueller Industries, Inc.
stockholders' equity 713,167 700,683
Noncontrolling interest 25,775 24,582
------ ------
Total equity 738,942 725,265
------- -------
$1,180,141 $1,182,913
========== ==========
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Year Ended
------------------
December 26, December 27,
2009 2008
---- ----
(Unaudited)
Operating activities:
Net income attributable to Mueller
Industries, Inc. $4,675 $80,814
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 41,758 44,884
Gain on early retirement of debt (128) (21,575)
Deferred income taxes (2,554) (4,465)
Stock-based compensation expense 2,633 2,915
Loss on disposal of properties 683 598
Net income attributable to
noncontrolling interest 662 1,796
Income tax benefit from exercise of
stock options (203) (92)
Impairment charge 29,755 18,000
Changes in assets and liabilities
Receivables (6,482) 91,705
Inventories 22,699 44,591
Other assets (505) (7,855)
Current liabilities (13,823) (84,584)
Other liabilities (1,808) 12,741
Other, net 26 1,459
-- -----
Net cash provided by operating activities 77,388 180,932
------ -------
Investing activities:
Capital expenditures (13,942) (22,261)
Proceeds from sales of properties 611 81
Net withdrawals from (deposits into)
restricted cash balances 7,013 (6,117)
----- ------
Net cash used in investing activities (6,318) (28,297)
------ -------
Financing activities:
Repayments of long-term debt (370) (126,877)
Dividends paid to stockholders of Mueller
Industries, Inc. (14,944) (14,847)
Dividends paid to noncontrolling interest (1,449) -
Issuance of shares under incentive stock
option plans from treasury 9,145 1,167
Issuance (repayment) of debt by joint
venture, net 131 (25,564)
Acquisition of treasury stock (870) (32)
Income tax benefit from exercise of stock
options 203 92
--- --
Net cash used in financing activities (8,154) (166,061)
------ --------
Effect of exchange rate changes on cash 4,225 (16,332)
----- -------
Increase (decrease) in cash and cash
equivalents 67,141 (29,758)
Cash and cash equivalents at the
beginning of the year 278,860 308,618
------- -------
Cash and cash equivalents at the end of
the year $346,001 $278,860
======== ========
MUELLER INDUSTRIES, INC.
RECONCILIATION OF NET (LOSS) INCOME AS REPORTED
TO NET INCOME BEFORE IMPAIRMENT CHARGES
(In thousands, except per share data)
Earnings without impairment charges is a measurement not derived in
accordance with generally accepted accounting principles (GAAP).
Excluding non-cash 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. Impairments reflect the impact
of long-term decisions and investments that were made in prior periods.
Reconciliation of earnings without impairment charges to net loss as
reported is as follows:
For the Quarter Ended December 26, 2009
---------------------------------------
Pro forma
Impact of Without
As Impairment Impairment
Reported Charges (A) 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 $0.28
====== ===== =====
(A) The impairment charges, primarily goodwill, are estimates that
will be adjusted, if necessary, after certain valuation procedures
are completed as required by GAAP.
SOURCE Mueller Industries, Inc.
Released February 2, 2010