Mueller Industries, Inc. Reports Third Quarter Results
MEMPHIS, Tenn., Oct. 21 /PRNewswire-FirstCall/ --
Quarterly and Year-to-Date Earnings
Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), today announced the Company's results for the third quarter of 2008. Net income for the third quarter was $18.7 million, or 50 cents per diluted share, which compares with net income of $31.3 million, or 84 cents per diluted share, for the third quarter of fiscal 2007. The third quarter of 2008 includes a pre-tax charge of $3.3 million to write-down certain inventories to the lower-of-cost-or-market that resulted from falling copper prices. Net sales for the three months ended September 27, 2008 were $665.5 million, compared with net sales of $693.7 million for the third quarter of 2007. The third quarter of 2007 included a one-time gain of approximately $8.9 million (pre-tax) pertaining to a favorable copper antitrust litigation settlement.
Year-to-date, the Company earned $73.0 million, or $1.96 per diluted share, on net sales of $2.12 billion. This compares with net income of $86.6 million, or $2.33 per diluted share, on net sales of $2.08 billion for the same period of 2007.
Mr. Karp said, "Our earnings were achieved despite the adverse conditions in the housing industry and the turbulence in the financial markets. We remained focused on enhancing our operations and providing our customers with superior service.
"We believe that our financial and operating strengths will allow us to take advantage of opportunities, which are likely to arise in the current economic environment. One such opportunity arose on October 9, 2008 when we repurchased $122.9 million of our outstanding 6% Subordinated Debentures at 84 percent of face value. This transaction will result in a fourth quarter gain of $19.1 million."
Financial and Operating Highlights
Regarding the third quarter of 2008, Mr. Karp said:
-- "Mueller ended the quarter with $308.4 million in cash. Subsequent to the end of the third quarter, total cash used to repurchase a portion of our outstanding 6% Subordinated Debentures, including accrued interest of approximately $3.4 million, was approximately $106.6 million.
-- "Our current ratio remains excellent at 2.4 to 1 and our working capital is $552.3 million. Our ratio of debt to total capitalization is a modest 29.4 percent.
-- "Shortly after quarter end, copper values declined precipitously trading as low as $2.16 per pound in mid-October. Consequently, the Company recognized a $3.3 million charge to write-down inventories that are accounted for on the FIFO method; domestic copper tube inventories were not affected, however, as they are accounted for on a LIFO basis and the net book value is substantially below current market. The COMEX average price of copper was $3.45 per pound in the third quarter of 2008, which compares with $3.48 per pound in the third quarter of 2007.
-- "Our Plumbing & Refrigeration segment posted operating earnings of $25.4 million on net sales of $371.3 million which compares with operating earnings of $52.3 million on net sales of $397.9 million in the third quarter of 2007. These decreases were primarily attributable to lower volumes and spreads in copper tube; also, the third quarter of last year included a gain on the proceeds from the copper antitrust litigation settlement.
-- "Our OEM segment posted operating earnings of $10.6 million during the third quarter of 2008 on net sales of $299.5 million, which compared with operating earnings of $5.6 million on net sales of $302.1 million for the same period in 2007. The operating earnings increase is primarily due to higher margins in brass rod."
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
(Unaudited)
For the Quarter Ended For the Nine Months Ended
September 27, September 29, September 27, September 29,
2008 2007 2008 2007
(In thousands, except per share data)
Net sales $665,496 $693,682 $2,123,075 $2,076,111
Cost of goods sold 588,469 603,219 1,861,475 1,801,543
Depreciation and
amortization 11,529 11,582 33,517 33,854
Selling, general, and
administrative expense 35,674 36,246 108,583 110,144
Copper antitrust
litigation settlement - (8,865) - (8,865)
Operating income 29,824 51,500 119,500 139,435
Interest expense (5,050) (5,384) (15,755) (16,567)
Other income, net 2,319 4,060 7,287 10,938
Income before income
taxes 27,093 50,176 111,032 133,806
Income tax expense (8,422) (18,852) (37,992) (47,171)
Net income $18,671 $31,324 $73,040 $86,635
Weighted average shares
for basic earnings per
share 37,136 37,075 37,117 37,054
Effect of dilutive
stock options 176 234 238 185
Adjusted weighted
average shares for
diluted earnings
per share 37,312 37,309 37,355 37,239
Basic earnings per
share $0.50 $0.84 $1.97 $2.34
Diluted earnings per
share $0.50 $0.84 $1.96 $2.33
Dividends per share $0.10 $0.10 $0.30 $0.30
Summary Segment Data:
Net sales:
Plumbing &
Refrigeration
Segment $371,315 $397,855 $1,159,613 $1,223,337
OEM Segment 299,470 302,122 979,665 868,053
Elimination of
intersegment sales (5,289) (6,295) (16,203) (15,279)
Net sales $665,496 $693,682 $2,123,075 $2,076,111
Operating income:
Plumbing &
Refrigeration
Segment $25,449 $52,260 $85,903 $130,860
OEM Segment 10,643 5,609 55,180 29,102
Unallocated
expenses (6,268) (6,369) (21,583) (20,527)
Operating income $29,824 $51,500 $119,500 $139,435
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 27, December 29,
2008 2007
(In thousands)
ASSETS
Cash and cash equivalents $308,351 $308,618
Accounts receivable, net 350,290 323,003
Inventories 260,937 269,032
Other current assets 38,849 39,694
Total current assets 958,427 940,347
Property, plant, and equipment, net 294,530 308,383
Other assets 203,399 200,474
$1,456,356 $1,449,204
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt (Note 1) $160,453 $72,743
Accounts payable 125,239 140,497
Other current liabilities 120,439 121,813
Total current liabilities 406,131 335,053
Long-term debt 158,726 281,738
Pension and postretirement
liabilities 34,980 36,071
Environmental reserves 8,853 8,897
Deferred income taxes 52,784 52,156
Other noncurrent liabilities 3,041 2,029
Total liabilities 664,515 715,944
Minority interest in subsidiary 26,558 22,765
Stockholders' equity 765,283 710,495
$1,456,356 $1,449,204
Note 1. - September 27, 2008 balance includes $122.9 million principal of
6% Subordinated Debentures repurchased on October 9, 2008.
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 27, September 29,
2008 2007
(In thousands)
Operating activities:
Net income $73,040 $86,635
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 33,984 34,107
Gain on early retirement of debt (2,482) -
Minority interest in subsidiary,
net of dividend paid 1,816 (644)
Stock-based compensation expense 2,238 1,975
Loss (gain) on disposal of properties 306 (3,114)
Deferred income taxes (515) (3,026)
Income tax benefit from exercise
of stock options (92) (130)
Changes in assets and liabilities, net of
business acquired:
Receivables (29,130) (36,370)
Inventories 6,635 57,656
Other assets (5,350) (6,103)
Current liabilities (16,027) 13,669
Other liabilities 784 3,754
Other, net (719) (1,003)
Net cash provided by operating
activities 64,488 147,406
Investing activities:
Capital expenditures (17,871) (22,776)
Net withdrawals from restricted cash balances 678 -
Acquisition of business, net of cash received - (31,970)
Proceeds from sales of properties 77 3,033
Net cash used in investing activities (17,116) (51,713)
Financing activities:
Repayments of long-term debt (23,650) (18,273)
Dividends paid (11,133) (11,117)
(Repayment) issuance of debt by joint
venture, net (12,491) 4,506
Issuance of shares under incentive stock
option plans from treasury 1,074 1,093
Income tax benefit from exercise of stock
options 92 130
Acquisition of treasury stock (31) (54)
Net cash used in financing activities (46,139) (23,715)
Effect of exchange rate changes on cash (1,500) 762
(Decrease) increase in cash and cash
equivalents (267) 72,740
Cash and cash equivalents at the beginning
of the period 308,618 200,471
Cash and cash equivalents at the end
of the period $308,351 $273,211
SOURCE Mueller Industries, Inc.
Released October 21, 2008