Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2007 Earnings
MEMPHIS, Tenn., Feb. 5 /PRNewswire-FirstCall/ -- Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller's net income for the fiscal year ended December 29, 2007 was $115.5 million, or $3.10 per diluted share, which compares with $148.9 million, or $4.00 per diluted share, for 2006. Net sales for 2007 were $2.70 billion compared with $2.51 billion in 2006.
For the fourth quarter of 2007, the Company's net income was $28.8 million, or 78 cents per diluted share, on net sales of $621.7 million. This compares with net income of $5.2 million, or 14 cents per diluted share, on net sales of $544.2 million for the fourth quarter of 2006.
Financial and Operating Highlights
Mr. Karp said:
-- "The increase in net sales is primarily due to the acquisition of
Extruded Metals, Inc. as well as the higher average cost of copper,
the Company's principal raw material, which is generally passed
through to customers by changes in selling prices. The COMEX average
price of copper was $3.25 per pound in the fourth quarter of 2007.
-- "During the fourth quarter of 2007, the Company recognized LIFO income
of $10.0 million (or 17 cents per diluted share after tax) resulting
from a decrease in inventory quantities accounted for under the LIFO
method. The fourth quarter of 2006 included a pre-tax charge of
approximately $14.2 million (or 26 cents per diluted share after tax)
due to a write-down of inventories to the lower of cost or market.
-- "Our return on average equity was 17.8 percent for 2007.
-- "Our current ratio remains strong at 2.8 to 1 and our working capital
is $605.3 million, of which over $300 million is cash on hand.
-- "Cash provided by operating activities was $185.8 million in 2007
compared with $64.5 million during 2006.
-- "As of year end, our financial leverage was modest with a debt to
total capitalization ratio of 33.3 percent.
-- "Total stockholders' equity was $710.5 million which equates to a book
value per share of $19.16 of which $8.32 per share is in cash.
-- "For the full year, our Plumbing & Refrigeration segment posted
operating earnings of $178.4 million on net sales of $1.57 billion
which compares with operating earnings of $197.4 million on net sales
of $1.72 billion in 2006. Operating earnings includes LIFO income of
$10.0 million in 2007. Also, in the fourth quarter of 2007, we wrote
down the goodwill carrying value of our Mexican operations by $2.8
million due to an impairment charge.
-- "Our OEM segment posted operating earnings of $38.2 million during the
year on net sales of $1.14 billion, which compares with operating
earnings of $44.8 million on net sales of $835.3 million for 2006.
-- "Capital expenditures during 2007 totaled $29.9 million; cash flow to
fund capital expenditures in 2008 are expected to be less than
depreciation.
-- "After year end, we acquired approximately $25.5 million of our
outstanding 6% Subordinated Debentures at approximately 90 percent of
face value. Accordingly, these were reclassified to the current
portion of long-term debt on our balance sheet."
Business Outlook for 2008
Regarding the outlook for 2008, Mr. Karp said, "Despite the challenges presented by the decline in the housing market, and the volatility in the prices of copper and energy, Mueller had its two best years ever in 2006 and 2007.
"The year 2008 will also be challenging as the national economy is slowing down and the housing market continues to contract. However, the U.S. economy has proven itself to be remarkably resilient, and we believe that later this year the housing market will bottom out and then gradually start to improve.
"Also, we anticipate that our non-residential businesses, which constitute a significant portion of our total, will have another good year in 2008.
"Mueller is well positioned to take advantage of opportunities in our marketplace. On average, we have made one or more acquisitions per year over the past decade. We will continue our quest to acquire sound companies which are compatible with our core businesses."
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 INCOME
(In thousands, except per share data)
For the Quarter Ended For the Year Ended
December 29, December 30, December 29, December 30,
2007 2006 2007 2006
(Unaudited) (Unaudited)
Net sales $621,734 $544,212 $2,697,845 $2,510,912
Cost of goods sold 523,381 486,383 2,324,924 2,109,436
Gross profit 98,353 57,829 372,921 401,476
Depreciation and
amortization 10,299 10,586 44,153 41,619
Selling, general, and
administrative expense 33,140 31,537 143,284 140,972
Copper litigation
settlement (28) - (8,893) -
Impairment charge 2,756 - 2,756 -
Operating income 52,186 15,706 191,621 218,885
Interest expense (5,504) (5,316) (22,071) (20,477)
Other income, net 2,793 1,773 13,731 5,171
Income before income taxes 49,475 12,163 183,281 203,579
Income tax expense (20,635) (6,988) (67,806) (54,710)
Net income $28,840 $5,175 $115,475 $148,869
Weighted average shares
for basic earnings per
share 37,079 37,016 37,060 36,983
Effect of dilutive stock
options 95 220 163 263
Adjusted weighted average
shares for diluted
earnings per share 37,174 37,236 37,223 37,246
Basic earnings per share $0.78 $0.14 $3.12 $4.03
Diluted earnings per share $0.78 $0.14 $3.10 $4.00
Summary Segment Data:
Net sales:
Plumbing & Refrigeration
segment $349,228 $352,253 $1,572,565 $1,716,613
OEM segment 276,249 206,867 1,144,302 835,339
Elimination of
intersegment sales (3,743) (14,908) (19,022) (41,040)
Net sales $621,734 $544,212 $2,697,845 $2,510,912
Operating income:
Plumbing & Refrigeration
segment $47,507 $18,018 $178,367 $197,402
OEM segment 9,113 2,438 38,215 44,764
Unallocated expenses (4,434) (4,750) (24,961) (23,281)
Operating income $52,186 $15,706 $191,621 $218,885
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 29, December 30,
2007 2006
(Unaudited)
ASSETS
Cash and cash equivalents $308,618 $200,471
Accounts receivable, net 323,003 281,679
Inventories 269,032 258,647
Other current assets 39,694 35,397
Total current assets 940,347 776,194
Property, plant, and equipment, net 308,383 315,064
Other assets 200,474 177,649
$1,449,204 $1,268,907
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $72,743 $35,998
Accounts payable 140,497 96,095
Other current liabilities 121,813 123,426
Total current liabilities 335,053 255,519
Long-term debt 281,738 308,154
Pension and postretirement liabilities 36,071 36,599
Environmental reserves 8,897 8,907
Deferred income taxes 52,156 46,408
Other noncurrent liabilities 2,029 2,206
Total liabilities 715,944 657,793
Minority interest in subsidiaries 22,765 22,300
Stockholders' equity 710,495 588,814
$1,449,204 $1,268,907
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Year Ended
December 29, December 30,
2007 2006
(Unaudited)
Operating activities:
Net income $115,475 $148,869
Reconciliation of net income to net
cash provided by operating activities:
Depreciation and amortization 44,477 41,855
Deferred income taxes 3,094 (19,339)
Stock-based compensation expense 2,737 2,789
(Gain) loss on disposal of properties (2,468) 2,620
Minority interest in subsidiaries,
net of dividends received (781) 2,610
Gain on sale of equity investment - (1,876)
Income tax benefit from exercise
of stock options (73) (1,065)
Equity in income of
unconsolidated subsidiary - (964)
Gain on early retirement of debt - (97)
Impairment charge 2,756 -
Changes in assets and liabilities,
net of businesses acquired:
Receivables (8,114) (14,350)
Inventories 20,411 (56,786)
Other assets (4,120) 1,449
Current liabilities 12,704 (41,357)
Other liabilities 1,809 (2,578)
Other, net (2,063) 2,759
Net cash provided by operating activities 185,844 64,539
Investing activities:
Capital expenditures (29,870) (41,206)
Proceeds from sales of properties and
equity investment 3,809 23,528
Businesses acquired, net of cash received (32,243) 3,632
Net deposits into restricted cash balances (4,194) -
Net cash used in investing activities (62,498) (14,046)
Financing activities:
Proceeds from issuance of long-term debt 16,635 28,759
Dividends paid (14,825) (14,775)
Issuance of shares under incentive
stock option plans from treasury 1,124 7,701
Repayments of long-term debt (18,765) (2,059)
Acquisition of treasury stock (54) (1,092)
Income tax benefit from exercise of
stock options 73 1,065
Net cash (used in) provided by
financing activities (15,812) 19,599
Effect of exchange rate changes on cash 613 694
Increase in cash and cash equivalents 108,147 70,786
Cash and cash equivalents at the
beginning of the year 200,471 129,685
Cash and cash equivalents at the end
of the year $308,618 $200,471
SOURCE Mueller Industries, Inc.
Released February 5, 2008