Exhibit 19.1
TO OUR STOCKHOLDERS, CUSTOMERS, AND EMPLOYEES
Mueller's net income for the second quarter was $36.4 million, or 98
cents per diluted share, constituting the third highest quarter in the
Company's history. This compares with $58.8 million, or $1.57 per diluted
share, for the extraordinary second quarter of fiscal 2006 which was our best
quarter ever. Net sales for the three months ended June 30, 2007 were $772.6
million, compared with net sales of $779.7 million for the second quarter of
2006.
Year-to-date, the Company earned $55.3 million, or $1.49 per diluted
share, on net sales of $1.38 billion. This compares with net income of $92.1
million, or $2.48 per diluted share, on net sales of $1.33 billion for the
first half of 2006.
Earnings and sales for the second quarter were affected by the decline
in the residential construction sector which saw housing starts down
approximately 25 percent compared with last year. However, the commercial
construction market continues to strengthen and has increased by
approximately 18 percent over last year. The Company's profit margins in the
commercial construction sector have historically been better than in the
other markets we serve.
Mueller's financial position is excellent. We ended the quarter with
almost $250 million of cash. Also, the Company declared and paid its regular
quarterly cash dividend of ten cents per common share during the second
quarter.
The residential construction sector remains weak, although the rate of
decline has subsided. We believe the housing market is near the bottom, and
will begin to improve in the first half of 2008. Positive factors include
low mortgage rates, high employment, an expanding economy, and population
growth. Also, we expect the commercial construction market to remain strong.
Our Annual Stockholders' Meeting was held at Mueller's headquarters in
Memphis, Tennessee on May 3, 2007. The stockholders reelected our seven
directors and approved the appointment of Ernst & Young LLP as our
independent registered public accounting firm.
Late in the quarter, Bob Hodes resigned from our Board after twelve
years of dedicated service. We thank Bob for his years of insightful counsel
and guidance.
Sincerely,
/s/Harvey L. Karp /s/William D. O'Hagan
Harvey L. Karp William D. O'Hagan
Chairman of the Board President and Chief Executive Officer
July 24, 2007
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, market demand, pricing, and competitive and technological factors,
among others, as set forth in the Company's SEC filings. These filings are
available through our website at www.muellerindustries.com.
-1-
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Quarter Ended
June 30, July 1,
2007 2006
(Unaudited)
Net sales $ 772,647 $ 779,663
Cost of goods sold 661,746 637,038
Depreciation and amortization 11,306 10,376
Selling, general, and
administrative expense 38,971 39,689
---------- ----------
Operating income 60,624 92,560
Interest expense (5,689) (5,214)
Other income (expense), net 1,925 (67)
---------- ----------
Income before income taxes 56,860 87,279
Income tax expense (20,462) (28,529)
---------- ----------
Net income $ 36,398 $ 58,750
========== ==========
Weighted average shares for basic
earnings per share 37,060 36,891
Effect of dilutive stock options 204 421
---------- ----------
Adjusted weighted average shares
for diluted earnings per share 37,264 37,312
---------- ----------
Basic earnings per share $ 0.98 $ 1.59
========== ==========
Diluted earnings per share $ 0.98 $ 1.57
========== ==========
Dividends per share $ 0.10 $ 0.10
========== ==========
-2-
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (continued)
(In thousands, except per share data)
For the Six Months Ended
June 30, July 1,
2007 2006
(Unaudited)
Net sales $ 1,382,429 $ 1,330,702
Cost of goods sold 1,198,324 1,094,107
Depreciation and amortization 22,272 20,571
Selling, general, and
administrative expense 73,898 74,648
---------- ----------
Operating income 87,935 141,376
Interest expense (11,183) (10,076)
Other income (expense), net 6,878 1,946
---------- ----------
Income before income taxes 83,630 133,246
Income tax expense (28,319) (41,131)
---------- ----------
Net income $ 55,311 $ 92,115
========== ==========
Weighted average shares for basic
earnings per share 37,044 36,791
Effect of dilutive stock options 160 405
---------- ----------
Adjusted weighted average shares
for diluted earnings per share 37,204 37,196
---------- ----------
Basic earnings per share $ 1.49 $ 2.50
========== ==========
Diluted earnings per share $ 1.49 $ 2.48
========== ==========
Dividends per share $ 0.20 $ 0.20
========== ==========
-3-
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, 2007 December 30, 2006
(Unaudited)
Assets
Cash and cash equivalents $ 247,916 $ 200,471
Accounts receivable, net 392,326 281,679
Inventories 251,544 258,647
Other current assets 41,497 35,397
---------- ----------
Total current assets 933,283 776,194
Property, plant, and equipment, net 325,822 315,064
Other assets 194,199 177,649
---------- ----------
$ 1,453,304 $ 1,268,907
========== ==========
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 48,037 $ 35,998
Accounts payable 181,136 96,095
Other current liabilities 146,804 123,426
---------- ----------
Total current liabilities 375,977 255,519
Long-term debt 308,084 308,154
Pension and postretirement liabilities 48,919 36,599
Environmental reserves 9,186 8,907
Deferred income taxes 42,398 46,408
Other noncurrent liabilities 2,015 2,206
---------- ----------
Total liabilities 786,579 657,793
Minority interest in subsidiaries 22,783 22,300
Stockholders' equity 643,942 588,814
---------- ----------
$ 1,453,304 $ 1,268,907
========== ==========
-4-