Exhibit 99.2
To Our Stockholders, Customers, and Employees
Mueller's Third Quarter Earnings
We are pleased to report Mueller's net income for the third quarter
was $31.3 million, or 84 cents per diluted share. This compares with $51.6
million, or $1.38 per diluted share, for the third quarter of 2006, which
included a one-time tax benefit of 28 cents per diluted share.
Our earnings for the third quarter of 2007 were the second best third
quarter in our history, and were achieved despite the steep decline in the
housing market.
Net sales for the three months ended September 29, 2007 were $693.7
million, compared with net sales of $636.0 million for the third quarter of
2006.
Our Plumbing and Refrigeration segment posted third quarter operating
earnings of $52.3 million and includes a one-time gain of approximately
$8.9 million (pre-tax) pertaining to a copper antitrust litigation
settlement. Our OEM segment posted operating earnings of $5.6 million
during the third quarter of 2007.
We believe the decline in the housing market is nearing a bottom, and
that indicators of a recovery phase will be evident by mid-2008, and then
gradually pick up momentum.
Meanwhile, the commercial-industrial sector of the construction
industry has been in an upward trend, having grown by fifteen percent over
the year before. Mueller's margins, in this sector of our business, have
historically been good.
We have noted that many of our customers have reduced their in-house
inventories of our products, in part due to the volatile copper market.
However, this means that any improvement in our markets, will result in
immediate business for Mueller.
The undersigned, Bill O'Hagan, Chief Executive Officer, has been
diagnosed with lung cancer and will undergo treatment. I will remain active
as Chief Executive Officer, although my treatment regimen may require
absences from time to time.
Mueller's Board of Directors has extended the employment term of
Harvey L. Karp, Chairman of the Board, until December 31, 2008, subject to
year-to-year extensions thereafter.
We are pleased to announce that Greg Christopher has been named Chief
Operating Officer. Greg is 45 years old and has been with Mueller since 1992
in increasingly significant management positions.
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
October 26, 2007
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Quarter Ended
September 29, September 30,
2007 2006
(Unaudited)
Net sales $ 693,682 $ 635,998
Cost of goods sold 603,219 528,946
Depreciation and amortization 11,582 10,462
Selling, general, and
administrative expense 36,246 34,787
Copper antitrust litigation
settlement (8,865) -
---------- ----------
Operating income 51,500 61,803
Interest expense (5,384) (5,085)
Other income, net 4,060 1,452
---------- ----------
Income before income taxes 50,176 58,170
Income tax expense (18,852) (6,591)
---------- ----------
Net income $ 31,324 $ 51,579
========== ==========
Weighted average shares
for basic earnings per share 37,075 36,976
Effect of dilutive stock options 234 379
---------- ----------
Adjusted weighted average shares
for diluted earnings per share 37,309 37,355
---------- ----------
Basic earnings per share $ 0.84 $ 1.39
========== ==========
Diluted earnings per share $ 0.84 $ 1.38
========== ==========
Dividends per share $ 0.10 $ 0.10
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (continued)
(In thousands, except per share data)
For the Nine Months Ended
September 29, September 30,
2007 2006
(Unaudited)
Net sales $ 2,076,111 $ 1,966,700
Cost of goods sold 1,801,543 1,623,053
Depreciation and amortization 33,854 31,033
Selling, general, and
administrative expense 110,144 109,435
Copper antitrust litigation
settlement (8,865) -
---------- ----------
Operating income 139,435 203,179
Interest expense (16,567) (15,161)
Other income, net 10,938 3,398
---------- ----------
Income before income taxes 133,806 191,416
Income tax expense (47,171) (47,722)
---------- ----------
Net income $ 86,635 $ 143,694
========== ==========
Weighted average shares
for basic earnings per share 37,054 36,853
Effect of dilutive stock options 185 396
---------- ----------
Adjusted weighted average shares
for diluted earnings per share 37,239 37,249
---------- ----------
Basic earnings per share $ 2.34 $ 3.90
========== ==========
Diluted earnings per share $ 2.33 $ 3.86
========== ==========
Dividends per share $ 0.30 $ 0.30
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 29, December 30,
2007 2006
(Unaudited)
Assets
Cash and cash equivalents $ 273,211 $ 200,471
Accounts receivable, net 351,707 281,679
Inventories 231,228 258,647
Other current assets 35,669 35,397
---------- ----------
Total current assets 891,815 776,194
Property, plant, and equipment, net 320,082 315,064
Other assets 189,975 177,649
---------- ----------
$ 1,401,872 $ 1,268,907
========== ==========
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 33,669 $ 35,998
Accounts payable 134,569 96,095
Other current liabilities 129,294 123,426
---------- ----------
Total current liabilities 297,532 255,519
Long-term debt 307,988 308,154
Pension and postretirement liabilities 45,220 36,599
Environmental reserves 9,159 8,907
Deferred income taxes 42,030 46,408
Other noncurrent liabilities 1,995 2,206
---------- ----------
Total liabilities 703,924 657,793
Minority interest in subsidiaries 22,419 22,300
Stockholders' equity 675,529 588,814
---------- ----------
$ 1,401,872 $ 1,268,907
========== ==========
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.
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