FOR IMMEDIATE RELEASE  Contact: Kent A. McKee
 Memphis, TN—July 20, 2010    (901) 753-3208
   
 
MUELLER INDUSTRIES, INC. REPORTS
SECOND QUARTER 2010 EARNINGS
 
Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller’s net income in the second quarter of 2010 was $15.6 million, or 41 cents per diluted share.  This compares with net income of $6.0 million, or 16 cents per diluted share, for the same period of 2009.  Net sales for the second quarter of 2010 were $540.4 million compared with $367.8 million in 2009.  For the first half of 2010, net income was $49.5 million, or $1.31 per diluted share, on net sales of $1.03 billion.  This compares with net income of $3.5 million, or 9 cents per diluted share, on net sales of $694.4 million for the first half of 2009.

Net sales of the Company’s core product lines increased substantially due to the higher market values of copper and brass, the Company’s principal raw materials, which are largely passed through to customers.  In the second quarter of 2010, the Comex average price of copper was 48 percent higher than in the second quarter of 2009.
 
Financial and Operating Highlights

Regarding the second quarter of 2010, Mr. Karp said:
 
●
“Our Plumbing & Refrigeration segment posted operating earnings of $19.7 million on net sales of $285.7 million which compares with prior year earnings of $11.9 million on net sales of $229.8 million.  Improved results were due to better spreads partially offset by lower unit shipments.
 
 ●
  “Our OEM segment posted operating earnings of $16.9 million during the second quarter of 2010 on net sales of $257.8 million, which compares with operating earnings of $8.1 million on net sales of $139.9 million for the same period in 2009.  Much of the improvement was due to higher unit shipments.
 
●
 “Our financial condition remains strong.  We ended the quarter with $397.2 million in cash equal to $10.53 per share.
 
●
“Total stockholders’ equity was $755.4 million which equates to a book value of $20.03 per share.
 
●
Our current ratio remains solid at 4.0 to 1, and our financial leverage is conservative with a debt to total capitalization ratio of 20.3 percent.
 
●
 “The Comex average price of copper was $3.19 per pound in the second quarter of 2010, which compares with $2.15 in the second quarter of 2009.  Higher selling prices due to rising material values accounted for approximately $111 million of the increase in net sales primarily in the Plumbing & Refrigeration segment.  Approximately $50 million of the increase in net sales was attributable to increased unit volume primarily in the OEM segment.
 
●
 “We recognized a charge of $2.5 million for environmental matters related to Eureka Mills, a non-operating site. “
 
Business Outlook

Regarding the outlook, Mr. Karp said, “Uncertainty seems to be the underlying theme.  Looming foreclosures, weak jobs reports, an environment of higher taxes, and rising federal deficits are causing widespread anxiety.  However, we believe Mueller’s financial strength and industry leadership positions us to pursue opportunities as they arise.”
 
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 that 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.
 
 
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
                         
                         
   
For the Quarter Ended
    
For the Six Months Ended
  
   
June 26,
    
June 27,
    
June 26,
    
June 27,
  
   
2010
    
2009
    
2010
    
2009
  
   
(Unaudited)
    
(Unaudited)
  
                         
Net sales
   $ 540,388     $ 367,800     $ 1,025,656     $ 694,358  
                                 
Cost of goods sold
     466,645       313,353       879,693       600,736  
Depreciation and amortization
     10,090       10,355       20,438       20,835  
Selling, general, and administrative expense
     33,468       30,316       70,791       61,474  
Insurance settlement
     1,210       —       (21,296 )     —  
                                 
Operating income
     28,975       13,776       76,030       11,313  
                                 
Interest expense
     (2,964 )     (2,482 )     (5,496 )     (5,118 )
Other (expense) income, net
     (2,518 )     385       (2,378 )     1,012  
                                 
Income before income taxes
     23,493       11,679       68,156       7,207  
Income tax expense
     (7,456 )     (5,512 )     (17,320 )     (3,550 )
                                 
Consolidated net income
     16,037       6,167       50,836       3,657  
                                 
Less: net income attributable to noncontrolling interest
     (479 )     (139 )     (1,320 )     (121 )
                                 
Net income attributable to Mueller Industries, Inc.
   $ 15,558     $ 6,028     $ 49,516     $ 3,536  
                                 
 
                                
Weighted average shares for basic earnings per share
     37,674       37,143       37,631       37,143  
Effect of dilutive stock-based awards
     43       120       69       97  
                                 
Adjusted weighted average shares for diluted earnings per share  
     37,717       37,263       37,700       37,240  
                                 
Basic earnings per share
   $ 0.41     $ 0.16     $ 1.32     $ 0.10  
                                 
Diluted earnings per share
   $ 0.41     $ 0.16     $ 1.31     $ 0.09  
                                 
Dividends per share
   $ 0.10     $ 0.10     $ 0.20     $ 0.20  
                                 
Summary Segment Data:
                                
Net sales:
                                
Plumbing & Refrigeration Segment
   $ 285,717     $ 229,763     $ 542,379     $ 420,156  
OEM Segment
     257,780       139,885       489,984       278,277  
Elimination of intersegment sales
     (3,109 )     (1,848 )     (6,707 )     (4,075 )
                                 
Net sales
   $ 540,388     $ 367,800     $ 1,025,656     $ 694,358  
                                 
Operating income:
                                
Plumbing & Refrigeration Segment
   $ 19,740     $ 11,882     $ 60,199     $ 22,213  
OEM Segment
     16,932       8,052       33,063       1,786  
Unallocated expenses
     (7,697 )     (6,158 )     (17,232 )     (12,686 )
                                 
Operating income
   $ 28,975     $ 13,776     $ 76,030     $ 11,313  
                                 
 
 
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MUELLER INDUSTRIES, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS
  
(In thousands)
  
             
             
             
   
June 26,
    
December 26,
  
   
2010
    
2009
  
   
(Unaudited)
  
ASSETS
            
Cash and cash equivalents
   $ 397,155     $ 346,001  
Accounts receivable, net
     286,578       228,739  
Inventories
     185,054       191,262  
Other current assets
     35,181       42,841  
                 
Total current assets
     903,968       808,843  
                 
Property, plant, and equipment, net
     237,743       250,395  
Other assets
     122,491       120,903  
                 
    $ 1,264,202     $ 1,180,141  
                 
                 
                 
LIABILITIES AND EQUITY
                
Current portion of debt
   $ 40,765     $ 24,325  
Accounts payable
     98,336       73,837  
Other current liabilities
     86,453       85,208  
                 
Total current liabilities
     225,554       183,370  
                 
Long-term debt, less current portion
     158,226       158,226  
Pension and postretirement liabilities
     43,082       44,320  
Environmental reserves
     25,630       23,268  
Deferred income taxes
     28,364       31,128  
Other noncurrent liabilities
     860       887  
                 
Total liabilities
     481,716       441,199  
                 
Total Mueller Industries, Inc. stockholders' equity
     755,436       713,167  
Noncontrolling interest
     27,050       25,775  
                 
Total equity
     782,486       738,942  
                 
    $ 1,264,202     $ 1,180,141  
 
 
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MUELLER INDUSTRIES, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  
(In thousands)
  
             
   
For the Six Months Ended
  
   
June 26,
    
June 27,
  
   
2010
    
2009
  
   
(Unaudited)
  
Operating activities:
            
Consolidated net income
   $ 50,836     $ 3,657  
Reconciliation of consolidated net income to net cash provided by operating activities:
                
Depreciation and amortization
     20,554       20,946  
Stock-based compensation expense
     1,435       1,220  
Insurance settlement
     (21,296 )     —  
Insurance proceeds - noncapital related
     5,561       —  
Loss on disposal of properties
     164       260  
Deferred income taxes
     (4,370 )     (136 )
Income tax benefit from exercise of stock options
     (88 )     —  
Gain on early retirement of debt
     —       (128 )
Changes in assets and liabilities:
                
Receivables
     (60,819 )     16,831  
Inventories
     4,796       45,209  
Other assets
     6,979       1,059  
Current liabilities
     26,129       (21,741 )
Other liabilities
     2,870       (546 )
Other, net
     (363 )     (101 )
                 
Net cash provided by operating activities
     32,388       66,530  
                 
Investing activities:
                
Capital expenditures
     (9,286 )     (8,725 )
Insurance proceeds for property and equipment
     17,703       —  
Net withdrawals from restricted cash balances
     11       13,039  
Proceeds from sales of properties
     23       606  
                 
Net cash provided by investing activities
     8,451       4,920  
                 
Financing activities:
                
Dividends paid
     (7,529 )     (7,428 )
Issuance (repayment) of debt by joint venture, net
     16,431       (14,567 )
Repayments of long-term debt
     —       (370 )
Dividends paid to noncontrolling interest
     —       (1,449 )
Acquisition of treasury stock
     (75 )     —  
Issuance of shares under incentive stock option plans from treasury
     2,465       —  
Income tax benefit from exercise of stock options
     88       —  
                 
Net cash provided by (used in) financing activities
     11,380       (23,814 )
                 
Effect of exchange rate changes on cash
     (1,065 )     7,463  
                 
Increase in cash and cash equivalents
     51,154       55,099  
                 
Cash and cash equivalents at the beginning of the period
     346,001       278,860  
                 
Cash and cash equivalents at the end of the period
   $ 397,155     $ 333,959  
                 
 
 
 
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MUELLER INDUSTRIES, INC.
RECONCILIATION OF NET INCOME AS REPORTED
TO NET INCOME BEFORE INSURANCE SETTLEMENT
(In thousands, except per share data)
               
Earnings without insurance settlement is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  Excluding the insurance settlement is useful as it measures the operating results that are the outcome of daily operating decisions made in the normal course of business.  The insurance settlement resulted from reimbursement for losses claimed as a result of a fire at our U.K. subsidiary in November 2008, the results of which are not impacted  by daily operations and are not expected to recur in future periods.  Reconciliation of earnings without insurance settlement to net income as reported is as follows:
 
    For the Six Months Ended June 26, 2010  
               
Pro forma
  
         
Impact of
    
Without
  
   
As
    
Insurance
    
Insurance
  
   
Reported
    
Settlement
    
Settlement
  
   
(Unaudited)
  
                   
Operating income
   $ 76,030     $ (21,296 )   $ 54,734  
                         
Interest expense
     (5,496 )     —       (5,496 )
Other income, net
     (2,378 )     —       (2,378 )
                         
Income before income taxes
     68,156       (21,296 )     46,860  
Income tax expense (Note A)
     (17,320 )     (618 )     (17,938 )
                         
Consolidated net income
     50,836       (21,914 )     28,922  
                         
Less net income attributable to noncontrolling interest
     (1,320 )     —       (1,320 )
                         
Net income attributable to Mueller Industries, Inc.
   $ 49,516     $ (21,914 )   $ 27,602  
                         
                         
Diluted earnings per share
   $ 1.31     $ (0.58 )   $ 0.73  
                         
                         
(A)  Realization of this insurance settlement resulted in a tax benefit primarily from the utilization of U.K. net operating
losses that were previously reserved.
  
 
                        
                         
 
 
 
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