Mueller Industries, Inc. Reports Second Quarter 2013 Earnings
 
MEMPHIS, Tenn., July 23, 2013 -- Mueller Industries, Inc. (NYSE: MLI) announced today that Mueller’s net income attributable to normal operations in the second quarter of 2013 was $25.5 million, or 90 cents per diluted share.  This compares with net income of $17.9 million, or 47 cents per diluted share, for the same period of 2012.  In addition, during the second quarter of 2013, the Company recognized an after-tax gain of $65.6 million (or $2.33 per diluted share) on the settlement of an insurance claim pertaining to the 2011 fire at its Wynne, Arkansas manufacturing operations.  Including this non-recurring gain, the Company’s net income in the second quarter of 2013 was $91.2 million, or $3.23 per diluted share.
 
Net sales for the second quarter of 2013 were $582.3 million compared with $594.1 million in the second quarter of 2012.  The decrease in net sales was principally due to lower copper costs that impacted the selling prices of the Company’s products.  Copper prices decreased to an average of $3.25 per pound in the second quarter of 2013 versus $3.54 per pound in the second quarter of 2012.
 
Diluted earnings per share from normal operations increased 43 cents in the second quarter of 2013 compared with the same period in 2012, of which, 23 cents was attributable to the reduction in the Company’s outstanding common shares.  The Company repurchased 10.4 million of its common shares in September 2012.  The remaining 20 cent per diluted share increase was attributable to improved performance of the Company’s reportable segments.  The OEM segment posted operating earnings of $20.9 million, an increase of $5.8 million over the same period in 2012.  Excluding the aforementioned insurance gain, the Plumbing & Refrigeration segment posted earnings from normal operations of $25.9 million, an increase of $3.3 million over the same period in 2012.
 
At the end of the second quarter of 2013, cash totaled $261.7 million equal to $9.30 per share and the Company’s current ratio was 3.5 to 1.
 
Regarding the outlook, Greg Christopher, CEO said, “The residential construction market continues to gain momentum, although its progress on a month-to-month basis remains bumpy.  Housing starts totaled 780,000 units in 2012, and are projected to increase by 20 percent in 2013 and by still another 20 percent in 2014.  Despite these gains, many housing market metrics have a long way to go before reaching their pre-recession peaks.
 
“The non-residential construction market remains relatively flat.  This is no surprise as it historically has lagged a recovering economy by about a year.  The non-residential market is important to Mueller and we expect to fully participate in its recovery.”
 
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.
 

*********************
 
 
1
 
 
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.

 
CONTACT
 
Jeffrey A. Martin
 
(901)753-3226
 
 
2
 
 
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

   
For the Quarter Ended
    
For the Six Months Ended
  
(In thousands, except per share data)
  
June 29, 2013
    
June 30, 2012
    
June 29, 2013
    
June 30, 2012
  
                         
Net sales
  
$
582,282
    
$
594,099 
    
$
1,141,972
    
$
1,171,767
  
                                 
Cost of goods sold
    
501,125
      
522,851
      
983,975
      
1,016,026
  
Depreciation and amortization
    
8,328
      
7,919
      
16,482
      
15,448
  
Selling, general, and administrative expense
    
34,814
      
33,487
      
66,157
      
65,089
  
Insurance settlement
    
(106,332
)
    
—
      
(106,332
)
    
(1,500
)
                                 
Operating income
    
144,347
      
29,842
      
181,690
      
76,704
  
                                 
Interest expense
    
(1,101
)
    
(2,721
)
    
(1,697
)
    
(5,358
)
Other income, net
    
319
      
490
      
3,482
      
744
  
                                 
Income before income taxes
    
143,565
      
27,611
      
183,475
      
72,090
  
                                 
Income tax expense
    
(51,723
)
    
(9,071
)
    
(65,199
)
    
(20,733
)
                                 
Consolidated net income
    
91,842
      
18,540
      
118,276
      
51,357
  
                                 
Net income attributable to noncontrolling interest
    
(692
)
    
(623
)
    
(924
)
    
(841
)
                                 
Net income attributable to Mueller Industries, Inc.
  
$
91,150
    
$
17,917
    
$
117,352
    
$
50,516
  
                                 
Weighted average shares for basic
  earnings per share
    
27,840
      
38,029
      
27,831
      
38,021
  
Effect of dilutive stock-based awards
    
370
      
436
      
372
      
440
  
                                 
Adjusted weighted average shares for diluted
  earnings per share
    
28,210
      
38,465
      
28,203
      
38,461
  
                                 
Basic earnings per share
  
$
3.27
    
$
0.47
    
$
4.22
    
$
1.33
  
                                 
Diluted earnings per share
  
$
3.23
    
$
0.47
    
$
4.16
    
$
1.31
  
                                 
Dividends per share
  
$
0.125
    
$
0.10
    
$
0.25
    
$
0.20
  
                                 
Summary Segment Data:
                                
                                 
Net sales:
                                
    Plumbing & Refrigeration Segment
  
$
328,673
    
$
331,688
    
$
640,487
    
$
647,042
  
    OEM Segment
    
257,044
      
268,551
      
510,831
      
539,527
  
    Elimination of intersegment sales
    
(3,435
)
    
(6,140
)
    
(9,346
)
    
(14,802
)
                                 
Net sales
  
$
582,282
    
$
594,099
    
$
1,141,972
    
$
1,171,767
  
                                 
Operating income:
                                
    Plumbing & Refrigeration Segment
  
$
129,810
    
$
22,605
    
$
152,437
    
$
50,863
  
    OEM Segment
    
20,939
      
15,057
      
41,262
      
39,782
  
    Unallocated expenses
    
(6,402
)
    
(7,820
)
    
(12,009
)
    
(13,941
)
                                 
Operating income
  
$
144,347
    
$
29,842
    
$
181,690
    
$
76,704
  
 
 
3
 
 
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
  
June 29, 2013
    
December 29, 2012
  
ASSETS
            
Cash and cash equivalents
  
$
261,667
    
$
198,934
  
Accounts receivable, net
    
305,706
      
271,093
  
Inventories
    
222,825
      
229,434
  
Other current assets
    
58,108
      
47,733
  
                 
    Total current assets
    
848,306
      
747,194
  
                 
Property, plant, and equipment, net
    
238,141
      
233,263
  
Other assets
    
123,428
  
 
  
123,698
  
                 
   
$
1,209,875
    
$
1,104,155
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
            
Current portion of debt
  
$
43,753
    
$
27,570
  
Accounts payable
    
76,713
      
87,574
  
Other current liabilities
    
119,867
      
143,552
  
                 
    Total current liabilities
    
240,333
      
258,696
  
                 
Long-term debt
    
206,800
      
207,300
  
Pension and postretirement liabilities
    
52,206
      
55,019
  
Environmental reserves
    
22,642
      
22,597
  
Deferred income taxes
    
37,147
      
20,910
  
Other noncurrent liabilities
    
1,104
      
1,667
  
                 
    Total liabilities
    
560,232
      
566,189
  
                 
Total Mueller Industries, Inc. stockholders’ equity
    
617,158
      
506,908
  
Noncontrolling interest
    
32,485
      
31,058
  
                 
    Total equity
    
649,643
      
537,966
  
                 
   
$
1,209,875
    
$
1,104,155
  
                 
 
 
4
 
 
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

   
For the Six Months Ended
  
 (In thousands)
  
June 29, 2013
    
June 30, 2012
  
         
Cash flows from operating activities
                
  Consolidated net income
  
$
118,276
    
$
51,357
  
  Reconciliation of consolidated net income to net cash
    provided by operating activities:
                
      Depreciation and amortization
    
16,649
      
15,843
  
      Stock-based compensation expense
    
3,326
      
2,061
  
      Insurance settlement
    
(106,332
)
    
(1,500
)
      Insurance proceeds – noncapital related
    
32,395
      
9,000
  
      (Gain) loss on disposal of properties
    
(2,984
)
    
106
  
      Deferred income taxes
    
12,468
      
(2,930
)
      Income tax benefit from exercise of stock options
    
(95
)
    
(83
)
      Changes in assets and liabilities
                
        Receivables
    
(35,095
)
    
(55,826
)
        Inventories
    
4,705
      
(9,055
)
        Other assets
    
(306
)
    
(1,371
)
        Current liabilities
    
6,150
      
9,121
  
        Other liabilities
    
(423
)
    
285
  
        Other, net
    
420
      
270
  
                 
Net cash provided by operating activities
    
49,154
      
17,278
  
                 
Cash flows from investing activities
                
  Capital expenditures
    
(21,687
)
    
(23,433
)
  Insurance proceeds for property and equipment
    
29,910
      
32,500
  
  Net (deposits into) withdrawals from restricted cash balances
    
(4,721
)
    
4,368
  
  Proceeds from the sales of properties
    
3,016
      
175
  
                 
Net cash provided by investing activities
    
6,518
      
13,610
  
                 
Cash flows from financing activities
                
  Repayments of long-term debt
    
(500
)
    
(148,676
)
  Dividends paid to stockholders of Mueller Industries, Inc.
    
(6,960
)
    
(7,605
)
  Debt issuance cost
    
(50
)
    
—
  
  Issuance (repayment) of debt by joint venture, net
    
15,544
      
(15,842
)
  Net cash received to settle stock-based awards
    
260
      
187
  
  Income tax benefit from exercise of stock options
    
95
      
83
  
                 
Net cash provided by (used in) financing activities
    
8,389
      
(171,853
)
                 
Effect of exchange rate changes on cash
    
(1,328
)
    
483
  
                 
Increase (decrease) in cash and cash equivalents
    
62,733
      
(140,482
)
Cash and cash equivalents at the beginning of the period
    
198,934
      
514,162
  
                 
Cash and cash equivalents at the end of the period
  
$
261,667
    
$
373,680
  
                 
 
 
5
 

MUELLER INDUSTRIES, INC.
Reconciliation of Net Income as Reported to Pro forma Without Insurance Settlement
(Unaudited)

Earnings attributable to normal operations without the 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 was related to a 2011 claim at the Company's Wynne, Arkansas, manufacturing operations.  Reconciliation of earnings attributable to normal operations without the insurance settlement to net income as reported is as follows:

   
For the Quarter Ended
June 29, 2013
  
(In thousands, except per share data)
  
As
Reported
    
Impact of
Insurance
Settlement
    
Pro forma
Without
Insurance
Settlement
  
                         
Operating income
  
$
144,347
    
$
106,332
    
$
38,015
  
                         
Interest expense
    
(1,101
)
    
—
      
(1,101
)
Other income, net
    
319
      
—
      
319
  
                         
Income before income taxes
    
143,565
      
106,332
      
37,233
  
Income tax expense
    
(51,723
)
    
(40,723
)
    
(11,000
)
                         
Consolidated net income
    
91,842
      
65,609
      
26,233
  
Net income attributable to noncontrolling interest
    
(692
)
    
—
      
(692
)
                         
Net income attributable to Mueller Industries, Inc.
  
$
91,150
    
$
65,609
    
$
25,541
  
                         
Diluted earnings per share
  
$
3.23
    
$
2.33
    
$
0.90
  
 
 
6