Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2014 Earnings
 
MEMPHIS, Tenn., February 3, 2015-- Mueller Industries, Inc. (NYSE: MLI) announced today that net income for the fourth quarter ending December 27, 2014 was $18.0 million, or 32 cents per diluted share.  This compares with net income of $15.4 million, or 27 cents per diluted share in the fourth quarter of 2013.
 
During the fourth quarter of 2014, the Company recognized gains on the sale of its ABS plastic pipe equipment and the sale of its U.K. based import distribution business totaling $4.8 million; offset by severance charges of $4.2 million related to the ongoing reorganization of the Yorkshire Copper Tube business acquired in early 2014.
 
For the 2014 fiscal year, net income was $101.6 million, or $ 1.79 per diluted share, on net sales of $2.4 billion.  This compares with net income of $172.6 million, or $3.06 per diluted share, on net sales of $2.2 billion for 2013.  In both 2014 and 2013 net income includes several unusual items. Excluding these unusual items*, fiscal year 2014 net income was $103.3 million, or $1.82 per diluted share, compared to $86.4 million, or $1.53 per diluted share in 2013, a 19 percent increase.
 
Financial and Operating Highlights:
 
●
 Unit volume increases, offset by decreases in copper prices, drove the increase in net sales for both the fourth quarter and the full year.
 
o  
Volume increased 18.9 percent for the quarter and 14.9 percent for the year compared to the same periods in 2013.  Our acquired businesses contributed 5.8 percent and 8.6 percent of the unit volume increases, respectively.
 
o  
The average price of copper for 2014 was $3.12 or 22 cents per pound lower than 2013.  For the fourth quarter the average price of copper was $2.99 or 30 cents per pound lower than the same period the year prior.
 
●
 For the 2014 fiscal year, cash generated from operations was $90.6 million.  The Company ended the year with $352.1 million of cash on hand or $6.19 per share.
 
●
 Debt to total capitalization was 23 percent at year-end and the current ratio was 4.0 to 1.
 
Regarding the outlook, Greg Christopher, Mueller’s CEO said, “We are pleased with the continued improvement in our business performance.  Unit volumes improved in all four quarters in 2014 versus the prior year and continue to rise with the gradual improvement of the markets we serve.  We are encouraged by the market trend and anticipate continued strengthening in 2015.”
 
* See schedule of unusual items attached to this release.
 
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.
 
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Page 1 of 6
 
 
 
 
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,” “encourage,” “anticipate,” 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
 
 
Page 2 of 6
 
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

   
For the Quarter Ended
    
For the Year Ended
  
(In thousands, except per share data)
  
December 27, 2014
    
December 28, 2013
    
December 27, 2014
    
December 28, 2013
  
                         
Net sales
  
$
537,342
    
$
487,715
    
$
2,364,227
    
$
2,158,541
  
                                 
Cost of goods sold
    
468,889
      
421,812
      
2,043,719
      
1,862,089
  
Depreciation and amortization
    
8,084
      
8,030
      
33,735
      
32,394
  
Selling, general, and administrative expense
    
31,228
      
35,836
      
131,740
      
134,914
  
Gain on sale of assets
    
(4,842
)
    
—
      
(6,259
)
    
(39,765
)
Severance
    
4,224
      
—
      
7,296
      
—
  
Impairment charges
    
—
      
—
      
—
      
4,304
  
Insurance settlements
    
—
      
—
      
—
      
(106,332
)
                                 
    Operating income
    
29,759
      
22,037
      
153,996
      
270,937
  
                                 
Interest expense
    
(1,827
)
    
(1,050
)
    
(5,740
)
    
(3,990
)
Other (expense) income, net
    
(683
)
    
127
      
(243
)
    
4,451
  
                                 
    Income before income taxes
    
27,249
      
21,114
      
148,013
      
271,398
  
                                 
Income tax expense
    
(9,200
)
    
(6,094
)
    
(45,479
)
    
(98,109
)
                                 
    Consolidated net income
    
18,049
      
15,020
      
102,534
      
173,289
  
                                 
Net (income) loss attributable to noncontrolling interest
    
(62
)
    
364
      
(974
)
    
(689
)
                                 
    Net income attributable to Mueller Industries, Inc.
  
$
17,987
    
$
15,384
    
$
101,560
    
$
172,600
  
                                 
Weighted average shares for basic earnings per share
    
56,169
      
55,854
      
56,042
      
55,742
  
Effect of dilutive stock-based awards
    
668
      
760
      
726
      
742
  
                                 
Adjusted weighted average shares for diluted earnings per share
    
56,837
      
56,614
      
56,768
      
56,484
  
                                 
Basic earnings per share
  
$
0.32
    
$
0.28
    
$
1.81
    
$
3.10
  
                                 
Diluted earnings per share
  
$
0.32
    
$
0.27
    
$
1.79
    
$
3.06
  
                                 
Dividends per share
  
$
0.0750
    
$
0.0625
    
$
0.3000
    
$
0.2500
  
                                 
Summary Segment Data:
                                
                                 
Net sales:
                                
    Plumbing & Refrigeration Segment
  
$
323,641
    
$
283,197
    
$
1,416,701
    
$
1,225,306
  
    OEM Segment
    
216,592
      
206,557
      
959,914
      
947,784
  
    Elimination of intersegment sales
    
(2,891
)
    
(2,039
)
    
(12,388
)
    
(14,549
)
                                 
Net sales
  
$
537,342
    
$
487,715
    
$
2,364,227
    
$
2,158,541
  
                                 
Operating income:
                                
    Plumbing & Refrigeration Segment
  
$
16,859
    
$
12,438
    
$
93,230
    
$
219,146
  
    OEM Segment
    
17,235
      
15,432
      
85,714
      
76,631
  
    Unallocated expenses
    
(4,335
)
    
(5,833
)
    
(24,948
)
    
(24,840
)
                                 
Operating income
  
$
29,759
    
$
22,037
    
$
153,996
    
$
270,937
  

 
Page 3 of 6
 

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
  
December 27, 2014
    
December 28, 2013
  
ASSETS
            
Cash and cash equivalents
  
$
352,134
    
$
311,800
  
Accounts receivable, net
    
275,065
      
271,847
  
Inventories
    
256,585
      
251,716
  
Other current assets
    
57,429
      
39,354
  
                 
    Total current assets
    
941,213
      
874,717
  
                 
Property, plant, and equipment, net
    
245,910
      
244,457
  
Other assets
    
140,973
      
128,593
  
                 
   
$
1,328,096
    
$
1,247,767
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
            
Current portion of debt
  
$
36,194
    
$
29,083
  
Accounts payable
    
100,735
      
80,897
  
Other current liabilities
    
101,140
      
109,276
  
                 
    Total current liabilities
    
238,069
      
219,256
  
                 
Long-term debt
    
205,250
      
206,250
  
Pension and postretirement liabilities
    
41,556
      
27,426
  
Environmental reserves
    
21,842
      
22,144
  
Deferred income taxes
    
24,556
      
35,975
  
Other noncurrent liabilities
    
1,389
      
849
  
                 
    Total liabilities
    
532,662
      
511,900
  
                 
Total Mueller Industries, Inc. stockholders’ equity
    
762,150
      
703,405
  
Noncontrolling interest
    
33,284
      
32,462
  
                 
    Total equity
    
795,434
      
735,867
  
                 
   
$
1,328,096
    
$
1,247,767
  
                 

 
Page 4 of 6
 
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

   
For the Year Ended
  
 (In thousands)
  
December 27, 2014
    
December 28, 2013
  
         
Cash flows from operating activities
                
  Consolidated net income
  
$
102,534
    
$
173,289
  
  Reconciliation of consolidated net income to net cash
    provided by operating activities:
                
      Depreciation and amortization
    
34,076
      
32,693
  
      Stock-based compensation expense
    
6,265
      
5,704
  
      Insurance settlements
    
—
      
(106,332
)
      Insurance proceeds – noncapital related
    
—
      
32,395
  
      Gain on disposal of assets
    
(5,405
)
    
(42,300
)
      Impairment charges
    
—
      
4,304
  
      Deferred income taxes
    
(6,495
)
    
19,213
  
      Income tax benefit from exercise of stock options
    
(837
)
    
(719
)
      Changes in assets and liabilities, net of business acquired:
                
        Receivables
    
(21,932
)
    
19,110
  
        Inventories
    
1,381
      
5,963
  
        Other assets
    
(23,652
)
    
562
  
        Current liabilities
    
5,849
      
(14,139
)
        Other liabilities
    
(2,223
)
    
(1,935
)
        Other, net
    
1,044
      
705
  
                 
Net cash provided by operating activities
    
90,605
      
128,513
  
                 
Cash flows from investing activities
                
  Capital expenditures
    
(39,173
)
    
(41,349
)
  Acquisition of business, net of cash acquired
    
(30,137
)
    
(55,276
)
  Proceeds from sale of assets, net of cash transferred
    
33,788
      
65,147
  
  Insurance proceeds for property and equipment
    
—
      
29,910
  
  Net deposits into restricted cash balances
    
(2,902
)
    
(1,417
)
                 
Net cash used in investing activities
    
(38,424
)
    
(2,985
)
                 
Cash flows from financing activities
                
  Dividends paid to stockholders of Mueller Industries, Inc.
    
(16,819
)
    
(13,941
)
  Debt issuance cost
    
—
      
(50
)
  Issuance of debt by joint venture, net
    
7,258
      
857
  
  Net cash used to settle stock-based awards
    
(719
)
    
(228
)
  Repurchase of common stock
    
(58
)
    
—
  
  Repayments of long-term debt
    
(1,050
)
    
(1,000
)
  Income tax benefit from exercise of stock options
    
837
      
719
  
                 
Net cash used in financing activities
    
(10,551
)
    
(13,643
)
                 
Effect of exchange rate changes on cash
    
(1,296
)
    
981
  
                 
Increase in cash and cash equivalents
    
40,334
      
112,866
  
Cash and cash equivalents at the beginning of the period
    
311,800
      
198,934
  
                 
Cash and cash equivalents at the end of the period
  
$
352,134
    
$
311,800
  
                 

 
Page 5 of 6
 
MUELLER INDUSTRIES, INC.
Reconciliation of Net Income as Reported to Pro Forma Without Unusual Items
(Unaudited)

Earnings attributable to normal operations without the unusual items noted below is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  Excluding these items is useful, as it measures the operating results that are the outcome of daily operating decisions made in the normal course of business.  Reconciliation of earnings attributable to normal operations without the unusual items to net income as reported is as follows:
   
For the Year Ended December 27, 2014
  
           
Impact of
        
(In thousands, except per share data)
  
As Reported
    
Yorkshire Copper Tube
Severance
    
Gain on
Sale of Assets
    
Pro forma
  
Operating income
  
$
153,996
    
$
7,296
    
$
(6,259
)
  
$
155,033
  
                                 
Interest expense
    
(5,740
)
    
—
      
—
      
(5,740
)
Other expense, net
    
(243
)
    
—
      
—
      
(243
)
                                 
Income before income taxes
    
148,013
      
7,296
      
(6,259
)
    
149,050
  
Income tax expense
    
(45,479
)
    
(1,563
)
    
2,266
      
(44,776
)
                                 
Consolidated net income
    
102,534
      
5,733
      
(3,993
)
    
104,274
  
Net income attributable to non-controlling interest
    
(974
)
    
—
      
—
      
(974
)
                                 
Net income attributable to Mueller Industries, Inc.
  
$
101,560
    
$
5,733
    
$
(3,993
)
  
$
103,300
  
                                 
Diluted earnings per share
  
$
1.79
    
$
0.10
    
$
(0.07
)
  
$
1.82
  

   
For the Year Ended December 28, 2013
  
           
Impact of
          
(In thousands, except per share data)
  
As Reported
    
Insurance
Settlement
    
Gain on
Plastic Sale
    
Impairments
    
Other
    
Pro forma
  
Operating income
  
$
270,937
    
$
(106,332
)
  
$
(39,765
)
  
$
4,304
    
$
2,290
    
$
131,434
  
                                                 
Interest expense
    
(3,990
)
    
—
      
—
      
—
      
—
      
(3,990
)
Other income, net
    
4,451
      
—
      
—
      
—
      
(3,000
)
    
1,451
  
                                                 
Income before income taxes
    
271,398
      
(106,332
)
    
(39,765
)
    
4,304
      
(710
)
    
128,895
  
Income tax expense
    
(98,109
)
    
40,723
      
16,845
      
(1,719
)
    
481
      
(41,779
)
                                                 
Consolidated net income
    
173,289
      
(65,609
)
    
(22,920
)
    
2,585
      
(229
)
    
87,116
  
Net income attributable to non-controlling interest
    
(689
)
    
—
      
—
      
—
      
—
      
(689
)
                                                 
Net income attributable to Mueller Industries, Inc.
  
$
172,600
    
$
(65,609
)
  
$
(22,920
)
  
$
2,585
    
$
(229
)
  
$
86,427
  
                                                 
Diluted earnings per share
  
$
3.06
    
$
(1.16
)
  
$
(0.41
)
  
$
0.05
    
$
(0.01
)
  
$
1.53
  


 
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