Mueller Industries, Inc. Reports Second Quarter 2015 Earnings

MEMPHIS, Tenn., July 21, 2015 -- Mueller Industries, Inc. (NYSE: MLI) announced today net income of $33.7 million, or 59 cents per diluted share, for the second quarter of 2015.  This compares to net income of $35.0 million, or 62 cents per diluted share during the second quarter of 2014.  Excluding unusual items, net income from normal operations for the second quarter of 2015 was $26.9 million, or 47 cents per diluted share, compared with $31.6 million, or 56 cents per diluted share for the second quarter of 2014.

Net sales for the second quarter of 2015 were $555.6 million compared with $649.7 million for the same quarter of the prior year.  Approximately $44.1 million of the decline was due to lower unit volumes, $36.6 million was due to lower selling prices as a result of lower copper prices, and $17.7 million of the decrease was due to divestitures of businesses during 2014.

The unit volume decline was largely impacted by an 8.5 percent reduction in shipments from our Copper Tube and Brass Rod businesses.  U.S. Copper Tube was hindered by production shortfalls caused by challenges associated with the commissioning of the new mill equipment that is being installed and Brass Rod felt the impact of increased competition from imports helped by the weakened Euro.

Financial and Related Highlights for the second quarter:
 
-  
The average price of copper was $2.77 per pound in the second quarter of 2015 compared with $3.10 per pound in the second quarter of 2014.
 
-  
Results for the second quarter of 2015 include final severance charges of $3.4 million related to the rationalization of the U.K. Copper Tube business acquired in the first quarter of 2014.
 
-  
Quarter end cash totaled $299.1 million, or $5.25 per share.
 
-  
Debt to total capitalization ratio was 20.9 percent and the current ratio was 4.4 to 1.
 
Regarding the outlook Greg Christopher, CEO, said, “We are pleased to see the steady improvement in market conditions continuing.  Our major reinvestment projects have hit critical periods where operating our plants and simultaneously installing and commissioning the new processes pose some disruptive stresses but we continue to progress forward.”

In addition he added, “During the second quarter of 2015, we made two acquisitions to support our long term growth strategy in the climate control sector.  On March 30, 2015 we acquired Turbotec Products, Inc., a company that specializes in heat transfer technologies for $14.2 million, and on June 18, 2015 we acquired Sherwood Valve, LLC, a manufacturer of valves for the refrigeration and compressed gas markets for approximately $21.8 million.”
 

 
 
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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.
 

 
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 Six Months Ended
 
(In thousands, except per share data)
 
June 27,
2015
   
June 28,
2014
   
June 27,
2015
   
June 28,
2014
 
                         
Net sales
 
$
555,593
   
$
649,691
   
$
1,092,835
   
$
1,224,065
 
                                 
Cost of goods sold
   
470,365
     
557,775
     
931,199
     
1,053,552
 
Depreciation and amortization
   
8,188
     
8,592
     
16,041
     
16,699
 
Selling, general, and administrative expense
   
33,420
     
33,367
     
66,251
     
66,508
 
Gain on sale of assets
   
(15,376
)
   
     
(15,376
)
   
(1,417
)
Severance
   
3,442
     
1,753
     
3,442
     
2,212
 
                                 
Operating income
   
55,554
     
48,204
     
91,278
     
86,511
 
Interest expense
   
(2,219
)
   
(1,457
)
   
(4,295
)
   
(2,483
)
Other income, net
   
265
     
127
     
370
     
215
 
                                 
Income before income taxes
   
53,600
     
46,874
     
87,353
     
84,243
 
Income tax expense
   
(19,738
)
   
(11,665
)
   
(31,151
)
   
(24,080
)
                                 
Consolidated net income
   
33,862
     
35,209
     
56,202
     
60,163
 
Net income attributable to noncontrolling interest
   
(211
)
   
(164
)
   
(573
)
   
(412
)
                                 
Net income attributable to Mueller Industries, Inc.
 
$
33,651
   
$
35,045
   
$
55,629
   
$
59,751
 
                                 
Weighted average shares for basic earnings per share
   
56,247
     
55,973
     
56,220
     
55,946
 
Effect of dilutive stock-based awards
   
743
     
747
     
737
     
800
 
                                 
Adjusted weighted average shares for diluted earnings per share
   
56,990
     
56,720
     
56,957
     
56,746
 
                                 
Basic earnings per share
 
$
0.60
   
$
0.63
   
$
0.99
   
$
1.07
 
                                 
Diluted earnings per share
 
$
0.59
   
$
0.62
   
$
0.98
   
$
1.05
 
                                 
Dividends per share
 
$
0.075
   
$
0.075
   
$
0.150
   
$
0.150
 
                                 
Summary Segment Data:
                               
                                 
Net sales:
                               
Plumbing & Refrigeration Segment
 
$
327,336
   
$
397,190
   
$
632,353
   
$
735,217
 
OEM Segment
   
230,380
     
255,409
     
465,697
     
495,439
 
Elimination of intersegment sales
   
(2,123
)
   
(2,908
)
   
(5,215
)
   
(6,591
)
                                 
Net sales
 
$
555,593
   
$
649,691
   
$
1,092,835
   
$
1,224,065
 
                                 
Operating income:
                               
Plumbing & Refrigeration Segment
 
$
35,983
   
$
32,330
   
$
55,474
   
$
56,215
 
OEM Segment
   
26,801
     
23,216
     
49,349
     
44,502
 
Unallocated expenses
   
(7,230
)
   
(7,342
)
   
(13,545
)
   
(14,206
)
                                 
Operating income
 
$
55,554
   
$
48,204
   
$
91,278
   
$
86,511
 
                                 

 
 
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
 
June 27,
2015
   
December 27,
 2014
 
ASSETS
           
Cash and cash equivalents
 
$
299,147
   
$
352,134
 
Accounts receivable, net
   
307,008
     
275,065
 
Inventories
   
278,937
     
256,585
 
Other current assets
   
45,680
     
57,429
 
                 
Total current assets
   
930,772
     
941,213
 
                 
Property, plant, and equipment, net
   
261,149
     
245,910
 
Other assets
   
153,037
     
140,973
 
                 
   
$
1,344,958
   
$
1,328,096
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
           
Current portion of debt
 
$
18,014
   
$
36,194
 
Accounts payable
   
89,715
     
100,735
 
Other current liabilities
   
101,772
     
101,140
 
                 
Total current liabilities
   
209,501
     
238,069
 
                 
Long-term debt
   
204,750
     
205,250
 
Pension and postretirement liabilities
   
40,059
     
41,556
 
Environmental reserves
   
21,657
     
21,842
 
Deferred income taxes
   
21,542
     
24,556
 
Other noncurrent liabilities
   
2,790
     
1,389
 
                 
Total liabilities
   
500,299
     
532,662
 
                 
Total Mueller Industries, Inc. stockholders’ equity
   
811,200
     
762,150
 
Noncontrolling interest
   
33,459
     
33,284
 
                 
Total equity
   
844,659
     
795,434
 
                 
   
$
1,344,958
   
$
1,328,096
 
                 
 

 
 
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

   
For the Six Months Ended
 
 (In thousands)
 
June 27,
2015
   
June 28,
2014
 
             
Cash flows from operating activities
               
Consolidated net income
 
$
56,202
   
$
60,163
 
Reconciliation of consolidated net income to net cash provided by (used in) operating activities:
               
Depreciation and amortization
   
16,293
     
16,840
 
Stock-based compensation expense
   
2,966
     
3,526
 
Gain on disposal of assets
   
(15,392
)
   
(1,225
)
Impairment charges
   
570
     
 
Deferred income taxes
   
(1,445
)
   
(6,523
)
Income tax benefit from exercise of stock options
   
(146
)
   
(316
)
Changes in assets and liabilities, net of businesses acquired
               
Receivables
   
(24,304
)
   
(100,413
)
Inventories
   
(5,252
)
   
(20,619
)
Other assets
   
6,963
     
(8,886
)
Current liabilities
   
(19,629
)
   
7,373
 
Other liabilities
   
(415
)
   
(893
)
Other, net
   
739
     
92
 
                 
Net cash provided by (used in) operating activities
   
17,150
     
(50,881
)
                 
Cash flows from investing activities
               
Capital expenditures
   
(15,969
)
   
(18,833
)
Businesses acquired, net of cash acquired
   
(35,978
)
   
(30,137
)
Net withdrawals from restricted cash balances
   
3,486
     
1,815
 
Proceeds from the sale of assets
   
5,518
     
4,874
 
                 
Net cash used in investing activities
   
(42,943
)
   
(42,281
)
                 
Cash flows from financing activities
               
Repayments of long-term debt
   
(500
)
   
(500
)
Dividends paid to stockholders of Mueller Industries, Inc.
   
(8,435
)
   
(8,394
)
Issuance of debt
   
     
22,635
 
(Repayment) issuance of debt by joint venture, net
   
(17,750
)
   
8,903
 
Net cash received to settle stock-based awards
   
125
     
296
 
Repurchase of common stock
   
     
(58
)
Income tax benefit from exercise of stock options
   
146
     
316
 
                 
Net cash (used in) provided by financing activities
   
(26,414
)
   
23,198
 
                 
Effect of exchange rate changes on cash
   
(780
)
   
363
 
                 
Decrease in cash and cash equivalents
   
(52,987
)
   
(69,601
)
Cash and cash equivalents at the beginning of the period
   
352,134
     
311,800
 
                 
Cash and cash equivalents at the end of the period
 
$
299,147
   
$
242,199
 
                 
 

 
 
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MUELLER INDUSTRIES, INC.
Reconciliation of Net Income as Reported to Pro forma without Unusual Items
(Unaudited)

Earnings attributable to normal operations without the gain on sale of assets, severance, and reduction of a valuation allowance 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 these items to net income as reported is as follows:

   
For the Quarter Ended June 27, 2015
 
           
Impact of
       
                     
(In thousands, except per share data)
 
As Reported
   
Yorkshire Copper Tube
Severance
   
Gain on
Sale of Assets
   
Pro forma
 
                         
Operating income
 
$
55,554
   
$
3,442
   
$
(15,376
)
 
$
43,620
 
                                 
Interest expense
   
(2,219
)
   
     
     
(2,219
)
Other income, net
   
265
     
     
     
265
 
                                 
    Income before income taxes
   
53,600
     
3,442
     
(15,376
)
   
41,666
 
Income tax expense
   
(19,738
)
   
(697
)
   
5,905
     
(14,530
)
                                 
    Consolidated net income
   
33,862
     
2,745
     
(9,471
)
   
27,136
 
Net income attributable to non-controlling interest
   
(211
)
   
     
     
(211
)
                                 
Net income attributable to Mueller Industries, Inc.
 
$
33,651
   
$
2,745
   
$
(9,471
)
 
$
26,925
 
                                 
Diluted earnings per share
 
$
0.59
   
$
0.05
   
$
(0.17
)
 
$
0.47
 
                                 

   
For the Quarter Ended June 28, 2014
 
           
Impact of
       
                     
(In thousands, except per share data)
 
As Reported
   
Yorkshire Copper Tube
Severance
   
Reduction of Valuation Allowance
   
Pro forma
 
                         
Operating income
 
$
48,204
   
$
1,753
   
$
   
$
49,957
 
                                 
Interest expense
   
(1,457
)
   
     
     
(1,457
)
Other income, net
   
127
     
     
     
127
 
                                 
    Income before income taxes
   
46,874
     
1,753
     
     
48,627
 
Income tax expense
   
(11,665
)
   
(377
)
   
(4,822
)
   
(16,864
)
                                 
    Consolidated net income
   
35,209
     
1,376
     
(4,822
)
   
31,763
 
Net income attributable to non-controlling interest
   
(164
)
   
     
     
(164
)
                                 
Net income attributable to Mueller Industries, Inc.
 
$
35,045
   
$
1,376
   
$
(4,822
)
 
$
31,599
 
                                 
Diluted earnings per share
 
$
0.62
   
$
0.02
   
$
(0.08
)
 
$
0.56
 
                                 




 
 
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