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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