Mueller Industries, Inc. Reports Third Quarter 2015 Earnings

MEMPHIS, Tenn., October 20, 2015 -- Mueller Industries, Inc. (NYSE: MLI) announced today net income of $17.8 million, or 31 cents per diluted share, for the third quarter of 2015.  This compares to net income of $23.8 million, or 42 cents per diluted share, during the third quarter of 2014.  Net sales for the third quarter of 2015 were $535.2 million compared with $602.8 million for the same quarter of the prior year.
Both revenues and earnings in the third quarter of 2015 were impacted by lower copper prices and lower unit volume in the OEM Segment.  The average price of copper was $2.40 per pound in the third quarter of 2015 compared to $3.16 per pound in the third quarter of 2014.  During the third quarter of 2015, copper declined $0.37 per pound, or 49 percent of the year-over-year decline.
The sharp decline of copper in the quarter put pressure on margins of our FIFO accounting businesses.  OEM volumes in the US continued to be impacted by soft demand in the industrial segment and increased import competition due to the stronger dollar.  OEM volumes in China were impacted by slowing demand due to general domestic economic conditions.

Financial and Operating Highlights for the third quarter of 2015:
-
The impact of the copper decline represented $63.3 million of the $67.6 million reduction in net sales and $13.5 million in lower gross margins.
-
The effective tax rate for the quarter reflects a benefit of $4.2 million related to a reduction to the Company's deferred tax liabilities.
-
The rationalization of the UK copper tube business acquired in 2014 was completed during the quarter.  All associated impairments and redundancy expenses are now complete.
-
During the quarter we completed the acquisition of Great Lakes Copper and invested in a joint venture that acquired Tecumseh Products Company for a total cash investment of $137.4 million.
-
The Company recognized $2.2 million in expenses related to transaction costs linked to the investment in Tecumseh Products Company in the final week of the quarter.
-
Cash provided from operations in the quarter was $78.3 million with the quarter end cash totaling $220.7 million, or $3.86 per share.
-
Debt to total capitalization was 20.5 percent and the current ratio was 3.6 to 1.

Regarding the outlook, Greg Christopher, Mueller's CEO, said "Construction remains positive in both residential and non-residential segments and we expect this trend to continue.  However, uncertainty in the industrial sectors looks to continue into the next few quarters."  He adds, "We have completed the rationalizations of our Yorkshire and Howell acquisitions and we are pleased with their continuing improvement.  Our balance sheet remains solid and cash remains strong after investing $173.3 million in acquisitions and $22.5 million in capital improvements year-to-date 2015."
 
 
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Mueller Industries, Inc. is a an industrial manufacturer that specializes in copper and copper alloy manufacturing while also producing goods made from aluminum, steel, and plastics.  It is headquartered in Memphis, Tennessee and comprises a network of operations in the United States, Canada, Mexico, Great Britain, and China.  Its products include tubing, fittings, valves, vessels, and related items for plumbing and HVACR related piping systems, as well as rod, forgings, extrusions, and various components for OEM applications.  Products are distributed into sectors such as building construction, appliance, defense, energy, and automotive.


*********************
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

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

 
 
For the Quarter Ended
   
For the Nine Months Ended
 
(In thousands, except per share data)
 
September 26, 2015
   
September 27, 2014
   
September 26, 2015
   
September 27, 2014
 
 
 
   
   
   
 
Net sales
 
$
535,184
   
$
602,820
   
$
1,628,019
   
$
1,826,885
 
 
                               
Cost of goods sold
   
467,167
     
521,278
     
1,398,366
     
1,574,830
 
Depreciation and amortization
   
8,749
     
8,952
     
24,790
     
25,651
 
Selling, general, and administrative expense
   
32,241
     
34,004
     
98,492
     
100,512
 
Gain on sale of assets
   
     
     
(15,376
)
   
(1,417
)
Severance
   
     
860
     
3,442
     
3,072
 
 
                               
    Operating income
   
27,027
     
37,726
     
118,305
     
124,237
 
 
                               
Interest expense
   
(1,682
)
   
(1,430
)
   
(5,977
)
   
(3,913
)
Other income, net
   
164
     
225
     
534
     
440
 
 
                               
    Income before income taxes
   
25,509
     
36,521
     
112,862
     
120,764
 
 
                               
Income tax expense
   
(5,223
)
   
(12,199
)
   
(36,374
)
   
(36,279
)
Income/(loss) from unconsolidated subsidiary, net of tax
   
(2,191
)
   
     
(2,191
)
   
 
 
                               
    Consolidated net income
   
18,095
     
24,322
     
74,297
     
84,485
 
 
                               
Net income attributable to noncontrolling interest
   
(295
)
   
(499
)
   
(868
)
   
(911
)
 
                               
    Net income attributable to Mueller Industries, Inc.
 
$
17,800
   
$
23,823
   
$
73,429
   
$
83,574
 
 
                               
Weighted average shares for basic earnings per share
   
56,375
     
56,107
     
56,272
     
55,999
 
Effect of dilutive stock-based awards
   
598
     
637
     
690
     
746
 
 
                               
Adjusted weighted average shares for diluted earnings per share
   
56,973
     
56,744
     
56,962
     
56,745
 
 
                               
Basic earnings per share
 
$
0.32
   
$
0.42
   
$
1.30
   
$
1.49
 
 
                               
Diluted earnings per share
 
$
0.31
   
$
0.42
   
$
1.29
   
$
1.47
 
 
                               
Dividends per share
 
$
0.075
   
$
0.075
   
$
0.225
   
$
0.225
 
 
                               
Summary Segment Data:
                               
 
                               
Net sales:
                               
    Plumbing & Refrigeration Segment
 
$
325,022
   
$
357,843
   
$
957,375
   
$
1,093,060
 
    OEM Segment
   
212,596
     
247,883
     
678,293
     
743,322
 
    Elimination of intersegment sales
   
(2,434
)
   
(2,906
)
   
(7,649
)
   
(9,497
)
 
                               
Net sales
 
$
535,184
   
$
602,820
   
$
1,628,019
   
$
1,826,885
 
 
                               
Operating income:
                               
    Plumbing & Refrigeration Segment
 
$
19,559
   
$
20,156
   
$
75,033
   
$
76,371
 
    OEM Segment
   
13,278
     
23,977
     
62,627
     
68,479
 
    Unallocated expenses
   
(5,810
)
   
(6,407
)
   
(19,355
)
   
(20,613
)
 
                               
Operating income
 
$
27,027
   
$
37,726
   
$
118,305
   
$
124,237
 

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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
September 26, 2015
 
December 27, 2014
 
ASSETS
   
Cash and cash equivalents
 
$
220,745
   
$
352,134
 
Accounts receivable, net
   
299,417
     
275,065
 
Inventories
   
250,799
     
256,585
 
Other current assets
   
54,538
     
57,429
 
 
               
    Total current assets
   
825,499
     
941,213
 
 
               
Property, plant, and equipment, net
   
270,655
     
245,910
 
Other assets
   
277,372
     
140,973
 
 
               
 
 
$
1,373,526
   
$
1,328,096
 
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
           
Current portion of debt
 
$
13,756
   
$
36,194
 
Accounts payable
   
113,597
     
100,735
 
Other current liabilities
   
102,188
     
101,140
 
 
               
    Total current liabilities
   
229,541
     
238,069
 
 
               
Long-term debt
   
204,500
     
205,250
 
Pension and postretirement liabilities
   
44,024
     
41,556
 
Environmental reserves
   
21,566
     
21,842
 
Deferred income taxes
   
22,142
     
24,556
 
Other noncurrent liabilities
   
3,570
     
1,389
 
 
               
    Total liabilities
   
525,343
     
532,662
 
 
               
Total Mueller Industries, Inc. stockholders' equity
   
815,433
     
762,150
 
Noncontrolling interest
   
32,750
     
33,284
 
 
               
    Total equity
   
848,183
     
795,434
 
 
               
 
 
$
1,373,526
   
$
1,328,096
 
 
               
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
 
For the Nine Months Ended
 
 (In thousands)
 
September 26, 2015
   
September 27, 2014
 
 
 
 
Cash flows from operating activities
 
   
 
  Consolidated net income
 
$
74,297
   
$
84,485
 
  Reconciliation of consolidated net income to net cash
    provided by operating activities:
               
     Depreciation and amortization
   
25,132
     
25,888
 
     Stock-based compensation expense
   
4,611
     
4,957
 
     Equity in losses of unconsolidated subsidiary
   
2,191
     
 
     Gain on disposal of assets
   
(14,875
)
   
(1,146
)
     Impairment charges
   
570
     
 
     Deferred income taxes
   
(8,262
)
   
(6,908
)
     Income tax benefit from exercise of stock options
   
(953
)
   
(829
)
     Changes in assets and liabilities, net of businesses acquired:
               
       Receivables
   
5,249
     
(62,854
)
       Inventories
   
29,901
     
(14,868
)
       Other assets
   
4,302
     
(15,272
)
       Current liabilities
   
(27,580
)
   
(8,675
)
       Other liabilities
   
740
     
(797
)
       Other, net
   
145
     
223
 
 
               
Net cash provided by operating activities
   
95,468
     
4,204
 
 
               
Cash flows from investing activities
               
  Capital expenditures
   
(22,502
)
   
(28,406
)
  Businesses acquired, net of cash acquired
   
(107,405
)
   
(30,137
)
  Net withdrawals from restricted cash balances
   
1,822
     
2,507
 
  Investment in unconsolidated subsidiary
   
(65,900
)
   
 
  Proceeds from the sales of assets
   
5,521
     
4,920
 
 
               
Net cash used in investing activities
   
(188,464
)
   
(51,116
)
 
               
Cash flows from financing activities
               
  Dividends paid to stockholders of Mueller Industries, Inc.
   
(12,669
)
   
(12,606
)
  Issuance of debt by Mueller Europe, Limited, net
   
     
12,008
 
  Repayment of debt by joint venture, net
   
(21,597
)
   
(3,170
)
  Net cash used to settle stock-based awards
   
(718
)
   
(887
)
  Repurchase of common stock
   
     
(58
)
  Repayments of long-term debt
   
(750
)
   
(800
)
  Income tax benefit from exercise of stock options
   
953
     
829
 
 
               
Net cash used in financing activities
   
(34,781
)
   
(4,684
)
 
               
Effect of exchange rate changes on cash
   
(3,612
)
   
(346
)
 
               
Decrease in cash and cash equivalents
   
(131,389
)
   
(51,942
)
Cash and cash equivalents at the beginning of the period
   
352,134
     
311,800
 
 
               
Cash and cash equivalents at the end of the period
 
$
220,745
   
$
259,858
 
 
               




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