For the quarterly period ended July 2, 2016
|
Commission file number 1–6770
|
Delaware
|
25-0790410
|
(State or other jurisdiction
|
(I.R.S. Employer
|
of incorporation or organization)
|
Identification No.)
|
8285 Tournament Drive, Suite 150
|
|
Memphis, Tennessee
|
38125
|
(Address of principal executive offices)
|
(Zip Code)
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Large accelerated filer ☒
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company ☐
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Page Number
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For the Quarter Ended
|
For the Six Months Ended
|
|||||||||||||||
(In thousands, except per share data)
|
July 2, 2016
|
June 27, 2015
|
July 2, 2016
|
June 27, 2015
|
|||||||||||||
|
|||||||||||||||||
Net sales
|
$
|
544,071
|
$
|
555,593
|
$
|
1,076,880
|
$
|
1,092,835
|
|||||||||
|
|||||||||||||||||
Cost of goods sold
|
456,060
|
470,365
|
902,702
|
931,199
|
|||||||||||||
Depreciation and amortization
|
9,061
|
8,188
|
17,981
|
16,041
|
|||||||||||||
Selling, general, and administrative expense
|
34,514
|
33,420
|
70,294
|
66,251
|
|||||||||||||
Gain on sale of assets
|
—
|
(15,376
|
)
|
—
|
(15,376
|
)
|
|||||||||||
Severance
|
—
|
3,442
|
—
|
3,442
|
|||||||||||||
|
|||||||||||||||||
Operating income
|
44,436
|
55,554
|
85,903
|
91,278
|
|||||||||||||
|
|||||||||||||||||
Interest expense
|
(1,692
|
)
|
(2,219
|
)
|
(3,540
|
)
|
(4,295
|
)
|
|||||||||
Other income, net
|
515
|
265
|
760
|
370
|
|||||||||||||
|
|||||||||||||||||
Income before income taxes
|
43,259
|
53,600
|
83,123
|
87,353
|
|||||||||||||
|
|||||||||||||||||
Income tax expense
|
(14,005
|
)
|
(19,738
|
)
|
(28,126
|
)
|
(31,151
|
)
|
|||||||||
(Loss) income from unconsolidated affiliates, net of tax
|
(995
|
)
|
—
|
1,927
|
—
|
||||||||||||
|
|||||||||||||||||
Consolidated net income
|
28,259
|
33,862
|
56,924
|
56,202
|
|||||||||||||
|
|||||||||||||||||
Net income attributable to noncontrolling interests
|
(462
|
)
|
(211
|
)
|
(497
|
)
|
(573
|
)
|
|||||||||
|
|||||||||||||||||
Net income attributable to Mueller Industries, Inc.
|
$
|
27,797
|
$
|
33,651
|
$
|
56,427
|
$
|
55,629
|
|||||||||
|
|||||||||||||||||
Weighted average shares for basic earnings per share
|
56,511
|
56,247
|
56,489
|
56,220
|
|||||||||||||
Effect of dilutive stock-based awards
|
418
|
743
|
456
|
737
|
|||||||||||||
|
|||||||||||||||||
Adjusted weighted average shares for diluted earnings per share
|
56,929
|
56,990
|
56,945
|
56,957
|
|||||||||||||
|
|||||||||||||||||
Basic earnings per share
|
$
|
0.49
|
$
|
0.60
|
$
|
1.00
|
$
|
0.99
|
|||||||||
|
|||||||||||||||||
Diluted earnings per share
|
$
|
0.49
|
$
|
0.59
|
$
|
0.99
|
$
|
0.98
|
|||||||||
|
|||||||||||||||||
Dividends per share
|
$
|
0.100
|
$
|
0.075
|
$
|
0.175
|
$
|
0.150
|
|||||||||
|
|||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
|
|
For the Quarter Ended
|
For the Six Months Ended
|
|||||||||||||||
(In thousands)
|
July 2, 2016
|
June 27, 2015
|
July 2, 2016
|
June 27, 2015
|
|||||||||||||
|
|||||||||||||||||
Consolidated net income
|
$
|
28,259
|
$
|
33,862
|
$
|
56,924
|
$
|
56,202
|
|||||||||
|
|||||||||||||||||
Other comprehensive income (loss), net of tax:
|
|||||||||||||||||
Foreign currency translation
|
(10,186
|
)
|
7,056
|
(11,297
|
)
|
(1,348
|
)
|
||||||||||
Net change with respect to derivative instruments and hedging activities
|
700
|
(1)
|
(903
|
)
|
(2)
|
1,294
|
(3)
|
(1,101
|
)
|
(4)
|
|||||||
Net actuarial (gain) loss on pension and postretirement obligations
|
1,530
|
(5)
|
(647
|
)
|
(6)
|
2,702
|
(7)
|
769
|
(8)
|
||||||||
Attributable to unconsolidated affiliates
|
1,438
|
(9)
|
—
|
1,438
|
(9)
|
—
|
|||||||||||
Other, net
|
9
|
34
|
23
|
7
|
|||||||||||||
|
|||||||||||||||||
Total other comprehensive (loss) income
|
(6,509
|
)
|
5,540
|
(5,840
|
)
|
(1,673
|
)
|
||||||||||
|
|||||||||||||||||
Consolidated comprehensive income
|
21,750
|
39,402
|
51,084
|
54,529
|
|||||||||||||
Comprehensive loss attributable to noncontrolling interests
|
123
|
520
|
862
|
175
|
|||||||||||||
|
|||||||||||||||||
Comprehensive income attributable to Mueller Industries, Inc.
|
$
|
21,873
|
$
|
39,922
|
$
|
51,946
|
$
|
54,704
|
|||||||||
|
|||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
|
(In thousands, except share data)
|
July 2,
2016
|
December 26,
2015
|
||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
283,161
|
$
|
274,844
|
||||
Accounts receivable, less allowance for doubtful accounts of $565 in 2016 and $623 in 2015
|
305,332
|
251,571
|
||||||
Inventories
|
249,954
|
239,378
|
||||||
Other current assets
|
27,276
|
34,608
|
||||||
|
||||||||
Total current assets
|
865,723
|
800,401
|
||||||
|
||||||||
Property, plant, and equipment, net
|
297,939
|
280,224
|
||||||
Goodwill, net
|
128,339
|
120,252
|
||||||
Intangible assets, net
|
39,050
|
40,636
|
||||||
Investment in unconsolidated affiliates
|
70,077
|
65,900
|
||||||
Other assets
|
19,347
|
31,388
|
||||||
|
||||||||
Total assets
|
$
|
1,420,475
|
$
|
1,338,801
|
||||
|
||||||||
Liabilities
|
||||||||
Current liabilities:
|
||||||||
Current portion of debt
|
$
|
16,226
|
$
|
11,760
|
||||
Accounts payable
|
105,138
|
88,051
|
||||||
Accrued wages and other employee costs
|
31,199
|
35,636
|
||||||
Other current liabilities
|
65,387
|
73,982
|
||||||
|
||||||||
Total current liabilities
|
217,950
|
209,429
|
||||||
|
||||||||
Long-term debt, less current portion
|
213,646
|
204,250
|
||||||
Pension liabilities
|
15,435
|
17,449
|
||||||
Postretirement benefits other than pensions
|
17,268
|
17,427
|
||||||
Environmental reserves
|
20,830
|
20,943
|
||||||
Deferred income taxes
|
13,644
|
7,161
|
||||||
Other noncurrent liabilities
|
2,930
|
2,440
|
||||||
|
||||||||
Total liabilities
|
501,703
|
479,099
|
||||||
|
||||||||
Equity
|
||||||||
Mueller Industries, Inc. stockholders' equity:
|
||||||||
Preferred stock - $1.00 par value; shares authorized 5,000,000; none outstanding
|
—
|
—
|
||||||
Common stock - $.01 par value; shares authorized 100,000,000; issued 80,183,004; outstanding 57,167,406 in 2016 and 57,158,608 in 2015
|
802
|
802
|
||||||
Additional paid-in capital
|
274,928
|
271,158
|
||||||
Retained earnings
|
1,110,010
|
1,063,543
|
||||||
Accumulated other comprehensive loss
|
(59,472
|
)
|
(54,990
|
)
|
||||
Treasury common stock, at cost
|
(453,613
|
)
|
(453,228
|
)
|
||||
|
||||||||
Total Mueller Industries, Inc. stockholders' equity
|
872,655
|
827,285
|
||||||
Noncontrolling interests
|
46,117
|
32,417
|
||||||
|
||||||||
Total equity
|
918,772
|
859,702
|
||||||
|
||||||||
Commitments and contingencies
|
—
|
—
|
||||||
|
||||||||
Total liabilities and equity
|
$
|
1,420,475
|
$
|
1,338,801
|
||||
|
||||||||
See accompanying notes to condensed consolidated financial statements.
|
|
For the Six Months Ended
|
|||||||
(In thousands)
|
July 2, 2016
|
June 27, 2015
|
||||||
|
||||||||
Cash flows from operating activities
|
||||||||
Consolidated net income
|
$
|
56,924
|
$
|
56,202
|
||||
Reconciliation of consolidated net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
18,162
|
16,293
|
||||||
Stock-based compensation expense
|
2,874
|
2,966
|
||||||
Equity in earnings of unconsolidated affiliates
|
(1,927
|
)
|
—
|
|||||
Gain on disposal of assets
|
(555
|
)
|
(15,392
|
)
|
||||
Impairment charges
|
—
|
570
|
||||||
Deferred income taxes
|
3,548
|
(1,445
|
)
|
|||||
Income tax benefit from exercise of stock options
|
(186
|
)
|
(146
|
)
|
||||
Changes in assets and liabilities, net of businesses acquired:
|
||||||||
Receivables
|
(52,334
|
)
|
(24,304
|
)
|
||||
Inventories
|
1,176
|
(5,252
|
)
|
|||||
Other assets
|
17,009
|
6,963
|
||||||
Current liabilities
|
(1,314
|
)
|
(19,629
|
)
|
||||
Other liabilities
|
(1,440
|
)
|
(415
|
)
|
||||
Other, net
|
(72
|
)
|
739
|
|||||
|
||||||||
Net cash provided by operating activities
|
41,865
|
17,150
|
||||||
|
||||||||
Cash flows from investing activities
|
||||||||
Capital expenditures
|
(10,248
|
)
|
(15,969
|
)
|
||||
Acquisition of businesses, net of cash acquired
|
(20,533
|
)
|
(35,978
|
)
|
||||
Net withdrawals from restricted cash balances
|
1,508
|
3,486
|
||||||
Proceeds from the sale of assets
|
1,482
|
5,518
|
||||||
|
||||||||
Net cash used in investing activities
|
(27,791
|
)
|
(42,943
|
)
|
||||
|
||||||||
Cash flows from financing activities
|
||||||||
Repayments of long-term debt
|
(500
|
)
|
(500
|
)
|
||||
Dividends paid to stockholders of Mueller Industries, Inc.
|
(9,887
|
)
|
(8,435
|
)
|
||||
Issuance (repayment) of debt by joint ventures, net
|
4,426
|
(17,750
|
)
|
|||||
Issuance of debt
|
2,000
|
—
|
||||||
Net cash received to settle stock-based awards
|
326
|
125
|
||||||
Income tax benefit from exercise of stock options
|
186
|
146
|
||||||
|
||||||||
Net cash used in financing activities
|
(3,449
|
)
|
(26,414
|
)
|
||||
|
||||||||
Effect of exchange rate changes on cash
|
(2,308
|
)
|
(780
|
)
|
||||
|
||||||||
Increase (decrease) in cash and cash equivalents
|
8,317
|
(52,987
|
)
|
|||||
Cash and cash equivalents at the beginning of the period
|
274,844
|
352,134
|
||||||
|
||||||||
Cash and cash equivalents at the end of the period
|
$
|
283,161
|
$
|
299,147
|
||||
|
||||||||
See accompanying notes to condensed consolidated financial statements.
|
|
For the Quarter Ended July 2, 2016
|
|||||||||||||||||||
(In thousands)
|
Piping Systems
|
Industrial Metals
|
Climate
|
Corporate and Eliminations
|
Total
|
|||||||||||||||
|
||||||||||||||||||||
Net sales
|
$
|
388,662
|
$
|
127,737
|
$
|
31,359
|
$
|
(3,687
|
)
|
$
|
544,071
|
|||||||||
|
||||||||||||||||||||
Cost of goods sold
|
333,356
|
104,874
|
22,448
|
(4,618
|
)
|
456,060
|
||||||||||||||
Depreciation and amortization
|
5,787
|
2,120
|
618
|
536
|
9,061
|
|||||||||||||||
Selling, general, and administrative expense
|
16,560
|
3,619
|
2,456
|
11,879
|
34,514
|
|||||||||||||||
|
||||||||||||||||||||
Operating income
|
32,959
|
17,124
|
5,837
|
(11,484
|
)
|
44,436
|
||||||||||||||
Interest expense
|
(1,692
|
)
|
||||||||||||||||||
Other income, net
|
515
|
|||||||||||||||||||
Income before taxes
|
$
|
43,259
|
|
For the Quarter Ended June 27, 2015
|
|||||||||||||||||||
(In thousands)
|
Piping Systems
|
Industrial Metals
|
Climate
|
Corporate and Eliminations
|
Total
|
|||||||||||||||
|
||||||||||||||||||||
Net sales
|
$
|
379,750
|
$
|
145,228
|
$
|
31,498
|
$
|
(883
|
)
|
$
|
555,593
|
|||||||||
|
||||||||||||||||||||
Cost of goods sold
|
326,338
|
120,808
|
24,134
|
(915
|
)
|
470,365
|
||||||||||||||
Depreciation and amortization
|
5,335
|
1,643
|
614
|
596
|
8,188
|
|||||||||||||||
Selling, general, and administrative expense
|
16,776
|
2,302
|
2,500
|
11,842
|
33,420
|
|||||||||||||||
Gain on sale of assets
|
(15,376
|
)
|
—
|
—
|
—
|
(15,376
|
)
|
|||||||||||||
Severance
|
3,442
|
—
|
—
|
—
|
3,442
|
|||||||||||||||
|
||||||||||||||||||||
Operating income
|
43,235
|
20,475
|
4,250
|
(12,406
|
)
|
55,554
|
||||||||||||||
Interest expense
|
(2,219
|
)
|
||||||||||||||||||
Other income, net
|
265
|
|||||||||||||||||||
Income before taxes
|
$
|
53,600
|
|
For the Six Months Ended July 2, 2016
|
|||||||||||||||||||
(In thousands)
|
Piping Systems
|
Industrial Metals
|
Climate
|
Corporate and Eliminations
|
Total
|
|||||||||||||||
|
||||||||||||||||||||
Net sales
|
$
|
757,552
|
$
|
262,258
|
$
|
62,065
|
$
|
(4,995
|
)
|
$
|
1,076,880
|
|||||||||
|
||||||||||||||||||||
Cost of goods sold
|
647,148
|
214,103
|
46,153
|
(4,702
|
)
|
902,702
|
||||||||||||||
Depreciation and amortization
|
11,436
|
4,255
|
1,217
|
1,073
|
17,981
|
|||||||||||||||
Selling, general, and administrative expense
|
34,850
|
6,864
|
4,979
|
23,601
|
70,294
|
|||||||||||||||
|
||||||||||||||||||||
Operating income
|
64,118
|
37,036
|
9,716
|
(24,967
|
)
|
85,903
|
||||||||||||||
Interest expense
|
(3,540
|
)
|
||||||||||||||||||
Other income, net
|
760
|
|||||||||||||||||||
Income before taxes
|
$
|
83,123
|
|
For the Six Months Ended June 27, 2015
|
|||||||||||||||||||
(In thousands)
|
Piping Systems
|
Industrial Metals
|
Climate
|
Corporate and Eliminations
|
Total
|
|||||||||||||||
|
||||||||||||||||||||
Net sales
|
$
|
741,232
|
$
|
296,264
|
$
|
57,309
|
$
|
(1,970
|
)
|
$
|
1,092,835
|
|||||||||
|
||||||||||||||||||||
Cost of goods sold
|
639,028
|
248,532
|
45,401
|
(1,762
|
)
|
931,199
|
||||||||||||||
Depreciation and amortization
|
10,522
|
3,298
|
1,039
|
1,182
|
16,041
|
|||||||||||||||
Selling, general, and administrative expense
|
34,122
|
5,000
|
4,354
|
22,775
|
66,251
|
|||||||||||||||
Gain on sale of assets
|
(15,376
|
)
|
—
|
—
|
—
|
(15,376
|
)
|
|||||||||||||
Severance
|
3,442
|
—
|
—
|
—
|
3,442
|
|||||||||||||||
|
||||||||||||||||||||
Operating income
|
69,494
|
39,434
|
6,515
|
(24,165
|
)
|
91,278
|
||||||||||||||
Interest expense
|
(4,295
|
)
|
||||||||||||||||||
Other income, net
|
370
|
|||||||||||||||||||
Income before taxes
|
$
|
87,353
|
(In thousands)
|
July 2,
2016
|
December 26,
2015
|
||||||
|
||||||||
Segment assets:
|
||||||||
Piping Systems
|
$
|
863,138
|
$
|
811,343
|
||||
Industrial Metals
|
160,655
|
153,102
|
||||||
Climate
|
66,383
|
61,672
|
||||||
General Corporate
|
330,299
|
312,684
|
||||||
|
||||||||
$
|
1,420,475
|
$
|
1,338,801
|
|||||
|
(In thousands)
|
July 2,
2016
|
December 26,
2015
|
||||||
|
||||||||
Raw materials and supplies
|
$
|
64,206
|
$
|
58,987
|
||||
Work-in-process
|
36,604
|
25,161
|
||||||
Finished goods
|
154,593
|
161,410
|
||||||
Valuation reserves
|
(5,449
|
)
|
(6,180
|
)
|
||||
|
||||||||
Inventories
|
$
|
249,954
|
$
|
239,378
|
||||
|
|
Asset Derivatives
|
Liability Derivatives
|
||||||||||||||||||
|
|
Fair Value
|
|
Fair Value
|
||||||||||||||||
(In thousands)
|
Balance Sheet Location
|
July 2,
2016
|
December 26,
2015
|
Balance Sheet Location
|
July 2,
2016
|
December 26,
2015
|
||||||||||||||
Hedging instrument:
|
|
|
||||||||||||||||||
Commodity contracts - gains
|
Other current assets
|
$
|
1,761
|
$
|
60
|
Other current liabilities
|
$
|
24
|
$
|
238
|
||||||||||
Commodity contracts - losses
|
Other current assets
|
(85
|
)
|
—
|
Other current liabilities
|
(522
|
)
|
(1,864
|
)
|
|||||||||||
Interest rate swap
|
Other assets
|
—
|
—
|
Other liabilities
|
(2,407
|
)
|
(1,692
|
)
|
||||||||||||
Total derivatives (1)
|
|
$
|
1,676
|
$
|
60
|
|
$
|
(2,905
|
)
|
$
|
(3,318
|
)
|
||||||||
|
|
|
||||||||||||||||||
(1) Does not include the impact of cash collateral received from or provided to counterparties.
|
||||||||||||||||||||
|
|
|
|
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(In thousands)
|
Location
|
July 2, 2016
|
June 27, 2015
|
July 2, 2016
|
June 27, 2015
|
|||||||||||||
Fair value hedges:
|
|
|||||||||||||||||
(Loss) gain on commodity contracts (qualifying)
|
Cost of goods sold
|
$
|
(332
|
)
|
$
|
1,256
|
$
|
(383
|
)
|
$
|
1,468
|
|||||||
Gain (loss) on hedged item - Inventory
|
Cost of goods sold
|
288
|
(1,403
|
)
|
350
|
(1,650
|
)
|
|||||||||||
Undesignated derivatives:
|
|
|||||||||||||||||
Gain on commodity contracts (nonqualifying)
|
Cost of goods sold
|
1,326
|
1,046
|
1,820
|
1,279
|
|
Three Months Ended July 2, 2016
|
|||||||||
(In thousands)
|
Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax
|
Classification Gains (Losses)
|
Loss (Gain) Reclassified from AOCI (Effective Portion), Net of Tax
|
|||||||
Cash flow hedges:
|
|
|||||||||
Commodity contracts
|
$
|
2,464
|
Cost of goods sold
|
$
|
(1,359
|
)
|
||||
Interest rate swap
|
(115
|
)
|
Interest expense
|
59
|
||||||
Other
|
(349
|
)
|
Other
|
—
|
||||||
Total
|
$
|
2,000
|
Total
|
$
|
(1,300
|
)
|
|
Three Months Ended June 27, 2015
|
|||||||||
(In thousands)
|
Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax
|
Classification Gains (Losses)
|
Loss (Gain) Reclassified from AOCI (Effective Portion), Net of Tax
|
|||||||
Cash flow hedges:
|
|
|||||||||
Commodity contracts
|
$
|
(1,159
|
)
|
Cost of goods sold
|
$
|
(81
|
)
|
|||
Interest rate swap
|
267
|
Interest expense
|
63
|
|||||||
Other
|
7
|
—
|
||||||||
Total
|
$
|
(885
|
)
|
$
|
(18
|
)
|
|
Six Months Ended July 2, 2016
|
|||||||||
(In thousands)
|
Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax
|
Classification Gains (Losses)
|
Loss (Gain) Reclassified from AOCI (Effective Portion), Net of Tax | |||||||
Cash flow hedges:
|
|
|||||||||
Commodity contracts
|
$
|
3,337
|
Cost of goods sold
|
$
|
(1,291
|
)
|
||||
Interest rate swap
|
(585
|
)
|
Interest expense
|
128
|
||||||
Other
|
(295
|
)
|
Other
|
—
|
||||||
Total
|
$
|
2,457
|
$
|
(1,163
|
)
|
|
Six Months Ended June 27, 2015
|
||||||||
(In thousands)
|
Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax
|
Classification Gains (Losses)
|
Loss (Gain) Reclassified from AOCI (Effective Portion), Net of Tax | ||||||
Cash flow hedges:
|
|
||||||||
Commodity contracts
|
$
|
(885
|
)
|
Cost of goods sold
|
$
|
490
|
|||
Interest rate swap
|
(765
|
)
|
Interest expense
|
131
|
|||||
Other
|
(72
|
)
|
Other
|
—
|
|||||
Total
|
$
|
(1,722
|
)
|
$
|
621
|
(In thousands)
|
March 31,
2016
|
September 30,
2015
|
||||||
|
||||||||
Current assets
|
$
|
248,511
|
$
|
251,389
|
||||
Noncurrent assets
|
119,900
|
112,156
|
||||||
Current liabilities
|
158,000
|
178,784
|
||||||
Noncurrent liabilities
|
70,237
|
63,643
|
||||||
|
March 31, 2016
|
|||||||
(In thousands)
|
For the Quarter Ended
|
For the Six Months Ended
|
||||||
|
||||||||
Net sales
|
$
|
138,900
|
$
|
290,500
|
||||
Gross profit
|
19,500
|
37,500
|
||||||
Net income
|
(1,990
|
)
|
3,854
|
|
For the Quarter Ended
|
For the Six Months Ended
|
||||||||||||||
(In thousands)
|
July 2,
2016
|
June 27,
2015
|
July 2,
2016
|
June 27,
2015
|
||||||||||||
|
||||||||||||||||
Pension benefits:
|
||||||||||||||||
Service cost
|
$
|
165
|
$
|
228
|
$
|
360
|
$
|
500
|
||||||||
Interest cost
|
1,969
|
2,027
|
3,944
|
4,081
|
||||||||||||
Expected return on plan assets
|
(2,466
|
)
|
(2,655
|
)
|
(4,932
|
)
|
(5,309
|
)
|
||||||||
Amortization of net loss
|
746
|
656
|
1,520
|
1,370
|
||||||||||||
|
||||||||||||||||
Net periodic benefit cost
|
$
|
414
|
$
|
256
|
$
|
892
|
$
|
642
|
||||||||
|
||||||||||||||||
Other benefits:
|
||||||||||||||||
Service cost
|
$
|
60
|
$
|
84
|
$
|
122
|
$
|
180
|
||||||||
Interest cost
|
149
|
190
|
305
|
386
|
||||||||||||
Amortization of prior service (credit) cost
|
(224
|
)
|
1
|
(448
|
)
|
3
|
||||||||||
Amortization of net gain
|
(20
|
)
|
(16
|
)
|
(18
|
)
|
(13
|
)
|
||||||||
|
||||||||||||||||
Net periodic benefit (income) cost
|
$
|
(35
|
)
|
$
|
259
|
$
|
(39
|
)
|
$
|
556
|
|
For the Six Months Ended July 2, 2016
|
|||||||||||||||||||
(In thousands)
|
Cumulative Translation Adjustment
|
Unrealized (Losses)/Gains on Derivatives
|
Minimum Pension/OPEB Liability Adjustment
|
Other
|
Total
|
|||||||||||||||
|
||||||||||||||||||||
Balance at December 26, 2015
|
$
|
(24,773
|
)
|
$
|
(2,009
|
)
|
$
|
(28,429
|
)
|
$
|
221
|
$
|
(54,990
|
)
|
||||||
|
||||||||||||||||||||
Other comprehensive income (loss) before reclassifications
|
(9,939
|
)
|
2,457
|
1,910
|
1,461
|
(4,111
|
)
|
|||||||||||||
Amounts reclassified from AOCI
|
—
|
(1,163
|
)
|
792
|
—
|
(371
|
)
|
|||||||||||||
|
||||||||||||||||||||
Net current-period other comprehensive income
|
(9,939
|
)
|
1,294
|
2,702
|
1,461
|
(4,482
|
)
|
|||||||||||||
|
||||||||||||||||||||
Balance at July 2, 2016
|
$
|
(34,712
|
)
|
$
|
(715
|
)
|
$
|
(25,727
|
)
|
$
|
1,682
|
$
|
(59,472
|
)
|
|
For the Six Months Ended June 27, 2015
|
|||||||||||||||||||
(In thousands)
|
Cumulative Translation Adjustment
|
Unrealized (Losses)/Gains on Derivatives
|
Minimum Pension/OPEB Liability Adjustment
|
Other
|
Total
|
|||||||||||||||
|
||||||||||||||||||||
Balance at December 27, 2014
|
$
|
(7,076
|
)
|
$
|
(953
|
)
|
$
|
(35,164
|
)
|
$
|
270
|
$
|
(42,923
|
)
|
||||||
|
||||||||||||||||||||
Other comprehensive income (loss) before reclassifications
|
(947
|
)
|
(1,722
|
)
|
(229
|
)
|
7
|
(2,891
|
)
|
|||||||||||
Amounts reclassified from AOCI
|
—
|
621
|
998
|
—
|
1,619
|
|||||||||||||||
|
||||||||||||||||||||
Net current-period other comprehensive income
|
(947
|
)
|
(1,101
|
)
|
769
|
7
|
(1,272
|
)
|
||||||||||||
|
||||||||||||||||||||
Balance at June 27, 2015
|
$
|
(8,023
|
)
|
$
|
(2,054
|
)
|
$
|
(34,395
|
)
|
$
|
277
|
$
|
(44,195
|
)
|
|
Amount reclassified from AOCI
|
||||||||
For the Three Months Ended
|
|||||||||
(In thousands)
|
July 2, 2016
|
June 27, 2015
|
Affected line item
|
||||||
|
|||||||||
Unrealized losses/(gains) on derivatives:
|
|
||||||||
Commodity contracts
|
$
|
(2,108
|
)
|
$
|
(111
|
)
|
Cost of goods sold
|
||
Interest rate swap
|
92
|
98
|
Interest expense
|
||||||
|
716
|
(5
|
)
|
Income tax expense
|
|||||
|
(1,300
|
)
|
(18
|
)
|
Net of tax
|
||||
|
—
|
—
|
Noncontrolling interests
|
||||||
|
|
||||||||
|
$
|
(1,300
|
)
|
$
|
(18
|
)
|
Net of tax and noncontrolling
interests
|
||
|
|
||||||||
Amortization of net loss and prior service cost on employee benefit plans
|
$
|
502
|
$
|
641
|
Selling, general, and administrative
expense
|
||||
|
(122
|
)
|
(164
|
)
|
Income tax expense
|
||||
|
380
|
477
|
Net of tax
|
||||||
|
—
|
—
|
Noncontrolling interests
|
||||||
|
|
||||||||
|
$
|
380
|
$
|
477
|
Net of tax and noncontrolling
interests
|
|
Amount reclassified from AOCI
|
||||||||
For the Six Months Ended
|
|||||||||
(In thousands)
|
July 2, 2016
|
June 27, 2015
|
Affected line item
|
||||||
|
|||||||||
Unrealized losses/(gains) on derivatives:
|
|
||||||||
Commodity contracts
|
$
|
(1,871
|
)
|
$
|
651
|
Cost of goods sold
|
|||
Interest rate swap
|
200
|
204
|
Interest expense
|
||||||
|
508
|
(234
|
)
|
Income tax expense
|
|||||
|
(1,163
|
)
|
621
|
Net of tax
|
|||||
|
—
|
—
|
Noncontrolling interests
|
||||||
|
|
||||||||
|
$
|
(1,163
|
)
|
$
|
621
|
Net of tax and noncontrolling
interests
|
|||
|
|
||||||||
Amortization of net loss and prior service cost on employee benefit plans
|
$
|
1,054
|
$
|
1,360
|
Selling, general, and administrative
expense
|
||||
|
(262
|
)
|
(362
|
)
|
Income tax expense
|
||||
|
792
|
998
|
Net of tax
|
||||||
|
—
|
—
|
Noncontrolling interests
|
||||||
|
|
||||||||
|
$
|
792
|
$
|
998
|
Net of tax and noncontrolling
interests
|
(In thousands)
|
Noncontrolling Interests
|
|||
|
||||
Balance at December 26, 2015
|
$
|
32,417
|
||
Purchase of Jungwoo-Mueller
|
14,562
|
|||
Net income attributable to noncontrolling interests
|
497
|
|||
Other comprehensive loss attributable to noncontrolling interests, net of tax:
|
||||
Foreign currency translation
|
(1,359
|
)
|
||
|
||||
Balance at July 2, 2016
|
$
|
46,117
|
||
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
·
|
Piping Systems: The Piping Systems segment is composed of Domestic Piping Systems Group, Canadian Operations, European Operations, Trading Group, Mueller-Xingrong (our Chinese joint venture), and Jungwoo-Mueller (our South Korean joint venture). The Domestic Piping Systems Group manufactures and sells copper tube, copper and plastic fittings, line sets, and valves in North America. The Canadian Operations manufacture copper tube and line sets in Canada and sells the products primarily in the U.S. and Canada. European Operations manufacture copper tube in the United Kingdom, which is sold throughout Europe. The Trading Group manufactures pipe nipples and sources products for import distribution in North America. Mueller-Xingrong manufactures engineered copper tube primarily for air-conditioning applications; these products are sold primarily to OEMs located in China. Jungwoo-Mueller manufactures copper-based joining products that are sold worldwide. The Piping Systems segment sells products to wholesalers in the plumbing and refrigeration markets, distributors to the manufactured housing and recreational vehicle industries, building material retailers, and air-conditioning OEMs.
|
·
|
Industrial Metals: The Industrial Metals segment is composed of Brass Rod & Copper Bar Products, Impacts & Micro Gauge, and Brass-Value Added Products. The segment manufactures and sells brass and copper alloy rod, bar, and shapes; aluminum and brass forgings; aluminum impact extrusions; and gas valves and assemblies. The segment manufactures and sells its products primarily to domestic OEMs in the industrial, construction, heating, ventilation, and air-conditioning, plumbing, and refrigeration markets.
|
·
|
Climate: The Climate segment is composed of Refrigeration Products, Fabricated Tube Products, Westermeyer, and Turbotec. The segment manufactures and sells refrigeration valves and fittings and fabricated tubular products. The segment sells its products primarily to the heating, ventilation, air-conditioning, and refrigeration markets in the U.S.
|
|
Three Months Ended
|
Percent Change
|
Six Months Ended
|
Percent Change
|
|||||||||||||||||||||
(In thousands)
|
July 2, 2016
|
June 27, 2015
|
2016 vs. 2015
|
July 2, 2016
|
June 27, 2015
|
2016 vs. 2015
|
|||||||||||||||||||
|
|||||||||||||||||||||||||
Net sales
|
$
|
544,071
|
$
|
555,593
|
(2.1
|
)
|
% |
$
|
1,076.880
|
$
|
1,092,835
|
(1.5
|
)%
|
||||||||||||
Operating income
|
44,436
|
55,554
|
(20.0
|
)
|
85,903
|
91,278
|
(5.9
|
)
|
|||||||||||||||||
Net income
|
27,797
|
33,651
|
(17.4
|
)
|
56,427
|
55,629
|
1.4
|
||||||||||||||||||
|
|
Quarter-to-Date
|
Year-to-Date
|
||||||||
|
2016 vs. 2015
|
2016 vs. 2015
|
||||||||
Net selling price in core product lines
|
(12.8
|
)%
|
(13.4
|
)%
|
||||||
Unit sales volume in core product lines
|
(2.0
|
)
|
(1.6
|
)
|
||||||
Acquisitions
|
14.0
|
13.9
|
||||||||
Other
|
(1.3
|
)
|
(0.4
|
)
|
||||||
|
||||||||||
|
(2.1
|
)%
|
(1.5
|
)%
|
|
|||||
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
(In thousands)
|
July 2, 2016
|
June 27, 2015
|
July 2, 2016
|
June 27, 2015
|
||||||||||||
|
||||||||||||||||
Cost of goods sold
|
$
|
456,060
|
$
|
470,365
|
$
|
902,702
|
$
|
931,199
|
||||||||
Depreciation and amortization
|
9,061
|
8,188
|
17,981
|
16,041
|
||||||||||||
Selling, general and administrative expense
|
34,514
|
33,420
|
70,294
|
66,251
|
||||||||||||
Gain on sale of assets
|
—
|
(15,376
|
)
|
—
|
(15,376
|
)
|
||||||||||
Severance
|
—
|
3,442
|
—
|
3,442
|
||||||||||||
|
||||||||||||||||
Operating expenses
|
$
|
499,635
|
$
|
500,039
|
$
|
990,977
|
$
|
1,001,557
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
||||||||||
|
July 2, 2016
|
|
|
June 27, 2015
|
|
|
July 2, 2016
|
|
|
June 27, 2015
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of goods sold
|
|
|
83.8
|
%
|
|
|
84.7
|
%
|
|
|
83.8
|
%
|
|
85.2
|
%
|
|
Depreciation and amortization
|
|
|
1.7
|
|
|
|
1.5
|
|
|
|
1.7
|
|
|
|
1.5
|
|
Selling, general and administrative expense
|
|
|
6.3
|
|
|
|
6.0
|
|
|
|
6.5
|
|
|
|
6.0
|
|
Gain on sale of assets
|
—
|
(2.8
|
)
|
—
|
(1.4
|
)
|
||||||||||
Severance
|
—
|
0.6
|
—
|
0.3
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses
|
|
|
91.8
|
%
|
|
|
90.0
|
%
|
|
|
92.0
|
%
|
|
|
91.6
|
%
|
|
Three Months Ended
|
Percent Change
|
Six Months Ended
|
Percent Change
|
|||||||||||||||||||||
(In thousands)
|
July 2, 2016
|
June 27, 2015
|
2016 vs. 2015
|
July 2, 2016
|
June 27, 2015
|
2016 vs. 2015
|
|||||||||||||||||||
|
|||||||||||||||||||||||||
Net sales
|
$
|
388,662
|
$
|
379,750
|
2.3
|
%
|
$
|
757,552
|
$
|
741,232
|
2.2
|
%
|
|||||||||||||
Operating income
|
32,959
|
43,235
|
(23.8
|
)
|
64,118
|
69,494
|
(7.7
|
)
|
|||||||||||||||||
|
|
|
Quarter-to-Date
|
|
|
|
|
Year-to-Date
|
|
|
|
|
|
2016 vs. 2015
|
|
|
|
|
2016 vs. 2015
|
|
|
|
Net selling price in core product lines
|
|
(13.4
|
)%
|
|
|
|
(14.0
|
)%
|
|
|
Unit sales volume in core product lines
|
|
(0.7
|
)
|
|
|
|
0.1
|
|
|
|
Acquisitions
|
|
17.7
|
|
|
|
16.8 |
|
|
||
Other
|
|
(1.3
|
)
|
|
|
|
(0.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
2.3
|
%
|
|
|
2.2
|
%
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
(In thousands)
|
July 2, 2016
|
June 27, 2015
|
July 2, 2016
|
June 27, 2015
|
||||||||||||
|
||||||||||||||||
Cost of goods sold
|
$
|
333,356
|
$
|
326,338
|
$
|
647,148
|
$
|
639,028
|
||||||||