Mueller Industries, Inc. Reports Third Quarter 2016 Earnings

MEMPHIS, Tenn., October 24, 2016 -- Mueller Industries, Inc. (NYSE: MLI) announced today net income of $26.0 million, or 45 cents per diluted share, for the third quarter of 2016.  This compares with net income of $17.8 million, or 31 cents per diluted share, for the third quarter of 2015, a 46 percent increase.
Increased unit volume in the quarter was offset by lower copper prices, resulting in net sales of $506.6 million compared with $535.2 million for the same quarter in 2015.
Financial and Operating Highlights:
-
The Company recognized a pre-tax impairment charge of $3.0 million during the third quarter of 2016 related to certain manufacturing assets.
-
The COMEX average price of copper was down 10 percent, or 24 cents per pound, during the period which reduced sales by an estimated $43.4 million.
-
The third quarter of 2016 results include net income of $1.1 million from Tecumseh Products Co., an unconsolidated affiliate.
-
At quarter end, cash totaled $297.8 million equal to $5.19 per share.
-
Debt to total capitalization was 19.8 percent and the current ratio was 4.3 to 1.


Regarding the outlook Greg Christopher, Mueller CEO, said, "The U.S. construction markets continue to grind upward.  Low interest rates, lean inventories of new homes and a high level of builders' confidence support a continued upward trend for residential construction spending.  The non-residential construction sector remains healthy despite continued declines in the public construction sector.  An aging and deteriorating U.S. infrastructure base and the commitment to promote reinvestment and job creation by both presidential candidates should eventually lead to a positive boost."

He adds, "As noted before, softness in the U.S. industrial sector and the slump in our international markets continues.  Improvement in these markets will have a positive influence on our businesses."






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Mueller Industries, Inc. is 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, South Korea, 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," "encourage," "anticipate," "appear," 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)
 
October 1,
2016
   
September 26,
2015
   
October 1,
2016
   
September 26,
2015
 
 
                       
Net sales
 
$
506,584
   
$
535,184
   
$
1,583,464
   
$
1,628,019
 
 
                               
Cost of goods sold
   
424,668
     
467,167
     
1,327,370
     
1,398,366
 
Depreciation and amortization
   
9,016
     
8,749
     
26,997
     
24,790
 
Selling, general, and administrative expense
   
32,413
     
32,241
     
102,707
     
97,922
 
Asset impairments
   
3,000
     
     
3,000
     
570
 
Gain on sale of assets
   
     
     
     
(15,376
)
Severance
   
     
     
     
3,442
 
 
                               
    Operating income
   
37,487
     
27,027
     
123,390
     
118,305
 
 
                               
Interest expense
   
(1,830
)
   
(1,682
)
   
(5,370
)
   
(5,977
)
Other income, net
   
120
     
164
     
880
     
534
 
 
                               
    Income before income taxes
   
35,777
     
25,509
     
118,900
     
112,862
 
 
                               
Income tax expense
   
(10,837
)
   
(5,223
)
   
(38,963
)
   
(36,374
)
Income (loss) from unconsolidated affiliates, net of tax
   
1,122
     
(2,191
)
   
3,049
     
(2,191
)
 
                               
    Consolidated net income
   
26,062
     
18,095
     
82,986
     
74,297
 
 
                               
Net income attributable to noncontrolling interests
   
(84
)
   
(295
)
   
(581
)
   
(868
)
 
                               
    Net income attributable to Mueller Industries, Inc.
 
$
25,978
   
$
17,800
   
$
82,405
   
$
73,429
 
 
                               
Weighted average shares for basic earnings per share
   
56,631
     
56,375
     
56,536
     
56,272
 
Effect of dilutive stock-based awards
   
586
     
598
     
589
     
690
 
 
                               
Adjusted weighted average shares for diluted earnings per share
   
57,217
     
56,973
     
57,125
     
56,962
 
 
                               
Basic earnings per share
 
$
0.46
   
$
0.32
   
$
1.46
   
$
1.30
 
 
                               
Diluted earnings per share
 
$
0.45
   
$
0.31
   
$
1.44
   
$
1.29
 
 
                               
Dividends per share
 
$
0.100
   
$
0.075
   
$
0.275
   
$
0.225
 
 
                               
Summary Segment Data:
                               
 
                               
Net sales:
                               
    Piping Systems Segment
 
$
351,557
   
$
367,892
   
$
1,109,109
   
$
1,109,124
 
    Industrial Metals Segment
   
131,350
     
139,472
     
393,608
     
435,736
 
    Climate Segment
   
30,003
     
28,494
     
92,068
     
85,803
 
    Elimination of intersegment sales
   
(6,326
)
   
(674
)
   
(11,321
)
   
(2,644
)
 
                               
Net sales
 
$
506,584
   
$
535,184
   
$
1,583,464
   
$
1,628,019
 
 
                               
Operating income:
                               
    Piping Systems Segment
 
$
24,138
   
$
25,422
   
$
88,256
   
$
94,916
 
    Industrial Metals Segment
   
18,749
     
9,128
     
55,785
     
48,562
 
    Climate Segment
   
4,824
     
3,443
     
14,540
     
9,958
 
    Unallocated expenses
   
(10,224
)
   
(10,966
)
   
(35,191
)
   
(35,131
)
 
                               
Operating income
 
$
37,487
   
$
27,027
   
$
123,390
   
$
118,305
 
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
 
October 1,
2016
   
December 26,
2015
 
ASSETS
           
Cash and cash equivalents
 
$
297,793
   
$
274,844
 
Accounts receivable, net
   
295,672
     
251,571
 
Inventories
   
251,130
     
239,378
 
Other current assets
   
28,999
     
34,608
 
 
               
    Total current assets
   
873,594
     
800,401
 
 
               
Property, plant, and equipment, net
   
289,074
     
280,224
 
Other assets
   
263,453
     
258,176
 
 
               
 
 
$
1,426,121
   
$
1,338,801
 
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current portion of debt
 
$
16,907
   
$
11,760
 
Accounts payable
   
92,451
     
88,051
 
Other current liabilities
   
92,842
     
109,618
 
 
               
    Total current liabilities
   
202,200
     
209,429
 
 
               
Long-term debt
   
213,847
     
204,250
 
Pension and postretirement liabilities
   
31,538
     
34,876
 
Environmental reserves
   
20,708
     
20,943
 
Deferred income taxes
   
19,106
     
7,161
 
Other noncurrent liabilities
   
2,118
     
2,440
 
 
               
    Total liabilities
   
489,517
     
479,099
 
 
               
Total Mueller Industries, Inc. stockholders' equity
   
893,772
     
827,285
 
Noncontrolling interests
   
42,832
     
32,417
 
 
               
    Total equity
   
936,604
     
859,702
 
 
               
 
 
$
1,426,121
   
$
1,338,801
 
 
               

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

 
 
For the Nine Months Ended
 
 (In thousands)
 
October 1,
2016
   
September 26,
2015
 
 
     
Cash flows from operating activities
           
  Consolidated net income
 
$
82,986
   
$
74,297
 
  Reconciliation of consolidated net income to net cash
    provided by operating activities:
               
     Depreciation and amortization
   
27,267
     
25,132
 
     Stock-based compensation expense
   
4,553
     
4,611
 
     Equity in (earnings) losses of unconsolidated affiliates
   
(3,049
)
   
2,191
 
     Gain on disposal of assets
   
(747
)
   
(14,875
)
     Impairment charges
   
3,000
     
570
 
     Deferred income taxes
   
6,491
     
(8,262
)
     Income tax benefit from exercise of stock options
   
     
(953
)
     Changes in assets and liabilities, net of businesses acquired:
               
       Receivables
   
(45,780
)
   
5,249
 
       Inventories
   
(914
)
   
29,901
 
       Other assets
   
14,428
     
4,302
 
       Current liabilities
   
(15,998
)
   
(27,580
)
       Other liabilities
   
(2,101
)
   
740
 
       Other, net
   
450
     
145
 
 
               
Net cash provided by operating activities
   
70,586
     
95,468
 
 
               
Cash flows from investing activities
               
  Capital expenditures
   
(15,632
)
   
(22,502
)
  Businesses acquired, net of cash acquired
   
(20,533
)
   
(107,405
)
  Net withdrawals from restricted cash balances
   
1,177
     
1,822
 
  Investment in unconsolidated affiliates
   
     
(65,900
)
  Proceeds from the sales of assets
   
5,301
     
5,521
 
 
               
Net cash used in investing activities
   
(29,687
)
   
(188,464
)
 
               
Cash flows from financing activities
               
  Dividends paid to stockholders of Mueller Industries, Inc.
   
(15,555
)
   
(12,669
)
  Dividends paid to noncontrolling interests
   
(3,765
)
   
 
  Repayment of debt by joint ventures, net
   
5,006
     
(21,597
)
  Issuance of long-term debt
   
2,000
     
 
  Net cash used to settle stock-based awards
   
(1,356
)
   
(718
)
  Repayments of long-term debt
   
(769
)
   
(750
)
  Income tax benefit from exercise of stock options
   
     
953
 
 
               
Net cash used in financing activities
   
(14,439
)
   
(34,781
)
 
               
Effect of exchange rate changes on cash
   
(3,511
)
   
(3,612
)
 
               
Increase (decrease) in cash and cash equivalents
   
22,949
     
(131,389
)
Cash and cash equivalents at the beginning of the period
   
274,844
     
352,134
 
 
               
Cash and cash equivalents at the end of the period
 
$
297,793
   
$
220,745
 
 
               



 
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