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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