mliletterhead1a05.jpg

Mueller Industries, Inc. Reports First Quarter 2018 Earnings

MEMPHIS, Tenn., April 24, 2018 -- Mueller Industries, Inc. (NYSE: MLI) announced today operating income of $47.4 million for the first quarter of 2018, compared with $45.6 million in the same quarter last year. On an adjusted basis, excluding non-cash impairment charges, operating income was up 11.7 percent over 2017, $50.9 million versus $45.6 million respectively.
Net income for the period was $24.1 million, or 42 cents per diluted share, on $640.1 million in net sales, compared with net income of $30.0 million, or 52 cents per diluted share, on $577.9 million in net sales for the same quarter of 2017.
Financial and Operating Highlights for the first quarter of 2018:
•
EPS was affected by:
•
A $3.5 million pre-tax asset impairment charge.
•
$5.3 million in net losses from our investment in Tecumseh Products Co. This includes a $2.4 million charge recorded to increase reserves for certain legal contingencies.
•
$3.2 million in additional interest expense over the same period in 2017 due to the issuance of debentures in March of 2017.
•
Net sales were impacted by:
•
Higher selling prices, as a result of higher copper prices, the average price of copper was 18.5 percent (49 cents per pound) higher compared with the same period of 2017.
•
A 6.4 percent increase in overall unit volume in the Company’s U.S. copper and brass businesses as our mills are beginning to operate more effectively.
•
The absence of $26.0 million of net sales recorded in the first quarter of 2017 by MXR, a business the Company exited in June 2017.
•
On March 31, 2018, the Company acquired Die-Mold Tool Limited, a manufacturer of plastic PEX fittings and plastic injection tooling, for approximately $12.5 million.
•
The Company repurchased 250 thousand shares of its common stock at a cost of approximately $6.6 million.
•
The effective tax rate of 17.6 percent reflects the impact of the new tax law and a $3.9 million benefit related to our investment in Tecumseh.
•
At quarter end, the Company had $91.6 million of cash, a current ratio of 3.6 to 1, and debt to total capitalization of 46.9 percent.


1


Our outlook remains consistent with our most recent annual report.  Greg Christopher, Mueller CEO, adds, “Our first quarter results were largely achieved because of improvement in our U.S. Brass Rod and Copper Tube mills, as the benefits of overcoming the operational challenges that plagued us in 2017 are realized.  We are also pleased to complete the acquisition of Die-Mold. Their current capabilities and products will complement our PEX pipe manufacturing platform, as well as strengthen our bench in the pressure plastics arena.
"Tecumseh continues to be on a path of correction but heavy lifting remains to execute our restructuring plan.  We will continue to monitor and review all alternatives.”


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


2


MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
For the Quarter Ended
(In thousands, except per share data)
 
March 31,
2018
 
April 1,
2017
 
 
 
 
 
Net sales
 
$
640,060

 
$
577,920

 
 
 
 
 
Cost of goods sold
 
545,670

 
488,427

Depreciation and amortization
 
9,456

 
8,355

Selling, general, and administrative expense
 
34,057

 
35,574

Asset impairment
 
3,469

 
—

 
 
 
 
 
Operating income
 
47,408

 
45,564

 
 
 
 
 
Interest expense
 
(5,909
)
 
(2,531
)
Other income, net
 
560

 
594

 
 
 
 
 
Income before income taxes
 
42,059

 
43,627

 
 
 
 
 
Income tax expense
 
(7,395
)
 
(11,929
)
Loss from unconsolidated affiliates, net of tax
 
(10,320
)
 
(1,243
)
 
 
 
 
 
Consolidated net income
 
24,344

 
30,455

 
 
 
 
 
Net income attributable to noncontrolling interests
 
(216
)
 
(468
)
 
 
 
 
 
Net income attributable to Mueller Industries, Inc.
 
$
24,128

 
$
29,987

 
 
 
 
 
Weighted average shares for basic earnings per share
 
56,900

 
56,780

Effect of dilutive stock-based awards
 
517

 
658

 
 
 
 
 
Adjusted weighted average shares for diluted earnings per share
 
57,417

 
57,438

 
 
 
 
 
Basic earnings per share
 
$
0.42

 
$
0.53

 
 
 
 
 
Diluted earnings per share
 
$
0.42

 
$
0.52

 
 
 
 
 
Dividends per share
 
$
0.100

 
$
8.100

 
 
 
 
 
Summary Segment Data:
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
    Piping Systems Segment
 
$
430,964

 
$
398,775

    Industrial Metals Segment
 
177,332

 
149,837

    Climate Segment
 
36,063

 
34,279

    Elimination of intersegment sales
 
(4,299
)
 
(4,971
)
 
 
 
 
 
Net sales
 
$
640,060

 
$
577,920

 
 
 
 
 
Operating income:
 
 
 
 
    Piping Systems Segment
 
$
32,949

 
$
30,590

    Industrial Metals Segment
 
22,633

 
20,347

    Climate Segment
 
5,547

 
5,610

    Unallocated expenses
 
(13,721
)
 
(10,983
)
 
 
 
 
 
Operating income
 
$
47,408

 
$
45,564


3


MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
March 31, 2018
 
December 30, 2017
ASSETS
 
 
 
Cash and cash equivalents
$
91,573

 
$
120,269

Accounts receivable, net
321,756

 
244,795

Inventories
329,231

 
327,901

Other current assets
20,267

 
46,150

 
 
 
 
    Total current assets
762,827

 
739,115

 
 
 
 
Property, plant, and equipment, net
300,074

 
304,321

Other assets
273,943

 
276,737

 
 
 
 
 
$
1,336,844

 
$
1,320,173

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current portion of debt
$
9,087

 
$
16,480

Accounts payable
115,425

 
102,503

Other current liabilities
88,812

 
123,269

 
 
 
 
    Total current liabilities
213,324

 
242,252

 
 
 
 
Long-term debt
478,778

 
448,592

Pension and postretirement liabilities
28,149

 
28,713

Environmental reserves
23,091

 
23,699

Deferred income taxes
18,807

 
19,403

Other noncurrent liabilities
21,630

 
21,486

 
 
 
 
    Total liabilities
783,779

 
784,145

 
 
 
 
Total Mueller Industries, Inc. stockholders’ equity
538,755

 
522,111

Noncontrolling interests
14,310

 
13,917

 
 
 
 
    Total equity
553,065

 
536,028

 
 
 
 
 
$
1,336,844

 
$
1,320,173













4


MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Quarter Ended
 (In thousands)
March 31,
2018
 
April 1,
2017
 
 
 
 
Cash flows from operating activities
 
 
 
Consolidated net income
$
24,344

 
$
30,455

Reconciliation of consolidated net income to net cash used in operating activities:
 

 
 

Depreciation and amortization
9,536

 
8,419

Stock-based compensation expense
1,912

 
1,736

Loss from unconsolidated affiliates
10,320

 
1,243

Gain on disposals of properties
(676
)
 
(16
)
Gain on sales of securities
—

 
(254
)
Impairment charge
3,469

 
—

Deferred income taxes
(940
)
 
(80
)
Changes in assets and liabilities:
 
 
 
Receivables
(72,843
)
 
(53,756
)
Inventories
3,504

 
(6,991
)
Other assets
20,967

 
1,205

Current liabilities
(23,898
)
 
8,215

Other liabilities
(1,845
)
 
(668
)
Other, net
(365
)
 
(930
)
 
 
 
 
Net cash used in operating activities
(26,515
)
 
(11,422
)
 
 
 
 
Cash flows from investing activities
 
 
 
Capital expenditures
(5,517
)
 
(7,345
)
Acquisition of businesses, net of cash acquired
(12,466
)
 
—

Investment in unconsolidated affiliates
(609
)
 
—

Proceeds from sales of properties
708

 
192

Proceeds from sales of securities
—

 
1,444

 
 
 
 
Net cash used in investing activities
(17,884
)
 
(5,709
)
 
 
 
 
Cash flows from financing activities
 
 
 
Dividends paid to stockholders of Mueller Industries, Inc.
(5,679
)
 
(179,848
)
Repurchase of common stock
(6,575
)
 
—

Issuance of long-term debt
41,754

 
—

Repayments of long-term debt
(15,903
)
 
(306
)
Repayment of debt by consolidated joint ventures, net
(3,342
)
 
(7,367
)
Net cash received (used) to settle stock-based awards
50

 
(870
)
 
 
 
 
Net cash provided by (used in) financing activities
10,305

 
(188,391
)
 
 
 
 
Effect of exchange rate changes on cash
1,289

 
2,499

 
 
 
 
Decrease in cash, cash equivalents, and restricted cash
(32,805
)
 
(203,023
)
Cash, cash equivalents, and restricted cash at the beginning of the period
126,563

 
360,469

 
 
 
 
Cash, cash equivalents, and restricted cash at the end of the period
$
93,758

 
$
157,446



5