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Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2018 Earnings

Collierville, Tenn., February 5, 2019 -- Mueller Industries, Inc. (NYSE: MLI) announced today operating income for the fourth quarter of $40.0 million, compared with $21.1 million in the same quarter of 2017. Net income for the quarter was $26.9 million, or 47 cents per diluted share, on net sales of $559.1 million, compared with net income of $5.7 million, or 10 cents per diluted share, on net sales of $523.5 million in the fourth quarter of 2017.
On a full year basis, the Company reported operating income of $173.0 million, compared with $150.8 million in fiscal year 2017. Net income for the year was $104.5 million, or $1.82 per diluted share, on net sales of $2.5 billion, compared with net income of $85.6 million, or $1.49 per diluted share, on net sales of $2.3 billion in 2017.

Financial and Operating Highlights:
•
Net sales for the quarter rose due to higher sales volumes combined with sales from the recently acquired ATCO business, offset by lower selling prices principally due to lower copper prices. Copper prices were 11 percent lower for the fourth quarter of 2018, averaging $2.75 per pound versus $3.10 per pound in the prior year period.
•
During the fourth quarter of 2018, we recognized an insurance recovery gain of $2.2 million related to the losses we incurred due to the 2017 fire at our Port Huron brass rod mill.
•
During the fourth quarter of 2018, the Company repurchased 1.14 million shares of its common stock at a cost of approximately $27.0 million.
•
The financial health of the Company remains strong. For the full year, the Company generated $167.9 million in cash from operations, ending the year with a current ratio of 3.0 to 1 and a return on equity of 19 percent compared to 16 percent in 2017.

Regarding the business, Greg Christopher, Mueller CEO, said, “Overall, our acquisitions are exceeding our expectations and we are beginning to see the benefits of the major capital investments we worked so hard to complete these past five years. Most notably our U.S. Copper Tube manufacturing platforms continue to improve and throughout the year, yielded positive results in throughput, quality, and cost reductions, which will continue to benefit us in the future.
In addition, we continue to utilize our strong cash generation to fund growth opportunities, reduce debt and, when appropriate, return capital to our shareholders.”
Looking forward, he added, “By almost any measure, 2018 was healthier than the prior year and we expect those improvements to continue. Our outlook for 2019 remains positive, and we see opportunities to capitalize and grow in these interesting times both here and abroad.”


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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 Collierville, Tennessee and comprises a network of operations in the United States, Canada, Mexico, Great Britain, South Korea, the Middle East, 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 Year Ended
(In thousands, except per share data)
December 29, 2018
 
December 30, 2017
 
December 29, 2018
 
December 30, 2017
 
 
 
 
 
 
 
 
Net sales
$
559,087

 
$
523,524

 
$
2,507,878

 
$
2,266,073

 
 
 
 
 
 
 
 
Cost of goods sold
473,954

 
456,617

 
2,150,400

 
1,940,617

Depreciation and amortization
10,474

 
8,728

 
39,555

 
33,944

Selling, general, and administrative expense
36,892

 
36,054

 
148,888

 
140,730

Gain on sale of assets
—

 
—

 
(253
)
 
(1,491
)
Impairment charges
—

 
1,055

 
—

 
1,466

Insurance recovery
(2,195
)
 
—

 
(3,681
)
 
—

 
 
 
 
 
 
 
 
Operating income
39,962

 
21,070

 
172,969

 
150,807

 
 
 
 
 
 
 
 
Interest expense
(6,471
)
 
(5,292
)
 
(25,199
)
 
(19,502
)
Environmental expense
(623
)
 
(6,221
)
 
(1,320
)
 
(7,284
)
Other income, net
1,713

 
1,332

 
3,967

 
2,951

 
 
 
 
 
 
 
 
Income before income taxes
34,581

 
10,889

 
150,417

 
126,972

 
 
 
 
 
 
 
 
Income tax expense
(7,773
)
 
(4,589
)
 
(30,952
)
 
(37,884
)
Income (loss) from unconsolidated affiliates, net of foreign tax
923

 
(331
)
 
(12,645
)
 
(2,077
)
 
 
 
 
 
 
 
 
Consolidated net income
27,731

 
5,969

 
106,820

 
87,011

 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
(874
)
 
(249
)
 
(2,361
)
 
(1,413
)
 
 
 
 
 
 
 
 
Net income attributable to Mueller Industries, Inc.
$
26,857

 
$
5,720

 
$
104,459

 
$
85,598

 
 
 
 
 
 
 
 
Weighted average shares for basic earnings per share
56,555

 
57,026

 
56,782

 
56,925

Effect of dilutive stock-based awards
377

 
612

 
487

 
559

 
 
 
 
 
 
 
 
Adjusted weighted average shares for diluted earnings per share
56,932

 
57,638

 
57,269

 
57,484

 
 
 
 
 
 
 
 
Basic earnings per share
$
0.47

 
$
0.10

 
$
1.84

 
$
1.50

 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.47

 
$
0.10

 
$
1.82

 
$
1.49

 
 
 
 
 
 
 
 
Dividends per share
$
0.10

 
$
0.10

 
$
0.40

 
$
8.40

 
 
 
 
 
 
 
 
Summary Segment Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
 
 
 
    Piping Systems Segment
$
350,961

 
$
359,253

 
$
1,645,633

 
$
1,564,950

    Industrial Metals Segment
139,129

 
150,212

 
651,061

 
602,131

    Climate Segment
72,215

 
28,045

 
229,069

 
131,448

    Elimination of intersegment sales
(3,218
)
 
(13,986
)
 
(17,885
)
 
(32,456
)
 
 
 
 
 
 
 
 
Net sales
$
559,087

 
$
523,524

 
$
2,507,878

 
$
2,266,073

 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
    Piping Systems Segment
$
22,453

 
$
13,273

 
$
122,829

 
$
99,596

    Industrial Metals Segment
21,770

 
14,930

 
75,607

 
74,364

    Climate Segment
7,450

 
3,170

 
24,118

 
20,325

    Unallocated expenses
(11,711
)
 
(10,303
)
 
(49,585
)
 
(43,478
)
 
 
 
 
 
 
 
 
Operating income
$
39,962

 
$
21,070

 
$
172,969

 
$
150,807


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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
December 29, 2018
 
December 30, 2017
ASSETS
 
 
 
Cash and cash equivalents
$
72,616

 
$
120,269

Accounts receivable, net
273,417

 
244,795

Inventories
329,795

 
327,901

Other current assets
26,790

 
46,150

 
 
 
 
    Total current assets
702,618

 
739,115

 
 
 
 
Property, plant, and equipment, net
370,633

 
304,321

Other assets
296,298

 
276,737

 
 
 
 
 
$
1,369,549

 
$
1,320,173

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current portion of debt
$
7,101

 
$
16,480

Accounts payable
103,754

 
102,503

Other current liabilities
121,946

 
123,269

 
 
 
 
    Total current liabilities
232,801

 
242,252

 
 
 
 
Long-term debt
489,597

 
448,592

Pension and postretirement liabilities
29,055

 
28,713

Environmental reserves
20,009

 
23,699

Deferred income taxes
16,615

 
19,403

Other noncurrent liabilities
18,212

 
21,486

 
 
 
 
    Total liabilities
806,289

 
784,145

 
 
 
 
Total Mueller Industries, Inc. stockholders’ equity
548,356

 
522,111

Noncontrolling interests
14,904

 
13,917

 
 
 
 
    Total equity
563,260

 
536,028

 
 
 
 
 
$
1,369,549

 
$
1,320,173













4


MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Year Ended
 (In thousands)
December 29, 2018
 
December 30, 2017
 
 
 
 
Cash flows from operating activities
 
 
 
Consolidated net income
$
106,820

 
$
87,011

Reconciliation of consolidated net income to net cash provided by operating activities:
 

 
 

Depreciation and amortization
39,873

 
34,247

Stock-based compensation expense
8,035

 
7,450

Loss from unconsolidated affiliates
12,645

 
2,077

Gain on sale of business
—

 
(1,491
)
Gain on disposals of assets
(253
)
 
(624
)
Insurance proceeds - noncapital related
2,306

 
500

Insurance recovery
(3,681
)
 
—

Impairment charges
—

 
1,466

Deferred income tax expense (benefit)
170

 
(3,160
)
Changes in assets and liabilities, net of effects of businesses acquired and sold:
 
 
 
Receivables
(11,342
)
 
(1,779
)
Inventories
27,512

 
(86,286
)
Other assets
14,353

 
(5,325
)
Current liabilities
(15,680
)
 
10,678

Other liabilities
(14,769
)
 
64

Other, net
1,903

 
(833
)
 
 
 
 
Net cash provided by operating activities
167,892

 
43,995

 
 
 
 
Cash flows from investing activities
 
 
 
Proceeds from sale of assets, net of cash transferred
18,703

 
31,564

Acquisition of businesses, net of cash acquired
(167,677
)
 
(18,396
)
Capital expenditures
(38,481
)
 
(46,131
)
Insurance proceeds - capital related
1,968

 
—

Investment in unconsolidated affiliates
(1,609
)
 
(3,317
)
 
 
 
 
Net cash used in investing activities
(187,096
)
 
(36,280
)
 
 
 
 
Cash flows from financing activities
 
 
 
Dividends paid to stockholders of Mueller Industries, Inc.
(22,705
)
 
(196,944
)
Dividends paid to noncontrolling interests
(592
)
 
(2,909
)
Issuance of long-term debt
204,233

 
71,475

Repayments of long-term debt
(172,002
)
 
(111,224
)
Repayment of debt by consolidated joint ventures, net
(2,915
)
 
(3,369
)
Repurchase of common stock
(33,562
)
 
—

Net cash used to settle stock-based awards
(726
)
 
(1,595
)
 
 
 
 
Net cash used in financing activities
(28,269
)
 
(244,566
)
 
 
 
 
Effect of exchange rate changes on cash
(1,952
)
 
2,945

 
 
 
 
Decrease in cash, cash equivalents, and restricted cash
(49,425
)
 
(233,906
)
Cash, cash equivalents, and restricted cash at the beginning of the year
126,563

 
360,469

 
 
 
 
Cash, cash equivalents, and restricted cash at the end of the year
$
77,138

 
$
126,563



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