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Mueller Industries, Inc. Reports First Quarter 2019 Earnings

COLLIERVILLE, Tenn., April 23, 2019 -- Mueller Industries, Inc. (NYSE: MLI) announced today first quarter operating income of $49.2 million, compared with $47.4 million in the same quarter of 2018.
Due to losses on the Company's equity investments in unconsolidated affiliates and an increase in its effective tax rate, the Company reported lower net income for the first quarter of 2019 compared to the prior year quarter. Net income was $15.7 million, or 28 cents per diluted share, on $611.8 million in net sales, compared with net income of $24.1 million, or 42 cents per diluted share, on $640.1 million in net sales for the same quarter of 2018.

Financial and Operating Highlights:
•
The net sales decline was due to lower selling prices and sales volumes in our Piping Systems and Industrial Metals segments. Copper prices, which largely influence these segments, were 11 percent lower in the first quarter of 2019 compared to the first quarter of 2018.
•
The acquisition of ATCO was a primary driver of growth in the Climate Segment sales, but also contributed to the overall increase in SG&A expenses.
•
We recorded a $14.6 million loss on our investment in Tecumseh Products Co. This includes $5.0 million in legal settlements and charges related to ongoing restructuring activities.
•
The effective tax rate for the quarter was 23 percent compared to 18 percent in the prior year quarter.
•
At quarter-end, the Company had $97.6 million in cash, a current ratio of 3.6 to 1, and debt to total capitalization of 49 percent.

Regarding the quarter and the outlook, Greg Christopher, Mueller CEO said, “Weakness in the Middle East resulted in lower export shipments by our Piping Systems segment, and a slow start to the year for U.S. industrial production impacted shipments in our Industrial Metals segment. Concerning Tecumseh, while the results are disappointing, Tecumseh is implementing a restructuring plan in 2019 to improve operations.”
He added, “Our outlook remains consistent with our 2018 year end expectations.”









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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
(In thousands, except per share data)
 
March 30, 2019
 
March 31, 2018
 
 
 
 
 
Net sales
 
$
611,781

 
$
640,060

 
 
 
 
 
Cost of goods sold
 
511,393

 
545,670

Depreciation and amortization
 
10,555

 
9,456

Selling, general, and administrative expense
 
40,653

 
34,057

Asset impairment
 
—

 
3,469

 
 
 
 
 
Operating income
 
49,180

 
47,408

 
 
 
 
 
Interest expense
 
(6,954
)
 
(5,909
)
Other (expense) income, net
 
(172
)
 
560

 
 
 
 
 
Income before income taxes
 
42,054

 
42,059

 
 
 
 
 
Income tax expense
 
(9,546
)
 
(7,395
)
Loss from unconsolidated affiliates, net of foreign tax
 
(15,369
)
 
(10,320
)
 
 
 
 
 
Consolidated net income
 
17,139

 
24,344

 
 
 
 
 
Net income attributable to noncontrolling interests
 
(1,416
)
 
(216
)
 
 
 
 
 
Net income attributable to Mueller Industries, Inc.
 
$
15,723

 
$
24,128

 
 
 
 
 
Weighted average shares for basic earnings per share
 
55,728

 
56,900

Effect of dilutive stock-based awards
 
526

 
517

 
 
 
 
 
Adjusted weighted average shares for diluted earnings per share
 
56,254

 
57,417

 
 
 
 
 
Basic earnings per share
 
$
0.28

 
$
0.42

 
 
 
 
 
Diluted earnings per share
 
$
0.28

 
$
0.42

 
 
 
 
 
Dividends per share
 
$
0.10

 
$
0.10

 
 
 
 
 
Summary Segment Data:
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
    Piping Systems Segment
 
$
376,492

 
$
430,964

    Industrial Metals Segment
 
150,875

 
177,332

    Climate Segment
 
89,834

 
36,063

    Elimination of intersegment sales
 
(5,420
)
 
(4,299
)
 
 
 
 
 
Net sales
 
$
611,781

 
$
640,060

 
 
 
 
 
Operating income:
 
 
 
 
    Piping Systems Segment
 
$
28,249

 
$
32,949

    Industrial Metals Segment
 
19,187

 
22,633

    Climate Segment
 
12,386

 
5,547

    Unallocated expenses
 
(10,642
)
 
(13,721
)
 
 
 
 
 
Operating income
 
$
49,180

 
$
47,408


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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
March 30,
2019
 
December 29, 2018
ASSETS
 
 
 
Cash and cash equivalents
$
97,596

 
$
72,616

Accounts receivable, net
309,765

 
273,417

Inventories
344,850

 
329,795

Other current assets
32,322

 
26,790

 
 
 
 
    Total current assets
784,533

 
702,618

 
 
 
 
Property, plant, and equipment, net
369,710

 
370,633

Operating lease right-of-use assets
29,515

 
—

Other assets
291,295

 
296,298

 
 
 
 
 
$
1,475,053

 
$
1,369,549

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current portion of debt
$
5,001

 
$
7,101

Accounts payable
107,301

 
103,754

Current portion of operating lease liabilities
4,737

 
—

Other current liabilities
103,490

 
121,946

 
 
 
 
    Total current liabilities
220,529

 
232,801

 
 
 
 
Long-term debt
559,836

 
489,597

Pension and postretirement liabilities
28,375

 
29,055

Environmental reserves
20,025

 
20,009

Deferred income taxes
18,940

 
16,615

Noncurrent operating lease liabilities
25,437

 
—

Other noncurrent liabilities
19,989

 
18,212

 
 
 
 
    Total liabilities
893,131

 
806,289

 
 
 
 
Total Mueller Industries, Inc. stockholders’ equity
565,398

 
548,356

Noncontrolling interests
16,524

 
14,904

 
 
 
 
    Total equity
581,922

 
563,260

 
 
 
 
 
$
1,475,053

 
$
1,369,549











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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Quarter Ended
 (In thousands)
March 30, 2019
 
March 31, 2018
 
 
 
 
Cash flows from operating activities
 
 
 
Consolidated net income
$
17,139

 
$
24,344

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

 
 

Depreciation and amortization
10,635

 
9,536

Stock-based compensation expense
2,007

 
1,912

Loss from unconsolidated affiliates
15,369

 
10,320

Loss (gain) on disposals of properties
37

 
(676
)
Impairment charge
—

 
3,469

Deferred income tax benefit
(225
)
 
(940
)
Changes in assets and liabilities, net of effects of business acquired:
 
 
 
Receivables
(34,067
)
 
(72,843
)
Inventories
(13,335
)
 
3,504

Other assets
(7,530
)
 
20,967

Current liabilities
(15,885
)
 
(23,898
)
Other liabilities
741

 
(1,845
)
Other, net
441

 
(365
)
 
 
 
 
Net cash used in operating activities
(24,673
)
 
(26,515
)
 
 
 
 
Cash flows from investing activities
 
 
 
Capital expenditures
(6,834
)
 
(5,517
)
Acquisition of business, net of cash acquired
—

 
(12,466
)
Investments in unconsolidated affiliates
(8,000
)
 
(609
)
Proceeds from sales of properties
4

 
708

 
 
 
 
Net cash used in investing activities
(14,830
)
 
(17,884
)
 
 
 
 
Cash flows from financing activities
 
 
 
Dividends paid to stockholders of Mueller Industries, Inc.
(5,574
)
 
(5,679
)
Repurchase of common stock
(1,763
)
 
(6,575
)
Issuance of long-term debt
100,557

 
41,754

Repayments of long-term debt
(30,472
)
 
(15,903
)
Repayment of debt by consolidated joint ventures, net
(2,121
)
 
(3,342
)
Net cash (used) received to settle stock-based awards
(175
)
 
50

 
 
 
 
Net cash provided by financing activities
60,452

 
10,305

 
 
 
 
Effect of exchange rate changes on cash
919

 
1,289

 
 
 
 
Increase (decrease) in cash, cash equivalents, and restricted cash
21,868

 
(32,805
)
Cash, cash equivalents, and restricted cash at the beginning of the period
77,138

 
126,563

 
 
 
 
Cash, cash equivalents, and restricted cash at the end of the period
$
99,006

 
$
93,758



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