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Mueller Industries, Inc. Reports Second Quarter 2019 Earnings

COLLIERVILLE, Tenn., July 23, 2019 -- Mueller Industries, Inc. (NYSE: MLI) announced today second quarter operating income of $51.5 million, compared with $51.9 million in the same quarter of 2018.
Net income was $28.0 million, or 50 cents per diluted share, on $666.4 million in net sales, compared with net income of $33.2 million, or 58 cents per diluted share, on $662.8 million in net sales for the same quarter of 2018.

Financial and Operating Highlights:
•
We recorded a $5.3 million loss on our investment in Tecumseh Products Co. in the second quarter of 2019, which narrowed significantly from the first quarter of 2019. On an as adjusted basis, excluding the loss, diluted earnings per share would have been 58 cents in the second quarter.
•
Consolidated net sales, as well as earnings in our FIFO businesses, were negatively impacted by the decline in copper during the quarter. Copper declined 22 cents per pound during the quarter and was, on average, 10 percent lower in the second quarter of 2019 compared with the second quarter of 2018.
•
Weaker demand from certain export markets and our industrial customer base impacted shipments in both the Piping Systems and Industrial Metals segments.
•
Cash generated from operations was $88.7 million in the second quarter and debt repayments totaled $82.5 million. Quarter-end cash on hand was $91.4 million, debt to total capitalization was 44 percent, and the current ratio was 3.2 to 1.

Regarding the quarter and the outlook, Greg Christopher, Mueller CEO said, “Considering the impact of softness in our export and industrial end-markets, as well as the negative effect of copper this quarter, these are healthy results. Demand in our businesses remains steady.”
He added, “Once again, charges taken for Tecumseh reduced our net income, but Tecumseh's results for the quarter improved over our first quarter, a trend we believe will continue.”










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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 Six Months Ended
(In thousands, except per share data)
 
June 29, 2019
 
June 30, 2018
 
June 29, 2019
 
June 30, 2018
 
 
 
 
 
 
 
 
 
Net sales
 
$
666,394

 
$
662,773

 
$
1,278,175

 
$
1,302,833

 
 
 
 
 
 
 
 
 
Cost of goods sold
 
563,948

 
563,820

 
1,075,341

 
1,109,490

Depreciation and amortization
 
10,478

 
9,006

 
21,033

 
18,462

Selling, general, and administrative expense
 
40,446

 
38,428

 
81,099

 
72,485

(Gain) loss on sale of assets
 
—

 
(409
)
 
—

 
3,060

 
 
 
 
 
 
 
 
 
Operating income
 
51,522

 
51,928

 
100,702

 
99,336

 
 
 
 
 
 
 
 
 
Interest expense
 
(7,033
)
 
(6,073
)
 
(13,987
)
 
(11,982
)
Other income, net
 
462

 
586

 
290

 
1,146

 
 
 
 
 
 
 
 
 
Income before income taxes
 
44,951

 
46,441

 
87,005

 
88,500

 
 
 
 
 
 
 
 
 
Income tax expense
 
(10,432
)
 
(12,411
)
 
(19,978
)
 
(19,806
)
Loss from unconsolidated affiliates, net of foreign tax
 
(5,843
)
 
(148
)
 
(21,212
)
 
(10,468
)
 
 
 
 
 
 
 
 
 
Consolidated net income
 
28,676

 
33,882

 
45,815

 
58,226

 
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
(690
)
 
(700
)
 
(2,106
)
 
(916
)
 
 
 
 
 
 
 
 
 
Net income attributable to Mueller Industries, Inc.
 
$
27,986

 
$
33,182

 
$
43,709

 
$
57,310

 
 
 
 
 
 
 
 
 
Weighted average shares for basic earnings per share
 
55,753

 
56,797

 
55,741

 
56,848

Effect of dilutive stock-based awards
 
561

 
514

 
543

 
516

 
 
 
 
 
 
 
 
 
Adjusted weighted average shares for diluted earnings per share
 
56,314

 
57,311

 
56,284

 
57,364

 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.50

 
$
0.58

 
$
0.78

 
$
1.01

 
 
 
 
 
 
 
 
 
Diluted earnings per share
 
$
0.50

 
$
0.58

 
$
0.78

 
$
1.00

 
 
 
 
 
 
 
 
 
Dividends per share
 
$
0.10

 
$
0.10

 
$
0.20

 
$
0.20

 
 
 
 
 
 
 
 
 
Summary Segment Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
 
 
 
 
    Piping Systems Segment
 
$
425,865

 
$
453,183

 
$
802,357

 
$
884,147

    Industrial Metals Segment
 
147,719

 
175,891

 
298,594

 
353,223

    Climate Segment
 
96,081

 
39,172

 
185,915

 
75,235

    Elimination of intersegment sales
 
(3,271
)
 
(5,473
)
 
(8,691
)
 
(9,772
)
 
 
 
 
 
 
 
 
 
Net sales
 
$
666,394

 
$
662,773

 
$
1,278,175

 
$
1,302,833

 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
    Piping Systems Segment
 
$
35,896

 
$
42,019

 
$
64,145

 
$
74,968

    Industrial Metals Segment
 
14,911

 
16,093

 
34,098

 
38,726

    Climate Segment
 
13,035

 
5,347

 
25,421

 
10,894

    Unallocated expenses
 
(12,320
)
 
(11,531
)
 
(22,962
)
 
(25,252
)
 
 
 
 
 
 
 
 
 
Operating income
 
$
51,522

 
$
51,928

 
$
100,702

 
$
99,336


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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
 
June 29,
2019
 
December 29, 2018
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
91,440

 
$
72,616

Accounts receivable, net
 
316,806

 
273,417

Inventories
 
300,391

 
329,795

Other current assets
 
25,867

 
26,790

 
 
 
 
 
    Total current assets
 
734,504

 
702,618

 
 
 
 
 
Property, plant, and equipment, net
 
365,025

 
370,633

Operating lease right-of-use assets
 
28,590

 
—

Other assets
 
288,949

 
296,298

 
 
 
 
 
 
 
$
1,417,068

 
$
1,369,549

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current portion of debt
 
$
2,891

 
$
7,101

Accounts payable
 
106,055

 
103,754

Current portion of operating lease liabilities
 
4,754

 
—

Other current liabilities
 
113,054

 
121,946

 
 
 
 
 
    Total current liabilities
 
226,754

 
232,801

 
 
 
 
 
Long-term debt
 
479,276

 
489,597

Pension and postretirement liabilities
 
28,099

 
29,055

Environmental reserves
 
19,904

 
20,009

Deferred income taxes
 
18,595

 
16,615

Noncurrent operating lease liabilities
 
24,491

 
—

Other noncurrent liabilities
 
15,587

 
18,212

 
 
 
 
 
    Total liabilities
 
812,706

 
806,289

 
 
 
 
 
Total Mueller Industries, Inc. stockholders’ equity
 
588,271

 
548,356

Noncontrolling interests
 
16,091

 
14,904

 
 
 
 
 
    Total equity
 
604,362

 
563,260

 
 
 
 
 
 
 
$
1,417,068

 
$
1,369,549











4


MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
For the Six Months Ended
 (In thousands)
 
June 29, 2019
 
June 30, 2018
 
 
 
 
 
Cash flows from operating activities
 
 
 
 
Consolidated net income
 
$
45,815

 
$
58,226

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

 
 

Depreciation and amortization
 
21,192

 
18,622

Stock-based compensation expense
 
4,302

 
3,906

Loss from unconsolidated affiliates
 
21,212

 
10,468

(Gain) loss on disposals of properties
 
(37
)
 
2,646

Deferred income tax benefit
 
(67
)
 
(1,260
)
Changes in assets and liabilities, net of effects of business acquired:
 
 
 
 
Receivables
 
(42,145
)
 
(90,345
)
Inventories
 
30,080

 
33,357

Other assets
 
(4,617
)
 
12,405

Current liabilities
 
(9,735
)
 
(11,566
)
Other liabilities
 
(1,485
)
 
(1,361
)
Other, net
 
(532
)
 
1,121

 
 
 
 
 
Net cash provided by operating activities
 
63,983

 
36,219

 
 
 
 
 
Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(13,034
)
 
(10,882
)
Acquisition of business, net of cash acquired
 
3,465

 
(12,467
)
Investments in unconsolidated affiliates
 
(10,500
)
 
(609
)
Proceeds from sales of properties
 
351

 
11,376

 
 
 
 
 
Net cash used in investing activities
 
(19,718
)
 
(12,582
)
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
Dividends paid to stockholders of Mueller Industries, Inc.
 
(11,151
)
 
(11,360
)
Repurchase of common stock
 
(1,763
)
 
(6,575
)
Issuance of long-term debt
 
100,638

 
193,247

Repayments of long-term debt
 
(110,914
)
 
(37,107
)
Repayment of debt by consolidated joint ventures, net
 
(4,132
)
 
(3,100
)
Net cash (used) received to settle stock-based awards
 
(127
)
 
103

Dividends paid to noncontrolling interests
 
—

 
(592
)
 
 
 
 
 
Net cash (used in) provided by financing activities
 
(27,449
)
 
134,616

 
 
 
 
 
Effect of exchange rate changes on cash
 
118

 
(368
)
 
 
 
 
 
Increase in cash, cash equivalents, and restricted cash
 
16,934

 
157,885

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
 
$
94,072

 
$
284,448











5


MUELLER INDUSTRIES, INC.
Reconciliation of Net Income as Reported to Non-GAAP Financial Measures Without Loss (Gain) from the Unconsolidated Affiliate Tecumseh Products
(Unaudited)

Earnings attributable to normal operations without the loss (gain) from Tecumseh Products (Tecumseh) is a measurement not derived in accordance with generally accepted accounting principles (GAAP). Excluding the loss (gain) is useful as it measures the operating results that are the outcome of daily operating decisions made in the normal course of business. Reconciliation of earnings attributable to normal operations without the loss (gain) from Tecumseh to net income as reported is as follows:

(In thousands, except per share data)
 
For the Quarter Ended June 29, 2019
 
 
As Reported (GAAP)
 
Loss from Tecumseh
 
As Adjusted (Non-GAAP)
 
 
 
 
 
 
 
Income before income taxes
 
$
44,951

 
$
—

 
$
44,951

 
 
 
 
 
 
 
Income tax expense
 
(10,432
)
 
(377
)
 
(10,809
)
Loss from unconsolidated affiliates, net of foreign tax
 
(5,843
)
 
5,256

 
(587
)
 
 
 
 
 
 
 
Consolidated net income
 
28,676

 
4,879

 
33,555

 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
(690
)
 
—

 
(690
)
 
 
 
 
 
 
 
Net income attributable to Mueller Industries, Inc.
 
$
27,986

 
$
4,879

 
$
32,865

 
 
 
 
 
 
 
Diluted earnings per share
 
$
0.50

 


 
$
0.58

 
 
 
 
 
 
 
(In thousands, except per share data)
 
For the Quarter Ended June 30, 2018
 
 
As Reported (GAAP)
 
Gain from Tecumseh
 
As Adjusted (Non-GAAP)
 
 
 
 
 
 
 
Income before income taxes
 
$
46,441

 
$
—

 
$
46,441

 
 
 
 
 
 
 
Income tax expense
 
(12,411
)
 
231

 
(12,180
)
Loss from unconsolidated affiliates, net of foreign tax
 
(148
)
 
(235
)
 
(383
)
 
 
 
 
 
 
 
Consolidated net income
 
33,882

 
(4
)
 
33,878

 
 
 
 

 

Net income attributable to noncontrolling interests
 
(700
)
 
—

 
(700
)
 
 
 
 
 
 
 
Net income attributable to Mueller Industries, Inc.
 
$
33,182

 
$
(4
)
 
$
33,178

 
 
 
 
 
 
 
Diluted earnings per share
 
$
0.58

 


 
$
0.58



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