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Mueller Industries, Inc. Reports Third Quarter 2019 Earnings

COLLIERVILLE, Tenn., October 22, 2019 -- Mueller Industries, Inc. (NYSE: MLI) announced today third quarter operating income of $46.3 million versus $33.7 million reported in the same quarter of 2018.
Net income was $29.1 million, or 52 cents per diluted share, on $608.6 million in net sales, compared with net income of $20.3 million, or 35 cents per diluted share, on $646.0 million in net sales for the same quarter of 2018.

Financial and Operating Highlights:
•
Lower copper prices contributed to the decline in net sales. COMEX copper fell eight cents per pound during the quarter and was, on average, four percent lower in the third quarter of 2019 compared with the third quarter of 2018.
•
Lower unit volume in both our Piping Systems and Industrial Metals segments further contributed to the reduction in net sales.
•
The effective tax rate for the quarter was 19 percent, compared with 12 percent in the prior year quarter. The rates in both quarters reflect non-recurring adjustments to tax provisions on foreign earnings.
•
We recorded a $1.9 million loss on our investment in Tecumseh Products Company in the third quarter of 2019, which represents a significant narrowing of the loss recorded in the second quarter of 2019.
•
Cash generated from operations was $67.9 million in the third quarter, and debt repayments totaled $40.6 million. Quarter-end cash on hand was $100.3 million, debt to total capitalization was 41 percent, and the current ratio was 3.0 to 1.

Regarding the outlook, Greg Christopher, Mueller CEO said, “The combination of our acquisitions and increased benefits from recent investments in our plants provided meaningful improvements to our results. We remain optimistic that the impact of global uncertainties and recent softness in demand will be mild, but nonetheless believe we are well positioned given our strong cash flow and low leverage, and prepared to react to changing market conditions.”
He added, “With regard to Tecumseh, management is executing the necessary and difficult action plans to restructure this business.”






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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 Nine Months Ended
(In thousands, except per share data)
 
September 28, 2019
 
September 29, 2018
 
September 28, 2019
 
September 29, 2018
 
 
 
 
 
 
 
 
 
Net sales
 
$
608,602

 
$
645,958

 
$
1,886,777

 
$
1,948,791

 
 
 
 
 
 
 
 
 
Cost of goods sold
 
510,788

 
566,956

 
1,586,129

 
1,676,446

Depreciation and amortization
 
10,823

 
10,619

 
31,856

 
29,081

Selling, general, and administrative expense
 
40,739

 
38,889

 
121,838

 
112,077

Gain on sale of assets
 
—

 
(2,691
)
 
—

 
(334
)
Insurance recovery
 
—

 
(1,486
)
 
—

 
(1,486
)
 
 
 
 
 
 
 
 
 
Operating income
 
46,252

 
33,671

 
146,954

 
133,007

 
 
 
 
 
 
 
 
 
Interest expense
 
(6,148
)
 
(6,746
)
 
(20,135
)
 
(18,728
)
Other income, net
 
533

 
411

 
823

 
1,557

 
 
 
 
 
 
 
 
 
Income before income taxes
 
40,637

 
27,336

 
127,642

 
115,836

 
 
 
 
 
 
 
 
 
Income tax expense
 
(7,665
)
 
(3,373
)
 
(27,643
)
 
(23,179
)
Loss from unconsolidated affiliates, net of foreign tax
 
(2,528
)
 
(3,100
)
 
(23,740
)
 
(13,568
)
 
 
 
 
 
 
 
 
 
Consolidated net income
 
30,444

 
20,863

 
76,259

 
79,089

 
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
(1,351
)
 
(571
)
 
(3,457
)
 
(1,487
)
 
 
 
 
 
 
 
 
 
Net income attributable to Mueller Industries, Inc.
 
$
29,093

 
$
20,292

 
$
72,802

 
$
77,602

 
 
 
 
 
 
 
 
 
Weighted average shares for basic earnings per share
 
55,832

 
56,877

 
55,771

 
56,858

Effect of dilutive stock-based awards
 
482

 
540

 
523

 
524

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

 
57,417

 
56,294

 
57,382

 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.52

 
$
0.36

 
$
1.31

 
$
1.36

 
 
 
 
 
 
 
 
 
Diluted earnings per share
 
$
0.52

 
$
0.35

 
$
1.29

 
$
1.35

 
 
 
 
 
 
 
 
 
Dividends per share
 
$
0.10

 
$
0.10

 
$
0.30

 
$
0.30

 
 
 
 
 
 
 
 
 
Summary Segment Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
 
 
 
 
    Piping Systems Segment
 
$
390,917

 
$
410,525

 
$
1,193,274

 
$
1,294,672

    Industrial Metals Segment
 
135,443

 
158,709

 
434,037

 
511,932

    Climate Segment
 
90,938

 
81,619

 
276,853

 
156,854

    Elimination of intersegment sales
 
(8,696
)
 
(4,895
)
 
(17,387
)
 
(14,667
)
 
 
 
 
 
 
 
 
 
Net sales
 
$
608,602

 
$
645,958

 
$
1,886,777

 
$
1,948,791

 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
    Piping Systems Segment
 
$
36,010

 
$
25,408

 
$
100,155

 
$
100,376

    Industrial Metals Segment
 
12,599

 
15,111

 
46,697

 
53,837

    Climate Segment
 
7,963

 
5,774

 
33,384

 
16,668

    Unallocated expenses
 
(10,320
)
 
(12,622
)
 
(33,282
)
 
(37,874
)
 
 
 
 
 
 
 
 
 
Operating income
 
$
46,252

 
$
33,671

 
$
146,954

 
$
133,007


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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
 
September 28,
2019
 
December 29, 2018
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
100,338

 
$
72,616

Accounts receivable, net
 
319,562

 
273,417

Inventories
 
277,567

 
329,795

Other current assets
 
33,242

 
26,790

 
 
 
 
 
    Total current assets
 
730,709

 
702,618

 
 
 
 
 
Property, plant, and equipment, net
 
361,308

 
370,633

Operating lease right-of-use assets
 
25,855

 
—

Other assets
 
284,893

 
296,298

 
 
 
 
 
 
 
$
1,402,765

 
$
1,369,549

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current portion of debt
 
$
7,387

 
$
7,101

Accounts payable
 
102,084

 
103,754

Current portion of operating lease liabilities
 
3,832

 
—

Other current liabilities
 
133,466

 
121,946

 
 
 
 
 
    Total current liabilities
 
246,769

 
232,801

 
 
 
 
 
Long-term debt
 
434,082

 
489,597

Pension and postretirement liabilities
 
27,399

 
29,055

Environmental reserves
 
19,774

 
20,009

Deferred income taxes
 
17,260

 
16,615

Noncurrent operating lease liabilities
 
22,712

 
—

Other noncurrent liabilities
 
10,173

 
18,212

 
 
 
 
 
    Total liabilities
 
778,169

 
806,289

 
 
 
 
 
Total Mueller Industries, Inc. stockholders’ equity
 
607,648

 
548,356

Noncontrolling interests
 
16,948

 
14,904

 
 
 
 
 
    Total equity
 
624,596

 
563,260

 
 
 
 
 
 
 
$
1,402,765

 
$
1,369,549











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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
For the Nine Months Ended
 (In thousands)
 
September 28, 2019
 
September 29, 2018
 
 
 
 
 
Cash flows from operating activities
 
 
 
 
Consolidated net income
 
$
76,259

 
$
79,089

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

 
 

Depreciation and amortization
 
32,095

 
29,320

Stock-based compensation expense
 
6,355

 
5,953

Loss from unconsolidated affiliates
 
23,740

 
13,568

Gain on disposals of properties
 
(24
)
 
(247
)
Insurance recovery
 
—

 
(1,486
)
Change in fair value of contingent consideration
 
4,500

 
—

Deferred income tax benefit
 
(1,593
)
 
(1,502
)
Changes in assets and liabilities, net of effects of business acquired:
 
 
 
 
Receivables
 
(47,433
)
 
(42,201
)
Inventories
 
50,985

 
48,716

Other assets
 
(7,485
)
 
11,250

Current liabilities
 
1,687

 
(7,947
)
Other liabilities
 
(7,112
)
 
(13,862
)
Other, net
 
(47
)
 
1,864

 
 
 
 
 
Net cash provided by operating activities
 
131,927

 
122,515

 
 
 
 
 
Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(20,162
)
 
(16,685
)
Acquisition of business, net of cash acquired
 
3,465

 
(167,677
)
Investments in unconsolidated affiliates
 
(11,000
)
 
(609
)
Proceeds from sales of properties
 
385

 
18,693

 
 
 
 
 
Net cash used in investing activities
 
(27,312
)
 
(166,278
)
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
Dividends paid to stockholders of Mueller Industries, Inc.
 
(16,738
)
 
(17,051
)
Repurchase of common stock
 
(1,763
)
 
(6,575
)
Payment of contingent consideration
 
(3,170
)
 
—

Issuance of long-term debt
 
100,658

 
194,131

Repayments of long-term debt
 
(151,305
)
 
(139,518
)
Repayment of debt by consolidated joint ventures, net
 
(4,352
)
 
(2,978
)
Net cash used to settle stock-based awards
 
(1,069
)
 
(726
)
Dividends paid to noncontrolling interests
 
—

 
(592
)
 
 
 
 
 
Net cash (used in) provided by financing activities
 
(77,739
)
 
26,691

 
 
 
 
 
Effect of exchange rate changes on cash
 
(1,511
)
 
(442
)
 
 
 
 
 
Increase (decrease) in cash, cash equivalents, and restricted cash
 
25,365

 
(17,514
)
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
 
$
102,503

 
$
109,049






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