Mueller Industries, Inc. Reports Second Quarter Earnings MEMPHIS, Tenn., July 15 /PRNewswire-FirstCall/ -- Quarterly and Year-to-Date Earnings Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), today announced the Company's results for the second quarter and first-half period ended June 28, 2003. For the second quarter ended June 28, 2003, earnings per diluted share from continuing operations were 24 cents compared with 11 cents in the first quarter of 2003 and 50 cents for the second quarter of 2002. Income from continuing operations for the second quarter was $9.0 million compared with $18.7 million for the second quarter of fiscal 2002. Net sales for the three months ended June 28, 2003, were $248.2 million compared with net sales of $260.5 million for the second quarter of 2002. Net sales in the first half of 2003 were $480.2 million compared with net sales of $509.6 million in the 2002 period. Year-to-date, income from continuing operations was $13.4 million compared with $36.6 million for the same period of 2002. Earnings per diluted share from continuing operations were 36 cents for the first half of 2003 compared with 98 cents reported a year ago. Net income was $12.9 million year-to-date compared with $36.4 million for the same period last year. Financial Highlights Regarding the financial results, Mr. Karp said, "Mueller's financial position is excellent. * "Mueller ended the quarter with $207.4 million of cash on hand. Our cash position significantly exceeds our total debt of $16.1 million. * "Our current ratio is nearly 5 to 1 and our working capital is $410.8 million. * "In the first half, we funded $10.8 million for acquisitions and investments and $16.0 million for capital expenditures. Capital expenditures for the current fiscal year should be less than depreciation." Operating Highlights With regard to second quarter 2003 operations, Mr. Karp noted the following: * "We shipped approximately 175.5 million pounds of product versus 186.6 million pounds in the second quarter of 2002. * "Gross profit was down to $44.8 million in the second quarter of 2003 which is significantly less than the second quarter of 2002, but a 12 percent rebound from the first quarter of 2003. * "Our Standard Products Division posted operating earnings of $11.9 million, compared with $25.4 million in the second quarter of 2002. Standard Products Division's net sales were $178.9 million for the quarter, compared with $187.2 million for the same period a year ago. Results were less than expected due primarily to weak volume and margins in copper tube. Copper tube spreads continue to be under pressure, although they appear to have bottomed out. * "Mueller's Industrial Products Division posted operating earnings of $3.6 million during the second quarter on sales of $71.6 million, which compares with operating earnings of $5.8 million from sales of $74.9 million during the second quarter of 2002. * "We are pleased with our performance in Europe as operations returned to profitability. Volumes are up over last year as well as the first quarter of 2003, although margins remain below last year's level." Business Outlook Discussing the business outlook, Mr. Karp said, "Housing fundamentals remain positive. Low mortgage rates continue to stimulate new home construction and purchasing. Also, building permits, an excellent indicator of future housing activity, remain at a high level. Household growth, the primary driver of housing demand, projected at 12 million for the decade, combined with demand for replacements and second homes, could result in another strong decade of demand for our products. A rebound in the commercial construction sector could result in an additional upswing in demand. "As our copper tube competitors continue to report losses, we have remained profitable, although significantly less than previous levels. We remain cautiously optimistic based upon our belief that housing fundamentals will remain strong and pricing will improve with continued improvements in demand." 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, market demand, pricing, and competitive and technological factors, among others, as set forth in the Company's SEC filings. Mueller Industries, Inc. is a leading manufacturer of copper tube and fittings; brass and copper alloy rod, bar and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; plastic fittings and valves; refrigeration valves and fittings; and fabricated tubular products. Mueller's operations are located throughout the United States and in Canada, Mexico, and Great Britain. MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) For the Quarter For the Six Months Ended Ended June 28, June 29, June 28, June 29, 2003 2002 2003 2002 (Unaudited) (Unaudited) Net sales $248,221 $260,507 $480,243 $509,560 Cost of goods sold 203,461 201,351 395,376 393,157 Depreciation and amortization 9,722 9,163 19,462 18,239 Selling, general, and administrative expense 23,575 22,374 46,871 44,355 Operating income 11,463 27,619 18,534 53,809 Interest expense (292) (343) (603) (836) Environmental expense (257) (230) (464) (405) Other income, net 2,182 1,414 2,739 3,040 Income from continuing operations before before income taxes 13,096 28,460 20,206 55,608 Income tax expense (4,117) (9,744) (6,767) (19,027) Income from continuing operations 8,979 18,716 13,439 36,581 Loss from operation of discontinued operations, net of tax -- (251) (539) (180) Net income $8,979 $18,465 $12,900 $36,401 Earnings (loss) per share: Basic earnings per share: Weighted average shares outstanding 34,263 33,940 34,260 33,724 From continuing operations $0.26 $0.55 $0.40 $1.09 From discontinued operations -- (0.01) (0.02) (0.01) Basic earnings per share $0.26 $0.54 $0.38 $1.08 Diluted earnings per share: Weighted average shares outstanding plus assumed conversions 36,803 37,198 36,787 37,267 From continuing operations $0.24 $0.50 $0.36 $0.98 From discontinued operations -- -- (0.01) -- Diluted earnings per share $0.24 $0.50 $0.35 $0.98 MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) June 28, December 28, 2003 2002 (Unaudited) ASSETS Cash and cash equivalents $207,354 $217,601 Accounts receivable, net 160,105 132,427 Inventories 139,586 142,953 Other current assets 6,759 7,366 Total current assets 513,804 500,347 Property, plant, and equipment, net 350,970 352,469 Other assets 141,189 135,131 $1,005,963 $987,947 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $3,711 $4,161 Accounts payable 37,717 41,004 Other current liabilities 61,606 61,186 Total current liabilities 103,034 106,351 Long-term debt 12,410 14,005 Other noncurrent liabilities 118,584 113,647 Total liabilities 234,028 234,003 Minority interest in subsidiaries 248 421 Stockholders' equity 771,687 753,523 $1,005,963 $987,947 MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Six Months Ended June 28, June 29, 2003 2002 (Unaudited) Operating activities: Net income from continuing operations $13,439 $36,581 Reconciliation of net income from continuing operations to net cash provided by operating activities: Depreciation and amortization 19,462 18,239 Deferred income taxes 4,030 6,854 Loss (gain) on disposal of properties 193 (962) Minority interest in subsidiaries, net of dividend paid (173) 66 Income tax benefit from exercise of stock options -- 10,252 Changes in assets and liabilities, net (22,814) (15,117) Net cash provided by operating activities 14,137 55,913 Investing activities: Purchase of Conbraco Industries, Inc. common stock (10,806) -- Capital expenditures (15,982) (13,121) Other, net 659 3,691 Net cash used in investing activities (26,129) (9,430) Financing activities: Repayments of long-term debt (2,045) (32,066) Acquisition of treasury stock -- (10,450) Proceeds from the sale of treasury stock 244 2,587 Net cash used in financing activities (1,801) (39,929) Effect of exchange rate changes on cash 3,294 1,066 (Decrease) increase in cash and cash equivalents (10,499) 7,620 Cash provided by (used in) discontinued operations 252 (304) Cash and cash equivalents at the beginning of the period 217,601 121,862 Cash and cash equivalents at the end of the period $207,354 $129,178