TO BUSINESS EDITOR: Mueller Industries, Inc. Reports Second Quarter Results MEMPHIS, Tenn., July 24 /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 of 2007. Net income for the second quarter was $36.4 million, or 98 cents per diluted share, constituting the third highest quarter in the Company's history. This compares with $58.8 million, or $1.57 per diluted share, for the extraordinary second quarter of fiscal 2006, which was the Company's best quarter ever. Net sales for the three months ended June 30, 2007 were $772.6 million, compared with net sales of $779.7 million for the second quarter of 2006. Year-to-date, the Company earned $55.3 million, or $1.49 per diluted share, on net sales of $1.38 billion. This compares with net income of $92.1 million, or $2.48 per diluted share, on net sales of $1.33 billion for the first half of 2006. Earnings and sales for the second quarter were affected by the decline in the residential construction sector, which saw housing starts down approximately 25 percent compared with last year. However, the commercial construction market continues to strengthen and has increased by approximately 18 percent over last year. The Company's profit margins in the commercial construction sector have historically been better than in the other markets the Company serves. Financial and Operating Highlights Regarding the second quarter of 2007, Mr. Karp said: -- "Mueller ended the quarter with almost $250 million in cash; our current ratio remains excellent at 2.48 to 1 and our working capital is $557.3 million. -- "The COMEX average price of copper was $3.46 per pound in the second quarter of 2007, which compares with $3.37 per pound in the second quarter of 2006. -- "Our Plumbing & Refrigeration segment posted operating earnings of $51.7 million on net sales of $455.5 million which compares with operating earnings of $78.3 million on net sales of $551.2 million in the second quarter of 2006. Our European businesses were profitable on the strength of our trading activities. -- "Our OEM segment posted operating earnings of $18.0 million during the second quarter of 2007 on net sales of $322.2 million, which compared with operating earnings of $21.5 million on net sales of $242.1 million for the same period in 2006. -- "Selling, general, and administrative expense was $39.0 million in the second quarter of 2007 which is comparable to the same period of 2006. -- "Capital expenditures during the first half of 2007 totaled $15.6 million. We expect to invest between $30 and $40 million for capital expenditures during 2007." Business Outlook for 2007 Regarding the outlook for 2007, Mr. Karp said, "The residential construction sector remains weak, although the rate of decline has subsided. We believe the housing market is near the bottom, and will begin to improve in the first half of 2008. Positive factors include low mortgage rates, high employment, an expanding economy, and population growth. Also, we expect the commercial construction market to remain strong." 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, Great Britain, and China. Mueller's business is importantly linked to (1) the construction of new homes; (2) the improvement and reconditioning of existing homes and structures; and (3) the commercial construction market, which includes office buildings, factories, hotels, hospitals, etc. 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," 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. MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data)
For the Quarter Ended For the Six Months Ended June 30, July 1, June 30, July 1, 2007 2006 2007 2006 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited) Net sales $ 772,647 $ 779,663 $ 1,382,429 $ 1,330,702 Cost of goods sold 661,746 637,038 1,198,324 1,094,107 Gross profit 110,901 142,625 184,105 236,595 Depreciation and amortization 11,306 10,376 22,272 20,571 Selling, general, and administrative expense 38,971 39,689 73,898 74,648 Operating income 60,624 92,560 87,935 141,376 Interest expense (5,689) (5,214) (11,183) (10,076) Other income (expense), net 1,925 (67) 6,878 1,946 Income before income taxes 56,860 87,279 83,630 133,246 Income tax expense (20,462) (28,529) (28,319) (41,131) Net income $ 36,398 $ 58,750 $ 55,311 $ 92,115 Weighted average shares for basic earnings per share 37,060 36,891 37,044 36,791 Effect of dilutive stock options 204 421 160 405 Adjusted weighted average shares for diluted earnings per share 37,264 37,312 37,204 37,196 Basic earnings per share $ 0.98 $ 1.59 $ 1.49 $ 2.50 Diluted earnings per share $ 0.98 $ 1.57 $ 1.49 $ 2.48 Summary Segment Data: Net sales: Plumbing & Refrigeration Segment $ 455,486 $ 551,158 $ 825,482 $ 938,099 OEM Segment 322,201 242,128 565,931 410,100 Elimination of intersegment sales (5,040) (13,623) (8,984) (17,497) Net sales $ 772,647 $ 779,663 $ 1,382,429 $ 1,330,702 Operating income: Plumbing & Refrigeration Segment $ 51,746 $ 78,328 $ 78,600 $ 122,521 OEM Segment 17,999 21,511 23,493 32,464 Unallocated expenses (9,121) (7,279) (14,158) (13,609) Operating income $ 60,624 $ 92,560 $ 87,935 $ 141,376
MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) June 30, December 30, 2007 2006 ----------- ----------- (Unaudited) ASSETS Cash and cash equivalents $ 247,916 $ 200,471 Accounts receivable, net 392,326 281,679 Inventories 251,544 258,647 Other current assets 41,497 35,397 Total current assets 933,283 776,194 Property, plant, and equipment, net 325,822 315,064 Other assets 194,199 177,649 $ 1,453,304 $ 1,268,907 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $ 48,037 $ 35,998 Accounts payable 181,136 96,095 Other current liabilities 146,804 123,426 Total current liabilities 375,977 255,519 Long-term debt 308,084 308,154 Pension and postretirement liabilities 48,919 36,599 Environmental reserves 9,186 8,907 Deferred income taxes 42,398 46,408 Other noncurrent liabilities 2,015 2,206 Total liabilities 786,579 657,793 Minority interest in subsidiaries 22,783 22,300 Stockholders' equity 643,942 588,814 $ 1,453,304 $ 1,268,907 MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Six Months Ended June 30, July 1, 2007 2006 ----------- ----------- (Unaudited) Operating activities: Net income $ 55,311 $ 92,115 Reconciliation of net income to net cash provided by (used in) operating activities: Depreciation and amortization 22,465 20,719 Deferred income taxes (6,140) (4,946) (Gain) loss on disposal of properties (3,137) 1,905 Stock-based compensation expense 1,273 1,308 Income tax benefit from exercise of stock options (124) (1,042) Minority interest in subsidiaries, net of dividend paid (18) 1,805 Gain on sale of equity investment -- (1,876) Equity in earnings of unconsolidated subsidiary -- (964) Gain on early retirement of debt -- (97) Changes in assets and liabilities, net of businesses acquired: Receivables (78,521) (161,990) Inventories 35,467 (51,127) Other assets (10,948) (4,642) Current liabilities 78,376 93,142 Other liabilities 773 4,439 Other, net 2,144 (3,657) Net cash provided by (used in) operating activities 96,921 (14,908) Investing activities: Capital expenditures (15,638) (20,918) Acquisition of businesses, net of cash received (31,970) 3,632 Proceeds from sales of properties and equity investment 3,032 23,218 Net cash (used in) provided by investing activities (44,576) 5,932 Financing activities: Proceeds from issuance of long-term debt 19,054 22,425 Repayments of long-term debt (18,116) (3,413) Dividends paid (7,410) (7,373) Issuance of shares under incentive stock option plans from treasury 977 5,823 Income tax benefit from exercise of stock options 124 1,042 Acquisition of treasury stock (54) (396) Net cash (used in) provided by financing activities (5,425) 18,108 Effect of exchange rate changes on cash 525 70 Increase in cash and cash equivalents 47,445 9,202 Cash and cash equivalents at the beginning of the period 200,471 129,685 Cash and cash equivalents at the end of the period $ 247,916 $ 138,887