FOR IMMEDIATE RELEASE
Contact: Kent A. McKee
Memphis, TN—July 22, 2008
(901) 753-3208
 

MUELLER INDUSTRIES, INC. REPORTS 
SECOND QUARTER 2008 EARNINGS


Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller’s net income in the second quarter of 2008 was $27.0 million, or 72 cents per diluted share. This compares with $36.4 million, or 98 cents per diluted share, for the same period of 2007. Net sales for the second quarter of 2008 were $753.5 million compared with $772.6 million in 2007. For the first half, net income was $54.4 million, or $1.45 per diluted share on net sales of $1.46 billion. This compares with net income of $55.3 million, or $1.49 per diluted share, on net sales of $1.38 billion for the first half of 2007.

Mr. Karp said, “Mueller’s earnings for the first half of 2008 were achieved despite the continuing decline in the housing industry, the sub-prime mortgage melt down, the turbulence in the financial markets, rising metal costs, sky-high energy prices and a slowing national economy. Considering these adverse circumstances, we are pleased with our results.

“Obviously, we cannot predict how long these difficult circumstances will persist. However, we are confident that Mueller’s excellent balance sheet, strong cash flows and experienced management team will allow us to maximize our competitiveness and take advantage of opportunities.”


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Financial and Operating Highlights

Regarding the second quarter of 2008, Mr. Karp said:
 
  • “Our Plumbing & Refrigeration segment posted operating earnings of $35.4 million on net sales of $404.4 million which compares with prior year earnings of $51.7 million on net sales of $455.5 million. Operating results were affected by lower spreads and unit shipments in most product lines.
     
 
•
“Our OEM segment posted operating earnings of $19.0 million during the second quarter of 2008 on net sales of $354.0 million, which compares with operating earnings of $18.0 million on net sales of $322.2 million for the same period in 2007.
 
 
·
“During the second quarter of 2008, capital expenditures totaled $6.3 million. We expect to invest between $30 and $40 million for capital expenditures during 2008.
 
 
·
“The COMEX average price of copper was $3.80 per pound in the second quarter of 2008, which compares with $3.46 in the second quarter of 2007.
 
 
·
“Our current ratio remains solid at 3.16 to 1. We ended the quarter with $273.6 million in cash and $661.0 million in working capital.
     
 
· 
 “Our return on average equity was 16.3 percent for the four quarters ended June, 2008.
     
  ·  “As of quarter end, our financial leverage was modest with a debt to total capitalization ratio of 30.6 percent.
     
 
·
“Total stockholders’ equity was $765.0 million which equates to a book value per share of $20.60 of which $7.37 per share is in cash.”
 



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.


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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.

 
 
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MUELLER INDUSTRIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(In thousands, except per share data)
  
                   
                   
   
For the Quarter Ended
  
For the Six Months Ended
  
   
June 28,
  
June 30,
  
June 28,
  
June 30,
  
   
2008
  
2007
  
2008
  
2007
  
   
(Unaudited)
  
(Unaudited)
  
                   
Net sales
  
$
753,471
  
$
772,647
  
$
1,457,579
  
$
1,382,429
  
Cost of goods sold
    
661,209
   
661,746
   
1,273,006
   
1,198,324
 
Depreciation and amortization
    
11,004
   
11,306
   
21,988
   
22,272
 
Selling, general, and administrative expense
    
34,618
   
38,971
   
72,909
   
73,898
 
                           
Operating income
    
46,640
   
60,624
   
89,676
   
87,935
 
Interest expense
    
(5,238
)
  
(5,689
)
  
(10,705
)
  
(11,183
)
Other income (expense), net
    
951
   
1,925
   
4,968
   
6,878
 
                           
Income before income taxes
    
 42,353
    
56,860
   
83,939
   
83,630
 
Income tax expense
    
(15,339
)
  
(20,462
)
  
(29,570
)
  
(28,319
)
                           
Net income
  
$
27,014
 
$
36,398
  
$
54,369
  
$
55,311
  
                           
                           
Weighted average shares
                          
for basic earnings per share
    
37,119
   
37,060
   
37,108
   
37,044
 
Effect of dilutive stock options
    
340
   
204
   
269
   
160
 
                           
Adjusted weighted average shares
                          
for diluted earnings per share
    
37,459
   
37,264
   
37,377
   
37,204
 
                           
Basic earnings per share
  
$
0.73
 
$
0.98
  
$
1.47
  
$
1.49
  
                           
Diluted earnings per share
  
$
0.72
 
$
0.98
  
$
1.45
  
$
1.49
  
                           
Dividends per share
  
$
0.10
  
$
0.10
  
$
0.20
  
$
0.20
  
                           
Summary Segment Data:
                          
Net sales:
                          
Plumbing & Refrigeration Segment
  
$
404,414
  
$
455,486
  
$
788,298
  
$
825,482
  
OEM Segment
    
353,988
   
322,201
   
680,195
   
565,931
 
Elimination of intersegment sales
    
(4,931
)
  
(5,040
)
  
(10,914
)
  
(8,984
)
                           
Net sales
  
$
753,471
  
$
772,647
  
$
1,457,579
  
$
1,382,429
  
                           
Operating income:
                          
Plumbing & Refrigeration Segment
  
$
35,370
  
$
51,746
  
$
60,454
  
$
78,600
  
OEM Segment
    
18,963
   
17,999
   
44,537
   
23,493
 
Unallocated expenses
    
(7,693
)
  
(9,121
)
  
(15,315
)
  
(14,158
)
                           
Operating income
  
$
46,640
  
$
60,624
  
$
89,676
  
$
87,935
  
 
 
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  MUELLER INDUSTRIES, INC.
  CONDENSED CONSOLIDATED BALANCE SHEETS
  (In thousands)
  
                
                
                
        
June 28,
  
December 29,
  
        
2008
  
2007
  
        
(Unaudited)
  
ASSETS
  
 
          
 Cash and cash equivalents
        
$
273,620
  
$
308,618
  
 Accounts receivable, net
          
392,826
   
323,003
 
 Inventories
          
263,752
   
269,032
 
 Other current assets
          
36,789
   
39,694
 
 Total current assets
          
966,987
   
940,347
 
                     
 Property, plant, and equipment, net
          
303,453
   
308,383
 
 Other assets
          
201,361
   
200,474
 
                     
 
        
$
1,471,801
  
$
1,449,204
  
                     
                     
                     
 LIABILITIES AND STOCKHOLDERS' EQUITY
                    
 Current portion of long-term debt
        
$
55,365
  
$
72,743
  
 Accounts payable
          
130,182
   
140,497
 
 Other current liabilities
          
120,478
   
121,813
 
 Total current liabilities
          
306,025
   
335,053
 
                     
 Long-term debt
          
281,586
   
281,738
 
 Pension and postretirement liabilities
          
36,001
   
36,071
 
 Environmental reserves
          
8,873
   
8,897
 
 Deferred income taxes
          
46,197
   
52,156
 
 Other noncurrent liabilities
          
2,197
   
2,029
 
                     
 Total liabilities
          
680,879
   
715,944
 
                     
 Minority interest in subsidiary
          
25,895
   
22,765
 
                     
 Stockholders' equity
          
765,027
   
710,495
 
                     
         
$
1,471,801
  
$
1,449,204
  

5
 

 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  
(In thousands)
  
           
   
For the Six Months Ended
  
   
June 28,
  
June 30,
  
   
2008
  
2007
  
   
(Unaudited)
  
Operating activities:
          
Net income
  
$
54,369
  
$
55,311
  
Reconciliation of net income to net cash
              
provided by operating activities:
              
 Depreciation and amortization
    
22,323
   
22,465
 
 Gain on early retirement of debt
    
(2,482
)
  
-
 
 Minority interest in subsidiary, net of dividend paid
    
1,562
   
(18
)
 Stock-based compensation expense
    
1,479
   
1,273
 
 Loss (gain) on disposal of properties
    
341
   
(3,137
)
 Deferred income taxes
    
130
   
(6,140
)
 Income tax benefit from exercise of stock options
    
(69
)
  
(124
)
 Changes in assets and liabilities, net of business
              
 acquired:
              
 Receivables
    
(66,599
)
  
(78,521
)
 Inventories
    
7,489
   
35,467
 
 Other assets
    
(2,321
)
  
(10,948
)
 Current liabilities
    
(12,757
)
  
78,376
 
 Other liabilities
    
1,342
   
773
 
 Other, net
    
(1,167
)
  
2,144
 
               
Net cash provided by operating activities
    
3,640
   
96,921
 
               
Investing activities:
              
Capital expenditures
    
(14,833
)
  
(15,638
)
Net deposits into restricted cash balances
    
(632
)
  
-
 
Acquisition of business, net of cash received
    
-
   
(31,970
)
Proceeds from sales of properties
    
-
   
3,032
 
               
Net cash used in investing activities
    
(15,465
)
  
(44,576
)
               
Financing activities:
              
Repayments of long-term debt
    
(23,605
)
  
(18,116
)
Dividends paid
    
(7,421
)
  
(7,410
)
Issuance of debt by joint venture, net
    
5,411
   
19,054
 
Issuance of shares under incentive stock option plans
              
from treasury
    
1,055
   
977
 
Income tax benefit from exercise of stock options
    
69
   
124
 
Acquisition of treasury stock
    
(13
)
  
(54
)
               
Net cash used in financing activities
    
(24,504
)
  
(5,425
)
               
Effect of exchange rate changes on cash
    
1,331
   
525
 
               
(Decrease) increase in cash and cash equivalents
    
(34,998
)
  
47,445
 
Cash and cash equivalents at the beginning of the period
    
308,618
   
200,471
 
               
Cash and cash equivalents at the end of the period
  
$
273,620
  
$
247,916
  

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