FOR IMMEDIATE RELEASE Contact: Kent A. McKee
Memphis, TN--October 21, 2008 (901) 753-3208
MUELLER INDUSTRIES, INC. REPORTS
THIRD QUARTER RESULTS
Quarterly and Year-to-Date Earnings
Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), today
announced the Company's results for the third quarter of 2008. Net income for
the third quarter was $18.7 million, or 50 cents per diluted share, which
compares with net income of $31.3 million, or 84 cents per diluted share, for
the third quarter of fiscal 2007. The third quarter of 2008 includes a pre-tax
charge of $3.3 million to write-down certain inventories to the
lower-of-cost-or-market that resulted from falling copper prices. Net sales for
the three months ended September 27, 2008 were $665.5 million, compared with net
sales of $693.7 million for the third quarter of 2007. The third quarter of 2007
included a one-time gain of approximately $8.9 million (pre-tax) pertaining to a
favorable copper antitrust litigation settlement.
Year-to-date, the Company earned $73.0 million, or $1.96 per diluted
share, on net sales of $2.12 billion. This compares with net income of $86.6
million, or $2.33 per diluted share, on net sales of $2.08 billion for the same
period of 2007.
Mr. Karp said, "Our earnings were achieved despite the adverse
conditions in the housing industry and the turbulence in the financial markets.
We remained focused on enhancing our operations and providing our customers with
superior service.
"We believe that our financial and operating strengths will allow us to
take advantage of opportunities, which are likely to arise in the current
economic environment. One such opportunity arose on October 9, 2008 when we
repurchased $122.9 million of our outstanding 6% Subordinated Debentures at 84
percent of face value. This transaction will result in a fourth quarter gain of
$19.1 million."
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Financial and Operating Highlights
Regarding the third quarter of 2008, Mr. Karp said:
o "Mueller ended the quarter with $308.4 million in cash.
Subsequent to the end of the third quarter, total cash used to
repurchase a portion of our outstanding 6% Subordinated
Debentures, including accrued interest of approximately $3.4
million, was approximately $106.6 million.
o "Our current ratio remains excellent at 2.4 to 1 and our
working capital is $552.3 million. Our ratio of debt to total
capitalization is a modest 29.4 percent.
o "Shortly after quarter end, copper values declined
precipitously trading as low as $2.16 per pound in
mid-October. Consequently, the Company recognized a $3.3
million charge to write-down inventories that are accounted
for on the FIFO method; domestic copper tube inventories were
not affected, however, as they are accounted for on a LIFO
basis and the net book value is substantially below current
market. The COMEX average price of copper was $3.45 per pound
in the third quarter of 2008, which compares with $3.48 per
pound in the third quarter of 2007.
o "Our Plumbing & Refrigeration segment posted operating
earnings of $25.4 million on net sales of $371.3 million which
compares with operating earnings of $52.3 million on net sales
of $397.9 million in the third quarter of 2007. These
decreases were primarily attributable to lower volumes and
spreads in copper tube; also, the third quarter of last year
included a gain on the proceeds from the copper antitrust
litigation settlement.
o "Our OEM segment posted operating earnings of $10.6 million
during the third quarter of 2008 on net sales of $299.5
million, which compared with operating earnings of $5.6
million on net sales of $302.1 million for the same period in
2007. The operating earnings increase is primarily due to
higher margins in brass rod."
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
(Unaudited)
For the Quarter Ended For the Nine Months Ended
-------------------------- --------------------------
September 27, September 29, September 27, September 29,
2008 2007 2008 2007
----------- ----------- ----------- -----------
(In thousands, except per share data)
Net sales $ 665,496 $ 693,682 $ 2,123,075 $ 2,076,111
Cost of goods sold 588,469 603,219 1,861,475 1,801,543
Depreciation and amortization 11,529 11,582 33,517 33,854
Selling, general, and administrative expense 35,674 36,246 108,583 110,144
Copper antitrust litigation settlement -- (8,865) -- (8,865)
----------- ----------- ----------- -----------
Operating income 29,824 51,500 119,500 139,435
Interest expense (5,050) (5,384) (15,755) (16,567)
Other income, net 2,319 4,060 7,287 10,938
----------- ----------- ----------- -----------
Income before income taxes 27,093 50,176 111,032 133,806
Income tax expense (8,422) (18,852) (37,992) (47,171)
----------- ----------- ----------- -----------
Net income $ 18,671 $ 31,324 $ 73,040 $ 86,635
=========== =========== =========== ===========
Weighted average shares
for basic earnings per share 37,136 37,075 37,117 37,054
Effect of dilutive stock options 176 234 238 185
----------- ----------- ----------- -----------
Adjusted weighted average shares
for diluted earnings per share 37,312 37,309 37,355 37,239
----------- ----------- ----------- -----------
Basic earnings per share $ 0.50 $ 0.84 $ 1.97 $ 2.34
=========== =========== =========== ===========
Diluted earnings per share $ 0.50 $ 0.84 $ 1.96 $ 2.33
=========== =========== =========== ===========
Dividends per share $ 0.10 $ 0.10 $ 0.30 $ 0.30
=========== =========== =========== ===========
Summary Segment Data:
Net sales:
Plumbing & Refrigeration Segment $ 371,315 $ 397,855 $ 1,159,613 $ 1,223,337
OEM Segment 299,470 302,122 979,665 868,053
Elimination of intersegment sales (5,289) (6,295) (16,203) (15,279)
----------- ----------- ----------- -----------
Net sales $ 665,496 $ 693,682 $ 2,123,075 $ 2,076,111
=========== =========== =========== ===========
Operating income:
Plumbing & Refrigeration Segment $ 25,449 $ 52,260 $ 85,903 $ 130,860
OEM Segment 10,643 5,609 55,180 29,102
Unallocated expenses (6,268) (6,369) (21,583) (20,527)
----------- ----------- ----------- -----------
Operating income $ 29,824 $ 51,500 $ 119,500 $ 139,435
=========== =========== =========== ===========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 27, December 29,
2008 2007
---------- ----------
(In thousands)
ASSETS
Cash and cash equivalents $ 308,351 $ 308,618
Accounts receivable, net 350,290 323,003
Inventories 260,937 269,032
Other current assets 38,849 39,694
---------- ----------
Total current assets 958,427 940,347
Property, plant, and equipment, net 294,530 308,383
Other assets 203,399 200,474
---------- ----------
$1,456,356 $1,449,204
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt (Note 1) $ 160,453 $ 72,743
Accounts payable 125,239 140,497
Other current liabilities 120,439 121,813
---------- ----------
Total current liabilities 406,131 335,053
Long-term debt 158,726 281,738
Pension and postretirement liabilities 34,980 36,071
Environmental reserves 8,853 8,897
Deferred income taxes 52,784 52,156
Other noncurrent liabilities 3,041 2,029
---------- ----------
Total liabilities 664,515 715,944
Minority interest in subsidiary 26,558 22,765
Stockholders' equity 765,283 710,495
---------- ----------
$1,456,356 $1,449,204
========== ==========
Note 1. - September 27, 2008 balance includes $122.9 million principal of 6%
Subordinated Debentures repurchased on October 9, 2008.
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
----------------------
September 27, September 29,
2008 2007
--------- ---------
(In thousands)
Operating activities:
Net income $ 73,040 $ 86,635
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 33,984 34,107
Gain on early retirement of debt (2,482) --
Minority interest in subsidiary, net of dividend paid 1,816 (644)
Stock-based compensation expense 2,238 1,975
Loss (gain) on disposal of properties 306 (3,114)
Deferred income taxes (515) (3,026)
Income tax benefit from exercise of stock options (92) (130)
Changes in assets and liabilities, net of business
acquired:
Receivables (29,130) (36,370)
Inventories 6,635 57,656
Other assets (5,350) (6,103)
Current liabilities (16,027) 13,669
Other liabilities 784 3,754
Other, net (719) (1,003)
--------- ---------
Net cash provided by operating activities 64,488 147,406
--------- ---------
Investing activities:
Capital expenditures (17,871) (22,776)
Net withdrawals from restricted cash balances 678 --
Acquisition of business, net of cash received -- (31,970)
Proceeds from sales of properties 77 3,033
--------- ---------
Net cash used in investing activities (17,116) (51,713)
--------- ---------
Financing activities:
Repayments of long-term debt (23,650) (18,273)
Dividends paid (11,133) (11,117)
(Repayment) issuance of debt by joint venture, net (12,491) 4,506
Issuance of shares under incentive stock option plans
from treasury 1,074 1,093
Income tax benefit from exercise of stock options 92 130
Acquisition of treasury stock (31) (54)
--------- ---------
Net cash used in financing activities (46,139) (23,715)
--------- ---------
Effect of exchange rate changes on cash (1,500) 762
--------- ---------
(Decrease) increase in cash and cash equivalents (267) 72,740
Cash and cash equivalents at the beginning of the period 308,618 200,471
--------- ---------
Cash and cash equivalents at the end of the period $ 308,351 $ 273,211
========= =========
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