Mueller Industries, Inc. Reports Second Quarter 2009 Earnings

MEMPHIS, Tenn., July 21 /PRNewswire-FirstCall/ — Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller’s net income in the second quarter of 2009 was $6.0 million, or 16 cents per diluted share.  This compares with $27.0 million, or 72 cents per diluted share, for the same period of 2008.  Net sales for the second quarter of 2009 were $367.8 million compared with $753.5 million in 2008.  For the first half of 2009, net income was $3.5 million, or 9 cents per diluted share, on net sales of $694.4 million.  This compares with net income of $54.4 million, or $1.45 per diluted share, on net sales of $1.46 billion for the first half of 2008.

Net sales of the Company’s core product lines including copper tube, fittings, brass rod and forgings were substantially affected by the lower market values of copper and brass, the Company’s principal raw materials, which are largely passed through to customers.  In the second quarter of 2009, the Comex average price of copper was 43 percent lower than in the second quarter of 2008.  Approximately $206 million of the decrease in net sales was attributable to lower unit volume primarily in the OEM segment.  Lower selling prices, primarily in the Plumbing & Refrigeration segment, accounted for approximately $146 million of the decrease in net sales.

Mr. Karp said, “Mueller was profitable in the second quarter of 2009, after reporting a small loss in the first quarter of the year.  We believe the construction industry is at, or near, a ‘bottom,’ although the pace and the extent of recovery remain uncertain.

“Mueller made rapid and extensive adjustments to its businesses as unit volumes declined, as a result of the national economic downturn.  We expect Mueller to emerge from the current economic malaise a stronger, more efficient and more competitive company.“

Financial and Operating Highlights

Regarding the second quarter of 2009, Mr. Karp said:
 
·
“Our financial condition remains strong, and, in fact, improved in the second quarter.  We ended the quarter with $334.0 million in cash and $581.2 million in working capital.
 
·
“Total stockholders’ equity attributable to Mueller was $719.3 million which equates to a book value per share of $19.37 of which $8.99 per share is in cash.
 
·
“Our current ratio remains solid at 4.6 to 1, and our financial leverage is conservative with a debt to total capitalization ratio of 18.9 percent.
 
·
“Our Plumbing & Refrigeration segment posted operating earnings of $11.9 million on net sales of $229.8 million which compares with prior year earnings of $35.4 million on net sales of $404.4 million.  Operating results were adversely affected by lower spreads and unit shipments.
 
 
 
·
“Our OEM segment posted operating earnings of $8.1 million during the second quarter of 2009 on net sales of $139.9 million, which compares with operating earnings of $19.0 million on net sales of $354.0 million for the same period in 2008.
 
·
“The Comex average price of copper was $2.15 per pound in the second quarter of 2009, which compares with $3.80 in the second quarter of 2008.
 
·
“During the first half of 2009, capital expenditures totaled $8.7 million. “

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.


MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)

   
For the Quarter
    
For the Six Months
  
   
Ended
    
Ended
  
   
June 27,
    
June 28,
    
June 27,
    
June 28,
  
   
2009
    
2008
    
2009
    
2008
  
   
(Unaudited)
    
(Unaudited)
  
                         
Net sales
   $ 367,800     $ 753,471     $ 694,358     $ 1,457,579  
                                 
Cost of goods sold
     313,353       661,209       600,736       1,273,006  
Depreciation and amortization
     10,355       11,004       20,835       21,988  
Selling, general, and administrative expense
     30,316       34,618       61,474       72,909  
                                 
Operating income
     13,776       46,640       11,313       89,676  
                                 
Interest expense
     (2,482 )     (5,238 )     (5,118 )     (10,705 )
Other income, net
     385       1,961       1,012       6,530  
                                 
Income before income taxes
     11,679       43,363       7,207       85,501  
Income tax expense
     (5,512 )     (15,339 )     (3,550 )     (29,570 )
                                 
Consolidated net income
     6,167       28,024       3,657       55,931  
                                 
Less: net income attributable to noncontrolling interest
     (139 )     (1,010 )     (121 )     (1,562 )
                                 
Net income attributable to Mueller Industries, Inc.
   $ 6,028     $ 27,014     $ 3,536     $ 54,369  
                                 
Weighted average shares for basic earnings per share
     37,143       37,119       37,143       37,108  
Effect of dilutive stock options
     120       340       97       269  
                                 
Adjusted weighted average shares for diluted earnings per share
     37,263       37,459       37,240       37,377  
                                 
Basic earnings per share
   $ 0.16     $ 0.73     $ 0.10     $ 1.47  
                                 
Diluted earnings per share
   $ 0.16     $ 0.72     $ 0.09     $ 1.45  
                                 
Dividends per share
   $ 0.10     $ 0.10     $ 0.20     $ 0.20  
                                 
Summary Segment Data:
                                
Net sales:
                                
Plumbing & Refrigeration Segment
   $ 229,763     $ 404,414     $ 420,156     $ 788,298  
OEM Segment
     139,885       353,988       278,277       680,195  
Elimination of intersegment sales
     (1,848 )     (4,931 )     (4,075 )     (10,914 )
                                 
Net sales
   $ 367,800     $ 753,471     $ 694,358     $ 1,457,579  
                                 
Operating income:
                                
Plumbing & Refrigeration Segment
   $ 11,882     $ 35,370     $ 22,213     $ 60,454  
OEM Segment
     8,052       18,963       1,786       44,537  
Unallocated expenses
     (6,158 )     (7,693 )     (12,686 )     (15,315 )
                                 
Operating income
   $ 13,776     $ 46,640     $ 11,313     $ 89,676  
 
 
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

   
June 27,
    
December 27,
  
   
2009
    
2008
  
   
(Unaudited)
  
ASSETS
            
Cash and cash equivalents
   $ 333,959     $ 278,860  
Accounts receivable, net
     207,238       219,035  
Inventories
     169,118       210,609  
Other current assets
     32,033       46,322  
Total current assets
     742,348       754,826  
                 
Property, plant, and equipment, net
     268,017       276,927  
Other assets
     151,537       151,160  
    $ 1,161,902     $ 1,182,913  
                 
LIABILITIES AND EQUITY
                
Current portion of debt
   $ 9,629     $ 24,184  
Accounts payable
     59,871       63,732  
Other current liabilities
     91,678       113,668  
Total current liabilities
     161,178       201,584  
                 
Long-term debt, less current portion
     158,226       158,726  
Pension and postretirement liabilities
     39,688       38,452  
Environmental reserves
     23,352       23,248  
Deferred income taxes
     33,496       33,940  
Other noncurrent liabilities
     1,417       1,698  
Total liabilities
     417,357       457,648  
Total Mueller Industries, Inc. stockholders' equity
     719,339       700,683  
Noncontrolling interest
     25,206       24,582  
                 
Total equity
     744,545       725,265  
    $ 1,161,902     $ 1,182,913  

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

   
For the Six Months Ended
  
   
June 27,
    
June 28,
  
   
2009
    
2008
  
   
(Unaudited)
  
Operating activities:
            
Net income attributable to Mueller Industries, Inc.
   $ 3,536     $ 54,369  
Reconciliation of net income attributable to Mueller Industries, Inc. to net cash provided by operating activities:
                
Depreciation and amortization
     20,946       22,323  
Gain on early retirement of debt
     (128 )     (2,482 )
Net income attributable to noncontrolling interest
     121       1,562  
Stock-based compensation expense
     1,220       1,479  
Loss on disposal of properties
     260       341  
Deferred income taxes
     (136 )     130  
Income tax benefit from exercise of stock options
     -       (69 )
Changes in assets and liabilities:
                
Receivables
     16,831       (66,599 )
Inventories
     45,209       7,489  
Other assets
     1,059       (2,321 )
Current liabilities
     (21,741 )     (12,757 )
Other liabilities
     (546 )     1,342  
Other, net
     (101 )     (1,167 )
                 
Net cash provided by operating activities
     66,530       3,640  
                 
Investing activities:
                
Capital expenditures
     (8,725 )     (14,833 )
Net withdrawals from (deposits into) restricted cash balances
     13,039       (632 )
Proceeds from sales of properties
     606       -  
Net cash provided by (used in) investing activities
     4,920       (15,465 )
                 
Financing activities:
                
Repayments of long-term debt
     (370 )     (23,605 )
Dividends paid to stockholders of Mueller Industries, Inc.
     (7,428 )     (7,421 )
Dividends paid to noncontrolling interests
     (1,449 )     -  
(Repayment) issuance of debt by joint venture, net
     (14,567 )     5,411  
Issuance of shares under incentive stock option plans from treasury
     -       1,055  
Income tax benefit from exercise of stock options
     -       69  
Acquisition of treasury stock
     -       (13 )
                 
Net cash used in financing activities
     (23,814 )     (24,504 )
                 
Effect of exchange rate changes on cash
     7,463       1,331  
                 
Increase (decrease) in cash and cash equivalents
     55,099       (34,998 )
Cash and cash equivalents at the beginning of the period
     278,860       308,618  
                 
Cash and cash equivalents at the end of the period
   $ 333,959     $ 273,620  

CONTACT: Kent A. McKee, of Mueller Industries, Inc., +1-901-753-3208