FOR IMMEDIATE RELEASE
Contact:
Kent A. McKee
Memphis, TN—April 20, 2010
  
(901) 753-3208

MUELLER INDUSTRIES, INC. REPORTS
FIRST QUARTER 2010 RESULTS

Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller’s net income was $34.0 million, or 90 cents per diluted share, for the first quarter of 2010.  This compares with a net loss of $2.5 million, or 7 cents per diluted share, for the same period of 2009.  First quarter net sales for 2010 were $485.3 million compared with $326.6 million in 2009.

During the first quarter of 2010, the Company recognized a gain of $22.5 million (or 62 cents per diluted share after tax) on the settlement of an insurance claim pertaining to the 2008 fire at its U.K. copper tube operation.  Further, the realization of this gain resulted in a tax benefit primarily from the utilization of U.K. net operating losses that were previously reserved.

Financial and Operating Highlights

Regarding the first quarter of 2010, Mr. Karp said:
 
·
“Net sales increased to $485.3 million primarily due to higher selling prices that reflect increased raw material costs.  The Comex average price of copper was $3.28 per pound in the first quarter of 2010, which compares with $1.57 in the first quarter of 2009.  Gross profit was $72.2 million in the first quarter which is the best of the last six consecutive quarters.
 
·
“Our Plumbing & Refrigeration segment posted operating earnings of $40.5 million that includes a $22.5 million gain on the settlement of an insurance claim as discussed above.  Net sales for the first quarter of 2010 were $256.7 million.  In the same period a year ago, segment earnings were $10.3 million on net sales of $190.4 million.  Volumes were mixed; tube volumes were lower, while fittings volume improved slightly.
 
 
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·
“Our OEM segment posted operating earnings of $16.1 million during the first quarter of 2010 on net sales of $232.2 million, which compares with an operating loss of $6.3 million on net sales of $138.4 million for the same period in 2009.  The increase in earnings was primarily due to higher volume and better spreads as demand improved.
 
 
·
“Stockholders’ equity was $740.8 million which equates to a book value per share of $19.66 of which $10.54 per share was cash.
 
 
·
“Our current ratio remained solid at 4.0 to 1.  We ended the quarter with $397.2 million in cash and $657.3 million in working capital.
 
 
·
“As of quarter end, our financial leverage was modest with a debt to total capitalization ratio of 19.5 percent.”
 
Business Outlook for 2010

Regarding the outlook for 2010, Mr. Karp said, “Business conditions have shown signs of improvement as the economic recovery in the United States takes hold. Although the commercial construction sector remains sluggish, residential construction has improved somewhat from the trough.  We expect that residential construction gains will be modest for the remainder of the year, while meaningful improvement in commercial construction is unlikely to occur before 2011.”

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 OPERATIONS
(In thousands, except per share data)

   
For the Quarter Ended
  
   
March 27,
    
March 28,
  
   
2010
    
2009
  
   
(Unaudited)
  
             
Net sales
   $ 485,268     $ 326,558  
                 
Cost of goods sold
     413,048       287,383  
Depreciation and amortization
     10,348       10,480  
Selling, general, and administrative expense
     37,323       31,158  
Insurance gain
     (22,506 )     -  
                 
Operating income (loss)
     47,055       (2,463 )
                 
Interest expense
     (2,532 )     (2,636 )
Other income, net
     140       627  
                 
Income (loss) before income taxes
     44,663       (4,472 )
                 
Income tax (expense) benefit
     (9,864 )     1,962  
                 
Consolidated net income (loss)
     34,799       (2,510 )
                 
Less net (income) loss attributable to noncontrolling interest
     (841 )     18  
                 
Net income (loss) attributable to Mueller Industries, Inc.
   $ 33,958     $ (2,492 )
                 
Weighted average shares
                
for basic earnings (loss) per share
     37,588       37,143  
Effect of dilutive stock-based awards
     94       -  
                 
Adjusted weighted average shares
                
for diluted earnings (loss) per share
     37,682       37,143  
                 
Basic earnings (loss) per share
   $ 0.90     $ (0.07 )
                 
Diluted earnings (loss) per share
   $ 0.90     $ (0.07 )
                 
Dividends per share
   $ 0.10     $ 0.10  
                 
Summary Segment Data:
                
Net sales:
                
Plumbing & Refrigeration Segment
   $ 256,662     $ 190,393  
OEM Segment
     232,204       138,392  
Elimination of intersegment sales
     (3,598 )     (2,227 )
                 
Net sales
   $ 485,268     $ 326,558  
                 
Operating income (loss):
                
Plumbing & Refrigeration Segment
   $ 40,459     $ 10,331  
OEM Segment
     16,131       (6,266 )
Unallocated expenses
     (9,535 )     (6,528 )
                 
Operating income (loss)
   $ 47,055     $ (2,463 )
 
 
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

   
March 27,
    
December 26,
  
   
2010
    
2009
  
   
(Unaudited)
  
ASSETS
            
Cash and cash equivalents
   $ 397,180     $ 346,001  
Accounts receivable, net
     256,950       228,739  
Inventories
     185,828       191,262  
Other current assets
     33,478       42,841  
                 
Total current assets
     873,436       808,843  
                 
Property, plant, and equipment, net
     242,796       250,395  
Other assets
     121,902       120,903  
                 
    $ 1,238,134     $ 1,180,141  
                 
LIABILITIES AND EQUITY
                
Current portion of debt
   $ 27,739     $ 24,325  
Accounts payable
     89,061       73,837  
Other current liabilities
     99,306       85,208  
                 
Total current liabilities
     216,106       183,370  
                 
Long-term debt, less current portion
     158,226       158,226  
Pension and postretirement liabilities
     42,843       44,320  
Environmental reserves
     23,862       23,268  
Deferred income taxes
     28,675       31,128  
Other noncurrent liabilities
     923       887  
                 
Total liabilities
     470,635       441,199  
                 
Total Mueller Industries, Inc. stockholders' equity
     740,815       713,167  
Noncontrolling interest
     26,684       25,775  
                 
Total equity
     767,499       738,942  
                 
    $ 1,238,134     $ 1,180,141  
 
 
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

   
For the Quarter Ended
  
   
March 27,
    
March 28,
  
   
2010
    
2009
  
   
(Unaudited)
  
Operating activities:
            
Net income (loss) attributable to Mueller Industries, Inc.
   $ 33,958     $ (2,492 )
Reconciliation of net income (loss) attributable to Mueller Industries,
                
Inc. to net cash provided by operating activities:
                
Depreciation and amortization
     10,389       10,521  
Stock-based compensation expense
     704       607  
Gain on disposal of properties
     (6 )     (87 )
Insurance gain
     (22,506 )     -  
Insurance proceeds - noncapital related
     5,561       -  
Deferred income taxes
     (3,623 )     (248 )
Income tax benefit from exercise of stock options
     (11 )     -  
Net income (loss) attributable to noncontrolling interest
     841       (18 )
Changes in assets and liabilities:
                
Receivables
     (30,689 )     28,010  
Inventories
     3,748       38,657  
Other assets
     6,938       3,070  
Current liabilities
     30,899       (42,167 )
Other liabilities
     155       (620 )
Other, net
     280       (261 )
                 
Net cash provided by operating activities
     36,638       34,972  
                 
Investing activities:
                
Capital expenditures
     (4,479 )     (4,842 )
Insurance proceeds for property and equipment
     17,703       -  
Proceeds from sales of properties
     8       402  
Net withdrawals from restricted cash balances
     2,524       5,852  
                 
Net cash provided by investing activities
     15,756       1,412  
                 
Financing activities:
                
Dividends paid
     (3,759 )     (3,714 )
Issuance of shares under incentive stock option plans
                
from treasury
     720       -  
Income tax benefit from exercise of stock options
     11       -  
Issuance (repayment) of debt by joint venture, net
     3,436       (10,152 )
                 
Net cash provided by (used in) financing activities
     408       (13,866 )
                 
Effect of exchange rate changes on cash
     (1,623 )     (1,042 )
                 
Increase in cash and cash equivalents
     51,179       21,476  
                 
Cash and cash equivalents at the beginning of the period
     346,001       278,860  
                 
Cash and cash equivalents at the end of the period
   $ 397,180     $ 300,336  
 
 
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MUELLER INDUSTRIES, INC.
RECONCILIATION OF NET INCOME AS REPORTED
TO NET INCOME BEFORE INSURANCE GAIN
(In thousands, except per share data)

Earnings without insurance gain is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  Excluding the insurance gain is useful as it measures the operating results that are the outcome of daily operating decisions made in the normal course of business.  The insurance gain resulted from final settlement for losses claimed as a result of a fire at our U.K. subsidiary in November 2008, the results of which are not impacted by daily operations and are not expected to recur in future periods.  Reconciliation of earnings without insurance gain to net income as reported is as follows:

   
For the Quarter Ended March 27, 2010
  
               
Pro forma
  
         
Impact of
    
Without
  
   
As
    
Insurance
    
Insurance
  
   
Reported
    
Gain
    
Gain
  
   
(Unaudited)
  
                   
Operating income
   $ 47,055     $ (22,506 )   $ 24,549  
                         
Interest expense
     (2,532 )     -       (2,532 )
Other income, net
     140       -       140  
                         
Income before income taxes
     44,663       (22,506 )     22,157  
Income tax expense (Note A)
     (9,864 )     (819 )     (10,683 )
                         
Consolidated net income
     34,799       (23,325 )     11,474  
                         
Less net income attributable to noncontrolling interest
     (841 )     -       (841 )
Net income attributable to Mueller Industries, Inc.
   $ 33,958     $ (23,325 )   $ 10,633  
                         
Diluted earnings per share
   $ 0.90     $ (0.62 )   $ 0.28  

(A)
Realization of this insurance gain resulted in a tax benefit primarily from the utilization of U.K. net operating losses that were previously reserved.

 
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