Mueller Industries, Inc. Reports First Quarter 2011 Results

MEMPHIS, Tenn., April 26, 2011 /PRNewswire/ -- Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller's net income was $40.6 million, or $1.07 per diluted share, for the first quarter of 2011. This compares with net income of $34.0 million, or 90 cents per diluted share, for the same period of 2010.

Both the first quarters of 2011 and 2010 had unusual items which were included in net income. In 2011, income of 18 cents per diluted share was included, resulting from the favorable settlement of a legal action. And, in the first quarter of 2010, income of 62 cents per diluted share was included in net income, resulting from an insurance claim. Excluding these unusual items, Mueller's net income for the first quarter of 2011 was $33.8 million, or 89 cents per diluted share, compared with $10.6 million, or 28 cents per diluted share, for the first quarter of 2010. On this basis, net income more than tripled.

Net sales in the first quarter of 2011 amounted to $687.7 million, a 42 percent increase over net sales in the same quarter a year ago. The first quarter of 2011 was a 14-week period while the first quarter of 2010 was a 13-week period.

Financial and Operating Highlights

Regarding the first quarter of 2011, Mr. Karp said:


Business Outlook for 2011

Regarding the outlook for 2011, Mr. Karp said, "The construction sector remains anemic. On the residential side, foreclosures and the threats thereof weigh on weak demand caused by poor jobs growth, even though mortgage rates are low and favorable affordability conditions exist. As for commercial construction, private nonresidential activity suffers from high vacancy rates.

"Despite these difficult conditions, Mueller achieved a very good first quarter and we remain positive about the outlook for the year."

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 Ended



April 2,


March 27,



2011


2010



(Unaudited)






Net sales


$ 687,681


$ 485,268






Cost of goods sold


589,874


413,048

Depreciation and amortization


9,699


10,348

Selling, general, and administrative expense


35,369


37,323

Litigation settlement


(10,500)


-

Insurance gain


-


(22,506)






Operating income


63,239


47,055






Interest expense


(3,348)


(2,532)

Other income, net


1,059


140






Income before income taxes


60,950


44,663






Income tax expense


(20,408)


(9,864)






Consolidated net income


40,542


34,799






Net loss (income) attributable to noncontrolling interest


45


(841)






Net income attributable to Mueller Industries, Inc.


$   40,587


$   33,958






Weighted average shares





for basic earnings per share


37,723


37,588

Effect of dilutive stock-based awards


263


94






Adjusted weighted average shares





for diluted earnings per share


37,986


37,682






Basic earnings per share


$       1.08


$       0.90






Diluted earnings per share


$       1.07


$       0.90






Dividends per share


$       0.10


$       0.10






Summary Segment Data:





Net sales:





Plumbing & Refrigeration Segment


$ 380,589


$ 256,662

OEM Segment


319,336


232,204

Elimination of intersegment sales


(12,244)


(3,598)






Net sales


$ 687,681


$ 485,268






Operating income:





Plumbing & Refrigeration Segment


$   29,683


$   40,459

OEM Segment


29,646


16,131

Unallocated expenses


3,910


(9,535)






Operating income


$   63,239


$   47,055



MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


















April 2,


December 25,



2011


2010



(Unaudited)

ASSETS





Cash and cash equivalents


$    413,922


$      394,139

Accounts receivable, net


353,321


269,258

Inventories


231,270


209,892

Other current assets


36,583


39,025

   Total current assets


1,035,096


912,314






Property, plant, and equipment, net


227,890


229,498

Other assets


119,026


117,184








$ 1,382,012


$   1,258,996
















LIABILITIES AND STOCKHOLDERS' EQUITY





Current portion of long-term debt


$      43,117


$        32,020

Accounts payable


123,031


67,849

Other current liabilities


111,982


95,258

   Total current liabilities


278,130


195,127






Long-term debt


157,226


158,226

Pension and postretirement liabilities


40,995


40,939

Environmental reserves


23,263


23,902

Deferred income taxes


21,915


24,081

Other noncurrent liabilities


808


824






   Total liabilities


522,337


443,099






Total Mueller Industries, Inc. stockholders' equity


832,299


788,736

Noncontrolling interest


27,376


27,161






   Total equity


859,675


815,897








$ 1,382,012


$   1,258,996





MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)












For the Quarter Ended





April 2,


March 27,





2011


2010





(Unaudited)

Operating activities:





Consolidated net income


$   40,542


$   34,799

Reconciliation of net income to net cash provided by






operating activities:







Depreciation and amortization


9,769


10,389



Stock-based compensation expense


764


704



Gain on disposal of properties


(268)


(6)



Insurance gain


-


(22,506)



Insurance proceeds - noncapital related


-


5,561



Deferred income taxes


(1,924)


(3,623)



Income tax benefit from exercise of stock options


-


(11)



Changes in assets and liabilities:







Receivables


(80,974)


(30,689)



Inventories


(13,471)


3,748



Other assets


2,640


6,938



Current liabilities


70,387


30,899



Other liabilities


(1,084)


155



Other, net


(548)


280








Net cash provided by operating activities


25,833


36,638








Investing activities:





Capital expenditures


(5,050)


(4,479)

Business acquired


(6,882)


-

Insurance proceeds for property damage


-


17,703

Proceeds from sales of properties


132


8

Net withdrawals from restricted cash balances


261


2,524








Net cash (used in) provided by investing activities


(11,539)


15,756








Financing activities:





Dividends paid


(3,772)


(3,759)

Debt issuance costs


(1,942)


-

Issuance of shares under incentive stock option plans






from treasury


7


720

Income tax benefit from exercise of stock options


-


11

Issuance of debt by joint venture, net


9,689


3,436








Net cash provided by financing activities


3,982


408








Effect of exchange rate changes on cash


1,507


(1,623)








Increase in cash and cash equivalents


19,783


51,179








Cash and cash equivalents at the beginning of the period


394,139


346,001








Cash and cash equivalents at the end of the period


$ 413,922


$ 397,180



MUELLER INDUSTRIES, INC.

RECONCILIATION OF NET INCOME AS REPORTED

TO NET INCOME BEFORE LITIGATION SETTLEMENT AND INSURANCE GAIN

(In thousands, except per share data)








Earnings without the litigation settlement in 2011 and without the insurance gain in 2010 is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  Excluding the litigation settlement and 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 litigation settlement resulted from the collection of proceeds from the lawsuit against Peter Berkman, Jeffrey Berkman, and Homewerks Worldwide LLC.  The insurance gain resulted from the 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. Reconciliations of earnings without the litigation settlement and insurance gain to net income as reported are as follows:



For the Quarter Ended April 2, 2011







Pro forma





Impact of


Without



As


Litigation


Litigation



Reported


Settlement


Settlement



(Unaudited)








Operating income


$ 63,239


$ (10,500)


$  52,739








Interest expense


(3,348)


-


(3,348)

Other income, net


1,059


-


1,059








Income before income taxes


60,950


(10,500)


50,450

Income tax expense


(20,408)


3,675


(16,733)








Consolidated net income


40,542


(6,825)


33,717








Net loss attributable to noncontrolling interest


45


-


45








Net income attributable to Mueller Industries, Inc.


$ 40,587


$   (6,825)


$  33,762















Diluted earnings per share


$     1.07


$     (0.18)


$      0.89

















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








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.





CONTACT: Kent A. McKee, +1-901-753-3208