Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2011 Results

MEMPHIS, Tenn., Feb. 7, 2012 /PRNewswire/ -- Mueller Industries, Inc. (NYSE: MLI) announced today that the Company's net income for the fiscal year ended December 31, 2011, was $86.3 million, or $2.26 per diluted share, which includes a favorable litigation settlement gain of $10.5 million, or 18 cents per diluted share. For fiscal 2010, the Company earned $86.2 million, or $2.28 per diluted share, which includes insurance settlement gains of $22.7 million, or 62 cents per diluted share. Net sales for 2011 were $2.42 billion compared with $2.06 billion in 2010.

In the fourth quarter of 2011, the Company's net income was $12.9 million, or 34 cents per diluted share, on net sales of $491.4 million. This compares with net income of $17.7 million, or 47 cents per diluted share, on net sales of $526.9 million in the fourth quarter of 2010.

Financial and Operating Highlights


Business Outlook for 2012

Regarding the outlook for 2012, Greg Christopher, CEO said, "Our business outlook for 2012 remains positive. We have successfully navigated from the 2009 downturn with two consecutive years of improvements in operations and earnings. Our financial condition remains strong and we have major capital improvement projects in progress that we believe will strengthen us for the future.

"We believe the construction industry will start to rebound in 2012. We anticipate a modest increase in new housing starts as well as an upturn in the non-residential market."

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


For the Year Ended



December 31,


December 25,


December 31,


December 25,



2011


2010


2011


2010



(Unaudited)


(Unaudited)










Net sales


$              491,384


$              526,901


$           2,417,797


$           2,059,797










Cost of goods sold


427,942


457,521


2,115,677


1,774,811

Depreciation and amortization


9,284


9,992


36,865


40,364

Selling, general, and administrative expense


33,009


31,610


135,953


131,211

Insurance settlements


-


(1,452)


-


(22,736)

Litigation settlement


-


-


(10,500)


-










Operating income


21,149


29,230


139,802


136,147










Interest expense


(2,549)


(3,079)


(11,553)


(11,647)

Other income (expense), net


487


(302)


1,912


(2,650)










Income before income taxes


19,087


25,849


130,161


121,850

Income tax expense


(6,015)


(7,897)


(43,075)


(34,315)










Consolidated net income


13,072


17,952


87,086


87,535










Less net income attributable to noncontrolling interest


(144)


(206)


(765)


(1,364)










Net income attributable to Mueller Industries, Inc.


$                12,928


$                17,746


$                86,321


$                86,171




























Weighted average shares









    for basic earnings per share


38,001


37,717


37,835


37,672

Effect of dilutive stock-based awards


341


157


361


97










Adjusted weighted average shares









    for diluted earnings per share


38,342


37,874


38,196


37,769



















Basic earnings per share


$                    0.34


$                    0.47


$                    2.28


$                    2.29



















Diluted earnings per share


$                    0.34


$                    0.47


$                    2.26


$                    2.28



















Dividends per share


$                    0.10


$                    0.10


$                    0.40


$                    0.40



















Summary Segment Data:









Net sales:









Plumbing & Refrigeration segment


$              277,001


$              290,500


$           1,330,435


$           1,115,614

OEM segment


219,813


239,890


1,119,795


958,855

Elimination of intersegment sales


(5,430)


(3,489)


(32,433)


(14,672)










Net sales


$              491,384


$              526,901


$           2,417,797


$           2,059,797










Operating income:









Plumbing & Refrigeration segment


$                16,404


$                11,957


$                84,761


$                83,667

OEM segment


12,036


24,060


72,670


80,117

Unallocated expenses


(7,291)


(6,787)


(17,629)


(27,637)










Operating income


$                21,149


$                29,230


$              139,802


$              136,147





MUELLER INDUSTRIES, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS



(In thousands)


























December 31,


December 25,





2011


2010





(Unaudited)



ASSETS







Cash and cash equivalents


$            514,162


$            394,139



Accounts receivable, net


250,027


269,258



Inventories


219,193


209,892



Other current assets


43,317


39,025



   Total current assets


1,026,699


912,314










Property, plant, and equipment, net


203,744


229,498



Other assets


117,161


117,184












$         1,347,604


$         1,258,996
























LIABILITIES AND STOCKHOLDERS' EQUITY







Current portion of long-term debt


$              41,265


$              32,020



Accounts payable


65,545


67,849



Other current liabilities


106,434


95,258



   Total current liabilities


213,244


195,127










Long-term debt


156,476


158,226



Pension and postretirement liabilities


54,244


40,939



Environmental reserves


22,892


23,902



Deferred income taxes


14,856


24,081



Other noncurrent liabilities


1,130


824










   Total liabilities


462,842


443,099










Total Mueller Industries, Inc. stockholders' equity


855,688


788,736



Noncontrolling interest


29,074


27,161










   Total equity


884,762


815,897












$         1,347,604


$         1,258,996



MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)














For the Year Ended






December 31,


December 25,






2011


2010






(Unaudited)

Operating activities:





Consolidated net income


$             87,086


$             87,535

Reconciliation of consolidated net income






to net cash provided by operating activities:







Depreciation and amortization


37,262


40,652



Stock-based compensation expense


3,482


2,877



Insurance settlements


-


(22,736)



Insurance proceeds - noncapital related


10,000


5,561



(Gain) loss on disposal of properties


(202)


756



Deferred income taxes


(4,190)


(6,627)



Income tax benefit from exercise of stock options


(853)


(145)



Changes in assets and liabilities, net of businesses acquired:








Receivables


28,487


(41,731)




Inventories


(15,678)


(17,248)




Other assets


460


2,974




Current liabilities


7,966


4,913




Other liabilities


(1,593)


(623)




Other, net


1,522


199









Net cash provided by operating activities


153,749


56,357









Investing activities:





Capital expenditures


(18,751)


(18,678)

Businesses acquired


(6,882)


(2,021)

Insurance proceeds for property and equipment


-


18,798

Net deposits in restricted cash balances


(3,055)


(156)

Proceeds from sales of properties


1,984


71









Net cash used in investing activities


(26,704)


(1,986)









Financing activities:





Dividends paid to stockholders of Mueller Industries, Inc.


(15,146)


(15,074)

Issuance of debt by joint venture, net


6,162


6,848

Repayments of long-term debt


(750)


-

Dividends paid to noncontrolling interests


-


(741)

Net proceeds from exercise of incentive stock options


4,732


2,573

Debt issuance costs


(1,942)


-









Net cash used in financing activities


(6,944)


(6,394)









Effect of exchange rate changes on cash


(78)


161









Increase in cash and cash equivalents


120,023


48,138









Cash and cash equivalents at the beginning of the period


394,139


346,001









Cash and cash equivalents at the end of the period


$           514,162


$           394,139



MUELLER INDUSTRIES, INC.

RECONCILIATION OF NET INCOME AS REPORTED TO NET INCOME

BEFORE INSURANCE SETTLEMENT

(In thousands, except per share data)








Earnings without insurance settlement is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  Excluding the insurance settlement 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 settlement resulted from reimbursement for losses claimed as a result of a fire at our Fulton, Mississippi copper tube mill in July 2009, the results of which are not impacted by daily operations. Reconciliation of earnings without insurance settlement to net income as reported is as follows:










For the Quarter Ended December 25, 2010







Pro forma





Impact of


Without



As


Insurance


Insurance



Reported


Settlement


Settlement



(Unaudited)








Operating income


$                29,230


$                (1,452)


$                27,778








Interest expense


(3,079)


-


(3,079)

Other expense, net


(302)


-


(302)








Income before income taxes


25,849


(1,452)


24,397

Income tax expense


(7,897)


555


(7,342)








Consolidated net income


17,952


(897)


17,055








Less net income attributable to noncontrolling interest


(206)


-


(206)








Net income attributable to Mueller Industries, Inc.


$                17,746


$                   (897)


$                16,849








Diluted earnings per share


$                    0.47


$                  (0.02)


$                    0.45



MUELLER INDUSTRIES, INC.

RECONCILIATION OF NET INCOME AS REPORTED TO NET INCOME

BEFORE LITIGATION SETTLEMENT AND INSURANCE SETTLEMENTS

(In thousands, except per share data)








Earnings without litigation settlement in 2011 and without insurance settlements in 2010 is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  Excluding the litigation settlement and insurance settlements 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 settlements resulted from reimbursement for losses claimed as a result of fires at our U.K. copper tube mill in November 2008, and our Fulton, Mississippi copper tube mill in July 2009, the results of which are not impacted by daily operations. Reconciliation of earnings without litigation settlement and insurance settlements to net income as reported is as follows:










For the Year Ended December 31, 2011







Pro forma





Impact of


Without



As


Litigation


Litigation



Reported


Settlement


Settlement



(Unaudited)








Operating income


$              139,802


$              (10,500)


$             129,302








Interest expense


(11,553)


-


(11,553)

Other expense, net


1,912


-


1,912








Income before income taxes


130,161


(10,500)


119,661

Income tax expense


(43,075)


3,675


(39,400)








Consolidated net income


87,086


(6,825)


80,261








Less net income attributable to noncontrolling interest


(765)


-


(765)








Net income attributable to Mueller Industries, Inc.


$                86,321


$                (6,825)


$               79,496








Diluted earnings per share


$                    2.26


$                  (0.18)


$                   2.08

















For the Year Ended December 25, 2010







Pro forma





Impact of


Without



As


Insurance


Insurance



Reported


Settlements (A)


Settlements



(Unaudited)








Operating income


$              136,147


$              (22,736)


$             113,411








Interest expense


(11,647)


-


(11,647)

Other expense, net


(2,650)


-


(2,650)








Income before income taxes


121,850


(22,736)


99,114

Income tax expense


(34,315)


(535)


(34,850)








Consolidated net income


87,535


(23,271)


64,264








Less net income attributable to noncontrolling interest


(1,364)


-


(1,364)








Net income attributable to Mueller Industries, Inc.


$                86,171


$              (23,271)


$               62,900








Diluted earnings per share


$                    2.28


$                  (0.62)


$                   1.66








(A) Realization of this insurance settlement 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