Mueller Industries, Inc. Reports First Quarter 2011 Results
MEMPHIS, Tennessee, 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:
- "The increase in net sales was primarily due to core product lines --
copper tube, fittings, and brass rod -- of which approximately $82
million was due to increased unit volume and approximately $92 million
was due to higher selling prices that reflect increased raw material
costs. The Comex average price of copper was $4.39 per pound in the
first quarter of 2011, which compares with $3.28 in the first quarter
of 2010.
- "Our Plumbing & Refrigeration segment posted operating earnings of
$29.7 million. Net sales for the first quarter of 2011 totaled $380.6
million. In the same period a year ago, comparable segment earnings
were $18.0 million (plus a $22.5 million gain on the settlement of an
insurance claim as discussed above) on net sales of $256.7 million.
Volumes and margins were better across most product lines contributing
to the improved earnings.
- "Our OEM segment posted operating earnings of $29.6 million during the
first quarter of 2011 on net sales of $319.3 million, which compares
with operating income of $16.1 million on net sales of $232.2 million
for the same period in 2010. The increase in earnings was primarily due
to higher volume and lower costs.
- "Stockholders' equity was $832.3 million which equates to a book value
per share of $21.99, of which $10.93 per share is cash.
- "Our current ratio remained solid at 3.7 to 1. We ended the quarter
with $413.9 million in cash and $757.0 million in working capital.
- "As of quarter end, our financial leverage was modest with a debt to
total capitalization ratio of 18.9 percent."
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.
*********************
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
Impact forma
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
Impact forma
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.
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