Mueller Industries, Inc. Reports First Quarter 2012 Results

News provided by

Mueller Industries, Inc.

24 Apr, 2012, 11:00 GMT

MEMPHIS, Tennessee, April 24, 2012 /PRNewswire/ -- Mueller Industries, Inc. (NYSE: MLI), announced today that net income was $32.6 million, or 85 cents per diluted share, for the first quarter of 2012. This compares with net income of $40.6 million, or $1.07 per diluted share, for the same period of 2011. Net sales in the first quarter of 2012 were $577.7 million which compares with $687.7 million in the first quarter a year ago.

Both the first quarters of 2012 and 2011 had unusual items included in net income. The first quarter of 2012 includes the effects of a LIFO gain of $8.0 million, or 13 cents per diluted share, and a gain on the settlement of an insurance claim of $1.5 million, or two cents per diluted share. In 2011, income of 18 cents per diluted share was included, resulting from the favorable settlement of a legal action. Excluding these unusual items, Mueller's net income for the first quarter of 2012 was $26.6 million, or 69 cents per diluted share, compared with $33.8 million, or 89 cents per diluted share, for the first quarter of 2011.

Financial and Operating Highlights

  • The first quarter of 2011 was a 14-week period while the first quarter of 2012 was a 13-week period.  Approximately one-half of the decrease in net sales for the first quarter of 2012 was attributable to the extra week of business in the first quarter of 2011.  The balance of the decrease was principally due to lower raw material costs which are passed on to customers in reduced selling prices.  The Comex average price of copper was $3.78 per pound in the first quarter of 2012, which compares with $4.39 in the first quarter of 2011.
  • The Plumbing & Refrigeration segment posted operating earnings of $28.3 million.  Net sales for the first quarter of 2012 totaled $315.4 million.  In the same period a year ago, comparable segment earnings were $29.7 million on net sales of $380.6 million.  Lower earnings were primarily due to the factors noted above coupled with some margin erosion.
  • The OEM segment posted operating earnings of $24.7 million during the first quarter of 2012 on net sales of $271.0 million, which compares with operating income of $29.6 million on net sales of $319.3 million for the same period in 2011.   
  • Stockholders' equity was $893.1 million which equates to a book value per share of $23.35.
  • Mueller ended the quarter with $526.9 million in cash, or $13.78 per share.  Working capital was $846.4 million.
  • As of quarter end, the debt to total capitalization ratio was 17.7 percent, and the current ratio was 4.1 to 1.

Business Outlook for 2012

Regarding the outlook for 2012, Greg Christopher, CEO said, "We expect that the construction market will recover. The question is 'when.' No one knows the answer, but there are encouraging signs. Building permits for single-family homes and apartments in March 2012 were 30 percent higher than a year before. Permits are an excellent indicator of future business. In addition, home prices are affordable and mortgage rates are low. Although the recovery date is uncertain, Mueller is well prepared to ramp-up production when it occurs."

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



March 31,


April 2,



2012


2011



(Unaudited)






Net sales


$ 577,668


$ 687,681






Cost of goods sold


493,175


589,874

Depreciation and amortization


7,529


9,699

Selling, general, and administrative expense


31,602


35,369

Litigation settlement


-


(10,500)

Insurance settlement


(1,500)


-






Operating income


46,862


63,239






Interest expense


(2,637)


(3,348)

Other income, net


254


1,059






Income before income taxes


44,479


60,950






Income tax expense


(11,662)


(20,408)






Consolidated net income


32,817


40,542






Net (income) loss attributable to noncontrolling interest


(218)


45






Net income attributable to Mueller Industries, Inc.


$ 32,599


$ 40,587






Weighted average shares





for basic earnings per share


38,014


37,723

Effect of dilutive stock-based awards


444


263






Adjusted weighted average shares





for diluted earnings per share


38,458


37,986






Basic earnings per share


$   0.86


$   1.08






Diluted earnings per share


$   0.85


$   1.07






Dividends per share


$   0.10


$   0.10






Summary Segment Data:





Net sales:





Plumbing & Refrigeration Segment


$ 315,354


$ 380,589

OEM Segment


270,976


319,336

Elimination of intersegment sales


(8,662)


(12,244)






Net sales


$ 577,668


$ 687,681






Operating income:





Plumbing & Refrigeration Segment


$ 28,258


$ 29,683

OEM Segment


24,725


29,646

Unallocated expenses


(6,121)


3,910






Operating income


$ 46,862


$ 63,239



















MUELLER INDUSTRIES, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS



(In thousands)


























March 31,


December 31,





2012


2011





(Unaudited)



ASSETS







Cash and cash equivalents


$  526,885


$   514,162



Accounts receivable, net


315,346


250,027



Inventories


236,310


219,193



Other current assets


43,679


43,317










    Total current assets


1,122,220


1,026,699










Property, plant, and equipment, net


206,719


203,744



Other assets


117,023


117,161












$ 1,445,962


$  1,347,604
























LIABILITIES AND STOCKHOLDERS' EQUITY







Current portion of long-term debt


$   42,590


$    41,265



Accounts payable


97,836


65,545



Other current liabilities


135,378


106,434










    Total current liabilities


275,804


213,244










Long-term debt


156,226


156,476



Pension and postretirement liabilities


54,367


54,244



Environmental reserves


22,771


22,892



Deferred income taxes


13,187


14,856



Other noncurrent liabilities


889


1,130










    Total liabilities


523,244


462,842










Total Mueller Industries, Inc. stockholders' equity


893,065


855,688



Noncontrolling interest


29,653


29,074










    Total equity


922,718


884,762












$ 1,445,962


$  1,347,604



















MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)












For the Quarter Ended





March 31,


April 2,





2012


2011





(Unaudited)

Operating activities:





Consolidated net income


$ 32,817


$ 40,542

Reconciliation of net income to net cash (used in) provided by






operating activities:







Depreciation and amortization


7,621


9,769



Stock-based compensation expense


898


764



Insurance settlement


(1,500)


-



Insurance proceeds - noncapital related


9,000


-



Loss (gain) on disposal of properties


26


(268)



Deferred income taxes


(2,470)


(1,924)



Income tax benefit from exercise of stock options


(21)


-



Changes in assets and liabilities:







Receivables


(66,992)


(80,974)



Inventories


(13,744)


(13,471)



Other assets


(1,294)


2,640



Current liabilities


24,688


70,387



Other liabilities


151


(1,084)



Other, net


38


(548)








Net cash (used in) provided by operating activities


(10,782)


25,833








Investing activities:





Capital expenditures


(9,340)


(5,050)

Business acquired


-


(6,882)

Insurance proceeds for property damage


32,500


-

Net withdrawals from restricted cash balances


2,166


261

Proceeds from sales of properties


87


132








Net cash provided by (used in) investing activities


25,413


(11,539)








Financing activities:





Dividends paid


(3,802)


(3,772)

Debt issuance costs


-


(1,942)

Issuance of debt by joint venture, net


899


9,689

Repayment of long-term debt


(250)


-

Net proceeds from the exercise of stock options


73


7

Income tax benefit from exercise of stock options


21


-








Net cash (used in) provided by financing activities


(3,059)


3,982








Effect of exchange rate changes on cash


1,151


1,507








Increase in cash and cash equivalents


12,723


19,783








Cash and cash equivalents at the beginning of the period


514,162


394,139








Cash and cash equivalents at the end of the period


$ 526,885


$ 413,922












MUELLER INDUSTRIES, INC.

RECONCILIATION OF NET INCOME AS REPORTED

TO NET INCOME BEFORE LIFO GAIN, INSURANCE SETTLEMENT AND LITIGATION SETTLEMENT

(In thousands, except per share data)


Earnings without the LIFO gain and insurance settlement in 2012 and without the litigation settlement in 2011 is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  Excluding the LIFO gain, insurance settlement, and litigation 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 LIFO gain resulted from deferred recognition of a 2011 decrement and the insurance settlement was related to a 2009 claim at the Company's Fulton, Mississippi, copper tube mill.  The litigation settlement resulted from the collection of proceeds from the lawsuit against Peter Berkman, Jeffrey Berkman, and Homewerks Worldwide LLC, the results of which are not impacted by daily operations. Reconciliations of earnings without the LIFO gain, insurance settlement, and litigation settlement to net income as reported are as follows:



For the Quarter Ended March 31, 2012


As
Reported


Impact of 
LIFO
Gain


Impact of 
Insurance
Settlement


Pro forma


(Unaudited)









Operating income

$ 46,862


$  (7,979)


$  (1,500)


$ 37,383









Interest expense

(2,637)


-


-


(2,637)

Other income, net

254


-


-


254









Income before income taxes

44,479


(7,979)


(1,500)


35,000

Income tax expense

(11,662)


2,872


585


(8,205)









Consolidated net income

32,817


(5,107)


(915)


26,795









Net income attributable to noncontrolling interest

(218)


-


-


(218)









Net income attributable to Mueller Industries, Inc.

$ 32,599


$  (5,107)


$   (915)


$ 26,577

















Diluted earnings per share

$  0.85


$  (0.13)


$  (0.02)


$   0.69


















For the Quarter Ended April 2, 2011




As
Reported


Impact of 
Litigation
Settlement


Pro forma




(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