Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2011 Results
MEMPHIS, Tennessee, February 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
- The decrease in net sales in the fourth quarter of 2011 was partially due to the lower average cost of copper. The Comex average price of copper was $3.41 per pound in the fourth quarter of 2011, which compares with $3.93 per pound in the fourth quarter of 2010. Approximately $25.2 million of the decrease in net sales was attributable to lower unit shipments.
- For the fourth quarter of 2011, the Plumbing & Refrigeration segment posted operating income of $16.4 million on net sales of $277.0 million, which compares with operating income of $12.0 million on net sales of $290.5 million in the fourth quarter of 2010. Lower shipment volumes were offset by better spreads.
- The OEM segment reported operating income of $12.0 million on net sales of $219.8 million for the fourth quarter of 2011. This compares with operating income of $24.1 million on net sales of $239.9 million in the fourth quarter of 2010. The decrease in operating income was due to lower shipments and spreads across most product lines.
- For 2011, net cash provided by operating activities increased to $153.7 million.
- The Company's current ratio was 4.8 to 1 and our working capital was $813.5 million, of which over $500 million was cash on hand, equal to $13.45 per share.
- As of year-end, the debt to total capitalization ratio was 18.8 percent.
- Capital expenditures during 2011 totaled $18.8 million. The Company has improvement projects underway which will increase funding of capital expenditures significantly over the next few years.
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 December December December
31, 25, 31, 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 December
31, 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 December
31, 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
As Impact of Pro forma Without
Reported Insurance Insurance
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
As Impact of Pro forma Without
Reported Litigation Litigation
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
As Impact of Pro forma Without
Reported Insurance Insurance
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.
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