Mueller Industries, Inc. Reports Second Quarter 2012 Earnings

News provided by

Mueller Industries, Inc.

24 Jul, 2012, 11:00 GMT

MEMPHIS, Tennessee, July 24, 2012 /PRNewswire/ -- Mueller Industries, Inc. (NYSE: MLI) announced today that Mueller's net income in the second quarter of 2012 was $17.9 million, or 47 cents per diluted share. This compares with net income of $22.3 million, or 59 cents per diluted share, for the same period of 2011. Net sales for the second quarter of 2012 were $594.1 million compared with $652.9 million in the second quarter of 2011. Of the decrease in net sales, approximately $51.6 million was attributable to lower copper and other raw material costs that impact the selling prices of our products. Copper prices decreased to an average of $3.55 per pound in the second quarter of 2012 versus $4.16 per pound in the same quarter of 2011. 

Second Quarter Financial and Operating Highlights

  • The Plumbing & Refrigeration segment posted operating earnings of $22.6 million on net sales of $331.7 million, which compares with prior year earnings of $24.8 million on net sales of $347.1 million. The decrease in earnings was due to slightly lower spreads.
  • The OEM segment posted operating earnings of $15.1 million during the second quarter of 2012 on net sales of $268.6 million, which compares with operating earnings of $18.8 million on net sales of $314.1 million for the same period in 2011.  Unit volumes decreased somewhat and spreads were slightly lower.
  • The Company redeemed its outstanding 6% Subordinated Debentures, due 2014 late in the second quarter.  In future periods, the redemption will result in a savings of approximately $8.9 million in interest expense, or 15 cents per diluted share, on an annualized basis.
  • At quarter end, cash totaled $373.7 million equal to $9.77 per share and the current ratio was 3.9 to 1.  Total stockholders' equity was $904.3 million.

Business Outlook

Regarding the outlook, Greg Christopher, CEO said, "The long awaited housing recovery may have begun.  Mortgage rates are at historic lows, even as home prices have shown signs of firming. Also, in some markets it has become cheaper to buy than to rent. However, commercial construction activity has recently been uneven after showing gains earlier in the year. We believe that overall business conditions in the construction sector are improving, but at an irregular pace."

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 that 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 Six Months Ended



June 30,


July 2,


June 30,


July 2,



2012


2011


2012


2011



(Unaudited)


(Unaudited)










Net sales


$ 594,099


$ 652,923


$ 1,171,767


$ 1,340,604










Cost of goods sold


522,851


573,877


1,016,026


1,163,751

Depreciation and amortization


7,919


9,166


15,448


18,865

Selling, general, and administrative expense


33,487


33,330


65,089


68,699

Litigation settlement


-


-


-


(10,500)

Insurance settlement


-


-


(1,500)


-










Operating income


29,842


36,550


76,704


99,789










Interest expense


(2,721)


(2,834)


(5,358)


(6,182)

Other income, net


490


264


744


1,323










Income before income taxes


27,611


33,980


72,090


94,930










Income tax expense


(9,071)


(11,249)


(20,733)


(31,657)










Consolidated net income


18,540


22,731


51,357


63,273










Net income attributable to noncontrolling interest


(623)


(400)


(841)


(355)










Net income attributable to Mueller Industries, Inc.


$ 17,917


$ 22,331


$   50,516


$   62,918










Weighted average shares









for basic earnings per share


38,029


37,737


38,021


37,730

Effect of dilutive stock-based awards


436


356


440


309










Adjusted weighted average shares









for diluted earnings per share


38,465


38,093


38,461


38,039










Basic earnings per share


$   0.47


$   0.59


$    1.33


$    1.67










Diluted earnings per share


$   0.47


$   0.59


$    1.31


$    1.65










Dividends per share


$   0.10


$   0.10


$    0.20


$    0.20










Summary Segment Data:









Net sales:









Plumbing & Refrigeration Segment


$ 331,688


$ 347,069


$  647,042


$  727,658

OEM Segment


268,551


314,086


539,527


633,422

Elimination of intersegment sales


(6,140)


(8,232)


(14,802)


(20,476)










Net sales


$ 594,099


$ 652,923


$ 1,171,767


$ 1,340,604










Operating income:









Plumbing & Refrigeration Segment


$  22,605


$   24,790


$   50,863


$   54,473

OEM Segment


15,057


18,816


39,782


48,462

Unallocated expenses


(7,820)


(7,056)


(13,941)


(3,146)










Operating income


$  29,842


$   36,550


$   76,704


$   99,789













MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)












June 30,


December 31,





2012


2011





(Unaudited)



ASSETS







Cash and cash equivalents


$  373,680


$   514,162



Accounts receivable, net


299,264


250,027



Inventories


229,338


219,193



Other current assets


41,768


43,317










    Total current assets


944,050


1,026,699










Property, plant, and equipment, net


212,035


203,744



Other assets


116,355


117,161












$ 1,272,440


$  1,347,604










LIABILITIES AND STOCKHOLDERS' EQUITY







Current portion of debt


$   25,715


$    41,265



Accounts payable


89,914


65,545



Other current liabilities


124,757


106,434










    Total current liabilities


240,386


213,244










Long-term debt


7,800


156,476



Pension and postretirement liabilities


53,162


54,244



Environmental reserves


22,600


22,892



Deferred income taxes


13,079


14,856



Other noncurrent liabilities


966


1,130










    Total liabilities


337,993


462,842










Total Mueller Industries, Inc. stockholders' equity


904,343


855,688



Noncontrolling interest


30,104


29,074










    Total equity


934,447


884,762












$ 1,272,440


$  1,347,604

















MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)












For the Six Months Ended



June 30,


July 2,



2012


2011


(Unaudited)

Operating activities:







Consolidated net income




$ 51,357


$ 63,273

Reconciliation of consolidated net income to net cash provided by





    (used in) operating activities:





      Depreciation and amortization


15,843


18,999

      Stock-based compensation expense


2,061


1,712

      Loss (gain) on disposal of properties


106


(275)

      Insurance settlement


(1,500)


-

      Insurance proceeds - noncapital related


9,000


-

      Deferred income taxes


(2,930)


(2,549)

      Income tax benefit from exercise of stock options


(83)


(90)

      Changes in assets and liabilities, net of business acquired:





        Receivables


(55,826)


(55,010)

        Inventories


(9,055)


(78,966)

        Other assets


(1,371)


(4,398)

        Current liabilities


9,121


17,199

        Other liabilities


285


768

        Other, net


270


433






Net cash provided by (used in) operating activities


17,278


(38,904)






Investing activities:





Capital expenditures


(23,433)


(8,743)

Acquisition of business


-


(6,882)

Insurance proceeds for property and equipment


32,500


-

Proceeds from sales of properties


175


151

Net withdrawals from (deposits into) restricted cash balances


4,368


(3,877)






Net cash provided by (used in) investing activities


13,610


(19,351)






Financing activities:





Dividends paid


(7,605)


(7,546)

Debt issuance costs


-


(1,942)

Net proceeds from the exercise of stock options


187


592

Income tax benefit from exercise of stock options


83


90

Repayments of long-term debt


(148,676)


(250)

(Repayments) issuance of debt by joint venture, net


(15,842)


16,498






Net cash (used in) provided by financing activities


(171,853)


7,442






Effect of exchange rate changes on cash


483


1,713






Decrease in cash and cash equivalents


(140,482)


(49,100)






Cash and cash equivalents at the beginning of the period


514,162


394,139






Cash and cash equivalents at the end of the period


$ 373,680


$ 345,039









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.  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 Six Months Ended June 30, 2012












As Reported


Impact of  LIFOGain


Impact of Insurance Settlement


Pro forma



(Unaudited)










Operating income


$ 76,704


$  (7,979)


$  (1,500)


$ 67,225










Interest expense


(5,358)


-


-


(5,358)

Other income, net


744


-


-


744










Income before income taxes


72,090


(7,979)


(1,500)


62,611

Income tax expense


(20,733)


2,872


585


(17,276)










Consolidated net income


51,357


(5,107)


(915)


45,335










Net income attributable to noncontrolling interest


(841)


-


-


(841)










Net income attributable to Mueller Industries, Inc.


$ 50,516


$  (5,107)


$   (915)


$ 44,494



















Diluted earnings per share


$  1.31


$  (0.13)


$  (0.02)


$   1.16





















For the Six Months Ended July 2, 2011
















Impact of 







As


Litigation







Reported


Settlement


Pro forma





(Unaudited)












Operating income


$ 99,789


$ (10,500)


$ 89,289












Interest expense


(6,182)


-


(6,182)



Other income, net


1,323


-


1,323












Income before income taxes


94,930


(10,500)


84,430



Income tax expense


(31,657)


3,675


(27,982)












Consolidated net income


63,273


(6,825)


56,448












Net income attributable to noncontrolling interest


(355)


-


(355)












Net income attributable to Mueller Industries, Inc.


$ 62,918


$  (6,825)


$ 56,093





















Diluted earnings per share


$  1.65


$  (0.18)


$   1.47