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