Mueller Industries, Inc. Reports Forty-Four Percent Increase in Second Quarter 2011 Earnings
MEMPHIS, Tennessee, July 26, 2011 /PRNewswire/ --
Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller's net income in the second quarter of 2011 was $22.3 million, or 59 cents per diluted share. This compares with net income of $15.6 million, or 41 cents per diluted share, for the same period of 2010. Net sales for the second quarter of 2011 were $652.9 million compared with $540.4 million in the second quarter of 2010.
For the first half of 2011, net income was $62.9 million, or $1.65 per diluted share, on net sales of $1.34 billion. This compares with net income of $49.5 million, or $1.31 per diluted share, on net sales of $1.03 billion for the first half of 2010. The year-to-date results of both 2011 and 2010 include unusual items in net income. For the 2011 period, income of 18 cents per diluted share was included, resulting from the favorable settlement of a legal action. And, in 2010, income of 58 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 half of 2011 was $56.1 million, or $1.47 per diluted share, compared with $27.6 million, or 73 cents per diluted share, for the first half of 2010.
Financial and Operating Highlights
Regarding the second quarter of 2011, Mr. Karp said:
- "Our Plumbing & Refrigeration segment posted operating earnings of $24.8 million on net sales of $347.1 million which compares with prior year earnings of $19.7 million on net sales of $285.7 million. Improved results were due to better spreads.
- "Our OEM segment posted operating earnings of $18.8 million during the second quarter of 2011 on net sales of $314.1 million, which compares with operating earnings of $16.9 million on net sales of $257.8 million for the same period in 2010.
- "Our financial condition remains strong. We ended the quarter with $345.0 million in cash equal to $9.11 per share. In preparation for a major maintenance program at our Fulton, Mississippi, copper tube mill, we increased inventory by more than 15 million pounds to ensure uninterrupted supply for our customers; accordingly, we used in excess of $60 million cash to fund this temporary bulge in inventory quantities.
- "Total stockholders' equity was $854.3 million.
- "Our current ratio was 4.4 to 1, and our financial leverage is conservative with a debt to total capitalization ratio of 19 percent.
- "The Comex average price of copper was $4.16 per pound in the second quarter of 2011, which compares with $3.19 in the second quarter of 2010. Higher selling prices due to rising material values accounted for approximately $90 million of the increase in net sales primarily in the Plumbing & Refrigeration segment."
Business Outlook
Regarding the outlook, Mr. Karp said, "The construction industry continues to struggle in the face of high unemployment, foreclosures, and a weak economic recovery. Nonetheless, we believe we are at or near the cyclical lows. We are well prepared to ramp-up production when the recovery gains momentum. Mueller's performance in the first half was gratifying."
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 For the Six Months
Ended Ended
--------------- ------------------
July 2, June 26, July 2, June 26,
2011 2010 2011 2010
---- ---- ---- ----
(Unaudited) (Unaudited)
Net sales $652,923 $540,388 $1,340,604 $1,025,656
Cost of goods
sold 573,877 466,645 1,163,751 879,693
Depreciation and
amortization 9,166 10,090 18,865 20,438
Selling,
general, and
administrative
expense 33,330 33,468 68,699 70,791
Litigation
settlement - - (10,500) -
Insurance
settlement - 1,210 - (21,296)
--- ----- --- -------
Operating income 36,550 28,975 99,789 76,030
Interest expense (2,834) (2,964) (6,182) (5,496)
Other income
(expense), net 264 (2,518) 1,323 (2,378)
--- ------ ----- ------
Income before
income taxes 33,980 23,493 94,930 68,156
Income tax
expense (11,249) (7,456) (31,657) (17,320)
------- ------ ------- -------
Consolidated net
income 22,731 16,037 63,273 50,836
Net income
attributable to
noncontrolling
interest (400) (479) (355) (1,320)
---- ---- ---- ------
Net income
attributable to
Mueller
Industries,
Inc. $22,331 $15,558 $62,918 $49,516
======= ======= ======= =======
Weighted average
shares
for basic
earnings per
share 37,737 37,674 37,730 37,631
Effect of
dilutive stock-
based awards 356 43 309 69
--- --- --- ---
Adjusted
weighted
average shares
for diluted
earnings per
share 38,093 37,717 38,039 37,700
------ ------ ------ ------
Basic earnings
per share $0.59 $0.41 $1.67 $1.32
===== ===== ===== =====
Diluted earnings
per share $0.59 $0.41 $1.65 $1.31
===== ===== ===== =====
Dividends per
share $0.10 $0.10 $0.20 $0.20
===== ===== ===== =====
Summary Segment
Data:
---------------
Net sales:
Plumbing &
Refrigeration
Segment $347,069 $285,717 $727,658 $542,379
OEM Segment 314,086 257,780 633,422 489,984
Elimination of
intersegment
sales (8,232) (3,109) (20,476) (6,707)
------ ------ ------- ------
Net sales $652,923 $540,388 $1,340,604 $1,025,656
======== ======== ========== ==========
Operating
income:
Plumbing &
Refrigeration
Segment $24,790 $19,740 $54,473 $60,199
OEM Segment 18,816 16,932 48,462 33,063
Unallocated
expenses (7,056) (7,697) (3,146) (17,232)
------ ------ ------ -------
Operating income $36,550 $28,975 $99,789 $76,030
======= ======= ======= =======
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 2, December 25,
2011 2010
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $345,039 $394,139
Accounts receivable, net 327,381 269,258
Inventories 296,999 209,892
Other current assets 47,144 39,025
------ ------
Total current assets 1,016,563 912,314
Property, plant, and equipment, net 223,234 229,498
Other assets 118,747 117,184
------- -------
$1,358,544 $1,258,996
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of debt $50,582 $32,020
Accounts payable 86,574 67,849
Other current liabilities 94,496 95,258
------ ------
Total current liabilities 231,652 195,127
Long-term debt 156,976 158,226
Pension and postretirement liabilities 40,558 40,939
Environmental reserves 23,232 23,902
Deferred income taxes 21,813 24,081
Other noncurrent liabilities 1,877 824
----- ---
Total liabilities 476,108 443,099
Total Mueller Industries, Inc.
stockholders' equity 854,305 788,736
Noncontrolling interest 28,131 27,161
------ ------
Total equity 882,436 815,897
------- -------
$1,358,544 $1,258,996
========== ==========
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Six Months
Ended
------------------
July 2, June 26,
2011 2010
---- ----
(Unaudited)
Operating activities:
Consolidated net income $63,273 $50,836
Reconciliation of net income to net cash
(used in)
provided by operating activities:
Depreciation and amortization 18,999 20,554
Stock-based compensation expense 1,712 1,435
(Gain) loss on disposal of properties (275) 164
Insurance settlement - (21,296)
Insurance proceeds - noncapital related - 5,561
Deferred income taxes (2,549) (4,370)
Income tax benefit from exercise of stock
options (90) (88)
Changes in assets and liabilities, net of
business acquired:
Receivables (55,010) (60,819)
Inventories (78,966) 4,796
Other assets (4,398) 6,979
Current liabilities 17,199 26,129
Other liabilities 768 2,870
Other, net 433 (363)
--- ----
Net cash (used in) provided by operating
activities (38,904) 32,388
------- ------
Investing activities:
Capital expenditures (8,743) (9,286)
Acquisition of business (6,882) -
Insurance proceeds - 17,703
Proceeds from sales of properties 151 23
Net (deposits into) withdrawals from
restricted cash balances (3,877) 11
------ ---
Net cash (used in) provided by investing
activities (19,351) 8,451
------- -----
Financing activities:
Dividends paid (7,546) (7,529)
Debt issuance costs (1,942) -
Issuance of shares under stock-based
incentive plans
from treasury 1,335 2,465
Income tax benefit from exercise of stock
options 90 88
Acquisition of treasury stock (743) (75)
Repayments of long-term debt (250) -
Issuance of debt by joint venture, net 16,498 16,431
------ ------
Net cash provided by financing activities 7,442 11,380
----- ------
Effect of exchange rate changes on cash 1,713 (1,065)
----- ------
(Decrease) increase in cash and cash
equivalents (49,100) 51,154
Cash and cash equivalents at the beginning
of the period 394,139 346,001
------- -------
Cash and cash equivalents at the end of the
period $345,039 $397,155
======== ========
MUELLER INDUSTRIES, INC.
RECONCILIATION OF NET INCOME AS REPORTED
TO NET INCOME BEFORE LITIGATION SETTLEMENT AND INSURANCE SETTLEMENT
(In thousands, except per share data)
Earnings without the litigation settlement in 2011 and without the
insurance settlement in 2010 is a measurement not derived in
accordance with generally accepted accounting principles (GAAP).
Excluding the litigation settlement and 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 litigation settlement resulted from the collection of proceeds
from the lawsuit against Peter Berkman, Jeffrey Berkman, and
Homewerks Worldwide LLC. The insurance settlement 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 settlement to net income as reported are as
follows:
For the Six Months Ended July 2, 2011
---------------------------------
Pro forma
Impact of Without
As Litigation Litigation
Reported Settlement Settlement
-------- ---------- ----------
(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
===== ====== =====
For the Six Months Ended June 26, 2010
----------------------------------
Pro forma
Impact of Without
As Insurance Insurance
Reported Settlement Settlement
-------- ---------- ----------
(Unaudited)
Operating income $76,030 $(21,296) $54,734
Interest expense (5,496) - (5,496)
Other expense, net (2,378) - (2,378)
------ --- ------
Income before income taxes 68,156 (21,296) 46,860
Income tax expense (Note A) (17,320) (618) (17,938)
------- ---- -------
Consolidated net income 50,836 (21,914) 28,922
Net income attributable to
noncontrolling interest (1,320) - (1,320)
------ --- ------
Net income attributable to
Mueller Industries, Inc. $49,516 $(21,914) $27,602
======= ======== =======
Diluted earnings per share $1.31 $(0.58) $0.73
===== ====== =====
(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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