Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2010 Results
MEMPHIS, Tennessee, February 1, 2011 /PRNewswire/ --
Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller's net income in the fourth quarter was $17.7 million, or 47 cents per diluted share, on net sales of $526.9 million. This compares with a net loss of $17.5 million, or a loss of 47 cents per diluted share, on net sales of $433.0 million in the fourth quarter of 2009. The fourth quarter of 2009 included non-cash impairment charges of 74 cents per diluted share primarily related to goodwill.
For the fiscal year ended December 25, 2010, Mueller earned $86.2 million, or $2.28 per diluted share, which includes insurance settlement gains of $23.3 million, or 62 cents per diluted share. For fiscal 2009, the Company earned $4.7 million, or 12 cents per diluted share. Net sales for 2010 were $2.06 billion compared with $1.55 billion in 2009.
Financial and Operating Highlights
Regarding the fourth quarter and 2010 results, Mr. Karp said:
- "The increase in net sales in 2010 was largely due to the higher
average cost of copper. The Comex average price of copper was $3.93 per
pound in the fourth quarter of 2010, which compares with $3.03 per
pound in the fourth quarter of 2009. Higher selling prices due to
rising raw material values accounted for approximately $358 million of
the increase in net sales primarily in the Plumbing & Refrigeration
segment. Approximately $116 million of the increase in net sales was
attributable to increased unit volume primarily in the OEM segment.
- "For the full year, our Plumbing & Refrigeration segment posted net
sales of $1.12 billion and generated operating earnings of $83.7
million, which includes insurance settlement gains of $22.7 million.
This compares with operating earnings of $27.0 million on net sales of
$892.1 million in 2009. For the fourth quarter of 2010, operating
income was $12.0 million on net sales of $290.5 million, which
compares with an operating loss of $11.2 million on net sales of $231.0
million in the fourth quarter of 2009. The fourth quarter of 2009
included non-cash impairment charges totaling $19.5 million that
reduced operating earnings.
- "Our OEM segment posted operating earnings of $80.1 million during 2010
on net sales of $958.9 million, which compares with operating earnings
of $28.7 million on net sales of $664.1 million for 2009. For the
fourth quarter of 2010, operating income was $24.1 million on net sales
of $239.9 million, which compares with operating income of $10.4
million on net sales of $204.2 million in the fourth quarter of 2009.
The fourth quarter of 2009 included non-cash impairment charges
totaling $10.3 million that reduced operating earnings.
- "Our current ratio was 4.7 to 1 and our working capital was $717.2
million, of which almost $400 million was cash on hand, equal to $10.41
per share.
- "As of year end, our financial leverage was modest with a debt to total
capitalization ratio of 18.9 percent.
- "Stockholders' equity was $788.7 million which equates to a book value
of $20.84 per share.
- "Capital expenditures during 2010 totaled $18.7 million. We expect to
increase our funding of capital expenditures in 2011 due to operating
improvement opportunities."
Business Outlook for 2011
Regarding the outlook for 2011, Mr. Karp said, "Overall, we are positive about Mueller's business outlook for 2011. We have weathered two difficult years and have remained solidly profitable while gaining in financial strength.
"We do not underestimate the challenges. We recognize that the residential construction industry continues to struggle, as job growth remains sluggish while home prices have declined. However, on the positive side, the U.S. economy is growing again, mortgage rates are low, and consumer confidence has improved. On balance, we believe housing starts will commence rising in 2011.
"The private non-residential construction sector, which includes offices, industrial and retail projects, declined by almost 25 percent in 2010 and over 15 percent in 2009. This market is likely at or near a bottom, and we anticipate better times ahead. All in all, we expect that most of the conditions that affect our businesses will gradually improve as 2011 progresses."
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 OPERATIONS
(In thousands, except per share data)
For the Quarter Ended For the Year Ended
--------------------- ------------------
December 25, December 26, December 25, December 26,
2010 2009 2010 2009
---- ---- ---- ----
(Unaudited) (Unaudited)
Net sales $526,901 $432,977 $2,059,797 $1,547,225
Cost of
goods
sold 457,521 372,247 1,774,811 1,327,022
Depreciation
and
amortization 9,992 10,292 40,364 41,568
Selling,
general,
and
administrative
expense 31,610 27,593 131,211 116,660
Insurance
settlements (1,452) - (22,736) -
Impairment
charges - 29,755 - 29,755
--- ------ --- ------
Operating
income
(loss) 29,230 (6,910) 136,147 32,220
Interest
expense (3,079) (2,410) (11,647) (9,963)
Other
(expense)
income,
net (302) 184 (2,650) 872
---- --- ------ ---
Income
(loss)
before
income
taxes 25,849 (9,136) 121,850 23,129
Income tax
expense (7,897) (7,996) (34,315) (17,792)
------ ------ ------- -------
Consolidated
net
income
(loss) 17,952 (17,132) 87,535 5,337
Less net
income
attributable
to
noncontrolling
interest (206) (395) (1,364) (662)
---- ---- ------ ----
Net income
(loss)
attributable
to
Mueller
Industries,
Inc. $17,746 $(17,527) $86,171 $4,675
======= ======== ======= ======
Weighted
average
shares
for basic
earnings
(loss)
per share 37,717 37,584 37,672 37,336
Effect of
dilutive
stock
options 157 - 97 88
--- --- --- ---
Adjusted
weighted
average
shares
for
diluted
earnings
(loss)
per share 37,874 37,584 37,769 37,424
------ ------ ------ ------
Basic
earnings
(loss)
per share $0.47 $(0.47) $2.29 $0.13
===== ====== ===== =====
Diluted
earnings
(loss)
per share $0.47 $(0.47) $2.28 $0.12
===== ====== ===== =====
Dividends
per share $0.10 $0.10 $0.40 $0.40
===== ===== ===== =====
Summary
Segment
Data:
--------
Net sales:
Plumbing &
Refrigeration
segment $290,500 $231,036 $1,115,614 $892,071
OEM
segment 239,890 204,190 958,855 664,088
Elimination
of
intersegment
sales (3,489) (2,249) (14,672) (8,934)
------ ------ ------- ------
Net sales $526,901 $432,977 $2,059,797 $1,547,225
======== ======== ========== ==========
Operating
income
(loss):
Plumbing &
Refrigeration
segment $11,957 $(11,156) $83,667 $27,043
OEM
segment 24,060 10,410 80,117 28,725
Unallocated
expenses (6,787) (6,164) (27,637) (23,548)
------ ------ ------- -------
Operating
income
(loss) $29,230 $(6,910) $136,147 $32,220
======= ======= ======== =======
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 25, December 26,
2010 2009
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $394,139 $346,001
Accounts receivable, net 269,258 228,739
Inventories 209,892 191,262
Other current assets 39,025 42,841
------ ------
Total current assets 912,314 808,843
Property, plant, and equipment,
net 229,498 250,395
Other assets 117,184 120,903
------- -------
$1,258,996 $1,180,141
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current portion of long-term
debt $32,020 $24,325
Accounts payable 67,849 73,837
Other current liabilities 95,258 85,208
------ ------
Total current liabilities 195,127 183,370
Long-term debt 158,226 158,226
Pension and postretirement
liabilities 40,939 44,320
Environmental reserves 23,902 23,268
Deferred income taxes 24,081 31,128
Other noncurrent liabilities 824 887
--- ---
Total liabilities 443,099 441,199
Total Mueller Industries, Inc.
stockholders' equity 788,736 713,167
Noncontrolling interest 27,161 25,775
------ ------
Total equity 815,897 738,942
------- -------
$1,258,996 $1,180,141
========== ==========
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Year Ended
------------------
December 25, December 26,
2010 2009
---- ----
(Unaudited)
Operating activities:
Consolidated net income $87,535 $5,337
Reconciliation of consolidated net
income
to net cash provided by operating
activities:
Depreciation and amortization 40,652 41,758
Stock-based compensation expense 2,877 2,633
Insurance settlements (22,736) -
Insurance proceeds -noncapital
related 5,561 7,338
Loss on disposal of properties 756 683
Deferred income taxes (6,627) (2,554)
Income tax benefit from exercise of
stock options (145) (203)
Impairment charges - 29,755
Gain on early retirement of debt - (128)
Changes in assets and liabilities,
net of business acquired:
Receivables (41,731) (6,482)
Inventories (17,248) 22,699
Other assets 2,974 (505)
Current liabilities 4,913 (21,161)
Other liabilities (623) (1,808)
Other, net 199 26
--- ---
Net cash provided by operating
activities 56,357 77,388
------ ------
Investing activities:
Capital expenditures (18,678) (13,942)
Business acquired (2,021) -
Insurance proceeds for property and
equipment 18,798 -
Net (deposits in) withdrawals from
restricted cash balances (156) 7,013
Proceeds from sales of properties 71 611
--- ---
Net cash used in investing activities (1,986) (6,318)
------ ------
Financing activities:
Dividends paid (15,074) (14,944)
Repayment of debt by joint venture,
net 6,848 131
Repayments of long-term debt - (370)
Dividends paid to noncontrolling
interest (741) (1,449)
Acquisition of treasury stock (418) (870)
Issuance of shares under incentive
stock option plans
from treasury 2,846 9,145
Income tax benefit from exercise of
stock options 145 203
--- ---
Net cash used in financing activities (6,394) (8,154)
------ ------
Effect of exchange rate changes on
cash 161 4,225
--- -----
Increase in cash and cash equivalents 48,138 67,141
Cash and cash equivalents at the
beginning of the period 346,001 278,860
------- -------
Cash and cash equivalents at the end
of the period $394,139 $346,001
======== ========
MUELLER INDUSTRIES, INC.
RECONCILIATION OF NET INCOME (LOSS) AS REPORTED TO NET INCOME
BEFORE INSURANCE SETTLEMENT AND IMPAIRMENT CHARGES
(In thousands, except per share data)
Earnings without insurance settlement and impairment charges is a
measurement not derived in accordance with generally accepted
accounting principles (GAAP). Excluding the insurance settlement and
impairment charges 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 and are not expected to
recur in future periods. Impairments reflect the impact of long-
term decisions and investments that were made in prior periods.
Reconciliation of earnings without insurance settlement and
impairment charges to net income as reported is as follows:
For the Quarter Ended December 25, 2010
---------------------------------------
Pro forma
Impact of Without
As Insurance Insurance
Reported 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
===== ====== =====
For the Quarter Ended December 26, 2009
---------------------------------------
Pro forma
Impact of Without
As Impairment Impairment
Reported Charges Charges
-------- ------- -------
(Unaudited)
Operating (loss) income $(6,910) $29,755 $22,845
Interest expense (2,410) - (2,410)
Other income, net 184 - 184
--- --- ---
(Loss) income before income
taxes (9,136) 29,755 20,619
Income tax expense (7,996) (1,807) (9,803)
------ ------ ------
Consolidated net (loss)
income (17,132) 27,948 10,816
Less net income
attributable to
noncontrolling interest (395) - (395)
---- --- ----
Net (loss) income
attributable to Mueller
Industries, Inc. $(17,527) $27,948 $10,421
======== ======= =======
Diluted (loss) earnings per
share $(0.47) $0.74 $0.27
====== ===== =====
MUELLER INDUSTRIES, INC.
RECONCILIATION OF NET INCOME AS REPORTED TO NET INCOME
BEFORE INSURANCE SETTLEMENTS AND IMPAIRMENT CHARGES
(In thousands, except per share data)
Earnings without insurance settlements and impairment charges is a
measurement not derived in accordance with generally accepted
accounting principles (GAAP). Excluding the insurance settlements
and impairment charges 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 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 and are not expected to recur in future periods.
Impairments reflect the impact of long-term decisions and
investments that were made in prior periods. Reconciliation of
earnings without insurance settlements and impairment charges to net
income as reported is as follows:
For the Year Ended December 25, 2010
------------------------------------
Pro forma
Impact of Without
As Insurance Insurance
Reported 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.
For the Year Ended December 26, 2009
------------------------------------
Pro forma
Impact of Without
As Impairment Impairment
Reported Charges Charges
-------- ------- -------
(Unaudited)
Operating income $32,220 $29,755 $61,975
Interest expense (9,963) - (9,963)
Other expense, net 872 - 872
--- --- ---
Income before income taxes 23,129 29,755 52,884
Income tax expense (17,792) (1,807) (19,599)
------- ------ -------
Consolidated net income 5,337 27,948 33,285
Less net income
attributable to
noncontrolling interest (662) - (662)
---- --- ----
Net income attributable to
Mueller Industries, Inc. $4,675 $27,948 $32,623
====== ======= =======
Diluted earnings per share $0.12 $0.75 $0.87
===== ===== =====
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