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