Mueller Industries, Inc. Reports Third Quarter 2013 Earnings

GlobeNewswire Europe

MEMPHIS, Tenn., October 22, 2013 -- Mueller Industries, Inc. (MLI) announced today that Mueller`s net income attributable to normal operations in the third quarter of 2013 was $19.5 million, or 69 cents per diluted share.  This compares with net income of $15.5 million, or 41 cents per diluted share, for the same period of 2012.  

In addition, during the third quarter of 2013, the Company recognized an after-tax gain of $22.9 million (or 81 cents per diluted share) on the sale of its Schedule 40 pressure plastics fittings business along with the sale of certain other plastic fittings manufacturing assets.  Also during the third quarter of 2013, the Company recognized an after-tax asset impairment charge of $2.6 million (or 9 cents per diluted share) primarily related to real property associated with the aforementioned plastics sale transaction.  Including these non-recurring items, the Company`s net income in the third quarter of 2013 was $39.9 million, or $1.41 per diluted share.

Net sales for the third quarter of 2013 were $528.9 million compared with $514.2 million in the third quarter of 2012.  The increase in net sales was principally due to a 6.6 percent overall increase in unit volumes offset somewhat by lower copper costs that impacted the selling prices of the Company`s products.  Copper prices decreased to an average of $3.23 per pound in the third quarter of 2013 compared with $3.53 per pound in the third quarter of 2012.

Excluding the aforementioned non-recurring items, the Plumbing & Refrigeration and OEM segments reported an increase in third quarter income from normal operations of $1.1 million and $5.6 million, respectively, compared to the same period in 2012 due notably to the improvement in volumes.  

At the end of the third quarter of 2013, the Company`s net book value per share was $23.41, of which $11.40 per share was cash. The Company ended the quarter with $322.2 million of cash on hand and a current ratio of 3.8 to 1.

Regarding the outlook, Greg Christopher, Mueller`s CEO said, "Mueller`s businesses perform best when unit volumes increase.  This is because, once our fixed costs are covered, each added increment of volume tends to generate higher margins.  This was well illustrated by our results for the quarter just ended.  We are on track to increase volumes as the construction industry improves.

"In addition, subsequent to the end of the third quarter of 2013, Mueller closed on the acquisition of Howell Metal Company and entered into a definitive agreement to acquire KME`s Yorkshire Copper Tube business, subject to regulatory approval in the United Kingdom.  Howell manufactures copper tube and linesets for U.S. distribution while Yorkshire Copper Tube produces European standard copper distribution tubes.  These acquisitions complement our strategy to grow and strengthen our core businesses."

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," "pro forma," 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.

CONTACT
Jeffrey A. Martin
(901)753-3226

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

For the Quarter Ended For the Nine Months Ended
(In thousands, except per share data) September 28, 2013 September 29, 2012 September 28, 2013 September 29, 2012
Net sales $ 528,854 $ 514,165 $ 1,670,826 $ 1,685,932
Cost of goods sold 456,302 449,718 1,440,277 1,465,744
Depreciation and amortization 7,882 7,870 24,364 23,318
Selling, general, and administrative expense 32,921 32,120 99,078 97,209
Gain on sale of plastic fittings manufacturing assets (39,765 ) - (39,765 ) -
Impairment charges 4,304 - 4,304 -
Insurance settlements - - (106,332 ) (1,500 )
    Operating income 67,210 24,457 248,900 101,161
Interest expense (1,243 ) (353 ) (2,940 ) (5,711 )
Other income, net 842 219 4,324 963
    Income before income taxes 66,809 24,323 250,284 96,413
Income tax expense (26,816 ) (8,753 ) (92,015 ) (29,486 )
    Consolidated net income 39,993 15,570 158,269 66,927
Net income attributable to noncontrolling interest (129 ) (59 ) (1,053 ) (900 )
    Net income attributable to Mueller Industries, Inc. $ 39,864 $ 15,511 $ 157,216 $ 66,027
Weighted average shares for basic earnings per share 27,894 37,505 27,852 37,849
Effect of dilutive stock-based awards 361 452 369 444
Adjusted weighted average shares for diluted earnings per share 28,255 37,957 28,221 38,293
Basic earnings per share $ 1.43 $ 0.41 $ 5.64 $ 1.74
Diluted earnings per share $ 1.41 $ 0.41 $ 5.57 $ 1.72
Dividends per share $ 0.125 $ 0.10 $ 0.375 $ 0.30
Summary Segment Data:
Net sales:
    Plumbing & Refrigeration Segment $ 301,622 $ 297,913 $ 942,109 $ 944,955
    OEM Segment 230,396 221,468 741,227 760,995
    Elimination of intersegment sales (3,164 ) (5,216 ) (12,510 ) (20,018 )
Net sales $ 528,854 $ 514,165 $ 1,670,826 $ 1,685,932
Operating income:
    Plumbing & Refrigeration Segment $ 54,271 $ 17,593 $ 206,708 $ 68,456
    OEM Segment 19,937 14,421 61,199 54,203
    Unallocated expenses (6,998 ) (7,557 ) (19,007 ) (21,498 )
Operating income $ 67,210 $ 24,457 $ 248,900 $ 101,161

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands) September 28, 2013 December 29, 2012
ASSETS
Cash and cash equivalents $ 322,177 $ 198,934
Accounts receivable, net 312,919 271,093
Inventories 234,081 229,434
Other current assets 55,166 47,733
    Total current assets 924,343 747,194
Property, plant, and equipment, net 222,751 233,263
Other assets 113,527 123,698
$ 1,260,621 $ 1,104,155
LIABILITIES AND STOCKHOLDERS` EQUITY
Current portion of debt $ 33,036 $ 27,570
Accounts payable 76,725 87,574
Other current liabilities 134,411 143,552
    Total current liabilities 244,172 258,696
Long-term debt 206,550 207,300
Pension and postretirement liabilities 52,205 55,019
Environmental reserves 22,435 22,597
Deferred income taxes 39,698 20,910
Other noncurrent liabilities 1,141 1,667
    Total liabilities 566,201 566,189
Total Mueller Industries, Inc. stockholders` equity 661,749 506,908
Noncontrolling interest 32,671 31,058
    Total equity 694,420 537,966
$ 1,260,621 $ 1,104,155

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

For the Nine Months Ended
 (In thousands) September 28, 2013 September 29, 2012
Cash flows from operating activities
  Consolidated net income $ 158,269 $ 66,927
  Reconciliation of consolidated net income to net cash
    provided by operating activities:
      Depreciation and amortization 24,583 23,713
      Stock-based compensation expense 4,560 3,042
      Insurance settlements (106,332 ) (1,500 )
      Insurance proceeds - noncapital related 32,395 14,250
      Gain on sale of plastic fittings manufacturing assets (39,765 ) -
      (Gain) loss on disposal of properties (3,316 ) 175
      Impairment charges 4,304 -
      Deferred income taxes 14,152 2,319
      Income tax benefit from exercise of stock options (670 ) (517 )
      Changes in assets and liabilities, net of business acquired:
        Receivables (38,370 ) (15,779 )
        Inventories (4,566 ) 585
        Other assets 4,886 (8,434 )
        Current liabilities 19,649 (21,120 )
        Other liabilities (297 ) 7,834
        Other, net 508 1,271
Net cash provided by operating activities 69,990 72,766
Cash flows from investing activities
  Capital expenditures (33,402 ) (43,841 )
  Acquisition of business - (11,503 )
  Insurance proceeds for property and equipment 29,910 42,250
  Net (deposits into) withdrawals from restricted cash balances (2,473 ) 6,908
  Proceeds from the sales of assets 64,966 502
Net cash provided by (used in) investing activities 59,001 (5,684 )
Cash flows from financing activities
  Dividends paid to stockholders of Mueller Industries, Inc. (10,449 ) (11,415 )
  Debt issuance cost (50 ) -
  Issuance of long-term debt - 200,000
  Issuance (repayment) of debt by joint venture, net 4,940 (28,955 )
  Net cash used to settle stock-based awards (337 ) (740 )
  Repurchase of common stock - (427,448 )
  Repayments of long-term debt (750 ) (148,926 )
  Income tax benefit from exercise of stock options 670 517
Net cash used in financing activities (5,976 ) (416,967 )
Effect of exchange rate changes on cash 228 1,478
Increase (decrease) in cash and cash equivalents 123,243 (348,407 )
Cash and cash equivalents at the beginning of the period 198,934 514,162
Cash and cash equivalents at the end of the period $ 322,177 $ 165,755

MUELLER INDUSTRIES, INC.
Reconciliation of Net Income as Reported to Pro Forma Without Gain on Sale of
Plastic Fittings Manufacturing Assets and Impairment Charges
(Unaudited)

Earnings attributable to normal operations without the gain on sale of plastic fittings manufacturing assets and impairment charges is a measurement not derived in accordance with generally accepted accounting principles (GAAP).  Excluding the gain on sale of plastic fittings manufacturing assets 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.  Reconciliation of earnings attributable to normal operations without the gain on sale of plastic fittings manufacturing assets and impairment charges to net income as reported is as follows:

For the Quarter Ended September 28, 2013
Impact of
(In thousands, except per share data) As Reported Gain on Sale of
Plastic Fittings
Manufacturing
Assets
Impairment
Charges
Pro Forma
Operating income $ 67,210 $ 39,765 $ (4,304 ) $ 31,749
Interest expense (1,243 ) - - (1,243 )
Other income, net 842 - - 842
    Income before income taxes 66,809 39,765 (4,304 ) 31,348
Income tax expense (26,816 ) (16,845 ) 1,719 (11,690 )
    Consolidated net income 39,993 22,920 (2,585 ) 19,658
Net income attributable to noncontrolling interest (129 ) - - (129 )
    Net income attributable to Mueller Industries, Inc. $ 39,864 $ 22,920 $ (2,585 ) $ 19,529
Diluted earnings per share $ 1.41 $ 0.81 $ (0.09 ) $ 0.69



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Source: Mueller Industries Inc. via Thomson Reuters ONE

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