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Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2018 Earnings

COLLIERVILLE, Tenn.--(BUSINESS WIRE)--

Mueller Industries, Inc. (MLI) announced today operating income for the fourth quarter of $40.0 million, compared with $21.1 million in the same quarter of 2017. Net income for the quarter was $26.9 million, or 47 cents per diluted share, on net sales of $559.1 million, compared with net income of $5.7 million, or 10 cents per diluted share, on net sales of $523.5 million in the fourth quarter of 2017.

On a full year basis, the Company reported operating income of $173.0 million, compared with $150.8 million in fiscal year 2017. Net income for the year was $104.5 million, or $1.82 per diluted share, on net sales of $2.5 billion, compared with net income of $85.6 million, or $1.49 per diluted share, on net sales of $2.3 billion in 2017.

Financial and Operating Highlights:

  • Net sales for the quarter rose due to higher sales volumes combined with sales from the recently acquired ATCO business, offset by lower selling prices principally due to lower copper prices. Copper prices were 11 percent lower for the fourth quarter of 2018, averaging $2.75 per pound versus $3.10 per pound in the prior year period.
  • During the fourth quarter of 2018, we recognized an insurance recovery gain of $2.2 million related to the losses we incurred due to the 2017 fire at our Port Huron brass rod mill.
  • During the fourth quarter of 2018, the Company repurchased 1.14 million shares of its common stock at a cost of approximately $27.0 million.
  • The financial health of the Company remains strong. For the full year, the Company generated $167.9 million in cash from operations, ending the year with a current ratio of 3.0 to 1 and a return on equity of 19 percent compared to 16 percent in 2017.

Regarding the business, Greg Christopher, Mueller CEO, said, “Overall, our acquisitions are exceeding our expectations and we are beginning to see the benefits of the major capital investments we worked so hard to complete these past five years. Most notably our U.S. Copper Tube manufacturing platforms continue to improve and throughout the year, yielded positive results in throughput, quality, and cost reductions, which will continue to benefit us in the future.

“In addition, we continue to utilize our strong cash generation to fund growth opportunities, reduce debt and, when appropriate, return capital to our shareholders.”

Looking forward, he added, “By almost any measure, 2018 was healthier than the prior year and we expect those improvements to continue. Our outlook for 2019 remains positive, and we see opportunities to capitalize and grow in these interesting times both here and abroad.”

Mueller Industries, Inc. is an industrial manufacturer that specializes in copper and copper alloy manufacturing while also producing goods made from aluminum, steel, and plastics. It is headquartered in Collierville, Tennessee and comprises a network of operations in the United States, Canada, Mexico, Great Britain, South Korea, the Middle East, and China. Its products include tubing, fittings, valves, vessels, and related items for plumbing and HVACR related piping systems, as well as rod, forgings, extrusions, and various components for OEM applications. Products are distributed into sectors such as building construction, appliance, defense, energy, and automotive.

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,” “encourage,” “anticipate,” “appear,” 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
(Unaudited)
 
For the Quarter Ended For the Year Ended
(In thousands, except per share data)

December 29,
2018

 

December 30,
2017

December 29,
2018

 

December 30,
2017

 
Net sales $ 559,087 $ 523,524 $ 2,507,878 $ 2,266,073
 
Cost of goods sold 473,954 456,617 2,150,400 1,940,617
Depreciation and amortization 10,474 8,728 39,555 33,944
Selling, general, and administrative expense 36,892 36,054 148,888 140,730
Gain on sale of assets (253 ) (1,491 )
Impairment charges 1,055 1,466
Insurance recovery (2,195 )   (3,681 )  
 
Operating income 39,962 21,070 172,969 150,807
 
Interest expense (6,471 ) (5,292 ) (25,199 ) (19,502 )
Environmental expense (623 ) (6,221 ) (1,320 ) (7,284 )
Other income, net 1,713   1,332   3,967   2,951  
 
Income before income taxes 34,581 10,889 150,417 126,972
 
Income tax expense (7,773 ) (4,589 ) (30,952 ) (37,884 )
Income (loss) from unconsolidated affiliates, net of foreign tax 923   (331 ) (12,645 ) (2,077 )
 
Consolidated net income 27,731 5,969 106,820 87,011
 
Net income attributable to noncontrolling interests (874 ) (249 ) (2,361 ) (1,413 )
 
Net income attributable to Mueller Industries, Inc. $ 26,857   $ 5,720   $ 104,459   $ 85,598  
 
Weighted average shares for basic earnings per share 56,555 57,026 56,782 56,925
Effect of dilutive stock-based awards 377 612 487 559
 
Adjusted weighted average shares for diluted earnings per share 56,932 57,638 57,269 57,484
 
Basic earnings per share $ 0.47   $ 0.10   $ 1.84   $ 1.50  
 
Diluted earnings per share $ 0.47   $ 0.10   $ 1.82   $ 1.49  
 
Dividends per share $ 0.10   $ 0.10   $ 0.40   $ 8.40  
 
Summary Segment Data:
 
Net sales:
Piping Systems Segment $ 350,961 $ 359,253 $ 1,645,633 $ 1,564,950
Industrial Metals Segment 139,129 150,212 651,061 602,131
Climate Segment 72,215 28,045 229,069 131,448
Elimination of intersegment sales (3,218 ) (13,986 ) (17,885 ) (32,456 )
 
Net sales $ 559,087   $ 523,524   $ 2,507,878   $ 2,266,073  
 
Operating income:
Piping Systems Segment $ 22,453 $ 13,273 $ 122,829 $ 99,596
Industrial Metals Segment 21,770 14,930 75,607 74,364
Climate Segment 7,450 3,170 24,118 20,325
Unallocated expenses (11,711 ) (10,303 ) (49,585 ) (43,478 )
 
Operating income $ 39,962   $ 21,070   $ 172,969   $ 150,807  
 
   
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)

December 29,
2018

December 30,
2017

ASSETS
Cash and cash equivalents $ 72,616 $ 120,269
Accounts receivable, net 273,417 244,795
Inventories 329,795 327,901
Other current assets 26,790 46,150
 
Total current assets 702,618 739,115
 
Property, plant, and equipment, net 370,633 304,321
Other assets 296,298 276,737
 
$ 1,369,549 $ 1,320,173
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of debt $ 7,101 $ 16,480
Accounts payable 103,754 102,503
Other current liabilities 121,946 123,269
 
Total current liabilities 232,801 242,252
 
Long-term debt 489,597 448,592
Pension and postretirement liabilities 29,055 28,713
Environmental reserves 20,009 23,699
Deferred income taxes 16,615 19,403
Other noncurrent liabilities 18,212 21,486
 
Total liabilities 806,289 784,145
 
Total Mueller Industries, Inc. stockholders’ equity 548,356 522,111
Noncontrolling interests 14,904 13,917
 
Total equity 563,260 536,028
 
$ 1,369,549 $ 1,320,173
 
 
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Year Ended
(In thousands)

December 29,
2018

 

December 30,
2017

 
Cash flows from operating activities
Consolidated net income $ 106,820 $ 87,011
Reconciliation of consolidated net income to net cash provided by operating activities:
Depreciation and amortization 39,873 34,247
Stock-based compensation expense 8,035 7,450
Loss from unconsolidated affiliates 12,645 2,077
Gain on sale of business (1,491 )
Gain on disposals of assets (253 ) (624 )
Insurance proceeds - noncapital related 2,306 500
Insurance recovery (3,681 )
Impairment charges 1,466
Deferred income tax expense (benefit) 170 (3,160 )
Changes in assets and liabilities, net of effects of businesses acquired and sold:
Receivables (11,342 ) (1,779 )
Inventories 27,512 (86,286 )
Other assets 14,353 (5,325 )
Current liabilities (15,680 ) 10,678
Other liabilities (14,769 ) 64
Other, net 1,903   (833 )
 
Net cash provided by operating activities 167,892   43,995  
 
Cash flows from investing activities
Proceeds from sale of assets, net of cash transferred 18,703 31,564
Acquisition of businesses, net of cash acquired (167,677 ) (18,396 )
Capital expenditures (38,481 ) (46,131 )
Insurance proceeds - capital related 1,968
Investment in unconsolidated affiliates (1,609 ) (3,317 )
 
Net cash used in investing activities (187,096 ) (36,280 )
 
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc. (22,705 ) (196,944 )
Dividends paid to noncontrolling interests (592 ) (2,909 )
Issuance of long-term debt 204,233 71,475
Repayments of long-term debt (172,002 ) (111,224 )
Repayment of debt by consolidated joint ventures, net (2,915 ) (3,369 )
Repurchase of common stock (33,562 )
Net cash used to settle stock-based awards (726 ) (1,595 )
 
Net cash used in financing activities (28,269 ) (244,566 )
 
Effect of exchange rate changes on cash (1,952 ) 2,945  
 
Decrease in cash, cash equivalents, and restricted cash (49,425 ) (233,906 )
Cash, cash equivalents, and restricted cash at the beginning of the year 126,563   360,469  
 
Cash, cash equivalents, and restricted cash at the end of the year $ 77,138   $ 126,563  

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