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Mueller Industries, Inc. Reports Third Quarter 2019 Earnings

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

Mueller Industries, Inc. (MLI) announced today third quarter operating income of $46.3 million versus $33.7 million reported in the same quarter of 2018.

Net income was $29.1 million, or 52 cents per diluted share, on $608.6 million in net sales, compared with net income of $20.3 million, or 35 cents per diluted share, on $646.0 million in net sales for the same quarter of 2018.

Financial and Operating Highlights:

  • Lower copper prices contributed to the decline in net sales. COMEX copper fell eight cents per pound during the quarter and was, on average, four percent lower in the third quarter of 2019 compared with the third quarter of 2018.
  • Lower unit volume in both our Piping Systems and Industrial Metals segments further contributed to the reduction in net sales.
  • The effective tax rate for the quarter was 19 percent, compared with 12 percent in the prior year quarter. The rates in both quarters reflect non-recurring adjustments to tax provisions on foreign earnings.
  • We recorded a $1.9 million loss on our investment in Tecumseh Products Company in the third quarter of 2019, which represents a significant narrowing of the loss recorded in the second quarter of 2019.
  • Cash generated from operations was $67.9 million in the third quarter, and debt repayments totaled $40.6 million. Quarter-end cash on hand was $100.3 million, debt to total capitalization was 41 percent, and the current ratio was 3.0 to 1.

Regarding the outlook, Greg Christopher, Mueller CEO said, “The combination of our acquisitions and increased benefits from recent investments in our plants provided meaningful improvements to our results. We remain optimistic that the impact of global uncertainties and recent softness in demand will be mild, but nonetheless believe we are well positioned given our strong cash flow and low leverage, and prepared to react to changing market conditions.”

He added, “With regard to Tecumseh, management is executing the necessary and difficult action plans to restructure this business.”

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 Nine Months Ended

(In thousands, except per share data)

 

September 28,
2019

 

September 29,
2018

 

September 28,
2019

 

September 29,
2018

 

 

 

 

 

 

 

 

 

Net sales

 

$

608,602

 

 

$

645,958

 

 

$

1,886,777

 

 

$

1,948,791

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

510,788

 

 

 

566,956

 

 

 

1,586,129

 

 

 

1,676,446

 

Depreciation and amortization

 

 

10,823

 

 

 

10,619

 

 

 

31,856

 

 

 

29,081

 

Selling, general, and administrative expense

 

 

40,739

 

 

 

38,889

 

 

 

121,838

 

 

 

112,077

 

Gain on sale of assets

 

 

 

(2,691

)

 

 

 

(334

)

Insurance recovery

 

 

 

(1,486

)

 

 

 

(1,486

)

 

 

 

 

 

 

 

 

 

Operating income

 

 

46,252

 

 

 

33,671

 

 

 

146,954

 

 

 

133,007

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(6,148

)

 

 

(6,746

)

 

 

(20,135

)

 

 

(18,728

)

Other income, net

 

 

533

 

 

 

411

 

 

 

823

 

 

 

1,557

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

40,637

 

 

 

27,336

 

 

 

127,642

 

 

 

115,836

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(7,665

)

 

 

(3,373

)

 

 

(27,643

)

 

 

(23,179

)

Loss from unconsolidated affiliates, net of foreign tax

 

 

(2,528

)

 

 

(3,100

)

 

 

(23,740

)

 

 

(13,568

)

 

 

 

 

 

 

 

 

 

Consolidated net income

 

 

30,444

 

 

 

20,863

 

 

 

76,259

 

 

 

79,089

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

 

(1,351

)

 

 

(571

)

 

 

(3,457

)

 

 

(1,487

)

 

 

 

 

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

 

$

29,093

 

 

$

20,292

 

 

$

72,802

 

 

$

77,602

 

 

 

 

 

 

 

 

 

 

Weighted average shares for basic earnings per share

 

 

55,832

 

 

 

56,877

 

 

 

55,771

 

 

 

56,858

 

Effect of dilutive stock-based awards

 

 

482

 

 

 

540

 

 

 

523

 

 

 

524

 

 

 

 

 

 

 

 

 

 

Adjusted weighted average shares for diluted earnings per share

 

 

56,314

 

 

 

57,417

 

 

 

56,294

 

 

 

57,382

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.52

 

 

$

0.36

 

 

$

1.31

 

 

$

1.36

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.52

 

 

$

0.35

 

 

$

1.29

 

 

$

1.35

 

 

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.10

 

 

$

0.10

 

 

$

0.30

 

 

$

0.30

 

 

 

 

 

 

 

 

 

 

Summary Segment Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

Piping Systems Segment

 

$

390,917

 

 

$

410,525

 

 

$

1,193,274

 

 

$

1,294,672

 

Industrial Metals Segment

 

 

135,443

 

 

 

158,709

 

 

 

434,037

 

 

 

511,932

 

Climate Segment

 

 

90,938

 

 

 

81,619

 

 

 

276,853

 

 

 

156,854

 

Elimination of intersegment sales

 

 

(8,696

)

 

 

(4,895

)

 

 

(17,387

)

 

 

(14,667

)

 

 

 

 

 

 

 

 

 

Net sales

 

$

608,602

 

 

$

645,958

 

 

$

1,886,777

 

 

$

1,948,791

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

Piping Systems Segment

 

$

36,010

 

 

$

25,408

 

 

$

100,155

 

 

$

100,376

 

Industrial Metals Segment

 

 

12,599

 

 

 

15,111

 

 

 

46,697

 

 

 

53,837

 

Climate Segment

 

 

7,963

 

 

 

5,774

 

 

 

33,384

 

 

 

16,668

 

Unallocated expenses

 

 

(10,320

)

 

 

(12,622

)

 

 

(33,282

)

 

 

(37,874

)

 

 

 

 

 

 

 

 

 

Operating income

 

$

46,252

 

 

$

33,671

 

 

$

146,954

 

 

$

133,007

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

September 28,
2019

 

December 29,
2018

ASSETS

 

 

 

 

Cash and cash equivalents

 

$

100,338

 

$

72,616

Accounts receivable, net

 

 

319,562

 

 

273,417

Inventories

 

 

277,567

 

 

329,795

Other current assets

 

 

33,242

 

 

26,790

 

 

 

 

 

Total current assets

 

 

730,709

 

 

702,618

 

 

 

 

 

Property, plant, and equipment, net

 

 

361,308

 

 

370,633

Operating lease right-of-use assets

 

 

25,855

 

Other assets

 

 

284,893

 

 

296,298

 

 

 

 

 

 

 

$

1,402,765

 

$

1,369,549

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current portion of debt

 

$

7,387

 

$

7,101

Accounts payable

 

 

102,084

 

 

103,754

Current portion of operating lease liabilities

 

 

3,832

 

Other current liabilities

 

 

133,466

 

 

121,946

 

 

 

 

 

Total current liabilities

 

 

246,769

 

 

232,801

 

 

 

 

 

Long-term debt

 

 

434,082

 

 

489,597

Pension and postretirement liabilities

 

 

27,399

 

 

29,055

Environmental reserves

 

 

19,774

 

 

20,009

Deferred income taxes

 

 

17,260

 

 

16,615

Noncurrent operating lease liabilities

 

 

22,712

 

Other noncurrent liabilities

 

 

10,173

 

 

18,212

 

 

 

 

 

Total liabilities

 

 

778,169

 

 

806,289

 

 

 

 

 

Total Mueller Industries, Inc. stockholders’ equity

 

 

607,648

 

 

548,356

Noncontrolling interests

 

 

16,948

 

 

14,904

 

 

 

 

 

Total equity

 

 

624,596

 

 

563,260

 

 

 

 

 

 

 

$

1,402,765

 

$

1,369,549

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

For the Nine Months Ended

(In thousands)

 

September 28,
2019

 

September 29,
2018

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

Consolidated net income

 

$

76,259

 

 

$

79,089

 

Reconciliation of consolidated net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

32,095

 

 

29,320

 

Stock-based compensation expense

 

6,355

 

 

5,953

 

Loss from unconsolidated affiliates

 

23,740

 

 

13,568

 

Gain on disposals of properties

 

(24

)

 

(247

)

Insurance recovery

 

 

 

(1,486

)

Change in fair value of contingent consideration

 

4,500

 

 

 

Deferred income tax benefit

 

(1,593

)

 

(1,502

)

Changes in assets and liabilities, net of effects of business acquired:

 

 

 

 

Receivables

 

(47,433

)

 

(42,201

)

Inventories

 

50,985

 

 

48,716

 

Other assets

 

(7,485

)

 

11,250

 

Current liabilities

 

1,687

 

 

(7,947

)

Other liabilities

 

(7,112

)

 

(13,862

)

Other, net

 

(47

)

 

1,864

 

 

 

 

 

 

Net cash provided by operating activities

 

131,927

 

 

122,515

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

(20,162

)

 

(16,685

)

Acquisition of business, net of cash acquired

 

3,465

 

 

(167,677

)

Investments in unconsolidated affiliates

 

(11,000

)

 

(609

)

Proceeds from sales of properties

 

385

 

 

18,693

 

 

 

 

 

 

Net cash used in investing activities

 

(27,312

)

 

(166,278

)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Dividends paid to stockholders of Mueller Industries, Inc.

 

(16,738

)

 

(17,051

)

Repurchase of common stock

 

(1,763

)

 

(6,575

)

Payment of contingent consideration

 

(3,170

)

 

 

Issuance of long-term debt

 

100,658

 

 

194,131

 

Repayments of long-term debt

 

(151,305

)

 

(139,518

)

Repayment of debt by consolidated joint ventures, net

 

(4,352

)

 

(2,978

)

Net cash used to settle stock-based awards

 

(1,069

)

 

(726

)

Dividends paid to noncontrolling interests

 

 

 

(592

)

 

 

 

 

 

Net cash (used in) provided by financing activities

 

(77,739

)

 

26,691

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(1,511

)

 

(442

)

 

 

 

 

 

Increase (decrease) in cash, cash equivalents, and restricted cash

 

25,365

 

 

(17,514

)

Cash, cash equivalents, and restricted cash at the beginning of the period

 

77,138

 

 

126,563

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash at the end of the period

 

$

102,503

 

 

$

109,049

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20191022005240/en/