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| 8-K - MUELLER INDUSTRIES INC | v229695_8k.htm |
Mueller Industries, Inc. Reports Forty-Four Percent Increase in Second Quarter 2011 Earnings
MEMPHIS, Tenn., July 26, 2011 /PRNewswire/ -- Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), announced today that Mueller's net income in the second quarter of 2011 was $22.3 million, or 59 cents per diluted share. This compares with net income of $15.6 million, or 41 cents per diluted share, for the same period of 2010. Net sales for the second quarter of 2011 were $652.9 million compared with $540.4 million in the second quarter of 2010.
For the first half of 2011, net income was $62.9 million, or $1.65 per diluted share, on net sales of $1.34 billion. This compares with net income of $49.5 million, or $1.31 per diluted share, on net sales of $1.03 billion for the first half of 2010. The year-to-date results of both 2011 and 2010 include unusual items in net income. For the 2011 period, income of 18 cents per diluted share was included, resulting from the favorable settlement of a legal action. And, in 2010, income of 58 cents per diluted share was included in net income, resulting from an insurance claim. Excluding these unusual items, Mueller's net income for the first half of 2011 was $56.1 million, or $1.47 per diluted share, compared with $27.6 million, or 73 cents per diluted share, for the first half of 2010.
Financial and Operating Highlights
Regarding the second quarter of 2011, Mr. Karp said:
- "Our Plumbing & Refrigeration segment posted operating earnings of $24.8 million on net sales of $347.1 million which compares with prior year earnings of $19.7 million on net sales of $285.7 million. Improved results were due to better spreads.
- "Our OEM segment posted operating earnings of $18.8 million during the second quarter of 2011 on net sales of $314.1 million, which compares with operating earnings of $16.9 million on net sales of $257.8 million for the same period in 2010.
- "Our financial condition remains strong. We ended the quarter with $345.0 million in cash equal to $9.11 per share. In preparation for a major maintenance program at our Fulton, Mississippi, copper tube mill, we increased inventory by more than 15 million pounds to ensure uninterrupted supply for our customers; accordingly, we used in excess of $60 million cash to fund this temporary bulge in inventory quantities.
- "Total stockholders' equity was $854.3 million.
- "Our current ratio was 4.4 to 1, and our financial leverage is conservative with a debt to total capitalization ratio of 19 percent.
- "The Comex average price of copper was $4.16 per pound in the second quarter of 2011, which compares with $3.19 in the second quarter of 2010. Higher selling prices due to rising material values accounted for approximately $90 million of the increase in net sales primarily in the Plumbing & Refrigeration segment."
Business Outlook
Regarding the outlook, Mr. Karp said, "The construction industry continues to struggle in the face of high unemployment, foreclosures, and a weak economic recovery. Nonetheless, we believe we are at or near the cyclical lows. We are well prepared to ramp-up production when the recovery gains momentum. Mueller's performance in the first half was gratifying."
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 | |||||||
July 2, | June 26, | July 2, | June 26, | |||||
2011 | 2010 | 2011 | 2010 | |||||
(Unaudited) | (Unaudited) | |||||||
Net sales | $ 652,923 | $ 540,388 | $ 1,340,604 | $ 1,025,656 | ||||
Cost of goods sold | 573,877 | 466,645 | 1,163,751 | 879,693 | ||||
Depreciation and amortization | 9,166 | 10,090 | 18,865 | 20,438 | ||||
Selling, general, and administrative expense | 33,330 | 33,468 | 68,699 | 70,791 | ||||
Litigation settlement | - | - | (10,500) | - | ||||
Insurance settlement | - | 1,210 | - | (21,296) | ||||
Operating income | 36,550 | 28,975 | 99,789 | 76,030 | ||||
Interest expense | (2,834) | (2,964) | (6,182) | (5,496) | ||||
Other income (expense), net | 264 | (2,518) | 1,323 | (2,378) | ||||
Income before income taxes | 33,980 | 23,493 | 94,930 | 68,156 | ||||
Income tax expense | (11,249) | (7,456) | (31,657) | (17,320) | ||||
Consolidated net income | 22,731 | 16,037 | 63,273 | 50,836 | ||||
Net income attributable to noncontrolling interest | (400) | (479) | (355) | (1,320) | ||||
Net income attributable to Mueller Industries, Inc. | $ 22,331 | $ 15,558 | $ 62,918 | $ 49,516 | ||||
Weighted average shares | ||||||||
for basic earnings per share | 37,737 | 37,674 | 37,730 | 37,631 | ||||
Effect of dilutive stock-based awards | 356 | 43 | 309 | 69 | ||||
Adjusted weighted average shares | ||||||||
for diluted earnings per share | 38,093 | 37,717 | 38,039 | 37,700 | ||||
Basic earnings per share | $ 0.59 | $ 0.41 | $ 1.67 | $ 1.32 | ||||
Diluted earnings per share | $ 0.59 | $ 0.41 | $ 1.65 | $ 1.31 | ||||
Dividends per share | $ 0.10 | $ 0.10 | $ 0.20 | $ 0.20 | ||||
Summary Segment Data: | ||||||||
Net sales: | ||||||||
Plumbing & Refrigeration Segment | $ 347,069 | $ 285,717 | $ 727,658 | $ 542,379 | ||||
OEM Segment | 314,086 | 257,780 | 633,422 | 489,984 | ||||
Elimination of intersegment sales | (8,232) | (3,109) | (20,476) | (6,707) | ||||
Net sales | $ 652,923 | $ 540,388 | $ 1,340,604 | $ 1,025,656 | ||||
Operating income: | ||||||||
Plumbing & Refrigeration Segment | $ 24,790 | $ 19,740 | $ 54,473 | $ 60,199 | ||||
OEM Segment | 18,816 | 16,932 | 48,462 | 33,063 | ||||
Unallocated expenses | (7,056) | (7,697) | (3,146) | (17,232) | ||||
Operating income | $ 36,550 | $ 28,975 | $ 99,789 | $ 76,030 | ||||
MUELLER INDUSTRIES, INC. | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(In thousands) | ||||
July 2, | December 25, | |||
2011 | 2010 | |||
(Unaudited) | ||||
ASSETS | ||||
Cash and cash equivalents | $ 345,039 | $ 394,139 | ||
Accounts receivable, net | 327,381 | 269,258 | ||
Inventories | 296,999 | 209,892 | ||
Other current assets | 47,144 | 39,025 | ||
Total current assets | 1,016,563 | 912,314 | ||
Property, plant, and equipment, net | 223,234 | 229,498 | ||
Other assets | 118,747 | 117,184 | ||
$ 1,358,544 | $ 1,258,996 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current portion of debt | $ 50,582 | $ 32,020 | ||
Accounts payable | 86,574 | 67,849 | ||
Other current liabilities | 94,496 | 95,258 | ||
Total current liabilities | 231,652 | 195,127 | ||
Long-term debt | 156,976 | 158,226 | ||
Pension and postretirement liabilities | 40,558 | 40,939 | ||
Environmental reserves | 23,232 | 23,902 | ||
Deferred income taxes | 21,813 | 24,081 | ||
Other noncurrent liabilities | 1,877 | 824 | ||
Total liabilities | 476,108 | 443,099 | ||
Total Mueller Industries, Inc. stockholders' equity | 854,305 | 788,736 | ||
Noncontrolling interest | 28,131 | 27,161 | ||
Total equity | 882,436 | 815,897 | ||
$ 1,358,544 | $ 1,258,996 | |||
MUELLER INDUSTRIES, INC. | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(In thousands) | ||||||
For the Six Months Ended | ||||||
July 2, | June 26, | |||||
2011 | 2010 | |||||
(Unaudited) | ||||||
Operating activities: | ||||||
Consolidated net income | $ 63,273 | $ 50,836 | ||||
Reconciliation of net income to net cash (used in) | ||||||
provided by operating activities: | ||||||
Depreciation and amortization | 18,999 | 20,554 | ||||
Stock-based compensation expense | 1,712 | 1,435 | ||||
(Gain) loss on disposal of properties | (275) | 164 | ||||
Insurance settlement | - | (21,296) | ||||
Insurance proceeds - noncapital related | - | 5,561 | ||||
Deferred income taxes | (2,549) | (4,370) | ||||
Income tax benefit from exercise of stock options | (90) | (88) | ||||
Changes in assets and liabilities, net of business acquired: | ||||||
Receivables | (55,010) | (60,819) | ||||
Inventories | (78,966) | 4,796 | ||||
Other assets | (4,398) | 6,979 | ||||
Current liabilities | 17,199 | 26,129 | ||||
Other liabilities | 768 | 2,870 | ||||
Other, net | 433 | (363) | ||||
Net cash (used in) provided by operating activities | (38,904) | 32,388 | ||||
Investing activities: | ||||||
Capital expenditures | (8,743) | (9,286) | ||||
Acquisition of business | (6,882) | - | ||||
Insurance proceeds | - | 17,703 | ||||
Proceeds from sales of properties | 151 | 23 | ||||
Net (deposits into) withdrawals from restricted cash balances | (3,877) | 11 | ||||
Net cash (used in) provided by investing activities | (19,351) | 8,451 | ||||
Financing activities: | ||||||
Dividends paid | (7,546) | (7,529) | ||||
Debt issuance costs | (1,942) | - | ||||
Issuance of shares under stock-based incentive plans | ||||||
from treasury | 1,335 | 2,465 | ||||
Income tax benefit from exercise of stock options | 90 | 88 | ||||
Acquisition of treasury stock | (743) | (75) | ||||
Repayments of long-term debt | (250) | - | ||||
Issuance of debt by joint venture, net | 16,498 | 16,431 | ||||
Net cash provided by financing activities | 7,442 | 11,380 | ||||
Effect of exchange rate changes on cash | 1,713 | (1,065) | ||||
(Decrease) increase in cash and cash equivalents | (49,100) | 51,154 | ||||
Cash and cash equivalents at the beginning of the period | 394,139 | 346,001 | ||||
Cash and cash equivalents at the end of the period | $ 345,039 | $ 397,155 | ||||
MUELLER INDUSTRIES, INC. | ||||||
RECONCILIATION OF NET INCOME AS REPORTED | ||||||
TO NET INCOME BEFORE LITIGATION SETTLEMENT AND INSURANCE SETTLEMENT | ||||||
(In thousands, except per share data) | ||||||
Earnings without the litigation settlement in 2011 and without the insurance settlement in 2010 is a measurement not derived in accordance with generally accepted accounting principles (GAAP). Excluding the litigation settlement and insurance 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 litigation settlement resulted from the collection of proceeds from the lawsuit against Peter Berkman, Jeffrey Berkman, and Homewerks Worldwide LLC. The insurance settlement resulted from the final settlement for losses claimed as a result of a fire at our U.K. subsidiary in November 2008, the results of which are not impacted by daily operations and are not expected to recur in future periods. Reconciliations of earnings without the litigation settlement and insurance settlement to net income as reported are as follows: | ||||||
For the Six Months Ended July 2, 2011 | ||||||
Pro forma | ||||||
Impact of | Without | |||||
As | Litigation | Litigation | ||||
Reported | Settlement | Settlement | ||||
(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 | |||
For the Six Months Ended June 26, 2010 | ||||||
Pro forma | ||||||
Impact of | Without | |||||
As | Insurance | Insurance | ||||
Reported | Settlement | Settlement | ||||
(Unaudited) | ||||||
Operating income | $ 76,030 | $ (21,296) | $ 54,734 | |||
Interest expense | (5,496) | - | (5,496) | |||
Other expense, net | (2,378) | - | (2,378) | |||
Income before income taxes | 68,156 | (21,296) | 46,860 | |||
Income tax expense (Note A) | (17,320) | (618) | (17,938) | |||
Consolidated net income | 50,836 | (21,914) | 28,922 | |||
Net income attributable to noncontrolling interest | (1,320) | - | (1,320) | |||
Net income attributable to Mueller Industries, Inc. | $ 49,516 | $ (21,914) | $ 27,602 | |||
Diluted earnings per share | $ 1.31 | $ (0.58) | $ 0.73 | |||
(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. | ||||||
CONTACT: Kent A. McKee, +1-901-753-3208