| FOR IMMEDIATE RELEASE | Contact: | Kent A. McKee |
| Memphis, TN—October 20, 2009 | | (901) 753-3208 |
MUELLER INDUSTRIES, INC. REPORTS
THIRD QUARTER RESULTS
Quarterly and Year-to-Date Earnings
Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), today announced the Company’s results for the third quarter of 2009. For the three months ended September 26, 2009, net income was $18.7 million, or 50 cents per diluted share, on net sales of $419.9 million. For the third quarter of 2008, the Company posted net income of $18.7 million, or 50 cents per diluted share, on net sales of $665.5 million.
Year-to-date, the Company earned $22.2 million, or 59 cents per diluted share, compared with net income of $73.0 million, or $1.96 per diluted share, for the same period of 2008. Net sales for the first nine months of 2009 were $1.11 billion which compares with net sales of $2.12 billion for the same period a year ago.
Net sales of the Company’s core product lines including copper tube, fittings, brass rod and forgings were substantially affected by the lower market values of copper and brass, the Company’s principal raw materials, which are largely passed through to customers. In the third quarter of 2009, the Comex average price of copper was 23 percent lower than in the third quarter of 2008. In addition, unit volumes of most of the Company’s core product lines were well below year ago levels.
Mr. Karp said, “Our cost control initiatives have helped to mitigate the impact of weak demand in the residential and commercial construction sectors. We expect challenging market conditions will continue into next year. “
Financial and Operating Highlights
Regarding the third quarter of 2009, Mr. Karp said:
| | · | “We continue to generate cash by intensively managing working capital and monitoring capital expenditures. Mueller ended the quarter with $353.9 million in cash, or $9.40 per share. Our financial position remains strong. |
| | · | “Total stockholders’ equity was $737.8 million which equates to a book value per share of $19.60. |
| | · | “Mueller’s current ratio remains excellent at 4.4 to 1 and our working capital is $608.8 million. Leverage is conservative with a ratio of debt to total capitalization at 18.8 percent. |
| | · | “The Comex average price of copper was $2.67 per pound in the third quarter of 2009, which compares with $3.45 per pound in the third quarter of 2008. |
| | · | “Our Plumbing & Refrigeration segment posted operating earnings of $16.0 million on net sales of $240.9 million compared with operating earnings of $25.4 million on net sales of $371.3 million in the third quarter of 2008. Due to lower throughput volumes, we experienced higher per unit conversion costs. |
| | · | “Our OEM segment posted operating earnings of $16.5 million during the third quarter of 2009 on net sales of $181.6 million, which compared with operating earnings of $10.6 million on net sales of $299.5 million for the same period in 2008.” |
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 which 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 Nine Months Ended | |
| | | September 26, | | | September 27, | | | September 26, | | | September 27, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | (Unaudited) | | | (Unaudited) | |
| | | | | | | | | | | | | |
| Net sales | | $ | 419,890 | | | $ | 665,496 | | | $ | 1,114,248 | | | $ | 2,123,075 | |
| | | | | | | | | | | | | | | �� | | |
| Cost of goods sold | | | 354,039 | | | | 588,469 | | | | 954,775 | | | | 1,861,475 | |
| Depreciation and amortization | | | 10,441 | | | | 11,529 | | | | 31,276 | | | | 33,517 | |
| Selling, general, and administrative expense | | | 27,593 | | | | 35,674 | | | | 89,067 | | | | 108,583 | |
| | | | | | | | | | | | | | | | | |
| Operating income | | | 27,817 | | | | 29,824 | | | | 39,130 | | | | 119,500 | |
| | | | | | | | | | | | | | | | | |
| Interest expense | | | (2,435 | ) | | | (5,050 | ) | | | (7,553 | ) | | | (15,755 | ) |
| Other (expense) income, net | | | (324 | ) | | | 2,573 | | | | 688 | | | | 9,103 | |
| | | | | | | | | | | | | | | | | |
| Income before income taxes | | | 25,058 | | | | 27,347 | | | | 32,265 | | | | 112,848 | |
| Income tax expense | | | (6,246 | ) | | | (8,422 | ) | | | (9,796 | ) | | | (37,992 | ) |
| | | | | | | | | | | | | | | | | |
| Consolidated net income | | | 18,812 | | | | 18,925 | | | | 22,469 | | | | 74,856 | |
| | | | | | | | | | | | | | | | | |
| Less: net income attributable to noncontrolling interest | | | (146 | ) | | | (254 | ) | | | (267 | ) | | | (1,816 | ) |
| | | | | | | | | | | | | | | | | |
| Net income attributable to Mueller Industries, Inc. | | $ | 18,666 | | | $ | 18,671 | | | $ | 22,202 | | | $ | 73,040 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares for basic earnings per share | | | 37,474 | | | | 37,136 | | | | 37,253 | | | | 37,117 | |
| Effect of dilutive stock options | | | 72 | | | | 176 | | | | 89 | | | | 238 | |
| | | | | | | | | | | | | | | | | |
| Adjusted weighted average shares for diluted earnings per share | | | 37,546 | | | | 37,312 | | | | 37,342 | | | | 37,355 | |
| | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.50 | | | $ | 0.50 | | | $ | 0.60 | | | $ | 1.97 | |
| | | | | | | | | | | | | | | | | |
| Diluted earnings per share | | $ | 0.50 | | | $ | 0.50 | | | $ | 0.59 | | | $ | 1.96 | |
| | | | | | | | | | | | | | | | | |
| Dividends per share | | $ | 0.10 | | | $ | 0.10 | | | $ | 0.30 | | | $ | 0.30 | |
| | | | | | | | | | | | | | | | | |
| Summary Segment Data: | | | | | | | | | | | | | | | | |
| Net sales: | | | | | | | | | | | | | | | | |
| Plumbing & Refrigeration Segment | | $ | 240,878 | | | $ | 371,315 | | | $ | 661,035 | | | $ | 1,159,613 | |
| OEM Segment | | | 181,621 | | | | 299,470 | | | | 459,898 | | | | 979,665 | |
| Elimination of intersegment sales | | | (2,609 | ) | | | (5,289 | ) | | | (6,685 | ) | | | (16,203 | ) |
| | | | | | | | | | | | | | | | | |
| Net sales | | $ | 419,890 | | | $ | 665,496 | | | $ | 1,114,248 | | | $ | 2,123,075 | |
| | | | | | | | | | | | | | | | | |
| Operating income: | | | | | | | | | | | | | | | | |
| Plumbing & Refrigeration Segment | | $ | 15,986 | | | $ | 25,449 | | | $ | 38,199 | | | $ | 85,903 | |
| OEM Segment | | | 16,530 | | | | 10,643 | | | | 18,315 | | | | 55,180 | |
| Unallocated expenses | | | (4,699 | ) | | | (6,268 | ) | | | (17,384 | ) | | | (21,583 | ) |
| | | | | | | | | | | | | | | | | |
| Operating income | | $ | 27,817 | | | $ | 29,824 | | | $ | 39,130 | | | $ | 119,500 | |
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| | | September 26, | | | December 27, | |
| | | 2009 | | | 2008 | |
| | | (Unaudited) | |
| ASSETS | | | | | | |
| Cash and cash equivalents | | $ | 353,874 | | | $ | 278,860 | |
| Accounts receivable, net | | | 225,316 | | | | 219,035 | |
| Inventories | | | 178,372 | | | | 210,609 | |
| Other current assets | | | 30,327 | | | | 46,322 | |
| Total current assets | | | 787,889 | | | | 754,826 | |
| | | | | | | | | |
| Property, plant, and equipment, net | | | 258,278 | | | | 276,927 | |
| Other assets | | | 151,429 | | | | 151,160 | |
| | | | | | | | | |
| | | $ | 1,197,596 | | | $ | 1,182,913 | |
| | | | | | | | | |
| LIABILITIES AND EQUITY | | | | | | | | |
| Current portion of debt | | $ | 12,372 | | | $ | 24,184 | |
| Accounts payable | | | 70,380 | | | | 63,732 | |
| Other current liabilities | | | 96,346 | | | | 113,668 | |
| Total current liabilities | | | 179,098 | | | | 201,584 | |
| | | | | | | | | |
| Long-term debt, less current portion | | | 158,226 | | | | 158,726 | |
| Pension and postretirement liabilities | | | 39,180 | | | | 38,452 | |
| Environmental reserves | | | 23,090 | | | | 23,248 | |
| Deferred income taxes | | | 33,435 | | | | 33,940 | |
| Other noncurrent liabilities | | | 1,401 | | | | 1,698 | |
| | | | | | | | | |
| Total liabilities | | | 434,430 | | | | 457,648 | |
| | | | | | | | | |
| Total Mueller Industries, Inc. stockholders' equity | | | 737,799 | | | | 700,683 | |
| Noncontrolling interest | | | 25,367 | | | | 24,582 | |
| | | | | | | | | |
| Total equity | | | 763,166 | | | | 725,265 | |
| | | | | | | | | |
| | | $ | 1,197,596 | | | $ | 1,182,913 | |
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| | | For the Nine Months Ended | |
| | | September 26, | | | September 27, | |
| | | 2009 | | | 2008 | |
| | | (Unaudited) | |
| Operating activities: | | | | | | |
| Net income attributable to Mueller Industries, Inc. | | $ | 22,202 | | | $ | 73,040 | |
| Reconciliation of net income attributable to Mueller Industries, | | | | | | | | |
| Inc. to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 31,440 | | | | 33,984 | |
| Gain on early retirement of debt | | | (128 | ) | | | (2,482 | ) |
| Net income attributable to noncontrolling interest | | | 267 | | | | 1,816 | |
| Stock-based compensation expense | | | 1,892 | | | | 2,238 | |
| Loss on disposal of properties | | | 975 | | | | 306 | |
| Deferred income taxes | | | (2,012 | ) | | | (515 | ) |
| Income tax benefit from exercise of stock options | | | (189 | ) | | | (92 | ) |
| Changes in assets and liabilities: | | | | | | | | |
| Receivables | | | (3,030 | ) | | | (29,130 | ) |
| Inventories | | | 35,339 | | | | 6,635 | |
| Other assets | | | 4,152 | | | | (5,350 | ) |
| Current liabilities | | | (6,229 | ) | | | (16,027 | ) |
| Other liabilities | | | (337 | ) | | | 784 | |
| Other, net | | | 17 | | | | (719 | ) |
| | | | | | | | | |
| Net cash provided by operating activities | | | 84,359 | | | | 64,488 | |
| | | | | | | | | |
| Investing activities: | | | | | | | | |
| Capital expenditures | | | (11,002 | ) | | | (17,871 | ) |
| Net withdrawals from restricted cash balances | | | 12,806 | | | | 678 | |
| Proceeds from sales of properties | | | 611 | | | | 77 | |
| | | | | | | | | |
| Net cash provided by (used in) investing activities | | | 2,415 | | | | (17,116 | ) |
| | | | | | | | | |
| Financing activities: | | | | | | | | |
| Repayments of long-term debt | | | (370 | ) | | | (23,650 | ) |
| Dividends paid to stockholders of Mueller Industries, Inc. | | | (11,186 | ) | | | (11,133 | ) |
| Dividends paid to noncontrolling interests | | | (1,449 | ) | | | - | |
| Repayment of debt by joint venture, net | | | (11,813 | ) | | | (12,491 | ) |
| Issuance of shares under incentive stock option plans | | | | | | | | |
| from treasury | | | 8,678 | | | | 1,074 | |
| Income tax benefit from exercise of stock options | | | 189 | | | | 92 | |
| Acquisition of treasury stock | | | (416 | ) | | | (31 | ) |
| | | | | | | | | |
| Net cash used in financing activities | | | (16,367 | ) | | | (46,139 | ) |
| | | | | | | | | |
| Effect of exchange rate changes on cash | | | 4,607 | | | | (1,500 | ) |
| | | | | | | | | |
| Increase (decrease) in cash and cash equivalents | | | 75,014 | | | | (267 | ) |
| Cash and cash equivalents at the beginning of the period | | | 278,860 | | | | 308,618 | |
| | | | | | | | | |
| Cash and cash equivalents at the end of the period | | $ | 353,874 | | | $ | 308,351 | |
