Exhibit 19.1
To Our Stockholders, Customers, and Employees
Mueller's net income in the first quarter of 2007 was $18.9 million, or
51 cents per diluted share, which compares with $33.4 million, or 90 cents
per diluted share, for the same period of 2006. First quarter net sales for
2007 were $609.8 million compared with $551.0 million in 2006. The increase
in net sales was primarily attributable to acquired businesses. The change
in net sales was also affected by the increased cost of copper, the
Company's principal raw material, which was largely passed through to
customers, offset by lower unit volume. The COMEX average price of copper
was $2.70 per pound in the first quarter of 2007, which compares with $2.25
in the first quarter of 2006.
Our Plumbing & Refrigeration segment posted operating earnings of $26.9
million on net sales of $370.0 million, which compares with prior year
earnings of $44.2 million on net sales of $386.9 million. Operating margins
were affected by higher unit costs on lower production volume. Net sales
for the Trading Group trended up but operating income was off slightly.
European results overall were profitable on the strength of our trading
businesses which continue to perform well.
Our OEM segment posted operating earnings of $5.5 million during the
first quarter of 2007 on net sales of $243.7 million, which compares with
operating earnings of $11.0 million on net sales of $168.0 million for the
same period in 2006. Our Chinese joint venture reported total operating
income of $1.7 million.
We completed the acquisition of Extruded Metals, a brass rod mill, at
the end of February; their results are included in the OEM segment. We are
presently rationalizing production with particular emphasis on casting
operations. Operations have already been accretive to earnings; however,
there are opportunities for additional improvement as we integrate the brass
mill operations.
The housing construction market is undergoing a much anticipated
correction which has dampened demand for certain of our products. However,
we believe this market will improve later this year or early next year. On
the other hand, the commercial construction market remains strong.
Very Truly Yours,
/s/Harvey L. Karp /s/William D. O'Hagan
Harvey L. Karp William D. O'Hagan
Chairman of the Board President and Chief Executive Officer
April 24, 2007
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, market demand, pricing, and competitive and technological factors,
among others, as set forth in the Company's SEC filings.
-1-
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Quarter Ended
March 31, 2007 April 1, 2006
(Unaudited)
Net sales $ 609,782 $ 551,039
Cost of goods sold 536,578 457,069
Depreciation and amortization 10,966 10,195
Selling, general, and
administrative expense 34,927 34,959
---------- ----------
Operating income 27,311 48,816
Interest expense (5,494) (4,862)
Other income, net 4,953 2,013
---------- ----------
Income before taxes 26,770 45,967
Income tax expense (7,857) (12,602)
---------- ----------
Net income $ 18,913 $ 33,365
========== ==========
Basic earnings per share:
Weighted average shares
outstanding 37,027 36,691
========== ==========
Basic earnings per share $ 0.51 $ 0.91
========== ==========
Diluted earnings per share:
Weighted average shares
outstanding plus assumed
conversions 37,144 37,081
========== ==========
Diluted earnings per share $ 0.51 $ 0.90
========== ==========
Dividends per share $ 0.10 $ 0.10
========== ==========
-2-
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, 2007 December 30, 2006
(Unaudited)
Assets
Cash and cash equivalents $ 194,489 $ 200,471
Accounts receivable, net 370,957 281,679
Inventories 218,980 258,647
Other current assets 32,981 35,397
---------- ----------
Total current assets 817,407 776,194
Property, plant, and equipment, net 328,742 315,064
Other assets 187,438 177,649
---------- ----------
$ 1,333,587 $ 1,268,907
========== ==========
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 34,555 $ 35,998
Accounts payable 136,888 96,095
Other current liabilities 124,386 123,426
---------- ----------
Total current liabilities 295,829 255,519
Long-term debt 308,130 308,154
Pension and postretirement liabilities 47,447 36,599
Environmental reserves 9,197 8,907
Deferred income taxes 43,716 46,408
Other noncurrent liabilities 2,007 2,206
---------- ----------
Total liabilities 706,326 657,793
Minority interest in subsidiaries 22,994 22,300
Stockholders' equity 604,267 588,814
---------- ----------
$ 1,333,587 $ 1,268,907
========== ==========
-3-