Exhibit 19.1
To Our Stockholders, Customers, and Employees
Mueller's net income in the first quarter of 2008 increased forty-five
percent to $27.4 million, or 73 cents per diluted share. This compares with
$18.9 million, or 51 cents per diluted share, for the same period of 2007.
First quarter net sales for 2008 were $704.1 million compared with $609.8
million in 2007. 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 $3.53 per pound in the first quarter of 2008,
which compares with $2.70 in the first quarter of 2007.
Our Plumbing & Refrigeration segment posted operating earnings of $25.1
million on net sales of $383.9 million, which compares with prior year
earnings of $26.9 million on net sales of $370.0 million. Operating results
were affected by lower unit volumes and spreads in copper tube and DWV
plastic fittings. Other key product lines performed well.
Our OEM segment posted operating earnings of $25.6 million during the
first quarter of 2008 on net sales of $326.2 million, which compares with
operating earnings of $5.5 million on net sales of $243.7 million for the
same period in 2007. The acquisition of Extruded Metals, a brass rod mill,
at the end of February 2007, was an important contributor to the improvement
in our operating income during the quarter. We believe there are additional
opportunities to rationalize production as we integrate our brass rod mill
operations.
The housing construction market continues to contract. Housing starts
have already declined almost 60 percent over the past 2 1/2 years. However,
we believe the market is close to a bottom, and that it will soon commence a
gradual, but perhaps fitful, improvement. Mortgage rates remain at
historically low levels and will provide an incentive for buyers to return to
the housing market.
On the other hand, the private non-residential construction market, an
important market for Mueller, continues to show strength. So far this year
it has grown at an annualized rate of 13 percent.
Economists are divided over whether our nation has entered into a
recession. If, in fact, we are in a recession, our goal is to emerge from
the downturn, a stronger and more formidable competitor.
As you know, the undersigned, Bill O'Hagan, Chief Executive Officer, has
recently been successfully treated for lung cancer that is presently in
remission. My rehabilitation treatments are going well and I look forward to
seeing you in Memphis at our Annual Meeting of Stockholders scheduled for
May 1, 2008.
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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 22, 2008
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.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Quarter Ended
March 29, 2008 March 31, 2007
(Unaudited)
Net sales $ 704,108 $ 609,782
Cost of goods sold 611,797 536,578
Depreciation and amortization 10,984 10,966
Selling, general, and
administrative expense 38,291 34,927
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Operating income 43,036 27,311
Interest expense (5,467) (5,494)
Other income, net 4,017 4,953
---------- ----------
Income before taxes 41,586 26,770
Income tax expense (14,231) (7,857)
---------- ----------
Net income $ 27,355 $ 18,913
========== ==========
Basic earnings per share:
Weighted average shares
outstanding 37,089 37,027
========== ==========
Basic earnings per share $ 0.74 $ 0.51
========== ==========
Diluted earnings per share:
Weighted average shares
outstanding plus assumed
conversions 37,281 37,144
========== ==========
Diluted earnings per share $ 0.73 $ 0.51
========== ==========
Dividends per share $ 0.10 $ 0.10
========== ==========
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CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 29, 2008 December 29, 2007
(Unaudited)
Assets
Cash and cash equivalents $ 274,280 $ 308,618
Accounts receivable, net 386,607 323,003
Inventories 273,596 269,032
Other current assets 47,256 39,694
---------- ----------
Total current assets 981,739 940,347
Property, plant, and equipment, net 306,982 308,383
Other assets 201,250 200,474
---------- ----------
$ 1,489,971 $ 1,449,204
========== ==========
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 69,885 $ 72,743
Accounts payable 151,840 140,497
Other current liabilities 125,113 121,813
---------- ----------
Total current liabilities 346,838 335,053
Long-term debt, less current portion 282,242 281,738
Pension and postretirement liabilities 35,803 36,071
Environmental reserves 8,893 8,897
Deferred income taxes 52,287 52,156
Other noncurrent liabilities 1,949 2,029
---------- ----------
Total liabilities 728,012 715,944
Minority interest in subsidiaries 24,171 22,765
Stockholders' equity 737,788 710,495
---------- ----------
$ 1,489,971 $ 1,449,204
========== ==========
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