Mueller Industries, Inc. Reports Third Quarter Results
MEMPHIS, Tenn., Oct. 23 /PRNewswire-FirstCall/ --
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 2007. Net income for
the third quarter was $31.3 million, or 84 cents per diluted share, which
compares with net income of $51.6 million, or $1.38 per diluted share, for the
third quarter of fiscal 2006. Net sales for the three months ended September 29,
2007 were $693.7 million, compared with net sales of $636.0 million for the
third quarter of 2006. The third quarter of 2007 includes a one-time gain of
approximately $8.9 million (pre-tax) pertaining to a copper antitrust litigation
settlement.
Year-to-date, the Company earned $86.6 million, or $2.33 per diluted
share, on net sales of $2.08 billion. This compares with net income from
continuing operations of $143.7 million, or $3.86 per diluted share, on net
sales of $1.97 billion for the same period of 2006.
Financial and Operating Highlights
Regarding the third quarter of 2007, Mr. Karp said:
-- "The COMEX average price of copper was $3.48 per pound in the third
quarter of 2007, which compares with $3.54 per pound in the third
quarter of 2006.
-- "Mueller ended the quarter with $273.2 million in cash.
-- "Our current ratio remains excellent at 3.0 to 1 and our working
capital is $594.3 million.
-- "Our Plumbing & Refrigeration segment posted operating earnings of
$52.3 million on net sales of $397.9 million which compares with
operating earnings of $56.9 million on net sales of $426.3 million
in the third quarter of 2006. These decreases were primarily
attributable to lower selling prices and spreads in copper tube,
partially offset by proceeds from the copper antitrust litigation
settlement.
-- "Our OEM segment posted operating earnings of $5.6 million during
the third quarter of 2007 on net sales of $302.1 million, which
compared with operating earnings of $9.9 million on net sales of
$218.4 million for the same period in 2006. The OEM segment posted
lower operating earnings primarily due to lower margins in brass
rod.
-- "Capital expenditures during the first nine months of 2007 totaled
$22.8 million."
Business Outlook
Mr. Karp said, "We believe the decline in the housing market is nearing a
bottom, and that indicators of a recovery phase will be evident by mid-2008,
then gradually pick up momentum. Meanwhile, the commercial-industrial sector of
the construction industry has been in an upward trend, having grown by fifteen
percent over the year before. Mueller's margins in this sector of our business
have historically been good.
"We have noted that many of our customers have reduced their in-house
inventories of our products, in part due to the volatile copper market. However,
this means that any improvement in our markets will result in immediate business
for Mueller."
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.
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
------------------------- --------------------------
Sept. 29 Sept. 30 Sept. 29 Sept. 30
2007 2006 2007 2006
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
Net sales $ 693,682 $ 635,998 $ 2,076,111 $ 1,966,700
Cost of goods sold 603,219 528,946 1,801,543 1,623,053
----------- ----------- ----------- -----------
Gross profit 90,463 107,052 274,568 343,647
Depreciation and amortization 11,582 10,462 33,854 31,033
Selling, general, and
administrative expense 36,246 34,787 110,144 109,435
Copper antitrust litigation
settlement (8,865) -- (8,865) --
----------- ----------- ----------- -----------
Operating income 51,500 61,803 139,435 203,179
Interest expense (5,384) (5,085) (16,567) (15,161)
Other income, net 4,060 1,452 10,938 3,398
----------- ----------- ----------- -----------
Income before income taxes 50,176 58,170 133,806 191,416
Income tax expense (18,852) (6,591) (47,171) (47,722)
----------- ----------- ----------- -----------
Net income $ 31,324 $ 51,579 $ 86,635 $ 143,694
=========== =========== =========== ===========
Weighted average shares
for basic earnings per share 37,075 36,976 37,054 36,853
Effect of dilutive stock options 234 379 185 396
----------- ----------- ----------- -----------
Adjusted weighted average
shares for diluted earnings per
share 37,309 37,355 37,239 37,249
----------- ----------- ----------- -----------
Basic earnings per share $ 0.84 $ 1.39 $ 2.34 $ 3.90
=========== =========== =========== ===========
Diluted earnings per share $ 0.84 $ 1.38 $ 2.33 $ 3.86
=========== =========== =========== ===========
Summary Segment Data:
Net sales:
Plumbing & Refrigeration
Segment $ 397,855 $ 426,261 $ 1,223,337 $ 1,364,360
OEM Segment 302,122 218,372 868,053 628,472
Elimination of intersegment sales (6,295) (8,635) (15,279) (26,132)
----------- ----------- ----------- -----------
Net sales $ 693,682 $ 635,998 $ 2,076,111 $ 1,966,700
=========== =========== =========== ===========
Operating income:
Plumbing & Refrigeration
Segment $ 52,260 $ 56,863 $ 130,860 $ 179,384
OEM Segment 5,609 9,862 29,102 42,326
Unallocated expenses (6,369) (4,922) (20,527) (18,531)
----------- ----------- ----------- -----------
Operating income $ 51,500 $ 61,803 $ 139,435 $ 203,179
=========== =========== =========== ===========
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 29, December 30,
2007 2006
------------- ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 273,211 $ 200,471
Accounts receivable, net 351,707 281,679
Inventories 231,228 258,647
Other current assets 35,669 35,397
---------- ----------
Total current assets 891,815 776,194
Property, plant, and equipment, net 320,082 315,064
Other assets 189,975 177,649
---------- ----------
$1,401,872 $1,268,907
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 33,669 $ 35,998
Accounts payable 134,569 96,095
Other current liabilities 129,294 123,426
---------- ----------
Total current liabilities 297,532 255,519
Long-term debt 307,988 308,154
Pension and postretirement liabilities 45,220 36,599
Environmental reserves 9,159 8,907
Deferred income taxes 42,030 46,408
Other noncurrent liabilities 1,995 2,206
---------- ----------
Total liabilities 703,924 657,793
Minority interest in subsidiaries 22,419 22,300
Stockholders' equity 675,529 588,814
---------- ----------
$1,401,872 $1,268,907
========== ==========
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Nine Months Ended
------------------------------
September 29, September 30,
2007 2006
------------- -------------
(Unaudited)
Operating activities:
Net income $ 86,635 $ 143,694
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 34,107 31,225
(Gain) loss on disposal of properties (3,114) 1,913
Deferred income taxes (3,026) (11,193)
Share-based compensation expense 1,975 2,041
Minority interest in
subsidiaries, net of dividend paid (644) 2,526
Income tax benefit from exercise
of stock options (130) (1,217)
Gain on sale of equity investment -- (1,876)
Equity in earnings of
unconsolidated subsidiary -- (964)
Gain on early retirement of debt -- (97)
Changes in assets and liabilities,
net of businesses acquired:
Receivables (36,370) (59,227)
Inventories 57,656 (96,979)
Other assets (6,103) (5,340)
Current liabilities 13,669 20,755
Other liabilities 3,754 2,770
Other, net (1,003) (2,987)
--------- ---------
Net cash provided by operating activities 147,406 25,044
--------- ---------
Investing activities:
Capital expenditures (22,776) (32,975)
Acquisition of businesses, net of
cash received (31,970) 3,632
Proceeds from sales of properties and
equity investment 3,033 23,227
--------- ---------
Net cash used in investing activities (51,713) (6,116)
--------- ---------
Financing activities:
Issuance of debt by joint venture 4,506 24,918
Repayments of long-term debt (18,273) (1,922)
Dividends paid (11,117) (11,073)
Issuance of shares under incentive
stock option plans from treasury 1,093 7,116
Proceeds from issuance of debt -- 1,902
Income tax benefit from exercise
of stock options 130 1,217
Acquisition of treasury stock (54) (570)
--------- ---------
Net cash (used in) provided by
financing activities (23,715) 21,588
--------- ---------
Effect of exchange rate changes on cash 762 262
--------- ---------
Increase in cash and cash equivalents 72,740 40,778
Cash and cash equivalents at the
beginning of the period 200,471 129,685
--------- ---------
Cash and cash equivalents at the end
of the period $ 273,211 $ 170,463
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