FOR IMMEDIATE RELEASE Contact: Kent A. McKee
Memphis, TN--April 22, 2008 (901) 753-3208
MUELLER INDUSTRIES, INC. REPORTS 45 PERCENT
INCREASE IN FIRST QUARTER 2008 EARNINGS
Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI),
announced today that Mueller's net income increased 45 percent in the first
quarter of 2008 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.
Financial and Operating Highlights
Regarding the first quarter of 2008, Mr. Karp said:
o "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 spreads and unit shipments
in copper tube and DWV plastic fittings. Other key product lines
performed well.
o "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.
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o "Other income includes a gain of $2.4 million related to the early
retirement of debt.
o "During the first quarter of 2008, capital expenditures totaled $8.6
million. We expect to invest between $30 and $40 million for capital
expenditures during 2008.
o "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.
o "Our current ratio remains solid at 2.8 to 1. We ended the quarter
with $274.3 million in cash and $634.9 million in working capital.
o "Our return on average equity was 18.5 percent for the four quarters
ended March, 2008.
o "As of year end, our financial leverage was modest with a debt to
total capitalization ratio of 32.3 percent.
o "Total stockholders' equity was $737.8 million which equates to a
book value per share of $19.89 of which $7.39 per share is in cash."
Business Outlook for 2008
Regarding the outlook for 2008, Mr. Karp said, "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."
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.
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Quarter Ended
------------------------
March 29, March 31,
2008 2007
--------- ---------
(Unaudited)
Net sales $ 704,108 $ 609,782
Cost of goods sold 611,797 536,578
--------- ---------
Gross profit 92,311 73,204
Depreciation and amortization 10,984 10,966
Selling, general, and administrative expense 38,291 34,927
--------- ---------
Operating income 43,036 27,311
Interest expense (5,467) (5,494)
Other income, net 4,017 4,953
--------- ---------
Income before income taxes 41,586 26,770
Income tax expense (14,231) (7,857)
--------- ---------
Net income $ 27,355 $ 18,913
========= =========
Weighted average shares
for basic earnings per share 37,089 37,027
Effect of dilutive stock options 192 117
--------- ---------
Adjusted weighted average shares
for diluted earnings per share 37,281 37,144
--------- ---------
Basic earnings per share $ 0.74 $ 0.51
========= =========
Diluted earnings per share $ 0.73 $ 0.51
========= =========
Dividends per share $ 0.10 $ 0.10
========= =========
Summary Segment Data:
Net sales:
Plumbing & Refrigeration Segment $ 383,884 $ 369,996
OEM Segment 326,207 243,730
Elimination of intersegment sales (5,983) (3,944)
--------- ---------
Net sales $ 704,108 $ 609,782
========= =========
Operating income:
Plumbing & Refrigeration Segment $ 25,084 $ 26,854
OEM Segment 25,574 5,494
Unallocated expenses (7,622) (5,037)
--------- ---------
Operating income $ 43,036 $ 27,311
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 29, December 29,
2008 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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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Quarter Ended
----------------------
March 29, March 31,
2008 2007
--------- ---------
(Unaudited)
Operating activities:
Net income $ 27,355 $ 18,913
Reconciliation of net income to net cash (used in)
provided by operating activities:
Depreciation and amortization 11,110 11,012
Stock-based compensation expense 731 628
Gain on early retirement of debt (2,408) --
Loss (gain) on disposals of properties 339 (3,132)
Deferred income taxes (429) (1,156)
Income tax benefit from exercise of stock options -- (66)
Minority interest in subsidiaries 552 402
Changes in assets and liabilities, net
of business acquired:
Receivables (62,218) (59,857)
Inventories (3,664) 66,512
Other assets (6,780) (314)
Current liabilities 14,264 13,445
Other liabilities 2,566 23
Other, net (2,708) 719
--------- ---------
Net cash (used in) provided by operating activities (21,290) 47,129
--------- ---------
Investing activities:
Capital expenditures (8,573) (8,725)
Acquisition of business, net of cash received -- (31,970)
Proceeds from sales of properties -- 3,032
Net withdrawals from restricted cash balances 85 --
--------- ---------
Net cash used in investing activities (8,488) (37,663)
--------- ---------
Financing activities:
Dividends paid (3,709) (3,703)
Issuance of shares under incentive stock option plans
from treasury 266 155
Issuance of debt by joint venture 21,032 5,434
Repayments of long-term debt (22,979) (17,429)
Income tax benefit from exercise of stock options -- 66
--------- ---------
Net cash used in financing activities (5,390) (15,477)
--------- ---------
Effect of exchange rate changes on cash 830 29
--------- ---------
Decrease in cash and cash equivalents (34,338) (5,982)
Cash and cash equivalents at the beginning of the period 308,618 200,471
--------- ---------
Cash and cash equivalents at the end of the period $ 274,280 $ 194,489
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