Market Overview

Mueller Industries, Inc. Reports Second Quarter 2018 Earnings

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Mueller Industries, Inc. (NYSE:MLI) announced today second quarter
operating income of $51.9 million, compared with $46.7 million in the
same quarter of 2017, an increase of 11 percent.

Net income for the period was $33.2 million, or 58 cents per diluted
share, on $662.8 million in net sales, compared with net income of $27.6
million, or 48 cents per diluted share, on $614.3 million in net sales
for the same quarter of 2017.

Financial and Operating Highlights for the second quarter of 2018:

  • The average price of COMEX copper was 51 cents per pound higher
    compared with the same period of 2017.
  • Net sales were impacted by higher selling prices resulting from these
    higher copper prices, and were partially offset by the absence of
    $41.3 million of net sales recorded in the second quarter of 2017 by
    MXR, a business the Company exited in June 2017.
  • During the quarter, the Company generated $62.7 million in cash from
    operations.

Regarding the outlook, Greg Christopher, Mueller CEO said, "Our outlook
remains positive as economic conditions remain supportive of our
businesses. As performance gradually improves in our Fulton and Cedar
City copper tube mills, we continue to recover volume and share of
market lost during our modernization efforts."

In addition, Mr. Christopher commented, "We are excited about our most
recent acquisition, ATCO Flex. ATCO is an excellent addition to our
Climate Products portfolio, and will contribute to our goal of becoming
a more valuable resource to our HVAC and refrigeration customer base.
Customer support of the acquisition has been extremely favorable."

Mueller Industries, Inc. is an industrial manufacturer that specializes
in copper and copper alloy manufacturing while also producing goods made
from aluminum, steel, and plastics. It is headquartered in Memphis,
Tennessee and comprises a network of operations in the United States,
Canada, Mexico, Great Britain, South Korea, the Middle East, and China.
Its products include tubing, fittings, valves, vessels, and related
items for plumbing and HVACR related piping systems, as well as rod,
forgings, extrusions, and various components for OEM applications.
Products are distributed into sectors such as building construction,
appliance, defense, energy, and automotive.

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,"
"encourage," "anticipate," "appear," 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
(Unaudited)
 
For the Quarter Ended For the Six Months Ended
(In thousands, except per share data) June 30, 2018   July 1, 2017 June 30, 2018   July 1, 2017
 
Net sales $ 662,773 $ 614,266 $ 1,302,833 $ 1,192,186
 
Cost of goods sold 563,820 524,311 1,109,490 1,012,738
Depreciation and amortization 9,006 8,595 18,462 16,950
Selling, general, and administrative expense 38,428 36,299 72,485 71,873
(Gain) loss on sale of assets (409 ) (1,631 ) 3,060   (1,631 )
 
Operating income 51,928 46,692 99,336 92,256
 
Interest expense (6,073 ) (6,442 ) (11,982 ) (8,973 )
Other income, net 586   342   1,146   936  
 
Income before income taxes 46,441 40,592 88,500 84,219
 
Income tax expense (12,411 ) (12,650 ) (19,806 ) (24,579 )
Loss from unconsolidated affiliates, net of foreign tax (148 ) (109 ) (10,468 ) (1,352 )
 
Consolidated net income 33,882 27,833 58,226 58,288
 
Net income attributable to noncontrolling interests (700 ) (200 ) (916 ) (668 )
 
Net income attributable to Mueller Industries, Inc. $ 33,182   $ 27,633   $ 57,310   $ 57,620  
 
Weighted average shares for basic earnings per share 56,797 56,906 56,848 56,843
Effect of dilutive stock-based awards 514   511   516   585  
 
Adjusted weighted average shares for diluted earnings per share 57,311   57,417   57,364   57,428  
 
Basic earnings per share $ 0.58   $ 0.49   $ 1.01   $ 1.01  
 
Diluted earnings per share $ 0.58   $ 0.48   $ 1.00   $ 1.00  
 
Dividends per share $ 0.100   $ 0.100   $ 0.200   $ 8.200  
 
Summary Segment Data:
 
Net sales:
Piping Systems Segment $ 453,183 $ 422,844 $ 884,147 $ 821,619
Industrial Metals Segment 175,891 154,504 353,223 304,341
Climate Segment 39,172 36,636 75,235 70,915
Elimination of intersegment sales (5,473 ) 282   (9,772 ) (4,689 )
 
Net sales $ 662,773   $ 614,266   $ 1,302,833   $ 1,192,186  
 
Operating income:
Piping Systems Segment $ 42,019 $ 34,792 $ 74,968 $ 65,382
Industrial Metals Segment 16,093 16,389 38,726 36,736
Climate Segment 5,347 6,116 10,894 11,726
Unallocated expenses (11,531 ) (10,605 ) (25,252 ) (21,588 )
 
Operating income $ 51,928   $ 46,692   $ 99,336   $ 92,256  
 
   
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands) June 30,
2018

December 30,
2017

ASSETS
Cash and cash equivalents $ 281,445 $ 120,269
Accounts receivable, net 333,903 244,795
Inventories 294,540 327,901
Other current assets 27,625 46,150
 
Total current assets 937,513 739,115
 
Property, plant, and equipment, net 284,836 304,321
Other assets 274,035 276,737
 
$ 1,496,384 $ 1,320,173
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of debt $ 59,952 $ 16,480
Accounts payable 112,090 102,503
Other current liabilities 101,432 123,269
 
Total current liabilities 273,474 242,252
 
Long-term debt 558,534 448,592
Pension and postretirement liabilities 26,999 28,713
Environmental reserves 22,984 23,699
Deferred income taxes 19,650 19,403
Other noncurrent liabilities 22,654 21,486
 
Total liabilities 924,295 784,145
 
Total Mueller Industries, Inc. stockholders' equity 557,701 522,111
Noncontrolling interests 14,388 13,917
 
Total equity 572,089 536,028
 
$ 1,496,384 $ 1,320,173
 
 
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Six Months Ended
(In thousands) June 30, 2018   July 1, 2017
 
Cash flows from operating activities
Consolidated net income $ 58,226 $ 58,288
 
Reconciliation of consolidated net income to net cash provided by
operating activities:
Depreciation and amortization 18,622 17,093
Stock-based compensation expense 3,906 3,692
Loss from unconsolidated affiliates 10,468 1,352
Gain on sale of business (1,631 )
Loss on disposals of properties 2,646 81
Gain on sales of securities (611 )
Impairment charge 411
Deferred income taxes (1,260 ) 3
Changes in assets and liabilities:
Receivables (90,345 ) (47,108 )
Inventories 33,357 (10,874 )
Other assets 12,405 (4,723 )
Current liabilities (11,566 ) (1,262 )
Other liabilities (1,361 ) (1,086 )
Other, net 1,121   (1,078 )
 
Net cash provided by operating activities 36,219   12,547  
 
Cash flows from investing activities
Capital expenditures (10,882 ) (11,908 )
Acquisition of businesses, net of cash acquired (12,467 ) (18,419 )
Proceeds from sale of business, net of cash sold 17,483
Investment in unconsolidated affiliates (609 ) (1,617 )
Proceeds from sales of properties 11,376 1,363
Proceeds from sales of securities   1,787  
 
Net cash used in investing activities (12,582 ) (11,311 )
 
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc. (11,360 ) (185,539 )
Repurchase of common stock (6,575 )
Issuance of long-term debt 193,247
Repayments of long-term debt (37,107 ) (611 )
Repayment of debt by consolidated joint ventures, net (3,100 ) (3,320 )
Net cash received (used) to settle stock-based awards 103 (785 )
Dividends paid to noncontrolling interests (592 ) (2,909 )
 
Net cash provided by (used in) financing activities 134,616   (193,164 )
 
Effect of exchange rate changes on cash (368 ) 3,516  
 
Increase (decrease) in cash, cash equivalents, and restricted cash 157,885 (188,412 )
Cash, cash equivalents, and restricted cash at the beginning of the
period
126,563   360,469  
 
Cash, cash equivalents, and restricted cash at the end of the period $ 284,448   $ 172,057  

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