Mueller Industries, Inc. Reports Third Quarter Results

Dienstag, 23.10.2012 13:05 von

PR Newswire

MEMPHIS, Tenn., Oct. 23, 2012 /PRNewswire/ --

Quarterly and Year-to-Date Earnings

Mueller Industries, Inc. (NYSE: MLI), announced today that net income in the third quarter was $15.5 million, or 41 cents per diluted share, on net sales of $514.2 million.  This compares with net income of $10.5 million, or 27 cents per diluted share, on net sales of $585.8 million in the third quarter of 2011.

Year-to-date, the Company earned $66.0 million, or $1.72 per diluted share.  For the same period of 2011, net income was $73.4 million, or $1.92 per diluted share, which includes a favorable litigation settlement gain of 18 cents per diluted share.  Net sales for the first nine months of 2012 were $1.69 billion compared with net sales of $1.93 billion for the same period a year ago.   

In the third quarter, the Company repurchased 10,422,859 shares of its outstanding common stock for an aggregate purchase price of $427.4 million, or $41.00 per share.  As of the end of the third quarter, the total common stock outstanding was 27,970,180 shares (excluding dilutive equity awards).  The privately negotiated transaction significantly reduced the outstanding shares which should result in significant accretion to earnings per share in future periods.  On a pro forma basis (assuming the repurchase occurred at the beginning of the period), net income for the third quarter of 2012 would have been 51 cents per diluted share.

Financial and Operating Highlights

  • The net sales decrease of $71.6 million was primarily due to lower selling prices. The average price of copper, the principal raw material of the Company, was $3.53 per pound in the third quarter of 2012, which compares with $4.07 per pound in the third quarter of 2011.
  • The Plumbing & Refrigeration segment posted operating earnings of $17.6 million on net sales of $297.9 million compared with operating earnings of $13.9 million on net sales of $325.8 million in the third quarter of 2011.  The decrease in net sales was primarily due to lower selling prices.   
  • The OEM segment posted operating earnings of $14.4 million during the third quarter of 2012 on net sales of $221.5 million, which compared with operating earnings of $12.2 million on net sales of $266.6 million for the same period in 2011.  The decrease in net sales was attributable to lower selling prices on 6.9 percent lower unit volumes.    
  • The Company's total equity and cash balance decreased due to the share repurchase transaction noted above.  At the end of the third quarter, cash was $165.8 million and total stockholders' equity was $495.0 million.
  • The ratio of debt to total capitalization was 29.5 percent at the end of the third quarter of 2012.  The increased leverage was due primarily to the borrowings under the Company's credit facility related to the share repurchase transaction.
  • As of the end of the third quarter, the current ratio was 3.3 to 1.

Business Outlook

Regarding the outlook, Greg Christopher, CEO said, "We agree with the many economists who believe the construction industry is in the process of recovery.  Most predict that 2013 will be a much better year for housing and thereafter commercial construction.

"Absent disruptions to the market from potential changes in federal tax and spending policies, we should see improved demand levels for our products, especially as we move into the seasonally stronger spring months."

Mueller Industries, Inc. is a leading manufacturer of copper tube and fittings, brass rod and forgings, and a broad array of flow control products in these metals as well as aluminum and plastics.  Mueller's operations are located throughout the United States and in Canada, Mexico, Great Britain, and China.  Mueller's business is importantly linked to the construction and improvement of homes and nonresidential structures, including office buildings, hotels, schools, hospitals, and manufacturing buildings. 

************************

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 "pro forma," "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





September 29,



October 1,



September 29,



October 1,





2012



2011



2012



2011





(Unaudited)



(Unaudited)



















Net sales



$    514,165



$    585,809



$  1,685,932



$  1,926,413



















Cost of goods sold



449,718



523,984



1,465,744



1,687,735

Depreciation and amortization



7,870



8,716



23,318



27,581

Selling, general, and administrative expense



32,120



34,245



97,209



102,944

Litigation settlement



-



-



-



(10,500)

Insurance settlement



-



-



(1,500)



-



















Operating income



24,457



18,864



101,161



118,653



















Interest expense



(353)



(2,822)



(5,711)



(9,004)

Other income, net



219



102



963



1,425



















Income before income taxes



24,323



16,144



96,413



111,074



















Income tax expense



(8,753)



(5,403)



(29,486)



(37,060)



















Consolidated net income



15,570



10,741



66,927



74,014



















Net income attributable to noncontrolling interest



(59)



(266)



(900)



(621)



















Net income attributable to Mueller Industries, Inc.



$      15,511



$      10,475



$      66,027



$      73,393



















Weighted average shares

















for basic earnings per share



37,505



37,878



37,849



37,779

Effect of dilutive stock-based awards



452



483



444



367



















Adjusted weighted average shares

















for diluted earnings per share



37,957



38,361



38,293



38,146



















Basic earnings per share



$         0.41



$         0.28



$         1.74



$         1.94



















Diluted earnings per share



$         0.41



$         0.27



$         1.72



$         1.92



















Dividends per share



$         0.10



$         0.10



$         0.30



$         0.30



















Summary Segment Data:

















Net sales:

















Plumbing & Refrigeration Segment



$    297,913



$    325,776



$    944,955



$  1,053,434

OEM Segment



221,468



266,560



760,995



899,982

Elimination of intersegment sales



(5,216)



(6,527)



(20,018)



(27,003)



















Net sales



$    514,165



$    585,809



$  1,685,932



$  1,926,413



















Operating income:

















Plumbing & Refrigeration Segment



$      17,593



$      13,884



$      68,456



$      68,357

OEM Segment



14,421



12,172



54,203



60,634

Unallocated expenses



(7,557)



(7,192)



(21,498)



(10,338)



















Operating income



$      24,457



$      18,864



$    101,161



$    118,653



















 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)



































September 29,



December 31,





2012



2011





(Unaudited)

ASSETS









Cash and cash equivalents



$       165,755



$       514,162

Accounts receivable, net



261,015



250,027

Inventories



224,358



219,193

Other current assets



38,381



43,317











    Total current assets



689,509



1,026,699











Property, plant, and equipment, net



228,860



203,744

Other assets



121,047



117,161















$    1,039,416



$    1,347,604































LIABILITIES AND STOCKHOLDERS' EQUITY







Current portion of debt



$         12,570



$         41,265

Accounts payable



65,513



65,545

Other current liabilities



133,027



106,434











    Total current liabilities



211,110



213,244











Long-term debt



207,550



156,476

Pension and postretirement liabilities



53,246



54,244

Environmental reserves



22,811



22,892

Deferred income taxes



18,604



14,856

Other noncurrent liabilities



985



1,130











    Total liabilities



514,306



462,842











Total Mueller Industries, Inc. stockholders' equity



495,047



855,688

Noncontrolling interest



30,063



29,074











    Total equity



525,110



884,762















$    1,039,416



$    1,347,604















MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)























For the Nine Months Ended









September 29,



October 1,









2012



2011









(Unaudited)

Operating activities:









Consolidated net income



$         66,927



$         74,014

Reconciliation of consolidated net income to net cash provided by











operating activities:













Depreciation and amortization



23,713



27,844





Stock-based compensation expense



3,042



2,583





Loss (gain) on disposal of properties



175



(99)





Insurance settlement



(1,500)



-





Insurance proceeds - noncapital related



14,250



10,000





Deferred income taxes



2,319



(2,785)





Income tax benefit from exercise of stock options



(517)



(867)





Changes in assets and liabilities, net of businesses acquired:













Receivables



(15,779)



(38,480)





Inventories



585



(10,432)





Other assets



(8,434)



(9,263)





Current liabilities



(21,120)



13,703





Other liabilities



7,834



1,907





Other, net



1,271



759















Net cash provided by operating activities



72,766



68,884















Investing activities:









Capital expenditures



(43,841)



(13,128)

Acquisition of businesses



(11,503)



(6,882)

Insurance proceeds for property and equipment



42,250



-

Proceeds from sales of properties



502



1,745

Net withdrawals from (deposits into) restricted cash balances



6,908



(5,120)















Net cash used in investing activities



(5,684)



(23,385)















Financing activities:









Dividends paid



(11,415)



(11,345)

Debt issuance costs



-



(1,942)

Net cash (used) received to settle stock-based awards



(740)



3,674

Repurchase of common stock



(427,448)



-

Income tax benefit from exercise of stock options



517



867

Repayments of long-term debt



(148,926)



(1,902)

Issuance of long-term debt



200,000



-

(Repayments) issuance of debt by joint venture, net



(28,955)



19,316















Net cash (used in) provided by financing activities



(416,967)



8,668















Effect of exchange rate changes on cash



1,478



547















(Decrease) increase in cash and cash equivalents



(348,407)



54,714















Cash and cash equivalents at the beginning of the period



514,162



394,139















Cash and cash equivalents at the end of the period



$       165,755



$       448,853















     



























MUELLER INDUSTRIES, INC.



PRO FORMA CONDENSED STATEMENTS OF INCOME



QUARTER ENDED SEPTEMBER 29, 2012



(In thousands, except per share data)





























The following table illustrates the effects of the stock repurchase transaction (10,422,859 shares at $41.00 per share) on reported earnings as if it had occurred on the first day of the third quarter of 2012.  Earnings including the effects of the stock repurchase transaction is a measurement not derived in accordance with generally accepted accounting principles.  Including the effects of the stock repurchase transaction is useful as it measures the effects of increased borrowings and decreased available cash on hand to the operating results, and measures the impact of the decreased share count in the weighted average shares computation.  These adjustments are helpful in illustrating the impact of these transactions on the reported earnings and diluted earnings per share.  The reconciliation of pro forma earnings including the effects of the stock repurchase transaction to net income as reported is as follows:



































For the Three Months Ended September 29, 2012















































Effect of





















As



Stock





















Reported



Repurchase



Pro Forma

















(Unaudited)







































Operating income



$  24,457



$                 -



$        24,457







































Interest expense



(353)



(1,731)

(a)

(2,084)













Other income, net



219



(121)

(b)

98







































Income before income taxes



24,323



(1,852)



22,471













Income tax expense



(8,753)



648



(8,105)







































Consolidated net income



15,570



(1,204)



14,366







































Net income attributable to noncontrolling interest



(59)



-



(59)







































Net income attributable to Mueller Industries, Inc.



$  15,511



$         (1,204)



$        14,307







































Weighted average shares

























for basic earnings per share



37,505







27,655













Effect of dilutive stock-based awards



452







452







































Adjusted weighted average shares

























for diluted earnings per share



37,957







28,107

































































Diluted earnings per share



$      0.41







$            0.51







































(a) Represents the estimated increase in interest expense for the quarter, assuming an all-in borrowing rate of 3.75% applied to the amount borrowed to fund the stock repurchase transaction.































(b) Represents the estimated decrease in interest income for the quarter, assuming a weighted average return of 0.21% on the amount of the cash portion of the repurchase transaction.

























































SOURCE Mueller Industries, Inc.

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