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Mueller Industries Inc.$29.73($.07)(.23%)

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 Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2017 Earnings
   Tuesday, February 06, 2018 7:00:00 AM ET

Mueller Industries, Inc. (MLI ) announced today operating income of $22.0 million for the fourth quarter of 2017, compared with $29.3 million in the same quarter of 2016. Net income for the quarter was $5.7 million, or 10 cents per diluted share, on net sales of $523.5 million, compared with net income of $17.3 million, or 30 cents per diluted share, on net sales of $472.2 million in the fourth quarter of 2016.

On a full year basis, the Company reported operating income of $152.0 million, compared with $152.7 million in fiscal year 2016. Net income for the year was $85.6 million, or $1.49 per diluted share, on net sales of $2.3 billion, compared with net income of $99.7 million, or $1.74 per diluted share, on net sales of $2.1 billion in fiscal year 2016.

Financial and Operating Highlights:

-- During the fourth quarter of 2017, copper prices rose 4 percent and averaged $3.10 per pound. During the fourth quarter of 2016, copper prices rose 20 percent and averaged $2.39 per pound.

-- The effect of changes in copper prices during the quarter on inventory valuations and hedging positions compared with the prior year quarter, along with physical inventory adjustments, resulted in a $12.0 million negative swing in operating income in the fourth quarter of 2017 compared with the fourth quarter of 2016. Both the Piping Systems and Industrial Metals segments were impacted.

-- A casting outage in our brass rod mill impaired our ability to melt scrap returns in the fourth quarter of 2017 causing an excess build of $38.9 million in inventory. The line is now operating, and inventory levels are expected to normalize in 2018.

-- A $6.5 million pre-tax environmental charge was recorded in the quarter related to ongoing remediation activities at U.S.S. Lead, a non-operating property.

-- Interest expense for the quarter was $5.3 million, compared with $2.0 million in the same quarter of 2016. The increase was primarily due to interest on the Company’s 6% Subordinated Debentures.

-- The effective tax rate for the quarter of 42 percent reflects the net impact of the 2017 Tax Cuts and Jobs Act.

Regarding the business, Greg Christopher, Mueller CEO, said, "Our fourth quarter earnings were adversely affected by inventory impacts and, to a lesser but still important degree, the ongoing challenges in our U.S. copper tube business as previously reported. The modernization of our Fulton, Mississippi copper tube mill, combined with the costs associated with the startup of our new Cedar City, Utah mill, hampered our fourth quarter results. On a full year basis, cost overruns, start-up costs, throughput constraints, quality and yield challenges, along with an associated decline in market share, impacted our copper tube earnings by over $25.0 million."

In conclusion, he added "The international markets we serve remained stable and better than anticipated in 2017, and demand in the U.S. markets continued to remain positive. We anticipate these conditions will continue in 2018. We will be aggressive in regaining our market share positions and avoiding the same operational issues experienced in 2017, as we remain steadfast in our commitment to grow."

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, 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 Year Ended
                                                                                                          ------------------------------------------------------------------------------------------------------------                                                  ---------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)                                                                       December 30,          December 31,                                                December 30,            December 31,    
                                                                                                                2017                                                                           2016                                                                           2017                                                                             2016
                                                                                                          --------------  --------------------                                           --------------  --------------------                                           ---------------  --------------------                                           ----------------  --------------------
                                                                                                                                                                                                                                                                                                                                                                           
Net sales                                                                                                       $ 523,524                                                                      $ 472,158                                                                     $ 2,266,073                                                                      $ 2,055,622
                                                                                                                                                                                                                                                                                                                                                                           
Cost of goods sold                                                                                                456,617                                                                        396,129                                                                       1,940,617                                                                        1,723,499
Depreciation and amortization                                                                                       8,728                                                                          8,136                                                                          33,944                                                                           35,133
Selling, general, and administrative expense                                                                       35,136                                                                         34,792                                                                         139,580                                                                          137,499
Gain on sale of assets                                                                                     --                                                                 --                                                                          (1,491 )                                                                 --
Impairment charges                                                                                                  1,055                                                       3,778                                                        1,466                                                         6,778  
                                                                                                          ------------------------------------                                           ------------------------------------                                           -------------------------------------                                           --------------------------------------
                                                                                                                                                                                                                                                                                                                                                                           
Operating income                                                                                                   21,988                                                                         29,323                                                                         151,957                                                                          152,713
                                                                                                                                                                                                                                                                                                                                                                           
Interest expense                                                                                                   (5,292 )                                                                       (2,017 )                                                                       (19,502 )                                                                         (7,387 )
Environmental expense                                                                                              (6,221 )                                                                         (668 )                                                                        (7,284 )                                                                         (1,279 )
Other income, net                                                                                                     414                                                         492                                                        1,801                                                         1,983  
                                                                                                          ------------------------------------                                           ------------------------------------                                           -------------------------------------                                           --------------------------------------
                                                                                                                                                                                                                                                                                                                                                                           
Income before income taxes                                                                                         10,889                                                                         27,130                                                                         126,972                                                                          146,030
                                                                                                                                                                                                                                                                                                                                                                           
Income tax expense                                                                                                 (4,589 )                                                                       (9,174 )                                                                       (37,884 )                                                                        (48,137 )
(Loss) income from unconsolidated affiliates, net of tax                                                             (331 )                                                                       (1,188 )                                                                        (2,077 )                                                                          1,861  
                                                                                                          ------------------------------------                                           ------------------------------------                                           -------------------------------------                                           --------------------------------------
                                                                                                                                                                                                                                                                                                                                                                           
Consolidated net income                                                                                             5,969                                                                         16,768                                                                          87,011                                                                           99,754
                                                                                                                                                                                                                                                                                                                                                                           
Net (income) loss attributable to noncontrolling interests                                                           (249 )                                                                          554                                                       (1,413 )                                                                            (27 )
                                                                                                          ------------------------------------                                           ------------------------------------                                           -------------------------------------                                           --------------------------------------
                                                                                                                                                                                                                                                                                                                                                                           
Net income attributable to Mueller Industries, Inc.                                                             $   5,720                                                   $  17,322                                                  $    85,598                                                   $    99,727  
                                                                                                          ======= ======= ====================                                           ======= ======= ====================                                           ====== ========= ====================                                           ======= ========= ====================
                                                                                                                                                                                                                                                                                                                                                                           
Weighted average shares for basic earnings per share                                                               57,026                                                                         56,680                                                                          56,925                                                                           56,572
Effect of dilutive stock-based awards                                                                                 612                                                         620                                                          559                                                           597  
                                                                                                          ------------------------------------                                           ------------------------------------                                           -------------------------------------                                           --------------------------------------
                                                                                                                                                                                                                                                                                                                                                                           
Adjusted weighted average shares for diluted earnings per share                                                    57,638                                                      57,300                                                       57,484                                                        57,169  
                                                                                                          ------------------------------------                                           ------------------------------------                                           -------------------------------------                                           --------------------------------------
                                                                                                                                                                                                                                                                                                                                                                           
Basic earnings per share                                                                                        $    0.10                                                   $    0.31                                                  $      1.50                                                   $      1.76  
                                                                                                          ======= ======= ====================                                           ======= ======= ====================                                           ====== ========= ====================                                           ======= ========= ====================
                                                                                                                                                                                                                                                                                                                                                                           
Diluted earnings per share                                                                                      $    0.10                                                   $    0.30                                                  $      1.49                                                   $      1.74  
                                                                                                          ======= ======= ====================                                           ======= ======= ====================                                           ====== ========= ====================                                           ======= ========= ====================
                                                                                                                                                                                                                                                                                                                                                                           
Dividends per share                                                                                             $   0.100                                                   $   0.100                                                  $     8.400                                                   $     0.375  
                                                                                                          ======= ======= ====================                                           ======= ======= ====================                                           ====== ========= ====================                                           ======= ========= ====================
                                                                                                                                                                                                                                                                                                                                                                           
Summary Segment Data:
                                                                                                                                                                                                                                                                                                                                                                           
Net sales:
    Piping Systems Segment                                                                                      $ 359,253                                                                      $ 320,480                                                                     $ 1,564,950                                                                      $ 1,429,589
    Industrial Metals Segment                                                                                     150,212                                                                        127,452                                                                         602,131                                                                          521,060
    Climate Segment                                                                                                28,045                                                                         27,690                                                                         131,448                                                                          119,758
    Elimination of intersegment sales                                                                             (13,986 )                                                                       (3,464 )                                                                       (32,456 )                                                                        (14,785 )
                                                                                                          ------------------------------------                                           ------------------------------------                                           -------------------------------------                                           --------------------------------------
                                                                                                                                                                                                                                                                                                                                                                           
Net sales                                                                                                       $ 523,524                                                   $ 472,158                                                  $ 2,266,073                                                   $ 2,055,622  
                                                                                                          ======= ======= ====================                                           ======= ======= ====================                                           ====== ========= ====================                                           ======= ========= ====================
                                                                                                                                                                                                                                                                                                                                                                           
Operating income:
    Piping Systems Segment                                                                                      $  13,886                                                                      $  15,630                                                                     $    99,558                                                                      $   103,886
    Industrial Metals Segment                                                                                      15,277                                                                         22,383                                                                          75,752                                                                           78,168
    Climate Segment                                                                                                 3,170                                                                          3,193                                                                          20,325                                                                           17,733
    Unallocated expenses                                                                                          (10,345 )                                                                      (11,883 )                                                                       (43,678 )                                                                        (47,074 )
                                                                                                          ------------------------------------                                           ------------------------------------                                           -------------------------------------                                           --------------------------------------
                                                                                                                                                                                                                                                                                                                                                                           
Operating income                                                                                                $  21,988                                                   $  29,323                                                  $   151,957                                                   $   152,713  
                                                                                                          ======= ======= ====================                                           ======= ======= ====================                                           ====== ========= ====================                                           ======= ========= ====================
                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                          
                                                                                                       MUELLER INDUSTRIES, INC.
                                                                                                 CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                              (Unaudited)
                                                                                                                                                                                                        
(In thousands)                                                                                                                       December 30,                                                                December 31,
                                                                                                                                         2017                                                                        2016
                                                                                                                         ---------------------------------                                             ------------------------------
ASSETS
Cash and cash equivalents                                                                                                   $   120,269                                                                         $              351,317
Accounts receivable, net                                                                                                        244,795                                                                                        256,291
Inventories                                                                                                                     327,901                                                                                        242,013
Other current assets                                                                                                             46,150                                                                      44,702
                                                                                                                         -----------------------------------                                           --------------------------------
                                                                                                                                                                                                        
    Total current assets                                                                                                        739,115                                                                                        894,323
                                                                                                                                                                                                        
Property, plant, and equipment, net                                                                                             304,321                                                                                        295,231
Other assets                                                                                                                    276,737                                                                     257,922
                                                                                                                         -----------------------------------                                           --------------------------------
                                                                                                                                                                                                        
                                                                                                                            $ 1,320,173                                                      $            1,447,476
                                                                                                                         ==== ========= ====================                                           ========== ====================
                                                                                                                                                                                                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of debt                                                                                                     $    16,480                                                                         $               13,655
Accounts payable                                                                                                                102,503                                                                                        103,175
Other current liabilities                                                                                                       123,269                                                                     102,162
                                                                                                                         -----------------------------------                                           --------------------------------
                                                                                                                                                                                                        
    Total current liabilities                                                                                                   242,252                                                                                        218,992
                                                                                                                                                                                                        
Long-term debt                                                                                                                  448,592                                                                                        213,709
Pension and postretirement liabilities                                                                                           28,713                                                                                         31,273
Environmental reserves                                                                                                           23,699                                                                                         21,208
Deferred income taxes                                                                                                            19,403                                                                                         19,573
Other noncurrent liabilities                                                                                                     21,486                                                                       6,284
                                                                                                                         -----------------------------------                                           --------------------------------
                                                                                                                                                                                                        
    Total liabilities                                                                                                           784,145                                                                     511,039
                                                                                                                         -----------------------------------                                           --------------------------------
                                                                                                                                                                                                        
Total Mueller Industries, Inc. stockholders’ equity                                                  522,111                                                                                        898,684
Noncontrolling interests                                                                                                         13,917                                                                      37,753
                                                                                                                         -----------------------------------                                           --------------------------------
                                                                                                                                                                                                        
    Total equity                                                                                                                536,028                                                                     936,437
                                                                                                                         -----------------------------------                                           --------------------------------
                                                                                                                                                                                                        
                                                                                                                            $ 1,320,173                                                      $            1,447,476
                                                                                                                         ==== ========= ====================                                           ========== ====================
                                                                                                                                                                                                                   
                                                                        
                                                                                                     MUELLER INDUSTRIES, INC.
                                                                                          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                            (Unaudited)
                                                                                                                
                                                                                                                                                                For the Year Ended
                                                                                                               --------------------------------------------------------------------------------------------------------------------
 (In thousands)                                                                                                            December 30,                             December 31,
                                                                                                                               2017                                                                           2016
                                                                                                               ----------------------------------                                             ----------------------------------
                                                                                                                                                                                               
Cash flows from operating activities
Consolidated net income                                                                                              $  87,011                                                                      $  99,754
                                                                                                                                                                                                               
Reconciliation of consolidated net income to net cash provided by
operating activities:
   Depreciation and amortization                                                                                        34,247                                                                         35,702
   Stock-based compensation expense                                                                                      7,450                                                                          6,387
   Loss (income) from unconsolidated affiliates                                                                          2,077                                                                         (1,861 )
   Gain on disposal of assets                                                                                           (2,115 )                                                                         (651 )
   Insurance proceeds - noncapital related                                                                                 500                                                                 --
   Impairment charges                                                                                                    1,466                                                                          6,778
   Deferred income taxes                                                                                                (3,160 )                                                                        6,998
   Changes in assets and liabilities, net of businesses acquired and
   sold:
      Receivables                                                                                                       (1,779 )                                                                      (16,552 )
      Inventories                                                                                                      (86,286 )                                                                        6,662
      Other assets                                                                                                      (5,325 )                                                                        5,808
      Current liabilities                                                                                               10,678                                                                          5,646
      Other liabilities                                                                                                     64                                                                          1,518
      Other, net                                                                                                          (833 )                                                                        1,588  
                                                                                                               ------------------------------------                                           ------------------------------------
                                                                                                                                                                                               
Net cash provided by operating activities                                                                               43,995                                                     157,777  
                                                                                                               ------------------------------------                                           ------------------------------------
                                                                                                                                                                                               
Cash flows from investing activities
Proceeds from sale of assets, net of cash transferred                                                                   31,564                                                                         10,304
Acquisition of businesses, net of cash acquired                                                                        (18,396 )                                                                      (20,533 )
Capital expenditures                                                                                                   (46,131 )                                                                      (37,497 )
Investment in unconsolidated affiliates                                                                                 (3,317 )                                                               --
Net withdrawals from (deposits to) restricted cash balances                                                              2,858                                                      (5,331 )
                                                                                                               ------------------------------------                                           ------------------------------------
                                                                                                                                                                                               
Net cash used in investing activities                                                                                  (33,422 )                                                                      (53,057 )
                                                                                                               ------------------------------------                                           ------------------------------------
                                                                                                                                                                                               
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.                                                            (196,944 )                                                                      (21,224 )
Dividends paid to noncontrolling interests                                                                              (2,909 )                                                                       (3,765 )
Issuance of long-term debt                                                                                              71,475                                                                          3,500
Repayments of long-term debt                                                                                          (111,224 )                                                                       (1,074 )
(Repayment) issuance of debt by consolidated joint ventures, net                                                        (3,369 )                                                                        2,265
Net cash used to settle stock-based awards                                                                              (1,595 )                                                                       (1,306 )
Debt issuance costs                                                                                             --                                                        (957 )
                                                                                                               ------------------------------------                                           ------------------------------------
                                                                                                                                                                                               
Net cash used in financing activities                                                                                 (244,566 )                                                                      (22,561 )
                                                                                                               ------------------------------------                                           ------------------------------------
                                                                                                                                                                                               
Effect of exchange rate changes on cash                                                                                  2,945                                                      (5,686 )
                                                                                                               ------------------------------------                                           ------------------------------------
                                                                                                                                                                                               
(Decrease) increase in cash and cash equivalents                                                                      (231,048 )                                                                       76,473
Cash and cash equivalents at the beginning of the year                                                                 351,317                                                     274,844  
                                                                                                               ------------------------------------                                           ------------------------------------
                                                                                                                                                                                               
Cash and cash equivalents at the end of the year                                                                     $ 120,269                                                   $ 351,317  
                                                                                                               ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                               

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180206005217r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180206005217/en/

SOURCE: Mueller Industries, Inc.

Mueller Industries, Inc. 
Jeffrey A. Martin, 901-753-3226


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