Mueller Industries, Inc. (NYSE: 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.
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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,” “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, | ||||||||||||||||
| 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, | |||||||
| 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, | ||||||||
| 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 | ||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20180206005217/en/
Contacts:
Jeffrey A. Martin, 901-753-3226
