Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2019 Earnings

Nachrichtenquelle: Business Wire (engl.)
04.02.2020, 13:00  |  119   |   |   

Mueller Industries, Inc. (NYSE: MLI) announced today operating income for the fourth quarter of $44.4 million, compared with $40.0 million in the same quarter of 2018. Net income for the quarter was $28.2 million, or 50 cents per diluted share, on net sales of $543.8 million, compared with net income of $26.9 million, or 47 cents per diluted share, on net sales of $559.1 million in the fourth quarter of 2018.

On a full year basis, the Company reported operating income of $191.4 million, compared with $173.0 million in fiscal year 2018. Net income for the year was $101.0 million, or $1.79 per diluted share, on net sales of $2.4 billion, compared with net income of $104.5 million, or $1.82 per diluted share, on net sales of $2.5 billion in 2018.

Financial and Operating Highlights:

Fourth Quarter:

  • The average price of copper was 2.4 percent lower compared with the prior year period, which impacted net sales for both our Piping Systems and Industrial Metals segments.
  • Net sales declined 2.7 percent compared with the prior year period as a result of both lower copper prices and lower shipments in our Industrial Metals segment. Declines were partially offset by higher sales volume in our Piping Systems and Climate businesses.
  • We recorded a $191,000 loss on our investment in Tecumseh compared to $1.4 million of income in the prior year.

Full Year:

  • The average price of copper was 7.2 percent lower as compared with the prior year, averaging $2.72 per pound.
  • Net sales declined 3.1 percent as compared with the prior year primarily as a result of both lower copper prices and lower shipments in our Industrial Metals segment. Declines were offset by sales from ATCO, a business acquired in the third quarter of 2018.
  • We recorded a $22.0 million loss on our investment in Tecumseh compared with a $10.0 million loss in the prior year. On an adjusted basis, excluding Tecumseh, 2019 diluted earnings per share would have been $2.19, compared with $1.95 in 2018, a 12.3 percent increase.
  • We generated $200.5 million in cash from operations.
  • We repaid $110.4 million of debt, and ended the year with a debt to total capitalization ratio of 37 percent.
  • Our current ratio is 3.0 to 1, and return on equity for the year was 16 percent.

Regarding the business, Greg Christopher, Mueller CEO, said, “Our diverse portfolio of businesses proved to be a strength as we delivered another year of double digit operating income growth. Our businesses continue to execute their operational plans and remain focused on the long term. Prudent capital deployment and laser focused execution are core operating principles and drivers of our strong cash generation.”

He added, “Our outlook for 2020 remains positive despite softening of the industrial markets, which we experienced during the fourth quarter. Cost mitigation initiatives we undertook in the second half of 2019, combined with improved performance in our Piping Systems and Climate businesses support our expectations. Our Piping Systems and Climate businesses benefit from building construction, one of the principal market sectors in which we operate. The fundamentals of the construction sector remain solid, and the economies we operate in are healthy or improving.”

Lastly, he continued, “Tecumseh’s operating results improved in the second half of the year. We expect earnings to be bumpy as management continues to aggressively execute its restructuring plan.”

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 Collierville, 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 Year Ended

(In thousands, except per share data)

December 28,
2019

 

December 29,
2018

 

December 28,
2019

 

December 29,
2018

 

 

 

 

 

 

 

 

Net sales

$

543,839

 

 

$

559,087

 

 

$

2,430,616

 

 

$

2,507,878

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

449,481

 

 

 

473,954

 

 

 

2,035,610

 

 

 

2,150,400

 

Depreciation and amortization

 

10,837

 

 

 

10,474

 

 

 

42,693

 

 

 

39,555

 

Selling, general, and administrative expense

 

39,557

 

 

 

36,892

 

 

 

161,395

 

 

 

148,635

 

Insurance recovery

 

(485

)

 

 

(2,195

)

 

 

(485

)

 

 

(3,681

)

 

 

 

 

 

 

 

 

Operating income

 

44,449

 

 

 

39,962

 

 

 

191,403

 

 

 

172,969

 

 

 

 

 

 

 

 

 

Interest expense

 

(5,548

)

 

 

(6,471

)

 

 

(25,683

)

 

 

(25,199

)

Environmental expense

 

(440

)

 

 

(623

)

 

 

(1,321

)

 

 

(1,320

)

Other income, net

 

(20

)

 

 

1,713

 

 

 

1,684

 

 

 

3,967

 

 

 

 

 

 

 

 

 

Income before income taxes

 

38,441

 

 

 

34,581

 

 

 

166,083

 

 

 

150,417

 

 

 

 

 

 

 

 

 

Income tax expense

 

(7,614

)

 

 

(7,773

)

 

 

(35,257

)

 

 

(30,952

)

(Loss) income from unconsolidated affiliates, net of foreign tax

 

(854

)

 

 

923

 

 

 

(24,594

)

 

 

(12,645

)

 

 

 

 

 

 

 

 

Consolidated net income

 

29,973

 

 

 

27,731

 

 

 

106,232

 

 

 

106,820

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(1,803

)

 

 

(874

)

 

 

(5,260

)

 

 

(2,361

)

 

 

 

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

$

28,170

 

 

$

26,857

 

 

$

100,972

 

 

$

104,459

 

 

 

 

 

 

 

 

 

Weighted average shares for basic earnings per share

 

55,869

 

 

 

56,555

 

 

 

55,798

 

 

 

56,782

 

Effect of dilutive stock-based awards

 

611

 

 

 

377

 

 

 

545

 

 

 

487

 

 

 

 

 

 

 

 

 

Adjusted weighted average shares for diluted earnings per share

 

56,480

 

 

 

56,932

 

 

 

56,343

 

 

 

57,269

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.50

 

 

$

0.47

 

 

$

1.81

 

 

$

1.84

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

0.50

 

 

$

0.47

 

 

$

1.79

 

 

$

1.82

 

 

 

 

 

 

 

 

 

Dividends per share

$

0.10

 

 

$

0.10

 

 

$

0.40

 

 

$

0.40

 

 

 

 

 

 

 

 

 

Summary Segment Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

Piping Systems Segment

$

349,182

 

 

$

350,961

 

 

$

1,542,456

 

 

$

1,645,633

 

Industrial Metals Segment

 

120,336

 

 

 

139,129

 

 

 

554,373

 

 

 

651,061

 

Climate Segment

 

79,362

 

 

 

72,215

 

 

 

356,215

 

 

 

229,069

 

Elimination of intersegment sales

 

(5,041

)

 

 

(3,218

)

 

 

(22,428

)

 

 

(17,885

)

 

 

 

 

 

 

 

 

Net sales

$

543,839

 

 

$

559,087

 

 

$

2,430,616

 

 

$

2,507,878

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

Piping Systems Segment

$

31,724

 

 

$

22,453

 

 

$

131,879

 

 

$

122,829

 

Industrial Metals Segment

 

15,026

 

 

 

21,770

 

 

 

61,724

 

 

 

75,607

 

Climate Segment

 

9,343

 

 

 

7,450

 

 

 

42,727

 

 

 

24,118

 

Unallocated expenses

 

(11,644

)

 

 

(11,711

)

 

 

(44,927

)

 

 

(49,585

)

 

 

 

 

 

 

 

 

Operating income

$

44,449

 

 

$

39,962

 

 

$

191,403

 

 

$

172,969

 

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(In thousands)

December 28,
2019

 

December 29,
2018

ASSETS

 

 

 

Cash and cash equivalents

$

97,944

 

$

72,616

Accounts receivable, net

 

269,943

 

 

273,417

Inventories

 

292,107

 

 

329,795

Other current assets

 

33,778

 

 

26,790

 

 

 

 

Total current assets

 

693,772

 

 

702,618

 

 

 

 

Property, plant, and equipment, net

 

363,128

 

 

370,633

Operating lease right-of-use assets

 

26,922

 

Other assets

 

287,118

 

 

296,298

 

 

 

 

 

$

1,370,940

 

$

1,369,549

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current portion of debt

$

7,530

 

$

7,101

Accounts payable

 

85,644

 

 

103,754

Current portion of operating lease liabilities

 

5,250

 

Other current liabilities

 

135,863

 

 

121,946

 

 

 

 

Total current liabilities

 

234,287

 

 

232,801

 

 

 

 

Long-term debt

 

378,724

 

 

489,597

Pension and postretirement liabilities

 

22,208

 

 

29,055

Environmental reserves

 

19,972

 

 

20,009

Deferred income taxes

 

21,094

 

 

16,615

Noncurrent operating lease liabilities

 

22,388

 

Other noncurrent liabilities

 

10,131

 

 

18,212

 

 

 

 

Total liabilities

 

708,804

 

 

806,289

 

 

 

 

Total Mueller Industries, Inc. stockholders’ equity

 

643,468

 

 

548,356

Noncontrolling interests

 

18,668

 

 

14,904

 

 

 

 

Total equity

 

662,136

 

 

563,260

 

 

 

 

 

$

1,370,940

 

$

1,369,549

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

 

For the Year Ended

(In thousands)

December
28, 2019

 

December
29, 2018

 

 

 

 

Cash flows from operating activities

 

 

 

Consolidated net income

$

106,232

 

 

$

106,820

 

Reconciliation of consolidated net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

43,011

 

 

 

39,873

 

Stock-based compensation expense

 

8,744

 

 

 

8,035

 

Loss from unconsolidated affiliates

 

24,594

 

 

 

12,645

 

Gain on disposals of assets

 

(963

)

 

 

(253

)

Insurance proceeds - noncapital related

 

485

 

 

 

2,306

 

Change in the fair value of contingent consideration

 

3,625

 

 

Insurance recovery

 

(485

)

 

 

(3,681

)

Deferred income tax (benefit) expense

 

(428

)

 

 

170

 

Provision for doubtful accounts receivable

 

(80

)

 

Changes in assets and liabilities, net of effects of businesses acquired and sold:

 

 

 

Receivables

 

6,585

 

 

 

(11,342

)

Inventories

 

39,561

 

 

 

27,512

 

Other assets

 

(15,639

)

 

 

14,353

 

Current liabilities

 

(7,076

)

 

 

(15,680

)

Other liabilities

 

(7,944

)

 

 

(14,769

)

Other, net

 

322

 

 

 

1,903

 

 

 

 

 

Net cash provided by operating activities

 

200,544

 

 

 

167,892

 

 

 

 

 

Cash flows from investing activities

 

 

 

Proceeds from sale of assets, net of cash transferred

 

3,240

 

 

 

18,703

 

Acquisition of businesses, net of cash acquired

 

3,465

 

 

 

(167,677

)

Capital expenditures

 

(31,162

)

 

 

(38,481

)

Insurance proceeds - capital related

 

 

1,968

 

Investment in unconsolidated affiliates

 

(16,000

)

 

 

(1,609

)

 

 

 

 

Net cash used in investing activities

 

(40,457

)

 

 

(187,096

)

 

 

 

 

Cash flows from financing activities

 

 

 

Dividends paid to stockholders of Mueller Industries, Inc.

 

(22,325

)

 

 

(22,705

)

Dividends paid to noncontrolling interests

 

(846

)

 

 

(592

)

Issuance of long-term debt

 

100,658

 

 

 

204,233

 

Repayments of long-term debt

 

(206,718

)

 

 

(172,002

)

Repayment of debt by consolidated joint ventures, net

 

(4,305

)

 

 

(2,915

)

Repurchase of common stock

 

(1,763

)

 

 

(33,562

)

Payment of contingent consideration

 

(3,170

)

 

Net cash used to settle stock-based awards

 

(1,225

)

 

 

(726

)

 

 

 

 

Net cash used in financing activities

 

(139,694

)

 

 

(28,269

)

 

 

 

 

Effect of exchange rate changes on cash

 

511

 

 

 

(1,952

)

 

 

 

 

Increase (decrease) in cash, cash equivalents, and restricted cash

 

20,904

 

 

 

(49,425

)

Cash, cash equivalents, and restricted cash at the beginning of the year

 

77,138

 

 

 

126,563

 

 

 

 

 

Cash, cash equivalents, and restricted cash at the end of the year

$

98,042

 

 

$

77,138

 

 

MUELLER INDUSTRIES, INC.
Reconciliation of Net Income as Reported to Non-GAAP Financial Measures Without Loss from the Unconsolidated Affiliate Tecumseh Products
(Unaudited)

Earnings attributable to normal operations without the loss from Tecumseh Products (Tecumseh) is a measurement not derived in accordance with generally accepted accounting principles (GAAP). Excluding the loss is useful as it measures the operating results that are the outcome of daily operating decisions made in the normal course of business. Reconciliation of earnings attributable to normal operations without the loss from Tecumseh to net income as reported is as follows:

 

(In thousands, except per share data)

 

For the Year Ended December 28, 2019

 

 

As Reported
(GAAP)

 

Loss from
Tecumseh

 

As Adjusted
(Non-GAAP)

 

 

 

 

 

 

 

Income before income taxes

 

$

166,083

 

 

$—

 

$

166,083

 

 

 

 

 

 

 

 

Income tax expense

 

 

(35,257

)

 

 

538

 

 

 

(34,719

)

Loss from unconsolidated affiliates, net of foreign tax

 

 

(24,594

)

 

 

22,026

 

 

 

(2,568

)

 

 

 

 

 

 

 

Consolidated net income

 

 

106,232

 

 

 

22,564

 

 

 

128,796

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

 

(5,260

)

 

 

 

 

(5,260

)

 

 

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

 

$

100,972

 

 

$

22,564

 

 

$

123,536

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

1.79

 

 

$

0.40

 

 

$

2.19

 

 

 

 

 

 

 

 

(In thousands, except per share data)

 

For the Quarter Ended December 29, 2018

 

 

As Reported
(GAAP)

 

Loss from
Tecumseh

 

As Adjusted
(Non-GAAP)

 

 

 

 

 

 

 

Income before income taxes

 

$

150,417

 

 

$—

 

$

150,417

 

 

 

 

 

 

 

 

Income tax expense

 

 

(30,952

)

 

 

(2,775

)

 

 

(33,727

)

Loss from unconsolidated affiliates, net of foreign tax

 

 

(12,645

)

 

 

10,025

 

 

 

(2,620

)

 

 

 

 

 

 

 

Consolidated net income

 

 

106,820

 

 

 

7,250

 

 

 

114,070

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

 

(2,361

)

 

 

 

 

(2,361

)

 

 

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

 

$

104,459

 

 

$

7,250

 

 

$

111,709

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

1.82

 

 

$

0.13

 

 

$

1.95

 

 

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