Mueller Industries, Inc. Reports Second Quarter 2012 Earnings

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

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

For the Quarter Ended

For the Six Months Ended

June 30,

July 2,

June 30,

July 2,

2012

2011

2012

2011

(Unaudited)

(Unaudited)

Net sales

$ 594,099

$ 652,923

$ 1,171,767

$ 1,340,604

Cost of goods sold

522,851

573,877

1,016,026

1,163,751

Depreciation and amortization

7,919

9,166

15,448

18,865

Selling, general, and administrative expense

33,487

33,330

65,089

68,699

Litigation settlement

-

-

-

(10,500)

Insurance settlement

-

-

(1,500)

-

Operating income

29,842

36,550

76,704

99,789

Interest expense

(2,721)

(2,834)

(5,358)

(6,182)

Other income, net

490

264

744

1,323

Income before income taxes

27,611

33,980

72,090

94,930

Income tax expense

(9,071)

(11,249)

(20,733)

(31,657)

Consolidated net income

18,540

22,731

51,357

63,273

Net income attributable to noncontrolling interest

(623)

(400)

(841)

(355)

Net income attributable to Mueller Industries, Inc.

$  17,917

$  22,331

$     50,516

$     62,918

Weighted average shares

for basic earnings per share

38,029

37,737

38,021

37,730

Effect of dilutive stock-based awards

436

356

440

309

Adjusted weighted average shares

for diluted earnings per share

38,465

38,093

38,461

38,039

Basic earnings per share

$      0.47

$      0.59

$        1.33

$        1.67

Diluted earnings per share

$      0.47

$      0.59

$        1.31

$        1.65

Dividends per share

$      0.10

$      0.10

$        0.20

$        0.20

Summary Segment Data:

Net sales:

Plumbing & Refrigeration Segment

$ 331,688

$ 347,069

$   647,042

$   727,658

OEM Segment

268,551

314,086

539,527

633,422

Elimination of intersegment sales

(6,140)

(8,232)

(14,802)

(20,476)

Net sales

$ 594,099

$ 652,923

$ 1,171,767

$ 1,340,604

Operating income:

Plumbing & Refrigeration Segment

$   22,605

$  24,790

$     50,863

$     54,473

OEM Segment

15,057

18,816

39,782

48,462

Unallocated expenses

(7,820)

(7,056)

(13,941)

(3,146)

Operating income

$  29,842

$  36,550

$     76,704

$     99,789

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

June 30,

December 31,

2012

2011

(Unaudited)

ASSETS

Cash and cash equivalents

$   373,680

$      514,162

Accounts receivable, net

299,264

250,027

Inventories

229,338

219,193

Other current assets

41,768

43,317

    Total current assets

944,050

1,026,699

Property, plant, and equipment, net

212,035

203,744

Other assets

116,355

117,161

$ 1,272,440

$   1,347,604

LIABILITIES AND STOCKHOLDERS' EQUITY

Current portion of debt

$     25,715

$        41,265

Accounts payable

89,914

65,545

Other current liabilities

124,757

106,434

    Total current liabilities

240,386

213,244

Long-term debt

7,800

156,476

Pension and postretirement liabilities

53,162

54,244

Environmental reserves

22,600

22,892

Deferred income taxes

13,079

14,856

Other noncurrent liabilities

966

1,130

    Total liabilities

337,993

462,842

Total Mueller Industries, Inc. stockholders' equity

904,343

855,688

Noncontrolling interest

30,104

29,074

    Total equity

934,447

884,762

$ 1,272,440

$   1,347,604

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For the Six Months Ended

June 30,

July 2,

2012

2011

(Unaudited)

Operating activities:

Consolidated net income

$  51,357

$  63,273

Reconciliation of consolidated net income to net cash provided by

    (used in) operating activities:

      Depreciation and amortization

15,843

18,999

      Stock-based compensation expense

2,061

1,712

      Loss (gain) on disposal of properties

106

(275)

      Insurance settlement

(1,500)

-

      Insurance proceeds - noncapital related

9,000

-

      Deferred income taxes

(2,930)

(2,549)

      Income tax benefit from exercise of stock options

(83)

(90)

      Changes in assets and liabilities, net of business acquired:

        Receivables

(55,826)

(55,010)

        Inventories

(9,055)

(78,966)

        Other assets

(1,371)

(4,398)

        Current liabilities

9,121

17,199

        Other liabilities

285

768

        Other, net

270

433

Net cash provided by (used in) operating activities

17,278

(38,904)

Investing activities:

Capital expenditures

(23,433)

(8,743)

Acquisition of business

-

(6,882)

Insurance proceeds for property and equipment

32,500

-

Proceeds from sales of properties

175

151

Net withdrawals from (deposits into) restricted cash balances

4,368

(3,877)

Net cash provided by (used in) investing activities

13,610

(19,351)

Financing activities:

Dividends paid

(7,605)

(7,546)

Debt issuance costs

-

(1,942)

Net proceeds from the exercise of stock options

187

592

Income tax benefit from exercise of stock options

83

90

Repayments of long-term debt

(148,676)

(250)

(Repayments) issuance of debt by joint venture, net

(15,842)

16,498

Net cash (used in) provided by financing activities

(171,853)

7,442

Effect of exchange rate changes on cash

483

1,713

Decrease in cash and cash equivalents

(140,482)

(49,100)

Cash and cash equivalents at the beginning of the period

514,162

394,139

Cash and cash equivalents at the end of the period

$ 373,680

$ 345,039

MUELLER INDUSTRIES, INC.

RECONCILIATION OF NET INCOME AS REPORTED

TO NET INCOME BEFORE LIFO GAIN, INSURANCE SETTLEMENT AND LITIGATION SETTLEMENT

(In thousands, except per share data)

Earnings without the LIFO gain and insurance settlement in 2012 and without the litigation settlement in 2011 is a measurement not derived in accordance with generally accepted accounting principles.  Excluding the LIFO gain, insurance settlement, and litigation settlement is useful as it measures the operating results that are the outcome of daily operating decisions made in the normal course of business.  The LIFO gain resulted from deferred recognition of a 2011 decrement and the insurance settlement was related to a 2009 claim at the Company's Fulton, Mississippi, copper tube mill.  The litigation settlement resulted from the collection of proceeds from the lawsuit against Peter Berkman, Jeffrey Berkman, and Homewerks Worldwide LLC, the results of which are not impacted by daily operations. Reconciliations of earnings without the LIFO gain, insurance settlement, and litigation settlement to net income as reported are as follows:

For the Six Months Ended June 30, 2012

Impact of 

Impact of 

As

LIFO

Insurance

Reported

Gain

Settlement

Pro forma

(Unaudited)

Operating income

$ 76,704

$   (7,979)

$   (1,500)

$  67,225

Interest expense

(5,358)

-

-

(5,358)

Other income, net

744

-

-

744

Income before income taxes

72,090

(7,979)

(1,500)

62,611

Income tax expense

(20,733)

2,872

585

(17,276)

Consolidated net income

51,357

(5,107)

(915)

45,335

Net income attributable to noncontrolling interest

(841)

-

-

(841)

Net income attributable to Mueller Industries, Inc.

$ 50,516

$   (5,107)

$     (915)

$  44,494

Diluted earnings per share

$    1.31

$    (0.13)

$    (0.02)

$     1.16

For the Six Months Ended July 2, 2011

Impact of 

As

Litigation

Reported

Settlement

Pro forma

(Unaudited)

Operating income

$ 99,789

$ (10,500)

$  89,289

Interest expense

(6,182)

-

(6,182)

Other income, net

1,323

-

1,323

Income before income taxes

94,930

(10,500)

84,430

Income tax expense

(31,657)

3,675

(27,982)

Consolidated net income

63,273

(6,825)

56,448

Net income attributable to noncontrolling interest

(355)

-

(355)

Net income attributable to Mueller Industries, Inc.

$ 62,918

$   (6,825)

$  56,093

Diluted earnings per share

$    1.65

$    (0.18)

$      1.47