EX-99.1 2 mi7574ex991.txt EXHIBIT 99.1 Exhibit 99.1 MUELLER INDUSTRIES, INC. REPORTS RECORD THIRD QUARTER RESULTS MEMPHIS, Tenn., Oct. 24 /PRNewswire-FirstCall/ -- Quarterly and Year-to-Date Earnings Harvey L. Karp, Chairman of Mueller Industries, Inc. (NYSE: MLI), today announced the Company's results for the third quarter of 2006. Net income for the third quarter was $51.6 million, or $1.38 per diluted share, which compares with income from continuing operations of $21.0 million, or 57 cents per diluted share, for the third quarter of fiscal 2005. Net sales for the three months ended September 30, 2006 were $636.0 million, compared with net sales of $434.1 million for the third quarter of 2005. This increase in net sales is primarily due to the increased cost of copper, the Company's principal raw material, which is generally passed through to customers by changes in selling prices. During the third quarter of 2006, the Company recorded additional state income tax benefits, the majority of which relate to certain state income tax credit carryforwards that were previously unrecognized. The total benefit related to these matters was $10.4 million, or 28 cents per diluted share, and resulted in reducing the overall effective tax rate to 11.3 percent for the third quarter of 2006. Year-to-date, the Company earned $143.7 million, or $3.86 per diluted share, on net sales of $1.97 billion. This compares with net income from continuing operations of $53.4 million, or $1.44 per diluted share, on net sales of $1.25 billion for the same period of 2005. Financial and Operating Highlights Regarding the third quarter of 2006, Mr. Karp said: - "The COMEX average price of copper was $3.54 per pound in the third quarter of 2006, which compares with $1.70 per pound in the third quarter of 2005. - "Mueller ended the quarter with $170.5 million in cash. - "Our current ratio remains excellent at 2.7 to 1 and our working capital is $513.6 million. - "Our Plumbing & Refrigeration segment posted operating earnings of $56.9 million on net sales of $426.3 million which compares with operating earnings of $31.0 million on net sales of $322.5 million in the third quarter of 2005. Unit volumes in our core product lines, particularly copper tube, were down substantially compared with the preceding quarter and the third quarter of 2005. The impact of these volume decreases on net sales was offset by rising copper prices. Overall, operating results remained strong despite lower volumes and margin pressures on our Trading Group. - "Our OEM segment posted operating earnings of $9.9 million during the third quarter of 2006 on net sales of $218.4 million, which compared with operating earnings of $5.7 million on net sales of $114.3 million for the same period in 2005. Included in the OEM segment is our Chinese joint venture which reported total operating income of $1.8 million. The OEM segment also was impacted by lower unit volumes. - "Capital expenditures during the first nine months of 2006 totaled $33.0 million of which $15.8 million relates to our Chinese joint venture. We expect to invest between $40 and $45 million for capital expenditures during 2006." Business Outlook Mr. Karp said, "The housing market is in the midst of a much anticipated 'correction'. Housing starts for the third quarter of 2006 were 18.7 percent less than for the same quarter last year. Also, the inventory of new unsold homes has risen to a 6.6 months supply. The downturn in housing is likely to continue into next year, but may be moderated by prevailing low mortgage rates and positive demographic factors. The non-residential construction market continues to strengthen and the home improvement sector has shown steady growth. "Mueller will continue to react to changing market conditions which present opportunities as well as challenges." Mueller Industries, Inc. is a leading manufacturer of copper tube and fittings; brass and copper alloy rod, bar and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; plastic fittings and valves; refrigeration valves and fittings; and fabricated tubular products. Mueller's operations are located throughout the United States and in Canada, Mexico, Great Britain, and China. Mueller's business is importantly linked to (1) the construction of new homes; (2) the improvement and reconditioning of existing homes and structures; and (3) the commercial construction market which includes, office buildings, factories, hotels, hospitals, etc. 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," 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 -------------------------- -------------------------- Sept. 30, Oct. 1, Sept. 30, Oct. 1, 2006 2005 2006 2005 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited) Net sales $ 635,998 $ 434,130 $ 1,966,700 $ 1,246,299 Cost of goods sold 528,946 360,514 1,623,053 1,040,201 Gross profit 107,052 73,616 343,647 206,098 Depreciation and amortization 10,462 10,082 31,033 30,571 Selling, general, and administrative expense 34,787 33,297 109,435 92,788 Operating income 61,803 30,237 203,179 82,739 Interest expense (5,085) (4,794) (15,161) (14,730) Other income, net 1,452 5,421 3,398 10,188 Income from continuing operations before income taxes 58,170 30,864 191,416 78,197 Income tax expense (6,591) (9,848) (47,722) (24,790) Income from continuing operations 51,579 21,016 143,694 53,407 Income from discontinued operations, net of income taxes - 3,324 - 3,324 Net income $ 51,579 $ 24,340 $ 143,694 $ 56,731 Earnings per share: Weighted average shares for basic earnings per share 36,976 36,625 36,853 36,576 Effect of dilutive stock options 379 495 396 536 Adjusted weighted average shares for diluted earnings per share 37,355 37,120 37,249 37,112 Basic earnings per share: From continuing operations $ 1.39 $ 0.57 $ 3.90 $ 1.46 From discontinued operations - 0.09 - 0.09 Basic earnings per share $ 1.39 $ 0.66 $ 3.90 $ 1.55 Diluted earnings per share: From continuing operations $ 1.38 $ 0.57 $ 3.86 $ 1.44 From discontinued operations - 0.09 - 0.09 Diluted earnings per share $ 1.38 $ 0.66 $ 3.86 $ 1.53 Summary Segment Data: Net sales: Plumbing & Refrigeration Segment $ 426,261 $ 322,507 $ 1,364,360 $ 918,839 OEM Segment 218,372 114,325 628,472 336,608 Elimination of intersegment sales (8,635) (2,702) (26,132) (9,148) Net sales $ 635,998 $ 434,130 $ 1,966,700 $ 1,246,299 Operating income: Plumbing & Refrigeration Segment $ 56,863 $ 30,955 $ 179,384 $ 78,732 OEM Segment 9,862 5,700 42,326 19,540 Unallocated expenses (4,922) (6,418) (18,531) (15,533) Operating income $ 61,803 $ 30,237 $ 203,179 $ 82,739
MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2006 2005 ------------- ------------- (Unaudited) ASSETS Cash and cash equivalents $ 170,463 $ 129,685 Accounts receivable, net 309,153 248,395 Inventories 298,140 196,987 Other current assets 43,294 36,919 Total current assets 821,050 611,986 Property, plant, and equipment, net 315,649 307,046 Other assets 170,699 185,606 $ 1,307,398 $ 1,104,638 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $ 33,255 $ 4,120 Accounts payable 142,577 124,216 Other current liabilities 131,569 123,056 Total current liabilities 307,401 251,392 Long-term debt 308,273 312,070 Pension and postretirement liabilities 35,939 35,236 Environmental reserves 8,965 9,073 Deferred income taxes 44,662 63,944 Other noncurrent liabilities 3,062 3,078 Total liabilities 708,302 674,793 Minority interest in subsidiaries 21,738 6,937 Stockholders' equity 577,358 422,908 $ 1,307,398 $ 1,104,638 MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Nine Months Ended ------------------------------ September 30, October 1, 2006 2005 ------------- ------------- (Unaudited) Operating activities: Net income from continuing operations $ 143,694 $ 53,407 Reconciliation of net income from continuing operations to net cash provided by operating activities: Depreciation and amortization 31,225 30,691 Deferred income taxes (11,193) (1,813) Minority interest in subsidiaries 2,526 7 Share-based compensation expense 2,041 - Loss (gain) on disposal of properties 1,913 (3,713) Gain on sale of equity investment (1,876) - Income tax benefit from exercise of stock options (1,217) 529 Equity in earnings of unconsolidated subsidiary (964) (4,005) Gain on early retirement of debt (97) - Changes in assets and liabilities, net of business acquired: Receivables (63,791) (49,665) Inventories (96,979) 8,703 Current liabilities 25,319 50,639 Other, net (5,557) (1,629) Net cash provided by operating activities 25,044 83,151 Investing activities: Capital expenditures (32,975) (13,425) Proceeds from sales of properties and equity investment 23,227 10,059 Business acquired, net of cash received 3,632 (10,891) Net cash used in investing activities (6,116) (14,257) Financing activities: Issuance of debt by joint venture 24,918 - Dividends paid (11,073) (10,983) Proceeds from the sale of treasury stock 7,116 4,346 Repayments of long-term debt (1,922) (4,355) Proceeds from the issuance of debt 1,902 - Income tax benefit from exercise of stock options 1,217 - Acquisition of treasury stock (570) (168) Net cash provided by (used in) financing activities 21,588 (11,160) Effect of exchange rate changes on cash 262 (495) Net cash provided by operating activities of discontinued operations - 3,324 Increase in cash and cash equivalents 40,778 60,563 Cash and cash equivalents at the beginning of the period 129,685 47,449 Cash and cash equivalents at the end of the period $ 170,463 $ 108,012 SOURCE Mueller Industries, Inc. -0- 10/24/2006 /CONTACT: Kent A. McKee of Mueller Industries, Inc., +1-901-753-3208/