Attached files
Exhibit 19.1
To Our Stockholders, Customers, and Employees
Mueller’s net income was $34.0 million, or 90 cents per diluted share, for the first quarter of 2010. This compares with a net loss of $2.5 million, or 7 cents per diluted share, for the same period of 2009. First quarter net sales for 2010 were $485.3 million compared with $326.6 million in 2009.
During the first quarter of 2010, the Company recognized a gain of $22.5 million (or 62 cents per diluted share after tax) on the settlement of an insurance claim pertaining to the 2008 fire at its U.K. copper tube operation. Further, the realization of this gain resulted in a tax benefit primarily from the utilization of U.K. net operating losses that were previously reserved.
Net sales increased to $485.3 million primarily due to higher selling prices that reflect increased raw material costs. The Comex average price of copper was $3.28 per pound in the first quarter of 2010, which compares with $1.57 in the first quarter of 2009. Gross profit was $72.2 million in the first quarter which is the best of the last six consecutive quarters.
Our Plumbing & Refrigeration segment posted operating earnings of $40.5 million that includes a $22.5 million gain on the settlement of an insurance claim as discussed above. Net sales for the first quarter of 2010 were $256.7 million. In the same period a year ago, segment earnings were $10.3 million on net sales of $190.4 million. Volumes were mixed; tube volumes were lower, while fittings volume improved slightly.
Our OEM segment posted operating earnings of $16.1 million during the first quarter of 2010 on net sales of $232.2 million, which compares with an operating loss of $6.3 million on net sales of $138.4 million for the same period in 2009. The increase in earnings was primarily due to higher volume and better spreads as demand improved.
Business conditions have shown signs of improvement as the economic recovery in the United States takes hold. Although the commercial construction sector remains sluggish, residential construction has improved somewhat from the trough. We expect that residential construction gains will be modest for the remainder of the year, while improvement in commercial construction is more likely to occur in 2011.
Our Annual Stockholders’ Meeting will be held at Mueller’s headquarters in Memphis, Tennessee on May 6, 2010. We hope you can attend, but if you cannot, we urge you to sign and return your proxy card.
Very Truly Yours,
| /S/ Harvey L. Karp | /S/ Gregory L. Christopher |
| Harvey L. Karp | Gregory L. Christopher |
| Chairman of the Board | Chief Executive Officer |
April 20, 2010
Statements in this release that are not strictly historical may be “forward-looking” statements, which involve risks and uncertainties. These include economic and currency conditions, continued availability of raw materials, market demand, pricing, and competitive and technological factors, among others, as set forth in the Company’s SEC filings.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except per share data)
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For the Quarter Ended
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March 27,
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March 28,
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2010
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2009
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(Unaudited)
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Net sales
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$ | 485,268 | $ | 326,558 | ||||
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Cost of goods sold
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413,048 | 287,383 | ||||||
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Depreciation and amortization
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10,348 | 10,480 | ||||||
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Selling, general, and administrative expense
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37,323 | 31,158 | ||||||
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Insurance gain
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(22,506 | ) | - | |||||
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Operating income (loss)
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47,055 | (2,463 | ) | |||||
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Interest expense
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(2,532 | ) | (2,636 | ) | ||||
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Other income, net
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140 | 627 | ||||||
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Income (loss) before income taxes
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44,663 | (4,472 | ) | |||||
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Income tax (expense) benefit
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(9,864 | ) | 1,962 | |||||
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Consolidated net income (loss)
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34,799 | (2,510 | ) | |||||
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Less net (income) loss attributable to noncontrolling interest
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(841 | ) | 18 | |||||
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Net income (loss) attributable to the Company
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$ | 33,958 | $ | (2,492 | ) | |||
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Basic earnings (loss) per share:
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Weighted average shares outstanding
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37,588 | 37,143 | ||||||
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Basic earnings (loss) per share
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$ | 0.90 | $ | (0.07 | ) | |||
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Diluted earnings (loss) per share:
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Weighted average shares outstanding plus assumed conversions
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37,682 | 37,143 | ||||||
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Diluted earnings (loss) per share
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$ | 0.90 | $ | (0.07 | ) | |||
| Dividends per share | $ | 0.10 | $ | 0.10 | ||||
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands)
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March 27,
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December 26,
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2010
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2009
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(Unaudited)
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ASSETS
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Cash and cash equivalents
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$ | 397,180 | $ | 346,001 | ||||
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Accounts receivable, net
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256,950 | 228,739 | ||||||
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Inventories
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185,828 | 191,262 | ||||||
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Other current assets
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33,478 | 42,841 | ||||||
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Total current assets
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873,436 | 808,843 | ||||||
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Property, plant, and equipment, net
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242,796 | 250,395 | ||||||
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Other assets
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121,902 | 120,903 | ||||||
| $ | 1,238,134 | $ | 1,180,141 | |||||
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LIABILITIES AND EQUITY
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Current portion of long-term debt
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$ | 27,739 | $ | 24,325 | ||||
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Accounts payable
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89,061 | 73,837 | ||||||
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Other current liabilities
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99,306 | 85,208 | ||||||
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Total current liabilities
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216,106 | 183,370 | ||||||
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Long-term debt, less current portion
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158,226 | 158,226 | ||||||
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Pension and postretirement liabilities
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42,843 | 44,320 | ||||||
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Environmental reserves
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23,862 | 23,268 | ||||||
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Deferred income taxes
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28,675 | 31,128 | ||||||
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Other noncurrent liabilities
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923 | 887 | ||||||
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Total liabilities
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470,635 | 441,199 | ||||||
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Stockholders' equity
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740,815 | 713,167 | ||||||
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Noncontrolling interest
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26,684 | 25,775 | ||||||
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Total equity
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767,499 | 738,942 | ||||||
| $ | 1,238,134 | $ | 1,180,141 | |||||
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