Attached files
Exhibit 19.1
To Our Stockholders, Customers, and Employees
Mueller’s net income was $40.6 million, or $1.07 per diluted share, for the first quarter of 2011. This compares with net income of $34.0 million, or 90 cents per diluted share, for the same period of 2010.
Both the first quarters of 2011 and 2010 had unusual items which were included in net income. In 2011, income of 18 cents per diluted share was included, resulting from the favorable settlement of a legal action. And, in the first quarter of 2010, income of 62 cents per diluted share was included in net income, resulting from an insurance claim. Excluding these unusual items, Mueller’s net income for the first quarter of 2011 was $33.8 million, or 89 cents per diluted share, compared with $10.6 million, or 28 cents per diluted share, for the first quarter of 2010. On this basis, net income more than tripled.
Net sales in the first quarter of 2011 amounted to $687.7 million, a 42 percent increase over net sales in the same quarter a year ago. The first quarter of 2011 was a 14-week period while the first quarter of 2010 was a 13-week period.
Our Plumbing & Refrigeration segment posted operating earnings of $29.7 million. Net sales for the first quarter of 2011 totaled $380.6 million. In the same period a year ago, comparable segment earnings were $18.0 million (plus a $22.5 million gain on the settlement of an insurance claim as discussed above) on net sales of $256.7 million. Volumes and margins were better across most product lines contributing to the improved earnings.
Our OEM segment posted operating earnings of $29.6 million during the first quarter of 2011 on net sales of $319.3 million, which compares with operating income of $16.1 million on net sales of $232.2 million for the same period in 2010. The increase in earnings was primarily due to higher volume and lower costs.
The construction sector remains anemic. On the residential side, foreclosures and the threats thereof weigh on weak demand caused by poor jobs growth, even though mortgage rates are low and favorable affordability conditions exist. As for commercial construction, private nonresidential activity suffers from high vacancy rates. Despite these difficult conditions, Mueller achieved a very good first quarter and we remain positive about the outlook for the year.
Very Truly Yours,
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/S/ Harvey L. Karp
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/S/ Gregory L. Christopher
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Harvey L. Karp
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Gregory L. Christopher
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Chairman of the Board
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Chief Executive Officer
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April 26, 2011
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.
1
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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||||||||
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(In thousands, except per share data)
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||||||||
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For the Quarter Ended
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||||||||
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April 2,
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March 27,
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|||||||
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2011
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2010
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|||||||
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(Unaudited)
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||||||||
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Net sales
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$
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687,681
|
$
|
485,268
|
||||
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Cost of goods sold
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589,874
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413,048
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||||||
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Depreciation and amortization
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9,699
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10,348
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||||||
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Selling, general, and administrative expense
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35,369
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37,323
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||||||
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Litigation settlement
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(10,500
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)
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--
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|||||
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Insurance gain
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--
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(22,506
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)
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|||||
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Operating income
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63,239
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47,055
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||||||
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Interest expense
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(3,348
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)
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(2,532
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)
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||||
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Other income, net
|
1,059
|
140
|
||||||
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Income before income taxes
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60,950
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44,663
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||||||
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Income tax expense
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(20,408
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)
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(9,864
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)
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||||
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Consolidated net income
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40,542
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34,799
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||||||
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Net loss (income) attributable to noncontrolling interest
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45
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(841
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)
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|||||
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Net income attributable to the Company
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$
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40,587
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$
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33,958
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||||
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Basic earnings per share:
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||||||||
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Weighted average shares outstanding
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37,723
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37,588
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||||||
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Basic earnings per share
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$
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1.08
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$
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0.90
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||||
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Diluted earnings per share:
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||||||||
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Weighted average shares outstanding plus assumed conversions
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37,986
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37,682
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||||||
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Diluted earnings per share
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$
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1.07
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$
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0.90
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||||
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Dividends per share
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$
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0.10
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$
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0.10
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||||
2
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CONDENSED CONSOLIDATED BALANCE SHEETS
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||||||||
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(In thousands)
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||||||||
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April 2,
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December 25,
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|||||||
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2011
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2010
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|||||||
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(Unaudited)
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||||||||
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ASSETS
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||||||||
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Cash and cash equivalents
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$
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413,922
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$
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394,139
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||||
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Accounts receivable, net
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353,321
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269,258
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||||||
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Inventories
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231,270
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209,892
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||||||
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Other current assets
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36,583
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39,025
|
||||||
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Total current assets
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1,035,096
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912,314
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||||||
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Property, plant, and equipment, net
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227,890
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229,498
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||||||
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Other assets
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119,026
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117,184
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||||||
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$
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1,382,012
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$
|
1,258,996
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|||||
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LIABILITIES AND EQUITY
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||||||||
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Current portion of long-term debt
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$
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43,117
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$
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32,020
|
||||
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Accounts payable
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123,031
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67,849
|
||||||
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Other current liabilities
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111,982
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95,258
|
||||||
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Total current liabilities
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278,130
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195,127
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||||||
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Long-term debt, less current portion
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157,226
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158,226
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||||||
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Pension and postretirement liabilities
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40,995
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40,939
|
||||||
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Environmental reserves
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23,263
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23,902
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||||||
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Deferred income taxes
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21,915
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24,081
|
||||||
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Other noncurrent liabilities
|
808
|
824
|
||||||
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Total liabilities
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522,337
|
443,099
|
||||||
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Stockholders' equity
|
832,299
|
788,736
|
||||||
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Noncontrolling interest
|
27,376
|
27,161
|
||||||
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Total equity
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859,675
|
815,897
|
||||||
|
$
|
1,382,012
|
$
|
1,258,996
|
|||||
3