MUELLER INDUSTRIES INC - FORM 8-K - October 24, 2017

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 24, 2017
mlia11.jpg
   MUELLER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
  
  Delaware
  1-6770
  25-0790410
(State or other
(Commission File
(IRS Employer
jurisdiction of
Number)
Identification No.)
incorporation)
 
 
  
8285 Tournament Drive, Suite 150
  Memphis, Tennessee
38125
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code:
  (901) 753-3200
Registrant’s Former Name or Address, if changed since last report:
  N/A
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 
 
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 
 
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 
 
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 
 
 Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new of revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 


Item 2.02.
Results of Operations and Financial Condition.

On October 24, 2017, the Registrant issued a press release announcing earnings for the quarter ended September 30, 2017. A copy of the press release announcing the third quarter 2017 earnings is attached as Exhibit 99.1.

Item 9.01.
Financial Statements and Exhibits.
 
(d) Exhibits
 
 
99.1
Press release, dated October 24, 2017 reporting third quarter 2017 earnings.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




















2

 SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
MUELLER INDUSTRIES, INC.
 
 
 
By:
/s/ JEFFREY A. MARTIN
 
 
Name:
Jeffrey A. Martin
 
Title:
Chief Financial Officer and Treasurer
 
 
 
Date:  October 24, 2017
 
 


 


 






















3

Exhibit Index
 
Exhibit No.
Description 
 
 
99.1



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
























4

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Mueller Industries, Inc. Reports Third Quarter 2017 Earnings

MEMPHIS, Tenn., October 24, 2017 -- Mueller Industries, Inc. (NYSE: MLI) announced today operating income of $37.6 million for the third quarter of 2017, compared with $37.5 million in the same quarter last year. Net income for the period was $22.3 million, or 39 cents per diluted share, on net sales of $550.4 million. This compares with net income of $26.0 million, or 45 cents per diluted share, on net sales of $506.6 million in the same quarter of 2016.

Financial and Operating Highlights for the third quarter of 2017:
•
The average price of copper was 34 percent (73 cents per pound) higher compared with the same period of 2016.
•
The increase in net sales was primarily attributable to higher selling prices, offset by the absence of $28.3 million of sales recorded by MXR, a business the Company exited in June 2017.
•
Interest expense for the quarter was $5.2 million compared with $1.8 million in the same quarter of 2016. The increase was primarily due to interest on the Company’s 6% Subordinated Debentures.
•
During the quarter, the Company paid down $100.0 million of debt.
•
At quarter-end, cash totaled $106.3 million.


Regarding the outlook, Greg Christopher, Mueller CEO, said, “Demand in most of our businesses was solid in the third quarter despite the disruption natural disasters caused in key U.S. markets. We expect this positive trend to continue.”

In addition, Mr. Christopher commented, “Our third quarter volume and operating income were significantly affected by challenges we face in our U.S. copper tube operations as we carry out major capital investment projects. Production disruptions and higher spending related to the ongoing projects, as well as lower spreads due to the rapid rise in copper prices, reduced earnings in our U.S. copper tube businesses by approximately $10.0 million compared to the third quarter of 2016.

“These capital projects are aimed at improving quality, conversion costs, yield and capacity. We believe the challenges that have affected us all year reached a crest in the third quarter. We are confident that we will make progress in ironing out the major issues by year-end and anticipate that we will begin realizing the benefits in 2018.”




5


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 Memphis, Tennessee and comprises a network of operations in the United States, Canada, Mexico, Great Britain, South Korea, 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.

CONTACT
Jeffrey A. Martin
(901) 753-3226


6

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
For the Quarter Ended
 
For the Nine Months Ended
(In thousands, except per share data)
September 30, 2017
 
October 1, 2016
 
September 30, 2017
 
October 1, 2016
 
 
 
 
 
 
 
 
Net sales
$
550,363

 
$
506,584

 
$
1,742,549

 
$
1,583,464

 
 
 
 
 
 
 
 
Cost of goods sold
471,262

 
424,668

 
1,484,000

 
1,327,370

Depreciation and amortization
8,266

 
9,016

 
25,216

 
26,997

Selling, general, and administrative expense
33,276

 
32,413

 
102,953

 
102,707

Asset impairments
—

 
3,000

 
411

 
3,000

 
 
 
 
 
 
 
 
Operating income
37,559

 
37,487

 
129,969

 
123,390

 
 
 
 
 
 
 
 
Interest expense
(5,237
)
 
(1,830
)
 
(14,210
)
 
(5,370
)
Other (expense) income, net
(458
)
 
120

 
324

 
880

 
 
 
 
 
 
 
 
Income before income taxes
31,864

 
35,777

 
116,083

 
118,900

 
 
 
 
 
 
 
 
Income tax expense
(8,716
)
 
(10,837
)
 
(33,295
)
 
(38,963
)
(Loss) income from unconsolidated affiliates, net of tax
(394
)
 
1,122

 
(1,746
)
 
3,049

 
 
 
 
 
 
 
 
Consolidated net income
22,754

 
26,062

 
81,042

 
82,986

 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
(496
)
 
(84
)
 
(1,164
)
 
(581
)
 
 
 
 
 
 
 
 
Net income attributable to Mueller Industries, Inc.
$
22,258

 
$
25,978

 
$
79,878

 
$
82,405

 
 
 
 
 
 
 
 
Weighted average shares for basic earnings per share
56,987

 
56,631

 
56,891

 
56,536

Effect of dilutive stock-based awards
456

 
586

 
542

 
589

 
 
 
 
 
 
 
 
Adjusted weighted average shares for diluted earnings per share
57,443

 
57,217

 
57,433

 
57,125

 
 
 
 
 
 
 
 
Basic earnings per share
$
0.39

 
$
0.46

 
$
1.40

 
$
1.46

 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.39

 
$
0.45

 
$
1.39

 
$
1.44

 
 
 
 
 
 
 
 
Dividends per share
$
0.100

 
$
0.100

 
$
8.300

 
$
0.275

 
 
 
 
 
 
 
 
Summary Segment Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
 
 
 
    Piping Systems Segment
$
384,078

 
$
351,557

 
$
1,205,697

 
$
1,109,109

    Industrial Metals Segment
147,578

 
131,350

 
451,919

 
393,608

    Climate Segment
32,488

 
30,003

 
103,403

 
92,068

    Elimination of intersegment sales
(13,781
)
 
(6,326
)
 
(18,470
)
 
(11,321
)
 
 
 
 
 
 
 
 
Net sales
$
550,363

 
$
506,584

 
$
1,742,549

 
$
1,583,464

 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
    Piping Systems Segment
$
20,724

 
$
24,138

 
$
85,672

 
$
88,256

    Industrial Metals Segment
23,045

 
18,749

 
60,475

 
55,785

    Climate Segment
5,429

 
4,824

 
17,155

 
14,540

    Unallocated expenses
(11,639
)
 
(10,224
)
 
(33,333
)
 
(35,191
)
 
 
 
 
 
 
 
 
Operating income
$
37,559

 
$
37,487

 
$
129,969

 
$
123,390


7

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(In thousands)
September 30, 2017
 
December 31, 2016
ASSETS
 
 
 
Cash and cash equivalents
$
106,344

 
$
351,317

Accounts receivable, net
276,678

 
256,291

Inventories
284,114

 
242,013

Other current assets
25,692

 
44,702

 
 
 
 
    Total current assets
692,828

 
894,323

 
 
 
 
Property, plant, and equipment, net
283,845

 
295,231

Other assets
272,551

 
257,922

 
 
 
 
 
$
1,249,224

 
$
1,447,476

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current portion of debt
$
14,450

 
$
13,655

Accounts payable
125,032

 
103,175

Other current liabilities
105,677

 
102,162

 
 
 
 
    Total current liabilities
245,159

 
218,992

 
 
 
 
Long-term debt
388,818

 
213,709

Pension and postretirement liabilities
31,877

 
31,273

Environmental reserves
21,365

 
21,208

Deferred income taxes
19,963

 
19,573

Other noncurrent liabilities
12,005

 
6,284

 
 
 
 
    Total liabilities
719,187

 
511,039

 
 
 
 
Total Mueller Industries, Inc. stockholders’ equity
516,903

 
898,684

Noncontrolling interests
13,134

 
37,753

 
 
 
 
    Total equity
530,037

 
936,437

 
 
 
 
 
$
1,249,224

 
$
1,447,476













8

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Nine Months Ended
 (In thousands)
September 30, 2017
 
October 1, 2016
 
 
 
 
Cash flows from operating activities
 
 
 
Consolidated net income
$
81,042

 
$
82,986

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

 
 

Depreciation and amortization
25,439

 
27,267

Stock-based compensation expense
5,555

 
4,553

Loss (income) from unconsolidated affiliates
1,746

 
(3,049
)
Gain on sale of business
(1,491
)
 
—

Gain on disposals of properties
(26
)
 
(747
)
Gain on sales of securities
(611
)
 
—

Impairment charges
411

 
3,000

Deferred income taxes
624

 
6,491

Changes in assets and liabilities, net of businesses acquired and sold:
 
 
 
Receivables
(33,359
)
 
(45,780
)
Inventories
(40,920
)
 
(914
)
Other assets
(3,372
)
 
14,428

Current liabilities
20,967

 
(15,998
)
Other liabilities
(1,498
)
 
(2,101
)
Other, net
(973
)
 
450

 
 
 
 
Net cash provided by operating activities
53,534

 
70,586

 
 
 
 
Cash flows from investing activities
 
 
 
Capital expenditures
(17,297
)
 
(15,632
)
Acquisition of businesses, net of cash acquired
(18,396
)
 
(20,533
)
Proceeds from sale of business, net of cash sold
17,483

 
—

Net withdrawals from restricted cash balances
5,197

 
1,177

Investment in unconsolidated affiliates
(3,317
)
 
—

Proceeds from sales of properties
11,732

 
5,301

Proceeds from sales of securities
1,787

 
—

 
 
 
 
Net cash used in investing activities
(2,811
)
 
(29,687
)
 
 
 
 
Cash flows from financing activities
 
 
 
Dividends paid to stockholders of Mueller Industries, Inc.
(191,241
)
 
(15,555
)
Dividends paid to noncontrolling interests
(2,909
)
 
(3,765
)
Issuance of long-term debt
—

 
2,000

(Repayment) issuance of debt by consolidated joint ventures, net
(3,451
)
 
5,006

Net cash used to settle stock-based awards
(1,644
)
 
(1,356
)
Repayments of long-term debt
(100,917
)
 
(769
)
 
 
 
 
Net cash used in financing activities
(300,162
)
 
(14,439
)
 
 
 
 
Effect of exchange rate changes on cash
4,466

 
(3,511
)
 
 
 
 
(Decrease) increase in cash and cash equivalents
(244,973
)
 
22,949

Cash and cash equivalents at the beginning of the period
351,317

 
274,844

 
 
 
 
Cash and cash equivalents at the end of the period
$
106,344

 
$
297,793


9

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