Mueller Industries, Inc. Reports Third Quarter 2015 Earnings

MEMPHIS, Tenn., October 20, 2015 -- Mueller Industries, Inc. (NYSE: MLI) announced today net income of $17.8 million, or 31 cents per diluted share, for the third quarter of 2015.  This compares to net income of $23.8 million, or 42 cents per diluted share, during the third quarter of 2014.  Net sales for the third quarter of 2015 were $535.2 million compared with $602.8 million for the same quarter of the prior year.

Both revenues and earnings in the third quarter of 2015 were impacted by lower copper prices and lower unit volume in the OEM Segment.  The average price of copper was $2.40 per pound in the third quarter of 2015 compared to $3.16 per pound in the third quarter of 2014.  During the third quarter of 2015, copper declined $0.37 per pound, or 49 percent of the year-over-year decline.

The sharp decline of copper in the quarter put pressure on margins of our FIFO accounting businesses.  OEM volumes in the US continued to be impacted by soft demand in the industrial segment and increased import competition due to the stronger dollar.  OEM volumes in China were impacted by slowing demand due to general domestic economic conditions.  

Financial and Operating Highlights for the third quarter of 2015:

• The impact of the copper decline represented $63.3 million of the $67.6 million reduction in net sales and $13.5 million in lower gross margins.
• The effective tax rate for the quarter reflects a benefit of $4.2 million related to a reduction to the Company's deferred tax liabilities.
• The rationalization of the UK copper tube business acquired in 2014 was completed during the quarter.  All associated impairments and redundancy expenses are now complete.
• During the quarter we completed the acquisition of Great Lakes Copper and invested in a joint venture that acquired Tecumseh Products Company for a total cash investment of $137.4 million.
• The Company recognized $2.2 million in expenses related to transaction costs linked to the investment in Tecumseh Products Company in the final week of the quarter.
• Cash provided from operations in the quarter was $78.3 million with the quarter end cash totaling $220.7 million, or $3.86 per share.
• Debt to total capitalization was 20.5 percent and the current ratio was 3.6 to 1.

Regarding the outlook, Greg Christopher, Mueller's CEO, said "Construction remains positive in both residential and non-residential segments and we expect this trend to continue.  However, uncertainty in the industrial sectors looks to continue into the next few quarters."  He adds, "We have completed the rationalizations of our Yorkshire and Howell acquisitions and we are pleased with their continuing improvement.  Our balance sheet remains solid and cash remains strong after investing $173.3 million in acquisitions and $22.5 million in capital improvements year-to-date 2015."

Mueller Industries, Inc. is a 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, 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," 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

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 26, 2015				September 27, 2014				September 26, 2015				September 27, 2014
Net sales		$	535,184			$	602,820			$	1,628,019			$	1,826,885
Cost of goods sold			467,167				521,278				1,398,366				1,574,830
Depreciation and amortization			8,749				8,952				24,790				25,651
Selling, general, and administrative expense			32,241				34,004				98,492				100,512
Gain on sale of assets			-				-				(15,376	)			(1,417	)
Severance			-				860				3,442				3,072
Operating income			27,027				37,726				118,305				124,237
Interest expense			(1,682	)			(1,430	)			(5,977	)			(3,913	)
Other income, net			164				225				534				440
Income before income taxes			25,509				36,521				112,862				120,764
Income tax expense			(5,223	)			(12,199	)			(36,374	)			(36,279	)
Income/(loss) from unconsolidated   subsidiary, net of tax			(2,191	)			-				(2,191	)			-
Consolidated net income			18,095				24,322				74,297				84,485
Net income attributable to noncontrolling   interest			(295	)			(499	)			(868	)			(911	)
Net income attributable to Mueller   Industries, Inc.		$	17,800			$	23,823			$	73,429			$	83,574
Weighted average shares for basic earnings   per share			56,375				56,107				56,272				55,999
Effect of dilutive stock-based awards			598				637				690				746
Adjusted weighted average shares for   diluted earnings per share			56,973				56,744				56,962				56,745
Basic earnings per share		$	0.32			$	0.42			$	1.30			$	1.49
Diluted earnings per share		$	0.31			$	0.42			$	1.29			$	1.47
Dividends per share		$	0.075			$	0.075			$	0.225			$	0.225
Summary Segment Data:
Net sales:
Plumbing & Refrigeration Segment		$	325,022			$	357,843			$	957,375			$	1,093,060
OEM Segment			212,596				247,883				678,293				743,322
Elimination of intersegment sales			(2,434	)			(2,906	)			(7,649	)			(9,497	)
Net sales		$	535,184			$	602,820			$	1,628,019			$	1,826,885
Operating income:
Plumbing & Refrigeration Segment		$	19,559			$	20,156			$	75,033			$	76,371
OEM Segment			13,278				23,977				62,627				68,479
Unallocated expenses			(5,810	)			(6,407	)			(19,355	)			(20,613	)
Operating income		$	27,027			$	37,726			$	118,305			$	124,237

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands)		September 26, 2015				December 27, 2014
ASSETS
Cash and cash equivalents		$	220,745			$	352,134
Accounts receivable, net			299,417				275,065
Inventories			250,799				256,585
Other current assets			54,538				57,429
Total current assets			825,499				941,213
Property, plant, and equipment, net			270,655				245,910
Other assets			277,372				140,973
		$	1,373,526			$	1,328,096
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of debt		$	13,756			$	36,194
Accounts payable			113,597				100,735
Other current liabilities			102,188				101,140
Total current liabilities			229,541				238,069
Long-term debt			204,500				205,250
Pension and postretirement liabilities			44,024				41,556
Environmental reserves			21,566				21,842
Deferred income taxes			22,142				24,556
Other noncurrent liabilities			3,570				1,389
Total liabilities			525,343				532,662
Total Mueller Industries, Inc. stockholders' equity			815,433				762,150
Noncontrolling interest			32,750				33,284
Total equity			848,183				795,434
		$	1,373,526			$	1,328,096

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		For the Nine Months Ended
(In thousands)		September 26, 2015				September 27, 2014
Cash flows from operating activities
Consolidated net income		$	74,297			$	84,485
Reconciliation of consolidated net income to net cash   provided by operating activities:
Depreciation and amortization			25,132				25,888
Stock-based compensation expense			4,611				4,957
Equity in losses of unconsolidated subsidiary			2,191				-
Gain on disposal of assets			(14,875	)			(1,146	)
Impairment charges			570				-
Deferred income taxes			(8,262	)			(6,908	)
Income tax benefit from exercise of stock options			(953	)			(829	)
Changes in assets and liabilities, net of businesses acquired:
Receivables			5,249				(62,854	)
Inventories			29,901				(14,868	)
Other assets			4,302				(15,272	)
Current liabilities			(27,580	)			(8,675	)
Other liabilities			740				(797	)
Other, net			145				223
Net cash provided by operating activities			95,468				4,204
Cash flows from investing activities
Capital expenditures			(22,502	)			(28,406	)
Businesses acquired, net of cash acquired			(107,405	)			(30,137	)
Net withdrawals from restricted cash balances			1,822				2,507
Investment in unconsolidated subsidiary			(65,900	)			-
Proceeds from the sales of assets			5,521				4,920
Net cash used in investing activities			(188,464	)			(51,116	)
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.			(12,669	)			(12,606	)
Issuance of debt by Mueller Europe, Limited, net			-				12,008
Repayment of debt by joint venture, net			(21,597	)			(3,170	)
Net cash used to settle stock-based awards			(718	)			(887	)
Repurchase of common stock			-				(58	)
Repayments of long-term debt			(750	)			(800	)
Income tax benefit from exercise of stock options			953				829
Net cash used in financing activities			(34,781	)			(4,684	)
Effect of exchange rate changes on cash			(3,612	)			(346	)
Decrease in cash and cash equivalents			(131,389	)			(51,942	)
Cash and cash equivalents at the beginning of the period			352,134				311,800
Cash and cash equivalents at the end of the period		$	220,745			$	259,858

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