Mueller Industries Inc. Reports Third Quarter 2017 Earnings

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."

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

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

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

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

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