Mueller Industries, Inc. Reports Fourth Quarter and Fiscal 2007 Earnings

MEMPHIS, Tenn., Feb. 5 /PRNewswire-FirstCall/ -- Harvey L. Karp, Chairman of Mueller Industries, Inc. , announced today that Mueller's net income for the fiscal year ended December 29, 2007 was $115.5 million, or $3.10 per diluted share, which compares with $148.9 million, or $4.00 per diluted share, for 2006. Net sales for 2007 were $2.70 billion compared with $2.51 billion in 2006.

For the fourth quarter of 2007, the Company's net income was $28.8 million, or 78 cents per diluted share, on net sales of $621.7 million. This compares with net income of $5.2 million, or 14 cents per diluted share, on net sales of $544.2 million for the fourth quarter of 2006.

Financial and Operating Highlights Mr. Karp said: -- "The increase in net sales is primarily due to the acquisition of Extruded Metals, Inc. as well as the higher average cost of copper, the Company's principal raw material, which is generally passed through to customers by changes in selling prices. The COMEX average price of copper was $3.25 per pound in the fourth quarter of 2007. -- "During the fourth quarter of 2007, the Company recognized LIFO income of $10.0 million (or 17 cents per diluted share after tax) resulting from a decrease in inventory quantities accounted for under the LIFO method. The fourth quarter of 2006 included a pre-tax charge of approximately $14.2 million (or 26 cents per diluted share after tax) due to a write-down of inventories to the lower of cost or market. -- "Our return on average equity was 17.8 percent for 2007. -- "Our current ratio remains strong at 2.8 to 1 and our working capital is $605.3 million, of which over $300 million is cash on hand. -- "Cash provided by operating activities was $185.8 million in 2007 compared with $64.5 million during 2006. -- "As of year end, our financial leverage was modest with a debt to total capitalization ratio of 33.3 percent. -- "Total stockholders' equity was $710.5 million which equates to a book value per share of $19.16 of which $8.32 per share is in cash. -- "For the full year, our Plumbing & Refrigeration segment posted operating earnings of $178.4 million on net sales of $1.57 billion which compares with operating earnings of $197.4 million on net sales of $1.72 billion in 2006. Operating earnings includes LIFO income of $10.0 million in 2007. Also, in the fourth quarter of 2007, we wrote down the goodwill carrying value of our Mexican operations by $2.8 million due to an impairment charge. -- "Our OEM segment posted operating earnings of $38.2 million during the year on net sales of $1.14 billion, which compares with operating earnings of $44.8 million on net sales of $835.3 million for 2006. -- "Capital expenditures during 2007 totaled $29.9 million; cash flow to fund capital expenditures in 2008 are expected to be less than depreciation. -- "After year end, we acquired approximately $25.5 million of our outstanding 6% Subordinated Debentures at approximately 90 percent of face value. Accordingly, these were reclassified to the current portion of long-term debt on our balance sheet." Business Outlook for 2008

Regarding the outlook for 2008, Mr. Karp said, "Despite the challenges presented by the decline in the housing market, and the volatility in the prices of copper and energy, Mueller had its two best years ever in 2006 and 2007.

"The year 2008 will also be challenging as the national economy is slowing down and the housing market continues to contract. However, the U.S. economy has proven itself to be remarkably resilient, and we believe that later this year the housing market will bottom out and then gradually start to improve.

"Also, we anticipate that our non-residential businesses, which constitute a significant portion of our total, will have another good year in 2008.

"Mueller is well positioned to take advantage of opportunities in our marketplace. On average, we have made one or more acquisitions per year over the past decade. We will continue our quest to acquire sound companies which are compatible with our core businesses."

Mueller Industries, Inc. is a leading manufacturer of copper tube and fittings; brass and copper alloy rod, bar and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; plastic fittings and valves; refrigeration valves and fittings; and fabricated tubular products. Mueller's operations are located throughout the United States and in Canada, Mexico, Great Britain, and China. Mueller's business is importantly linked to: (1) the construction of new homes; (2) the improvement and reconditioning of existing homes and structures; and (3) the commercial construction market which includes, office buildings, factories, hotels, hospitals, etc.

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.

MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) For the Quarter Ended For the Year Ended December 29, December 30, December 29, December 30, 2007 2006 2007 2006 (Unaudited) (Unaudited) Net sales $621,734 $544,212 $2,697,845 $2,510,912 Cost of goods sold 523,381 486,383 2,324,924 2,109,436 Gross profit 98,353 57,829 372,921 401,476 Depreciation and amortization 10,299 10,586 44,153 41,619 Selling, general, and administrative expense 33,140 31,537 143,284 140,972 Copper litigation settlement (28) - (8,893) - Impairment charge 2,756 - 2,756 - Operating income 52,186 15,706 191,621 218,885 Interest expense (5,504) (5,316) (22,071) (20,477) Other income, net 2,793 1,773 13,731 5,171 Income before income taxes 49,475 12,163 183,281 203,579 Income tax expense (20,635) (6,988) (67,806) (54,710) Net income $28,840 $5,175 $115,475 $148,869 Weighted average shares for basic earnings per share 37,079 37,016 37,060 36,983 Effect of dilutive stock options 95 220 163 263 Adjusted weighted average shares for diluted earnings per share 37,174 37,236 37,223 37,246 Basic earnings per share $0.78 $0.14 $3.12 $4.03 Diluted earnings per share $0.78 $0.14 $3.10 $4.00 Summary Segment Data: Net sales: Plumbing & Refrigeration segment $349,228 $352,253 $1,572,565 $1,716,613 OEM segment 276,249 206,867 1,144,302 835,339 Elimination of intersegment sales (3,743) (14,908) (19,022) (41,040) Net sales $621,734 $544,212 $2,697,845 $2,510,912 Operating income: Plumbing & Refrigeration segment $47,507 $18,018 $178,367 $197,402 OEM segment 9,113 2,438 38,215 44,764 Unallocated expenses (4,434) (4,750) (24,961) (23,281) Operating income $52,186 $15,706 $191,621 $218,885 MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 29, December 30, 2007 2006 (Unaudited) ASSETS Cash and cash equivalents $308,618 $200,471 Accounts receivable, net 323,003 281,679 Inventories 269,032 258,647 Other current assets 39,694 35,397 Total current assets 940,347 776,194 Property, plant, and equipment, net 308,383 315,064 Other assets 200,474 177,649 $1,449,204 $1,268,907 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $72,743 $35,998 Accounts payable 140,497 96,095 Other current liabilities 121,813 123,426 Total current liabilities 335,053 255,519 Long-term debt 281,738 308,154 Pension and postretirement liabilities 36,071 36,599 Environmental reserves 8,897 8,907 Deferred income taxes 52,156 46,408 Other noncurrent liabilities 2,029 2,206 Total liabilities 715,944 657,793 Minority interest in subsidiaries 22,765 22,300 Stockholders' equity 710,495 588,814 $1,449,204 $1,268,907 MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Year Ended December 29, December 30, 2007 2006 (Unaudited) Operating activities: Net income $115,475 $148,869 Reconciliation of net income to net cash provided by operating activities: Depreciation and amortization 44,477 41,855 Deferred income taxes 3,094 (19,339) Stock-based compensation expense 2,737 2,789 (Gain) loss on disposal of properties (2,468) 2,620 Minority interest in subsidiaries, net of dividends received (781) 2,610 Gain on sale of equity investment - (1,876) Income tax benefit from exercise of stock options (73) (1,065) Equity in income of unconsolidated subsidiary - (964) Gain on early retirement of debt - (97) Impairment charge 2,756 - Changes in assets and liabilities, net of businesses acquired: Receivables (8,114) (14,350) Inventories 20,411 (56,786) Other assets (4,120) 1,449 Current liabilities 12,704 (41,357) Other liabilities 1,809 (2,578) Other, net (2,063) 2,759 Net cash provided by operating activities 185,844 64,539 Investing activities: Capital expenditures (29,870) (41,206) Proceeds from sales of properties and equity investment 3,809 23,528 Businesses acquired, net of cash received (32,243) 3,632 Net deposits into restricted cash balances (4,194) - Net cash used in investing activities (62,498) (14,046) Financing activities: Proceeds from issuance of long-term debt 16,635 28,759 Dividends paid (14,825) (14,775) Issuance of shares under incentive stock option plans from treasury 1,124 7,701 Repayments of long-term debt (18,765) (2,059) Acquisition of treasury stock (54) (1,092) Income tax benefit from exercise of stock options 73 1,065 Net cash (used in) provided by financing activities (15,812) 19,599 Effect of exchange rate changes on cash 613 694 Increase in cash and cash equivalents 108,147 70,786 Cash and cash equivalents at the beginning of the year 200,471 129,685 Cash and cash equivalents at the end of the year $308,618 $200,471