For the quarterly period ended June 27, 2015
|
Commission file number 1–6770
|
Delaware
|
25-0790410
|
(State or other jurisdiction
|
(I.R.S. Employer
|
of incorporation or organization)
|
Identification No.)
|
8285 Tournament Drive, Suite 150
|
|
Memphis, Tennessee
|
38125
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer x
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company o
|
Page Number
|
||
Part I. Financial Information
|
||
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
18
|
||
28
|
||
29
|
||
29
|
||
30
|
||
30
|
||
31
|
||
32
|
For the Quarter Ended
|
For the Six Months Ended
|
||||||||||||||||
(In thousands, except per share data)
|
June 27, 2015
|
June 28, 2014
|
June 27, 2015
|
June 28, 2014
|
|||||||||||||
Net sales
|
$
|
555,593
|
$
|
649,691
|
$
|
1,092,835
|
$
|
1,224,065
|
|||||||||
Cost of goods sold
|
470,365
|
557,775
|
931,199
|
1,053,552
|
|||||||||||||
Depreciation and amortization
|
8,188
|
8,592
|
16,041
|
16,699
|
|||||||||||||
Selling, general, and administrative expense
|
33,420
|
33,367
|
66,251
|
66,508
|
|||||||||||||
Gain on sale of assets
|
(15,376
|
)
|
—
|
(15,376
|
)
|
(1,417
|
)
|
||||||||||
Severance
|
3,442
|
1,753
|
3,442
|
2,212
|
|||||||||||||
Operating income
|
55,554
|
48,204
|
91,278
|
86,511
|
|||||||||||||
Interest expense
|
(2,219
|
)
|
(1,457
|
)
|
(4,295
|
)
|
(2,483
|
)
|
|||||||||
Other income, net
|
265
|
127
|
370
|
215
|
|||||||||||||
Income before income taxes
|
53,600
|
46,874
|
87,353
|
84,243
|
|||||||||||||
Income tax expense
|
(19,738
|
)
|
(11,665
|
)
|
(31,151
|
)
|
(24,080
|
)
|
|||||||||
Consolidated net income
|
33,862
|
35,209
|
56,202
|
60,163
|
|||||||||||||
Net income attributable to noncontrolling interest
|
(211
|
)
|
(164
|
)
|
(573
|
)
|
(412
|
)
|
|||||||||
Net income attributable to Mueller Industries, Inc.
|
$
|
33,651
|
$
|
35,045
|
$
|
55,629
|
$
|
59,751
|
|||||||||
Weighted average shares for basic earnings per share
|
56,247
|
55,973
|
56,220
|
55,946
|
|||||||||||||
Effect of dilutive stock-based awards
|
743
|
747
|
737
|
800
|
|||||||||||||
Adjusted weighted average shares for diluted earnings per share
|
56,990
|
56,720
|
56,957
|
56,746
|
|||||||||||||
Basic earnings per share
|
$
|
0.60
|
$
|
0.63
|
$
|
0.99
|
$
|
1.07
|
|||||||||
Diluted earnings per share
|
$
|
0.59
|
$
|
0.62
|
$
|
0.98
|
$
|
1.05
|
|||||||||
Dividends per share
|
$
|
0.075
|
$
|
0.075
|
$
|
0.150
|
$
|
0.150
|
|||||||||
See accompanying notes to condensed consolidated financial statements.
|
For the Quarter Ended
|
For the Six Months Ended
|
||||||||||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
June 27, 2015
|
June 28, 2014
|
|||||||||||||
Consolidated net income
|
$
|
33,862
|
$
|
35,209
|
$
|
56,202
|
$
|
60,163
|
|||||||||
Other comprehensive income (loss), net of tax:
|
|||||||||||||||||
Foreign currency translation
|
7,056
|
1,795
|
(1,348
|
)
|
2,962
|
||||||||||||
Net change with respect to derivative instruments and hedging activities
|
(903
|
)
|
(1)
|
(360
|
)
|
(2)
|
(1,101
|
)
|
(3)
|
(1,476
|
)
|
(4)
|
|||||
Net actuarial (gain) loss on pension and postretirement obligations
|
(647
|
)
|
(5)
|
(159
|
)
|
(6)
|
769
|
(7)
|
(156
|
)
|
(8)
|
||||||
Other, net
|
34
|
24
|
7
|
9
|
|||||||||||||
Total other comprehensive income (loss)
|
5,540
|
1,300
|
(1,673
|
)
|
1,339
|
||||||||||||
Consolidated comprehensive income
|
39,402
|
36,509
|
54,529
|
61,502
|
|||||||||||||
Comprehensive income attributable to noncontrolling interest
|
520
|
594
|
175
|
341
|
|||||||||||||
Comprehensive income attributable to Mueller Industries, Inc.
|
$
|
39,922
|
$
|
37,103
|
$
|
54,704
|
$
|
61,843
|
|||||||||
See accompanying notes to condensed consolidated financial statements.
|
(In thousands, except share data)
|
June 27,
2015
|
December 27,
2014
|
||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
299,147
|
$
|
352,134
|
||||
Accounts receivable, less allowance for doubtful accounts of $762 in 2015 and $666 in 2014
|
307,008
|
275,065
|
||||||
Inventories
|
278,937
|
256,585
|
||||||
Other current assets
|
45,680
|
57,429
|
||||||
Total current assets
|
930,772
|
941,213
|
||||||
Property, plant, and equipment, net
|
261,149
|
245,910
|
||||||
Goodwill
|
101,453
|
102,909
|
||||||
Other assets
|
51,584
|
38,064
|
||||||
Total assets
|
$
|
1,344,958
|
$
|
1,328,096
|
||||
Liabilities
|
||||||||
Current liabilities:
|
||||||||
Current portion of debt
|
$
|
18,014
|
$
|
36,194
|
||||
Accounts payable
|
89,715
|
100,735
|
||||||
Accrued wages and other employee costs
|
34,654
|
41,595
|
||||||
Other current liabilities
|
67,118
|
59,545
|
||||||
Total current liabilities
|
209,501
|
238,069
|
||||||
Long-term debt, less current portion
|
204,750
|
205,250
|
||||||
Pension liabilities
|
18,728
|
20,070
|
||||||
Postretirement benefits other than pensions
|
21,331
|
21,486
|
||||||
Environmental reserves
|
21,657
|
21,842
|
||||||
Deferred income taxes
|
21,542
|
24,556
|
||||||
Other noncurrent liabilities
|
2,790
|
1,389
|
||||||
Total liabilities
|
500,299
|
532,662
|
||||||
Equity
|
||||||||
Mueller Industries, Inc. stockholders’ equity:
|
||||||||
Preferred stock - $1.00 par value; shares authorized 5,000,000; none outstanding
|
—
|
—
|
||||||
Common stock - $.01 par value; shares authorized 100,000,000; issued 80,183,004; outstanding 56,986,344 in 2015 and 56,901,445 in 2014
|
802
|
802
|
||||||
Additional paid-in capital
|
270,784
|
268,575
|
||||||
Retained earnings
|
1,039,882
|
992,798
|
||||||
Accumulated other comprehensive loss
|
(44,195
|
)
|
(42,923
|
)
|
||||
Treasury common stock, at cost
|
(456,073
|
)
|
(457,102
|
)
|
||||
Total Mueller Industries, Inc. stockholders’ equity
|
811,200
|
762,150
|
||||||
Noncontrolling interest
|
33,459
|
33,284
|
||||||
Total equity
|
844,659
|
795,434
|
||||||
Commitments and contingencies
|
—
|
—
|
||||||
Total liabilities and equity
|
$
|
1,344,958
|
$
|
1,328,096
|
||||
See accompanying notes to condensed consolidated financial statements.
|
For the Six Months Ended
|
||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
||||||
Cash flows from operating activities
|
||||||||
Consolidated net income
|
$
|
56,202
|
$
|
60,163
|
||||
Reconciliation of consolidated net income to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
16,293
|
16,840
|
||||||
Stock-based compensation expense
|
2,966
|
3,526
|
||||||
Gain on disposal of assets
|
(15,392
|
)
|
(1,225
|
)
|
||||
Impairment charges
|
570
|
—
|
||||||
Deferred income taxes
|
(1,445
|
)
|
(6,523
|
)
|
||||
Income tax benefit from exercise of stock options
|
(146
|
)
|
(316
|
)
|
||||
Changes in assets and liabilities, net of businesses acquired:
|
||||||||
Receivables
|
(24,304
|
)
|
(100,413
|
)
|
||||
Inventories
|
(5,252
|
)
|
(20,619
|
)
|
||||
Other assets
|
6,963
|
(8,886
|
)
|
|||||
Current liabilities
|
(19,629
|
)
|
7,373
|
|||||
Other liabilities
|
(415
|
)
|
(893
|
)
|
||||
Other, net
|
739
|
92
|
||||||
Net cash provided by (used in) operating activities
|
17,150
|
(50,881
|
)
|
|||||
Cash flows from investing activities
|
||||||||
Capital expenditures
|
(15,969
|
)
|
(18,833
|
)
|
||||
Acquisition of businesses, net of cash acquired
|
(35,978
|
)
|
(30,137
|
)
|
||||
Net withdrawals from restricted cash balances
|
3,486
|
1,815
|
||||||
Proceeds from the sale of assets
|
5,518
|
4,874
|
||||||
Net cash used in investing activities
|
(42,943
|
)
|
(42,281
|
)
|
||||
Cash flows from financing activities
|
||||||||
Repayments of long-term debt
|
(500
|
)
|
(500
|
)
|
||||
Dividends paid to stockholders of Mueller Industries, Inc.
|
(8,435
|
)
|
(8,394
|
)
|
||||
(Repayment) issuance of debt by joint venture, net
|
(17,750
|
)
|
8,903
|
|||||
Issuance of debt
|
—
|
22,635
|
||||||
Net cash received to settle stock-based awards
|
125
|
296
|
||||||
Repurchase of common stock
|
—
|
(58
|
)
|
|||||
Income tax benefit from exercise of stock options
|
146
|
316
|
||||||
Net cash (used in) provided by financing activities
|
(26,414
|
)
|
23,198
|
|||||
Effect of exchange rate changes on cash
|
(780
|
)
|
363
|
|||||
Decrease in cash and cash equivalents
|
(52,987
|
)
|
(69,601
|
)
|
||||
Cash and cash equivalents at the beginning of the period
|
352,134
|
311,800
|
||||||
Cash and cash equivalents at the end of the period
|
$
|
299,147
|
$
|
242,199
|
||||
See accompanying notes to condensed consolidated financial statements.
|
(In thousands)
|
June 27,
2015
|
December 27,
2014
|
||||||
Raw materials and supplies
|
$
|
70,487
|
$
|
53,586
|
||||
Work-in-process
|
51,978
|
39,707
|
||||||
Finished goods
|
163,497
|
168,481
|
||||||
Valuation reserves
|
(7,025
|
)
|
(5,189
|
)
|
||||
Inventories
|
$
|
278,937
|
$
|
256,585
|
||||
For the Quarter Ended June 27, 2015
|
||||||||||||||||
(In thousands)
|
Plumbing & Refrigeration Segment
|
OEM
Segment
|
Corporate and Eliminations
|
Total
|
||||||||||||
Net sales
|
$
|
327,336
|
$
|
230,380
|
$
|
(2,123
|
)
|
$
|
555,593
|
|||||||
Cost of goods sold
|
278,237
|
194,207
|
(2,079
|
)
|
470,365
|
|||||||||||
Depreciation and amortization
|
4,577
|
3,133
|
478
|
8,188
|
||||||||||||
Selling, general, and administrative expense
|
20,473
|
6,239
|
6,708
|
33,420
|
||||||||||||
Gain on sale of assets
|
(15,376
|
)
|
—
|
—
|
(15,376
|
)
|
||||||||||
Severance
|
3,442
|
—
|
—
|
3,442
|
||||||||||||
Operating income
|
35,983
|
26,801
|
(7,230
|
)
|
55,554
|
|||||||||||
Interest expense
|
(2,219
|
)
|
||||||||||||||
Other income, net
|
265
|
|||||||||||||||
Income before income taxes
|
$
|
53,600
|
For the Quarter Ended June 28, 2014
|
||||||||||||||||
(In thousands)
|
Plumbing & Refrigeration Segment
|
OEM
Segment
|
Corporate and Eliminations
|
Total
|
||||||||||||
Net sales
|
$
|
397,190
|
$
|
255,409
|
$
|
(2,908
|
)
|
$
|
649,691
|
|||||||
Cost of goods sold
|
336,256
|
224,392
|
(2,873
|
)
|
557,775
|
|||||||||||
Depreciation and amortization
|
5,096
|
2,892
|
604
|
8,592
|
||||||||||||
Selling, general, and administrative expense
|
21,755
|
4,909
|
6,703
|
33,367
|
||||||||||||
Severance
|
1,753
|
—
|
—
|
1,753
|
||||||||||||
Operating income
|
32,330
|
23,216
|
(7,342
|
)
|
48,204
|
|||||||||||
Interest expense
|
(1,457
|
)
|
||||||||||||||
Other income, net
|
127
|
|||||||||||||||
Income before income taxes
|
$
|
46,874
|
For the Six Months Ended June 27, 2015
|
||||||||||||||||
(In thousands)
|
Plumbing & Refrigeration Segment
|
OEM
Segment
|
Corporate and Eliminations
|
Total
|
||||||||||||
Net sales
|
$
|
632,353
|
$
|
465,697
|
$
|
(5,215
|
)
|
$
|
1,092,835
|
|||||||
Cost of goods sold
|
538,700
|
397,640
|
(5,141
|
)
|
931,199
|
|||||||||||
Depreciation and amortization
|
9,100
|
5,988
|
953
|
16,041
|
||||||||||||
Selling, general, and administrative expense
|
41,013
|
12,720
|
12,518
|
66,251
|
||||||||||||
Gain on sale of assets
|
(15,376
|
)
|
—
|
—
|
(15,376
|
)
|
||||||||||
Severance
|
3,442
|
—
|
—
|
3,442
|
||||||||||||
Operating income
|
55,474
|
49,349
|
(13,545
|
)
|
91,278
|
|||||||||||
Interest expense
|
(4,295
|
)
|
||||||||||||||
Other income, net
|
370
|
|||||||||||||||
Income before income taxes
|
$
|
87,353
|
For the Six Months Ended June 28, 2014
|
||||||||||||||||
(In thousands)
|
Plumbing & Refrigeration Segment
|
OEM
Segment
|
Corporate and Eliminations
|
Total
|
||||||||||||
Net sales
|
$
|
735,217
|
$
|
495,439
|
$
|
(6,591
|
)
|
$
|
1,224,065
|
|||||||
Cost of goods sold
|
625,281
|
434,795
|
(6,524
|
)
|
1,053,552
|
|||||||||||
Depreciation and amortization
|
9,516
|
5,975
|
1,208
|
16,699
|
||||||||||||
Selling, general, and administrative expense
|
43,410
|
10,167
|
12,931
|
66,508
|
||||||||||||
Gain on sale of assets
|
(1,417
|
)
|
—
|
—
|
(1,417
|
)
|
||||||||||
Severance
|
2,212
|
—
|
—
|
2,212
|
||||||||||||
Operating income
|
56,215
|
44,502
|
(14,206
|
)
|
86,511
|
|||||||||||
Interest expense
|
(2,483
|
)
|
||||||||||||||
Other income, net
|
215
|
|||||||||||||||
Income before income taxes
|
$
|
84,243
|
For the Quarter Ended
|
For the Six Months Ended
|
|||||||||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
June 27, 2015
|
June 28, 2014
|
||||||||||||
Pension benefits:
|
||||||||||||||||
Service cost
|
$
|
228
|
$
|
175
|
$
|
500
|
$
|
397
|
||||||||
Interest cost
|
2,027
|
2,059
|
4,081
|
4,127
|
||||||||||||
Expected return on plan assets
|
(2,655
|
)
|
(3,201
|
)
|
(5,309
|
)
|
(6,402
|
)
|
||||||||
Amortization of net loss
|
656
|
189
|
1,370
|
377
|
||||||||||||
Net periodic benefit cost (income)
|
$
|
256
|
$
|
(778
|
)
|
$
|
642
|
$
|
(1,501
|
)
|
||||||
Other benefits:
|
||||||||||||||||
Service cost
|
$
|
84
|
$
|
87
|
$
|
180
|
$
|
176
|
||||||||
Interest cost
|
190
|
186
|
386
|
363
|
||||||||||||
Amortization of prior service cost (credit)
|
1
|
(1
|
)
|
3
|
(1
|
)
|
||||||||||
Amortization of net gain
|
(16
|
)
|
(45
|
)
|
(13
|
)
|
(109
|
)
|
||||||||
Net periodic benefit cost
|
$
|
259
|
$
|
227
|
$
|
556
|
$
|
429
|
Asset Derivatives
|
Liability Derivatives
|
|||||||||||||||||
Fair Value
|
Fair Value
|
|||||||||||||||||
(In thousands)
|
Balance Sheet Location
|
June 27,
2015
|
December 27,
2014
|
Balance Sheet Location
|
June 27,
2015
|
December 27,
2014
|
||||||||||||
Hedging instrument:
|
||||||||||||||||||
Commodity contracts - gains
|
Other current assets
|
$
|
1,361
|
$
|
99
|
Other current liabilities
|
$
|
40
|
$
|
15
|
||||||||
Commodity contracts - losses
|
Other current assets
|
—
|
(4
|
)
|
Other current liabilities
|
(1,319
|
)
|
(832
|
)
|
|||||||||
Foreign currency contracts
|
Other current assets
|
—
|
—
|
Other current liabilities
|
(34
|
)
|
(81
|
)
|
||||||||||
Interest rate swap
|
Other assets
|
—
|
—
|
Other liabilities
|
(1,921
|
)
|
(927
|
)
|
||||||||||
Total derivatives (1)
|
$
|
1,361
|
$
|
95
|
$
|
(3,234
|
)
|
$
|
(1,825
|
)
|
||||||||
(1) Does not include the impact of cash collateral received from or provided to counterparties.
|
||||||||||||||||||
Three Months Ended
|
Six Months Ended
|
||||||||||||||||
(In thousands)
|
Location
|
June 27, 2015
|
June 28, 2014
|
June 27, 2015
|
June 28, 2014
|
||||||||||||
Fair value hedges:
|
|||||||||||||||||
Gain (loss) on commodity contracts (qualifying)
|
Cost of goods sold
|
$
|
1,256
|
$
|
(20
|
)
|
$
|
1,468
|
$
|
6,271
|
|||||||
(Loss) gain on hedged item - Inventory
|
Cost of goods sold
|
(1,403
|
)
|
20
|
(1,650
|
)
|
(5,780
|
)
|
|||||||||
Undesignated derivatives:
|
|||||||||||||||||
Gain (loss) on commodity contracts (nonqualifying)
|
Cost of goods sold
|
1,046
|
(72
|
)
|
1,279
|
1,466
|
Three Months Ended June 27, 2015
|
||||||||||||
(In thousands)
|
Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax
|
Classification Gains (Losses)
|
Loss (Gain) Reclassified from AOCI (Effective Portion), Net of Tax
|
|||||||||
Cash flow hedges:
|
||||||||||||
Commodity contracts
|
$
|
(1,159
|
)
|
Cost of goods sold
|
|
$
|
(81 | ) | ||||
Foreign currency contracts
|
3
|
Depreciation expense
|
|
— | ||||||||
Interest rate swap
|
267
|
Interest expense
|
|
63 |
Three Months Ended June 28, 2014
|
|||||||||||||
(In thousands)
|
Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax
|
Classification Gains (Losses)
|
Loss (Gain) Reclassified from AOCI (Effective Portion), Net of Tax
|
||||||||||
Cash flow hedges:
|
|||||||||||||
Commodity contracts
|
$
|
578
|
Cost of goods sold
|
|
$
|
168 | |||||||
Foreign currency contracts
|
(25
|
)
|
Depreciation expense
|
|
(63 |
)
|
|||||||
Interest rate swap
|
(1,022
|
)
|
Interest expense
|
|
— |
Six Months Ended June 27, 2015
|
||||||||||||||
(In thousands)
|
Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax
|
Classification Gains (Losses)
|
Loss (Gain) Reclassified from AOCI (Effective Portion), Net of Tax
|
|||||||||||
Cash flow hedges:
|
||||||||||||||
Commodity contracts
|
$
|
(885
|
) |
Cost of goods sold
|
|
$
|
490 | |||||||
Foreign currency contracts
|
(52
|
)
|
Depreciation expense
|
|
— |
|
||||||||
Interest rate swap
|
(765
|
)
|
Interest expense
|
|
131 | |||||||||
Other | (19 | ) | Other | — |
Six Months Ended June 28, 2014
|
|||||||||||||
(In thousands)
|
Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax
|
Classification Gains (Losses)
|
Loss (Gain) Reclassified from AOCI (Effective Portion), Net of Tax
|
||||||||||
Cash flow hedges:
|
|||||||||||||
Commodity contracts
|
$
|
(432
|
) |
Cost of goods sold
|
|
$
|
459 | ||||||
Foreign currency contracts
|
(3
|
)
|
Depreciation expense
|
|
(237 |
)
|
|||||||
Interest rate swap
|
(1,267
|
)
|
Interest expense
|
|
— |
For the Six Months Ended June 27, 2015
|
||||||||||||||||||||
(In thousands)
|
Cumulative Translation Adjustment
|
Unrealized (Losses)/Gains on Derivatives
|
Minimum Pension/OPEB Liability Adjustment
|
Unrealized Gains on Equity Investments
|
Total
|
|||||||||||||||
Balance at December 27, 2014
|
$
|
(7,076
|
)
|
$
|
(953
|
)
|
$
|
(35,164
|
)
|
$
|
270
|
$
|
(42,923
|
)
|
||||||
Other comprehensive income (loss) before reclassifications
|
(947
|
)
|
(1,722
|
)
|
(229
|
)
|
7
|
(2,891
|
)
|
|||||||||||
Amounts reclassified from AOCI
|
—
|
621
|
998
|
—
|
1,619
|
|||||||||||||||
Net current-period other comprehensive income
|
(947
|
)
|
(1,101
|
)
|
769
|
7
|
(1,272
|
)
|
||||||||||||
Balance at June 27, 2015
|
$
|
(8,023
|
)
|
$
|
(2,054
|
)
|
$
|
(34,395
|
)
|
$
|
277
|
$
|
(44,195
|
)
|
For the Six Months Ended June 28, 2014
|
||||||||||||||||||||
(In thousands)
|
Cumulative Translation Adjustment
|
Unrealized (Losses)/Gains on Derivatives
|
Minimum Pension/OPEB Liability Adjustment
|
Unrealized Gains on Equity Investments
|
Total
|
|||||||||||||||
Balance at December 28, 2013
|
$
|
(462
|
)
|
$
|
1,546
|
$
|
(12,158
|
)
|
$
|
255
|
$
|
(10,819
|
)
|
|||||||
Other comprehensive income (loss) before reclassifications
|
3,713
|
(1,698
|
)
|
(388
|
)
|
9
|
1,636
|
|||||||||||||
Amounts reclassified from AOCI
|
—
|
222
|
232
|
—
|
454
|
|||||||||||||||
Net current-period other comprehensive income
|
3,713
|
(1,476
|
)
|
(156
|
)
|
9
|
2,090
|
|||||||||||||
Balance at June 28, 2014
|
$
|
3,251
|
$
|
70
|
$
|
(12,314
|
)
|
$
|
264
|
$
|
(8,729
|
)
|
Amount reclassified from AOCI
|
|||||||||
For the Three Months Ended
|
|||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
Affected line item
|
||||||
Unrealized losses/(gains) on derivatives:
|
|||||||||
Commodity contracts
|
$
|
(111
|
)
|
$
|
208
|
Cost of goods sold
|
|||
Foreign currency contracts
|
—
|
(99
|
)
|
Depreciation expense
|
|||||
Interest rate swap
|
98
|
—
|
Interest expense
|
||||||
(5
|
)
|
(4
|
)
|
Income tax expense
|
|||||
(18
|
)
|
105
|
Net of tax
|
||||||
—
|
—
|
Noncontrolling interest
|
|||||||
$
|
(18
|
)
|
$
|
105
|
Net of tax and noncontrolling
interest
|
||||
Amortization of net loss and prior service cost on employee benefit plans
|
$
|
641
|
$
|
143
|
Selling, general, and administrative
expense
|
||||
(164
|
)
|
(22
|
)
|
Income tax expense
|
|||||
477
|
121
|
Net of tax
|
|||||||
—
|
—
|
Noncontrolling interest
|
|||||||
$
|
477
|
$
|
121
|
Net of tax and noncontrolling interest
|
Amount reclassified from AOCI
|
|||||||||
For the Six Months Ended
|
|||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
Affected line item
|
||||||
Unrealized losses/(gains) on derivatives:
|
|||||||||
Commodity contracts
|
$
|
651
|
$
|
565
|
Cost of goods sold
|
||||
Foreign currency contracts
|
—
|
(375
|
)
|
Depreciation expense
|
|||||
Interest rate swap
|
204
|
—
|
Interest expense
|
||||||
(234
|
)
|
32
|
Income tax (expense) benefit
|
||||||
621
|
222
|
Net of tax
|
|||||||
—
|
—
|
Noncontrolling interest
|
|||||||
$
|
621
|
$
|
222
|
Net of tax and noncontrolling interest
|
|||||
Amortization of net loss and prior service cost on employee benefit plans
|
$
|
1,360
|
$
|
267
|
Selling, general, and administrative expense
|
||||
(362
|
)
|
(35
|
)
|
Income tax expense
|
|||||
998
|
232
|
Net of tax
|
|||||||
—
|
—
|
Noncontrolling interest
|
|||||||
$
|
998
|
$
|
232
|
Net of tax and noncontrolling interest
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
·
|
Plumbing & Refrigeration: The Plumbing & Refrigeration segment is composed of SPD, European Operations, and Mexican Operations. SPD manufactures and sells copper tube, copper and plastic fittings, line sets, and valves in North America and sources products for import distribution in North America. European Operations manufacture copper tube in the United Kingdom, which is sold throughout Europe. Mexican Operations consist of pipe nipple manufacturing and import distribution businesses including product lines of malleable iron fittings and other plumbing specialties. The Plumbing & Refrigeration segment sells products to wholesalers in the HVAC, plumbing, and refrigeration markets, to distributors to the manufactured housing and recreational vehicle industries, and to building material retailers.
|
·
|
OEM: The OEM segment is composed of IPD, EPD, and Mueller-Xingrong, the Company’s Chinese joint venture. The OEM segment manufactures and sells brass and copper alloy rod, bar, and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; refrigeration valves and fittings; fabricated tubular products; and gas valves and assemblies. Mueller-Xingrong manufactures engineered copper tube primarily for air-conditioning applications; these products are sold primarily to OEMs located in China. The OEM segment sells its products primarily to original equipment manufacturers, many of which are in the HVAC, plumbing, and refrigeration markets.
|
Three Months Ended
|
Percent Change
|
Six Months Ended
|
Percent Change
|
||||||||||||||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
2015 vs. 2014
|
June 27, 2015
|
June 28, 2014
|
2015 vs. 2014
|
|||||||||||||||||
Net sales
|
$
|
555,593
|
$
|
649,691
|
|
(14.5
|
)
|
%
|
$
|
1,092,835
|
$
|
1,224,065
|
|
(10.7
|
)
|
%
|
|||||||
Operating income
|
55,554
|
48,204
|
15.2
|
91,278
|
86,511
|
5.5
|
|||||||||||||||||
Net income
|
33,651
|
35,045
|
(4.0
|
)
|
55,629
|
59,751
|
(6.9
|
)
|
|||||||||||||||
Quarter-to-Date
|
Year-to-Date
|
|||||||||
2015 vs. 2014
|
2015 vs. 2014
|
|||||||||
Net selling price in core product lines
|
(5.6
|
)
|
%
|
(7.1
|
)
|
%
|
||||
Unit sales volume in core product lines
|
(7.1
|
)
|
(1.3
|
)
|
||||||
Acquisitions & new products
|
1.2
|
0.8
|
||||||||
Dispositions
|
(2.5
|
)
|
(2.7
|
)
|
||||||
Other
|
(0.5
|
)
|
(0.4
|
)
|
||||||
(14.5
|
)
|
%
|
(10.7
|
)
|
%
|
|||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
June 27, 2015
|
June 28, 2014
|
||||||||||||
Cost of goods sold
|
$
|
470,365
|
$
|
557,775
|
$
|
931,199
|
$
|
1,053,552
|
||||||||
Depreciation and
amortization
|
8,188
|
8,592
|
16,041
|
16,699
|
||||||||||||
Selling, general and administrative expense
|
33,420
|
33,367
|
66,251
|
66,508
|
||||||||||||
Gain on sale of assets
|
(15,376
|
)
|
—
|
(15,376
|
)
|
(1,417
|
)
|
|||||||||
Severance
|
3,442
|
1,753
|
3,442
|
2,212
|
||||||||||||
Operating expenses
|
$
|
500,039
|
$
|
601,487
|
$
|
1,001,557
|
$
|
1,137,554
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 27, 2015
|
June 28, 2014
|
June 27, 2015
|
June 28, 2014
|
|||||||||||||
Cost of goods sold
|
84.7
|
%
|
85.9
|
%
|
85.2
|
%
|
86.0
|
%
|
||||||||
Depreciation and
amortization
|
1.5
|
1.3
|
1.5
|
1.4
|
||||||||||||
Selling, general and administrative expense
|
6.0
|
5.1
|
6.0
|
5.4
|
||||||||||||
Gain on sale of assets
|
(2.8
|
)
|
—
|
(1.4
|
)
|
(0.1
|
)
|
|||||||||
Severance
|
0.6
|
0.3
|
0.3
|
0.2
|
||||||||||||
Operating expenses
|
90.0
|
%
|
92.6
|
%
|
91.6
|
%
|
92.9
|
%
|
Three Months Ended
|
Percent Change
|
Six Months Ended
|
Percent Change
|
||||||||||||||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
2015 vs. 2014
|
June 27, 2015
|
June 28, 2014
|
2015 vs. 2014
|
|||||||||||||||||
Net sales
|
$
|
327,336
|
$
|
397,190
|
|
(17.6
|
)
|
%
|
$
|
632,353
|
$
|
735,217
|
|
(14.0
|
)
|
%
|
|||||||
Operating income
|
35,983
|
32,330
|
11.3
|
55,474
|
56,215
|
(1.3
|
)
|
||||||||||||||||
Quarter-to-Date
|
Year-to-Date
|
||||||||
2015 vs. 2014
|
2015 vs. 2014
|
||||||||
Net selling price in core product lines
|
(6.2
|
)
|
%
|
(7.8
|
)
|
%
|
|||
Unit sales volume in core product lines
|
(6.9
|
)
|
(1.2
|
)
|
|||||
Dispositions
|
(4.1
|
)
|
(4.6
|
)
|
|||||
Other
|
(0.4
|
)
|
(0.4
|
)
|
|||||
(17.6
|
)
|
%
|
(14.0
|
)
|
%
|
||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
June 27, 2015
|
June 28, 2014
|
||||||||||||||
Cost of goods sold
|
$
|
278,237
|
$
|
336,256
|
$
|
538,700
|
$
|
625,281
|
||||||||||
Depreciation and amortization
|
4,577
|
5,096
|
9,100
|
9,516
|
||||||||||||||
Selling, general and administrative expense
|
20,473
|
21,755
|
41,013
|
43,410
|
||||||||||||||
Gain on sale of assets
|
(15,376
|
)
|
—
|
(15,376
|
)
|
(1,417
|
)
|
|||||||||||
Severance
|
3,442
|
1,753
|
3,442
|
2,212
|
||||||||||||||
Operating expenses
|
$
|
291,353
|
$
|
364,860
|
$
|
576,879
|
$
|
679,002
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||
June 27, 2015
|
June 28, 2014
|
June 27, 2015
|
June 28, 2014
|
|||||||||||||||
Cost of goods sold
|
85.0
|
%
|
84.7
|
%
|
85.2
|
%
|
85.0
|
%
|
||||||||||
Depreciation and amortization
|
1.4
|
1.3
|
1.4
|
1.3
|
||||||||||||||
Selling, general and administrative expense
|
6.2
|
5.5
|
6.5
|
5.9
|
||||||||||||||
Gain on sale of assets
|
(4.7
|
)
|
—
|
(2.4
|
)
|
(0.2
|
)
|
|||||||||||
Severance
|
1.1
|
0.4
|
0.5
|
0.3
|
||||||||||||||
Operating expenses
|
89.0
|
%
|
91.9
|
%
|
91.2
|
%
|
92.3
|
%
|
Three Months Ended
|
Percent Change
|
Six Months Ended
|
Percent Change
|
||||||||||||||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
2015 vs. 2014
|
June 27, 2015
|
June 28, 2014
|
2015 vs. 2014
|
|||||||||||||||||
Net sales
|
$
|
230,380
|
$
|
255,409
|
|
(9.8
|
)
|
%
|
$
|
465,697
|
$
|
495,439
|
|
(6.0
|
)
|
%
|
|||||||
Operating income
|
26,801
|
23,216
|
15.4
|
49,349
|
44,502
|
10.9
|
|||||||||||||||||
Quarter-to-Date
|
Year-to-Date
|
||||||||
2015 vs. 2014
|
2015 vs. 2014
|
||||||||
Net selling price in core product lines
|
(4.8
|
)
|
%
|
(6.1
|
)
|
%
|
|||
Unit sales volume in core product lines
|
(7.6
|
)
|
(1.4
|
)
|
|||||
Acquisitions & new products
|
3.1
|
2.1
|
|||||||
Other
|
(0.5
|
)
|
(0.6
|
)
|
|||||
(9.8
|
)
|
%
|
(6.0
|
)
|
%
|
||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||
(In thousands)
|
June 27, 2015
|
June 28, 2014
|
June 27, 2015
|
June 28, 2014
|
||||||||||||||
Cost of goods sold
|
$
|
194,207
|
$
|
224,392
|
$
|
397,640
|
$
|
434,795
|
||||||||||
Depreciation and amortization
|
3,133
|
2,892
|
5,988
|
5,975
|
||||||||||||||
Selling, general and administrative expense
|
6,239
|
4,909
|
12,720
|
10,167
|
||||||||||||||
Operating expenses
|
$
|
203,579
|
$
|
232,193
|
$
|
416,348
|
$
|
450,937
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||
June 27, 2015
|
June 28, 2014
|
June 27, 2015
|
June 28, 2014
|
|||||||||||||||
Cost of goods sold
|
84.3
|
%
|
87.9
|
%
|
85.4
|
%
|
87.8
|
%
|
||||||||||
Depreciation and amortization
|
1.4
|
1.1
|
1.3
|
1.2
|
||||||||||||||
Selling, general and administrative expense
|
2.7
|
1.9
|
2.7
|
2.0
|
||||||||||||||
Operating expenses
|
88.4
|
%
|
90.9
|
%
|
89.4
|
%
|
91.0
|
%
|
(In thousands)
|
2015
|
2014
|
||||||
Cash and cash equivalents
|
$
|
299,147
|
$
|
242,199
|
||||
Property, plant, and equipment, net
|
261,149
|
245,441
|
||||||
Total debt
|
222,764
|
266,078
|
||||||
Working capital, net of cash and current debt
|
440,138
|
496,022
|
||||||
Cash provided by (used in) operating activities
|
17,150
|
(50,881
|
)
|
|||||
Cash used in investing activities
|
(42,943
|
)
|
(42,281
|
)
|
||||
Cash (used in) provided by financing activities
|
(26,414
|
)
|
23,198
|
Quantitative and Qualitative Disclosures About Market Risk
|
Controls and Procedures
|
Risk Factors
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
(a)
|
(b)
|
(c)
|
(d)
|
||||||||||||||||||||
Total Number
of Shares Purchased
|
Average Price
Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
|
||||||||||||||||||||
15,287,060
|
(1)
|
||||||||||||||||||||||
March 29 – April 25, 2015
|
16,551
|
(2)
|
$
|
35.91
|
—
|
||||||||||||||||||
April 26 – May 23, 2015
|
5,425
|
(2)
|
35.46
|
—
|
|||||||||||||||||||
May 24 – June 27, 2015
|
—
|
(2)
|
—
|
—
|
|||||||||||||||||||
(1) Shares available to be purchased under the Company’s 20 million share repurchase authorization until October 2015. The extension of the authorization was announced on October 24, 2014.
|
|||||||||||||||||||||||
(2) Shares tendered to the Company by holders of stock-based awards in payment of the purchase price and/or withholding taxes upon exercise and/or vesting.
|
Exhibits
|
10.1
|
Membership Interest Purchase Agreement by and between Sherwood Valve Products, Inc. and Taylor-Wharton International LLC, dated as of June 18, 2015 (Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, dated June 19, 2015).
|
||
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
||
101.INS
|
XBRL Instance Document
|
||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
||
101.PRE
|
XBRL Presentation Linkbase Document
|
||
101.SCH
|
XBRL Taxonomy Extension Schema
|
MUELLER INDUSTRIES, INC.
|
|
/s/ Jeffrey A. Martin
|
|
Jeffrey A. Martin
|
|
July 22, 2015
|
Chief Financial Officer and Treasurer
|
Date
|
(Principal Financial and Accounting Officer)
|
/s/ Anthony J. Steinriede
|
|
July 22, 2015
|
Anthony J. Steinriede
|
Date
|
Vice President – Corporate Controller
|
EXHIBIT INDEX
|
|
Description
|
|
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.INS
|
XBRL Instance Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Presentation Linkbase Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Mueller Industries, Inc.;
|
||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
||
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
||
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
||
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
||
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: July 22, 2015
|
|
/s/Gregory L. Christopher | |
Gregory L. Christopher
|
|
Chief Executive Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Mueller Industries, Inc.;
|
||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
||
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
||
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
||
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
||
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: July 22, 2015
|
|
/s/ Jeffrey A. Martin
|
|
Jeffrey A. Martin
|
|
Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|||
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|||
|
||||
/s/ Gregory L. Christopher | ||||
Gregory L. Christopher
|
||||
Chief Executive Officer
|
||||
Date: July 22, 2015
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|||
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|||
/s/Jeffrey A. Martin
|
||||
Jeffrey A. Martin
|
||||
Chief Financial Officer
|
||||
Date: July 22, 2015
|
//.!:NWK]^_
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