VOL. 126 | NO. 22 | Wednesday, February 02, 2011
Mueller’s Sales Up On Higher Copper Prices
By Bill Dries
Memphis-based Mueller Industries Inc. posted a net income of $17.7 million on net sales of $527 million in the fourth quarter of 2010. It also showed an increase in net sales for the year after two rough years for the bottom line.
The fourth-quarter figures released Tuesday compare to a net loss of $17.5 million on net sales of $433 million in the fourth quarter of 2009 for Mueller.
The chairman of Mueller warned that the annual sales figures were up largely because of the higher cost of copper.
Harvey L. Karp also offered some general optimism in the residential and nonresidential construction sectors.
Mueller makes copper and brass products including copper tubes and fittings as well as aluminum and plastic fittings and tubes. The products are used in home construction and renovation and in commercial construction.
Because of that Mueller’s financials are an indicator of the health of residential and nonresidential construction.
“Overall, we are positive about Mueller’s business outlook for 2011,” Karp said in a Tuesday statement announcing the fourth-quarter figures and the year-end totals. “We have weathered two difficult years and have remained solidly profitable while gaining in financial strength.”
Analyst Edward Wheeler of Buckingham Research Group in New York, who follows Mueller, said the numbers “look fine.”
“They did well. They’re executing very well,” he said. “They’re doing a nice job.”
Net sales in 2010 for Mueller were $2 billion compared to $1.5 billion in 2009.
The price per pound of copper in the fourth quarter was $3.93 compared to $3.03 in the fourth quarter of 2009.
The increase in raw materials price accounted for $358 million of the annual net sales increase especially in plumbing and refrigeration where much of the tubing is copper.
Karp’s view of residential construction is that it will continue to struggle. But he predicted housing starts will begin rising in the year ahead.
“The U.S. economy is growing again, mortgage rates are low and consumer confidence has improved,” Karp added.
The outlook by Karp was more sobering for private nonresidential construction. The sector includes office, industrial and retail.
“The market is likely at or near a bottom and we anticipate better times ahead,” Karp said citing a 25 percent decline in 2010 after a 15 percent drop the year before. “All in all, we expect that most of the conditions that affect our businesses will gradually improve as 2011 progresses.”
Mueller’s board of directors declared a cash dividend of 10 cents a share on its common stock in October for the fourth quarter.
As 2011 began, the company bought assets of Tube Forming LP. The assets included factor leaseholds where Tube Forming made copper tubing and parts for heating and air conditioning and refrigeration units.
Mueller bought the assets of the subsidiary of Wolverine Tube Inc. for $6.9 million effective Dec. 28 using existing cash on hand.