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Mueller Industries, Inc. Reports Third Quarter 2020 Earnings

Mueller Industries, Inc. (NYSE: MLI) announced third quarter operating income of $69.2 million, compared with $46.3 million for the prior year period.

Net income for the period was $42.7 million, or 76 cents per diluted share, compared to net income of $29.1 million, or 52 cents per diluted share in 2019. Net sales were $619.1 million, compared with $608.6 million in the third quarter of 2019.

Third Quarter Financial and Operating Highlights:

  • COMEX copper averaged $2.94 per pound, 12 percent higher than the prior year period.
  • The $10.5 million increase in quarter-over-quarter sales was due to $15.2 million from higher selling prices associated with the rise in copper and $24.2 million of sales from recently acquired businesses. These increases were largely offset by lower volumes, particularly in our core businesses, which have not fully recovered from the impacts of the COVID-19 pandemic.
  • We recorded a $5.5 million loss on our investment in Tecumseh Products Company, compared to the $1.9 million loss recorded during the prior year period. Included in the $5.5 million loss was $1.2 million of pre-tax restructuring charges and $0.8 million in foreign currency losses.
  • The effective tax rate for the quarter was 24 percent, a more normal rate, compared with 19 percent in the prior year period.
  • We generated an additional $54.1 million in cash from operations for the quarter, totaling $196.9 million year-to-date. At the end of the quarter cash on hand was $113.6 million, with only $55.0 million drawn on our credit facility.
  • During the quarter, we funded the purchase of certain assets of Wieland-Kessler, LLC for $57.2 million.
  • Our current ratio remains at 2.9 to 1 and our debt to total capitalization remains low at 32 percent.

Regarding the outlook, CEO Greg Christopher said, "Amidst the unprecedented challenges posed by the COVID-19 pandemic, to have achieved these results is certainly gratifying.

"The US economy appears to be rebounding, but it is not yet back to the strong pre-pandemic levels. Acquisitions and capital investments in our manufacturing operations are paying off, and should continue to support strong cash generation and our strategic growth initiatives as global economies reopen and regain their strength."

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 Collierville, Tennessee and comprises a network of operations in the United States, Canada, Mexico, Great Britain, South Korea, the Middle East, 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.

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,
2020

September 28,
2019

September 26,
2020

September 28,
2019

Net sales

$

619,105

$

608,602

$

1,722,192

$

1,886,777

Cost of goods sold

500,780

510,788

1,412,654

1,586,129

Depreciation and amortization

10,752

10,823

32,888

31,856

Selling, general, and administrative expense

38,346

40,739

114,714

121,838

Asset impairments

3,035

Litigation settlement, net

(21,933

)

Operating income

69,227

46,252

180,834

146,954

Interest expense

(4,885

)

(6,148

)

(15,237

)

(20,135

)

Other income, net

522

533

3,634

823

Income before income taxes

64,864

40,637

169,231

127,642

Income tax expense

(15,450

)

(7,665

)

(42,623

)

(27,643

)

Loss from unconsolidated affiliates, net of foreign tax

(5,457

)

(2,528

)

(20,213

)

(23,740

)

Consolidated net income

43,957

30,444

106,395

76,259

Net income attributable to noncontrolling interests

(1,255

)

(1,351

)

(3,322

)

(3,457

)

Net income attributable to Mueller Industries, Inc.

$

42,702

$

29,093

$

103,073

$

72,802

Weighted average shares for basic earnings per share

55,816

55,832

55,805

55,771

Effect of dilutive stock-based awards

550

482

534

523

Adjusted weighted average shares for diluted earnings per share

56,366

56,314

56,339

56,294

Basic earnings per share

$

0.77

$

0.52

$

1.85

$

1.31

Diluted earnings per share

$

0.76

$

0.52

$

1.83

$

1.29

Dividends per share

$

0.10

$

0.10

$

0.30

$

0.30

Summary Segment Data:

Net sales:

Piping Systems Segment

$

409,414

$

390,917

$

1,128,467

$

1,193,274

Industrial Metals Segment

118,831

135,443

338,652

434,037

Climate Segment

97,604

90,938

276,983

276,853

Elimination of intersegment sales

(6,744

)

(8,696

)

(21,910

)

(17,387

)

Net sales

$

619,105

$

608,602

$

1,722,192

$

1,886,777

Operating income:

Piping Systems Segment

$

44,863

$

36,010

$

122,613

$

100,155

Industrial Metals Segment

18,348

12,599

38,403

46,697

Climate Segment

18,156

7,963

43,523

33,384

Unallocated expenses

(12,140

)

(10,320

)

(23,705

)

(33,282

)

Operating income

$

69,227

$

46,252

$

180,834

$

146,954

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(Unaudited)

(In thousands)

September 26,
2020

December 28,
2019

ASSETS

Cash and cash equivalents

$

113,640

$

97,944

Accounts receivable, net

320,035

269,943

Inventories

271,310

292,107

Other current assets

24,880

33,778

Total current assets

729,865

693,772

Property, plant, and equipment, net

368,736

363,128

Operating lease right-of-use assets

22,397

26,922

Other assets

299,014

287,118

$

1,420,012

$

1,370,940

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current portion of debt

$

6,684

$

7,530

Accounts payable

108,063

85,644

Current portion of operating lease liabilities

6,320

5,250

Other current liabilities

131,685

135,863

Total current liabilities

252,752

234,287

Long-term debt

342,972

378,724

Pension and postretirement liabilities

18,186

22,208

Environmental reserves

19,809

19,972

Deferred income taxes

18,066

21,094

Noncurrent operating lease liabilities

16,464

22,388

Other noncurrent liabilities

12,412

10,131

Total liabilities

680,661

708,804

Total Mueller Industries, Inc. stockholders’ equity

717,621

643,468

Noncontrolling interests

21,730

18,668

Total equity

739,351

662,136

$

1,420,012

$

1,370,940

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

For the Nine Months Ended

(In thousands)

September 26,
2020

September 28,
2019

Cash flows from operating activities

Consolidated net income

$

106,395

$

76,259

Reconciliation of consolidated net income to net cash provided by operating activities:

Depreciation and amortization

33,127

32,095

Stock-based compensation expense

6,332

6,355

Provision for doubtful accounts receivable

953

(66

)

Loss from unconsolidated affiliates

20,213

23,740

Loss (gain) on disposals of properties

144

(24

)

Impairment charges

3,035

Change in fair value of contingent consideration

4,500

Deferred income tax benefit

(836

)

(1,593

)

Changes in assets and liabilities, net of effects of business acquired:

Receivables

(45,530

)

(47,367

)

Inventories

41,598

50,985

Other assets

9,053

(7,485

)

Current liabilities

25,913

1,687

Other liabilities

(5,813

)

(7,112

)

Other, net

2,294

(47

)

Net cash provided by operating activities

196,878

131,927

Cash flows from investing activities

Capital expenditures

(29,204

)

(20,162

)

Acquisition of businesses, net of cash acquired

(72,648

)

3,465

Investments in unconsolidated affiliates

(11,000

)

Issuance of notes receivable

(9,155

)

Proceeds from sales of properties

12

385

Net cash used in investing activities

(110,995

)

(27,312

)

Cash flows from financing activities

Dividends paid to stockholders of Mueller Industries, Inc.

(16,754

)

(16,738

)

Repurchase of common stock

(5,574

)

(1,763

)

Payment of contingent consideration

(7,000

)

(3,170

)

Issuance of long-term debt

150,027

100,658

Repayments of long-term debt

(186,492

)

(151,305

)

Repayment of debt by consolidated joint ventures, net

(299

)

(4,352

)

Net cash used to settle stock-based awards

(160

)

(1,069

)

Net cash used in financing activities

(66,252

)

(77,739

)

Effect of exchange rate changes on cash

(3,294

)

(1,511

)

Increase in cash, cash equivalents, and restricted cash

16,337

25,365

Cash, cash equivalents, and restricted cash at the beginning of the period

98,042

77,138

Cash, cash equivalents, and restricted cash at the end of the period

$

114,379

$

102,503

Contacts:

Jeffrey A. Martin
(901) 753-3226

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