Mueller Industries, Inc. Reports Third Quarter 2020 Earnings

COLLIERVILLE, Tenn.--(BUSINESS WIRE)-- 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

 

 

 

Jeffrey A. Martin
(901) 753-3226

Source: Mueller Industries, Inc.