Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended	September 28, 2019	Commission file number	1-6770

MUELLER INDUSTRIES INC.

(Exact name of registrant as specified in its charter)



Delaware	25-0790410
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



150 Schilling Boulevard	Suite 100
Collierville	Tennessee	38017
(Address of principal executive offices)		(Zip Code)

(901) 753-3200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock	MLI	NYSE

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of the Registrant’s common stock outstanding as of October 18, 2019 was 56,952,083.

MUELLER INDUSTRIES, INC.

FORM 10-Q

For the Quarterly Period Ended September 28, 2019

As used in this report, the terms “Company,” “Mueller,” and “Registrant” mean Mueller Industries, Inc. and its consolidated subsidiaries taken as a whole, unless the context indicates otherwise.

INDEX



		Page Number
Part I. Financial Information

	Item 1. – Financial Statements (Unaudited)

	a.) Condensed Consolidated Statements of Income	3

	b.) Condensed Consolidated Statements of Comprehensive Income	4

	c.) Condensed Consolidated Balance Sheets	5

	d.) Condensed Consolidated Statements of Cash Flows	6

	e.) Condensed Consolidated Statements of Changes in Equity	7

	f.) Notes to Condensed Consolidated Financial Statements	9

	Item 2. – Management's Discussion and Analysis of Financial Condition and Results of Operations	27

	Item 3. – Quantitative and Qualitative Disclosures About Market Risk	38

	Item 4. – Controls and Procedures	39

Part II. Other Information

	Item 1. – Legal Proceedings	40

	Item 1A – Risk Factors	40

	Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds	41

	Item 6. – Exhibits	42

Signatures		43

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018

Net sales	$	608,602		$	645,958		$	1,886,777		$	1,948,791

Cost of goods sold	510,788			566,956			1,586,129			1,676,446
Depreciation and amortization	10,823			10,619			31,856			29,081
Selling, general, and administrative expense	40,739			38,889			121,838			112,077
Gain on sale of assets	—			(2,691		)	—			(334		)
Insurance recovery	—			(1,486		)	—			(1,486		)

Operating income	46,252			33,671			146,954			133,007

Interest expense	(6,148		)	(6,746		)	(20,135		)	(18,728		)
Other income, net	533			411			823			1,557

Income before income taxes	40,637			27,336			127,642			115,836

Income tax expense	(7,665		)	(3,373		)	(27,643		)	(23,179		)
Loss from unconsolidated affiliates, net of foreign tax	(2,528		)	(3,100		)	(23,740		)	(13,568		)

Consolidated net income	30,444			20,863			76,259			79,089

Net income attributable to noncontrolling interests	(1,351		)	(571		)	(3,457		)	(1,487		)

Net income attributable to Mueller Industries, Inc.	$	29,093		$	20,292		$	72,802		$	77,602

Weighted average shares for basic earnings per share	55,832			56,877			55,771			56,858
Effect of dilutive stock-based awards	482			540			523			524

Adjusted weighted average shares for diluted earnings per share	56,314			57,417			56,294			57,382

Basic earnings per share	$	0.52		$	0.36		$	1.31		$	1.36

Diluted earnings per share	$	0.52		$	0.35		$	1.29		$	1.35

Dividends per share	$	0.10		$	0.10		$	0.30		$	0.30

See accompanying notes to condensed consolidated financial statements.

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	For the Quarter Ended						For the Nine Months Ended
(In thousands)	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018

Consolidated net income	$	30,444		$	20,863		$	76,259		$	79,089

Other comprehensive loss, net of tax:
Foreign currency translation	(6,692		)	1,111			(3,612		)	(5,534		)
Net change with respect to derivative instruments and hedging activities, net of tax of $56, $(33), $(34), and $243	(195		)	131			133			(896		)
Net change in pension and postretirement obligation adjustments, net of tax of $(232), $(79), $(323), and $(221)	777			270			1,207			769
Attributable to unconsolidated affiliates, net of tax of $(159), $2,005, $(240), and $2,086	547			(6,907		)	828			(7,187		)

Total other comprehensive loss, net	(5,563		)	(5,395		)	(1,444		)	(12,848		)

Consolidated comprehensive income	24,881			15,468			74,815			66,241
Comprehensive income attributable to noncontrolling interests	(857		)	(34		)	(2,044		)	(1,097		)

Comprehensive income attributable to Mueller Industries, Inc.	$	24,024		$	15,434		$	72,771		$	65,144

See accompanying notes to condensed consolidated financial statements.

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



(In thousands, except share data)	September 28, 2019			December 29, 2018
Assets
Current assets:
Cash and cash equivalents	$	100,338		$	72,616
Accounts receivable, less allowance for doubtful accounts of $757 in 2019 and $836 in 2018	319,562			273,417
Inventories	277,567			329,795
Other current assets	33,242			26,790

Total current assets	730,709			702,618

Property, plant, and equipment, net	361,308			370,633
Operating lease right-of-use assets	25,855			—
Goodwill, net	152,445			150,335
Intangible assets, net	60,609			61,971
Investments in unconsolidated affiliates	46,369			58,042
Other assets	25,470			25,950

Total assets	$	1,402,765		$	1,369,549

Liabilities
Current liabilities:
Current portion of debt	$	7,387		$	7,101
Accounts payable	102,084			103,754
Accrued wages and other employee costs	38,282			38,549
Current portion of operating lease liabilities	3,832			—
Other current liabilities	95,184			83,397

Total current liabilities	246,769			232,801

Long-term debt, less current portion	434,082			489,597
Pension liabilities	12,783			14,237
Postretirement benefits other than pensions	14,616			14,818
Environmental reserves	19,774			20,009
Deferred income taxes	17,260			16,615
Noncurrent operating lease liabilities	22,712			—
Other noncurrent liabilities	10,173			18,212

Total liabilities	778,169			806,289

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 56,952,083 in 2019 and 56,702,997 in 2018	802			802
Additional paid-in capital	276,198			276,849
Retained earnings	880,537			824,737
Accumulated other comprehensive loss	(79,823		)	(79,792		)
Treasury common stock, at cost	(470,066		)	(474,240		)

Total Mueller Industries, Inc. stockholders' equity	607,648			548,356
Noncontrolling interests	16,948			14,904

Total equity	624,596			563,260

Commitments and contingencies	—			—

Total liabilities and equity	$	1,402,765		$	1,369,549

See accompanying notes to condensed consolidated financial statements.

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	For the Nine Months Ended
(In thousands)	September 28, 2019			September 29, 2018

Cash flows from operating activities
Consolidated net income	$	76,259		$	79,089
Reconciliation of consolidated net income to net cash provided by operating activities:
Depreciation and amortization	32,095			29,320
Stock-based compensation expense	6,355			5,953
Loss from unconsolidated affiliates	23,740			13,568
Gain on disposals of properties	(24		)	(247		)
Insurance recovery	—			(1,486		)
Change in fair value of contingent consideration	4,500			—
Deferred income tax benefit	(1,593		)	(1,502		)
Changes in assets and liabilities, net of effects of business acquired:
Receivables	(47,433		)	(42,201		)
Inventories	50,985			48,716
Other assets	(7,485		)	11,250
Current liabilities	1,687			(7,947		)
Other liabilities	(7,112		)	(13,862		)
Other, net	(47		)	1,864

Net cash provided by operating activities	131,927			122,515

Cash flows from investing activities
Capital expenditures	(20,162		)	(16,685		)
Acquisition of business, net of cash acquired	3,465			(167,677		)
Investments in unconsolidated affiliates	(11,000		)	(609		)
Proceeds from sales of assets	385			18,693

Net cash used in investing activities	(27,312		)	(166,278		)

Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.	(16,738		)	(17,051		)
Dividends paid to noncontrolling interests	—			(592		)
Repurchase of common stock	(1,763		)	(6,575		)
Payment of contingent consideration	(3,170		)	—
Issuance of long-term debt	100,658			194,131
Repayments of long-term debt	(151,305		)	(139,518		)
Repayment of debt by consolidated joint ventures, net	(4,352		)	(2,978		)
Net cash used to settle stock-based awards	(1,069		)	(726		)

Net cash (used in) provided by financing activities	(77,739		)	26,691

Effect of exchange rate changes on cash	(1,511		)	(442		)

Increase (decrease) in cash, cash equivalents, and restricted cash	25,365			(17,514		)
Cash, cash equivalents, and restricted cash at the beginning of the period	77,138			126,563

Cash, cash equivalents, and restricted cash at the end of the period	$	102,503		$	109,049

See accompanying notes to condensed consolidated financial statements.

MUELLER INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)



	For the Quarter Ended						For the Nine Months Ended
(In thousands)	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018

Common stock:
Balance at beginning of period	$	802		$	802		$	802		$	802

Balance at end of period	$	802		$	802		$	802		$	802

Additional paid-in capital:
Balance at beginning of period	$	280,626		$	277,987		$	276,849		$	274,585
Issuance of shares under incentive stock option plans	(341		)	(20		)	(624		)	(279		)
Stock-based compensation expense	2,053			2,047			6,355			5,953
Issuance of restricted stock	(6,140		)	(5,247		)	(6,382		)	(5,492		)

Balance at end of period	$	276,198		$	274,767		$	276,198		$	274,767

Retained earnings:
Balance at beginning of period	$	857,121		$	788,753		$	824,737		$	743,503
Net income attributable to Mueller Industries, Inc.	29,093			20,292			72,802			77,602
Dividends paid or payable to stockholders of Mueller Industries, Inc.	(5,677		)	(5,758		)	(17,002		)	(17,262		)
Reclassification of stranded effects of the Act	—			—			—			(556		)
Other adjustments	—			340			—			340

Balance at end of period	$	880,537		$	803,627		$	880,537		$	803,627

Accumulated other comprehensive loss:
Balance at beginning of period	$	(74,754	)	$	(58,101	)	$	(79,792	)	$	(51,056	)
Total other comprehensive loss attributable to Mueller Industries, Inc.	(5,069		)	(4,856		)	(31		)	(12,457		)
Reclassification of stranded effects of the Act	—			—			—			556

Balance at end of period	$	(79,823	)	$	(62,957	)	$	(79,823	)	$	(62,957	)

MUELLER INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)



(In thousands)	For the Quarter Ended						For the Nine Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018

Treasury stock:
Balance at beginning of period	$	(475,524	)	$	(451,740	)	$	(474,240	)	$	(445,723	)
Issuance of shares under incentive stock option plans	(601		)	565			(445		)	1,136
Repurchase of common stock	—			(1,325		)	(1,763		)	(8,158		)
Issuance of restricted stock	6,059			5,247			6,382			5,492

Balance at end of period	$	(470,066	)	$	(447,253	)	$	(470,066	)	$	(447,253	)

Noncontrolling interests:
Balance at beginning of period	$	16,091		$	14,388		$	14,904		$	13,917
Dividends paid to noncontrolling interests	—			—			—			(592		)
Net income attributable to noncontrolling interests	1,351			571			3,457			1,487
Foreign currency translation	(494		)	(537		)	(1,413		)	(390		)

Balance at end of period	$	16,948		$	14,422		$	16,948		$	14,422

See accompanying notes to condensed consolidated financial statements.

MUELLER INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

General

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been condensed or omitted. Results of operations for the interim periods presented are not necessarily indicative of results which may be expected for any other interim period or for the year as a whole. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K, including the annual financial statements incorporated therein.

The accompanying unaudited interim financial statements include all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented herein.

Note 1 – Recent Accounting Standards

Adopted

In July 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-11, Leases (Topic 842): Targeted Improvements and ASU No. 2018-10, Codification Improvements to Topic 842, Leases. The ASUs clarify how to apply certain aspects of the new leasing standard, ASC 842. ASC 842 requires an entity to recognize a right-of-use asset and lease liability for each lease with a term of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a financing or operating lease. The guidance also requires certain quantitative and qualitative disclosures about leasing arrangements. The Company adopted the ASU during the first quarter of 2019 using a modified retrospective approach and applied the transition provisions at the beginning of the fiscal year. Financial results reported in periods prior to 2018 are unchanged. The Company elected a package of practical expedients, which, among other things, does not require the reassessment of lease classification. The Company does not separate lease and non-lease components of contracts. The Company implemented a system to identify its entire population of leases and tested the population for completeness. As of the effective date, the Company recognized noncurrent right-of-use assets of $29.5 million and corresponding current and noncurrent lease liabilities of $4.8 million and $25.4 million, respectively.

Issued

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. For employers that sponsor defined benefit pension and/or other postretirement benefit plans, the ASU eliminates requirements for certain disclosures that are no longer considered cost beneficial, requires new disclosures related to the weighted-average interest crediting rate for cash balance plans and explanations for significant gains and losses related to changes in benefit obligations, and clarifies the requirements for entities that provide aggregate disclosures for two or more plans. The ASU will be effective for the annual period beginning in 2020. The updated guidance requires retrospective adoption, and early adoption is permitted. The Company does not expect the adoption of the ASU to have a material impact on its Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU eliminates requirements to disclose the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, but requires public companies to disclose changes in unrealized gains and losses for the period included in other comprehensive income (OCI) for recurring level 3 fair value measurements or instruments held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs for level 3 fair value measurements. The ASU will be effective for interim and annual periods beginning in 2020. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements, and can elect to early adopt in interim periods. The guidance on changes in unrealized gains and losses for the period included in OCI for recurring level 3 measurements, the range and weighted average of significant unobservable inputs used to develop level 3 fair value measurements, and the narrative description of measurement uncertainty is applied prospectively. All other amendments should be applied retrospectively. The Company does not expect the adoption of the ASU to have a material impact on its Condensed Consolidated Financial Statements.

Note 2 – Earnings per Common Share

Basic per share amounts have been computed based on the average number of common shares outstanding. Diluted per share amounts reflect the increase in average common shares outstanding that would result from the assumed exercise of outstanding stock options and vesting of restricted stock awards, computed using the treasury stock method. Approximately 110 thousand and 79 thousand stock-based awards were excluded from the computation of diluted earnings per share for the quarters ended September 28, 2019 and September 29, 2018, respectively, because they were antidilutive.

Note 3 – Acquisitions

ATCO

On July 2, 2018, the Company entered into a stock purchase agreement pursuant to which the Company acquired all of the outstanding capital stock of ATCO Rubber Products, Inc. (ATCO) for approximately $158.1 million, net of working capital adjustments. The total purchase price consisted of $151.8 million in cash at closing and a contingent consideration arrangement which requires the Company to pay the former owner up to $12.0 million based on EBITDA growth of the acquired business. ATCO is an industry leader in the manufacturing and distribution of insulated HVAC flexible duct systems and will support the Company’s strategy to grow its Climate Products businesses to become a more valuable resource to its HVAC customers. The acquired business is reported in the Company’s Climate segment.

The fair value of the assets acquired totaled $137.9 million, consisting primarily of property, plant, and equipment of $83.1 million, inventories of $31.7 million, accounts receivable of $21.8 million, other current assets of $1.1 million, and other assets of $0.2 million. The fair value of the liabilities assumed totaled $20.4 million, consisting primarily of accounts payable of $8.1 million, other current liabilities of $10.2 million, and long-term debt of $2.1 million. Of the remaining purchase price, $17.2 million was allocated to tax-deductible goodwill and $23.4 million was allocated to intangible assets, including technology, customer relationships, trade names, and supply contracts. The valuation of the business has been finalized. Changes to the purchase price allocation from the amounts presented in the Company’s 2018 Annual Report on Form 10-K included the valuation of the contingent consideration, intangible assets, and working capital. These changes resulted in a net decrease to goodwill of $0.5 million.

ATCO had net sales of approximately $49.4 million and $144.8 million, respectively, for the quarter and nine months ended September 28, 2019.

The following table presents condensed pro forma consolidated results of operations as if the ATCO acquisition had occurred at the beginning of 2018. The pro forma information does not purport to be indicative of the results that would have been obtained if the operations had actually been combined during the periods presented and is not necessarily indicative of operating results to be expected in future periods. The most significant pro forma adjustments to the historical results of operations relate to the application of purchase accounting and the financing structure.



	For the Nine Months Ended
(In thousands, except per share data)	September 29, 2018

Net sales	$	2,036,367
Net income	84,823

Basic earnings per share	$	1.49
Diluted earnings per share	1.48

Die-Mold

On March 31, 2018, the Company entered into a share purchase agreement pursuant to which the Company acquired all of the outstanding shares of Die-Mold Tool Limited (Die-Mold) for approximately $13.6 million, net of working capital adjustments. The total purchase price consisted of $12.4 million in cash at closing and a contingent consideration arrangement which requires the Company to pay the former owner up to $2.3 million based on EBITDA growth of the acquired business. Die-Mold, based out of Ontario, Canada, is a manufacturer of plastic PEX and other plumbing-related fittings and an integrated designer and manufacturer of plastic injection tooling. The business complements the Company’s existing businesses within the Piping Systems segment.

The fair value of the assets acquired totaled $7.1 million, consisting primarily of property, plant, and equipment of $3.3 million, inventories of $1.8 million, accounts receivable of $1.7 million, and other current assets of $0.3 million. The fair value of the liabilities assumed totaled $2.9 million, consisting primarily of accounts payable of $0.7 million, other current liabilities of $0.2 million, and deferred taxes of $2.0 million. Of the remaining purchase price, $9.4 million was allocated to non-deductible goodwill and intangible assets.

Note 4 – Segment Information

Each of the Company’s reportable segments is composed of certain operating segments that are aggregated primarily by the nature of products offered as follows:

Piping Systems

Piping Systems is composed of the following operating segments: Domestic Piping Systems Group, Great Lakes Copper, Heatlink Group, Die-Mold, European Operations, Trading Group, and Jungwoo-Mueller (the Company’s South Korean joint venture). The Domestic Piping Systems Group manufactures copper tube, fittings, and line sets. These products are manufactured in the U.S., sold in the U.S., and exported to markets worldwide. Outside the U.S., Great Lakes Copper manufactures copper tube and line sets in Canada and sells the products primarily in the U.S. and Canada. Heatlink Group produces a complete line of products for PEX plumbing and radiant systems in Canada and sells these products in Canada and the U.S. Die-Mold manufactures PEX and other plumbing-related fittings and plastic injection tooling in Canada and sells these products in Canada and the U.S. European Operations manufacture copper tube in the U.K. which is sold primarily in Europe. The Trading Group manufactures pipe nipples and resells brass and plastic plumbing valves, malleable iron fittings, faucets, and plumbing specialty products in the U.S. and Mexico. Jungwoo-Mueller manufactures copper-based joining products that are sold worldwide. The Piping Systems segment’s products are sold primarily to plumbing, refrigeration, and air-conditioning wholesalers, hardware wholesalers and co-ops, building product retailers, and air-conditioning original equipment manufacturers (OEMs).

Industrial Metals

Industrial Metals is composed of the following operating segments: Brass Rod & Copper Bar Products, Impacts & Micro Gauge, and Brass Value-Added Products. These businesses manufacture brass rod, impact extrusions, and forgings, as well as a wide variety of end products including plumbing brass, automotive components, valves, fittings, and gas assemblies. These products are manufactured in the U.S. and sold primarily to OEMs in the U.S., many of which are in the industrial, transportation, construction, heating, ventilation, and air-conditioning, plumbing, refrigeration, and energy markets.

Climate

Climate is composed of the following operating segments: Refrigeration Products, Fabricated Tube Products, Westermeyer, Turbotec, and ATCO. These domestic businesses manufacture and fabricate valves, assemblies, high pressure components, coaxial heat exchangers, and insulated HVAC flexible duct systems primarily for the heating, ventilation, air-conditioning, and refrigeration markets in the U.S.

Summarized segment information is as follows:



	For the Quarter Ended September 28, 2019
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations			Total

Net sales	$	390,917	$	135,443	$	90,938	$	(8,696	)	$	608,602

Cost of goods sold	330,418		117,893		70,523		(8,046		)	510,788
Depreciation and amortization	5,751		1,836		2,491		745			10,823
Selling, general, and administrative expense	18,738		3,115		9,961		8,925			40,739

Operating income	36,010		12,599		7,963		(10,320		)	46,252

Interest expense										(6,148		)
Other income, net										533

Income before income taxes										$	40,637



	For the Quarter Ended September 29, 2018
(In thousands)	Piping Systems			Industrial Metals			Climate		Corporate and Eliminations			Total

Net sales	$	410,525		$	158,709		$	81,619	$	(4,895	)	$	645,958

Cost of goods sold	363,174			141,435			66,832		(4,485		)	566,956
Depreciation and amortization	5,946			1,864			2,123		686			10,619
Selling, general, and administrative expense	17,387			3,086			6,890		11,526			38,889
Gain on sale of assets	(1,390		)	(1,301		)	—		—			(2,691		)
Insurance recovery	—			(1,486		)	—		—			(1,486		)

Operating income	25,408			15,111			5,774		(12,622		)	33,671

Interest expense												(6,746		)
Other income, net												411

Income before income taxes												$	27,336

Segment information (continued):



	For the Nine Months Ended September 28, 2019
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations			Total

Net sales	$	1,193,274	$	434,037	$	276,853	$	(17,387	)	$	1,886,777

Cost of goods sold	1,019,546		372,542		212,201		(18,160		)	1,586,129
Depreciation and amortization	16,953		5,518		6,932		2,453			31,856
Selling, general, and administrative expense	56,620		9,280		24,336		31,602			121,838