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Mueller Industries, Inc. Reports First Quarter 2020 Earnings

COLLIERVILLE, Tenn., April 21, 2020 -- Mueller Industries, Inc. (NYSE: MLI) announces first quarter 2020 earnings results. Operating income for the first quarter was $59.3 million versus $49.2 million for the prior year period.
Net income for the first quarter was $32.4 million, or 57 cents per diluted share, on $602.9 million in net sales, versus prior year net income of $15.7 million, or 28 cents per diluted share, on $611.8 million in net sales.

Period Financial and Operating Highlights:
Average COMEX copper traded 9 percent lower in the first quarter of 2020 versus the prior year period. During the quarter, COMEX copper declined 64 cents per pound, or 22 percent, with 40 cents of that decline occurring in March.
The 1.4 percent decline in net sales was attributable to the lower copper prices and lower sales volumes in our Industrial Metals segment; partially offset by higher sales volumes in our Piping Systems and Climate segments.
Unusual impacts during the quarter included the following:
A $21.9 million gain from our claim under the Deepwater Horizon Economic and Property Damage Settlement Program;
A $3.0 million impairment charge on certain idled manufacturing equipment during the quarter; and
Mark-to-market losses on open hedge positions, which reduced earnings $9.6 million.
We recorded a $6.3 million loss on our investment in Tecumseh Products Company in the quarter, compared to a $14.6 million loss in the prior year period.
The effective tax rate for the quarter was 26 percent, compared with 23 percent in 2019.
At quarter-end, cash on hand was $154.3 million. Debt to total capitalization was 42 percent, and the current ratio was 3.4 to 1.

Regarding the state of the Company and outlook, Greg Christopher, Mueller CEO said:
“The COVID-19 pandemic has had widespread effects around the world, and our Company is no exception. Our efforts to mitigate the health and safety risk to our employees and facilities began in February, and we have continually adapted our approach as guided by the public health experts. Amidst this turbulence, 67 of our 68 locations across three continents have remained open to support the critical infrastructure industries we serve, and we have had just one temporary closure due to a confirmed case of COVID-19. Our employees have truly stepped up to the

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plate by adopting the precautionary measures designed to protect them and their families while our Company does its part during this crisis.
Our primary market, the construction industry, while generally deemed essential, has seen reduced activity due largely to government orders and public health risk mitigation measures. We have, however, seen above normal demand levels in other segments for more niche products used for oxygen service in hospitals, the delivery of medical gases and medical equipment components.
These are tough times, but our balance sheet and liquidity position are solid. We have an established record of prudent financial management, and we began to prepare for a potential correction in the economy during the fourth quarter of 2019. We have further bolstered our position by implementing even more cash conservation measures, including the deferral of non-essential capital expenditures. Our committed credit facility provides for additional liquidity if needed to support our operations and seize potential opportunities, as we are well within our covenants.
2020 was off to a strong start, with softening in demand related to the virus hitting us during the latter half of March. Although the impact on the first quarter was mild, we currently anticipate that April and May could be off 30 percent - 40 percent, with any reversal depending upon the timing and progress of the reopening of the economy. We will continue to adapt as required. As a result, we do not intend to suspend or reduce our second quarter dividend.
Like all others, we look forward to the conclusion of this public health crisis, but in the meantime, are working actively as ever to capitalize on a number of opportunities we see on the horizon.”


















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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.

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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.

CONTACT
Jeffrey A. Martin
(901) 753-3226

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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
For the Quarter Ended
(In thousands, except per share data)
 
March 28, 2020
 
March 30, 2019
 
 
 
 
 
Net sales
 
$
602,919

 
$
611,781

 
 
 
 
 
Cost of goods sold
 
508,715

 
511,393

Depreciation and amortization
 
11,039

 
10,555

Selling, general, and administrative expense
 
42,752

 
40,653

Asset impairments
 
3,035

 

Litigation settlement, net
 
(21,933
)
 

 
 
 
 
 
Operating income
 
59,311

 
49,180

 
 
 
 
 
Interest expense
 
(5,379
)
 
(6,954
)
Other income (expense), net
 
278

 
(172
)
 
 
 
 
 
Income before income taxes
 
54,210

 
42,054

 
 
 
 
 
Income tax expense
 
(14,144
)
 
(9,546
)
Loss from unconsolidated affiliates, net of foreign tax
 
(6,115
)
 
(15,369
)
 
 
 
 
 
Consolidated net income
 
33,951

 
17,139

 
 
 
 
 
Net income attributable to noncontrolling interests
 
(1,536
)
 
(1,416
)
 
 
 
 
 
Net income attributable to Mueller Industries, Inc.
 
$
32,415

 
$
15,723

 
 
 
 
 
Weighted average shares for basic earnings per share
 
55,875

 
55,728

Effect of dilutive stock-based awards
 
583

 
526

 
 
 
 
 
Adjusted weighted average shares for diluted earnings per share
 
56,458

 
56,254

 
 
 
 
 
Basic earnings per share
 
$
0.58

 
$
0.28

 
 
 
 
 
Diluted earnings per share
 
$
0.57

 
$
0.28

 
 
 
 
 
Dividends per share
 
$
0.10

 
$
0.10

 
 
 
 
 
Summary Segment Data:
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
    Piping Systems Segment
 
$
385,013

 
$
376,492

    Industrial Metals Segment
 
131,202

 
150,875

    Climate Segment
 
93,272

 
89,834

    Elimination of intersegment sales
 
(6,568
)
 
(5,420
)
 
 
 
 
 
Net sales
 
$
602,919

 
$
611,781

 
 
 
 
 
Operating income:
 
 
 
 
    Piping Systems Segment
 
$
36,676

 
$
28,249

    Industrial Metals Segment
 
11,182

 
19,187

    Climate Segment
 
13,014

 
12,386

    Unallocated expenses
 
(1,561
)
 
(10,642
)
 
 
 
 
 
Operating income
 
$
59,311

 
$
49,180


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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
(Unaudited)
 
 
(In thousands)
 
March 28,
2020
 
December 28, 2019
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
154,283

 
$
97,944

Accounts receivable, net
 
308,836

 
269,943

Inventories
 
270,119

 
292,107

Other current assets
 
40,888

 
33,778

 
 
 
 
 
    Total current assets
 
774,126

 
693,772

 
 
 
 
 
Property, plant, and equipment, net
 
366,828

 
363,128

Operating lease right-of-use assets
 
18,632

 
26,922

Other assets
 
286,353

 
287,118

 
 
 
 
 
 
 
$
1,445,939

 
$
1,370,940

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current portion of debt
 
$
7,591

 
$
7,530

Accounts payable
 
94,251

 
85,644

Current portion of operating lease liabilities
 
5,047

 
5,250

Other current liabilities
 
123,010

 
135,863

 
 
 
 
 
    Total current liabilities
 
229,899

 
234,287

 
 
 
 
 
Long-term debt
 
468,234

 
378,724

Pension and postretirement liabilities
 
19,193

 
22,208

Environmental reserves
 
19,875

 
19,972

Deferred income taxes
 
19,513

 
21,094

Noncurrent operating lease liabilities
 
14,124

 
22,388

Other noncurrent liabilities
 
9,801

 
10,131

 
 
 
 
 
    Total liabilities
 
780,639

 
708,804

 
 
 
 
 
Total Mueller Industries, Inc. stockholders’ equity
 
645,687

 
643,468

Noncontrolling interests
 
19,613

 
18,668

 
 
 
 
 
    Total equity
 
665,300

 
662,136

 
 
 
 
 
 
 
$
1,445,939

 
$
1,370,940










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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
For the Quarter Ended
 (In thousands)
 
March 28, 2020
 
March 30, 2019
 
 
 
 
 
Cash flows from operating activities
 
 
 
 
Consolidated net income
 
$
33,951

 
$
17,139

Reconciliation of consolidated net income to net cash provided by (used in) operating activities:
 
 

 
 

Depreciation and amortization
 
11,119

 
10,635

Stock-based compensation expense
 
1,985

 
2,007

Provision for doubtful accounts receivable
 
1,100

 
(38
)
Loss from unconsolidated affiliates
 
6,115

 
15,369

Loss on disposals of properties
 
32

 
37

Impairment charges
 
3,035

 

Deferred income tax expense (benefit)
 
213

 
(225
)
Changes in assets and liabilities, net of effects of business acquired:
 
 
 
 
Receivables
 
(46,291
)
 
(34,029
)
Inventories
 
17,450

 
(13,335
)
Other assets
 
8,010

 
(7,530
)
Current liabilities
 
(10,821
)
 
(15,885
)
Other liabilities
 
(1,643
)
 
741

Other, net
 
3,796

 
441

 
 
 
 
 
Net cash provided by (used in) operating activities
 
28,051

 
(24,673
)
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(17,094
)
 
(6,834
)
Acquisition of business, net of cash acquired
 
(15,407
)
 

Investments in unconsolidated affiliates
 

 
(8,000
)
Proceeds from sales of properties
 

 
4

 
 
 
 
 
Net cash used in investing activities
 
(32,501
)
 
(14,830
)
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
Dividends paid to stockholders of Mueller Industries, Inc.
 

 
(5,574
)
Repurchase of common stock
 
(5,574
)
 
(1,763
)
Issuance of long-term debt
 
110,000

 
100,557

Repayments of long-term debt
 
(20,572
)
 
(30,472
)
Issuance (repayment) of debt by consolidated joint ventures, net
 
189

 
(2,121
)
Net cash received (used) to settle stock-based awards
 
464

 
(175
)
 
 
 
 
 
Net cash provided by financing activities
 
84,507

 
60,452

 
 
 
 
 
Effect of exchange rate changes on cash
 
(6,135
)
 
919

 
 
 
 
 
Increase in cash, cash equivalents, and restricted cash
 
73,922

 
21,868

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
 
$
171,964

 
$
99,006






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