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Mueller Industries, Inc. Reports Second Quarter 2020 Earnings

COLLIERVILLE, Tenn., July 21, 2020 -- Mueller Industries, Inc. (NYSE: MLI) announced second quarter operating income of $52.3 million, compared with $51.5 million for the prior year period.
Net income for the second quarter was $28.0 million, or 50 cents per diluted share, the same as reported for 2019. Net sales were $500.2 million, compared with $666.4 million in the second quarter of 2019.

Second Quarter Financial and Operating Highlights:
On average, COMEX copper traded 13 percent lower during the quarter versus the same period of 2019.
Approximately $29.0 million of the quarter-over-quarter decline in sales was due to lower copper prices, with the balance attributable to lower volumes, which stemmed in large part from the COVID-19 shutdowns.
Mark-to-market recovery on open hedge positions improved earnings by $3.3 million.
We recorded an $8.6 million loss on our investment in Tecumseh Products Company, compared to the $5.3 million loss recorded during the prior year period. Included in the $8.6 million loss was $1.7 million of pre-tax restructuring charges and $3.0 million in foreign currency losses. Our restructuring efforts will continue.
The effective tax rate for the quarter was 26 percent, compared with 23 percent in the prior year period.
During the quarter, we generated $114.7 million in cash from operations and repaid $145.0 million on our revolving credit facility.
Cash on hand was $123.6 million at quarter-end, with only $35.0 million drawn on our revolving credit facility.

Regarding the state of the Company and outlook, Greg Christopher, Mueller CEO said:
“Our proactive response to the COVID-19 pandemic, combined with timely cost controls, was critical to our continued profitability, notwithstanding volume declines. We anticipate that our businesses will strengthen as global economies continue to reopen. Given our low cost platform, we believe we are well positioned to remain solidly profitable, even at reduced demand levels.”





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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 EndedFor the Six Months Ended
(In thousands, except per share data)June 27, 2020June 29, 2019June 27, 2020June 29, 2019
Net sales$500,168  $666,394  $1,103,087  $1,278,175  
Cost of goods sold403,159563,948911,8741,075,341
Depreciation and amortization11,09710,47822,13621,033
Selling, general, and administrative expense33,61640,44676,36881,099
Asset impairments—  —  3,035  —  
Litigation settlement, net—  —  (21,933) —  
Operating income52,29651,522111,607100,702
Interest expense(4,973) (7,033) (10,352) (13,987) 
Other income, net2,834  462  3,112  290  
Income before income taxes50,15744,951  104,36787,005  
Income tax expense(13,029) (10,432) (27,173) (19,978) 
Loss from unconsolidated affiliates, net of foreign tax(8,641) (5,843) (14,756) (21,212) 
Consolidated net income28,487  28,676  62,438  45,815  
Net income attributable to noncontrolling interests(531) (690) (2,067) (2,106) 
Net income attributable to Mueller Industries, Inc.$27,956  $27,986  $60,371  $43,709  
Weighted average shares for basic earnings per share55,72355,75355,79955,741
Effect of dilutive stock-based awards471561527543
Adjusted weighted average shares for diluted earnings per share
56,19456,31456,32656,284
Basic earnings per share$0.50  $0.50  $1.08  $0.78  
Diluted earnings per share$0.50  $0.50  $1.07  $0.78  
Dividends per share$0.10  $0.10  $0.20  $0.20  
Summary Segment Data:
Net sales:
    Piping Systems Segment$334,040  $425,865  $719,053  $802,357  
    Industrial Metals Segment88,619147,719219,821298,594
    Climate Segment86,10796,081179,379185,915
    Elimination of intersegment sales(8,598) (3,271) (15,166) (8,691) 
Net sales
$500,168  $666,394  $1,103,087  $1,278,175  
Operating income:
    Piping Systems Segment$41,074  $35,896  $77,750  $64,145  
    Industrial Metals Segment8,87314,91120,05534,098
    Climate Segment12,35313,03525,36725,421
    Unallocated expenses(10,004) (12,320) (11,565) (22,962) 
Operating income$52,296  $51,522  $111,607  $100,702  
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(Unaudited)
(In thousands)
June 27,
2020
December 28, 2019
ASSETS
Cash and cash equivalents$123,610  $97,944  
Accounts receivable, net
273,710269,943
Inventories244,414292,107
Other current assets
28,95733,778
    Total current assets670,691693,772
Property, plant, and equipment, net362,785363,128
Operating lease right-of-use assets
17,17226,922  
Other assets
272,742287,118
$1,323,390  $1,370,940  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of debt$6,543  $7,530  
Accounts payable93,57985,644
Current portion of operating lease liabilities
4,623  5,250  
Other current liabilities
124,519135,863
    Total current liabilities229,264234,287
Long-term debt323,114378,724
Pension and postretirement liabilities17,99822,208
Environmental reserves19,77619,972
Deferred income taxes19,63521,094
Noncurrent operating lease liabilities13,00922,388  
Other noncurrent liabilities
10,39010,131
    Total liabilities
633,186708,804
Total Mueller Industries, Inc. stockholders’ equity670,681  643,468
Noncontrolling interests
19,523  18,668
    Total equity
690,204  662,136
$1,323,390  $1,370,940  








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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended
 (In thousands)
June 27, 2020June 29, 2019
Cash flows from operating activities
Consolidated net income$62,438  $45,815  
Reconciliation of consolidated net income to net cash provided by operating activities:  
Depreciation and amortization22,296  21,192  
Stock-based compensation expense4,198  4,302  
Provision for doubtful accounts receivable1,850  (100) 
Loss from unconsolidated affiliates14,756  21,212  
Gain on disposals of properties(9) (37) 
Impairment charges3,035  —  
Deferred income tax expense (benefit)764  (67) 
Changes in assets and liabilities, net of effects of business acquired:
Receivables(11,212) (42,045) 
Inventories43,263  30,080  
Other assets3,967  (4,617) 
Current liabilities(277) (9,735) 
Other liabilities(5,369) (1,485) 
Other, net3,082  (532) 
Net cash provided by operating activities142,782  63,983  
Cash flows from investing activities
Capital expenditures(22,215) (13,034) 
Acquisition of business, net of cash acquired(15,415) 3,465  
Investments in unconsolidated affiliates—  (10,500) 
Proceeds from sales of properties 351  
Net cash used in investing activities(37,629) (19,718) 
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.(11,168) (11,151) 
Repurchase of common stock(5,574) (1,763) 
Issuance of long-term debt110,015  100,638  
Repayments of long-term debt(166,021) (110,914) 
Repayment of debt by consolidated joint ventures, net(471) (4,132) 
Net cash received (used) to settle stock-based awards696  (127) 
Net cash used in financing activities(72,523) (27,449) 
Effect of exchange rate changes on cash(6,160) 118  
Increase in cash, cash equivalents, and restricted cash26,470  16,934  
Cash, cash equivalents, and restricted cash at the beginning of the period98,042  77,138  
Cash, cash equivalents, and restricted cash at the end of the period$124,512  $94,072  



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