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 Ended																		For the Six Months Ended
(In thousands, except per share data)						June 27, 2020						June 29, 2019						June 27, 2020						June 29, 2019
Net sales						$	500,168					$	666,394					$	1,103,087					$	1,278,175
Cost of goods sold						403,159						563,948						911,874						1,075,341
Depreciation and amortization						11,097						10,478						22,136						21,033
Selling, general, and administrative expense						33,616						40,446						76,368						81,099
Asset impairments						—						—						3,035						—
Litigation settlement, net						—						—						(21,933)						—
Operating income						52,296						51,522						111,607						100,702
Interest expense						(4,973)						(7,033)						(10,352)						(13,987)
Other income, net						2,834						462						3,112						290
Income before income taxes						50,157						44,951						104,367						87,005
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 income						28,487						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 share						55,723						55,753						55,799						55,741
Effect of dilutive stock-based awards						471						561						527						543
Adjusted weighted average shares for diluted earnings per share						56,194						56,314						56,326						56,284
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 Segment						88,619						147,719						219,821						298,594
Climate Segment						86,107						96,081						179,379						185,915
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 Segment						8,873						14,911						20,055						34,098
Climate Segment						12,353						13,035						25,367						25,421
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						273,710						269,943
Inventories						244,414						292,107
Other current assets						28,957						33,778
Total current assets						670,691						693,772
Property, plant, and equipment, net						362,785						363,128
Operating lease right-of-use assets						17,172						26,922
Other assets						272,742						287,118
						$	1,323,390					$	1,370,940
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of debt						$	6,543					$	7,530
Accounts payable						93,579						85,644
Current portion of operating lease liabilities						4,623						5,250
Other current liabilities						124,519						135,863
Total current liabilities						229,264						234,287
Long-term debt						323,114						378,724
Pension and postretirement liabilities						17,998						22,208
Environmental reserves						19,776						19,972
Deferred income taxes						19,635						21,094
Noncurrent operating lease liabilities						13,009						22,388
Other noncurrent liabilities						10,390						10,131
Total liabilities						633,186						708,804
Total Mueller Industries, Inc. stockholders’ equity						670,681						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, 2020						June 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 amortization						22,296						21,192
Stock-based compensation expense						4,198						4,302
Provision for doubtful accounts receivable						1,850						(100)
Loss from unconsolidated affiliates						14,756						21,212
Gain on disposals of properties						(9)						(37)
Impairment charges						3,035						—
Deferred income tax expense (benefit)						764						(67)
Changes in assets and liabilities, net of effects of business acquired:
Receivables						(11,212)						(42,045)
Inventories						43,263						30,080
Other assets						3,967						(4,617)
Current liabilities						(277)						(9,735)
Other liabilities						(5,369)						(1,485)
Other, net						3,082						(532)
Net cash provided by operating activities						142,782						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						1						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 debt						110,015						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 awards						696						(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 cash						26,470						16,934
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						$	124,512					$	94,072

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