Mueller Industries, Inc. Reports Fiscal 2020 Fourth Quarter and Full Year Results

COLLIERVILLE, Tenn., February 2, 2021 -- Mueller Industries, Inc. (NYSE: MLI) today reported 2020 fourth quarter and full year results.

Fourth Quarter:

•Operating income of $65.0 million versus $44.4 million

•Net sales of $675.9 million versus $543.8 million

•Net income of $36.4 million versus $28.2 million

•EPS of $0.64 versus $0.50

Full Year:

•Operating income of $245.8 million versus $191.4 million

•Adjusted operating income of $227.5 million versus $191.4 million (adjustments include $3.8 million for asset impairments and a $22.1 million gain for the Deepwater Horizon settlement)

•Net sales of $2.4 billion versus $2.4 billion

•Net income of $139.5 million versus $101.0 million

•EPS of $2.47 versus $1.79

*Comparisons to prior year periods

Quarter Commentary

•The average price of copper was 21.9 percent higher during the quarter compared with the prior year quarter.

•Net sales growth of $132.0 million was largely influenced by the higher copper prices ($61.8 million), with the balance attributable to recently acquired businesses and higher unit sales volumes.

•The Company recognized a $17.8 million expense to terminate its U.S. defined benefit pension plan, which consisted of an $11.6 million non-cash charge and $6.2 million in federal excise tax on surplus assets returned to the Company.

•The Company recorded income of $10.0 million on its investment in Tecumseh in the quarter, including a pre-tax gain of $11.6 million from a land sale and $1.1 million of expense related to Tecumseh’s ongoing restructuring activities.

•The effective tax rate of 31.8 percent reflects the accounting for several discrete items in the quarter. The effective tax rate of 19.8 percent for the prior year quarter reflects a favorable impact from the recognition of foreign net operating losses.

•Cash generated from operations was $48.2 million.

Full Year Commentary

•The average price of copper was 2.8 percent higher than in 2019. COMEX copper hit a low of $2.12 per pound in March and a high of $3.63 per pound in December.

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•Net sales were flat as compared to the prior year, with volume from acquisitions offsetting declines stemming from the COVID-19 pandemic.

•Our Tecumseh investment showed improvement in 2020 reflecting early impacts of the ongoing restructuring.

•Our operating cash flow exceeded $245.1 million. The Company’s liquidity position remained strong, with cash and cash equivalents of $119.1 million, total debt of $327.9 million and approximately $300.0 million currently available under the Company’s existing credit facility. Total debt to total capitalization was a modest 29.0 percent.

•The 2020 effective tax rate was 26.4 percent compared with 21.2 percent in 2019.

Operating Highlights and Outlook:

Greg Christopher, CEO, commented, “Mueller delivered a solid fourth quarter and anticipates a continuation of this positive trend into 2021. This was our third consecutive year of double digit earnings growth. Our teams managed the challenges presented by the COVID-19 pandemic, and we expect to reap ongoing benefits from our more efficient and controlled operating environment.

Although pandemic related public health regulations are likely to remain in place, we are hopeful that the limitations such measures may exert on demand will subside as we approach the second half of the year. On January 29, 2021, we closed on our previously announced acquisition of the Hart & Cooley Flexible Duct business, which expands our presence in the air quality and climate control systems markets.

Our diversified portfolio of businesses is well balanced and capitalized, and we are optimistic that 2021 will bring continued strong cash generation. We believe we are well positioned for the reopening of global economies.”

Mueller Industries, Inc. (NYSE: MLI) is an industrial corporation whose holdings manufacture vital goods for important markets such as air, water, oil and gas distribution; climate comfort; food preservation; energy transmission; medical; aerospace; and automotive. It includes a network of companies and brands throughout North America, Europe, Asia, and the Middle East.

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NON-GAAP MEASURES

This press release contains a reference to a non-GAAP measure (adjusted operating income). We believe this financial measure, which is used by management to monitor and evaluate performance, allows investors to better evaluate changes in operating income on a comparable basis from period to period.

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 Year Ended
(In thousands, except per share data)			December 26, 2020						December 28, 2019						December 26, 2020						December 28, 2019
Net sales			$	675,851					$	543,839					$	2,398,043					$	2,430,616
Cost of goods sold			553,507						449,481						1,966,161						2,035,610
Depreciation and amortization			11,955						10,837						44,843						42,693
Selling, general, and administrative expense			44,649						39,072						159,483						160,910
Litigation settlement. net			—						—						(22,053)						—
Impairment charges			736						—						3,771						—
Operating income			65,004						44,449						245,838						191,403
Interest expense			(4,010)						(5,548)						(19,247)						(25,683)
Environmental expense			(3,488)						(440)						(4,454)						(1,321)
Pension plan termination costs			(17,835)						—						(17,835)						—
Other income, net			287						(20)						4,887						1,684
Income before income taxes			39,958						38,441						209,189						166,083
Income tax expense			(12,698)						(7,614)						(55,321)						(35,257)
Income (loss) from unconsolidated affiliates, net of foreign tax			9,994						(854)						(10,219)						(24,594)
Consolidated net income			37,254						29,973						143,649						106,232
Net income attributable to noncontrolling interests			(834)						(1,803)						(4,156)						(5,260)
Net income attributable to Mueller Industries, Inc.			$	36,420					$	28,170					$	139,493					$	100,972
Weighted average shares for basic earnings per share			55,869						55,869						55,821						55,798
Effect of dilutive stock-based awards			673						611						569						545
Adjusted weighted average shares for diluted earnings per share			56,542						56,480						56,390						56,343
Basic earnings per share			$	0.65					$	0.50					$	2.50					$	1.81
Diluted earnings per share			$	0.64					$	0.50					$	2.47					$	1.79
Dividends per share			$	0.10					$	0.10					$	0.40					$	0.40
Summary Segment Data:
Net sales:
Piping Systems Segment			$	454,535					$	349,182					$	1,583,002					$	1,542,456
Industrial Metals Segment			133,507						120,336						472,159						554,372
Climate Segment			93,148						79,362						370,131						356,216
Elimination of intersegment sales			(5,339)						(5,041)						(27,249)						(22,428)
Net sales			$	675,851					$	543,839					$	2,398,043					$	2,430,616
Operating income:
Piping Systems Segment			$	43,106					$	31,724					$	165,719					$	131,879
Industrial Metals Segment			15,662						15,026						54,065						61,724
Climate Segment			13,279						9,343						56,802						42,727
Unallocated expenses			(7,043)						(11,644)						(30,748)						(44,927)
Operating income			$	65,004					$	44,449					$	245,838					$	191,403

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MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(In thousands)			December 26, 2020						December 28, 2019
ASSETS
Cash and cash equivalents			$	119,075					$	97,944
Accounts receivable, net			357,532						269,943
Inventories			315,002						292,107
Other current assets			33,752						33,778
Total current assets			825,361						693,772
Property, plant, and equipment, net			376,572						363,128
Operating lease right-of-use assets			29,301						26,922
Other assets			297,334						287,118
			$	1,528,568					$	1,370,940
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of debt			$	41,283					$	7,530
Accounts payable			147,741						85,644
Current portion of operating lease liabilities			6,259						5,250
Other current liabilities			144,360						135,863
Total current liabilities			339,643						234,287
Long-term debt			286,593						378,724
Pension and postretirement liabilities			26,841						22,208
Environmental reserves			21,256						19,972
Deferred income taxes			16,842						21,094
Noncurrent operating lease liabilities			21,602						22,388
Other noncurrent liabilities			14,731						10,131
Total liabilities			727,508						708,804
Total Mueller Industries, Inc. stockholders’ equity			776,745						643,468
Noncontrolling interests			24,315						18,668
Total equity			801,060						662,136
			$	1,528,568					$	1,370,940

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MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

			For the Year Ended
(In thousands)			December 26, 2020						December 28, 2019
Cash flows from operating activities
Consolidated net income			$	143,649					$	106,232
Reconciliation of consolidated net income to net cash provided by operating activities:
Depreciation and amortization			45,162						43,011
Stock-based compensation expense			8,570						8,744
Provision for doubtful accounts receivable			1,208						(80)
Loss from unconsolidated affiliates			10,219						24,594
Non-cash pension plan termination charge			11,642						—
Loss (gain) on disposals of assets			132						(963)
Change in the fair value of contingent consideration			—						3,625
Impairment charges			3,771						—
Deferred income tax benefit			(4,046)						(428)
Changes in assets and liabilities, net of effects of businesses acquired:
Receivables			(76,404)						6,585
Inventories			5,207						39,561
Other assets			20,609						(15,639)
Current liabilities			74,097						(7,076)
Other liabilities			(1,142)						(7,944)
Other, net			2,399						322
Net cash provided by operating activities			245,073						200,544
Cash flows from investing activities
Proceeds from sale of assets, net of cash transferred			181						3,240
Acquisition of businesses, net of cash acquired			(72,648)						3,465
Capital expenditures			(43,885)						(31,162)
Issuance of notes receivable			(9,270)						—
Investments in unconsolidated affiliates			—						(16,000)
Net cash used in investing activities			(125,622)						(40,457)
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.			(22,341)						(22,325)
Dividends paid to noncontrolling interests			—						(846)
Issuance of long-term debt			190,038						100,658
Repayments of long-term debt			(246,898)						(206,718)
Repayment of debt by consolidated joint ventures, net			(259)						(4,305)
Repurchase of common stock			(5,574)						(1,763)
Payment of contingent consideration			(7,000)						(3,170)
Net cash used to settle stock-based awards			(230)						(1,225)
Net cash used in financing activities			(92,264)						(139,694)
Effect of exchange rate changes on cash			2,147						511
Increase in cash, cash equivalents, and restricted cash			29,334						20,904
Cash, cash equivalents, and restricted cash at the beginning of the year			98,042						77,138
Cash, cash equivalents, and restricted cash at the end of the year			$	127,376					$	98,042

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