Mueller Industries, Inc. Reports Second Quarter 2023 Earnings

COLLIERVILLE, Tenn., July 25, 2023 -- Mueller Industries, Inc. (NYSE: MLI) announces results for the second quarter of 2023. Comparisons are to the second quarter of 2022, which, for context, yielded the highest quarterly earnings on record and a 70 percent increase in operating income over the same period in 2021.

•Operating Income of $210.7 million versus $268.9 million

•Net Income of $177.7 million versus $206.6 million

•Diluted EPS of $3.12 versus $3.65

•Net Sales of $897.0 million versus $1.15 billion

Second Quarter Financial and Operating Highlights:

•The decrease in net sales was primarily attributable to the normalization of demand across our three segments. In addition, lower COMEX copper prices, which were 11 percent below the second quarter of 2022, contributed to the decline.

•The change in metal prices, net of hedges, resulted in a $6.9 million increase in cost of goods sold in the current quarter as compared with an $8.0 million decrease in the prior year period.

•Operating costs were unfavorably stressed due to the impacts of several nonrecurring events:

◦As previously reported, our copper fitting manufacturing plant was damaged by a tornado on March 31, 2023 and remains shut down. While we rebuild the facility, we are producing some product in makeshift operations and sourcing the rest.

◦Our Brass Rod business was disrupted by a fire that resulted from work being performed by a third party contractor, thereby impairing production for nearly three weeks during the quarter.

◦Our Westermeyer business, which lost its manufacturing plant to a fire in August 2022, continues to operate at 80-85 percent of pre-fire levels in makeshift production operations. The business settled and recorded a $19.5 million gain from the insurance claim arising from the fire.

•Cash and short-term investments at quarter end were $898.4 million, an increase of $116.0 million during the quarter.

•Our current ratio increased to 5.4 to 1.

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Regarding the quarter performance and outlook, Greg Christopher, Mueller’s CEO said, “Our team managed through some difficult issues and demonstrated its commitment to servicing customers, no matter the obstacles. Given the state of business and the unforeseen challenges we confronted, to have achieved these results is quite positive.

Decline in overall demand was as anticipated due to the easing of supply chain congestion and moderation of construction activity from its peak levels in 2022. Expenses were elevated due to inflation and the aforementioned disruptions, which absorbed considerable amounts of additional time and cost.

For the second half, we maintain our view that inflation and interest rates will remain at elevated levels and as such, will continue to exert pressure on the global economy. Demand and backlogs appear to have moderated to more normal levels, as supply chains have been sensibly rebalanced.

We will adjust as conditions dictate and are focused on investments that will optimize our manufacturing platform, reduce costs and improve profitability. We continue to generate strong cash flows, which provide us the necessary resources to act swiftly as growth opportunities present themselves.”

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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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)						July 1, 2023						June 25, 2022						July 1, 2023						June 25, 2022
Net sales						$	896,984					$	1,150,042					$	1,868,176					$	2,160,044
Cost of goods sold						639,272						820,914						1,318,070						1,565,425
Depreciation and amortization						10,416						11,302						21,073						22,143
Selling, general, and administrative expense						56,062						48,956						108,693						96,412
Gain on sale of assets						—						—						—						(5,507)
Gain on insurance settlement						(19,466)						—						(19,466)						—
Operating income						210,700						268,870						439,806						481,571
Interest expense						(135)						(147)						(278)						(305)
Interest income						7,732						103						13,967						263
Unrealized gain on short-term investments						20,820						—						20,820						—
Other income, net						1,841						2,100						4,077						2,720
Income before income taxes						240,958						270,926						478,392						484,249
Income tax expense						(62,122)						(68,290)						(123,479)						(122,489)
Income (loss) from unconsolidated affiliates, net of foreign tax						715						4,888						(269)						5,012
Consolidated net income						179,551						207,524						354,644						366,772
Net income attributable to noncontrolling interests						(1,840)						(972)						(3,694)						(1,904)
Net income attributable to Mueller Industries, Inc.						$	177,711					$	206,552					$	350,950					$	364,868
Weighted average shares for basic earnings per share						55,660						55,787						55,677						55,943
Effect of dilutive stock-based awards						1340						741						1023						776
Adjusted weighted average shares for diluted earnings per share						57,000						56,528						56,700						56,719
Basic earnings per share						$	3.19					$	3.70					$	6.30					$	6.52
Diluted earnings per share						$	3.12					$	3.65					$	6.19					$	6.43
Dividends per share						$	0.30					$	0.25					$	0.60					$	0.50

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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME, CONTINUED
(Unaudited)
						For the Quarter Ended												For the Six Months Ended
(In thousands)						July 1, 2023						June 25, 2022						July 1, 2023						June 25, 2022
Summary Segment Data:
Net sales:
Piping Systems Segment						$	638,005					$	824,807					$	1,300,484					$	1,528,237
Industrial Metals Segment						146,266						179,175						311,500						353,487
Climate Segment						123,954						164,484						276,908						305,106
Elimination of intersegment sales						(11,241)						(18,424)						(20,716)						(26,786)
Net sales						$	896,984					$	1,150,042					$	1,868,176					$	2,160,044
Operating income:
Piping Systems Segment						$	151,142					$	211,579					$	314,996					$	372,067
Industrial Metals Segment						17,971						24,168						45,186						47,427
Climate Segment						57,067						50,747						111,055						87,447
Unallocated income (expenses)						(15,480)						(17,624)						(31,431)						(25,370)
Operating income						$	210,700					$	268,870					$	439,806					$	481,571

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MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

						(Unaudited)
(In thousands)						July 1, 2023						December 31, 2022
ASSETS
Cash and cash equivalents						$	771,317					$	461,018
Short-term investments						127,051						217,863
Accounts receivable, net						459,467						380,352
Inventories						465,729						448,919
Other current assets						28,172						26,501
Total current assets						1,851,736						1,534,653
Property, plant, and equipment, net						386,928						379,950
Operating lease right-of-use assets						31,164						22,892
Other assets						306,592						304,904
Total assets						$	2,576,420					$	2,242,399
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of debt						$	670					$	811
Accounts payable						155,096						128,000
Current portion of operating lease liabilities						6,951						4,942
Other current liabilities						181,831						214,542
Total current liabilities						344,548						348,295
Long-term debt						1,267						1,218
Pension and postretirement liabilities						12,166						13,055
Environmental reserves						15,729						16,380
Deferred income taxes						18,821						16,258
Noncurrent operating lease liabilities						23,596						16,880
Other noncurrent liabilities						17,355						16,349
Total liabilities						433,482						428,435
Total Mueller Industries, Inc. stockholders’ equity						2,116,230						1,790,914
Noncontrolling interests						26,708						23,050
Total equity						2,142,938						1,813,964
Total liabilities and equity						$	2,576,420					$	2,242,399

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MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

						For the Six Months Ended
(In thousands)						July 1, 2023						June 25, 2022
Cash flows from operating activities
Consolidated net income						$	354,644					$	366,772
Reconciliation of consolidated net income to net cash provided by operating activities:
Depreciation and amortization						21,252						22,322
Stock-based compensation expense						12,459						5,171
Provision for doubtful accounts receivable						(80)						151
Loss (income) from unconsolidated affiliates						269						(5,012)
Insurance proceeds - noncapital related						9,854						—
Gain on disposals of properties						(141)						(6,800)
Unrealized gain on short-term investments						(20,820)						—
Gain on insurance settlement						(19,466)						—
Deferred income tax expense (benefit)						2,406						(373)
Changes in assets and liabilities:
Receivables						(77,701)						(146,438)
Inventories						(12,149)						(49,354)
Other assets						(5,571)						(6,095)
Current liabilities						(14,460)						28,906
Other liabilities						(976)						(4,283)
Other, net						1,310						(433)
Net cash provided by operating activities						250,830						204,534
Cash flows from investing activities
Capital expenditures						(29,221)						(23,248)
Insurance proceeds - capital related						24,646						—
Purchase of short-term investments						(106,231)						—
Proceeds from the maturity of short-term investments						217,863						—
Proceeds from sales of properties						142						7,561
Dividends from unconsolidated affiliates						797						1,609
Net cash provided by (used in) investing activities						107,996						(14,078)
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.						(33,402)						(27,968)
Repurchase of common stock						(19,303)						(33,469)
Repayments of debt						(130)						(111)
(Repayment) issuance of debt by consolidated joint ventures, net						(143)						360
Net cash used to settle stock-based awards						(2,588)						(95)
Net cash used in financing activities						(55,566)						(61,283)
Effect of exchange rate changes on cash						4,825						(2,234)
Increase in cash, cash equivalents, and restricted cash						308,085						126,939
Cash, cash equivalents, and restricted cash at the beginning of the period						465,296						90,376
Cash, cash equivalents, and restricted cash at the end of the period						$	773,381					$	217,315

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