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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly report ended September 28, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 1-6770
mlilogocoppera04.jpg
MUELLER INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
Delaware25-0790410
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
150 Schilling BoulevardSuite 100 
ColliervilleTennessee38017
(Address of principal executive offices)(Zip Code)
(901) 753-3200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
Common StockMLINYSE
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   ☒    No   ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  
Yes   ☒    No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes   ☐    No   ☒

The number of shares of the Registrant’s common stock outstanding as of October 18, 2024 was 113,735,099.


MUELLER INDUSTRIES, INC.

FORM 10-Q

For the Quarterly Period Ended September 28, 2024
As used in this report, the terms “Company,” “Mueller,” and “Registrant” mean Mueller Industries, Inc. and its consolidated subsidiaries taken as a whole, unless the context indicates otherwise.

INDEX
  Page Number
 
   
  
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
   
2

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

For the Quarter EndedFor the Nine Months Ended
(In thousands, except per share data)September 28, 2024September 30, 2023September 28, 2024September 30, 2023
Net sales$997,831 $819,792 $2,845,230 $2,687,968 
Cost of goods sold722,469 579,058 2,056,162 1,897,128 
Depreciation and amortization11,710 9,631 30,897 30,704 
Selling, general, and administrative expense59,619 48,295 161,993 156,988 
Gain on sale of assets(2,667)— (3,953)— 
Gain on sale of business— (4,137)— (4,137)
Asset impairments— 5,934 — 5,934 
Gain on insurance settlement— — — (19,466)
Operating income206,700 181,011 600,131 620,817 
Interest expense(113)(230)(335)(508)
Interest income11,145 10,599 42,773 24,566 
Realized and unrealized gains (losses) on short-term investments164 (2,368)529 20,362 
Other (expense) income, net(122)(47)(848)2,120 
Income before income taxes217,774 188,965 642,250 667,357 
Income tax expense(49,188)(50,843)(159,406)(174,322)
Income (loss) from unconsolidated affiliates, net of foreign tax3,197 (2,413)(5,905)(2,682)
Consolidated net income171,783 135,709 476,939 490,353 
Net income attributable to noncontrolling interests(3,084)(3,000)(9,712)(6,694)
Net income attributable to Mueller Industries, Inc.$168,699 $132,709 $467,227 $483,659 
Weighted average shares for basic earnings per share (1)
111,363 111,416 111,332 111,374 
Effect of dilutive stock-based awards (1)
2,412 2,452 2,635 2,182 
Adjusted weighted average shares for diluted earnings per share (1)
113,775 113,868 113,967 113,556 
Basic earnings per share (1)
$1.51 $1.19 $4.20 $4.34 
Diluted earnings per share (1)
$1.48 $1.17 $4.10 $4.26 
Dividends per share (1)
$0.20 $0.15 $0.60 $0.45 

See accompanying notes to condensed consolidated financial statements.

(1) Adjusted retroactively to reflect the two-for-one stock split that occurred on October 20, 2023. Refer to Note 2 - Earnings per Common Share for additional information.
3

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 For the Quarter EndedFor the Nine Months Ended
(In thousands)September 28, 2024September 30, 2023September 28, 2024September 30, 2023
Consolidated net income$171,783 $135,709 $476,939 $490,353 
Other comprehensive income (loss), net of tax:    
Foreign currency translation6,117 (9,078)(5,909)8,898 
Net change with respect to derivative instruments and hedging activities, net of tax of $(425), $(93), $(304) and $410
1,460 324 1,041 (1,401)
Net change in pension and postretirement obligation adjustments, net of tax of $134, $(15), $155 and $(3)
(323)— (380)1 
Attributable to unconsolidated affiliates, net of tax of $(27), $(64), $433 and $(540)
90 222 (1,493)1,860 
Total other comprehensive income (loss), net7,344 (8,532)(6,741)9,358 
Consolidated comprehensive income179,127 127,177 470,198 499,711 
Comprehensive income attributable to noncontrolling interests(3,499)(3,280)(8,983)(6,938)
Comprehensive income attributable to Mueller Industries, Inc.$175,628 $123,897 $461,215 $492,773 

See accompanying notes to condensed consolidated financial statements.




4

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)
(In thousands, except share data)September 28,
2024		December 30,
2023
Assets  
Current assets:  
Cash and cash equivalents
$965,116 $1,170,893 
Short-term investments4,449 98,146 
Accounts receivable, less allowance for doubtful accounts of $2,330 in 2024 and $2,830 in 2023
500,617 351,561 
Inventories400,252 380,248 
Other current assets
45,144 39,173 
Total current assets1,915,578 2,040,021 
Property, plant, and equipment, net506,234 385,165 
Operating lease right-of-use assets32,202 35,170 
Goodwill, net599,559 151,820 
Intangible assets, net46,112 46,208 
Investments in unconsolidated affiliates80,174 83,436 
Other assets26,273 17,481 
Total assets$3,206,132 $2,759,301 
5

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)September 28,
2024		December 30,
2023
Liabilities  
Current liabilities:  
Current portion of debt
$927 $796 
Accounts payable
183,511 120,485 
Accrued wages and other employee costs
48,216 55,644 
Current portion of operating lease liabilities
7,681 7,893 
Other current liabilities
153,658 132,320 
Total current liabilities393,993 317,138 
Long-term debt, less current portion19 185 
Pension liabilities3,270 2,832 
Postretirement benefits other than pensions8,812 9,230 
Environmental reserves14,696 15,030 
Deferred income taxes24,663 19,134 
Noncurrent operating lease liabilities24,504 26,683 
Other noncurrent liabilities27,539 10,353 
Total liabilities497,496 400,585 
Equity  
Mueller Industries, Inc. stockholders' equity:  
Preferred stock - $1.00 par value; shares authorized 5,000,000; none outstanding
— — 
 Common stock - $.01 par value; shares authorized 250,000,000; issued 160,366,008; outstanding 113,734,299 in 2024 and 114,157,918 in 2023
1,604 1,604 
Additional paid-in capital323,568 312,171 
Retained earnings2,992,922 2,594,300 
Accumulated other comprehensive loss(53,233)(47,221)
Treasury common stock, at cost(586,479)(523,409)
Total Mueller Industries, Inc. stockholders' equity2,678,382 2,337,445 
Noncontrolling interests30,254 21,271 
Total equity2,708,636 2,358,716 
Commitments and contingencies— — 
Total liabilities and equity$3,206,132 $2,759,301 
See accompanying notes to condensed consolidated financial statements.
6

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 For the Nine Months Ended
(In thousands)September 28, 2024September 30, 2023
Cash flows from operating activities  
Consolidated net income$476,939 $490,353 
Reconciliation of consolidated net income to net cash provided by operating activities:  
Depreciation and amortization31,140 31,053 
Stock-based compensation expense19,956 17,268 
Provision for doubtful accounts receivable(262)(63)
Loss from unconsolidated affiliates5,905 2,682 
Dividends from unconsolidated affiliates4,130 — 
Insurance proceeds - noncapital related15,000 9,854 
Gain on disposals of properties(3,953)(106)
Gain on sale of business— (4,137)
Unrealized gain on short-term investments(164)(18,449)
Gain on sales of securities(365)— 
Impairment charges— 5,934 
Gain on insurance settlement— (19,466)
Deferred income tax expense1,837 3,803 
Changes in assets and liabilities, net of effects of businesses acquired:  
Receivables(99,281)(36,855)
Inventories34,027 53,372 
Other assets(3,175)(12,897)
Current liabilities25,303 (25,503)
Other liabilities(2,467)(1,828)
Other, net1,217 3,475 
Net cash provided by operating activities$505,787 $498,490 

















7

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

For the Nine Months Ended
(In thousands)September 28, 2024September 30, 2023
Cash flows from investing activities
Capital expenditures$(51,288)$(39,469)
Acquisition of businesses, net of cash acquired(602,692)— 
Investments in unconsolidated affiliates(8,700)(3,999)
Insurance proceeds - capital related— 24,646 
Purchase of short-term investments(4,285)(106,231)
Purchase of long-term investments(7,976)— 
Proceeds from the maturity of short-term investments— 217,863 
Proceeds from the sale of securities98,465 — 
Issuance of notes receivable(3,800)— 
Proceeds from sales of assets9,026 214 
Dividends from unconsolidated affiliates— 1,093 
Net cash (used in) provided by investing activities$(571,250)$94,117 
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.$(66,796)$(50,133)
Repurchase of common stock(48,681)(19,303)
Repayments of debt(167)(185)
Issuance (repayment) of debt by consolidated joint ventures, net144 (265)
Net cash used to settle stock-based awards(22,946)(9,113)
Net cash used in financing activities$(138,446)$(78,999)
Effect of exchange rate changes on cash(4,709)2,312 
(Decrease) increase in cash, cash equivalents, and restricted cash(208,618)515,920 
Cash, cash equivalents, and restricted cash at the beginning of the period1,174,223 465,296 
Cash, cash equivalents, and restricted cash at the end of the period$965,605 $981,216 

See accompanying notes to condensed consolidated financial statements.
8

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)

For the Quarter EndedFor the Nine Months Ended
(In thousands)September 28, 2024September 30, 2023September 28, 2024September 30, 2023
Common stock:    
Balance at beginning of period$1,604 $802 $1,604 $802 
Balance at end of period$1,604 $802 $1,604 $802 
Additional paid-in capital:    
Balance at beginning of period$325,763 $309,705 $312,171 $297,270 
Acquisition of shares under incentive stock option plans90 254 433 688 
Stock-based compensation expense6,480 4,809 19,956 17,268 
Issuance of restricted stock(8,765)(1,121)(8,992)(1,579)
Balance at end of period$323,568 $313,647 $323,568 $313,647 
Retained earnings:     
Balance at beginning of period$2,847,420 $2,376,618 $2,594,300 $2,059,796 
Net income attributable to Mueller Industries, Inc.168,699 132,709 467,227 483,659 
Dividends paid or payable to stockholders of Mueller Industries, Inc.(23,197)(17,170)(68,605)(51,298)
Balance at end of period$2,992,922 $2,492,157 $2,992,922 $2,492,157 
Accumulated other comprehensive loss:    
Balance at beginning of period$(60,162)$(46,249)$(47,221)$(64,175)
Total other comprehensive income (loss) attributable to Mueller Industries, Inc.6,929 (8,812)(6,012)9,114 
Balance at end of period$(53,233)$(55,061)$(53,233)$(55,061)
9

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)

For the Quarter EndedFor the Nine Months Ended
(In thousands)September 28, 2024September 30, 2023September 28, 2024September 30, 2023
Treasury stock:    
Balance at beginning of period$(568,522)$(524,646)$(523,409)$(502,779)
Acquisition of shares under incentive stock option plans(21,035)(6,779)(23,381)(9,801)
Repurchase of common stock(5,687)— (48,681)(19,303)
Issuance of restricted stock8,765 1,121 8,992 1,579 
Balance at end of period$(586,479)$(530,304)$(586,479)$(530,304)
Noncontrolling interests:    
Balance at beginning of period$26,755 $26,708 $21,271 $23,050 
Net income attributable to noncontrolling interests3,084 3,000 9,712 6,694 
Foreign currency translation415 280 (729)244 
Balance at end of period$30,254 $29,988 $30,254 $29,988 

See accompanying notes to condensed consolidated financial statements.

10

MUELLER INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

General

Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been condensed or omitted.  Results of operations for the interim periods presented are not necessarily indicative of results which may be expected for any other interim period or for the year as a whole.  This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K, including the annual financial statements incorporated therein.

The accompanying unaudited interim financial statements include all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented herein.  Certain prior year balances have been reclassified to conform to current year presentation.

Note 1 – Recent Accounting Standards

Adopted

In June 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The new guidance was issued to clarify existing guidance measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduce new disclosure requirements for applicable equity securities. The ASU was effective for fiscal years beginning after December 15, 2023 for public entities. The guidance requires prospective adoption, and early adoption was permitted. The Company adopted the ASU during the first quarter of 2024. The adoption of the ASU did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

Issued

In March 2024, the Securities and Exchange Commission issued final rules on the enhancement and standardization of climate-related disclosures. The rules require disclosure of, among other things: material climate-related risks, activities to mitigate or adapt to such risks, governance and management of such risks, and material greenhouse gas (GHG) emissions from operations owned or controlled (Scope 1) and/or indirect emissions from purchased energy consumed in operations (Scope 2). Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. The rules will become effective on a phased-in timeline in fiscal years beginning in 2025. The Company is in the process of analyzing the impact of the rules on its disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new guidance primarily enhances and expands both the income tax rate reconciliation disclosure and the income taxes paid disclosure. The ASU is effective for annual periods beginning after December 15, 2024 for public entities on a prospective basis. Early adoption is permitted. The Company is in the process of analyzing the impact of the standard on its disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The new guidance requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The ASU applies to all public entities and is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. The guidance requires retrospective adoption, and early adoption is permitted. The Company is in the process of analyzing the impact of the standard on its disclosures.

Note 2 – Earnings per Common Share

Basic per share amounts have been computed based on the average number of common shares outstanding.  Diluted per share amounts reflect the increase in average common shares outstanding that would result from the assumed exercise of outstanding stock options and vesting of restricted and performance stock awards, computed using the treasury stock method. There were 143 thousand stock-based awards excluded from the computation of diluted earnings per share for the quarter ended
11

September 28, 2024 because they were antidilutive. There were no stock-based awards excluded from the computation of diluted earnings per share for the quarter ended September 30, 2023 because they were antidilutive.

On September 26, 2023, the Company’s shareholders approved an amendment to the Company’s Restated Certificate of Incorporation to increase the total number of authorized shares of Common Stock from 100,000,000 to 250,000,000. Subsequently, the Company’s Board of Directors announced a two-for-one stock split of its common stock effected in the form of a stock dividend of one share for each outstanding share. The record date for the stock split was October 6, 2023, and the additional shares were distributed on October 20, 2023. All references to share and per share amounts presented in the Condensed Consolidated Financial Statements and this Quarterly Report on Form 10-Q have been adjusted retroactively to reflect the stock split.

Note 3 – Acquisitions and Dispositions

Acquisitions

Elkhart Products Corporation

On August 2, 2024, the Company entered into an equity purchase agreement to acquire all of the outstanding shares of Elkhart Products Corporation (Elkhart) for approximately $38.1 million in cash at closing, net of working capital adjustments. Elkhart is a U.S. manufacturer of copper solder fittings with two manufacturing locations in Elkhart, Indiana and Fayetteville, Arkansas. The business complements the Company’s existing business within the Piping Systems segment where the operating results are included in the Domestic Piping Systems Group subsequent to the acquisition date.

The provisional fair value of the assets acquired totaled $35.8 million, consisting primarily of inventories of $18.7 million, accounts receivable of $10.8 million, property, plant, and equipment of $5.9 million, and other current assets of $0.4 million. The fair value of the liabilities assumed totaled $12.5 million, consisting primarily of other current liabilities of $6.8 million and accounts payable of $5.7 million. Of the remaining purchase price, $14.8 million was allocated to tax-deductible goodwill and intangible assets. The purchase price allocation is provisional as of September 28, 2024 and subject to change upon the completion of the final valuation of the long-lived assets during the measurement period.

The acquisition of Elkhart was not material to the Company's financial position or results of operations; therefore, pro forma operating results and other disclosures related to the acquisition are not presented as the results would not be significantly different than the reported results.

Nehring Electrical Works Company

On April 19, 2024, the Company entered into an equity purchase agreement to acquire Nehring Electrical Works Company and certain of its affiliated companies (collectively, “Nehring”). The transaction closed on May 28, 2024, whereby the Company purchased all of the outstanding equity of Nehring for approximately $583.5 million, net of working capital adjustments. The total purchase price consisted of $564.5 million in cash on hand at closing and a contingent consideration arrangement which requires the Company to pay the sellers up to $19.0 million based on EBITDA growth of the acquired business. Nehring produces high-quality wire and cable solutions for the utility, telecommunication, electrical distribution, and OEM markets. Nehring provides the Company a substantial platform for expansion in the energy infrastructure space. The acquired business is reported in the Company’s Industrial Metals segment.

The provisional fair value of the assets acquired totaled $179.3 million, consisting primarily of property, plant, and equipment of $99.3 million, accounts receivable of $41.7 million, inventories of $37.4 million, and other current assets of $0.9 million. The fair value of the liabilities assumed totaled $28.9 million, consisting primarily of accounts payable of $19.6 million and other current liabilities of $9.3 million. Of the remaining purchase price, $433.1 million was allocated to tax-deductible goodwill and intangible assets. The purchase price allocation is provisional as of September 28, 2024 and subject to change upon the completion of the final valuation of the long-lived assets and contingent consideration during the measurement period.

Since the acquisition date, Nehring has reported net sales of $122.7 million and operating income of $13.8 million, and the Company has incurred approximately $2.7 million of transaction related expenses.

12

The following table presents condensed pro forma consolidated results of operations as if the Nehring acquisition had occurred at the beginning of the periods presented. The pro forma information does not purport to be indicative of the results that would have been obtained if the operations had actually been combined during the periods presented, and is not necessarily indicative of operating results to be expected in future periods. The most significant pro forma adjustments to the historical results of operations relate to the application of purchase accounting, the financing structure, and estimated income taxes.

For the Quarter EndedFor the For the Nine Months Ended
(In thousands, except per share data)September 28, 2024September 30, 2023September 28, 2024September 30, 2023
Net sales$997,831 $910,348 $2,979,692 $2,991,673 
Net income168,699 141,464 475,224 512,909 
Basic earnings per share$1.51 $1.27 $4.27 $4.61 
Diluted earnings per share1.48 1.24 4.17 4.52 

Disposition

Heatlink Group

On September 2, 2021, the Company entered into a contribution agreement with a limited liability company in the retail distribution business, pursuant to which the Company exchanged the outstanding common stock of Die-Mold for a 17 percent equity interest in the limited liability company. Die-Mold manufactures PEX and other plumbing-related fittings and plastic injection tooling in Canada and sells these products in Canada and the U.S. and was included in the Piping Systems segment.

Effective July 3, 2023, the Company transferred 100 percent of the outstanding shares of Heatlink Group, Inc. and Heatlink Group USA, LLC for an additional 11 percent equity interest in the limited liability company. Heatlink Group produces a complete line of products for PEX plumbing and radiant systems in Canada and sells these products in Canada and the U.S. and was included in the Piping Systems segment. Heatlink Group reported net sales of $15.6 million and operating income of $1.7 million in the first nine months of 2023. As a result of the transaction, the Company recognized a gain of $4.1 million in the third quarter of 2023 based on the excess of the fair value of the consideration received (the 11 percent equity interest) over the carrying value of Heatlink Group. The Company equally weighted an income discounted cash flow approach and market comparable companies approach using an EBITDA multiple to determine the fair value of the consideration received of $26.0 million, which is recognized within the Investments in unconsolidated affiliates line of the Condensed Consolidated Balance Sheet. The excess of the fair value of the deconsolidated subsidiary over its carrying value resulted in the gain.

Note 4 – Segment Information

Each of the Company’s reportable segments is composed of certain operating segments that are aggregated primarily by the nature of products offered as follows:

Piping Systems

Piping Systems is composed of the following operating segments: Domestic Piping Systems Group, Great Lakes Copper, European Operations, Trading Group, Jungwoo-Mueller (the Company’s South Korean joint venture), and Mueller Middle East (the Company’s Bahraini joint venture).  The Domestic Piping Systems Group manufactures and distributes copper tube, fittings, and line sets.  These products are manufactured in the U.S., sold in the U.S., and exported to markets worldwide.  Outside the U.S., Great Lakes Copper manufactures copper tube and line sets in Canada and sells the products primarily in the U.S. and Canada. European Operations manufactures copper tube in the U.K. which is sold primarily in Europe.  The Trading Group manufactures pipe nipples and resells brass and plastic plumbing valves, malleable iron fittings, faucets, and plumbing specialty products in the U.S. and Mexico.  Jungwoo-Mueller manufactures copper-based joining products that are sold worldwide.  Mueller Middle East manufactures copper tube and serves markets in the Middle East and Northern Africa. The Piping Systems segment’s products are sold primarily to plumbing, refrigeration, and air-conditioning wholesalers, hardware wholesalers and co-ops, building product retailers, and air-conditioning original equipment manufacturers (OEMs).

13

Industrial Metals

Industrial Metals is composed of the following operating segments: Brass Rod, Impacts & Micro Gauge, Brass Value-Added Products, Precision Tube, and Nehring (acquired in fiscal June 2024).  These businesses manufacture brass rod, impact extrusions, forgings, specialty copper, copper alloy, and aluminum tube, as well as a wide variety of end products including plumbing brass, automotive components, valves, fittings, gas assemblies, and high-quality wire and cable solutions.  These products are manufactured in the U.S. and sold primarily to OEMs and utilities in the U.S., many of which are in the industrial, transportation, construction, heating, ventilation, and air-conditioning, plumbing, refrigeration, energy, telecommunication, and electrical transmission and distribution markets.

Climate

Climate is composed of the following operating segments: Refrigeration Products, Westermeyer, Turbotec, Flex Duct, and Linesets, Inc. The segment manufactures and sells refrigeration valves and fittings, high pressure components, coaxial heat exchangers, insulated HVAC flexible duct systems, and line sets primarily for the heating, ventilation, air-conditioning, and refrigeration markets in the U.S.

Summarized segment information is as follows:

 For the Quarter Ended September 28, 2024
(In thousands)Piping SystemsIndustrial MetalsClimateCorporate and EliminationsTotal
Net sales$653,884 $238,014 $128,482 $(22,549)$997,831 
Cost of goods sold459,818 204,406 81,579 (23,334)722,469 
Depreciation and amortization5,082 3,976 1,650 1,002 11,710 
Selling, general, and administrative expense25,383 5,435 7,152 21,649 59,619 
Gain on sale of assets— — (2,667)— (2,667)
Operating income163,601 24,197 40,768 (21,866)206,700 
Interest expense    (113)
Interest income11,145 
Realized and unrealized gains on short-term investments164 
Other expense, net    (122)
Income before income taxes    $217,774 















14

Segment information (continued):

 For the Quarter Ended September 30, 2023
(In thousands)Piping SystemsIndustrial MetalsClimateCorporate and EliminationsTotal
Net sales$568,151 $141,012 $119,949 $(9,320)$819,792 
Cost of goods sold394,736 119,108 76,133 (10,919)579,058 
Depreciation and amortization5,025 1,835 1,618 1,153 9,631 
Selling, general, and administrative expense21,847 3,848 7,352 15,248 48,295 
Gain on sale of business— — — (4,137)(4,137)
Asset impairments5,934 — — — 5,934 
Operating income140,609 16,221 34,846 (10,665)181,011 
Interest expense    (230)
Interest income10,599 
Realized and unrealized losses on short-term investments(2,368)
Other expense, net    (47)
Income before income taxes    $188,965 

For the Nine Months Ended September 28, 2024
(In thousands)Piping SystemsIndustrial MetalsClimateCorporate and EliminationsTotal
Net sales$1,932,521 $589,422 $375,824 $(52,537)$2,845,230 
Cost of goods sold1,381,585 490,275 239,461 (55,159)2,056,162 
Depreciation and amortization14,574 8,264 4,891 3,168 30,897 
Selling, general, and administrative expense67,542 12,722 21,803 59,926 161,993 
Loss (gain) on sale of assets281 — (2,667)(1,567)(3,953)
Operating income468,539 78,161 112,336 (58,905)600,131 
Interest expense(335)
Interest income42,773 
Realized and unrealized gains on short-term investments529 
Other expense, net(848)
Income before income taxes$642,250 







15

Segment information (continued):

For the Nine Months Ended September 30, 2023
( In thousands)Piping SystemsIndustrial MetalsClimateCorporate and EliminationsTotal
Net sales$1,868,635 $452,512 $396,857 $(30,036)$2,687,968 
Cost of goods sold1,315,212 375,375 242,009 (35,468)1,897,128 
Depreciation and amortization15,835 5,411 5,973 3,485 30,704 
Selling, general, and administrative expense76,049 10,319 22,440 48,180 156,988 
Gain on sale of business— — — (4,137)(4,137)
Asset impairments5,934 — — — 5,934 
Gain on insurance settlement— — (19,466)— (19,466)
Operating income455,605 61,407 145,901 (42,096)620,817 
Interest expense(508)
Interest income24,566 
Realized and unrealized gains on short-term investments20,362 
Other income, net2,120 
Income before income taxes$667,357 

The following table presents total assets attributable to each segment:

(In thousands)September 28,
2024		December 30, 2023
Segment assets:
Piping Systems$1,139,615 $1,029,821 
Industrial Metals811,792 157,761 
Climate268,534 252,561 
General Corporate986,191 1,319,158 
$3,206,132 $2,759,301 

16

The following tables represent a disaggregation of revenue from contracts with customers, along with the reportable segment for each category:

For the Quarter Ended September 28, 2024
(In thousands)Piping SystemsIndustrial MetalsClimateTotal
Tube and fittings$541,568 $— $— $541,568 
Brass rod, forgings, wire and cable— 209,257 — 209,257 
OEM components, tube and assemblies— 17,775 30,169 47,944 
Valves and plumbing specialties112,316 — — 112,316 
Flex duct and other HVAC components— — 98,313 98,313 
Other— 10,982 — 10,982 
 653,884 238,014 128,482 1,020,380 
Intersegment sales(22,549)
Net sales$997,831 

For the Quarter Ended September 30, 2023
(In thousands)Piping SystemsIndustrial MetalsClimateTotal
Tube and fittings$457,164 $— $— $457,164 
Brass rod and forgings— 112,164 — 112,164 
OEM components, tube and assemblies— 18,823 29,293 48,116 
Valves and plumbing specialties110,987 — — 110,987 
Flex duct and other HVAC components— — 90,656 90,656 
Other— 10,025 — 10,025 
 568,151 141,012 119,949 829,112 
Intersegment sales(9,320)
Net sales$819,792 

















17

Disaggregation of revenue from contracts with customers (continued):

For the Nine Months Ended September 28, 2024
(In thousands)Piping SystemsIndustrial MetalsClimateTotal
Tube and fittings$1,588,893 $— $— $1,588,893 
Brass rod, forgings, wire and cable— 495,612 — 495,612 
OEM components, tube & assemblies— 57,150 90,755 147,905 
Valves and plumbing specialties343,628 — — 343,628 
Flex duct and other HVAC components— — 285,069 285,069 
Other— 36,660 — 36,660 
 1,932,521 589,422 375,824 2,897,767 
Intersegment sales(52,537)
Net sales$2,845,230 

For the Nine Months Ended September 30, 2023
(In thousands)Piping SystemsIndustrial MetalsClimateTotal
Tube and fittings$1,520,104 $— $— $1,520,104 
Brass rod and forgings— 356,067 — 356,067 
OEM components, tube & assemblies— 62,405 95,702 158,107 
Valves and plumbing specialties348,531 — — 348,531 
Flex duct and other HVAC components— — 301,155 301,155 
Other— 34,040 — 34,040 
1,868,635 452,512 396,857 2,718,004 
Intersegment sales(30,036)
Net sales$2,687,968 

Note 5 – Cash, Cash Equivalents, and Restricted Cash

(In thousands)September 28,
2024		December 30,
2023
Cash & cash equivalents$965,116 $1,170,893 
Restricted cash included within other current assets387 3,228 
Restricted cash included within other assets102 102 
Total cash, cash equivalents, and restricted cash$965,605 $1,174,223 

Amounts included in restricted cash relate to required deposits in brokerage accounts that facilitate the Company’s hedging activities as well as imprest funds for the Company’s self-insured workers’ compensation program.

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Note 6 – Inventories

(In thousands)September 28,
2024		December 30,
2023
Raw materials and supplies$152,713 $111,843 
Work-in-process51,994 61,793 
Finished goods208,106 220,629 
Valuation reserves(12,561)(14,017)
Inventories$400,252 $380,248 

Note 7 – Financial Instruments

Short-Term Investments

The fair value of short-term investments at September 28, 2024 and December 30, 2023, consisting of marketable securities, approximates the carrying value on that date. These marketable securities are stated at fair value and classified as level 1 within the fair value hierarchy. This classification is defined as a fair value determined using observable inputs that reflect quoted prices in active markets for identical assets.

Derivative Instruments and Hedging Activities

The Company’s earnings and cash flows are subject to fluctuations due to changes in commodity prices, foreign currency exchange rates, and interest rates.  The Company uses derivative instruments such as commodity futures contracts, foreign currency forward contracts, and interest rate swaps to manage these exposures.

All derivatives are recognized in the Condensed Consolidated Balance Sheets at their fair values.  On the date the derivative contract is entered into, it is either a) designated as a hedge of a forecasted transaction or the variability of cash flow to be paid (cash flow hedge) or b) not designated in a hedge accounting relationship, even though the derivative contract was executed to mitigate an economic exposure (economic hedge), as the Company does not enter into derivative contracts for trading purposes.  Changes in the fair value of a derivative that is qualified, designated, and highly effective as a cash flow hedge are recorded in stockholders’ equity within AOCI, to the extent effective, until they are reclassified to earnings in the same period or periods during which the hedged transaction affects earnings.  Changes in the fair value of undesignated derivatives executed as economic hedges are reported in current earnings.

The Company documents all relationships between derivative instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions.  This process includes linking all derivative instruments that are designated as fair value hedges to specific assets and liabilities in the Condensed Consolidated Balance Sheets and linking cash flow hedges to specific forecasted transactions or variability of cash flow.

The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the designated derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows or fair values of hedged items.  When a derivative instrument is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable of occurring, hedge accounting is discontinued prospectively in accordance with the derecognition criteria for hedge accounting.

Commodity Futures Contracts

Copper and brass represent the largest component of the Company’s variable costs of production.  The cost of these materials is subject to global market fluctuations caused by factors beyond the Company’s control.  The Company occasionally enters into forward fixed-price arrangements with certain customers; the risk of these arrangements is generally managed with commodity futures contracts.  These futures contracts have been designated as cash flow hedges.  

At September 28, 2024, the Company held open futures contracts to purchase approximately $16.1 million of copper over the next 15 months related to fixed price sales orders.  The fair value of those futures contracts was a $1.4 million net gain position, which was determined by obtaining quoted market prices (level 1 within the fair value hierarchy).  In the next 12 months, the
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Company will reclassify into earnings realized gains or losses relating to cash flow hedges.  At September 28, 2024, this amount was approximately $1.1 million of deferred net gains, net of tax.

The Company may also enter into futures contracts to protect the value of inventory against market fluctuations.  At September 28, 2024, the Company held $1.7 million open futures contracts to sell copper over the next eight months related to copper inventory.  The fair value of those futures contracts was a $0.1 million net loss position, which was determined by obtaining quoted market prices (level 1 within the fair value hierarchy).

The Company presents its derivative assets and liabilities in the Condensed Consolidated Balance Sheets on a net basis by counterparty.  The following table summarizes the location and fair value of the derivative instruments and disaggregates the net derivative assets and liabilities into gross components on a contract-by-contract basis:

 Asset DerivativesLiability Derivatives
   Fair Value Fair Value
(In thousands)Balance Sheet LocationSeptember 28,
2024		December 30,
2023		Balance Sheet LocationSeptember 28,
2024		December 30,
2023
      
Commodity contracts - gains
Other current assets
$1,431 $589 
Other current liabilities
$— $16 
Commodity contracts - losses
Other current assets
— (281)
Other current liabilities
(128)(383)
Total derivatives (1)
 $1,431 $308  $(128)$(367)
(1) Does not include the impact of cash collateral provided to counterparties.

The following tables summarize the effects of derivative instruments on the Company’s Condensed Consolidated Statements of Income:

   For the Quarter EndedFor the Nine Months Ended
(In thousands)LocationSeptember 28, 2024September 30, 2023September 28, 2024September 30, 2023
Undesignated derivatives: 
Gain (loss) on commodity contracts (nonqualifying)Cost of goods sold$4,052 $1,102 $(2,606)$(955)

The following tables summarize amounts recognized in and reclassified from AOCI during the period:

 For the Quarter Ended September 28, 2024
(In thousands)Gain Recognized in AOCI (Effective Portion), Net of TaxClassification Gains (Losses)Loss Reclassified from AOCI (Effective Portion), Net of Tax
Cash flow hedges:   
Commodity contracts$929 Cost of goods sold$531 
Other— Other— 
Total$929 Total$531 
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Amounts recognized in and reclassified from AOCI (continued):

 For the Quarter Ended September 30, 2023
(In thousands)Gain Recognized in AOCI (Effective Portion), Net of TaxClassification Gains (Losses)Loss Reclassified from AOCI (Effective Portion), Net of Tax
Cash flow hedges:   
Commodity contracts$132 Cost of goods sold$183 
Other9 Other— 
Total$141 Total$183 

 For the Nine Months Ended September 28, 2024
(In thousands)Gain Recognized in AOCI (Effective Portion), Net of TaxClassification Gains (Losses)Gain Reclassified from AOCI (Effective Portion), Net of Tax
Cash flow hedges:   
Commodity contracts$2,058 Cost of goods sold$(1,039)
Other22 Other— 
Total$2,080 Total$(1,039)

 For the Nine Months Ended September 30, 2023
(In thousands)