Business Wire | Jul 21, 2020 07:00AM EDT

Mueller Industries, Inc. Reports Second Quarter 2020 Earnings

Jul. 21, 2020

COLLIERVILLE, Tenn.--(BUSINESS WIRE)--Jul. 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."

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.

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

For the Quarter Ended For the Six Months Ended

(In thousands, June 27, June 29,except per share 2020 2019 June 27, 2020 June 29, 2019data)



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 11,097 10,478 22,136 21,033 amortization

Selling, general,and administrative 33,616 40,446 76,368 81,099 expense

Asset impairments - - 3,035 -

Litigation - - (21,933 ) - settlement, net



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 50,157 44,951 104,367 87,005 income taxes



Income tax expense (13,029 ) (10,432 ) (27,173 ) (19,978 )

Loss fromunconsolidated (8,641 ) (5,843 ) (14,756 ) (21,212 )affiliates, net of foreign tax



Consolidated net 28,487 28,676 62,438 45,815 income



Net incomeattributable to (531 ) (690 ) (2,067 ) (2,106 )noncontrolling interests



Net incomeattributable to $ 27,956 $ 27,986 $ 60,371 $ 43,709 Mueller Industries, Inc.



Weighted averageshares for basic 55,723 55,753 55,799 55,741 earnings per share

Effect of dilutive 471 561 527 543 stock-based awards



Adjusted weightedaverage shares for 56,194 56,314 56,326 56,284 diluted earnings per share



Basic earnings per $ 0.50 $ 0.50 $ 1.08 $ 0.78 share



Diluted earnings $ 0.50 $ 0.50 $ 1.07 $ 0.78 per share



Dividends per share $ 0.10 $ 0.10 $ 0.20 $ 0.20



Summary Segment Data:



Net sales:

Piping Systems $ 334,040 $ 425,865 $ 719,053 $ 802,357 Segment

Industrial Metals 88,619 147,719 219,821 298,594 Segment

Climate Segment 86,107 96,081 179,379 185,915

Elimination of (8,598 ) (3,271 ) (15,166 ) (8,691 )intersegment sales



Net sales $ 500,168 $ 666,394 $ 1,103,087 $ 1,278,175



Operating income:

Piping Systems $ 41,074 $ 35,896 $ 77,750 $ 64,145 Segment

Industrial Metals 8,873 14,911 20,055 34,098 Segment

Climate Segment 12,353 13,035 25,367 25,421

Unallocated (10,004 ) (12,320 ) (11,565 ) (22,962 )expenses



Operating income $ 52,296 $ 51,522 $ 111,607 $ 100,702

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands) June 27, December 28, 2020 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' 670,681 643,468equity

Noncontrolling interests 19,523 18,668



Total equity 690,204 662,136



$ 1,323,390 $ 1,370,940

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Six Months Ended

(In thousands) June 27, June 29, 2020 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 (11,168 ) (11,151 )Industries, Inc.

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, (471 ) (4,132 )net

Net cash received (used) to settle stock-based 696 (127 )awards



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 26,470 16,934 cash

Cash, cash equivalents, and restricted cash at the 98,042 77,138 beginning of the period



Cash, cash equivalents, and restricted cash at the $ 124,512 $ 94,072 end of the period

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CONTACT: Jeffrey A. Martin (901) 753-3226