Business Wire | Feb 2, 2021 07:00AM EST

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

Feb. 02, 2021

COLLIERVILLE, Tenn.--(BUSINESS WIRE)--Feb. 02, 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. * 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.

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.

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

For the Quarter Ended For the Year Ended

(In thousands, except December December December 26, December 28,per share data) 26, 28, 2020 2019 2020 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 11,955 10,837 44,843 42,693amortization

Selling, general, andadministrative 44,649 39,072 159,483 160,910 expense

Litigation - - (22,053) - settlement. net

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 (17,835) - (17,835) - termination costs

Other income, net 287 (20) 4,887 1,684



Income before income 39,958 38,441 209,189 166,083 taxes



Income tax expense (12,698) (7,614) (55,321) (35,257)

Income (loss) fromunconsolidated 9,994 (854) (10,219) (24,594) affiliates, net offoreign tax



Consolidated net 37,254 29,973 143,649 106,232 income

Net incomeattributable to (834) (1,803) (4,156) (5,260) noncontrollinginterests



Net incomeattributable to $ 36,420 $ 28,170 $ 139,493 $ 100,972 Mueller Industries,Inc.



Weighted averageshares for basic 55,869 55,869 55,821 55,798 earnings per share

Effect of dilutive 673 611 569 545stock-based awards



Adjusted weightedaverage shares for 56,542 56,480 56,390 56,343diluted earnings per share



Basic earnings per $ 0.65 $ 0.50 $ 2.50 $ 1.81 share



Diluted earnings per $ 0.64 $ 0.50 $ 2.47 $ 1.79 share



Dividends per share $ 0.10 $ 0.10 $ 0.40 $ 0.40



Summary Segment Data:



Net sales:

Piping Systems $ 454,535 $ 349,182 $ 1,583,002 $ 1,542,456 Segment

Industrial Metals 133,507 120,336 472,159 554,372Segment

Climate Segment 93,148 79,362 370,131 356,216

Elimination of (5,339) (5,041) (27,249) (22,428) intersegment sales



Net sales $ 675,851 $ 543,839 $ 2,398,043 $ 2,430,616



Operating income:

Piping Systems $ 43,106 $ 31,724 $ 165,719 $ 131,879 Segment

Industrial Metals 15,662 15,026 54,065 61,724Segment

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

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands) December 26, December 28, 2020 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' 776,745 643,468equity

Noncontrolling interests 24,315 18,668



Total equity 801,060 662,136



$ 1,528,568 $ 1,370,940

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Year Ended

December December(In thousands) 26, 28, 2020 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, (22,341) (22,325) Inc.

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 29,334 20,904 cash

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



Cash, cash equivalents, and restricted cash at the $ 127,376 $ 98,042 end of the year

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