Business Wire | Oct 20, 2020 07:04AM EDT

Mueller Industries, Inc. Reports Third Quarter 2020 Earnings

Oct. 20, 2020

COLLIERVILLE, Tenn.--(BUSINESS WIRE)--Oct. 20, 2020--Mueller Industries, Inc. (NYSE: MLI) announced third quarter operating income of $69.2 million, compared with $46.3 million for the prior year period.

Net income for the period was $42.7 million, or 76 cents per diluted share, compared to net income of $29.1 million, or 52 cents per diluted share in 2019. Net sales were $619.1 million, compared with $608.6 million in the third quarter of 2019.

Third Quarter Financial and Operating Highlights:

* COMEX copper averaged $2.94 per pound, 12 percent higher than the prior year period. * The $10.5 million increase in quarter-over-quarter sales was due to $15.2 million from higher selling prices associated with the rise in copper and $24.2 million of sales from recently acquired businesses. These increases were largely offset by lower volumes, particularly in our core businesses, which have not fully recovered from the impacts of the COVID-19 pandemic. * We recorded a $5.5 million loss on our investment in Tecumseh Products Company, compared to the $1.9 million loss recorded during the prior year period. Included in the $5.5 million loss was $1.2 million of pre-tax restructuring charges and $0.8 million in foreign currency losses. * The effective tax rate for the quarter was 24 percent, a more normal rate, compared with 19 percent in the prior year period. * We generated an additional $54.1 million in cash from operations for the quarter, totaling $196.9 million year-to-date. At the end of the quarter cash on hand was $113.6 million, with only $55.0 million drawn on our credit facility. * During the quarter, we funded the purchase of certain assets of Wieland-Kessler, LLC for $57.2 million. * Our current ratio remains at 2.9 to 1 and our debt to total capitalization remains low at 32 percent.

Regarding the outlook, CEO Greg Christopher said, "Amidst the unprecedented challenges posed by the COVID-19 pandemic, to have achieved these results is certainly gratifying.

"The US economy appears to be rebounding, but it is not yet back to the strong pre-pandemic levels. Acquisitions and capital investments in our manufacturing operations are paying off, and should continue to support strong cash generation and our strategic growth initiatives as global economies reopen and regain their strength."

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.

*********************

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 Nine Months Ended

(In thousands, September 26, September 28, September 26, September 28,except per 2020 2019 2020 2019share data)



Net sales $ 619,105 $ 608,602 $ 1,722,192 $ 1,886,777



Cost of goods 500,780 510,788 1,412,654 1,586,129 sold

Depreciationand 10,752 10,823 32,888 31,856 amortization

Selling,general, and 38,346 40,739 114,714 121,838 administrativeexpense

Asset - - 3,035 - impairments

Litigationsettlement, - - (21,933 ) - net



Operating 69,227 46,252 180,834 146,954 income



Interest (4,885 ) (6,148 ) (15,237 ) (20,135 ) expense

Other income, 522 533 3,634 823 net



Income before 64,864 40,637 169,231 127,642 income taxes



Income tax (15,450 ) (7,665 ) (42,623 ) (27,643 ) expense

Loss fromunconsolidatedaffiliates, (5,457 ) (2,528 ) (20,213 ) (23,740 ) net of foreigntax



Consolidated 43,957 30,444 106,395 76,259 net income



Net incomeattributableto (1,255 ) (1,351 ) (3,322 ) (3,457 ) noncontrollinginterests



Net incomeattributableto Mueller $ 42,702 $ 29,093 $ 103,073 $ 72,802 Industries,Inc.



Weightedaverage sharesfor basic 55,816 55,832 55,805 55,771 earnings pershare

Effect ofdilutive 550 482 534 523 stock-basedawards



Adjustedweightedaverage shares 56,366 56,314 56,339 56,294 for dilutedearnings pershare



Basic earnings $ 0.77 $ 0.52 $ 1.85 $ 1.31 per share



Dilutedearnings per $ 0.76 $ 0.52 $ 1.83 $ 1.29 share



Dividends per $ 0.10 $ 0.10 $ 0.30 $ 0.30 share



Summary Segment Data:



Net sales:

Piping Systems $ 409,414 $ 390,917 $ 1,128,467 $ 1,193,274 Segment

Industrial 118,831 135,443 338,652 434,037 Metals Segment

Climate 97,604 90,938 276,983 276,853 Segment

Elimination ofintersegment (6,744 ) (8,696 ) (21,910 ) (17,387 ) sales



Net sales $ 619,105 $ 608,602 $ 1,722,192 $ 1,886,777



Operating income:

Piping Systems $ 44,863 $ 36,010 $ 122,613 $ 100,155 Segment

Industrial 18,348 12,599 38,403 46,697 Metals Segment

Climate 18,156 7,963 43,523 33,384 Segment

Unallocated (12,140 ) (10,320 ) (23,705 ) (33,282 ) expenses



Operating $ 69,227 $ 46,252 $ 180,834 $ 146,954 income

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

September 26, 2020

December 28, 2019

ASSETS

Cash and cash equivalents

$

113,640

$

97,944

Accounts receivable, net

320,035

269,943

Inventories

271,310

292,107

Other current assets

24,880

33,778

Total current assets

729,865

693,772

Property, plant, and equipment, net

368,736

363,128

Operating lease right-of-use assets

22,397

26,922

Other assets

299,014

287,118

$

1,420,012

$

1,370,940

LIABILITIES AND STOCKHOLDERS' EQUITY

Current portion of debt

$

6,684

$

7,530

Accounts payable

108,063

85,644

Current portion of operating lease liabilities

6,320

5,250

Other current liabilities

131,685

135,863

Total current liabilities

252,752

234,287

Long-term debt

342,972

378,724

Pension and postretirement liabilities

18,186

22,208

Environmental reserves

19,809

19,972

Deferred income taxes

18,066

21,094

Noncurrent operating lease liabilities

16,464

22,388

Other noncurrent liabilities

12,412

10,131

Total liabilities

680,661

708,804

Total Mueller Industries, Inc. stockholders' equity

717,621

643,468

Noncontrolling interests

21,730

18,668

Total equity

739,351

662,136

$

1,420,012

$

1,370,940

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 26, December(In thousands) 2020 28, 2019

ASSETS

Cash and cash equivalents $ 113,640 $ 97,944

Accounts receivable, net 320,035 269,943

Inventories 271,310 292,107

Other current assets 24,880 33,778



Total current assets 729,865 693,772



Property, plant, and equipment, net 368,736 363,128

Operating lease right-of-use assets 22,397 26,922

Other assets 299,014 287,118



$ 1,420,012 $ 1,370,940



LIABILITIES AND STOCKHOLDERS' EQUITY

Current portion of debt $ 6,684 $ 7,530

Accounts payable 108,063 85,644

Current portion of operating lease liabilities 6,320 5,250

Other current liabilities 131,685 135,863



Total current liabilities 252,752 234,287



Long-term debt 342,972 378,724

Pension and postretirement liabilities 18,186 22,208

Environmental reserves 19,809 19,972

Deferred income taxes 18,066 21,094

Noncurrent operating lease liabilities 16,464 22,388

Other noncurrent liabilities 12,412 10,131



Total liabilities 680,661 708,804



Total Mueller Industries, Inc. stockholders' 717,621 643,468equity

Noncontrolling interests 21,730 18,668



Total equity 739,351 662,136



$ 1,420,012 $ 1,370,940

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Nine Months Ended

(In thousands)

September 26, 2020

September 28, 2019

Cash flows from operating activities

Consolidated net income

$

106,395

$

76,259

Reconciliation of consolidated net income to net cash provided by operating activities:

Depreciation and amortization

33,127

32,095

Stock-based compensation expense

6,332

6,355

Provision for doubtful accounts receivable

953

(66

)

Loss from unconsolidated affiliates

20,213

23,740

Loss (gain) on disposals of properties

144

(24

)

Impairment charges

3,035

-

Change in fair value of contingent consideration

-

4,500

Deferred income tax benefit

(836

)

(1,593

)

Changes in assets and liabilities, net of effects of business acquired:

Receivables

(45,530

)

(47,367

)

Inventories

41,598

50,985

Other assets

9,053

(7,485

)

Current liabilities

25,913

1,687

Other liabilities

(5,813

)

(7,112

)

Other, net

2,294

(47

)

Net cash provided by operating activities

196,878

131,927

Cash flows from investing activities

Capital expenditures

(29,204

)

(20,162

)

Acquisition of businesses, net of cash acquired

(72,648

)

3,465

Investments in unconsolidated affiliates

-

(11,000

)

Issuance of notes receivable

(9,155

)

-

Proceeds from sales of properties

12

385

Net cash used in investing activities

(110,995

)

(27,312

)

Cash flows from financing activities

Dividends paid to stockholders of Mueller Industries, Inc.

(16,754

)

(16,738

)

Repurchase of common stock

(5,574

)

(1,763

)

Payment of contingent consideration

(7,000

)

(3,170

)

Issuance of long-term debt

150,027

100,658

Repayments of long-term debt

(186,492

)

(151,305

)

Repayment of debt by consolidated joint ventures, net

(299

)

(4,352

)

Net cash used to settle stock-based awards

(160

)

(1,069

)

Net cash used in financing activities

(66,252

)

(77,739

)

Effect of exchange rate changes on cash

(3,294

)

(1,511

)

Increase in cash, cash equivalents, and restricted cash

16,337

25,365

Cash, cash equivalents, and restricted cash at the beginning of the period

98,042

77,138

Cash, cash equivalents, and restricted cash at the end of the period

$

114,379

$

102,503

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