EX-99.1 2 exhibit991q22020earnin.htm EX-99.1
Mueller Industries, Inc. Reports Second Quarter 2020 Earnings
COLLIERVILLE, Tenn., July 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.”
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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.
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) |  | June 27, 2020 |  | June 29, 2019 |  | June 27, 2020 |  | June 29, 2019
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 amortization |  | 11,097 |  | 10,478 |  | 22,136 |  | 21,033
Selling, general, and administrative expense |  | 33,616 |  | 40,446 |  | 76,368 |  | 81,099
Asset impairments |  | — |  |  | — |  |  | 3,035 |  |  | — |
Litigation settlement, net |  | — |  |  | — |  |  | (21,933) |  |  | — |
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 income taxes |  | 50,157 |  | 44,951 |  |  | 104,367 |  | 87,005 |
Income tax expense |  | (13,029) |  |  | (10,432) |  |  | (27,173) |  |  | (19,978) |
Loss from unconsolidated affiliates, net of foreign tax |  | (8,641) |  |  | (5,843) |  |  | (14,756) |  |  | (21,212) |
Consolidated net income |  | 28,487 |  |  | 28,676 |  |  | 62,438 |  |  | 45,815 |
Net income attributable to noncontrolling interests |  | (531) |  |  | (690) |  |  | (2,067) |  |  | (2,106) |
Net income attributable to Mueller Industries, Inc. |  | $ | 27,956 |  |  | $ | 27,986 |  |  | $ | 60,371 |  |  | $ | 43,709 |
Weighted average shares for basic earnings per share |  | 55,723 |  | 55,753 |  | 55,799 |  | 55,741
Effect of dilutive stock-based awards |  | 471 |  | 561 |  | 527 |  | 543
Adjusted weighted average shares for diluted earnings per share |  | 56,194 |  | 56,314 |  | 56,326 |  | 56,284
Basic earnings per share |  | $ | 0.50 |  |  | $ | 0.50 |  |  | $ | 1.08 |  |  | $ | 0.78 |
Diluted earnings per share |  | $ | 0.50 |  |  | $ | 0.50 |  |  | $ | 1.07 |  |  | $ | 0.78 |
Dividends per share |  | $ | 0.10 |  |  | $ | 0.10 |  |  | $ | 0.20 |  |  | $ | 0.20 |
Summary Segment Data: |  |  |  |  |  |  |  |
Net sales: |  |  |  |  |  |  |  |
Piping Systems Segment |  | $ | 334,040 |  |  | $ | 425,865 |  |  | $ | 719,053 |  |  | $ | 802,357 |
Industrial Metals Segment |  | 88,619 |  | 147,719 |  | 219,821 |  | 298,594
Climate Segment |  | 86,107 |  | 96,081 |  | 179,379 |  | 185,915
Elimination of intersegment sales |  | (8,598) |  |  | (3,271) |  |  | (15,166) |  |  | (8,691) |
Net sales |  | $ | 500,168 |  |  | $ | 666,394 |  |  | $ | 1,103,087 |  |  | $ | 1,278,175 |
Operating income: |  |  |  |  |  |  |  |
Piping Systems Segment |  | $ | 41,074 |  |  | $ | 35,896 |  |  | $ | 77,750 |  |  | $ | 64,145 |
Industrial Metals Segment |  | 8,873 |  | 14,911 |  | 20,055 |  | 34,098
Climate Segment |  | 12,353 |  | 13,035 |  | 25,367 |  | 25,421
Unallocated expenses |  | (10,004) |  |  | (12,320) |  |  | (11,565) |  |  | (22,962) |
Operating income |  | $ | 52,296 |  |  | $ | 51,522 |  |  | $ | 111,607 |  |  | $ | 100,702 |

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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

|  | (Unaudited) |  |
(In thousands) |  | June 27, 2020 |  | December 28, 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’ equity |  | 670,681 |  |  | 643,468
Noncontrolling interests |  | 19,523 |  |  | 18,668
Total equity |  | 690,204 |  |  | 662,136
|  | $ | 1,323,390 |  |  | $ | 1,370,940 |

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

|  | For the Six Months Ended |  |
(In thousands) |  | June 27, 2020 |  | June 29, 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 Industries, Inc. |  | (11,168) |  |  | (11,151) |
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, net |  | (471) |  |  | (4,132) |
Net cash received (used) to settle stock-based awards |  | 696 |  |  | (127) |
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 cash |  | 26,470 |  |  | 16,934 |
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 |  | $ | 124,512 |  |  | $ | 94,072 |

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