MUELLER INDUSTRIES INC - FORM 8-K - EX-99.1 - October 20, 2020

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Mueller Industries, Inc. Reports Third Quarter 2020 Earnings

COLLIERVILLE, Tenn., October 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."




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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 EndedFor the Nine Months Ended
(In thousands, except per share data)September 26, 2020September 28, 2019September 26, 2020September 28, 2019
Net sales$619,105 $608,602 $1,722,192 $1,886,777 
Cost of goods sold500,780510,7881,412,6541,586,129
Depreciation and amortization10,75210,82332,88831,856
Selling, general, and administrative expense38,34640,739114,714121,838
Asset impairments— — 3,035 — 
Litigation settlement, net— — (21,933)— 
Operating income69,22746,252180,834146,954
Interest expense(4,885)(6,148)(15,237)(20,135)
Other income, net522 533 3,634 823 
Income before income taxes64,86440,637 169,231127,642 
Income tax expense(15,450)(7,665)(42,623)(27,643)
Loss from unconsolidated affiliates, net of foreign tax(5,457)(2,528)(20,213)(23,740)
Consolidated net income43,957 30,444 106,395 76,259 
Net income attributable to noncontrolling interests(1,255)(1,351)(3,322)(3,457)
Net income attributable to Mueller Industries, Inc.$42,702 $29,093 $103,073 $72,802 
Weighted average shares for basic earnings per share55,81655,83255,80555,771
Effect of dilutive stock-based awards550482534523
Adjusted weighted average shares for diluted earnings per share
56,36656,31456,33956,294
Basic earnings per share$0.77 $0.52 $1.85 $1.31 
Diluted earnings per share$0.76 $0.52 $1.83 $1.29 
Dividends per share$0.10 $0.10 $0.30 $0.30 
Summary Segment Data:
Net sales:
    Piping Systems Segment$409,414 $390,917 $1,128,467 $1,193,274 
    Industrial Metals Segment118,831135,443338,652434,037
    Climate Segment97,60490,938276,983276,853
    Elimination of intersegment sales(6,744)(8,696)(21,910)(17,387)
Net sales
$619,105 $608,602 $1,722,192 $1,886,777 
Operating income:
    Piping Systems Segment$44,863 $36,010 $122,613 $100,155 
    Industrial Metals Segment18,34812,59938,40346,697
    Climate Segment18,1567,96343,52333,384
    Unallocated expenses(12,140)(10,320)(23,705)(33,282)
Operating income$69,227 $46,252 $180,834 $146,954 
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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
320,035269,943
Inventories271,310292,107
Other current assets
24,88033,778
    Total current assets729,865693,772
Property, plant, and equipment, net368,736363,128
Operating lease right-of-use assets
22,39726,922 
Other assets
299,014287,118
$1,420,012 $1,370,940 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of debt$6,684 $7,530 
Accounts payable108,06385,644
Current portion of operating lease liabilities
6,320 5,250 
Other current liabilities
131,685135,863
    Total current liabilities252,752234,287
Long-term debt342,972378,724
Pension and postretirement liabilities18,18622,208
Environmental reserves19,80919,972
Deferred income taxes18,06621,094
Noncurrent operating lease liabilities16,46422,388 
Other noncurrent liabilities
12,41210,131
    Total liabilities
680,661708,804
Total Mueller Industries, Inc. stockholders’ equity717,621 643,468
Noncontrolling interests
21,730 18,668
    Total equity
739,351 662,136
$1,420,012 $1,370,940 








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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
 (In thousands)
September 26, 2020September 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 amortization33,127 32,095 
Stock-based compensation expense6,332 6,355 
Provision for doubtful accounts receivable953 (66)
Loss from unconsolidated affiliates20,213 23,740 
Loss (gain) on disposals of properties144 (24)
Impairment charges3,035 — 
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)
Inventories41,598 50,985 
Other assets9,053 (7,485)
Current liabilities25,913 1,687 
Other liabilities(5,813)(7,112)
Other, net2,294 (47)
Net cash provided by operating activities196,878 131,927 
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 properties12 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 debt150,027 100,658 
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 cash16,337 25,365 
Cash, cash equivalents, and restricted cash at the beginning of the period98,042 77,138 
Cash, cash equivalents, and restricted cash at the end of the period$114,379 $102,503 



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