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.
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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 Nine Months Ended | |||||||||||||||||||
(In thousands, except per share data) |
September 26,
|
September 28,
|
September 26,
|
September 28,
| ||||||||||||||||
Net sales | $ | 619,105 | $ | 608,602 | $ | 1,722,192 | $ | 1,886,777 | ||||||||||||
Cost of goods sold | 500,780 | 510,788 | 1,412,654 | 1,586,129 | ||||||||||||||||
Depreciation and amortization | 10,752 | 10,823 | 32,888 | 31,856 | ||||||||||||||||
Selling, general, and administrative expense | 38,346 | 40,739 | 114,714 | 121,838 | ||||||||||||||||
Asset impairments | — | — | 3,035 | — | ||||||||||||||||
Litigation settlement, net | — | — | (21,933 | ) | — | |||||||||||||||
Operating income | 69,227 | 46,252 | 180,834 | 146,954 | ||||||||||||||||
Interest expense | (4,885 | ) | (6,148 | ) | (15,237 | ) | (20,135 | ) | ||||||||||||
Other income, net | 522 | 533 | 3,634 | 823 | ||||||||||||||||
Income before income taxes | 64,864 | 40,637 | 169,231 | 127,642 | ||||||||||||||||
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 income | 43,957 | 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 share | 55,816 | 55,832 | 55,805 | 55,771 | ||||||||||||||||
Effect of dilutive stock-based awards | 550 | 482 | 534 | 523 | ||||||||||||||||
Adjusted weighted average shares for diluted earnings per share | 56,366 | 56,314 | 56,339 | 56,294 | ||||||||||||||||
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 Segment | 118,831 | 135,443 | 338,652 | 434,037 | ||||||||||||||||
Climate Segment | 97,604 | 90,938 | 276,983 | 276,853 | ||||||||||||||||
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 Segment | 18,348 | 12,599 | 38,403 | 46,697 | ||||||||||||||||
Climate Segment | 18,156 | 7,963 | 43,523 | 33,384 | ||||||||||||||||
Unallocated expenses | (12,140 | ) | (10,320 | ) | (23,705 | ) | (33,282 | ) | ||||||||||||
Operating income | $ | 69,227 | $ | 46,252 | $ | 180,834 | $ | 146,954 | ||||||||||||
MUELLER INDUSTRIES, INC. | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited) | ||||||
(In thousands) |
September 26,
|
December 28,
| ||||
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 STATEMENTS OF CASH FLOWS | ||||||||||
(Unaudited) | ||||||||||
For the Nine Months Ended | ||||||||||
(In thousands) |
September 26,
|
September 28,
| ||||||||
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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