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| 8-K - 8-K - MUELLER INDUSTRIES INC | mli-062720x8k.htm |
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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