Mueller Industries, Inc. Reports First Quarter 2020 Earnings

COLLIERVILLE, Tenn.--()--Mueller Industries, Inc. (NYSE: MLI) announces first quarter 2020 earnings results. Operating income for the first quarter was $59.3 million versus $49.2 million for the prior year period.

Net income for the first quarter was $32.4 million, or 57 cents per diluted share, on $602.9 million in net sales, versus prior year net income of $15.7 million, or 28 cents per diluted share, on $611.8 million in net sales.

Period Financial and Operating Highlights:

  • Average COMEX copper traded 9 percent lower in the first quarter of 2020 versus the prior year period. During the quarter, COMEX copper declined 64 cents per pound, or 22 percent, with 40 cents of that decline occurring in March.
  • The 1.4 percent decline in net sales was attributable to the lower copper prices and lower sales volumes in our Industrial Metals segment; partially offset by higher sales volumes in our Piping Systems and Climate segments.
  • Unusual impacts during the quarter included the following:
    • A $21.9 million gain from our claim under the Deepwater Horizon Economic and Property Damage Settlement Program;
    • A $3.0 million impairment charge on certain idled manufacturing equipment during the quarter; and
    • Mark-to-market losses on open hedge positions, which reduced earnings $9.6 million.
  • We recorded a $6.3 million loss on our investment in Tecumseh Products Company in the quarter, compared to a $14.6 million loss in the prior year period.
  • The effective tax rate for the quarter was 26 percent, compared with 23 percent in 2019.
  • At quarter-end, cash on hand was $154.3 million. Debt to total capitalization was 42 percent, and the current ratio was 3.4 to 1.

Regarding the state of the Company and outlook, Greg Christopher, Mueller CEO said:

The COVID-19 pandemic has had widespread effects around the world, and our Company is no exception. Our efforts to mitigate the health and safety risk to our employees and facilities began in February, and we have continually adapted our approach as guided by the public health experts. Amidst this turbulence, 67 of our 68 locations across three continents have remained open to support the critical infrastructure industries we serve, and we have had just one temporary closure due to a confirmed case of COVID-19. Our employees have truly stepped up to the plate by adopting the precautionary measures designed to protect them and their families while our Company does its part during this crisis.

Our primary market, the construction industry, while generally deemed essential, has seen reduced activity due largely to government orders and public health risk mitigation measures. We have, however, seen above normal demand levels in other segments for more niche products used for oxygen service in hospitals, the delivery of medical gases and medical equipment components.

These are tough times, but our balance sheet and liquidity position are solid. We have an established record of prudent financial management, and we began to prepare for a potential correction in the economy during the fourth quarter of 2019. We have further bolstered our position by implementing even more cash conservation measures, including the deferral of non-essential capital expenditures. Our committed credit facility provides for additional liquidity if needed to support our operations and seize potential opportunities, as we are well within our covenants.

2020 was off to a strong start, with softening in demand related to the virus hitting us during the latter half of March. Although the impact on the first quarter was mild, we currently anticipate that April and May could be off 30 percent - 40 percent, with any reversal depending upon the timing and progress of the reopening of the economy. We will continue to adapt as required. As a result, we do not intend to suspend or reduce our second quarter dividend.

Like all others, we look forward to the conclusion of this public health crisis, but in the meantime, are working actively as ever to capitalize on a number of opportunities we see on the horizon.”

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

(In thousands, except per share data)

 

March 28,
2020

 

March 30,
2019

 

 

 

 

 

Net sales

 

$

602,919

 

 

$

611,781

 

 

 

 

 

 

Cost of goods sold

 

508,715

 

 

511,393

 

Depreciation and amortization

 

11,039

 

 

10,555

 

Selling, general, and administrative expense

 

42,752

 

 

40,653

 

Asset impairments

 

3,035

 

 

 

Litigation settlement, net

 

(21,933

)

 

 

 

 

 

 

 

Operating income

 

59,311

 

 

49,180

 

 

 

 

 

 

Interest expense

 

(5,379

)

 

(6,954

)

Other income (expense), net

 

278

 

 

(172

)

 

 

 

 

 

Income before income taxes

 

54,210

 

 

42,054

 

 

 

 

 

 

Income tax expense

 

(14,144

)

 

(9,546

)

Loss from unconsolidated affiliates, net of foreign tax

 

(6,115

)

 

(15,369

)

 

 

 

 

 

Consolidated net income

 

33,951

 

 

17,139

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(1,536

)

 

(1,416

)

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

 

$

32,415

 

 

$

15,723

 

 

 

 

 

 

Weighted average shares for basic earnings per share

 

55,875

 

 

55,728

 

Effect of dilutive stock-based awards

 

583

 

 

526

 

 

 

 

 

 

Adjusted weighted average shares for diluted earnings per share

 

56,458

 

 

56,254

 

 

 

 

 

 

Basic earnings per share

 

$

0.58

 

 

$

0.28

 

 

 

 

 

 

Diluted earnings per share

 

$

0.57

 

 

$

0.28

 

 

 

 

 

 

Dividends per share

 

$

0.10

 

 

$

0.10

 

 

 

 

 

 

Summary Segment Data:

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

Piping Systems Segment

 

$

385,013

 

 

$

376,492

 

Industrial Metals Segment

 

131,202

 

 

150,875

 

Climate Segment

 

93,272

 

 

89,834

 

Elimination of intersegment sales

 

(6,568

)

 

(5,420

)

 

 

 

 

 

Net sales

 

$

602,919

 

 

$

611,781

 

 

 

 

 

 

Operating income:

 

 

 

 

Piping Systems Segment

 

$

36,676

 

 

$

28,249

 

Industrial Metals Segment

 

11,182

 

 

19,187

 

Climate Segment

 

13,014

 

 

12,386

 

Unallocated expenses

 

(1,561

)

 

(10,642

)

 

 

 

 

 

Operating income

 

$

59,311

 

 

$

49,180

 

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

(Unaudited)

 

 

(In thousands)

 

March 28,
2020

 

December 28,
2019

ASSETS

 

 

 

 

Cash and cash equivalents

 

$

154,283

 

$

97,944

Accounts receivable, net

 

308,836

 

269,943

Inventories

 

270,119

 

292,107

Other current assets

 

40,888

 

33,778

 

 

 

 

 

Total current assets

 

774,126

 

693,772

 

 

 

 

 

Property, plant, and equipment, net

 

366,828

 

363,128

Operating lease right-of-use assets

 

18,632

 

26,922

Other assets

 

286,353

 

287,118

 

 

 

 

 

 

 

$

1,445,939

 

$

1,370,940

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current portion of debt

 

$

7,591

 

$

7,530

Accounts payable

 

94,251

 

85,644

Current portion of operating lease liabilities

 

5,047

 

5,250

Other current liabilities

 

123,010

 

135,863

 

 

 

 

 

Total current liabilities

 

229,899

 

234,287

 

 

 

 

 

Long-term debt

 

468,234

 

378,724

Pension and postretirement liabilities

 

19,193

 

22,208

Environmental reserves

 

19,875

 

19,972

Deferred income taxes

 

19,513

 

21,094

Noncurrent operating lease liabilities

 

14,124

 

22,388

Other noncurrent liabilities

 

9,801

 

10,131

 

 

 

 

 

Total liabilities

 

780,639

 

708,804

 

 

 

 

 

Total Mueller Industries, Inc. stockholders’ equity

 

645,687

 

643,468

Noncontrolling interests

 

19,613

 

18,668

 

 

 

 

 

Total equity

 

665,300

 

662,136

 

 

 

 

 

 

 

$

1,445,939

 

$

1,370,940

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For the Quarter Ended

(In thousands)

 

March 28,
2020

 

March 30,
2019

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

Consolidated net income

 

$

33,951

 

 

$

17,139

 

Reconciliation of consolidated net income to net cash provided by (used in) operating activities:

 

 

 

 

Depreciation and amortization

 

11,119

 

 

10,635

 

Stock-based compensation expense

 

1,985

 

 

2,007

 

Provision for doubtful accounts receivable

 

1,100

 

 

(38

)

Loss from unconsolidated affiliates

 

6,115

 

 

15,369

 

Loss on disposals of properties

 

32

 

 

37

 

Impairment charges

 

3,035

 

 

 

Deferred income tax expense (benefit)

 

213

 

 

(225

)

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

 

 

 

 

Receivables

 

(46,291

)

 

(34,029

)

Inventories

 

17,450

 

 

(13,335

)

Other assets

 

8,010

 

 

(7,530

)

Current liabilities

 

(10,821

)

 

(15,885

)

Other liabilities

 

(1,643

)

 

741

 

Other, net

 

3,796

 

 

441

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

28,051

 

 

(24,673

)

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

(17,094

)

 

(6,834

)

Acquisition of business, net of cash acquired

 

(15,407

)

 

 

Investments in unconsolidated affiliates

 

 

 

(8,000

)

Proceeds from sales of properties

 

 

 

4

 

 

 

 

 

 

Net cash used in investing activities

 

(32,501

)

 

(14,830

)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Dividends paid to stockholders of Mueller Industries, Inc.

 

 

 

(5,574

)

Repurchase of common stock

 

(5,574

)

 

(1,763

)

Issuance of long-term debt

 

110,000

 

 

100,557

 

Repayments of long-term debt

 

(20,572

)

 

(30,472

)

Issuance (repayment) of debt by consolidated joint ventures, net

 

189

 

 

(2,121

)

Net cash received (used) to settle stock-based awards

 

464

 

 

(175

)

 

 

 

 

 

Net cash provided by financing activities

 

84,507

 

 

60,452

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(6,135

)

 

919

 

 

 

 

 

 

Increase in cash, cash equivalents, and restricted cash

 

73,922

 

 

21,868

 

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

 

$

171,964

 

 

$

99,006

 

 

Contacts

Jeffrey A. Martin
(901) 753-3226

Contacts

Jeffrey A. Martin
(901) 753-3226