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Mueller Industries, Inc. Reports Fiscal 2020 Fourth Quarter and Full Year Results

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Mueller Industries, Inc. (NYSE: MLI) today reported 2020 fourth quarter and full year results.

Fourth Quarter:

  • Operating income of $65.0 million versus $44.4 million

  • Net sales of $675.9 million versus $543.8 million

  • Net income of $36.4 million versus $28.2 million

  • EPS of $0.64 versus $0.50

Full Year:

  • Operating income of $245.8 million versus $191.4 million

  • Adjusted operating income of $227.5 million versus $191.4 million (adjustments include $3.8 million for asset impairments and a $22.1 million gain for the Deepwater Horizon settlement)

  • Net sales of $2.4 billion versus $2.4 billion

  • Net income of $139.5 million versus $101.0 million

  • EPS of $2.47 versus $1.79

*Comparisons to prior year periods

Quarter Commentary

  • The average price of copper was 21.9 percent higher during the quarter compared with the prior year quarter.

  • Net sales growth of $132.0 million was largely influenced by the higher copper prices ($61.8 million), with the balance attributable to recently acquired businesses and higher unit sales volumes.

  • The Company recognized a $17.8 million expense to terminate its U.S. defined benefit pension plan, which consisted of an $11.6 million non-cash charge and $6.2 million in federal excise tax on surplus assets returned to the Company.

  • The Company recorded income of $10.0 million on its investment in Tecumseh in the quarter, including a pre-tax gain of $11.6 million from a land sale and $1.1 million of expense related to Tecumseh’s ongoing restructuring activities.

  • The effective tax rate of 31.8 percent reflects the accounting for several discrete items in the quarter. The effective tax rate of 19.8 percent for the prior year quarter reflects a favorable impact from the recognition of foreign net operating losses.

  • Cash generated from operations was $48.2 million.

Full Year Commentary

  • The average price of copper was 2.8 percent higher than in 2019. COMEX copper hit a low of $2.12 per pound in March and a high of $3.63 per pound in December.

  • Net sales were flat as compared to the prior year, with volume from acquisitions offsetting declines stemming from the COVID-19 pandemic.

  • Our Tecumseh investment showed improvement in 2020 reflecting early impacts of the ongoing restructuring.

  • Our operating cash flow exceeded $245.1 million. The Company’s liquidity position remained strong, with cash and cash equivalents of $119.1 million, total debt of $327.9 million and approximately $300.0 million currently available under the Company’s existing credit facility. Total debt to total capitalization was a modest 29.0 percent.

  • The 2020 effective tax rate was 26.4 percent compared with 21.2 percent in 2019.

Operating Highlights and Outlook:

Greg Christopher, CEO, commented, "Mueller delivered a solid fourth quarter and anticipates a continuation of this positive trend into 2021. This was our third consecutive year of double digit earnings growth. Our teams managed the challenges presented by the COVID-19 pandemic, and we expect to reap ongoing benefits from our more efficient and controlled operating environment.

Although pandemic related public health regulations are likely to remain in place, we are hopeful that the limitations such measures may exert on demand will subside as we approach the second half of the year. On January 29, 2021, we closed on our previously announced acquisition of the Hart & Cooley Flexible Duct business, which expands our presence in the air quality and climate control systems markets.

Our diversified portfolio of businesses is well balanced and capitalized, and we are optimistic that 2021 will bring continued strong cash generation. We believe we are well positioned for the reopening of global economies."

Mueller Industries, Inc. (NYSE: MLI) is an industrial corporation whose holdings manufacture vital goods for important markets such as air, water, oil and gas distribution; climate comfort; food preservation; energy transmission; medical; aerospace; and automotive. It includes a network of companies and brands throughout North America, Europe, Asia, and the Middle East.

NON-GAAP MEASURES

This press release contains a reference to a non-GAAP measure (adjusted operating income). We believe this financial measure, which is used by management to monitor and evaluate performance, allows investors to better evaluate changes in operating income on a comparable basis from period to period.

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 Year Ended

(In thousands, except per share data)

December 26,
2020

December 28,
2019

December 26,
2020

December 28,
2019

Net sales

$

675,851

$

543,839

$

2,398,043

$

2,430,616

Cost of goods sold

553,507

449,481

1,966,161

2,035,610

Depreciation and amortization

11,955

10,837

44,843

42,693

Selling, general, and administrative expense

44,649

39,072

159,483

160,910

Litigation settlement. net

(22,053)

Impairment charges

736

3,771

Operating income

65,004

44,449

245,838

191,403

Interest expense

(4,010)

(5,548)

(19,247)

(25,683)

Environmental expense

(3,488)

(440)

(4,454)

(1,321)

Pension plan termination costs

(17,835)

(17,835)

Other income, net

287

(20)

4,887

1,684

Income before income taxes

39,958

38,441

209,189

166,083

Income tax expense

(12,698)

(7,614)

(55,321)

(35,257)

Income (loss) from unconsolidated affiliates, net of foreign tax

9,994

(854)

(10,219)

(24,594)

Consolidated net income

37,254

29,973

143,649

106,232

Net income attributable to noncontrolling interests

(834)

(1,803)

(4,156)

(5,260)

Net income attributable to Mueller Industries, Inc.

$

36,420

$

28,170

$

139,493

$

100,972

Weighted average shares for basic earnings per share

55,869

55,869

55,821

55,798

Effect of dilutive stock-based awards

673

611

569

545

Adjusted weighted average shares for diluted earnings per share

56,542

56,480

56,390

56,343

Basic earnings per share

$

0.65

$

0.50

$

2.50

$

1.81

Diluted earnings per share

$

0.64

$

0.50

$

2.47

$

1.79

Dividends per share

$

0.10

$

0.10

$

0.40

$

0.40

Summary Segment Data:

Net sales:

Piping Systems Segment

$

454,535

$

349,182

$

1,583,002

$

1,542,456

Industrial Metals Segment

133,507

120,336

472,159

554,372

Climate Segment

93,148

79,362

370,131

356,216

Elimination of intersegment sales

(5,339)

(5,041)

(27,249)

(22,428)

Net sales

$

675,851

$

543,839

$

2,398,043

$

2,430,616

Operating income:

Piping Systems Segment

$

43,106

$

31,724

$

165,719

$

131,879

Industrial Metals Segment

15,662

15,026

54,065

61,724

Climate Segment

13,279

9,343

56,802

42,727

Unallocated expenses

(7,043)

(11,644)

(30,748)

(44,927)

Operating income

$

65,004

$

44,449

$

245,838

$

191,403

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

December 26,
2020

December 28,
2019

ASSETS

Cash and cash equivalents

$

119,075

$

97,944

Accounts receivable, net

357,532

269,943

Inventories

315,002

292,107

Other current assets

33,752

33,778

Total current assets

825,361

693,772

Property, plant, and equipment, net

376,572

363,128

Operating lease right-of-use assets

29,301

26,922

Other assets

297,334

287,118

$

1,528,568

$

1,370,940

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current portion of debt

$

41,283

$

7,530

Accounts payable

147,741

85,644

Current portion of operating lease liabilities

6,259

5,250

Other current liabilities

144,360

135,863

Total current liabilities

339,643

234,287

Long-term debt

286,593

378,724

Pension and postretirement liabilities

26,841

22,208

Environmental reserves

21,256

19,972

Deferred income taxes

16,842

21,094

Noncurrent operating lease liabilities

21,602

22,388

Other noncurrent liabilities

14,731

10,131

Total liabilities

727,508

708,804

Total Mueller Industries, Inc. stockholders’ equity

776,745

643,468

Noncontrolling interests

24,315

18,668

Total equity

801,060

662,136

$

1,528,568

$

1,370,940

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Year Ended

(In thousands)

December 26,
2020

December 28,
2019

Cash flows from operating activities

Consolidated net income

$

143,649

$

106,232

Reconciliation of consolidated net income to net cash provided by operating activities:

Depreciation and amortization

45,162

43,011

Stock-based compensation expense

8,570

8,744

Provision for doubtful accounts receivable

1,208

(80)

Loss from unconsolidated affiliates

10,219

24,594

Non-cash pension plan termination charge

11,642

Loss (gain) on disposals of assets

132

(963)

Change in the fair value of contingent consideration

3,625

Impairment charges

3,771

Deferred income tax benefit

(4,046)

(428)

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

Receivables

(76,404)

6,585

Inventories

5,207

39,561

Other assets

20,609

(15,639)

Current liabilities

74,097

(7,076)

Other liabilities

(1,142)

(7,944)

Other, net

2,399

322

Net cash provided by operating activities

245,073

200,544

Cash flows from investing activities

Proceeds from sale of assets, net of cash transferred

181

3,240

Acquisition of businesses, net of cash acquired

(72,648)

3,465

Capital expenditures

(43,885)

(31,162)

Issuance of notes receivable

(9,270)

Investments in unconsolidated affiliates

(16,000)

Net cash used in investing activities

(125,622)

(40,457)

Cash flows from financing activities

Dividends paid to stockholders of Mueller Industries, Inc.

(22,341)

(22,325)

Dividends paid to noncontrolling interests

(846)

Issuance of long-term debt

190,038

100,658

Repayments of long-term debt

(246,898)

(206,718)

Repayment of debt by consolidated joint ventures, net

(259)

(4,305)

Repurchase of common stock

(5,574)

(1,763)

Payment of contingent consideration

(7,000)

(3,170)

Net cash used to settle stock-based awards

(230)

(1,225)

Net cash used in financing activities

(92,264)

(139,694)

Effect of exchange rate changes on cash

2,147

511

Increase in cash, cash equivalents, and restricted cash

29,334

20,904

Cash, cash equivalents, and restricted cash at the beginning of the year

98,042

77,138

Cash, cash equivalents, and restricted cash at the end of the year

$

127,376

$

98,042

View source version on businesswire.com: https://www.businesswire.com/news/home/20210202005193/en/

Contacts

Jeffrey A. Martin
(901) 753-3226