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Mueller Industries, Inc. Reports Second Quarter 2023 Earnings

Published: 2023-07-25 11:00:00 ET
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COLLIERVILLE, Tenn.--(BUSINESS WIRE)-- Mueller Industries, Inc. (NYSE: MLI) announces results for the second quarter of 2023. Comparisons are to the second quarter of 2022, which, for context, yielded the highest quarterly earnings on record and a 70 percent increase in operating income over the same period in 2021.

  • Operating Income of $210.7 million versus $268.9 million
  • Net Income of $177.7 million versus $206.6 million
  • Diluted EPS of $3.12 versus $3.65
  • Net Sales of $897.0 million versus $1.15 billion

Second Quarter Financial and Operating Highlights:

  • The decrease in net sales was primarily attributable to the normalization of demand across our three segments. In addition, lower COMEX copper prices, which were 11 percent below the second quarter of 2022, contributed to the decline.
  • The change in metal prices, net of hedges, resulted in a $6.9 million increase in cost of goods sold in the current quarter as compared with an $8.0 million decrease in the prior year period.
  • Operating costs were unfavorably stressed due to the impacts of several nonrecurring events:
    • As previously reported, our copper fitting manufacturing plant was damaged by a tornado on March 31, 2023 and remains shut down. While we rebuild the facility, we are producing some product in makeshift operations and sourcing the rest.
    • Our Brass Rod business was disrupted by a fire that resulted from work being performed by a third party contractor, thereby impairing production for nearly three weeks during the quarter.
    • Our Westermeyer business, which lost its manufacturing plant to a fire in August 2022, continues to operate at 80-85 percent of pre-fire levels in makeshift production operations. The business settled and recorded a $19.5 million gain from the insurance claim arising from the fire.
  • Cash and short-term investments at quarter end were $898.4 million, an increase of $116.0 million during the quarter.
  • Our current ratio increased to 5.4 to 1.

Regarding the quarter performance and outlook, Greg Christopher, Mueller’s CEO said, “Our team managed through some difficult issues and demonstrated its commitment to servicing customers, no matter the obstacles. Given the state of business and the unforeseen challenges we confronted, to have achieved these results is quite positive.

Decline in overall demand was as anticipated due to the easing of supply chain congestion and moderation of construction activity from its peak levels in 2022. Expenses were elevated due to inflation and the aforementioned disruptions, which absorbed considerable amounts of additional time and cost.

For the second half, we maintain our view that inflation and interest rates will remain at elevated levels and as such, will continue to exert pressure on the global economy. Demand and backlogs appear to have moderated to more normal levels, as supply chains have been sensibly rebalanced.

We will adjust as conditions dictate and are focused on investments that will optimize our manufacturing platform, reduce costs and improve profitability. We continue to generate strong cash flows, which provide us the necessary resources to act swiftly as growth opportunities present themselves.”

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.

***********************

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 Six Months Ended

(In thousands, except per share data)

 

July 1, 2023

 

June 25, 2022

 

July 1, 2023

 

June 25, 2022

 

 

 

 

 

 

 

 

 

Net sales

 

$

896,984

 

 

$

1,150,042

 

 

$

1,868,176

 

 

$

2,160,044

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

639,272

 

 

 

820,914

 

 

 

1,318,070

 

 

 

1,565,425

 

Depreciation and amortization

 

 

10,416

 

 

 

11,302

 

 

 

21,073

 

 

 

22,143

 

Selling, general, and administrative expense

 

 

56,062

 

 

 

48,956

 

 

 

108,693

 

 

 

96,412

 

Gain on sale of assets

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,507

)

Gain on insurance settlement

 

 

(19,466

)

 

 

—

 

 

 

(19,466

)

 

 

—

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

210,700

 

 

 

268,870

 

 

 

439,806

 

 

 

481,571

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(135

)

 

 

(147

)

 

 

(278

)

 

 

(305

)

Interest income

 

 

7,732

 

 

 

103

 

 

 

13,967

 

 

 

263

 

Unrealized gain on short-term investments

 

 

20,820

 

 

 

—

 

 

 

20,820

 

 

 

—

 

Other income, net

 

 

1,841

 

 

 

2,100

 

 

 

4,077

 

 

 

2,720

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

240,958

 

 

 

270,926

 

 

 

478,392

 

 

 

484,249

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(62,122

)

 

 

(68,290

)

 

 

(123,479

)

 

 

(122,489

)

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

 

 

715

 

 

 

4,888

 

 

 

(269

)

 

 

5,012

 

 

 

 

 

 

 

 

 

 

Consolidated net income

 

 

179,551

 

 

 

207,524

 

 

 

354,644

 

 

 

366,772

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

 

(1,840

)

 

 

(972

)

 

 

(3,694

)

 

 

(1,904

)

 

 

 

 

 

 

 

 

 

Net income attributable to Mueller Industries, Inc.

 

$

177,711

 

 

$

206,552

 

 

$

350,950

 

 

$

364,868

 

 

 

 

 

 

 

 

 

 

Weighted average shares for basic earnings per share

 

 

55,660

 

 

 

55,787

 

 

 

55,677

 

 

 

55,943

 

Effect of dilutive stock-based awards

 

 

1340

 

 

 

741

 

 

 

1023

 

 

 

776

 

 

 

 

 

 

 

 

 

 

Adjusted weighted average shares for diluted earnings per share

 

 

57,000

 

 

 

56,528

 

 

 

56,700

 

 

 

56,719

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

3.19

 

 

$

3.70

 

 

$

6.30

 

 

$

6.52

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

3.12

 

 

$

3.65

 

 

$

6.19

 

 

$

6.43

 

 

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.30

 

 

$

0.25

 

 

$

0.60

 

 

$

0.50

 

 

 

 

 

 

 

 

 

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME, CONTINUED

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

For the Six Months Ended

(In thousands)

 

July 1, 2023

 

June 25, 2022

 

July 1, 2023

 

June 25, 2022

 

 

 

 

 

 

 

 

 

Summary Segment Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

Piping Systems Segment

 

$

638,005

 

 

$

824,807

 

 

$

1,300,484

 

 

$

1,528,237

 

Industrial Metals Segment

 

 

146,266

 

 

 

179,175

 

 

 

311,500

 

 

 

353,487

 

Climate Segment

 

 

123,954

 

 

 

164,484

 

 

 

276,908

 

 

 

305,106

 

Elimination of intersegment sales

 

 

(11,241

)

 

 

(18,424

)

 

 

(20,716

)

 

 

(26,786

)

 

 

 

 

 

 

 

 

 

Net sales

 

$

896,984

 

 

$

1,150,042

 

 

$

1,868,176

 

 

$

2,160,044

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

Piping Systems Segment

 

$

151,142

 

 

$

211,579

 

 

$

314,996

 

 

$

372,067

 

Industrial Metals Segment

 

 

17,971

 

 

 

24,168

 

 

 

45,186

 

 

 

47,427

 

Climate Segment

 

 

57,067

 

 

 

50,747

 

 

 

111,055

 

 

 

87,447

 

Unallocated income (expenses)

 

 

(15,480

)

 

 

(17,624

)

 

 

(31,431

)

 

 

(25,370

)

 

 

 

 

 

 

 

 

 

Operating income

 

$

210,700

 

 

$

268,870

 

 

$

439,806

 

 

$

481,571

 

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

(Unaudited)

 

 

(In thousands)

 

July 1, 2023

 

December 31, 2022

ASSETS

 

 

 

 

Cash and cash equivalents

 

$

771,317

 

$

461,018

Short-term investments

 

 

127,051

 

 

217,863

Accounts receivable, net

 

 

459,467

 

 

380,352

Inventories

 

 

465,729

 

 

448,919

Other current assets

 

 

28,172

 

 

26,501

 

 

 

 

 

Total current assets

 

 

1,851,736

 

 

1,534,653

 

 

 

 

 

Property, plant, and equipment, net

 

 

386,928

 

 

379,950

Operating lease right-of-use assets

 

 

31,164

 

 

22,892

Other assets

 

 

306,592

 

 

304,904

 

 

 

 

 

Total assets

 

$

2,576,420

 

$

2,242,399

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current portion of debt

 

$

670

 

$

811

Accounts payable

 

 

155,096

 

 

128,000

Current portion of operating lease liabilities

 

 

6,951

 

 

4,942

Other current liabilities

 

 

181,831

 

 

214,542

 

 

 

 

 

Total current liabilities

 

 

344,548

 

 

348,295

 

 

 

 

 

Long-term debt

 

 

1,267

 

 

1,218

Pension and postretirement liabilities

 

 

12,166

 

 

13,055

Environmental reserves

 

 

15,729

 

 

16,380

Deferred income taxes

 

 

18,821

 

 

16,258

Noncurrent operating lease liabilities

 

 

23,596

 

 

16,880

Other noncurrent liabilities

 

 

17,355

 

 

16,349

 

 

 

 

 

Total liabilities

 

 

433,482

 

 

428,435

 

 

 

 

 

Total Mueller Industries, Inc. stockholders’ equity

 

 

2,116,230

 

 

1,790,914

Noncontrolling interests

 

 

26,708

 

 

23,050

 

 

 

 

 

Total equity

 

 

2,142,938

 

 

1,813,964

 

 

 

 

 

Total liabilities and equity

 

$

2,576,420

 

$

2,242,399

MUELLER INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For the Six Months Ended

(In thousands)

 

July 1, 2023

 

June 25, 2022

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

Consolidated net income

 

$

354,644

 

 

$

366,772

 

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

 

 

 

 

Depreciation and amortization

 

 

21,252

 

 

 

22,322

 

Stock-based compensation expense

 

 

12,459

 

 

 

5,171

 

Provision for doubtful accounts receivable

 

 

(80

)

 

 

151

 

Loss (income) from unconsolidated affiliates

 

 

269

 

 

 

(5,012

)

Insurance proceeds - noncapital related

 

 

9,854

 

 

 

—

 

Gain on disposals of properties

 

 

(141

)

 

 

(6,800

)

Unrealized gain on short-term investments

 

 

(20,820

)

 

 

—

 

Gain on insurance settlement

 

 

(19,466

)

 

 

—

 

Deferred income tax expense (benefit)

 

 

2,406

 

 

 

(373

)

Changes in assets and liabilities:

 

 

 

 

Receivables

 

 

(77,701

)

 

 

(146,438

)

Inventories

 

 

(12,149

)

 

 

(49,354

)

Other assets

 

 

(5,571

)

 

 

(6,095

)

Current liabilities

 

 

(14,460

)

 

 

28,906

 

Other liabilities

 

 

(976

)

 

 

(4,283

)

Other, net

 

 

1,310

 

 

 

(433

)

 

 

 

 

 

Net cash provided by operating activities

 

 

250,830

 

 

 

204,534

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

 

(29,221

)

 

 

(23,248

)

Insurance proceeds - capital related

 

 

24,646

 

 

 

—

 

Purchase of short-term investments

 

 

(106,231

)

 

 

—

 

Proceeds from the maturity of short-term investments

 

 

217,863

 

 

 

—

 

Proceeds from sales of properties

 

 

142

 

 

 

7,561

 

Dividends from unconsolidated affiliates

 

 

797

 

 

 

1,609

 

 

 

 

 

 

Net cash provided by (used in) investing activities

 

 

107,996

 

 

 

(14,078

)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Dividends paid to stockholders of Mueller Industries, Inc.

 

 

(33,402

)

 

 

(27,968

)

Repurchase of common stock

 

 

(19,303

)

 

 

(33,469

)

Repayments of debt

 

 

(130

)

 

 

(111

)

(Repayment) issuance of debt by consolidated joint ventures, net

 

 

(143

)

 

 

360

 

Net cash used to settle stock-based awards

 

 

(2,588

)

 

 

(95

)

 

 

 

 

 

Net cash used in financing activities

 

 

(55,566

)

 

 

(61,283

)

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

4,825

 

 

 

(2,234

)

 

 

 

 

 

Increase in cash, cash equivalents, and restricted cash

 

 

308,085

 

 

 

126,939

 

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

 

 

465,296

 

 

 

90,376

 

 

 

 

 

 

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

 

$

773,381

 

 

$

217,315

 

 

Jeffrey A. Martin (901) 753-3226

Source: Mueller Industries, Inc.