Mueller Industries Inc 10-Q for FY2023 Q3

Mueller Industries Inc (MLI)

10-Q 2023-10-25 For: 2023-09-30

Added on April 09, 2026

About this 10-Q

Mueller Industries Inc filed this 10-Q on October 25, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $819.79M; down 13.2% from $944.83M a year earlier
Net income: $132.71M; down 14.1% from net income of $154.54M a year earlier
Diluted EPS: $1.17; down 14.6% from $1.37 a year earlier

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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly report ended September 30, 2023
			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ______ to ______
			Commission file number 1-6770


Delaware			25-0790410
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


150 Schilling Boulevard	Suite 100
Collierville	Tennessee	38017
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock	MLI	NYSE


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


		Page Number
Part I. Financial Information

	Item 1. – Financial Statements (Unaudited)

	a.) Condensed Consolidated Statements of Income	3

	b.) Condensed Consolidated Statements of Comprehensive Income	4

	c.) Condensed Consolidated Balance Sheets	5

	d.) Condensed Consolidated Statements of Cash Flows	7

	e.) Condensed Consolidated Statements of Changes in Equity	9

	f.) Notes to Condensed Consolidated Financial Statements	11

	Item 2. – Management's Discussion and Analysis of Financial Condition and Results of Operations	27

	Item 3. – Quantitative and Qualitative Disclosures About Market Risk	36

	Item 4. – Controls and Procedures	38

Part II. Other Information

	Item 1. – Legal Proceedings	38

	Item 1A. – Risk Factors	38

	Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds	39

	Item 6. – Exhibits	40

Signatures		41


	For the Quarter Ended				For the Nine Months Ended
(In thousands, except per share data)	September 30, 2023		September 24, 2022		September 30, 2023		September 24, 2022

Net sales	$	819,792	$	944,830	$	2,687,968	$	3,104,874

Cost of goods sold	579,058		678,637		1,897,128		2,244,062
Depreciation and amortization	9,631		10,850		30,704		32,993
Selling, general, and administrative expense	48,295		50,178		156,988		146,590
Gain on sale of assets	—		—		—		(5,507)
Gain on sale of business	(4,137)		—		(4,137)		—
Asset impairments	5,934		—		5,934		—

Gain on insurance settlement	—		—		(19,466)		—

Operating income	181,011		205,165		620,817		686,736

Interest expense	(230)		(361)		(508)		(666)
Interest income	10,599		1,356		24,566		1,619
Unrealized (loss) gain on short-term investments	(2,371)		—		18,449		—
Other (expense) income, net	(44)		(326)		4,033		2,394

Income before income taxes	188,965		205,834		667,357		690,083

Income tax expense	(50,843)		(51,035)		(174,322)		(173,524)
(Loss) income from unconsolidated affiliates, net of foreign tax	(2,413)		1,014		(2,682)		6,026

Consolidated net income	135,709		155,813		490,353		522,585
Net income attributable to noncontrolling interests	(3,000)		(1,271)		(6,694)		(3,175)

Net income attributable to Mueller Industries, Inc.	$	132,709	$	154,542	$	483,659	$	519,410

Weighted average shares for basic earnings per share (1)	111,416		111,178		111,374		111,650
Effect of dilutive stock-based awards (1)	2,452		1,670		2,182		1,592

Adjusted weighted average shares for diluted earnings per share (1)	113,868		112,848		113,556		113,242

Basic earnings per share (1)	$	1.19	$	1.39	$	4.34	$	4.65

Diluted earnings per share (1)	$	1.17	$	1.37	$	4.26	$	4.59

Dividends per share (1)	$	0.150	$	0.125	$	0.450	$	0.375


	For the Quarter Ended				For the Nine Months Ended
(In thousands)	September 30, 2023		September 24, 2022		September 30, 2023		September 24, 2022

Consolidated net income	$	135,709	$	155,813	$	490,353	$	522,585

Other comprehensive (loss) income, net of tax:
Foreign currency translation	(9,078)		(28,179)		8,898		(44,086)
Net change with respect to derivative instruments and hedging activities, net of tax of $(93), $352, $410, and $3,198	324		(1,179)		(1,401)		(10,974)
Net change in pension and postretirement obligation adjustments, net of tax of $(15), $(573), $(3), and $(676)	—		1,608		1		1,729
Attributable to unconsolidated affiliates, net of tax of $(64), $56, $(540), and $(1,224)	222		(191)		1,860		4,218

Total other comprehensive (loss) income, net	(8,532)		(27,941)		9,358		(49,113)

Consolidated comprehensive income	127,177		127,872		499,711		473,472
Comprehensive (income) loss attributable to noncontrolling interests	(3,280)		148		(6,938)		(167)

Comprehensive income attributable to Mueller Industries, Inc.	$	123,897	$	128,020	$	492,773	$	473,305


	(Unaudited)
(In thousands, except share data)	September 30, 2023		December 31, 2022

Assets
Current assets:
Cash and cash equivalents	$	979,790	$	461,018
Short-term investments	124,680		217,863
Accounts receivable, less allowance for doubtful accounts of $2,918 in 2023 and $2,687 in 2022	409,187		380,352
Inventories	391,740		448,919
Other current assets	31,373		26,501

Total current assets	1,936,770		1,534,653

Property, plant, and equipment, net	376,678		379,950
Operating lease right-of-use assets	33,898		22,892
Goodwill, net	150,921		157,588
Intangible assets, net	46,798		54,785
Investments in unconsolidated affiliates	97,025		72,364
Other assets	21,651		20,167

Total assets	$	2,663,741	$	2,242,399


MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
(In thousands, except share data)	September 30, 2023		December 31, 2022
Liabilities
Current liabilities:
Current portion of debt	$	556	$	811
Accounts payable	141,930		128,000
Accrued wages and other employee costs	49,065		61,915
Current portion of operating lease liabilities	7,431		4,942
Other current liabilities	123,523		152,627

Total current liabilities	322,505		348,295

Long-term debt, less current portion	1,301		1,218
Pension liabilities	3,797		4,078
Postretirement benefits other than pensions	9,131		8,977
Environmental reserves	15,420		16,380
Deferred income taxes	18,502		16,258
Noncurrent operating lease liabilities	25,793		16,880
Other noncurrent liabilities	16,063		16,349

Total liabilities	412,512		428,435

Equity
Mueller Industries, Inc. stockholders' equity:
Preferred stock - $1.00 par value; shares authorized 5,000,000; none outstanding	—		—
Common stock - $.01 par value; shares authorized 250,000,000 in 2023 and 100,000,000 in 2022; issued 160,366,008; outstanding 113,528,010 in 2023 and 114,003,234 in 2022 (1)	802		802
Additional paid-in capital	313,647		297,270
Retained earnings	2,492,157		2,059,796
Accumulated other comprehensive loss	(55,061)		(64,175)
Treasury common stock, at cost	(530,304)		(502,779)

Total Mueller Industries, Inc. stockholders' equity	2,221,241		1,790,914
Noncontrolling interests	29,988		23,050

Total equity	2,251,229		1,813,964

Commitments and contingencies	—		—

Total liabilities and equity	$	2,663,741	$	2,242,399


	For the Quarter Ended September 30, 2023
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	568,151	$	141,012	$	119,949	$	(9,320)	$	819,792

Cost of goods sold	394,736		119,108		76,133		(10,919)		579,058
Depreciation and amortization	5,025		1,835		1,618		1,153		9,631
Selling, general, and administrative expense	21,847		3,848		7,352		15,248		48,295

Gain on sale of business	—		—		—		(4,137)		(4,137)
Asset impairments	5,934		—		—		—		5,934



Operating income	140,609		16,221		34,846		(10,665)		181,011

Interest expense									(230)
Interest income									10,599
Unrealized loss on short-term investments									(2,371)
Other expense, net									(44)

Income before income taxes									$	188,965


	For the Quarter Ended September 24, 2022
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	634,808	$	144,880	$	174,650	$	(9,508)	$	944,830

Cost of goods sold	440,216		128,152		114,850		(4,581)		678,637
Depreciation and amortization	5,516		1,846		2,289		1,199		10,850
Selling, general, and administrative expense	21,137		2,805		10,049		16,187		50,178





Operating income	167,939		12,077		47,462		(22,313)		205,165

Interest expense									(361)
Interest income									1,356
Other expense, net									(326)

Income before income taxes									$	205,834


	For the Nine Months Ended September 30, 2023
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	1,868,635	$	452,512	$	396,857	$	(30,036)	$	2,687,968

Cost of goods sold	1,315,212		375,375		242,009		(35,468)		1,897,128
Depreciation and amortization	15,835		5,411		5,973		3,485		30,704
Selling, general, and administrative expense	76,049		10,319		22,440		48,180		156,988

Gain on sale of business	—		—		—		(4,137)		(4,137)
Asset impairments	5,934		—		—		—		5,934

Gain on insurance settlement	—		—		(19,466)		—		(19,466)

Operating income	455,605		61,407		145,901		(42,096)		620,817

Interest expense									(508)
Interest income									24,566
Unrealized gain on short-term investments									18,449
Other income, net									4,033

Income before income taxes									$	667,357


	For the Nine Months Ended September 24, 2022
( In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	2,163,045	$	498,367	$	479,756	$	(36,294)	$	3,104,874

Cost of goods sold	1,539,493		424,802		311,917		(32,150)		2,244,062
Depreciation and amortization	16,846		5,636		6,989		3,522		32,993
Selling, general, and administrative expense	66,700		8,425		25,941		45,524		146,590
Gain on sale of assets	—		—		—		(5,507)		(5,507)




Operating income	540,006		59,504		134,909		(47,683)		686,736

Interest expense									(666)
Interest income									1,619
Other income, net									2,394

Income before income taxes									$	690,083


(In thousands)	September 30, 2023		December 31, 2022

Segment assets:
Piping Systems	$	1,083,888	$	1,088,940
Industrial Metals	168,608		160,702
Climate	257,832		279,940
General Corporate	1,153,413		712,817

	$	2,663,741	$	2,242,399


	For the Nine Months Ended
(In thousands)	September 30, 2023		September 24, 2022

Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.	(50,133)		(41,876)

Repurchase of common stock	(19,303)		(38,054)


Repayments of debt	(185)		(148)
(Repayment) issuance of debt by consolidated joint ventures, net	(265)		406
Net cash used to settle stock-based awards	(9,113)		(1,619)


Net cash used in financing activities	(78,999)		(81,291)

Effect of exchange rate changes on cash	2,312		(10,310)

Increase in cash, cash equivalents, and restricted cash	515,920		409,042
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	$	981,216	$	499,418


(In thousands)	September 30, 2023		December 31, 2022

Raw materials and supplies	$	107,081	$	133,189
Work-in-process	68,737		64,177
Finished goods	226,255		265,842
Valuation reserves	(10,333)		(14,289)

Inventories	$	391,740	$	448,919


	For the Quarter Ended September 30, 2023
(In thousands)	Gain Recognized in AOCI (Effective Portion), Net of Tax		Classification Gains (Losses)	Loss Reclassified from AOCI (Effective Portion), Net of Tax

Cash flow hedges:
Commodity contracts	$	132	Cost of goods sold	$	183
Other	9		Other	—

Total	$	141	Total	$	183


	Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value
(In thousands)	Balance Sheet Location	September 30, 2023		December 31, 2022		Balance Sheet Location	September 30, 2023		December 31, 2022

Commodity contracts - gains	Other current assets	$	186	$	3,746	Other current liabilities	$	45	$	—
Commodity contracts - losses	Other current assets	(23)		(1,483)		Other current liabilities	(148)		—

Total derivatives (1)		$	163	$	2,263		$	(103)	$	—


	For the Quarter Ended September 24, 2022
(In thousands)	(Loss) Gain Recognized in AOCI (Effective Portion), Net of Tax		Classification Gains (Losses)	Loss Reclassified from AOCI (Effective Portion), Net of Tax

Cash flow hedges:
Commodity contracts	$	(5,984)	Cost of goods sold	$	4,767
Other	38		Other	—

Total	$	(5,946)	Total	$	4,767


	For the Nine Months Ended September 30, 2023
(In thousands)	Cumulative Translation Adjustment		Unrealized Gain (Loss) on Derivatives		Pension/OPEB Liability Adjustment		Attributable to Unconsol. Affiliates		Total

Balance as of December 31, 2022	$	(69,238)	$	1,486	$	1,222	$	2,355	$	(64,175)

Other comprehensive income before reclassifications	8,654		1,147		221		1,860		11,882
Amounts reclassified from AOCI	—		(2,548)		(220)		—		(2,768)

Net current-period other comprehensive income (loss)	8,654		(1,401)		1		1,860		9,114


Balance as of September 30, 2023	$	(60,584)	$	85	$	1,223	$	4,215	$	(55,061)


	Amount reclassified from AOCI
	For the Quarter Ended				For the Nine Months Ended
(In thousands)	September 30, 2023		September 24, 2022		September 30, 2023		September 24, 2022		Affected line item

Unrealized losses (gains) on derivative commodity contracts	$	236	$	6,151	$	(3,275)	$	2,906	Cost of goods sold

	(53)		(1,384)		727		(653)		Income tax (benefit) expense

	$	183	$	4,767	$	(2,548)	$	2,253	Net of tax and noncontrolling interests

Amortization of net (gain) loss and prior service (credit) cost on employee benefit plans	$	(99)	$	184	$	(296)	$	356	Other (expense) income, net
	26		(31)		76		(51)		Income tax expense (benefit)

	$	(73)	$	153	$	(220)	$	305	Net of tax and noncontrolling interests


	For the Quarter Ended				Percent Change		For the Nine Months Ended				Percent Change
(In thousands)	September 30, 2023		September 24, 2022		2023 vs. 2022		September 30, 2023		September 24, 2022		2023 vs. 2022

Net sales	$	819,792	$	944,830	(13.2)	%	$	2,687,968	$	3,104,874	(13.4)	%
Operating income	181,011		205,165		(11.8)		620,817		686,736		(9.6)
Net income	132,709		154,542		(14.1)		483,659		519,410		(6.9)


	Quarter-to- Date		Year-to- Date
Net selling price in core product lines	(0.3)	%	(2.1)	%
Unit sales volume in core product lines	(4.8)		(7.1)

Dispositions	(1.2)		(0.4)
Other	(6.9)		(3.8)

	(13.2)	%	(13.4)	%


(In thousands)	2023		2022

Increase (decrease) in:
Cash, cash equivalents, and restricted cash	$	515,920	$	409,042
Short-term investments	(93,183)		—
Property, plant, and equipment, net	(3,272)		(11,402)
Total debt	(172)		432
Working capital, net of cash and current debt	(91,120)		14,153

Net cash provided by operating activities	498,490		516,912
Net cash provided by (used in) investing activities	94,117		(16,269)
Net cash used in financing activities	(78,999)		(81,291)


	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (2)


July 2 - July 29, 2023	1,222	$	41.78	—	25,003,808
July 30 - August 26, 2023	178,378	$	40.43	—	25,003,808
August 27 - September 30, 2023	4,210	$	38.02	—	25,003,808
Total	183,810			—


31.1			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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101.LAB			Inline XBRL Taxonomy Extension Label Linkbase

101.PRE			Inline XBRL Presentation Linkbase Document

101.SCH			Inline XBRL Taxonomy Extension Schema

104			Cover Page Interactive Data File (embedded within the Inline XBRL document and included in exhibit 101)


			MUELLER INDUSTRIES, INC.


			/s/ Jeffrey A. Martin
			Jeffrey A. Martin
October 25, 2023			Chief Financial Officer and Treasurer
Date			(Principal Financial and Accounting Officer)


			/s/ Anthony J. Steinriede
October 25, 2023			Anthony J. Steinriede
Date			Vice President – Corporate Controller


1.	I have reviewed this quarterly report on Form 10-Q of Mueller Industries, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: October 25, 2023
			/s/ Gregory L. Christopher
			Gregory L. Christopher
			Chief Executive Officer


(1)			The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)			The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ JEFFREY A. MARTIN
Jeffrey A. Martin
Chief Financial Officer
October 25, 2023