Mueller Industries Inc 10-Q for FY2023 Q2

Mueller Industries Inc (MLI)

10-Q 2023-07-26 For: 2023-07-01

Added on April 09, 2026

About this 10-Q

Mueller Industries Inc filed this 10-Q on July 26, 2023, covering the quarter ended July 1, 2023 (FY2023 Q2).

Headline figures

Quarter ended July 1, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $896.98M; down 22.0% from $1.15B a year earlier
Net income: $177.71M; down 14.0% from net income of $206.55M a year earlier
Diluted EPS: $3.12; down 14.5% from $3.65 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 July 1, 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	6

	e.) Condensed Consolidated Statements of Changes in Equity	8

	f.) Notes to Condensed Consolidated Financial Statements	10

	Item 2. – Management's Discussion and Analysis of Financial Condition and Results of Operations	26

	Item 3. – Quantitative and Qualitative Disclosures About Market Risk	35

	Item 4. – Controls and Procedures	37

Part II. Other Information

	Item 1. – Legal Proceedings	37

	Item 1A. – Risk Factors	37

	Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds	38

	Item 5. – Other Information	37

	Item 6. – Exhibits	39

Signatures		40


	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	1,340		741		1,023		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


	For the Quarter Ended				For the Six Months Ended
(In thousands)	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022

Consolidated net income	$	179,551	$	207,524	$	354,644	$	366,772

Other comprehensive income (loss), net of tax:
Foreign currency translation	7,725		(17,120)		17,976		(15,907)
Net change with respect to derivative instruments and hedging activities, net of tax of $775, $3,450, $503, and $2,846	(2,679)		(11,886)		(1,725)		(9,795)
Net change in pension and postretirement obligation adjustments, net of tax of $1, $31, $12, and $(103)	9		(299)		1		121
Attributable to unconsolidated affiliates, net of tax of $(103), $(656), $(476), and $(1,280)	353		2,261		1,638		4,409

Total other comprehensive income (loss), net	5,408		(27,044)		17,890		(21,172)

Consolidated comprehensive income	184,959		180,480		372,534		345,600
Comprehensive (income) loss attributable to noncontrolling interests	(1,546)		584		(3,658)		(315)

Comprehensive income attributable to Mueller Industries, Inc.	$	183,413	$	181,064	$	368,876	$	345,285


	(Unaudited)
(In thousands, except share data)	July 1, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	771,317	$	461,018
Short-term investments	127,051		217,863
Accounts receivable, less allowance for doubtful accounts of $2,905 in 2023 and $2,687 in 2022	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
Goodwill, net	158,769		157,588
Intangible assets, net	52,926		54,785
Investments in unconsolidated affiliates	73,412		72,364
Other assets	21,485		20,167

Total assets	$	2,576,420	$	2,242,399

Liabilities
Current liabilities:
Current portion of debt	$	670	$	811
Accounts payable	155,096		128,000
Accrued wages and other employee costs	45,148		61,915
Current portion of operating lease liabilities	6,951		4,942
Other current liabilities	136,683		152,627

Total current liabilities	344,548		348,295

Long-term debt, less current portion	1,267		1,218
Pension liabilities	2,929		4,078
Postretirement benefits other than pensions	9,237		8,977
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

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 100,000,000; issued 80,183,004; outstanding 56,777,485 in 2023 and 57,001,617 in 2022	802		802
Additional paid-in capital	309,705		297,270
Retained earnings	2,376,618		2,059,796
Accumulated other comprehensive loss	(46,249)		(64,175)
Treasury common stock, at cost	(524,646)		(502,779)

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

Commitments and contingencies	—		—

Total liabilities and equity	$	2,576,420	$	2,242,399


	For the Quarter Ended July 1, 2023
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	638,005	$	146,266	$	123,954	$	(11,241)	$	896,984

Cost of goods sold	452,866		123,097		77,064		(13,755)		639,272
Depreciation and amortization	5,252		1,804		2,202		1,158		10,416
Selling, general, and administrative expense	28,745		3,394		7,087		16,836		56,062




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

Operating income	151,142		17,971		57,067		(15,480)		210,700

Interest expense									(135)
Interest income									7,732
Unrealized gain on short-term investments									20,820
Other income, net									1,841

Income before income taxes									$	240,958


	For the Quarter Ended June 25, 2022
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	824,807	$	179,175	$	164,484	$	(18,424)	$	1,150,042

Cost of goods sold	585,090		150,940		103,110		(18,226)		820,914
Depreciation and amortization	5,930		1,846		2,348		1,178		11,302
Selling, general, and administrative expense	22,208		2,221		8,279		16,248		48,956





Operating income	211,579		24,168		50,747		(17,624)		268,870

Interest expense									(147)
Interest income									103
Other income, net									2,100

Income before income taxes									$	270,926


	For the Six Months Ended July 1, 2023
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	1,300,484	$	311,500	$	276,908	$	(20,716)	$	1,868,176

Cost of goods sold	920,476		256,267		165,876		(24,549)		1,318,070
Depreciation and amortization	10,810		3,576		4,355		2,332		21,073
Selling, general, and administrative expense	54,202		6,471		15,088		32,932		108,693




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

Operating income	314,996		45,186		111,055		(31,431)		439,806

Interest expense									(278)
Interest income									13,967
Unrealized gain on short-term investments									20,820
Other income, net									4,077

Income before income taxes									$	478,392


	For the Six Months Ended June 25, 2022
( In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	1,528,237	$	353,487	$	305,106	$	(26,786)	$	2,160,044

Cost of goods sold	1,099,277		296,650		197,067		(27,569)		1,565,425
Depreciation and amortization	11,330		3,790		4,700		2,323		22,143
Selling, general, and administrative expense	45,563		5,620		15,892		29,337		96,412
Gain on sale of assets	—		—		—		(5,507)		(5,507)




Operating income	372,067		47,427		87,447		(25,370)		481,571

Interest expense									(305)
Interest income									263
Other income, net									2,720

Income before income taxes									$	484,249


(In thousands)	July 1, 2023		December 31, 2022

Segment assets:
Piping Systems	$	1,218,810	$	1,088,940
Industrial Metals	165,534		160,702
Climate	263,666		279,940
General Corporate	928,410		712,817

	$	2,576,420	$	2,242,399


	Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value
(In thousands)	Balance Sheet Location	July 1, 2023		December 31, 2022		Balance Sheet Location	July 1, 2023		December 31, 2022

Commodity contracts - gains	Other current assets	$	74	$	3,746	Other current liabilities	$	305	$	—
Commodity contracts - losses	Other current assets	(9)		(1,483)		Other current liabilities	(814)		—

Total derivatives (1)		$	65	$	2,263		$	(509)	$	—


	For the Six Months Ended
(In thousands)	July 1, 2023		June 25, 2022

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


(In thousands)	July 1, 2023		December 31, 2022

Raw materials and supplies	$	158,302	$	133,189
Work-in-process	79,601		64,177
Finished goods	239,635		265,842
Valuation reserves	(11,809)		(14,289)

Inventories	$	465,729	$	448,919


	For the Quarter Ended				For the Six Months Ended
(In thousands)	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022

Pension benefits:

Interest cost	$	595	$	393	$	1,189	$	787
Expected return on plan assets	(842)		(967)		(1,683)		(1,934)
Amortization of net loss	—		243		—		487

Net periodic benefit income	$	(247)	$	(331)	$	(494)	$	(660)

Other benefits:
Service cost	$	50	$	72	$	101	$	144
Interest cost	128		103		256		206
Amortization of prior service cost (credit)	—		(79)		(1)		(197)
Amortization of net gain	(99)		(60)		(196)		(118)
Curtailment gain	—		$	(1,756)	—		$	(1,756)

Net periodic benefit cost (income)	$	79	$	(1,720)	$	160	$	(1,721)


	For the Quarter Ended July 1, 2023
(In thousands)	(Loss) Gain Recognized in AOCI (Effective Portion), Net of Tax		Classification Gains (Losses)	Gain Reclassified from AOCI (Effective Portion), Net of Tax

Cash flow hedges:
Commodity contracts	$	(1,961)	Cost of goods sold	$	(742)
Other	24		Other	—

Total	$	(1,937)	Total	$	(742)


	For the Six Months Ended July 1, 2023
(In thousands)	Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax		Classification Gains (Losses)	Gain Reclassified from AOCI (Effective Portion), Net of Tax

Cash flow hedges:
Commodity contracts	$	1,008	Cost of goods sold	$	(2,731)
Other	(2)		Other	—

Total	$	1,006	Total	$	(2,731)


	For the Six Months Ended July 1, 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	18,012		1,006		148		1,638		20,804
Amounts reclassified from AOCI	—		(2,731)		(147)		—		(2,878)

Net current-period other comprehensive income (loss)	18,012		(1,725)		1		1,638		17,926


Balance as of July 1, 2023	$	(51,226)	$	(239)	$	1,223	$	3,993	$	(46,249)


	Amount reclassified from AOCI
	For the Quarter Ended				For the Six Months Ended
(In thousands)	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022		Affected line item

Unrealized gains on derivative commodity contracts	$	(960)	$	(1,021)	$	(3,511)	$	(3,245)	Cost of goods sold

	218		229		780		731		Income tax expense

	$	(742)	$	(792)	$	(2,731)	$	(2,514)	Net of tax and noncontrolling interests

Amortization of net loss and prior service cost on employee benefit plans	$	(99)	$	104	$	(197)	$	172	Other income, net
	25		(15)		50		(20)		Income tax expense (benefit)

	$	(74)	$	89	$	(147)	$	152	Net of tax and noncontrolling interests


	For the Quarter Ended				Percent Change		For the Six Months Ended				Percent Change
(In thousands)	July 1, 2023		June 25, 2022		2023 vs. 2022		July 1, 2023		June 25, 2022		2023 vs. 2022

Net sales	$	896,984	$	1,150,042	(22.0)	%	$	1,868,176	$	2,160,044	(13.5)	%
Operating income	210,700		268,870		(21.6)		439,806		481,571		(8.7)
Net income	177,711		206,552		(14.0)		350,950		364,868		(3.8)


	Quarter-to- Date		Year-to- Date
Net selling price in core product lines	(4.6)	%	(2.8)	%
Unit sales volume in core product lines	(11.8)		(8.1)


Other	(5.6)		(2.6)

	(22.0)	%	(13.5)	%


(In thousands)	2023		2022

Increase (decrease) in:
Cash, cash equivalents, and restricted cash	$	308,085	$	126,939
Short-term investments	(90,812)		—
Property, plant, and equipment, net	6,978		2,577
Total debt	(92)		368
Working capital, net of cash and current debt	10,390		166,145

Net cash provided by operating activities	250,830		204,534
Net cash provided by (used in) investing activities	107,996		(14,078)
Net cash used in financing activities	(55,566)		(61,283)


	(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)


April 2 - April 29, 2023	1,641	$	63.80	—	12,759,795
April 30 - May 27, 2023	269,263	$	74.95	257,891	12,501,904
May 28 - July 1, 2023	185	$	83.57	—	12,501,904
Total	271,089			257,891


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.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
July 26, 2023			Chief Financial Officer and Treasurer
Date			(Principal Financial and Accounting Officer)


			/s/ Anthony J. Steinriede
July 26, 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: July 26, 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
July 26, 2023