Mueller Industries Inc 10-Q for FY2022 Q2

Mueller Industries Inc (MLI)

10-Q 2022-07-20 For: 2022-06-25

Added on April 09, 2026

About this 10-Q

Mueller Industries Inc filed this 10-Q on July 20, 2022, covering the quarter ended June 25, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 25, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.15B; up 13.6% from $1.01B a year earlier
Net income: $206.55M; up 89.8% from net income of $108.83M a year earlier
Diluted EPS: $3.65; up 90.1% from $1.92 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 June 25, 2022
			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	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 Six Months Ended
(In thousands, except per share data)	June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021

Net sales	$	1,150,042	$	1,012,592	$	2,160,044	$	1,830,740

Cost of goods sold	820,914		799,712		1,565,425		1,468,130
Depreciation and amortization	11,302		11,134		22,143		22,889
Selling, general, and administrative expense	48,956		43,932		96,412		89,367
Gain on sale of assets	—		—		(5,507)		—





Operating income	268,870		157,814		481,571		250,354

Interest expense	(147)		(1,866)		(305)		(6,335)
Redemption premium	—		(5,674)		—		(5,674)
Other income, net	2,203		683		2,983		1,260

Income before income taxes	270,926		150,957		484,249		239,605

Income tax expense	(68,290)		(39,006)		(122,489)		(60,767)
Income (loss) from unconsolidated affiliates, net of foreign tax	4,888		(1,019)		5,012		(2,668)

Consolidated net income	207,524		110,932		366,772		176,170

Net income attributable to noncontrolling interests	(972)		(2,100)		(1,904)		(4,231)

Net income attributable to Mueller Industries, Inc.	$	206,552	$	108,832	$	364,868	$	171,939

Weighted average shares for basic earnings per share	55,787		55,946		55,943		55,931
Effect of dilutive stock-based awards	741		866		776		811

Adjusted weighted average shares for diluted earnings per share	56,528		56,812		56,719		56,742

Basic earnings per share	$	3.70	$	1.95	$	6.52	$	3.07

Diluted earnings per share	$	3.65	$	1.92	$	6.43	$	3.03

Dividends per share	$	0.25	$	0.13	$	0.50	$	0.26


	For the Quarter Ended				For the Six Months Ended
(In thousands)	June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021

Consolidated net income	$	207,524	$	110,932	$	366,772	$	176,170

Other comprehensive (loss) income, net of tax:
Foreign currency translation	(17,120)		3,515		(15,907)		7,902
Net change with respect to derivative instruments and hedging activities, net of tax of $3,450, $961, $2,846, and $814	(11,886)		(3,337)		(9,795)		(2,844)
Net change in pension and postretirement obligation adjustments, net of tax of $31, $1, $(103), and $57	(299)		74		121		(17)
Attributable to unconsolidated affiliates, net of tax of $(656), $219, $(1,280), and $(358)	2,261		(753)		4,409		1,234

Total other comprehensive (loss) income, net	(27,044)		(501)		(21,172)		6,275

Consolidated comprehensive income	180,480		110,431		345,600		182,445
Comprehensive loss (income) attributable to noncontrolling interests	584		(1,333)		(315)		(3,885)

Comprehensive income attributable to Mueller Industries, Inc.	$	181,064	$	109,098	$	345,285	$	178,560


	(Unaudited)
(In thousands, except share data)	June 25, 2022		December 25, 2021
Assets
Current assets:
Cash and cash equivalents	$	202,501	$	87,924
Accounts receivable, less allowance for doubtful accounts of $2,577 in 2022 and $2,590 in 2021	611,578		471,859
Inventories	475,951		430,244
Other current assets	45,726		28,976

Total current assets	1,335,756		1,019,003

Property, plant, and equipment, net	388,139		385,562
Operating lease right-of-use assets	22,870		23,510
Goodwill, net	162,630		171,330
Intangible assets, net	60,508		61,714
Investments in unconsolidated affiliates	70,225		61,133
Other assets	6,844		6,684

Total assets	$	2,046,972	$	1,728,936

Liabilities
Current liabilities:
Current portion of debt	$	1,112	$	811
Accounts payable	208,869		180,793
Accrued wages and other employee costs	43,586		49,629
Current portion of operating lease liabilities	5,725		6,015
Other current liabilities	159,479		145,191

Total current liabilities	418,771		382,439

Long-term debt, less current portion	1,131		1,064
Pension liabilities	4,684		5,572
Postretirement benefits other than pensions	11,924		11,961
Environmental reserves	16,300		17,678
Deferred income taxes	11,712		14,347
Noncurrent operating lease liabilities	15,899		17,099
Other noncurrent liabilities	20,928		21,813

Total liabilities	501,349		471,973

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 56,730,133 in 2022 and 57,295,961 in 2021	802		802
Additional paid-in capital	291,228		286,208
Retained earnings	1,794,811		1,458,489
Accumulated other comprehensive loss	(72,930)		(53,347)
Treasury common stock, at cost	(503,448)		(470,034)

Total Mueller Industries, Inc. stockholders' equity	1,510,463		1,222,118
Noncontrolling interests	35,160		34,845

Total equity	1,545,623		1,256,963

Commitments and contingencies	—		—

Total liabilities and equity	$	2,046,972	$	1,728,936


	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)

Other income, net									2,203

Income before income taxes									$	270,926


	For the Quarter Ended June 26, 2021
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	711,616	$	180,040	$	131,708	$	(10,772)	$	1,012,592

Cost of goods sold	558,278		155,399		96,303		(10,268)		799,712
Depreciation and amortization	5,515		1,694		2,753		1,172		11,134
Selling, general, and administrative expense	23,315		2,448		7,280		10,889		43,932




Operating income	124,508		20,499		25,372		(12,565)		157,814

Interest expense									(1,866)
Redemption premium									(5,674)
Other income, net									683

Income before income taxes									$	150,957


	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)

Other income, net									2,983

Income before income taxes									$	484,249


	For the Six Months Ended June 26, 2021
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	1,259,364	$	344,892	$	242,734	$	(16,250)	$	1,830,740

Cost of goods sold	1,008,632		296,290		180,385		(17,177)		1,468,130
Depreciation and amortization	11,725		3,437		5,382		2,345		22,889
Selling, general, and administrative expense	47,401		5,819		14,260		21,887		89,367




Operating income	191,606		39,346		42,707		(23,305)		250,354

Interest expense									(6,335)
Redemption premium									(5,674)
Other income, net									1,260

Income before income taxes									$	239,605


(In thousands)	June 25, 2022		December 25, 2021

Segment assets:
Piping Systems	$	1,298,116	$	1,160,272
Industrial Metals	195,907		173,290
Climate	288,776		250,107
General Corporate	264,173		145,267

	$	2,046,972	$	1,728,936


	Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value
(In thousands)	Balance Sheet Location	June 25, 2022		December 25, 2021		Balance Sheet Location	June 25, 2022		December 25, 2021

Commodity contracts - gains	Other current assets	$	4,214	$	1,150	Other current liabilities	$	—	$	—
Commodity contracts - losses	Other current assets	—		(46)		Other current liabilities	(12,864)		(353)

Total derivatives (1)		$	4,214	$	1,104		$	(12,864)	$	(353)


	For the Six Months Ended
(In thousands)	June 25, 2022		June 26, 2021

Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.	(27,968)		(14,546)

Repurchase of common stock	(33,469)		—

Issuance of debt	—		425,000
Repayments of debt	(111)		(400,497)
Issuance of debt by consolidated joint ventures, net	360		463
Net cash (used) received to settle stock-based awards	(95)		414
Debt issuance costs	—		(1,111)

Net cash (used in) provided by financing activities	(61,283)		9,723

Effect of exchange rate changes on cash	(2,234)		987

Increase (decrease) in cash, cash equivalents, and restricted cash	126,939		(1,654)
Cash, cash equivalents, and restricted cash at the beginning of the period	90,376		127,376

Cash, cash equivalents, and restricted cash at the end of the period	$	217,315	$	125,722


(In thousands)	June 25, 2022		December 25, 2021

Raw materials and supplies	$	149,270	$	130,133
Work-in-process	95,722		64,989
Finished goods	240,985		245,226
Valuation reserves	(10,026)		(10,104)

Inventories	$	475,951	$	430,244


	For the Quarter Ended				For the Six Months Ended
(In thousands)	June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021

Pension benefits:

Interest cost	$	393	$	313	$	787	$	626
Expected return on plan assets	(967)		(904)		(1,934)		(1,808)
Amortization of net loss	243		379		487		757

Net periodic benefit income	$	(331)	$	(212)	$	(660)	$	(425)

Other benefits:
Service cost	$	72	$	65	$	144	$	130
Interest cost	103		87		206		174
Amortization of prior service credit	(79)		(117)		(197)		(235)
Amortization of net gain	(60)		(33)		(118)		(64)
Curtailment gain	(1,756)		$	—	(1,756)		$	—

Net periodic benefit (income) cost	$	(1,720)	$	2	$	(1,721)	$	5


	For the Quarter Ended June 25, 2022
(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	$	(11,107)	Cost of goods sold	$	(792)
Other	13		Other	—

Total	$	(11,094)	Total	$	(792)


	For the Quarter Ended June 26, 2021
(In thousands)	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	$	(1,475)	Cost of goods sold	$	(1,853)
Other	(9)		Other	—

Total	$	(1,484)	Total	$	(1,853)


	For the Six Months Ended June 26, 2021
(In thousands)	Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax		Classification Gains (Losses)	(Gain) Loss Reclassified from AOCI (Effective Portion), Net of Tax

Cash flow hedges:
Commodity contracts	$	16	Cost of goods sold	$	(2,849)
Other	(12)		Other	1

Total	$	4	Total	$	(2,848)


	For the Six Months Ended June 25, 2022
(In thousands)	Cumulative Translation Adjustment		Unrealized Gain (Loss) on Derivatives		Pension/OPEB Liability Adjustment		Attributable to Unconsol. Affiliates		Total

Balance as of December 25, 2021	$	(42,303)	$	803	$	(11,500)	$	(347)	$	(53,347)

Other comprehensive (loss) income before reclassifications	(14,318)		(7,281)		(31)		4,409		(17,221)
Amounts reclassified from AOCI	—		(2,514)		152		—		(2,362)

Net current-period other comprehensive (loss) income	(14,318)		(9,795)		121		4,409		(19,583)


Balance as of June 25, 2022	$	(56,621)	$	(8,992)	$	(11,379)	$	4,062	$	(72,930)


	Amount reclassified from AOCI
	For the Quarter Ended				For the Six Months Ended
(In thousands)	June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021		Affected line item

Unrealized gains on derivative commodity contracts	$	(1,021)	$	(2,390)	$	(3,245)	$	(3,689)	Cost of goods sold

	229		537		731		841		Income tax expense

	$	(792)	$	(1,853)	$	(2,514)	$	(2,848)	Net of tax and noncontrolling interests

Amortization of net loss and prior service cost on employee benefit plans	$	104	$	229	$	172	$	458	Other income, net
	(15)		(38)		(20)		(75)		Income tax benefit

	$	89	$	191	$	152	$	383	Net of tax and noncontrolling interests


	For the Quarter Ended				Percent Change		For the Six Months Ended				Percent Change
(In thousands)	June 25, 2022		June 26, 2021		2022 vs. 2021		June 25, 2022		June 26, 2021		2022 vs. 2021

Net sales	$	1,150,042	$	1,012,592	13.6	%	$	2,160,044	$	1,830,740	18.0	%
Operating income	268,870		157,814		70.4		481,571		250,354		92.4
Net income	206,552		108,832		89.8		364,868		171,939		112.2


	Quarter-to- Date		Year-to- Date
Net selling price in core product lines	11.4	%	15.2	%
Unit sales volume in core product lines	(3.8)		(3.0)
Acquisitions	1.1		2.2
Dispositions	(3.1)		(3.2)
Other	8.0		6.8

	13.6	%	18.0	%


(In thousands)	2022		2021

Increase (decrease) in:
Cash, cash equivalents, and restricted cash	$	126,939	$	(1,654)
Property, plant, and equipment, net	2,577		8,674
Total debt	368		29,548
Working capital, net of cash and current debt	166,145		207,387

Net cash provided by operating activities	204,534		9,280
Net cash used in investing activities	(14,078)		(21,644)
Net cash (used in) provided by financing activities	(61,283)		9,723


	(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)


March 27, 2022 - April 23, 2022	341,129	$	53.67	341,129	13,065,342
April 24, 2022 - May 21, 2022	23,502	$	53.07	400	13,064,942
May 22, 2022 - June 25, 2022	216,736	$	51.53	216,736	12,848,206
Total	581,367			558,265


10.1			Change in Control Agreement, effective July 18 , 2022 by and between the Registrant and Steffen Sigloch .

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.

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase

101.INS			Inline XBRL Instance Document

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
July 20, 2022			Chief Financial Officer and Treasurer
Date			(Principal Financial and Accounting Officer)


			/s/ Anthony J. Steinriede
July 20, 2022			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 20, 2022
			/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 20, 2022