Mueller Industries Inc 10-Q for FY2021 Q3

Mueller Industries Inc (MLI)

10-Q 2021-10-20 For: 2021-09-25

Added on April 09, 2026

About this 10-Q

Mueller Industries Inc filed this 10-Q on October 20, 2021, covering the quarter ended September 25, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 25, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $982.25M; up 58.7% from $619.11M a year earlier
Net income: $170.98M; up 300.4% from net income of $42.7M a year earlier
Diluted EPS: $3.01; up 296.1% from $0.76 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 25, 2021
			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 Nine Months Ended
(In thousands, except per share data)	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020

Net sales	$	982,248	$	619,105	$	2,812,988	$	1,722,192

Cost of goods sold	744,265		500,780		2,212,395		1,412,654
Depreciation and amortization	10,868		10,752		33,757		32,888
Selling, general, and administrative expense	48,524		38,346		137,891		117,749
Gain on sale of businesses	(54,759)		—		(54,759)		—


Litigation settlement, net	—		—		—		(21,933)


Operating income	233,350		69,227		483,704		180,834

Interest expense	(1,116)		(4,885)		(7,451)		(15,237)
Redemption premium	—		—		(5,674)		—
Other (expense) income, net	(2,548)		522		(1,288)		3,634

Income before income taxes	229,686		64,864		469,291		169,231

Income tax expense	(60,229)		(15,450)		(120,996)		(42,623)
Income (loss) from unconsolidated affiliates, net of foreign tax	2,799		(5,457)		131		(20,213)

Consolidated net income	172,256		43,957		348,426		106,395

Net income attributable to noncontrolling interests	(1,276)		(1,255)		(5,507)		(3,322)

Net income attributable to Mueller Industries, Inc.	$	170,980	$	42,702	$	342,919	$	103,073

Weighted average shares for basic earnings per share	56,077		55,816		55,979		55,805
Effect of dilutive stock-based awards	731		550		784		534

Adjusted weighted average shares for diluted earnings per share	56,808		56,366		56,763		56,339

Basic earnings per share	$	3.05	$	0.77	$	6.13	$	1.85

Diluted earnings per share	$	3.01	$	0.76	$	6.04	$	1.83

Dividends per share	$	0.13	$	0.10	$	0.39	$	0.30


	For the Quarter Ended				For the Nine Months Ended
(In thousands)	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020

Consolidated net income	$	172,256	$	43,957	$	348,426	$	106,395

Other comprehensive (loss) income, net of tax:
Foreign currency translation	(8,569)		9,320		(667)		(11,514)
Net change with respect to derivative instruments and hedging activities, net of tax of $(610), $(43), $204, and $(53)	2,122		151		(722)		192
Net change in pension and postretirement obligation adjustments, net of tax of $(137), $92, $(80), and $224	493		(170)		476		(715)
Attributable to unconsolidated affiliates, net of tax of $(284), $(99), $(642), and $163	977		339		2,211		(564)

Total other comprehensive (loss) income, net	(4,977)		9,640		1,298		(12,601)

Consolidated comprehensive income	167,279		53,597		349,724		93,794
Comprehensive income attributable to noncontrolling interests	(192)		(2,207)		(4,077)		(3,062)

Comprehensive income attributable to Mueller Industries, Inc.	$	167,087	$	51,390	$	345,647	$	90,732


	(Unaudited)
(In thousands, except share data)	September 25, 2021		December 26, 2020
Assets
Current assets:
Cash and cash equivalents	$	104,789	$	119,075
Accounts receivable, less allowance for doubtful accounts of $2,687 in 2021 and $1,538 in 2020	493,960		357,532
Inventories	405,590		315,002
Other current assets	33,604		33,752

Total current assets	1,037,943		825,361

Property, plant, and equipment, net	370,222		376,572
Operating lease right-of-use assets	24,147		29,301
Goodwill, net	159,988		167,764
Intangible assets, net	63,579		77,207
Investments in unconsolidated affiliates	65,000		37,976
Other assets	7,658		14,387

Total assets	$	1,728,537	$	1,528,568

Liabilities
Current liabilities:
Current portion of debt	$	1,110	$	41,283
Accounts payable	180,509		147,741
Accrued wages and other employee costs	49,932		46,299
Current portion of operating lease liabilities	6,193		6,259
Other current liabilities	142,354		98,061

Total current liabilities	380,098		339,643

Long-term debt, less current portion	121,012		286,593
Pension liabilities	10,901		13,552
Postretirement benefits other than pensions	13,231		13,289
Environmental reserves	20,902		21,256
Deferred income taxes	13,393		16,842
Noncurrent operating lease liabilities	17,399		21,602
Other noncurrent liabilities	25,369		14,731

Total liabilities	602,305		727,508

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 57,367,709 in 2021 and 57,087,432 in 2020	802		802
Additional paid-in capital	283,285		280,051
Retained earnings	1,340,337		1,019,694
Accumulated other comprehensive loss	(52,155)		(54,883)
Treasury common stock, at cost	(464,707)		(468,919)

Total Mueller Industries, Inc. stockholders' equity	1,107,562		776,745
Noncontrolling interests	18,670		24,315

Total equity	1,126,232		801,060

Commitments and contingencies	—		—

Total liabilities and equity	$	1,728,537	$	1,528,568


	For the Quarter Ended September 25, 2021
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	688,200	$	182,245	$	122,252	$	(10,449)	$	982,248

Cost of goods sold	506,703		158,822		89,175		(10,435)		744,265
Depreciation and amortization	5,547		1,661		2,484		1,176		10,868
Selling, general, and administrative expense	23,751		2,710		9,521		12,542		48,524
Gain on sale of businesses	—		—		—		(54,759)		(54,759)





Operating income	152,199		19,052		21,072		41,027		233,350

Interest expense									(1,116)

Other (expense) income, net									(2,548)

Income before income taxes									$	229,686


	For the Quarter Ended September 26, 2020
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	409,414	$	118,831	$	97,604	$	(6,744)	$	619,105

Cost of goods sold	339,904		95,717		70,450		(5,291)		500,780
Depreciation and amortization	5,362		1,774		2,547		1,069		10,752
Selling, general, and administrative expense	19,285		2,992		6,451		9,618		38,346




Operating income	44,863		18,348		18,156		(12,140)		69,227

Interest expense									(4,885)
Other income, net									522

Income before income taxes									$	64,864


	For the Nine Months Ended September 25, 2021
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	1,947,564	$	527,137	$	364,986	$	(26,699)	$	2,812,988

Cost of goods sold	1,515,335		455,112		269,560		(27,612)		2,212,395
Depreciation and amortization	17,272		5,098		7,866		3,521		33,757
Selling, general, and administrative expense	71,152		8,529		23,781		34,429		137,891
Gain on sale of businesses	—		—		—		(54,759)		(54,759)





Operating income	343,805		58,398		63,779		17,722		483,704

Interest expense									(7,451)
Redemption premium									(5,674)
Other income, net									(1,288)

Income before income taxes									$	469,291


	For the Nine Months Ended September 26, 2020
( In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	1,128,467	$	338,652	$	276,983	$	(21,910)	$	1,722,192

Cost of goods sold	931,339		285,788		206,083		(10,556)		1,412,654
Depreciation and amortization	16,517		5,771		7,770		2,830		32,888
Selling, general, and administrative expense	57,998		8,690		19,607		31,454		117,749

Litigation settlement, net	—		—		—		(21,933)		(21,933)


Operating income	122,613		38,403		43,523		(23,705)		180,834

Interest expense									(15,237)
Other income, net									3,634

Income before income taxes									$	169,231


(In thousands)	September 25, 2021		December 26, 2020

Segment assets:
Piping Systems	$	1,142,523	$	977,937
Industrial Metals	186,040		152,683
Climate	244,603		258,668
General Corporate	155,371		139,280

	$	1,728,537	$	1,528,568


	Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value
(In thousands)	Balance Sheet Location	September 25, 2021		December 26, 2020		Balance Sheet Location	September 25, 2021		December 26, 2020

Commodity contracts - gains	Other current assets	$	671	$	1,213	Other current liabilities	$	27	$	68
Commodity contracts - losses	Other current assets	(559)		(8)		Other current liabilities	(43)		(5,863)

Total derivatives (1)		$	112	$	1,205		$	(16)	$	(5,795)


	For the Nine Months Ended
(In thousands)	September 25, 2021		September 26, 2020

Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.	(21,846)		(16,754)
Dividends paid to noncontrolling interests	(9,722)		—
Repurchase of common stock	—		(5,574)
Payment of contingent consideration	(1,250)		(7,000)
Issuance of debt	475,000		150,027
Repayments of debt	(680,572)		(186,492)
Repayment of debt by consolidated joint ventures, net	(4,865)		(299)
Net cash received (used) to settle stock-based awards	219		(160)
Debt issuance costs	(1,111)		—

Net cash used in financing activities	(244,147)		(66,252)

Effect of exchange rate changes on cash	(377)		(3,294)

(Decrease) increase in cash, cash equivalents, and restricted cash	(19,225)		16,337
Cash, cash equivalents, and restricted cash at the beginning of the period	127,376		98,042

Cash, cash equivalents, and restricted cash at the end of the period	$	108,151	$	114,379


(In thousands)	September 25, 2021		December 26, 2020

Raw materials and supplies	$	133,109	$	85,927
Work-in-process	66,574		49,361
Finished goods	215,007		186,785
Valuation reserves	(9,100)		(7,071)

Inventories	$	405,590	$	315,002


	For the Quarter Ended				For the Nine Months Ended
(In thousands)	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020

Pension benefits:

Interest cost	$	313	$	862	$	939	$	2,586
Expected return on plan assets	(903)		(1,496)		(2,711)		(4,486)
Amortization of net loss	378		494		1,135		1,482

Net periodic benefit income	$	(212)	$	(140)	$	(637)	$	(418)

Other benefits:
Service cost	$	64	$	59	$	194	$	176
Interest cost	87		106		261		321
Amortization of prior service credit	(118)		(117)		(353)		(401)
Amortization of net gain	(32)		(50)		(96)		(150)
Curtailment gain	—		$	—	—		$	(2,591)

Net periodic benefit cost (income)	$	1	$	(2)	$	6	$	(2,645)


	For the Quarter Ended September 25, 2021
(In thousands)	Gain Recognized in AOCI (Effective Portion), Net of Tax		Classification Gains (Losses)	Loss (Gain) Reclassified from AOCI (Effective Portion), Net of Tax

Cash flow hedges:
Commodity contracts	$	845	Cost of goods sold	$	1,265
Other	13		Other	(1)

Total	$	858	Total	$	1,264


	For the Quarter Ended September 26, 2020
(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	$	337	Cost of goods sold	$	(180)
Other	(6)		Other	—

Total	$	331	Total	$	(180)


	For the Nine Months Ended September 26, 2020
(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	$	(5,084)	Cost of goods sold	$	5,273
Other	2		Other	1

Total	$	(5,082)	Total	$	5,274


	For the Nine Months Ended September 25, 2021
(In thousands)	Cumulative Translation Adjustment		Unrealized Gain (Loss) on Derivatives		Pension/OPEB Liability Adjustment		Attributable to Unconsol. Affiliates		Total

Balance as of December 26, 2020	$	(37,339)	$	984	$	(17,203)	$	(1,325)	$	(54,883)

Other comprehensive income (loss) before reclassifications	763		862		(98)		2,211		3,738
Amounts reclassified from AOCI	—		(1,584)		574		—		(1,010)

Net current-period other comprehensive income (loss)	763		(722)		476		2,211		2,728


Balance as of September 25, 2021	$	(36,576)	$	262	$	(16,727)	$	886	$	(52,155)


	Amount reclassified from AOCI
	For the Quarter Ended				For the Nine Months Ended
(In thousands)	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020		Affected line item

Unrealized losses (gains) on derivative commodity contracts	$	1,077	$	(248)	$	(2,612)	$	6,581	Cost of goods sold

	187		68		1,028		(1,307)		Income tax expense (benefit)

	$	1,264	$	(180)	$	(1,584)	$	5,274	Net of tax and noncontrolling interests

Amortization of net loss and prior service cost on employee benefit plans	$	228	$	327	$	686	$	931	Other income, net
	(37)		(63)		(112)		(178)		Income tax benefit

	$	191	$	264	$	574	$	753	Net of tax and noncontrolling interests


	For the Quarter Ended				Percent Change		For the Nine Months Ended				Percent Change
(In thousands)	September 25, 2021		September 26, 2020		2021 vs. 2020		September 25, 2021		September 26, 2020		2021 vs. 2020

Net sales	$	982,248	$	619,105	58.7	%	$	2,812,988	$	1,722,192	63.3	%
Operating income	233,350		69,227		237.1		483,704		180,834		167.5
Net income	170,980		42,702		300.4		342,919		103,073		232.7


	Quarter-to- Date		Year-to- Date
Net selling price in core product lines	42.7	%	39.6	%
Unit sales volume in core product lines	5.5		9.0
Acquisitions	7.5		9.5
Dispositions	(1.4)		—
Other	4.4		5.2

	58.7	%	63.3	%


(In thousands)	2021		2020

Increase (decrease) in:
Cash, cash equivalents, and restricted cash	$	(19,225)	$	16,337
Property, plant, and equipment, net	(6,350)		5,608
Total debt	(205,754)		(36,598)
Working capital, net of cash and current debt	146,240		1,086

Net cash provided by operating activities	181,481		196,878
Net cash provided by (used in) investing activities	43,818		(110,995)
Net cash used in financing activities	(244,147)		(66,252)


	(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)


June 27, 2021 - July 24, 2021	3,507	$	39.11	—	13,575,058
July 25, 2021 - August 21, 2021	1,666	$	36.24	—	13,575,058
August 22, 2021 - September 25, 2021	1,000	$	20.37	—	13,575,058
Total	6,173			—


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
October 20, 2021			Chief Financial Officer and Treasurer
Date			(Principal Financial and Accounting Officer)


			/s/ Anthony J. Steinriede
October 20, 2021			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 20, 2021
			/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 20, 2021