Mueller Industries Inc 10-Q for FY2022 Q3

Mueller Industries Inc (MLI)

10-Q 2022-10-19 For: 2022-09-24

Added on April 09, 2026

About this 10-Q

Mueller Industries Inc filed this 10-Q on October 19, 2022, covering the quarter ended September 24, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 24, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $944.83M; down 3.8% from $982.25M a year earlier
Net income: $154.54M; down 9.6% from net income of $170.98M a year earlier
Diluted EPS: $2.74; down 9.0% from $3.01 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 24, 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 Nine Months Ended
(In thousands, except per share data)	September 24, 2022		September 25, 2021		September 24, 2022		September 25, 2021

Net sales	$	944,830	$	982,248	$	3,104,874	$	2,812,988

Cost of goods sold	678,637		744,265		2,244,062		2,212,395
Depreciation and amortization	10,850		10,868		32,993		33,757
Selling, general, and administrative expense	50,178		48,524		146,590		137,891
Gain on sale of assets	—		—		(5,507)		—
Gain on sale of businesses	—		(54,759)		—		(54,759)




Operating income	205,165		233,350		686,736		483,704

Interest expense	(361)		(1,116)		(666)		(7,451)
Redemption premium	—		—		—		(5,674)
Other income (expense), net	1,030		(2,548)		4,013		(1,288)

Income before income taxes	205,834		229,686		690,083		469,291

Income tax expense	(51,035)		(60,229)		(173,524)		(120,996)
Income from unconsolidated affiliates, net of foreign tax	1,014		2,799		6,026		131

Consolidated net income	155,813		172,256		522,585		348,426

Net income attributable to noncontrolling interests	(1,271)		(1,276)		(3,175)		(5,507)

Net income attributable to Mueller Industries, Inc.	$	154,542	$	170,980	$	519,410	$	342,919

Weighted average shares for basic earnings per share	55,589		56,077		55,825		55,979
Effect of dilutive stock-based awards	835		731		796		784

Adjusted weighted average shares for diluted earnings per share	56,424		56,808		56,621		56,763

Basic earnings per share	$	2.78	$	3.05	$	9.30	$	6.13

Diluted earnings per share	$	2.74	$	3.01	$	9.17	$	6.04

Dividends per share	$	0.25	$	0.13	$	0.75	$	0.39


	For the Quarter Ended				For the Nine Months Ended
(In thousands)	September 24, 2022		September 25, 2021		September 24, 2022		September 25, 2021

Consolidated net income	$	155,813	$	172,256	$	522,585	$	348,426

Other comprehensive (loss) income, net of tax:
Foreign currency translation	(28,179)		(8,569)		(44,086)		(667)
Net change with respect to derivative instruments and hedging activities, net of tax of $352, $(610), $3,198, and $204	(1,179)		2,122		(10,974)		(722)
Net change in pension and postretirement obligation adjustments, net of tax of $(573), $(137), $(676), and $(80)	1,608		493		1,729		476
Attributable to unconsolidated affiliates, net of tax of $56, $(284), $(1,224), and $(642)	(191)		977		4,218		2,211

Total other comprehensive (loss) income, net	(27,941)		(4,977)		(49,113)		1,298

Consolidated comprehensive income	127,872		167,279		473,472		349,724
Comprehensive loss (income) attributable to noncontrolling interests	148		(192)		(167)		(4,077)

Comprehensive income attributable to Mueller Industries, Inc.	$	128,020	$	167,087	$	473,305	$	345,647


	(Unaudited)
(In thousands, except share data)	September 24, 2022		December 25, 2021
Assets
Current assets:
Cash and cash equivalents	$	483,496	$	87,924
Accounts receivable, less allowance for doubtful accounts of $2,691 in 2022 and $2,590 in 2021	441,287		471,859
Inventories	454,511		430,244
Other current assets	41,630		28,976

Total current assets	1,420,924		1,019,003

Property, plant, and equipment, net	374,160		385,562
Operating lease right-of-use assets	24,297		23,510
Goodwill, net	156,938		171,330
Intangible assets, net	55,540		61,714
Investments in unconsolidated affiliates	70,439		61,133
Other assets	7,453		6,684

Total assets	$	2,109,751	$	1,728,936

Liabilities
Current liabilities:
Current portion of debt	$	1,123	$	811
Accounts payable	166,978		180,793
Accrued wages and other employee costs	54,252		49,629
Current portion of operating lease liabilities	5,271		6,015
Other current liabilities	147,323		145,191

Total current liabilities	374,947		382,439

Long-term debt, less current portion	1,184		1,064
Pension liabilities	5,419		5,572
Postretirement benefits other than pensions	11,786		11,961
Environmental reserves	15,612		17,678
Deferred income taxes	11,428		14,347
Noncurrent operating lease liabilities	18,431		17,099
Other noncurrent liabilities	16,295		21,813

Total liabilities	455,102		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 56,863,688 in 2022 and 57,295,961 in 2021	802		802
Additional paid-in capital	294,402		286,208
Retained earnings	1,935,137		1,458,489
Accumulated other comprehensive loss	(99,452)		(53,347)
Treasury common stock, at cost	(505,647)		(470,034)

Total Mueller Industries, Inc. stockholders' equity	1,625,242		1,222,118
Noncontrolling interests	29,407		34,845

Total equity	1,654,649		1,256,963

Commitments and contingencies	—		—

Total liabilities and equity	$	2,109,751	$	1,728,936


	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)

Other income (expense), net									1,030

Income before income taxes									$	205,834


	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 loss, net									(2,548)

Income before income taxes									$	229,686


	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)

Other income, net									4,013

Income before income taxes									$	690,083


	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 loss, net									(1,288)

Income before income taxes									$	469,291


(In thousands)	September 24, 2022		December 25, 2021

Segment assets:
Piping Systems	$	1,169,693	$	1,160,272
Industrial Metals	169,385		173,290
Climate	287,387		250,107
General Corporate	483,286		145,267

	$	2,109,751	$	1,728,936


	Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value
(In thousands)	Balance Sheet Location	September 24, 2022		December 25, 2021		Balance Sheet Location	September 24, 2022		December 25, 2021

Commodity contracts - gains	Other current assets	$	1,774	$	1,150	Other current liabilities	$	31	$	—
Commodity contracts - losses	Other current assets	—		(46)		Other current liabilities	(13,529)		(353)

Total derivatives (1)		$	1,774	$	1,104		$	(13,498)	$	(353)


	For the Nine Months Ended
(In thousands)	September 24, 2022		September 25, 2021

Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.	(41,876)		(21,846)
Dividends paid to noncontrolling interests	—		(9,722)
Repurchase of common stock	(38,054)		—
Payment of contingent consideration	—		(1,250)
Issuance of debt	—		475,000
Repayments of debt	(148)		(680,572)
Issuance (repayment) of debt by consolidated joint ventures, net	406		(4,865)
Net cash (used) received to settle stock-based awards	(1,619)		219
Debt issuance costs	—		(1,111)

Net cash used in financing activities	(81,291)		(244,147)

Effect of exchange rate changes on cash	(10,310)		(377)

Increase (decrease) in cash, cash equivalents, and restricted cash	409,042		(19,225)
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	$	499,418	$	108,151


(In thousands)	September 24, 2022		December 25, 2021

Raw materials and supplies	$	157,497	$	130,133
Work-in-process	61,080		64,989
Finished goods	246,220		245,226
Valuation reserves	(10,286)		(10,104)

Inventories	$	454,511	$	430,244


	For the Quarter Ended				For the Nine Months Ended
(In thousands)	September 24, 2022		September 25, 2021		September 24, 2022		September 25, 2021

Pension benefits:

Interest cost	$	394	$	313	$	1,181	$	939
Expected return on plan assets	(967)		(903)		(2,901)		(2,711)
Amortization of net loss	244		378		731		1,135

Net periodic benefit income	$	(329)	$	(212)	$	(989)	$	(637)

Other benefits:
Service cost	$	72	$	64	$	216	$	194
Interest cost	104		87		310		261
Amortization of prior service credit	(1)		(118)		(198)		(353)
Amortization of net gain	(59)		(32)		(177)		(96)
Curtailment gain	—		$	—	(1,756)		$	—

Net periodic benefit cost (income)	$	116	$	1	$	(1,605)	$	6


	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 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 Nine Months Ended September 24, 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	(41,078)		(13,227)		1,424		4,218		(48,663)
Amounts reclassified from AOCI	—		2,253		305		—		2,558

Net current-period other comprehensive (loss) income	(41,078)		(10,974)		1,729		4,218		(46,105)


Balance as of September 24, 2022	$	(83,381)	$	(10,171)	$	(9,771)	$	3,871	$	(99,452)


	Amount reclassified from AOCI
	For the Quarter Ended				For the Nine Months Ended
(In thousands)	September 24, 2022		September 25, 2021		September 24, 2022		September 25, 2021		Affected line item

Unrealized losses (gains) on derivative commodity contracts	$	6,151	$	1,077	$	2,906	$	(2,612)	Cost of goods sold

	(1,384)		187		(653)		1,028		Income tax (benefit) expense

	$	4,767	$	1,264	$	2,253	$	(1,584)	Net of tax and noncontrolling interests

Amortization of net loss and prior service cost on employee benefit plans	$	184	$	228	$	356	$	686	Other income, net
	(31)		(37)		(51)		(112)		Income tax benefit

	$	153	$	191	$	305	$	574	Net of tax and noncontrolling interests


	For the Quarter Ended				Percent Change		For the Nine Months Ended				Percent Change
(In thousands)	September 24, 2022		September 25, 2021		2022 vs. 2021		September 24, 2022		September 25, 2021		2022 vs. 2021

Net sales	$	944,830	$	982,248	(3.8)	%	$	3,104,874	$	2,812,988	10.4	%
Operating income	205,165		233,350		(12.1)		686,736		483,704		42.0
Net income	154,542		170,980		(9.6)		519,410		342,919		51.5


	Quarter-to- Date		Year-to- Date
Net selling price in core product lines	(0.4)	%	9.1	%
Unit sales volume in core product lines	(9.5)		(5.3)
Acquisitions	1.2		1.2
Dispositions	(2.1)		(2.8)
Other	7.0		8.2

	(3.8)	%	10.4	%


(In thousands)	2022		2021

Increase (decrease) in:
Cash, cash equivalents, and restricted cash	$	409,042	$	(19,225)
Property, plant, and equipment, net	(11,402)		(6,350)
Total debt	432		(205,754)
Working capital, net of cash and current debt	14,153		146,240

Net cash provided by operating activities	516,912		181,481
Net cash (used in) provided by investing activities	(16,269)		43,818
Net cash used in financing activities	(81,291)		(244,147)


	(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 26, 2022 - July 23, 2022	89,035	$	51.93	88,411	12,759,795
July 24, 2022 - August 20, 2022	52,241	$	65.94	—	12,759,795
August 21, 2022 - September 24, 2022	4,333	$	44.97	—	12,759,795
Total	145,609			88,411


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 19, 2022			Chief Financial Officer and Treasurer
Date			(Principal Financial and Accounting Officer)


			/s/ Anthony J. Steinriede
October 19, 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: October 19, 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
October 19, 2022