Mueller Industries Inc 10-Q for FY2021 Q2

Mueller Industries Inc (MLI)

10-Q 2021-07-21 For: 2021-06-26

Added on April 09, 2026

About this 10-Q

Mueller Industries Inc filed this 10-Q on July 21, 2021, covering the quarter ended June 26, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 26, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.01B; up 102.5% from $500.17M a year earlier
Net income: $108.83M; up 289.3% from net income of $27.96M a year earlier
Diluted EPS: $1.92; up 284.0% from $0.50 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 26, 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	7

	f.) Notes to Condensed Consolidated Financial Statements	9

	Item 2. – Management's Discussion and Analysis of Financial Condition and Results of Operations	25

	Item 3. – Quantitative and Qualitative Disclosures About Market Risk	34

	Item 4. – Controls and Procedures	36

Part II. Other Information

	Item 1. – Legal Proceedings	36

	Item 1A – Risk Factors	36

	Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds	37

	Item 6. – Exhibits	38

Signatures		39


	For the Quarter Ended				For the Six Months Ended
(In thousands, except per share data)	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020

Net sales	$	1,012,592	$	500,168	$	1,830,740	$	1,103,087

Cost of goods sold	799,712		403,159		1,468,130		911,874
Depreciation and amortization	11,134		11,097		22,889		22,136
Selling, general, and administrative expense	43,932		33,616		89,367		76,368
Asset impairments	—		—		—		3,035
Litigation settlement, net	—		—		—		(21,933)


Operating income	157,814		52,296		250,354		111,607

Interest expense	(1,866)		(4,973)		(6,335)		(10,352)
Redemption premium	(5,674)		—		(5,674)		—
Other income, net	683		2,834		1,260		3,112

Income before income taxes	150,957		50,157		239,605		104,367

Income tax expense	(39,006)		(13,029)		(60,767)		(27,173)
Loss from unconsolidated affiliates, net of foreign tax	(1,019)		(8,641)		(2,668)		(14,756)

Consolidated net income	110,932		28,487		176,170		62,438

Net income attributable to noncontrolling interests	(2,100)		(531)		(4,231)		(2,067)

Net income attributable to Mueller Industries, Inc.	$	108,832	$	27,956	$	171,939	$	60,371

Weighted average shares for basic earnings per share	55,946		55,723		55,931		55,799
Effect of dilutive stock-based awards	866		471		811		527

Adjusted weighted average shares for diluted earnings per share	56,812		56,194		56,742		56,326

Basic earnings per share	$	1.95	$	0.50	$	3.07	$	1.08

Diluted earnings per share	$	1.92	$	0.50	$	3.03	$	1.07

Dividends per share	$	0.13	$	0.10	$	0.26	$	0.20


	For the Quarter Ended				For the Six Months Ended
(In thousands)	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020

Consolidated net income	$	110,932	$	28,487	$	176,170	$	62,438

Other comprehensive (loss) income, net of tax:
Foreign currency translation	3,515		421		7,902		(20,834)
Net change with respect to derivative instruments and hedging activities, net of tax of $961, $(970), $814, and $(10)	(3,337)		3,398		(2,844)		41
Net change in pension and postretirement obligation adjustments, net of tax of $1, $375, $57, and $132	74		(1,284)		(17)		(545)
Attributable to unconsolidated affiliates, net of tax of $219, $810, $(358), and $262	(753)		(2,790)		1,234		(903)

Total other comprehensive (loss) income, net	(501)		(255)		6,275		(22,241)

Consolidated comprehensive income	110,431		28,232		182,445		40,197
Comprehensive (income) loss attributable to noncontrolling interests	(1,333)		90		(3,885)		(855)

Comprehensive income attributable to Mueller Industries, Inc.	$	109,098	$	28,322	$	178,560	$	39,342


	(Unaudited)
(In thousands, except share data)	June 26, 2021		December 26, 2020
Assets
Current assets:
Cash and cash equivalents	$	110,681	$	119,075
Accounts receivable, less allowance for doubtful accounts of $2,818 in 2021 and $1,538 in 2020	542,044		357,532
Inventories	384,982		315,002
Other current assets	44,288		33,752

Total current assets	1,081,995		825,361

Property, plant, and equipment, net	385,246		376,572
Operating lease right-of-use assets	26,871		29,301
Goodwill, net	169,364		167,764
Intangible assets, net	76,886		77,207
Investments in unconsolidated affiliates	36,899		37,976
Other assets	12,176		14,387

Total assets	$	1,789,437	$	1,528,568

Liabilities
Current liabilities:
Current portion of debt	$	6,428	$	41,283
Accounts payable	190,403		147,741
Accrued wages and other employee costs	39,502		46,299
Current portion of operating lease liabilities	6,546		6,259
Other current liabilities	119,550		98,061

Total current liabilities	362,429		339,643

Long-term debt, less current portion	350,996		286,593
Pension liabilities	11,799		13,552
Postretirement benefits other than pensions	13,368		13,289
Environmental reserves	21,020		21,256
Deferred income taxes	16,363		16,842
Noncurrent operating lease liabilities	19,433		21,602
Other noncurrent liabilities	20,113		14,731

Total liabilities	815,521		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 57,151,341 in 2021 and 57,087,432 in 2020	802		802
Additional paid-in capital	285,148		280,051
Retained earnings	1,176,812		1,019,694
Accumulated other comprehensive loss	(48,262)		(54,883)
Treasury common stock, at cost	(468,784)		(468,919)

Total Mueller Industries, Inc. stockholders' equity	945,716		776,745
Noncontrolling interests	28,200		24,315

Total equity	973,916		801,060

Commitments and contingencies	—		—

Total liabilities and equity	$	1,789,437	$	1,528,568


	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 Quarter Ended June 27, 2020
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	334,040	$	88,619	$	86,107	$	(8,598)	$	500,168

Cost of goods sold	272,271		75,274		64,540		(8,926)		403,159
Depreciation and amortization	5,456		1,995		2,757		889		11,097
Selling, general, and administrative expense	15,239		2,477		6,457		9,443		33,616




Operating income	41,074		8,873		12,353		(10,004)		52,296

Interest expense									(4,973)
Other income, net									2,834

Income before income taxes									$	50,157


	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


	For the Six Months Ended June 27, 2020
( In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	719,053	$	219,821	$	179,379	$	(15,166)	$	1,103,087

Cost of goods sold	591,435		190,071		135,633		(5,265)		911,874
Depreciation and amortization	11,155		3,997		5,223		1,761		22,136
Selling, general, and administrative expense	35,678		5,698		13,156		21,836		76,368
Asset impairments	3,035		—		—		—		3,035
Litigation settlement, net	—		—		—		(21,933)		(21,933)


Operating income	77,750		20,055		25,367		(11,565)		111,607

Interest expense									(10,352)
Other income, net									3,112

Income before income taxes									$	104,367


(In thousands)	June 26, 2021		December 26, 2020

Segment assets:
Piping Systems	$	1,222,336	$	977,937
Industrial Metals	173,227		152,683
Climate	272,318		258,668
General Corporate	121,556		139,280

	$	1,789,437	$	1,528,568


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

Commodity contracts - gains	Other current assets	$	132	$	1,213	Other current liabilities	$	1,788	$	68
Commodity contracts - losses	Other current assets	(83)		(8)		Other current liabilities	(7,285)		(5,863)

Total derivatives (1)		$	49	$	1,205		$	(5,497)	$	(5,795)


	For the Six Months Ended
(In thousands)	June 26, 2021		June 27, 2020

Cash flows from operating activities
Consolidated net income	$	176,170	$	62,438
Reconciliation of consolidated net income to net cash provided by operating activities:
Depreciation and amortization	22,975		22,296
Stock-based compensation expense	4,817		4,198
Provision for doubtful accounts receivable	1,280		1,850
Loss from unconsolidated affiliates	2,668		14,756
Redemption premium	5,674		—
Gain on disposals of properties	(819)		(9)

Impairment charges	—		3,035


Deferred income tax expense	3,252		764
Changes in assets and liabilities, net of effects of businesses acquired:
Receivables	(190,944)		(11,212)
Inventories	(63,949)		43,263
Other assets	(5,482)		3,967
Current liabilities	50,456		(277)
Other liabilities	3,429		(5,369)
Other, net	(247)		3,082

Net cash provided by operating activities	9,280		142,782

Cash flows from investing activities
Capital expenditures	(17,978)		(22,215)
Acquisition of businesses, net of cash acquired	(13,935)		(15,415)


Payment received for notes receivable	8,539		—
Proceeds from sales of assets	1,730		1


Net cash used in investing activities	(21,644)		(37,629)

Cash flows from financing activities


(In thousands)	June 26, 2021		December 26, 2020

Raw materials and supplies	$	122,931	$	85,927
Work-in-process	73,336		49,361
Finished goods	197,006		186,785
Valuation reserves	(8,291)		(7,071)

Inventories	$	384,982	$	315,002


	For the Quarter Ended				For the Six Months Ended
(In thousands)	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020

Pension benefits:

Interest cost	$	313	$	866	$	626	$	1,724
Expected return on plan assets	(904)		(1,495)		(1,808)		(2,990)
Amortization of net loss	379		528		757		988

Net periodic benefit income	$	(212)	$	(101)	$	(425)	$	(278)

Other benefits:
Service cost	$	65	$	56	$	130	$	117
Interest cost	87		106		174		215
Amortization of prior service credit	(117)		(58)		(235)		(284)
Amortization of net gain	(33)		(47)		(64)		(100)
Curtailment gain	—		$	(2,591)	—		$	(2,591)

Net periodic benefit cost (income)	$	2	$	(2,534)	$	5	$	(2,643)


	For the Six Months Ended June 27, 2020
(In thousands)	Cumulative Translation Adjustment		Unrealized Gain (Loss) on Derivatives		Pension/OPEB Liability Adjustment		Attributable to Unconsol. Affiliates		Total

Balance as of December 28, 2019	$	(46,198)	$	476	$	(21,855)	$	(1,193)	$	(68,770)

Other comprehensive loss before reclassifications	(19,622)		(5,413)		(1,034)		(903)		(26,972)
Amounts reclassified from AOCI	—		5,454		489		—		5,943

Net current-period other comprehensive (loss) income	(19,622)		41		(545)		(903)		(21,029)


Balance as of June 27, 2020	$	(65,820)	$	517	$	(22,400)	$	(2,096)	$	(89,799)


	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 Quarter Ended June 27, 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	$	(1,715)	Cost of goods sold	$	5,075
Other	37		Other	1

Total	$	(1,678)	Total	$	5,076


	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)


	Amount reclassified from AOCI
	For the Quarter Ended				For the Six Months Ended
(In thousands)	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020		Affected line item

Unrealized (gains) losses on derivative commodity contracts	$	(2,390)	$	6,361	$	(3,689)	$	6,829	Cost of goods sold

	537		(1,285)		841		(1,375)		Income tax expense (benefit)

	$	(1,853)	$	5,076	$	(2,848)	$	5,454	Net of tax and noncontrolling interests

Amortization of net loss and prior service cost on employee benefit plans	$	229	$	423	$	458	$	604	Other income, net
	(38)		(86)		(75)		(115)		Income tax benefit

	$	191	$	337	$	383	$	489	Net of tax and noncontrolling interests


	For the Quarter Ended				Percent Change		For the Six Months Ended				Percent Change
(In thousands)	June 26, 2021		June 27, 2020		2021 vs. 2020		June 26, 2021		June 27, 2020		2021 vs. 2020

Net sales	$	1,012,592	$	500,168	102.5	%	$	1,830,740	$	1,103,087	66.0	%
Operating income	157,814		52,296		201.8		250,354		111,607		124.3
Net income	108,832		27,956		289.3		171,939		60,371		184.8


	Quarter-to- Date		Year-to- Date
Net selling price in core product lines	55.7	%	37.9	%
Unit sales volume in core product lines	22.1		10.9
Acquisitions	14.4		10.6

Other	10.3		6.6

	102.5	%	66.0	%


(In thousands)	2021		2020

Increase (decrease) in:
Cash, cash equivalents, and restricted cash	$	(1,654)	$	26,470
Property, plant, and equipment, net	8,674		(343)
Total debt	29,548		(56,597)
Working capital, net of cash and current debt	207,387		(44,711)

Net cash provided by operating activities	9,280		142,782
Net cash used in investing activities	(21,644)		(37,629)
Net cash provided by (used in) financing activities	9,723		(72,523)


	(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 28, 2021 - April 24, 2021	—	$	—	—	13,575,058
April 25, 2021 - May 22, 2021	3,553	$	45.61	—	13,575,058
May 23, 2021 - June 26, 2021	1,221	$	43.44	—	13,575,058
Total	4,774			—


10.1			Credit Agreement, dated as of March 31, 2021, among the Company (as borrower), Bank of America, N.A. (as administrative agent), and certain lenders named therein (Incorporated herein by reference to Exhibit 10.1 of th e Registrant ’s Current Report on Form 8-K, dated April 5, 2021).

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 21, 2021			Chief Financial Officer and Treasurer
Date			(Principal Financial and Accounting Officer)


			/s/ Anthony J. Steinriede
July 21, 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: July 21, 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
July 21, 2021