Mueller Industries Inc 10-Q for FY2021 Q1

Mueller Industries Inc (MLI)

10-Q 2021-04-21 For: 2021-03-27

Added on April 09, 2026

About this 10-Q

Mueller Industries Inc filed this 10-Q on April 21, 2021, covering the quarter ended March 27, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 27, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $818.15M; up 35.7% from $602.92M a year earlier
Net income: $63.11M; up 94.7% from net income of $32.42M a year earlier
Diluted EPS: $1.11; up 94.7% from $0.57 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 March 27, 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	22

	Item 3. – Quantitative and Qualitative Disclosures About Market Risk	30

	Item 4. – Controls and Procedures	32

Part II. Other Information

	Item 1. – Legal Proceedings	32

	Item 1A – Risk Factors	32

	Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds	33

	Item 6. – Exhibits	34

Signatures		35


	For the Quarter Ended
(In thousands, except per share data)	March 27, 2021		March 28, 2020

Net sales	$	818,148	$	602,919

Cost of goods sold	668,418		508,715
Depreciation and amortization	11,755		11,039
Selling, general, and administrative expense	45,435		42,752
Asset impairments	—		3,035
Litigation settlement, net	—		(21,933)


Operating income	92,540		59,311

Interest expense	(4,469)		(5,379)
Other income, net	577		278

Income before income taxes	88,648		54,210

Income tax expense	(21,761)		(14,144)
Loss from unconsolidated affiliates, net of foreign tax	(1,649)		(6,115)

Consolidated net income	65,238		33,951

Net income attributable to noncontrolling interests	(2,131)		(1,536)

Net income attributable to Mueller Industries, Inc.	$	63,107	$	32,415

Weighted average shares for basic earnings per share	55,916		55,875
Effect of dilutive stock-based awards	756		583

Adjusted weighted average shares for diluted earnings per share	56,672		56,458

Basic earnings per share	$	1.13	$	0.58

Diluted earnings per share	$	1.11	$	0.57

Dividends per share	$	0.13	$	0.10


	For the Quarter Ended
(In thousands)	March 27, 2021		March 28, 2020

Consolidated net income	$	65,238	$	33,951

Other comprehensive income (loss), net of tax:
Foreign currency translation	4,387		(21,255)
Net change with respect to derivative instruments and hedging activities, net of tax of $(147) and $960	493		(3,357)
Net change in pension and postretirement obligation adjustments, net of tax of $56 and $(243)	(91)		739
Attributable to unconsolidated affiliates, net of tax of $(577) and $(548)	1,987		1,887

Total other comprehensive income (loss), net	6,776		(21,986)

Consolidated comprehensive income	72,014		11,965
Comprehensive income attributable to noncontrolling interests	(2,552)		(945)

Comprehensive income attributable to Mueller Industries, Inc.	$	69,462	$	11,020


	(Unaudited)
(In thousands, except share data)	March 27, 2021		December 26, 2020
Assets
Current assets:
Cash and cash equivalents	$	129,876	$	119,075
Accounts receivable, less allowance for doubtful accounts of $3,168 in 2021 and $1,538 in 2020	447,492		357,532
Inventories	365,457		315,002
Other current assets	43,710		33,752

Total current assets	986,535		825,361

Property, plant, and equipment, net	384,853		376,572
Operating lease right-of-use assets	28,494		29,301
Goodwill, net	168,207		167,764
Intangible assets, net	77,784		77,207
Investments in unconsolidated affiliates	38,891		37,976
Other assets	13,565		14,387

Total assets	$	1,698,329	$	1,528,568

Liabilities
Current liabilities:
Current portion of debt	$	106,164	$	41,283
Accounts payable	177,174		147,741
Accrued wages and other employee costs	39,426		46,299
Current portion of operating lease liabilities	6,567		6,259
Other current liabilities	115,157		98,061

Total current liabilities	444,488		339,643

Long-term debt, less current portion	286,576		286,593
Pension liabilities	12,183		13,552
Postretirement benefits other than pensions	13,285		13,289
Environmental reserves	21,322		21,256
Deferred income taxes	17,127		16,842
Noncurrent operating lease liabilities	20,832		21,602
Other noncurrent liabilities	14,503		14,731

Total liabilities	830,316		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 57,122,617 in 2021 and 57,087,432 in 2020	802		802
Additional paid-in capital	282,713		280,051
Retained earnings	1,075,410		1,019,694
Accumulated other comprehensive loss	(48,528)		(54,883)
Treasury common stock, at cost	(469,251)		(468,919)

Total Mueller Industries, Inc. stockholders' equity	841,146		776,745
Noncontrolling interests	26,867		24,315

Total equity	868,013		801,060



Total liabilities and equity	$	1,698,329	$	1,528,568


	For the Quarter Ended March 27, 2021
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	547,748	$	164,852	$	111,026	$	(5,478)	$	818,148

Cost of goods sold	450,354		140,891		84,082		(6,909)		668,418
Depreciation and amortization	6,210		1,743		2,629		1,173		11,755
Selling, general, and administrative expense	24,086		3,371		6,980		10,998		45,435




Operating income	67,098		18,847		17,335		(10,740)		92,540

Interest expense									(4,469)
Other income, net									577

Income before income taxes									$	88,648


	For the Quarter Ended March 28, 2020
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations		Total

Net sales	$	385,013	$	131,202	$	93,272	$	(6,568)	$	602,919

Cost of goods sold	319,164		114,797		71,093		3,661		508,715
Depreciation and amortization	5,699		2,002		2,466		872		11,039
Selling, general, and administrative expense	20,439		3,221		6,699		12,393		42,752
Asset impairments	3,035		—		—		—		3,035
Litigation settlement, net	—		—		—		(21,933)		(21,933)


Operating income	36,676		11,182		13,014		(1,561)		59,311

Interest expense									(5,379)
Other income, net									278

Income before income taxes									$	54,210


	Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value
(In thousands)	Balance Sheet Location	March 27, 2021		December 26, 2020		Balance Sheet Location	March 27, 2021		December 26, 2020

Commodity contracts - gains	Other current assets	$	1,965	$	1,213	Other current liabilities	$	—	$	68
Commodity contracts - losses	Other current assets	(55)		(8)		Other current liabilities	(14,667)		(5,863)

Total derivatives (1)		$	1,910	$	1,205		$	(14,667)	$	(5,795)


	For the Quarter Ended March 27, 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	$	1,491	Cost of goods sold	$	(996)
Other	(3)		Other	1

Total	$	1,488	Total	$	(995)


	For the Quarter Ended March 28, 2020
(In thousands)	Loss 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	$	(3,706)	Cost of goods sold	$	378
Other	(29)		Other	—

Total	$	(3,735)	Total	$	378


	For the Quarter Ended March 27, 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	3,966		1,488		(283)		1,987		7,158
Amounts reclassified from AOCI	—		(995)		192		—		(803)

Net current-period other comprehensive income (loss)	3,966		493		(91)		1,987		6,355


Balance as of March 27, 2021	$	(33,373)	$	1,477	$	(17,294)	$	662	$	(48,528)


	For the Quarter Ended
(In thousands)	March 27, 2021		March 28, 2020

Cash flows from operating activities
Consolidated net income	$	65,238	$	33,951
Reconciliation of consolidated net income to net cash (used in) provided by operating activities:
Depreciation and amortization	11,775		11,119
Stock-based compensation expense	2,109		1,985
Provision for doubtful accounts receivable	1,631		1,100
Loss from unconsolidated affiliates	1,649		6,115

(Gain) loss on disposals of properties	(936)		32

Impairment charges	—		3,035


Deferred income tax expense	142		213
Changes in assets and liabilities, net of effects of businesses acquired:
Receivables	(89,972)		(46,291)
Inventories	(45,590)		17,450
Other assets	1,230		8,010
Current liabilities	33,941		(10,821)
Other liabilities	(3,703)		(1,643)
Other, net	(95)		3,796

Net cash (used in) provided by operating activities	(22,581)		28,051

Cash flows from investing activities
Capital expenditures	(9,227)		(17,094)
Acquisition of businesses, net of cash acquired	(14,029)		(15,407)



Proceeds from sales of assets	1,730		—


Net cash used in investing activities	(21,526)		(32,501)

Cash flows from financing activities


(In thousands)	March 27, 2021		December 26, 2020

Raw materials and supplies	$	119,196	$	85,927
Work-in-process	52,803		49,361
Finished goods	201,748		186,785
Valuation reserves	(8,290)		(7,071)

Inventories	$	365,457	$	315,002


	For the Quarter Ended
(In thousands)		March 27, 2021		March 28, 2020

Pension benefits:

Interest cost		$	313	$	858
Expected return on plan assets		(904)		(1,495)
Amortization of net loss		378		460

Net periodic benefit income		$	(213)	$	(177)

Other benefits:
Service cost		$	65	$	61
Interest cost		87		109
Amortization of prior service credit		(118)		(226)
Amortization of net gain		(31)		(53)


Net periodic benefit cost (income)		$	3	$	(109)


	Quarter-to- Date
Net selling price in core product lines	24.9	%
Unit sales volume in core product lines	3.3
Acquisitions	3.8

Other	3.7

	35.7	%


		Amount reclassified from AOCI
	For the Quarter Ended
(In thousands)			March 27, 2021		March 28, 2020		Affected line item

Unrealized (gains) losses on derivative commodity contracts			$	(1,299)	$	468	Cost of goods sold

			304		(90)		Income tax expense (benefit)

			$	(995)	$	378	Net of tax and noncontrolling interests

Amortization of net loss and prior service cost on employee benefit plans			$	229	$	181	Other income, net
			(37)		(29)		Income tax benefit

			$	192	$	152	Net of tax and noncontrolling interests


	For the Quarter Ended			Percent Change
(In thousands)		March 27, 2021		March 28, 2020		2021 vs. 2020

Net sales		$	818,148	$	602,919	35.7	%
Operating income		92,540		59,311		56.0
Net income		63,107		32,415		94.7


	Quarter-to- Date
Net selling price in core product lines	31.2	%
Unit sales volume in core product lines	4.4
Acquisitions	4.0

Other	2.7

	42.3	%


	Quarter-to- Date
Net selling price in core product lines	24.4	%
Unit sales volume in core product lines	2.2


Other	(1.0)

	25.6	%


(In thousands)	2021		2020

Increase (decrease) in:
Cash, cash equivalents, and restricted cash	$	21,655	$	73,922
Property, plant, and equipment, net	8,281		3,700
Total debt	64,864		89,571
Working capital, net of cash and current debt	110,409		28,464

Net cash (used in) provided by operating activities	(22,581)		28,051
Net cash used in investing activities	(21,526)		(32,501)
Net cash provided by financing activities	64,978		84,507


	(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)


December 27, 2020 - January 23, 2021	58,371	$	36.37	—	13,575,058
January 24, 2021 - February 20, 2021	3,387	$	38.26	—	13,575,058
February 21, 2021 - March 27, 2021	2,102	$	43.65	—	13,575,058
Total	63,860			—


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


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