Mueller Industries, Inc. Reports Fiscal 2020 Fourth Quarter and Full Year Results

Rhea-AI Summary

Mueller Industries (NYSE: MLI) reported strong fourth-quarter results for 2020, with operating income rising to $65.0 million from $44.4 million year-over-year. Net sales increased to $675.9 million compared to $543.8 million, driven largely by higher copper prices and acquisitions. Full-year net income was $139.5 million, up from $101.0 million, and earnings per share improved to $2.47 from $1.79. The company anticipates continued earnings growth in 2021 and highlighted a strong liquidity position with $119.1 million in cash.

Positive

• Fourth-quarter operating income rose to $65.0 million, up from $44.4 million.
• Net sales increased to $675.9 million, boosted by higher copper prices and recent acquisitions.
• Full-year net income increased to $139.5 million from $101.0 million.
• EPS improved to $2.47, up from $1.79.
• Strong liquidity position with cash and cash equivalents of $119.1 million.

Negative

• Recognized a $17.8 million expense to terminate the U.S. defined benefit pension plan.
• Effective tax rate increased to 26.4% from 21.2%, impacting net income.

Mueller Industries, Inc. (NYSE: MLI) today reported 2020 fourth quarter and full year results.

Fourth Quarter:

• Operating income of $65.0 million versus $44.4 million
• Net sales of $675.9 million versus $543.8 million
• Net income of $36.4 million versus $28.2 million
• EPS of $0.64 versus $0.50

Full Year:

• Operating income of $245.8 million versus $191.4 million
• Adjusted operating income of $227.5 million versus $191.4 million (adjustments include $3.8 million for asset impairments and a $22.1 million gain for the Deepwater Horizon settlement)
• Net sales of $2.4 billion versus $2.4 billion
• Net income of $139.5 million versus $101.0 million
• EPS of $2.47 versus $1.79

*Comparisons to prior year periods

Quarter Commentary

• The average price of copper was 21.9 percent higher during the quarter compared with the prior year quarter.
• Net sales growth of $132.0 million was largely influenced by the higher copper prices ($61.8 million), with the balance attributable to recently acquired businesses and higher unit sales volumes.
• The Company recognized a $17.8 million expense to terminate its U.S. defined benefit pension plan, which consisted of an $11.6 million non-cash charge and $6.2 million in federal excise tax on surplus assets returned to the Company.
• The Company recorded income of $10.0 million on its investment in Tecumseh in the quarter, including a pre-tax gain of $11.6 million from a land sale and $1.1 million of expense related to Tecumseh’s ongoing restructuring activities.
• The effective tax rate of 31.8 percent reflects the accounting for several discrete items in the quarter. The effective tax rate of 19.8 percent for the prior year quarter reflects a favorable impact from the recognition of foreign net operating losses.
• Cash generated from operations was $48.2 million.

Full Year Commentary

• The average price of copper was 2.8 percent higher than in 2019. COMEX copper hit a low of $2.12 per pound in March and a high of $3.63 per pound in December.
• Net sales were flat as compared to the prior year, with volume from acquisitions offsetting declines stemming from the COVID-19 pandemic.
• Our Tecumseh investment showed improvement in 2020 reflecting early impacts of the ongoing restructuring.
• Our operating cash flow exceeded $245.1 million. The Company’s liquidity position remained strong, with cash and cash equivalents of $119.1 million, total debt of $327.9 million and approximately $300.0 million currently available under the Company’s existing credit facility. Total debt to total capitalization was a modest 29.0 percent.
• The 2020 effective tax rate was 26.4 percent compared with 21.2 percent in 2019.

Operating Highlights and Outlook:

Greg Christopher, CEO, commented, “Mueller delivered a solid fourth quarter and anticipates a continuation of this positive trend into 2021. This was our third consecutive year of double digit earnings growth. Our teams managed the challenges presented by the COVID-19 pandemic, and we expect to reap ongoing benefits from our more efficient and controlled operating environment.

Although pandemic related public health regulations are likely to remain in place, we are hopeful that the limitations such measures may exert on demand will subside as we approach the second half of the year. On January 29, 2021, we closed on our previously announced acquisition of the Hart & Cooley Flexible Duct business, which expands our presence in the air quality and climate control systems markets.

Our diversified portfolio of businesses is well balanced and capitalized, and we are optimistic that 2021 will bring continued strong cash generation. We believe we are well positioned for the reopening of global economies.”

Mueller Industries, Inc. (NYSE: MLI) is an industrial corporation whose holdings manufacture vital goods for important markets such as air, water, oil and gas distribution; climate comfort; food preservation; energy transmission; medical; aerospace; and automotive. It includes a network of companies and brands throughout North America, Europe, Asia, and the Middle East.

NON-GAAP MEASURES

This press release contains a reference to a non-GAAP measure (adjusted operating income). We believe this financial measure, which is used by management to monitor and evaluate performance, allows investors to better evaluate changes in operating income on a comparable basis from period to period.

Statements in this release that are not strictly historical may be “forward-looking” statements, which involve risks and uncertainties. These include economic and currency conditions, continued availability of raw materials and energy, market demand, pricing, competitive and technological factors, and the availability of financing, among others, as set forth in the Company’s SEC filings. The words “outlook,” “estimate,” “project,” “intend,” “expect,” “believe,” “target,” “encourage,” “anticipate,” “appear,” and similar expressions are intended to identify forward-looking statements. The reader should not place undue reliance on forward-looking statements, which speak only as of the date of this report. The Company has no obligation to publicly update or revise any forward-looking statements to reflect events after the date of this report.

 

MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
	For the Quarter Ended								For the Year Ended
(In thousands, except per share data)	December 26, 2020				December 28, 2019				December 26, 2020				December 28, 2019
Net sales	$	675,851			$	543,839			$	2,398,043			$	2,430,616
Cost of goods sold	553,507				449,481				1,966,161				2,035,610
Depreciation and amortization	11,955				10,837				44,843				42,693
Selling, general, and administrative expense	44,649				39,072				159,483				160,910
Litigation settlement. net	—				—				(22,053)				—
Impairment charges	736				—				3,771				—
Operating income	65,004				44,449				245,838				191,403
Interest expense	(4,010)				(5,548)				(19,247)				(25,683)
Environmental expense	(3,488)				(440)				(4,454)				(1,321)
Pension plan termination costs	(17,835)				—				(17,835)				—
Other income, net	287				(20)				4,887				1,684
Income before income taxes	39,958				38,441				209,189				166,083
Income tax expense	(12,698)				(7,614)				(55,321)				(35,257)
Income (loss) from unconsolidated affiliates, net of foreign tax	9,994				(854)				(10,219)				(24,594)
Consolidated net income	37,254				29,973				143,649				106,232
Net income attributable to noncontrolling interests	(834)				(1,803)				(4,156)				(5,260)
Net income attributable to Mueller Industries, Inc.	$	36,420			$	28,170			$	139,493			$	100,972
Weighted average shares for basic earnings per share	55,869				55,869				55,821				55,798
Effect of dilutive stock-based awards	673				611				569				545
Adjusted weighted average shares for diluted earnings per share	56,542				56,480				56,390				56,343
Basic earnings per share	$	0.65			$	0.50			$	2.50			$	1.81
Diluted earnings per share	$	0.64			$	0.50			$	2.47			$	1.79
Dividends per share	$	0.10			$	0.10			$	0.40			$	0.40
Summary Segment Data:
Net sales:
Piping Systems Segment	$	454,535			$	349,182			$	1,583,002			$	1,542,456
Industrial Metals Segment	133,507				120,336				472,159				554,372
Climate Segment	93,148				79,362				370,131				356,216
Elimination of intersegment sales	(5,339)				(5,041)				(27,249)				(22,428)
Net sales	$	675,851			$	543,839			$	2,398,043			$	2,430,616
Operating income:
Piping Systems Segment	$	43,106			$	31,724			$	165,719			$	131,879
Industrial Metals Segment	15,662				15,026				54,065				61,724
Climate Segment	13,279				9,343				56,802				42,727
Unallocated expenses	(7,043)				(11,644)				(30,748)				(44,927)
Operating income	$	65,004			$	44,449			$	245,838			$	191,403

 

MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)	December 26, 2020				December 28, 2019
ASSETS
Cash and cash equivalents	$	119,075			$	97,944
Accounts receivable, net	357,532				269,943
Inventories	315,002				292,107
Other current assets	33,752				33,778
Total current assets	825,361				693,772
Property, plant, and equipment, net	376,572				363,128
Operating lease right-of-use assets	29,301				26,922
Other assets	297,334				287,118
	$	1,528,568			$	1,370,940
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of debt	$	41,283			$	7,530
Accounts payable	147,741				85,644
Current portion of operating lease liabilities	6,259				5,250
Other current liabilities	144,360				135,863
Total current liabilities	339,643				234,287
Long-term debt	286,593				378,724
Pension and postretirement liabilities	26,841				22,208
Environmental reserves	21,256				19,972
Deferred income taxes	16,842				21,094
Noncurrent operating lease liabilities	21,602				22,388
Other noncurrent liabilities	14,731				10,131
Total liabilities	727,508				708,804
Total Mueller Industries, Inc. stockholders’ equity	776,745				643,468
Noncontrolling interests	24,315				18,668
Total equity	801,060				662,136
	$	1,528,568			$	1,370,940

 

MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	For the Year Ended
(In thousands)	December 26, 2020				December 28, 2019
Cash flows from operating activities
Consolidated net income	$	143,649			$	106,232
Reconciliation of consolidated net income to net cash provided by operating activities:
Depreciation and amortization	45,162				43,011
Stock-based compensation expense	8,570				8,744
Provision for doubtful accounts receivable	1,208				(80)
Loss from unconsolidated affiliates	10,219				24,594
Non-cash pension plan termination charge	11,642				—
Loss (gain) on disposals of assets	132				(963)
Change in the fair value of contingent consideration	—				3,625
Impairment charges	3,771				—
Deferred income tax benefit	(4,046)				(428)
Changes in assets and liabilities, net of effects of businesses acquired:
Receivables	(76,404)				6,585
Inventories	5,207				39,561
Other assets	20,609				(15,639)
Current liabilities	74,097				(7,076)
Other liabilities	(1,142)				(7,944)
Other, net	2,399				322
Net cash provided by operating activities	245,073				200,544
Cash flows from investing activities
Proceeds from sale of assets, net of cash transferred	181				3,240
Acquisition of businesses, net of cash acquired	(72,648)				3,465
Capital expenditures	(43,885)				(31,162)
Issuance of notes receivable	(9,270)				—
Investments in unconsolidated affiliates	—				(16,000)
Net cash used in investing activities	(125,622)				(40,457)
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.	(22,341)				(22,325)
Dividends paid to noncontrolling interests	—				(846)
Issuance of long-term debt	190,038				100,658
Repayments of long-term debt	(246,898)				(206,718)
Repayment of debt by consolidated joint ventures, net	(259)				(4,305)
Repurchase of common stock	(5,574)				(1,763)
Payment of contingent consideration	(7,000)				(3,170)
Net cash used to settle stock-based awards	(230)				(1,225)
Net cash used in financing activities	(92,264)				(139,694)
Effect of exchange rate changes on cash	2,147				511
Increase in cash, cash equivalents, and restricted cash	29,334				20,904
Cash, cash equivalents, and restricted cash at the beginning of the year	98,042				77,138
Cash, cash equivalents, and restricted cash at the end of the year	$	127,376			$	98,042

 

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FAQ

What were Mueller Industries' earnings for the fourth quarter of 2020?

Mueller Industries reported an operating income of $65.0 million and net income of $36.4 million for Q4 2020.

How did net sales perform for Mueller Industries in 2020?

Mueller Industries' net sales for 2020 were $2.4 billion, unchanged from the previous year.

What is Mueller Industries' EPS for the full year of 2020?

The earnings per share for Mueller Industries for the full year 2020 was $2.47, compared to $1.79 in 2019.

What is Mueller Industries' outlook for 2021?

Mueller Industries anticipates continued earnings growth and benefits from an efficient operating environment in 2021.