Mueller Industries, Inc. Reports Fiscal 2022 Fourth Quarter and Full Year Results

Rhea-AI Summary

Mueller Industries, Inc. (NYSE: MLI) reported strong financial results for Q4 2022 and the full year. Fourth quarter operating income rose to $190.4 million, a 10.6% increase year-over-year, while net sales decreased 8.2% to $877.6 million. Net income improved 10.6% to $138.9 million, with diluted EPS at $2.46. For the full year, operating income surged 33.7% to $877.1 million, and net income was up 40.5% to $658.3 million. The company also achieved a low current ratio of 4 to 1 and eliminated a significant long-term pension risk.

Despite challenges, including declining copper prices and lower unit volumes, MLI maintains a positive outlook for 2023 with strong backlogs in key markets.

Positive

• Operating income for Q4 2022 at $190.4 million, up 10.6%
• Net income rose 10.6% to $138.9 million in Q4 2022
• Full year operating income increased 33.7% to $877.1 million
• Net sales for the full year reached $4.0 billion, up 5.7%
• Diluted EPS increased 41.1% to $11.64 for the full year
• Successful withdrawal from a pension plan, reducing long-term risk
• Achieved $207 million cash flow from operations in Q4
• Current ratio stands at a strong 4 to 1

Negative

• Net sales declined 8.2% in Q4 compared to the previous year
• Average copper price fell 16.4%, impacting sales
• 11% reduction in unit volumes noted across mill businesses

COLLIERVILLE, Tenn.--(BUSINESS WIRE)-- Mueller Industries, Inc. (NYSE: MLI) today reported 2022 fourth quarter and full year results.

For the Fourth Quarter 2022 versus Fourth Quarter 2021:

• Operating income: $190.4 million vs $172.1 million, up 10.6%.
• Net sales: $877.6 million vs $956.4 million, down 8.2%.
• Net income: $138.9 million vs $125.6 million, up 10.6%.
• Diluted EPS: $2.46 vs $2.21, up 11.3%.

For the Full Year 2022 versus the Full Year 2021:

• Operating income: $877.1 million vs $655.8 million, up 33.7%.
• Net sales: $4.0 billion vs $3.8 billion, up 5.7%.
• Net income: $658.3 million vs $468.5 million, up 40.5%.
• Diluted EPS: $11.64 vs $8.25, up 41.1%.

Fourth Quarter Financial and Operating Commentary

• The average price of copper was $3.66 per pound, a 16.4 percent decline as compared with the fourth quarter of 2021.
• Net sales declined $78.8 million, reflecting the impact of lower copper prices as well as an 11 percent reduction in unit volumes across our mill businesses, the largest of which emanated from our international operations. These reductions were offset by a 22 percent increase in net sales from our higher value added businesses, particularly in our climate segment.
• The Company recognized a $13.1 million expense related to its complete withdrawal from a multi-employer pension plan, thereby eliminating a significant long term financial risk.
• The Company generated $207 million of cash from operations in the fourth quarter, $723.9 million for the year and cash and short-term investments totaled $678.9 million at year end. The Company’s current ratio is 4 to 1.

Operating Highlights and Outlook:

Greg Christopher, CEO, commented, “We concluded 2022 by delivering the best fourth quarter of operating and net income in the Company’s history. Not only have we reinvested to be a low cost producer, but we have also pursued acquisitions that both strengthen our market leading positions in core products and expand our portfolio into higher value added content. In tandem, these strategic actions have improved our gross margins to levels we believe are more appropriate for the industries we serve.

Economic activity as a whole began to temper during the second half of 2022 amidst rising interest rates, inflationary pressures, and global instability. Beyond that, the destocking of inventories and normalization of supply chains exerted downward impacts.

Notwithstanding, we head into 2023 with an optimistic outlook. Although we anticipate some decline in U.S. residential building markets as compared with 2022, we also believe that household formations will remain underserved by the housing supply. As such, demand levels should remain at healthy levels relative to industry capacity. At the same time, we maintain continued backlogs in other critical markets including commercial construction, refrigeration, HVAC and transportation. Internationally, we believe that following a difficult 2022, market conditions may be bottoming out, thereby positioning our businesses for a rebound.

This was another record year of financial performance for our Company, but we still see many opportunities ahead of us. Importantly, our strong performance has enabled us to build a war chest to fund continued investments to improve our low cost position and support our bold plans for growth.”

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.

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 31, 2022				December 25, 2021				December 31, 2022				December 25, 2021
Net sales	$	877,581			$	956,357			$	3,982,455			$	3,769,345
Cost of goods sold		620,800				726,594				2,864,862				2,938,989
Depreciation and amortization		10,738				11,633				43,731				45,390
Selling, general, and administrative expense		55,630				48,729				203,086				184,052
Gain on sale of businesses		—				(3,001	)			—				(57,760	)
Gain on sale of assets, net		—				—				(6,373	)			—
Impairment charges		—				261				—				2,829
Operating income		190,413				172,141				877,149				655,845
Interest expense		(144	)			(258	)			(810	)			(7,709	)
Environmental expense		349				(982	)			(1,298	)			(5,053	)
Redemption premium		—				—				—				(5,674	)
Pension plan termination expense		(13,100	)			—				(13,100	)			—
Other income, net		8,430				947				14,090				3,730
Income before income taxes		185,948				171,848				876,031				641,139
Income tax expense		(49,798	)			(44,862	)			(223,322	)			(165,858	)
Income (loss) from unconsolidated affiliates, net of foreign tax		4,085				(288	)			10,111				(157	)
Consolidated net income		140,235				126,698				662,820				475,124
Net income attributable to noncontrolling interests		(1,329	)			(1,097	)			(4,504	)			(6,604	)
Net income attributable to Mueller Industries, Inc.	$	138,906			$	125,601			$	658,316			$	468,520
Weighted average shares for basic earnings per share		55,642				56,104				55,779				56,011
Effect of dilutive stock-based awards		717				796				776				787
Adjusted weighted average shares for diluted earnings per share		56,359				56,900				56,555				56,798
Basic earnings per share	$	2.50			$	2.24			$	11.80			$	8.36
Diluted earnings per share	$	2.46			$	2.21			$	11.64			$	8.25
Dividends per share	$	0.25			$	0.13			$	1.00			$	0.52

	For the Quarter Ended								For the Year Ended
(In thousands)	December 31, 2022				December 25, 2021				December 31, 2022				December 25, 2021
Summary Segment Data:
Net sales:
Piping Systems Segment	$	567,039			$	652,466			$	2,730,084			$	2,600,030
Industrial Metals Segment		146,322				176,226				644,689				703,363
Climate Segment		170,551				130,428				650,307				495,414
Elimination of intersegment sales		(6,331	)			(2,763	)			(42,625	)			(29,462	)
Net sales	$	877,581			$	956,357			$	3,982,455			$	3,769,345
Operating income:
Piping Systems Segment	$	131,056			$	142,482			$	671,062			$	486,287
Industrial Metals Segment		22,960				27,077				82,464				85,475
Climate Segment		53,158				21,757				188,067				85,536
Unallocated expenses		(16,761	)			(19,175	)			(64,444	)			(1,453	)
Operating income	$	190,413			$	172,141			$	877,149			$	655,845

MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)	December 31, 2022			December 25 2021
ASSETS
Cash and cash equivalents	$	461,018		$	87,924
Short-term investments		217,863			—
Accounts receivable, net		380,352			471,859
Inventories		448,919			430,244
Other current assets		26,501			28,976
Total current assets		1,534,653			1,019,003
Property, plant, and equipment, net		379,950			385,562
Operating lease right-of-use assets		22,892			23,510
Other assets		304,904			300,861
	$	2,242,399		$	1,728,936
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of debt	$	811		$	811
Accounts payable		128,000			180,793
Current portion of operating lease liabilities		4,942			6,015
Other current liabilities		214,542			194,820
Total current liabilities		348,295			382,439
Long-term debt		1,218			1,064
Pension and postretirement liabilities		13,055			17,533
Environmental reserves		16,380			17,678
Deferred income taxes		16,258			14,347
Noncurrent operating lease liabilities		16,880			17,099
Other noncurrent liabilities		16,349			21,813
Total liabilities		428,435			471,973
Total Mueller Industries, Inc. stockholders’ equity		1,790,914			1,222,118
Noncontrolling interests		23,050			34,845
Total equity		1,813,964			1,256,963
	$	2,242,399		$	1,728,936

MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	For the Year Ended
(In thousands)	December 31, 2022				December 25, 2021
Cash flows from operating activities
Consolidated net income	$	662,820			$	475,124
Reconciliation of consolidated net income to net cash provided by operating activities:
Depreciation and amortization		44,088				45,655
Stock-based compensation expense		17,801				9,822
Provision for doubtful accounts receivable		323				1,216
(Income) loss from unconsolidated affiliates		(10,111	)			157
Gain on sale of businesses		—				(57,760	)
(Gain) loss on disposals of assets		(6,373	)			(769	)
Redemption premium		—				5,674
Insurance proceeds - noncapital related		1,646				—
Impairment charges		—				2,829
Deferred income tax (benefit) expense		(3,880	)			7,413
Changes in assets and liabilities, net of effects of businesses acquired and sold:
Receivables		82,713				(124,708	)
Inventories		(24,189	)			(119,514	)
Other assets		(8,971	)			919
Current liabilities		(26,633	)			73,755
Other liabilities		(7,564	)			(5,467	)
Other, net		2,273				(2,645	)
Net cash provided by operating activities		723,943				311,701
Cash flows from investing activities
Proceeds from sale of assets, net of cash transferred		7,850				2,302
Purchase of short-term investments		(217,863	)			—
Proceeds from sale of business, net of cash sold		—				81,884
Acquisition of businesses, net of cash acquired		—				(30,206	)
Capital expenditures		(37,639	)			(31,833	)
Insurance proceeds - capital related		3,354				—
Dividends from unconsolidated affiliates		2,295				—
Payment received for (issuance of) notes receivable		—				8,539
Investments in unconsolidated affiliates		—				(1,613	)
Net cash (used in) provided by investing activities		(242,003	)			29,073

	For the Year Ended
(In thousands)	December 31, 2022				December 25, 2021
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.		(55,787	)			(29,137	)
Dividends paid to noncontrolling interests		(7,248	)			(9,722	)
Issuance of long-term debt		—				595,000
Repayments of long-term debt		(204	)			(920,610	)
Issuance (repayment) of debt by consolidated joint ventures, net		67				(5,113	)
Repurchase of common stock		(38,054	)			(4,864	)
Payment of contingent consideration		—				(1,250	)
Net cash (used) received to settle stock-based awards		(1,429	)			85
Debt issuance costs		—				(1,111	)
Net cash used in financing activities		(102,655	)			(376,722	)
Effect of exchange rate changes on cash		(4,365	)			(1,052	)
Increase (decrease) in cash, cash equivalents, and restricted cash		374,920				(37,000	)
Cash, cash equivalents, and restricted cash at the beginning of the year		90,376				127,376
Cash, cash equivalents, and restricted cash at the end of the year	$	465,296			$	90,376

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230207005332/en/

Jeffrey A. Martin

(901) 753-3226

Source: Mueller Industries, Inc.

FAQ

What were Mueller Industries' Q4 2022 earnings results?

Mueller Industries reported Q4 2022 operating income of $190.4 million, net income of $138.9 million, and diluted EPS of $2.46.

How did Mueller Industries perform in 2022 compared to 2021?

In 2022, Mueller Industries' operating income increased by 33.7% to $877.1 million, and net income rose by 40.5% to $658.3 million.

What is the outlook for Mueller Industries in 2023?

Mueller Industries anticipates some decline in U.S. residential building markets but maintains a positive outlook due to ongoing backlogs in critical sectors.

What factors contributed to the decline in net sales for Q4 2022?

The decline in net sales was attributed to lower copper prices and an 11% reduction in unit volumes across mill businesses.

How much cash did Mueller Industries generate from operations in Q4 2022?

Mueller Industries generated $207 million in cash from operations in Q4 2022.