Mueller Industries, Inc. Reports Second Quarter 2023 Earnings

Rhea-AI Summary

Mueller Industries, Inc. (NYSE: MLI) announces Q2 2023 results with a decrease in net sales attributed to normalized demand and lower copper prices. Operating costs were unfavorably impacted by nonrecurring events including tornado and fire damages. Cash and short-term investments increased to $898.4 million. CEO expects inflation and interest rates to remain elevated, affecting global economy.

Positive

• Mueller Industries, Inc. reported strong cash flows, with cash and short-term investments increasing to $898.4 million at quarter end.
• CEO Greg Christopher expressed a positive outlook for the second half despite the decline in overall demand and elevated expenses due to inflation and disruptions.

Negative

• Decrease in net sales was primarily due to the normalization of demand across segments and lower COMEX copper prices, resulting in a decrease from $1.15 billion to $897.0 million in net sales.

COLLIERVILLE, Tenn.--(BUSINESS WIRE)-- Mueller Industries, Inc. (NYSE: MLI) announces results for the second quarter of 2023. Comparisons are to the second quarter of 2022, which, for context, yielded the highest quarterly earnings on record and a 70 percent increase in operating income over the same period in 2021.

• Operating Income of $210.7 million versus $268.9 million
• Net Income of $177.7 million versus $206.6 million
• Diluted EPS of $3.12 versus $3.65
• Net Sales of $897.0 million versus $1.15 billion

Second Quarter Financial and Operating Highlights:

• The decrease in net sales was primarily attributable to the normalization of demand across our three segments. In addition, lower COMEX copper prices, which were 11 percent below the second quarter of 2022, contributed to the decline.
• The change in metal prices, net of hedges, resulted in a $6.9 million increase in cost of goods sold in the current quarter as compared with an $8.0 million decrease in the prior year period.
• Operating costs were unfavorably stressed due to the impacts of several nonrecurring events:
  • As previously reported, our copper fitting manufacturing plant was damaged by a tornado on March 31, 2023 and remains shut down. While we rebuild the facility, we are producing some product in makeshift operations and sourcing the rest.
  • Our Brass Rod business was disrupted by a fire that resulted from work being performed by a third party contractor, thereby impairing production for nearly three weeks during the quarter.
  • Our Westermeyer business, which lost its manufacturing plant to a fire in August 2022, continues to operate at 80-85 percent of pre-fire levels in makeshift production operations. The business settled and recorded a $19.5 million gain from the insurance claim arising from the fire.
• Cash and short-term investments at quarter end were $898.4 million, an increase of $116.0 million during the quarter.
• Our current ratio increased to 5.4 to 1.

Regarding the quarter performance and outlook, Greg Christopher, Mueller’s CEO said, “Our team managed through some difficult issues and demonstrated its commitment to servicing customers, no matter the obstacles. Given the state of business and the unforeseen challenges we confronted, to have achieved these results is quite positive.

Decline in overall demand was as anticipated due to the easing of supply chain congestion and moderation of construction activity from its peak levels in 2022. Expenses were elevated due to inflation and the aforementioned disruptions, which absorbed considerable amounts of additional time and cost.

For the second half, we maintain our view that inflation and interest rates will remain at elevated levels and as such, will continue to exert pressure on the global economy. Demand and backlogs appear to have moderated to more normal levels, as supply chains have been sensibly rebalanced.

We will adjust as conditions dictate and are focused on investments that will optimize our manufacturing platform, reduce costs and improve profitability. We continue to generate strong cash flows, which provide us the necessary resources to act swiftly as growth opportunities present themselves.”

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.

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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 Six Months Ended
(In thousands, except per share data)		July 1, 2023				June 25, 2022				July 1, 2023				June 25, 2022
Net sales		$	896,984			$	1,150,042			$	1,868,176			$	2,160,044
Cost of goods sold			639,272				820,914				1,318,070				1,565,425
Depreciation and amortization			10,416				11,302				21,073				22,143
Selling, general, and administrative expense			56,062				48,956				108,693				96,412
Gain on sale of assets			—				—				—				(5,507	)
Gain on insurance settlement			(19,466	)			—				(19,466	)			—
Operating income			210,700				268,870				439,806				481,571
Interest expense			(135	)			(147	)			(278	)			(305	)
Interest income			7,732				103				13,967				263
Unrealized gain on short-term investments			20,820				—				20,820				—
Other income, net			1,841				2,100				4,077				2,720
Income before income taxes			240,958				270,926				478,392				484,249
Income tax expense			(62,122	)			(68,290	)			(123,479	)			(122,489	)
Income (loss) from unconsolidated affiliates, net of foreign tax			715				4,888				(269	)			5,012
Consolidated net income			179,551				207,524				354,644				366,772
Net income attributable to noncontrolling interests			(1,840	)			(972	)			(3,694	)			(1,904	)
Net income attributable to Mueller Industries, Inc.		$	177,711			$	206,552			$	350,950			$	364,868
Weighted average shares for basic earnings per share			55,660				55,787				55,677				55,943
Effect of dilutive stock-based awards			1340				741				1023				776
Adjusted weighted average shares for diluted earnings per share			57,000				56,528				56,700				56,719
Basic earnings per share		$	3.19			$	3.70			$	6.30			$	6.52
Diluted earnings per share		$	3.12			$	3.65			$	6.19			$	6.43
Dividends per share		$	0.30			$	0.25			$	0.60			$	0.50
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME, CONTINUED
(Unaudited)
		For the Quarter Ended								For the Six Months Ended
(In thousands)		July 1, 2023				June 25, 2022				July 1, 2023				June 25, 2022
Summary Segment Data:
Net sales:
Piping Systems Segment		$	638,005			$	824,807			$	1,300,484			$	1,528,237
Industrial Metals Segment			146,266				179,175				311,500				353,487
Climate Segment			123,954				164,484				276,908				305,106
Elimination of intersegment sales			(11,241	)			(18,424	)			(20,716	)			(26,786	)
Net sales		$	896,984			$	1,150,042			$	1,868,176			$	2,160,044
Operating income:
Piping Systems Segment		$	151,142			$	211,579			$	314,996			$	372,067
Industrial Metals Segment			17,971				24,168				45,186				47,427
Climate Segment			57,067				50,747				111,055				87,447
Unallocated income (expenses)			(15,480	)			(17,624	)			(31,431	)			(25,370	)
Operating income		$	210,700			$	268,870			$	439,806			$	481,571

MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
		(Unaudited)
(In thousands)		July 1, 2023			December 31, 2022
ASSETS
Cash and cash equivalents		$	771,317		$	461,018
Short-term investments			127,051			217,863
Accounts receivable, net			459,467			380,352
Inventories			465,729			448,919
Other current assets			28,172			26,501
Total current assets			1,851,736			1,534,653
Property, plant, and equipment, net			386,928			379,950
Operating lease right-of-use assets			31,164			22,892
Other assets			306,592			304,904
Total assets		$	2,576,420		$	2,242,399
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of debt		$	670		$	811
Accounts payable			155,096			128,000
Current portion of operating lease liabilities			6,951			4,942
Other current liabilities			181,831			214,542
Total current liabilities			344,548			348,295
Long-term debt			1,267			1,218
Pension and postretirement liabilities			12,166			13,055
Environmental reserves			15,729			16,380
Deferred income taxes			18,821			16,258
Noncurrent operating lease liabilities			23,596			16,880
Other noncurrent liabilities			17,355			16,349
Total liabilities			433,482			428,435
Total Mueller Industries, Inc. stockholders’ equity			2,116,230			1,790,914
Noncontrolling interests			26,708			23,050
Total equity			2,142,938			1,813,964
Total liabilities and equity		$	2,576,420		$	2,242,399

MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		For the Six Months Ended
(In thousands)		July 1, 2023				June 25, 2022
Cash flows from operating activities
Consolidated net income		$	354,644			$	366,772
Reconciliation of consolidated net income to net cash provided by operating activities:
Depreciation and amortization			21,252				22,322
Stock-based compensation expense			12,459				5,171
Provision for doubtful accounts receivable			(80	)			151
Loss (income) from unconsolidated affiliates			269				(5,012	)
Insurance proceeds - noncapital related			9,854				—
Gain on disposals of properties			(141	)			(6,800	)
Unrealized gain on short-term investments			(20,820	)			—
Gain on insurance settlement			(19,466	)			—
Deferred income tax expense (benefit)			2,406				(373	)
Changes in assets and liabilities:
Receivables			(77,701	)			(146,438	)
Inventories			(12,149	)			(49,354	)
Other assets			(5,571	)			(6,095	)
Current liabilities			(14,460	)			28,906
Other liabilities			(976	)			(4,283	)
Other, net			1,310				(433	)
Net cash provided by operating activities			250,830				204,534
Cash flows from investing activities
Capital expenditures			(29,221	)			(23,248	)
Insurance proceeds - capital related			24,646				—
Purchase of short-term investments			(106,231	)			—
Proceeds from the maturity of short-term investments			217,863				—
Proceeds from sales of properties			142				7,561
Dividends from unconsolidated affiliates			797				1,609
Net cash provided by (used in) investing activities			107,996				(14,078	)
Cash flows from financing activities
Dividends paid to stockholders of Mueller Industries, Inc.			(33,402	)			(27,968	)
Repurchase of common stock			(19,303	)			(33,469	)
Repayments of debt			(130	)			(111	)
(Repayment) issuance of debt by consolidated joint ventures, net			(143	)			360
Net cash used to settle stock-based awards			(2,588	)			(95	)
Net cash used in financing activities			(55,566	)			(61,283	)
Effect of exchange rate changes on cash			4,825				(2,234	)
Increase in cash, cash equivalents, and restricted cash			308,085				126,939
Cash, cash equivalents, and restricted cash at the beginning of the period			465,296				90,376
Cash, cash equivalents, and restricted cash at the end of the period		$	773,381			$	217,315

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230725228774/en/

Jeffrey A. Martin

(901) 753-3226

Source: Mueller Industries, Inc.

FAQ

What are Mueller Industries, Inc.'s Q2 2023 results?

Mueller Industries, Inc. (NYSE: MLI) reported Q2 2023 results with a decrease in net sales attributed to normalized demand and lower copper prices. Operating costs were unfavorably impacted by nonrecurring events including tornado and fire damages. Cash and short-term investments increased to $898.4 million.

What is the outlook for Mueller Industries, Inc. in the second half of 2023?

CEO Greg Christopher expects inflation and interest rates to remain elevated, affecting the global economy, but maintains a positive outlook for the second half despite the decline in overall demand and elevated expenses due to inflation and disruptions.