Mueller Industries Inc: Form 10-Q for the period ended Mar 28, 2026

General Overview

We are a leading manufacturer of copper, brass, and aluminum products. The range of products we manufacture is broad: copper tube and fittings; line sets; brass rod, bar, and shapes; aluminum and brass forgings; aluminum impact extrusions; refrigeration valves and fittings; pressure vessels; steel nipples; insulated flexible duct systems; and high-quality wire and cable solutions. We also resell brass and plastic plumbing valves, plastic fittings, malleable iron fittings, faucets, and plumbing specialty products. Our operations are located throughout the United States and in Canada, Mexico, Great Britain, South Korea, the Middle East, and China.

Each of our reportable segments is composed of certain operating segments that are aggregated primarily by the nature of products offered as follows:

• Piping Systems: The Piping Systems segment is composed of Domestic Piping Systems Group, Great Lakes Copper, European Operations, Trading Group, Jungwoo-Mueller (our South Korean joint venture), and Mueller Middle East

(our Bahraini joint venture). The Domestic Piping Systems Group manufactures and distributes copper tube, fittings, and line sets. These products are manufactured in the U.S., sold in the U.S., and exported to markets worldwide. Great Lakes Copper manufactures copper tube and line sets in Canada and sells the products primarily in the U.S. and Canada. European Operations manufactures copper tube in the United Kingdom, which is sold throughout Europe. The Trading Group manufactures pipe nipples and sources products for import distribution in North America. Jungwoo-Mueller manufactures copper-based joining products that are sold worldwide. Mueller Middle East manufactures copper tube and serves markets in the Middle East and Northern Africa. The Piping Systems segment sells products to wholesalers in the plumbing and refrigeration markets, distributors to the manufactured housing and recreational vehicle industries, building material retailers, and air-conditioning original equipment manufacturers (OEMs).

• Industrial Metals: The Industrial Metals segment is composed of Brass Rod, Impacts & Micro Gauge, Brass Value-Added Products, Precision Tube, and Electrical Group. The segment manufactures and sells brass rod, bar, and shapes; aluminum and brass forgings; aluminum impact extrusions; specialty copper, copper alloy, and aluminum tube; and high-quality wire and cable solutions. The segment manufactures and sells its products primarily to domestic OEMs and distributors, and utilities in the industrial, transportation, construction, heating, ventilation, and air-conditioning, plumbing, refrigeration, energy, telecommunication, and electrical transmission and distribution markets.
• Climate: The Climate segment is composed of Refrigeration Products, Westermeyer, Turbotec, Flex Duct, and Linesets, Inc. The segment manufactures and sells refrigeration valves and fittings, high pressure components, coaxial heat exchangers, insulated HVAC flexible duct systems, and line sets. The segment sells its products primarily to the heating, ventilation, air-conditioning, and refrigeration markets in the U.S.

New housing starts and commercial construction are important determinants of our sales to the heating, ventilation, and air-conditioning, refrigeration, and plumbing markets because the principal end use of a significant portion of our products is in the construction of single and multi-family housing and commercial buildings. Repairs and remodeling projects are also important drivers of underlying demand for these products. In addition, our products are used in various transportation, automotive, and industrial applications.

According to the U.S. Census Bureau, the January 2026 seasonally adjusted annual rate of new housing starts was 1.49 million, compared to the March 2025 rate of 1.36 million. The average 30-year fixed mortgage rate was 6.11 percent for the first quarter of 2026 and 6.60 percent for the year ended December 2025. The private non-residential construction sector includes offices, industrial, health care, and retail projects. According to the U.S. Census Bureau, the seasonally adjusted annual value of private nonresidential construction put in place was $728.2 billion in January 2026 compared to the January 2025 rate of $751.1 billion.

Profitability of certain of our product lines depends upon the “spreads” between the cost of raw material and the selling prices of our products. The open market prices for copper cathode and copper and brass scrap, for example, influence the selling price of copper tube and brass rod, two principal products manufactured by the Company. We attempt to minimize the effects on profitability from fluctuations in material costs by passing through these costs to our customers; however, margins of our businesses that account for inventory on a FIFO basis may be impacted in periods of significant fluctuations in material costs. Our earnings and cash flow are dependent upon these spreads that fluctuate based upon market conditions.

Earnings and profitability are also impacted by unit volumes that are subject to market trends, such as substitute products, imports, technologies, and market share. We intensively manage our pricing structure while attempting to maximize profitability. From time-to-time, this practice results in lost sales opportunities and lower volume. For plumbing systems, plastics are the primary substitute product; these products represent an increasing share of consumption. For certain air-conditioning and refrigeration applications, aluminum-based systems are the primary substitution threat. We cannot predict the acceptance or the rate of switching that may occur. U.S. consumption of copper tube and brass rod is still predominantly supplied by U.S. manufacturers. In recent years, brass rod consumption in the U.S. has declined due to the outsourcing of many manufactured products to offshore regions.

Results of Operations

Consolidated Results

The following table compares summary operating results for the first quarters of 2026 and 2025:

(In thousands)

The increase in net sales during the first quarter of 2026 was primarily due to (i) higher net selling prices of $219.1 million in our core product lines, primarily copper tube, brass rod, and high-quality wire and cable, related to the rise in raw material costs, and (ii) an increase in sales of $16.8 million in our non-core product lines. These increases were partially offset by (i) lower unit sales volume of $33.4 million in our core product lines, primarily copper tube, and (ii) a decrease in sales of $9.7 million as a result of the sale of Sherwood during the first quarter of 2026.

Net selling prices generally fluctuate with changes in raw material costs. Changes in raw material costs are generally passed through to customers by adjustments to selling prices. The following graph shows the Comex average copper price per pound by quarter for the current and prior fiscal years:

The following tables compare cost of goods sold and operating expenses as dollar amounts and as a percent of net sales for the first quarters of 2026 and 2025:

(In thousands)

Cost of goods sold increased in the first quarter of 2026 primarily due to the factors noted above regarding the change in net sales. Gross margin as a percentage of sales was 30.0 percent compared with 27.2 percent in the prior year quarter. Depreciation and amortization was consistent with the first quarter of 2025. Selling, general, and administrative expense increased in the first quarter of 2026 primarily as a result of (i) higher employment costs, including incentive compensation, of $6.8 million and (ii) higher legal and professional fees of $3.5 million. These increases were partially offset by (i) lower product-related costs of $4.7 million, (ii) lower taxes and insurance of $0.5 million, (iii) the absence of $0.5 million of expenses associated with Sherwood, and (iv) higher foreign currency transaction gains of $0.4 million. In addition, during the first quarter of 2026, we recognized a gain of $41.4 million on the sale of our Sherwood business as well as fixed asset impairment charges on idled equipment of $2.7 million. During the first quarter of 2026 we recognized net losses on the disposal of assets of $1.5 million, compared to net gains on the disposal of assets of $14.5 million recognized during the first quarter of 2025.

Interest income was higher in the first quarter of 2026 primarily as a result of higher interest rates. During the first quarter of 2026, we recognized unrealized losses on short-term investments of $2.0 million compared to unrealized losses of $5.0 million in the first quarter of 2025. We recognized other expense, net, of $1.2 million in the first quarter of 2026 compared to other income, net, of $0.1 million in the first quarter of 2025. This change was primarily due to higher environmental remediation expense for our non-operating properties in 2026.

Our effective tax rate for the first quarter of 2026 was 25 percent compared with 24 percent for the same period last year. The primary items impacting the effective tax rate were (i) increases related to the provision for state income taxes, net of the federal benefit, of $10.7 million and (ii) the effect of foreign tax rates higher than statutory tax rates and other foreign adjustments of $2.2 million. This was partially offset by decreases to other items of $0.7 million.

For the first quarter of 2025, the difference between the effective tax rate and the amount computed using the U.S. federal statutory rate was primarily attributable to (i) increases related to the provision for state income taxes, net of the federal benefit, of

$6.8 million and (ii) the effect of foreign tax rates higher than statutory tax rates and other foreign adjustments of $2.1 million. These were partially offset by other adjustments of $1.9 million.

During the first quarters of 2026 and 2025, we recognized net income of $0.1 million and net losses of $0.5 million, respectively, on our investments in unconsolidated affiliates.

Piping Systems Segment

The following table compares summary operating results for the first quarters of 2026 and 2025 for the businesses comprising our Piping Systems segment:

(In thousands)

The increase in net sales during the first quarter of 2026 was primarily attributable to (i) higher net selling prices in the segment’s core product lines, primarily copper tube, of $162.6 million and (ii) an increase in sales of $15.4 million in the segment’s non-core product lines. These increases were partially offset by lower unit sales volume of $54.8 million in the segment’s core product lines.

The following tables compare cost of goods sold and operating expenses as dollar amounts and as a percent of net sales for the first quarters of 2026 and 2025:

(In thousands)

The increase in cost of goods sold during the first quarter of 2026 was primarily due to the factors noted above regarding the change in net sales. Gross margin as a percentage of sales was 33.9 percent compared with 28.4 percent in the prior year quarter.

Depreciation and amortization was consistent with the first quarter of 2025. Selling, general, and administrative expense decreased for the first quarter of 2026 primarily as a result of lower product-related costs of $4.7 million, partially offset by higher employment costs, including incentive compensation, of $2.9 million. In addition, during the first quarter of 2026 the segment recognized fixed asset impairment charges on idled equipment of $2.7 million and net losses on the disposal of assets of $1.5 million. During the first quarter of 2025 the segment recognized net gains on the disposal of assets of $14.5 million.

Industrial Metals Segment

The following table compares summary operating results for the first quarters of 2026 and 2025 for the businesses comprising our Industrial Metals segment:

(In thousands)

The increase in net sales during the first quarter of 2026 was primarily due to (i) higher net selling prices of $56.5 million in the segment’s core product lines, primarily brass rod and high-quality wire and cable, and (ii) higher unit sales volume of $21.5 million in the segment’s core product lines. These increases were slightly offset by a decrease in sales of $9.7 million as a result of the sale of Sherwood during the first quarter of 2026.

The following tables compare cost of goods sold and operating expenses as dollar amounts and as a percent of net sales for the first quarters of 2026 and 2025:

(In thousands)

The change in cost of goods sold during the first quarter of 2026 was primarily due to the factors noted above regarding the change in net sales. Gross margin as a percentage of sales was 18.4 percent compared with 17.6 percent in the prior year quarter. Depreciation and amortization was consistent with the first quarter of 2025. Selling, general, and administrative expense increased during the first quarter of 2026 primarily due to (i) higher legal and professional fees of $0.6 million and (ii) higher employment costs of $0.4 million. These increases were partially offset by the absence of $0.5 million of expenses associated with Sherwood.

Climate Segment

The following table compares summary operating results for the first quarters of 2026 and 2025 for the businesses comprising our Climate segment:

(In thousands)

Net sales for the segment were consistent with the first quarter of 2025.

The following tables compare cost of goods sold and operating expenses as dollar amounts and as a percent of net sales for the first quarters of 2026 and 2025:

(In thousands)

Cost of goods sold increased during the first quarter of 2026 primarily due to the rise in raw material costs. Gross margin as a percentage of sales was 33.9 percent compared with 36.2 percent in the prior year quarter. Depreciation and amortization and selling, general, and administrative expense were consistent with the first quarter of 2025.

Liquidity and Capital Resources

The following table presents selected financial information for the first quarters of 2026 and 2025:

(In thousands)

Cash Flows from Operating Activities

During the quarter ended March 28, 2026, net cash provided by operating activities was primarily attributable to (i) consolidated net income of $241.4 million and (ii) an increase in current liabilities of $88.9 million. There were also increases due to non-cash adjustments primarily consisting of (i) depreciation and amortization of $16.7 million and (ii) stock-based compensation expense of $7.3 million. These increases were partially offset by (i) an increase in accounts receivable of $200.2 million, (ii) an increase in inventories of $43.9 million, and (iii) a gain of $41.4 million related to the sale of the Sherwood business.

During the quarter ended March 29, 2025, net cash provided by operating activities was primarily attributable to (i) consolidated net income of $159.3 million, (ii) an increase in current liabilities of $57.7 million, and (iii) dividends from unconsolidated affiliates of $2.8 million. There were also increases due to non-cash adjustments primarily consisting of (i) depreciation and amortization of $17.1 million, (ii) stock-based compensation expense of $6.2 million, and (iii) unrealized losses on short-term investments of $5.0 million. These increases were partially offset by (i) an increase in accounts receivable of $101.5 million, (ii) an increase in inventories of $18.5 million, and (iii) net gains on the disposal of assets of $14.5 million.

Cash Flows from Investing Activities

The major components of net cash provided by investing activities during the quarter ended March 28, 2026 included proceeds from the sale of the Sherwood business, net of cash sold, of $57.0 million, partially offset by capital expenditures of $17.2 million.

The major components of net cash used in investing activities during the quarter ended March 29, 2025 included (i) the purchase of short-term investments of $26.6 million and (ii) capital expenditures of $16.6 million. These uses were partially offset by proceeds from the sale of properties of $19.7 million.

Cash Flows from Financing Activities

For the quarter ended March 28, 2026, net cash used in financing activities consisted primarily of (i) $75.0 million used to repurchase common stock of the Company, (ii) $38.0 million used for the payment of regular quarterly dividends to stockholders of the Company, and (iii) $4.8 million used for the payment of dividends to noncontrolling interests.

For the quarter ended March 29, 2025, net cash used in financing activities consisted primarily of (i) $243.6 million used to repurchase common stock of the Company, (ii) $27.3 million used for the payment of regular quarterly dividends to stockholders of the Company, (iii) $12.2 million used for the payment of dividends to noncontrolling interests, and (iv) $4.5 million net cash used to settle stock-based awards.

Liquidity and Outlook

We believe that cash provided by operations, funds available under the Credit Agreement, and cash on hand will be adequate to meet our liquidity needs, including working capital, capital expenditures, and debt payment obligations.

As of March 28, 2026, we had $1.4 billion of cash on hand and $372.5 million available to be drawn under the Credit Agreement. The Credit Agreement matured on March 31, 2026 and the Company entered into a new credit agreement on March 27, 2026. Under the terms of the new credit agreement, there was $72.5 million available to be drawn. Our current ratio was 5.4 to 1.

We have significant environmental remediation obligations which we expect to pay over future years. Cash used for environmental remediation activities was approximately $1.2 million during the first quarter of 2026. We expect to spend approximately $3.6 million over the next twelve months for ongoing environmental remediation activities.

The Company declared a quarterly cash dividend of 35.0 cents and 25.0 cents per common share during the first quarters of 2026 and 2025, respectively. Payment of dividends in the future is dependent upon our financial condition, cash flows, capital requirements, earnings, and other factors.

On March 30, 2026, the Company entered into a definitive agreement to acquire Bison Metals Technologies LLC for approximately $142.0 million in cash on hand at closing.

Long-Term Debt

As of March 28, 2026, the Company had no debt.

The Company’s Credit Agreement provides for an unsecured $400.0 million revolving credit facility, which matures March 31, 2026. There were no borrowings outstanding under the Credit Agreement as of March 28, 2026. The Credit Agreement backed approximately $27.5 million in letters of credit at the end of the first quarter of 2026.

On March 27, 2026, the Company entered into a new credit agreement to replace its prior Credit Agreement that matured on March 31, 2026. The new credit agreement provides for an unsecured $100.0 million revolving credit facility, which matures March 27, 2031.

Covenants contained in the Company’s financing obligations require, among other things, the maintenance of minimum levels of tangible net worth and the satisfaction of certain minimum financial ratios. As of March 28, 2026, the Company was in compliance with all of its debt covenants.

Share Repurchase Program

The Board of Directors has extended, until July 2026, the authorization to repurchase up to 40 million shares of the Company’s common stock through open market transactions or through privately negotiated transactions. We may cancel, suspend, or extend the time period for the repurchase of shares at any time. Any repurchases will be funded primarily through existing cash and cash from operations. We may hold any shares repurchased in treasury or use a portion of the repurchased shares for our stock-based compensation plans, as well as for other corporate purposes. From its initial authorization in 1999 through March 28, 2026, the Company has repurchased approximately 19.6 million shares under this authorization. See Part II., Item 2. below for information about the Company’s share repurchases during the quarter ended March 28, 2026.

Contractual Cash Obligations

There have been no significant changes in our contractual cash obligations reported at December 27, 2025.

The Company is exposed to market risk from changes in raw material and energy costs, interest rates, and foreign currency exchange rates. To reduce such risks, we may periodically use financial instruments. Hedging transactions are authorized and executed pursuant to policies and procedures. Further, we do not buy or sell financial instruments for trading purposes.

Cost and Availability of Raw Materials and Energy

Raw materials, primarily copper and brass, represent the largest component of the Company’s variable costs of production. The cost of these materials is subject to global market fluctuations caused by factors beyond our control. Significant increases in the cost of metal, to the extent not reflected in prices for our finished products, or the lack of availability could materially and adversely affect our business, results of operations, and financial condition.

The Company occasionally enters into future fixed-price arrangements with certain customers. We may utilize futures contracts to hedge risks associated with these forward fixed-price arrangements. We may also utilize futures contracts to manage price risk associated with inventory. Depending on the nature of the hedge, changes in the fair value of the futures contracts will either be offset against the change in fair value of the inventory through earnings or recognized as a component of accumulated other comprehensive income (AOCI) in equity and reflected in earnings upon the sale of inventory. Periodic value fluctuations of the contracts generally offset the value fluctuations of the underlying fixed-price transactions or inventory. At March 28, 2026, we held open futures contracts to purchase approximately $46.1 million of copper over the next nine months related to fixed-price sales orders and to sell approximately $5.0 million of copper over the next month related to copper inventory.

We may enter into futures contracts or forward fixed-price arrangements with certain vendors to manage price risk associated with natural gas purchases. The effective portion of gains and losses with respect to these positions are deferred in equity as a component of AOCI and reflected in earnings upon consumption of natural gas. Periodic value fluctuations of the futures contracts generally offset the value fluctuations of the underlying natural gas prices. As of March 28, 2026, we held no open futures contracts to purchase natural gas.

Interest Rates

At March 28, 2026, we had no variable-rate debt and $27.5 million in letters of credit outstanding. At this borrowing level, a hypothetical 10 percent increase in interest rates would have had an insignificant unfavorable impact on our pretax earnings and cash flows. The primary interest rate exposure on variable-rate debt is based on the Secured Overnight Financing Rate (SOFR).

Foreign Currency Exchange Rates

Foreign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than an entity’s functional currency. The Company and its subsidiaries generally enter into transactions denominated in their respective functional currencies. We may utilize certain futures or forward contracts with financial institutions to hedge foreign currency transactional exposures. Gains and losses with respect to these positions are deferred in equity as a component of AOCI and reflected in earnings upon collection of receivables or payment of commitments. At March 28, 2026, we had open forward contracts with a financial institution to sell approximately 6.4 million euros, 8.5 million Swedish kronor, and 2.9 million Norwegian kroner through April 2026.

The Company’s primary foreign currency exposure arises from foreign-denominated revenues and profits and their translation into U.S. dollars. The primary currencies to which we are exposed include the Canadian dollar, the British pound sterling, the Mexican peso, the South Korean won, and the Bahraini dinar. The Company generally views its investments in foreign subsidiaries with a functional currency other than the U.S. dollar as long-term. As a result, we generally do not hedge these net investments.

Cautionary Statement Regarding Forward Looking Information

This Quarterly Report contains various forward-looking statements and includes assumptions concerning the Company’s operations, future results, and prospects. These forward-looking statements are based on current expectations and are subject to risk and uncertainties, and may be influenced by factors that could cause actual outcomes and results to be materially different from those predicted. The forward-looking statements reflect knowledge and information available as of the date of preparation of the Quarterly Report, and the Company undertakes no obligation to update these forward-looking statements. We identify the forward-looking statements by using the words “anticipates,” “believes,” “expects,” “intends” or similar expressions in such statements.

In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statement identifying important economic, political, and technological factors, among others, which could cause actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. In addition to those factors discussed under “Risk Factors” in the Annual Report on Form 10-K for the year ended December 27, 2025, such factors include: (i) the current and projected future business environment, including interest rates and capital and consumer spending; (ii) the domestic housing and commercial construction industry environment; (iii) availability and price fluctuations in commodities (including copper, natural gas, and other raw materials); (iv) competitive factors and competitor responses to the Company’s initiatives; (v) stability of government laws and regulations, including taxes; (vi) the impact of enhanced U.S. tariffs, import/export restrictions or other trade barriers on global economic conditions, financial markets and our business; (vii) availability of financing; and (viii) continuation of the environment to make acquisitions, domestic and foreign, including regulatory requirements and market values of candidates.

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure information required to be disclosed in Company reports filed under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(e) of the Exchange Act as of March 28, 2026. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of March 28, 2026 to ensure that information required to be disclosed in Company reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the Company’s fiscal quarter ending March 28, 2026, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company is exposed to risk as it operates its businesses. To provide a framework to understand the operating environment of the Company, we have provided a brief explanation of the more significant risks associated with our businesses in our 2025 Annual Report on Form 10-K. There have been no material changes in risk factors that were previously disclosed in our 2025 Annual Report on Form 10-K. Additionally, the operating results of the Company’s unconsolidated affiliates may be adversely affected by unfavorable economic and market conditions.