Mueller Industries

Sales jumped 25% to 1.43 billion dollars this quarter, and all three business segments sold more actual units, not just higher priced ones. Industrial Metals sales grew 31% and Piping Systems grew 27%. Management says backlogs are strong and demand keeps strengthening across commercial, industrial, and electrical markets.

Mueller closed two acquisitions in a single quarter, Bison Metals Technologies in March and Chicago Extruded Metals in June, spending 138 million dollars in cash. Bison already delivered a record quarter right out of the gate. The company generated 212 million dollars of cash from operations this quarter and still holds 1.42 billion dollars in cash with essentially no debt.

The residential construction recovery Mueller keeps hoping for has not arrived. Management again described US housing as something that will improve eventually, which is not a plan you can bank on. Climate segment sales grew just 5% to 145 million dollars, the weakest of the three segments, and its operating income was flat.

A big chunk of the sales growth came from copper prices, which averaged 6.16 dollars per pound, up 31% from last year. If copper falls, revenue and margins fall with it. Profit growth is already much slower than sales growth, with operating income up just 2% to 310 million dollars, and even adjusting for a one time gain last year it was up about 16%.