Mueller Industries : 2021 Annual Report and 2022 Proxy

2021 ANNUAL REPORT | 2022 PROXY STATEMENT

MUELLER INDUSTRIES, INC.

RESULTS AT A GLANCE

SUMMARY OF OPERATIONS

2021

2020

2019

2018

2017

(Dollars in thousands except per share data)

($)

($)

($)

($)

($)

Net sales

3,769,345

2,398,043

2,430,616

2,507,878

2,266,073

Operating income Net income Adjusted EBITDA(1)

655,845

245,838

191,403

172,969 150,807

468,520

139,493

100,972

104,459 85,598

645,535

272,399

232,648

208,590 184,726

Diluted earnings per share Dividends per share(2)

8.25

2.47

1.79

1.82 1.49

0.52

0.40

0.40

0.40 8.40

SUMMARY OF CASH FLOW (Dollars in thousands)

2021

2020

2019

2018 2017

($)

($)

($)

($)

($)

Cash Flow from Operations Capital Expenditures

Free Cash Flow(3)

311,701 31,833 279,868

245,073 43,885 201,188

200,544 31,162 169,382

167,892 43,995

38,481 46,131

129,411

(2,136)

SIGNIFICANT YEAR-END DATA

2021

2020

2019

2018

2017

(Dollars in thousands except per share data)

($)

($)

($)

($)

($)

Cash and cash equivalents

87,924

119,075

97,944

72,616

120,269

Total Assets

1,728,936

1,528,568

1,370,940

1,369,549

1,320,173

Total Debt

1,875

327,876

386,254

496,698

465,072

Ratio of current assets to current liabilities Book value per share

2.7 to 1

2.4 to 1

3.0 to 1

3.0 to 1

3.1 to 1

21.33

13.61

11.30

9.67

9.03

2021 HIGHLIGHTS

GROSS MARGIN 25.0%

FREE CASH FLOW

$298.0

22.0%

$279.9

2018

2017

2018

2019

2020

2021

2017

2019

2020

2021

• (1) EBITDA is a non-GAAP financial measure. See Appendix A for a reconciliation of EBITDA to our results reported under GAAP.

• (2) Dividends in 2017 include a special dividend of $8.00 per share paid on March 9, 2017.

• (3) Free cash flow is a non-GAAP financial measure, which represents cash flow from operations minus capital expenditures. Both cash flow from operations and capital expenditures presented above are as reported in the Company's Annual Report on Form 10-K for the years presented.

z MESSAGE FROM

OUR CHAIRMAN

Dear Stockholders:

In 2021, Mueller Industries delivered its second consecutive year of record earnings amidst a macroeconomic environment marked by the ongoing pandemic, supply-chain disruptions and a difficult labor market. At Mueller, we strive to "Be Flexible and Receptive to Change," and that approach proved vital to our success.

Our results demonstrate what our Company can accomplish when its potential is unleashed and we fire on all cylinders. Favorable market conditions led to robust demand levels in all of our businesses. Our manufacturing facilities operated at very high levels of efficiency and productivity, and our sales and marketing teams proactively responded to significant levels of inflation across our supply chain by swiftly implementing necessary price increases.

Having now achieved our fourth consecutive year of double digit operating earnings growth, we remain committed to and focused on executing our long term strategic plan. Our priorities are to protect and expand our core businesses, grow our downstream value-added businesses, and to plant seeds in innovative products and emerging technologies. In so doing, we will continue to drive growth and create value for our stockholders.

Below are just a few examples of our achievements during the past year:

Strategic Execution

Expansion

In January 2021, we acquired the former Hart & Cooley flexible duct business, which complements the ATCO Flex business we acquired in 2018. We reintroduced it to the market as "H&C Flex" and the business has significantly benefitted from the implementation of our culture and best practices. Production continues to improve, and we are confident that H&C Flex will be an important supplier to the markets we serve, and an even more positive contributor to our 2022 results.

In December, we acquired the bank debt of the Mueller Middle East copper tube mill in Bahrain, in which we previously held a minority interest. The business had underperformed since commencing operations in 2018, and as such, required a new leadership team and vision. After acquiring the debt on favorable terms, we have restructured the business and accelerated investment plans so that the business can operate with a more stable and efficient capital platform. We anticipate that the business will be profitable in early 2022.

Innovation

We spent the full year installing our state of the art copper scrap refining system at our Mueller Europe operation in the United Kingdom. The project will be completed by the end of the second quarter of 2022, and will serve as the United Kingdom's only copper refinery. This investment will not only deliver important financial benefits to the Company, but it will also contribute to our sustainability goals. Specifically, the refining system will enable us to fully supply the needs of our mill by utilizing local copper scrap, thereby reducing our reliance upon imported raw materials (which are costly to mine and transport), and mitigating the costs associated with exporting copper scrap to be refined in other countries. Establishing such a circular economy is a vital benefit to both our Company and the communities in which we operate.

In today's tight labor environment, contractors across a wide spectrum of vocations are seeking products that reduce labor hours, training and skill requirements. This trend has paved the way for a rapidly evolving innovation in piping systems called "press fittings," which offer a way to join pipes mechanically (i.e., without a torch or flame). Since we first introduced our line of plumbing press technology in 2016, it has achieved double digit earnings growth on an annual basis. In late 2021, building on this momentum and in direct response to our customers' needs, we launched two new press product lines: our new "Carbon Steel Press Fitting" for use in natural gas systems, non-potable water applications and fire sprinkler systems, and our proprietary copper "ACR Press Fitting," which is used systems that carry refrigerant. As a global leader in air conditioning and refrigeration pipe and joining products, we are excited to bring this new functionality to our customers to help them adapt to these ongoing challenges.

Optimization

Although growth is our focus, we continually evaluate our portfolio of businesses to ensure they remain aligned with our long term objectives. Should an investment no longer fit within our long term growth strategy, or remain on track to achieve our high standard of financial and operational performance, we consider alternate courses of action. In 2021, we exercised the opportunity to divest of four businesses that while profitable, were not positioned to meet our long term expectations. The proceeds from these divestitures were substantial relative to the performance of the businesses, and the gains from these divestitures contributed $57.8 million of our operating income in 2021.

Financial Performance

Sales in 2021 grew by $1.4 billion, or 60%, to $3.8 billion. Organic sales increased in all three business segments as market demand outpaced capacity for the majority of the year in every one of our businesses. COMEX copper rose 51% over the prior year, thereby contributing to our increased revenues, as we successfully passed these costs through to our customers in a timely manner. Moreover, growth through acquisitions (including the H&C Flex acquisition, and our August 2020 acquisition of the Kessler Sales and Distribution business) also contributed to the overall increase in sales.

Operating income in 2021 reached $656 million, a $410 million increase over the prior year. Adjusting for the gains from the proceeds of the four divestitures, the improvement was $352 million. This growth was fueled by our strong sales, combined with a 400 basis point expansion of our gross margin stemming from effective price management in response to wage inflation and escalating consumable, freight and distribution costs.

In 2021, we generated $312 million in cash from operations, fueled by the strength of our operating performance, after investing an additional $212 million in working capital to support our growth. This robust cash generation was the highest in our history, and paved the way for us to opportunistically pay down $330 million of debt, fund $62 million in acquisitions and capital expenditures, and return $29 million to our valued stockholders in the form of quarterly dividends. We closed the year with a strong balance sheet, including $88 million of cash on hand and zero net debt.

While we have ambitious goals for the future, we continue to employ a prudent and balanced approach for managing our capital allocation and risk, prioritizing re-investment in our operations and acquisitions to drive growth, as well as stockholder returns. Given our strong cash generation and healthy balance sheet, we recently announced a 92% increase in our regular quarterly dividend for 2022 from $0.13 per share to $0.25 per share. On an annualized run rate, this increases our dividend from $0.52 per share to $1.00 per share.

A BALANCED APPROACH TO CAPITAL ALLOCATION:

5-YEAR HISTORY

11%

17%

Regular Dividends

Share Repurchases

Sustainability

Ensuring the safety, health and well-being of our employees is the most critical pillar of our business and values. In 2021, despite increased staffing at all locations to support ongoing demand, our OSHA incidence rate remained at our lowest level of all time. To better demonstrate our longstanding commitment to the critical environmental, social and governance measures that we and our stakeholders value, we recently published our inaugural Sustainability Report. Our newly updated 2022 Sustainability Report is also now available on our website atwww.muellerindustries.com/about-us/sustainability/, and we invite you to follow our progress in these areas.

Outlook and Conclusion

We look to the future with high expectations for our Company. At our core, we are a manufacturer, and the diverse array of products we produce and distribute are essential in supporting, among other critical infrastructure needs, clean air and water applications, food preservation, medical and health related technologies, transportation and climate comfort. Our products are integral to residential home construction, but they are used even more extensively in the schools, firehouses, convenience stores, supermarkets, hospitals, office buildings, hotels and other service facilities that support burgeoning residential communities. As we head into 2022, demand remains at very high levels across our businesses, and we are optimistic that this will continue.

Once again, I want to express my appreciation to our dedicated employees, loyal customers and valued stockholders for their confidence and continued support.

Very truly yours,

Greg Christopher

Chairman and Chief Executive Officer

NOTICE

THURSDAY, MAY 5, 2022

8:00 A.M., Central Time

150 Schilling Boulevard,

Second Floor

Collierville, Tennessee 38017

REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:

BY INTERNEThttp://www.proxyvote.com

BY TELEPHONE

Call the telephone number on your proxy card.

BY MAIL

Mark, date, sign and return your proxy card in the enclosed envelope.

IN PERSON

Attend the Annual meeting at the

Company's headquarters.

It is important that your shares be represented at the

Annual Meeting regardless of the size of your holdings. Whether or not you intend to be present at the meeting in person, we urge you to mark, date and sign the enclosed proxy card and return it in the enclosed self-addressed envelope, which requires no postage if mailed in the

United States.

of Annual Meeting of Stockholders

PURPOSE

To vote on three proposals:

• 1. To elect eight directors, each to serve on the Company's Board of Directors (the "Board"), until the next annual meeting of stockholders (tentatively scheduled for May 4, 2023), or until his or her successor is elected and qualified;

• 2. To consider and act upon a proposal to approve the appointment of Ernst & Young LLP, independent registered public accountants, as auditors of the Company for the fiscal year ending December 31, 2022; and

• 3. To conduct an advisory vote on the compensation of the Company's named executive officers ("NEOs").

To conduct and transact such other business as may properly be brought before the Annual Meeting and any adjournment thereof.

RECORD DATE

Only stockholders of record at the close of business on March 18, 2022, will be entitled to notice of and vote at the Annual Meeting or any adjournment(s) thereof. A complete list of stockholders entitled to vote at the Annual Meeting will be prepared and maintained at the Company's corporate headquarters at 150 Schilling Boulevard, Suite 100, Collierville, Tennessee 38017. This list will be available for inspection by stockholders of record during normal business hours for a period of at least 10 days prior to the Annual Meeting.

/s/ Christopher J. Miritello

Christopher J. Miritello

Corporate Secretary

March 31, 2022