MUELLER INDUSTRIES INC (MLI)

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

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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 June 2026 seasonally adjusted annual rate of new housing starts was 1.43 million, compared to the June 2025 rate of 1.38 million. The average 30-year fixed mortgage rate was 6.28 percent for the first half 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 $738.7 billion in May 2026 compared to the May 2025 rate of $791.0 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.

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Results of Operations

Consolidated Results

The following table compares summary operating results for the second quarter and first half of 2026 and 2025:

The increase in net sales during the second quarter of 2026 was primarily due to (i) higher net selling prices of $184.6 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, (ii) sales of $62.5 million recorded by Bison, acquired on March 30, 2026, (iii) an increase in sales of $36.0 million in our non-core product lines, and (iv) higher unit sales volume of $17.4 million in our core product lines, primarily brass rod and high-quality wire and cable. These increases were partially offset by a decrease in sales of $10.7 million as a result of the sale of Sherwood during the first quarter of 2026.

The increase in net sales during the first half of 2026 was primarily due to (i) higher net selling prices of $400.7 million in our core product lines, (ii) sales of $62.5 million recorded by Bison, and (iii) an increase in sales of $52.7 million in our non-core product lines. These increases were partially offset by (i) a decrease in sales of $20.3 million as a result of the sale of Sherwood and (ii) lower unit sales volume of $13.0 million in our core product lines.

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:

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

Q2 2026 compared to Q2 2025

Cost of goods sold increased in the second quarter of 2026 primarily due to the factors noted above regarding the change in net sales. Gross margin as a percentage of sales was 27.7 percent compared with 31.0 percent in the prior year quarter. Depreciation and amortization was consistent with the second quarter of 2025. Selling, general, and administrative expense increased slightly in the second quarter of 2026 primarily as a result of (i) higher employment costs, including incentive compensation, of $1.6 million, (ii) higher legal and professional fees of $1.5 million, and (iii) incremental expenses of $1.4 million associated with Bison. These increases were largely offset by (i) lower product-related costs of $1.4 million, (ii) lower foreign currency transaction losses of $1.2 million, (iii) the absence of $0.5 million of expenses associated with Sherwood, and (iv) lower taxes and insurance of $0.4 million. In addition, during the second quarter of 2025, we recognized a gain of $36.3 million for the excess of insurance proceeds received over the losses incurred related to the March 2023 tornado at our Covington, Tennessee manufacturing operation.

Interest income was higher in the second quarter of 2026 primarily as a result of higher interest rates. During the second quarters of 2026 and 2025, we recognized unrealized gains on short-term investments of $6.5 million and $13.2 million, respectively. Other expense, net, was consistent with the second quarter of 2025.

Our effective tax rate for the second quarter of 2026 was 25 percent compared with 24 percent for the same period

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FINANCIAL REVIEW

The Financial Review section of our Annual Report on Form 10-K consists of the following: Management’s Discussion and Analysis of Results of Operations and Financial Condition (MD&A), the Consolidated Financial Statements, and Other Financial Information, all of which include information about our significant accounting policies, practices, and the transactions that impact our financial results.  The following MD&A describes the principal factors affecting the results of operations, liquidity and capital resources, contractual cash obligations, and the critical accounting estimates of the Company.  The following discussion compares our results for the year ended December 27, 2025 to the year ended December 28, 2024. The discussion comparing our results for the year ended December 28, 2024 to the year ended December 30, 2023 is included within the MD&A in our 2024 Annual Report on Form 10-K and is incorporated herein by reference. The discussion in the Financial Review section should be read in conjunction with the other sections of this Annual Report, particularly “Item 1: Business” and our other detailed discussion of risk factors included in this MD&A.

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; compressed gas valves; 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.  Mueller’s operations are located throughout the United States and in Canada, Mexico, Great Britain, South Korea, the Middle East, and China.

Each of the 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 manufacture 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 Nehring Electrical Works Company (Nehring).  The segment manufactures and sells brass rod, bar, and shapes; aluminum and brass forgings; aluminum impact extrusions; gas valves and assemblies; 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 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, actual housing starts in the U.S. were 1.36 million in 2025 compared to 1.37 million in 2024.  The average 30-year fixed mortgage rate was approximately 6.60 percent in 2025 and 6.72 percent in 2024.  The private

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nonresidential 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 $737.4 billion in October 2025 and $744.0 billion in 2024.

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 2025 and 2024:

The increase in net sales in 2025 was primarily due to (i) higher net selling prices of $336.9 million in our core product lines, primarily copper tube, copper fittings, and brass rod, (ii) incremental sales of $208.1 million recorded by Nehring, acquired in fiscal June 2024, (iii) an increase in sales of $41.5 million in our non-core product lines, and (iv) incremental sales of $35.1 million recorded by Elkhart, acquired in fiscal August 2024. These increases were partially offset by lower unit sales volume of $212.0 million in our core product lines.

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 most recent three-year period:

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The following tables compare cost of goods sold and operating expenses as dollar amounts and as a percent of net sales for 2025 and 2024:

The increase in cost of goods sold in 2025 was primarily due to the factors noted above regarding the change in net sales. Gross margin as a percentage of sales was 29.0 percent compared with 27.7 percent in the prior year.

Depreciation and amortization increased in 2025 primarily as a result of incremental expenses associated with the acquisitions of Nehring and Elkhart.

Selling, general, and administrative expenses increased in 2025 primarily due to (i) product-related costs of $10.0 million, (ii) higher foreign currency transaction losses of $9.9 million, (iii) higher employment costs of $4.7 million, (iv) higher sales and

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marketing costs of $2.1 million, (v) higher repairs and maintenance of $1.3 million, and (vi) incremental expenses of $0.8 million associated with the acquisitions of Nehring and Elkhart. These increases were partially offset by income of $4.6 million recognized for a change in fair value of contingent consideration arrangements associated with businesses acquired.

During 2025, we recognized a gain of $41.1 million for the excess of insurance proceeds received over the losses incurred related to the March 2023 tornado at our Covington, Tennessee manufacturing operation and net gains on the disposal of assets of $25.9 million. We also recognized fixed asset impairment charges on idled equipment of $3.7 million.

During 2024, we recognized net gains on the disposal of assets of $5.8 million.

Interest income was lower in 2025 than in 2024 primarily as a result of lower interest rates.

During 2025, we recognized realized and unrealized gains on short-term investments of $18.5 million compared to $0.9 million in 2024. These gains were higher in 2025 due to the performance of short-term investments.

During 2025, we recognized a $4.8 million expense related to the withdrawal from a multiemployer pension plan. During 2024, we recognized a gain of $1.3 million for the extinguishment of a New Markets Tax Credit liability.

Environmental expense for our non-operating properties in 2025 was consistent with 2024.

In 2025, we recognized other income, net of $1.3 million compared to other expense, net, of $2.9 million in 2024. This change was primarily due to (i) net losses of $2.4 million on foreign currency hedges recognized in 2024 and (ii) investment expenses of $1.6 million recognized in 2024.

Income tax expense was

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