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

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(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.

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Results of Operations

Consolidated Results

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

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:

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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 first quarters of 2026 and 2025:

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

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$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 unconsolidat

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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 $247.4 million in 2025, representing an effective tax rate of 24.4 percent.  This rate was higher than what would be computed using the U.S. statutory federal rate primarily due to (i) the provision for state and local income taxes, net of the federal benefit, of $36.2 million and (ii) the effect of foreign statutory rates different from the U.S. federal rate and other foreign adjustments of $6.2 million. These items were partially offset by other adjustments of $7.6 million.

Income tax expense was $205.1 million in 2024, representing an effective tax rate of 25.0 percent.  This rate was higher than what would be computed using the U.S. statutory federal rate primarily due to (i) the provision for state and local income taxes, net of the federal benefit, of $19.8 million, (ii) the effect of foreign statutory rates different from the U.S. federal rate and other foreign adjustments of $9.3 million, and (iii) other adjustments of $3.6 million.

During 2025, we recognized net income of $8.6 million on our investments in unconsolidated affiliates, net of foreign tax, compared to net income of $2.2 million in 2024. The net income on these investments for 2025 included losses of $2.5 million for Tecumseh and income of $11.1 million for the retail distribution business. The net income on these investments for 2024 included losses of $9.5 million for Tecumseh and income of $11.7 million for the retail distribution business.

Piping Systems Segment

The following table compares summary operating results for 2025 and 2024 for the businesses comprising our Piping Systems segment:

The increase in net sales in 2025 was primarily attributable to (i) higher net selling prices of $299.1 million in the segment’s core product lines, primarily copper tube and copper fittings, (ii) incremental sales of $35.1 million recorded by Elkhart, and (iii) an increase in sales of $18.3 million in the segment’s non-core product lines. These increases were partially offset by lower unit sales volume of $154.2 million in the segment’s core product lines.

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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:

Gross margin as a percentage of sales was 31.9 percent compared with 29.2 percent in the prior year. The increase in cost of goods sold in 2025 was primarily due to the factors noted above regarding the change in net sales.

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

Selling, general, and administrative expense increased for 2025 primarily as a result of (i) product-related costs of $10.0 million, (ii) higher foreign currency transaction losses of $9.3 million, (iii) higher employment costs of $4.5 million, (iv) incremental expenses of $3.0 million associated with the acquisition of Elkhart, and (v) higher sales and marketing expense of $2.1 million.

During 2025, the segment recognized net gains on the disposal of assets of $15.0 million and 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. The segment also recognized fixed asset impairment charges on idled equipment of $2.0 million.

Industrial Metals Segment

The following table compares summary operating results for 2025 and 2024 for the businesses comprising our Industrial Metals segment:

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The increase in net sales in 2025 was primarily due to (i) incremental sales of $208.1 million recorded by Nehring, (ii) higher net selling prices of $37.8 million in the segment’s core product lines, primarily brass rod, and (iii) an increase in sales of $14.2 million in the segment’s non-core product lines. These increases were partially offset by lower unit sales volume of $57.8 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 2025 and 2024:

Gross margin as a percentage of sales was 16.0 percent compared with 16.2 percent in the prior year. The increase in cost of goods sold in 2025 was primarily due to the factors noted above regarding the change in net sales.

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

Selling, general, and administrative expense increased in 2025 primarily as a result of incremental expenses of $4.7 million associated with the acquisition of Nehring.

During 2025, the segment recognized fixed asset impairment charges on idled equipment of $1.7 million.

Climate Segment

The following table compares summary operating results for 2025 and 2024 for the businesses comprising our Climate segment:

Net sales increased for 2025 primarily as a result of an increase in volume and price in certain product lines.

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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:

Cost of goods sold increased in 2025, consistent with factors noted above regarding the change in net sales. Gross margin as a percentage of sales was 36.6 percent compared with 36.2 percent in the prior year.

Depreciation and amortization and selling, general, and administrative expenses were consistent with the prior year.

During 2025, the segment recognized net losses on the disposal of assets of $1.0 million. During 2024, the segment recognized net gains of $4.5 million on the sale of two buildings.

LIQUIDITY AND CAPITAL RESOURCES

The following table presents selected financial information for 2025 and 2024:

Cash Provided by Operating Activities

During 2025, net cash provided by operating activities was primarily attributable to (i) consolidated net income of $773.6 million, (ii) an increase in current liabilities of $35.1 million, and (iii) non-capital related insurance proceeds of $15.5 million for the March 2023 tornado in Covington, Tennessee. There were also increases due to non-cash adjustments primarily

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consisting of (i) depreciation and amortization of $68.6 million and (ii) stock-based compensation expense of $26.8 million. These increases were partially offset by (i) the gain of $41.1 million related to insurance proceeds for the March 2023 tornado in Covington, Tennessee, (ii) an increase in inventories of $40.4 million, (iii) gains on the disposal of assets of $25.9 million, (iv) an increase in accounts receivable of $19.1 million, (v) gains on the sale of securities of $16.7 million, and (vi) an increase in other assets of $16.4 million.

During 2024, net cash provided by operating activities was primarily attributable to (i) consolidated net income of $617.5 million, (ii) an increase in current liabilities of $24.4 million, (iii) non-capital related insurance proceeds of $18.9 million for the March 2023 tornado in Covington, Tennessee, and (iv) dividends from unconsolidated affiliates of $4.8 million. There were also increases due to non-cash adjustments primarily consisting of (i) depreciation and amortization of $53.4 million and (ii) stock-based compensation expense of $26.8 million. These increases were partially offset by (i) an increase in accounts receivable of $56.6 million, (ii) an increase in inventories of $32.8 million, and (iii) gains on the disposal of properties of $5.8 million.

Cash Used in Investing Activities

The major components of net cash used in investing activities in 2025 included (i) the purchase of short-term investments of $70.7 million, (ii) capital expenditures of $68.8 million, and (iii) investments in unconsolidated affiliates of $17.9 million. These uses were partially offset by (i) proceeds from the sale of securities of $88.4 million, (ii) proceeds from the sale of properties of $38.5 million, and (iii) insurance proceeds of $4.5 million for property and equipment related to the March 2023 tornado in Covington, Tennessee.

The major components of net cash used in investing activities in 2024 included (i) $602.7 million for the acquisitions of Nehring and Elkhart, net of cash acquired, (ii) capital expenditures of $80.2 million, (iii) the purchase of short-term investments of $21.3 million, (iv) investments in unconsolidated affiliates of $8.7 million, (v) the purchase of long-term investments of $6.8 million, and (vi) the issuance of notes receivable of $3.8 million. These uses were partially offset by (i) proceeds from the sale of securities of $98.5 million, (ii) proceeds from the sale of properties of $12.0 million, and (iii) insurance proceeds of $6.1 million for property and equipment related to the March 2023 tornado in Covington, Tennessee.

Cash Used in Financing Activities

For 2025, net cash used in financing activities consisted primarily of (i) $243.6 million used for the repurchase of common stock of the Company, (ii) $109.1 million used for the payment of regular quarterly dividends to stockholders of the Company, (iii) $29.5 million used to settle stock-based awards, and (iv) $12.2 million used for the payment of dividends to noncontrolling interests.

For 2024, net cash used in financing activities consisted primarily of (i) $89.1 million used for the payment of regular quarterly dividends to stockholders of the Company, (ii) $48.7 million used for the repurchase of common stock of the Company, and (iii) $22.9 million 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.  Our current ratio was 5.9 to 1 as of December 27, 2025.

As of December 27, 2025, $194.6 million of our cash and cash equivalents were held by foreign subsidiaries.  The Company continues to assert that a portion of the undistributed earnings of its foreign subsidiaries are permanently reinvested.  No taxes have been accrued with respect to these undistributed earnings or any additional outside basis differences. The Company has accrued appropriate taxes for any undistributed earnings that are not considered permanently reinvested.

We believe that cash held domestically, funds available through the Credit Agreement, and cash generated from U.S. based operations will be adequate to meet the future needs of our U.S. based operations.

Fluctuations in the cost of copper and other raw materials affect the Company’s liquidity.  Changes in material costs directly impact components of working capital, primarily inventories, accounts receivable, and accounts payable.  The price of copper has fluctuated significantly and averaged approximately $4.81 in 2025, $4.22 in 2024, and $3.86 in 2023.

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We have several environmental remediation obligations which we expect to pay over future years.  Approximately $1.7 million was spent during 2025 for environmental matters.  As of December 27, 2025, we expect to spend $3.2 million in 2026, $1.1 million in 2027, $0.9 million in 2028, $1.0 million in 2029, $0.9 million in 2030, and $11.8 million thereafter for ongoing projects.

Cash used to fund pension and other postretirement benefit obligations was $0.5 million in 2025 and $0.7 million in 2024.  We anticipate making contributions of approximately $1.2 million to these plans in 2026. In 2025 we withdrew from the IAM National Pension Fund and recognized $4.8 million in related expenses, which represents our best estimate of probable loss for the related withdrawal liability anticipated in 2026.

The Company declared and paid a quarterly cash dividend of 15 cents per common share during each quarter of 2023, 20 cents per common share during each quarter of 2024, and 25 cents per common share during each quarter of 2025.  Payment of dividends in the future is dependent upon our financial condition, cash flows, capital requirements, and other factors.

Capital Expenditures

During 2025 our capital expenditures were $68.8 million.  We anticipate investing approximately $80.0 million to $90.0 million for capital expenditures in 2026.

Long-Term Debt

The Company’s Credit Agreement provides for an unsecured $400.0 million revolving credit facility, which matures on March 31, 2026.  Funds borrowed under the Credit Agreement may be used for working capital purposes and other general corporate purposes.  In addition, the Credit Agreement provides a sublimit of $50.0 million for the issuance of letters of credit, a sublimit of $35.0 million for loans and letters of credit made in certain foreign currencies, and a swing line loan sublimit of $25.0 million.  Outstanding letters of credit and foreign currency loans reduce borrowing availability under the Credit Agreement.  There were no borrowings outstanding under the Credit Agreement at December 27, 2025. We are currently negotiating a new credit agreement to replace the current Credit Agreement upon maturity.

Jungwoo-Mueller has several secured revolving credit arrangements with a total borrowing capacity of KRW 18.0 billion (or approximately $12.2 million).  Borrowings are secured by the real property and equipment of Jungwoo-Mueller.  There were no borrowings outstanding at Jungwoo-Mueller as of December 27, 2025.

As of December 27, 2025, the Company had no debt outstanding.

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 December 27, 2025, we were in compliance with all of our debt covenants.

Share Repurchase Program

The Company’s Board of Directors has extended, until July 2026, its 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.  The Company may hold any shares repurchased in treasury or use a portion of the repurchased shares for stock-based compensation plans, as well as for other corporate purposes.  From its initial authorization in 1999 through December 27, 2025, the Company had repurchased approximately 19.0 million shares under this authorization.

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CONTRACTUAL CASH OBLIGATIONS

The following table presents payments due by the Company under contractual obligations with minimum firm commitments as of December 27, 2025:

(1)This includes contractual supply commitments totaling $1.31 billion at year-end prices; these contracts contain variable pricing based on Comex and the London Metals Exchange quoted prices. These commitments are for purchases of raw materials, primarily copper cathode and brass scrap, that are expected to be consumed in the ordinary course of business.

The above obligations will be satisfied with existing cash, funds available under the Credit Agreement, and cash generated by operations.  The Company has no off-balance sheet financing arrangements.

MARKET RISKS

The Company is exposed to market risks 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.  A discussion of the Company’s accounting for derivative instruments and hedging activities is included in “Note 1 - Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements.

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 forward 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 December 27, 2025, we held open futures contracts to purchase approximately $16.6 million of copper over the next 12 months related to fixed-price sales orders and to sell approximately $164.9 million of copper over the next 12 months months 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 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.  There were no open futures contracts to purchase natural gas at December 27, 2025.

Interest Rates

The Company had no variable-rate debt outstanding at December 27, 2025 and December 28, 2024.  At this borrowing level, a hypothetical 10 percent increase in interest rates would have had an insignificant unfavorable impact on our pre-tax earnings

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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 December 27, 2025, we had open forward contracts with a financial institution to sell approximately 5.3 million euros, 36.6 million Swedish kronor, and 10.9 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.  The net investment in foreign subsidiaries translated into U.S. dollars using the year-end exchange rates was $403.2 million at December 27, 2025 and $326.4 million at December 28, 2024.  The potential loss in value of the Company’s net investment in foreign subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates at December 27, 2025 and December 28, 2024 amounted to $40.3 million and $32.6 million, respectively.  This change would be reflected in the foreign currency translation component of AOCI in the equity section of our Consolidated Balance Sheets until the foreign subsidiaries are sold or otherwise disposed.

We have significant investments in foreign operations whose functional currency is the British pound sterling, the Mexican peso, the Canadian dollar, the South Korean won, and the Bahraini dinar.  In 2025, the value of the British pound increased approximately seven percent, the Mexican peso increased approximately 14 percent, the Canadian dollar increased approximately five percent, and the South Korean won increased approximately two percent relative to the U.S. dollar. The Bahraini dinar is pegged to the U.S. dollar.  The resulting net foreign currency translation losses were included in calculating net other comprehensive income for the year ended December 27, 2025 and were recorded as a component of AOCI.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s accounting policies are more fully described in “Note 1 - Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements.  As disclosed in Note 1, the preparation of financial statements in conformity with general accepted accounting principles in the United States requires management to make estimates and assumptions about future events that affect amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates.  Management believes the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective, and complex judgments.

Impairment of Goodwill

As of December 27, 2025, we had $298.2 million of recorded goodwill from our business acquisitions, representing the excess of the purchase price over the fair value of the net assets we have acquired.

Goodwill is subject to impairment testing, which is performed annually as of the first day of the fourth quarter unless circumstances indicate the need to accelerate the timing of the tests.  These circumstances include a significant change in the business climate, operating performance indicators, competition, or sale or disposition of a significant portion of one of our businesses.  In our evaluation of goodwill impairment, we perform a qualitative assessment at the reporting unit level that requires management judgment and the use of estimates to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount.  If the qualitative assessment is not conclusive, management compares the fair value of a reporting unit with its carrying amount and will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

We identify reporting units by evaluating components of our operating segments and combining those components with similar economic characteristics.  Reporting units with significant recorded goodwill include Domestic Piping Systems, B&K LLC, Great Lakes, European Operations, Nehring Electrical Works, and Flex Duct.

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The fair value of each reporting unit is estimated using a combination of the income and market approaches, incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Estimates used by management can significantly affect the outcome of the impairment test.  Changes in forecasted operating results and other assumptions could materially affect these estimates.

The accounting guidance allows us to first assess qualitative factors to determine whether additional indefinite-lived intangible asset impairment testing, including goodwill, is required. We utilized this qualitative assessment in the annual goodwill impairment testing for all reporting units, except the Nehring Electrical Works reporting unit, in the fourth quarter of 2025. Based on the qualitative assessment, the Company concluded that it was more likely than not that the fair value of those reporting units exceeded their respective carrying values. The Company chose to perform a quantitative impairment analysis in the fourth quarter of 2025 for its Nehring Electrical Works reporting unit. As a result of the quantitative analysis, no impairment loss was recognized for the goodwill of the reporting unit.

Management believes the future sales growth and EBITDA margins in the long-range plan and the discount rate used in the valuations requires use of judgment. If any of the Company's reporting units do not meet their long-range plan estimates or discount rates increase significantly, the Company could be required to perform an interim goodwill impairment analysis and record impairment charges in future periods. The assumptions used for reporting units with fair values exceeding carrying values of 10 percent or less are more sensitive to future performance and will be monitored accordingly.

Business Combinations

We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values. The excess of the consideration over the amount allocated to the assets and liabilities, if any, is recorded to goodwill. We use all available information to estimate fair values. We typically engage third-party valuation specialists to assist in the fair value determination of inventories, tangible long-lived assets, and intangible assets other than goodwill. The carrying values of acquired receivables and accounts payable have historically approximated their fair values as of the acquisition date. As necessary, we may engage third-party specialists to assist in the estimation of fair value for certain liabilities. We adjust the preliminary purchase price allocation, as necessary, typically up to one year after the acquisition closing date as we obtain more information regarding asset valuations and liabilities assumed.

Our acquisition accounting methodology contains uncertainties because it requires management to make assumptions and to apply judgment to estimate the fair value of acquired assets and liabilities. Management estimates the fair value of assets and liabilities based upon quoted market prices, the carrying value of the acquired assets and widely accepted valuation techniques, including discounted cash flows and market multiple analyses. Unanticipated events or circumstances may occur which could affect the accuracy of our fair value estimates, including assumptions regarding industry economic factors and business strategies.

If actual results are materially different than the assumptions we used to determine fair value of the assets and liabilities acquired through a business combination, it is possible that adjustments to the carrying values of such assets and liabilities will have an impact on our net earnings.

Environmental Reserves

We recognize an environmental reserve when it is probable that a loss is likely to occur and the amount of the loss is reasonably estimable.  We estimate the duration and extent of our remediation obligations based upon reports of outside consultants, internal and third-party estimates and analyses of cleanup costs and ongoing monitoring costs, communications with regulatory agencies, and changes in environmental law.  If we were to determine that our estimates of the duration or extent of our environmental obligations were no longer accurate, we would adjust our environmental reserve accordingly in the period that such determination is made.  Estimated future expenditures for environmental remediation are not discounted to their present value.

Environmental expenses that relate to ongoing operations are included as a component of cost of goods sold.  Environmental expenses related to non-operating properties are presented below operating income in the Consolidated Statements of Income.

Income Taxes

We estimate total income tax expense based on domestic and international statutory income tax rates in the tax jurisdictions where we operate, permanent differences between financial reporting and tax reporting, and available credits and incentives.

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Deferred income tax assets and liabilities are recognized for the future tax effects of temporary differences between the treatment of certain items for financial statement and tax purposes using tax rates in effect for the years in which the differences are expected to reverse.  Realization of certain components of deferred tax assets is dependent upon the occurrence of future events.

Valuation allowances are recorded when, in the opinion of management, it is more likely than not that all or a portion of the deferred tax assets will not be realized.  These valuation allowances can be impacted by changes in tax laws, changes to statutory tax rates, and future taxable income levels, and are based on our judgment, estimates, and assumptions.  In the event we were to determine that we would not be able to realize all or a portion of the net deferred tax assets in the future, we would increase the valuation allowance through a charge to income tax expense in the period that such determination is made.  Conversely, if we were to determine that we would be able to realize our deferred tax assets in the future, in excess of the net carrying amounts, we would decrease the recorded valuation allowance through a decrease to income tax expense in the period that such determination is made.

We record liabilities for known or anticipated tax issues based on our analysis of whether, and the extent to which, additional taxes will be due.  These unrecognized tax benefits are retained until the associated uncertainty is resolved.  Tax benefits for uncertain tax positions that are recognized in the Consolidated Financial Statements are measured as the largest amount of benefit, determined on a cumulative probability basis, that is more likely than not to be realized upon ultimate settlement.  To the extent we prevail in matters for which a liability for an uncertain tax position is established or are required to pay amounts in excess of the liability, our effective tax rate in a given period may be materially affected.

New Accounting Pronouncements

See “Note 1 – Summary of Significant Accounting Policies” in our Consolidated Financial Statements.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Annual 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 Annual 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 this Annual Report on Form 10-K, 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.

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MUELLER INDUSTRIES, INC.