Financial Data and Key Metrics Changes - Consolidated net sales increased by 7.3% to $333.2 million compared to the prior year, driven by growth in both water flow solutions and water management solutions [15][23] - Gross profit decreased by 6.7% to $98.3 million, with gross margin declining by 440 basis points to 29.5% due to higher costs associated with unfavorable manufacturing performance and warranty obligations [16][18] - Adjusted EBITDA decreased by 7.7% to $57.8 million, leading to an adjusted EBITDA margin of 17.3%, down from 20.2% in the prior year [19] Business Line Data and Key Metrics Changes - Water flow solutions net sales increased by 10.7% to $195.9 million, primarily due to higher pricing, although volumes decreased due to manufacturing inefficiencies [23] - Water management solutions net sales increased by 2.8% to $137.3 million, with double-digit growth in repair and installation products, but volumes decreased due to supply chain disruptions [25][26] Market Data and Key Metrics Changes - The municipal repair and replacement market remains strong, supported by healthy budgets, particularly in larger municipalities [43] - The infrastructure bill, allocating $55 billion for water-related projects, is expected to benefit the company in the long term, although immediate benefits may be limited due to supply chain constraints [44][45] Company Strategy and Development Direction - The company is focused on improving operational performance and production levels to manage healthy demand and record backlog [12][40] - Significant investments are being made in labor and new facilities to enhance productivity and sustainability, with a new brass foundry expected to improve manufacturing capabilities [38][41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges from inflation, supply chain disruptions, and manufacturing inefficiencies, which have impacted conversion margins [33][34] - The company anticipates continued price realization benefits and improved operational performance in 2023, despite current economic uncertainties [49][51] Other Important Information - The company reported a record backlog and healthy order activity, indicating strong demand for its products [10][36] - Free cash flow for the nine-month period was negative $16.2 million, primarily due to decreased cash from operating activities [28] Q&A Session Summary Question: Insights on fiscal Q4 growth and demand drivers - Management expects improving net price realization and a supportive backlog to drive growth in Q4 and early 2023, with strong municipal budgets as a key factor [57][58] Question: Impact of manufacturing inefficiencies on EBITDA guidance - The primary driver for lower EBITDA guidance was unfavorable manufacturing performance, particularly at the brass foundry, which affected production and efficiency [68][70] Question: Future margin improvements with new foundry - The new foundry is expected to eliminate current operational inefficiencies, leading to significant improvements in manufacturing performance and margins once operational [71][72] Question: Strategies for securing raw materials - The company is currently limited in forward purchasing due to supply chain constraints, but is actively managing inventory and purchasing strategies to secure necessary materials [109][112]

Where Intelligence Meets Infrastructure® Earnings Conference Call For The Third Quarter Ended June 30, 2022 August 5, 2022 These slides are not intended to be a stand-alone presentation, but are for use in conjunction with the earnings call NON-GAAP Financial Measures In an effort to provide investors with additional information regarding the Company's results as determined by accounting principles generally accepted in the United States ("GAAP"), the Company also provides non-GAAP information that manageme ...

Financial Performance - Net sales for the three months ended June 30, 2022, increased by $22.7 million or 7.3% to $333.2 million compared to $310.5 million in the prior year, primarily due to higher pricing across most product lines [118]. - Gross profit for the same period decreased by $7.1 million or 6.7% to $98.3 million, with a gross margin of 29.5%, down from 33.9% in the prior year, attributed to unfavorable manufacturing performance and inflation [119]. - Selling, general and administrative expenses (SG&A) rose by $2.0 million to $60.8 million, representing 18.2% of net sales, compared to 18.9% in the prior year [120]. - Net sales for the nine months ended June 30, 2022 increased by $100.6 million or 12.3% to $916.0 million compared to $815.4 million in the prior year, driven by higher pricing and increased shipment volumes [134]. - Gross profit for the nine months ended June 30, 2022 rose by $6.5 million to $278.7 million, with a gross margin of 30.4%, down from 33.4% in the prior year due to inflation and supply chain disruptions [135]. - SG&A expenses increased by $12.9 million to $175.1 million, representing 19.1% of net sales, compared to 19.9% in the prior year [136]. Segment Performance - Water Flow Solutions net sales increased by $18.9 million or 10.7% to $195.9 million, while gross profit decreased by $0.4 million or 0.7% to $60.8 million, with a gross margin of 31.0% [125][126]. - Water Management Solutions net sales rose by $3.8 million or 2.8% to $137.3 million, with gross profit declining to $37.5 million and a gross margin of 27.3% [128][129]. - Water Flow Solutions segment net sales increased by $81.8 million or 18.1% to $534.7 million, with a gross margin of 31.8% [141][142]. - Water Management Solutions segment net sales increased by $18.8 million or 5.2% to $381.3 million, but gross profit decreased by $11.0 million or 9.2% to $108.8 million [144][145]. Challenges and Expectations - The company expects continued challenges in the operating environment for fiscal year 2022 due to inflation, labor availability, and global supply chain disruptions [111]. Management and Structural Changes - A new management structure was announced effective October 1, 2021, aimed at increasing revenue growth and enhancing profitability through better alignment of products and services [114]. Financial Charges and Expenses - The company recorded a $4.5 million warranty charge in the three months ended June 30, 2022, impacting the gross profit of the Water Management Solutions segment [129]. - Interest expense, net decreased by $2.6 million to $4.2 million due to refinancing efforts, resulting in lower interest costs [122]. - Interest expense, net decreased by $6.0 million to $13.0 million due to refinancing of senior notes [138]. Capital and Cash Management - Capital expenditures for the nine months ended June 30, 2022 were $36.7 million, down from $46.1 million in the prior year, with guidance for fiscal year 2022 set between $50.0 million and $55.0 million [152]. - Cash and cash equivalents were $154.9 million at June 30, 2022, with an additional $160.7 million of borrowing capacity under the ABL Agreement [148]. - A quarterly dividend of $0.058 per share was declared, resulting in an estimated cash outlay of $9.1 million [149]. Debt and Credit Facilities - The ABL Agreement includes a $175.0 million revolving credit facility, with the potential to increase by an additional $150.0 million under certain conditions [155]. - As of June 30, 2022, excess availability under the ABL Agreement was $160.7 million, reduced by $14.1 million of outstanding letters of credit and $0.2 million of accrued fees and expenses [159]. - The company has $450.0 million of 4.0% Senior Unsecured Notes maturing on June 15, 2029, with cash interest payments of $18.9 million in 2022 and $18.0 million annually thereafter [166]. - The company incurred a $16.7 million loss on extinguishment of the 5.5% Senior Notes, which included a $12.4 million call premium and a $4.3 million write-off of deferred debt issuance costs [163]. - The company has purchase obligations for raw materials and other parts of approximately $163.1 million expected to incur during the next 12 months [166]. - The corporate credit rating as of June 30, 2022, was Ba1 from Moody's and BB from Standard & Poor's, both with a stable outlook [165]. - The ABL Agreement is secured by a first-priority perfected lien on all U.S. inventories, accounts receivable, and certain cash [158]. - The company capitalized $5.5 million of financing costs related to the 4.0% Senior Notes, amortized over the term using the effective interest method [160]. - The ABL Agreement terminates on July 29, 2025, with a commitment fee for unused borrowing capacity of 37.5 basis points per annum [159]. - The company had $14.1 million of letters of credit and $33.1 million of surety bonds outstanding as of June 30, 2022 [168]. Seasonal Business Trends - The business is seasonal, with net sales and operating income historically lowest in the three-month periods ending December 31 and March 31 due to weather conditions [169].

Where Intelligence Meets Infrastructure® Earnings Conference Call For The Second Quarter Ended March 31, 2022 May 3, 2022 These slides are not intended to be a stand-alone presentation, but are for use in conjunction with the earnings call NON-GAAP Financial Measures In an effort to provide investors with additional information regarding the Company's results as determined by accounting principles generally accepted in the United States ("GAAP"), the Company also provides non-GAAP information that managemen ...

Financial Data and Key Metrics Changes - The company achieved record second quarter net sales of $310.5 million, an increase of $43 million or 16.1% compared to the prior year [10] - Gross profit increased by $4.4 million or 5% to $92.8 million, yielding a gross margin of 29.9%, which is a decrease of 310 basis points from the prior year [11] - Adjusted EBITDA was $50.6 million, nearly flat compared to the prior year quarter, with an adjusted EBITDA margin of 16.3%, down 310 basis points from the previous year [13] Business Line Data and Key Metrics Changes - **Water Flow Solutions**: Net sales increased by $36.8 million or 25% to $183.9 million, driven by increased volumes and higher pricing [15] - **Water Management Solutions**: Net sales increased by $6.2 million or 5.1% to $126.6 million, primarily due to higher pricing and increased volumes [17] Market Data and Key Metrics Changes - The municipal repair and replacement market remains robust, benefiting from healthy budgets, especially in larger municipalities [30] - New residential construction maintained momentum with a 10% increase in total housing starts [30] Company Strategy and Development Direction - The company is focused on becoming a technology-enabled solutions provider to water companies, bridging the gap between infrastructure and technology [33] - The company aims to maintain price increases that cover inflationary costs to preserve margins [29] Management's Comments on Operating Environment and Future Outlook - The management noted ongoing operational challenges due to inflation, supply chain disruptions, and unfavorable manufacturing performance [24] - The company raised its annual guidance for consolidated net sales growth to between 10% and 12% [31] - Adjusted EBITDA is expected to increase between 7% and 10% compared to the prior year [32] Other Important Information - The company reported a net cash provided by operating activities of $800,000 for the six-month period, a significant decrease from $63.2 million in the prior year [20] - Total debt outstanding was $447.1 million with total cash of $164.1 million as of March 31, 2022 [21] Q&A Session Summary Question: What is the expectation for sequential margin improvement? - Management anticipates that initiatives around uptime and supply chain logistics will contribute to sequential improvement in margins [38] Question: How will free cash flow be impacted by higher CapEx and inventory levels? - Management expects free cash flow to be positive in the second half of the year but below 2021 levels due to higher inventory levels and capital expenditures [42][43] Question: What pricing actions were taken in the quarter? - Management indicated that pricing actions were taken on brass and steel products, with price realization stepping up sequentially due to previous quarter actions [48][49] Question: How have higher natural gas prices impacted margins? - Management noted that natural gas has a minimal impact on operating costs as most foundries are powered by electricity [90] Question: What is the outlook for the infrastructure bill's impact on demand? - Management believes that meaningful impacts from the infrastructure bill will be seen in 2023 and beyond, with limited effects in the current year [81][82]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended March 31, 2022, show increased net sales and income, a slight decrease in total assets due to lower cash, and a significant decrease in operating cash flow primarily from increased inventories and changes in current liabilities [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets slightly decreased to $1,511.5 million, driven by lower cash and cash equivalents, partially offset by increased inventories, while total liabilities decreased and stockholders' equity rose Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2022 | September 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $164.1 | $227.5 | ($63.4) | | Inventories, net | $229.2 | $184.7 | $44.5 | | Total current assets | $647.1 | $653.7 | ($6.6) | | Total assets | $1,511.5 | $1,518.0 | ($6.5) | | Total current liabilities | $201.5 | $220.1 | ($18.6) | | Long-term debt | $446.1 | $445.9 | $0.2 | | Total liabilities | $805.4 | $823.1 | ($17.7) | | Total stockholders' equity | $706.1 | $694.9 | $11.2 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three and six months ended March 31, 2022, net sales and net income increased significantly year-over-year, with Q2 net sales reaching $310.5 million and six-month net sales at $582.8 million Statements of Operations Summary (in millions, except per share data) | Metric | Q2 2022 | Q2 2021 | YoY Change | H1 2022 | H1 2021 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $310.5 | $267.5 | +16.1% | $582.8 | $504.9 | +15.4% | | Gross profit | $92.8 | $88.4 | +5.0% | $180.4 | $166.8 | +8.2% | | Operating income | $34.2 | $33.4 | +2.4% | $63.1 | $61.2 | +3.1% | | Net income | $23.6 | $20.9 | +12.9% | $43.0 | $37.6 | +14.4% | | Diluted EPS | $0.15 | $0.13 | +15.4% | $0.27 | $0.24 | +12.5% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended March 31, 2022, net cash from operations significantly decreased to $0.8 million, primarily due to increased inventories and other current liabilities, while investing and financing activities used $25.8 million and $39.1 million respectively Cash Flow Summary - Six Months Ended March 31 (in millions) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $0.8 | $63.2 | | Net cash used in investing activities | ($25.8) | ($30.8) | | Net cash used in financing activities | ($39.1) | ($14.5) | | Net change in cash and cash equivalents | ($63.4) | $19.3 | - The sharp decline in operating cash flow was mainly driven by a significant increase in **inventory ($47.5 million use of cash)** and payments of **other current liabilities ($36.0 million use of cash)**[20](index=20&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's new segment structure, borrowing arrangements including $450.0 million in Senior Notes, segment performance with Water Flow Solutions showing stronger growth, and disclosures on environmental and other contingencies - Effective October 1, 2021, the company reorganized into two new reportable segments: **Water Flow Solutions** (iron gate valves, specialty valves, service brass) and **Water Management Solutions** (fire hydrants, repair, metering, leak detection)[23](index=23&type=chunk)[87](index=87&type=chunk) Segment Net Sales - Six Months Ended March 31 (in millions) | Segment | 2022 | 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Water Flow Solutions | $338.8 | $275.9 | +22.8% | | Water Management Solutions | $244.0 | $229.0 | +6.6% | | **Total** | **$582.8** | **$504.9** | **+15.4%** | - The company's long-term debt primarily consists of **$450.0 million of 4.0% Senior Unsecured Notes due in 2029**[58](index=58&type=chunk)[63](index=63&type=chunk) - On April 22, 2022, the Board of Directors declared a quarterly dividend of **$0.058 per share**[103](index=103&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q2 2022 sales growth to pricing and volume, but gross margin declined due to inflation and manufacturing issues, with expectations of continued challenges despite strong liquidity [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q2 2022 consolidated net sales increased 16.1% driven by both segments, though gross margin compressed to 29.9% due to cost pressures, with similar trends observed for the six-month period - Q2 2022 net sales increased **16.1% to $310.5 million**, primarily due to higher pricing and increased shipment volumes[114](index=114&type=chunk) - Q2 2022 gross margin declined to **29.9% from 33.0%** in the prior year, impacted by inflation and unfavorable manufacturing performance which offset the benefits of higher pricing[117](index=117&type=chunk) Segment Net Sales Growth - Q2 2022 vs Q2 2021 | Segment | Q2 2022 Sales (M) | Q2 2021 Sales (M) | YoY Growth | | :--- | :--- | :--- | :--- | | Water Flow Solutions | $183.9 | $147.1 | 25.0% | | Water Management Solutions | $126.6 | $120.4 | 5.1% | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, the company maintained strong liquidity with $164.1 million in cash and $160.1 million in borrowing capacity, having repurchased $20.0 million in stock and paid $18.3 million in dividends, with projected capital expenditures of $70.0-$75.0 million for fiscal year 2022 - The company maintains a strong liquidity position with **$164.1 million in cash** and **$160.1 million of additional borrowing capacity** at the end of the quarter[146](index=146&type=chunk) - In the six months ended March 31, 2022, the company repurchased **$20.0 million of its common stock**, with **$115.0 million remaining** under its share repurchase authorization[147](index=147&type=chunk) - Capital expenditures are projected to be between **$70.0 million and $75.0 million** for fiscal year 2022[150](index=150&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting identified - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by this report[170](index=170&type=chunk)[171](index=171&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[168](index=168&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company refers to Note 12 of the condensed consolidated financial statements for details on legal proceedings - For details on legal proceedings, the report directs readers to **Note 12 in Part I, Item 1**[175](index=175&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No new risk factors are disclosed in this report, with investors directed to the comprehensive risk factors section of the most recent Annual Report on Form 10-K - The report refers to the **'Risk Factors' section in the company's Annual Report on Form 10-K** for a comprehensive discussion of potential risks[176](index=176&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the six months ended March 31, 2022, the company repurchased 1,408,274 shares for $20.0 million, with $115.0 million remaining under the share repurchase authorization Share Repurchase Activity - Six Months Ended March 31, 2022 | Metric | Value | | :--- | :--- | | Total Shares Repurchased | 1,408,274 | | Total Cost | $20.0 million | | Remaining Authorization | $115.0 million | [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL-formatted financial data - The exhibits filed with this report include **CEO and CFO certifications** pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[179](index=179&type=chunk)

Where Intelligence Meets Infrastructure® Earnings Conference Call For The First Quarter Ended December 31, 2021 February 4, 2022 These slides are not intended to be a stand-alone presentation, but are for use in conjunction with the earnings call NON-GAAP Financial Measures In an effort to provide investors with additional information regarding the Company's results as determined by accounting principles generally accepted in the United States ("GAAP"), the Company also provides non-GAAP information that ma ...

Mueller Water Products, Inc. (NYSE:MWA) Q1 2022 Earnings Conference Call February 4, 2022 9:00 AM ET Company Participants Scott Hall – President and Chief Executive Officer Martie Zakas – Chief Financial Officer Whit Kincaid – Vice President of Investor Relations Conference Call Participants Deane Dray – RBC Capital Markets Bryan Blair – Oppenheimer Brent Thielman – D.A. Davidson Walter Liptak – Seaport Michael Anastasiou – Cowen Unidentified Analyst – Goldman Sachs Andrew Buscaglia – Berngiler Operator Wel ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-32892 MUELLER WATER PRODUCTS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Ide ...

PART I [Business Overview](index=4&type=section&id=Item%201.%20BUSINESS) Mueller Water Products, Inc. is a leading North American manufacturer of water infrastructure products, operating through Infrastructure and Technologies segments, with fiscal 2021 net sales of $1,111.0 million - The company operates through two primary business segments: Infrastructure and Technologies[18] - Recent strategic acquisitions include Krausz Industries in 2018 to bolster the Infrastructure segment and i2O Water Ltd in 2021 to enhance the Technologies segment's pressure management solutions[19][21] [Business Strategy](index=5&type=section&id=Business%20Strategy) The company's strategy focuses on accelerating new product development, implementing intelligent technology, driving operational excellence, modernizing facilities, and pursuing strategic acquisitions - Key strategic pillars include accelerating new product development, developing an integrated intelligent technology platform (Sentryx), driving operational excellence, modernizing manufacturing facilities, and seeking strategic acquisitions[24][25][26] - The company is making significant capital investments to modernize manufacturing, including a new brass foundry in Decatur, IL (production in late 2022) and expanding capabilities at its new facility in Kimball, TN[27] [Description of Products and Services](index=5&type=section&id=Description%20of%20Products%20and%20Services) The company offers a wide range of water infrastructure products, including valves, hydrants, metering systems, and leak detection solutions across its Infrastructure and Technologies segments Infrastructure Gross Sales by Product (2019-2021) | Product Line | 2021 Gross Sales (in millions) | 2020 Gross Sales (in millions) | 2019 Gross Sales (in millions) | | :--- | :--- | :--- | :--- | | Water and Gas Valves | $681.1 | $583.2 | $576.4 | | Fire Hydrants | $236.7 | $201.4 | $199.7 | - The Technologies segment's water metering products and systems accounted for **78% of its net sales** in fiscal 2021, down slightly from 79% in 2020 and 81% in 2019[41] [Sales, Marketing and Distribution](index=9&type=section&id=Sales%2C%20Marketing%20and%20Distribution) The company primarily sells through non-exclusive distributors, with significant customer concentration in both its Infrastructure and Technologies segments - The Infrastructure segment's two largest distributors accounted for approximately **38% of its gross sales** in fiscal 2021, representing a significant customer concentration[57] - The Technologies segment's five largest customers accounted for approximately **48% of its gross sales** in fiscal 2021[58] [Backlog](index=11&type=section&id=Backlog) The company's total backlog doubled at the end of fiscal 2021, primarily driven by a substantial increase in the Infrastructure segment's orders Backlog by Segment (as of September 30) | Segment | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | | Infrastructure | $391.2 | $147.6 | | Technologies | $49.0 | $72.8 | | **Total Backlog** | **$440.2** | **$220.4** | [Competition](index=11&type=section&id=Competition) The company faces strong competition in its mature valve and hydrant markets and from larger players in the water metering systems market, while the leak detection market is highly fragmented - Principal competitors for fire hydrants and iron gate valves include McWane, Inc. and American Cast Iron Pipe Company[62] - In the water metering market, key competitors are Sensus, Itron, Inc., Neptune Technology Group Inc., Badger Meter, Inc., and Master Meter, Inc[65] [Human Capital](index=14&type=section&id=Human%20Capital) As of September 30, 2021, Mueller Water Products employed approximately 3,400 people, with a significant portion of its hourly workforce covered by collective bargaining agreements, and emphasizes diversity in its Board of Directors - As of September 30, 2021, the company employed approximately **3,400 people**, with **66% of its hourly workforce** represented by collective bargaining agreements[81] - The Board of Directors' composition as of September 30, 2021, included **27% women** and **36% minorities**[78] [Risk Factors](index=17&type=section&id=Item%201A.%20RISK%20FACTORS) The company faces various risks including dependence on municipal spending, intense competition, customer concentration, supply chain disruptions, cybersecurity threats, and the ongoing impact of the COVID-19 pandemic - A significant portion of the business depends on municipal spending for water infrastructure repair and replacement, as well as new residential construction, making it sensitive to economic conditions, interest rates, and government funding levels[88][93] - The company faces concentration risk, with a small group of key distributors and customers accounting for a significant portion of sales in both the Infrastructure and Technologies segments[94] - Operational risks include reliance on single-source suppliers, potential disruptions in the supply chain, interruptions at key manufacturing facilities, and cybersecurity threats to information technology systems and technology-enabled products[113][115][120] - The COVID-19 pandemic continues to pose risks, including potential plant closures, supply chain disruptions, cost increases, and labor availability challenges, with the full impact remaining uncertain[146] [Properties](index=29&type=section&id=Item%202.%20PROPERTIES) The company operates numerous manufacturing, distribution, R&D, and administrative facilities primarily in the United States, with key manufacturing sites in Alabama, Tennessee, Illinois, and North Carolina, and corporate headquarters in Atlanta, GA Principal Properties Overview | Segment | Activity | Key Locations | | :--- | :--- | :--- | | Infrastructure | Manufacturing | Albertville, AL; Chattanooga, TN; Decatur, IL; Ariel, Israel | | Technologies | Manufacturing | Cleveland, NC | | Technologies | R&D | Atlanta, GA; Toronto, Ontario; Southampton, UK | | Corporate | Headquarters | Atlanta, GA | [Legal Proceedings](index=31&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) The company is involved in various legal proceedings arising from normal business operations but does not anticipate any material adverse effects on its business or prospects - The company is involved in various legal proceedings in the normal course of operations but does not believe any will have a material adverse effect on the business[156] PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=32&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on the NYSE under MWA, and as of September 30, 2021, $135.0 million remained authorized for future share repurchases - The company has a stock repurchase program with **$135.0 million** remaining authorization as of September 30, 2021[164] Share Repurchases (Quarter Ended Sep 30, 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 1-31, 2021 | — | $ — | | August 1-31, 2021 | 651,271 | $15.33 | | September 1-30, 2021 | — | $ — | | **Total** | **651,271** | **$15.33** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Fiscal 2021 saw consolidated net sales increase to $1,111.0 million, driven by volume and pricing, despite gross margin decline due to inflation and supply chain issues, with 2022 sales growth anticipated amid continued cost pressures - For fiscal year 2022, the company anticipates consolidated net sales will be **4% to 8% higher** than fiscal year 2021, driven by higher pricing and increased shipment volumes[176] - In 2021, the business was impacted by raw material and other cost inflation, supply chain disruptions, and labor availability challenges, which are expected to continue into 2022[172][173] [Results of Operations](index=35&type=section&id=Results%20of%20Operations) For fiscal year 2021, net sales increased 15.2% to $1,111.0 million, driven by higher volume and pricing, while gross margin declined to 32.3% due to increased manufacturing costs and inflation Consolidated Results of Operations (FY 2021 vs. FY 2020) | Metric (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Net Sales | $1,111.0 | $964.1 | | Gross Profit | $358.5 | $328.2 | | Operating Income | $131.7 | $116.8 | | Net Income | $70.4 | $72.0 | - Consolidated net sales for 2021 increased **15.2% year-over-year**, driven by higher shipment volume and pricing[178] - Gross margin decreased to **32.3% in 2021** from **34.0% in 2020**, primarily due to higher manufacturing costs from inflation, higher labor costs, and a $2.4 million inventory write-off[179] [Financial Condition](index=38&type=section&id=Financial%20Condition) As of September 30, 2021, the company's financial position strengthened with $227.5 million in cash, increased receivables and inventories due to higher sales, and stable total outstanding debt Key Balance Sheet Items (as of September 30) | Account (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $227.5 | $208.9 | | Receivables, net | $212.2 | $180.8 | | Inventories, net | $184.7 | $162.5 | | Property, plant and equipment, net | $283.4 | $253.8 | | Total outstanding debt | $446.9 | $447.6 | [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity in fiscal 2021 with $227.5 million in cash and $158.7 million in borrowing capacity, while increasing capital expenditures for facility modernization and refinancing debt - At September 30, 2021, the company had cash and cash equivalents of **$227.5 million** and approximately **$158.7 million** of additional borrowing capacity under its ABL Agreement[200] - Capital expenditures are estimated to be between **$70 million and $80 million** for fiscal 2022, an increase from **$62.7 million in 2021**, to support facility modernization and expansion[202] - The company refinanced its debt by issuing **$450.0 million of 4.0% Senior Notes** and redeeming its **5.5% Senior Notes**, incurring a **$16.7 million loss** on early extinguishment of debt[212][215] [Quantitative and Qualitative Disclosure About Market Risk](index=45&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK) The company is exposed to market risks primarily from commodity price fluctuations for raw materials like brass ingot and scrap steel, which saw significant cost increases in 2021, and foreign currency exchange rates due to international operations - The company is exposed to commodity price risk for raw materials such as brass ingot, scrap steel, sand, and resin[239] - In fiscal 2021, the average cost per ton of scrap steel increased by **33%** and the average cost of brass ingot increased by **35%** compared to 2020[240] [Controls and Procedures](index=47&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of September 30, 2021 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[245] - Management concluded that the company's internal control over financial reporting was effective as of September 30, 2021, based on the COSO framework[249] PART III [Directors, Executive Officers and Corporate Governance](index=48&type=section&id=Item%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) This section details the names, ages, and positions of the company's executive officers and directors as of September 30, 2021, including biographies for key personnel - Scott Hall serves as the President and Chief Executive Officer, and Marietta Edmunds Zakas serves as the Executive Vice President and Chief Financial Officer[255][257] [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=51&type=section&id=Item%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section provides information on securities authorized for issuance under the company's equity compensation plans, with 8,060,093 securities available for future issuance as of September 30, 2021 Equity Compensation Plan Information (as of Sep 30, 2021) | Plan Name | Securities to be Issued Upon Exercise | Weighted Avg. Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | 2006 Stock Incentive Plan | 2,195,769 | $10.67 | 5,806,070 | | Employee Stock Purchase Plan (ESPP) | 33,381 | — | 2,254,023 | | **Total** | **2,229,150** | | **8,060,093** | PART IV [Exhibits and Financial Statement Schedules](index=53&type=section&id=Item%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K, including an index to the consolidated financial statements and various material contracts - This section provides an index to the audited consolidated financial statements, including the balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows[288]