Core Insights - Mueller Water Products (MWA) reported revenue of $380.3 million for the quarter ended June 2025, reflecting a year-over-year increase of 6.6% and a surprise of +3.84% over the Zacks Consensus Estimate of $366.25 million [1] - The earnings per share (EPS) for the quarter was $0.34, slightly below the consensus estimate of $0.35, resulting in an EPS surprise of -2.86% [1] Financial Performance Metrics - Net Sales for Water Management Solutions reached $163.7 million, exceeding the two-analyst average estimate of $156 million, with a year-over-year change of +10.2% [4] - Net Sales for Water Flow Solutions amounted to $216.6 million, surpassing the $210 million average estimate, representing a year-over-year increase of +4.1% [4] - Adjusted operating income for Water Flow Solutions was reported at $60.5 million, above the average estimate of $54.5 million [4] - Adjusted operating income for Corporate was reported at -$16.1 million, compared to the average estimate of -$14 million [4] - Adjusted operating income for Water Management Solutions was $30.3 million, slightly above the estimated $30 million [4] Stock Performance - Over the past month, shares of Mueller Water Products have returned -2.2%, while the Zacks S&P 500 composite has seen a +0.6% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Mueller Water Products reported quarterly earnings of $0.34 per share, slightly missing the consensus estimate of $0.35 per share, but showing an increase from $0.32 per share a year ago [1][2] Financial Performance - The company posted revenues of $380.3 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 3.84% and up from $356.7 million year-over-year [3] - Over the last four quarters, Mueller Water Products has surpassed consensus revenue estimates four times [3] Stock Performance - Since the beginning of the year, Mueller Water Products shares have increased by approximately 7.7%, outperforming the S&P 500's gain of 6.1% [4] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future due to unfavorable estimate revisions [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.31 on revenues of $358.8 million, and for the current fiscal year, it is $1.23 on revenues of $1.39 billion [8] - The Steel - Pipe and Tube industry, to which Mueller Water Products belongs, is currently ranked in the top 21% of over 250 Zacks industries, suggesting a favorable industry outlook [9]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Mueller Water Products delivered strong Q3 2025 results, achieving record sales and profitability, and raising full-year guidance [Q3 2025 Financial Highlights](index=1&type=section&id=Q3%202025%20Financial%20Highlights) Mueller Water Products reported strong third-quarter fiscal 2025 results, with increased net sales, operating income, and net income per diluted share, also raising its annual guidance for fiscal 2025 net sales and adjusted EBITDA Q3 2025 Financial Performance | Metric | Q3 2025 | Q3 2024 | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | | Net Sales | $380.3 million | $356.7 million | +6.6% | | Operating Income | $73.7 million | $67.0 million | +10.0% | | Adjusted Operating Income | $74.7 million | $69.9 million | +6.9% | | Net Income | $52.5 million | $47.3 million | +11.0% | | Adjusted Net Income | $53.2 million | $49.5 million | +7.5% | | Net Income per Diluted Share | $0.33 | $0.30 | +10.0% | | Adjusted Net Income per Diluted Share | $0.34 | $0.32 | +6.3% | | Adjusted EBITDA | $86.4 million | $85.2 million | +1.4% | | Operating Margin | 19.4% | 18.8% | +0.6 percentage points | | Adjusted Operating Margin | 19.6% | 19.6% | 0.0 percentage points | | Net Income Margin | 13.8% | 13.3% | +0.5 percentage points | | Adjusted EBITDA Margin | 22.7% | 23.9% | -1.2 percentage points | - The company repurchased **$10.0 million** of common stock during the third quarter[2](index=2&type=chunk) - For the nine-month period, net cash provided by operating activities decreased to **$135.8 million** from **$149.5 million**, and free cash flow decreased to **$103.0 million** from **$121.5 million**[2](index=2&type=chunk) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) CEO Martie Edmunds Zakas highlighted record consolidated net sales, gross margin, and adjusted EBITDA for Q3 2025, attributing success to manufacturing efficiencies and higher order levels despite macroeconomic challenges and tariffs, also noting the positive impact of closing the legacy brass foundry and the company's commitment to sustainability and innovation, expressing confidence in achieving record annual results for the second consecutive year and raising fiscal 2025 guidance - Achieved new records for consolidated net sales, gross margin, and adjusted EBITDA in **Q3 2025**[3](index=3&type=chunk) - Gross margin exceeded **38%** this quarter, a sequential improvement of **320 basis points**[3](index=3&type=chunk) - Successfully capitalized on higher-than-expected order levels and drove manufacturing efficiencies, mitigating tariff challenges[3](index=3&type=chunk)[4](index=4&type=chunk) - Published annual ESG Report, emphasizing ongoing progress in sustainability, innovation, and impact[4](index=4&type=chunk) - On track for record annual results for the second consecutive year and raised annual guidance for **2025** net sales and adjusted EBITDA[4](index=4&type=chunk) [Consolidated Financial Results](index=2&type=section&id=Consolidated%20Financial%20Results) This section details Mueller Water Products' consolidated financial performance for Q3 2025, covering net sales, profitability, and expenses [Net Sales](index=2&type=section&id=Net%20Sales) Consolidated net sales for the third quarter of 2025 increased by 6.6% year-over-year, driven primarily by higher volumes across most product lines and increased pricing Consolidated Net Sales Performance | Metric | Q3 2025 | Q3 2024 | Change | | :------- | :------ | :------ | :----- | | Net Sales | $380.3 million | $356.7 million | +6.6% | - Increase primarily due to increased volumes across most product lines and higher pricing[5](index=5&type=chunk) [Gross Profit & Margin](index=2&type=section&id=Gross%20Profit%20%26%20Margin) Gross profit and gross margin both saw significant increases in Q3 2025, primarily due to manufacturing efficiencies and higher volumes, despite being partially offset by increased tariffs Consolidated Gross Profit and Margin | Metric | Q3 2025 | Q3 2024 | Change | | :--------- | :------ | :------ | :----- | | Gross Profit | $145.7 million | $131.4 million | +10.9% | | Gross Margin | 38.3% | 36.8% | +150 basis points | - Improvements were primarily due to manufacturing efficiencies and increased volumes, partially offset by higher tariffs[6](index=6&type=chunk) [Selling, General & Administrative Expenses](index=2&type=section&id=Selling%2C%20General%20%26%20Administrative%20Expenses) Selling, general and administrative (SG&A) expenses increased in Q3 2025, largely due to an unfavorable foreign currency impact and inflationary pressures, partially mitigated by lower amortization expense Consolidated SG&A Expenses | Metric | Q3 2025 | Q3 2024 | Change | | :-------------------------------- | :------ | :------ | :----- | | SG&A Expenses | $71.0 million | $61.5 million | +15.4% | | Unfavorable Foreign Currency Impact | $9.1 million | N/A | N/A | - The increase was primarily due to an unfavorable foreign currency impact of **$9.1 million** and inflationary pressures, partially offset by lower amortization expense[7](index=7&type=chunk) [Operating Income & Margin](index=2&type=section&id=Operating%20Income%20%26%20Margin) Operating income and margin improved in Q3 2025, benefiting from manufacturing efficiencies, increased volumes, and lower amortization, despite headwinds from unfavorable foreign currency and higher tariffs; adjusted operating income also increased, with adjusted operating margin remaining flat Consolidated Operating Income and Margin | Metric | Q3 2025 | Q3 2024 | Change | | :------------------------ | :------ | :------ | :----- | | Operating Income | $73.7 million | $67.0 million | +10.0% | | Operating Margin | 19.4% | 18.8% | +0.6 percentage points | | Adjusted Operating Income | $74.7 million | $69.9 million | +6.9% | | Adjusted Operating Margin | 19.6% | 19.6% | 0.0 percentage points | - Benefits from manufacturing efficiencies, increased volumes, and lower amortization expense were partially offset by unfavorable foreign currency and higher tariffs[8](index=8&type=chunk) - Strategic reorganization and other charges of **$1.0 million** were incurred, primarily related to leadership transition, and excluded from adjusted results[9](index=9&type=chunk) [Net Income & EPS](index=3&type=section&id=Net%20Income%20%26%20EPS) Net income and net income per diluted share increased significantly in Q3 2025, with adjusted figures also showing healthy growth, reflecting overall improved profitability Consolidated Net Income and EPS | Metric | Q3 2025 | Q3 2024 | Change | | :-------------------------------- | :------ | :------ | :----- | | Net Income | $52.5 million | $47.3 million | +11.0% | | Net Income Margin | 13.8% | 13.3% | +0.5 percentage points | | Adjusted Net Income | $53.2 million | $49.5 million | +7.5% | | Net Income per Diluted Share | $0.33 | $0.30 | +10.0% | | Adjusted Net Income per Diluted Share | $0.34 | $0.32 | +6.3% | [Adjusted EBITDA & Margin](index=3&type=section&id=Adjusted%20EBITDA%20%26%20Margin) Adjusted EBITDA saw a modest increase in Q3 2025, though the adjusted EBITDA margin slightly declined compared to the prior year quarter, impacted by unfavorable currency fluctuations Consolidated Adjusted EBITDA and Margin | Metric | Q3 2025 | Q3 2024 | Change | | :------------------ | :------ | :------ | :----- | | Adjusted EBITDA | $86.4 million | $85.2 million | +1.4% | | Adjusted EBITDA Margin | 22.7% | 23.9% | -1.2 percentage points | - Adjusted EBITDA included a **$7.7 million** unfavorable currency impact during the quarter[11](index=11&type=chunk) [Segment Results](index=3&type=section&id=Segment%20Results) This section analyzes the financial performance of Mueller Water Products' Water Flow Solutions and Water Management Solutions segments [Water Flow Solutions](index=3&type=section&id=Water%20Flow%20Solutions) The Water Flow Solutions segment experienced growth in net sales and adjusted operating income in Q3 2025, driven by increased volumes and pricing, despite higher tariffs; adjusted EBITDA also saw a slight increase Water Flow Solutions Segment Performance (Q3 2025) | Metric | Q3 2025 | Q3 2024 | Change | | :------------------------ | :------ | :------ | :----- | | Net Sales | $216.6 million | $208.1 million | +4.1% | | Operating Income | $60.5 million | $57.8 million | +4.7% | | Adjusted Operating Income | $60.5 million | $57.8 million | +4.7% | | Adjusted EBITDA | $67.1 million | $66.9 million | +0.3% | | Operating Margin | 27.9% | 27.8% | +0.1 percentage points | | Adjusted Operating Margin | 27.9% | 27.8% | +0.1 percentage points | | Adjusted EBITDA Margin | 31.0% | 32.1% | -1.1 percentage points | - Net sales increase primarily due to increased volumes of iron gate and specialty valves and higher pricing, partially offset by lower volumes of service brass products[12](index=12&type=chunk) - Operating income benefits from increased volumes, manufacturing efficiencies, and lower amortization expense, more than offsetting higher tariffs[13](index=13&type=chunk) [Water Management Solutions](index=3&type=section&id=Water%20Management%20Solutions) The Water Management Solutions segment demonstrated strong performance in Q3 2025, with double-digit growth in net sales and adjusted operating income, primarily due to increased volumes and manufacturing efficiencies, despite some foreign currency and tariff impacts Water Management Solutions Segment Performance (Q3 2025) | Metric | Q3 2025 | Q3 2024 | Change | | :------------------------ | :------ | :------ | :----- | | Net Sales | $163.7 million | $148.6 million | +10.2% | | Operating Income | $30.1 million | $25.5 million | +18.0% | | Adjusted Operating Income | $30.3 million | $26.9 million | +12.6% | | Adjusted EBITDA | $35.3 million | $34.0 million | +3.8% | | Operating Margin | 18.4% | 17.2% | +1.2 percentage points | | Adjusted Operating Margin | 18.5% | 18.1% | +0.4 percentage points | | Adjusted EBITDA Margin | 21.6% | 22.9% | -1.3 percentage points | - Net sales increase primarily due to increased volumes of repair products and hydrants and higher pricing, partially offset by lower volumes of natural gas distribution products[15](index=15&type=chunk) - Operating income benefits from manufacturing efficiencies, increased volumes, and lower amortization expense, more than offsetting unfavorable foreign currency and higher tariffs[16](index=16&type=chunk) [Other Financial Details](index=4&type=section&id=Other%20Financial%20Details) This section covers Mueller Water Products' interest expense and income tax details for the reporting period [Interest Expense, Net](index=4&type=section&id=Interest%20Expense%2C%20Net) Net interest expense decreased in Q3 2025, primarily due to higher interest income Net Interest Expense | Metric | Q3 2025 | Q3 2024 | Change | | :------------------ | :------ | :------ | :----- | | Interest Expense, Net | $1.7 million | $2.8 million | -39.3% | - Decrease primarily as a result of higher interest income[18](index=18&type=chunk) [Income Taxes](index=4&type=section&id=Income%20Taxes) Income tax expense and the effective tax rate increased in Q3 2025 compared to the prior year quarter Income Tax Expense and Rate | Metric | Q3 2025 | Q3 2024 | Change | | :------------------ | :------ | :------ | :----- | | Income Tax Expense | $19.5 million | $15.9 million | +22.6% | | Effective Tax Rate | 27.1% | 25.2% | +1.9 percentage points | [Cash Flow and Balance Sheet](index=4&type=section&id=Cash%20Flow%20and%20Balance%20Sheet) This section provides an overview of Mueller Water Products' cash flow activities, capital expenditures, and balance sheet position [Operating Activities](index=4&type=section&id=Operating%20Activities) Net cash provided by operating activities for the nine-month period decreased year-over-year, primarily due to changes in working capital, partially offset by higher net income Net Cash Provided by Operating Activities (9 Months) | Metric | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net Cash Provided by Operating Activities | $135.8 million | $149.5 million | -$13.7 million | - The decrease was primarily driven by changes in working capital, including decreases in other current liabilities, partially offset by higher net income[20](index=20&type=chunk) [Capital Expenditures](index=4&type=section&id=Capital%20Expenditures) Capital expenditures increased for the first nine months of fiscal 2025, mainly due to increased investments in iron foundries Capital Expenditures (9 Months) | Metric | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | | :------------------ | :--------------------------- | :--------------------------- | :----- | | Capital Expenditures | $32.8 million | $28.0 million | +$4.8 million | - Primarily driven by increased expenditures in iron foundries[21](index=21&type=chunk) [Free Cash Flow](index=4&type=section&id=Free%20Cash%20Flow) Free cash flow for the nine-month period decreased due to lower net cash from operating activities and higher capital expenditures Free Cash Flow (9 Months) | Metric | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | | :------------ | :--------------------------- | :--------------------------- | :----- | | Free Cash Flow | $103.0 million | $121.5 million | -$18.5 million | - Decrease due to the decrease in net cash provided by operating activities and higher capital expenditures[22](index=22&type=chunk) [Debt and Liquidity](index=4&type=section&id=Debt%20and%20Liquidity) As of June 30, 2025, the company maintained a healthy liquidity position with significant cash and low leverage ratios, with no borrowings under its ABL Agreement Debt and Liquidity Position (June 30, 2025) | Metric | As of June 30, 2025 | | :-------------------------------- | :------------------ | | Total Debt Outstanding | $450.8 million | | Cash and Cash Equivalents | $372.0 million | | Debt Leverage Ratio | 1.5x | | Net Debt Leverage Ratio | 0.3x | - No borrowings under the ABL Agreement at the end of the quarter or during the quarter[23](index=23&type=chunk) - No maturities on the Company's debt financings until **June 2029**, and **4.0%** Senior Notes have no financial maintenance covenants[23](index=23&type=chunk) [Fiscal 2025 Outlook](index=4&type=section&id=Fiscal%202025%20Outlook) This section outlines Mueller Water Products' revised financial guidance and key metric expectations for fiscal year 2025 [Revised Guidance](index=4&type=section&id=Revised%20Guidance) Mueller Water Products increased its fiscal 2025 guidance for consolidated net sales and adjusted EBITDA, while maintaining its free cash flow as a percentage of adjusted net income expectation; this guidance incorporates anticipated impacts from recently enacted tariffs Revised Fiscal 2025 Guidance | Metric | Revised FY2025 Guidance | Prior Year Change | | :-------------------------------- | :---------------------- | :---------------- | | Consolidated Net Sales | $1,405 million - $1,415 million | +6.9% to +7.6% | | Adjusted EBITDA | $318 million - $322 million | +11.7% to +13.1% | | Free Cash Flow as % of Adjusted Net Income | >80% | Maintained | - Guidance reflects anticipated impacts from recently enacted tariffs[24](index=24&type=chunk) [Additional Financial Metrics](index=5&type=section&id=Additional%20Financial%20Metrics) The company provided specific expectations for several key financial metrics for fiscal 2025, including SG&A expenses, net interest expense, effective income tax rate, depreciation and amortization, capital expenditures, and pension benefit Fiscal 2025 Financial Metric Expectations | Metric | FY2025 Expectation | | :-------------------------------- | :------------------ | | Total SG&A Expenses | $245 million - $247 million | | Net Interest Expense | $7.5 million - $8.0 million | | Effective Income Tax Rate | 25% - 26% | | Depreciation and Amortization | $45 million - $46 million | | Capital Expenditures | $50 million - $52 million | | Pension Benefit Other Than Service | ~$0.2 million | | Annual Amortization Expense Decrease | ~$18 million (due to fully amortized intangibles) | [Corporate Information](index=5&type=section&id=Corporate%20Information) This section provides details on Mueller Water Products' investor communications, non-GAAP measures, forward-looking statements, and company overview [Conference Call Webcast](index=5&type=section&id=Conference%20Call%20Webcast) Mueller Water Products will host a quarterly earnings conference call and webcast on Tuesday, August 5, 2025, at 10:00 a.m. ET, with replay and archive options available - Quarterly earnings conference call scheduled for **Tuesday, August 5, 2025**, at **10:00 a.m. ET**[26](index=26&type=chunk) - A live webcast will be available on the Investor Relations section of the Company's website (www.muellerwaterproducts.com)[26](index=26&type=chunk) - Replay available for **30 days** by dialing **1-866-470-4775**, and webcast archive for at least **90 days**[26](index=26&type=chunk) [Use of Non-GAAP Measures](index=5&type=section&id=Use%20of%20Non-GAAP%20Measures) The company provides non-GAAP financial measures, such as adjusted net income, adjusted operating income, adjusted EBITDA, net debt, and free cash flow, to offer additional insights into its performance and liquidity, as these are used by management for evaluation and by investors for recurring performance analysis; reconciliations to GAAP are provided, but forward-looking non-GAAP measures are not reconciled due to inherent uncertainties - Non-GAAP measures (Adjusted net income, adjusted net income per diluted share, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin) are used by management to evaluate underlying performance and by investors for recurring performance[28](index=28&type=chunk) - Non-GAAP liquidity measures (Net debt, net debt leverage, free cash flow) are used to evaluate capital management, financial position, and ability to generate liquidity from operations[29](index=29&type=chunk) - Reconciliations of non-GAAP measures to GAAP results are included in the press release attachment, but forward-looking non-GAAP measures are not reconciled to GAAP due to the unpredictability of certain items[31](index=31&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding future activities, events, and financial performance, which are based on current assumptions but are subject to various risks and uncertainties; readers are cautioned against undue reliance and advised to review the company's SEC filings for detailed risk factors - Statements regarding outlooks, projections, forecasts, expectations, and future performance are considered forward-looking statements[32](index=32&type=chunk) - Actual results may differ materially due to factors such as logistical challenges, geopolitical conditions, supply chain disruptions, inability to realize operational benefits, workforce issues, cybersecurity risks, cyclical demand, and regulatory changes[33](index=33&type=chunk) - The company undertakes no duty to update forward-looking statements except as required by law, and advises reviewing risk factors in Forms **10-K** and **10-Q**[35](index=35&type=chunk) [About Mueller Water Products, Inc.](index=7&type=section&id=About%20Mueller%20Water%20Products%2C%20Inc.) Mueller Water Products, Inc. is a leading North American manufacturer and marketer of products and solutions for water transmission, distribution, and measurement, offering a broad portfolio to help municipalities improve efficiency, customer service, and capital spending - Leading manufacturer and marketer of products and solutions for water transmission, distribution, and measurement in North America[36](index=36&type=chunk) - Portfolio includes engineered valves, fire hydrants, pipe connection and repair products, metering products, leak detection, pipe condition assessment, pressure management products, and software[36](index=36&type=chunk) - Aims to help municipalities increase operational efficiencies, improve customer service, and prioritize capital spending[36](index=36&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents Mueller Water Products' unaudited condensed consolidated balance sheets, statements of operations, and cash flows [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets provide a snapshot of the company's financial position at June 30, 2025, compared to September 30, 2024, showing increases in total assets, cash and cash equivalents, and total stockholders' equity, while total liabilities decreased Condensed Consolidated Balance Sheets (in millions) | Asset/Liability/Equity | June 30, 2025 (in millions) | September 30, 2024 (in millions) | | :-------------------------------- | :-------------------------- | :----------------------------- | | Cash and cash equivalents | $372.0 | $309.9 | | Total current assets | $937.8 | $858.4 | | Total assets | $1,730.4 | $1,635.9 | | Total current liabilities | $242.8 | $258.0 | | Total liabilities | $801.4 | $825.8 | | Total stockholders' equity | $929.0 | $810.1 | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations detail the company's financial performance for the three and nine months ended June 30, 2025, compared to the prior year, highlighting growth in net sales, gross profit, operating income, and net income Condensed Consolidated Statements of Operations (in millions) | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 9 Months Ended June 30, 2025 (in millions) | 9 Months Ended June 30, 2024 (in millions) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net sales | $380.3 | $356.7 | $1,048.9 | $966.5 | | Gross profit | $145.7 | $131.4 | $376.7 | $348.1 | | Operating income | $73.7 | $67.0 | $191.0 | $153.3 | | Income before income taxes | $72.0 | $63.2 | $185.5 | $139.0 | | Net income | $52.5 | $47.3 | $139.1 | $105.9 | | Net income per diluted share | $0.33 | $0.30 | $0.88 | $0.68 | | Dividends declared per share | $0.067 | $0.064 | $0.201 | $0.192 | - For the nine-month period ended **June 30, 2025**, Cost of sales included **$4.1 million** in Inventory and other asset write-downs associated with the closure of the legacy brass foundry[41](index=41&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows illustrate the sources and uses of cash for the nine months ended June 30, 2025, showing a decrease in net cash provided by operating activities and free cash flow, alongside increased capital expenditures and common stock repurchases Condensed Consolidated Statements of Cash Flows (in millions) | Cash Flow Activity | 9 Months Ended June 30, 2025 (in millions) | 9 Months Ended June 30, 2024 (in millions) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash provided by operating activities | $135.8 | $149.5 | | Net cash used in investing activities | ($32.7) | ($27.9) | | Net cash used in financing activities | ($47.2) | ($40.7) | | Net change in cash and cash equivalents | $62.1 | $83.0 | | Cash and cash equivalents at end of period | $372.0 | $243.3 | | Capital expenditures | $32.8 | $28.0 | | Common stock repurchased | $15.0 | $10.0 | Supplemental Cash Flow Information (in millions) | Supplemental Cash Flow Information | 9 Months Ended June 30, 2025 (in millions) | 9 Months Ended June 30, 2024 (in millions) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Cash paid for interest, net | $9.1 | $13.1 | | Cash paid for income taxes, net | $49.8 | $47.3 | [Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (Unaudited)](index=12&type=section&id=Segment%20Results%20and%20Reconciliation%20of%20Non-GAAP%20to%20GAAP%20Performance%20Measures%20%28Unaudited%29) This section provides detailed unaudited segment results and reconciliations of non-GAAP to GAAP financial measures for various periods [Q3 2025 Segment Results and Reconciliations](index=12&type=section&id=Q3%202025%20Segment%20Results%20and%20Reconciliations) This section provides detailed financial results for the Water Flow Solutions and Water Management Solutions segments for the three months ended June 30, 2025, along with reconciliations of non-GAAP measures like adjusted net income, adjusted operating income, adjusted EBITDA, and free cash flow to their GAAP equivalents Q3 2025 Segment Performance and Reconciliations (in millions) | Metric (Q3 2025) | Water Flow Solutions (in millions) | Water Management Solutions (in millions) | Corporate (in millions) | Consolidated (in millions) | | :-------------------------------- | :------------------------------- | :----------------------------------- | :---------------------- | :------------------------- | | Net sales | $216.6 | $163.7 | — | $380.3 | | Gross profit | $83.8 | $61.9 | — | $145.7 | | Operating income (loss) | $60.5 | $30.1 | ($16.9) | $73.7 | | Adjusted operating income (loss) | $60.5 | $30.3 | ($16.1) | $74.7 | | Adjusted EBITDA | $67.1 | $35.3 | ($16.0) | $86.4 | | Net income | | | | $52.5 | | Adjusted net income | | | | $53.2 | | Free cash flow | | | | $55.7 | | Debt leverage | | | | 1.5x | | Net debt leverage | | | | 0.3x | - Strategic reorganization and other charges of **$1.0 million** were primarily related to leadership transition and certain transaction-related expenses[45](index=45&type=chunk)[46](index=46&type=chunk) [Q3 2024 Segment Results and Reconciliations](index=15&type=section&id=Q3%202024%20Segment%20Results%20and%20Reconciliations) This section presents the detailed financial performance of the Water Flow Solutions and Water Management Solutions segments for the three months ended June 30, 2024, including reconciliations of non-GAAP measures to GAAP, providing a comparative basis for the current quarter's results Q3 2024 Segment Performance and Reconciliations (in millions) | Metric (Q3 2024) | Water Flow Solutions (in millions) | Water Management Solutions (in millions) | Corporate (in millions) | Consolidated (in millions) | | :-------------------------------- | :------------------------------- | :----------------------------------- | :---------------------- | :------------------------- | | Net sales | $208.1 | $148.6 | — | $356.7 | | Gross profit | $81.9 | $49.5 | — | $131.4 | | Operating income (loss) | $57.8 | $25.5 | ($16.3) | $67.0 | | Adjusted operating income (loss) | $57.8 | $26.9 | ($14.8) | $69.9 | | Adjusted EBITDA | $66.9 | $34.0 | ($15.7) | $85.2 | | Net income | | | | $47.3 | | Adjusted net income | | | | $49.5 | | Free cash flow | | | | $75.1 | | Debt leverage | | | | 1.7x | | Net debt leverage | | | | 0.8x | - Strategic reorganization and other charges of **$2.9 million** primarily related to non-cash asset impairment, leadership transition, severance, and transaction-related expenses[47](index=47&type=chunk)[48](index=48&type=chunk) [YTD Q3 2025 Segment Results and Reconciliations](index=18&type=section&id=YTD%20Q3%202025%20Segment%20Results%20and%20Reconciliations) This section details the year-to-date financial performance for the Water Flow Solutions and Water Management Solutions segments for the nine months ended June 30, 2025, including reconciliations of non-GAAP measures to GAAP, providing a comprehensive view of segment contributions YTD Q3 2025 Segment Performance and Reconciliations (in millions) | Metric (YTD Q3 2025) | Water Flow Solutions (in millions) | Water Management Solutions (in millions) | Corporate (in millions) | Consolidated (in millions) | | :-------------------------------- | :------------------------------- | :----------------------------------- | :---------------------- | :------------------------- | | Net sales | $607.4 | $441.5 | — | $1,048.9 | | Gross profit | $215.9 | $160.8 | — | $376.7 | | Operating income (loss) | $149.9 | $88.7 | ($47.6) | $191.0 | | Adjusted operating income (loss) | $155.0 | $89.3 | ($44.1) | $200.2 | | Adjusted EBITDA | $174.0 | $104.3 | ($43.9) | $234.4 | | Net income | | | | $139.1 | | Adjusted net income | | | | $146.0 | | Free cash flow | | | | $103.0 | - Gross profit includes **$4.1 million** in Inventory and other asset write-downs associated with the closure of the legacy brass foundry[49](index=49&type=chunk) - Strategic reorganization and other charges of **$5.1 million** primarily related to leadership transition, non-cash asset impairment, and transaction-related expenses[49](index=49&type=chunk) [YTD Q3 2024 Segment Results and Reconciliations](index=20&type=section&id=YTD%20Q3%202024%20Segment%20Results%20and%20Reconciliations) This section provides the year-to-date financial performance for the Water Flow Solutions and Water Management Solutions segments for the nine months ended June 30, 2024, including reconciliations of non-GAAP measures to GAAP, serving as a baseline for comparison YTD Q3 2024 Segment Performance and Reconciliations (in millions) | Metric (YTD Q3 2024) | Water Flow Solutions (in millions) | Water Management Solutions (in millions) | Corporate (in millions) | Consolidated (in millions) | | :-------------------------------- | :------------------------------- | :----------------------------------- | :---------------------- | :------------------------- | | Net sales | $555.2 | $411.3 | — | $966.5 | | Gross profit | $205.7 | $142.4 | — | $348.1 | | Operating income (loss) | $137.6 | $69.6 | ($53.9) | $153.3 | | Adjusted operating income (loss) | $137.8 | $71.0 | ($42.8) | $166.0 | | Adjusted EBITDA | $166.0 | $91.8 | ($45.6) | $212.2 | | Net income | | | | $105.9 | | Adjusted net income | | | | $115.6 | | Free cash flow | | | | $121.5 | - Strategic reorganization and other charges of **$12.7 million** primarily related to leadership transition, transaction-related expenses, cybersecurity incidents, non-cash asset impairment, and severance[50](index=50&type=chunk)

Core Insights - Mueller Water Products, Inc. reported a 6.6% increase in net sales to $380.3 million for the third quarter of fiscal 2025, compared to $356.7 million in the same quarter of the previous year [4][6] - The company achieved a net income of $52.5 million, up 11.0% from $47.3 million in the prior year quarter, with a net income margin improvement to 13.8% from 13.3% [11][41] - Adjusted EBITDA increased by 1.4% to $86.4 million, with an adjusted EBITDA margin of 22.7%, down from 23.9% in the prior year [12][41] - The company raised its annual guidance for fiscal 2025 net sales to between $1,405 million and $1,415 million, reflecting an increase of 6.9% to 7.6% compared to the previous year [25] Financial Performance - Gross profit for the third quarter increased by 10.9% to $145.7 million, with a gross margin of 38.3%, up from 36.8% in the prior year [7][41] - Operating income rose by 10.0% to $73.7 million, with an operating margin of 19.4%, compared to 18.8% in the prior year [9][41] - Selling, general and administrative expenses increased by 15.4% to $71.0 million, primarily due to unfavorable foreign currency impacts and inflationary pressures [8][41] Segment Results - Water Flow Solutions segment net sales increased by 4.1% to $216.6 million, driven by higher volumes of iron gate and specialty valves [13][45] - Water Management Solutions segment net sales rose by 10.2% to $163.7 million, primarily due to increased volumes of repair products and hydrants [16][45] Cash Flow and Balance Sheet - Net cash provided by operating activities for the nine-month period was $135.8 million, down from $149.5 million in the prior year [21][43] - Free cash flow for the nine-month period was $103.0 million, a decrease from $121.5 million in the previous year [23][43] - As of June 30, 2025, total debt outstanding was $450.8 million, with cash and cash equivalents of $372.0 million, resulting in a debt leverage ratio of 1.5 times [24][45] Outlook - The company expects adjusted EBITDA for fiscal 2025 to be between $318 million and $322 million, reflecting an increase of 11.7% to 13.1% compared to the prior year [25][26] - Total SG&A expenses are projected to be between $245 million and $247 million for fiscal 2025 [26]

Core Insights - Mueller Water Products, Inc. released its 2024 Environmental, Social and Governance (ESG) report, showcasing its commitment to sustainability and innovation in water management solutions [1][2] ESG Activities Summary - The 2024 ESG report highlights activities across six key pillars: Products, Environment, Health and Safety, Employees, Communities, and Governance [2] - The company has identified an estimated 7.7 billion gallons in water loss savings for clients through its EchoShore leak detection program, achieving this milestone three years ahead of schedule [6] - A new goal has been set to identify a total of 18 billion gallons of water loss by 2029 [6] - The company utilized approximately 69,900 metric tons of recycled metal, with 95% of the metal used in product production being recycled [6] - Hazardous waste directed to disposal has decreased by 21% year-over-year [6] - Scope 1 and 2 greenhouse gas emissions intensity was reduced by 1% year-over-year compared to 2023 [6] Company Overview - Mueller Water Products is a leading manufacturer and marketer of products and solutions for water transmission, distribution, and measurement in North America [4] - The company's product portfolio includes engineered valves, fire hydrants, pipe connection and repair products, metering products, leak detection, and software for critical water system data [4]

Company Overview - Mueller Water Products, Inc. is a leading manufacturer and marketer of products and solutions for water transmission, distribution, and measurement in North America [2] - The company's product portfolio includes engineered valves, fire hydrants, pipe connection and repair products, metering products, leak detection, pipe condition assessment, pressure management products, and software for critical water system data [2] - Mueller Water Products aims to help municipalities enhance operational efficiencies, improve customer service, and prioritize capital spending [2] Upcoming Financial Results - Mueller Water Products plans to release its financial results for the third quarter ended June 30, 2025, after U.S. markets close on August 4, 2025 [1] - A conference call to discuss earnings and business results will be held on August 5, 2025, at 10:00 a.m. ET, with a webcast available on the company's Investor Relations website [1]

Company Overview - Mueller Water Products, Inc. (MWA) is experiencing significant attention from investors due to high implied volatility in its options market, particularly the Aug 15, 2025 $15.00 Call option [1] - The company currently holds a Zacks Rank 3 (Hold) in the Steel - Pipe and Tube industry, which is positioned in the top 39% of the Zacks Industry Rank [3] Analyst Sentiment - Over the past 60 days, no analysts have increased their earnings estimates for the current quarter, while two analysts have lowered their estimates, resulting in a decrease in the Zacks Consensus Estimate from earnings of 36 cents per share to 34 cents [3] Options Market Insights - The high implied volatility suggests that options traders are anticipating a significant price movement for Mueller Water Products shares, indicating potential upcoming events that could lead to a major rally or sell-off [2][4] - Seasoned options traders often seek to sell premium on options with high implied volatility, aiming to benefit from the decay of the option's value if the underlying stock does not move as much as expected [4]

The program was led by Dr. Emad Kandil, Professor and Ellis Hanna Chair in Surgery at Tulane University School of Medicine, a leading figure in thyroid ablation and endocrine surgery. He was joined by Dr. Gregory Randolph, Professor of Otolaryngology–Head and Neck Surgery at Harvard Medical School and the Claire and John Bertucci Endowed Chair in Thyroid Surgical Oncology. Visiting Tulane as a Distinguished Professor on May 9, 2025, Dr. Randolph engaged in academic discussions with Dr. Kandil on a range of ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Mueller Water Products, Inc.'s unaudited condensed consolidated financial statements for the periods ended March 31, 2025, detailing financial position and performance - The company operates in two business segments: **Water Flow Solutions** (iron gate valves, specialty valves, service brass) and **Water Management Solutions** (fire hydrants, repair/installation, metering, leak detection, etc.)[25](index=25&type=chunk) - The business is seasonal, with net sales and operating income historically **lowest** in the quarters ending December 31 and March 31 due to weather conditions restricting construction activity[27](index=27&type=chunk) [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2025, shows increased total assets and stockholders' equity, alongside a decrease in total liabilities Condensed Consolidated Balance Sheet Data (in millions) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Total current assets** | $890.7 | $858.4 | | **Total assets** | $1,670.6 | $1,635.9 | | **Total current liabilities** | $235.3 | $258.0 | | **Total liabilities** | $797.0 | $825.8 | | **Total stockholders' equity** | $873.6 | $810.1 | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Net sales and net income increased for both the three and six-month periods ended March 31, 2025, reflecting improved operational performance Key Operating Results (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $364.3 | $353.4 | $668.6 | $609.8 | | **Gross profit** | $128.0 | $130.4 | $231.0 | $216.7 | | **Operating income** | $69.9 | $63.5 | $117.3 | $86.3 | | **Net income** | $51.3 | $44.3 | $86.6 | $58.6 | | **Diluted EPS** | $0.33 | $0.28 | $0.55 | $0.37 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased for the six months ended March 31, 2025, contributing to a higher cash balance at period-end Cash Flow Summary - Six Months Ended March 31 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $68.4 | $62.2 | | **Net cash used in investing activities** | $(21.0) | $(15.7) | | **Net cash used in financing activities** | $(26.9) | $(31.4) | | **Net change in cash and cash equivalents** | $19.3 | $18.9 | | **Cash and cash equivalents at end of period** | $329.2 | $179.2 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on segment performance, debt, legal contingencies, and subsequent events supporting the financial statements Segment Performance - Six Months Ended March 31, 2025 (in millions) | Segment | Net Revenue | Operating Income | | :--- | :--- | :--- | | Water Flow Solutions | $390.8 | $89.4 | | Water Management Solutions | $277.8 | $58.6 | | Corporate | - | $(30.7) | | **Total** | **$668.6** | **$117.3** | - The company has **$450.0 million** of **4.0%** Senior Unsecured Notes outstanding, which mature on June 15, 2029[61](index=61&type=chunk) - Contingencies include a matter with U.S. Customs and Border Protection (CBP) for underpayment of duties, for which **$9.1 million** was expensed in 2024, and a class-action lawsuit related to a 2023 cybersecurity incident[91](index=91&type=chunk)[93](index=93&type=chunk) - On April 30, 2025, the Board of Directors declared a quarterly dividend of **$0.067 per share**[99](index=99&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting sales growth, gross margin trends, liquidity, and future outlook for fiscal year 2025 - For fiscal year 2025, the company anticipates consolidated net sales will increase between **5.7%** and **6.5%** compared with fiscal 2024[109](index=109&type=chunk) - The company expects continued resilient demand in the municipal repair and replacement market, but anticipates new residential construction will be constrained by the interest rate environment[109](index=109&type=chunk) - Liquidity is **strong** with **$329.2 million** in cash and cash equivalents and an additional **$163.0 million** of borrowing capacity under the ABL facility as of March 31, 2025[140](index=140&type=chunk) - Fiscal 2025 capital expenditures are expected to be between **$45.0 million** and **$50.0 million**[144](index=144&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Net sales and operating income increased for the six months ended March 31, 2025, despite a slight decline in gross margin due to inefficiencies YTD 2025 vs. YTD 2024 Performance (in millions) | Metric | YTD 2025 | YTD 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Net Sales** | $668.6 | $609.8 | +9.6% | | **Gross Profit** | $231.0 | $216.7 | +6.6% | | **Operating Income** | $117.3 | $86.3 | +35.9% | | **SG&A** | $109.6 | $120.6 | -9.1% | - Water Flow Solutions YTD net sales increased **12.6%** to **$390.8 million**, driven by higher volumes and pricing[133](index=133&type=chunk) - Water Management Solutions YTD net sales increased **5.7%** to **$277.8 million**, also due to higher volumes and pricing[136](index=136&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with substantial cash and available credit, supported by positive operating cash flows and a share repurchase program - The company repurchased **$5.0 million** of its common stock in the first six months of fiscal 2025, with **$75.0 million** remaining under the share repurchase authorization[141](index=141&type=chunk) - Net cash provided by operating activities increased to **$68.4 million** for the six months ended March 31, 2025, from **$62.2 million** in the prior year, primarily due to higher net income[143](index=143&type=chunk) - Material cash requirements include annual interest payments of **$18.0 million** on senior notes, lease obligations, and purchase obligations of approximately **$110.9 million** expected in the next 12 months[158](index=158&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls during the quarter - 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[165](index=165&type=chunk) - There were **no changes** in internal control over financial reporting during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[163](index=163&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10 of the financial statements for details on various legal proceedings, including environmental, customs, and cybersecurity-related matters - The company is involved in various legal proceedings, with details provided in Note 10 of the financial statements[169](index=169&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section indicates no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - The report refers to the risk factors discussed in the company's 2024 Annual Report on Form 10-K and indicates **no material changes** from that disclosure[170](index=170&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 fiscal 2025, the company repurchased shares under its stock repurchase program, with a significant amount remaining authorized for future repurchases Share Repurchases in Q2 Fiscal 2025 | Period | Total Shares Purchased | Avg. Price Paid per Share | Shares Purchased as Part of Program | Remaining Authorization (millions) | | :--- | :--- | :--- | :--- | :--- | | Jan 2025 | — | — | — | $80.0 | | Feb 2025 | 199,389 | $26.75 | 185,961 | $75.0 | | Mar 2025 | — | — | — | $75.0 | - During the three months ended March 31, 2025, the company repurchased **185,961 shares** under its share repurchase authorization. An additional **13,428 shares** were surrendered to pay tax withholding obligations for equity awards[174](index=174&type=chunk) [Other Information](index=36&type=section&id=Item%205.%20Other%20Information) This section discloses a Rule 10b5-1 trading plan adopted by a Board member, with no other Section 16 officers or directors adopting or modifying plans - On February 7, 2025, a Board Member, Brian Healy, adopted a Rule 10b5-1 trading plan to purchase up to **$110,000** worth of company stock, with a maximum duration until January 30, 2026[172](index=172&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL-formatted financial data - The report includes required certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[176](index=176&type=chunk)

Financial Data and Key Metrics Changes - Consolidated net sales increased by 3.1% to $364.3 million, surpassing the previous year's strong results [21][7] - Gross profit decreased by 1.8% to $128 million, with a gross margin of 35.1%, down 180 basis points year over year [21][22] - Adjusted operating income increased by 9.6% to $73.1 million, with an adjusted operating margin improving by 120 basis points to 20.1% [23][24] - Adjusted EBITDA reached a record $84.5 million, up 2.8% year over year, with an adjusted EBITDA margin of 23.2% [24] - Adjusted net income per diluted share increased by 13.3% to $0.34, setting a new second quarter record [25] Business Line Data and Key Metrics Changes - Water Flow Solutions (WFS) net sales increased by 5.1% to $216.2 million, driven by higher volumes of iron gate and specialty valves [25] - Water Management Solutions (WMS) net sales increased by 0.3% to $148.1 million, primarily due to increased volumes of repair products [27] Market Data and Key Metrics Changes - Approximately 92% of net sales are in the U.S., with 60% to 65% of net sales used for the repair and replacement of municipal water infrastructure [11][21] - The company is experiencing resilient end market demand, particularly in the municipal market, while facing uncertainty in the residential construction market [52][33] Company Strategy and Development Direction - The company is focused on enhancing operational excellence, increasing supply chain efficiencies, and developing advanced manufacturing capabilities [14][10] - There is a strong emphasis on adapting to external challenges, including recently enacted tariffs, through pricing actions and supply chain mitigation plans [10][17] - The company aims to capture benefits from investments needed to address aging North American water infrastructure [32][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to external challenges and maintain focus on delivering critical products [10][34] - The company updated its fiscal 2025 outlook, increasing guidance for consolidated net sales while maintaining adjusted EBITDA guidance [30][31] - Management highlighted the importance of monitoring customer order patterns closely due to uncertainties in the market [19][52] Other Important Information - The company has a strong balance sheet with a net debt leverage ratio below one and no debt maturities until June 2029 [29] - Free cash flow expectations are maintained at over 80% of adjusted net income for 2025 [31] Q&A Session Summary Question: Was there any pre-buy observed due to tariffs? - Management indicated that there were no significant signs of pre-buying, but they are closely analyzing order patterns [40][41] Question: Is the new foundry fully operational? - The new foundry is fully operational, and the old foundry is no longer producing products [42] Question: What is the expected gross margin for the next quarter? - Management expects improvements in gross margin throughout the back half of the year, with an implied range of about 37% [74][75] Question: How much of the business is tied to new lot development versus repair and replacement? - Approximately 60% to 65% of revenue is associated with repair and replacement, while residential construction accounts for about 20% to 25% [86]