MUELLER WATER PRODUCTS REPORTS 2025 THIRD QUARTER RESULTS Increased Net Sales 6.6% to $380.3 Million Reported Net Income per Diluted Share of $0.33 Delivered Adjusted Net Income per Diluted Share of $0.34 Raises Annual Guidance for Fiscal 2025 Net Sales and Adjusted EBITDA ATLANTA, August 4, 2025 - Mueller Water Products, Inc. (NYSE: MWA), a leading manufacturer and marketer of products and solutions used in the transmission, distribution and measurement of water in North America, announced financial result ...

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]

Financial Data and Key Metrics Changes - Consolidated net sales increased by 3.1% to $364.3 million, surpassing the previous year's strong results [20] - Gross profit decreased by 1.8% to $128 million, with a gross margin of 35.1%, down 180 basis points year over year [20] - Adjusted EBITDA reached a record $84.5 million, an increase of 2.8% compared to the prior year, with an adjusted EBITDA margin of 23.2% [23] - Adjusted net income per diluted share increased by 13.3% to $0.34, setting a new second quarter record [24] 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 [24] - Water Management Solutions (WMS) net sales increased by 0.3% to $148.1 million, primarily due to increased volumes of repair products [26] - Adjusted operating income for WFS increased by 6.3% to $55.9 million, while adjusted EBITDA decreased by 0.3% to $62.2 million [25] 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] - The company is experiencing resilient end market demand, particularly in the municipal market, while facing challenges in the residential construction market [52] Company Strategy and Development Direction - The company is focused on enhancing operational excellence, improving supply chain efficiencies, and developing advanced manufacturing capabilities [14] - Recent investments and experience with inflationary cycles position the company to strengthen its market presence [18] - The company aims to capture benefits from investments needed to address aging North American water infrastructure [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to adapt to external challenges, including recently enacted tariffs [9] - The company is increasing its annual guidance for 2025 net sales while maintaining adjusted EBITDA guidance due to higher costs from tariffs [29] - Management anticipates continued resilience in the municipal market, with some uncertainty in the residential construction market [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 [28] - Free cash flow for the first half of the year was $47.3 million, representing 51% of adjusted net income [28] Q&A Session Summary Question: Was there any pre-buy observed due to tariffs? - Management indicated that there was no significant pre-buy observed, but it is being analyzed closely [39][40] Question: Is the new foundry fully operational? - The new foundry is fully operational, and the impairment charge of $800,000 was related to the legacy foundry [42][43] Question: What is the outlook for capital expenditures now that the new foundry is operational? - Most capital for the new foundry has already been spent, and anticipated CapEx will remain at 3% to 4% of sales [48][49] Question: How is end market demand being affected by tariffs? - Management expects continued resiliency in the municipal market, but some uncertainty in the residential construction market [52] Question: How are pricing strategies being adjusted in light of tariffs? - Targeted price increases have been implemented for specialty valve and repair products, but they may not fully cover the expected tariff impacts [60][62] Question: What is the expected gross margin for the next quarter? - Management anticipates improvements in gross margin, expecting an implied range of about 37% for the back half of the year [74]

Where Intelligence Meets Infrastructure® Earnings Conference Call 2025 Second Quarter March 31, 2025 May 6, 2025 These slides are not intended to be a stand-alone presentation, but are for use in conjunction with the earnings call Non-GAAP 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 management believes is usefu ...