Mueller Water Products(MWA) - 2025 Q1 - Quarterly Report

Financial Performance - For fiscal year 2025, the company anticipates consolidated net sales to increase between 4.2% and 5.7% compared to fiscal 2024[111]. - Net sales for the three months ended December 31, 2024, were $304.3 million, an increase of$47.9 million or 18.7% from $256.4 million in the prior year period[115]. - Gross profit for the three months ended December 31, 2024, was$103.0 million, an increase of $16.7 million or 19.4$86.3 million in the prior year period[116]. - Net sales for Water Flow Solutions increased by $33.3 million or 23.6$174.6 million for the three months ended December 31, 2024, driven by higher volumes and pricing[121]. - Net sales for Water Management Solutions increased by $14.6 million or 12.7$129.7 million, primarily due to higher volumes of hydrants and pricing[124]. Expenses and Profitability - Selling, general and administrative expenses for the three months ended December 31, 2024, were $53.9 million, a decrease of$3.0 million or 5.3% from $56.9 million in the prior year period[117]. - Net interest expense for the three months ended December 31, 2024, was$1.6 million, a decrease of $1.7 million or 51.5$3.3 million in the prior year period[119]. - Strategic reorganization and other charges for the three months ended December 31, 2024, were $1.7 million, down from$6.6 million in the prior year period[118]. - Gross profit for Water Flow Solutions rose by $8.5 million or 18.2$55.1 million, with a gross margin of 31.6% compared to 33.0% in the prior year[122]. - Gross profit for Water Management Solutions increased by $8.2 million or 20.7$47.9 million, with a gross margin of 36.9% compared to 34.5% in the prior year[125]. Cash Flow and Capital Expenditures - Cash and cash equivalents on hand were $338.2 million at December 31, 2024, with an additional borrowing capacity of$163.0 million under the ABL[128]. - Net cash provided by operating activities was $54.1 million for the three months ended December 31, 2024, down from$67.9 million in the prior year[131]. - Capital expenditures increased to $11.9 million from$5.7 million in the prior year, with guidance for fiscal year 2025 capital expenditures expected between $45.0 million and$50.0 million[132]. - A quarterly dividend of $0.067 per share was declared, resulting in an estimated cash outlay of$10.5 million[129]. Market and Operational Challenges - Approximately 60% to 65% of the company's 2024 net sales were associated with the repair and replacement of municipal water infrastructure[105]. - The Israel-Hamas war caused temporary shutdowns and ongoing supply chain challenges, adversely impacting production efficiency[106]. - The company incurred approximately $1.5 million in expenses related to cybersecurity incidents in the first quarter of fiscal 2024[109]. Credit Rating - The corporate credit rating remained stable at Ba1 from Moody's and BB from Standard & Poor's as of December 31, 2024[143].