Mueller Water Products(MWA) - 2020 Q1 - Quarterly Report

Financial Performance - Net sales for the quarter ended December 31, 2019 increased by 10.3% or $19.8 million to $212.6 million from $192.8 million, primarily due to Krausz sales and higher pricing and shipment volumes at Infrastructure[111]. - Gross profit for the quarter ended December 31, 2019 increased by $12.5 million to $72.6 million, with a gross margin of 34.1%, compared to 31.2% in the prior year period[112]. - Selling, general and administrative expenses (SG&A) increased to $49.9 million from $41.0 million, with SG&A as a percentage of net sales rising to 23.5% from 21.3%[113]. - Net income for the quarter ended December 31, 2019 was $10.3 million, compared to a net loss of $21.0 million in the prior year period[110]. - Infrastructure segment net sales increased by 12.1% to $192.8 million, driven by Krausz net sales and higher pricing[117]. - Technologies segment net sales decreased to $19.8 million from $20.8 million, impacted by lower shipment volumes at Metrology[121]. Cash and Liquidity - Cash and cash equivalents were $136.8 million at December 31, 2019, with an additional borrowing capacity of $122.0 million under the ABL Agreement[124]. - The company anticipates that its existing cash, cash equivalents, and borrowing capacity will be sufficient to meet anticipated operating expenses and obligations through December 31, 2020[130]. - As of December 31, 2019, the ABL Agreement consists of a revolving credit facility for up to $175 million, with the potential to increase by an additional $150 million under certain conditions[131]. - Borrowings under the ABL Agreement bear interest at a floating rate equal to LIBOR plus a margin of 125 to 150 basis points, with a commitment fee of 25 basis points per annum for unused capacity[132]. - The company issued $450 million of Senior Unsecured Notes on June 12, 2018, maturing in June 2026, with a fair value of $473.6 million as of December 31, 2019[136]. - The company had $13.8 million of letters of credit and $22.7 million of surety bonds outstanding as of December 31, 2019[142]. Tax and Ratings - The effective income tax rate for the quarter ended December 31, 2019 was 22.8%, compared to 21.9% in the prior year period[116]. - The corporate credit rating is Ba2 from Moody's and BB from Standard & Poor's as of December 31, 2019, with a stable outlook[140]. Industry Dependency - The business is dependent on the construction industry, which is seasonal, with historically lower net sales and operating income in the quarters ending December 31 and March 31 due to weather conditions[143]. Capital Expenditures - Capital expenditures for the three months ended December 31, 2019 were $15.2 million, with estimated capital expenditures for 2020 projected to be between $80 million and $90 million[129]. Customer Collections - Collections from customers increased to $253.6 million for the three months ended December 31, 2019, compared to $242.3 million in the prior year period[127].