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Core Viewpoint - Mueller Water Products, Inc. is actively participating in the Gabelli 35th Annual Pump, Valve & Water Systems Symposium, indicating its commitment to industry engagement and innovation [1]. 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]. - The company aims to help municipalities enhance operational efficiencies, improve customer service, and prioritize capital spending, positioning itself as a key player in the water infrastructure sector [2].

Core Viewpoint - Mueller Water Products, Inc. is actively participating in the Gabelli 35th Annual Pump, Valve & Water Systems Symposium, indicating its commitment to industry engagement and innovation [1]. 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]. - The company aims to help municipalities enhance operational efficiencies, improve customer service, and prioritize capital spending, positioning itself as a key player in the water infrastructure sector [2].

Financial Data and Key Metrics Changes - The company achieved record first quarter results for adjusted EBITDA and adjusted net income per diluted share, with net sales growth of 18.7% to $304.3 million compared to the prior year [12][22] - Adjusted net income per diluted share increased by 92% to $0.25, marking a record for the first quarter [30][31] - Adjusted EBITDA rose 41.7% to $63.5 million, with an adjusted EBITDA margin of 20.9%, a 340 basis points improvement year-over-year [28][29] Business Line Data and Key Metrics Changes - Water Flow Solutions net sales increased 23.6% to $174.6 million, driven by higher volumes of iron gate and specialty valves [32] - Water Management Solutions net sales increased 12.7% to $129.7 million, primarily due to higher volumes of hydrants [35] - Adjusted operating income for Water Flow Solutions increased 40.9% to $38.6 million, while adjusted EBITDA increased 21.8% to $44.7 million [33][34] Market Data and Key Metrics Changes - The company noted that more than 90% of annual sales are in the US, indicating a strong domestic market focus [15] - The company experienced headwinds in the Kraus repair products segment due to the Israel-Hamas war, impacting overall performance [19] Company Strategy and Development Direction - The company is focused on operational improvements and capital investments to enhance capabilities and efficiencies, particularly with the closure of the legacy brass foundry expected to generate an 80 to 100 basis point annualized improvement in gross margin starting in the second half of 2025 [18][21] - The company aims to capture benefits from long-term end market growth trends through product innovation and service, particularly in response to aging North American water infrastructure [48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating external challenges, including potential tariffs, through price actions and operational efficiencies [15][84] - The company is increasing its guidance for 2025 net sales and adjusted EBITDA, reflecting strong first quarter results and anticipated benefits from recent price actions [13][42] Other Important Information - The company generated $42 million of free cash flow in the quarter, after allocating $12 million towards capital expenditures [13][38] - The new CFO, Melissa Rasmussen, is set to join the company, with the current CFO transitioning to a consulting role [16] Q&A Session Summary Question: How is the company thinking about pricing and volumes in guidance? - Management indicated that the sales guidance assumes benefits from both volume and price, with expectations for low to mid-single-digit price realization [52][53] Question: What is the outlook for infrastructure funding and project timing? - Management noted a trend of increasing infrastructure bill activity but emphasized that guidance does not assume a meaningful impact from infrastructure funding [58][101] Question: Can you discuss order levels and the impact of inventory cycles? - Management highlighted that order levels exceeded expectations, with normalized lead times aiding in converting orders to shipments, though some headwinds are expected from lapping record sales [61][64] Question: What are the implications of tariffs on the business? - Management stated that while tariffs could increase costs, the company is well-positioned to manage these through pricing actions and strategic sourcing initiatives [82][84] Question: How is the company positioned regarding land development and customer demand? - Management observed resilient demand for new homes despite elevated mortgage rates, with homebuilders maintaining strong balance sheets [114]

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% from $86.3 million in the prior year period[116]. - Net sales for Water Flow Solutions increased by $33.3 million or 23.6% to $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% to $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% from $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% to $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% to $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].

Core Viewpoint - Mueller Water Products (MWA) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, reflecting the changing earnings picture of a company [1][2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, influenced by institutional investors who adjust their valuations based on these estimates [4]. Company Performance and Outlook - The upgrade for Mueller Water Products indicates an improvement in the company's underlying business, which is expected to positively impact its stock price [5]. - The Zacks Consensus Estimate for Mueller Water Products is projected at $1.17 per share for the fiscal year ending September 2025, representing a year-over-year increase of 21.9% [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions and potential for market-beating returns [10].

Core Insights - Mueller Water Products (MWA) reported a revenue of $304.3 million for the quarter ended December 2024, marking an 18.7% increase year-over-year and exceeding the Zacks Consensus Estimate of $281.75 million by 8% [1] - The company's earnings per share (EPS) was $0.25, up from $0.13 in the same quarter last year, representing a surprise of 31.58% compared to the consensus estimate of $0.19 [1] Financial Performance Metrics - Net Sales for Water Management Solutions reached $129.70 million, surpassing the average estimate of $124.50 million by two analysts, reflecting a year-over-year increase of 12.7% [4] - Net Sales for Water Flow Solutions amounted to $174.60 million, exceeding the average estimate of $157.50 million, with a year-over-year change of 23.6% [4] - Adjusted operating income for Water Management Solutions was reported at $27.60 million, significantly higher than the average estimate of $18.50 million [4] - Adjusted operating income for Water Flow Solutions was $38.60 million, compared to the average estimate of $35 million [4] - The corporate adjusted operating loss was $13.80 million, slightly worse than the average estimate of -$13.50 million [4] Stock Performance - Over the past month, shares of Mueller Water Products have returned +3.1%, outperforming the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Core Insights - Mueller Water Products (MWA) reported quarterly earnings of $0.25 per share, exceeding the Zacks Consensus Estimate of $0.19 per share, and up from $0.13 per share a year ago [1][2] - The company achieved revenues of $304.3 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 8% and increasing from $256.4 million year-over-year [3] - The stock has shown a 31.58% earnings surprise this quarter and has surpassed consensus EPS estimates three out of the last four quarters [2][3] Earnings Performance - The earnings surprise of 31.58% indicates strong performance relative to expectations [2] - In the previous quarter, the company had an earnings expectation of $0.25 per share but reported $0.22, resulting in a negative surprise of -12% [2] - The company has consistently outperformed revenue estimates, achieving this four times in the last four quarters [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.34, with expected revenues of $357.75 million, and for the current fiscal year, the EPS estimate is $1.17 on revenues of $1.36 billion [8] - The estimate revisions trend for Mueller Water Products is favorable, leading to a Zacks Rank 2 (Buy), suggesting expected outperformance in the near future [7] - The Steel - Pipe and Tube industry, to which Mueller Water Products belongs, is currently ranked in the top 16% of over 250 Zacks industries, indicating a positive industry outlook [9]

Financial Performance - Net sales increased by 18.7 percent to $304.3 million compared to $256.4 million in the prior year quarter[2] - Reported net income rose by 146.9 percent to $35.3 million, with a net income margin of 11.6 percent compared to 5.6 percent in the prior year quarter[9] - Adjusted EBITDA increased by 41.7 percent to $63.5 million, improving the adjusted EBITDA margin to 20.9 percent from 17.5 percent in the prior year quarter[10] - Adjusted net income increased by 97.0 percent to $39.2 million compared to $19.9 million in the prior year quarter[9] - Operating income increased by 107.9 percent to $47.4 million, with an operating margin of 15.6 percent compared to 8.9 percent in the prior year quarter[6] - Net income for the quarter was $35.3 million, a substantial increase from $14.3 million in the same quarter of 2023, resulting in net income per diluted share of $0.22[41] - The company’s net income for the quarter was $35.3 million, translating to a net income margin of 11.6%, compared to $14.3 million and a margin of 5.6% in the same quarter of the previous year[44][46] Sales and Revenue Growth - Water Flow Solutions segment net sales increased by 23.6 percent to $174.6 million, driven by higher volumes and pricing[12] - Water Management Solutions segment net sales increased by 12.7 percent to $129.7 million, primarily due to higher volumes of hydrants[15] - The company raised its fiscal 2025 guidance for consolidated net sales to between $1,370 million and $1,390 million, representing a 4.2 percent to 5.7 percent increase compared to the prior year[23] - Net sales for the three months ended December 31, 2024, reached $304.3 million, a significant increase from $256.4 million in the same period of 2023, representing a growth of approximately 18.7%[44] Profitability Metrics - Gross profit for the same period was $103.0 million, representing a gross margin of 33.8%, compared to $86.3 million and a gross margin of 33.7% in the prior year[41] - The company reported an operating income of $47.4 million with an operating margin of 15.6%, compared to an operating income of $22.8 million and an operating margin of 8.9% in the prior year[44] - Adjusted EBITDA for the three months ended December 31, 2024, was $63.5 million, reflecting an adjusted EBITDA margin of 20.9%, compared to $44.8 million and a margin of 17.5% in the same quarter of 2023[44] Cash Flow and Capital Expenditures - Free cash flow decreased to $42.2 million from $62.2 million in the prior year quarter due to higher capital expenditures[21] - The company invested $11.9 million in capital expenditures during the quarter, up from $5.7 million in the prior year quarter[20] - Capital expenditures for the quarter totaled $11.9 million, up from $5.7 million in the same period last year, indicating increased investment in operations[44][46] - Free cash flow for the quarter was $42.2 million, after capital expenditures of $11.9 million, compared to a free cash flow of $62.2 million in the previous quarter[45][47] Financial Position - Cash and cash equivalents at the end of the period were $338.2 million, up from $216.7 million at the end of the same period last year[43] - Total current assets decreased slightly to $842.7 million from $858.4 million in the previous quarter[39] - Total liabilities decreased to $785.1 million from $825.8 million in the previous quarter, indicating improved financial health[39] - The company’s net debt at the end of the period was $111.3 million, with a net debt leverage ratio of 0.4x based on trailing twelve months' adjusted EBITDA[45] Operational Efficiency - Strategic reorganization and other charges for the quarter were $1.7 million, down from $6.6 million in the prior year, indicating improved operational efficiency[41] - Strategic reorganization and other charges amounted to $1.7 million, primarily related to leadership transition and severance expenses[45] - The company is transitioning operations to a new foundry in Decatur, Illinois, which is expected to enhance production capabilities and operational efficiencies[41] - The effective tax rate for adjusting items was reported at 22.9%, which may be subject to rounding[45]

Core Insights - Mueller Water Products, Inc. reported a strong financial performance for the first quarter of fiscal 2025, with net sales increasing by 18.7% to $304.3 million compared to $256.4 million in the prior year quarter [1][5][6] - The company achieved a reported net income of $35.3 million, a significant increase of 146.9% from $14.3 million in the prior year quarter, resulting in a net income margin of 11.6% [10][39] - Adjusted EBITDA rose by 41.7% to $63.5 million, with an improved adjusted EBITDA margin of 20.9% compared to 17.5% in the prior year quarter [11][39] Financial Performance - Net sales increased by $47.9 million, or 18.7%, primarily due to higher volumes and pricing across most product lines [6][12] - Operating income surged by 107.9% to $47.4 million, with an operating margin of 15.6%, up from 8.9% in the prior year quarter [7][39] - Adjusted operating income increased by 78.2% to $52.4 million, with an adjusted operating margin of 17.2%, compared to 11.5% in the prior year quarter [9][39] Segment Results - Water Flow Solutions segment net sales increased by 23.6% to $174.6 million, driven by higher volumes of iron gate and specialty valves [12][13] - Water Management Solutions segment net sales rose by 12.7% to $129.7 million, primarily due to increased volumes of hydrants [15][16] Cash Flow and Balance Sheet - Net cash provided by operating activities decreased to $54.1 million from $67.9 million in the prior year quarter, attributed to changes in working capital [20][22] - Free cash flow decreased to $42.2 million from $62.2 million, reflecting higher capital expenditures of $11.9 million compared to $5.7 million in the prior year [22][46] - As of December 31, 2024, total debt was $449.5 million, with cash and cash equivalents of $338.2 million, resulting in a debt leverage ratio of 1.5 times [23][24] Fiscal 2025 Outlook - The company raised its fiscal 2025 guidance for consolidated net sales to between $1,370 million and $1,390 million, representing a 4.2% to 5.7% increase compared to the prior year [24][25] - Adjusted EBITDA expectations for fiscal 2025 were increased to between $310 million and $315 million, indicating an 8.9% to 10.6% increase compared to the prior year [24][25]