PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and related disclosures for Mueller Water Products, Inc [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Mueller Water Products, Inc. and its subsidiaries for the periods ended June 30, 2025, and September 30, 2024 (balance sheet), and June 30, 2025, and 2024 (statements of operations, comprehensive income, stockholders' equity, and cash flows) It includes detailed notes explaining the company's organization, accounting policies, revenue recognition, income taxes, borrowing arrangements, retirement plans, stock-based compensation, supplemental balance sheet information, segment performance, accumulated other comprehensive loss, commitments, contingencies, and subsequent events [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position as of June 30, 2025, and September 30, 2024 | Metric | June 30, 2025 (in millions) | September 30, 2024 (in millions) | | :-------------------------------- | :----------------------------- | :--------------------------------- | | **Assets:** | | | | Cash and cash equivalents | $372.0 | $309.9 | | Receivables, net | $205.4 | $208.9 | | Inventories, net | $316.6 | $301.7 | | **Total current assets** | **$937.8** | **$858.4** | | Property, plant and equipment, net | $327.8 | $318.8 | | **Total assets** | **$1,730.4** | **$1,635.9** | | **Liabilities and Stockholders' Equity:** | | | | **Total current liabilities** | **$242.8** | **$258.0** | | Long-term debt | $449.8 | $448.7 | | **Total liabilities** | **$801.4** | **$825.8** | | **Total stockholders' equity** | **$929.0** | **$810.1** | | **Total liabilities and stockholders' equity** | **$1,730.4** | **$1,635.9** | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance for the three and nine months ended June 30, 2025 and 2024 | Metric | Three months ended June 30, 2025 (in millions) | Three months ended June 30, 2024 (in millions) | Nine months ended June 30, 2025 (in millions) | Nine 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 basic share | $0.34 | $0.30 | $0.89 | $0.68 | | 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 | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's comprehensive income for the three and nine months ended June 30, 2025 and 2024 | Metric | Three months ended June 30, 2025 (in millions) | Three months ended June 30, 2024 (in millions) | Nine months ended June 30, 2025 (in millions) | Nine months ended June 30, 2024 (in millions) | | :------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income | $52.5 | $47.3 | $139.1 | $105.9 | | Total other comprehensive income (loss), net of income tax | $20.6 | $(3.8) | $18.9 | $6.3 | | Comprehensive income | $73.1 | $43.5 | $158.0 | $112.2 | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in stockholders' equity for the nine months ended June 30, 2025 and 2024 | Metric | September 30, 2024 (in millions) | June 30, 2025 (in millions) | | :-------------------------------- | :----------------------------- | :-------------------------- | | Total Stockholders' Equity | $810.1 | $929.0 | | Net income (9 months) | $105.9 (2024) | $139.1 (2025) | | Dividends declared (9 months) | $(29.9) (2024) | $(31.4) (2025) | | Stock repurchased (9 months) | $(10.0) (2024) | $(15.0) (2025) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows for the nine months ended June 30, 2025 and 2024 | Metric | Nine months ended June 30, 2025 (in millions) | Nine 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 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1. Organization and Basis of Presentation](index=10&type=section&id=Note%201.%20Organization%20and%20Basis%20of%20Presentation) This note describes the company's business segments, seasonal operations, and significant accounting policies - **Mueller Water Products** operates in two segments: **Water Flow Solutions** (iron gate valves, specialty valves, service brass products) and **Water Management Solutions** (fire hydrants, repair/installation, natural gas, metering, leak detection, pressure management)[24](index=24&type=chunk) - The business is seasonal, with **net sales** and **operating income** historically **lowest** in the December 31 and March 31 quarters due to cold weather restricting construction in the northern U.S. and Canada[26](index=26&type=chunk) - The company recorded **$5.1 million** in **Strategic reorganization and other charges** for the nine months ended June 30, 2025, **down from $12.7 million** in the prior year, related to leadership transition, asset impairment, and transaction expenses[32](index=32&type=chunk) - The company is involved in a **New Markets Tax Credit (NMTC) program** for its brass foundry, consolidating related variable interest entities (VIEs) and expecting to recognize an **estimated gain of $3.9 million** in December 2027[33](index=33&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 2. Revenue from Contracts with Customers](index=12&type=section&id=Note%202.%20Revenue%20from%20Contracts%20with%20Customers) This note details the company's revenue recognition policies and related contract balances | Metric | June 30, 2025 (in millions) | September 30, 2024 (in millions) | | :-------------------------- | :----------------------------- | :--------------------------------- | | Receivables, net | $205.4 | $208.9 | | Deferred revenue | $11.3 | $12.8 | | Metric | Nine months ended June 30, 2025 (in millions) | Nine months ended June 30, 2024 (in millions) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Beginning balance (Allowance for Credit Losses) | $8.3 | $7.3 | | Provision (reversed) charged to expense | $(0.2) | $2.3 | | Write-offs and other | $(2.8) | $(1.7) | | Ending balance (Allowance for Credit Losses) | $5.3 | $7.9 | | Metric | Nine months ended June 30, 2025 (in millions) | Nine months ended June 30, 2024 (in millions) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Beginning balance (Deferred Revenue) | $12.8 | $9.2 | | Revenue deferred during the period | $6.2 | $6.9 | | Previously deferred revenue recognized | $(7.7) | $(5.0) | | Ending balance (Deferred Revenue) | $11.3 | $11.1 | - Revenue for product sales is recognized upon shipment when control transfers to the customer Performance obligations for software hosting and leak detection monitoring services are satisfied over time[45](index=45&type=chunk)[47](index=47&type=chunk) [Note 3. Income Taxes](index=14&type=section&id=Note%203.%20Income%20Taxes) This note provides information on the company's effective income tax rates and unrecognized tax benefits | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Nine months ended June 30, 2025 | Nine months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | U.S. federal statutory income tax rate | 21.0 % | 21.0 % | 21.0 % | 21.0 % | | Effective income tax rate | 27.1 % | 25.2 % | 25.0 % | 23.8 % | - Gross liabilities for **unrecognized income tax benefits increased to $3.6 million** at June 30, 2025, from **$3.0 million** at September 30, 2024[52](index=52&type=chunk) - The company is assessing the impact of the newly enacted H.R. 1 (One Big Beautiful Bill Act) but does not expect a **material impact** on its financial statements or estimated annual **effective tax rate** for 2025[54](index=54&type=chunk) [Note 4. Borrowing Arrangements](index=15&type=section&id=Note%204.%20Borrowing%20Arrangements) This note outlines the company's debt structure, credit facilities, and related fair values | Debt Component | June 30, 2025 (in millions) | September 30, 2024 (in millions) | | :----------------------- | :----------------------------- | :--------------------------------- | | 4.0% Senior Notes | $450.0 | $450.0 | | Finance leases | $3.5 | $2.7 | | Total debt | $453.5 | $452.7 | | Long-term debt (net) | $449.8 | $448.7 | - The **ABL agreement** provides a revolving credit facility of up to **$175.0 million**, maturing in March 2029, with an **excess availability of $163.0 million** at June 30, 2025[55](index=55&type=chunk)[61](index=61&type=chunk) - The **4.0% Senior Unsecured Notes**, totaling **$450.0 million**, mature on June 15, 2029, and had a **fair value of $432.7 million** at June 30, 2025[62](index=62&type=chunk)[63](index=63&type=chunk) [Note 5. Retirement Plan](index=16&type=section&id=Note%205.%20Retirement%20Plan) This note details the company's net periodic pension costs for the reported periods | Metric | Three months ended June 30, 2025 (in millions) | Three months ended June 30, 2024 (in millions) | Nine months ended June 30, 2025 (in millions) | Nine months ended June 30, 2024 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Service cost | $0.2 | $0.2 | $0.5 | $0.5 | | Pension expense (benefit) other than service | $— | $1.0 | $(0.1) | $3.0 | | Net periodic cost | $0.2 | $1.2 | $0.4 | $3.5 | [Note 6. Stock-based Compensation Plans](index=17&type=section&id=Note%206.%20Stock-based%20Compensation%20Plans) This note describes the company's stock-based compensation programs and related expenses | Grant Type | Total grant date fair value (in millions) - 9 months ended June 30, 2025 | | :-------------------------------- | :----------------------------------------------------------------------- | | MRSUs | $2.7 | | PRSUs | $1.8 | | Restricted stock units | $4.4 | | Phantom Plan instruments | $3.4 | | Non-qualified stock options | $1.8 | | Employee stock purchase plan instruments | $0.3 | | **Total** | **$14.4** | - **Operating income** included **stock-based compensation expense of $3.2 million** for the three months ended June 30, 2025 (**down from $3.7 million** in 2024) and **$10.8 million** for the nine months ended June 30, 2025 (**up from $10.1 million** in 2024)[78](index=78&type=chunk) - As of June 30, 2025, there was approximately **$13.0 million of unrecognized compensation expense** related to **stock-based compensation**, to be expensed through March 2028[78](index=78&type=chunk) [Note 7. Supplemental Balance Sheet Information](index=20&type=section&id=Note%207.%20Supplemental%20Balance%20Sheet%20Information) This note provides additional details on specific asset and liability categories from the balance sheet | Asset Category | June 30, 2025 (in millions) | September 30, 2024 (in millions) | | :-------------------------------- | :----------------------------- | :--------------------------------- | | Inventories, net | $316.6 | $301.7 | | Property, plant and equipment, net | $327.8 | $318.8 | | Goodwill, net | $87.6 | $80.7 | | Total other current assets | $43.8 | $37.9 | | Total other noncurrent assets | $69.1 | $68.3 | | Liability Category | June 30, 2025 (in millions) | September 30, 2024 (in millions) | | :-------------------------------- | :----------------------------- | :--------------------------------- | | Total other current liabilities | $123.2 | $147.3 | | Total other noncurrent liabilities | $58.9 | $63.7 | - **Goodwill**, entirely within the **Water Management Solutions** segment, **increased to $87.6 million** at June 30, 2025, from **$80.7 million** at September 30, 2024, primarily due to changes in foreign currency exchange rates[82](index=82&type=chunk)[83](index=83&type=chunk) [Note 8. Segment Information](index=22&type=section&id=Note%208.%20Segment%20Information) This note presents financial performance data for the company's Water Flow Solutions and Water Management Solutions segments | Metric | Water Flow Solutions (3 months) | Water Management Solutions (3 months) | Water Flow Solutions (9 months) | Water Management Solutions (9 months) | | :-------------------------------- | :------------------------------ | :------------------------------------ | :------------------------------ | :------------------------------------ | | Net revenue (2025) | $216.6 million | $163.7 million | $607.4 million | $441.5 million | | Net revenue (2024) | $208.1 million | $148.6 million | $555.2 million | $411.3 million | | Operating income (2025) | $60.5 million | $30.1 million | $149.9 million | $88.7 million | | Operating income (2024) | $57.8 million | $25.5 million | $137.6 million | $69.6 million | | Capital expenditures (2025) | $5.3 million | $6.4 million | $15.8 million | $17.0 million | | Capital expenditures (2024) | $6.2 million | $6.0 million | $16.1 million | $11.9 million | - **Water Flow Solutions' net revenue increased 4.1%** for the three months and **9.4%** for the nine months ended June 30, 2025, driven by increased volumes and higher pricing[84](index=84&type=chunk) - **Water Management Solutions' net revenue increased 10.2%** for the three months and **7.3%** for the nine months ended June 30, 2025, also due to increased volumes and higher pricing[84](index=84&type=chunk) [Note 9. Accumulated Other Comprehensive Loss](index=23&type=section&id=Note%209.%20Accumulated%20Other%20Comprehensive%20Loss) This note details the components and changes in accumulated other comprehensive loss | Component | September 30, 2024 (in millions) | June 30, 2025 (in millions) | | :-------------------------------- | :----------------------------- | :-------------------------- | | Pension actuarial amortization, net of income tax | $(19.7) | $(18.5) | | Foreign currency translation, net of income tax | $(11.1) | $6.6 | | Total Accumulated Other Comprehensive Loss | $(30.8) | $(11.9) | - **Total accumulated other comprehensive loss decreased from $(30.8) million** at September 30, 2024, to **$(11.9) million** at June 30, 2025, primarily due to **$17.7 million in foreign currency translation income**[85](index=85&type=chunk) [Note 10. Commitments and Contingencies](index=23&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) This note outlines the company's legal proceedings, environmental matters, and other contingent liabilities - The company is involved in various **legal proceedings**, including environmental matters where Tyco International plc has an **indemnification obligation**, and a **Superfund site** in North Birmingham, Alabama, for which no amount has been accrued due to estimation uncertainty[86](index=86&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) - A **CBP matter** regarding underpaid duties for certain products resulted in an **assessment of approximately $9.0 million**, which the company had originally expensed **$9.1 million** for in 2024[90](index=90&type=chunk)[91](index=91&type=chunk) - A **cybersecurity incident** led to a **putative class action lawsuit**, which the company **settled for an aggregate cap of $285,000** for class members, plus legal fees and a service award, subject to court approval[92](index=92&type=chunk) [Note 11. Subsequent Events](index=24&type=section&id=Note%2011.%20Subsequent%20Events) This note discloses significant events occurring after the balance sheet date - On July 30, 2025, the Board of Directors declared a **quarterly dividend of $0.067 per share**, payable on or about August 21, 2025[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of the company's business, a detailed analysis of its financial performance for the three and nine months ended June 30, 2025, compared to the prior year, and a discussion of its financial condition, liquidity, and capital resources It highlights key factors impacting results, such as sales growth, gross margin changes, operating expenses, and strategic initiatives, while also addressing external challenges like geopolitical events, cybersecurity incidents, and inflationary pressures [Overview](index=25&type=section&id=Overview) This section provides an overview of the company's business, market segments, and key operational challenges - **Mueller Water Products** operates in two segments: **Water Flow Solutions** (**57% of FY2024 net sales**) and **Water Management Solutions** (**43% of FY2024 net sales**)[102](index=102&type=chunk) - Approximately **60-65% of 2024 net sales** were from municipal water infrastructure repair/replacement, **25-30%** from residential construction, and **10%** from natural gas utilities/industrial applications[103](index=103&type=chunk) - The Israel-Hamas war caused supply chain disruptions and labor challenges at the Ariel, Israel facility, leading to investments in recruiting, supplier expansion, and shifting manufacturing[104](index=104&type=chunk) - **Cybersecurity incidents** in fiscal 2024 caused temporary operational disruptions and incurred **$1.5 million in expenses**, but had **no material impact** on full fiscal 2024 consolidated **net sales**[105](index=105&type=chunk)[106](index=106&type=chunk) - For fiscal year 2025, consolidated **net sales** are anticipated to **increase between 6.9% and 7.6%** compared to fiscal 2024, driven by resilient demand in municipal repair and replacement, despite economic uncertainties[108](index=108&type=chunk) - **Inventory costs increased by approximately 1.5%** in the first nine months of 2025 due to inflation, with further increases expected from new tariffs enacted after March 2025[110](index=110&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance for the reported periods, highlighting key drivers and changes [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=27&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) This section compares the company's consolidated and segment financial results for the three months ended June 30 Consolidated Financial Performance (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change ($) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | :--------- | | Net sales | $380.3 | $356.7 | $23.6 | 6.6% | | Gross profit | $145.7 | $131.4 | $14.3 | 10.9% | | Gross margin | 38.3% | 36.8% | 1.5 pts | | | Selling, general and administrative | $71.0 | $61.5 | $9.5 | 15.4% | | Operating income | $73.7 | $67.0 | $6.7 | 10.0% | | Net interest expense | $1.7 | $2.8 | $(1.1) | (39.3)% | | Net income | $52.5 | $47.3 | $5.2 | 11.0% | - **Gross profit** was negatively impacted by approximately **7%** due to inflation and increased tariffs[114](index=114&type=chunk) - **SG&A expenses increased by $9.5 million**, primarily due to a **$9.1 million unfavorable foreign currency fluctuation** (U.S. dollar depreciation vs. Israeli shekel), inflation, and higher personnel/third-party fees[115](index=115&type=chunk) Segment Net Sales (Three Months Ended June 30) | Segment | 2025 (in millions) | 2024 (in millions) | Change ($) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :--------- | :--------- | | Water Flow Solutions | $216.6 | $208.1 | $8.5 | 4.1% | | Water Management Solutions | $163.7 | $148.6 | $15.1 | 10.2% | - **Water Flow Solutions' gross margin decreased to 38.7%** (**from 39.4%**), while **Water Management Solutions' gross margin increased to 37.8%** (**from 33.3%**)[120](index=120&type=chunk)[123](index=123&type=chunk) - **Water Management Solutions' SG&A increased significantly by $9.0 million** (**39.8%**), mainly due to a **$7.1 million unfavorable foreign currency impact**[124](index=124&type=chunk) [Nine months ended June 30, 2025 Compared to Nine months ended June 30, 2024](index=30&type=section&id=Nine%20months%20ended%20June%2030%2C%202025%20Compared%20to%20Nine%20months%20ended%20June%2030%2C%202024) This section compares the company's consolidated and segment financial results for the nine months ended June 30 Consolidated Financial Performance (Nine Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change ($) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | :--------- | | Net sales | $1,048.9 | $966.5 | $82.4 | 8.5% | | Gross profit | $376.7 | $348.1 | $28.6 | 8.2% | | Gross margin | 35.9% | 36.0% | (0.1) pts | | | Selling, general and administrative | $180.6 | $182.1 | $(1.5) | (0.8)% | | Operating income | $191.0 | $153.3 | $37.7 | 24.6% | | Net interest expense | $5.6 | $9.7 | $(4.1) | (42.3)% | | Net income | $139.1 | $105.9 | $33.2 | 31.3% | - **Gross profit** was negatively impacted by approximately **5%** due to inflation and increased tariffs, and by a **$4.1 million write-down of inventory and assets** at the legacy brass foundry[128](index=128&type=chunk)[134](index=134&type=chunk) - **SG&A decreased by $1.5 million**, primarily due to lower intangible amortization, partially offset by **unfavorable foreign currency fluctuation** and higher personnel/third-party fees[129](index=129&type=chunk) Segment Net Sales (Nine Months Ended June 30) | Segment | 2025 (in millions) | 2024 (in millions) | Change ($) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :--------- | :--------- | | Water Flow Solutions | $607.4 | $555.2 | $52.2 | 9.4% | | Water Management Solutions | $441.5 | $411.3 | $30.2 | 7.3% | - **Water Flow Solutions' gross margin decreased to 35.5%** (**from 37.0%**), while **Water Management Solutions' gross margin increased to 36.4%** (**from 34.6%**)[134](index=134&type=chunk)[137](index=137&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, borrowing capacity, and capital allocation strategies Cash and Borrowing Capacity (June 30, 2025) | Metric | Amount (in millions) | | :-------------------------------- | :------------------- | | Cash and cash equivalents | $372.0 | | Additional borrowing capacity under ABL | $163.0 | - The company **repurchased $15.0 million of common stock** during the nine months ended June 30, 2025, with **$65.0 million remaining under the share repurchase authorization**[142](index=142&type=chunk) - **Cash flows provided by operating activities decreased by $13.7 million to $135.8 million** for the nine months ended June 30, 2025, primarily due to changes in working capital and other assets/liabilities, despite increased **net income**[144](index=144&type=chunk) - **Capital expenditures increased to $32.8 million** for the nine months ended June 30, 2025, from **$28.0 million** in the prior year, driven by foundry investments and **cybersecurity infrastructure improvements**[145](index=145&type=chunk) - Expected **capital expenditures** for fiscal year 2025 are between **$50.0 million and $52.0 million**[145](index=145&type=chunk) - The company expects existing **cash**, equivalents, and **borrowing capacity**, combined with **operating cash flows**, to be **sufficient** for anticipated operating needs, tax payments, **capital expenditures**, and debt service for the next twelve months[146](index=146&type=chunk) Credit Ratings (June 30, 2025) | Rating Agency | Corporate Credit Rating | 4.0% Senior Notes Rating | Outlook | | :-------------- | :---------------------- | :----------------------- | :------ | | Moody's | Ba1 | Ba1 | Stable | | Standard & Poor's | BB | BB | Positive | [Material Cash Requirements](index=35&type=section&id=Material%20Cash%20Requirements) This section outlines the company's significant future cash obligations, including debt and lease payments - The company has **debt obligations of $450.0 million 4.0% Senior Notes** maturing in 2029, with **annual cash interest payments of $18.0 million** through 2029[158](index=158&type=chunk) - **Cumulative cash obligations** include **$33.1 million for operating leases** through 2034 and **$4.0 million for finance leases** through 2030[158](index=158&type=chunk) - **Purchase obligations** for raw materials and parts are approximately **$128.7 million** for the next 12 months and **$1.4 million** beyond June 30, 2026[158](index=158&type=chunk) [Off-Balance Sheet Arrangements](index=35&type=section&id=Off-Balance%20Sheet%20Arrangements) This section details the company's off-balance sheet commitments and guarantees - The company does not have relationships with unconsolidated entities or financial partnerships for **off-balance sheet arrangements**[159](index=159&type=chunk) - As of June 30, 2025, the company had **$11.8 million in letters of credit** and **$13.4 million in surety bonds** outstanding[160](index=160&type=chunk) [Seasonality](index=35&type=section&id=Seasonality) This section explains the seasonal impact on the company's net sales and operating income - The company's business is seasonal, with **net sales** and **operating income** typically **lowest** in the December 31 and March 31 quarters due to cold weather impacting construction[161](index=161&type=chunk) [Critical Accounting Estimates](index=35&type=section&id=Critical%20Accounting%20Estimates) This section confirms no changes to the company's critical accounting estimates since the prior fiscal year-end - There have been **no changes** in the company's determination of **critical accounting estimates** since September 30, 2024[162](index=162&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that there have been no material changes to the company's internal control over financial reporting during the quarter ended June 30, 2025 The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of the end of the reporting period, while acknowledging the inherent limitations of any control system - **No material changes** occurred in **internal control over financial reporting** during the quarter ended June 30, 2025[163](index=163&type=chunk) - The CEO and CFO concluded that **disclosure controls and procedures** were **effective** as of June 30, 2025[165](index=165&type=chunk)[166](index=166&type=chunk) - Management acknowledges that control systems provide reasonable, not absolute, assurance and have **inherent limitations**[167](index=167&type=chunk) PART II. OTHER INFORMATION This section provides additional disclosures on legal matters, risk factors, equity sales, and corporate governance [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10 of the financial statements for details on legal proceedings, which include environmental matters, a CBP duty underpayment issue, and a cybersecurity incident class action lawsuit - **Legal proceedings information** is detailed in Note 10 to the Condensed Consolidated Financial Statements[170](index=170&type=chunk) [Item 1A. Risk Factors](index=37&type=page&id=Item%201A.%20Risk%20Factors) This section directs readers to the company's 2024 Annual Report on Form 10-K for a comprehensive discussion of risk factors that could materially affect its business, financial condition, or operating results, noting that additional unknown or immaterial risks may also exist - Readers should refer to the 'RISK FACTORS' section in the 2024 Annual Report on Form 10-K for a **comprehensive discussion** of factors that could materially affect the business[171](index=171&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activities during the third quarter of fiscal 2025, indicating that 405,592 shares were repurchased under its authorized program, with $65.0 million remaining under the authorization Share Repurchase Activity (Third Quarter Fiscal 2025) | Period | Total shares purchased | Average price paid per share | Shares purchased under announced plans | Maximum dollar value remaining (in millions) | | :---------------- | :--------------------- | :--------------------------- | :------------------------------------- | :------------------------------------------- | | April 1-30, 2025 | — | $— | — | $75.0 | | May 1-31, 2025 | 405,592 | $24.64 | 405,592 | $65.0 | | June 1-30, 2025 | — | $— | — | $65.0 | | **Total** | **405,592** | **$24.64** | **405,592** | | - The company has a **stock repurchase program** authorized for up to **$250.0 million**, **increased** in 2017 from **$50.0 million**[174](index=174&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) This section states that no officers or directors adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - **No officers or directors** adopted, modified, or terminated **Rule 10b5-1** or **non-Rule 10b5-1 trading arrangements** during the three months ended June 30, 2025[173](index=173&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including certifications from the CEO and CFO (Sections 302 and 906 of Sarbanes-Oxley Act), and XBRL formatted financial information - Exhibits include **certifications from the CEO and CFO** (31.1, 31.2, 32.1, 32.2) and **XBRL formatted financial information** (101, 104)[175](index=175&type=chunk)

Financial Data and Key Metrics Changes - Consolidated net sales increased by 6.6% to $380.3 million, setting a new quarterly record [18][6] - Gross margin exceeded 38%, reflecting a sequential improvement of 320 basis points [7][19] - Adjusted EBITDA reached a record $86.4 million, an increase of 1.4% year over year [22] - Adjusted net income per diluted share increased by 6.3% year over year to $0.334, setting a new third-quarter record [23] Business Line Data and Key Metrics Changes - Water Supply Solutions (WSS) net sales increased by 4.1% to $216.6 million, driven by volume growth in iron gate and specialty valves [23] - Water Management Solutions (WMS) net sales increased by 10.2% to $163.7 million, led by strong volume growth of repair products and hydrants [26] - Adjusted operating income for WSS increased by 4.7% to $60.5 million, while WMS adjusted operating income increased by 12.6% to $30.3 million [24][26] Market Data and Key Metrics Changes - The residential construction market is experiencing a slowdown, particularly in single-family housing starts, influenced by high interest rates and macroeconomic uncertainty [38] - The municipal repair and replacement market remains strong, driven by the need to repair aging infrastructure [40] Company Strategy and Development Direction - The company aims to enhance manufacturing efficiencies and operational excellence while navigating external challenges such as tariffs [17][12] - The closure of the legacy brass foundry is expected to yield benefits in the fourth quarter and into the next year [13][19] - The company is focused on sustainability and innovation, as highlighted in their annual ESG report [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving record results for the second consecutive year, despite external uncertainties [9][17] - The anticipated impact of tariffs has been lower than initially expected, with updated estimates for annualized tariff impact decreasing to approximately 3% to 4% of cost of sales [14] - The company is prepared to implement additional pricing actions to offset higher input costs as needed [16] Other Important Information - Free cash flow for the first nine months of the year was $103 million, representing 71% of adjusted net income [28] - The company ended the quarter with $451 million in total debt and $372 million in cash and cash equivalents, maintaining a strong balance sheet [29] Q&A Session Summary Question: Insights on end markets and stability - Management noted a slowdown in the residential construction market, particularly in single-family housing starts, while the municipal market remains strong [38][40] Question: Margin outlook and FX impact - Management indicated that the FX headwind was a one-time event and discussed expectations for margins moving forward [41][42] Question: Legacy brass foundry impact on margins - The legacy brass foundry closure is expected to improve margins, with management anticipating an 8-10 basis point improvement [47] Question: Infrastructure funding and market conditions - Management highlighted that infrastructure funding has been slow, with no immediate benefits expected from the infrastructure bill [74][75] Question: Pricing actions and demand pull forward - Management confirmed no significant pre-buy demand was observed, and pricing adjustments were made in response to tariffs [66][72]

Financial Data and Key Metrics Changes - Consolidated net sales increased by 6.6% to $380.3 million, setting a new quarterly record [17] - Gross margin improved to 38.3%, reflecting a 150 basis point increase year over year [18] - Adjusted EBITDA reached a record $86.4 million, up 1.4% compared to the prior year [21] - Free cash flow for the quarter was $56 million after $12 million in capital expenditures [9] - Adjusted net income per diluted share increased by 6.3% year over year to $0.34 [22] Business Line Data and Key Metrics Changes - Water Supply Solutions (WSS) net sales increased by 4.1% to $216.6 million, driven by volume growth in iron gate and specialty valves [22] - Water Management Solutions (WMS) net sales rose by 10.2% to $163.7 million, led by strong volume growth in repair products and hydrants [24] - Adjusted operating income for WSS increased by 4.7% to $60.5 million, while WMS saw a 12.6% increase to $30.3 million [23][25] Market Data and Key Metrics Changes - The residential construction market is experiencing a slowdown, particularly in single-family housing starts, which may impact future sales [35] - The municipal repair and replacement market remains strong, driven by the need to repair aging infrastructure [37] Company Strategy and Development Direction - The company aims to enhance operational efficiencies and customer service while navigating external challenges such as tariffs [9][16] - Focus on sustainability and innovative solutions is emphasized, with ongoing investments in facilities and employees [10][30] - The closure of the legacy brass foundry is expected to yield benefits in the upcoming quarters [14][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledges heightened macroeconomic and geopolitical uncertainty but remains optimistic about achieving record results for the second consecutive year [7][9] - The anticipated impact of tariffs has been lower than initially expected, with ongoing efforts to mitigate costs through pricing actions and supply chain initiatives [14][15] - The company is excited about the long-term growth potential in water infrastructure solutions, despite current challenges [30][72] Other Important Information - The company has updated its annual guidance for 2025, increasing net sales expectations by $15 million and adjusted EBITDA by $7.5 million [27][28] - Total debt stands at $451 million, with a strong balance sheet and no debt maturities until June 2029 [26][27] Q&A Session Summary Question: Insights on end markets and stability - Management noted a slowdown in the residential construction market, particularly in single-family housing starts, while the municipal market remains strong [35][37] Question: Margin outlook and FX impact - Management indicated that the FX headwind was a one-time event and that margins are expected to improve moving forward [38][46] Question: Legacy brass foundry impact on margins - The legacy brass foundry closure is expected to improve margins, with the tariff impact being significant in the specialty valve business [44][45] Question: Infrastructure funding and market conditions - Management expressed that infrastructure funding has been slow, but the need for investment in water infrastructure remains critical [70][72] Question: Pricing actions and demand pull forward - No significant pre-buy demand was observed, and pricing adjustments have been made in response to tariffs [62][64]

Financial Performance - Q3 Fiscal 2025 - Net sales reached $380.3 million, a 6.6% year-over-year increase, driven by higher volumes and pricing across most product lines[12, 25, 30] - Gross margin increased by 150 bps year-over-year to 38.3%, driven by manufacturing efficiencies and increased volumes[12, 26, 27] - Adjusted EBITDA was $86.4 million, a 1.4% year-over-year increase, but the adjusted EBITDA margin decreased 120 bps year-over-year to 22.7%[12, 32] - Adjusted net income per diluted share increased by 6.3% year-over-year to $0.34[12, 32] - Free cash flow was $55.7 million[12] Financial Performance - Year-to-Date (YTD) Q3 Fiscal 2025 - Net sales reached $1,048.9 million, an 8.5% year-over-year increase[12] - Adjusted EBITDA was $234.4 million, a 10.5% year-over-year increase[12] - Adjusted net income per diluted share increased by 25.7% year-over-year to $0.93[12] - Free cash flow was $103.0 million[12] Fiscal Year 2025 Outlook - The company expects consolidated net sales between $1,405 million and $1,415 million, representing a 6.9% to 7.6% year-over-year growth[47, 48] - The company expects adjusted EBITDA between $318 million and $322 million, representing an 11.7% to 13.1% year-over-year growth[47, 48]

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]