Mueller Water Products, Inc. (NYSE: MWA) today announced financial
results for its fourth quarter and fiscal year ended
September 30, 2023.
In the fourth quarter, the Company:
- Achieved net sales of $301.4
million, a 9.1 percent decrease as compared with $331.4 million in
the prior year quarter
- Reported operating income of $24.9
million as compared with $11.6 million in the prior year quarter
and increased adjusted operating income 81.4 percent to $39.9
million as compared with $22.0 million in the prior year
quarter
- Reported operating margin of 8.3
percent as compared with 3.5 percent in the prior year quarter and
increased adjusted operating margin to 13.2 percent as compared
with 6.6 percent in the prior year quarter
- Generated net income of $17.2
million as compared with $7.1 million in the prior year quarter and
increased adjusted net income 90.4 percent to $29.7 million as
compared with $15.6 million in the prior year quarter
- Reported net income per diluted
share of $0.11 as compared with $0.05 in the prior year quarter and
increased adjusted net income per diluted share 90.0 percent to
$0.19 as compared with $0.10 in the prior year quarter
- Increased adjusted EBITDA 43.5
percent to $55.4 million as compared with $38.6 million in the
prior year quarter, resulting in an adjusted EBITDA margin of 18.4
percent as compared with 11.6 percent in the prior year
quarter
- Repurchased $10.0 million of common
stock
In the fiscal year, the Company:
- Increased net sales 2.3 percent to
$1,275.7 million as compared with the prior year of $1,247.4
million
- Reported operating income of $127.4
million as compared with $111.6 million in the prior year and
increased adjusted operating income 10.1 percent to $143.3 million
as compared with $130.1 million in the prior year
- Reported operating margin of 10.0
percent as compared with 8.9 percent in the prior year and
increased adjusted operating margin to 11.2 percent as compared
with 10.4 percent in the prior year
- Generated net income of $85.5
million as compared with $76.6 million in the prior year, and
increased adjusted net income 7.7 percent to $98.0 million as
compared with $91.0 million in the prior year
- Reported net income per diluted
share of $0.55 as compared with $0.48 in the prior year, and
increased adjusted net income per diluted share 8.6 percent to
$0.63 as compared with $0.58 in the prior year
- Increased adjusted EBITDA 3.9
percent to $202.1 million as compared with $194.5 million in the
prior year, resulting in adjusted EBITDA margin of 15.8 percent as
compared with 15.6 percent in the prior year
- Returned $48.1 million to
shareholders through dividends and common stock repurchases
- Increased net cash provided by
operating activities $56.7 million to $109.0 million as
compared with $52.3 million in the prior year and increased free
cash flow $63.8 million to $61.4 million as compared with $(2.4)
million in the prior year
“Our team members executed well to finish fiscal 2023 despite a
challenging external environment as we increased consolidated net
sales and margins and improved cash flow relative to the prior
year. Fourth quarter net sales exceeded our August expectations
with a 350 basis point year-over-year improvement in gross margin
resulting from continued price realization benefits, more moderate
inflationary pressures and improved execution by our operations and
supply chain teams. Coupled with lower SG&A spending, primarily
driven by our previously announced cost actions, our improved gross
margin led to the highest quarterly adjusted EBITDA margin in more
than two years,” said Martie Edmunds Zakas, Chief Executive Officer
of Mueller Water Products.
“Though order levels during the fourth quarter were higher than
anticipated, we expect to face volume headwinds in 2024 due to the
elevated short cycle backlog at the beginning of fiscal 2023,
ongoing channel and customer inventory destocking and continued
macroeconomic headwinds from higher interest rates. We are focused
on delivering the benefits from our capital investments in
specialty and large gate valves, and service brass products, as we
expect these products to benefit from the increased federal
infrastructure funding beyond 2024.
“We have made substantial progress in recovering from the
cybersecurity incident announced on October 28, 2023. All of our
facilities are operational, and we have substantially returned to
normalized operations. I am very thankful for our dedicated
employees who have worked tirelessly to support our customers
through this difficult time.
“We believe we are at an inflection point with our strategic
capital investments and operational improvements, well-positioning
us to deliver long-term sustainable organic growth and margin
improvements. We have a strong foundation built on our talented and
committed employees, industry-leading brands, and deep distribution
channel and direct customer relationships. Additionally, our strong
balance sheet, liquidity and cash flow allow us to continue to
deliver shareholder value by reinvesting in our operations and
returning cash to shareholders through our quarterly dividend,
which was recently increased for the eighth time since 2014, as
well as through share repurchases,” Ms. Zakas concluded.
Consolidated Results
Net sales for the 2023 fourth quarter decreased $30.0 million,
or 9.1 percent, to $301.4 million as compared with $331.4 million
in the prior year quarter. The decrease in net sales was driven by
lower volumes partially offset by higher pricing.
Operating income increased $13.3 million, or 114.7 percent, to
$24.9 million as compared with $11.6 million in the prior year
quarter, as benefits from higher pricing and lower SG&A
expenses more than offset lower volumes and higher costs associated
with warranty obligations. Operating income margin was 8.3 percent
as compared with 3.5 percent in the prior year quarter.
During the quarter, the Company incurred $9.3 million of
strategic reorganization and other charges and a $5.7 million
warranty charge at Water Management Solutions, which have been
excluded from adjusted results. The strategic reorganization and
other charges primarily consisted of expenses associated with the
previously announced leadership transition, and restructuring
costs.
Adjusted operating income increased $17.9 million, or 81.4
percent, to $39.9 million for the quarter as compared with $22.0
million in the prior year quarter.
Adjusted EBITDA of $55.4 million increased $16.8 million, or
43.5 percent, as compared with $38.6 million in the prior year
quarter. Adjusted EBITDA margin improved to 18.4 percent as
compared with 11.6 percent in the prior year quarter.
Segment Results
Water Flow Solutions
Net sales for the 2023 fourth quarter decreased $17.9 million,
or 10.0 percent, to $161.5 million as compared with $179.4 million
in the prior year quarter. This decrease was primarily due to lower
volumes in iron gate valves, which was partially offset by higher
pricing across most product lines and volume growth in service
brass products.
Operating income was $27.6 million and adjusted operating
income, excluding strategic reorganization and other benefits, was
$27.5 million in the quarter. Adjusted operating income increased
$7.0 million, or 34.1 percent, compared with the prior year
quarter, as benefits from higher pricing, favorable manufacturing
performance and lower SG&A expense more than offset lower
volumes. Operating income margin was 17.1 percent as compared with
7.5 percent in the prior year quarter.
Adjusted EBITDA of $36.6 million increased $8.6 million, or 30.7
percent, as compared with $28.0 million in the prior year quarter.
Adjusted EBITDA margin was 22.7 percent as compared with 15.6
percent in the prior year quarter.
Water Management Solutions
Net sales for the 2023 fourth quarter decreased $12.1 million,
or 8.0 percent, to $139.9 million, as compared with $152.0 million
in the prior year quarter. This decrease was primarily due to lower
volumes in hydrants and water applications, which were partially
offset by higher pricing across most product lines.
Operating income was $15.7 million and adjusted operating
income, excluding a $5.7 million warranty charge and strategic
reorganization and other charges, was $21.9 million in the quarter.
Adjusted operating income increased $8.1 million, or 58.7 percent,
compared with the prior year quarter, as benefits from higher
pricing, lower SG&A expense and lower freight costs more than
offset lower volumes. Operating income margin was 11.2 percent as
compared with 8.9 percent in the prior year quarter.
Adjusted EBITDA of $29.1 million increased $7.2 million, or 32.9
percent, as compared with $21.9 million in the prior year quarter.
Adjusted EBITDA margin was 20.8 percent as compared with 14.4
percent in the prior year quarter.
Interest Expense, Net
Interest expense, net, for the fiscal year was $14.7 million as
compared with $16.9 million in the prior year, primarily as a
result of higher interest income.
Income Taxes
For the fiscal year, income tax expense was $23.5 million, or
21.6 percent of income before tax, as compared with the prior year
effective tax rate of 22.3 percent. The lower effective tax rate
for the fiscal year was primarily due to higher benefits from
R&D tax credits and lower effective state tax rates due to
state apportionment changes.
Cash Flow and Balance Sheet
Net cash provided by operating activities for the fiscal year
increased $56.7 million to $109.0 million as compared with
$52.3 million in the prior year period. The increase was primarily
driven by improvements in working capital compared with the prior
year period, including a sequential decrease in inventories during
the fourth quarter.
During the fiscal year, the Company invested $47.6 million in
capital expenditures as compared with $54.7 million in the prior
year period.
Free cash flow (defined as net cash provided by operating
activities less capital expenditures) for the fiscal year increased
$63.8 million to $61.4 million as compared with $(2.4) million in
the prior year period, primarily due to the increase in cash
provided by operating activities.
As of September 30, 2023, Mueller Water Products had $447.4
million of total debt outstanding and $160.3 million of cash and
cash equivalents, resulting in a debt leverage ratio of 2.2 times
and net debt leverage ratio of 1.4 times. There are no maturities
on the Company’s debt financings until June 2029, and its 4.0
percent Senior Notes have no financial maintenance covenants. Based
on September 30, 2023, data, the Company had approximately
$162.4 million of excess availability under its ABL Agreement,
bringing its total liquidity to $322.7 million.
Fiscal 2024 Outlook
The Company anticipates that channel and customer inventory
levels will be substantially normalized by the end of the first
quarter of fiscal 2024. At the end of fiscal 2023, iron gate valve
and hydrant backlogs were normalized, while the backlog for service
brass products remained elevated. Due to these factors, the Company
expects to face volume headwinds in fiscal 2024 relative to the
prior year and anticipates that consolidated net sales will
decrease between 3 and 8 percent as compared with fiscal 2023. For
fiscal 2024, consolidated net sales seasonality is expected to be
closer to pre-pandemic patterns. For example, net sales for the
first half of the fiscal year averaged approximately 45 percent of
consolidated net sales for the 5-year period from 2015 to 2019. For
the first quarter of fiscal 2024, the Company anticipates its
consolidated net sales to range between $245 million and $255
million.
The Company continues to evaluate the business, financial and
related impacts of the cybersecurity incident announced on October
28, 2023, so the full costs of the incident have not yet been
determined. However, the Company anticipates the incident will
negatively impact the Company's results. Due to the need for
further evaluation of the impacts of the incident, the Company will
not provide profitability and margin guidance for the fiscal year
at this time. However, the Company currently expects margins to
improve in the second half of the year primarily due to its focus
on operational and supply chain productivity improvements.
The Company’s expectations for certain additional financial
metrics for fiscal 2024 are as follows:
- Total SG&A expenses between $240
million and $245 million
- Net interest expense between $14
million and $15 million
- Effective income tax rate between 23
percent and 25 percent
- Depreciation and amortization
between $64 million and $65 million
- Pension expense other than service
of approximately $4.0 million
- Capital expenditures between $45
million and $50 million
Conference Call Webcast
Mueller Water Products’ quarterly earnings conference call will
take place Thursday, December 14, 2023, at 10 a.m. ET. Members of
Mueller Water Products’ leadership team will discuss the Company’s
recent financial performance and respond to questions from
financial analysts. A live webcast of the call will be available on
the Investor Relations section of the Company’s website. Please go
to the website (www.muellerwaterproducts.com) at least 15 minutes
prior to the start of the call to register, download and install
any necessary software. A replay of the call will be available for
30 days and can be accessed by dialing 1-800-819-5743. An archive
of the webcast will also be available for at least 90 days on the
Investor Relations section of the Company’s website.
Use of Non-GAAP Measures
In an effort to provide investors with additional information
regarding the Company’s results as determined by accounting
principles generally accepted in the United States (“GAAP”), the
Company also provides non-GAAP information that management believes
is useful to investors. These non-GAAP measures have limitations as
analytical tools, and securities analysts, investors and other
interested parties should not consider any of these non-GAAP
measures in isolation or as a substitute for analysis of the
Company’s results as reported under GAAP. These non-GAAP measures
may not be comparable to similarly titled measures used by other
companies.
The Company presents adjusted net income, adjusted net income
per diluted share, adjusted operating income, adjusted operating
margin, adjusted EBITDA and adjusted EBITDA margin as performance
measures because management uses these measures to evaluate the
Company’s underlying performance on a consistent basis across
periods and to make decisions about operational strategies.
Management also believes these measures are frequently used by
securities analysts, investors and other interested parties in the
evaluation of the Company’s recurring performance.
The Company presents net debt and net debt leverage as
performance measures because management uses them to evaluate its
capital management and financial position, and the investment
community commonly uses them as measures of indebtedness. The
Company presents free cash flow to assist management and investors
in analyzing the Company’s ability to generate liquidity from its
operating activities.
The calculations of these non-GAAP measures and reconciliations
to GAAP results are included as an attachment to this press
release, which has been posted online at
www.muellerwaterproducts.com. The Company does not reconcile
forward-looking non-GAAP measures to the comparable GAAP measures,
as permitted by Regulation S-K, as certain items, e.g., expenses
related to corporate development activities, transactions, pension
expenses/(benefits) and corporate restructuring, may have not yet
occurred, are out of the Company’s control and/or cannot be
reasonably predicted without unreasonable efforts. Additionally,
such reconciliation would imply a degree of precision and certainty
regarding relevant items that may be confusing to investors. Such
items could have a substantial impact on GAAP measures of the
Company's financial performance.
Forward-Looking Statements
This press release contains certain statements that may be
deemed “forward-looking statements” within the meaning of the
federal securities laws. All statements that address activities,
events or developments that the Company intends, expects, plans,
projects, believes or anticipates will or may occur in the future
are forward-looking statements, including, without limitation,
statements regarding outlooks, projections, forecasts,
expectations, commitments, trend descriptions and the ability to
capitalize on trends, value creation, Board of Directors and
committee composition plans, long-term strategies and the execution
or acceleration thereof, operational improvements, inventory
positions, the benefits of capital investments, financial or
operating performance including improving sales growth and driving
increased margins, capital allocation and growth strategy plans,
the Company’s product portfolio positioning and the demand for the
Company’s products. Forward-looking statements are based on certain
assumptions and assessments made by the Company in light of the
Company’s experience and perception of historical trends, current
conditions and expected future developments.
Actual results and the timing of events may differ materially
from those contemplated by the forward-looking statements due to a
number of factors, including, without limitation, the ongoing
assessment and remediation of the cybersecurity incident announced
on October 28, 2023, including; legal, reputational, audit and
financial risks resulting therefrom and the effectiveness of the
Company’s business continuity plans related thereto, as well as the
Company’s ability to recover under its cybersecurity insurance
policies; logistical challenges and supply chain disruptions,
geopolitical conditions, including the Israel-Hamas war, public
health crises, or other events; inventory and in-stock positions of
our distributors and end customers; an inability to realize the
anticipated benefits from our operational initiatives, including
our large capital investments in Chattanooga and Kimball, Tennessee
and Decatur, Illinois, plant closures, and reorganization and
related strategic realignment activities; an inability to attract
or retain a skilled and diverse workforce, including executive
officers, increased competition related to the workforce and labor
markets; an inability to protect the Company’s information systems
against further service interruption, misappropriation of data or
breaches of security; failure to comply with personal data
protection and privacy laws; cyclical and changing demand in core
markets such as municipal spending, residential construction, and
natural gas distribution; government monetary or fiscal policies;
the impact of adverse weather conditions; the impact of
manufacturing and product performance; the impact of wage,
commodity and materials price inflation; foreign exchange rate
fluctuations; the impact of warranty charges and claims, and
related accommodations; the strength of our brands and reputation;
an inability to successfully resolve significant legal proceedings
or government investigations; compliance with environmental, trade
and anti-corruption laws and regulations; climate change and legal
or regulatory responses thereto; changing regulatory, trade and
tariff conditions; the failure to integrate and/or realize any of
the anticipated benefits of acquisitions or divestitures; an
inability to achieve some or all of our Environmental, Social and
Governance goals; and other factors that are described in the
section entitled “RISK FACTORS” in Item 1A of the Company’s most
recent Annual Report on Form 10-K and later filings on Form 10-Q,
as applicable.
Forward-looking statements do not guarantee future performance
and are only as of the date they are made. The Company undertakes
no duty to update its forward-looking statements except as required
by law. Undue reliance should not be placed on any forward-looking
statements. You are advised to review any further disclosures the
Company makes on related subjects in subsequent Forms 10-K, 10-Q,
8-K and other reports filed with the U.S. Securities and Exchange
Commission.
About Mueller Water Products, Inc.
Mueller Water Products, Inc. is a leading manufacturer and
marketer of products and services used in the transmission,
distribution and measurement of water in North America. Our broad
product and service portfolio includes engineered valves, fire
hydrants, pipe connection and repair products, metering products,
leak detection, pipe condition assessment, pressure management
products, and software technology that provides critical water
system data. We help municipalities increase operational
efficiencies, improve customer service and prioritize capital
spending, demonstrating why Mueller Water Products is Where
Intelligence Meets Infrastructure®. Visit us at
www.muellerwaterproducts.com.
Mueller refers to one or more of Mueller Water Products, Inc.
(MWP), a Delaware corporation, and its subsidiaries. MWP and each
of its subsidiaries are legally separate and independent entities
when providing products and services. MWP does not provide products
or services to third parties. MWP and each of its subsidiaries are
liable only for their own acts and omissions and not those of each
other.
Investor Relations and Media Contact: Whit Kincaid
770-206-4116wkincaid@muellerwp.com
MUELLER WATER PRODUCTS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
(in millions, except share amounts) |
Assets: |
|
|
|
Cash and cash equivalents |
$ |
160.3 |
|
|
$ |
146.5 |
|
Receivables, net of allowance for credit losses of
$7.3 million and $5.6 million |
|
217.1 |
|
|
|
228.0 |
|
Inventories, net |
|
297.9 |
|
|
|
278.7 |
|
Other current assets |
|
31.5 |
|
|
|
26.8 |
|
Total current assets |
|
706.8 |
|
|
|
680.0 |
|
Property, plant and equipment, net |
|
311.7 |
|
|
|
301.6 |
|
Intangible assets, net |
|
334.0 |
|
|
|
361.2 |
|
Goodwill, net |
|
93.7 |
|
|
|
98.6 |
|
Other noncurrent assets |
|
58.8 |
|
|
|
56.7 |
|
Total assets |
$ |
1,505.0 |
|
|
$ |
1,498.1 |
|
|
|
|
|
Liabilities and stockholders’
equity: |
|
|
|
Current portion of long-term debt |
$ |
0.7 |
|
|
$ |
0.8 |
|
Accounts payable |
|
102.9 |
|
|
|
122.8 |
|
Other current liabilities |
|
115.2 |
|
|
|
117.4 |
|
Total current liabilities |
|
218.8 |
|
|
|
241.0 |
|
Long-term debt |
|
446.7 |
|
|
|
446.1 |
|
Deferred income taxes |
|
73.8 |
|
|
|
86.3 |
|
Other noncurrent liabilities |
|
54.2 |
|
|
|
55.4 |
|
Total liabilities |
|
793.5 |
|
|
|
828.8 |
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
Preferred stock: par value $0.01 per share; 60,000,000 shares
authorized, none outstanding at September 30, 2023 and 2022 |
|
— |
|
|
|
— |
|
Common stock: par value $0.01 per share; 600,000,000 shares
authorized; 155,871,932 and 155,844,138 shares outstanding at
September 30, 2023 and 2022, respectively |
|
1.6 |
|
|
|
1.6 |
|
Additional paid-in capital |
|
1,240.4 |
|
|
|
1,279.6 |
|
Accumulated deficit |
|
(481.8 |
) |
|
|
(567.3 |
) |
Accumulated other comprehensive loss |
|
(48.7 |
) |
|
|
(44.6 |
) |
Total stockholders’ equity |
|
711.5 |
|
|
|
669.3 |
|
Total liabilities and stockholders’ equity |
$ |
1,505.0 |
|
|
$ |
1,498.1 |
|
MUELLER WATER PRODUCTS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(UNAUDITED)
|
Three months ended |
|
Year ended |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
(in millions, except per share amounts) |
Net sales |
$ |
301.4 |
|
$ |
331.4 |
|
|
$ |
1,275.7 |
|
$ |
1,247.4 |
|
Cost of sales (1) |
|
213.0 |
|
|
245.8 |
|
|
|
896.2 |
|
|
883.1 |
|
Gross profit |
|
88.4 |
|
|
85.6 |
|
|
|
379.5 |
|
|
364.3 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
|
54.2 |
|
|
63.6 |
|
|
|
241.9 |
|
|
238.7 |
|
Strategic reorganization and other charges (2) |
|
9.3 |
|
|
3.6 |
|
|
|
10.2 |
|
|
7.2 |
|
Goodwill impairment |
|
— |
|
|
6.8 |
|
|
|
— |
|
|
6.8 |
|
Total operating expenses |
|
63.5 |
|
|
74.0 |
|
|
|
252.1 |
|
|
252.7 |
|
Operating income |
|
24.9 |
|
|
11.6 |
|
|
|
127.4 |
|
|
111.6 |
|
Pension expense (benefit)
other than service |
|
0.9 |
|
|
(1.0 |
) |
|
|
3.7 |
|
|
(3.9 |
) |
Interest expense, net |
|
3.3 |
|
|
3.9 |
|
|
|
14.7 |
|
|
16.9 |
|
Income before income taxes |
|
20.7 |
|
|
8.7 |
|
|
|
109.0 |
|
|
98.6 |
|
Income tax expense |
|
3.5 |
|
|
1.6 |
|
|
|
23.5 |
|
|
22.0 |
|
Net income |
$ |
17.2 |
|
$ |
7.1 |
|
|
$ |
85.5 |
|
$ |
76.6 |
|
|
|
|
|
|
|
|
|
Net income per basic
share |
$ |
0.11 |
|
$ |
0.05 |
|
|
$ |
0.55 |
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
Net income per diluted
share |
$ |
0.11 |
|
$ |
0.05 |
|
|
$ |
0.55 |
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
156.3 |
|
|
156.3 |
|
|
|
156.3 |
|
|
157.4 |
|
Diluted |
|
157.0 |
|
|
157.0 |
|
|
|
156.8 |
|
|
158.0 |
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
$ |
0.061 |
|
$ |
0.058 |
|
|
$ |
0.244 |
|
$ |
0.232 |
|
|
|
|
|
|
|
|
|
(1) For the years
ended September 30, 2023 and 2022, the Company recorded charges of
$5.7 million and $4.5 million, respectively, in connection with its
warranty obligations. |
(2) For the year
ended September 30, 2023, Strategic reorganization and other
charges primarily relate to expenses associated with the leadership
transition, other restructuring charges related to severance in
addition to certain transaction-related expenses. For the year
ended September 30, 2022, Strategic reorganization and other
charges primarily relate to transaction expenses, plant closures in
Aurora, Illinois and Surrey, British Columbia, Canada, and the
Albertville tragedy. |
MUELLER WATER PRODUCTS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(UNAUDITED)
|
Year ended |
|
September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
(in millions) |
Operating activities: |
|
|
|
Net income |
$ |
85.5 |
|
|
$ |
76.6 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation |
|
34.4 |
|
|
|
32.0 |
|
Amortization |
|
28.1 |
|
|
|
28.5 |
|
Gain on sale of assets |
|
(4.0 |
) |
|
|
— |
|
Goodwill impairment |
|
— |
|
|
|
6.8 |
|
Stock-based compensation |
|
8.5 |
|
|
|
8.7 |
|
Pension cost (benefit) |
|
4.4 |
|
|
|
(2.6 |
) |
Deferred income taxes |
|
(14.4 |
) |
|
|
(3.5 |
) |
Inventory reserve provision |
|
0.4 |
|
|
|
1.6 |
|
Other, net |
|
0.9 |
|
|
|
1.3 |
|
Changes in assets and liabilities, net of acquisition: |
|
|
|
Receivables, net |
|
10.9 |
|
|
|
(17.8 |
) |
Inventories |
|
(19.9 |
) |
|
|
(98.3 |
) |
Other assets |
|
(3.3 |
) |
|
|
1.3 |
|
Accounts payable |
|
(19.7 |
) |
|
|
32.2 |
|
Other current liabilities |
|
(2.0 |
) |
|
|
(8.5 |
) |
Other noncurrent liabilities |
|
(0.8 |
) |
|
|
(6.0 |
) |
Net cash provided by operating activities |
|
109.0 |
|
|
|
52.3 |
|
Investing activities: |
|
|
|
Capital expenditures |
|
(47.6 |
) |
|
|
(54.7 |
) |
Acquisition, net of cash acquired |
|
— |
|
|
|
(0.2 |
) |
Proceeds from sales of assets |
|
5.5 |
|
|
|
— |
|
Net cash used in investing activities |
|
(42.1 |
) |
|
|
(54.9 |
) |
Financing activities: |
|
|
|
Dividends paid |
|
(38.1 |
) |
|
|
(36.5 |
) |
Stock repurchased under buyback program |
|
(10.0 |
) |
|
|
(35.0 |
) |
Employee taxes related to stock-based compensation |
|
(2.3 |
) |
|
|
(1.8 |
) |
Common stock issued |
|
2.7 |
|
|
|
2.0 |
|
Payments for finance lease obligations |
|
(1.1 |
) |
|
|
(0.7 |
) |
Net cash used in financing activities |
|
(48.8 |
) |
|
|
(72.0 |
) |
Effect of currency exchange
rate changes on cash |
|
(4.3 |
) |
|
|
(6.4 |
) |
Net change in cash and cash equivalents |
|
13.8 |
|
|
|
(81.0 |
) |
Cash and cash equivalents at
beginning of year |
|
146.5 |
|
|
|
227.5 |
|
Cash and cash equivalents at
end of year |
$ |
160.3 |
|
|
$ |
146.5 |
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
Cash paid for interest |
$ |
15.1 |
|
|
$ |
19.2 |
|
Cash paid for income taxes |
$ |
37.7 |
|
|
$ |
26.9 |
|
MUELLER WATER PRODUCTS, INC. AND
SUBSIDIARIESSEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP
PERFORMANCE MEASURES(UNAUDITED)
|
Quarter ended September 30, 2023 |
|
Water Flow Solutions |
|
Water Management Solutions |
|
Corporate |
|
Consolidated |
|
(dollars in millions, except per share amounts) |
Net sales |
$ |
161.5 |
|
|
$ |
139.9 |
|
|
$ |
— |
|
|
$ |
301.4 |
|
|
|
|
|
|
|
|
|
Gross profit (1) |
$ |
47.5 |
|
|
$ |
40.9 |
|
|
$ |
— |
|
|
$ |
88.4 |
|
Selling, general and
administrative expenses |
|
20.0 |
|
|
|
24.7 |
|
|
|
9.5 |
|
|
|
54.2 |
|
Strategic reorganization and
other (benefits) charges (2) |
|
(0.1 |
) |
|
|
0.5 |
|
|
|
8.9 |
|
|
|
9.3 |
|
Operating income (loss) |
$ |
27.6 |
|
|
$ |
15.7 |
|
|
$ |
(18.4 |
) |
|
$ |
24.9 |
|
|
|
|
|
|
|
|
|
Operating margin |
|
17.1 |
% |
|
|
11.2 |
% |
|
|
|
|
8.3 |
% |
|
|
|
|
|
|
|
|
Capital expenditures |
$ |
10.3 |
|
|
$ |
4.9 |
|
|
$ |
— |
|
|
$ |
15.2 |
|
|
|
|
|
|
|
|
|
Reconciliation of
non-GAAP to GAAP performance measures: |
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
$ |
17.2 |
|
Warranty charge (1) |
|
|
|
|
|
|
|
5.7 |
|
Strategic reorganization and other charges (2) |
|
|
|
|
|
|
|
9.3 |
|
Income tax benefit of adjusting items |
|
|
|
|
|
|
|
(2.5 |
) |
Adjusted net income |
|
|
|
|
|
|
$ |
29.7 |
|
|
|
|
|
|
|
|
|
Weighted average diluted shares outstanding |
|
|
|
|
|
|
|
157.0 |
|
|
|
|
|
|
|
|
|
Adjusted net income per diluted share |
|
|
|
|
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
$ |
17.2 |
|
Income tax expense (3) |
|
|
|
|
|
|
|
3.5 |
|
Interest expense, net (3) |
|
|
|
|
|
|
|
3.3 |
|
Pension expense other than service (3) |
|
|
|
|
|
|
|
0.9 |
|
Operating income (loss) |
$ |
27.6 |
|
|
$ |
15.7 |
|
|
$ |
(18.4 |
) |
|
|
24.9 |
|
Warranty charge (1) |
|
— |
|
|
|
5.7 |
|
|
|
— |
|
|
|
5.7 |
|
Strategic reorganization and other (benefits) charges (2) |
|
(0.1 |
) |
|
|
0.5 |
|
|
|
8.9 |
|
|
|
9.3 |
|
Adjusted operating income (loss) |
|
27.5 |
|
|
|
21.9 |
|
|
|
(9.5 |
) |
|
|
39.9 |
|
Pension expense other than service (3) |
|
— |
|
|
|
— |
|
|
|
(0.9 |
) |
|
|
(0.9 |
) |
Depreciation and amortization |
|
9.1 |
|
|
|
7.2 |
|
|
|
0.1 |
|
|
|
16.4 |
|
Adjusted EBITDA |
$ |
36.6 |
|
|
$ |
29.1 |
|
|
$ |
(10.3 |
) |
|
$ |
55.4 |
|
|
|
|
|
|
|
|
|
Adjusted operating margin |
|
17.0 |
% |
|
|
15.7 |
% |
|
|
|
|
13.2 |
% |
Adjusted EBITDA margin |
|
22.7 |
% |
|
|
20.8 |
% |
|
|
|
|
18.4 |
% |
|
|
|
|
|
|
|
|
Reconciliation of free cash flow to net cash provided by operating
activities: |
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
$ |
56.5 |
|
Less capital expenditures |
|
|
|
|
|
|
|
15.2 |
|
Free cash flow |
|
|
|
|
|
|
$ |
41.3 |
|
|
|
|
|
|
|
|
|
|
(1) Gross profit
includes a charge of $5.7 million in connection with warranty
obligations in Water Management Solutions. |
(2) Strategic
reorganization and other (benefits) charges primarily relate to
expenses associated with the leadership transition and other
restructuring charges related to severance. |
(3) The Company does
not allocate interest, income taxes or pension expense other than
service to its segments. |
MUELLER WATER PRODUCTS, INC. AND
SUBSIDIARIESSEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP
PERFORMANCE MEASURES(UNAUDITED)
|
Quarter ended September 30, 2022 |
|
Water Flow Solutions |
|
Water Management Solutions |
|
Corporate |
|
Consolidated |
|
(dollars in millions, except per share amounts) |
Net sales |
$ |
179.4 |
|
|
$ |
152.0 |
|
|
$ |
— |
|
|
$ |
331.4 |
|
|
|
|
|
|
|
|
|
Gross profit |
$ |
42.5 |
|
|
$ |
43.1 |
|
|
$ |
— |
|
|
$ |
85.6 |
|
Selling, general and
administrative expenses |
|
22.0 |
|
|
|
29.3 |
|
|
|
12.3 |
|
|
|
63.6 |
|
Strategic reorganization and
other charges (1) |
|
0.2 |
|
|
|
0.2 |
|
|
|
3.2 |
|
|
|
3.6 |
|
Goodwill impairment |
|
6.8 |
|
|
|
— |
|
|
|
— |
|
|
|
6.8 |
|
Operating income (loss) |
$ |
13.5 |
|
|
$ |
13.6 |
|
|
$ |
(15.5 |
) |
|
$ |
11.6 |
|
|
|
|
|
|
|
|
|
Operating margin |
|
7.5 |
% |
|
|
8.9 |
% |
|
|
|
|
3.5 |
% |
|
|
|
|
|
|
|
|
Capital expenditures |
$ |
13.8 |
|
|
$ |
4.2 |
|
|
$ |
— |
|
|
$ |
18.0 |
|
|
|
|
|
|
|
|
|
Reconciliation of
non-GAAP to GAAP performance measures: |
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
$ |
7.1 |
|
Strategic reorganization and other charges (1) |
|
|
|
|
|
|
|
3.6 |
|
Goodwill impairment |
|
|
|
|
|
|
|
6.8 |
|
Income tax benefit of adjusting items |
|
|
|
|
|
|
|
(1.9 |
) |
Adjusted net income |
|
|
|
|
|
|
$ |
15.6 |
|
|
|
|
|
|
|
|
|
Weighted average diluted shares outstanding |
|
|
|
|
|
|
|
157.0 |
|
|
|
|
|
|
|
|
|
Adjusted net income per diluted share |
|
|
|
|
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
$ |
7.1 |
|
Income tax expense (2) |
|
|
|
|
|
|
|
1.6 |
|
Interest expense, net (2) |
|
|
|
|
|
|
|
3.9 |
|
Pension benefit other than service (2) |
|
|
|
|
|
|
|
(1.0 |
) |
Operating income (loss) |
$ |
13.5 |
|
|
$ |
13.6 |
|
|
$ |
(15.5 |
) |
|
|
11.6 |
|
Strategic reorganization and other charges (1) |
|
0.2 |
|
|
|
0.2 |
|
|
|
3.2 |
|
|
|
3.6 |
|
Goodwill impairment |
|
6.8 |
|
|
|
— |
|
|
|
— |
|
|
|
6.8 |
|
Adjusted operating income (loss) |
|
20.5 |
|
|
|
13.8 |
|
|
|
(12.3 |
) |
|
|
22.0 |
|
Pension benefit other than service (2) |
|
— |
|
|
|
— |
|
|
|
1.0 |
|
|
|
1.0 |
|
Depreciation and amortization |
|
7.5 |
|
|
|
8.1 |
|
|
|
— |
|
|
|
15.6 |
|
Adjusted EBITDA |
$ |
28.0 |
|
|
$ |
21.9 |
|
|
$ |
(11.3 |
) |
|
$ |
38.6 |
|
|
|
|
|
|
|
|
|
Adjusted operating margin |
|
11.4 |
% |
|
|
9.1 |
% |
|
|
|
|
6.6 |
% |
Adjusted EBITDA margin |
|
15.6 |
% |
|
|
14.4 |
% |
|
|
|
|
11.6 |
% |
|
|
|
|
|
|
|
|
Reconciliation of free cash flow to net cash provided by operating
activities: |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
$ |
31.8 |
|
Less capital expenditures |
|
|
|
|
|
|
|
18.0 |
|
Free cash flow |
|
|
|
|
|
|
$ |
13.8 |
|
|
|
|
|
|
|
|
|
(1) Strategic
reorganization and other charges primarily relate to transaction
expenses. |
(2) The Company does
not allocate interest, income taxes or pension benefit other than
service to its segments. |
MUELLER WATER PRODUCTS, INC. AND
SUBSIDIARIESSEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP
PERFORMANCE MEASURES(UNAUDITED)
|
Year ended September 30, 2023 |
|
Water Flow Solutions |
|
Water Management Solutions |
|
Corporate |
|
Consolidated |
|
(dollars in millions, except per share amounts) |
Net sales |
$ |
634.4 |
|
|
$ |
641.3 |
|
|
$ |
— |
|
|
$ |
1,275.7 |
|
|
|
|
|
|
|
|
|
Gross profit (1) |
$ |
164.9 |
|
|
$ |
214.6 |
|
|
$ |
— |
|
|
$ |
379.5 |
|
Selling, general and
administrative expenses |
|
85.3 |
|
|
|
106.9 |
|
|
|
49.7 |
|
|
|
241.9 |
|
Strategic reorganization and
other charges (2) |
|
— |
|
|
|
1.7 |
|
|
|
8.5 |
|
|
|
10.2 |
|
Operating income (loss) |
$ |
79.6 |
|
|
$ |
106.0 |
|
|
$ |
(58.2 |
) |
|
$ |
127.4 |
|
|
|
|
|
|
|
|
|
Operating margin |
|
12.5 |
% |
|
|
16.5 |
% |
|
|
|
|
10.0 |
% |
|
|
|
|
|
|
|
|
Capital expenditures |
$ |
33.4 |
|
|
$ |
14.2 |
|
|
$ |
— |
|
|
$ |
47.6 |
|
|
|
|
|
|
|
|
|
Reconciliation of
non-GAAP to GAAP performance measures: |
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
$ |
85.5 |
|
Warranty charge (1) |
|
|
|
|
|
|
|
5.7 |
|
Strategic reorganization and other charges (2) |
|
|
|
|
|
|
|
10.2 |
|
Income tax benefit of adjusting items |
|
|
|
|
|
|
|
(3.4 |
) |
Adjusted net income |
|
|
|
|
|
|
$ |
98.0 |
|
|
|
|
|
|
|
|
|
Weighted average diluted shares outstanding |
|
|
|
|
|
|
|
156.8 |
|
|
|
|
|
|
|
|
|
Adjusted net income per diluted share |
|
|
|
|
|
|
$ |
0.63 |
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
$ |
85.5 |
|
Income tax expense (3) |
|
|
|
|
|
|
|
23.5 |
|
Interest expense, net (3) |
|
|
|
|
|
|
|
14.7 |
|
Pension expense other than service (3) |
|
|
|
|
|
|
|
3.7 |
|
Operating income (loss) |
$ |
79.6 |
|
|
$ |
106.0 |
|
|
$ |
(58.2 |
) |
|
|
127.4 |
|
Warranty charge (1) |
|
— |
|
|
|
5.7 |
|
|
|
— |
|
|
|
5.7 |
|
Strategic reorganization and other charges (2) |
|
— |
|
|
|
1.7 |
|
|
|
8.5 |
|
|
|
10.2 |
|
Adjusted operating income (loss) |
|
79.6 |
|
|
|
113.4 |
|
|
|
(49.7 |
) |
|
|
143.3 |
|
Pension expense other than service (3) |
|
— |
|
|
|
— |
|
|
|
(3.7 |
) |
|
|
(3.7 |
) |
Depreciation and amortization |
|
32.8 |
|
|
|
29.5 |
|
|
|
0.2 |
|
|
|
62.5 |
|
Adjusted EBITDA |
$ |
112.4 |
|
|
$ |
142.9 |
|
|
$ |
(53.2 |
) |
|
$ |
202.1 |
|
|
|
|
|
|
|
|
|
Adjusted operating margin |
|
12.5 |
% |
|
|
17.7 |
% |
|
|
|
|
11.2 |
% |
Adjusted EBITDA margin |
|
17.7 |
% |
|
|
22.3 |
% |
|
|
|
|
15.8 |
% |
|
|
|
|
|
|
|
|
Reconciliation of net debt to total debt (end of period): |
|
|
|
|
|
|
|
Current portion of long-term debt |
|
|
|
|
|
|
$ |
0.7 |
|
Long-term debt |
|
|
|
|
|
|
|
446.7 |
|
Total debt |
|
|
|
|
|
|
$ |
447.4 |
|
Less cash and cash equivalents |
|
|
|
|
|
|
|
160.3 |
|
Net debt |
|
|
|
|
|
|
$ |
287.1 |
|
|
|
|
|
|
|
|
|
Net debt leverage (net debt divided by trailing twelve months’
adjusted EBITDA) |
|
|
|
|
|
1.4 x |
|
|
|
|
|
|
|
|
Reconciliation of free cash flow to net cash provided by operating
activities: |
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
$ |
109.0 |
|
Less capital expenditures |
|
|
|
|
|
|
|
47.6 |
|
Free cash flow |
|
|
|
|
|
|
$ |
61.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Gross profit
includes a charge of $5.7 million in connection with warranty
obligations in Water Management Solutions. |
(2) Strategic
reorganization and other charges includes expenses associated with
the leadership transition, other restructuring charges related to
severance in addition to certain transaction-related expenses. |
(3) The Company does
not allocate interest, income taxes or pension expense other than
service to its segments. |
MUELLER WATER PRODUCTS, INC. AND
SUBSIDIARIESSEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP
PERFORMANCE MEASURES(UNAUDITED)
|
Year ended September 30, 2022 |
|
Water Flow Solutions |
|
Water Management Solutions |
|
Corporate |
|
Consolidated |
|
(dollars in millions, except per share amounts) |
Net sales |
$ |
714.1 |
|
|
$ |
533.3 |
|
|
$ |
— |
|
|
$ |
1,247.4 |
|
|
|
|
|
|
|
|
|
Gross profit (1) |
$ |
212.4 |
|
|
$ |
151.9 |
|
|
$ |
— |
|
|
$ |
364.3 |
|
Selling, general and
administrative expenses |
|
87.1 |
|
|
|
102.8 |
|
|
|
48.8 |
|
|
|
238.7 |
|
Strategic reorganization and
other charges (2) |
|
0.2 |
|
|
|
0.4 |
|
|
|
6.6 |
|
|
|
7.2 |
|
Goodwill Impairment |
|
6.8 |
|
|
|
— |
|
|
|
— |
|
|
|
6.8 |
|
Operating income (loss) |
$ |
118.3 |
|
|
$ |
48.7 |
|
|
$ |
(55.4 |
) |
|
$ |
111.6 |
|
|
|
|
|
|
|
|
|
Operating margin |
|
16.6 |
% |
|
|
9.1 |
% |
|
|
|
|
8.9 |
% |
|
|
|
|
|
|
|
|
Capital expenditures |
$ |
43.4 |
|
|
$ |
11.3 |
|
|
$ |
— |
|
|
$ |
54.7 |
|
|
|
|
|
|
|
|
|
Reconciliation of
non-GAAP to GAAP performance measures: |
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
$ |
76.6 |
|
Warranty charge (1) |
|
|
|
|
|
|
|
4.5 |
|
Strategic reorganization and other charges (2) |
|
|
|
|
|
|
|
7.2 |
|
Goodwill impairment |
|
|
|
|
|
|
|
6.8 |
|
Income tax benefit of adjusting items |
|
|
|
|
|
|
|
(4.1 |
) |
Adjusted net income |
|
|
|
|
|
|
$ |
91.0 |
|
|
|
|
|
|
|
|
|
Weighted average diluted shares outstanding |
|
|
|
|
|
|
|
158.0 |
|
|
|
|
|
|
|
|
|
Adjusted net income per diluted share |
|
|
|
|
|
|
$ |
0.58 |
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
$ |
76.6 |
|
Income tax expense (3) |
|
|
|
|
|
|
|
22.0 |
|
Interest expense, net (3) |
|
|
|
|
|
|
|
16.9 |
|
Pension benefit other than service (3) |
|
|
|
|
|
|
|
(3.9 |
) |
Operating income (loss) |
$ |
118.3 |
|
|
$ |
48.7 |
|
|
$ |
(55.4 |
) |
|
|
111.6 |
|
Warranty charge (1) |
|
— |
|
|
|
4.5 |
|
|
|
— |
|
|
|
4.5 |
|
Strategic reorganization and other charges (2) |
|
0.2 |
|
|
|
0.4 |
|
|
|
6.6 |
|
|
|
7.2 |
|
Goodwill impairment |
|
6.8 |
|
|
|
— |
|
|
|
— |
|
|
|
6.8 |
|
Adjusted operating income (loss) |
|
125.3 |
|
|
|
53.6 |
|
|
|
(48.8 |
) |
|
|
130.1 |
|
Pension benefit other than service (3) |
|
— |
|
|
|
— |
|
|
|
3.9 |
|
|
|
3.9 |
|
Depreciation and amortization |
|
30.0 |
|
|
|
30.3 |
|
|
|
0.2 |
|
|
|
60.5 |
|
Adjusted EBITDA |
$ |
155.3 |
|
|
$ |
83.9 |
|
|
$ |
(44.7 |
) |
|
$ |
194.5 |
|
|
|
|
|
|
|
|
|
Adjusted operating margin |
|
17.5 |
% |
|
|
10.1 |
% |
|
|
|
|
10.4 |
% |
Adjusted EBITDA margin |
|
21.7 |
% |
|
|
15.7 |
% |
|
|
|
|
15.6 |
% |
|
|
|
|
|
|
|
|
Reconciliation of net debt to total debt (end of period): |
|
|
|
|
|
|
|
Current portion of long-term debt |
|
|
|
|
|
|
$ |
0.8 |
|
Long-term debt |
|
|
|
|
|
|
|
446.1 |
|
Total debt |
|
|
|
|
|
|
|
446.9 |
|
Less cash and cash equivalents |
|
|
|
|
|
|
|
146.5 |
|
Net debt |
|
|
|
|
|
|
$ |
300.4 |
|
|
|
|
|
|
|
|
|
Net debt leverage (net debt divided by trailing twelve months’
adjusted EBITDA) |
|
|
|
1.5x |
|
|
|
|
|
|
|
|
Reconciliation of free cash flow to net cash provided by operating
activities: |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
$ |
52.3 |
|
Less capital expenditures |
|
|
|
|
|
|
|
54.7 |
|
Free cash flow |
|
|
|
|
|
|
$ |
(2.4 |
) |
|
|
|
|
|
|
|
|
(1) Gross profit
includes a charge of $4.5 million in connection with warranty
obligations in Water Management Solutions. |
(2) Strategic
reorganization and other charges primarily relate to transaction
expenses, plant closures in Aurora, Illinois and British Columbia,
Canada, and the Albertville tragedy. |
(3) The Company does
not allocate interest, income taxes or pension benefit other than
service to its segments. |
Mueller Water Products (NYSE:MWA)
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Mueller Water Products (NYSE:MWA)
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