MWA

As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the water infrastructure industry, including Mueller Water Products (NYSE:MWA) and its peers. Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings. The 5 water infrastructure stocks we track reported a satisfactory Q2. As a group, revenues missed analysts’ consensus estimates by 6.4%. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 9.4% since the latest earnings results. As one of the oldest companies in the water infrastructure industry, Mueller (NYSE:MWA) is a provider of water infrastructure products and flow control systems for various sectors. Mueller Water Products reported revenues of $395.9 million, up 4.1% year on year. This print exceeded analysts’ expectations by 1.2%. Overall, it was a very strong quarter for the company with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates. “Our outstanding third quarter results reflect strong execution across the business and continued progress against our operating priorities, despite a dynamic operating environment. We delivered quarterly records for net sales, adjusted EBITDA and adjusted net income per diluted share, while expanding our adjusted EBITDA margin 440 basis points year-over-year. These results demonstrate the strength of our brands and product portfolio, as well as the benefits from our continued focus on operational excellence, productivity and disciplined cost management. I am proud of what our teams have accomplished and their continued commitment to serving our customers,” said Paul McAndrew, President and Chief Executive Officer of Mueller Water Products. Mueller Water Products delivered the weakest full-year guidance update in the group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 7.6% since reporting and currently trades at $24.41. We think Mueller Water Products is a good business, but is it a buy today? Read our full report here, it’s free. Founded in 1874, Watts Water (NYSE:WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally. Watts Water Technologies reported revenues of $763.2 million, up 18.6% year on year, outperforming analysts’ expectations by 4.9%. The business had a stunning quarter with an impressive beat of analysts’ organic revenue estimates and a beat of analysts’ EPS estimates. Watts Water Technologies delivered the biggest analyst estimate beat and fastest revenue growth of the whole group. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $365.92. Is now the time to buy Watts Water Technologies? Access our full analysis of the earnings results here, it’s free. As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE:TNC) designs, manufactures, and sells cleaning products to various sectors. Tennant reported revenues of $324 million, up 1.7% year on year, falling short of analysts’ expectations by 1.7%. It was a softer quarter as it posted full-year EBITDA guidance missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates. As expected, the stock is down 20.2% since the results and currently trades at $69.60. Read our full analysis of Tennant’s results here. Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ:ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors. Energy Recovery reported revenues of $12 million, down 57.2% year on year. This print came in 36.3% below analysts’ expectations. Overall, it was a softer quarter as it also produced a significant miss of analysts’ EBITDA estimates. Energy Recovery had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is down 11.6% since reporting and currently trades at $7.83. Read our full, actionable report on Energy Recovery here, it’s free. Formed through a spinoff, Xylem (NYSE:XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector. Xylem reported revenues of $2.34 billion, up 1.5% year on year. This number met analysts’ expectations. Overall, it was a strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and full-year EPS guidance slightly topping analysts’ expectations. The stock is down 8.4% since reporting and currently trades at $110.12. Read our full, actionable report on Xylem here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Image source: The Motley Fool. Thursday, August 6, 2026 at 11:00 a.m. ET President and Chief Executive Officer - Paul McAndrew Chief Financial Officer - Melissa Rasmussen Operator: Good morning, and thank you for standing by. Today's conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to Whit Kincaid. Whit Kincaid: Good morning, everyone. Thank you for joining us for Mueller Water Products Third Quarter Conference Call. Yesterday afternoon, we issued our press release reporting results of operations for the quarter ended June 30, 2026. A copy of the press release is available on our website, muellerwaterproducts.com. I am joined this morning by Paul McAndrew, our President and Chief Executive Officer; and Melissa Rasmussen, our Chief Financial Officer. Following our prepared remarks, we will address questions related to the information covered on the call. As a reminder, please keep to one question and a follow-up and then return to the queue. This morning's call is being recorded and webcast live on the Internet. We have also posted slides on our website to accompany today's discussion. They also address forward-looking statements and our non-GAAP disclosure requirements. At this time, please refer to Slide 2. This slide identifies non-GAAP financial measures referenced in our press release, on our slides and on this call. It discloses the reasons why we believe these measures provide useful information to investors. Reconciliations between non-GAAP and GAAP financial measures are included in the supplemental information within our press release and on our website. Slide 3 addresses forward-looking statements made on this call. This slide includes cautionary information identifying important factors that could cause actual results to differ materially from those included in forward-looking statements. Please review Slides 2 and 3 in their entirety. During this call, all references to a specific year or quarter, unless specified otherwise, refer to our fiscal year, which ends the 30th of September. A replay of this morning's call will be available for 30 days at 1 (866) 386-1299. The archived webcast and corresponding slides will be available for at least 90 days on the Investor Relations section of our website. I'll now turn the call over to Paul. Paul McAndrew: Thanks, Whit. Good morning, everyone. Thank you for joining our third quarter earnings call. Our outstanding third quarter results reflect strong execution and continued progress against the operating priorities we outlined in the last quarter. We achieved quarterly records for net sales, adjusted EBITDA and adjusted net income per diluted share. Net sales grew 4.1% in the quarter, supported by commercial execution, resilient municipal end market demand and strong growth in project-related specialty valves. Adjusted EBITDA margin expanded 440 basis points year-over-year, reflecting our continued focus on operational excellence, productivity and disciplined cost management. Free cash flow was strong this quarter, enabling us to continue funding capacity and efficiency investments, while returning approximately $21 million to shareholders through our quarterly dividend and share repurchases. I am proud of what our teams have accomplished and the continued commitment to serving our customers. Last quarter, we introduced the Mueller Operating System as the framework we are using to drive greater discipline, execution and accountability across the company. Our results provide further evidence of the progress we are making in expanding margins, strengthening cash generation, investing in growth and simplification. Following our announcement from the last quarter, we completed the exit of the i2O pressure monitoring business outside of North America. GWF AG, a utility metering and smart water technology company headquartered in Switzerland, acquired certain assets and liabilities of i2O Water. During the quarter, we incurred one-time costs associated with the transaction, along with a tax benefit, which lowered our income tax rate. We expect the cost savings and tax benefits to support margin expansion and enhance free cash flow. With our increased fiscal 2026 adjusted EBITDA guidance, we remain on track to deliver another year of meaningful margin expansion, while we continue to navigate slower new residential construction activity and broader external uncertainty. We remain focused on what we can control, executing our strategies, investing in growth and proactively managing costs. Our commercial initiatives are focused on increasing market penetration through our leading products and expanding into adjacent markets for our specialty valves. We believe the disciplined execution embedded in the Mueller Operating System positions us well to build on this momentum and create long-term value for our customers and shareholders. I am proud of the progress our teams have achieved this year, reflecting a focus on serving customers, strengthening operations and collaborating across the organization. We recently published our 2025 sustainability report, highlighting our continued progress in advancing environmental stewardship, operational excellence, responsible business practices, employee well-being and community impact. As cities and municipalities confront a growing range of challenges, critical infrastructure is under increasing strain. At the same time, aging systems continue to pose significant risks. Against this backdrop, Mueller's role as a provider of resilient, reliable water infrastructure solutions is more essential than ever. Notable 2025 achievements include reaching an outstanding milestone of the lowest total recordable incident rate in our history, reflective of our team's unwavering commitment to safety. We've also maintained strong momentum towards reducing our carbon footprint, cutting Scope 1 and 2 emissions intensity by 13% year-over-year, bringing our total reduction to 35%. This moves us closer to our goal of reducing greenhouse gas emissions intensity by 50% by 2035. As for employee engagement, we reached our goal 1 year ahead of our schedule, achieving an 80% employee engagement score in our annual employee survey. Our vision is to be the leader in water infrastructure solutions. Solving challenges, enriching lives and safeguarding the future. We will continue to drive progress through our innovative products and solutions that help utilities and municipalities strengthen system resilience, detect leaks faster and with greater precision, rehabilitate and maintain aging infrastructure and provide life-saving fire protection. Our achievements over the past several years establish a new foundation for future progress and are the direct result of the hard work, focus and collaboration demonstrated across our organization. With that, I'll turn it over to Melissa to take us through the financials. Melissa Rasmussen: Thanks, Paul, and good morning, everyone. We are pleased to deliver another record quarter, demonstrating the strength of our business, the resilience of our end markets and the continued execution by our teams despite a dynamic external environment. Consolidated net sales increased 4.1% to a new record of $395.9 million, driven primarily by higher pricing across most product lines, partially offset by slightly lower volumes. Gross profit increased 6.9% to a record $155.8 million, with gross margin expanding 110 basis points to 39.4%. The improvement reflects the benefits of pricing actions and tariff refunds, which more than offset inflationary pressures, performance, volume impacts, portfolio optimization costs and product mix. During the quarter, we incurred $3.1 million of portfolio optimization costs associated with the strategic exit of the i2O pressure monitoring business outside of North America, impacting WMS cost of sales. While we continue to experience elevated tariff costs, mainly attributable to Section 232 tariffs, along with ongoing inflationary pressures, the International Emergency Economic Powers Act tariff refunds received during the quarter helped offset a portion of those impacts. Excluding the impact of these prior period tariff refunds and the portfolio optimization costs, adjusted gross margin was approximately 30 basis points higher than the prior year's gross margin of 38.3%, demonstrating the underlying benefit of our pricing actions and operational execution despite a challenging cost environment. Total SG&A expenses for the quarter of $64 million decreased $7 million year-over-year, reflecting reduced foreign currency headwinds and lower incentive compensation expense, partially offset by continued inflationary pressures. This performance underscores our disciplined approach to cost management while continuing to invest in the business. We incurred $11.2 million of strategic reorganization and other charges. These costs primarily relate to the i2O exit, including non-cash asset impairment charges, certain transaction-related expenses, severance and costs associated with our leadership transition. Our adjusted results do not include strategic reorganization and other charges or the portfolio optimization costs reflected in the WMS segment. Adjusted EBITDA reached a record of $107.4 million, an increase of 24.3% compared to the prior year quarter. Adjusted EBITDA margin expanded 440 basis points year-over-year to a record 27.1%. This strong performance was primarily driven by pricing actions, tariff refunds and favorable SG&A cost management, which more than offset inflationary pressures, performance, volume impacts and product mix. On a trailing 12-month basis, adjusted EBITDA improved to $369 million or 24.9% of net sales, representing an improvement of 290 basis points versus the prior 12-month period. Adjusted net income per diluted share increased 47.1% year-over-year to a record $0.50 per share. During the quarter, we benefited from lower net interest expense driven by higher interest income. Our third quarter effective income tax rate was 15.7% compared with 27.1% in the prior year quarter, reflecting a one-time tax benefit associated with the exit of the i2O business. This benefit contributed approximately $0.06 per diluted share during the quarter. Turning now to segment performance, starting with WFS. Net sales were $215.3 million, declining 0.6% year-over-year as higher pricing across most product lines and volume growth in specialty valves largely offset lower iron gate valve and service brass volumes. Adjusted EBITDA increased 9.5% to a record $73.5 million. Adjusted EBITDA margin expanded 310 basis points to a record 34.1% compared to 31% in the prior year period, reflecting the benefits of pricing, tariff refunds and performance, which more than offset lower volumes, inflationary pressures and product mix. Moving to WMS. Net sales increased 10.3% to $180.6 million, driven by strong volume growth in hydrants and natural gas distribution products, along with higher pricing across most product lines. Adjusted EBITDA increased 43.6% to a record $50.7 million, reflecting benefits from higher pricing, lower SG&A expenses, including reduced foreign currency headwinds, volume growth and tariff refunds, which more than offset performance and inflationary pressures. Adjusted EBITDA margin expanded 650 basis points to a record 28.1% compared with 21.6% in the prior year period. The continued improvement in profitability reflects the significant progress we have made in strengthening operating performance and driving leverage across the business. Turning to free cash flow. For the first 9 months of the year, free cash flow increased $7.6 million to $110.6 million and represented 59% of adjusted net income. The increase was driven by higher net cash provided by operating activities, partially offset by higher capital expenditures. Net cash provided by operating activities increased $18.4 million year-over-year, driven primarily by favorable non-cash adjustments and higher net income, partially offset by changes in working capital and other assets and liabilities. While working capital remains elevated due to inventory investments, inflation and tariffs, these investments continue to support customer service levels and our long-term growth objectives. We invested $43.6 million in capital expenditures during the first 9 months of the year compared with $32.8 million in the prior year period, reflecting continued investments in our iron foundries that support future productivity, capacity and operational excellence. We ended the quarter with $495 million of cash and cash equivalents and $453 million of total debt. Our balance sheet remains exceptionally strong, providing significant flexibility to support both organic investments and strategic growth opportunities. We have no debt maturities until June 2029 and $450 million of senior notes at a favorable 4% fixed interest rate and had no borrowings under our ABL facility. We ended the quarter with total liquidity of $659 million, including $164 million of available capacity under the ABL, positioning us well to execute our strategic priorities and pursue attractive acquisition opportunities. Turning now to our outlook for fiscal 2026. Given our strong year-to-date performance and outlook for the balance of the year, we are narrowing our consolidated net sales growth guidance to a range of 2.8% and 3.5% year-over-year, reflecting our current expectations for end market demand, volumes and price realization. While we anticipate softer new residential construction activity during the fourth quarter, we continue to expect resilient municipal repair and replacement activity and strong growth in specialty valves. Based on our record performance through the first 9 months of the year and confidence in our ability to execute for the rest of the year, we are raising our annual adjusted EBITDA guidance to a new range of $367 million to $372 million. At the midpoint, our updated guidance range represents an adjusted EBITDA margin of 25.1%, which would represent another annual record for the company. We are also reducing our expectations for total SG&A expenses within this updated guidance to a new range of $241 million to $245 million, reflecting ongoing discipline in managing costs while supporting strategic growth initiatives. Additionally, we are lowering our effective tax rate guidance to between 21% and 23%, reflecting the onetime tax benefit recognized during the third quarter. Finally, we are reaffirming our capital expenditure outlook of $60 million to $65 million and continue to expect our free cash flow conversion to exceed 70% of adjusted net income for the full year. Overall, our performance year-to-date demonstrates the strength of our business model, the resilience of our end markets and the effectiveness of our pricing, operational and cost management initiatives. We remain confident in our ability to deliver another record year while continuing to invest for long-term growth and value creation. With that, I'll turn it back to Paul for closing comments. Paul McAndrew: Thanks, Melissa. I want to provide a few closing comments before opening it up for Q&A. Overall, I am extremely proud of our team's outstanding performance this quarter. I'm pleased for the third consecutive quarter, we are raising our annual adjusted EBITDA guidance. We delivered strong results in an uncertain operating environment by staying focused on serving customers, executing with discipline and investing in capabilities that support long-term value creation. Our priorities remain clear: drive above-market sales growth, continued expanding margins and maintain disciplined capital allocation. The Mueller Operating System is the execution engine behind those priorities, providing the tools, processes and management disciplines to improve execution, accountability and continuous improvement across the company. This quarter provides further evidence that the system is taking hold. At the center of our success are our employees. Their commitment, collaboration and safety-first mindset enable us to serve customers well, strengthen operations and sustain our momentum. Through the disciplined execution embedded in the Mueller Operating System, we will continue to reduce complexity, improve business processes, expand margins and generate cash to fund growth investments, including capacity, efficiency, digital tools, innovation and specialty valve capabilities. Finally, we will remain disciplined in allocating capital across organic investments, targeted acquisitions and cash return to shareholders. Mueller is becoming a stronger, more focused and more resilient company, and we remain committed to creating sustainable long-term value for our shareholders. I want to thank our employees worldwide for their extraordinary commitment to our customers and communities. They are the reason for our success and why Mueller has been a trusted partner for more than a century. That concludes our comments. Operator, please open the line up for questions. Operator: Bryan Blair with Oppenheimer. Bryan Blair: Updated guidance implies top line down slightly year-on-year against a pretty healthy stacked comp and I think about 1% EBITDA growth, again against solid Q4 '25 performance. How should we think about segment contribution to that? The year has progressed a little differently than we expected, still very strong overall. Just curious how we should think about the Q4 dynamics by segment. Paul McAndrew: Yes, I'll give the overall first, Bryan, and then I'll let Melissa talk by segment. You are correct. We narrowed our net sales range. I guess that's based on our current expectations around orders and shipments, mainly around the slower residential construction activity. We're also lapping tariff price actions from Q4 implementation of last year. Again, we really -- overall, really pleased where we are as a company, Bryan. Pleased to be growing net sales and expanding margins for the third consecutive year. It's really where we are reflective of where we see the slower residential construction and the uncertain macro environment as we move into Q4. As for segments, I'll pass it over to Melissa. Melissa Rasmussen: For the WFS segment, we are expecting adjusted EBITDA to be above prior year due to gross margin improvements, operational efficiencies and then price realization. We're expecting to see a sequential decline from third to fourth quarter, which part of that is due to the typical seasonality decline sequentially, and we expect volumes and product mix to be a driver of that as well. Volume will be impacting our short-cycle products, so iron gate valves and service brass, and we'll expect to see a shift toward specialty valves because we have continued to see strength in specialty valves throughout the year. For WMS, we're expecting to see lower margins versus the prior year and sequentially. And that's going to be due to lower hydrant volume. We have benefited from a backlog in hydrants throughout the first 3 quarters. We expect that, that backlog will be normalized as we enter fourth quarter. So the residential slowdown will impact WMS more than it has so far this year. We do expect to see that we'll be lapping our tariff pricing that was put in place and began to benefit the fourth quarter of last year, and we'll continue to see higher inflationary pressures and ongoing tariff expense, while we have had the relief from the IEEPA tariffs, that has been replaced by higher Section 232 tariffs impacting our Krausz business line. And we do not expect to have any further tariff refunds. Bryan Blair: Okay. Very helpful detail. You mentioned tariff refunds there. I think you gave us the math that we can back into consolidated benefit for fiscal Q3. What were tariff refunds on a segment level? Melissa Rasmussen: Yes. So as I mentioned in the prepared remarks, we had 150 basis point benefit overall for the tariff refunds in the quarter. For the segment, that's split about 50-50. So you would see a 140 basis point impact in WFS and 170 basis point impact in WMS. Operator: Our next caller is Walt Liptak from Seaport Research. Walter Liptak: Thanks for the guidance for fourth quarter. I wanted to ask about the specialty valves. You called those out a couple of times because of projects, and it sounds like the demand was strong. I wonder if you could provide some more detail about the demand levels in the third quarter and what the visibility is like in the fourth quarter? Paul McAndrew: Yes. Sure, Walt. Specialty valve is slightly different in terms of how we -- the sales cycle in comparison to our short-cycle business. So specialty valve makes up the majority of our backlog then. And it's been the fastest-growing category for us over the past few years, and we are really leveraging our operational investments and the consolidation of locations into Kimball, along with our engineering investments. And I think you know there's many different types of valves within specialty valve then that impact not just potable water, but wastewater and industrial water. And industrial water, although a small category for us, has been one of our fastest-growing categories as we kind of not just think about the potable water or the infrastructure water around data centers, we're also seeing a step increase then of our ability to get specialty valves into industrial water for data centers as well. Walter Liptak: Okay. Great. And I wonder the data center opportunity, are you -- are these being sold through distribution? Or are you getting spec-ed into the data centers? Paul McAndrew: It's a combination. We sell through distribution. We've also made commercial investments in our teams to gain access for approved manufacturers list as well. So it's one of our commercial initiatives going forward, and we're starting to see traction right now. Operator: Our next caller is Jeffrey with RBC Capital Markets. Jeffrey Reive: Maybe just following up on the data center question. Could you size how big that business is for you today? Paul McAndrew: It's relatively small in the overall size of the business for us, Jeff. And industrial water within specialty valves is a piece of that, where we are seeing probably our fastest growth, and it is one of our highest commercial initiatives then to really work with these engineering firms around the AMLs. But in terms of size right now, relatively small. Jeffrey Reive: Got it. I appreciate that. And maybe just a higher-level question, kind of the muni repair and replacement market seems to be resilient, but I think some federal stimulus seems to be sunsetting. Just like as you look over the next like year or 2, I mean, how much visibility do you have into the spending outlook? Paul McAndrew: Yes. You think about the federal sunset and federal investment is less than 5% of the total investment into municipalities, the rest coming from state and local governments. And we are seeing the sunset, and it's going to take multiple years to see that impact because a lot of those funds have already been appropriated in and they just need to be executed into projects. So over the next 1 to 3 years, we don't see any meaningful change then from the federal funding impact. Jeffrey Reive: Got it. And maybe if I could just sneak in one more. I think at ACE this year, you guys are showcasing your hydrant renewal system. I think it's a really great opportunity. Can you just update us on where the commercialization stands today? Any early customer feedback and how you're thinking about revenue contribution as this scales? Paul McAndrew: Yes. So we have launched hydrogen renewal. We continue to get very positive customer feedback from customer trials. And just as a reminder for everyone, this will be replacing aged hydrants without having to dig up the part of the hydro, which is below the ground. So it gives a much more efficient solution for our customers. And we're also pleased how much positive feedback we've had, Jeff, on the leak testing capabilities integrated into that solution as well. Operator: Our next caller is Brian Lee with Goldman Sachs. Keshav Choudhary: This is Keshav Choudhary on for Brian Lee. So pricing has been a contributor for your growth in recent quarters. Can you maybe discuss the sustainability of the pricing realization going forward, particularly as the tariff-related price increases began to lap up in the second half and whether you're seeing any change in sort of customer acceptance as these increases work through the market? Melissa Rasmussen: We have historically been successful at taking pricing actions to offset inflationary impacts. We have typically ranged in the mid- and low single-digit range of price realization. And we continue to expect to see that opportunity into the future. We have been price/cost positive and continue to expect that, that will be the same as we move into fourth quarter. With the price realization, we will expect to see a little bit lower price realization in fourth quarter because we'll be lapping the tariff benefits that we started to see in fourth quarter of last year. Paul McAndrew: Yes. Just a reminder, we have very strong brands and very good pricing power. So we feel comfortable whatever inflation or tariff impacts we may see, we have the pricing ability to offset that cost. Keshav Choudhary: That helps. Just maybe one more. So as you look towards fiscal '27, the residential demand has been slow. And if the residential construction continues to remain soft, can the municipal repair and replacement activity and the specialty valve project continue to support growth? Or do you see limits to how much of these markets can offset the resi weakness and resi will need to come back at some point to help with the growth? Paul McAndrew: Yes. We don't give our guidance for 2027 until the next earnings call. We continue to look at all those market indicators as you referenced them, and we know that we're going to be seeing continued or level out where slowdown in residential construction. We believe from a municipal perspective and our commercial and strategic initiatives, that they can really offset where we can see that kind of depressed residential construction right now. But I'd like to add, residential construction cannot stay depressed forever. There is a pent-up demand of housing, and we know that they will bounce back, and we will -- that will be a tailwind for us as well when that bounce back comes. Operator: I will now turn the call back over to Paul for any closing comments. Paul McAndrew: Thank you, operator. Thanks to everyone who joined us on our call today. Overall, we are excited about the quarter. Our results provide further evidence of the progress we are making in expanding margins, strengthening cash generation, investing in growth and simplification. Our increased annual guidance for adjusted EBITDA reflects the confidence we have in our commercial and operational capabilities. We remain vigilant in increasingly uncertain -- we remain vigilant in an increasingly uncertain external operating environment as it relates to demand, tariffs and inflationary pressures. We will stay focused on what we can control and take action if needed. I want to once again thank our dedicated team members. We look forward to speaking with you again on our fourth quarter results when they are announced in early November. And with that, operator, please conclude the call. Operator: Thank you, sir. This concludes today's conference. You may disconnect at this time, and have a great rest of your day. Before you buy stock in Mueller Water Products, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Mueller Water Products wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. 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Mueller Water Products (MWA) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Mueller Water Products (MWA) just reported record third quarter results, raised full year adjusted EBITDA guidance for the third consecutive quarter and highlighted strong Water Management Solutions performance, putting fresh attention on how the stock reflects this momentum. See our latest analysis for Mueller Water Products. Mueller Water Products shares now trade at US$26.65, with the stock posting an 11.32% year to date share price return while the 3 year total shareholder return is 96.39%. This suggests momentum has been building around record earnings, higher guidance, ongoing buybacks and fresh acquisition plans. If strong execution in water infrastructure has your attention, it can be worth widening your search to other power and grid related plays via the 36 power grid technology and infrastructure stocks. After a record quarter, higher guidance and ongoing buybacks, Mueller Water Products still trades at an estimated 26% discount to intrinsic value and 16% below analyst targets. Is that a genuine mispricing, or is the market factoring in real risks? At a last close of $26.65 versus a narrative fair value of $32.20, the current pricing of Mueller Water Products leaves a valuation gap that hinges on how credible the long term growth and margin story looks. Read the complete narrative. The core thesis leans on steady revenue expansion, higher margins, and a future earnings profile that supports a richer multiple than today. Curious which growth path, profitability assumptions, and discount rate have to align to make $32.20 reasonable? The narrative sets out that full blueprint without assuming rapid growth or technology-style valuations. Result: Fair Value of $32.20 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Mueller Water Products still faces real pressure points, including reliance on municipal budgets and ongoing capital needs for foundry upgrades that could weigh on free cash flow. Find out about the key risks to this Mueller Water Products narrative. If the mix of optimism and risk around Mueller Water Products feels compelling, take a moment to review the data yourself, then move quickly to form your own view. You can start by checking the 4 key rewards. If Mueller Water Products has sharpened your focus on quality, do not stop here. Broaden your watchlist with other focused ideas sourced from the Simply Wall St Screener. Target potential upside by scanning a curated set of 51 high quality undervalued stocks that combine appealing prices with solid underlying businesses. Strengthen your income stream by reviewing 8 dividend fortresses that offer higher yields supported by ongoing cash generation. Dial back overall risk by assessing 79 resilient stocks with low risk scores that score well on financial resilience and volatility. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include MWA. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in Mueller Water Products? Here are five stocks we like better. Record Q3 performance: Net sales rose 4.1% to $395.9 million, while adjusted EBITDA increased 24.3% to a record $107.4 million and adjusted EPS climbed 47.1% to $0.50. Results were supported by pricing, tariff refunds, cost controls and resilient municipal infrastructure demand. Strong segment profitability: Water Management Solutions sales grew 10.3% and adjusted EBITDA surged 43.6%, while Water Flow Solutions delivered record adjusted EBITDA despite slightly lower sales. Specialty valves remained the fastest-growing category, although residential construction weakness is expected to pressure fourth-quarter results. Fiscal 2026 outlook raised: Mueller increased adjusted EBITDA guidance to $367 million–$372 million and expects free-cash-flow conversion above 70% of adjusted net income. Management cautioned that no further tariff refunds are expected and that tariff-related costs and seasonal pressures will affect the fourth quarter. Small Caps Are Crushing the S&P 500—3 Stocks Still Worth Buying Mueller Water Products (NYSE:MWA) reported record third-quarter results for the fiscal quarter ended June 30, 2026, as pricing actions, tariff refunds, cost management and demand in municipal infrastructure and specialty valves supported sales and profitability. Net sales increased 4.1% year over year to a quarterly record of $395.9 million. Adjusted EBITDA rose 24.3% to a record $107.4 million, while adjusted EBITDA margin expanded 440 basis points to 27.1%. Adjusted diluted earnings per share increased 47.1% from the prior-year quarter to a record $0.50. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Russell 2000 Stocks: Too Early or Finally Interesting? President and CEO Paul McAndrew said the quarter reflected commercial execution, resilient municipal end-market demand and strong project-related specialty-valve growth. He also said the company generated strong free cash flow while continuing to invest in capacity and efficiency initiatives and returning about $21 million to shareholders through dividends and share repurchases. Gross profit rose 6.9% to $155.8 million, and gross margin increased 110 basis points to 39.4%. Chief Financial Officer Melissa Rasmussen said pricing actions and refunds related to International Emergency Economic Powers Act tariffs more than offset inflation, operational-performance effects, volume impacts, portfolio optimization costs and product mix. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Burry Just Sold Amazon, Replaced it With Alibaba, is He Right? The company incurred $3.1 million of portfolio optimization costs in cost of sales associated with its exit from the i2O pressure-monitoring business outside North America. Excluding tariff refunds and those portfolio optimization costs, adjusted gross margin was about 30 basis points above the prior-year gross margin of 38.3%, Rasmussen said. SG&A expense declined $7 million year over year to $64 million, reflecting reduced foreign-exchange headwinds and lower incentive compensation expense, partially offset by inflation. The company also recorded $11.2 million of strategic reorganization and other charges, mainly tied to the i2O exit, including non-cash asset impairments, transaction expenses and severance, as well as costs related to its leadership transition. → No Hangover: Revisiting Microsoft One Week After Earnings The quarter’s effective tax rate was 15.7%, compared with 27.1% a year earlier. Rasmussen said a one-time tax benefit connected with the i2O exit contributed approximately $0.06 per diluted share. Water Flow Solutions: Net sales declined 0.6% to $215.3 million. Higher pricing and specialty-valve volume growth largely offset lower iron gate-valve and service-brass volumes. Adjusted EBITDA increased 9.5% to a record $73.5 million, and margin rose 310 basis points to 34.1%. Water Management Solutions: Net sales increased 10.3% to $180.6 million, driven by hydrant and natural-gas distribution-product volume growth and higher pricing. Adjusted EBITDA rose 43.6% to a record $50.7 million, while margin expanded 650 basis points to 28.1%. During the question-and-answer session, Rasmussen said third-quarter tariff refunds provided a 150-basis-point benefit to consolidated results, split roughly evenly between the two segments. The benefit was 140 basis points in Water Flow Solutions and 170 basis points in Water Management Solutions, she said. The company expects no additional tariff refunds. Rasmussen said Section 232 tariffs continue to create elevated costs, including impacts on the Krausz business line, while the company expects its pricing actions to remain price-cost positive entering the fourth quarter. For the first nine months of fiscal 2026, free cash flow increased $7.6 million from the prior-year period to $110.6 million, representing 59% of adjusted net income. Cash provided by operating activities increased $18.4 million, though the company said working capital remains elevated because of inventory investments, inflation and tariffs. Capital expenditures were $43.6 million during the first nine months, compared with $32.8 million a year earlier, primarily reflecting investments in iron foundries intended to support productivity, capacity and operations. Mueller ended the quarter with $495 million of cash and equivalents, $453 million of total debt and $659 million of total liquidity. The company had no borrowings under its asset-based lending facility and no debt maturities until June 2029, according to Rasmussen. Mueller narrowed its fiscal 2026 net-sales growth forecast to 2.8% to 3.5% year over year and raised adjusted EBITDA guidance to $367 million to $372 million. At the midpoint, the outlook implies an adjusted EBITDA margin of 25.1%, which would be an annual record for the company. The company reduced its expected SG&A expense range to $241 million to $245 million and lowered effective tax-rate guidance to 21% to 23%, reflecting the third-quarter tax benefit. It reaffirmed capital spending of $60 million to $65 million and expects free-cash-flow conversion to exceed 70% of adjusted net income. Management expects slower new residential construction activity to weigh more heavily on fourth-quarter results, particularly in Water Management Solutions as hydrant backlog normalizes. In Water Flow Solutions, the company expects adjusted EBITDA to remain above the prior year, though it anticipates a sequential decline due partly to normal seasonality, short-cycle volume pressure and product mix. McAndrew said municipal repair-and-replacement demand remains resilient and specialty valves continue to be the company’s fastest-growing category. He said specialty-valve opportunities include potable water, wastewater, industrial water and data-center-related projects, though the data-center business remains relatively small for Mueller. McAndrew also said federal funding represents less than 5% of total municipal investment, with most spending coming from state and local governments. While some federal stimulus is sunsetting, he said the company does not expect a meaningful effect from that funding over the next one to three years because projects supported by appropriated funds still need to be executed. Mueller Water Products, Inc is a leading provider of water infrastructure and flow control products and services designed to help water utilities and municipalities manage, control and measure their water distribution systems. The company's portfolio includes a comprehensive range of products such as fire hydrants, valves, pipe repair systems, fittings and couplings, along with advanced metering and monitoring solutions. By combining traditional mechanical components with digital technologies, Mueller Water Products addresses the critical need for reliable and sustainable water distribution across North America. The company's operations are organized around two primary business segments. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Mueller Water Products Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved record quarterly net sales and adjusted EBITDA, driven by strong commercial execution and resilient municipal demand despite a dynamic macro environment. Expanded adjusted EBITDA margin by 440 basis points year-over-year, attributed to the new Mueller Operating System's focus on productivity and disciplined cost management. Completed the strategic exit of the i2O pressure monitoring business outside North America to simplify the portfolio and enhance long-term free cash flow. Leveraged strong pricing power across most product lines to successfully offset persistent inflationary pressures and elevated tariff costs. Capitalized on robust growth in project-related specialty valves, which helped mitigate lower volumes in short-cycle products like iron gate valves. Maintained a safety-first culture, reaching the lowest total recordable incident rate in company history while advancing carbon footprint reduction goals. Raised annual adjusted EBITDA guidance to $367 million–$372 million, implying a record 25.1% margin at the midpoint based on year-to-date execution momentum. Narrowed net sales growth guidance to 2.8%–3.5%, accounting for anticipated softness in new residential construction activity during the fourth quarter. Expects municipal repair and replacement activity to remain resilient, supported by multi-year federal funding cycles that have already been appropriated. Anticipates fourth-quarter margins will face headwinds from the normalization of hydrant backlogs and the lapping of prior-year tariff-related price actions. Reaffirmed capital expenditure targets of $60 million–$65 million, focused on foundry modernization to support future productivity and capacity. Recognized $11.2 million in strategic reorganization charges primarily related to the i2O business exit, including non-cash asset impairments and severance. Benefited from a one-time $0.06 per share tax gain associated with the i2O divestiture, lowering the effective tax rate for the quarter to 15.7%. Received prior-period tariff refunds under the International Emergency Economic Powers Act, providing a 150 basis point benefit to consolidated margins. Identified ongoing Section 232 tariffs as a continuing headwind, specifically impacting the Krausz business line following the expiration of other tariff reliefs. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects WFS margins to improve year-over-year due to price realization, though a sequential decline is expected due to typical seasonality and product mix shifts. WMS margins are projected to be lower sequentially as the hydrant backlog normalizes and residential construction slowdowns begin to impact volumes more significantly. Specialty valves represent the fastest-growing category, benefiting from operational consolidation and increased penetration in industrial water applications. While currently a small portion of total revenue, data centers are a high-priority commercial initiative where the company is successfully gaining access to approved manufacturer lists. Management clarified that federal investment accounts for less than 5% of total municipal spending, with the majority driven by state and local budgets. No meaningful change in funding impact is expected for 1-3 years as previously appropriated funds continue to be executed into active projects. The company expects to remain price/cost positive, though price realization will appear lower in Q4 as they lap the significant tariff-related increases implemented last year. Management expressed confidence in their brands' pricing power to offset future inflationary or tariff impacts if they arise.

This article first appeared on GuruFocus. Net Sales: Increased 4.1% to a record $395.9 million. Gross Profit: Increased 6.9% to a record $155.8 million, with gross margin expanding 110 basis points to 39.4%. Adjusted EBITDA: Reached a record $107.4 million, an increase of 24.3% year over year. Adjusted EBITDA Margin: Expanded 440 basis points year over year to a record 27.1%. Adjusted Net Income per Diluted Share: Increased 47.1% year over year to a record $0.50 per share. Water Flow Solutions (WFS) Net Sales: Declined 0.6% to $215.3 million. WFS Adjusted EBITDA: Increased 9.5% to a record $73.5 million, with margin expanding 310 basis points to 34.1%. Water Management Solutions (WMS) Net Sales: Increased 10.3% to $180.6 million. WMS Adjusted EBITDA: Increased 43.6% to a record $50.7 million, with margin expanding 650 basis points to 28.1%. Free Cash Flow: For the first 9 months, increased $7.6 million to $110.6 million. Capital Expenditures: Invested $43.6 million in the first 9 months, compared to $32.8 million in the prior year period. Cash and Cash Equivalents: Ended the quarter at $495 million. Total Debt: Ended the quarter at $453 million. Fiscal 2026 Net Sales Growth Guidance: Narrowed to a range of 2.8% to 3.5% year over year. Fiscal 2026 Adjusted EBITDA Guidance: Raised to a new range of $367 million to $370 million. Warning! GuruFocus has detected 8 Warning Sign with KOP. Is MWA fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record net sales, adjusted EBITDA, and adjusted net income per diluted share in Q3 2026, with net sales up 4.1% year-over-year. Adjusted EBITDA margin expanded 440 basis points year-over-year to a record 27.1%, driven by pricing actions, tariff refunds, and disciplined cost management. Strong free cash flow of $110.6 million in the first nine months, with a healthy balance sheet and no debt maturities until 2029. WMS segment delivered 10.3% net sales growth and a 650 basis point adjusted EBITDA margin expansion, driven by strong hydrant and natural gas product volumes. Raised fiscal 2026 adjusted EBITDA guidance for the third consecutive quarter, reflecting confidence in continued margin expansion and operational execution. Specialty valves, including industrial water for data centers, are a fast-growing category with strong demand and positive traction in commercial initiatives. Slower new residential construction activity is expected to impact Q4 volumes, particularly in short-cycle products like iron gate valves and service brass. Tariff costs remain elevated, with Section 232 tariffs increasing and no further tariff refunds expected in Q4, pressuring margins. WMS segment margins are expected to decline in Q4 due to normalization of hydrant backlog and lapping of prior-year tariff pricing benefits. Working capital remains elevated due to inventory investments, inflation, and tariffs, which could pressure cash flow conversion. The strategic exit of the I2O pressure monitoring business outside North America incurred $11.2 million in strategic reorganization charges and $3.1 million in portfolio optimization costs. External uncertainty from tariffs, inflation, and residential construction weakness requires continued vigilance and may limit growth in the near term. Q: How should we think about Q4 dynamics by segment, given the updated guidance implies a slight top-line decline against a strong prior-year comp?A: Paul McAndrew (CEO) noted the narrowed net sales guidance reflects expectations for slower residential construction activity and overlapping tariff price actions from Q4 of last year. Melissa Rasmussen (CFO) detailed that for the Water Flow Solutions (WFS) segment, adjusted EBITDA is expected to be above prior year due to gross margin improvements and price realization, though it will decline sequentially due to seasonality and a shift toward specialty valves. For the Water Management Solutions (WMS) segment, margins are expected to be lower year-over-year and sequentially as the hydrant backlog normalizes, the residential slowdown impacts results, and the company laps tariff pricing benefits from last year while facing higher Section 232 tariffs without further refunds. Q: What were the tariff refunds on a segment level for the quarter?A: Melissa Rasmussen (CFO) confirmed that the tariff refunds provided a 150 basis point benefit overall in the quarter, split roughly 50-50 between segments. This translates to a 140 basis point impact in WFS and a 170 basis point impact in WMS. Q: Can you provide more detail on the demand levels for specialty valves in Q3 and the visibility into Q4?A: Paul McAndrew (CEO) explained that specialty valves have a different, longer sales cycle compared to short-cycle products and make up the majority of the company's backlog. It has been the fastest-growing category, benefiting from operational investments, location consolidation, and engineering investments. The company is seeing strong demand not only in potable water but also in wastewater and industrial water applications, with industrial water for data centers being one of the fastest-growing categories. Q: Are the data center opportunities being sold through distribution or are you getting specified into the projects?A: Paul McAndrew (CEO) stated that the company sells through distribution but has also made commercial investments in its teams to gain access to approved manufacturer lists (AMLs). This is a key commercial initiative going forward, and they are starting to see traction. Q: Could you size how big the data center business is for you today?A: Paul McAndrew (CEO) noted that the data center business is relatively small in the overall size of the company. Industrial water within specialty valves is a piece of that, and while it is seeing the fastest growth and is a high commercial initiative, its current size remains relatively small. Q: How much visibility do you have into the municipal repair and replacement spending outlook over the next year or two, given that some federal stimulus is sunsetting?A: Paul McAndrew (CEO) clarified that federal investment represents less than 5% of total municipal investment, with the rest coming from state and local governments. While the federal stimulus is sunsetting, it will take multiple years to see an impact because a large portion of those funds have already been appropriated and are awaiting project execution. Therefore, the company does not see any meaningful change from federal funding impacts over the next one to three years. Q: Can you update us on the commercialization of the hydrant renewal system and any early customer feedback?A: Paul McAndrew (CEO) confirmed that the hydrant renewal system has been launched and is receiving very positive feedback from customer trials. The solution replaces aged hydrants without digging up the below-ground portion, offering a more efficient solution. The company is also pleased with the positive feedback on the leak testing capabilities integrated into the solution. Q: How sustainable is the pricing realization going forward, particularly as tariff-related price increases lap, and are you seeing any change in customer acceptance?A: Paul McAndrew (CEO) stated that the company has historically been successful at taking pricing actions to offset inflationary impacts, typically in the mid-to-low single-digit range. They expect this to continue, remaining price/cost positive into Q4, though price realization will be slightly lower as they lap the tariff benefits from last year. He emphasized the company's strong brands and pricing power to offset any future inflation or tariff costs. Q: Looking toward fiscal 2027, can municipal repair and replacement and specialty valve projects continue to offset residential weakness, or will resi need to recover to support growth?A: Paul McAndrew (CEO) stated that while they will provide formal guidance for 2027 on the next call, they expect the slowdown in residential construction to level out. He believes that municipal demand and their commercial and strategic initiatives can offset the currently depressed residential construction levels. He added that residential construction cannot stay depressed forever, and the pent-up demand for housing will eventually provide a tailwind for the company. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Mueller Water Products (MWA) came out with quarterly earnings of $0.5 per share, beating the Zacks Consensus Estimate of $0.39 per share. This compares to earnings of $0.34 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +28.21%. A quarter ago, it was expected that this maker of fire hydrants, pipes and water valves would post earnings of $0.38 per share when it actually produced earnings of $0.4, delivering a surprise of +5.26%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Mueller Water Products, which belongs to the Zacks Manufacturing - General Industrial industry, posted revenues of $395.9 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.51%. This compares to year-ago revenues of $380.3 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Mueller Water Products shares have added about 11.7% since the beginning of the year versus the S&P 500's gain of 13%. While Mueller Water Products has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Mueller Water Products was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.40 on $390.55 million in revenues for the coming quarter and $1.47 on $1.48 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Manufacturing - General Industrial is currently in the top 22% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, DNOW (DNOW), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This energy and industrial distribution company is expected to post quarterly earnings of $0.08 per share in its upcoming report, which represents a year-over-year change of -70.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. DNOW's revenues are expected to be $1.26 billion, up 101.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MUELLER WATER PRODUCTS (MWA) : Free Stock Analysis Report DNOW Inc. (DNOW) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Increased Net Sales 4.1% to $395.9 Million Reported Net Income per Diluted Share of $0.43 Achieved Adjusted Net Income per Diluted Share of $0.50 Raises Annual Guidance for Fiscal 2026 Adjusted EBITDA ATLANTA, Aug. 05, 2026 (GLOBE NEWSWIRE) -- Mueller Water Products, Inc. (NYSE: MWA), a leading manufacturer and marketer of products and solutions used in the transmission, distribution and measurement of water in North America, announced financial results for its fiscal 2026 third quarter ended June 30, 2026. In the third quarter of 2026, the Company: Increased net sales 4.1% to $395.9 million as compared with $380.3 million in the prior year quarter Reported operating income of $80.6 million as compared with $73.7 million in the prior year quarter, and increased adjusted operating income 27.0% to $94.9 million as compared with $74.7 million in the prior year quarter Reported operating margin of 20.4% as compared with 19.4% in the prior year quarter, and expanded adjusted operating margin to 24.0% as compared with 19.6% in the prior year quarter Reported net income of $67.3 million as compared with $52.5 million in the prior year quarter, with net income margin of 17.0% as compared with 13.8% in the prior year quarter, and increased adjusted net income 48.1% to $78.8 million as compared with $53.2 million in the prior year quarter Reported net income per diluted share of $0.43 as compared with $0.33 in the prior year quarter, and increased adjusted net income per diluted share 47.1% to $0.50 as compared with $0.34 in the prior year quarter Increased adjusted EBITDA 24.3% to $107.4 million as compared with $86.4 million in the prior year quarter, and expanded adjusted EBITDA margin to 27.1% as compared with 22.7% in the prior year quarter Reported net cash provided by operating activities for the nine-month period of $154.2 million as compared with $135.8 million in the prior year period Generated free cash flow for the nine-month period of $110.6 million as compared with $103.0 million in the prior year period Repurchased $10.0 million of common stock during the third quarter “Our outstanding third quarter results reflect strong execution across the business and continued progress against our operating priorities, despite a dynamic operating environment. We delivered quarterly records for net sales, adjusted EBITDA and adjusted net income per diluted share, while expanding our adjusted EBITDA margin 440 basis points year-over-year. These results demonstrate the strength of our brands and product portfolio, as well as the benefits from our continued focus on operational excellence, productivity and disciplined cost management. I am proud of what our teams have accomplished and their continued commitment to serving our customers,” said Paul McAndrew, President and Chief Executive Officer of Mueller Water Products. “With our increased fiscal 2026 adjusted EBITDA guidance, we remain on track to deliver another year of meaningful margin expansion. While we continue to navigate slower new residential construction activity and broader external uncertainty, we remain focused on executing our strategies, investing in growth and proactively managing costs. We believe the disciplined execution embedded in the Mueller Operating System positions us well to build on this momentum and create long-term value for our customers and shareholders,” Mr. McAndrew concluded. Consolidated Results Net sales for the third quarter increased $15.6 million, or 4.1%, to $395.9 million as compared with $380.3 million in the prior year quarter, primarily due to higher pricing across most product lines, partially offset by slightly lower volumes. Gross profit for the third quarter increased $10.1 million, or 6.9%, to $155.8 million as compared with $145.7 million in the prior year quarter. Gross margin of 39.4% increased 110 basis points as compared with 38.3% in the prior year quarter, primarily due to higher pricing and tariff refunds, partially offset by inflationary pressures, performance, lower volumes, portfolio optimization costs and product mix. Selling, general and administrative expenses for the third quarter decreased $7.0 million, or 9.9%, to $64.0 million as compared with $71.0 million in the prior year quarter. This decrease was primarily due to reduced foreign currency headwinds and lower incentive-based compensation, partially offset by inflationary pressures. Operating income for the third quarter increased $6.9 million, or 9.4%, to $80.6 million as compared with $73.7 million in the prior year quarter. This increase was primarily driven by higher pricing, tariff refunds and lower SG&A expenses, partially offset by strategic reorganization and other charges, inflationary pressures, performance, lower volumes, portfolio optimization costs and product mix. Operating margin for the third quarter expanded to 20.4% as compared with 19.4% in the prior year quarter. During the quarter, the Company incurred $11.2 million of strategic reorganization and other charges, primarily related to certain transaction-related expenses, non-cash asset impairment expenses, severance and expenses associated with our leadership transition. Adjusted results do not include the strategic reorganization and other charges or the portfolio optimization costs. Adjusted operating income increased $20.2 million, or 27.0%, to $94.9 million as compared with $74.7 million in the prior year quarter. This increase was primarily driven by higher pricing, tariff refunds and lower SG&A expenses, partially offset by inflationary pressures, performance, lower volumes and product mix. Adjusted operating margin expanded 440 basis points to 24.0% as compared with 19.6% in the prior year quarter. Net income increased $14.8 million, or 28.2%, to $67.3 million as compared with $52.5 million in the prior year quarter. Net income margin expanded to 17.0% as compared with 13.8% in the prior year quarter. Adjusted net income increased $25.6 million, or 48.1%, to $78.8 million as compared with $53.2 million in the prior year quarter. Adjusted EBITDA of $107.4 million increased $21.0 million, or 24.3%, as compared with $86.4 million in the prior year quarter. Adjusted EBITDA margin expanded 440 basis points to 27.1% as compared with 22.7% in the prior year quarter. Segment Results Water Flow Solutions Net sales for the 2026 third quarter decreased $1.3 million, or 0.6%, to $215.3 million as compared with $216.6 million in the prior year quarter, primarily due to lower volumes, mostly offset by higher pricing across most product lines. Operating income and adjusted operating income were both $66.0 million for the third quarter. Adjusted operating income increased $5.5 million, or 9.1%, compared with the prior year quarter. Benefits from higher pricing, tariff refunds and performance more than offset lower volumes, inflationary pressures and product mix. Operating and adjusted operating margin were both 30.7% as compared with 27.9% for both the prior year quarter operating and adjusted operating margins, respectively. Adjusted EBITDA of $73.5 million increased $6.4 million, or 9.5%, as compared with $67.1 million in the prior year quarter. Adjusted EBITDA margin expanded 310 basis points to 34.1% as compared with 31.0% in the prior year quarter. Water Management Solutions Net sales for the 2026 third quarter increased $16.9 million, or 10.3%, to $180.6 million as compared with $163.7 million in the prior year quarter, primarily due to increased volumes and higher pricing across most product lines. Operating income was $35.9 million and adjusted operating income was $45.6 million for the third quarter. Adjusted operating income increased $15.3 million, or 50.5%, compared with the prior year quarter. Benefits from higher pricing, lower SG&A expenses, including reduced foreign currency headwinds, volume growth and tariff refunds more than offset performance and inflationary pressures. Operating margin was 19.9% and adjusted operating margin was 25.2%, as compared with 18.4% and 18.5% for the prior year quarter operating and adjusted operating margins, respectively. Adjusted EBITDA of $50.7 million increased $15.4 million, or 43.6%, as compared with $35.3 million in the prior year quarter. Adjusted EBITDA margin expanded 650 basis points to 28.1% as compared with 21.6% in the prior year quarter. Interest Expense, Net Interest expense, net, for the 2026 third quarter decreased to $0.7 million as compared with $1.7 million in the prior year quarter, primarily as a result of higher interest income. Income Taxes For the 2026 third quarter, income tax expense was $12.5 million, or 15.7% of income before tax, as compared with $19.5 million in the prior year quarter, or 27.1% of income before tax. The decrease in effective tax rate was primarily attributable to a one-time tax benefit resulting from the recognition of a loss on a foreign subsidiary investment, benefiting adjusted net income per diluted share by $0.06. Cash Flow and Balance Sheet Net cash provided by operating activities for the nine-month period ended June 30, 2026, increased $18.4 million to $154.2 million as compared with $135.8 million in the prior year period. The increase was primarily driven by favorable non-cash adjustments and higher net income compared with the prior year period, partially offset by changes in working capital and other assets and liabilities. Through the first nine months of 2026, the Company invested $43.6 million in capital expenditures as compared with $32.8 million in the prior year period, primarily driven by investments in our iron foundries. Free cash flow (defined as net cash provided by operating activities less capital expenditures) for the nine-month period increased $7.6 million to $110.6 million as compared with $103.0 million in the prior year period, due to the increase in net cash provided by operating activities partially offset by higher capital expenditures. As of June 30, 2026, the Company had $452.9 million of total debt outstanding and $495.3 million of cash and cash equivalents. We did not have any borrowings under our ABL Agreement at the end of the quarter, nor did we borrow any amounts under our ABL during the quarter. There are no maturities on the Company’s debt financings until June 2029, and our 4.0% Senior Notes have no financial maintenance covenants. At the end of the quarter, the Company had $659.0 million of total liquidity, including $163.7 million in availability under the ABL. Fiscal 2026 Outlook The Company is narrowing its guidance for fiscal 2026 consolidated net sales to between $1,470 million and $1,480 million, or an increase of 2.8% to 3.5% compared with the prior year. The Company is increasing its expectations for fiscal 2026 adjusted EBITDA to between $367 million and $372 million, or an increase of 12.5% to 14.0% compared with the prior year. The Company is reducing its total SG&A expenses to be between $241 million and $245 million and its guidance for the effective tax rate to be between 21% and 23%, reflecting the one-time tax benefit in the third quarter. The Company is reiterating its expectation for free cash flow as a percentage of adjusted net income to exceed 70% in fiscal 2026. The Company’s expectations for certain additional financial metrics for fiscal 2026 are as follows: Total SG&A expenses between $241 million and $245 million Net interest expense between $4 million and $5 million Effective income tax rate between 21% and 23% Depreciation and amortization between $49 million and $50 million Capital expenditures between $60 million and $65 million Pension expense other than service of approximately $0.1 million Conference Call Webcast Mueller Water Products’ quarterly earnings conference call will take place on Thursday, August 6, 2026, at 11:00 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 1-866-386-1299. 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. Adjusted net income, adjusted net income per diluted share, adjusted operating income, adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures that the Company presents 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. Free cash flow is a non-GAAP liquidity measure used 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), corporate restructuring and non-cash asset impairment, may have not yet occurred, are out of the Company’s control 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, long-term strategies, and the execution or acceleration thereof, operational improvements, inventory positions, the benefits of capital investments, financial or operating performance, including driving increased margins, operational and commercial initiatives, capital allocation and growth strategy plans, 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, changing regulatory, trade and tariff conditions, including the impact of the Section 232 tariffs on the products produced by our Krausz business; logistical challenges and supply chain disruptions, geopolitical conditions, 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, plant closures, and reorganization and related strategic realignment activities; an inability to attract or retain a skilled and diverse workforce, increased competition related to the workforce, and labor markets; an inability to protect the Company’s information systems against service interruption; risks resulting from possible future cybersecurity incidents; 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 higher interest rates; 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; the failure to integrate and/or realize any of the anticipated benefits of acquisitions or divestitures; an inability to achieve our goals and commitments in environmental and sustainability programs; 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 United States Securities and Exchange Commission. About Mueller Water Products, Inc. Mueller Water Products, Inc. is a leading manufacturer and marketer of products and solutions used in the transmission, distribution and measurement of water in North America. Our broad portfolio includes engineered valves, fire hydrants, pipe connection and repair products, metering products, leak detection, pipe condition assessment, pressure management products, and software 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 Contact: Whit [email protected] Media Contact: Jenny [email protected]