Mueller Water Products, Inc. Q3 FY2025 earnings call

• Achieved record consolidated net sales, gross margin, and adjusted EBITDA in Q3 despite macroeconomic and geopolitical uncertainty. - Net sales grew 6.6% to $380.3M, gross margin 38.3% (150 basis points improvement). - Generated $56M free cash flow after $12M cap ex, returned $20M to shareholders. - Published annual ESG report, closed legacy brass foundry, EchoShore leak detection tech saved 7.7B gallons water since 2020. - Updated 2025 guidance: net sales $1.405B-$1.415B (+$15M midpoint), adjusted EBITDA $318M-$322M (+$7.5M midpoint).

Consolidated net sales increased 6.6% to $380.3 million. WFS: Net sales $216.6 million (+4.1%), adjusted operating income $60.5 million (+4.7%), adjusted EBITDA $67.1 million (+0.3%), adjusted EBITDA margin 31% (down from 32.1% prior year). WMS: Net sales $163.7 million (+10.2%), adjusted operating income $30.3 million (+12.6%), adjusted EBITDA $35.3 million (+3.8%), adjusted EBITDA margin 21.6% (down from 25.9% prior year excluding FX).

• Increased 2025 consolidated net sales guidance midpoint by $15M to $1.405B-$1.415B. - Increased adjusted EBITDA guidance midpoint by $7.5M to $318M-$322M, with 22.7% margin (100 basis points improvement). - Maintaining free cash flow >80% of adjusted net income. - Capital expenditures expected $50M-$52M for 2025.

• Macroeconomic and geopolitical uncertainty, including tariffs. - Impact of foreign currency fluctuations, particularly USD vs Israeli shekel. - Potential need for additional pricing actions to offset higher input costs.

Q: What's the stability of end markets, especially utility and residential?

A: Residential construction slowing due to housing starts decline; municipal repair and replacement market remains strong.

Q: How much was the margin headwind from tariffs vs lower service brass volumes for legacy brass foundry?

A: Tariffs impacted specialty valve business (WFS) largely.

Q: Will there be an FX tailwind next year?

A: Depends on currency rates, one-time impact in Q3.

Q: How much pricing has been realized and prebuy?

A: Price increases in Feb, no meaningful prebuy.

Q: Is backlog normalized?

A: Short-cycle backlog normalized, longer-term project backlog healthy.