Mueller Water Products, Inc. Q2 FY2026 earnings call

• Paul is pleased with strong performance this quarter, set new quarterly records for net sales, adjusted EBITDA, and adjusted net income per share. • Delivered net sales growth of 5.5%, expanded adjusted EBITDA margin 210 basis points. • Raising fiscal 2026 outlook for adjusted EBITDA. • Introduced Mueller Operating System focusing on engaged employees, enhancing customer experience, expanding margins by simplifying business, and accelerating growth through innovation, market expansion, and acquisitions. • Exited I2O pressure monitoring business outside of North America but plan to use the technology in North America.

WSS: Net sales increased 1% to $218.3 million, adjusted EBITDA grew 16.4% to $72.4 million, adjusted EBITDA margin expanded 440 basis points to 33.2%. WMS: Net sales increased 12.2% to $166.1 million, adjusted EBITDA in the quarter increased 11.5% to $40.6 million, adjusted EBITDA margin contracted 20 basis points to 24.4%.

• Reiterating full-year guidance for consolidated net sales growth to be between 2.8% and 4.2% year-over-year. • Raising annual adjusted EBITDA guidance by $5 million, at the midpoint to a new range of $360 to $365 million, midpoint represents adjusted EBITDA margin of more than 24.5%, improvement of 170 basis points year over year. • Maintaining expectations for total SG&A expenses within updated guidance. • Reaffirming capital expenditure outlook of $60 to $65 million. • Expecting free cash flow to exceed 70% of adjusted net income for the full year.

Q: Jeff Reeves with RBC Capital Markets asked about sell-in versus sell-out trends in the quarter across segments and inventory levels in the channel, and follow-up on WMS sales.

A: Paul responded on channel inventory being at normalized levels, backlog change seasonally, WMS sales driven by higher pricing and volume gains in hydrant and repair products with expected normalized growth.

Q: Brian Lee with Goldman Sachs asked about updated outlook, revenue guidance, impact of residential slowdown, and M&A in capital allocation strategy.

A: Paul talked about price realization, lap of tariff related price, resi slowdown being high single to low double digit, and increased activity in M&A for portfolio expansion.

Q: Walt Liptack with Seaport Research asked about free cash flow and residential sector.

A: Walt was told about second quarter free cash flow lower due to working capital and inventory, previously 85% now 70%, and investments in specially evolved business for industrial water growth.