Mueller Water Products, Inc. (MWA) Reports In-Line Q3 EPS, Revenues Beat

Mueller Water Products, Inc. (NYSE: MWA) reported Q3 EPS of $0.19, in-line with the analyst estimate of $0.19. Revenue for the quarter came in at $250.2 million versus the consensus estimate of $245.81 million.

• Increased net sales 7.8 percent, or $18.0 million, to $250.2 million as compared with $232.2 million in the prior year quarter.
• Generated operating income of $30.6 million and adjusted operating income of $47.3 million as compared with $43.0 million and $45.0 million, respectively, in the prior year quarter.
• Reported income from continuing operations of $15.3 million as compared with $24.1 million in the prior year quarter. Improved adjusted net income to $30.0 million as compared with $25.4 million in the prior year quarter.
• Recorded a $14.1 million warranty charge at Technologies, a $6.2 million charge related to debt refinancing, a $2.4 million settlement gain on termination of interest rate swap contracts and other charges of $2.6 million.
• Reported net income per diluted share of $0.10 and adjusted net income per diluted share of $0.19 as compared with net income per diluted share of $0.15 and adjusted net income per diluted share of $0.16 in the prior year quarter.
• Generated $43.2 million of free cash flow through the first nine months as compared with $3.8 million in the prior year period.
• Refinanced outstanding debt with $450 million of 5.5% Senior Notes due 2026 and decreased outstanding debt by $33.9 million.

“With net sales growth of 7.8 percent in the quarter, we continue to be very encouraged by the healthy demand in both municipal and residential end markets. Infrastructure and Technologies each generated solid volume growth in the quarter. In addition, we are benefiting from the price increases we implemented in the second quarter, which more than covered inflation. We also increased our adjusted operating income and adjusted net income per share. However, conversion margin lagged in the quarter primarily due to higher costs associated with inflation, some unexpected equipment downtime and repairs, and timing of certain SG&A expenses,” said Scott Hall, President and Chief Executive Officer of Mueller Water Products.

“We continue to make solid progress on our key initiatives to execute our go-to-market strategies as a customer-focused organization, drive operational excellence and accelerate new product development. Our new product development initiatives are gaining momentum. At the American Water Works Association Annual Conference, we introduced a smart fire hydrant that monitors pressure and detects leaks, and at Singapore International Water Week, we showcased the deployment of our EchoShore® TX leak detection monitoring system being used by PUB, Singapore’s National Water Agency.

“We anticipate continued growth in our end markets in 2018. For full year 2018, we expect our consolidated net sales increase to be at the high end of the 7 to 9 percent range we provided last quarter, with adjusted operating income growing between 9 and 11 percent.

“I am excited about where we are with our strategic initiatives and the contribution they should provide to our performance going forward. Our growth strategies are supported by our strong balance sheet and free cash flow with a capital allocation strategy focused on enhancing our position as a leading water infrastructure company.”

For earnings history and earnings-related data on Mueller Water Products, Inc. (MWA) click here.

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