Mueller Water Products Q3 Earnings Call Highlights

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.

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.

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. 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 increa...