Mueller Water Products — Fiscal Year 2026 Earnings Summary

Financial Performance:

• Net sales for the fourth quarter of 2026 were $376.5 million, a 1.1% decrease year-over-year; full-year 2026 net sales reached $1,475.0 million, a 3.2% increase year-over-year.
• Reported net income per diluted share was $0.33 for the quarter and $1.41 for the full year, compared to $0.33 and $1.22, respectively, in the prior year periods.
• Adjusted net income per diluted share was $0.38 for the quarter and $1.57 for the full year, representing a 19.8% increase year-over-year for the fiscal year.
• Adjusted EBITDA was $95.5 million for the quarter (up 4.0% year-over-year) and $372.2 million for the full year (up 14.1% year-over-year).
• Adjusted EBITDA margin expanded to 25.4% in the fourth quarter and 25.2% for the full year, compared to 24.1% and 22.8% in the prior year periods, respectively.
• Net cash provided by operating activities for fiscal 2026 was $262.9 million, a 19.9% increase year-over-year.
• Free cash flow for fiscal 2026 was $207.3 million, a 20.5% increase year-over-year.
• Total debt outstanding was $453.8 million as of September 30, 2026, with $566.0 million in cash and cash equivalents.
• Interest expense, net, decreased to $0.5 million for the quarter and $3.8 million for the full year, compared to $1.0 million and $6.6 million in the prior year periods.

Guidance and Future Outlook:

• Fiscal 2027 consolidated net sales guidance is set between $1,440 million and $1,470 million, excluding metering-related financial results (which were approximately $40 million in fiscal 2026).
• Fiscal 2027 adjusted EBITDA guidance is between $378 million and $388 million, with an expected midpoint adjusted EBITDA margin of 26.3%.
• The company anticipates free cash flow as a percentage of adjusted net income to exceed 80% in fiscal 2027.
• Fiscal 2027 SG&A expenses are projected between $228 million and $233 million.
• Fiscal 2027 net interest expense is expected to be between $3 million and $5 million.
• Fiscal 2027 effective income tax rate is projected between 24% and 26%.
• Fiscal 2027 depreciation and amortization is expected to be between $48 million and $52 million.
• Fiscal 2027 capital expenditures are anticipated to be between $60 million and $70 million.

Business Segments and Product Lines:

• Water Flow Solutions segment net sales decreased 3.0% to $210.9 million in the fourth quarter, driven by lower volumes offset by higher pricing; adjusted operating income increased 7.8% to $59.4 million.
• Water Management Solutions segment net sales increased 1.4% to $165.6 million in the fourth quarter, driven by higher pricing offset by lower volumes; adjusted operating income decreased 9.5% to $36.0 million.
• The company announced an agreement to transition its metering business, operating via the Mueller Systems subsidiary, to ZENNER USA.

Market and Competitive Landscape:

• Municipal repair and replacement demand remains resilient.
• The company faced inflationary pressures, tariffs, and lower volumes in the fourth quarter, which were partially offset by higher pricing across most product lines.
• The company noted slower new residential construction activity during the fiscal year.

Risks and Challenges:

• Strategic reorganization and other charges of $8.9 million were incurred in the fourth quarter, primarily related to the closure of the legacy brass foundry in Decatur, Illinois, and severance.
• Gross profit in the fourth quarter included $0.6 million of Decatur legacy brass foundry closure costs.
• The company faces risks related to changing regulatory, trade, and tariff conditions, including Section 232 tariffs on products from the Krausz business.
• Potential risks include supply chain disruptions, geopolitical conditions, labor market challenges, cybersecurity incidents, and fluctuations in commodity and materials prices.

Management Commentary and Tone:

• Paul McAndrew, President and CEO, stated the company delivered record profitability, expanded adjusted EBITDA margin by 240 basis points in the year and 940 basis points over three years, and generated more than $200 million in free cash flow.
• Management highlighted the implementation of the Mueller Operating System to improve performance and the execution of portfolio optimization strategies.
• The tone was confident, citing the stability of the business and the dedication of employees despite market uncertainty.

Other Key Points:

• The Board of Directors approved a $300.0 million increase to the common stock repurchase authorization, bringing the total authorization to $334.5 million.
• The Board declared a quarterly dividend of $0.08 per share, a 14.3% increase from the prior quarterly dividend of $0.07 per share.
• During fiscal 2026, the company returned $74.3 million to shareholders, consisting of $43.8 million in dividends and $30.5 million in common stock repurchases.
• Capital expenditures for fiscal 2026 were $55.6 million, primarily driven by investments in iron foundries.
• The company had $730.7 million of total liquidity at the end of the quarter, including $164.7 million available under its ABL agreement.