Mueller Water Products Reports 2017 First Quarter Results

Mueller Water Products, Inc. (NYSE:MWA) has announced that for its fiscal first quarter ended December 31, 2016, net sales were $167.2 million and net income was $6.7 million. On January 6, 2017, the Company sold its Anvil International business for $315 million in cash, subject to working capital and other adjustments. Anvil’s operating results have been reclassified as discontinued operations, and its assets and liabilities have been reclassified as items held for sale, for all periods presented. In the 2017 first quarter, the Company:

  • Increased net sales $4.1 million to $167.2 million, as compared with $163.1 million in the prior year quarter,
  • Improved operating income from continuing operations 21.9 percent to $13.9 million, as compared with $11.4 million, and improved adjusted operating income from continuing operations 24.6 percent to $15.2 million, as compared with $12.2 million, both compared to the prior year, and,
  • Increased income from continuing operations 35.0 percent to $5.4 million, as compared with $4.0 million in the prior year, and
  • Earned net income per diluted share of $0.04.

Subsequent to the quarter end, the Company’s Board of Directors increased the quarterly dividend by 33 percent to $0.04 per share and authorized total share repurchases of up to $250 million, which includes a prior authorization.

The Board also appointed J. Scott Hall as president and chief executive officer, effective January 23, 2017, succeeding Gregory E. Hyland, who has transitioned to the role of executive chairman.

“We saw sales growth and continued margin expansion at Mueller Co. and Mueller Technologies in the first quarter, with our strongest growth being in our technology business where net sales grew almost 14 percent year-over-year and adjusted operating income also continued to improve,” said Hyland.

“Operationally, this quarter was Mueller Co.’s 18th consecutive quarter of year-over-year margin expansion. Compared with the prior year, Mueller Co.’s adjusted operating income increased 9.2 percent, its adjusted operating margin increased 130 basis points, and its adjusted EBITDA margin improved 170 basis points to 24.1 percent.

“Mueller Technologies’ focus is on accelerating sales growth of its AMI and leak detection technologies and improving operating performance over the course of the year. Backlog at Mueller Systems and orders at Echologics are both up substantially on a year-over-year basis.

“In January, we announced a number of strategic decisions, including the divestiture of Anvil. We determined that, as a pure-play water infrastructure company, Mueller Water Products would be better positioned from a financial and operating perspective to deliver long-term value to our stockholders.

“Finally, I welcome Scott Hall, who has joined the Company from Textron, where he was president of its Industrial segment.”

“This is an exciting time for Mueller Water Products, and I’m delighted to join the Company and help lead it into its next stage of growth,” said Hall. “I have long admired its brand leadership and reputation for quality and customer service, and I believe that Mueller Water Products is well-positioned to improve value for its stockholders and capitalize on the need to rebuild our nation’s water infrastructure.

“Our team continues to expect year-over-year growth in demand for our products in our addressed water markets in 2017 driven by improvement in both the municipal and residential construction markets. As capacity utilization increases, we believe operating leverage will continue to be strong in each of our businesses.”

Consolidated Results

Net sales for the 2017 first quarter increased $4.1 million, or 2.5 percent, to $167.2 million, as compared with $163.1 million for the 2016 first quarter, due primarily to increased shipment volumes at both Mueller Co. and Mueller Technologies.
Adjusted operating income from continuing operations for the 2017 first quarter increased $3.0 million to $15.2 million as compared with $12.2 million for the 2016 first quarter. Both Mueller Co. and Mueller Technologies contributed to the improvement.

Segment Results

Mueller Co.

Net sales for the 2017 first quarter increased $1.6 million to $146.3 million, as compared with $144.7 million for the 2016 first quarter, primarily due to higher shipment volumes.

Adjusted operating income for the 2017 first quarter increased 9.2 percent to $26.2 million, as compared with $24.0 million for the 2016 first quarter. Adjusted operating margin for the 2017 first quarter increased 130 basis points to 17.9 percent, as compared with 16.6 percent for the 2016 first quarter. Most of the increase in adjusted operating income and adjusted operating margin was due to operational efficiencies.

Mueller Technologies

Net sales for the 2017 first quarter increased 13.6 percent to $20.9 million, as compared with $18.4 million for the 2016 first quarter. Increased net sales resulted primarily from higher AMI shipments, which grew 40 percent year-over-year.

Adjusted operating loss for the 2017 first quarter was $2.2 million, as compared with $3.3 million for the 2016 first quarter. This improvement in operating results was due to higher AMI shipments and decreased selling, general and administrative expenses.

Interest Expense, Net

Interest expense, net for the 2017 first quarter increased to $6.4 million, as compared with $6.1 million for the 2016 first quarter.

Income Taxes

For the 2017 first quarter, income tax expense of $2.1 million was 28.0 percent of income before income taxes.

Discontinued Operations

The Company sold its Anvil business for an initial purchase price of $315 million subject to working capital and other adjustments. Anvil’s operating results for all periods presented have been reclassified as discontinued operations.

More information available at http://ir.muellerwaterproducts.com/press-releases/2017/02-02-2017-213602480.