mwa-20231231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-32892

MUELLER WATER PRODUCTS, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-3547095
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)

1200 Abernathy Road N.E.

Suite 1200

Atlanta, GA 30328

(Address of principal executive offices)

(770) 206-4200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01	MWA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

There were 156,177,315 shares of common stock of the registrant outstanding at February 5, 2024.

TABLE OF CONTENTS



ITEM		PAGE
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets - December 31, 2023 and September 30, 2023	3
	Unaudited Condensed Consolidated Statements of Operations - Three Months Ended December 31, 2023 and 2022	4
	Unaudited Condensed Consolidated Statements of Comprehensive Income - Three Months Ended December 31, 2023 and 2022	5
	Unaudited Condensed Consolidated Statements of Stockholders' Equity - Three Months Ended December 31, 2023 and 2022	6
	Unaudited Condensed Consolidated Statements of Cash Flows - Three Months Ended December 31, 2023 and 2022	7
	Notes to the Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 4.	Controls and Procedures	29

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
I tem 5.	O ther Information	31
Item 6.	Exhibits	32
	Signatures	32


	December 31,		September 30,
	2023		2023
	(in millions, except share amounts)
Assets:
Cash and cash equivalents	$	216.7	$	160.3
Receivables, net of allowance for credit losses of $7.5 million and $7.3 million	167.9		217.1
Inventories, net	311.3		297.9
Other current assets	33.5		31.5
Total current assets	729.4		706.8
Property, plant and equipment, net	308.4		311.7
Intangible assets, net	329.3		334.0
Goodwill, net	98.3		93.7
Other noncurrent assets	63.4		58.8
Total assets	$	1,528.8	$	1,505.0

Liabilities and stockholders’ equity:
Current portion of long-term debt	$	0.6	$	0.7
Accounts payable	108.9		102.9
Other current liabilities	112.1		115.2
Total current liabilities	221.6		218.8
Long-term debt	446.8		446.7
Deferred income taxes	71.1		73.8
Other noncurrent liabilities	58.1		54.2
Total liabilities	797.6		793.5

Commitments and contingencies (Note 10.)

Preferred stock: par value $0.01 per share; 60,000,000 shares authorized; none outstanding at December 31, 2023, and September 30, 2023	—		—
Common stock: par value $0.01 per share; 600,000,000 shares authorized; 156,112,060 and 155,871,932 shares outstanding at December 31, 2023, and September 30, 2023, respectively	1.6		1.6
Additional paid-in capital	1,231.9		1,240.4
Accumulated deficit	(467.5)		(481.8)
Accumulated other comprehensive loss	(34.8)		(48.7)
Total stockholders' equity	731.2		711.5
Total liabilities and stockholders' equity	$	1,528.8	$	1,505.0


	Three months ended
	December 31,
	2023		2022

	(in millions, except per share amounts)
Net sales	$	256.4	$	314.8
Cost of sales	170.1		221.6
Gross profit	86.3		93.2
Operating expenses:
Selling, general and administrative	56.9		62.9
Strategic reorganization and other charges (benefits)	6.6		(3.7)
Total operating expenses	63.5		59.2
Operating income	22.8		34.0
Other expenses:
Pension expense other than service	1.0		0.9
Interest expense, net	3.3		3.7
Other expense	1.6		—
Total other expenses, net	5.9		4.6
Income before income taxes	16.9		29.4
Income tax expense	2.6		6.9
Net income	$	14.3	$	22.5

Net income per share:
Basic	$	0.09	$	0.14
Diluted	$	0.09	$	0.14

Weighted average shares outstanding:
Basic	156.0		156.4
Diluted	156.7		157.0

Dividends declared per share	$	0.064	$	0.061


	Common stock		Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive (loss) income		Total
	(in millions)
Balance at September 30, 2023	$	1.6	$	1,240.4	$	(481.8)	$	(48.7)	$	711.5
Net income	—		—		14.3		—		14.3
Dividends declared	—		(10.0)		—		—		(10.0)
Stock-based compensation	—		2.6		—		—		2.6
Shares retained for employee taxes	—		(1.5)		—		—		(1.5)
Common stock issued	—		0.4		—		—		0.4

Other comprehensive income, net of tax	—		—		—		13.9		13.9
Balance at December 31, 2023	$	1.6	$	1,231.9	$	(467.5)	$	(34.8)	$	731.2


	Number granted	Weighted average grant date fair value per instrument		Total grant date fair value (in millions)
Quarter ended December 31, 2023
MRSUs	136,983	$	18.11	$	2.5
PRSUs	136,983	13.22		1.8
Restricted stock units	161,943	13.27		2.1
Phantom Plan instruments	230,523	13.22		3.0
Non-qualified stock options	457,356	3.96		1.8
Employee stock purchase plan instruments	31,139	$	3.48	0.1
Total - Quarter ended December 31, 2023				$	11.3


						November 28, 2023
Variables used in determining grant date fair value:
Dividend yield						2.00%
Risk-free rate						4.50%
Expected term (in years)						2.84


Balance at September 30, 2023:
Goodwill	$	817.8
Accumulated impairment	(724.1)
Goodwill, net	93.7
Activity during the three months ended December 31, 2023:
Change in foreign currency exchange rates	4.6
Balance at December 31, 2023	$	98.3


	Pension actuarial amortization, net of income tax		Foreign currency translation, net of income tax		Total

	(in millions)
Balance at September 30, 2023	$	(28.5)	$	(20.2)	$	(48.7)
Current period other comprehensive income	0.6		13.3		13.9
Balance at December 31, 2023	$	(27.9)	$	(6.9)	$	(34.8)


	Three months ended December 31, 2023
	Water Flow Solutions		Water Management Solutions		Corporate		Total

	(in millions)
Net sales	$	141.3	$	115.1	$	—	$	256.4
Gross profit	$	46.6	$	39.7	$	—	$	86.3
Operating expenses:
Selling, general and administrative	19.2		24.6		13.1		56.9
Strategic reorganization and other charges	0.2		—		6.4		6.6
Total operating expenses	19.4		24.6		19.5		63.5
Operating income (loss)	$	27.2	$	15.1	$	(19.5)	22.8
Non-operating expenses:
Pension expense other than service


	December 31,		September 30,
	2023		2023

	(in millions)
Billed receivables	$	167.5	$	218.1
Unbilled receivables	7.9		6.3
Gross customer receivables	175.4		224.4
Allowance for credit losses	(7.5)		(7.3)
Receivables, net	$	167.9	$	217.1

Deferred revenue	$	8.4	$	9.2


	Three months ended
	December 31,
	2023		2022
U.S. federal statutory income tax rate	21.0	%	21.0	%
Adjustments to reconcile to the effective tax rate:
State income taxes, net of federal benefit	3.0		3.4
Excess tax deficit related to stock-based compensation	0.8		0.7
Tax credits	(2.7)		(1.6)
Global Intangible Low-Taxed Income	1.3		0.8
Foreign income tax rate differential	(1.8)		(1.6)
Nondeductible compensation	1.4		0.5
Uncertain tax positions	(8.8)		—
Valuation allowances	0.4		(0.2)
Other	0.8		0.5

Effective income tax rate	15.4	%	23.5	%


	December 31,		September 30,
	2023		2023

	(in millions)
Inventories:
Purchased components and raw materials	$	169.0	$	176.9
Work in process, net	66.5		60.0
Finished goods, net	75.8		61.0
Inventories, net	$	311.3	$	297.9

Other current assets:
Prepaid expenses	$	18.4	$	17.8
Non-trade receivables	2.4		1.7
Maintenance and repair supplies and tooling	4.4		4.1
Income taxes	0.8		0.8
Workers' compensation reimbursement receivable	1.8		2.2
Other current assets	5.7		4.9
Total other current assets	$	33.5	$	31.5

Property, plant and equipment:
Land	$	6.5	$	6.4
Buildings	118.0		117.2
Machinery and equipment	528.2		525.8
Construction in progress	40.5		36.9
Total property, plant and equipment	693.2		686.3
Accumulated depreciation	(384.8)		(374.6)
Property, plant and equipment, net	$	308.4	$	311.7

Other noncurrent assets:
Operating lease right-of-use assets	$	29.9	$	23.6
Maintenance and repair supplies and tooling	21.8		21.1
Workers' compensation reimbursement receivable	2.4		2.4
Pension asset	6.2		6.6
Note receivable	1.8		1.8
Deferred financing fees	0.6		0.7
Other noncurrent assets	0.7		2.6
Total other noncurrent assets	$	63.4	$	58.8


	December 31,		September 30,
	2023		2023

	(in millions)
Other current liabilities:
Compensation and benefits	$	25.3	$	33.8
Customer rebates	18.0		14.6
Income taxes payable	15.2		8.5
Warranty accrual	10.0		8.6
Deferred revenue	8.4		9.2
Returned goods accrual	6.3		6.7
Taxes other than income taxes	0.7		2.0
Operating lease liabilities	5.3		4.9
Workers' compensation accrual	4.3		4.0
Strategic reorganization and other charges liabilities	7.8		6.6
Interest payable	0.8		5.3
Other current liabilities	10.0		11.0
Total other current liabilities	$	112.1	$	115.2

Other noncurrent liabilities:
Operating lease liabilities	$	25.8	$	19.8
Warranty accrual	6.7		7.1
Transition tax liability	3.1		3.1
Uncertain tax position liability	3.7		5.0
NMTC liability	3.9		3.9
Workers' compensation accrual	5.6		5.9
Asset retirement obligation	4.2		4.2

Deferred development grant	2.5		2.5
Other noncurrent liabilities	2.6		2.7
Total other noncurrent liabilities	$	58.1	$	54.2

SEC Form 10-Q filed by MUELLER WATER PRODUCTS