Mueller Water Products (MWA) Gabelli Funds 35th Annual Pump, Valve & Water Symposium summary

Strategic initiatives and operational excellence

• Achieved a significant step change in business performance over the last 12–18 months, driven by operational and commercial excellence initiatives, including Lean Six Sigma and digital transformation.

• Vertically integrated manufacturing with recent investment in a new state-of-the-art brass foundry to support lead service line replacement and future growth.

• Operational excellence has led to improved supply chain, productivity, and service levels, with a focus on both COGS and SG&A efficiencies.

• Digital transformation targets both customer interaction (ordering, website) and internal operations to support productivity.

• The company operates as a unified organization under the Mueller One initiative, enhancing collaboration and margin expansion.

Key presentations and strategic updates

• Reported record Q1 FY25 results, with net sales up 18.7% year-over-year and strong adjusted EBITDA and net income per share, driven by resilient demand and operational execution.

• Raised FY25 guidance for net sales ($1,370M–$1,390M) and adjusted EBITDA ($310M–$315M), reflecting Q1 outperformance and recent price actions.

• Announced closure of legacy brass foundry, transitioning to a new state-of-the-art facility, expected to improve gross margin by 80–100 bps annually starting in H2 2025.

• Continued disciplined capital allocation, with capital expenditures below 4% of net sales and a balanced approach to investments, acquisitions, and shareholder returns.

• Emphasized ESG progress, including a 3% reduction in emissions intensity, 90% recycled metal usage, and an MSCI ESG rating upgrade to AAA.

Financial performance and guidance

• Sales reached nearly $1.4 billion in the last 12 months, with EBITDA at $303 million and a 590 basis point EBITDA margin improvement from FY23 to FY24.

• FY25 guidance includes a further 90 basis point EBITDA margin increase, with revenue growth at about 5% and EBITDA growth at nearly 9%.

• Q1 FY25 free cash flow was $42.2M, with capital expenditures of $11.9M; free cash flow expected to remain >80% of adjusted net income for FY25.

• Net debt leverage reduced to 0.4x as of December 31, 2024, with $501M in liquidity and no debt maturities before June 2029.

• Maintained commitment to shareholder returns, with $182M in dividends and $70M in share repurchases over the past five years.