Mueller Water Products (MWA) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 net sales of $356.7 million, up 9.2% year-over-year, driven by strong Water Flow Solutions volumes and pricing, despite a 3% negative impact from the Israel-Hamas war.

• Record adjusted EBITDA of $85.2 million, up 56.6% year-over-year, with margin improving to 23.9% and adjusted net income per diluted share of $0.32, up 77.8%.

• Net income for Q3 rose to $47.3 million from $24.5 million in the prior year, reflecting improved manufacturing performance and cost management.

• Free cash flow for the nine-month period increased by $101.4 million to $121.5 million, with net cash from operating activities at $149.5 million.

• Operational improvements led to gross margin above 36% for the second consecutive quarter, with a 620 basis point year-over-year increase.

Financial highlights

• Q3 net sales: $356.7 million (+9.2% y/y); YTD net sales: $966.5 million (-0.8% y/y).

• Q3 gross profit: $131.4 million (+31.3% y/y); gross margin: 36.8% (up from 30.6%).

• Q3 adjusted EBITDA: $85.2 million (+56.6% y/y); adjusted EBITDA margin: 23.9% (up from 16.7%).

• Q3 net income: $47.3 million; adjusted net income per diluted share: $0.32 (+77.8% y/y).

• Operating income for Q3: $67.0 million (up 88.2% y/y); adjusted operating income: $69.9 million (up 77.0% y/y).

Outlook and guidance

• FY2024 net sales expected between $1,285 million and $1,295 million, up 0.7% to 1.5% year-over-year.

• Adjusted EBITDA guidance raised to $271–$275 million, up 34.1% to 36.1% year-over-year.

• Free cash flow as a percent of adjusted net income expected to exceed 85% for fiscal 2024.

• Sequential Q4 net sales decrease expected due to seasonality and fewer production days.

• Capex for FY2024 projected at $40–$45 million; effective tax rate projected at ~24%.