Mueller Water Products (MWA) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 rose 9.2% year-over-year to $356.7 million, driven by strong Water Flow Solutions volumes, higher pricing, and steady end market demand, despite a 3% negative impact from the Israel-Hamas war.

• Record adjusted EBITDA reached $85.2 million, up 56.6% year-over-year, with margin improving to 23.9%, supported by operational improvements and disciplined SG&A spending.

• Adjusted net income per diluted share was $0.32, up 77.8% year-over-year; net income for the quarter rose to $47.3 million.

• Free cash flow for the nine-month period increased by $101.4 million to $121.5 million, with year-to-date cash flow from operations at $149.5 million.

• Management raised annual guidance for net sales and adjusted EBITDA, citing resilient end market demand and operational execution.

Financial highlights

• Q3 2024 net sales: $356.7M (+9.2% YoY); nine months: $966.5M (-0.8% YoY).

• Q3 2024 gross profit: $131.4M (+31.3% YoY); gross margin: 36.8% (up from 30.6%).

• Q3 adjusted EBITDA: $85.2M (+56.6% YoY); adjusted EBITDA margin: 23.9% (+720 bps YoY).

• Q3 adjusted net income per diluted share: $0.32 (+77.8% YoY); Q3 net income: $47.3M ($0.30/share basic).

• Operating income for Q3 2024: $67.0M (up from $35.6M YoY); adjusted operating income: $69.9M (+77% YoY).

Outlook and guidance

• Fiscal 2024 net sales expected between $1,285 million and $1,295 million, up 0.7% to 1.5% from 2023.

• 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.

• Capital expenditures for FY 2024 projected at $40M–$45M.

• Anticipates continued healthy municipal and new residential construction markets; expects Infrastructure Bill benefits to begin in 2025.