What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-07 · 94 added, 65 removed, 562 unchanged (22% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, September 30,

June 30, September 30,

(in millions, except share amounts)

22 unchanged sentences

60,000,000 shares authorized;

none outstanding at March 31, 2024, and September 30, 2023

none outstanding at June 30, 2024, and September 30, 2023

Common stock:

1 unchanged sentence

600,000,000 shares authorized;

155,681,228 and 155,871,932 shares outstanding at March 31, 2024, and September 30, 2023, respectively

155,765,042 and 155,871,932 shares outstanding at June 30, 2024, and September 30, 2023, respectively

Additional paid-in capital 1,208.3 1,240.4

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended Six months ended

March 31, March 31,

Three months ended Nine months ended

June 30, June 30,

2024 2023 2024 2023

5 unchanged sentences

Selling, general and administrative 61.5 60.6 182.1 187.7

Strategic reorganization and other charges (benefits) 3.2 0.7 9.8 ( 3.0 )

Strategic reorganization and other charges 2.9 3.9 12.7 0.9

Total operating expenses 64.4 64.5 194.8 188.6

19 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended Six months ended

March 31, March 31,

Three months ended Nine months ended

June 30, June 30,

2024 2023 2024 2023

32 unchanged sentences

Balance at March 31, 2024 $ 1.6 $ 1,214.7 $ ( 423.2 ) $ ( 38.6 ) $ 754.5

Net income — — 47.3 — 47.3

Dividends declared — ( 9.9 ) — — ( 9.9 )

Stock-based compensation — 2.5 — — 2.5

Common stock issued — 1.0 — — 1.0

Other comprehensive loss, net of tax — — — ( 3.8 ) ( 3.8 )

Balance at June 30, 2024 $ 1.6 $ 1,208.3 $ ( 375.9 ) $ ( 42.4 ) $ 791.6

The accompanying notes are an integral part of the condensed consolidated financial statements.

MUELLER WATER PRODUCTS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

stock Additional

18 unchanged sentences

Balance at March 31, 2023 $ 1.6 $ 1,264.3 $ ( 523.5 ) $ ( 41.5 ) $ 700.9

Net income — — 24.5 — 24.5

Dividends declared — ( 9.6 ) — — ( 9.6 )

Stock-based compensation — 1.7 — — 1.7

Shares retained for employee taxes — ( 0.1 ) — — ( 0.1 )

Common stock issued — 0.9 — — 0.9

Other comprehensive loss, net of tax — — — ( 4.1 ) ( 4.1 )

Balance at June 30, 2023 $ 1.6 $ 1,257.2 $ ( 499.0 ) $ ( 45.6 ) $ 714.2

The accompanying notes are an integral part of the condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months ended

Nine months ended

(in millions)

1 unchanged sentence

Net income $ 105.9 $ 68.3

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 28.8 25.1

Amortization 20.4 21.0

Non-cash asset impairment 1.4 —

Loss (gain) on sale of assets 0.4 ( 3.7 )

11 unchanged sentences

Other noncurrent liabilities 6.2 ( 2.8 )

Net cash provided by (used in) operating activities 62.2 ( 22.2 )

Net cash provided by operating activities 149.5 52.5

Investing activities:

15 unchanged sentences

The accompanying notes are an integral part of the condensed consolidated financial statements.

Six months ended

Nine months ended

(in millions)

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024

AS OF AND FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024

Organization and Basis of Presentation

14 unchanged sentences

Net sales and operating income historically have been lowest in the three-month periods ending December 31 and March 31 when the northern United States and most of Canada generally face weather conditions that restrict significant construction activity.

Therefore, the results of operations for the three and six months ended March 31, 2024 are not necessarily indicative of operating results that may be achieved for any other interim period or the full year.

Therefore, the results of operations for the three and nine months ended June 30, 2024 are not necessarily indicative of operating results that may be achieved for any other interim period or the full year.

Unless the context indicates otherwise, whenever we refer to a particular year, we mean our fiscal year ended or ending September 30 in that particular calendar year.

18 unchanged sentences

We do not expect ASU 2023-09 to have a material impact on our financial statements and related disclosures.

Securities and Exchange Commission (“SEC”) Final Rules

In March 2024, the SEC issued final rules on the enhancement and standardization of climate-related disclosures.

The rules will require registrants to disclose certain climate-related information, including Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics, in registration statements and annual reports.

Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to materiality thresholds.

The rules will become effective on a phased-in timeline in fiscal years beginning in 2025.

In April 2024, due to legal challenges to the rule, the SEC voluntarily stayed implementation of the final rules.

We are currently evaluating the impact the rules may have on our disclosures.

Strategic Reorganization and Other Charges

During the six months ended March 31, 2024, we recorded approximately $ 9.8 million in Strategic reorganization and other charges, consisting of $ 1.5 million of expenses related to the cybersecurity incidents, expenses associated with our previously announced leadership transition, severance as well as certain other transaction-related expenses.

During the six months ended March 31, 2023, we recorded a $ 4.0 million gain, before tax, on the sale of our Aurora, Illinois facility which was partially offset by certain transaction-related expenses.

During the nine months ended June 30, 2024, we recorded approximately $ 12.7 million in Strategic reorganization and other charges, consisting of amounts associated with our leadership transition, certain transaction-related expenses, cybersecurity incidents expense, $ 1.4 million of non-cash impairment of assets in our Water Management Solutions segment, and severance.

During the nine months ended June 30, 2023, we recorded certain amounts related to severance and transaction-related expenses partially offset by a $ 4.0 million gain, before tax, on the sale of our Aurora, Illinois facility.

Activity in accrued strategic reorganization and other charges, reported as part of Other current liabilities, is presented below:

Six months ended

Nine months ended

(in millions)

1 unchanged sentence

Amounts accrued 12.7 0.9

Amounts (paid) received, net ( 9.2 ) 0.9

Amounts paid and other adjustments, net ( 15.2 ) ( 2.0 )

Ending balance $ 4.1 $ 2.2

39 unchanged sentences

Contract liabilities are reversed when the performance obligation is satisfied and revenue is recognized.

During the three and six months ended March 31, 2024, approximately $ 1.9 million and $ 4.2 million, respectively of deferred revenue was recognized into revenue that was previously included in deferred revenue.

Also, during the three and six months ended March 31, 2024, $ 2.4 million and $ 3.9 million of additional deferred revenue was recorded.

Deferred revenue primarily consists of amounts related to monitoring, leak detection, software and hosting services.

During the three and nine months ended June 30, 2024, approximately $ 0.8 million and $ 5.0 million, respectively of deferred revenue was recognized into revenue that was previously included in deferred revenue.

During the three and nine months ended June 30, 2024, approximately $ 3.0 million and $ 6.9 million of additional deferred revenue was recorded.

The table below represents the balances of our customer receivables and deferred revenue:

Deferred revenue primarily consists of monitoring, leak detection, software and hosting services.

March 31, September 30,

June 30, September 30,

(in millions)

26 unchanged sentences

federal statutory income tax rate and the effective income tax rate is presented below:

Three months ended Six months ended

March 31, March 31,

Three months ended Nine months ended

June 30, June 30,

2024 2023 2024 2023

11 unchanged sentences

Effective income tax rate 25.2 % 20.7 % 23.8 % 22.7 %

At March 31, 2024 and September 30, 2023, the gross liabilities for unrecognized income tax benefits were $ 4.0 million and $ 5.0 million, respectively, and are included in Other noncurrent liabilities.

During the six months ended March 31, 2024, we recorded $ 1.6 million in income tax benefits due to the release of an uncertain tax position that expired on December 31, 2023.

No income tax benefits or expenses were recorded during the three months ended March 31, 2024 related to this uncertain tax position.

At June 30, 2024 and September 30, 2023, the gross liabilities for unrecognized income tax benefits were $ 4.1 million and $ 5.0 million, respectively, and are included in Other noncurrent liabilities.

During the nine months ended June 30, 2024, we recorded $ 1.6 million in income tax benefits due to the release of an uncertain tax position that expired on December 31, 2023.

No income tax benefits or expenses were recorded during the three months ended June 30, 2024 related to this uncertain tax position.

Borrowing Arrangements

The components of our long-term debt are as follows:

March 31, September 30,

June 30, September 30,

(in millions)

16 unchanged sentences

Borrowings under the ABL bear interest at a floating rate equal to SOFR plus an adjustment of 10 basis points plus an applicable margin range of 150 to 175 basis points, or a base rate, as defined in the ABL, plus an applicable margin range of 50 to 75 basis points.

At March 31, 2024, the applicable margin for SOFR-based loans was 150 basis points and for base rate loans was 50 basis points.

At June 30, 2024, the applicable margin for SOFR-based loans was 150 basis points and for base rate loans was 50 basis points.

The ABL is subject to mandatory prepayments if total outstanding borrowings under the ABL are greater than the aggregate commitments under the revolving credit facility or if we dispose of overdue accounts receivable in certain circumstances.

4 unchanged sentences

The ABL includes a commitment fee for any unused borrowing capacity of 37.5 basis points per annum when the unused capacity is above 50 % of the credit commitments, with a step down to 25.0 basis points per annum when unused capacity is less than or equal to 50 % of the credit commitments.

At March 31, 2024, the commitment fee was 37.5 basis points.

At June 30, 2024, the commitment fee was 37.5 basis points.

Borrowings are not subject to any financial maintenance covenants unless excess availability is less than the greater of $ 17.5 million and 10 % of the Loan Cap as defined in the ABL.

Excess availability based on March 31, 2024 data was $ 162.6 million, as reduced by $ 12.2 million of outstanding letters of credit and $ 0.2 million of accrued fees and expenses.

Excess availability based on June 30, 2024 data was $ 162.6 million, as reduced by $ 12.2 million of outstanding letters of credit and $ 0.2 million of accrued fees and expenses.

4.0 % Senior Unsecured Notes.

2 unchanged sentences

Substantially all of our United States subsidiaries guarantee the 4.0 % Senior Notes, which are subordinate to borrowings under our ABL.

Based on quoted market prices, which is a Level 1 measurement, the outstanding 4.0 % Senior Notes had a fair value of $ 407.7 million at March 31, 2024.

Based on quoted market prices, which is a Level 1 measurement, the outstanding 4.0 % Senior Notes had a fair value of $ 411.3 million at June 30, 2024.

An indenture governing the 4.0 % Senior Notes (“Indenture”) contains customary covenants and events of default, including covenants that limit our ability to incur certain debt and liens.

There are no financial maintenance covenants associated with the Indenture.

We believe we were in compliance with these covenants at March 31, 2024.

We may redeem some or all of the 4.0 % Senior Notes at any time prior to June 15, 2024 at certain “make-whole” redemption prices and on or after June 15, 2024 at specified redemption prices.

Additionally, we may redeem up to 40 % of the aggregate principal amount of the 4.0 % Senior Notes at any time prior to June 15, 2024 with the net proceeds of specified equity offerings at specified redemption prices set forth in the Indenture.

Upon a Change of Control, as defined in the Indenture, we

could be required to offer to purchase the 4.0 % Senior Notes at a price equal to 101 % of the outstanding principal amount if there is a Ratings Decline (as defined in the Indenture).

We believe we were in compliance with these covenants at June 30, 2024.

We may redeem some or all of the 4.0 % Senior Notes at any time after June 15, 2024, at specified redemption prices.

Upon a Change of Control, as defined in the Indenture, we could be required to offer to purchase the 4.0 % Senior Notes at a price equal to 101 % of the outstanding principal amount if there is a Ratings Decline (as defined in the Indenture).

Retirement Plan

2 unchanged sentences

The components of net periodic cost for our Pension Plan are presented below:

Three months ended Six months ended

March 31, March 31,

Three months ended Nine months ended

June 30, June 30,

2024 2023 2024 2023

8 unchanged sentences

The amortization of actuarial losses, net of income tax, is recorded as a component of Other comprehensive income.

For the three months ended March 31, 2024 and 2023, the amortization of actuarial net loss is shown net of income tax of $ 0.2 million and $ 0.3 million, respectively, in the condensed consolidated statements of comprehensive income.

For the six months ended March 31, 2024 and 2023, the amortization of actuarial loss is shown net of income tax of $ 0.4 million and $ 0.6 million respectively, in the condensed consolidated statements of comprehensive income.

For each of the three months ended June 30, 2024 and 2023, the amortization of actuarial net loss is shown net of income tax of $ 0.2 million in the condensed consolidated statements of comprehensive income.

For the nine months ended June 30, 2024 and 2023, the amortization of actuarial loss is shown net of income tax of $ 0.6 million and $ 0.8 million respectively, in the condensed consolidated statements of comprehensive income.

Stock-based Compensation Plans

2 unchanged sentences

2012 Phantom Plan, and Employee stock purchase plan instruments under our 2006 Employee Stock Purchase Plan.

Grants issued during the six months ended March 31, 2024 are as follows:

Grants issued during the nine months ended June 30, 2024 are as follows:

Number granted Weighted average grant date fair value per instrument Total grant date fair value

13 unchanged sentences

Total - Quarter ended March 31, 2024 1.4

Total - Year-to-date ended March 31, 2024 $ 12.7

Quarter ended June 30, 2024

Restricted stock units 55,572 $ 18.44 $ 1.0

Phantom Plan instruments 3,183 15.70 —

Employee stock purchase plan instruments 31,659 $ 3.01 0.1

Total - Quarter ended June 30, 2024 1.1

Total - Year to date ended June 30, 2024 $ 13.8

An MRSU award represents a target number of units that may be paid out at the end of a three-year award cycle based on a calculation of our relative total shareholder return (“TSR”) performance as compared with the TSR of a selected peer group.

12 unchanged sentences

The expected term represents the average period of time the units are expected to be outstanding.

At March 31, 2024, the outstanding Phantom Plan instruments had a fair value of $ 16.09 per instrument and our liability for Phantom Plan instruments was $ 3.0 million and is included within Other current liabilities and Other noncurrent liabilities.

At June 30, 2024, the outstanding Phantom Plan instruments had a fair value of $ 17.92 per instrument and our liability for Phantom Plan instruments was $ 4.1 million and is included within Other current liabilities for amounts related to instruments scheduled to vest in twelve months or less and Other noncurrent liabilities for amounts related to instruments scheduled to vest beyond twelve months.

Stock options generally vest ratably over three years on each anniversary date.

20 unchanged sentences

The price for the shares purchased under the ESPP is 85 % of the lower of the closing price on the first day or the last day of the offering period.

We issued 168,897 shares of common stock to settle PRSUs vested during the six months ended March 31, 2024;

no shares of common stock were issued to settle PRSUs during the three months ended March 31, 2024.

Additionally, we issued 112,654 and 259,414 shares of common stock to settle restricted stock units vested during the three and six months ended March 31, 2024, respectively.

Finally, we issued 66,968 and 70,550 shares of common stock to settle stock options exercised during the three and six months ended March 31, 2024, respectively.

Common shares totaling 9,952 and 119,913 were surrendered to us to pay the applicable tax withholding obligations of equity award participants for the three and six months ended March 31, 2024, respectively.

Operating income included stock-based compensation expense of $ 3.0 million and $ 3.4 million during the three months ended March 31, 2024 and 2023, respectively.

Operating income included stock-based compensation of $ 6.4 million and $ 6.2 million during the six months ended March 31, 2024 and 2023, respectively.

At March 31, 2024, there was approximately $ 14.2 million of unrecognized compensation expense related to stock-based compensation arrangements, which will be expensed through December 2026.

We excluded 603,417 and 998,607 stock-based compensation instruments from the calculations of diluted earnings per share in the three months ended March 31, 2024 and 2023, respectively, and 659,148 and 1,269,484 for the six months ended March 31, 2024 and 2023, respectively, since their inclusion would have been antidilutive.

We issued 168,897 shares of common stock to settle PRSUs vested during the nine months ended June 30, 2024;

no shares of common stock were issued to settle PRSUs during the three months ended June 30, 2024.

Additionally, we issued 696 and 260,110 shares of common stock to settle restricted stock units vested during the three and nine months ended June 30, 2024, respectively.

Finally, we issued 51,708 and 122,258 shares of common stock to settle stock options exercised during the three and nine months ended June 30, 2024, respectively.

Common shares totaling 249 and 120,162 were surrendered to us to pay the applicable tax withholding obligations of equity award participants for the three and nine months ended June 30, 2024, respectively.

Operating income included stock-based compensation expense of $ 3.7 million and $ 2.7 million during the three months ended June 30, 2024 and 2023, respectively.

Operating income included stock-based compensation of $ 10.1 million and $ 8.8 million during the nine months ended June 30, 2024 and 2023, respectively.

At June 30, 2024, there was approximately $ 12.3 million of unrecognized compensation expense related to stock-based compensation arrangements, which will be expensed through May 2027.

We excluded 24,636 and 249,933 stock-based compensation instruments from the calculations of diluted earnings per share in the three months ended June 30, 2024 and 2023, respectively, and 520,420 and 1,156,428 for the nine months ended June 30, 2024 and 2023, respectively, since their inclusion would have been antidilutive.

Supplemental Balance Sheet Information

Selected supplemental asset information is presented below:

March 31, September 30,

June 30, September 30,

(in millions)

7 unchanged sentences

Maintenance and repair supplies and tooling 5.2 4.1

Goods to be returned 4.6 3.9

Income taxes 0.8 0.8

20 unchanged sentences

Selected supplemental liability information is presented below:

March 31, September 30,

June 30, September 30,

(in millions)

26 unchanged sentences

Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis on September 1 of each fiscal year or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

The following table summarizes information concerning our goodwill, all of which is within our Water Management Solutions segment, during the six months ended March 31, 2024, in millions:

The following table summarizes information concerning our goodwill, all of which is within our Water Management Solutions segment, during the nine months ended June 30, 2024, in millions:

Balance at September 30, 2023:

2 unchanged sentences

Goodwill, net 93.7

Activity during the six months ended March 31, 2024:

Activity during the nine months ended June 30, 2024:

Change in foreign currency exchange rates 1.8

Balance at March 31, 2024

Balance at June 30, 2024

Segment Information

3 unchanged sentences

Summarized financial information for our segments is presented below:

Three months ended Six months ended

March 31, March 31,

Three months ended Nine months ended

June 30, June 30,

2024 2023 2024 2023

50 unchanged sentences

Current period other comprehensive income 1.8 4.5 6.3

Balance at March 31, 2024 $ ( 27.3 ) $ ( 11.3 ) $ ( 38.6 )

For the six months ended March 31, 2024, pension actuarial amortization included in the condensed consolidated statements of comprehensive income as a component of pension expense other than service was $ 1.6 million, net of income tax of $ 0.4 million.

Balance at June 30, 2024 $ ( 26.7 ) $ ( 15.7 ) $ ( 42.4 )

For the nine months ended June 30, 2024, pension actuarial amortization included in the condensed consolidated statements of comprehensive income as a component of pension expense other than service was $ 2.4 million, net of income tax of $ 0.6 million.

Refer to Note 5.

Retirement Plans for further information.

For the six months ended March 31, 2024, foreign currency translation included in the condensed consolidated statements of comprehensive income was $ 8.9 million, net of no income tax.

For the nine months ended June 30, 2024, foreign currency translation included in the condensed consolidated statements of comprehensive income was $ 4.5 million, net of no income tax.

Commitments and Contingencies

20 unchanged sentences

Ultimate liability for the site will depend on many factors that have not yet been determined, including the determination of the Environmental Protection Agency’s remediation costs, the number and financial viability of the other PRPs (there are four other PRPs currently) and the determination of the final allocation of the costs among the PRPs.

Since the amounts of such costs cannot be reasonably estimated at this time, no amounts have been accrued for this matter at March 31, 2024.

Since the amounts of such costs cannot be reasonably estimated at this time, no amounts have been accrued for this matter at June 30, 2024.

Indemnifications .

18 unchanged sentences

Subsequent Events

On April 23, 2024 , our Board of Directors declared a dividend of $ 0.064 per share on our common stock, payable on or about May 20, 2024 to stockholders of record at the close of business on May 10, 2024 .

On July 24, 2024 , our Board of Directors declared a dividend of $ 0.064 per share on our common stock, payable on or about August 20, 2024 to stockholders of record at the close of business on August 9, 2024 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements