ATLANTA, April 29 /PRNewswire-FirstCall/ -- Mueller Water Products,
Inc. (NYSE:MWA.BNYSE:MWA) today reported net sales of $421.6
million, income from operations of $28.0 million, and net income of
$5.7 million, or $0.05 per diluted share, in its second quarter
ended March 31, 2008. These results include cash restructuring
charges of $1.5 million ($0.9 million after tax, or $0.01 per
diluted share) comprised of severance and other costs in connection
with the previously announced closure of U.S. Pipe's manufacturing
operations in Burlington, N.J. Excluding these charges, adjusted
income from operations was $29.5 million and adjusted net income
was $6.6 million, or $0.06 per diluted share. Summarized
consolidated 2008 second quarter results compared to consolidated
2007 second quarter results are as follows: -- Net sales for the
2008 second quarter were $421.6 million compared to $459.7 million
for the 2007 second quarter. -- Income from operations for the 2008
second quarter was $28.0 million compared to $52.9 million in the
2007 second quarter. Operating income margin was 6.6 percent in the
2008 second quarter and was 11.5 percent in the 2007 second
quarter. Excluding the restructuring charges, adjusted income from
operations for the 2008 second quarter was $29.5 million and
adjusted operating income margin was 7.0 percent. -- Adjusted
EBITDA was $52.4 million in the 2008 second quarter compared to
$78.0 million in the 2007 second quarter. Adjusted EBITDA margin
for the 2008 second quarter was 12.4 percent compared to 17.0
percent in the 2007 second quarter. -- Net income per diluted share
was $0.05 for the 2008 second quarter compared to net income per
diluted share of $0.16 in the 2007 second quarter. Excluding the
restructuring charges, adjusted net income per diluted share was
$0.06 for the 2008 second quarter. -- Net debt as of March 31, 2008
was $978.2 million compared with $1,059.2 million as of March 31,
2007. "Our second quarter results reflect the current condition of
residential construction, rising raw material costs and the general
uncertainty of the economy," said Gregory E. Hyland, chairman,
president and chief executive officer of Mueller Water Products,
Inc. "We believe we are taking the right steps operationally to
deal with these factors, by reducing both fixed and variable costs
to address declines in volumes, and implementing price increases to
help counteract rising raw material costs. These initiatives are
essential for today's economic environment and should enhance our
profitability when the market rebounds." Second Quarter
Consolidated Operating Results Net sales decreased $38.1 million
year-over-year due to lower shipment volumes principally
attributable to the continued difficulties associated with
residential construction. This decrease was partially offset by
slightly higher pricing and the favorable impact of Canadian
currency exchange rates. The declines in operating income and
related margin were primarily attributable to reduced shipments and
significantly higher raw material costs. Cost reductions of $10.8
million offset the negative impact of reduced production. Second
Quarter Segment Results Mueller Co. Segment Net sales for the
Mueller Co. segment were $168.9 million in the 2008 second quarter
compared to $195.9 million in the 2007 second quarter. Net sales
declined primarily due to reduced volume of $31.7 million,
partially offset by higher pricing and favorable Canadian currency
exchange rates. Shipment volumes of iron gate valves, hydrants and
brass service products in the quarter were below prior year
primarily due to the soft market associated with the continued
downturn in residential construction. Income from operations of
$27.4 million and EBITDA of $39.7 million in the 2008 second
quarter compare to income from operations of $42.8 million and
EBITDA of $55.8 million in the 2007 second quarter. Volume declines
reduced operating income by approximately $12.7 million. Higher
sales pricing of $2.8 million did not offset a $4.2 million
increase in the cost of raw materials and purchased components. The
negative impact of reduced production was partially offset by cost
reductions of $4.5 million. U.S. Pipe Segment Net sales for the
U.S. Pipe segment were $114.2 million in the 2008 second quarter
compared to $129.7 million in the 2007 second quarter primarily as
a result of lower ductile iron pipe shipments. Loss from operations
of $2.8 million in the 2008 second quarter includes cash
restructuring charges of $1.5 million comprised of severance and
other costs related to the closure of the Burlington manufacturing
operations. Excluding the restructuring charges, adjusted loss from
operations was $1.3 million and adjusted EBITDA was $4.1 million.
These results compare to income from operations of $6.8 million and
EBITDA of $13.0 million in the 2007 second quarter. The 2008 second
quarter results were negatively impacted by increased raw material
costs of $7.5 million and lower shipments of ductile iron pipe.
Cost savings of $6.3 million realized during the quarter helped
reduce the impact of higher raw material costs, lower volume and
other factors. Anvil Segment Net sales for the Anvil segment were
$138.5 million in the 2008 second quarter compared to $134.1
million in the 2007 second quarter. This increase was driven
primarily by the favorable impact of Canadian currency exchange
rates and higher sales pricing. Income from operations of $12.9
million and EBITDA of $17.9 million in the 2008 second quarter
compare to income from operations of $13.6 million and EBITDA of
$19.3 million in the 2007 second quarter. Burlington Closure
Restructuring Charges In November 2007, the Company announced its
intention to close U.S. Pipe's manufacturing operations in
Burlington while retaining the facility as a full- service
distribution center for customers in the Northeast. In connection
with this action, the Company also announced its intention to
record restructuring charges of approximately $19.0 million. In the
2008 second quarter, the Company recorded $1.5 million of cash
restructuring charges. Year-to-date, the Company has recorded $17.7
million total restructuring charges, of which $14.8 million are
asset impairment charges and $2.9 million are cash charges related
to employee severance and other closure costs. The Company expects
to incur the remaining expenses throughout the remainder of fiscal
2008. Interest Expense, Net Interest expense, net of interest
income, was $18.1 million in the 2008 second quarter compared to
$21.1 million in the 2007 second quarter. Interest expense declined
as a result of lower interest rates and lower average net debt
outstanding. Income Tax Expense The effective income tax rate was
42.4 percent in the 2008 second quarter compared to 43.7 percent in
the 2007 second quarter. Use of Non-GAAP Measures The Company
presents certain non-GAAP measures, including adjusted EBITDA,
adjusted income from operations, adjusted net income, adjusted
operating income margin and net debt. Adjusted EBITDA represents
income before depreciation, amortization, interest expense,
interest income, income taxes, and restructuring charges relating
to the announced closing of U.S. Pipe's manufacturing operations in
Burlington, N.J. The Company presents adjusted EBITDA because it is
an important supplemental measure of performance and management
believes it is frequently used by securities analysts, investors
and interested parties in the evaluation of financial performance.
Adjusted income from operations, adjusted net income and adjusted
operating income margin exclude restructuring charges. Net debt is
total debt outstanding less cash and cash equivalents. In addition,
the Company's credit agreement uses its definition of EBITDA to
measure compliance with covenants, such as interest coverage and
debt incurrence. A form of EBITDA also is widely used by the
Company and others in its industry to evaluate and price potential
acquisition candidates. Adjusted EBITDA has limitations as an
analytical tool, and investors should not consider it in isolation
or as a substitute for analysis of the Company's results as
reported under GAAP. Some of these limitations are: Adjusted EBITDA
does not reflect the Company's cash expenditures or future
requirements for capital expenditures or contractual commitments.
Adjusted EBITDA does not reflect changes in, or cash requirements
for, working capital needs. Adjusted EBITDA does not reflect the
significant interest expense, or the cash requirements necessary to
service interest or principal payments on debt. Although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized often will have to be replaced in
the future, and adjusted EBITDA does not reflect any cash
requirements for such replacements; and other companies may
calculate adjusted EBITDA differently than the Company, limiting
its usefulness as a comparative measure. Adjusted EBITDA is a
measure of performance that is not required by, or presented in
accordance with GAAP. Adjusted EBITDA is not a measurement of
financial performance under GAAP and should not be considered as an
alternative to net income, operating income or any other
performance measures derived in accordance with GAAP. A
reconciliation of non-GAAP to GAAP results is included as an
attachment to this press release and has been posted at
http://www.muellerwaterproducts.com/. Conference Call Webcast
Mueller Water Products' quarterly earnings conference call will
take place Wednesday, April 30, 2008 at 9:00 a.m. EDT. Mueller
Water Products' chairman, president and chief executive officer,
Gregory E. Hyland, and members of the Company's leadership team
will discuss the Company's recent financial performance and respond
to questions from financial analysts. Mueller Water Products
invites interested investors to listen to the call and view the
accompanying slide presentation, which will be carried live on its
Web site at http://www.muellerwaterproducts.com/. Investors
interested in participating on the call should log on to the Web
site several minutes before the start of the call. After clicking
on the presentation icon, investors should follow the instructions
to ensure their systems are set up to hear the event and view the
presentation slides. Safe Harbor Statement Except for historical
information contained herein, the statements in this release are
forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and
uncertainties that may cause the actual results in future periods
of Mueller Water Products, Inc. to differ materially from
forecasted results. Those risks include, among others, changes in
customer orders and demand for our products; changes in raw
material prices, labor, equipment and transportation costs; pricing
actions by the Company and its competitors; changes in law; the
ability to attract and retain management and employees; the
inability to successfully execute management strategies with
respect to cost containment, production increases or decreases,
inventory control, the integration of acquired businesses, and the
construction of a new manufacturing plant; and general changes in
economic conditions or residential construction. Risks associated
with forward-looking statements are more fully described in our
filings with the Securities and Exchange Commission. Mueller Water
Products assumes no duty to update its forward-looking statements
as of any future date. About Mueller Water Products Mueller Water
Products is a leading North American manufacturer and marketer of
infrastructure and flow control products for use in water
distribution networks and treatment facilities. Its broad product
portfolio includes engineered valves, hydrants, ductile iron pipe
and pipe fittings, which are utilized by municipalities, as well as
the commercial and residential construction, oil and gas, HVAC and
fire protection industries. With annual net sales of approximately
$1.8 billion, the Company is comprised of three operating segments:
Mueller Co., U.S. Pipe and Anvil. Based in Atlanta, Georgia, the
Company employs approximately 6,500 people. Mueller Water Products
Series B common stock and Series A common stock trade on the New
York Stock Exchange under the ticker symbols MWA.B and MWA,
respectively. For more information about Mueller Water Products,
please visit the Company's Web site at
http://www.muellerwaterproducts.com/ . MUELLER WATER PRODUCTS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in millions) March 31,
September 30, 2008 2007 Assets: Cash and cash equivalents $119.6
$98.9 Receivables, net 270.7 302.1 Inventories 480.4 453.5 Deferred
income taxes 34.3 29.2 Other current assets 58.5 66.3 Total current
assets 963.5 950.0 Property, plant and equipment, net 339.8 351.8
Identifiable intangible assets, net 804.6 819.3 Goodwill 871.1
870.6 Other noncurrent assets 18.2 17.5 Total assets $2,997.2
$3,009.2 Liabilities and stockholders' equity: Current portion of
long-term debt $6.1 $6.2 Accounts payable 124.8 112.3 Other current
liabilities 84.7 121.8 Total current liabilities 215.6 240.3
Long-term debt 1,091.7 1,094.3 Deferred income taxes 304.5 307.3
Other noncurrent liabilities 80.3 56.3 Total liabilities 1,692.1
1,698.2 Commitments and contingencies Common stock: Series A 0.3
0.2 Series B 0.9 0.9 Additional paid-in capital 1,425.3 1,422.0
Accumulated deficit (121.2) (124.8) Accumulated other comprehensive
income (0.2) 12.7 Total stockholders' equity 1,305.1 1,311.0 Total
liabilities and stockholders' equity $2,997.2 $3,009.2 MUELLER
WATER PRODUCTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (in millions, except per share amounts) Three months
ended Six months ended March 31, March 31, 2008 2007 2008 2007 Net
sales $421.6 $459.7 $833.9 $871.6 Cost of sales 322.8 341.9 640.7
646.1 Gross profit 98.8 117.8 193.2 225.5 Operating expenses:
Selling, general and administrative 69.3 64.9 131.1 123.6
Restructuring 1.5 - 17.7 - Total operating expenses 70.8 64.9 148.8
123.6 Income from operations 28.0 52.9 44.4 101.9 Interest expense,
net 18.1 21.1 37.3 41.5 Income before income taxes 9.9 31.8 7.1
60.4 Income tax expense 4.2 13.9 3.0 25.5 Net income $5.7 $17.9
$4.1 $34.9 Basic and diluted net income per share $0.05 $0.16 $0.04
$0.30 Weighted average shares outstanding: Basic 115.1 114.7 115.0
114.6 Diluted 115.4 114.7 115.4 114.7 Dividends declared per share
$0.0175 $0.0175 $0.0350 $0.0350 MUELLER WATER PRODUCTS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY SIX MONTHS ENDED
MARCH 31, 2008 (UNAUDITED) (in millions) Accumu- lated Addition-
other al Accumu- compre- Common paid-in lated hensive stock capital
deficit income Total Balance at September 30, 2007 $1.1 $1,422.0
$(124.8) $12.7 $1,311.0 Adjustment to adopt FASB Interpretation No.
48 - - (0.5) - (0.5) Balance at October 1, 2007 1.1 1,422.0 (125.3)
12.7 1,310.5 Net income - - 4.1 - 4.1 Dividends declared - (4.0) -
- (4.0) Stock-based compensation - 6.4 - - 6.4 Stock issued under
stock compensation plans 0.1 0.9 - - 1.0 Net unrealized loss on
derivatives - - - (9.7) (9.7) Foreign currency translation
adjustments - - - (1.7) (1.7) Minimum pension liability - - - (1.5)
(1.5) Balance at March 31, 2008 $1.2 $1,425.3 $(121.2) $(0.2)
$1,305.1 MUELLER WATER PRODUCTS, INC. CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED) (in millions) Six months ended March 31,
2008 2007 Operating activities: Net income $4.1 $34.9 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation 31.8 35.0 Amortization of identifiable
intangible assets 14.7 14.5 Restructuring 14.8 - Stock-based
compensation 6.4 5.2 Accretion on debt - 5.4 Deferred income taxes
(0.9) 6.6 Other, net 1.8 3.9 Changes in assets and liabilities:
Receivables 30.5 53.1 Inventories (28.9) (50.8) Other current
assets and other noncurrent assets 3.8 (1.5) Accounts payable,
other current liabilities and other noncurrent liabilities (17.4)
(49.6) Net cash provided by operating activities 60.7 56.7
Investing activities: Capital expenditures (37.3) (42.5)
Acquisition of business, net of cash acquired - (22.5) Proceeds
from sales of property, plant, and equipment 7.2 - Net cash used in
investing activities (30.1) (65.0) Financing activities: Increase
(decrease) in outstanding checks (4.1) 3.9 Payments of long-term
debt (2.6) (4.3) Proceeds from issuance of common stock 1.0 -
Dividends to stockholders (4.0) (4.0) Net cash used in financing
activities (9.7) (4.4) Effect of exchange rate changes on cash
(0.2) 0.5 Net change in cash and cash equivalents 20.7 (12.2) Cash
and cash equivalents at beginning of period 98.9 81.4 Cash and cash
equivalents at end of period $119.6 $69.2 MUELLER WATER PRODUCTS,
INC. SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP
PERFORMANCE MEASURES (UNAUDITED) (in millions, except per share
amounts) Three months ended March 31, 2008 Mueller U.S. Co. Pipe
Anvil Corporate Total GAAP results: Net sales $168.9 $114.2 $138.5
$- $421.6 Income (loss) from operations $27.4 $(2.8) $12.9 $(9.5)
$28.0 Interest expense, net (18.1) Income tax expense (4.2) Net
income $5.7 Net income per diluted share $0.05 Capital expenditures
$4.4 $13.9 $2.2 $- $20.5 Non-GAAP results: Adjusted income (loss)
from operations and EBITDA: Income (loss) from operations $27.4
$(2.8) $12.9 $(9.5) $28.0 Restructuring charges - 1.5 - - 1.5
Adjusted income (loss) from operations 27.4 (1.3) 12.9 (9.5) 29.5
Depreciation and amortization 12.3 5.4 5.0 0.2 22.9 Adjusted EBITDA
$39.7 $4.1 $17.9 $(9.3) $52.4 Adjusted net income, excluding
restructuring charges: Net income $5.7 Restructuring charges - $1.5
million, net of tax 0.9 Adjusted net income, excluding
restructuring charges $6.6 Adjusted net income per diluted share,
excluding restructuring charges $0.06 Net debt (end of period):
Current portion of long-term debt $6.1 Long-term debt 1,091.7 Total
debt 1,097.8 Less cash and cash equivalents (119.6) Net debt $978.2
Three months ended March 31, 2007 Mueller U.S. Co. Pipe Anvil
Corporate Total GAAP results: Net sales $195.9 $129.7 $134.1 $-
$459.7 Income (loss) from operations $42.8 $6.8 $13.6 $(10.3) $52.9
Interest expense, net (21.1) Income tax expense (13.9) Net income
$17.9 Net income per diluted share $0.16 Capital expenditures $5.7
$12.1 $3.7 $1.0 $22.5 Non-GAAP results: EBITDA: Income (loss) from
operations $42.8 $6.8 $13.6 $(10.3) $52.9 Depreciation and
amortization 13.0 6.2 5.7 0.2 25.1 EBITDA $55.8 $13.0 $19.3 $(10.1)
$78.0 Net debt (end of period): Current portion of long-term debt
$8.9 Long-term debt 1,119.5 Total debt 1,128.4 Less cash and cash
equivalents (69.2) Net debt $1,059.2 MUELLER WATER PRODUCTS, INC.
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE
MEASURES (UNAUDITED) (in millions, except per share amounts) Six
months ended March 31, 2008 Mueller U.S. Co. Pipe Anvil Corporate
Total GAAP results: Net sales $330.5 $224.9 $278.5 $- $833.9 Income
(loss) from operations $52.2 $(18.1) $28.8 $(18.5) $44.4 Interest
expense, net (37.3) Income tax expense (3.0) Net income $4.1 Net
income per diluted share $0.04 Capital expenditures $8.8 $23.0 $5.5
$- $37.3 Non-GAAP results: Adjusted income (loss) from operations
and EBITDA: Income (loss) from operations $52.2 $(18.1) $28.8
$(18.5) $44.4 Restructuring charges - 17.7 - - 17.7 Adjusted income
(loss) from operations 52.2 (0.4) 28.8 (18.5) 62.1 Depreciation and
amortization 24.9 11.3 10.0 0.3 46.5 Adjusted EBITDA $77.1 $10.9
$38.8 $(18.2) $108.6 Adjusted net income, excluding restructuring
charges: Net income $4.1 Restructuring charges - $17.7 million, net
of tax 10.7 Adjusted net income, excluding restructuring charges
$14.8 Adjusted net income per diluted share, excluding
restructuring charges $0.13 Net debt (end of period): Current
portion of long-term debt $6.1 Long-term debt 1,091.7 Total debt
1,097.8 Less cash and cash equivalents (119.6) Net debt $978.2 Six
months ended March 31, 2007 Mueller U.S. Co. Pipe Anvil Corporate
Total GAAP results: Net sales $358.0 $246.1 $267.5 $- $871.6 Income
(loss) from operations $78.5 $14.0 $26.6 $(17.2) $101.9 Interest
expense, net (41.5) Income tax expense (25.5) Net income $34.9 Net
income per diluted share $0.30 Capital expenditures $12.4 $19.9
$8.8 $1.4 $42.5 Non-GAAP results: EBITDA: Income (loss) from
operations $78.5 $14.0 $26.6 $(17.2) $101.9 Depreciation and
amortization 25.7 11.7 11.6 0.5 49.5 EBITDA $104.2 $25.7 $38.2
$(16.7) $151.4 Net debt (end of period): Current portion of
long-term debt $8.9 Long-term debt 1,119.5 Total debt 1,128.4 Less
cash and cash equivalents (69.2) Net debt $1,059.2 Investor
Contact: Martie Edmunds Zakas Sr. Vice President - Strategic
Planning & Investor Relations 770-206-4237 Media Contact: John
Pensec Director - Corporate Communications and Public Affairs
770-206-4240 DATASOURCE: Mueller Water Products, Inc. CONTACT:
Investors, Martie Edmunds Zakas, Sr. Vice President - Strategic
Planning & Investor Relations, +1-770-206-4237; or Media, John
Pensec, Director - Corporate Communications and Public Affairs,
+1-770-206-4240, , both of Mueller Water Products, Inc. Web site:
http://www.muellerwaterproducts.com/
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