Q3 2026 Mueller Water Products, Inc. Earnings Call Transcript
Key Points
- Record net sales, adjusted EBITDA, and adjusted net income per diluted share in Q3 2026, with net sales up 4.1% year-over-year.
- Adjusted EBITDA margin expanded 440 basis points year-over-year to a record 27.1%, driven by pricing actions, tariff refunds, and disciplined cost management.
- Strong free cash flow of $110.6 million in the first nine months, with a healthy balance sheet and no debt maturities until 2029.
- WMS segment delivered 10.3% net sales growth and a 650 basis point adjusted EBITDA margin expansion, driven by strong hydrant and natural gas product volumes.
- Raised fiscal 2026 adjusted EBITDA guidance for the third consecutive quarter, reflecting confidence in continued margin expansion and operational execution.
- Specialty valves, including industrial water for data centers, are a fast-growing category with strong demand and positive traction in commercial initiatives.
- Slower new residential construction activity is expected to impact Q4 volumes, particularly in short-cycle products like iron gate valves and service brass.
- Tariff costs remain elevated, with Section 232 tariffs increasing and no further tariff refunds expected in Q4, pressuring margins.
- WMS segment margins are expected to decline in Q4 due to normalization of hydrant backlog and lapping of prior-year tariff pricing benefits.
- Working capital remains elevated due to inventory investments, inflation, and tariffs, which could pressure cash flow conversion.
- The strategic exit of the I2O pressure monitoring business outside North America incurred $11.2 million in strategic reorganization charges and $3.1 million in portfolio optimization costs.
- External uncertainty from tariffs, inflation, and residential construction weakness requires continued vigilance and may limit growth in the near term.
Good morning and thank you for standing by, your lines are on a listen-only mode until the question-and-answer session of today's conference at that time, they pressedar, followed by the number 1 to ask a question, please unmute your phone and state your name when prompted.
Today's conference is being recorded.
If you have any objections, you may disconnect at this time.
It is now my pleasure to turn the call over to Whit Kincaid.
Good morning, everyone.
Thank you for joining us for Muer Water Products 3rd quarter conference call.
Yesterday afternoon we issued our press release reporting results of operations for the quarter end of June 30th, 2026.
A copy of the press release is available on our website, newerwaterproducts.com.
I am joined this morning by Paul McAndrew, our President and Chief Executive Officer, and Melissa Rasmussen, our Chief Financial Officer.
Following our prepared remarks, we will address
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