ATLANTA, Feb. 03, 2021 (GLOBE NEWSWIRE) -- Mueller Water Products, Inc. (NYSE: MWA) announced today that for its fiscal 2021 first quarter ended December 31, 2020, net sales were $237.4 million and net income was $16.7 million.

During the 2021 first quarter, the Company:

• Increased net sales 11.7 percent to $237.4 million as compared with $212.6 million in the prior year quarter.
• Generated operating income of $27.8 million as compared with $20.3 million in the prior year quarter. Increased adjusted operating income 28.6 percent to $29.2 million as compared with $22.7 million in the prior year quarter.
• Achieved net income of $16.7 million as compared with net income of $10.3 million in the prior year quarter. Adjusted net income increased 43.9 percent to $17.7 million as compared with $12.3 million in the prior year quarter.
• Reported net income per diluted share of $0.11 as compared with $0.06 in the prior year quarter. Increased adjusted net income per diluted share 37.5 percent to $0.11 as compared with $0.08 in the prior year quarter.
• Increased adjusted EBITDA 19.5 percent to $44.7 million as compared with $37.4 million in the prior year quarter.
• Generated $34.1 million of net cash provided by operating activities and $18.5 million of free cash flow for the quarter.

“I am very pleased with our team’s performance this quarter. Their focused execution helped deliver a strong start to the year. We generated an 11.7 percent increase in consolidated net sales in the first quarter with strong volume growth across most of our product lines. We benefited from strength in the residential construction end market and our municipal end markets continued to be resilient,” said Scott Hall, President and Chief Executive Officer of Mueller Water Products.

“While continuing to manage through the ongoing uncertainty and operational challenges resulting from the COVID-19 pandemic, we maintained our focus on providing our customers with essential products and services needed to manage critical water infrastructure. Despite the challenges from the pandemic leading to higher manufacturing expenses and elevated levels of inflation, we delivered a 19.5 percent increase in adjusted EBITDA with a 120 basis points improvement in adjusted EBITDA margin. Our profit growth and continued improvements in working capital management helped us increase free cash flow during the quarter.

“We expect that the operational headwinds from the pandemic will continue to impact manufacturing costs throughout this year. Though there remains a high level of uncertainty regarding the pandemic, we continue to be hopeful that vaccines will help our employees and their communities return to a more normalized environment by year-end.

“Additionally, although price more than covered material cost inflation in the first quarter, we also took actions to address the anticipated impacts from higher costs associated with inflation later in the year. We implemented price increases for the majority of our Infrastructure products at the end of the first quarter to help offset the expected cost inflation.

“We continue to believe that growth in the residential construction end market will more than offset temporary delays in the project-related portions of the municipal market caused by the pandemic. We are raising our annual guidance for consolidated net sales and adjusted EBITDA growth based on our strong first quarter performance and current end market, price and cost inflation expectations.

“This past December, we released our first ESG Report highlighting our sustainability achievements to date and our ongoing initiatives to strengthen the organization’s focus and commitment to sustainability. Our inaugural report reflects how sustainability has been an integral part of Mueller Water Products for many years. We are committed to minimizing our water and energy footprints while delivering smart products that are more efficient for our customers and safer for the environment. As we look to the future, our commitment to advancing our ESG goals will remain at the forefront of how we operate our business and work to positively impact our world.

“I continue to be extremely impressed by our team members’ dedication to their customers, communities and fellow team members. I remain highly confident in our ability to navigate the uncertainty and challenges in this environment. Our top priorities during the pandemic will continue to be keeping our employees safe, protecting our communities, delivering exceptional products and support to our customers and increasing cash flow.

“Going forward, we will continue to maintain a strong balance sheet and take a balanced approach to our cash allocation strategies as we focus on reinvesting in our business, accelerating growth through acquisitions and returning cash to shareholders. We are confident in our strategic focus to be a world class manufacturing company and innovative industry leader bridging the gap between infrastructure and technology.”

Consolidated Results

Net sales for the 2021 first quarter increased $24.8 million, or 11.7 percent, to $237.4 million as compared with $212.6 million in the 2020 first quarter.

Operating income increased 36.9 percent to $27.8 million for the 2021 first quarter as compared with $20.3 million in the prior year quarter.

During the quarter, the Company incurred $1.4 million of strategic reorganization and other charges, which have been excluded from adjusted results.

Adjusted operating income increased $6.5 million, or 28.6 percent, to $29.2 million for the 2021 first quarter as compared with $22.7 million in the prior year quarter.

Adjusted EBITDA increased $7.3 million, or 19.5 percent, to $44.7 million for the 2021 first quarter as compared with $37.4 million in the prior year quarter. Adjusted EBITDA margin of 18.8 percent for the 2021 first quarter improved 120 basis points as compared with 17.6 percent in the prior year quarter.

Segment Results

Infrastructure

Net sales for the 2021 first quarter increased $23.6 million, or 12.3 percent, to $215.9 million as compared with $192.3 million in the 2020 first quarter. This increase was primarily due to increased shipment volumes across most of our product lines and higher pricing.

Operating income and adjusted operating income for the first quarter 2021 were $41.6 million and $41.7 million, respectively. Adjusted operating income increased $6.2 million, or 17.5 percent, as compared with the prior year quarter, primarily due to higher sales that were partially offset by unfavorable manufacturing performance, including approximately $1.4 million of additional manufacturing expenses related to the pandemic, and higher costs associated with inflation.

The estimated expense impact from the COVID-19 pandemic was flat as the additional manufacturing expenses in the quarter, which reduced gross profit, were offset by lower SG&A expenses attributed to reduced travel and trade show expense.

Adjusted EBITDA of $54.2 million increased $6.7 million, or 14.1 percent, as compared with $47.5 million in the prior year quarter.

Technologies

Net sales for the 2021 first quarter increased $1.2 million, or 5.9 percent, to $21.5 million primarily due to higher volumes of metering and leak detection-related products.

Operating loss and adjusted operating loss for the quarter were each $1.5 million. Adjusted operating loss improved $0.3 million as compared with a $1.8 million operating loss in the prior year quarter, primarily due to higher sales and lower SG&A expenses, partially offset by higher costs associated with inflation.

The estimated expense impact from the COVID-19 pandemic was a net benefit of $0.3 million in the quarter as $0.4 million of lower SG&A expenses, attributed to reduced travel and trade show expense, were partially offset by additional manufacturing expenses.

Adjusted EBITDA increased $0.4 million to $0.6 million as compared with $0.2 million in the prior year quarter.

Interest Expense, Net

Interest expense, net for the 2021 first quarter was $6.1 million and $7.4 million in the prior year quarter. The decrease in net interest expense was primarily due to a non-cash adjustment to capitalized interest in the prior year quarter.

Income Taxes

Income tax expense for the 2021 first quarter was $5.8 million, or 25.8 percent of income before tax, and for the prior year quarter was $3.1 million, or 23.1 percent of income before tax.

Cash Flow and Balance Sheet

Net cash provided by operating activities for the first quarter improved $46.5 million to $34.1 million as compared with the use of $12.4 million in the comparable prior year period, primarily driven by improvements in working capital management. Additionally, net cash used in operating activities in the first quarter of the prior year included the payment of $22.2 million associated with the Walter Energy payment.

The Company invested $15.6 million in capital expenditures during the first quarter which is comparable to the $15.2 million invested in the first quarter of the prior year.

Free cash flow (defined as net cash provided by operating activities less capital expenditures) for the first quarter improved $46.1 million to $18.5 million as compared with negative free cash flow of $27.6 million in the comparable prior year period.

As of December 31, 2020, Mueller Water Products had $447.7 million of total debt outstanding, $223.0 million of cash, cash equivalents and restricted cash, and the Company’s net debt leverage ratio was 1.1 times. There are no amounts due on this debt until June 2026 and the Company’s 5.5% senior unsecured notes have no financial covenants. Based on December 31, 2020 data, the Company had approximately $113.4 million of excess availability under its ABL Agreement, bringing its total liquidity to $336.4 million.

Full-Year Fiscal 2021 Outlook

For the full-year fiscal 2021, the Company currently anticipates that consolidated net sales will increase between 4 and 6 percent as compared with the prior year. Based on first quarter performance, backlog, and current expectations for end markets, price and inflation, the Company believes that adjusted EBITDA growth will be between 5 and 8 percent as compared with the prior year. The Company expects to generate positive free cash flow for the full year. These estimates are also based on current end market expectations and assume that the pandemic’s impact lessens during the second half of fiscal 2021.

The Company’s expectations for certain financial metrics for the full-year fiscal 2021 are as follows:

• Total SG&A expenses between $210 million and $215 million.
• Interest expense, net between $24 million and $25 million.
• Effective income tax rate between 24 percent and 26 percent.
• Depreciation and amortization between $60 million and $64 million.
• Capital expenditures between $80 million and $90 million

About Mueller Water Products, Inc.

Mueller Water Products, Inc. (NYSE: MWA) is a leading manufacturer and marketer of products and services used in the transmission, distribution and measurement of water in North America. Our broad product and service portfolio includes engineered valves, fire hydrants, pipe connection and repair products, metering products, leak detection and pipe condition assessment. We help municipalities increase operational efficiencies, improve customer service and prioritize capital spending, demonstrating why Mueller Water Products is Where Intelligence Meets Infrastructure^®. Visit us at www.muellerwaterproducts.com.