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Mueller Water Products Reports Fiscal 2012 First Quarter Results

About Mueller Water Products, Inc.

Mueller Water Products, Inc. is headquartered in Atlanta, GA and manufactures and markets products and services that are used in the transmission, distribution and measurement of safe, clean drinking water and in water treatment facilities. Our broad product portfolio includes engineered valves, fire hydrants, pipe fittings, water meters and ductile iron pipe, which are used by municipalities, as well as the residential and non-residential construction industries. Net sales for the twelve months ended December 31, 2011 were $1.4 billion and total employees numbered approximately 4,800 at December 31, 2011. The Company operates primarily through three segments: Mueller Co., U.S. Pipe and Anvil. The Company's common stock trades on the New York Stock Exchange under the ticker symbol MWA. For more information about Mueller Water Products, Inc., please visit our website at www.muellerwaterproducts.com.

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
    December 31,     September 30,
2011 2011
(in millions)
Assets:
Cash and cash equivalents $ 39.6 $ 61.2
Receivables, net 197.8 220.8
Inventories 250.6 237.7
Deferred income taxes 29.3 28.7
Other current assets   56.7     50.4  
Total current assets 574.0 598.8
 
Property, plant and equipment, net 239.4 243.8
Identifiable intangible assets 603.3 610.9
Other noncurrent assets   30.3     31.5  
 
Total assets $ 1,447.0   $ 1,485.0  
 
Liabilities and stockholders' equity:
Current portion of long-term debt $ 0.9 $ 0.9
Accounts payable 97.2 107.6
Other current liabilities   74.8     86.3  
Total current liabilities 172.9 194.8
 
Long-term debt 677.6 677.4
Deferred income taxes 153.2 154.2
Other noncurrent liabilities   75.8     79.6  
Total liabilities   1,079.5     1,106.0  
 
Commitments and contingencies
 

 

Series A common stock: 600,000,000 shares authorized;  156,438,509 shares and 155,793,612 shares outstanding at  December 31, 2011 and September 30, 2011, respectively

1.6 1.6
Additional paid-in capital 1,591.8 1,593.2
Accumulated deficit (1,173.5 ) (1,161.6 )
Accumulated other comprehensive loss   (52.4 )   (54.2 )
Total stockholders' equity   367.5     379.0  
 
Total liabilities and stockholders' equity $ 1,447.0   $ 1,485.0  
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
       
Three months ended
December 31,
2011 2010
(in millions, except per share amounts)
 
Net sales $ 311.5 $ 287.6
Cost of sales   259.7     238.0  
 
Gross profit   51.8     49.6  
 
Operating expenses:
Selling, general and administrative 53.4 52.0
Restructuring   1.3     1.9  
Total operating expenses   54.7     53.9  
 
Loss from operations (2.9 ) (4.3 )
 
Interest expense, net   15.7     15.9  
 
Loss before income taxes (18.6 ) (20.2 )
Income tax benefit   (6.7 )   (8.1 )
 
Net loss $ (11.9 ) $ (12.1 )
 
Net loss per share:
Basic $ (0.08 ) $ (0.08 )
Diluted $ (0.08 ) $ (0.08 )
 
Weighted average shares outstanding:
Basic   156.0     154.9  
Diluted   156.0     154.9  
 
Dividends declared per share $ 0.0175   $ 0.0175  
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
THREE MONTHS ENDED DECEMBER 31, 2011
(UNAUDITED)
                   

Common stock

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive loss

Total
(in millions)
 
Balance at September 30, 2011 $ 1.6 $ 1,593.2 $ (1,161.6) $ (54.2) $ 379.0
 
Net loss - - (11.9) - (11.9)
Dividends declared - (2.7) - - (2.7)
Stock-based compensation - 1.3 - - 1.3
Derivative instruments - - - 0.7 0.7
Foreign currency translation - - - 0.6 0.6
Minimum pension liability - - - 0.5 0.5
 
Balance at December 31, 2011 $ 1.6 $ 1,591.8 $ (1,173.5) $ (52.4) $ 367.5
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
       
Three months ended
December 31,
2011 2010
(in millions)
Operating activities:
Net loss $ (11.9 ) $ (12.1 )

Adjustments to reconcile net loss to net cash providedby (used in) operating activities:

Depreciation 11.8 12.6
Amortization 7.6 7.5
Stock-based compensation 1.5 1.9
Deferred income taxes (2.4 ) (3.0 )
Gain on disposal of assets 0.8 (0.6 )
Retirement plans 0.6 1.5
Interest rate swap contracts 1.4 1.9
Other, net 0.7 0.7
Changes in assets and liabilities:
Receivables 23.6 42.2
Inventories (12.8 ) 1.4
Other current assets and other noncurrent assets (1.7 ) (5.2 )
Accounts payable and other liabilities   (31.1 )   (43.6 )
 
Net cash provided by (used in) operating activities   (11.9 )   5.2  
 
Investing activities:
Capital expenditures (8.2 ) (6.4 )
Acquisitions - (7.9 )
Proceeds from sales of assets   0.1     0.6  
 
Net cash used in investing activities   (8.1 )   (13.7 )
 
Financing activities:
Increase (decrease) in outstanding checks 0.6 (1.4 )
Debt borrowings 0.1 0.2
Common stock issued - 0.1
Payment of deferred financing fees - (0.3 )
Dividends paid   (2.7 )   (2.7 )
 
Net cash used in financing activities   (2.0 )   (4.1 )
 
Effect of currency exchange rate changes on cash   0.4     0.8  
 
Net change in cash and cash equivalents (21.6 ) (11.8 )
Cash and cash equivalents at beginning of period   61.2     83.7  
 
Cash and cash equivalents at end of period $ 39.6   $ 71.9  
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES

SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES

(UNAUDITED)

(in millions, except per share amounts)

                   
Three months ended December 31, 2011
Mueller Co. U.S. Pipe Anvil Corporate Total

GAAP results:

Net sales $ 128.1   $ 96.1   $ 87.3   $ -   $ 311.5  
 
Gross profit (loss) $ 28.5 $ (1.0 ) $ 24.3 $ - $ 51.8
Selling, general and administrative expenses 23.4 6.9 16.5 6.6 53.4
Restructuring   0.4     0.9     0.1     (0.1 )   1.3  
Income (loss) from operations $ 4.7   $ (8.8 ) $ 7.7   $ (6.5 ) (2.9 )
Interest expense, net 15.7
Income tax benefit   (6.7 )
Net loss $ (11.9 )
Net loss per diluted share $ (0.08 )
 
Capital expenditures $ 3.4   $ 2.9   $ 1.9   $ -   $ 8.2  
 
Non-GAAP results:
Adjusted income (loss) from operations and EBITDA:
Income (loss) from operations $ 4.7 $ (8.8 ) $ 7.7 $ (6.5 ) $ (2.9 )
Restructuring   0.4     0.9     0.1     (0.1 )   1.3  
Adjusted income (loss) from operations 5.1 (7.9 ) 7.8 (6.6 ) (1.6 )
Depreciation and amortization   11.2     4.4     3.6     0.2     19.4  
Adjusted EBITDA $ 16.3   $ (3.5 ) $ 11.4   $ (6.4 ) $ 17.8  
 
Adjusted operating margin   4.0 %   -8.2 %   8.9 %   -     -0.5 %
Adjusted EBITDA margin   12.7 %   -3.6 %   13.1 %   -     5.7 %
 
Adjusted net loss:
Net loss $ (11.9 )
Interest rate swap settlement costs, net of tax 0.8
Restructuring, net of tax   0.8  
Adjusted net loss $ (10.3 )
Adjusted net loss per diluted share $ (0.07 )
 
Free cash flow:
Net cash used in operating activities $ (11.9 )
Capital expenditures   (8.2 )
Free cash flow $ (20.1 )
 
Net debt (end of period):
Current portion of long-term debt $ 0.9
Long-term debt   677.6  
Total debt 678.5
Less cash and cash equivalents   (39.6 )
Net debt $ 638.9  
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES

SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES

(UNAUDITED)

(in millions, except per share amounts)

 
    Three months ended December 31, 2010
Mueller Co.     U.S. Pipe     Anvil     Corporate     Total
GAAP results:
Net sales $ 129.8   $ 74.4   $ 83.4   $ -   $ 287.6  
 
Gross profit (loss) $ 29.2 $ (2.4 ) $ 22.4 $ 0.4 $ 49.6
Selling, general and administrative expenses 20.4 7.0 15.9 8.7 52.0
Restructuring   0.4     0.9     0.6     -     1.9  
Income (loss) from operations $ 8.4   $ (10.3 ) $ 5.9   $ (8.3 ) (4.3 )
Interest expense, net 15.9
Income tax benefit   (8.1 )
Net loss $ (12.1 )
Net loss per diluted share $ (0.08 )
 
Capital expenditures $ 3.2   $ 1.4   $ 1.4   $ 0.4   $ 6.4  
 
Non-GAAP results:
Adjusted income (loss) from operations and EBITDA:
Income (loss) from operations $ 8.4 $ (10.3 ) $ 5.9 $ (8.3 ) $ (4.3 )
Restructuring   0.4     0.9     0.6     -     1.9  
Adjusted income (loss) from operations 8.8 (9.4 ) 6.5 (8.3 ) (2.4 )
Depreciation and amortization   11.7     4.5     3.7     0.2     20.1  
Adjusted EBITDA $ 20.5   $ (4.9 ) $ 10.2   $ (8.1 ) $ 17.7  
 
Adjusted operating margin   6.8 %   -12.6 %   7.8 %   -     -0.8 %
Adjusted EBITDA margin   15.8 %   -6.6 %   12.2 %   -     6.2 %
 
Adjusted net loss:
Net loss $ (12.1 )
Interest rate swap settlement costs, net of tax 1.2
Restructuring, net of tax   1.2  
Adjusted net loss $ (9.7 )
Adjusted net loss per diluted share $ (0.06 )
 
Free cash flow:
Net cash provided by operating activities $ 5.2
Capital expenditures   (6.4 )
Free cash flow $ (1.2 )
 
Net debt (end of period):
Current portion of long-term debt $ 0.8
Long-term debt   691.7  

Total debt

692.5
Less cash and cash equivalents   (71.9 )
Net debt $ 620.6  
 




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