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Mueller Water Products Management Discusses Q3 2012 Results - Earnings Call Transcript

Third quarter results yielded increases in net sales, adjusted operating income and adjusted EBITDA on a year-over-year basis. The data on the residential construction market is trending positive, and we believe we saw some pockets of growth from this market segment during the third quarter.

At Mueller Co. base business in the third quarter, net sales increased 6.9%, and adjusted operating income grew 14%, driven by increased domestic shipments of valves, hydrants and brass products.

We also had a number of wins at both Mueller Systems and Echologics. Mueller Systems announced a supply agreement with American Water, the largest publicly traded U.S. water and wastewater utility company for water meters and automated meter reading systems, and also a $6.6 million agreement for our meters and AMI systems with Bentonville, Arkansas.

Echologics also recently extended its contract with the City of New Orleans, which is expected to generate approximately $5 million in revenue over the next 2 years. It is encouraging to see the traction both businesses are gaining in the marketplace.

Anvil, again, delivered solid results in the third quarter. We saw some softness in certain markets. While net sales were essentially flat, adjusted operating income increased year-over-year. We continue to believe that we are well-positioned for future profitable growth, as end market demand improves, and we are able to increase capacity utilization.

I'll now turn the call over to Evan, who will provide more details on our third quarter financial results.

Evan L. Hart

Thanks, Greg, and good morning, everyone. I'll first review the consolidated results, and then discuss segment performance. Consolidated net sales for the 2012 third quarter of $275.9 million increased $16.3 million or 6.3% from the 2011 third quarter net sales of $259.6 million. Net sales increased due to higher shipment volumes and higher prices.

Consolidated gross profit of $79.6 million for the 2012 third quarter improved from $73.1 million for the 2011 third quarter. Gross profit margin for the 2012 third quarter improved 70 basis points to 28.9%, and was positively impacted, primarily, by higher sales prices at both Mueller Co. and Anvil, as well as higher shipment volumes at Mueller Co.

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