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Mueller Water Products Reports Fiscal 2012 Fourth Quarter Results

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. Our broad product and services portfolio includes engineered valves, fire hydrants, metering products and systems, 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™. The piping component systems produced by Anvil help build connections that last in commercial, industrial and oil & gas applications. Visit us at www.muellerwaterproducts.com.

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES    
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
                   
September 30, September 30,
2012 2011
 
Assets:
Cash and cash equivalents $ 83.0 $ 61.0
Receivables, net 166.1 147.4
Inventories 183.2 175.9
Deferred income taxes 19.3 28.7
Other current assets 38.0 43.8
Current assets held for sale   -     142.0  
Total current assets 489.6 598.8
 
Property, plant and equipment, net 144.7 145.7
Identifiable intangible assets 573.7 602.4
Other noncurrent assets 32.7 30.4
Noncurrent assets held for sale   -     107.7  
 
Total assets $ 1,240.7   $ 1,485.0  
 
Liabilities and stockholders' equity:
Current portion of long-term debt $ 1.1 $ 0.9
Accounts payable 84.5 59.1
Other current liabilities 82.8 77.9
Current liabilities held for sale   -     56.9  
Total current liabilities 168.4 194.8
 
Long-term debt 621.7 677.4
Deferred income taxes 132.1 154.2
Other noncurrent liabilities   86.8     79.6  
Total liabilities   1,009.0     1,106.0  
 
Commitments and contingencies
 
Common stock: 600,000,000 shares authorized;
156,840,648 shares and 155,793,612 shares outstanding at September
30, 2012 and September 30, 2011, respectively 1.6 1.6
Additional paid-in capital 1,587.3 1,593.2
Accumulated deficit (1,269.5 ) (1,161.6 )
Accumulated other comprehensive loss   (87.7 )   (54.2 )
Total stockholders' equity   231.7     379.0  
 
Total liabilities and stockholders' equity $ 1,240.7   $ 1,485.0  
 
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
         
Three months ended Year ended
September 30, September 30,
2012 2011 2012 2011
(in millions, except per share amounts)
 
Net sales $ 281.1 $ 256.3 $ 1,023.9 $ 964.6
Cost of sales   204.5     191.4     752.8     716.5  
 
Gross profit   76.6     64.9     271.1     248.1  
 
Operating expenses:
Selling, general and administrative 53.9 51.5 204.2 191.8
Restructuring   0.8     1.2     2.8     3.6  
Total operating expenses   54.7     52.7     207.0     195.4  
 
Operating income 21.9 12.2 64.1 52.7
 
Interest expense, net 13.9 16.6 60.0 65.6
Loss on early extinguishment of debt   -     -     1.5     -  
 
Income (loss) before income taxes 8.0 (4.4 ) 2.6 (12.9 )
Income tax expense (benefit) (a)   4.1     1.4     8.2     (2.9 )
 
Income (loss) from continuing operations 3.9 (5.8 ) (5.6 ) (10.0 )
Income (loss) from discontinued operations, net of tax (b)   0.1     (3.8 )   (102.3 )   (28.1 )
 
Net income (loss) $ 4.0   $ (9.6 ) $ (107.9 ) $ (38.1 )
 
Net income (loss) per basic share:
Continuing operations $ 0.03 $ (0.04 ) $ (0.04 ) $ (0.07 )
Discontinued operations   -     (0.02 )   (0.65 )   (0.18 )
Net income (loss) $ 0.03   $ (0.06 ) $ (0.69 ) $ (0.25 )
 
Net income (loss) per diluted share:
Continuing operations $ 0.03 $ (0.04 ) $ (0.04 ) $ (0.07 )
Discontinued operations   -     (0.02 )   (0.65 )   (0.18 )
Net income (loss) $ 0.03   $ (0.06 ) $ (0.69 ) $ (0.25 )
 
Weighted average shares outstanding:
Basic   156.8     155.6     156.5     155.3  
Diluted   158.5     155.6     156.5     155.3  
 
Dividends declared per share $ 0.07   $ 0.07   $ 0.07   $ 0.07  
 
 

(a)   Due to the loss incurred on the disposition of our U.S. Pipe business, income tax expense for the year ended September 30, 2012 included a $5.9 million valuation allowance charge related to deferred tax asset balances at September 30, 2011 that has been allocated to continuing operations.

 

(b)   On April 1, 2012, we sold our U.S. Pipe business. U.S. Pipe's results of operations have been reclassified as discontinued operations for all periods presented.

 
 

  MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
YEAR ENDED SEPTEMBER 30, 2012
(UNAUDITED)
                                 
 
Accumulated
Additional other
Common paid-in Accumulated comprehensive
stock capital deficit loss Total
(in millions)
 
Balance at September 30, 2011 $       1.6 $   1,593.2 $   (1,161.6 ) $ (54.2 ) $       379.0
Net loss - - (107.9 ) - (107.9 )
Dividends declared - (11.0 ) - - (11.0 )
Stock-based compensation - 4.9 - - 4.9
Stock issued under stock compensation plans - 0.2 - - 0.2
Derivative instruments - - - 3.0 3.0
Foreign currency translation - - - 2.9 2.9
Minimum pension liability         -       -       -     (39.4 )         (39.4 )
 
Balance at September 30, 2012

$

     

1.6

 

$

 

1,587.3

  $   (1,269.5 ) $ (87.7 ) $       231.7  
 
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES    
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
                           
Year ended
September 30,
2012 2011
(in millions)
Operating activities:
Net loss $   (107.9 ) $     (38.1 )
Adjustments to reconcile net loss to net cash
provided by operating activities:
Loss from discontinued operations     102.3         28.1  
Loss from continuing operations (5.6 ) (10.0 )
 
Depreciation 31.2 33.9
Amortization 29.4 29.2
Deferred income taxes 7.9 (22.2 )
Stock-based compensation 5.1 5.0
Interest rate swap contracts 5.0 8.0
Retirement plans 4.6 7.5
Amortization of deferred financing fees 2.3 2.3
Loss on early extinguishment of debt 1.5 -
Other, net 0.7 2.8
Changes in assets and liabilities:
Receivables (17.6 ) (13.6 )
Inventories (6.0 ) 24.7
Other current assets and other noncurrent assets 13.5 1.9
Accounts payable and other liabilities     4.7         (33.7 )
 
Net cash provided by operating activities
from continuing operations     76.7         35.8  
 
Investing activities:
Capital expenditures (31.4 ) (23.1 )
Acquisitions of businesses, net of cash acquired (1.3 ) (9.2 )
Proceeds from sales of assets     0.3         1.1  
 
Net cash used in investing activities
from continuing operations     (32.4 )       (31.2 )
 
Financing activities:
Early retirement of debt (23.2 ) -
Proceeds from debt - 40.7
Other debt payments (33.4 ) (55.0 )
Dividends paid (11.0 ) (10.9 )
Common stock issued 0.2 1.0
Payment of deferred financing fees - (0.4 )
Other     (0.7 )       1.7  
 
Net cash used in financing activities
from continuing operations     (68.1 )       (22.9 )
 
Net cash flows from discontinued operations:
Operating activities (43.2 ) 4.1
Investing activities     87.5         (8.4 )
 
Net cash provided by (used in) discontinued operations     44.3         (4.3 )
 
Effect of currency exchange rate changes on cash     1.5         (0.4 )
 
Cash and cash equivalents at beginning of year     61.0         84.0  
 
 
 
Cash and cash equivalents at end of year $   83.0   $     61.0  
 
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES
(UNAUDITED)
(dollars in millions, except per share amounts)
                                   
Three months ended September 30, 2012
Mueller Co. Anvil Corporate Total
GAAP results:
Net sales $ 187.2   $     93.9   $   -     $   281.1  
 
Gross profit $ 49.1 $     27.5 $   - $ 76.6
Selling, general and administrative expenses 27.6 17.6 8.7 53.9
Restructuring expenses   0.6         0.1       0.1         0.8  
Operating income (loss) $ 20.9   $     9.8   $   (8.8 )   21.9
Interest expense, net 13.9
Income tax expense     4.1  
Income from continuing operations

 

3.9

Loss from discontinued operations, net of tax     0.1  
Net income

$

 

4.0

 
 
Net income:
Continuing operations $ 0.03
Discontinued operations     -  
Net income $   0.03  
 
Capital expenditures $ 8.0   $     3.9   $   -     $   11.9  
 
Non-GAAP results:
Adjusted operating income (loss) and EBITDA:
Operating income (loss) $ 20.9 $ 9.8 $ (8.8 ) $ 21.9
Restructuring   0.6         0.1       0.1         0.8  
Adjusted operating income (loss) 21.5 9.9 (8.7 ) 22.7
Depreciation and amortization   11.6         3.6       0.2         15.4  
Adjusted EBITDA $ 33.1   $     13.5   $   (8.5 )   $   38.1  
 
Adjusted operating margin   11.5 %       10.5 %     8.1 %
Adjusted EBITDA margin   17.7 %       14.4 %     13.6 %
 
Adjusted net income:
Net income

$

4.0

Discontinued operations, net of tax (0.1 )
Restructuring, net of tax 0.5
Interest rate swap settlement costs, net of tax     0.4  
Adjusted net income

$

 

4.8

 
Adjusted net income per diluted share $   0.03  
 
Free cash flow:
Net cash provided by operating activities $ 52.2
Less capital expenditures     (11.9 )
Free cash flow $   40.3  
 
Net debt (end of period):
Current portion of long-term debt $ 1.1
Long-term debt     621.7  
Total debt 622.8
Less cash and cash equivalents     (83.0 )
Net debt $   539.8  
 
Adjusted EBITDA:
Current quarter $ 38.1
Three prior quarters     89.4  
Adjusted EBITDA $   127.5  
 
Net debt leverage (net debt divided by adjusted EBITDA)     4.2  
 
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES
(UNAUDITED)
(dollars in millions, except per share amounts)
           
Three months ended September 30, 2011
Mueller Co.           Anvil           Corporate           Total
GAAP results:
Net sales $ 161.0   $       95.3   $ -   $       256.3  
 
Gross profit $ 37.3 $       27.7 $ (0.1 ) $       64.9
Selling, general and administrative expenses 24.2 17.7 9.6 51.5
Restructuring expenses   0.2           -     1.0           1.2  
Operating income (loss) $ 12.9   $       10.0   $ (10.7 ) 12.2
Interest expense, net 16.6
Income tax expense         1.4  
Loss from continuing operations (5.8 )
Loss from discontinued operations, net of tax         (3.8 )
Net loss $       (9.6 )
 
Net loss:
Continuing operations $ (0.04 )
Discontinued operations         (0.02 )
Net loss $       (0.06 )
 
Capital expenditures $ 3.8   $       3.1   $ 0.3   $       7.2  
 
Non-GAAP results:
Adjusted operating income (loss) and EBITDA:
Operating income (loss) $ 12.9 $ 10.0 $ (10.7 ) $ 12.2
Restructuring   0.2           -     1.0           1.2  
Adjusted operating income (loss) 13.1 10.0 (9.7 ) 13.4
Depreciation and amortization   12.0           3.6     0.3           15.9  
Adjusted EBITDA $ 25.1   $       13.6   $ (9.4 ) $       29.3  
 
Adjusted operating margin   8.1 %         10.5 %         5.2 %
Adjusted EBITDA margin   15.6 %         14.3 %         11.4 %
 
Adjusted net loss:
Net loss $ (9.6 )
Discontinued operations, net of tax 3.8
Interest rate swap settlement costs, net of tax 1.2
Restructuring, net of tax         0.7  
Adjusted net loss $       (3.9 )
Adjusted net loss per diluted share $       (0.03 )
 
Free cash flow:
Net cash provided by operating activities

 

$ 36.0
Less capital expenditures         (7.2 )
Free cash flow $       28.8  
 
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES    
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES
(UNAUDITED)
(dollars in millions, except per share amounts)
                                                       
Year ended September 30, 2012
Mueller Co. Anvil Corporate Total
GAAP results:
Net sales $ 652.4   $     371.5   $ -     $ 1,023.9  
 
Gross profit $ 162.8 $     108.3 $ - $ 271.1
Selling, general and administrative expenses 102.6 70.7 30.9 204.2
Restructuring expenses   2.5         0.3     -       2.8  
Operating income (loss) $ 57.7   $     37.3   $ (30.9 )   64.1
Interest expense, net 60.0
Loss on early extinguishment of debt 1.5
Income tax expense   8.2  
Loss from continuing operations (5.6 )
Loss from discontinued operations, net of tax   (102.3 )
Net loss $ (107.9 )
 
Net loss per diluted share:
Continuing operations $ (0.04 )
Discontinued operations   (0.65 )
Net loss $ (0.69 )
 
Capital expenditures $ 20.0   $     11.4   $ -     $ 31.4  
 
Non-GAAP results:
Adjusted operating income (loss) and EBITDA:
Operating income (loss) $ 57.7 $ 37.3 $ (30.9 ) $ 64.1
Restructuring   2.5         0.3     -       2.8  
Adjusted operating income (loss) 60.2 37.6 (30.9 ) 66.9
Depreciation and amortization   45.7         14.3     0.6       60.6  
Adjusted EBITDA $ 105.9   $     51.9   $ (30.3 )   $ 127.5  
 
Adjusted operating margin   9.2 %       10.1 %   6.5 %
Adjusted EBITDA margin   16.2 %       14.0 %   12.5 %
 
Adjusted net income:
Net loss $ (107.9 )
Discontinued operations, net of tax 102.3
Valuation allowance against beginning of the year
deferred tax assets 5.9
Interest rate swap settlement costs, net of tax 3.0
Restructuring, net of tax 1.7
Loss on early extinguishment of debt, net of tax   0.9  
Adjusted net income $ 5.9  
Adjusted net income per diluted share $ 0.04  
 
Free cash flow:
Net cash provided by operating activities $ 76.7
Less capital expenditures   (31.4 )
Free cash flow $ 45.3  
 
Net debt (end of period):
Current portion of long-term debt $ 1.1
Long-term debt   621.7  
Total debt 622.8
Less cash and cash equivalents   (83.0 )
Net debt $ 539.8  
 
Adjusted EBITDA:
Current quarter $ 38.1
Three prior quarters   89.4  
Adjusted EBITDA $ 127.5  
 
Net debt leverage (net debt divided by adjusted EBITDA)   4.2  
 
 

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES

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

(UNAUDITED)

(dollars in millions, except per share amounts)

                 
Year ended September 30, 2011
Mueller Co.               Anvil               Corporate                 Total
GAAP results:
Net sales $ 605.5   $     359.1     $ -     $     964.6  
 
Gross profit $ 147.0 $     101.1 $ - $     248.1
Selling, general and administrative expenses 91.8 68.1 31.9 191.8
Restructuring expenses   1.4         1.2       1.0           3.6  
Operating income (loss) $ 53.8   $     31.8     $ (32.9 )   52.7
Interest expense, net 65.6
Income tax benefit       (2.9 )
Loss from continuing operations (10.0 )
Loss from discontinued operations, net of tax       (28.1 )
Net loss $     (38.1 )
 
Net loss per diluted share:
Continuing operations $ (0.07 )
Discontinued operations       (0.18 )
Net loss $     (0.25 )
 
Capital expenditures $ 14.8   $     7.5     $ 0.8     $     23.1  
 
Non-GAAP results:
Adjusted operating income (loss) and EBITDA:
Operating income (loss) $ 53.8 $ 31.8 $ (32.9 ) $ 52.7
Restructuring   1.4         1.2       1.0           3.6  
Adjusted operating income (loss) 55.2 33.0 (31.9 ) 56.3
Depreciation and amortization   47.7         14.5       0.9           63.1  
Adjusted EBITDA $ 102.9   $     47.5     $ (31.0 )   $     119.4  
 
Adjusted operating margin   9.1 %       9.2 %         5.8 %
Adjusted EBITDA margin   17.0 %       13.2 %         12.4 %
 
Adjusted net income:
Net loss $ (38.1 )
Discontinued operations, net of tax 28.1
Interest rate swap settlement costs, net of tax 4.9
Restructuring, net of tax       2.2  
Adjusted net income $     (2.9 )
Adjusted net income per diluted share $     (0.02 )
 
Free cash flow:
Net cash provided by operating activities $ 35.8
Less capital expenditures       (23.1 )
Free cash flow $     12.7  




Stock quotes in this article: MWA 

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