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Mueller Water Products Reports 2016 Second Quarter Results

Adjusted net income per diluted share improved to $0.10 from $0.08
Adjusted operating income increased 14.8 percent to $30.2 million

ATLANTA, April 26, 2016 (GLOBE NEWSWIRE) -- Mueller Water Products, Inc. MWA, +1.01% announced today that for its fiscal second quarter ended March 31, 2016, net sales were $283.6 million compared with $290.3 million in the prior year period. Operating income was $29.3 million compared with $25.6 million in the prior year period, and adjusted operating income was $30.2 million compared with $26.3 million in the prior year period. Net income was $15.7 million, or $0.10 per diluted share, compared with $12.3 million, or $0.08 per diluted share, in the prior year period. Adjusted net income increased to $16.3 million, or $0.10 per diluted share, from $12.7 million, or $0.08 per diluted share, in the prior year period.

"We were very pleased with the second quarter's results, which, overall, came in about as expected," said Gregory E. Hyland, chairman, president and chief executive officer of Mueller Water Products. "Our adjusted operating income increased 14.8 percent, despite slightly lower net sales.

"We believe Mueller Co.'s end markets remain solid, as demand for its core products continued to grow. The increased shipment volumes coupled with better operating efficiencies and lower costs led to a 9.0 percent increase in adjusted operating income and a 110 basis point improvement in adjusted operating margin. Mueller Co.'s adjusted EBITDA margin in the second quarter was 24.1 percent, and on a trailing 12 month basis, it was 26.6 percent.

"Anvil's second quarter net sales, excluding sales to the oil & gas market, increased 3.3 percent year-over-year. Additionally, Anvil's adjusted operating income increased 14.9 percent, despite overall net sales declining $4.7 million to $86.4 million.

"Mueller Technologies remains focused on growing sales of its higher-margin AMI and leak detection technologies, and on improving operating performance over the course of the year. Backlog and projects awarded at both Mueller Systems and Echologics continue to be up substantially on a year-over-year basis at the end of the quarter. Mueller Technologies benefited from a transition to higher-margin products, with its adjusted operating loss increasing only $0.3 million despite a $6.9 million decrease in net sales.

"We continue to expect demand for our products to increase year-over-year, driven by growth in both municipal spending and residential construction, and we believe we are on track to meet our expectations for the full year.

"In March, we increased our quarterly dividend to $0.03 per share as part of a disciplined capital allocation strategy that seeks to enhance the value delivered to our stockholders. The increase reflects our continued confidence in our strengthening financial position and earnings prospects."

Consolidated Results

Net sales for the 2016 second quarter decreased $6.7 million, or 2.3 percent, to $283.6 million as compared with $290.3 million for the 2015 second quarter, with increased shipment volumes at Mueller Co. offset by lower shipment volumes at Mueller Technologies and Anvil.

Adjusted operating income for the 2016 second quarter increased $3.9 million to $30.2 million as compared with $26.3 million for the 2015 second quarter. The increase in adjusted operating income was primarily due to improved operating performance at Mueller Co. and Anvil of $2.9 million and $1.1 million, respectively.

Segment Results

Mueller Co.

Net sales for the 2016 second quarter of $182.2 million increased $4.9 million as compared with $177.3 million for the 2015 second quarter. Mueller Co.'s sales increased 6.5 percent, excluding sales of Henry Pratt's water treatment valves, which decreased $4.4 million in the quarter.

Adjusted operating income for the 2016 second quarter improved 9.0 percent to $35.3 million as compared with $32.4 million for the 2015 second quarter. Adjusted operating margin for the 2016 second quarter improved 110 basis points to 19.4 percent as compared with 18.3 percent for the 2015 second quarter.

Anvil

Net sales for the 2016 second quarter decreased 5.2 percent to $86.4 million as compared with $91.1 million for the 2015 second quarter.

Adjusted operating income for the 2016 second quarter improved 14.9 percent to $8.5 million as compared with $7.4 million for the 2015 second quarter. This improvement reflects lower raw material costs and other cost savings.

Mueller Technologies

Net sales for the 2016 second quarter decreased to $15.0 million as compared with $21.9 million for the 2015 second quarter. Despite the overall decline in net sales, we saw an increase of 26 percent in sales of our AMI systems, and our backlog and projects awarded, both of which are primarily AMI, were up about 30 percent.

Adjusted operating loss for the 2016 second quarter was $4.9 million as compared with $4.6 million for the 2015 second quarter.

Interest Expense, Net

Interest expense, net for the 2016 second quarter was $5.9 million slightly down from $6.1 million for the 2015 second quarter.

Income Taxes

For the 2016 second quarter, income tax expense of $7.7 million was 32.9 percent of income before income taxes. In the 2016 second quarter, we recognized an income tax benefit of $0.7 million associated with the adoption of new accounting rules related to income taxes for stock compensation plans. Adjusted net income per diluted share would have been $0.10 even without the income tax benefit of $0.7 million.

Use of Non-GAAP Measures

The Company reports its financial results under accounting principles generally accepted in the United States ("GAAP"), as well as through the use of non-GAAP measures. The Company presents adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, free cash flow, net debt and net debt leverage as non-GAAP measures. Adjusted operating income represents operating income excluding restructuring. This amount divided by net sales is adjusted operating margin. Adjusted EBITDA represents operating income excluding restructuring, depreciation and amortization. This amount divided by net sales is adjusted EBITDA margin. The Company presents adjusted operating income, adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin because these are measures management believes are frequently used by securities analysts, investors and other interested parties in the evaluation of financial performance. Adjusted net income and adjusted net income per diluted share exclude, on an after-tax basis, restructuring. Restructuring is excluded because it is not considered indicative of recurring operations...


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