Mueller Water Products (NYSE:MWA) reported record adjusted earnings for fiscal 2026 and forecast further margin expansion in 2027, as the company prepares to transition its unprofitable metering business to ZENNER USA.
Full-year net sales rose 3.2% to approximately $1.5 billion, as higher pricing offset lower volumes. Adjusted EBITDA increased 14.1% to $372.2 million, and adjusted EBITDA margin expanded 240 basis points to 25.2%. Adjusted net income per share rose 19.8% to $1.57.
President and CEO Paul McAndrew attributed the results to improved productivity and cost management, stronger commercial execution and greater leadership accountability. “Together, these efforts have made Mueller a more profitable business and positioned us well for fiscal 2027,” he said.
Metering transition to support margins
Mueller has agreed to transition the metering business operated by its Mueller Systems subsidiary to ZENNER USA, part of the Minol-ZENNER Group. McAndrew said the exit would simplify operations and allow Mueller to direct resources toward opportunities with stronger growth potential.
The metering business generated approximately $40 million in sales in fiscal 2026 and had a negative adjusted EBITDA margin. McAndrew said its sales had declined at a compound annual rate of 10% over the past four or five years.
Most of the transition is expected to occur in fiscal 2027, although some activity and costs could extend beyond the year. Mueller expects approximately $26 million of one-time expenses in 2027, primarily related to warranty liabilities, operating and customer service costs, transaction costs and severance. Most of the expenses are expected in the first quarter.
The company expects an annualized adjusted EBITDA margin benefit of 100 to 140 basis points, primarily beginning in the second quarter. At the midpoint, the benefit would equal approximately $8 million in annualized EBITDA, McAndrew said. He added that Mueller will continue to support customers with warranty commitments during the transition.
Fourth-quarter results and segment performance
Fourth-quarter net sales fell 1.1% year over year to $376.5 million, primarily because of lower volumes, partly offset by higher pricing. Adjusted EBITDA rose 4.0% to $95.5 million, with adjusted EBITDA margin expanding 130 basis points to 25.4%. Adjusted net income per share was unchanged at $0.38.
In Water Flow Solutions, quarterly sales fell 3.0% to $210.9 million, reflecting lower iron gate valve and service brass volumes. Higher pricing and specialty valve volumes partly offset those declines. Segment adjusted EBITDA rose 7.0% to $67.1 million, and margin expanded 300 basis points to 31.8%.
Water Management Solutions sales rose 1.4% to $165.6 million, helped by pricing and growth in repair and natural gas distribution products. Segment adjusted EBITDA fell 8.4% to $41.2 million, while margin declined 270 basis points to 24.9%, reflecting lower volumes, tariffs and inflationary pressures.
Executive Vice President of Finance Mike Morgan said full-year adjusted earnings per share included a combined $0.09 benefit from tariff refunds and a one-time tax item associated with the i2O business exit. Morgan, who joined Mueller in October, is expected to become chief financial officer on or about November 19, following the filing of the annual report.
Fiscal 2027 outlook
Mueller’s 2027 guidance excludes all metering-related financial results. The company expects net sales of $1.44 billion to $1.47 billion and adjusted EBITDA of $378 million to $388 million. At the midpoint, the forecast implies an adjusted EBITDA margin of 26.3%, up 110 basis points from fiscal 2026.
Excluding the metering portfolio change, sales are expected to range from flat to approximately 2.5% higher year over year. The outlook includes low- to mid-single-digit pricing benefits, including a price increase that had not yet been announced. McAndrew said the increase would come later in the second quarter.
McAndrew said Mueller expects residential construction to decline by low single digits after a double-digit decline in fiscal 2026. Municipal spending is expected to remain cautious, while specialty valve sales are projected to grow by double digits.
A prior-year benefit from fulfilling hydrant backlog will create a sales headwind of around 2% in fiscal 2027, McAndrew said. Excluding that impact, Mueller expects consolidated volumes to be flat at the midpoint of its guidance.
Morgan said the company expects price to exceed costs in dollar terms, with a roughly neutral effect on margins. McAndrew said the company’s assumptions include Section 232 tariffs affecting steel products from Israel.
Cash flow and capital returns
Free cash flow increased $35.3 million to $207.3 million in fiscal 2026, exceeding the company’s expectations because of favorable working capital and lower capital expenditures. Mueller ended the year with $566 million in cash and equivalents and $454 million in total debt.
The company returned $74 million to shareholders through dividends and share repurchases during the year. It also recently announced a $300 million increase in its repurchase authorization and a 14.3% increase in its quarterly dividend to $0.08 per share.
For fiscal 2027, Mueller expects free cash flow to exceed 80% of adjusted net income and capital expenditures of $60 million to $70 million, with investments focused in part on its iron foundries.
About Mueller Water Products (NYSE:MWA)
Mueller Water Products, Inc (NYSE:MWA) manufactures products and provides services used in the treatment, transmission, distribution, and measurement of water. Its customers include municipalities, water utilities, distributors, contractors, and industrial organizations.
The company’s product portfolio includes water valves, fire hydrants, pipe fittings, repair and connection products, and related infrastructure equipment. Through its Echologics business, Mueller also provides acoustic leak-detection technologies and other solutions designed to help utilities monitor and manage water distribution systems.
Mueller Water Products traces its history to Mueller Co, which was founded in 1857.
