Mueller Water Products Q3 net loss at $19.0 million

Mueller Water Products, Inc. has reported net sales of $363.2 million and a net loss of $19.0 million in the quarter ended June 30, 2009, which included restructuring charges of $3.9 million and a write-off of deferred financing fees of $2.3 million.

“During the third quarter, we made significant progress with our ongoing cost containment actions and strong free cash flow generation,” said Gregory E. Hyland, chairman, president and chief executive officer of Mueller Water Products. “Our water infrastructure markets continue to stabilize, particularly for our Mueller Co. business. We increased production at Mueller Co. and U.S. Pipe in response to an increase in orders, which will benefit future quarters due to higher capacity utilization. We expect non-residential construction to soften further, which will negatively impact our Anvil business. We are continuing to manage aggressively through this economic cycle, focusing on containing costs and generating free cash flow. Our employees continue to do an exceptional job in helping us manage costs while making sure we maintain our high standards for service and quality.”

Net sales for the quarter declined $165.3 million year-over-year due to lower shipment volumes of $176.0 million across all business segments and unfavorable Canadian currency exchange rates, partially offset by price increases of $20.0 million.

Adjusted loss from operations for the 2009 third quarter was $4.6 million, a decrease of $58.4 million from the 2008 third quarter. Results were negatively impacted by significantly lower shipment volumes and considerably higher per-unit overhead costs on products sold due to lower production. Raw material costs were also slightly higher, and there was higher bad debt expense related to a specific customer. Partially offsetting these factors were higher sales pricing, manufacturing cost savings and reduced other selling, general and administrative expenses.

Net sales for the Mueller Co. segment of $154.6 million in the 2009 third quarter declined from 2008 third quarter net sales of $203.0 million. Lower shipment volumes of $55.5 million were partially offset by higher pricing of $10.4 million. Shipment volumes of iron gate valves, hydrants and brass service products in the quarter were below the prior year period.

Adjusted income from operations of $13.6 million and adjusted EBITDA of $26.3 million in the 2009 third quarter compare to income from operations and EBITDA of $40.4 million and $52.7 million, respectively, in the 2008 third quarter. Adjusted income from operations decreased $26.8 million due to $21.6 million of lower shipment volumes and $18.1 million of higher per-unit overhead costs on products sold from lower production. Adjusted income from operations was also impacted by $5.7 million of higher raw material costs and $0.9 million of bad debt expense related to a specific customer. The decrease was partially offset by $10.4 million of higher sales pricing, $5.8 million of manufacturing cost savings and $2.2 million of reduced other selling, general and administrative expenses.

Net sales for the U.S. Pipe segment of $96.7 million in the 2009 third quarter declined from 2008 third quarter net sales of $167.7 million. Net sales decreased $70.1 million due to lower shipment volumes.

Adjusted loss from operations of $16.8 million and an adjusted EBITDA loss of $12.5 million in the 2009 third quarter compare to adjusted income from operations of $3.1 million and adjusted EBITDA of $8.5 million in the 2008 third quarter. The 2009 third quarter results were negatively impacted by $17.9 million of lower shipment volumes, $8.8 million of higher per-unit overhead costs on products sold due to lower production and $3.0 million of bad debt expense related to a specific customer. The decrease was partially offset by $4.2 million of manufacturing cost savings, $2.6 million of lower other selling, general and administrative expenses, and $1.2 million of lower raw material costs.

Net sales for the Anvil segment of $111.9 million in the 2009 third quarter declined from 2008 third quarter net sales of $157.8 million. The net sales decline was due to $50.4 million of lower shipment volumes and $6.0 million of unfavorable Canadian currency exchange rates. This decline was partially offset by higher pricing of $10.5 million.

Adjusted income from operations of $6.7 million and adjusted EBITDA of $11.1 million in the 2009 third quarter compare to income from operations and EBITDA of $21.9 million and $26.9 million, respectively, in the 2008 third quarter. Adjusted income from operations decreased $13.8 million due to lower shipment volumes and $11.3 million due to higher per-unit overhead costs on products sold from lower production. Income from operations was also impacted by higher raw material costs of $4.0 million. These items were partially offset by higher sales pricing of $10.5 million; lower selling, general and administrative expenses of $2.7 million; and manufacturing cost savings of $1.8 million.

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