A weak housing market and rising costs helped drag Mueller Water Products Inc.'s fiscal second-quarter profit down about 68 percent, an analyst said Thursday.
Brean Murray, Carret & Co. analyst Michael Gaugler kept a "Hold" rating on the company, which makes water safety and conservation products.
For the period ended March 31, Atlanta-based Mueller posted profit of $5.7 million, or 5 cents per share, compared with profit of $17.9 million, or 16 cents per share, in the year-ago period.
Excluding restructuring charges, income was $6.6 million, or 6 cents per share.
Revenue fell 8 percent to $421.6 million from $459.7 million.
Analysts polled by Thomson Financial expected, on average, earnings of 9 cents per share on revenue of $434 million. Analysts polled by Thomson Financial typically exclude one-time items, such as restructuring charges.
While the results did fall shy of Wall Street's forecast, Mueller did manage to bounce back from a fiscal first-quarter loss.
"Mueller Water Products' fiscal second-quarter results reflected continued softness in new residential housing construction, and were also negatively impacted by rising raw material costs," Gaugler said in a note to clients.
Recent price increases should help _ iron pipe prices were raised 15 percent in January and hydrant prices 5 percent in February, with more hikes expected _ though competitors are likely following suit, he said.
"We remain more concerned about continued commodity price escalation than potential pricing power in end markets, given the time intervals necessary to pass increases through to end customers," he said.
Due in part to likely higher raw-material costs, Gaugler cut his 2008 earnings estimate to 25 cents from 61 cents per share, below analysts' 48-cents-per-share forecast.
The company's fiscal year ends in September.
Mueller's shares fell 2 cents to $8.03 in Thursday morning trading.
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