Mueller Water Products (MWA 5.26%), a leading supplier of products and solutions used for water transmission, distribution, and management, released its fiscal third quarter 2025 results on August 4, 2025. The most notable news was that revenue (GAAP) reached $380.3 million, easily outpacing analyst expectations of $367.8 million. Adjusted earnings per share (EPS) matched consensus at $0.34. The quarter established new company records in consolidated net sales, gross margin, and adjusted EBITDA. Management noted higher than expected order activity, margin gains from manufacturing improvements, and the positive impact of targeted price increases. Despite facing increased tariffs and currency headwinds, overall performance exceeded expectations and led the company to raise guidance for the full fiscal year.
| Metric | Q3 2025 | Q3 2025 Estimate | Q3 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.34 | $0.34 | $0.32 | 6.3 % |
| Revenue (GAAP) | $380.3 million | $367.78 million | $356.7 million | 6.6 % |
| Operating Margin (GAAP) | 19.4 % | 18.8 % | 0.6 pp | |
| Net Income Margin (GAAP) | 13.8 % | 13.3 % | 0.5 pp | |
| Adjusted EBITDA (Non-GAAP) | $86.4 million | $85.2 million | 1.4 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q2 2025 earnings report.
Business Overview and Recent Strategic Priorities
Mueller Water Products specializes in products and systems vital to water infrastructure. Its product lineup includes iron gate valves, which regulate water flow, fire hydrants for public safety, as well as advanced solutions for water management such as pressure control and leak detection. These products are widely specified in U.S. metropolitan water systems, providing recurring sales and a solid customer base.
In recent years, the company has focused on modernizing manufacturing capabilities, expanding its portfolio, and introducing new technology like intelligent water monitoring. Investments such as upgrading foundries and advanced manufacturing initiatives are viewed as key to margin expansion, cost control, and product quality. Its leading market position, broad distribution network, and ongoing innovation help drive growth amid a competitive and regulated landscape.
Quarter Highlights: Financial and Operational Developments
Net sales (GAAP) rose 6.6%, marking a new high in consolidated revenue. Higher volumes across most product lines and recent price increases fueled this growth. Notably, both the Water Flow Solutions and Water Management Solutions segments contributed, with Water Management Solutions growing at a faster 10.2% pace, attributed to increased sales of repair products and hydrants.
Gross profit grew to $145.7 million, and gross margin increased by 1.5 percentage points to 38.3% compared to the prior year. The improvement reflected better manufacturing efficiencies and added scale, which offset costs from recently enacted tariffs. Management stated, “Our gross margin exceeded 38% this quarter, reflecting a significant sequential improvement of 320 basis points.”
While operating income and net income margins both widened compared to the prior year, the results were partially held back by a sharp rise in selling, general, and administrative (SG&A) expenses. SG&A expense increased 15.4% to $71.0 million, driven mainly by currency fluctuations related to the Israeli shekel and some inflationary pressures, partly offset by lower amortization expense. Adjusted EBITDA for the company increased 1.4%, but the EBITDA margin contracted to 22.7% from 23.9%, as unfavorable foreign exchange and ongoing tariff costs outpaced some operational benefits.
Cash flow from operations and free cash flow for 9M FY2025 were $135.8 million and $103.0 million, respectively, both lower than in the prior year periods. Management attributed the decline to working capital changes and fewer one-time liabilities, partially offset by higher net income. Capital expenditures rose to $32.8 million for 9M FY2025, supporting the modernization of iron foundries and new manufacturing initiatives. The company bought back $10 million in stock, and total net leverage dropped to 0.3 times adjusted EBITDA (non-GAAP), indicating a strong balance sheet position.
Iron gate valves, which form the backbone of many U.S. water systems, continued to show robust order trends amid ongoing infrastructure investment. Repair products, typically fast-turnaround parts for maintaining water infrastructure, saw heightened demand in Water Management Solutions. However, the company encountered pockets of weakness, with lower volumes in service brass products and natural gas distribution products—potentially signaling softer demand or increased competition in those areas. The company did not report significant new product launches but reaffirmed an emphasis on Environmental, Social, and Governance (ESG) initiatives and published a new annual ESG report.
Management closed a legacy brass foundry during the period, aiming to boost margins and operational flexibility. In doing so, the company took a $0.8 million asset write-down (GAAP, Q2 FY2025), but expects the closure to positively impact future profitability. There was a minor increase in the quarterly dividend, which rose to $0.067 per share. This marks a continuation of the company’s capital return program, including both dividends and share repurchases.
Outlook and What to Watch
Management raised its financial outlook for fiscal 2025. Guidance for net sales now stands at $1,405–$1,415 million for FY2025, up from a previous midpoint of $1,395 million, while adjusted EBITDA (non-GAAP) is forecast at $318–$322 million, up from $310–$315 million. Free cash flow is expected to exceed 80% of adjusted net income for FY2025. The guidance uplift follows the strong quarter and the benefit of recent price actions, though management noted there is a lag between higher tariffs and the benefit from future price increases.
The company did not alter other guidance areas significantly, maintaining its outlook for expenses and capital investment. For the upcoming quarter and beyond, investors should watch for further impacts from tariffs, currency swings, margin performance in both operating segments, and cash flow trends. The rollout of additional price increases to address tariffs is expected to benefit results later in the year, particularly in Q4 FY2025, following a lag period identified by management.
The quarterly dividend was raised 4.7% to $0.067 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
