On Nov. 5, Mueller Water (NYSE:MWA) (NYSE:MWA-B) released fourth-quarter earnings for the period ended Sept. 30.

  • The soft residential construction market led to a 8.3% decrease on the top line.
  • The revenue decrease contributed to a 310-basis-point drop-off in operating margin.
  • Mueller Water is rated four stars in our Motley Fool CAPS investor-intelligence database. Former parent and fellow Motley Fool Hidden Gems recommendation Walter Industries (NYSE:WLT) also sports an impressive four-star rating.

(Figures in millions, except per-share data.)

Income Statement Highlights

Q4 2007

Q4 2006

Change

Sales

$474.9

$518.1

(8.3%)

Net Profit

$14.6

$16.9

(13.6%)

EPS

$0.13

$0.15

(13.3%)

Diluted Shares

115.5

114.7

0.7%

Get back to basics with the income statement.

Margin Checkup

Q4 2007

Q4 2006

Change*

Gross Margin

24.9%

26.1%

(1.2)

Operating Margin

10.7%

13.8%

(3.1)

Net Margin

3.1%

3.3%

(0.2)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q4 2007

Q4 2006

Change

Cash + ST Invest.

$87.3

$81.4

7.2%

Accounts Rec.

$302.1

$322.9

(6.4%)

Inventory

$453.5

$454.6

(0.2%)

Liabilities

Q4 2007

Q4 2006

Change

Accounts Payable

$100.7

$129.9

(22.5%)

Long-Term Debt

$1,094.3

$1,118.3

(2.1%)

The balance sheet reflects the company's health.

Cash Flow Highlights

FY 2007

FY 2006

Change

Cash From Ops.

$159.2

$107.6

48%

Capital Expenditures

$88.3

$71.1

24.2%

Free Cash Flow

$70.9

$36.5

94.2%

Free cash flow is a Fool's best friend.

Related Foolishness:

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