What was the segment-level split of the tariff refunds mentioned?

The overall 150 basis point benefit from tariff refunds was split approximately 50-50 between segments, resulting in a 140 basis point impact in WFS and a 170 basis point impact in WMS. “For the segment, that's split about 50-50. So you would see a 140 basis point impact in WFS and 170 basis point impact in WMS.”

Provide more detail on specialty valves demand, visibility for Q4, and how the data center opportunity is being pursued (distribution vs. direct spec-in).

Specialty valves are the fastest-growing category, leveraging operational and engineering investments. Demand includes potable, wastewater, and industrial water, with industrial water for data centers being a small but fastest-growing segment. Sales are through distribution and direct commercial efforts for Approved Manufacturers Lists (AMLs). “industrial water, although a small category for us, has been one of our fastest-growing categories as we kind of not just think about the potable water or the infrastructure water around data centers, we're also seeing a step increase then of our ability to get specialty valves into industrial water for data centers as well.”

With federal stimulus sunsetting, what is the visibility into municipal repair and replacement spending over the next 1-2 years?

Federal investment is less than 5% of total municipal investment. The sunsetting impact will take multiple years to materialize as appropriated funds still need to be executed. No meaningful change is expected from federal funding impact over the next 1-3 years. “You think about the federal sunset and federal investment is less than 5% of the total investment into municipalities, the rest coming from state and local governments. And we are seeing the sunset, and it's going to take multiple years to see that impact because a lot of those funds have already been appropriated in and they just need to be executed into projects.”

MWA

Mueller Water Products (MWA) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q3 FY26)· Industrials· Aug 6, 2026

Source: earnings call transcript

Executive summary

Mueller Water Products Q3 FY26 — Record Performance Driven by Margin Expansion and Specialty Valve Growth

Mueller Water Products delivered a record third quarter, driven by strong commercial execution, resilient municipal demand, and significant margin expansion. The company's Mueller Operating System is credited for improved operational efficiency and disciplined cost management, leading to raised full-year adjusted EBITDA guidance. While facing headwinds from slower residential construction and ongoing inflationary pressures, strategic investments in capacity and specialty valves are positioning the company for long-term growth.

Highlights

Achieved record net sales of $395.9 million, growing 4.1% year-over-year.
Adjusted EBITDA reached a record $107.4 million, increasing 24.3% year-over-year, with margin expanding 440 basis points to 27.1%.
Adjusted net income per diluted share increased 47.1% to a record $0.50, benefiting from a one-time tax benefit of $0.06 per share.
Free cash flow for the first 9 months increased $7.6 million to $110.6 million, representing 59% of adjusted net income.
Raised annual adjusted EBITDA guidance to a new range of $367 million to $372 million, implying a 25.1% margin at the midpoint.

Concerns

Experienced slightly lower volumes, particularly in iron gate valve and service brass, partially offsetting higher pricing.
Incurred $3.1 million in portfolio optimization costs and $11.2 million in strategic reorganization charges related to the i2O business exit.
Anticipates softer new residential construction activity during Q4 FY26, impacting short-cycle products and hydrant volumes.
Continued to experience elevated Section 232 tariff costs and ongoing inflationary pressures, partially offset by IEEPA tariff refunds.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Net Sales Growth	2.8% and 3.5% year-over-year high materiality	FY26	High
Full-year 2026 Adjusted EBITDA	$367 million to $372 million high materiality	FY26	High
Full-year 2026 SG&A Expenses	$241 million to $245 million medium materiality	FY26	High
Full-year 2026 Effective Tax Rate	between 21% and 23% medium materiality	FY26	High
Full-year 2026 Capital Expenditures	$60 million to $65 million medium materiality	FY26	High
Full-year 2026 Free Cash Flow Conversion	exceed 70% of adjusted net income medium materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Water Flow Solutions (WFS) Higher pricing across most product lines and volume growth in specialty valves largely offset lower iron gate valve and service brass volumes. Margin improvement reflects benefits of pricing, tariff refunds, and performance, offsetting lower volumes, inflationary pressures, and product mix. Adjusted EBITDA: $73.5 millionAdjusted EBITDA growth: 9.5% YoYAdjusted EBITDA margin expansion: 310 bps YoYTariff refunds impact: 140 bps	$215.3 million	-0.6%	—	Adjusted EBITDA margin 34.1%
Water Management Solutions (WMS) Driven by strong volume growth in hydrants and natural gas distribution products, along with higher pricing across most product lines. Margin improvement reflects benefits from higher pricing, lower SG&A (including reduced foreign currency headwinds), volume growth, and tariff refunds, offsetting performance and inflationary pressures. Adjusted EBITDA: $50.7 millionAdjusted EBITDA growth: 43.6% YoYAdjusted EBITDA margin expansion: 650 bps YoYTariff refunds impact: 170 bps	$180.6 million	10.3%	—	Adjusted EBITDA margin 28.1%

Orderbook & backlog

Specialty Valves Backlog N/A Q3 FY26

N/A

Makes up the majority of our backlog; fastest-growing category over the past few years.

Hydrant Backlog N/A Q3 FY26

expected to normalize in Q4 FY26

Benefited from a backlog in hydrants throughout the first 3 quarters. We expect that, that backlog will be normalized as we enter fourth quarter.

Product announcements

Product	Type	Timeline	Details
Hydrant renewal system	launch	—

Deals & partnerships

GWF AG Acquisition of certain assets and liabilities of i2O Water pressure monitoring business outside of North America.

Completed the exit of the i2O pressure monitoring business outside of North America. GWF AG, a utility metering and smart water technology company headquartered in Switzerland, acquired certain assets and liabilities of i2O Water.

Capital programs

Iron Foundries Investments underway

Benefit:support future productivity, capacity and operational excellence

reflecting continued investments in our iron foundries that support future productivity, capacity and operational excellence.

Risks & headwinds

Slower new residential construction activity Q4 FY26 and potentially into FY27

anticipated softer activity during the fourth quarter

Mitigation:Resilient municipal repair and replacement activity and strong growth in specialty valves are expected to partially offset; residential construction cannot stay depressed forever due to pent-up demand.

Elevated tariff costs and inflationary pressures ongoing

continued to experience elevated tariff costs, mainly attributable to Section 232 tariffs, along with ongoing inflationary pressures

Mitigation:IEEPA tariff refunds helped offset a portion of impacts; strong brands and pricing power to offset costs.

Uncertain macro environment ongoing

broader external uncertainty

Mitigation:Focus on what can be controlled, executing strategies, investing in growth, proactively managing costs through Mueller Operating System.

What to watch in Q4 FY26

Residential Construction Activity

Next quarter / FY27

Current Slower activity

Target Stabilization or rebound

Why it matters

Residential construction weakness impacts short-cycle products and hydrant volumes, and its recovery is a key tailwind for overall growth.

While we anticipate softer new residential construction activity during the fourth quarter, we continue to expect resilient municipal repair and replacement activity and strong growth in specialty valves.

Find out whether MWA delivers this. Inve re-checks your case every morning.

Q&A highlights

How should segment contribution to the updated Q4 guidance be thought of, given the top-line decline and EBITDA growth against strong prior-year comps?

WFS adjusted EBITDA is expected to be above prior year due to gross margin improvements, efficiencies, and price realization, but with sequential decline due to seasonality and lower short-cycle product volumes. WMS expects lower margins YoY and sequentially due to normalizing hydrant backlog, residential slowdown impact, lapping tariff pricing, and higher Section 232 tariffs offsetting IEEPA refunds.

“For the WFS segment, we are expecting adjusted EBITDA to be above prior year due to gross margin improvements, operational efficiencies and then price realization. We're expecting to see a sequential decline from third to fourth quarter, which part of that is due to the typical seasonality decline sequentially, and we expect volumes and product mix to be a driver of that as well.”

asked by Bryan Blair · answered by Melissa Rasmussen

2 min read 6 chapters

Detailed narrative

Record Q3 Performance and Margin Expansion

Mueller Water Products achieved record net sales, adjusted EBITDA, and adjusted net income per diluted share in Q3 FY26. Net sales grew 4.1% to $395.9 million, driven by higher pricing and strong specialty valve demand. Adjusted EBITDA margin expanded 440 basis points year-over-year to a record 27.1%, primarily due to pricing actions, tariff refunds, and favorable SG&A cost management, despite inflationary pressures and volume impacts.

Mueller Operating System and Operational Excellence

The company highlighted the Mueller Operating System as a key framework driving discipline, execution, and accountability. This system has contributed to expanding margins, strengthening cash generation, and investing in growth. The Q3 results provide further evidence of its effectiveness in reducing complexity, improving processes, and fostering continuous improvement across the organization.

Strategic Portfolio Optimization

Mueller completed the exit of its i2O pressure monitoring business outside North America, selling certain assets and liabilities to GWF AG. This strategic move resulted in $3.1 million in portfolio optimization costs and $11.2 million in strategic reorganization charges, but also generated a one-time tax benefit of approximately $0.06 per diluted share, supporting future margin expansion and free cash flow.

End Market Dynamics and Growth Drivers

While facing slower new residential construction activity, the company benefited from resilient municipal repair and replacement demand and strong growth in project-related specialty valves. Commercial initiatives are focused on increasing market penetration for leading products and expanding into adjacent markets, particularly industrial water applications for data centers, where the company is seeing traction.

Financial Strength and Capital Allocation

Mueller ended the quarter with a strong balance sheet, including $495 million in cash and equivalents and $659 million in total liquidity. The company continues to fund capacity and efficiency investments, such as in iron foundries, while returning $21 million to shareholders through dividends and share repurchases. Capital allocation priorities remain organic investments, targeted acquisitions, and shareholder returns.

Sustainability Achievements

The company's 2025 sustainability report highlighted significant progress, including achieving its lowest total recordable incident rate and reducing Scope 1 and 2 emissions intensity by 13% year-over-year, totaling a 35% reduction towards a 50% goal by 2035. Employee engagement also reached 80%, one year ahead of schedule, demonstrating a strong commitment to employee well-being.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.