Water infrastructure products manufacturer Mueller Water Products reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 9.4% year on year to $380.8 million. On the other hand, the company’s full-year revenue guidance of $1.46 billion at the midpoint came in 0.6% below analysts’ estimates. Its non-GAAP profit of $0.38 per share was 12.3% above analysts’ consensus estimates.

Is now the time to buy MWA? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Mueller Water Products’ third quarter results were met with a negative market reaction, despite revenue and non-GAAP profits exceeding Wall Street expectations. Management attributed the quarter’s performance to robust volume growth in iron gate valves, hydrants, and specialty valves, as well as improved price realization. CEO Marietta Zakas highlighted manufacturing efficiencies and operational improvements as key factors behind the company’s expanded gross margins, noting, “Our team’s unwavering commitment and relentless focus on operational excellence and customer service enabled consolidated gross margin expansion of 500 basis points in the fourth quarter.”

Looking forward, management’s outlook for the remainder of the year and into 2026 is shaped by cautious optimism, with a focus on continued margin expansion and strategic investments in manufacturing capacity. CFO Melissa Rasmussen stated that municipal repair and replacement demand is expected to offset a decline in residential construction, while ongoing capital investments in iron foundries and digital customer experience initiatives are anticipated to drive long-term growth. CEO Zakas noted, “We expect to deliver continued net sales growth and margin expansion in 2026,” but also acknowledged external headwinds such as tariffs and lingering uncertainty in the macro environment.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to strength in core product lines, commercial execution, and operational efficiency, while highlighting the impact of tariffs and strategic investments on future outcomes.

• Core product strength: Double-digit net sales growth was seen in iron gate valves, specialty valves, hydrants, and repair products, aided by resilient demand from municipal customers and targeted commercial initiatives.
• Manufacturing efficiencies: Operational improvements and the transition to a new brass foundry drove significant gross margin expansion, with further benefits expected as the company scales production and realizes cost savings from facility upgrades.
• Commercial investments: The company cited investments in digital customer experience and process optimization as supporting improved delivery times and expanded market penetration, contributing to mid-single-digit volume growth for the year.
• Tariff headwinds: Management acknowledged that new tariffs primarily affected specialty valves and repair products, but emphasized that price actions and supply chain initiatives largely offset these impacts during the quarter.
• Leadership transition: CEO Marietta Zakas announced her upcoming retirement in early 2026, with President Paul McAndrew set to assume the CEO role, ensuring continuity in strategy and operational focus.

Drivers of Future Performance

Management projects that long-term growth will be driven by municipal demand, operational investments, and ongoing margin expansion, despite near-term headwinds from tariffs and a slowdown in residential construction.

• Municipal demand resilience: The company expects municipal repair and replacement activities to deliver low- to mid-single-digit growth, helping to offset high single-digit declines anticipated in residential construction, as stated by CFO Melissa Rasmussen.
• Operational and digital investments: Planned multi-year capital expenditures in iron foundries and enhancements to digital customer interfaces are expected to build future capacity, drive efficiencies, and improve the customer experience, though immediate margin benefits are not anticipated in the coming year.
• Tariff and cost management: Management believes that targeted pricing and supply chain initiatives will help mitigate the estimated 3% tariff impact on cost of sales, but cautions that further price increases are not included in current guidance, leaving some upside if implemented.

Catalysts in Upcoming Quarters

Looking ahead, our analyst team will be monitoring (1) the pace and impact of capital investments in iron foundries and digital customer experience projects, (2) execution of targeted pricing initiatives and their ability to offset tariff-related cost pressures, and (3) the resilience of municipal demand amid continued weakness in residential construction. Updates on the rollout of new products and progress toward margin expansion will also be closely tracked.

Mueller Water Products currently trades at $23.51, down from $25 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

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