Mueller Water Products Inc.

S&P Global Ratings' stable outlook on Mueller Water Products Inc. reflects our expectation that increased spending by water utilities, coupled with the benefits of management's cost-efficiency initiatives and improved pricing, will enable the company to modestly expand its EBITDA over the next 12 months. Therefore, we expect Mueller's adjusted debt to EBITDA to be in the 1.5x-2.0x range and its funds from operations (FFO)-to-debt ratio to be in the 35-40% range over this period. We could consider downgrading Mueller if a softer operating performance or more aggressive financial policies (such as a large acquisition or more significant share repurchases) cause the company to sustain debt to EBITDA or more than 3x or FFO to debt of less than 30% without

...We expect Mueller to retain its market position through a potential downturn. Mueller occupies a special niche in the waterworks repair space. While it is smaller than its peers, the company benefits from its large installed base of products across North American municipalities and a robust distribution network, which will allow it to retain its market position. Given the increased need for municipal spending on aging water systems, along with the company's conservative financial policy, we expect it to maintain solid credit metrics even amid difficult market environments. The company's Technologies segment will likely remain unprofitable for the foreseeable future. In our opinion, Mueller's Technologies segment will continue to face substantial headwinds arising from operational challenges and raw material price inflation, which will limit its profitability. The company has faced some difficulties in entering the intelligent water metering space because larger and more established players...

Full Report