Mueller Water Products Inc.

Overview Key strengths Key risks Strong brand recognition among waterworks customers, which drives some pricing power. Relatively smaller in terms of revenue and more limited operational focus when compared to similarly rated peers. Exposed to favorable trends in the municipal utilities market. High customer and geographic concentration. Large installed base across the U.S. Exposed to cyclical residential and nonresidential construction end markets, which may result in compression of cash flow and an increase in leverage over time. Given its conservative financial policy, we believe Mueller has flexibility to absorb the expected adverse effects from the recent cybersecurity breach reported on Oct. 28, 2023. The incident caused disruptions and limitation of access to portions of the company?s business applications that support

...We do not believe Mueller's recent cybersecurity event will impact its ratings. Given its conservative financial policy, we believe Mueller has flexibility to absorb the expected adverse effects from the recent cybersecurity breach reported on Oct. 28, 2023. The incident caused disruptions and limitation of access to portions of the company's business applications that support aspects of its operations and corporate functions, which limited its ability to take orders and ship products. The cyber-attack has already affected the timing of its financial disclosures and delayed filing itself, and we will continue to monitor the situation and assess any impact to Mueller's revenue, EBITDA, and customer relationships. Nevertheless, we believe Mueller has plenty of cushion in the rating given its historically conservative financial policy, with leverage well below the downgrade threshold of 3x. Volume declines will likely continue into 2024 and lead to negative sales growth overall, partly offset...

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