Mueller Water Products Inc
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
MWA$24.05-2.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001350593-24-000042
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001350593-24-000058
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 85 previous paragraphs and 85 current paragraphs.
41 unchanged; 30 reworded; 14 added; 14 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Net sales for the three months ended June 30, 2024 were $356.7 million as compared with $326.6 million in the prior year period, an increase of $30.1 million or 9.2%, primarily as a result of net higher volumes and, to a lesser extent, higher pricing. The Israel-Hamas war negatively impacted Net sales by about 3%.
Current report
Gross profit for the three months ended June 30, 2024 was $131.4 million as compared with $100.1 million in the prior year period, an increase of $31.3 million or 31.3%, primarily as a result of favorable manufacturing performance, higher volumes and favorable price/cost. The Israel-Hamas war negatively impacted Gross profit by about 7%. Inflation impacted Cost of sales by approximately 2% and Gross profit by approximately 4%. As a result, Gross margin was 36.8% in the three months ended June 30, 2024 as compared with 30.6% in the prior year period.
Current report
Net sales for the three months ended June 30, 2024 were $208.1 million as compared with $150.1 million in the prior year period, an increase of $58.0 million or 38.6%, primarily as a result of higher volumes and, to a lesser extent, higher pricing across most product lines.
Current report
Gross profit for the three months ended June 30, 2024 was $81.9 million as compared with $33.6 million in the prior year period, an increase of $48.3 million or 143.8%. This increase was primarily a result of favorable manufacturing performance driven by labor and overhead efficiencies, higher volumes across most product lines and, to a lesser extent, favorable price/cost. Inflation negatively impacted Cost of sales by approximately 3% and Gross profit by approximately 4%. As a result, Gross margin was 39.4% in the three months ended June 30, 2024 and 22.4% in the prior year period.
Current report
SG&A for the three months ended June 30, 2024 was $24.1 million as compared with $20.9 million in the prior year period, an increase of $3.2 million or 15.3%, primarily as a result of higher employee incentives, and inflation of approximately 3%, partially offset by lower salary and benefit expense, and third-party fees. SG&A as a percentage of net sales was 11.6% and 13.9% in the three months ended June 30, 2024 and 2023, respectively.
Current report
Net sales for the three months ended June 30, 2024 were $148.6 million as compared with $176.5 million in the prior year period, a decrease of $27.9 million or 15.8%, as a result of lower volumes, primarily with respect to fire hydrants as well as negative impacts from the Israel-Hamas war, partially offset by higher pricing across most product lines.
Current report
Gross profit for the three months ended June 30, 2024 was $49.5 million as compared with $66.5 million in the prior year period, a decrease of $17.0 million or 25.6%. The decrease was primarily driven by lower volumes across most product lines and the impact from the Israel-Hamas war. The decrease was partially offset by favorable price/cost. Inflation negatively impacted Cost of sales by approximately 1%, and Gross profit by approximately 3%. Gross margin was 33.3% in the three months ended June 30, 2024 as compared with 37.7% in the prior year period.
Current report
SG&A for the three months ended June 30, 2024 was $22.6 million as compared with $26.5 million in the prior year period, a decrease of $3.9 million or 14.7%, primarily due to lower salary and benefit expense associated with our restructuring activities, and third-party fees. The decrease was partially offset by higher employee incentives, and approximately 4% inflation. SG&A as a percentage of net sales was 15.2% and 15.0% in the three months ended June 30, 2024 and 2023, respectively.
Current report
SG&A for the three months ended June 30, 2024 was $14.8 million as compared with $13.2 million in the prior year period, an increase of $1.6 million or 12.1%, primarily as a result of higher employee incentive costs and third-party fees, and approximately 3% inflation. The increase was partially offset by lower salary and benefit expense as a result of restructuring activities we undertook in the third quarter of 2023.
Current report
Net sales for the nine months ended June 30, 2024 were $966.5 million as compared with $974.3 million in the prior year period, a decrease of $7.8 million or 0.8%, primarily as a result of lower volumes, including a negative impact from the Israel-Hamas war of less than 2%, partially offset by higher pricing across most product lines.
Current report
Net sales for the nine months ended June 30, 2024 were $555.2 million as compared with $472.9 million in the prior year period, an increase of $82.3 million or 17.4%, primarily as a result of higher volumes and, to a lesser extent, higher pricing across most product lines.
Current report
Net sales for the nine months ended June 30, 2024 were $411.3 million as compared with $501.4 million in the prior year period, a decrease of $90.1 million or 18.0%, primarily as a result of lower volumes largely due to fire hydrants, including the impact of the Israel-Hamas war, partially offset by higher pricing across most product lines.
Current report
Gross profit for the nine months ended June 30, 2024 was $142.4 million as compared with $173.7 million in the prior year period, a decrease of $31.3 million or 18.0%. This decrease was primarily a result of inefficiencies associated with lower volumes including the impact of the Israel-Hamas war, partially offset by favorable price/cost and favorable manufacturing performance. Gross margin was 34.6% in both the nine months ended June 30, 2024 and the prior year period.
Current report
SG&A for the nine months ended June 30, 2024 was $42.8 million as compared with $40.2 million in the prior year period, an increase of $2.6 million or 6.5%, primarily as a result of higher costs associated with increased employee incentives, approximately 3% inflation, and higher third-party fees partially offset by lower salary and benefit expense associated with restructuring activities we undertook in 2023, and lower travel expense.
Removed paragraphs (14)
Previous report
Net sales in the three months ended March 31, 2024 were $353.4 million as compared with $332.9 million in the prior year period, an increase of $20.5 million or 6.2%, primarily as a result of higher pricing across most product lines and overall increased volumes.
Previous report
Gross profit in the three months ended March 31, 2024 was $130.4 million as compared with $97.8 million in the prior year period, an increase of $32.6 million or 33.3%, primarily as a result of an increase in both favorable manufacturing performance and pricing. These increases were partially offset by Cost of sales inflation of approximately 2% while inflation impacted Gross profit by approximately 3%. As a result, Gross margin was 36.9% in the three months ended March 31, 2024 as compared with 29.4% in the prior year period.
Previous report
Net sales in the three months ended March 31, 2024 were $205.8 million as compared with $157.2 million in the prior year period, an increase of $48.6 million or 30.9%, primarily as a result of higher volumes and higher pricing across most product lines.
Previous report
Gross profit in the three months ended March 31, 2024 was $77.2 million as compared with $37.2 million in the prior year period, an increase of $40.0 million or 107.5%. This increase was primarily a result of higher volumes across most product lines, favorable manufacturing performance driven by overhead, material and labor efficiencies, as well as higher pricing. Additionally, inflation negatively impacted Cost of sales by approximately 2% and Gross profit by approximately 4%. As a result, Gross margin was 37.5% in the three months ended March 31, 2024 and 23.7% in the prior year period.
Previous report
Net sales in the three months ended March 31, 2024 were $147.6 million as compared with $175.7 million in the prior year period, a decrease of $28.1 million or 16.0%, as a result of lower volumes across most products lines partially offset by higher pricing across most product lines. Net sales were impacted nominally by the Israel-Hamas war.
Previous report
Gross profit in the three months ended March 31, 2024 was $53.2 million as compared with $60.6 million in the prior year period, a decrease of $7.4 million or 12.2%. The decrease was primarily a result of lower volumes across most product lines and impacts of the Israel-Hamas war, partially offset by favorable manufacturing performance driven by material efficiencies and lower supply chain costs and higher pricing. Gross margin was 36.0% in the three months ended March 31, 2024 as compared with 34.5% in the prior year period.
Previous report
SG&A in the three months ended March 31, 2024 was $24.2 million as compared with $28.7 million in the prior year period, a decrease of $4.5 million or 15.7%, primarily due to lower salary and benefit expense associated with our restructuring activities, third-party fees and engineering material expenses, which were partially offset by increased costs related to incentives as well as approximately 4% inflation and increased bad debt expense. SG&A as a percentage of net sales was 16.4% and 16.3% in the three months ended March 31, 2024 and 2023, respectively.
Previous report
SG&A in the three months ended March 31, 2024 was $14.9 million as compared with $13.5 million in the prior year period, an increase of $1.4 million or 10.4%, primarily as a result of higher incentive costs and third-party fees, as well as approximately 3% inflation.
Previous report
Net sales in the six months ended March 31, 2024 were $609.8 million as compared with $647.7 million in the prior year period. a decrease of $37.9 million or 5.9%, primarily as a result of a decrease in net volumes partially offset by higher pricing across most product lines.
Previous report
Net sales in the six months ended March 31, 2024 were $347.1 million as compared with $322.8 million in the prior year period, an increase of $24.3 million or 7.5%, primarily as a result of higher pricing and higher volumes across most product lines.
Previous report
SG&A in the six months ended March 31, 2024 was $43.8 million as compared with $44.4 million in the prior year period, a decrease of $0.6 million or 1.4%, primarily as a result of lower salary and benefit expense associated with our restructuring activities, and third-party fees, partially offset by approximately 3% inflation and increased incentives. SG&A as a percentage of net sales was 12.6% and 13.8% in the six months ended March 31, 2024 and 2023, respectively.
Previous report
Net sales in the six months ended March 31, 2024 were $262.7 million as compared with $324.9 million in the prior year period, a decrease of $62.2 million or 19.1%, primarily as a result of lower volumes across most product lines partially offset by higher pricing across most product lines.
Previous report
Gross profit in the six months ended March 31, 2024 was $92.9 million as compared with $107.2 million in the prior year period, a decrease of $14.3 million or 13.3%. This decrease was primarily a result of lower volumes, offset by pricing and favorable manufacturing performance. Gross margin was 35.4% in the six months ended March 31, 2024 and 33.0% in the prior year period. Additionally, Cost of sales and Gross margin were impacted approximately 1% by deflation.
Previous report
SG&A in the six months ended March 31, 2024 was $28.0 million as compared with $27.0 million in the prior year period, an increase of $1.0 million or 3.7%, primarily as a result of higher costs associated with approximately 3% inflation, increased incentives, higher third-party fees and unfavorable foreign currency fluctuation, partially offset by lower salary and benefit expense associated with our restructuring activities, and lower travel expense.
Reworded paragraphs (30)
Previous wording
We have two reportable segments: Water Flow Solutions and Water Management Solutions. Water Flow Solutions’ portfolio includes iron gate valves, specialty valves and service brass products. Water Flow Solutions represented 50% of our fiscal 2023 net sales. Water Management Solutions’ portfolio includes fire hydrants, repair and installation, natural gas, metering, leak detection, and pressure management and control products and solutions. Water Management Solutions represented 50% of our fiscal 2023 net sales.
Current wording
We have two reportable segments: Water Flow Solutions and Water Management Solutions. Water Flow Solutions’ portfolio includes iron gate valves, specialty valves and service brass products. Water Flow Solutions represented approximately 50% of our fiscal 2023 net sales. Water Management Solutions’ portfolio includes fire hydrants, repair and installation, natural gas, metering, leak detection, and pressure management and control products and solutions. Water Management Solutions represented approximately 50% of our fiscal 2023 net sales.
Previous wording
In October 2023, the Israel-Hamas war caused a temporary shutdown of our facility in Ariel, Israel. While we have reopened the facility, the war has caused supply interruptions and may hinder our ability to acquire the necessary materials we need to make our products. Supply disruptions from lack of access to materials have adversely impacted, and continue to adversely impact, our ability to produce and deliver our products from our facility in Ariel, Israel. Additionally, production at this facility has been adversely impacted by limited labor availability in the region. We have made investments in recruiting and training new team members, expanding our suppliers and expediting product shipments to increase production levels and meet customer delivery times.
Current wording
In October 2023, the Israel-Hamas war caused a temporary shutdown of our facility in Ariel, Israel. While we reopened the facility in November 2023, the war caused supply chain challenges and continues to hinder our ability to most efficiently manufacture our products. These supply chain disruptions have adversely impacted, and continue to adversely impact, our ability to optimally produce and deliver our products from our facility in Ariel, Israel. Additionally, production at this facility has been adversely impacted by limited labor availability in the region. We have made investments in recruiting and training new team members, expanding our suppliers and expediting product shipments to increase production levels and meet customer delivery times.
Previous wording
The cybersecurity incident consisted of unauthorized access and deployment of ransomware by a third party to a portion of our internal information system infrastructure. The incident caused temporary disruptions and limitations of access to portions of our business applications supporting aspects of our operations including shipping, receiving and payment functions. Operational delays and investigation and remediation costs in connection with the incident adversely impacted our results for the first quarter of 2024; however, on a fiscal year-to-date basis, there was no impact to our consolidated net sales. We have restored the impacted applications and systems. As reported on November 29, 2023, we identified a separate cybersecurity incident, which primarily related to a system that was at the end of its useful life and was already in the process of being replaced in the ordinary course of business and the replacement of this system was concluded during our second quarter.
Current wording
The cybersecurity incident consisted of unauthorized access and deployment of ransomware by a third party to a portion of our internal information system infrastructure. The incident caused temporary disruptions and limitations of access to portions of our business applications supporting aspects of our operations including shipping, receiving and payment functions. Operational delays and investigation and remediation costs in connection with the incident adversely impacted our results for the first quarter of 2024; however, on a fiscal year-to-date basis, there was no impact to our consolidated net sales. We have restored the impacted applications and systems. As reported on November 29, 2023, we identified a separate cybersecurity incident, which primarily related to a system that was at the end of its useful life and was already in the process of being replaced in the ordinary course of business and the replacement of this system was concluded during our second quarter 2024.
Previous wording
In the first quarter of fiscal 2024, we incurred approximately $1.5 million of expenses related to the cybersecurity incidents. We continue to analyze and remediate the impacts of the cybersecurity incidents, including making enhancements to our cybersecurity processes and analyzing the data accessed, exfiltrated or otherwise impacted in connection with the cybersecurity incidents.
Current wording
In the first quarter of fiscal 2024, we incurred approximately $1.5 million of expenses related to the cybersecurity incidents. We continue to address the impacts of the cybersecurity incidents, including making enhancements to our cybersecurity processes and analyzing the data accessed, exfiltrated or otherwise impacted in connection with the cybersecurity incidents.
Previous wording
Although we believe that our channel and customer inventory levels normalized during the first quarter of 2024, the external operating environment remains uncertain. We expect to continue to face challenges emanating from the higher interest rate environment, the Israel-Hamas war and labor inflation and availability. From a comparable perspective, in fiscal year 2023, we benefited from fulfilling an elevated backlog for certain products, which has now become more normalized as we have reduced short-cycle backlog across our portfolio, particularly with regard to iron gate valve and hydrant products. For fiscal year 2024, we anticipate that consolidated net sales will be flat to down two percent as compared with fiscal year 2023. We anticipate stable demand in the municipal repair and replacement end market driven by the aging water infrastructure despite budgetary pressures on municipalities. Additionally, we anticipate that new residential construction activity will stabilize relative to the challenges we experienced in fiscal 2023 where Census data indicates that total housing starts decreased 12.9% compared to 2022. In April 2024, Blue Chip Economic Indicators forecasted a 0.7% increase in housing starts for the calendar year 2024 as compared to the calendar year 2023. Finally, we anticipate that high interest rates will continue to negatively impact new lot and land development, depending on the geography.
Current wording
We believe that our channel and customer inventory levels normalized during the first quarter of 2024 and our orders and shipments reflect a more typical operating environment compared with the high backlog environment we experienced during and after the pandemic. However, the external operating environment remains dynamic as we face uncertainties and challenges emanating from the higher interest rate environment, the Israel-Hamas war and labor inflation and availability. From a comparable perspective, in fiscal year 2023, we benefited from fulfilling an elevated backlog for certain products, which has now become more normalized as we have reduced short-cycle backlog across our portfolio, particularly with regard to iron gate valve and hydrant products. For fiscal year 2024, we anticipate that consolidated net sales will increase between 0.7% and 1.5% as compared with fiscal year 2023. For the remainder of fiscal 2024, we anticipate stable demand in the municipal repair and replacement end market driven by the aging water infrastructure despite budgetary pressures on municipalities. Additionally, we anticipate that new residential construction activity, and new lot and land development, will be constrained by the higher interest rate environment, depending on the geography, after improving relative to the challenges we experienced in fiscal 2023 where Census data indicates that total housing starts decreased 12.9% compared to 2022. In July 2024, Blue Chip Economic Indicators forecasted a 2.1% decrease in housing starts for the calendar year 2024 as compared to the calendar year 2023.
Previous wording
For the remainder of fiscal 2024, we anticipate that inflation will continue to modestly impact manufacturing costs, primarily due to wage inflation but also raw materials and purchased parts. Inventory for the first half of fiscal 2024 experienced approximately 0.1% deflation. We expect external challenges to persist during the balance of fiscal year 2024. We will continue to monitor the market and economic conditions impacting our business and take appropriate actions to address inflationary and other cost pressures such as price increases, cost containment measures and supplier management, among other things.
Current wording
For the remainder of fiscal 2024, we anticipate that inflation will continue to modestly impact manufacturing costs, primarily due to wage inflation but also raw materials and purchased parts. Inventory for the first nine months of fiscal 2024 experienced approximately 0.1% inflation. We expect external challenges to persist during the balance of fiscal year 2024. We will continue to monitor the market and economic conditions impacting our business and take appropriate actions to address inflationary and other cost pressures such as price increases, cost containment measures and supplier management, among other things.
Previous wording
Selling, general and administrative expenses (“SG&A”) in the three months ended March 31, 2024 were $63.7 million as compared with $64.2 million in the prior year period, a decrease of $0.5 million or 0.8%, primarily due to a decrease in salary and benefit expense associated with our restructuring activities, as well as lower third-party fees, and engineering materials, partially offset by approximately 3% inflation, an increase in bad debt expense and incentives. SG&A as a percentage of net sales was 18.0% and 19.3% for the three months ended March 31, 2024 and March 31, 2023, respectively.
Current wording
Selling, general and administrative expenses (“SG&A”) for the three months ended June 30, 2024 were $61.5 million as compared with $60.6 million in the prior year period, an increase of $0.9 million or 1.5%, primarily due to an increase in employee incentives and approximately 3% inflation, partially offset by lower salary and benefit expense associated with our restructuring activities, and lower third-party fees. SG&A as a percentage of net sales was 17.2% and 18.6% for the three months ended June 30, 2024 and June 30, 2023, respectively.
Previous wording
Strategic reorganization and other charges in the three months ended March 31, 2024 were $3.2 million and primarily consisted of expenses associated with our previously announced leadership transition, severance and certain transaction-related expenses. Strategic reorganization and other charges for the three months ended March 31, 2023 were $0.7 million and primarily consisted of severance and certain transaction-related expenses.
Current wording
Strategic reorganization and other charges for the three months ended June 30, 2024 were $2.9 million and consisted of $1.4 million related to a non-cash asset impairment in addition to expenses associated with our leadership transition, severance and certain transaction-related expenses. Strategic reorganization and other charges for the three months ended June 30, 2023 were $3.9 million and consisted of severance and certain transaction-related expenses.
Previous wording
Net interest expense in the three months ended March 31, 2024 was $3.6 million as compared with $3.9 million in the prior year period, a decrease of $0.3 million or 7.7%, primarily due to higher interest income as a result of higher interest rates, partially offset by lower capitalized interest. The components of net interest expense are provided below:
Current wording
Net interest expense for the three months ended June 30, 2024 was $2.8 million as compared with $3.8 million in the prior year period, a decrease of $1.0 million or 26.3%, primarily due to higher interest income, partially offset by lower capitalized interest. The components of net interest expense are as shown below:
Previous wording
Six Months Ended March 31, 2024 Compared to Six Months Ended March 31, 2023
Current wording
Nine Months Ended June 30, 2024 Compared to Nine Months Ended June 30, 2023
Previous wording
Gross profit in the six months ended March 31, 2024 was $216.7 million as compared with $191.0 million in the prior year period, an increase of $25.7 million or 13.5%, primarily as a result of higher pricing and favorable manufacturing performance related to labor, overhead, material and logistic efficiencies, partially offset by overall lower volumes. As a result, Gross margin increased 600 basis points to 35.5% in the six months ended March 31, 2024 as compared with 29.5% in the prior year period.
Current wording
Gross profit for the nine months ended June 30, 2024 was $348.1 million as compared with $291.1 million in the prior year period, an increase of $57.0 million or 19.6%, primarily as a result of favorable manufacturing performance related to labor, overhead, and logistic efficiencies, and favorable price/cost. This increase was partially offset by overall lower volumes, negative impacts from the Israel-Hamas war of less than 4% and inflation, which impacted Cost of sales by 1% and Gross profit by 2%. As a result, Gross margin increased 610 basis points to 36.0% in the nine months ended June 30, 2024 as compared with 29.9% in the prior year period.
Previous wording
Selling, general and administrative expenses (“SG&A”) in the six months ended March 31, 2024 were $120.6 million as compared with $127.1 million in the prior year period, a decrease of $6.5 million or 5.1%, primarily due to a decrease in salary and benefit expense associated with our restructuring activities, third-party fees, commission, and engineering materials expense, partially offset by higher costs associated with approximately 3% inflation, the impact of foreign currency fluctuation and higher incentives. SG&A as a percentage of net sales was 19.8% and 19.6% for the six months ended March 31, 2024 and March 31, 2023, respectively.
Current wording
Selling, general and administrative expenses (“SG&A”) for the nine months ended June 30, 2024 were $182.1 million as compared with $187.7 million in the prior year period, a decrease of $5.6 million or 3.0%, primarily due to a decrease in salary and benefit expense associated with our restructuring activities, third-party fees, and engineering materials expense, partially offset by higher employee incentives, higher costs associated with approximately 3% inflation, and the impact of foreign currency fluctuation. SG&A as a percentage of net sales was 18.8% and 19.3% for the nine months ended June 30, 2024 and June 30, 2023, respectively.
Previous wording
Strategic reorganization and other charges in the six months ended March 31, 2024 were $9.8 million, primarily consisting of expenses associated with our previously announced leadership transition, approximately $1.5 million of expenses related to the cybersecurity incidents, severance, and certain transaction-related expenses. Strategic reorganization and other charges for the six months ended March 31, 2023 were a benefit of $3.0 million, which primarily consisted of a $4.0 million gain, before tax, on the sale of our Aurora, Illinois facility, which was partially offset by certain transaction-related expenses.
Current wording
Strategic reorganization and other charges for the nine months ended June 30, 2024 were $12.7 million, primarily consisting of $5.6 million associated with our leadership transition, certain transaction-related expenses, $1.5 million related to the cybersecurity incidents, $1.4 million related to a non-cash asset impairment, and severance. Strategic reorganization and other charges for the nine months ended June 30, 2023 were $0.9 million, which related to severance and certain transaction-related expenses partially offset by a $4.0 million gain, before tax, on the sale of our Aurora, Illinois facility.
Previous wording
Net interest expense in the six months ended March 31, 2024 was $6.9 million as compared with $7.6 million in the prior year period, a decrease of $0.7 million or 9.2%, primarily due to higher interest income as a result of higher interest rates, partially offset by lower capitalized interest. The components of net interest expense are provided below:
Current wording
Net interest expense for the nine months ended June 30, 2024 was $9.7 million as compared with $11.4 million in the prior year period, a decrease of $1.7 million or 14.9%, primarily due to higher interest income, partially offset by lower capitalized interest. The components of net interest expense are below:
Previous wording
Other expense in the six months ended March 31, 2024 was $1.6 million from the release of an indemnification receivable related to an expired uncertain tax position. There was no Other expense in the six months ended March 31, 2023.
Current wording
Other expense for the nine months ended June 30, 2024 was $1.6 million from the release of an indemnification receivable related to an expired uncertain tax position. There was no Other expense in the nine months ended June 30, 2023.
Previous wording
During the six months ended March 31, 2024, we recorded $1.6 million in income tax benefits due to the release of an uncertain tax position that expired on December 31, 2023.
Current wording
During the nine months ended June 30, 2024, we recorded $1.6 million in income tax benefits due to the release of an uncertain tax position that expired on December 31, 2023 that was related to the release of an indemnification receivable recorded in Other expense.
Previous wording
Gross profit in the six months ended March 31, 2024 was $123.8 million as compared with $83.8 million in the prior year period, an increase of $40.0 million or 47.7%. Gross margin was 35.7% in the six months ended March 31, 2024 and 26.0% in the prior year period. This increase was primarily a result of higher pricing across most product lines, favorable manufacturing performance driven by material, labor, overhead, and logistic efficiencies, and higher volumes across most product lines. Additionally, Cost of sales and Gross profit were negatively impacted by approximately 1% inflation.
Current wording
Gross profit for the nine months ended June 30, 2024 was $205.7 million as compared with $117.4 million in the prior year period, an increase of $88.3 million or 75.2%. Gross margin was 37.0% in the nine months ended June 30, 2024 and 24.8% in the prior year period. This increase was primarily a result of favorable manufacturing performance driven by labor, overhead, and logistic efficiencies, as well as higher volumes and favorable price/cost across most product lines. Additionally, Cost of sales and Gross profit were negatively impacted by approximately 1% and 2% inflation, respectively.
Previous wording
SG&A in the three months ended March 31, 2024 was $24.6 million as compared with $22.0 million in the prior year period, an increase of $2.6 million or 11.8%, primarily as a result of higher incentives, inflation of approximately 3%, as well as increased travel expenses partially offset by lower salary and benefit expense associated with our restructuring activities, and third-party fees. SG&A as a percentage of net sales was 12.0% and 14.0% in the three months ended March 31, 2024 and 2023, respectively.
Current wording
SG&A for the nine months ended June 30, 2024 was $67.9 million as compared with $65.3 million in the prior year period, an increase of $2.6 million or 4.0%, primarily as a result of increased employee incentives and approximately 3% inflation, partially offset by lower salary and benefit expense associated with our restructuring activities, and third-party fees. SG&A as a percentage of net sales was 12.2% and 13.8% in the nine months ended June 30, 2024 and 2023, respectively.
Previous wording
SG&A in the six months ended March 31, 2024 was $48.8 million as compared with $55.7 million in the prior year period, a decrease of $6.9 million or 12.4%, primarily due to lower salary and benefit expense associated with our restructuring activities, third-party fees, and engineering materials expense, partially offset by unfavorable foreign currency fluctuation, and higher costs associated with approximately 4% inflation and increased incentives. SG&A as a percentage of net sales was 18.6% and 17.1% in the six months ended March 31, 2024 and 2023, respectively.
Current wording
SG&A for the nine months ended June 30, 2024 was $71.4 million as compared with $82.2 million in the prior year period, a decrease of $10.8 million or 13.1%, primarily due to lower salary and benefit expense associated with our restructuring activities, third-party fees, and engineering materials expense, partially offset by higher employee incentives, higher costs associated with approximately 4% inflation, and unfavorable foreign currency fluctuation. SG&A as a percentage of net sales was 17.4% and 16.4% in the nine months ended June 30, 2024 and 2023, respectively.
Previous wording
We had cash and cash equivalents on hand of $179.2 million at March 31, 2024 and $162.6 million of additional borrowing capacity under our ABL based on March 31, 2024 data. At March 31, 2024, cash and cash equivalents included $76.2 million, $1.7 million and $9.0 million in Israel, Canada, and China, respectively.
Current wording
We had cash and cash equivalents on hand of $243.3 million at June 30, 2024 and $162.6 million of additional borrowing capacity under our ABL based on June 30, 2024 data. At June 30, 2024, cash and cash equivalents included $75.5 million, $8.0 million and $9.6 million in Israel, Canada, and China, respectively.
Previous wording
We repurchased $10.0 million of our outstanding common stock during the six months ended March 31, 2024 under our publicly announced share repurchase program, and as of March 31, 2024, we had $80.0 million remaining under our share repurchase authorization.
Current wording
We repurchased $10.0 million of our outstanding common stock during the nine months ended June 30, 2024 under our publicly announced share repurchase program, and as of June 30, 2024, we had $80.0 million remaining under our share repurchase authorization.
Previous wording
Net cash provided by operating activities was $62.2 million during the six months ended March 31, 2024 as compared with net cash used in operating activities of $22.2 million in the prior year period. The increase in net operating cash flow was primarily driven by higher net income and improvements in working capital compared with the prior year period, including a reduction in Inventory purchases as well as a lesser impact of Accounts payable and Other current liabilities.
Current wording
Net cash provided by operating activities was $149.5 million during the nine months ended June 30, 2024 as compared with net cash provided by operating activities of $52.5 million in the prior year period. The increase in net operating cash flow was primarily driven by higher net income and improvements in working capital compared with the prior year period.
Previous wording
Capital expenditures were $15.8 million in the six months ended March 31, 2024 as compared with $20.5 million in the prior year period. Capital expenditures decreased primarily as a result of lower expenditures associated with the new Decatur foundry as compared with the prior year period. For the fiscal year 2024, we have provided guidance that our capital expenditures are expected to be between $40.0 million and $45.0 million.
Current wording
Capital expenditures were $28.0 million in the nine months ended June 30, 2024 as compared with $32.4 million in the prior year period. Capital expenditures decreased primarily as a result of lower expenditures associated with the new Decatur foundry as compared with the prior year period. For the fiscal year 2024, we have provided guidance that our capital expenditures are expected to be between $40.0 million and $45.0 million.
Previous wording
We anticipate that our existing cash, cash equivalents and borrowing capacity combined with our expected operating cash flows will be sufficient to meet our anticipated operating needs, income tax payments, capital expenditures and debt service obligations as they become due through the twelve months from the date of this filing. However, our ability to make these payments will depend largely on our future operating performance, which may be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control.
Current wording
We anticipate that our existing cash, cash equivalents and borrowing capacity combined with our expected operating cash flows will be sufficient to meet our anticipated operating needs, income tax payments, capital expenditures and debt service obligations as they become due through the next twelve months from the date of this filing. However, our ability to make these payments will depend largely on our future operating performance, which may be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control.
Previous wording
On March 28, 2024, we amended our ABL to, among other things, (i) extend the maturity date from July 29, 2025 to the earlier of (a) March 28, 2029 and (b) 91 days prior to the stated maturity date of the Company’s 4.0% Senior Notes due June 15, 2029 (as may be extended from time to time in accordance with the Indenture governing the notes) if the 4.0% Senior Notes are then outstanding, (ii) decrease the grid-based interest rate margins by approximately 50 basis points to 150 basis points for Secured Overnight Financing Rate (“SOFR”) loans and 50 basis points for base rate loans when average availability is greater than 50% of the aggregate revolving commitments, and to 175 basis points for SOFR loans and 75 basis points for base rate loans, when average availability is less than or equal to 50% of the aggregate revolving credit commitments and (iii) replace the previously fixed 37.5 basis point unused commitment fee with a grid-based, quarterly unused commitment fee equal to (a) 37.5 basis points if average daily outstanding credit extensions for such quarter under the ABL (“Total Outstandings”) are less than or equal to 50% of the aggregate revolving credit commitments or (b) 25.0 basis points if Total Outstandings for such quarter are greater than or equal to 50% of the aggregate revolving credit commitments. We incurred approximately $0.8 million in debt issuance costs in connection with the ABL amendment which were capitalized and will be amortized over the term of the ABL.
Current wording
On March 28, 2024, we amended our ABL to, among other things, (i) extend the maturity date from July 29, 2025 to the earlier of (a) March 28, 2029 and (b) 91 days prior to the stated maturity date of the Company’s 4.0% Senior Notes due June 15, 2029 (as may be extended from time to time in accordance with the Indenture governing the notes) if the 4.0% Senior Notes are then outstanding, (ii) decrease the grid-based interest rate margins by approximately 50 basis points to 150 basis points for Secured Overnight Financing Rate (“SOFR”) loans and 50 basis points for base rate loans when average availability is greater than 50% of the aggregate revolving commitments, and to 175 basis points for SOFR loans and 75 basis points for base rate loans, when average availability is less than or equal to 50% of the aggregate revolving credit commitments and (iii) replace the previously fixed 37.5 basis point unused commitment fee with a grid-based, quarterly unused commitment fee equal to (a) 37.5 basis points if average daily outstanding credit extensions for such quarter under the ABL (“Total Outstandings”) are less than or equal to 50% of the aggregate revolving credit commitments or (b) 25.0 basis points if Total Outstandings for such quarter are greater than or equal to 50% of the aggregate revolving credit commitments. We incurred approximately $0.9 million in debt issuance costs in connection with the ABL amendment which were capitalized and will be amortized over the term of the ABL.
Previous wording
On May 28, 2021, we privately issued $450.0 million of 4.0% Senior Unsecured Notes (“4.0% Senior Notes”), which mature on June 15, 2029, and bear interest at 4.0%, paid semi-annually in June and December. We capitalized $5.5 million of financing costs which are being amortized over the term of the 4.0% Senior Notes using the effective interest method. Substantially all of our United States subsidiaries guarantee the 4.0% Senior Notes, which are subordinate to borrowings under our ABL. Based on quoted market prices, which is a Level 1 measurement, the outstanding 4.0% Senior Notes had a fair value of $407.7 million at March 31, 2024.
Current wording
On May 28, 2021, we privately issued $450.0 million of 4.0% Senior Unsecured Notes (“4.0% Senior Notes”), which mature on June 15, 2029, and bear interest at 4.0%, paid semi-annually in June and December. We capitalized $5.5 million of financing costs which are being amortized over the term of the 4.0% Senior Notes using the effective interest method. Substantially all of our United States subsidiaries guarantee the 4.0% Senior Notes, which are subordinate to borrowings under our ABL. Based on quoted market prices, which is a Level 1 measurement, the outstanding 4.0% Senior Notes had a fair value of $411.3 million at June 30, 2024.
Previous wording
We may redeem some or all of the 4.0% Senior Notes at any time prior to June 15, 2024 at certain “make-whole” redemption prices and on or after June 15, 2024 at specified redemption prices. Additionally, we may redeem up to 40% of the aggregate principal amount of the 4.0% Senior Notes at any time prior to June 15, 2024 with the net proceeds of specified equity offerings at specified redemption prices as set forth in the Indenture. Upon a Change of Control, as defined in the Indenture, we could be required to offer to purchase the 4.0% Senior Notes at a price equal to 101% of the outstanding principal amount if there is a Ratings Decline (as defined in the Indenture).
Current wording
We may redeem some or all of the 4.0% Senior Notes at any time after June 15, 2024, at specified redemption prices. Upon a Change of Control, as defined in the Indenture, we could be required to offer to purchase the 4.0% Senior Notes at a price equal to 101% of the outstanding principal amount if there is a Ratings Decline (as defined in the Indenture).
Previous wording
We enter into a variety of contractual obligations as part of our normal operations in addition to capital expenditures. As of March 31, 2024, we had (i) debt obligations related to our $450.0 million 4.0% Senior Notes which mature in 2029 and include annual cash interest payments of $18.0 million in 2024 through 2029, (ii) cumulative cash obligations of $36.6 million for operating leases through 2033 and $2.3 million for finance leases through 2028, and (iii) purchase obligations for raw materials and other parts of approximately $105.3 million which we expect to incur during the next 12 months and $0.9 million beyond March 31, 2025. Additionally, we may continue to invest to strengthen our systems, cybersecurity training, policies, programs, response plans and other similar measures. We expect to fund these cash requirements from cash on hand and cash generated from operations.
Current wording
We enter into a variety of contractual obligations as part of our normal operations in addition to capital expenditures. As of June 30, 2024, we had (i) debt obligations related to our $450.0 million 4.0% Senior Notes which mature in 2029 and include annual cash interest payments of $18.0 million in 2024 through 2029, (ii) cumulative cash obligations of $34.5 million for operating leases through 2034 and $2.3 million for finance leases through 2030, and (iii) purchase obligations for raw materials and other parts of approximately $125.6 million which we expect to incur during the next 12 months and $1.7 million beyond June 30, 2025. Additionally, we may continue to invest to strengthen our systems, cybersecurity training, policies, programs, response plans and other similar measures. We expect to fund these cash requirements from cash on hand and cash generated from operations.
Previous wording
We use letters of credit and surety bonds in the ordinary course of business to ensure the performance of contractual obligations. At March 31, 2024, we had $12.2 million of letters of credit and $13.7 million of surety bonds outstanding.
Current wording
We use letters of credit and surety bonds in the ordinary course of business to ensure the performance of contractual obligations. At June 30, 2024, we had $12.2 million of letters of credit and $13.4 million of surety bonds outstanding.
Previous wording
Our business is seasonal as a result of the impact of cold weather conditions. Net sales and operating income historically have been lowest in the three-month periods ending December 31 and March 31 when the northern United States and most of Canada generally face weather conditions that restrict significant construction activity.
Current wording
Our business is seasonal as a result of the impact of cold weather conditions. Net sales and operating income historically have been lowest in the three-month periods ending December 31 and March 31 when the northern United States and most of Canada generally face weather conditions that restrict significant construction activity. Therefore, the results of operations for the three and nine months ended June 30, 2024 are not necessarily indicative of operating results that may be achieved for any other interim period or the full year.