Mueller Water Products, Inc.

As of September 30, 2025, we had cash and cash equivalents of $431.5 million and approximately $163.7 million of additional borrowing capacity under our asset-based lending arrangement (the “ABL”). Undistributed earnings from our subsidiaries in Israel, Canada and China are considered to be permanently reinvested outside of the United States. As of September 30, 2025, cash and cash equivalents included $84.3 million, $14.0 million, and $8.8 million in Israel, Canada, and China, respectively.

Historically, we have funded our liquidity requirements through cash flows from operating activities, borrowings under our credit facilities, and working capital management activities. Our primary historical cash requirements have been for working capital, capital expenditures, income tax payments, and contractual obligations, which primarily consist of required long-term debt and related interest payments and commitments under non-cancellable operating lease agreements. When appropriate, the Company may utilize liquidity towards debt service requirements, including voluntary debt prepayments, as well as repurchases of common stock or other securities, based on excess cash flows. The most significant components of our operating assets and liabilities are inventories, accounts receivable, prepaid expenses and other assets, accounts payable, and other payables and accrued expenses. We closely monitor various items related to cash flow including, but not limited to, cash receipts, cash disbursements, payment terms and discounts. We continue to be focused on these items in addition to other key measures we use to determine how our consolidated business and operating segments are performing.

We believe that cash on hand, cash expected to be generated from operations and the availability of borrowings under our ABL will be sufficient to fund our working capital requirements, liquidity obligations, anticipated capital expenditures, income tax payments and payments due under our existing debt for the next 12 months and thereafter for the foreseeable future. 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. Depending on our liquidity levels, conditions in the capital markets and other factors, we may from time to time consider the prepayment, refinancing or issuance of debt, issuance of equity or other securities, the proceeds of which could provide additional liquidity for our operations, as well as modifications to our debt structure or business acquisitions.

Share Repurchase Program

Our stock repurchase program allows us to repurchase up to $250.0 million of our common stock. The program does not commit us to any particular timing or quantity of purchases, and we may suspend or discontinue the program at any time. We repurchased 591,553 and 636,789 shares of our common stock in 2025 and 2024, respectively.

We repurchased $15.0 million of our outstanding common stock during the fiscal year ended September 30, 2025 and had $65.0 million remaining under our share repurchase authorization as of September 30, 2025.

ABL Agreement

Our ABL is provided by a syndicate of banking institutions and consists of a revolving credit facility of $175.0 million in borrowing capacity that matures the earlier of (a) March 16, 2029, which is ninety-one days prior to the stated maturity date of our 4.0% Senior Notes if the Notes are still outstanding on that date or (b) March 28, 2029. The ABL includes the ability to borrow up to $25.0 million of swing line loans and up to $60.0 million of letters of credit. The ABL permits us to increase the size of the credit facility by an additional $150.0 million in certain circumstances subject to adequate borrowing base availability.

Borrowings under the ABL bear interest at a floating rate equal to Secured Overnight Financing Rate (‘SOFR”) plus an adjustment of 10 basis points and an applicable margin range of 150 to 175 basis points, or a base rate, as defined in the ABL, plus an applicable margin of 50 to 75 basis points. As of September 30, 2025, the applicable margin was 150 basis points for SOFR-based loans and 50 basis points for base rate loans.

The ABL is subject to mandatory prepayments if total outstanding borrowings under the ABL are greater than the aggregate commitments under the revolving credit facility or if we dispose of overdue accounts receivable in certain circumstances. The borrowing base under the ABL is equal to the sum of (a) 85% of the value of eligible accounts receivable and (b) the lesser of (i) 70% of the value of eligible inventory or (ii) 85% of the net orderly liquidation value of eligible inventory, less certain reserves. Prepayments can be made at any time without penalty.

The ABL contains customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, may restrict the ability of us and our subsidiaries to pay dividends or repurchase stock.

Substantially all of our United States subsidiaries are borrowers under the ABL and are jointly and severally liable for any outstanding borrowings. Our obligations under the ABL are secured by a first-priority perfected lien on all of our United States inventory, accounts receivable, certain cash balances and other supporting assets.

The ABL includes a commitment fee for any unused borrowing capacity of 37.5 basis points per annum when the unused capacity is above 50% of the credit commitments, with a step down to 25.0 basis points per annum when unused capacity is less than or equal to 50% of the credit commitments. As of September 30, 2025, the commitment fee was 37.5 basis points.

Borrowings are not subject to any financial maintenance covenants unless excess availability is less than the greater of $17.5 million and 10% of the Loan Cap as defined in the ABL. Excess availability based on September 30, 2025 data was $163.7 million, as reduced by $11.1 million of outstanding letters of credit and $0.2 million of accrued fees and expenses.

We were in compliance with all required covenants as of September 30, 2025.

4.0% Senior Unsecured Notes

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. Proceeds from the 4.0% Senior Notes, along with cash on hand, were used to redeem previously existing notes. Substantially all of our U.S. subsidiaries guarantee the 4.0% Senior Notes, which are subordinate to borrowings under our ABL. Based on quoted market prices the outstanding 4.0% Senior Notes had a fair value of $434.1 million as of September 30, 2025.

An indenture governing the 4.0% Senior Notes (“Indenture”) contains customary covenants and events of default, including covenants that limit our ability to incur certain debt and liens. We were in compliance with all required covenants as of September 30, 2025. There are no financial maintenance covenants associated with the Indenture.

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 would 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).

Credit Ratings

Our corporate credit rating and the credit ratings for our debt and outlook are presented below:

These ratings are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agencies.

Net Cash Flows Provided by Operating Activities

Net cash flows provided by operating activities for the fiscal year ended September 30, 2025 decreased $19.5 million to $219.3 million, from $238.8 million for the fiscal year ended September 30, 2024. Net cash flows provided by operating activities was lower over the comparable periods primarily a result of a $67.7 million change in working capital and other assets and liabilities and a decrease of $27.6 million in non-cash reconciling items, largely offset by an increase in net income of $75.8 million.

Net Cash Flows Used in Investing Activities

Net cash flows used in investing activities for the fiscal year ended September 30, 2025 decreased $0.1 million to $47.1 million, from $47.2 million for the fiscal year ended September 30, 2024. Capital expenditures were generally consistent year over year.

Net Cash Flows Used in Financing Activities

Net cash flows used in financing activities for the fiscal year ended September 30, 2025 increased $12.3 million to $58.3 million, from $46.0 million for the fiscal year ended September 30, 2024. The increase in fiscal year ended September 30, 2025 primarily relates to an additional $5.0 million of shares repurchased under the share repurchase program, $3.0 million in less cash provided by common stock issuances, additional employee taxes related to stock-based compensation of $2.8 million and $2.0 million incremental dividends paid during the year.