Mueller Water Products, Inc.
For the period ended Mar 31, 2026. Filed May 6, 2026.
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.
Mar 31, 2026 · Filed May 6, 2026
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 2025-12-31; filed 2026-02-05.
0001350593-26-000010
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0001350593-26-000024
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 74 previous paragraphs and 93 current paragraphs.
43 unchanged; 26 reworded; 22 added; 5 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 4 previous and 6 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 (22)
Current report
Net sales for the three months ended March 31, 2026 were $384.4 million as compared with $364.3 million in the prior year period, an increase of $20.1 million or 5.5%, primarily as a result of higher pricing across most product lines and increased volumes.
Current report
Gross profit for the three months ended March 31, 2026 was $144.5 million as compared with $128.0 million in the prior year period, an increase of $16.5 million or 12.9%. Gross margin was 37.6% in the three months ended March 31, 2026 as compared with 35.1% in the prior year period. Gross margin increased 250 basis points primarily as a result of favorable pricing across most product lines, manufacturing efficiencies, and higher volumes. Gross profit was negatively impacted by increased tariffs as well as approximately 4% inflation.
Current report
Net sales for the three months ended March 31, 2026 were $218.3 million as compared with $216.2 million in the prior year period, an increase of $2.1 million or 1.0%, primarily as a result of higher pricing across most product lines partially offset by lower volumes.
Current report
Gross profit for the three months ended March 31, 2026 was $87.1 million as compared with $77.0 million in the prior year period, an increase of $10.1 million or 13.1%. This increase was primarily a result of manufacturing efficiencies and higher pricing across most product lines, partially offset by increased tariffs, approximately 6% inflation, and lower volumes. Gross margin was 39.9% in the three months ended March 31, 2026 and 35.6% in the prior year period.
Current report
SG&A was $21.9 million for both the three months ended March 31, 2026 and 2025. SG&A was flat year-over-year as inflation of approximately 3% was offset by lower personnel-related costs, including incentive-based compensation. SG&A as a percentage of net sales was 10.0% and 10.1% in the three months ended March 31, 2026 and 2025, respectively.
Current report
Net sales for the three months ended March 31, 2026 were $166.1 million as compared with $148.1 million in the prior year period, an increase of $18.0 million or 12.2%, primarily as a result of increased volumes and higher pricing across most product lines.
Current report
SG&A for the three months ended March 31, 2026 was $21.9 million as compared with $19.6 million in the prior year period, an increase of $2.3 million or 11.7%, primarily due to unfavorable foreign currency exchange and approximately 4% inflation. SG&A as a percentage of net sales was 13.2% for both of the three month periods ended March 31, 2026 and 2025.
Current report
Six months ended March 31, 2026 Compared to Six months ended March 31, 2025
Current report
Consolidated Analysis
Current report
Net sales for the six months ended March 31, 2026 were $702.6 million as compared with $668.6 million in the prior year period, an increase of $34.0 million or 5.1%, primarily as a result of higher pricing across most product lines.
Current report
SG&A for the six months ended March 31, 2026 was $119.5 million as compared with $109.6 million in the prior year period, an increase of $9.9 million or 9.0%, primarily due to unfavorable foreign currency exchange and approximately 3% inflation. SG&A as a percentage of net sales was 17.0% and 16.4% for the six months ended March 31, 2026 and March 31, 2025, respectively.
Current report
Income tax expense for the six months ended March 31, 2026 was $32.2 million as compared with $26.9 million in the prior year period, an increase of $5.3 million or 19.7%, driven by higher pre-tax income. The effective tax rate for the six months ended March 31, 2026 was 23.9% as compared with 23.7% in the prior year. The effective tax rate increased primarily due to lower excess tax benefits on stock compensation largely offset by a reduction in nondeductible compensation.
Current report
Segment Analysis
Current report
Water Flow Solutions
Current report
Net sales for the six months ended March 31, 2026 were $391.3 million as compared with $390.8 million in the prior year period, an increase of $0.5 million or 0.1%, primarily as a result of higher pricing across most product lines offset by lower volumes.
Current report
Gross profit for the six months ended March 31, 2026 was $157.9 million as compared with $132.1 million in the prior year period, an increase of $25.8 million or 19.5%. This increase was primarily a result of favorable manufacturing efficiencies and higher pricing across most product lines, partially offset by increased tariffs, approximately 5% inflation, and lower volumes. Gross margin was 40.4% in the six months ended March 31, 2026 and 33.8% in the prior year period.
Current report
Water Management Solutions
Current report
Net sales for the six months ended March 31, 2026 were $311.3 million as compared with $277.8 million in the prior year period, an increase of $33.5 million or 12.1%, primarily as a result of higher volumes and higher pricing across most product lines.
Current report
Gross profit for the six months ended March 31, 2026 was $106.4 million as compared with $98.9 million in the prior year period, an increase of $7.5 million or 7.6%. The increase was primarily driven by higher pricing across most product lines and increased volumes. Gross margin was negatively impacted by increased tariffs and approximately 3% inflation. Gross margin was 34.2% in the six months ended March 31, 2026 as compared with 35.6% in the prior year period.
Current report
SG&A for the six months ended March 31, 2026 was $46.4 million as compared with $39.9 million in the prior year period, an increase of $6.5 million or 16.3%, primarily due to unfavorable foreign currency exchange, approximately 3% inflation, and higher personnel-related expenses. SG&A as a percentage of net sales was 14.9% and 14.4% in the six months ended March 31, 2026 and 2025, respectively.
Current report
Corporate
Current report
SG&A for the six months ended March 31, 2026 was $29.8 million as compared with $28.0 million in the prior year period, an increase of $1.8 million or 6.4%. The increase was primarily driven by inflation of approximately 3% and higher personnel-related expenses.
Removed paragraphs (5)
Previous report
Net sales for the three months ended December 31, 2025 were $318.2 million as compared with $304.3 million in the prior year period, an increase of $13.9 million or 4.6%, primarily as a result of higher pricing across most product lines.
Previous report
Net sales for the three months ended December 31, 2025 were $173.0 million as compared with $174.6 million in the prior year period, a decrease of $1.6 million or 0.9%, primarily as a result of lower volumes of service brass products, partially offset by higher pricing across most product lines and increased volumes of specialty valves.
Previous report
Gross profit for the three months ended December 31, 2025 was $70.8 million as compared with $55.1 million in the prior year period, an increase of $15.7 million or 28.5%. This increase was primarily a result of manufacturing efficiencies, higher pricing across most product lines, and a $3.3 million write-down of inventory and other assets associated with our legacy brass foundry in Decatur, Illinois in the prior year period, partially offset by approximately 5% inflation, lower volumes and increased tariffs. Gross margin was 40.9% in the three months ended December 31, 2025 and 31.6% in the prior year period.
Previous report
Net sales for the three months ended December 31, 2025 were $145.2 million as compared with $129.7 million in the prior year period, an increase of $15.5 million or 12.0%, primarily as a result of higher pricing across most product lines and higher volumes of hydrants, partially offset by lower volumes of natural gas distribution and repair products.
Previous report
SG&A for the three months ended December 31, 2025 was $13.9 million as compared with $13.8 million in the prior year period, an increase of $0.1 million or 0.7% is primarily a result of higher personnel-related expenses and approximately 3% inflation, which was mostly offset by lower third-party fees.
Reworded paragraphs (26)
Previous wording
On November 6, 2025, we announced that Ms. Marietta Edmunds Zakas will retire as the Company’s Chief Executive Officer and as a member of the Company’s Board of Directors, effective as of February 9, 2026 (the “Transition Date”). In connection with Ms. Zakas’ retirement, the Company’s Board of Directors appointed Mr. Paul McAndrew as President and Chief Executive Officer, effective as of the Transition Date.
Current wording
On February 9, 2026, Ms. Marietta Edmunds Zakas retired as the Company’s Chief Executive Officer and as a member of the Company’s Board of Directors. Mr. Paul McAndrew started serving as the Company’s President and Chief Executive Officer on this date.
Previous wording
In October 2023, the Israel-Hamas war caused a temporary shutdown in our facility in Ariel, Israel. We reopened the facility in November 2023, but the war caused supply chain challenges that decreased the manufacturing efficiencies for our products produced in Israel. While the facility was adversely impacted by this event, we have mitigated operational risk by adding suppliers and improving throughput in order to increase production levels and to meet customer delivery times. While net sales levels have returned to pre-war levels, margin expansion has been hindered by tariffs on products manufactured in Israel and imported into the United States.
Current wording
In October 2023, the Israel-Hamas war caused a temporary shutdown in our facility in Ariel, Israel. We reopened the facility in November 2023, but the war caused supply chain challenges that reduced the manufacturing efficiencies for our products produced in Israel. While the facility was adversely impacted by this event, we have mitigated operational risk by adding suppliers and improving throughput in order to increase production levels and to meet customer delivery times. While net sales levels have returned to pre-war levels, margin expansion has been hindered by tariffs on products manufactured in Israel and imported into the United States (“U.S.”).
Previous wording
While tariffs are adversely impacting several product lines, Repair and Specialty Valve product lines are bearing most of the higher costs. In 2025, the United States government announced significant changes to its trade policy, including tariff increases on imported steel and aluminum from 25% to 50% under Section 232 of the Trade Expansion Act (“Section 232”). The increase in Section 232 tariffs to 50% has resulted in material, upward pressure on certain purchased components and raw material costs, including the Repair products we import to the United States that are produced by our Krausz business, which have borne most of the higher costs. As previously disclosed, we have, and intend to continue to take, appropriate actions to address these increases through, among other things, pricing actions and adding suppliers. Despite these actions, Section 232 tariffs are likely to continue to negatively impact the Company’s business, results of operations, and financial condition during fiscal 2026. The ultimate impact of Section 232 tariffs remains to be determined and will depend on several factors, including our ability to successfully mitigate their impact and whether additional or incremental U.S. tariffs or other measures are announced or imposed.
Current wording
While tariffs are adversely impacting several product lines, Repair and Specialty Valve product lines are bearing most of the higher costs. In 2025, the U.S. government announced significant changes to its trade policy, including tariff increases on imported steel and aluminum from 25% to 50% under Section 232 of the Trade Expansion Act (“Section 232”). The increase in Section 232 tariffs to 50% has resulted in material, upward pressure on certain purchased components and raw material costs, including the Repair products we import to the U.S. that are produced by our Krausz business, which have borne most of the higher costs. As previously disclosed, we have taken, and intend to continue to take, actions intended to mitigate these increases through, among other things, pricing actions and adding suppliers. Despite these actions, Section 232 tariffs are likely to continue to negatively impact the Company’s business, results of operations, and financial condition during fiscal 2026. The ultimate impact of Section 232 tariffs remains to be determined and will depend on several factors, including our ability to successfully mitigate their impact and whether additional or incremental U.S. tariffs or other changes to trade policies are announced or imposed.
Previous wording
For fiscal year 2026, we anticipate that consolidated net sales will increase between 2.8% and 4.2% as compared with fiscal 2025. The external operating environment remains uncertain as we face changes in government policies, including possible disruptions to global supply chains resulting from such changes, the interest rate and tariff environment, as well as geopolitical conditions and labor and material inflation and availability. We expect these challenges to continue during the remainder of fiscal 2026. We continue to anticipate resilient demand associated with the municipal repair and replacement end market driven by the aging water infrastructure and increasing water rates, moderated by budgetary and operational pressures on municipalities. We anticipate that new residential construction activity and new lot and land development will be relatively constrained by the uncertainty in the economy, affordability concerns and interest rate environment, depending on the geographic region.
Current wording
For fiscal year 2026, we anticipate that consolidated net sales will increase between 2.8% and 4.2% as compared with fiscal 2025. The external operating environment remains uncertain as we face changes in government policies, including possible disruptions to global supply chains resulting from such changes, the interest rate and tariff environment, as well as geopolitical conditions and increased labor and material costs, and constraints of labor and material availability. We expect these challenges to continue during the remainder of fiscal 2026. We continue to anticipate resilient demand associated with the municipal repair and replacement end market driven by the aging water infrastructure and increasing water rates, moderated by budgetary and operational pressures on municipalities. We anticipate that new residential construction activity and new lot and land development will be relatively constrained by the uncertainty in the economy, affordability concerns, and interest rate environment, depending on the geographic region.
Previous wording
We are anticipating a more normalized operating environment in fiscal 2026 leading to normalized seasonality for consolidated net sales. Therefore, we anticipate quarterly consolidated net sales as a percentage of fiscal year 2026 consolidated net sales to be the highest in the third quarter and lowest in the first quarter, with a sequential increase in consolidated net sales in the second quarter as construction activity ramps up in the Spring. For the remainder of fiscal 2026, we anticipate that inflation will continue to modestly impact manufacturing costs, primarily due to wage inflation, as well as raw materials and purchased parts. In addition, higher direct tariff costs of approximately 3% of costs of sales are expected to continue to contribute to inflationary pressures during the remainder of fiscal 2026. While pricing actions were taken in fiscal 2025 in response to new tariffs, we will continue to monitor the market and economic conditions impacting our business and take appropriate actions to mitigate inflationary and other cost pressures, including by implementing price increases, cost containment measures and supplier management measures, among other actions.
Current wording
We typically experience quarterly seasonality with consolidated net sales highest in the third quarter and lowest in the first quarter, with a sequential increase in the second quarter as construction activity ramps up in the Spring. For the remainder of fiscal 2026, we anticipate that inflation will continue to modestly impact manufacturing costs, primarily due to wage inflation, as well as raw materials and purchased parts. In addition, we expect higher direct tariff costs of approximately 3% of costs of sales to continue to contribute to inflationary pressures during the remainder of fiscal 2026. While pricing actions were taken in fiscal 2025 in response to new tariffs, we will continue to monitor the market and economic conditions impacting our business and take appropriate actions to mitigate inflationary and other cost pressures, including by implementing price increases, cost containment measures and supplier management measures, among other actions.
Previous wording
Selling, general and administrative expenses (“SG&A”) for the three months ended December 31, 2025 were $59.8 million as compared with $53.9 million in the prior year period, an increase of $5.9 million or 10.9%, primarily due to higher personnel-related expenses, inflation of approximately 3% and unfavorable foreign currency fluctuations. SG&A as a percentage of net sales was 18.8% and 17.7% for the three months ended December 31, 2025 and 2024, respectively.
Current wording
Selling, general and administrative expenses (“SG&A”) for the three months ended March 31, 2026 were $59.7 million as compared with $55.7 million in the prior year period, an increase of $4.0 million or 7.2%, primarily due to unfavorable foreign currency exchange and inflation of approximately 4%. SG&A as a percentage of net sales was 15.5% and 15.3% for the three months ended March 31, 2026 and 2025, respectively.
Previous wording
Strategic reorganization and other charges for the three months ended December 31, 2025 were $3.3 million and consisted primarily of severance and expenses associated with our leadership transition. Strategic reorganization and other charges for the three months ended December 31, 2024 were $1.7 million and consisted of expenses associated with our leadership transition and severance.
Current wording
Strategic reorganization and other charges for the three months ended March 31, 2026 were $4.4 million and consisted primarily of expenses associated with our leadership transition, certain transaction-related expenses, and severance. Strategic reorganization and other charges for the three months ended March 31, 2025 were $2.4 million and consisted of expenses associated with our leadership transition, a non-cash asset impairment, and certain transaction-related expenses.
Previous wording
Net interest expense for the three months ended December 31, 2025 was $1.0 million as compared with $1.6 million in the prior year period, a decrease of $0.6 million or 37.5%, primarily due to higher interest income. The components of net interest expense are as shown below:
Current wording
Net interest expense for the three months ended March 31, 2026 was $1.6 million as compared with $2.3 million in the prior year period, a decrease of $0.7 million or 30.4%, primarily due to higher interest income. The components of net interest expense are as shown below:
Previous wording
Income tax expense for the three months ended December 31, 2025 was $12.5 million as compared with $10.5 million in the prior year period, an increase of $2.0 million or 19.0% driven by higher pre-tax income. The effective tax rate for the three months ended December 31, 2025 was 22.4% as compared with 22.9% in the prior year. The effective tax rate was generally consistent period over period.
Current wording
Income tax expense for the three months ended March 31, 2026 was $19.7 million as compared with $16.4 million in the prior year period, an increase of $3.3 million or 20.1%, driven by higher pre-tax income. The effective tax rate for the three months ended March 31, 2026 was 25.0% as compared with 24.2% in the prior year. The effective tax rate increased primarily due to lower excess tax benefits on stock compensation.
Previous wording
Gross profit for the three months ended December 31, 2025 was $49.0 million as compared with $47.9 million in the prior year period, an increase of $1.1 million or 2.3%. The increase was primarily a result of higher pricing and higher volumes which was partially offset by increased tariffs, unfavorable manufacturing efficiencies, and approximately 3% inflation. Gross margin was 33.7% in the three months ended December 31, 2025 as compared with 36.9% in the prior year period.
Current wording
Gross profit for the three months ended March 31, 2026 was $57.4 million as compared with $51.0 million in the prior year period, an increase of $6.4 million or 12.5%. The increase was primarily a result of higher pricing and volumes which were partially offset by increased tariffs, unfavorable manufacturing efficiencies, and approximately 3% inflation. Gross margin was 34.6% in the three months ended March 31, 2026 as compared with 34.4% in the prior year period.
Previous wording
SG&A for the three months ended December 31, 2025 was $24.5 million as compared with $20.3 million in the prior year period, an increase of $4.2 million or 20.7%, primarily due to unfavorable foreign currency impacts, higher personnel-related expenses, third-party fees and approximately 3% inflation. SG&A as a percentage of net sales was 16.9% and 15.7% in the three months ended December 31, 2025 and 2024, respectively.
Current wording
SG&A for the three months ended March 31, 2026 was $15.9 million as compared with $14.2 million in the prior year period, an increase of $1.7 million or 12.0% is primarily a result of higher third-party fees and approximately 3% inflation.
Previous wording
Gross profit for the three months ended December 31, 2025 was $119.8 million as compared with $103.0 million in the prior year period, an increase of $16.8 million or 16.3%, primarily as a result of favorable pricing, manufacturing efficiencies largely driven by the legacy brass foundry closure in Decatur Illinois, and a $3.3 million write-down of inventory and other assets associated with our legacy brass foundry in the prior year period. Gross profit was negatively impacted by increased tariffs and approximately 4% inflation. As a result, gross margin was 37.6% in the three months ended December 31, 2025 as compared with 33.8% in the prior year period.
Current wording
Gross profit for the six months ended March 31, 2026 was $264.3 million as compared with $231.0 million in the prior year period, an increase of $33.3 million or 14.4%. Gross margin was 37.6% in the six months ended March 31, 2026 as compared with 34.5% in the prior year period. Gross margin increased 310 basis points primarily as a result of higher pricing, manufacturing efficiencies largely driven by the legacy brass foundry closure in Decatur, Illinois, a $4.1 million write-down of inventory and other assets associated with our legacy brass foundry in the prior year period, and increased volumes. Gross margin was negatively impacted by increased tariffs and approximately 4% inflation.
Previous wording
SG&A for the three months ended December 31, 2025 was $21.4 million as compared with $19.8 million in the prior year period, an increase of $1.6 million or 8.1%, primarily as a result of higher personnel-related expenses and inflation of approximately 3%. SG&A as a percentage of net sales was 12.4% and 11.3% in the three months ended December 31, 2025 and 2024, respectively.
Current wording
SG&A for the six months ended March 31, 2026 was $43.3 million as compared with $41.7 million in the prior year period, an increase of $1.6 million or 3.8%, primarily as a result of inflation of approximately 3%. SG&A as a percentage of net sales was 11.1% and 10.7% in the six months ended March 31, 2026 and 2025, respectively.
Previous wording
We had cash and cash equivalents on hand of $459.6 million as of December 31, 2025 and $163.7 million of additional borrowing capacity under our asset-based lending arrangement (the “ABL”). As of December 31, 2025, cash and cash equivalents included $88.6 million, $14.9 million and $8.4 million in Israel, Canada, and China, respectively.
Current wording
We had cash and cash equivalents on hand of $421.0 million as of March 31, 2026 and $163.7 million of additional borrowing capacity under our asset-based lending arrangement (the “ABL”). As of March 31, 2026, cash and cash equivalents included $91.8 million, $9.4 million, and $9.2 million in Israel, Canada, and China, respectively.
Previous wording
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 $5.5 million of our outstanding common stock during the three months ended December 31, 2025 under our publicly announced share repurchase program, and as of December 31, 2025, we had $59.5 million remaining under our share repurchase authorization. During the three months ended December 31, 2024, we did not repurchase any shares of our outstanding common stock.
Current wording
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 $5.5 million of our outstanding common stock during the six months ended March 31, 2026 under our publicly announced share repurchase program, and as of March 31, 2026, we had $59.5 million remaining under our share repurchase authorization. During the six months ended March 31, 2025, we repurchased $5.0 million of our outstanding common stock.
Previous wording
Our ABL is provided by a syndicate of banking institutions and consists of a revolving credit facility for up to $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.
Current wording
Our asset-based lending agreement, as amended, (the “ABL”) is provided by a syndicate of banking institutions and consists of a revolving credit facility for up to $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.
Previous wording
Borrowings under the ABL bear interest at a floating rate equal to 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 range of 50 to 75 basis points. As of December 31, 2025, the applicable margin was 150 basis points for SOFR-based loans and 50 basis points for base rate loans.
Current wording
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 range of 50 to 75 basis points. As of March 31, 2026, the applicable margin was 150 basis points for SOFR-based loans and 50 basis points for base rate loans.
Previous wording
Substantially all of our United States subsidiaries are borrowers under the ABL and are jointly and severally liable for 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.
Current wording
Substantially all of our U.S. subsidiaries are borrowers under the ABL and are jointly and severally liable for outstanding borrowings. Our obligations under the ABL are secured by a first-priority perfected lien on all of our U.S. inventory, accounts receivable, certain cash balances, and other supporting assets.
Previous wording
On May 28, 2021, we privately issued $450.0 million of 4.0% Unsecured Senior Notes (the “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 our previously existing notes. 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, the outstanding 4.0% Senior Notes had a fair value of $438.7 million as of December 31, 2025.
Current wording
On May 28, 2021, we privately issued $450.0 million of 4.0% Unsecured Senior Notes (the “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 our 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 $434.6 million as of March 31, 2026.
Previous wording
Cash flows provided by operating activities increased $7.1 million to $61.2 million during the three months ended December 31, 2025 compared with $54.1 million in the prior year period. This was driven by an increase in net income of $7.9 million and higher non-cash adjustments of $7.5 million, partially offset by a $8.3 million change in working capital and other assets and liabilities.
Current wording
Cash flows provided by operating activities decreased $20.0 million to $48.4 million during the six months ended March 31, 2026 compared with $68.4 million in the prior year period. This was driven by a $57.2 million change in working capital and other assets and liabilities, partially offset by an increase in net income of $15.7 million and higher non-cash adjustments of $21.5 million.
Previous wording
Capital expenditures were $17.2 million in the three months ended December 31, 2025 as compared with $11.9 million in the prior year period. Capital expenditures increased primarily as a result of higher expenditures associated with our iron foundries as compared with the prior year period.
Current wording
Cash flows used in investing activities increased $10.8 million to $31.8 million during the six months ended March 31, 2026 compared with $21.0 million in the prior year period. Capital expenditures were $31.9 million in the six months ended March 31, 2026 as compared with $21.1 million in the prior year period. Capital expenditures increased primarily as a result of higher expenditures associated with our iron foundries as compared with the prior year period.
Previous wording
Cash flows used in financing activities increased $6.5 million to $19.6 million during the three months ended December 31, 2025 as compared with $13.1 million in the prior year period. This was driven primarily by $5.5 million repurchases of common stock under the share repurchase program and $0.9 million in less cash provided by common stock issuances.
Current wording
Cash flows used in financing activities increased $3.6 million to $30.5 million during the six months ended March 31, 2026 as compared with $26.9 million in the prior year period. This was driven primarily by $2.6 million in less cash provided by common stock issuances, an increase of $0.9 million in dividends paid to shareholders, and an increase of $0.5 million in repurchases of common stock under the share repurchase program, partially offset by a decrease of $0.6 million in amounts withheld to pay employee taxes related to share-based compensation.
Previous wording
We enter into a variety of contractual obligations as part of our normal operations in addition to capital expenditures. As of December 31, 2025, 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 2026 through 2029; (ii) cumulative cash obligations of $32.1 million for operating leases through 2034 and $5.2 million for finance leases through 2031; and (iii) purchase obligations for raw materials and other purchased parts of approximately $127.8 million which we expect to incur during the next 12 months and $0.5 million beyond December 31, 2026. Additionally, we expect to invest to strengthen our information technology 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 March 31, 2026, 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 2026 through 2029; (ii) cumulative cash obligations of $30.2 million for operating leases through 2034 and $5.2 million for finance leases through 2031; and (iii) purchase obligations for raw materials and other purchased parts of approximately $122.5 million which we expect to incur during the next 12 months and $2.1 million beyond March 31, 2027. Additionally, we expect to invest to strengthen our information technology 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 declared a quarterly dividend of $0.070 per share on January 22, 2026, payable on or about February 20, 2026 to stockholders of record as of February 10, 2026, which will result in an estimated $10.9 million cash outlay.
Current wording
We declared a quarterly dividend of $0.070 per share on April 28, 2026, payable on or about May 20, 2026 to stockholders of record as of May 11, 2026, which will result in an estimated $11.0 million cash outlay.
Previous wording
Parts of our business depend upon construction activity, which is seasonal in many areas due to the impact of cold weather conditions on construction activity. Net sales and operating income have historically been lowest in our first and second quarters ending December 31 and March 31, respectively, 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 months ended December 31, 2025 are not necessarily indicative of operating results that may be achieved for any other interim period or the full year.
Current wording
Parts of our business depend upon construction activity, which is seasonal in many areas due to the impact of cold weather conditions on construction activity. Net sales and operating income have historically been lowest in our first and second quarters ending December 31 and March 31, respectively, when the northern U.S. and most of Canada generally face weather conditions that restrict significant construction activity. Therefore, the results of operations for the three and six months ended March 31, 2026 are not necessarily indicative of operating results that may be achieved for any other interim period or the full year.
Previous wording
The preparation of financial statements in accordance with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales, expenses and related disclosure of contingent assets and liabilities. These estimates are based upon experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates. We consider an accounting estimate to be critical if changes in the estimate that are reasonably likely to occur over time or the use of reasonably different estimates could have a material impact on our financial condition or results of operations. Our critical accounting estimates can be found in the “Critical Accounting Estimates” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2025 Annual Report on Form 10-K. There have been no changes in the Company’s determination of critical accounting estimates since September 30, 2025.
Current wording
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosure of contingent assets and liabilities. These estimates are based upon experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates. We consider an accounting estimate to be critical if changes in the estimate that are reasonably likely to occur over time or the use of reasonably different estimates could have a material impact on our financial condition or results of operations. Our critical accounting estimates can be found in the “Critical Accounting Estimates” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2025 Annual Report on Form 10-K. There have been no changes in the Company’s determination of critical accounting estimates since September 30, 2025.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Strategic reorganization and other charges for the six months ended March 31, 2026 were $7.7 million and consisted of expenses associated with our leadership transition, severance, and certain transaction-related expenses. Strategic reorganization and other charges for the six months ended March 31, 2025 were $4.1 million and consisted of expenses associated with our leadership transition, a non-cash asset impairment, and certain transaction-related expenses.
Current report — wording carried from elsewhere
Net interest expense for the six months ended March 31, 2026 was $2.6 million as compared with $3.9 million in the prior year period, a decrease of $1.3 million or 33.3%, primarily due to higher interest income. The components of net interest expense are as shown below: