Mueller Water Products, Inc.

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Case Summary

Company Name
Mueller Water Products, Inc.
Stock Symbol
Class Period
May 9, 2016 to August 6, 2018
Motion Deadline
June 10, 2019
Southern District of New York

The complaint charges Mueller Water and certain of its current and former officers with violations of the Securities Exchange Act of 1934.  Mueller Water operates in two business segments: Infrastructure and Technologies.  The Infrastructure segment manufactures valves for water and gas systems, fire hydrants and a broad line of pipe repair products.  The Technologies segment offers residential and commercial water meters, including manually read meters or remotely read meters via radio technology, and water leak detection and pipe condition assessment products.

The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose material adverse facts about the Company’s business, operations and prospects.  Specifically, defendants failed to disclose that, because the Company lacked adequate testing for product quality, certain products with radio components were susceptible to premature failure, which was reasonably likely to increase the Company’s expenses, including warranty costs, and materially impact the Company’s financial statements.  As a result of this information being withheld from the market, Mueller Water securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $14 per share.

On April 27, 2017, in connection with its second quarter 2017 financial results, the Company disclosed that some of its radio products produced between 2011 and 2014 had been failing prematurely, resulting in the Company taking a $9.8 million warranty charge for the quarter.  On this news, the price of Mueller Water stock fell $1.43 per share, or more than 11%, to close at $11.25 per share on April 28, 2017.

Then, on August 6, 2018, in connection with its third quarter 2018 financial results, the Company reported an “[o]perating loss [of] $16.1 million in the 2018 third quarter, which include[d] [a] $14.1 million warranty charge.”  According to the Company, “[d]uring the quarter, we completed a new study of our historical warranty experience.  As a result of this new information, we recorded a warranty charge of $14.1 million during the quarter.”  On this news, the Company’s share price fell $0.74 per share, or 6%, to close at $11.58 per share on August 7, 2018.

Class Period: May 9, 2016 - August 6, 2018
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