Company: MWA
Filing Date: 2025-11-19
Form Type: 10-K
Source: 0001350593-25-000066
Chunk: 408

Company: Mueller Water Products, Inc.
Filing Date: 2025-11-19
Form: 10-K
Item: Item 7
Chunk 408
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 using discount rates that consider the timing and risk of the cash flows.  The market approach is based on the guideline public company method, which uses market multiples to value our reporting units.    

The income approach is dependent on management’s best estimates of future operating results, including forecasted sales, earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins and the selection of discount rates.  There are inherent uncertainties related to the assumptions used and to management's application of these assumptions.  

We test our trade name indefinite-lived intangible assets for impairment using a “royalty savings method,” which is a variation of the discounted cash flow method.  This method estimates a fair value by calculating an estimated discounted future cash flow stream from the hypothetical licensing of the indefinite-lived intangible assets.  If this estimated fair value exceeds the carrying value, no impairment is indicated.  Conversely, if the estimated fair value is less than the carrying value, impairment is indicated.  This analysis is dependent on management’s best estimates of future operating results and the selection of reasonable discount rates and hypothetical royalty rates.

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Table of ContentsIndex to Financial Statements

We performed our annual impairment testing as of September 1, 2025.  The results of the testing indicated that the fair value exceeded the carrying value of our reporting unit that includes goodwill.  As such, no impairment charge was recorded.  Our determination of the estimated fair value was based on our concluded value using a combination of the income and market approach.  Additionally, we performed our annual impairment testing of indefinite-lived intangible assets as of September 1, 2025 and concluded no impairment charges should be recorded.  

Warranty Cost

We accrue for warranty expenses that may include customer costs of repair and/or replacement, including labor, materials, equipment, freight and overhead costs.  We accrue for the estimated cost of product warranties at the time of sale.  Warranty cost estimates are revised throughout applicable warranty periods as better information becomes available.  Critical factors in our analyses include warranty terms, specific claim situations, historical incurred and projected failure rates, the nature of product failures, product and labor costs, and general business conditions.  These estimates are inherently uncertain as they are based on historical data.  If warranty claims are made in the current period for issues that have not historically been the subject of warranty claims and were not taken into consideration in establishing the accrual or if claims for issues already considered in establishing the accrual exceed expectations, warranty expense may exceed the accrual for