Company: MWA
Filing Date: 2025-11-19
Form Type: 10-K
Source: 0001350593-25-000066
Chunk: 35

Company: Mueller Water Products, Inc.
Filing Date: 2025-11-19
Form: 10-K
Item: Item 8
Chunk 35
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 September 1 of each fiscal year or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  The carrying value of the reporting unit, including goodwill, is compared with the estimated fair value of the reporting unit as determined utilizing a combination of the income and market approach.  The income approach, which is a level 3 fair value measurement, is based on projected debt-free cash flow estimates which are discounted to the present value using discount rates that consider the timing and risk of those cash flows.  The market approach is based on the guideline public company method, which uses market multiples to value our reporting units as applicable.  We weight the approaches in a manner considering the risks of the underlying cash flows.  The key assumptions used in estimating the fair value of our reporting units utilizing the income approach include management's best estimate of revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”) margin, and discount rate.  The key assumptions used in estimating the fair value of our reporting units utilizing the market approach include revenue multiples, and EBITDA multiples.  Accordingly, a change in market conditions or other factors could have a material effect on the estimated values.  There are inherent uncertainties related to the assumptions used and to management's application of these assumptions.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 which contained goodwill.  As a result, no impairment charge was recorded during the fiscal year ended September 30, 2025.As a result of our annual impairment test as of September 1, 2024, we recorded an impairment charge of $16.3 million.  The results of the testing indicated that the carrying value of a reporting unit within Water Management Solutions exceeded the fair value primarily due to lower forecasted revenues and profitability based on a change, during the fourth quarter of 2024, in the forecasted product portfolio.

F- 18

Table of ContentsIndex to Financial Statements

Indefinite-lived Intangible AssetsIndefinite-lived intangible assets are tested for impairment on an annual basis on September 1 of each fiscal year or more frequently if events or circumstances indicate that it is more likely than not that the asset is impaired.  We test our trade name indefinite-lived intangible assets for impairment using a “royalty savings method”, which is an income approach using a variation of the discounted