Company: MWA
Filing Date: 2025-11-19
Form Type: 10-K
Source: 0001350593-25-000066
Chunk: 456

Company: Mueller Water Products, Inc.
Filing Date: 2025-11-19
Form: 10-K
Item: Item 7
Chunk 456
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 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 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 the estimated fair value exceeds the carrying value, no impairment is indicated.  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 revenue and the selection of reasonable discount rates and hypothetical royalty rates. We performed our annual impairment testing as of September 1, 2025 based on quantitative factors and, as a result, no impairment charge was recorded.   Intangible AssetsDirect internal and external costs to develop software used in the provision of services to customers by Water Management Solutions are capitalized and