XML 37 R20.htm IDEA: XBRL DOCUMENT
v3.21.2

Income Taxes | 12 Months Ended
--- | ---
Sep. 30, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before income taxes are presented below.
| 2021 |  | 2020 |  | 2019
| (in millions)
U.S. | $ | 94.0 |  |  | $ | 89.7 |  |  | $ | 78.4 |
Non-U.S. | 0.9 |  |  | 4.4 |  |  | 3.7 |
Income before income taxes | $ | 94.9 |  |  | $ | 94.1 |  |  | $ | 82.1 |
The Tax Cuts and Jobs Act (the “Act”) imposed a one-time transition tax on the undistributed, previously untaxed, post-1986 foreign “earnings and profits” (as defined by the IRS) of certain United States-owned corporations. At September 30, 2021, the remaining balance of our transition obligation is $4.7 million, which will be paid annually through January 2026, as provided in the Act. Other than for Krausz’s investment in its United States subsidiary, we have not recorded income taxes for unrepatriated foreign earnings that may be subject to withholding tax or any outside cost basis differences inherent in our foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. We have a foreign tax credit carryforward of $4.5 million, for which we have recorded a valuation allowance as we do not expect to utilize it prior to expiration. The federal income tax returns for Mueller Co. are closed for years prior to 2005 and for Mueller Water Products, Inc. for 2007 and 2008. Our 2009 through 2016 returns are closed except to the extent net operating losses from those years have been utilized on subsequent years’ returns. We also remain liable for any taxes related to U.S. Pipe income for periods prior to 2012 pursuant to the terms of the sale agreement with the purchaser of the segment. Our state income tax returns are generally closed for years prior to 2017, except to the extent of our state net operating loss carryforwards. Our Canadian income tax returns are generally closed for years prior to 2014. We do not have any material unpaid assessments. The components of income tax expense are as follows:
| 2021 |  | 2020 |  | 2019
| (in millions)
Current: |  |  |  |  |
U.S. federal | $ | 21.9 |  |  | $ | 10.9 |  |  | $ | 11.6 |
U.S. state and local | 6.3 |  |  | 2.7 |  |  | 3.9 |
Non-U.S. | 1.6 |  |  | 1.3 |  |  | 1.5 |
Total current income tax expense | 29.8 |  |  | 14.9 |  |  | 17.0 |
Deferred: |  |  |  |  |
U.S. federal | (4.7) |  |  | 5.6 |  |  | 2.5 |
U.S. state and local | (1.3) |  |  | 2.0 |  |  | (0.4) |
Non-U.S. | 0.7 |  |  | (0.4) |  |  | (0.8) |
Total deferred income tax (benefit) expense | (5.3) |  |  | 7.2 |  |  | 1.3 |
Income tax expense | $ | 24.5 |  |  | $ | 22.1 |  |  | $ | 18.3 |
The reconciliation between income tax expense at the United States federal statutory income tax rate and reported income tax expense is presented below.
| 2021 |  | 2020 |  | 2019
| (in millions)
Expense at U.S. federal statutory income tax rates of 21%, 21%, and 24.5%, respectively | $ | 19.9 |  |  | $ | 19.8 |  |  | $ | 17.2 |
Adjustments to reconcile to income tax expense: |  |  |  |  |
State income taxes, net of federal benefit | 3.1 |  |  | 3.3 |  |  | 3.2 |
Uncertain tax positions | 0.3 |  |  | 1.0 |  |  | (1.4) |
Nondeductible compensation | 0.6 |  |  | 0.6 |  |  | 0.3 |
Nondeductible expenses, other than compensation | 0.5 |  |  | 0.4 |  |  | 1.3 |
Valuation allowances | (0.4) |  |  | 0.1 |  |  | 1.3 |
Basis difference in foreign investment | 1.5 |  |  | 0.1 |  |  | (1.1) |
Foreign income taxes | (1.2) |  |  | — |  |  | 0.1 |
Federal transition tax | — |  |  | — |  |  | (0.6) |
Excess tax benefits related to stock compensation | (0.2) |  |  | (0.5) |  |  | (0.3) |
Tax credits | (1.6) |  |  | (1.8) |  |  | (1.8) |
Other | 2.0 |  |  | (0.9) |  |  | 0.1 |
Income tax expense | $ | 24.5 |  |  | $ | 22.1 |  |  | $ | 18.3 |
The following table summarizes information concerning our gross unrecognized tax benefits.
| 2021 |  | 2020
| (in millions)
Balance at beginning of year | $ | 4.5 |  |  | $ | 3.3 |
Increase related to current year positions | 0.6 |  |  | 1.5 |
Decrease as a result of statute of limitations lapse | (0.3) |  |  | (0.3) |
Balance at end of year | $ | 4.8 |  |  | $ | 4.5 |
Substantially all unrecognized tax benefits would, if recognized, impact the effective tax rate. We recognize interest related to uncertain tax positions as interest expense and recognize any penalties incurred as a component of selling, general and administrative expenses. At September 30, 2021 and 2020, we had $0.6 million and $0.4 million, respectively, of accrued interest expense related to unrecognized tax benefits. Deferred income tax balances are presented below.
| September 30,
| 2021 |  | 2020
| (in millions)
Deferred income tax assets: |  |  |
Accrued expenses | $ | 12.7 |  |  | $ | 12.2 |
Lease liabilities | 8.2 |  |  | 7.3 |
Inventories | 6.1 |  |  | 4.6 |
State net operating losses | 2.8 |  |  | 3.0 |
Net operating losses and credit carryovers | 14.8 |  |  | 3.0 |
Stock-based compensation | 3.8 |  |  | 2.6 |
Pension | — |  |  | 0.2 |
Other | 2.9 |  |  | 1.1 |
Total deferred income tax assets | 51.3 |  |  | 34.0 |
Valuation allowance | (13.6) |  |  | (2.9) |
Total deferred income tax assets, net of valuation allowance | 37.7 |  |  | 31.1 |
Deferred income tax liabilities: |  |  |
Intangible assets | 86.3 |  |  | 90.2 |
Lease assets | 7.6 |  |  | 6.6 |
Basis difference in foreign investment | 6.8 |  |  | 5.0 |
Pension | 3.9 |  |  | — |
Property, plant and equipment | 27.4 |  |  | 25.1 |
Other | 0.5 |  |  | 0.5 |
Total deferred income tax liabilities | 132.5 |  |  | 127.4 |
Net deferred income tax liabilities | $ | 94.8 |  |  | $ | 96.3 |
We reevaluate the need for a valuation allowance against our deferred tax assets each quarter considering results to date, projections of taxable income, tax planning strategies and reversing taxable temporary differences. Our state net operating loss carryforwards, which expire between the years 2024 and 2032, remain available to offset future taxable earnings.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration