Good morning, and welcome to the Mueller Water Products conference call. (Operator Instructions) At this time I will turn the call over to Miss Martie Zackas. Ma’am, you may begin.

Good morning everyone and thank you for joining us today as we discuss Mueller Water Products results for the 2009 first quarter. We issued our press release reporting results of operations for the three months ended December 31st, 2008 yesterday afternoon and a copy of it is available on our website. Mueller Water Products had 115.5 million shares outstanding as of December 31st, 2008. Last week we announced that stockholders approved a proposal to convert the Series B common stock into the Series A common stock. As a result of the conversion, each outstanding share of Series B common stock has been converted into one share of Series A common stock. Trading of the Series B common stock on the New York Stock Exchange ceased prior to the open of trading on January 29th, 2009. We believe this conversion will simplify the company’s capital structure and enhance liquidity. With us on the call this morning are Greg Hyland, our Chairman, President, and CEO, and Evan Hart, our CFO. In our press release and on this call we referenced certain non-GAAP financial measures, which are derived from GAAP financial measures. These non-GAAP measures are provided because we believe they are used by the financial community. We believe these measures will assist in assessing the company’s underlying performance for the period being reported. There are limitations to these non-GAAP measures, and reconciliations between GAAP and non-GAAP financial measures are included in the supplemental information within our press release. On today’s call we will make forward-looking statements in accordance with the Safe Harbor Provision of the Securities Litigation Reform Act of 1995. Remarks containing words such as expect, believe, anticipate, and project, constitute forward-looking statements. They are not guarantees, and such statements involve risks and uncertainties that could cause actual results to differ materially from these statements. Please see our Form 10-K for the fiscal year ended September 30, 2008 for a discussion of these risks. This morning’s call is being recorded and webcast live on the internet. The archived webcast along with the corresponding slides we are presenting this morning will be available in the Investor Relations section of our web site www.muellerwaterproducts.com for at least 90 days after the presentation. The slides related to this morning’s call are available on the web site to help illustrate the quarter’s results. In addition, we will be filing a copy of this morning’s call’s prepared remarks on form 8-K. After the prepared remarks we will open the call to questions from our dial-in participants. I will now turn the call over to Greg.

Thank you, Marty, and good morning everyone. We appreciate you joining us this morning as we discuss our results for the first quarter of fiscal 2009. I’ll begin today with a brief overview of the quarter. Evan Hart will then follow up with a detailed financial report, after which I will update you on key drivers influencing our business, our outlook for the second quarter, as well as how we are managing through this economic downturn. We will then open up the call for your questions. Net sales for the 2009 first quarter were $367.7 million. Adjusted income from operations in the first quarter were $12.7 million and adjusted net loss was $0.00 per diluted share. Adjusted off rain (ph) income margin in the first quarter was 3.5% and adjusted EBITDA margin was 9.7% for the quarter. Excluded from these results is an estimated good will impairment charge of $400 million, which Evan will discuss in detail. As we discussed in our last conference call, bookings declined in September and October, and that trend continued throughout the quarter. Volume was down $80 million with shipments of our core water infrastructure products down between 30% and 40% year-over-year. We believe a sharp decline in municipal spending coupled with continued distributor due stocking were the primary drivers of this drop-off. If you recall, municipal spending had been growing prior to September. However, the liquidity crisis, municipal budget shortfalls, and uncertainty surrounding the proposed federal stimulus bill all factored into the decline in municipal spending. I’ll talk more about our markets later in the call. During the quarter we implemented further action to respond to this current fall in market conditions by reducing head count and cutting production. Until we see improvement in our market, we will manage our controllable expenses and match our production to demand. We did see several positives during the quarter. We continue to see the benefits of the price increases realized during the second half of fiscal 2008 and saw a significant decrease in the purchase price of our key raw materials. We will cover this in more detail later in the call. I will now turn the call over to Evan Hart, who will discuss our financial results, including our debt and liquidity position. I will then come back and provide an outlook for the second quarter and second half of fiscal 2009.

Good morning, everyone. I will now provide a more in depth review of the financials. I will first review the consolidated results and then turn to segment performance. The results I will be discussing exclude the impact of the first quarter 2009 goodwill non-cash charge, which I will discuss after presenting segment performance. Consolidated net sales of $367.7 million in the 2009 first quarter decreased 44.6 million year-over-year. Net sales decreased due to lower shipment volumes of $80 million across all of our business segments at $8.4 million in unfavorable Canadian currency exchange rates, which were partially offset by 43.8 million of price increases implemented in fiscal 2008. Gross profit was 75 million in the 2009 first quarter, a decrease of 19.4 million compared to 94.4 million in the 2008 first quarter. Gross margin was 20.4% compared to 22.9% in the prior year period. Gross profit decreased primarily due to higher raw material costs of $40 million, lower volume of 27.9 million, and $1.1 million due to unfavorable Canadian currency exchange rates. This was partially offset by higher sales pricing of $43.8 million and cost savings of 10 million. Adjusted income from operations for the quarter of 12.7 million decreased 19.9 million from the prior year period of 32.6 million. 2009 first quarter adjusted income from operations was negatively impacted by higher raw material costs and lower shipment volumes, partially offset by higher sales pricing, operating cost savings, and a 3.5 million gain on the sale of a building. First quarter 2009 adjusted operating income and adjusted EBITDA margins of 3.5% and 9.7% respectively compare with the 2008 first quarter margin of 7.9% and 13.6% respectively. Selling, general, and administrative expenses were $62.3 million in the 2009 first quarter compared with 61.8 million in the 2008 first quarter. Interest expense,…

Thanks, Evan. As we said on the last conference call we expected this to be a tough quarter. The big prices that we paid for raw materials in fiscal 2008 impacted cost of goods sold, especially U.S. Pipe. As we entered the quarter we experienced a significant drop-off in bookings at U.S. Pipe and Mueller Company with no improvement throughout the quarter. Certainly, we were impacted by the continual deterioration in the residential construction market, but we believe the biggest impact was driven by a fall-off in municipal spending, which also drove our distributors to aggressively reduce their inventory. As I mentioned earlier, we believe public spending for our water infrastructure products have been growing about 10% per year prior to September. However, the liquidity crisis and municipal budget shortfalls contributed to the decline in municipal spending. We also believed the uncertainty surrounding the proposed stimulus bill has caused municipalities in general to delay projects until they have a better understanding of what federal money could become available to them. We also saw a softening in demand for Anvil Products towards the end of the quarter, as we are beginning to feel the downturn in spending into our residential construction. End market demand is by far our biggest challenge. We were pleased during the first quarter that we were able to maintain price increases realized in the second half of fiscal 2008. In the first quarter of 2009, price per ton of ductile arm pipe was 5.4% higher than the previous quarter and 37% higher than the first quarter 2008. The prices for valves and hydrants were 13.3% higher than the first quarter 2008. We also saw the average price of most of our raw materials decline in the quarter. For example, scrap steel at U.S. Pipe declined 49% from…

Thank you. (Operator Instructions) Our first question today comes from Kevin Maczka. Your line is open and please state your company name. Kevin Maczka – BB&T Capital Markets: Good morning; Kevin Maczka, BB&T Capital Markets.

Morning, Kevin. Kevin Maczka – BB&T Capital Markets: Good morning. Greg, I am wondering if you can say a little bit more about the channel inventory situation. You’ve got orders trending down 30% to 40% and it sounds like you're kind of implying that you’re not going to see any uptake until we get into the spring construction season. What is that inventory channel look like? Is that de-stocking still a big part of that where your distributors are still working down inventories, or has that played out and they are just not ordering out yet at this point.

Yes, Kevin, our best market intelligence leads us to believe that most of the de-stocking has occurred. I think that as I said in our prepared comments that there was a very aggressive take-down starting in September. So our belief is that we just won't see orders from the replenishment of that inventory. You know, typically as we get into the end of Q2 in past years, distributors would start bringing in some inventory to be prepared for the construction season. We think this year, as I said, that we won't see distributors bringing back, or bringing up, their inventories until we get into the construction season and they see the pick-up. So I think it’s the latter that you pointed out. We think we've seen most of the stocking; at this point, though, we don't expect to see, especially in the second quarter, any orders to start bringing up inventory. Kevin Maczka – BB&T Capital Markets: Okay, switching over to the debt covenant slide, you know you showed on the slide that you are well below your covenants, but I think you’ve said in the past you have an EBITDA number of around 180 million or so for the full year ’09 that you need to hit to not have those covenants become an issue. And I guess with running at a run-rate in Q1 well below that and looking at Q2 maybe even lower, can you just comment on your outlook there, Greg?

Sure. And, as you pointed out, actually at the end of December, our trailing fourth quarter EBITDA for bank covenant purposes was almost $252 million. I think it’s important to point out that the EBITDA that we report is not necessarily EBITDA that is used for bank covenant purposes because we are allowed to add back a certain item. So actually in our first quarter for bank covenant purposes, our EBITDA was about $40 million. But in current net debt levels, we need minimum trailing fourth quarter EBITDA of about $187 million. Of course, that is calculated as defined by our credit agreement. We monitor these covenants closely. We've been taking aggressive actions to reduce our controllable expenses with work force reductions and plant shutdowns. We are also focused on managing our working capital and generating free cash flow, which helps to lower our net debt. So we will continue to take the steps necessary to meet our debt covenant obligations. At this point we are in compliance with our debt covenant, and we anticipate [audio interruption]— Kevin Maczka – BB&T Capital Markets: You know, are there more big actions like that facility consolidations, things like that that you can do or is it more along the lines of what you’ve mentioned in terms of headcount reductions and salary freezes, things like that?

Yes, Kevin, I think relative that we don't see in the horizon any plant closures or exiting any of our plants. I know we've talked about this in the past, you're right, if you look at the last two, two and a half year, we've closed five manufacturing facilities. But we’re really down to our core operations and I think they are very efficient operations. So it would be difficult for us to, I would say in the short term, in six, eight, ten month period, to take on any further plants. I think it will be more of a continuation. As I mentioned, we implemented a salary freeze in the first quarter, in addition to the reduction in work force. So it will be more in line, I think, with those types of actions. We are reviewing the specific situation at each of our facilities. I think we will make additional announcements as specific plans are developed, but of course we will always be very sensitive to make sure that our employees are well informed in the process. Kevin Maczka – BB&T Capital Markets: Okay, thank you.

Our next question comes from Christopher Glynn, your line is open, please state your company name. Christopher Glynn – Oppenheimer & Co.: Yes, Chris Glynn from Oppenheimer. Good morning, thank you. I am just wondering on the price cost movement, I know you don't have a crystal ball, but would we assume maybe that the price stickiness at Muller Co. would be pretty safe?

You know, Chris, as we look, we've never experienced a decline, I think, essentially in a four month period as we have seen these last four months. And yet, as I said, we were pleased at our pricing at both Muller and U.S. Pipe. We realized the price increased that we realized in the second half of the year. So as you said as you started off your question, one never knows in this environment, but I would say right now that we are reasonably confident, but certainly we appreciate that in a recession it can be more challenging to maintain price. Christopher Glynn – Oppenheimer & Co.: Okay, and then in some sense or fashion, can you kind of talk about the dollar impact of benefits from cheaper raw materials in the second quarter relative to the first, and then relative to that into the second half.

Yes, I can give you an estimate. Certainly it’s going to depend on what shipments end up being, but we think that we can see potentially as much as a $20 million reduction in raw material prices. I’m sorry, let me rephrase that. The raw material costs flowing through our cost of goods sold versus what we experienced in the first quarter. I think that probably what we would see, we will see our biggest sequential quarter-over-quarter benefit in the second quarter because in the first quarter we had our peak prices flowing through, so we wouldn’t expect to see that kind of reduction on a sequential basis occurring in the second half of the year. But I think that we would be comfortable in saying that we could see at least half of that again in the second half of the year. Christopher Glynn – Oppenheimer & Co.: Okay, thanks, that's very helpful. And the 10 million in annualized cost savings from the 1Q cost actions, I take that that is annualized, correct me if I’m wrong. And then was there an expense in the segments associated with those actions?

Evan, why don't you handle that one?

Yes, this is Evan. We did have $10 million in the quarter cost-savings. And, you know, that's related to our Lean Six Sigma in manufacturing efficiencies of about $4.8 million; 2.8 million related to Burlington; 1.5 million in a head-count reduction; and about half a million of other savings. And those savings we expect are in the quarter and that's kind of the recap of that. Christopher Glynn – Oppenheimer & Co.: Great. Thanks, guys.

Our next question comes from Mike Schneider. Sir, your line is open, and please state your company name. Mike Schneider – Robert W. Baird & Co.: Hi. It's Mike Schneider from Robert Baird. Good morning.

Good morning, Mike. Mike Schneider – Robert W. Baird & Co.: Evan, I am sorry. Just to follow up, so the 10 million in savings you just ran through, that's an annualized number or that's quarterly savings?

That's quarterly savings. Mike Schneider – Robert W. Baird & Co.: Got it.

And to clarify as well, we had severance cost in the quarter of roughly $400,000 related to some of those savings. Mike Schneider – Robert W. Baird & Co.: Okay. And then just switching gears, so thank you very much for the raw materials information, Greg. The flipside of this now is that you're clearly indicating that the incremental cost of under absorption in the second quarter will be greater than that 20 million in cost savings on raw materials. Can you ballpark what you think the incremental costs of, or sequential costs of under absorption would be, Q2 versus Q1?

Yeah, Michael. As I've said, we think that we'll more than offset that, and I think it could be as much as a couple of million dollars higher on absorbed overhead cost than the raw material savings. Mike Schneider – Robert W. Baird & Co.: But only a couple of million dollars? I guess that's surprisingly small to me.

And, Mike, just to clarify, you were talking about on a sequential basis? Mike Schneider – Robert W. Baird & Co.: Yes.

Because that is how I answered the raw materials. Mike Schneider – Robert W. Baird & Co.: Okay. The commentary —

It's on a sequential basis. Mike Schneider – Robert W. Baird & Co.: All right. Again, that seems surprisingly small, even on a sequential basis. Can that from we deduce that because you took so many man hours out in Q1 and production hours out in Q1 that indeed it's — I don't know if impossible is the right word, but it's difficult to take many more hours out than you did in Q1?

No. Actually, we would probably expect to take out more hours in Q2 because as Evan was reviewing the cash flow, we did have a slight increase in inventory and certainly our objective, as we've said a number of times, is to match production with demand and not to have inventories grow. In fact, we would like to have a continual gradual decline in inventory. And as we also said that we expect revenues and orders to be down in Q2 from Q1. So, with those two coupled together, we would expect that actually production would probably be less in Q2 than Q1. Mike Schneider – Robert W. Baird & Co.: Okay. And I guess — I know this is qualitative, but just it surprises me that if the range of under absorption is 22-23 million sequentially, I would have almost expected the number to be much higher, simply because as you say, revenue is going to be down sequentially, your production days will be down sequentially because of that, and compounded by the fact that you want to reduce inventory in dollars, but it's just a reaction more than anything.

Mike, again I will point out, the lag — we're on a FIFO basis so it lags. So, what we experienced in last quarter flows through this quarter. Mike Schneider – Robert W. Baird & Co.: Right. Okay, and I guess, at Mueller, the pricing contribution; you outlined in the press release the exact dollars contributed by the increase in pricing, but when you take it as a percent of sales, the contribution of pricing in Mueller actually was smaller in Q1 than in Q4. I'm wondering if you have the numbers top of mind, just why pricing would have contributed seven points in Q4 and then only about 5.5 in Q1?

It's because our biggest drop off in shipments were our valve and hydrant products, and of course that was the product line where we had our significant price increases. So, if you look in Q4, we had nice shipments of valves and hydrants, we had the drop off in Q1 of those particular products of over 40%. So, it was a mix that was influencing that pricing difference. Mike Schneider – Robert W. Baird & Co.: Got it. That's very helpful. And then back to inventory then. On those lines, can you quantify just what unit inventory looks like, either year-over-year or sequentially, even though the dollars are up slightly?

Yeah. Unit inventory is reasonably flat to down slightly because of, as I said, that we had the unabsorbed overhead bumped up inventory, as did what happened to currency valuations. So, from a unit standpoint, we did not see the increase that it would be indicated by looking at a dollar volume, but it was not, I say, significantly below where we were in the fourth quarter, but yet shipments and orders were. So, relatively to, I think, current market demand, we would say inventory is higher than where we would want it to be. Mike Schneider – Robert W. Baird & Co.: Okay. And in US Pipe, as a percent again, volumes were down about 16%, but yet you've talked about declines as much as 46% in October. Again, just relative to my expectations, I would have expected US Pipe volumes to be down far greater to the tune of 30-40% given that orders have been running at that rate. Can you explain the discrepancy there?

Yeah. Shipments on a tonnage basis were down about 27.4% for pipe on a — Mike Schneider – Robert W. Baird & Co.: But on a dollar basis we're only down 16?

Right, because of the — Mike Schneider – Robert W. Baird & Co.: Got it. Okay. So, I was mixing pricing and tonnage. So, when you talk about orders being down, you were speaking more in tonnage terms, not dollars?

Yes, tonnage terms. Yes. Mike Schneider – Robert W. Baird & Co.: Okay. And then just pricing. It's been encouraging to see pricing hold in across this industry, even in this tough market. Can you focus specifically though just on project quotes for municipal projects? I know there's probably not many occurring right now, but what does pricing look like in that narrow niche?

Well, I think you may have answered the question right up front. I wish we would be seeing enough quotes to be able to get a good handle on that. I would still say, Mike, from what we are seeing, that we are confident in that the price increases realized in the second half of the year are, I would say, pretty much holding. Mike Schneider – Robert W. Baird & Co.: Okay. And then final question, and a focus of, I think a lot of people, the covenants again. Greg, you made the statement that you anticipate remaining in compliance. From that, I guess I just want to understand your view of fiscal 2009 here. Even with the — I guess the hole we're starting in during Q1 and Q2, what does it take in the second half for you to remain in compliance with the leverage ratio covenant, and by that I mean do we need to see an acceleration in market demand? Do we need to see distributor restocking? Just give us your sensitivity analysis.

Yeah, Mike. There is obviously two variables that affect meeting our covenant. On the demand side, we expect and we would need to see our traditional seasonality, and we have seen nothing that would lead us to believe that we won't see the traditional seasonality. In fact, we've seen — there is some data that says that the drop off in state and local government spending in the last quarter was the biggest percentage drop off in at least 50 years, because the data we looked at went back only 50 years. So, that would lead us to believe that certainly helps explain what we saw in this quarter, but also gives us some hope that we will see the seasonality because we know that that level of spending can't continue for that length of time. So, certainly we would need to see, I would say, the traditional seasonality in our business. Secondly, I think the pickup, as you referenced, the pickup and distributor restocking their inventory, I think that would certainly be a plus, and I think that we would expect that that will add to probably magnifying this year shipments in the second half of the year versus the first half of the year. Now relative to the other part of that, and certainly of that equation, is where our net debt is, and we are focused on managing working capital, generating free cash flow, and that helps lower our net debt. So, certainly on the demand side we need to see the typical seasonality, and we will continue, I think, continue to make progress in lowering net debt. Mike Schneider – Robert W. Baird & Co.: Okay. And then final question, I apologize. The new pipe plant, can you give us some analysis of where you are relative to your expectations on tons per day or man-hours per ton, any of those type of metrics, to give us some sense that indeed that plant is on track relative to your expectations in the early ramp?

Yeah. I would say that the efficiencies that we saw, or the production that we saw in November-December, gives us comfort that we are meeting the productivity that we expected out of that plant. Our only issue now of course is that the production was so low that we're not getting to see the benefit of those efficiencies because of the reduced production and reduced demand. Mike Schneider – Robert W. Baird & Co.: Okay. Thank you.

Thanks.

Our next question comes from Ryan Connors. Your line is open, and please state your company name. Ryan Connors – Benning and Scattergood Securities: Sure. It's Ryan Connors, Benning and Scattergood Securities. Good morning.

Good morning, Ryan.

Good morning. Ryan Connors – Benning and Scattergood Securities: I had a couple of things here. A lot of it's been covered, it's been very thorough, but I wonder if you could drill your raw material and input cost discussion down to Anvil in particular? Obviously, if my records are correct, this is the first quarter on record that Anvil is the biggest segment of the company from a revenue standpoint. And my understanding of their raw material mix is that there's more copper and brass ingots in there. I thought maybe raw materials might even be a material and was surprised to see it was actually a margin headwind. So, if you could just drill that raw material discussion down to Anvil in terms of what the impact was on the quarter and then what your outlook is in terms of going forward in terms of the input cost as a headwind or a tailwind in that segment?

Yeah. Anvil — again, and I'll go back to an earlier answer, that we use the FIFO method of accounting and Anvil's inventory terms are less than Mueller and Pipe. So, actually what was flowing through cost of goods sold for Anvil were the raw materials that we purchased in the summer. And of course, if you recall that that almost was at peak price or even not quite a peak price — peak pricing, so costs were still going up. So, that contributed to the — I would say to the primary headwind this quarter for Anvil on the raw materials side. We do believe, sequentially though, so then in Q2 that the raw material costs will be slightly better, but since we turn inventory lower in this business, we will still have some of those higher costs flowing through cost of goods sold, so we would really expect to see the benefit at Anvil of lower raw material costs in Q3 and Q4. Ryan Connors – Benning and Scattergood Securities: Okay. That's great. Thanks for that. And then I just had a bigger picture question, Greg. From a competitive standpoint, we spend a lot of time talking to utility operating managers trying to get a better feel of what they're doing, and a lot of them are talking about looking more closely at things like leak detection technologies that they believe can enable them to spend more wisely, especially in the rehabilitation aspect, rather than wholesale replacement of water mains to sort of do a real targeted leak detection program. And so, I'm wondering to what extent, just on two fronts, that's been a factor, that type of redeployment of those limited CapEx dollars — has been a factor in the weakness? And then, just from a longer term perspective, how you view leak detection and asset management as a competitive or substitute threat to your product?

That's a good question. I think in the short term that has really not been much of an impact. I think the biggest impact has been that the municipalities, I think, have tried to cut back spending every possible way. And again, I can't overemphasize also I think what we've seen in the past quarter, the uncertainty of the stimulus bill. We know there's one city that has a project ready to go, head it ready to go, a 54 inch pipeline, we were going to participate in that project, and several weeks ago the word came back that they're putting it on hold until they know exactly if they're going to get federal money. I think that's an example of some of the turmoil we're seeing in the marketplace. So, I don't think there has been any reduction in our volume or demand for our product from using alternative methods to stop a leak. I will say that probably more of the repairs that you're referencing are used in waste water than in drinking water, but then I would say even long term, I don't expect this to have a big impact. And I think the primary driver is that if you look at a lot of the pipe that will need to be replaced that's in the ground, 75, 80, 85 years, they were installed in a time when population was a lot less than what it is today. So, the municipalities and the water utilities that we talk to, they say that there is a definite need when it comes time to replace that pipe to replace it with larger diameter pipe because they need greater volumes of water that makes their system much more efficient, it saves energy on the pumping side, also makes them less susceptible to blowing out a pipe because they're not trying to put more volume through the pipe than the diameter would dictate. So, I think on a short-term basis, a municipality or water utility may find that if they go in and make a temporary patch, that we may see that picking up in the short-term, but I don't think it has a long-term impact, because I think again the need to replace the existing pipe with larger diameter pipe because greater volumes of water are needed will be the deciding factor. Ryan Connors – Benning and Scattergood Securities: Okay. Great to get your perspective there. Thanks for your time.

Thank you.

Our next question comes from Michael Gaugler. Your line is open, and please state your company name. Michael Gaugler – Brean Murray Carret: Brean Murray Carret — good morning, everyone.

Good morning, Michael.

Good morning. Michael Gaugler – Brean Murray Carret: Greg, I was wondering if you could give us a little bit more color in what you're seeing in the end market that your Anvil products go into, if there's a particular area there that causes you concern?

Michael, I would say it's more in general, we have — there are still some regions actually in the United States, where activity is holding up pretty well on the commercial construction side. I think that as we look at it, maybe our fire protection business could be a little slower than the mechanical side which is tied into HVAC because there could be some replacement there — but I would say there's not one area more than another, and some of our products, though it's not as big — we have some specialty products such as engineered hangars that will go into power plants and so on, and that business remains pretty strong. So, when we talk about we would expect to see a drop off in Anvil, but not to the same extent as the other businesses, and we've even had some, I would say, bright spots regionally. Michael Gaugler – Brean Murray Carret: Okay. The balance of my questions, so thanks.

Thanks, Michael

Our next question comes from Joel Tiss. Your line is open, and please state your company name. Joel Tiss – Buckingham Research: Hi, Buckingham Research. How are you doing, guys?

Hi, Joel.

Good morning, Joel. Joel Tiss – Buckingham Research: You've definitely done a good job answering all the questions. I just have one. Can you talk a little bit about potential for some of the distribution channels to be waiting for lower prices to come through, and sort of in the same thought, what a second half of 2009 year-over-year sounds like the pricing increases are going to start to wain. Do you think that's keeping some additional pressure on the channel or causing some of those people to wait a little bit?

Good question. I think it would be hard for me to answer that with any certainty, but I don't believe that that is the driving factor. I just think if their improving their liquidity, their forcing on it, getting their inventories just to, I think historically low levels, and waiting for demand. So, I'm not so sure they're necessarily waiting for lower prices. Quite frankly, our distributors like to see us put in price increases because that solves more of their bottom line. Relative to the second half of the year, and I'm sorry, Joel, maybe if you didn't — relative to the second half of the year, if you could ask that question again? Joel Tiss – Buckingham Research: Well, it seems like you're going to anniversary your price increases —

No. You're right. That's exactly right. I think when we start getting into Q4, if we implement no further price increases before then, that we'll be pretty flat year-over-year, because most of the price increases that we implemented last year were implemented before we got into the fourth quarter, and I think we start seeing that pricing in the fourth quarter, so you're right that we would expect to see positive contribution from price increases that we implemented last year through the third quarter, but I think it will be flat in Q4. Joel Tiss – Buckingham Research: And then as long as you're here, you think including sort of guessing that maybe you'll be a little bit below breakeven in the second quarter, do you think it's crazy to think that if we don't see any economic rebound and we don't see any impact of the stimulus, with all else being trending the way it is trending, that you guys could be close to breakeven for the year?

As again, and this probably ties into the way I answered a question a little earlier, we're still confident that we will see the seasonal uptake in demand and so as we look at the second half, we think clearly that the demand in volumes will be up in Q3 and Q4 versus Q2. And I think again, we're in a period where municipalities have cut back spending so significantly and so dramatically in the last three months, and probably I would say through most of this quarter, that they're at the point where they have to — they'll have to spend money. So, we think clearly that the Q2 will be the low point for us. Joel Tiss – Buckingham Research: Okay. Thank you very much.

Thanks, Joel.

Our next question comes from Brent Thielman. Your line is open, and please state your company name. Brent Thielman – D. A. Davidson & Co.: Yeah. It's Brent Thielman, D. A. Davidson, good morning.

Good morning, Brent.

Good morning. Brent Thielman – D. A. Davidson & Co.: Greg, just on some of your competitors I guess, for both Mueller Co. and US Pipe, can you just discuss a little bit what you're seeing on the pricing standpoint from some of those companies?

Yeah. So far, Brent, we have seen, I think, the price increases that were implemented in the second half of the year pretty much holding. And again, I think it gets down to that one, we fought so hard for those prices, two that we were all so far behind the curve in what was happening to raw materials, that we needed those price increases. So, right now, the best that we can see is that pricing is reasonably stable relative to the price increases that were implemented in the second half of the year. And again, as I said a little earlier that clearly in a recession our confidence may be a little less than I would say it has been in the past, but right now we haven't see any, what I would say, shifts. Brent Thielman – D. A. Davidson & Co.: Okay. That's helpful. And then I guess, you have seen input costs for some of the alternative products, particularly plastics which have pulled back dramatically. Can you discuss your ability, or likewise inability, to maintain prices for ductile iron pipe, if we begin to see some real pricing scale back for those types of products?

Yeah. I think that certainly on some projects or some instances it could be a factor, but I think generally it's less of a factor. And that gets back to that we think a lot of the market — that's why our pipe has lost a lot of the market share over the last 15 to 20 years, the plastic pipe in the smaller diameter sizes where there's lower pressure. So, I think incrementally there's not that much more to lose, and I think that again when you look at where a lot of our pipe is being used, it's where the engineers in municipalities would prefer to use ductile iron pipe because there's greater volume of water going through at higher pressure. Now of course, that doesn't mean that in some instance we may find a municipality that I absolutely got to save money here, so I'm going to go ahead and put in some plastic pipe, but I don't think we'll see that on a wholesale basis. I think again, where ductile iron pipe is used today, it is primarily because the engineers only have confidence in ductile iron pipe. Brent Thielman – D. A. Davidson & Co.: Okay. Very helpful. And then lastly, do you have any sense geographically where you're sort of seeing the biggest pressures in municipal spending, or is it kind of all across the board?

Interesting question. When you look at this time a year ago, we were seeing drop offs, especially in our Mueller orders — we were seeing drop offs in the west, in the south, where clearly the housing and residential construction was falling off, we see a big impact in our orders in those regions. But we actually in the northwest and the midwest, orders were up. This past quarter, orders were down in every region for Mueller branded products, and interestingly, pretty much about the same amount. A little more in the west I think, which continues to demonstrate what's happening in the housing market there — Brent Thielman – D. A. Davidson & Co.: Sure.

But it's pretty much consistent across all regions, which led us to conclude that our biggest impact on our business today is what I would say is almost a freeze in municipal spending. Brent Thielman – D. A. Davidson & Co.: Right. Okay. Thank you very much.

Thank you.

Our next question comes from Debra Coy. Your line is open, and please state your company name. Debra Coy – Janney Montgomery Scott:

Good morning, Debra. Debra Coy – Janney Montgomery Scott: Hi. The hardest to understand is, it sounds like you're saying as well, is really the sense of when and how spending can pick up in the municipal market. A couple of the things we're looking at is the bond market. The municipal bond market does seem to have unfrozen somewhat. Hopefully that will help. I'm wondering what your sense is of how the stimulus spending will play through? I mean, obviously we don't have a final bill yet, but we assume we get one, we assume we get additional funds related to the state revolving funds programs, but what are you hearing from your clients in terms of the timing of we do get incremental money, when they expect to actually see it? My concern is, is that it's going to take a while to actually flow through to the end markets.

Yeah. Debra, I think that's a good point. I do think that there are some projects ready to go, because I think there were projects that were already — I think they were ready to pull the pin, or in essence start, and they've put them on hold to see if they were going to get federal money. I think we could benefit in several ways, but I think as you point out, it's a moving target that I think prior to the stimulus bill that was approved by the house which had roughly $9-9.5 million — 3.5 for drinking water, six for wastewater — Debra Coy – Janney Montgomery Scott: Right.

I mean, just to point out what a moving target it is, I know we understand just yesterday, Senators Feinstein and Murray introduced an amendment that proposed an additional $7 billion for water infrastructure — Debra Coy – Janney Montgomery Scott: That's right. But it was shot down.

Yeah. I think it was shot down on a — I don't think it's dead. I think thank — but the hill may be a little steeper for it to climb, but I — to put it this way; we don't think that the amount of money that's been talked about is going to move the needle that much. It's not going to be a windfall. Debra Coy – Janney Montgomery Scott: Agreed.

But I think what it will do as I think once municipalities are aware that this money is going to be available for them, that it could free up capital for them to start spending capital, which I think is just absolutely frozen right now. So, I think that that's where we might see the initial benefit. I think it will be six to eight months before we would see any direct benefit from the package itself on spending for water infrastructure. But again, I think that we've seen projects being put on hold while Congress debates, and I think that once there is some certainty, some understanding by the municipalities, I think that's going to help to free up some of these budgets and — but I think back to your point, the direct money that will be available for water infrastructure, I agree, I don't think that will start working its way through to at least six to eight months. But I think one, removing the uncertainty, and two, once municipalities know that some money is coming, could be a benefit in, I think, thawing out the freeze that we're seeing now. Debra Coy – Janney Montgomery Scott: Okay. That's helpful. And then just one related last question. Just thinking about this historically, certainly I don't believe that we have seen water infrastructure spending drop off anywhere like 30 or 40% in any historical recession. It has certainly not been that kind of a deep cycle market, it's been much more of a flattening to maybe a temporary modest decline. I mean, what's your sense of sort of a realistic recession outlook, temporary stimulus delays aside?

Well, again, we have been looking at some numbers, and the one particular set of numbers we were looking at, going back to 1960 prior to this quarter, I think there were only two or three quarters where local government or state governments actually declined. I mean, actually went — did not grow somewhat. And this quarter was just a dramatic fall, and well into negative territory on a quarter over quarter basis. So, I think it would be a mistake, or we could be making a mistake if we extrapolate what happened in the last three or four months and say that will continue the next three or four quarters. So, I believe that there has been such a significant cutback in government spending in all areas, that we will see some rebounds because I don't think we can see that they will continue at that rate. We have an example of — we have a blanket order for a city where they're on a program where they are continuing to replace hydrants. We did not ship one hydrant in the last four months to that city, which is unheard of, because they put a hold. We have another where the water systems signed off on a project to spend $4 million on gate valves. We were going to get that order and city council said no in that particular instance, and that water system came back and said that that's the first time. Usually it has always been rubber stamped. So, I know that's a long winded answer to your question, but no, we don't think that we will see probably a double digit or a off the chart rebound, but we do expect that it will pick up somewhat because we, to the best of our knowledge, think local governments had cut back spending so dramatically. Debra Coy – Janney Montgomery Scott: Okay. That's helpful. I do have one very last question, I know the call has run long, but just your sense as we go through this unprecedented period, kind of how your competitors are surviving? In other words, you obviously have debt issues that you're dealing with, kind of their liquidity situation if you have any sense of that, and really trying to understand when we all come out of this at some point in the next year or so, will there be any changes to the competitive landscape? Do you have any opportunities here to take some share or do you think everybody kind of ends up in the same position when we come out of this cycle?

That's a great question. We've been asking that question a lot of ourselves. As we look at it, we think that our competitors are sufficiently strong that they can whether this storm. As you know and we've pointed out in our investor presentation, if you look at this industry and this market segment, it's been pretty stable for 60 or 70 years when you look at the brand names, you look at the manufacturers — Debra Coy – Janney Montgomery Scott: It's a small group, um-hum.

Yeah. So, I think as we look at it, that they are certainly — the data that we get from our trade associations would indicate there's been no significant — our market share has stayed the same. I don't know maybe what's happened between or among our other competitors, but I get the sense that we'll all survive, and probably we'll be stronger because we know that our competitors have been closing manufacturing facilities. I know that Griffin announced several months ago that they closed their manufacturing facility in New Jersey. So, I do think that our best guess is that everyone will survive and that we'll be stronger when we come out of it. Debra Coy – Janney Montgomery Scott: Okay. That's helpful. Thanks.

Thanks.

Our next question comes from Matt Victorioso (ph). Your line is open, and please state your company name. [Matt Victorioso] – Barclays Capital: Good morning, Barclays Capital. Just real quick, and I don't know if you've touched on this, but could you comment on your availability or ability to continue to repurchase your bonds and what your thoughts are on that going forward?

Yeah. Matt, we've looked at that. We said in our last conference call when we talked about uses of cash that that certainly is an item that we look at. We did this as you saw this quarter. We did (inaudible) and because we saw it was advantageous to do so. Our bonds are very thinly traded, but we'll always be — we're confident in our cash position. As I've said earlier in our prepared comments, we expect to generate positive free cash flow through the year. So, we'll always look at, and make decisions, at what the best opportunity is and at what makes the most sense. [Matt Victorioso] – Barclays Capital: And what your — does your bank that limit (ph) how much you can do there, or is there a certain size of a basket that limits how far you can go with bond buyback?

I'll ask Evan to take that.

Yeah. There is a basket for that, but I think it goes up to around the $50 million mark. [Matt Victorioso] – Barclays Capital: Okay. Great. And then just real quick, just to put a little more color around working capital and free cash flow in the year, how should we be — I mean, last year you were able to turn that into a slight source for the full fiscal year. Given the start to this fiscal year, how should we be thinking about working capital? Where can you get that back to over the course of the rest of the year?

Yes. Over the coming year with the inventory plans that we have, and as we look out, we project that we will have a source of cash for working capital for fiscal year 2009. [Matt Victorioso] – Barclays Capital: So you're going to turn that all the way back to the source, great. Okay, thank you very much.

Our next questions comes from Bret Levy (ph). Your line is open and please state your company name. [Bret Levy – Unidentified Company Name]: I was just about to ask the bond buyback basket question. So, of the 50 million, could you just refine that a little bit? Have buybacks to this point eroded that basket, and how much is left in it?

To date, we've purchased about $5 million. As Greg mentioned, our bonds are thinly traded, but we look at selective opportunities, and we were able to retire $5 million of debt in the quarter with generating a gain of $1.5 million, and that $5 million would go against the basket. [Bret Levy – Unidentified Company Name]: So that means there's 45 million left in the basket? And if earnings kind of continue in the direction they're going, is there a possibility that basket could get curtailed?

There is a possibility, but at this time we don't anticipate that. [Bret Levy – Unidentified Company Name]: Okay. And you got about 45 million more room, right?

Right. [Bret Levy – Unidentified Company Name]: Thank you, much.

Thank you.

That does conclude the question and answer segment of today's call.

Well, everyone, thanks very much for your continued interest in Mueller Water Products. I think probably again the best way for me to summarize is that obviously we're in a very challenging economy, but we have made the tough decisions, we'll continue to do so, manage our business, and to make sure that we address these conditions. So again, thanks for your interest.