Mueller Water Products · NYSE:MWA
Mueller Water Products — Oppenheimer 16th Annual Industrial Growth Conference 2021
37 slides from Mueller Water Products's conference presentation, May 5, 2021
Slide 1: Oppenheimer 16th Annual Industrial Growth Conference
Where Intelligence Meets Infrastructure® Oppenheimer 16th Annual Industrial Growth Conference May 5, 2021
Slide 2: NON-GAAP Financial Measures
2 NON-GAAP Financial Measures In an effort to provide investors with additional information regarding the Company’s results as determined by accounting principles generally accepted in the United States (“GAAP”), the Company also provides non-GAAP information that management believes is useful to in
Slide 3: Forward-Looking Statements
3 Forward-Looking Statements This presentation contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements that address activities, events or developments that the Company intends, expects, pla
Slide 4: Mueller Water Products at a Glance
4 Mueller Water Products at a Glance KEY PRODUCTS (2) END MARKETS (2) • Founded over 160 years ago • Spun off from Walter Industries in 2006 • Listed on NYSE (MWA) June 1, 2006 • Divested U.S. Pipe (April 2012) and Anvil (Jan. 2017) • Acquired Singer Valve (Feb. 2017) and Krausz Industries (Dec. 201
Slide 5: Investment Highlights
5 Investment Highlights • Leading brand and municipal market specification positions • Large installed base of iron gate valves and fire hydrants • Comprehensive distribution network and strong end-user relationships • Low-cost manufacturing operations using lost foam process • Favorable market dyna
Slide 6: End Market Overview
6 End Market Overview* • End markets improved during the quarter as municipal spending continues to recover from the pandemic and residential construction continues to see strong demand for single-family homes • For the first half of the year, increased consolidated net sales 6.1%, excluding the one
Slide 7: Mueller Water Products in a Strong Position vs. Great Recession
7 Mueller Water Products in a Strong Position vs. Great Recession • Reduced leverage by >2 turns since 2008, providing flexibility to invest in the business and return capital to shareholders through the cycle • Addressed legacy liabilities including exiting multi-employer pension plans and settling
Slide 8: Remain Focused on Executing Key Strategies to Grow and Enhance Our Business
8 Remain Focused on Executing Key Strategies to Grow and Enhance Our Business Where Intelligence Meets Infrastructure® Mueller is committed to manufacturing innovative products and creating smart solutions that will solve future challenges, whether it's at the source, at the plant, below the ground,
Slide 9: Commitment to Sustainability
9 Commitment to Sustainability • Released first ESG Report this past December • Inaugural report reflects how sustainability has been an integral part of Mueller Water Products for many years • While highlighting our sustainability achievements to date, discussed some of the ongoing initiatives to s
Slide 10: Products and Markets
Products and Markets [MUELLER] ‘=-",
Slide 11: Strong Position in Broader Water Market
11 Strong Position in Broader Water Market Leading Product Positions in Key Product Categories (1) (1) Company estimates based on internal analysis and information from trade associations and distributor networks, where available. (2) Company filings and presentations and management estimates. Fire
Slide 12: Mueller is Uniquely Positioned to Address Opportunities with Utilities
12 Mueller is Uniquely Positioned to Address Opportunities with Utilities with its Leading Infrastructure Products and Installed Base
Slide 13: U.S. Water Infrastructure Requires Substantial Long-term Investment
13 U.S. Water Infrastructure Requires Substantial Long-term Investment U.S. Water Infrastructure CAPEX and Investment GapRepair & Replacement Market (1) American Water Works Association, Buried No Longer: Confronting America’s Water Infrastructure Challenge 2012 (2) ASCE: 2021 Report Card for Americ
Slide 14: Aging Infrastructure Increasing Water Main Breaks
14 Aging Infrastructure Increasing Water Main Breaks (1) Bluefield Research 2019, Water Industry 4.0 Focus Report (2) U.S. Environmental Protection Agency, “Drinking Water Infrastructure Needs Survey and Assessment, Sixth Report to Congress,” March 2018. (3) EPA Aging Water Infrastructure Research P
Slide 15: Funding Water Utilities Infrastructure Repair
15 Funding Water Utilities Infrastructure Repair (1) Bluefield Research 2019, Water Industry 4.0 Focus Report (2) Bluefield Research 2019, U.S. Private Water Utilities Report (3) RAND Corporation 2017 Report titled “Not Everything is Broken” (4) American Water Works Association 2016 Water and Wastew
Slide 16: Need for Digital Water Solutions Expected to Accelerate
16 Need for Digital Water Solutions Expected to Accelerate “COVID-19 is an inflection point for long-term resilience, digital transformation of water sector. The U.S. & Canada digital water market is expected to sustain sizeable top-line losses in the immediate aftermath of the COVID-19 outbreak, bu
Slide 17: Broad-line of Technology-enabled Products
17 Broad-line of Technology-enabled Products • Currently have a number of products addressing these categories, including Echologics' pipe condition assessment services and fixed leak detection solutions, advanced meters and communication equipment, smart hydrants, pressure and water quality monitor
Slide 18: Modernizing Manufacturing Facilities
18 Expect capital expenditures as a % of consolidated net sales to decrease to less than 4% after the completion of the new brass foundry in Decatur, IL Modernizing Manufacturing Facilities • Three transformational CAPEX projects account for approximately $130M of capital spending • Expected to driv
Slide 19: Financial Performance
Financial Performance [MUELLER] ‘=-",
Slide 20: Q2 2021 Consolidated Financial Highlights
20 Q2 2021 Consolidated Financial Highlights* • Net sales of $267.5M increased $9.8M, or 3.8%, driven by the benefit of eliminating the one-month reporting lag, higher pricing and increased volumes at Technologies • Gross profit $88.4M with a gross margin of 33.0% − Gross margin increased 50 basis p
Slide 21: Full-Year Fiscal 2021 Outlook
21 Full-Year Fiscal 2021 Outlook* • Demand remained strong throughout the second quarter and we finished the quarter with an all-time high backlog • For 2021, continue to expect that strong growth in the residential construction end market will more than offset any temporary delays in the project-re
Slide 22: Free Cash Flow
22 Free Cash Flow* • Net cash provided by operating activities for six month period improved $66.2M to $63.2M, primarily driven by improvements in working capital management • First quarter 2020 included the $22.0M payment associated with the Walter Energy payment* • Invested $31.1M in capital expen
Slide 23: Strong Balance Sheet and Ample Liquidity
23 Strong Balance Sheet and Ample Liquidity* • Moody’s: Ba2 Corporate Rating, Ba3 Notes Rating, Stable Outlook • S&P: BB Corporate and Notes Ratings, Stable OutlookCredit Rating Debt Structure Debt Maturities Financial Covenants • $450M of 5.5% Senior Unsecured Notes (matures June 2026) • Asset base
Slide 24: Balanced and Disciplined Capital Allocation
24 Balanced and Disciplined Capital Allocation • Strong balance sheet, liquidity and cash flow to support our strategies • Maintaining balanced approach to capital allocation to strengthen and grow the business through capital investments and bolt-on acquisitions • Continuing to return cash to our s
Slide 25: Investment Highlights
25 Investment Highlights LONG-TERM END MARKET DYNAMICS CONTINUE TO IMPROVE LEVERAGING STRENGTHS TO INCREASE TECHNOLOGY-ENABLED PRODUCTS MODERNIZING MANUFACTURING AND DRIVING OPERATIONAL EXCELLENCE TO DELIVER MARGIN EXPANSION FLEXIBLE BALANCE SHEET AND STRONG CASH FLOW STRONG COMPETITIVE POSITION
Slide 26: Supplemental Data
Supplemental Data [MUELLER] ‘=-",
Slide 27: History of Strong Financial Performance
27 History of Strong Financial Performance $793 $801 $826 $916 $968 $964 $0 $200 $400 $600 $800 $1,000 $1,200 FY15 FY16 FY17 FY18 FY19 FY20 Consolidated Net Sales ($ in millions) $143 $156 $164 $180 $198 $191 18.1% 19.5% 19.8% 19.7% 20.5% 19.8% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% $0 $50 $100 $150 $200
Slide 28: Strong Balance Sheet with Significant Flexibility
28 Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1B since March 31, 2006 and $650M since September 30, 2008 • Total debt of $447.6M and total cash of $228.2M leading to net debt leverage of 1.1x at March 31, 2021 with $382.6M of excess availability under the ABL, based on Ma
Slide 29: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
29 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) As a result of the elimination of the one-month lag, the three month period ended March 31, 2021 includes an additional $6.0 million of net sales, and an additional $1.4 million in operating income in Infr
Slide 30: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
30 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) As a result of the elimination of the one-month lag, the three month period ended March 31, 2021 includes an additional $6.0 million of net sales, and an additional $1.4 million in operating income in Infr
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
31 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) Net sales and gross profit associated with certain products have been reclassified as Technologies segment items to conform to the current period presentation. (2) We do not allocate interest, income taxes
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
32 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) Net sales and gross profit associated with certain products have been reclassified as Technologies segment items to conform to the current period presentation. (2) We do not allocate interest, income taxes
Slide 33: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
33 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Six months ended March 31, 2021 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 462.8 $ 42.1 $ — $ 504.9 Gross profit $ 160.0 $ 6.8 $ — $ 166.
Slide 34: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
34 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) As a result of the elimination of the one-month lag, the six month period ended March 31, 2021 includes an additional $6.0 million of net sales, and an additional $1.4 million in operating income in Infras
Slide 35: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
35 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) Net sales and gross profit associated with certain products have been reclassified as Technologies segment items to conform to the current period presentation. (2) We do not allocate interest, income taxes
Slide 36: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
36 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) Net sales and gross profit associated with certain products have been reclassified as Technologies segment items to conform to the current period presentation. (2) We do not allocate interest, income taxes
Slide 37: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure®
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