Mueller Water Products · NYSE:MWA
Mueller Water Products — Oppenheimer 15th Annual Industrial Growth Conference 2020
36 slides from Mueller Water Products's conference presentation, May 6, 2020
Slide 1: Oppenheimer 15th Annual Industrial Growth Conference
Where Intelligence Meets Infrastructure® Oppenheimer 15th Annual Industrial Growth Conference May 6, 2020
Slide 2: Non-GAAP Financial Measures
NON-GAAP Financial Measures In an effort to provide investors with additional information regarding the Company’s results as determined under GAAP, the Company also provides non-GAAP information that management believes is useful to investors. These non-GAAP measures have limitations as analytical t
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation release 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, expect
Slide 4: Mueller Water Products at a Glance
Mueller Water Products at a Glance HISTORY LTM FINANCIALS END MARKETS* FISCAL YEAR 2019 • Founded 160 years ago as of March 31, 2020 <10% Natural gas utilities • Spun off from Walter % of Industries in 2006 $ in millions Total • Listed on NYSE (MWA) June Net sales $1,011.5 60-65% Repair and replacem
Slide 5: Investment Highlights
Investment Highlights • Leading brand and municipal market specification positions • Large installed base of iron gate valves and fire hydrants STRONG COMPETITIVE POSITION • Comprehensive distribution network and strong end-user relationships • Low-cost manufacturing operations using lost foam proce
Slide 6: COVID-19 Update
COVID-19 Update* • COVID-19 response team utilizing daily communication to share information and make quick decisions • Eliminated non-essential travel for all employees and executed remote work procedures Employees • Enhanced procedures for disinfection including reinforcing hand washing at all fac
Slide 7: Adapting to COVID-19
Adapting to COVID-19 (Provided May 5, 2020)* • Assuming material slowdown in our end markets for the second half of our fiscal year, especially residential construction • Based on our current outlook, currently expect our third quarter to be the most challenging quarter of this year • With April ord
Slide 8: Mueller Water Products in a Strong Position
Mueller Water Products in a Strong Position* • Impressive longevity, working with our customers for over a century to ensure that they have the vital products and services they need to deliver clean, safe drinking water • Strong balance sheet with ample liquidity with net debt leverage 1.6 times vs.
Slide 9: Keeping Eye on Long-term Strategies with Core Values
Keeping Eye on Long-term Strategies with Core Values Providing Foundation for Navigating the Crisis 9
Slide 10: Products and Markets
Products and Markets (MUELLER) ©"
Slide 11: Our Leading Product Positions
Our Leading Product Positions FIRE IRON GATE BUTTERFLY BRASS HYDRANTS VALVES VALVES PRODUCTS PRODUCT PRODUCT PRODUCT PRODUCT #1 POSITION #1 POSITION #1 POSITION #2 POSITION A.Y. McDonald ACIPCO DeZURIK Ford Meter Box McWane Company estimates based on internal analysis and information from trade asso
Slide 12: Mueller is Uniquely Positioned to Address Opportunities with Utilities
Mueller is Uniquely Positioned to Address Opportunities with Utilities with its Leading Infrastructure Products and Installed Base 12
Slide 13: U.S. Water Infrastructure Requires Substantial Long-term Investment
U.S. Water Infrastructure Requires Substantial Long-term Investment Repair & Replacement Market Future Drinking Water Infrastructure Expenditure Needs(4) • Restoring existing water systems and expanding them to serve a growing TREATMENT population through 2050 will require a $1.7 trillion investment
Slide 14: Funding Water Infrastructure Repair
Funding Water Infrastructure Repair Water Utilities in North America Sources of Funding for U.S. Utilities • >50,000 water utilities and >14,000 wastewater utilities in U.S. • For U.S. utilities, 96% funded at state and local government level(2) (1) and Canada • Majority of utilities have service co
Slide 15: After Crisis Need for Digital Water Solutions Expected to Accelerate
After Crisis Need for Digital Water Solutions Expected to Accelerate Bluefield Research April 2020 Note “COVID-19 is an inflection point for long-term resilience, digital transformation of water sector. The U.S. & Canada digital water market is expected to sustain sizeable top-line losses in the imm
Slide 16: Broad-line of Technology-enabled Products
Broad-line of Technology-enabled Products • Currently have a number of products addressing these segments, including Echologics' pipe condition assessment services and fixed leak detection solutions, advanced meters and communication equipment, smart hydrants, pressure and water quality monitors, an
Slide 17: Modernizing Manufacturing Facilities
Modernizing Manufacturing Facilities • Major projects driving capital spending above historical levels to deliver above-market sales growth by broadening our product capabilities and expand gross margins as we modernize facilities, equipment and processes − In addition to operational efficiencies, m
Slide 18: Financial Performance
Financial Performance (MUELLER) ©"
Slide 19: History of Strong Financial Performance
History of Strong Financial Performance • Over last three years (FY16 to FY19), delivered 6.5% net sales CAGR with 8.3% adjusted EBITDA CAGR • Adjusted EBITDA margin improved 100 bps. over the last three years (FY16 to FY19) Consolidated Net Sales Consolidated Adjusted EBITDA (1) and ($ in millions)
Slide 20: Second Quarter Highlights
Second Quarter Highlights* • Generated strong consolidated net sales growth of 10.1% driven by increased shipment volumes across most of our product lines and pricing • Significant sequential improvement versus the 3.1% organic net sales growth in the first quarter of this year • Higher volumes were
Slide 21: Q2 2020 Consolidated Financial Highlights
Q2 2020 Consolidated Financial Highlights* • Net sales increased 10.1%, or $23.7 million, to $257.7 million Second Quarter 2020 2019 primarily driven by increased shipment volumes across most of our product lines at Infrastructure and higher pricing Net sales $ 257.7 $ 234.0 • Gross profit increased
Slide 22: Free Cash Flow
Free Cash Flow* • Cash used in operating activities for six $0.0 ($3.0) month period ended March 31, 2020 improved $26.1 million to $3.0 million as ($10.0) compared with $29.1 million of cash used in ($37.3) ($29.1) the prior year ($20.0) • Cash used in operating activities includes ($30.0) the $22.
Slide 23: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity* • Moody’s: Ba2 Corporate Rating, Ba3 Notes Rating, Stable Outlook Credit Rating • S&P: BB Corporate and Notes Ratings, Stable Outlook Debt • $450M of 5.5% Senior Unsecured Notes** • Asset based lending agreement (“ABL”) provides up to $175M revolving credit facili
Slide 24: Balanced and Disciplined Capital Allocation
Balanced and Disciplined Capital Allocation • Given liquidity position on our balance sheet, Cash Allocation since December 31, 2016 our capital allocation priorities, continue to END MARKETS* focus on capital investments and returning $198M to Shareholders cash to shareholders through our quarterly
Slide 25: Investment Highlights
Investment Highlights • Leading brand and municipal market specification positions • Large installed base of iron gate valves and fire hydrants STRONG COMPETITIVE POSITION • Comprehensive distribution network and strong end-user relationships • Low-cost manufacturing operations using lost foam proce
Slide 26: Supplemental Data
Supplemental Data (MUELLER) ©"
Slide 27: Strong Balance Sheet with Significant Flexibility
Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1 billion since March 31, 2006 and $650 million since September 30, 2008 • Capital structure and net leverage position provide flexibility to support capital investments, quarterly dividend and acquisitions • Total debt of $447.3
Slide 28: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended March 31, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 240.3 $ 17.4 $ — $ 257.7 Gross profit $ 84.2 $ 1.8 $ — $ 86.0 Selling, g
Slide 29: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended March 31, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 23.8 Income tax expense (1) 6.8 Interest expense, net (1) 6.0 Pension b
Slide 30: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended March 31, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 214.1 $ 19.9 $ — $ 234.0 Gross profit $ 71.9 $ 2.9 $ — $ 74.8 Selling, g
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended March 31, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 10.9 Income tax expense (1) 3.9 Interest expense, net (1) 5.9 Walter En
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Six months ended March 31, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 433.1 $ 37.2 $ — $ 470.3 Gross profit 152.4 6.2 — 158.6 Selling, gene
Slide 33: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Six months ended March 31, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 34.1 Income tax expense (1) — Interest expense, net (1) 9.9 Walter E
Slide 34: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Six months ended March 31, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 386.1 $ 40.7 $ — $ 426.8 Gross profit $ 128.7 $ 6.2 $ — $ 134.9 Selli
Slide 35: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Six months ended March 31, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net loss $ (10.1) Income tax expense (1) (2.0) Interest expense, net (1) 11.4 Wal
Slide 36: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure®
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