Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (February 2015)
35 slides from Mueller Water Products's investor presentation, Feb 24, 2015
Slide 1: Investor Presentation February 2015
(Mueller Water Products) . Where Intelligence Meets Infrastructure® Investor Presentation February 2015
Slide 2: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company reports its financial results under ecourting principles generally aboepiali tha Uited ed er diluted hate: free cash isted EBIT adjusted net income (loss) pet tow net on and net debt leverage as non-GAAP Adjusted operating income (loss) represents operating in
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Thi ments that may be deemed forward -looking Setemonne "ihn the meaning of the Private Securities Litigation Retom Act of 1995. All refinancing, including potential annualized interes! s expense savings, which assumes that LIBOR ret of Below a certain floor and excludes t
Slide 4: Our Business
OUR BUSINESS FY2014 PRIMARY END MARKETS $1.2B LTM Net sales: $783mm net sales (as of December 31, 2014 ) 20% — ,5% Residential Specified in constuction” 100 largest 75% ¢ 15% Nonresident Repair and constucton replacment cromaial Satbuton treat ene U.S. metropolitan markets for valves or hydrants * D
Slide 5: Mueller Water Products
Mueller Water Products Leading provider of water infrastructure and flow control products and services in North America INVESTMENT HIGHLIGHTS I Improved results driven by strong incremental IB Leading brands in water infrastructure and one of operating leverage as end markets recover the largest ins
Slide 6: Business Performance: Long-Term Targets
BUSINESS PERFORMANCE: LONG-TERM TARGETS I Mueller Co. base business organic growth of in normalized end market conditions ll Metering and leak detection products and services @ Mueller Co. adjusted EBITDA margins of is we approach more normalized end market conditions @ Metering and leak coon saris
Slide 7: Broad Product Portfolio
BROAD PRODUCT PORTFOLIO Mueller Co.) Est. 1857 Historical Roots Est. 1999 (1850) $783mm Net Sales $406mm $126mm Adjusted Operating Income“) $42mm sdamm Depreciation & Amortization $t14mm $168mm Adjusted EBITDA $56mm Fis. een Cast Iron Fittings ry. Ball & Plug Val ; i Fipe Nigples aici Sere Product a
Slide 8: Intelligent Water Technology
INTELLIGENT WATER TECHNOLOGY™ Wate Treatment Pat Water ston Mueller Water Products manufactures and markets products and offers services used in the transmission, distribution and of safe, clean drinking water and in water treatment facilities. These products and services help utilities actively dia
Slide 9: Water Infrastructure Landscape
WATER INFRASTRUCTURE LANDSCAPE FIRE GATE BUTTERFLY & BRASS WATER HYDRANTS VALVES BALL VALVES PRODUCTS PRODUCT PRODUCT PRODUCT PRODUCT (MuellerWaterProducts) = #1 pjsi7i5nv #1 PaSmS #1 POSITION POSITION POSITION é é é é ‘AY. McDonald ry ACIPCO ry ry DeZURIK ry Ford Meter Box ry McWane é é ry
Slide 10: Strategy and Objectives
STRATEGY AND OBJECTIVES Capitalize on the large, attractive and growing water infrastructure markets worldwide Maintain leadership positions Continue to enhance Operational and organizational with customers and end users excellence Acquire and invest in businesses and technologies that expand our po
Slide 11: Significant Market Opportunities
Significant Market ‘woh | Opportunities *
Slide 12: Market Driver: Household Formation
MARKET DRIVER: HOUSEHOLD FORMATION New household formation drives housing starts demand. Household formation is driven by population growth, accelerating job growth, higher wages and higher consumer confidence. Employment Level - (25 to 34 Year Olds) Year-Over-Year Change in Household Formation (1 2
Slide 13: Market Driver: Housing Starts
MARKET DRIVER: HOUSING STARTS Homebuilders’ confidence also leads to housing starts. Confidence could be driven by improving job growth in key demographic for household formation: Millennials NAHB Housing Market index - National (1985 - Present) Housing Starts (1959 - 2016 Forecast) 100 Seasonally A
Slide 14: The Market Opportunity Is Significant and Growing
THE MARKET OPPORTUNITY IS SIGNIFICANT AND GROWING PAIR AND FUTURE DRINKING REPLACEMENT MARKET WATER INFRASTRUCTURE A cI t EXPENDITURE NEEDS® time as pipes STORAGE I ASCE graded drinking water infrastructure a D\) $39.5B I Atleast 40 cities under consent decre TREATMENT “ Washington, D.C. Suburban Wa
Slide 15: Funding Water Infrastructure Repair
FUNDING WATER INFRASTRUCTURE REPAIR HISTORICAL WATER RATES COMPARED TO OTHER UTILITIES“ (1) Bureau of Labor Statistics - FactSet (2014 Sraapic Octo: U.S, Wate nd - ak 8 Vea famorgan Water Woks Aesocaton 2012 Water ang Wastewater Rate Suvey (8) EPA Gen Wator ana Ornkng Water nase TOP FIVE WATER INDUS
Slide 16: Growth Opportunities: Smart Water
GROWTH OPPORTUNITIES: SMART WATER FACTORS AFFECTING INTELLIGENT Percent of Total North American MUNICIPAL WATER SYSTEMS WATER TECHNOLOGY™ Water Meter Market‘ Onerational Etiiences ins caneeeeeren ea) [ea % eas a Ss ena rioritization fi )9/ 9/ pial spending p Pees Visual Read 20% 5% Water Conservatio
Slide 17: Opportunities: AMI/Smart Metering
OPPORTUNITIES: AMI/SMART METERING OPPORTUNITY SOLUTION ENHANCED TWO-WAY AMI SYSTEMS Develop ni + MiEcho™ (24/7 + 420 Remote products hy support monitoring of ditrbution Disconnect Meter and enhance system for leal developed cay ] roposi Echologics) Z network (Mi.Echo’ + Mi.Data™ (consumer portal to
Slide 18: Opportunities: Leak Detection
OPPORTUNITIES: LEAK DETECTION OPPORTUNITY . Least Mueller . eens opportunities + Minimal barriers to international expansion + Estimated $1.1B global market‘) As wifessed by the recent water maln breaks lak detection a pipe condition assessment technology is becoming in COMPETITORS many competitors
Slide 19: Anvil
ANVIL Leading domestic manufacturer of piping system components O I Significant FY2014 net sales from #1 or #2 product positions I Customer service capabilities focused on quick delivery é I Domestically manufactured and domestically and internationally sourced products MW Track record of solid adju
Slide 20: Anvil Key Markets
ANVIL KEY MARKETS Mechanical, hus & Protection 75% 20% PowerlHigh 5 Pressure’ 5% Non-Residential Construction Oil & Gas Production Power Need Development Mechanical and Industrial: Grooved, Iron/Steel Fittings, Staple Hangers, Pipe Nipples, Bull Plug: Fire Protection: O-Lets, Grooved Fittings and Co
Slide 21: Market Driver: Non-Residential Construction
MARKET DRIVER: NON-RESIDENTIAL CONSTRUCTION The non-residential construction market is showing improvement Non-Residential Construction AIA Architecture Bilin (Real $ in Billions) Ditusion Index (> ion $400 Souroe: IHS Data as of February 10, 2015
Slide 22: Market Driver: Energy Market
MARKET DRIVER: ENERGY MARKET Sales to the energy market represented about 20% of 2014 Anvil net sales US. Land Based Rig Count Gil Price - WTI ($/ bbl) 2500 st60 - | ‘is | ind s100 | Ih ha Source: Baker Hughes Source: FactSet Data as of February 13, 2015 Data as of February 19, 2015
Slide 23: Actions & Business Results
Actions & Business Results
Slide 24: Management Actions / Initiatives
MANAGEMENT ACTIONS / INITIATIVES Reduce costs and improve operating leverage ll Divested U.S. Pipe fT Digstea three non-core assets of nvil I Implemented Lean Six Sigma and ‘other manufacturing improvements: Increased production capacity without footprint expansion + Lowered labor costs Il Closed se
Slide 25: History of Strong Financial Performance
HISTORY OF STRONG FINANCIAL PERFORMANCE Net Sales (Sin millions) 2 § 3 lll 3 ‘ Adjusted : 8: DA & ; : oe aaa
Slide 26: Consolidated Quarter 2015 Non-GAAP Results
CONSOLIDATED 187 QUARTER 2015 NON-GAAP RESULTS @ Mueller S increased adjusted operating income by 10.0% primarily due to an 11% increase in domestic shipments of valves 1Q FISCAL 2015 2014 and hydrants @ = Mueller Co. growth from municipal and Net sales $261.8 $257.4 some residential markets ™ Anvil
Slide 27: Debt Structure
DEBT STRUCTURE Net debt leverage of 2.4x and net debt of $454 million at December 31, 2014, down from a peak of jore than 6x No significant required principal payments on outstanding debt before 2021 ™@ No financial maintenance covenants with excess availability at the greater of $22.5 million or 10
Slide 28: Capital Allocation
CAPITAL ALLOCATION = Acquisitions = Debt reduction = Growth opportunities = Dividends Fv2010 Fv2011 Fy2o12 *¥2013 Fy2014
Slide 29: Why Invest in MWA?
WHY INVEST IN MWA? Water industry has fundamentally strong Strong operating leverage as end markets long-term dynamics recover Il Driven by need for new and upgraded I Recovery of residential construction market infrastructure @ Increased municipal spending Il Limited number of suppliers to end mark
Slide 30: Supplemental Data
Slide 31: Segment Results and Reconciliation
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 32: Segment Results and Reconciliation
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE Lees (Sin millions, except per share amounts)
Slide 33: Segment Results and Reconciliation
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 34: Segment Results and Reconciliation
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts) S @ Sr Sar Sa
Slide 35: Questions
Questions
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