Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (November 2020)
38 slides from Mueller Water Products's investor presentation, Nov 12, 2020
Slide 1: Where Intelligence Meets Infrastructure - Investor Presentation
Where Intelligence Meets Infrastructure® Investor Presentation November 11, 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 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, plans
Slide 4: Mueller Water Products at a Glance
Mueller Water Products at a Glance HISTORY LTM FINANCIALS (1) KEY PRODUCTS (2) END MARKETS (2) AS OF SEPTEMBER 30, 2020 • Founded over 160 years ago $ in millions % of Consolidated Net Sales • Spun off from Walter Net sales $964.1 Industries in 2006 • Listed on NYSE (MWA) June Adjusted EBITDA $190.6
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: End Market Performance
End Market Performance* • Customers increased their level of activity from the third quarter, prioritizing critical Key Takeaways network maintenance and existing infrastructure projects • Level of repair and replacement and project activity continues to vary significantly across • Overall, end mark
Slide 7: Mueller Water Products in a Strong Position vs. Great Recession
Mueller Water Products in a Strong Position vs. Great Recession FOCUSED COMPANY SERVING • Created more focused company after selling U.S. Pipe and Anvil with increased proportion of products for municipal repair and replacement market CRITICAL NEEDS FOR WATER • Additional sales primarily come from r
Slide 8: Continue to Make Progress on Key Strategies to Strengthen and Grow the Business
Continue to Make Progress on Key Strategies to Strengthen and Grow the Business 8
Slide 9: Sustainability
Sustainability • Recognize the important role we play in ensuring water is delivered more safely and efficiently than ever before • Mueller Water Products has had a robust Environmental, Health & Safety program for many years • Safety and environmental stewardship are top priorities and are included
Slide 10: Products and Markets
Products and Markets (MUELLER) ©"
Slide 11: Strong Position in Broader Water Market
Strong Position in Broader Water Market Leading Product Positions in Key Product Categories (1) Water-Related Revenue as a % of Total Revenue (2) With over 160 years in the water utility market, Mueller Mueller Water Products is a water-focused company with Water Products has a large installed base
Slide 12: Mueller Uniquely Positioned to Address Utility Opportunities
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 U.S. Water Infrastructure CAPEX and Investment Gap • Restoring existing water systems and expanding them to serve a growing • Spending on Water & Wastewater CAPEX in U.S. is >$50B (4) population through 2
Slide 14: Aging Infrastructure Increasing Water Main Breaks
Aging Infrastructure Increasing Water Main Breaks Aging of Pipe Infrastructure Water Main Break Rates Increasing (3) • Average age of water pipes has increased to 45 years in 2020 from 25 years • According to a study by Steven Folkman at Utah State University in 1970 (1) that surveyed nearly 200,000
Slide 15: Funding Water Utilities Infrastructure Repair
Funding Water Utilities 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 (3) (1) and Canada • Majority of utilities have
Slide 16: Need for Digital Water Solutions Expected to Accelerate
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 immediate afterm
Slide 17: Broad-line of Technology-enabled Products
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 monitors,
Slide 18: Modernizing Manufacturing Facilities
Modernizing Manufacturing Facilities • Three transformational projects account for approximately $130M of capital spending and expected to drive approximately $30M of annualized incremental gross profit through combination of efficiencies and sales growth, after all are completed − Modernizing facil
Slide 19: Financial Performance
Financial Performance (MUELLER) ©"
Slide 20: Fourth Quarter Highlights
Fourth Quarter Highlights* • Employees continue to execute in an extremely challenging environment resulting from the ongoing pandemic Key Takeaways − Continue to improve procedures to ensure high customer service levels and keep our employees safe and • Finished 2020 better healthy than expected, −
Slide 21: Q4 2020 Consolidated Financial Highlights
Q4 2020 Consolidated Financial Highlights* • Net sales of $265.3M decreased $1.6M, or 0.6%, primarily due to Fourth Quarter 2020 2019 reduced shipment volumes related to the pandemic impacting Technologies, partially offset by increased volumes and higher pricing at Infrastructure Net sales $ 265.3
Slide 22: Full-Year 2021 Outlook
Full-Year 2021 Outlook* • Believe continued strong growth in the residential construction end market will help offset any challenges in the project-related areas of our business Capital Allocation • Expectations also take into account our current backlog, new product initiatives and channel • Strong
Slide 23: Free Cash Flow
Free Cash Flow* $160.0 • Net cash provided by operating activities for fiscal year $140.3 ended September 30, 2020 improved $47.8M to $140.0 $67.7 $140.3M, primarily driven by improvements in inventory $120.0 management $92.5 $100.0 • Q1FY20 included the payment associated with the Walter Tax settle
Slide 24: Strong Balance Sheet and Ample Liquidity
Strong Balance Sheet and Ample Liquidity* Well-Prepared to Deal with Ongoing Challenges from Pandemic • Moody’s: Ba2 Corporate Rating, Ba3 Notes Rating, Stable Outlook Debt Maturities Credit Rating • S&P: BB Corporate and Notes Ratings, Stable Outlook $500 • $450M of 5.5% Senior Unsecured Notes (mat
Slide 25: Balanced and Disciplined Capital Allocation
Balanced and Disciplined Capital Allocation Cash Allocation since December 31, 2016 Capital Allocation Priorities (Through September 30, 2020) • Strong balance sheet, liquidity and cash flow $214M to Shareholders to support our strategies - $114M dividends - $100M share repurchases • Maintaining bal
Slide 26: Investment Highlights
Investment Highlights STRONG COMPETITIVE POSITION LONG-TERM END MARKET DYNAMICS CONTINUE TO IMPROVE MODERNIZING MANUFACTURING AND DRIVING OPERATIONAL EXCELLENCE TO DELIVER MARGIN EXPANSION LEVERAGING STRENGTHS TO INCREASE TECHNOLOGY-ENABLED PRODUCTS FLEXIBLE BALANCE SHEET AND STRONG CASH FLOW 26
Slide 27: Supplemental Data
Supplemental Data (MUELLER) ©"
Slide 28: History of Strong Financial Performance
History of Strong Financial Performance • Over last five years (FY15 to FY20), delivered 4.0% net sales CAGR with 5.9% adjusted EBITDA CAGR • Adjusted EBITDA margin improved 170 bps. over the last five years (FY15 to FY20) Consolidated Net Sales Consolidated Adjusted EBITDA (1) and ($ in millions) A
Slide 29: Strong Balance Sheet with Significant Flexibility
Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1B since March 31, 2006 and $650M since September 30, 2008 • Capital structure and net leverage position provide flexibility to support capital investments, quarterly dividend and acquisitions • Total debt of $447.6M and cash and
Slide 30: Segment Results and Non-GAAP Reconciliation - Q4 2020
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 242.5 $ 22.8 $ — $ 265.3 Gross profit $ 90.5 $ 3.4 $ — $ 93.9 Sellin
Slide 31: Segment Results and Non-GAAP Reconciliation - Q4 2020
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 26.7 Income tax expense (1) 8.8 Interest expense, net (1) 6.0 Pensi
Slide 32: Segment Results and Non-GAAP Reconciliation - Q4 2019
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 234.7 $ 32.2 $ — $ 266.9 Gross profit $ 81.5 $ 7.3 $ — $ 88.8 Sellin
Slide 33: Segment Results and Non-GAAP Reconciliation - Q4 2019
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 40.2 Income tax expense (1) 11.4 Interest expense, net (1) 4.2 Walt
Slide 34: Segment Results and Non-GAAP Reconciliation - FY2020
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 885.5 $ 78.6 $ — $ 964.1 Gross profit $ 316.4 $ 11.8 $ — $ 328.2 Sellin
Slide 35: Segment Results and Non-GAAP Reconciliation - FY2020
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 72.0 Income tax expense (1) 22.1 Interest expense, net (1) 25.5 Walter
Slide 36: Segment Results and Non-GAAP Reconciliation - FY2019
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 871.0 $ 97.0 $ — $ 968.0 Gross profit $ 302.9 $ 18.0 $ — $ 320.9 Sellin
Slide 37: Segment Results and Non-GAAP Reconciliation - FY2019
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 63.8 Income tax benefit (1) 18.3 Interest expense, net (1) 19.8 Walter
Slide 38: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure®
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