Mueller Water Products · NYSE:MWA
Mueller Water Products — Davenport Infrastructure and Basic Industry Conference 2008
30 slides from Mueller Water Products's conference presentation, Mar 6, 2008
Slide 1: Davenport Infrastructure and Basic Industry Conference March 6, 2008
Davenport Infrastructure and Basic Industry Conference March 6, 2008 Exhibit 99.1
Slide 2: Safe Harbor
2 Except for historical information contained herein, information in this presentation is forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cau
Slide 3: Key Attributes of Mueller Water Products
3 Key Attributes of Mueller Water Products Leading water infrastructure products provider Strong brands highly recognized for quality Low-cost manufacturing operations Attractive and growing water infrastructure industry
Slide 4: Leading Water Infrastructure Products Provider
4 Leading Water Infrastructure Products Provider Large installed base of products in U.S. Leading specifications position, including top 50 metropolitan U.S. markets LTM Net Sales: $1,849 MM LTM Adjusted EBITDA: $294 MM LTM Adjusted EBITDA Margin: 15.9% (a) Before corporate expenses
Slide 5: Broad and Profitable Product Portfolio
SEGMENT NET SALES PRODUCT PORTFOLIO ADJUSTED OPERATING INCOME (a) DEPRECIATION AND AMORTIZATION (b) HISTORICAL ROOTS EBITDA (a) (b) 5 Broad and Profitable Product Portfolio $756MM $144MM $52MM $196MM $531MM $27MM $24MM $51MM $562MM $60MM $23MM $83MM Iron Gate Valves Butterfly, Ball and Plug Valves F
Slide 6: Primary End Markets
6 Primary End Markets 70% of our FY2007 net sales was water infrastructure related 50% was residential construction 50% was repair and replacement (public sector) 30% of our FY2007 net sales was commercial construction related Source: Management Estimates 2007 Net Sales
Slide 7: Complete Water Transmission Solutions
7 Complete Water Transmission Solutions
Slide 8: The Water Infrastructure Industry
The Water Infrastructure Industry
Slide 9: An Aging Water Infrastructure Industry
9 An Aging Water Infrastructure Industry Water leakage rates as high as 20% Water systems are serving 2 to 3 times more people than originally intended (1) American Society of Civil Engineers graded water infrastructure a “D-” Existing and future legislation could lead to increased infrastructure in
Slide 10: An Aging Water Infrastructure
10 An Aging Water Infrastructure Source: The EPA Clean Water and Drinking Water Infrastructure Gap Analysis %
Slide 11: An Aging Water Infrastructure
11 An Aging Water Infrastructure Source: The EPA Clean Water and Drinking Water Infrastructure Gap Analysis
Slide 12: An Aging Water Infrastructure
12 An Aging Water Infrastructure Aging water pipes need to be rehabilitated or replaced When pipes are replaced, typically valves and hydrants are also replaced Source: EPA 2003 Drinking Water Needs Survey and Assessment
Slide 13: Water Infrastructure Market Opportunity
13 Water Infrastructure Market Opportunity Repair and replace market growing - Public spending on water infrastructure expected to increase 17% in 2008 (Oct. 2007 AWWA survey) - 55% of Mueller Co.’s net sales in 2007 - 45% of U.S. Pipe’s net sales in 2007 Rate Increases - Average annual rate increas
Slide 14: 75% of revenue comes from products that are #1 or #2
14 75% of revenue comes from products that are #1 or #2
Slide 15: Comprehensive Distribution Network
15 Comprehensive Distribution Network Installed base and specified products drive demand
Slide 16: Technical and Product Innovation
16 Technical and Product Innovation Manufacturing excellence - Commitment to being low-cost producer Lost foam manufacturing process - Only manufacturer utilizing process for valves and hydrants - Reduced production costs by 15% Automating ductile iron pipe manufacturing - Cuts labor costs in half -
Slide 17: Technical and Product Innovation
17 Technical and Product Innovation Product innovation - 150 years of market leadership - Half of all hydrants in the U.S. are Mueller - 3 million hydrants installed - Added security features - Mueller Super Centurion - Mueller Nozzle Check Valve
Slide 18: w + t =] Cy Ky a og =
w + t 3 =] 2 Cy 5 Ky a og 3 =
Slide 19: Management Actions
19 Management Actions Completed synergy plan - At high end of range of $40 - $50 million Implemented inventory reduction plan - Generated free cash flow Refinanced debt - Obtained terms and rates not available in today’s credit markets Continue to reduce fixed costs - Closed Burlington facility - Ex
Slide 20: First Quarter Fiscal 2008 Consolidated Results
20 2008 adjusted to exclude $16.2 million, $9.5 million net of tax ($0.08 per share), of restructuring charges related to the closure of Burlington manufacturing operations. See supplemental information for reconciliation of GAAP to non-GAAP performance measures Consolidated Results Net sales increa
Slide 21: Key Drivers
21 Key Drivers Residential Construction Repair and Replace Commercial Construction Water Infrastructure Distributors Raw Materials Pricing Housing starts down 38% Dec. 2007 over Dec. 2006 Public spending on water infrastructure expected to continue to increase long term Commercial construction curre
Slide 22: Second Quarter 2008 Outlook Update
22 Second Quarter 2008 Outlook Update Since our first-quarter conference call - Residential construction continues to trend downward - Seasonal uptick in revenue is minimal - Distributors are making fewer purchases - Cost of raw materials (scrap iron, brass ingot, coke and alloys) continues to incre
Slide 23: Potential Uses of Cash
23 Potential Uses of Cash Reinvesting in the business Paying dividends Repaying debt Repurchasing stock Making strategic acquisitions
Slide 24: Strategy and Objectives
24 Strategy and Objectives Maintain market leadership positions Expand internationally Continue to enhance operational excellence Broaden breadth and depth of products and services Capitalize on the large, attractive and growing water infrastructure markets worldwide
Slide 25: Investment Highlights
25 Investment Highlights Attractive long-term water industry dynamics - Driven by new and upgraded infrastructure - Limited number of suppliers to end markets Strong competitive position - Leading brand position with large installed base - Leading municipal specification positions - Comprehensive di
Slide 26: w + t =] Cy Ky a og =
w + t 3 =] 2 Cy 5 Ky a og 3 =
Slide 27: Segment Results & Reconciliation of GAAP to Non-GAAP Performance Measures
27 Segment Results & Reconciliation of GAAP to Non- GAAP Performance Measures $ in Millions Q1 '07 Q2 '07 Q3 '07 Q4 '07 FY 07 Q1 '08 LTM Net sales: Mueller Co. 162.1 195.9 203.1 195.0 756.1 161.6 755.6 U.S. Pipe 116.4 129.7 153.3 137.7 537.1 110.7 531.4 Anvil 133.4 134.1 146.1 142.2 555.8 140.0 562.
Slide 28: Net Sales and Operating Income
NET SALES OPERATING INCOME 28 (b) (a) (a) ($ in millions) Operating Margin $509 $536 $618 $664 $804 $775 $492 $465 $551 $598 $595 $543 $393 $387 $431 $485 $535 $557 $0 $200 $400 $600 $800 $1,000 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 $107 $114 $142
Slide 29: w + t =] Cy Ky a og =
w + t 3 =] 2 Cy 5 Ky a og 3 =
Slide 30: w + t =] Cy Ky a og =
w + t 3 =] 2 Cy 5 Ky a og 3 =
Mueller Water Products — Davenport Infrastructure and Basic Industry Conference 2008 on 6ix