Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (November 2014)
34 slides from Mueller Water Products's investor presentation, Nov 5, 2014
Slide 1: Where Intelligence Meets Infrastructure - Investor Presentation
(Mueller Water Products} Where Intelligence Meets Infrastructure® November 2014 Investor Presentation November 5, 2014
Slide 2: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company reports its financial results under accounting principles generally accepted in the United States ("GAAP"), as well as through the use of non-GAAP measures. The Company presents adjusted operating income, acjusted operating margin. adjusted & A margin, aduste
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 developments that we inter ect, bi project, believe or anticipate will or oe ocour in the futur forward-looking statements. Examples of forw
Slide 4: Our Business
OUR BUSINESS September 30, 2014) 20% Residential construction" Specified in 100 largest U.S. metropolitan markets for valves or hydrants FY2014 PRIMARY END MARKETS $1.28 LTM neemscyreenn GRaneras Neeaensacsn net sales (as of 215% ~ 15% Non-residential 5 Construction Repair and replacement of municip
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 Est. 1857 Historical Roots Est. 1999 (1850) $783mm Net Sales $401mm $124mm Adjusted Operating Income“) $42mm $42mm Depreciation & Amortization) $14mm $167mm Adjusted EBITDA?) $56mm Fire Hydrants ‘on Gate Valves Bute, Ball & Pg sia Metering Leak Detection and Pipe Condition As
Slide 8: Water Transmission Solutions
WATER TRANSMISSION SOLUTIONS Intelligent Water Technology™ Mueller Water Products Beg manufactures and markets 4 + products and services that are amo used in the transmission, distribution and measurement of safe, clean drinking water Le a and in water treatment facilities.
Slide 9: Water Infrastructure Landscape
WATER INFRASTRUCTURE LANDSCAPE FIRE GATE BUTTERFLY & BRASS WATER HYDRANTS: VALVES BALL VALVES PRODUCTS eee ee ee Saag é é é é AY.McDonald é ACIPCO é é DeZURIK é Ford Meter Box é McWane é ry ry
Slide 10: Anvil
ANVIL Leading domestic manufacturer of piping system components O I Significant FY2014 net sales from #1 or #2 segment positions I Customer service capabilities focused on quick delivery é I Domestically manufactured and internationally sourced products Wi Track record of solid adjusted EBITDA margi
Slide 11: 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 12: Strategy and Objectives
STRATEGY AND OBJECTIVES Capitalize on the large, attractive and growing water infrastructure markets worldwide Maintain leadership positions with customers and end users Continue to enhance operational and organizational excellence Develop, acquire and invest in businesses and technologies that expa
Slide 13: Our End Markets
Our End i? Markets
Slide 14: Historical Housing Starts
HISTORICAL HOUSING STARTS New household formation will be the key to driving housing start demand back to historical levels Housing Starts (1959 - 2016 Foracae!) aly Adjusted Annualized Fate 1989-Presant average hovsahols formationie 12 milion por your ‘Souree: US. Census Bureau Forecast: Bio Chip E
Slide 15: Non-Residential Construction
NON-RESIDENTIAL CONSTRUCTION The non-residential construction market remains stable Non-Residential Construction Se eacral lina nes (Real $ in Billions) ‘ $400 Souroe: IHS Data as of O
Slide 16: Significant Market Opportunities
Significant Market ‘woh | Opportunities *
Slide 17: 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 18: Funding Water Infrastructure Repair
FUNDING WATER INFRASTRUCTURE REPAIR HISTORICAL WATER RATES COMPARED TO OTHER UTILITIES” (1) "Bure of Labor States ~ FactSet (33014 Suman Dactong: US. ota uty — Bak 8 Vac 2 Water and We (8) EPA Goan Wator ana Grong Watr nase TOP FIVE WATER INDUSTRY ISSUES® HE Aging water and sewer infrastructure HE A
Slide 19: Significant Growth Opportunities
SIGNIFICANT GROWTH OPPORTUNITIES Factors Affecting Municipal Water Systems. | Our Solutions operational efficiencies Water Conservation . 1% of U.S. experiencing drought conditions‘ 240,000 water main breaks er year?) Non-revenue Wats * Up to 30% of vey hie is lost or unaccounted for + 4.7 trillion
Slide 20: Opportunities: AMI/Smart Metering
OPPORTUNITIES: AMI/SMART METERING OPPORTUNITY SOLUTION END USER COMPETITORS II Develop new produ SYSTEMS) to support and enhance American water SEnNSUS mpelling valu proposition for network gy One-way and two-way AMI ; systeme Bartlesville, OK @neetune @ Enhanced AMI system Charlotte County, FL + Mi
Slide 21: Opportunities: Leak Detection & Pipe Condition Assessment
OPPORTUNITIES: LEAK DETECTION & PIPE CONDITION ASSESSMENT peer sonoma man Ml Leverage Mueller brand ‘ragmented market y echologics — with many competitors International District of Columbia Water ang opportunities r | Acoustic, non-invasive Sewerage Authority technology — pro > Pure BB Minimal barri
Slide 22: Actions & Business Results
Actions & Business Results
Slide 23: Management Actions / Initiatives
MANAGEMENT ACTIONS / INITIATIVES Reduce costs and improve Manage working capital and Pursue strategic growth operating leverage capital expenditures to generate opportunities by leveraging free cash flow the Mueller brand I Divested U.S. Pipe in FY2012 I Generated free cash flow of $110.7mm_ Req lea
Slide 24: History of Strong Financial Performance
HISTORY OF STRONG FINANCIAL PERFORMANCE (See Appendices for GAAP Reconciliation) Net Sales (8 in millions)
Slide 25: Consolidated Non-GAAP Results
CONSOLIDATED NON-GAAP RESULTS 40201 . a ng fourth quarter with net sales up 9. Sas 4Q FISCAL 2014 2013 adjusted operating income up 29.0% ani adjusted EBITDA up 18.9% Net sales $320.7 $293.2 Mueller Co. increased net sales by 11.5% Mueller Co. adjusted operating income Adj. operating income $43.1 $3
Slide 26: Debt Structure
DEBT STRUCTURE Net debt leverage of 2.1x and net debt of $385 million at September 30, 2014, down from a peak of jore than 6x Debt maturities na no significant required principal payments before 2017 No financial maintenance covenants with excess availability at the greater of $22.5 million or 10.0%
Slide 27: Potential Uses of Cash
POTENTIAL USES OF CASH = Debt reduction = Acquisitions = Dividends = Growth opportunities
Slide 28: Why Invest in MWA?
WHY INVEST IN MWA? Water industry has fundamentally strong Expected strong operating leverage when long-term dynamics end markets recover Il Driven by need for new and upgraded I Recovery of residential construction market infrastructure @ Increased municipal spending Il Limited number of suppliers
Slide 29: Supplemental Data
Slide 30: Segment Results and Reconciliation of GAAP to Non-GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 31: Segment Results and Reconciliation of GAAP to Non-GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES ($n millions, except per share amounts) Neto spr dtd tae: Comin pera: sav Decor oper 003 Capi xpnts sss sto st se ‘Adj operte ome) a TDA Roane ‘a Dep ‘Ade ITD Ate operating an ‘Adjsss EITDA nage
Slide 32: Segment Results and Reconciliation of GAAP to Non-GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 33: Segment Results and Reconciliation of GAAP to Non-GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts) S @ Sr Sar Sa
Slide 34: Questions
Questions
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