Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (August 2024)
34 slides from Mueller Water Products's investor presentation, Aug 8, 2024
Slide 1: Where Intelligence Meets Infrastructure - Investor Presentation
Where Intelligence Meets Infrastructure® Investor Presentation August 8, 2024
Slide 2: Non-GAAP Measures
Non-GAAP Measures In an effort to provide investors with additional information regarding the Company’s results as determined by accounting principles generally accepted in the United States (“GAAP”), the Company also provides non-GAAP information that management believes is useful to investors. The
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 federal securities laws. All statements that address activities, events or developments that the Company intends, expects, plans, projects, believes or a
Slide 4: Mueller Water Products at a Glance (NYSE: MWA)
Mueller Water Products at a Glance (NYSE: MWA) History Highlights (1) Geography (2) Segments (2,3) (% of Consolidated Net Sales) (% of Consolidated Net Sales) • Founded more than 165 years ago $1.27B $267.6M Net Sales Adjusted EBITDA • Spun off from Walter (LTM Q3FY24) (LTM Q3FY24) United States Wat
Slide 5: Why Invest in Mueller
Why Invest in Mueller Growth strategies, capital investments and operational initiatives enable us to deliver further sales and adjusted EBITDA growth DRIVING GROWTH BENEFITING MODERNIZING ACCELERATING SUPPORTING WITH A STRONG FROM LONG- MANUFACTURING PRODUCT STRATEGIC COMPETITIVE TERM END AND DRIVI
Slide 6: ESG is Core to Mueller
ESG is Core to Mueller During Q2, MSCI upgraded Mueller to its highest ESG rating of AAA (1) Environmental Social Governance Products Mitigate our environmental Foster a strong company Promote sound governance 90% of 2023 net sales impact focusing on culture by emphasizing that acts in the best inte
Slide 7: Products and Markets
Products and Markets
Slide 8: Uniquely Positioned to Address Opportunities with Utilities
Uniquely Positioned to Address Opportunities with Utilities with its Leading Infrastructure Products and Installed Base • Water-focused Leading company Product Positions with in Key more Categories Product than 90%(1)of Broad Portfolio of Products and Solutions with consolidated net sales associated
Slide 9: Water Utilities Are Facing Many Challenges
Water Utilities Are Facing Many Challenges Implications for Utilities Aging • Unrealistic for U.S. water utilities and local governments to bridge the gap 2.3 million 53 years Infrastructure between their current capital spending miles of drinking water Average age of failing and projected need for
Slide 10: Aging Pipe Infrastructure and Water Main Breaks
Aging Pipe Infrastructure and Water Main Breaks Utah State Study on Water Main Break Rates in U.S. and Canada (1) • Surveyed more than 800 water utilities with nearly 400,000 miles of water mains in the U.S. and Canada, representing approximately 17% of the estimated total length • U.S. and Canada h
Slide 11: 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 >$50 billion (5) population th
Slide 12: Water Utilities and Water Infrastructure Funding
Water Utilities and Water Infrastructure Funding Water Utilities in North America Sources of Funding for U.S. Utilities • >50,000 water utilities and >14,000 wastewater utilities in U.S. • For U.S. utilities, 96% of funding at state/local government level (3) and Canada (1) − Majority of utilities h
Slide 13: Need for More Digital Products and Solutions Expected to Accelerate
Need for More Digital Products and Solutions Expected to Accelerate Aging Infrastructure and Non-Revenue Water “Bluefield • Average age of water pipes has increased to 45 years in 2020 from 25 years in 1970 (2) projects that • 260,000 water main breaks per year with distribution pipes (3) total glob
Slide 14: Technology-Enabled Products and Solutions Help Address Critical Needs for Water Utilities
Technology-Enabled Products and Solutions Help Address Critical Needs for Water Utilities Challenges Facing Water Utilities Current Product Offerings Aging Infrastructure Fixed Leak Detection Non-Revenue Water and Pipe Condition Climate Change Assessment Monitor Control Population Shifts Urbanizatio
Slide 15: Large Capital Investments Supporting Operational Improvements and Expanding Capabilities
Large Capital Investments Supporting Operational Improvements and Expanding Capabilities • Benefits include accelerating product development, driving operational efficiencies, reducing duplicative expenses, increasing revenue, expanding capabilities for American-made products and advancing sustainab
Slide 16: Financial Performance
Financial Performance
Slide 17: Consolidated GAAP Results (Q3 FY2024)
Consolidated GAAP Results (Q3 FY2024) Net Sales ($M) Gross Profit ($M) SG&A ($M) Operating Income ($M) % of Net Sales % of Net Sales % of Net Sales +31.3% y/y +1.5% y/y +88.2% y/y +9.2% y/y +620 bps. -140 bps. +790 bps. $131.4 $356.7 $60.6 $61.5 $67.0 $326.6 36.8% $100.1 18.6% 17.2% 18.8% 30.6% $35.
Slide 18: Consolidated Non-GAAP Results (Q3 FY2024)
Consolidated Non-GAAP Results (Q3 FY2024) (1) Adj. Operating Income ($M) Adj. EBITDA ($M) Adj. Net Income per Diluted Share % of Net Sales % of Net Sales +77.0% y/y +56.6% y/y +750 bps. +720 bps. +77.8% y/y $85.2 $0.32 $69.9 23.9% 19.6% $54.4 $39.5 $0.18 16.7% 12.1% Q3 FY2023 Q3 FY2024 Q3 FY2023 Q3
Slide 19: Free Cash Flow (YTD Q3 FY2024)
Free Cash Flow (YTD Q3 FY2024) • Increased Q3 YTD net cash provided by operating $160.0 $149.5 activities by $97.0M to $149.5M compared with $140.0 in prior year period $28.0 $120.0 − Increase primarily a result of higher net income and improvements in working capital compared with the $100.0 $ in M
Slide 20: Fiscal 2024 Outlook
Fiscal 2024 Outlook (1) • Raising net sales expectations to be between $1.285M Fiscal 2024 Metrics (1) and $1.295M, or +0.7% to +1.5% y/y − Believe municipal and new residential construction end markets Consolidated Net Sales $1,285M to $1,295M will continue to be healthy for the balance of the year
Slide 21: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity Ample capacity to support our strategic priorities, including acquisitions • Moody’s: Ba1 Corporate and Notes Ratings, Stable Outlook Debt Maturities Credit Rating • S&P: BB Corporate and Notes Ratings, Stable Outlook $500 • $450M of 4.0% Senior Notes (mature June
Slide 22: Balanced and Disciplined Capital Allocation
Balanced and Disciplined Capital Allocation Capital Allocation Priorities Cash Allocation Over Past 5 Years (FY19 to FY23)* • Strong balance sheet, liquidity and cash flow supporting our strategies $245M to Shareholders • Maintaining balanced approach to capital - $175M dividends - $70M share repurc
Slide 23: Investment Highlights
Investment Highlights DRIVING GROWTH WITH A STRONG COMPETITIVE POSITION AND BROAD PORTFOLIO OF PRODUCTS AND SOLUTIONS BENEFITING FROM LONG-TERM END MARKET DYNAMICS SUPPORTED BY AGING WATER INFRASTRUCTURE MODERNIZING MANUFACTURING AND DRIVING OPERATIONAL EXCELLENCE TO DELIVER GROSS MARGIN EXPANSION A
Slide 24: Supplemental Data
Supplemental Data
Slide 25: Historical Financial Performance
Historical Financial Performance • Over last five years, delivered net sales and adjusted EBITDA CAGRs of 6.8% and 2.3%, respectively • Prior to pandemic, delivered net sales and adjusted EBITDA CAGRs of 6.5% and 8.3%, respectively Consolidated Net Sales Consolidated Adjusted EBITDA (1) $ in million
Slide 26: Historical Free Cash Flow
Historical Free Cash Flow • Over the past 5 years, generated $550.8M $180.0 in cash provided by operating activities and $156.7 $160.0 delivered $231.5M of Free Cash Flow after $140.3 $140.0 investing $319.3M in capital expenditures • In fiscal 2023… $120.0 $109.0 $100.0 $92.5 $ in Millions − Increa
Slide 27: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Three months ended June 30, 2024 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 208.1 $ 148.6 $ — $ 356.7 Gross profit $ 81.9 $
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) Three months ended June 30, 2024 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 47.3 Income tax expense (3) 15.9 Interest expen
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) Three months ended June 30, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 150.1 $ 176.5 $ — $ 326.6 Gross profit $ 33.6 $
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) Three months ended June 30, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 24.5 Income tax expense (3) 6.4 Interest expens
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) Nine months ended June 30, 2024 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 555.2 $ 411.3 $ — $ 966.5 Gross profit $ 205.7 $
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) Nine months ended June 30, 2024 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 105.9 Income tax expense (3) 33.1 Other expense
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) Nine months ended June 30, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 472.9 $ 501.4 $ — $ 974.3 Gross profit $ 117.4 $
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) Nine months ended June 30, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 68.3 Income tax expense (3) 20.0 Interest expens
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