Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (September 2020)
37 slides from Mueller Water Products's investor presentation, Sep 15, 2020
Slide 1: Where Intelligence Meets Infrastructure® Investor Presentation
Where Intelligence Meets Infrastructure® Investor Presentation September 15, 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 release 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, expect
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 JUNE 30, 2020 FISCAL YEAR 2019 FISCAL YEAR 2019 • Founded 160 years ago $ in millions % of Consolidated Net Sales • Spun off from Walter Net sales $965.7 Industries in 2006 • Listed on NYSE (MWA) Jun
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: COVID-19 Update from Third Quarter 2020
COVID-19 Update from Third Quarter 2020* Key Actions Taken Key End Market Performance • Essential business providing products and services needed to • Municipal Water Repair & Replacement manage and maintain our nation’s critical water infrastructure − Municipal end market held up relatively well du
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: Keeping Eye on Long-term Strategies with Core Values
Keeping Eye on Long-term Strategies with Core Values Providing Foundation for Navigating the Crisis 8
Slide 9: Products and Markets
Products and Markets (MUELLER) ©"
Slide 10: 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 11: Mueller Uniquely Positioned to Address Utility Opportunities
Mueller is Uniquely Positioned to Address Opportunities with Utilities with its Leading Infrastructure Products and Installed Base 11
Slide 12: 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) (1) population throu
Slide 13: 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 in 1970 (1) • According to a study by Steven Folkman at Utah State University that surveyed nearly 200,000
Slide 14: 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 15: 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 16: 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 17: Modernizing Manufacturing Facilities
Modernizing Manufacturing Facilities • Major projects driving capital spending above historical levels to deliver above-market sales growth by broadening our product capabilities and expand gross margins as we modernize facilities, equipment and processes − In addition to operational efficiencies, m
Slide 18: Financial Performance
Financial Performance (MUELLER) ©"
Slide 19: History of Strong Financial Performance
History of Strong Financial Performance • Over last three years (FY16 to FY19), delivered 6.5% net sales CAGR with 8.3% adjusted EBITDA CAGR • Adjusted EBITDA margin improved 100 bps. over the last three years (FY16 to FY19) Consolidated Net Sales Consolidated Adjusted EBITDA (1) and ($ in millions)
Slide 20: Third Quarter Highlights
Third Quarter Highlights* • Realized a 16.7% decrease in consolidated net sales, which were better than expectations for a year-over-year decrease between 20% and 30% − Smaller-than-expected downturn in residential construction activity during the quarter − As expected, channel partners reacted quic
Slide 21: Fourth Quarter and Full-Year 2020 Outlook
Fourth Quarter and Full-Year 2020 Outlook* • Anticipate that consolidated net sales for the fourth quarter will be between flat and 5% lower compared with the prior year quarter − Generated strong bookings in June and July across entire Infrastructure segment, especially for shorter-cycle products (
Slide 22: Free Cash Flow
Free Cash Flow $120.0 • Net cash provided by operating activities for $100.0 $100.0 nine months ended June 30, 2020 improved $51.2 $82.2M to $100.0M, excluding the Walter Tax $80.0 Settlement of $22.2M in Q1FY20 $60.0 $40.0 $52.9 $48.8 • Improvements primarily driven by working capital management an
Slide 23: Strong Balance Sheet and Ample Liquidity
Strong Balance Sheet and Ample Liquidity* Believe We Are Well-Positioned to Face Future Challenges from COVID-19 Pandemic • Moody’s: Ba2 Corporate Rating, Ba3 Notes Rating, Stable Outlook Debt Maturities Credit Rating • S&P: BB Corporate and Notes Ratings, Stable Outlook $ in millions • $450 million
Slide 24: Balanced and Disciplined Capital Allocation
Balanced and Disciplined Capital Allocation • Given liquidity position on our balance sheet, Cash Allocation since December 31, 2016 (Through June 30, 2020) our capital allocation priorities, continue to focus on capital investments and returning $206M to Shareholders cash to shareholders through ou
Slide 25: 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 25
Slide 26: Supplemental Data
Supplemental Data (MUELLER) ©"
Slide 27: Q3 2020 Consolidated Financial Highlights
Q3 2020 Consolidated Financial Highlights* • Net sales of $228.5M decreased 16.7%, or $45.8M, primarily due to Third Quarter 2020 2019 reduced shipment volumes related to the pandemic seen across most of our product lines, partially offset by higher pricing Net sales $ 228.5 $ 274.3 • Gross profit o
Slide 28: Strong Balance Sheet with Significant Flexibility
Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1 billion since March 31, 2006 and $650 million since September 30, 2008 • Capital structure and net leverage position provide flexibility to support capital investments, quarterly dividend and acquisitions • Total debt of $447.6
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) Quarter ended June 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 209.9 $ 18.6 $ — $ 228.5 Gross profit $ 73.5 $ 2.2 $ — $ 75.7 Selling, ge
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) Quarter ended June 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 11.2 Income tax expense (1) 3.4 Interest expense, net (1) 6.1 Pension be
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) Quarter ended June 30, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 250.2 $ 24.1 $ — $ 274.3 Gross profit $ 92.7 $ 4.5 $ — $ 97.2 Selling, ge
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) Quarter ended June 30, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 33.7 Income tax expense (1) 8.9 Interest expense, net (1) 4.2 Walter Ene
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, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 643.0 $ 55.8 $ — $ 698.8 Gross profit $ 225.9 $ 8.4 $ — $ 234.3 Selli
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, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 45.3 Income tax expense (1) 13.3 Interest expense, net (1) 19.5 Walt
Slide 35: 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, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 636.3 $ 64.8 $ — $ 701.1 Gross profit $ 221.4 $ 10.7 $ — $ 232.1 Sell
Slide 36: 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, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 23.6 Income tax expense (1) 6.9 Interest expense, net (1) 15.6 Walte
Slide 37: Where Intelligence Meets Infrastructure®
Where Intelligence Meets Infrastructure®
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