Mueller Water Products · NYSE:MWA
Mueller Water Products — Gabelli 26th Annual Pump, Valve, & Water Systems Symposium (February 2016)
33 slides from Mueller Water Products's conference presentation, Feb 25, 2016
Slide 1: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure® Gabelli 26th Annual Pump, Valve, & Water Systems Symposium February 25, 2016
Slide 2: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company reports its financial results under accounting These items are excluded because they are not principles generally accepted in the United States (“GAAP”), considered indicative of recurring operations. Free as well as through the use of non-GAAP measures. The c
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains certain statements that may be Forward-looking statements are based on certain deemed “forward-looking statements” within the meaning assumptions and assessments made by us in light of our of the Private Securities Litigation Reform Act of 1995.
Slide 4: Our Business and Primary End Markets
OUR BUSINESS AND PRIMARY END MARKETS FY2015 NET SALES: $1.2 BILLION Net sales: $702mm Net sales: $371mm Net sales: $91mm 25% 5% 70% 5% Natural gas 10% Power/high pressure 100% Residential utilities Repair and Oil & gas Municipal spending construction* replacement of municipal water 85% distribution
Slide 5: Leading provider of water infrastructure and flow control products
Leading provider of water infrastructure and flow control products and services in North America INVESTMENT HIGHLIGHTS Industry-leading adjusted operating margins Transformed Company by acquiring or developing associated with Mueller Co. core products new technologies, adjusting portfolio and improv
Slide 6: Business Performance: Long-Term Targets
BUSINESS PERFORMANCE: LONG-TERM TARGETS Mueller Co. growth of 5%–10% TOP-LINE GROWTH Mueller Technologies >20% Mueller Co. adjusted EBITDA margins of 25%+ Mueller Technologies adjusted EBITDA margins of 20%+ EARNINGS LEVERAGE Anvil adjusted EBITDA margins in mid-teens Free cash flow greater than adj
Slide 7: Broad Product Portfolio
BROAD PRODUCT PORTFOLIO $ in millions Net Sales $ 702 $ 354 $ 90 Adjusted Operating 148 27 (13) Income(Loss)(1) Depreciation & Amortization 38 15 4 Adjusted EBITDA(1) 186 42 (9) Fire Hydrants Cast Iron Fittings Metering Systems Product and Services Portfolio Iron Gate Valves Pipe Nipples Leak Detect
Slide 8: Intelligent Water Technology
INTELLIGENT WATER TECHNOLOGY™ Mueller Water Products manufactures and markets products and offers services used in the transmission, distribution and measurement of safe, clean drinking water and in water treatment facilities. These products and services help utilities actively diagnose, monitor and
Slide 9: Water Infrastructure Landscape
WATER INFRASTRUCTURE LANDSCAPE #1 PRODUCT POSITION #1 PRODUCT POSITION #1 PRODUCT POSITION #2 PRODUCT POSITION Company estimates based on internal analysis and information from trade associations and distributor networks, where available. PAGE 9
Slide 10: Strategy and Objectives
STRATEGY AND OBJECTIVES Capitalize on the large, attractive and growing water infrastructure markets worldwide Continue to enhance Acquire and invest in Maintain leadership positions businesses and technologies with customers and end users operational and organizational excellence that expand our po
Slide 11: Significant Market Opportunities
Significant Market Opportunities
Slide 12: Market Driver: Housing Starts
MARKET DRIVER: HOUSING STARTS Homebuilders’ confidence is one driver of housing starts, and confidence could increase due to improving job growth in a key demographic for household formation: Millennials NAHB Housing Market Index - National (1985 – January 2016) Historical Housing Starts (1959 – Dec
Slide 13: The Market Opportunity Is Significant and Growing
THE MARKET OPPORTUNITY IS SIGNIFICANT AND GROWING Valves and fire hydrants are typically replaced at the same time as pipes ASCE graded drinking water infrastructure a D(1) At least 40 cities under consent decrees: Atlanta, Washington, D.C., Suburban Washington, D.C. (WSSC), New Orleans (1) ASCE: 20
Slide 14: Funding Water Infrastructure Repair
FUNDING WATER INFRASTRUCTURE REPAIR HISTORICAL WATER RATES COMPARED TOP FIVE WATER INDUSTRY ISSUES(2) TO OTHER UTILITIES(1) Aging water and sewer infrastructure 550 CPI Utilities Ability to fund capital programs (NSA 1982-1984 = 100) 450 Managing capital costs 350 Justifying capital improvement prog
Slide 15: Growth Opportunities: Smart Water
GROWTH OPPORTUNITIES: SMART WATER FACTORS AFFECTING MUNICIPAL WATER SYSTEMS Water Conservation Operational Efficiencies • 13% of U.S. experiencing • Budget constraints drought conditions(1) • Capital spending prioritization • 240,000 water main breaks per year(2) Non-Revenue Water Customer Service F
Slide 16: Mueller Technologies: Solutions for Today & Tomorrow
MUELLER TECHNOLOGIES: SOLUTIONS FOR TODAY & TOMORROW INTELLIGENT WATER TECHNOLOGY™ Smart Metering Leak Detection and • Longer-range AMI systems Pipe Condition Assessment • Remote Disconnect Meter (RDM) • Fixed transmission and distribution main leak detection / monitoring • Leak detection 420 RDM •
Slide 17: Leading domestic manufacturer of piping system components
Leading domestic manufacturer of piping system components Significant FY2015 net sales Domestically manufactured and Track record of solid adjusted from #1 or #2 product domestically and internationally EBITDA margins positions sourced products Customer service capabilities Network of over 1,000 dis
Slide 18: Anvil Key Markets
ANVIL KEY MARKETS KEY MARKETS % FY2015 NET SALES MARKET DRIVERS PRODUCTS KEY COMPETITORS Mechanical and Industrial: Victaulic, Ward, Grooved, Iron/Steel Fittings, Erico, Bonney Forge, Staple Hangers, Pipe Nipples, Westbrook Non-Residential Bull Plugs Construction 85% Mechanical, Industrial & Fire Pr
Slide 19: Market Driver: Non-Residential Construction
MARKET DRIVER: NON-RESIDENTIAL CONSTRUCTION The non-residential construction market is showing improvement Non-Residential Construction AIA Architectural Billing Index (Real $ in Billions) Diffusion Index (> 50 = expansion) $400 $337 $327 65 $350 $291 $287 60 $266 $263 $257 $300 $251 $237 $236 $223
Slide 20: Market Driver: Oil & Gas
MARKET DRIVER: OIL & GAS Sales to the oil & gas market represented about 10% of Anvil’s FY2015 net sales U.S. Land Based Rig Count Oil Price - WTI ($/bbl) 2,500 $160 $140 2,000 $120 1,500 $100 $80 1,000 $60 500 $40 $20 0 $0 Feb-90 Feb-92 Feb-94 Feb-96 Feb-98 Feb-00 Feb-02 Feb-04 Feb-06 Feb-08 Feb-10
Slide 21: Actions & Business Results
Actions&® = 4. Business Results
Slide 22: Management Actions / Initiatives
MANAGEMENT ACTIONS / INITIATIVES Manage working capital and Pursue strategic growth Reduce costs and improve capital expenditures to generate opportunities by leveraging operating leverage free cash flow the Mueller brand Divested U.S. Pipe Generated free cash flow of $50.3mm Acquired leak detection
Slide 23: History of Strong Financial Performance
HISTORY OF STRONG FINANCIAL PERFORMANCE ($ in millions) (1) (2) Net Sales $804 $756 $718 $702 Note: Mueller Co. $679 $664 $652 $632 $618 $613 $606 $595 2002-2012 net $556 $547 $535 $536 $509 $485 sales and adjusted $470 $431 $401 $393 $391 $387 EBITDA include $372 $371 $359 $347 Mueller Technologies
Slide 24: Consolidated Q1 2016 Non-GAAP Results
CONSOLIDATED Q1 2016 NON-GAAP RESULTS Mueller Co. continued to improve its operating performance. Domestic net sales of Mueller Co.'s Q1 FISCAL 2016 2015 valves, hydrants and brass products increased 9.2 percent year-over-year in the first quarter. Mueller Net sales $242.7 $261.8 Co.'s adjusted oper
Slide 25: Debt Structure
DEBT STRUCTURE Debt Maturity (at 12/31/2015) Net debt leverage of 2.0x and net debt of $ in millions $383.5 million at December 31, 2015, down $500 $466 from a peak of more than 6x $400 No significant required principal payments on $300 outstanding debt before November 2021 $200 No financial mainten
Slide 26: Capital Allocation
CAPITAL ALLOCATION Free Cash Flow ($ in millions) Acquisitions $120 $111 Debt reduction $100 $76 $78 $80 Share repurchases $60 $50 $45 $40 $28 Growth opportunities $20 $0 Dividends FY10 FY11 FY12 FY13 FY14 FY15 PAGE 26
Slide 27: Why Invest in MWA?
WHY INVEST IN MWA? Water industry has fundamentally strong Strong operating leverage as end markets long-term dynamics recover Driven by need for new and upgraded Recovery of residential construction market infrastructure Increased municipal spending Limited number of suppliers to end markets Operat
Slide 28: Supplemental Data
Supplemental - Data
Slide 29: Segment Results and Reconciliation: Quarter ended December 31, 2015
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Quarter ended December 31, 2015 ($ in millions, except per share amounts) Mueller Mueller Co. Anvil Technologies Corporate Total (in millions, except per share amounts) GAAP Results: Net sales $ 144.7 $ 79.6 $ 18.4 $ — $ 242
Slide 30: Segment Results and Reconciliation: Quarter ended December 31, 2014
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Quarter ended December 31, 2014 ($ in millions, except per share amounts) Mueller Mueller Co. Anvil Technologies Corporate Total (in millions, except per share amounts) GAAP results: Net sales $ 145.1 $ 97.1 $ 19.6 $ — $ 261
Slide 31: Segment Results and Reconciliation: Year ended September 30, 2015
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Year ended September 30, 2015 ($ in millions, except per share amounts) Mueller Mueller Co. Anvil Corporate Total Technologies (in millions, except per share amounts) GAAP Results: Net sales $ 702.2 $ 371.1 $ 91.2 $ — $ 1,16
Slide 32: Segment Results and Reconciliation: Year ended September 30, 2014
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Year ended September 30, 2014 ($ in millions, except per share amounts) Mueller Mueller Co. Anvil Corporate Total Technologies (in millions, except per share amounts) GAAP results: 1,184.7 Net sales $ 679.1 $ 401.4 $ 104.2 $
Slide 33: Questions
Questions