Mueller Water Products · NYSE:MWA
Mueller Water Products — Gabelli Annual Pump, Valve & Water Systems Symposium 2021
33 slides from Mueller Water Products's conference presentation, Feb 25, 2021
Slide 1: Gabelli Annual Pump, Valve & Water Systems Symposium
Where Intelligence Meets Infrastructure® Gabelli Annual Pump, Valve & Water Systems Symposium February 25, 2021
Slide 2: NON-GAAP Financial Measures
2 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
Slide 3: Forward-Looking Statements
3 Forward-Looking Statements This presentation 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, expects, pla
Slide 4: Mueller Water Products at a Glance
4 Mueller Water Products at a Glance KEY PRODUCTS (2) END MARKETS (2) • Founded over 160 years ago • Spun off from Walter Industries in 2006 • Listed on NYSE (MWA) June 1, 2006 • Divested U.S. Pipe (April 2012) and Anvil (Jan. 2017) • Acquired Singer Valve (Feb. 2017) and Krausz Industries (Dec. 201
Slide 5: Investment Highlights
5 Investment Highlights • Leading brand and municipal market specification positions • Large installed base of iron gate valves and fire hydrants • Comprehensive distribution network and strong end-user relationships • Low-cost manufacturing operations using lost foam process • Favorable market dyna
Slide 6: End Market Performance
6 End Market Performance* • Experienced strong end market demand during first quarter • Benefitted from the growth in residential construction and municipal end markets continue to be resilient • Distributors increased inventory levels during the quarter resulting from anticipated demand and impact
Slide 7: Mueller Water Products in a Strong Position vs. Great Recession
7 Mueller Water Products in a Strong Position vs. Great Recession • Reduced leverage by >2 turns since 2008, providing flexibility to invest in the business and return capital to shareholders through the cycle • Addressed legacy liabilities including exiting multi-employer pension plans and settling
Slide 8: Remain Focused on Executing Key Strategies to Grow and Enhance Our Business
8 Remain Focused on Executing Key Strategies to Grow and Enhance Our Business Where Intelligence Meets Infrastructure® Mueller is committed to manufacturing innovative products and creating smart solutions that will solve future challenges, whether it's at the source, at the plant, below the ground,
Slide 9: Commitment to Sustainability
9 Commitment to Sustainability • Released first ESG Report this past December • Inaugural report reflects how sustainability has been an integral part of Mueller Water Products for many years • While highlighting our sustainability achievements to date, discussed some of the ongoing initiatives to s
Slide 10: Products and Markets
Products and Markets [MUELLER] ‘=-",
Slide 11: Strong Position in Broader Water Market
11 Strong Position in Broader Water Market Leading Product Positions in Key Product Categories (1) (1) Company estimates based on internal analysis and information from trade associations and distributor networks, where available. (2) Company filings and presentations. Fire Hydrants Iron Gate Valves
Slide 12: Mueller is Uniquely Positioned to Address Opportunities with Utilities
12 Mueller is Uniquely Positioned to Address Opportunities with Utilities with its Leading Infrastructure Products and Installed Base
Slide 13: U.S. Water Infrastructure Requires Substantial Long-term Investment
13 U.S. Water Infrastructure Requires Substantial Long-term Investment U.S. Water Infrastructure CAPEX and Investment GapRepair & Replacement Market (1) American Water Works Association, Buried No Longer: Confronting America’s Water Infrastructure Challenge 2012 (2) ASCE: 2017 Report Card for Americ
Slide 14: Aging Infrastructure Increasing Water Main Breaks
14 Aging Infrastructure Increasing Water Main Breaks (1) Bluefield Research 2019, Water Industry 4.0 Focus Report (2) EPA Aging Water Infrastructure Research Program (3) “Water Main Break Rates in the USA and Canada: A Comprehensive Study,” March 2018, Steven Folkman at Utah State University, https:
Slide 15: Funding Water Utilities Infrastructure Repair
15 Funding Water Utilities Infrastructure Repair (1) Bluefield Research 2019, Water Industry 4.0 Focus Report (2) Bluefield Research 2019, U.S. Private Water Utilities Report (3) RAND Corporation 2017 Report titled “Not Everything is Broken” (4) American Water Works Association 2016 Water and Wastew
Slide 16: Need for Digital Water Solutions Expected to Accelerate
16 Need for Digital Water Solutions Expected to Accelerate “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 aftermath of the COVID-19 outbreak, bu
Slide 17: Broad-line of Technology-enabled Products
17 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 monitor
Slide 18: Modernizing Manufacturing Facilities
18 Expect capital expenditures as a % of consolidated net sales to decrease to less than 4% after the completion of the new brass foundry in Decatur, IL Modernizing Manufacturing Facilities • Three transformational projects account for approximately $130M of capital spending and expected to drive ap
Slide 19: Financial Performance
Financial Performance [MUELLER] ‘=-",
Slide 20: Q1 2021 Consolidated Financial Highlights
20 Q1 2021 Consolidated Financial Highlights* • Net sales of $237.4M increased $24.8M, or 11.7%, primarily driven by increased shipment volumes across most of our product lines and higher pricing • Gross profit increased $5.8M, or 8.0%, to $78.4M with a gross margin of 33.0% − Gross margin decreased
Slide 21: Full-Year Fiscal 2021 Outlook
21 Full-Year Fiscal 2021 Outlook* • Anticipate that strong growth in the residential construction end market will more than offset any temporary delays in the project-related portions of the municipal end market due to the pandemic • Updated annual guidance takes into account our strong first quarte
Slide 22: Free Cash Flow
22 Free Cash Flow* • Net cash provided by operating activities for the first quarter 2021 improved $46.5M to $34.1M, primarily driven by improvements in working capital management • First quarter 2020 included the $22.2M payment associated with the Walter Energy payment* • Invested $15.6M in capital
Slide 23: Strong Balance Sheet and Ample Liquidity
23 Strong Balance Sheet and Ample Liquidity* • Moody’s: Ba2 Corporate Rating, Ba3 Notes Rating, Stable Outlook • S&P: BB Corporate and Notes Ratings, Stable OutlookCredit Rating Debt Structure Debt Maturities Financial Covenants • $450M of 5.5% Senior Unsecured Notes (matures June 2026) • Asset base
Slide 24: Balanced and Disciplined Capital Allocation
24 Balanced and Disciplined Capital Allocation • Strong balance sheet, liquidity and cash flow to support our strategies • Maintaining balanced approach to capital allocation to strengthen and grow the business through capital investments and bolt-on acquisitions • Continuing to return cash to our s
Slide 25: Investment Highlights
25 Investment Highlights LONG-TERM END MARKET DYNAMICS CONTINUE TO IMPROVE LEVERAGING STRENGTHS TO INCREASE TECHNOLOGY-ENABLED PRODUCTS MODERNIZING MANUFACTURING AND DRIVING OPERATIONAL EXCELLENCE TO DELIVER MARGIN EXPANSION FLEXIBLE BALANCE SHEET AND STRONG CASH FLOW STRONG COMPETITIVE POSITION
Slide 26: Supplemental Data
Supplemental Data [MUELLER] ‘=-",
Slide 27: History of Strong Financial Performance
27 History of Strong Financial Performance $793 $801 $826 $916 $968 $964 $0 $200 $400 $600 $800 $1,000 $1,200 FY15 FY16 FY17 FY18 FY19 FY20 Consolidated Net Sales ($ in millions) $143 $156 $164 $180 $198 $191 18.1% 19.5% 19.8% 19.7% 20.5% 19.8% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% $0 $50 $100 $150 $200
Slide 28: Strong Balance Sheet with Significant Flexibility
28 Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1B since March 31, 2006 and $650M since September 30, 2008 • Total debt of $447.7M and total cash of $223.0M leading to net debt leverage of 1.1x at December 31, 2020 with $336.4M of excess availability under the ABL, based on
Slide 29: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
29 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended December 31, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 215.9 $ 21.5 $ — $ 237.4 Gross profit $ 73.7 $ 4.7 $ — $ 78.4 Sell
Slide 30: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
30 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) We do not allocate interest or income taxes to our segments. Quarter ended December 31, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
31 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended December 31, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 192.3 $ 20.3 $ — $ 212.6 Gross profit (1) $ 68.0 $ 4.6 $ — $ 7
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
32 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) We do not allocate interest or income taxes to our segments. Quarter ended December 31, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $
Slide 33: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure®
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