Mueller Water Products · NYSE:MWA
Mueller Water Products — Goldman Sachs Global Industrials Conference 2010
33 slides from Mueller Water Products's conference presentation, Nov 4, 2010
Slide 1: Goldman Sachs Global Industrials Conference
Exhibit 99.1 Goldman Sachs Global Industrials Conference November 4, 2010
Slide 2: Safe Harbor Statement
Safe Harbor Statement Safe Harbor Statement 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 intend
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures The Company presents adjusted income (loss) from operations, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per share, free cash flow and net debt as non-GAAP measures. Adjusted income (loss) from operations represents
Slide 4: Investment Highlights
Investment Highlights Leading North American provider of water infrastructure and flow control products Market opportunity with increasing investment needed in water industry One of the largest installed bases in the U.S. Leading brands in water infrastructure Specified in 100 largest U.S. metropoli
Slide 5: Our Business
Our Business • $1.3B LTM net sales (as of September 30, 2010) FY2010 Primary End Markets (2) • Portfolio includes: Net Sales $1.3B • Fire hydrants • Valves • Pipe fittings • Ductile iron pipe • Water meters • Specified in 100 largest U.S. metropolitan markets(1) • More than 75% of FY2010 net sales f
Slide 6: Broad Product Portfolio
Broad Product Portfolio ($ in millions) HISTORICAL ROOTS Est. 1857 Est. 1899 Est. 1999 (1850) SEGMENT NET SALES $613 $378 $347 ADJUSTED OPERATING INCOME (LOSS)(1) ($53) $23 $81 DEPRECIATION AND AMORTIZATION(2) $50 $19 $15 (1) (2) ADJUSTED EBITDA $131 ($34) $38 Restrained Joint Ductile Iron Iron Gate
Slide 7: Complete Water Transmission Solutions
Complete Water Transmission Solutions Mueller Water Products manufactures and markets products and services that are used in the transmission and distribution of safe, clean drinking water and in water treatment facilities. 7
Slide 8: * Company estimates based on internal analysis and information from trade associations and our
* Company estimates based on internal analysis and information from trade associations and our distributor networks, where available. 8
Slide 9: Strategy And Objectives
Strategy And Objectives Maintain leadership positions with customers and end users Continue to enhance operational and Capitalize on the large, organizational excellence attractive and growing water infrastructure markets worldwide Broaden breadth and depth of products and services Expand internatio
Slide 10: Our End Markets
Our End Markets
Slide 11: Primary End Markets: 2006-2010
Primary End Markets: 2006-2010 Since 2006, our exposure to the residential construction market has declined from roughly 40% to 5%. Source: Management estimates * Residential construction is driven primarily by new community development 11
Slide 12: Historical Housing Starts
Historical Housing Starts Historical Housing Starts (1991 - September 2010) Seasonally Adjusted Annualized 2,400 2,150 1,900 1,650 1,400 1991-2010 Average 1,435 1,150 900 Bottom of prior down cycle (798) April -Lowest starts (477) since Census Bureau began keeping records in 1959 650 400 Jan-91 Jan-
Slide 13: Non-Residential Construction
Non-Residential Construction Non-Residential Construction Actual / Forecast Architecture Billings Index Trends Source: IHS Global Insight Data as of October 20, 2010 13
Slide 14: A Significant Market Opportunity
A Significant Market Opportunity
Slide 15: Aging Water Infrastructure
Aging Water Infrastructure “America’s drinking water systems face an annual shortfall of at least $11 billion to replace aging facilities that are near the end of their useful lives and to comply with existing and future federal water regulations. This does not account for growth in the demand for d
Slide 16: The Market Opportunity Is Significant And Growing
The Market Opportunity Is Significant And Growing Future Drinking Water Infrastructure Expenditure Repair and Replacement Market Needs(1) • Aging water pipes need to be rehabilitated / replaced • Valves and hydrants typically replaced at same time as pipes Area in which Mueller Water • Up to 15% - 3
Slide 17: Aging Water Infrastructure
Aging Water Infrastructure • An average of 700 water mains break daily in U.S. (about one every two minutes) (1) • Baltimore water main break in March 2010 left 100,000 people without water (2) “When all aspects are considered, infrastructure becomes the towering issue in the water industry in both
Slide 18: Aging Water Infrastructure
AgingWaterInfrastructure Average life of 100 year and 75 year old pipe is converging, contributing to accelerating need for pipe replacement. (1) The EPA Clean Water and Drinking Water Infrastructure Gap Analysis 2002 18
Slide 19: Increasing Federal Awareness of Funding Needs
Increasing Federal Awareness of Funding Needs Stronger EPA regulations should lead to increased investment • At least 30 cities under consent decrees — Atlanta $4.0B “New Jersey can maintain — Washington, D.C. $2.8B a viable economy with a — Baltimore City and county $1.7B sound environment only if
Slide 20: Funding 2010 Water Infrastructure Repair
Funding 2010 Water Infrastructure Repair Historical Water Sources of Funding Rates Compared to Water Infrastructure Other Utilities (1) Repair (2) Rate Increases 10% Other 15% Operational Savings Bonds 47% 9% Loans Grants 16% 3% From 2007-2009 annual average residential water rates increased about 1
Slide 21: Actions & Business Results
Actions & Business Results
Slide 22: Management Actions/Initiatives
Management Actions/Initiatives Objectives Cost Savings Actions Reduce costs and improve Six plants closed since FY2006 operating leverage Sold certain non -core assets of Anvil Reduced headcount about 24% from September 30, 2008 to September 30, 2010 from approximately 6,300 to approximately 4,800 T
Slide 23: History of strong financial performance
History of strong financial performance (see appendices for GAAP reconciliation) (a) (b) (c) ($ in millions) $804 $756 $718 $664 $618 $613 $598 $595 $595 $509 $536 $547 $551 $537 $546 $535 $556 $492 $465 $485 $470 NET SALES $411 $431 $378 $393 $387 $347 2002 2003 2004 2005 2006 2007 2008 2009 2010 2
Slide 24: Consolidated Non-GAAP Results
Consolidated Non-GAAP Results Fourth Quarter Fiscal $ in millions (except per share amounts) 2010 2009 Net sales $346.7 $374.8 Adj. income from operations $15.4 $14.8 Adj. operating income % of net sales 4.4% 3.9% Adj. net income (loss) per share $0.00 ($0.03) Adj. EBITDA $36.7 $36.7 Adj. EBITDA % o
Slide 25: Refinancing Highlights
Refinancing Highlights • Recapitalization provides a long-term capital structure Debt Maturity ($ in millions) $450 $420 • Extends maturities with no significant required $400 principal payments before 2015 $350 $300 • Locks in long-term capital at attractive rates $250 $225 $200 $226 $150 • Preserv
Slide 26: Key Financial Metrics
Key Financial Metrics Free Cash Flow Capital Expenditures ($ in millions) ($ in millions) $140 $100 $88 $88 $115 $90 $120 $80 $71 $100 $94 $91 $70 $80 $60 $50 $40 $60 $40 $33 $37 $30 $40 $30 $20 $20 $10 $0 $0 FY2006 FY2007* FY2008 FY2009** FY2010*** FY2006 FY2007 FY2008 FY2009 FY2010 Total Debt Inve
Slide 27: Investment Highlights
Investment Highlights • Water industry has fundamentally strong long-term dynamics • Driven by new and upgraded infrastructure • Limited number of suppliers to end markets • Strong competitive position • Leading brand positions with large installed base • Leading municipal specification positions •
Slide 28: Supplemental Data
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Slide 29: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (in millions, except per share amounts) Three months ended September 30, 2010 Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 163.7 $ 94.9 $ 88.1 $ - $ 346.7 Gross profit (loss) $ 49.1 $ (3.1) $ 25.8 $
Slide 30: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures Three months ended September 30, 2009 (in millions, except per share amounts) Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 158.1 $ 105.3 $ 111.4 $ - $ 374.8 Gross profit $ 45.0 $ 0.6 $ 23.4 $ 0.2 $ 6
Slide 31: Segment Results And Reconciliation Of Non-GAAP To GAAP Performance Measures
Segment Results And Reconciliation Of Non-GAAP To GAAP Performance Measures Year ended September 30, 2010 (in millions, except per share amounts) Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 612.8 $ 377.8 $ 346.9 $ - $ 1,337.5 Gross profit (loss) $ 170.3 $ (22.7) $ 88.8 $ -
Slide 32: Segment Results And Reconciliation Of Non-GAAP To GAAP Performance Measures
Segment Results And Reconciliation Of Non-GAAP To GAAP Performance Measures (in millions, except per share amounts) Year ended September 30, 2009 Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 547.1 $ 410.9 $ 469.9 $ - $ 1,427.9 Gross profit (loss) $ 134.3 $ (5.7) $ 128.2 $ 0.
Slide 33: Questions
(Mueller Water Products|
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