Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (August 2022)
37 slides from Mueller Water Products's investor presentation, Aug 23, 2022
Slide 1: Investor Presentation August & September, 2022
Where Intelligence Meets Infrastructure® Investor Presentation August & September, 2022
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 by accounting principles generally accepted in the United States (“GAAP”), the Company also provides non-GAAP information that management believes is useful to in
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 federal securities laws. All statements that address activities, events or developments that the Company intends, expects, plans, projects, believes or
Slide 4: (1) Provided with Q3FY22 earnings press release and presentation on August 4 & 5,
4 (1) Provided with Q3FY22 earnings press release and presentation on August 4 & 5, 2022. See Appendix for reconciliation of non-GAAP measures to their corresponding GAAP measures. (2) Consolidated net sales Information for geography, segments, products and end markets based on FY2021 information an
Slide 5: • Leading brand and municipal market specification positions with large installed base • Comprehensive
5 • Leading brand and municipal market specification positions with large installed base • Comprehensive distribution network and strong end-user relationships with end-markets served by limited number of suppliers • Low-cost manufacturing operations using lost foam process • Favorable market dynami
Slide 6: Focused on Executing Strategic Initiatives to Grow and Enhance Business
6 Focused on Executing Strategic Initiatives to Grow and Enhance Business Including New Management Structure and ESG Goals • Confident growth strategies, capital investments and operational initiatives will enable us to deliver further sales and adjusted EBITDA growth Where Intelligence Meets Infras
Slide 7: • 10% decrease in energy consumption intensity, exceeding goal of 3% annual reduction, leading
7 • 10% decrease in energy consumption intensity, exceeding goal of 3% annual reduction, leading to a 15% decrease in scope 1 and 2 greenhouse gas emissions (GHG) intensity • Reduced water withdrawal intensity by 15%, exceeding goal of 3 percent annual reduction • Decreased waste to disposal intensi
Slide 8: Products and Markets
Products and Markets
Slide 9: Leading Product Positions in Key Product Categories
9 Hydrants, Iron Gate & Butterfly Valves, Brass Products, Pipe Repair & Leak Detection, Metering 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 fil
Slide 10: Mueller is Uniquely Positioned to Address Opportunities with Utilities
10 Mueller is Uniquely Positioned to Address Opportunities with Utilities with its Leading Infrastructure Products and Installed Base
Slide 11: Water Utilities Are Facing Many Challenges
11 Water Utilities Are Facing Many Challenges • Unrealistic for U.S. water utilities and local governments to bridge the gap between their current capital spending and projected need for capital spending, based on the age and life expectancy of their infrastructure • Moving forward the industry will
Slide 12: U.S. Water Infrastructure Requires Substantial Long-term Investment
12 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: 2021 Report Card for Americ
Slide 13: Aging Infrastructure Increasing Water Main Breaks
13 Aging Infrastructure Increasing Water Main Breaks (1) Bluefield Research 2019, Water Industry 4.0 Focus Report. (2) U.S. Environmental Protection Agency, “Drinking Water Infrastructure Needs Survey and Assessment, Sixth Report to Congress,” March 2018. (3) EPA Aging Water Infrastructure Research
Slide 14: Funding Water Utilities Infrastructure Repair
14 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 2021 Water and Was
Slide 15: Need for Digital Water Solutions Expected to Accelerate
15 Need for Digital Water Solutions Expected to Accelerate Climate Change, Population Growth and Water Scarcity • Aging workforce and anticipated retirements rated as one of the top challenges facing utilities projected to see significant retirements over the next ten years (8) • Increasing consumer
Slide 16: Broad-line of Connected Products that Close the Loop
16 Broad-line of Connected Products that “Close the Loop” with Water Network Administrators & Assets A digital services platform for water utilities to monitor, operate and monetize water distribution networks. Monitor Drive insights to inform decision-making process Control Automatic control of net
Slide 17: Large Capital Projects
17 Large Capital Projects Large Valve Foundry Brass Foundry Specialty Valve Manufacturing • Expect capital expenditures as a percent of consolidated net sales to decrease to less than 4% after the completion of the new brass foundry in Decatur, IL • Three large capital projects expected to account f
Slide 18: Water Flow Solutions and Water Management Solutions
18 • Designed to increase revenue growth, drive operational excellence, accelerate new product development and enhance profitability • Positions us for improved long-term growth and increased margins, while helping to accelerate the commercialization of our technology-enabled products and the Sentry
Slide 19: Financial Performance
Financial Performance
Slide 20: Q3 2022 Consolidated Results
20 Q3 2022 Consolidated Results (1,2) (1) Provided with Q3FY22 earnings press release and presentation on August 4 & 5, 2022. (2) See Appendix for reconciliation of non-GAAP measures to their corresponding GAAP measures. • Increased net sales in both Water Flow Solutions (+10.7% y/y) and Water Manag
Slide 21: End Markets (Q3 2022)
21 End Markets (Q3 2022) (1) • Order levels remained healthy during Q3 and believe municipal repair and replacement end market activity remained very strong, which continues to benefit from healthy budgets, especially at larger municipalities • Estimate that approximately two-thirds of net sales are
Slide 22: Full-Year Fiscal 2022 Outlook
22 Full-Year Fiscal 2022 Outlook (1) • On track to deliver our second consecutive year of double-digit consolidated net sales growth • Narrowing expectations for consolidated net sales growth between 11% and 12% compared with the prior year − Forecast takes into account the current expectations for
Slide 23: Free Cash Flow
23 (1) Provided with Q3FY22 earnings press release and presentation on August 4 & 5, 2022. (2) Average Net Working Capital defined as the average of Net Receivables + Net Inventories – Accounts Payable for last 5 quarters. Free Cash Flow (1) • Net cash provided by operating activities for the Q3FY22
Slide 24: Balance Sheet and Liquidity
24 Balance Sheet and Liquidity Credit Rating Debt Structure Debt Maturities Financial Covenants • $450M of 4.0% Senior Notes (mature June 2029) • Asset based lending agreement (“ABL”) provides up to $175M revolving credit facility subject to borrowing base (LIBOR + 200 basis points) with none outsta
Slide 25: Balanced and Disciplined Capital Allocation
25 Balanced and Disciplined Capital Allocation • Strong balance sheet, liquidity and cash flow supporting 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 26: Investment Highlights
26 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 27: Supplemental Data
Supplemental Data
Slide 28: Historical Financial Performance
28 Historical Financial Performance • Over last five years (FY16 to FY21), delivered net sales and adjusted EBITDA CAGRs of 6.8% and 5.4%, respectively • Prior to pandemic (FY16 to FY19), delivered net sales and adjusted EBITDA CAGRs of 6.5% and 8.3%, respectively $801 $826 $916 $968 $964 $1,111 $0
Slide 29: Strong Balance Sheet with Significant Flexibility
29 Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1B since March 31, 2006 and $650M since September 30, 2008 • Total debt of $447.0M and total cash of $154.9M leading to net debt leverage of 1.4x at June 30, 2022 • $315.6M of total liquidity including $160.7M of excess availa
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) Quarter ended June 30, 2022 Water Flow Solutions Water Management Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 195.9 $ 137.3 $ — $ 333.2 Gross profit $ 60.8 $ 37
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 June 30, 2022 Water Flow Solutions Water Management Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 26.5 Income tax expense (2) 7.1 Interest expense,
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) Quarter ended June 30, 2021 Water Flow Solutions Water Management Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 177.0 $ 133.5 $ — $ 310.5 Gross profit $ 61.2 $ 44
Slide 33: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
33 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended June 30, 2021 Water Flow Solutions Water Management Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 14.4 Loss on early extinguishment of debt 16.7 In
Slide 34: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
34 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Nine months ended June 30, 2022 Water Flow Solutions Water Management Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 534.7 $ 381.3 $ — $ 916.0 Gross profit $ 169.9
Slide 35: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
35 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Nine months ended June 30, 2022 Water Flow Solutions Water Management Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 69.5 Income tax expense (2) 20.4 Interest exp
Slide 36: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
36 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) As a result of the elimination of the one-month reporting lag, the nine-month period ended June 30, 2021, includes an additional $6.0 million of Net sales, and an additional $1.4 million in Operating incom
Slide 37: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
37 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Nine months ended June 30, 2021 Water Flow Solutions Water Management Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 52.0 Loss on early extinguishment of debt 16.
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