Mueller Water Products · NYSE:MWA
Mueller Water Products — Gabelli & Co. 24th Annual Industrial Flow & Infrastructure Conference (February 2014)
34 slides from Mueller Water Products's conference presentation, Feb 26, 2014
Slide 1: Where Intelligence Meets Infrastructure
(Mueller Water Products} Where Intelligence Meets Infrastructure® Gabelli & Co. 24" Annual Industrial Flow & Infrastructure Conference February 26, 2014
Slide 2: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company reports its financial results under accounting principles generally accepted in the United States ("GAAP"), as well as through the use of non-GA measures. The Company presents adjusted operating Income (loss), adusted operating margin, adjusted et income opera
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Thi tat may be deemed “forward-looking statements” within the meaning ofthe Private Secutis Ligation Reform Ac of 1995. Al developments that we intend, expect, a project, believe or anticipate will or eva occur in the futur forward-looking statements. Examples of forward-l
Slide 4: Our Business
OUR BUSINESS FY2013 PRIMARY END MARKETS @amn NET SALES $1.1B $1.1 billion LTM net sales (as of December 31, 2013) of mt distribution and treatment systems Specified in 100 largest U.S. metropolitan markets) 30% Non-residential construction (1) Valves or hydrants Pp p PORTFOLIO @ We r Lom Pipe Condit
Slide 5: Mueller Water Products
Mueller Water Products Leading provider of water infrastructure and flow control products and services in North America INVESTMENT HIGHLIGHTS Improved results driven by strong incremental I Leading brands in water infrastructure and one of operating leverage as end markets recover the largest instal
Slide 6: Business Performance: Long-Term Targets
BUSINESS PERFORMANCE: LONG-TERM TARGETS Mueller Water Products > II Mueller Co. base business organic growth of in normalized end market conditions ll Metering and leak detection products and services lH Mueller Co. adjusted EBITDA margins of in normalized end market conditions @ Metering and leak c
Slide 7: Broad Product Portfolio
BROAD PRODUCT PORTFOLIO Mueller Co.) Est. 1857 $743mm $100mm $45mm $144mm, Fire Hydrants an Gate Arta Metering System Leak Detection and Pipe Gondton Assessment Butterfly, Ball & Plug Valves Note: ll statistics are LTM ended December 3, 2013 Historical Roots Net Sales Adjusted Operating Income Depre
Slide 8: Water Transmission Solutions
WATER TRANSMISSION SOLUTIONS Mueller Water Products wn ew Sone FomSitin —— manufactures and markets — +E fo products and services that t_t i are used in the transmission, WOR rinse Gouptngsantingen bisshisiall t ———+ uevive distribution and jclanad 7 + <j measurement of safe, clean canvne t we fe dr
Slide 9: Water Infrastructure Landscape
WATER INFRASTRUCTURE LANDSCAPE FIRE GATE BUTTERFLY & BRASS WATER HYDRANTS: VALVES BALL VALVES PRODUCTS eee ee ee Saag é é é é AY.McDonald é ACIPCO é é DeZURIK é Ford Meter Box é McWane é ry ry
Slide 10: Anvil
ANVIL Leading domestic manufacturer of piping system components IB Significant Prien net sales from #1 or #2 si positions I Customer service capabilities focused on quick delivery Ml Domestically manufactured and internationally so products Wi Track record of operational excellence (solid adjusted E
Slide 11: Anvil Key Markets
ANVIL KEY MARKETS Mechanical Industrial & 75% Fire Protectio 20% Power/High 5% Pressure Non-Residential Construction Oil & Gas Power Need Development Mechanical: Grooved, Bull Plugs Fire Protection: O- Grooved, Iron Pains ‘Slaple Hangers, Pipe Nipple: Hammer Union Swages id Bull Plugs, Forged Steel
Slide 12: Strategy and Objectives
STRATEGY AND OBJECTIVES Capitalize on the large, attractive and growing water infrastructure markets worldwide Maintain leadership positions with customers and end users Continue to enhance operational and organizational excellence Develop, acquire and invest in businesses and technologies that expa
Slide 13: Our End Markets
Our End i? Markets
Slide 14: Historical Housing Starts
HISTORICAL HOUSING STARTS New household formation will be the key to driving housing start demand back to normal levels Historical Housing Stars (1959 - January 2014) nally Adjusted Annual 1989-Presant average hovsahols formationie 12 milion por your
Slide 15: Non-Residential Construction
NON-RESIDENTIAL CONSTRUCTION The non-residential construction market remains stable Non-Residential Construction tench er (Real $ in Billions) $400 Souroe: IHS Data as of February 11, 2014
Slide 16: Significant Market Opportunities
Significant Market ‘woh | Opportunities *
Slide 17: The Market Opportunity Is Significant and Growing
THE MARKET OPPORTUNITY IS SIGNIFICANT AND GROWING REPAIR AND REPLACEMENT MARKET as pipes I ASCE graded drinking water infrastructure aD" i Atleast 40 cities under consent decrees: Atlanta, Washington, D.C. (WSSQ), New Orleans Bg Percentage of Replacement Noes g s (0) ASCE:2013 Report Card for Americ
Slide 18: Funding Water Infrastructure Repair
FUNDING WATER INFRASTRUCTURE REPAIR HISTORICAL WATER RATES COMPARED TO OTHER UTILITIES“ Sources (1), Bureau of Labor Statistics - FactSet {2 AWWASuaie ol th indus Rapa 2012, @) ‘Ame (8) EPA Goan Wator na Grnking Water nase TOP THREE WATER INDUSTRY ISSUES®) IB State of water and sewer infrastructure
Slide 19: Significant Growth Opportunities
SIGNIFICANT GROWTH OPPORTUNITIES Factors Affecting Municipal Water Systems. | Our Solutions | Share of North American Market operational efficiencies Water Conservation . 26 states in drought condition 240,000 water main breaks per year’) Non-revenue Water Up t 20% of ireatal ator i lost or unaccoun
Slide 20: Opportunities: AMI/Smart Metering
OPPORTUNITIES: AMI/SMART METERING OPPORTUNITY SOLUTION END USER COMPETITORS Acquired Arkion Meters in 2011 to form Mueller Systems Introduced AMI solution: MiNet® - Mueller Infrastructure Network for Utilities Transition from one- y to two-way AMI systems Develop new products to to support ang jenha
Slide 21: Opportunities: Leak Detection & Pipe Condition Assessment
OPPORTUNITIES: LEAK DETECTION & PIPE CONDITION ASSESSMENT OPPORTUNITY SOLUTION END USER COMPETITORS A Echol E m sspigestere — @cholOBlCS tasers. = RE New Orleans) EA Fragmented and i Acoustic, non-invasive regional competitors leak detection and pipe | Port Authority of New I Developed fixed conditi
Slide 22: Actions & Business Results
Actions & Business Results
Slide 23: Management Actions / Initiatives
MANAGEMENT ACTIONS / INITIATIVES Manage working capital and capital expenditures to generate free cash flow Reduce costs and improve operating leverage Il Divested U.S. Pipe in FY2012 . Generated free cash flow of $78.5, een 3 up from $45.4 mm in Il Divested two non-core assets of Fy20 Anvil in FY20
Slide 24: History of Strong Financial Performance
HISTORY OF STRONG FINANCIAL PERFORMANCE (See Appendices for GAAP Reconciliation) = Net Sales (8 in millions) Adjusted 3652 $595 sue A $207 $190 $167 79) sia $139 | | (8 in millions)
Slide 25: Consolidated Non-GAAP Results
CONSOLIDATED NON-GAAP RESULTS Net sales increased 5% a d adlustod operating income grew 8 Mueller Co. increased net sales by 9.2% with growth across most product lines especially valves and brass products Domestic hydrant oe eae about 13% due to a timing is distributors and end users i delayed. orde
Slide 26: Debt Structure
DEBT STRUCTURE Net debt leverage of 3.0x at December 31, 2013 Net debt of $493.9 million at December 31, 2013 Debt maturities with no significant required principal payments before 2 No financial maintenance covenants with excess availability at the greater of $22.5 million or 10.0% of facility amou
Slide 27: Potential Uses of Cash
POTENTIAL USES OF CASH = Debt reduction tec row = Acquisitions = Dividends = Growth opportunities
Slide 28: Why Invest in MWA?
WHY INVEST IN MWA? Water industry has fundamentally strong Expected strong operating leverage when long-term dynamics end markets recover Il Driven by need for new and upgraded I Recovery of residential construction market infrastructure I Increased municipal spending I Limited number of suppliers t
Slide 29: Supplemental Data
Slide 30: Segment Results and Reconciliation of GAAP to Non-GAAP
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin miions, except per share amounts)
Slide 31: Segment Results and Reconciliation of GAAP to Non-GAAP
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin mitions, excep per share amounts)
Slide 32: Segment Results and Reconciliation of GAAP to Non-GAAP
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (sin share “Se
Slide 33: Segment Results and Reconciliation of GAAP to Non-GAAP
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin milous, excep per share amounts)
Slide 34: Questions
Questions