Mueller Water Products · NYSE:MWA
Mueller Water Products — RBC Global Industrials Conference 2021
39 slides from Mueller Water Products's conference presentation, Sep 9, 2021
Slide 1: RBC Global Industrials Conference September 9, 2021
Where Intelligence Meets Infrastructure® RBC Global Industrials Conference September 9, 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 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 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: Continue to Execute Strategic Priorities to Become World Class Water Technologies Company
6 Continue to Execute Strategic Priorities to Become World Class Water Technologies Company Bringing Solutions to Critical Water Infrastructure Where Intelligence Meets Infrastructure® Mueller is committed to manufacturing innovative products and creating smart solutions that will solve future chall
Slide 7: Commitment to Sustainability
7 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 8: Products and Markets
Products and Markets [MUELLER] ‘=-",
Slide 9: Strong Position in Broader Water Market
9 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 and management estimates. Fire H
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 P
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 Wastew
Slide 15: Need for Digital Water Solutions Expected to Accelerate
15 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 16: Broad-line of Technology-enabled Products
16 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 17: Sentryx Will Connect Products that Close the Loop
17 SentryxTM will Connect 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. Remote Flushing Mobile Workforce Management Water Quality Metering & Flow Measurement Pres
Slide 18: i2O Water Provides Next Generation Pressure Management Solutions
18 • Enhances and expands technology product offerings for pressure management solutions including sensors, controllers and software: − Pressure data loggers, advanced pressure valve controllers and network analytics to reduce water loss − Enable clients to monitor, analyze and control water network
Slide 19: Large Capital Projects
19 Large Capital Projects Large Casting Foundry Brass Foundry Specialty 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 for t
Slide 20: Financial Performance
Financial Performance [MUELLER] ‘=-",
Slide 21: Q3 2021 Consolidated Financial Highlights
21 Q3 2021 Consolidated Financial Highlights* • Net sales of $310.5M increased $82.0M, or 35.9%, driven by increased volumes at both Infrastructure and Technologies and higher pricing • Gross profit was $105.4M with a gross margin of 33.9%, and gross margin increased 80 basis points versus the prior
Slide 22: Key Q3 Updates (Pricing, Inflation, End Markets)
22 Key Q3 Updates (Pricing, Inflation, End Markets) • Raw material inflation accelerated during the third quarter impacting gross margins • Announced third price increase this year across many of our product lines during the third quarter • Price-cost more challenging in Q3 vs. Q2 due to the magnitu
Slide 23: Full-Year Fiscal 2021 Outlook
23 Full-Year Fiscal 2021 Outlook* • Due to the high level of demand coming out of the pandemic and supply constraints, believe that distributors have not been able to increase inventories to pre-pandemic levels • Dynamic has resulted in an all-time high backlog for Infrastructure-related products wi
Slide 24: Free Cash Flow
24 Free Cash Flow • Net cash provided by operating activities for nine month period improved $45.5M to $123.3M, primarily driven by higher earnings and $22.0M Walter Energy tax payment* in 2020 • Invested $46.1M in capital expenditures during nine month period compared to the $51.2M in prior year pe
Slide 25: Strong, Flexible Balance Sheet with Ample Liquidity and Capacity
25 Strong, Flexible Balance Sheet with Ample Liquidity and Capacity Credit Rating Debt Structure Debt Maturities Financial Covenants • $450M of 4.0% Senior Unsecured Notes (matures June 2029) • Asset based lending agreement (“ABL”) provides up to $175M revolving credit facility subject to borrowing
Slide 26: Balanced and Disciplined Capital Allocation
26 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 27: Investment Highlights
27 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 28: Supplemental Data
Supplemental Data [MUELLER] ‘=-",
Slide 29: History of Strong Financial Performance
29 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 30: Strong Balance Sheet with Significant Flexibility
30 Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1B since March 31, 2006 and $650M since September 30, 2008 • Total debt of $446.6M and total cash of $228.6M leading to net debt leverage of 1.0x at June 30, 2021 with $145.1M of excess availability under the ABL, based on Jun
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) (1) We do not allocate interest, income taxes or pension benefit (expense) other than service to our segments. Quarter ended June 30, 2021 Infrastructure Technologies Corporate Consolidated (dollars in mill
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 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 14.4 Loss on early extinguishment of debt 16.7 Income tax expense
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, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 209.4 $ 19.1 $ — $ 228.5 Gross profit (1) $ 73.3 $ 2.4 $ — $ 75
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) Quarter ended June 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 11.2 Income tax expense (2) 3.4 Interest expense, net (2) 6.1 Pens
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, 2021 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 750.1 $ 65.3 $ — $ 815.4 Gross profit $ 261.1 $ 11.1 $ — $
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) Nine months ended June 30, 2021 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 52.0 Loss on early extinguishment of debt 16.7 Income tax expe
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, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 641.6 $ 57.2 $ — $ 698.8 Gross profit (1) $ 225.4 $ 8.9 $ —
Slide 38: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
‹#›38 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Nine months ended June 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 45.3 Income tax expense (2) 13.3 Interest expense, net (2) 19.
Slide 39: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure®
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