Mueller Water Products · NYSE:MWA
Mueller Water Products — Baird's 2015 Industrial Conference
34 slides from Mueller Water Products's conference presentation, Nov 9, 2015
Slide 1: Mueller Water Products – Baird's 2015 Industrial Conference
(Mueller Water Products} Where Intelligence Meets Infrastructure® Baird’s 2015 Industrial Conference November 9 — 10, 2015
Slide 2: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company reports its financial results under accounting lebt and net debt le leverage as non- resents adjusted operating income, adjusted aa aah, adjusted EBITDA a1 adjusted EBITDA margin because these are measures management believes are frequently used by securities.
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS d-looking stat Thi tat may deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All vents OF developm ect, plan, project, believe or ‘anticipate will or may occur in the future are forward-looking statements. ased
Slide 4: Our Business and Primary End Markets
OUR BUSINESS AND PRIMARY END MARKETS FY2015 NET SALES: $1.2 BILLION Net sales: $702mm TECHNOLOGIES Net sales: $371mm Net sales: $91mm 25% ,5% — 70% 10% 3% 100% Resental w198 —opalr and } Powertigh pressure 3 Olle } Municipal spending 85% identi Driven primarily by new community development —_ t @ O
Slide 5: Mueller Water Products
Mu Water Products Leading provider of water infrastructure and flow control products and services in North America INVESTMENT HIGHLIGHTS @ Improved results driven by strong incremental operating leverage as end markets recover i Leveraging Mueller brand and relationships to expand intelligent water
Slide 6: Business Performance: Long-Term Targets
BUSINESS PERFORMANCE: LONG-TERM TARGETS I Mueller Co. growth of MI Mueller Technologies Hi Mueller Co. adjusted EBITDA margins of Mueller Technologies adjusted EBITDA margins of BB Anvil adjusted EBITDA margins in Ill Free cash flow greater than adjusted net income I Reducing working capital as a pe
Slide 7: Broad Product Portfolio
BROAD PRODUCT PORTFOLIO (Muelier Co.) aman (Mueller) TECHNOLOGIES Net Sales $702mm $371mm $91mm Adjusted Operating $145mm $31mm $(13)mm Income(Loss)\") Depreciation & Amortization $39mm $15mm $4mm $184mm $46mm $(9)mm_ Adjusted EBITDA” Cast Iron Fittings Metering Systems e Fire Hydrants ak Detection
Slide 8: Intelligent Water Technology
INTELLIGENT WATER TECHNOLOGY™ Water rete at Pap Sate oie, Manteskostction EME, Mueller Water Products manufactures and markets products and offers services used in the transmission, distribution and of safe, clean drinking water and in water treatment facilities. These products and services help uti
Slide 9: Water Infrastructure Landscape
WATER INFRASTRUCTURE LANDSCAPE GaN) 1 00S PORRGYaT ROAST PONRLST é é é é AY.McDonald e ACIPCO é ry DeZURIK é Ford Meter Box ry McWane ry ry ry
Slide 10: Strategy and Objectives
STRATEGY AND OBJECTIVES Capitalize on the large, attractive and growing water infrastructure markets worldwide Acquire and invest in businesses and technologies that expand our portfolio or Continue to enhance Operational and organizational Maintain leadership positions with customers and end users
Slide 11: Significant Market Opportunities
Significant Market ‘woh | Opportunities *
Slide 12: Market Driver: Household Formation
MARKET DRIVER: HOUSEHOLD FORMATION New household formation drives housing starts demand. Household formation is driven by population growth, job growth, higher wages and higher consumer confidence, among other factors. Employment Level - (25 to 34 Year Olds) Current Population Survey (CPS) Change in
Slide 13: Market Driver: Housing Starts
MARKET DRIVER: HOUSING STARTS Homebuilders’ confidence also drives housing starts. Confidence could be driven by improving job growth in a key demographic for household formation: Millennials NAHB Housing Market Index - National (1985 - September 2015) __Historical Housing Starts (1959 - September 2
Slide 14: The Market Opportunity Is Significant and Growing
THE MARKET OPPORTUNITY IS SIGNIFICANT AND GROWING REPAIR AND FUTURE DRINKING REPLACEMENT MARKET WATER INFRASTRUCTURE I Votes ane herons ae ypialy replaced at he same EXPENDITURE NEEDS” pe STORAGE I ASCE graded drinking water infrastructure a D'") $39.5B I Atleast 40 cities under consent decrees: Atl
Slide 15: Funding Water Infrastructure Repair
FUNDING WATER INFRASTRUCTURE REPAIR HISTORICAL WATER RATES COMPARED TO OTHER UTILITIES” CPI Utilities 450 ities (NSA 1982-1984 = 100) (1), Bureau of Labor Stati 2014 Sate Dioctone: U.S. Water ndusty ~ Back & Veatch (@) American Water Works Association 2014 Water and Wastewater Rate Survey (4) EPA le
Slide 16: Growth Opportunities: Smart Water
GROWTH OPPORTUNITIES: SMART WATER FACTORS AFFECTING MUNICIPAL WATER SYSTEMS erienci + Budget constraints itions(") g 26% of drought condi + Capital spending prioritization + 240,000 water main breaks per year®) Non-Revenue Water Customer Service Focus + Awareness/education + Up to 30% of treated wat
Slide 17: Mueller Technologies: Solutions for Today & Tomorrow
MUELLER TECHNOLOGIES: SOLUTIONS FOR TODAY & TOMORROW INTELLIGENT WATER TECHNOLOGY™ Smart Metering i | + AMR systems + AMI systems + Remote Disconnect Meter (RDM) + Leak detection + Consumer portal 420 ROM Mobile RDM Device ‘Mueller Systems __ National Operations Center - echologics 1 tomo cme Leak D
Slide 18: Anvil
ANVIL Leading domestic manufacturer of piping system components o I Significant FY2015 net sales I Domestically manufactured and —_‘MllTrack record of solid adjusted from #1 or #2 product domestically and internationally EBITDA margins positions sourced products I Customer service capabilities ill N
Slide 19: Anvil Key Markets
ANVIL KEY MARKETS Non-Residential Construction 85% 10% PowerlHigh 5% Pressure Mechanical, Industrial & Fire Protection Oil & Gas Production Power Need Development Mechanical and Industrial: Grooved, Iron/Steel Fittings, Staple Hangers, Pipe Nipples, Bull Plug: Fire Protection: O-Lets, Grooved Fittin
Slide 20: Market Driver: Non-Residential Construction
MARKET DRIVER: NON-RESIDENTIAL CONSTRUCTION The non-residential construction market is showing improvement Non-Residential Construction AlA Architectural Billing Index (Real $ in Billions) Diffusion Index (> 50 = expansion) $400 < $350 _ 38 si0 |B 8 a o 2s $250 aigeg are $200 $150 $100 $50 So | 30 E
Slide 21: Market Driver: Oil & Gas
MARKET DRIVER: OIL & GAS Sales to the oil & gas market represented about 10% of Anvil’s FY2015 net sales U.S. Land Based Rig Count Oil Price - WTI ($/bbl) 18 po AAT so A, Vo \* Wr \ of \ Vv Vv) s60 zs @ fk es BoB kB sgree so ‘Souroe: Baker Hughes Source: FactSet Data as of September 2015 Data as of
Slide 22: Actions & Business Results
Actions & Business Results
Slide 23: Management Actions / Initiatives
MANAGEMENT ACTIONS / INITIATIVES Reduce costs and improve Manage working capital and operating leverage capital expenditures to generate free cash flow I Divested U.S. Pipe Il Generated free cash flow of $50.3mm in F¥2015 and $110.7mm in 2014 a Digstea three non-core assets of invil IW Reduced debt
Slide 24: History of Strong Financial Performance
HISTORY OF STRONG FINANCIAL PERFORMANCE Net Sales ($ in millions) ‘echnologies in Adjusted EBITDA and Adjusted EBITDA Margin ($ in millions) Mueller Water Products|
Slide 25: Consolidated Q4 2015 Non-GAAP Results
CONSOLIDATED Q4 2015 NON-GAAP RESULTS @ Net sales grew at both Mueller Co. and Mueller Technologies, but were offset by lower 4Q FISCAL 2015 2014 shipments into the oil and gas market at Anvil as well as unfavorable impacts from changes Net sales $311.4 $320.7 in Canadian currency exchange rates ‘Ad
Slide 26: Debt Structure
DEBT STRUCTURE Net debt leverage of 2.0x and net debt of $375.9 million at September 30, 2015, down from a peak of more than 6x No significant required principal payments on outstanding debt before November 2021 No financial maintenance covenants with excess availability at the greater of $22.5 mill
Slide 27: Capital Allocation
CAPITAL ALLOCATION Acquisitions Debt reduction Share repurchases Growth opportunities , Dividends
Slide 28: Why Invest in MWA?
WHY INVEST IN MWA? Water industry has fundamentally strong Strong operating leverage as end markets long-term dynamics recover Il Driven by need for new and upgraded I Recovery of residential construction market infrastructure @ Increased municipal spending Il Limited number of suppliers to end mark
Slide 29: Supplemental Data
Slide 30: Segment Results and Reconciliation of GAAP to Non-GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 31: Segment Results and Reconciliation of GAAP to Non-GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 32: Segment Results and Reconciliation of GAAP to Non-GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES ($n millions, except per share amounts) Moca Mec Comte Tel ( Pt par ) eae
Slide 33: Segment Results and Reconciliation of GAAP to Non-GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin lion, except por share amounts) Sma “Mueller Co. “Anvil A Corporate ‘Total Beezxnur bd Techoslogics Tae Sapte ee aT smi sma sma s Ale ws * Ba 702
Slide 34: Questions
Questions
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