Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (September 2023)
35 slides from Mueller Water Products's investor presentation, Sep 12, 2023
Slide 1: Where Intelligence Meets Infrastructure® Investor Presentation September 2023
Where Intelligence Meets Infrastructure® Investor Presentation September 2023
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: Company overview and key facts
4 (1) 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 FY2022 information and estimates. (3) Water Flow Solutions includes iron gate valves, specialty valves an
Slide 5: Key strengths and market dynamics
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 Confident growth strategies, capital investments and operational initiatives will enable us to deliver further sales and adjusted EBITDA growth Where Intelligence Meets Infrastructure® Mueller is committed to manufacturing inn
Slide 7: ESG Is Core to What We Do
7 ESG Is Core to What We Do Released in May, our 2022 ESG Report demonstrates progress against our key targets and shows our continued commitment to report transparently and in line with leading frameworks. 2022 ESG Report Highlights 51% Reduction in Scope 1 and Scope 2 emissions intensity against a
Slide 8: Products and Markets
Products and Markets
Slide 9: Leading Product Positions in Key Product Categories
9 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) Consolidated net sales Information for geography, segments, products and end markets based on FY2022 infor
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 Total Addressable Market for Water & Wastewater Utilities, June 2023. (2) Bluefield Research 2019, U.S. Private Water Utilities Report. (3) RAND Corporation 2017 Report titled “Not Everything is Broken.” (4) American Water Works
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 percentage 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 accoun
Slide 18: Financial Performance
Financial Performance
Slide 19: Q3 FY2023 Consolidated Results
19 Q3 FY2023 Consolidated Results (1,2) (1) Provided with Q3FY23 earnings press release and presentation on August 3 & 4, 2023. (2) See Appendix for reconciliation of non-GAAP measures to their corresponding GAAP measures. • Decrease primarily due to lower volumes at Water Flow Solutions partially o
Slide 20: Full-Year Fiscal 2023 Outlook
20 Full-Year Fiscal 2023 Outlook* • Revising our annual guidance based on current expectations for channel inventory normalization, anticipated brass production levels and project order rates • Anticipate double-digit year-over-year decrease in volumes • Short-cycle backlog close to normalized, exce
Slide 21: Strong Balance Sheet and Liquidity
21 Strong Balance Sheet and Liquidity • Moody’s: Ba1 Corporate Rating, Ba1 Notes Rating, Stable Outlook • S&P: BB Corporate and Notes Ratings, Stable OutlookCredit Rating Debt Structure Debt Maturities Financial Covenants • $450M of 4.0% Senior Notes (mature June 2029) • Asset based lending agreemen
Slide 22: Balanced and Disciplined Capital Allocation
22 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 23: Investment Highlights
23 Investment Highlights LONG-TERM END MARKET DYNAMICS SUPPORTED BY ACCELERATION OF CHALLENGES FACING WATER INFRASTRUCTURE ACCELERATING PRODUCT DEVELOPMENT AND LEVERAGING STRENGTHS TO INCREASE TECHNOLOGY-ENABLED PRODUCTS MODERNIZING MANUFACTURING AND DRIVING OPERATIONAL EXCELLENCE TO DELIVER GROSS M
Slide 24: Supplemental Data
Supplemental Data
Slide 25: Historical Financial Performance
25 Historical Financial Performance • Over last five years, delivered net sales and adjusted EBITDA CAGRs of 8.6% and 3.5%, respectively • Prior to pandemic, delivered net sales and adjusted EBITDA CAGRs of 6.5% and 8.3%, respectively $801 $826 $916 $968 $964 $1,111 $1,247 $0 $200 $400 $600 $800 $1,
Slide 26: Free Cash Flow
26 (1) Average Net Working Capital defined as the average of Net Receivables + Net Inventories – Accounts Payable for last 5 quarters. Free Cash Flow • Increased net cash provided by operating activities for YTD Q3 FY2023 by $32.0M to $52.5M compared with prior-year period − Increase driven by impro
Slide 27: Strong Balance Sheet with Significant Flexibility
27 Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1B since March 31, 2006 and $650M since September 30, 2008 • Total debt of $447.5M and total cash of $141.2M leading to net debt leverage of 1.7x at June 30, 2023 • $303.5M of total liquidity including $162.3M of excess availa
Slide 28: Segment Results and Reconciliation: Three months ended June 30, 2023
28 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Three months ended June 30, 2023 Water Flow Solutions Water Management Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 150.1 $ 176.5 $ — $ 326.6 Gross profit $ 33.6
Slide 29: Segment Results and Reconciliation: Three months ended June 30, 2023 (EBITDA)
29 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Three months ended June 30, 2023 Water Flow Solutions Water Management Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 24.5 Income tax expense (2) 6.4 Interest exp
Slide 30: Segment Results and Reconciliation: Three months ended June 30, 2022
30 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Three months 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
Slide 31: Segment Results and Reconciliation: Three months ended June 30, 2022 (EBITDA)
31 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Three months 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 (3) 7.1 Interest exp
Slide 32: Segment Results and Reconciliation: Nine months ended June 30, 2023
32 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) Strategic reorganization and Strategic reorganization and other charges (benefits) includes severance and certain transaction-related expenses partially offset by a gain on the sale of our facility in Auro
Slide 33: Segment Results and Reconciliation: Nine months ended June 30, 2023 (EBITDA)
33 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Nine months ended June 30, 2023 Water Flow Solutions Water Management Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 68.3 Income tax expense (2) 20.0 Interest exp
Slide 34: Segment Results and Reconciliation: Nine months ended June 30, 2022
34 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) Strategic reorganization and other charges includes expenses associated with the Albertville tragedy and restructuring activities. (2) The Company recorded a charge of $4.5 million in connection with its w
Slide 35: Segment Results and Reconciliation: Nine months ended June 30, 2022 (EBITDA)
35 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) (1) Strategic reorganization and other charges includes expenses associated with the Albertville tragedy and restructuring activities. (2) The Company recorded a charge of $4.5 million in connection with its w
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