Mueller Water Products · NYSE:MWA
Mueller Water Products — BB&T Capital Markets Investor Conference 2011
36 slides from Mueller Water Products's conference presentation, Aug 10, 2011
Slide 1: BB&T Capital Markets Investor Conference
Exhibit 99.1 BB&T Capital Markets Investor Conference August 10, 2011 1
Slide 2: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures The Company presents adjusted income (loss) from operations, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted net income (loss) per share, free cash flow and net debt as non-GAAP measures.
Slide 3: Safe Harbor Statement
Safe Harbor Statement Safe Harbor Statement 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 we intend, expect,
Slide 4: Investment Highlights
Investment Highlights Leading North American provider of water infrastructure and flow control products and services Increasing investment needed in water infrastructure industry One of the largest installed bases in the U.S. Leading brands in water infrastructure Leveraging brands to expand intelli
Slide 5: Our Business
Our Business • $1.3B LTM net sales (as of June 30, 2011) FY2010 Primary End Markets (2) • Portfolio includes: Net Sales $1.3B • Fire hydrants • Valves • Pipe fittings • Ductile iron pipe • Metering systems • Leak detection • Specified in 100 largest U.S. metropolitan markets (1) • More than 75% of F
Slide 6: Broad Product Portfolio
Broad Product Portfolio ($ in millions) HISTORICAL ROOTS Est. 1857 Est. 1899 Est. 1999 (1850) SEGMENT NET SALES $608 $352 $352 ADJUSTED OPERATING INCOME (LOSS)(1) $69 ($46) $31 DEPRECIATION AND $19 $15 AMORTIZATION(2) $48 (1) (2) ADJUSTED EBITDA $117 ($27) $45 Ductile Iron Restrained Pipe Hydrants I
Slide 7: Complete Water Transmission Solutions
Complete Water Transmission Solutions Mueller Water Products manufactures and markets products and services that are used in the transmission, distribution and monitoring of safe, clean drinking water and in water treatment facilities. 7
Slide 8: * Company estimates based on internal analysis and information from trade associations and our
* Company estimates based on internal analysis and information from trade associations and our distributor networks, where available. 8
Slide 9: Strategy And Objectives
Strategy And Objectives Maintain leadership positions with customers and end users Continue to enhance operational Capitalize on the large, and organizational excellence attractive and growing water infrastructure markets worldwide Broaden breadth and depth of products and services Expand internatio
Slide 10: Strategic Initiatives
Strategic Initiatives Maintain leadership positions with customers and end users • Leveraging the Mueller brand • Leveraging distribution network • Developing value-added products • Improving customer service levels and services Continue to enhance operational and organizational excellence • Strengt
Slide 11: Our End Markets
Our End Markets 11
Slide 12: Primary End Markets: 2006-2010
Primary End Markets: 2006-2010 Since 2006, our exposure to the residential construction market has declined from roughly 40% to 5%. Source: Management estimates * Residential construction is driven primarily by new community development 12
Slide 13: Historical Housing Starts
Historical Housing Starts 13
Slide 14: Non-Residential Construction
Non-Residential Construction Non-Residential Construction Actual / Forecast Architecture Billings Index Trends Source: IHS Global Insight Data as of July 21, 2011 Data as of July 20, 2011 We continue to see signs that the non-residential market has stabilized 14
Slide 15: Significant Market Opportunities
Significant Market Opportunities 15
Slide 16: Opportunity: Aging Water Infrastructure
Opportunity: Aging Water Infrastructure “America’s drinking water systems face an annual shortfall of at least $11 billion to replace aging facilities that are near the end of their useful lives and to comply with existing and future federal water regulations. This does not account for growth in the
Slide 17: The Market Opportunity Is Significant And Growing
The Market Opportunity Is Significant And Growing Future Drinking Water Repair and Replacement Market Infrastructure Expenditure Needs(6) • Aging water pipes need to be repaired/ replaced • Valves and hydrants typically replaced at same time as pipes • More than 36 states project water shortages bet
Slide 18: Aging Water Infrastructure
AgingWater Infrastructure Accelerating Need Average life of 100 year and 75 year old pipe is converging, contributing to accelerating need for pipe replacement. (1) The EPA Clean Water and Drinking Water Infrastructure Gap Analysis 2002 18
Slide 19: Increasing Federal Awareness of Funding Needs
Increasing Federal Awareness of Funding Needs Stronger EPA regulations should lead to increased investment • At least 40 cities under consent decrees — Atlanta $4.0B “New Jersey can maintain — Washington, D.C. $2.6B a viable economy with a — Baltimore City and county $1.7B sound environment only if
Slide 20: Funding Water Infrastructure Repair
Funding Water Infrastructure Repair Historical Water Sources of Funding Rates Compared to Water Infrastructure Other Utilities (1) Repair (2) Long-term trends in consumer prices (CPI) for utilities (1913-2010) Rate Increases 10% Other 15% Operational Savings Bonds 47% 9% Loans Grants 16% 3% From 200
Slide 21: Opportunities: Smart Metering and Pipe Condition Assessment
Opportunities: Smart Metering and Pipe Condition Assessment Smart Metering • AdvancedMetering Infrastructure 20%of market - $200 million today* • Two-way mesh network • Forecasted to grow an average of 20% per year • Enhanced AMI System through 2015* • Mi.Hydrant • Mi.Data • Transition from one-way
Slide 22: Actions & Business Results
Actions & Business Results 22
Slide 23: Management Actions/Initiatives
Management Actions/Initiatives Objectives Actions Reduce costs and improve • Closed six plants since FY2006 operating leverage • Sold two non-core assets of Anvil • Reduced headcount by about 23% from September 30, 2008 to June 30, 2011 from approximately 6,300 to approximately 4,800 • Took actions
Slide 24: History of Strong Financial Performance
History of Strong Financial Performance (see appendices for GAAP reconciliation) (a) (b) (c) ($ in millions) $804 $756 $718 $664 $618 $613 $598 $595 $595 $536 $547 $551 $537 $546 $535 $556 $509 $492 $465 $485 $470 NET SALES $411 $431 $378 $393 $387 $347 2002 2003 2004 2005 2006 2007 2008 2009 2010 2
Slide 25: Consolidated Non-GAAP Results
Consolidated Non-GAAP Results Third Quarter Fiscal $ in millions (except per share amounts) 2011 2010 Net sales $366.7 $375.9 Adj. income from operations $15.6 $13.4 Adj. operating margin 4.3% 3.6% Adj. net income (loss) per share $0.00 ($0.01) Adj. EBITDA $35.9 $34.5 Adj. EBITDA margin 9.8% 9.2% •
Slide 26: Debt Structure
Debt Structure • FY 2010 recapitalization provided a long-term capital structure • Extended maturities with no significant required principal payments before 2015 • Locked in long-term capital at attractive rates • Preserved deleveraging capability • Expect greater operational flexibility • Eliminat
Slide 27: Key Financial Metrics
Key Financial Metrics Free Cash Flow Total Debt ($ in millions) ($ in millions) $73 million free cash flow average over last five years Debt has declined $857 million from 2006 $140 $1,800 $1,549 $115 $1,600 $120 $1,400 $100 $94 $91 $1,200 $1,127 $1,101 $1,096 $80 $1,000 $800 $740 $692 $60 $37 $600
Slide 28: Why Invest in MWA?
Why Invest in MWA? Water industry has fundamentally strong long-term dynamics • Driven by new and upgraded infrastructure • Limited number of suppliers to end markets Strong competitive position • Leading brand positions with large installed base • Leading municipal specification positions • Compreh
Slide 29: Supplemental Data
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Slide 30: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (in millions, except per share amounts) Three months ended June 30, 2011 Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 165.8 $ 107.1 $ 93.8 $ - $ 366.7 Gross profit (loss) $ 46.7 $ (2.8) $ 26.6 $ (0.2
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (in millions, except per share amounts) Three months ended June 30, 2010 Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 174.6 $ 120.2 $ 81.1 $ - $ 375.9 Gross profit (loss) $ 52.1 $ (2.7) $ 21.1 $ 0.1
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (in millions, except per share amounts) Nine months ended June 30, 2011 Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 444.5 $ 257.3 $ 263.8 $ - $ 965.6 Gross profit (loss) $ 109.7 $ (13.3) $ 73.4 $ 0.
Slide 33: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (in millions, except per share amounts) Nine months ended June 30, 2010 Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 449.1 $ 282.9 $ 258.8 $ - $ 990.8 Gross profit (loss) $ 121.2 $ (19.6) $ 63.0 $ 0.
Slide 34: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (in millions, except per share amounts) Year ended September 30, 2010 Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 612.8 $ 377.8 $ 346.9 $ - $ 1,337.5 Gross profit (loss) $ 170.3 $ (22.7) $ 88.8 $ -
Slide 35: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (in millions, except per share amounts) Year ended September 30, 2009 Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 547.1 $ 410.9 $ 469.9 $ - $ 1,427.9 Gross profit (loss) $ 134.3 $ (5.7) $ 128.2 $ 0.
Slide 36: Questions
(Mueller Water Products|
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