Mueller Water Products · NYSE:MWA
Mueller Water Products — Goldman Sachs Industrials Conference 2013
34 slides from Mueller Water Products's conference presentation, Nov 14, 2013
Slide 1: Where Intelligence Meets Infrastructure
(Mueller Water Products} Where Intelligence Meets Infrastructure® Goldman Sachs Industrials Conference 2013 November 14, 2013
Slide 2: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company reports its financial results under accounting GAAI Company presents adjusted operating income = oss), adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), aciusted te income (loss) per diluted share, free cash flow,
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Thi ments that may be deemed forward -looking Setemonne "ihn the meaning of the Private Securities Litigation Retom Act of 1995. All our expectations of operating leverage as our end mark: recover and the expected performance of our metering and leak detection prealice and
Slide 4: Our Business
OUR BUSINESS FY2013 PRIMARY END MARKETS @amn NET SALES $1.1B $1.1 billion LTM net sales (as of September 30, 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 Condi
Slide 5: Mueller Water Products
Mueller Water Products Leading North American provider of water infrastructure and flow control products and services INVESTMENT HIGHLIGHTS Improved results driven by strong incremental IB Leading brands in water infrastructure and one of operating leverage as end markets recover the largest install
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, Historical Roots $730mm, Net Sales $93mm Adjusted Operating Income") $45mm Depreciation & Amortization® $137mm, Adjusted EBITDA?) Fire Hydrants ioneee vale Metering System: Product and Services Portfolio Leak Detection and Pipe Gondton Assessment Butte
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 Non-Residential Construction Mechanical Industrial & 75% Fire Prot % 20 Oil & Gas Power/High 5% Power Need Pressure Development Mechanical: Grooved, KrowStee! Fitings, Staple langers, Pipe Nipples Bull Pugs Fire Protection: O- Grooved, Iron Pains ‘Slaple Hangers, Pipe Nipple: Hamme
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 Broaden breadth and depth of products and services Expand intern
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 Starts(1959 - August 2013) Hevesi ypelbobeyieaty ‘Year-Over-Year Changein Household Formation (12MMA) formations 1.2 milionperyear
Slide 15: Non-Residential Construction
NON-RESIDENTIAL CONSTRUCTION The non-residential construction market remains stable Ainarchitectural ling Index Non-Residential Construction (Real $in Billions) $400 ~ 3501, , oy te BH ox s300 72 B RB a a8 $250 SR 8 a g 2 $200 $150 $100 $50 so oaareae ‘ aR 88888898888 8 Source: KS Source: American n
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 EPAIR AND REPLACEMENT MARKET as pipes I ASCE graded drinking water infrastructure aD” I Atleast 40 cities under consent decrees: Atlanta, Washington, D.C. (WSSC), New Orleans Percentage of Replacement Sources (©) ASCE:2013 Report Card for America Inf
Slide 18: Funding Water Infrastructure Repair
3, 4 FUNDING WATER INFRASTRUCTURE REPAIR HISTORICAL WATER RATES COMPARED TO OTHER UTILITIES“ TOP THREE WATER INDUSTRY ISSUES IB State of water and sewer infrastructure I Lack of public understanding of the value of water I Capital costs and availability UTILITY COST OF SERVICE 80% of utility partici
Slide 19: Significant Growth Opportunities
SIGNIFICANT GROWTH OPPORTUNITIES Factors Affecting Municipal Water Systems. | Our Solutions | Share of Market® operational efficiencies Water Conservation . 26 states in drought condition 240,000 water main breaks yer year! Non-revenue water 30% of bie _ is lost or unaccounted for + 4.7 trillion alo
Slide 20: Opportunities: AMI/Smart Metering
OPPORTUNITIES: AMI/SMART METERING OPPORTUNITY SOLUTION END USER COMPETITORS Acquired Arkion jueller SYSTEMS = Systems in 200: American water SEnsuUS merged it with Hersey Meters in 2011 to form : Mueller Systems I Two-way mesh network Bentonville, AR NEPTUNE duced AMI I Enhanced AMI system Charlotte
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 tlw of $78.5 een 3 up from $45.4 mm in Il Divested two non-core assets of Fy20 Anvil in FY2010
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 ml Increased adjusted operating income eae fer year-over-year. Incr adjusted EBITDA 27% fourth quarter year: er-year. I Strong mix at Mueller Co. contributed to adjusted Speralng Income mprovemnane of }0% fourth quarter year-over-year and aausted operating margin improv
Slide 26: Debt Structure
DEBT STRUCTURE ‘bebe Maturity a 9/30/2013) I Net debt leverage of 3.0x at September 30, 2013 HE Net debt of $477.2 million at September 30, 2013 sx Debt maturities with no Siaicant required $0 principal payments before 2 0 0 sn I No financial maintenance covenants with excess 10 aveilaliy at the gre
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 Non-GAAP to GAAP
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES (Sin miions, except per share amounts)
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES (Sin mitions, except per share amounts)
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES (sin a
Slide 33: Segment Results and Reconciliation of Non-GAAP to GAAP
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES (Sin milous, excep per share amounts)
Slide 34: Questions
Questions
Mueller Water Products — Goldman Sachs Industrials Conference 2013 on 6ix