Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (November 2022)
35 slides from Mueller Water Products's investor presentation, November 2022
Slide 1: Where Intelligence Meets Infrastructure - Investor Presentation
Where Intelligence Meets Infrastructure® Investor Presentation November & December 2022
Slide 2: NON-GAAP Financial Measures
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 inve
Slide 3: Forward-Looking Statements
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 a
Slide 4: Mueller Water Products at a Glance
Mueller Water Products at a Glance History Highlights (1) Geography (2) Segments (2,3) (% of Consolidated Net Sales) (% of Consolidated Net Sales) • Founded more than 165 years ago $1.25B $194.5M Net Sales Adjusted EBITDA • Spun off from Walter (FY2022) (FY2022) United States Water Flow Solutions Wa
Slide 5: Investment Highlights
Investment Highlights STRONG COMPETITIVE POSITION WITH • Leading brand and municipal market specification positions with large installed base • Comprehensive distribution network and strong end-user relationships with end-markets BROAD PORTFOLIO OF PRODUCTS AND served by limited number of suppliers
Slide 6: Focused on Executing Strategic Initiatives to Grow and Enhance Business
Focused on Executing Strategic Initiatives to Grow and Enhance Business Including New Management Structure and ESG Goals Confident growth strategies, capital investments and operational initiatives will enable us to deliver further sales and adjusted EBITDA growth Where Intelligence Meets Infrastruc
Slide 7: Commitment to Becoming a Sustainability Leader in Our Industry
Commitment to Becoming a Sustainability Leader in Our Industry Our Board and management teams are committed to continuously improving our ESG strategies with our stakeholders’ priorities in mind, including transparent reporting of our risks, opportunities and performance Our Actions Key Initiatives
Slide 8: Products and Markets
Products and Markets
Slide 9: Strong Position in Broader Water Market
Strong Position in Broader Water Market Leading Product Positions in Key Product Categories (1) Water-Related Revenue as a % of Total Revenue (2) With over 160 years in the water utility market, Mueller Mueller Water Products is a water-focused company with Water Products has a large installed base
Slide 10: Mueller is Uniquely Positioned to Address Opportunities with Utilities
Mueller is Uniquely Positioned to Address Opportunities with Utilities with its Leading Infrastructure Products and Installed Base 10
Slide 11: Water Utilities Are Facing Many Challenges
Water Utilities Are Facing Many Challenges Implications for Utilities Implications for Mueller • Unrealistic for U.S. water utilities and • Municipal repair and replacement local governments to bridge the gap remains a tailwind Aging between their current capital spending Infrastructure • More detai
Slide 12: U.S. Water Infrastructure Requires Substantial Long-term Investment
U.S. Water Infrastructure Requires Substantial Long-term Investment Repair & Replacement Market U.S. Water Infrastructure CAPEX and Investment Gap • Restoring existing water systems and expanding them to serve a growing • Spending on Water & Wastewater CAPEX in U.S. is >$50B (4) population through 2
Slide 13: Aging Infrastructure Increasing Water Main Breaks
Aging Infrastructure Increasing Water Main Breaks Aging of Pipe Infrastructure Water Main Break Rates Increasing (4) • Average age of water pipes has increased to 45 years in 2020 from 25 years • According to a study by Steven Folkman at Utah State University in 1970 (1) that surveyed nearly 200,000
Slide 14: Funding Water Utilities Infrastructure Repair
Funding Water Utilities Infrastructure Repair Water Utilities in North America Sources of Funding for U.S. Utilities • >50,000 water utilities and >14,000 wastewater utilities in U.S. • For U.S. utilities, 96% funded at state and local government level (3) and Canada (1) − Majority of utilities have
Slide 15: Need for Digital Water Solutions Expected to Accelerate
Need for Digital Water Solutions Expected to Accelerate Aging Infrastructure and Non-Revenue Water “Bluefield • Average age of water pipes has increased to 45 years in 2020 from 25 years in 1970 (2) projects that • 240,000 water main breaks per year with 27% increase in break rates since 2012 (3,4)
Slide 16: Broad-line of Connected Products that Close the Loop
Broad-line of Connected Products that “Close the Loop” with Water Network Administrators & Assets 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,
Slide 17: Large Capital Projects
Large Capital Projects • 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 account for total capital spending around $150M and expected to drive app
Slide 18: Financial Performance
Financial Performance
Slide 19: Q4 2022 Consolidated Results
Q4 2022 Consolidated Results (1,2) Net Sales ($M) Gross Profit ($M) Adj. EBITDA ($M) Adj. Net Income per share % of Net Sales % of Net Sales +12.1% y/y -0.8% y/y -15.4% y/y -16.7% y/y -340 bps -380 bps $331.4 $45.6 $295.6 $86.3 $85.6 $0.12 $38.6 15.4% $0.10 29.2% 25.8% 11.6% Q4 FY2021 Q4 FY2022 Q4 F
Slide 20: Full-Year 2023 Outlook
Full-Year 2023 Outlook* • Consolidated net sales increase between 6% and 8% − Record backlog at end of 2022 across our short-cycle products − Expected realization from higher pricing position us to deliver net sales growth in 2023 − Slowdown in order activity in October; however, isn’t surprising gi
Slide 21: Free Cash Flow
Free Cash Flow • Net cash provided by operating activities for FY2022 was $52.3M compared with $156.7M in prior year • Decrease primarily due to an increase in inventories primarily $170.0 $156.7 driven by higher volumes and the supply chain disruptions, $150.0 as well as inflation $130.0 $62.7 − In
Slide 22: Balance Sheet and Liquidity
Balance Sheet and Liquidity Continue to have ample liquidity and capacity to support our strategic priorities, including acquisitions • Moody’s: Ba1 Corporate Rating, Ba1 Notes Rating, Stable Outlook Debt Maturities Credit Rating • S&P: BB Corporate and Notes Ratings, Stable Outlook • $450M of 4.0%
Slide 23: Balanced and Disciplined Capital Allocation
Balanced and Disciplined Capital Allocation Capital Allocation Priorities Cash Allocation Over Past 5 Years (FY17 – FY22) • Strong balance sheet, liquidity and cash flow supporting our strategies $256M to Shareholders • Maintaining balanced approach to capital - $166M dividends - $90M share repurcha
Slide 24: Investment Highlights
Investment Highlights STRONG COMPETITIVE POSITION WITH BROAD PORTFOLIO OF PRODUCTS AND SOLUTIONS UNIQUELY POSITIONED LONG-TERM END MARKET DYNAMICS DRIVEN BY CHALLENGES FACING WATER INFRASTRUCTURE MODERNIZING MANUFACTURING AND DRIVING OPERATIONAL EXCELLENCE TO DELIVER MARGIN EXPANSION LEVERAGING STRE
Slide 25: Supplemental Data
Supplemental Data
Slide 26: Historical Financial Performance
Historical Financial Performance • Over last five years (FY17 - FY22), delivered net sales and adjusted EBITDA CAGRs of 8.6% and 3.5%, respectively • Prior to pandemic (FY16 – FY19), delivered net sales and adjusted EBITDA CAGRs of 6.5% and 8.3%, respectively Consolidated Net Sales Consolidated Adju
Slide 27: Strong Balance Sheet with Significant Flexibility
Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1B since March 31, 2006 and $650M since September 30, 2008 • Total debt of $446.9M and total cash of $146.5M leading to net debt leverage of 1.5x at Sep. 30, 2022 • $307.2M of total liquidity including $160.7M of excess availabil
Slide 28: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 179.4 $ 152.0 $ — $ 331.4 Gross profit $ 42.5 $
Slide 29: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 7.1 Income tax expense (2) 1.6 Interest expense
Slide 30: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2021 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 164.9 $ 130.7 $ — $ 295.6 Gross profit $ 50.4 $
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2021 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 18.4 Income tax expense (2) 5.9 Interest expens
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 714.1 $ 533.3 $ — $ 1,247.4 Gross profit $ 212.4 $
Slide 33: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 76.6 Income tax expense (3) 22.0 Interest expense,
Slide 34: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2021 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 617.8 $ 493.2 $ — $ 1,111.0 Gross profit (2) $
Slide 35: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2021 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 70.4 Income tax benefit (5) 24.5 Interest expense,
Mueller Water Products — Investor Presentation (November 2022) on 6ix