Mueller Water Products · NYSE:MWA
Mueller Water Products — Gabelli & Co. 22nd Annual Pump, Valve & Motor Symposium (February 2012)
33 slides from Mueller Water Products's conference presentation, Feb 8, 2012
Slide 1: Gabelli & Co. 22nd Annual Pump, Valve & Motor Symposium
Gabelli & Co. 22™4 Annual Pump, Valve & Motor Symposium February 9, 2012
Slide 2: 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), a iu justed net income (loss) per share, free cash flow and net debt as non-GAAP measures. Adjusted income (loss) fr
Slide 3: Safe Harbor Statement
Safe Harbor Statement “eK d. ir basal the meaning, 1d tiviti ts OF of. Private ies Litigatic that we intend, expect, plan, project, believe, or anticipate will or may occur in the future are fonvard: statements. Examples of forward Hooking statements include, but are not limited to, Statements we ma
Slide 4: Mueller Water Products
Mueller Water Products Leading North American provider of water ihe and flow control products and services WE 4 Increasing investment needed in water infrastructure industry Leading brands in water infrastructure and one of the largest installed bases in the U.S. Leveraging brands to expand intellig
Slide 5: Water Products: Our Business
Water Products Our Business $1.48 LTM net sales (as of December 31, 2011) FY2011 Primary End arkets © les $1.3B Portfolio includes: + Fire hydrants + Valves = Pipe fittings + Ductile iron pipe + Metering systems + Leak detection metropolitan markets(?) Specified in 100 largest U. More than 75% of FY
Slide 6: Broad Product Portfolio
Broad Product Portfolio Mueller Co. ($ in millions) HISTORICAL ROOTS: Est. 1857 Est. 1899 Est. 1999 (1850) INCOME (LOSS) (?) DEPRECIATION AND AMORTIZATION (2) $47 * cm sa a Od $18 $14 Cast ron Fittings & PRODUCT Fittings Couplings PORTFOLIO Hangers & Systems Join Restraints Joint Fitings Fipe Nippte
Slide 7: Complete Water Transmission Solutions
Complete Water Transmission Solutions ware Ay Pump Sation Mueller Water Products manufactures and markets products and services that are used in the transmission, distribution and measurement of safe, clean drinking water and in water treatment facilities. Wats dsdape terme hs yam erates,
Slide 8: Mueller Water Products brands and market positions
eller Water Products © ak BUTTERFLY AND — BRASS WATER FIRE HYDRANTS — GATE VALVES BALL VALVES PRODUCTS DUCTILE IRON PIPE 1 1 #20 #i : _ a @ C= i ACIPCO @ @ ~) A.Y. McDonald tT) DeZURIK r) Ford Meter Box r) Griffin Pipe rT) MeWane r) e e e
Slide 9: Strategy And Objectives
Strategy And Objectives Maintain leadership positions with customers and end users | Continue to enhance operational r and organizational excellence water infrastructure markets worldwide Broaden breadth and depth of a! products and services Expand internationally
Slide 10: Strategic Initiatives
Strategic Initiatives Maintain leadership positions with customers and end users . cecal the Mueller brand + Leveraging distribution network . it service levels “aed saees Continue to enhance operational and organizational excellence + Strengthened balance sheet + Consolidated plants + Implemented L
Slide 11: Mueller Water Products
e Mueller Water Products) |i
Slide 12: Primary End Markets: 2006-2011
Primary End Markets: 2006-2011 FY 2006 FY 2011 Net Sales: $1.9B Net Sales: $1.3B Repair and repla nt f of municipal w water Nonresidential Residential Residential Construction* 5% Since 2006, our exposure to the residential construction market has declined from roughly 40% to 5%. Source: Management
Slide 13: Historical Housing Starts
eee Historical Housing 5 Starts Seasonally Adjusted Annualized (unis in thousands) uo ¥ Ysa ly wee ‘App12009 Low st starts (477 nce Consus Burau bogan ooping records in 1958, 500 a eee SEOSSREEEESEESEREERESED: us Bureau 2
Slide 14: Non-Residential Construction
eller Water Products Non-Residential Construction Non-Residential Construction Actual / Forecast AIA it Billings Index (Diffusion Index, national billings, seasonally adjusted) Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 “EEEEEELELERETEREERER REE EY cane Erex, Zann 8 Aston a Source: HS Global Isght at
Slide 15: Significant Market Opportunities
e Mueller Water Products) |i Significant Market Opportunities
Slide 16: The Market Opportunity Is Significant And Growing
jueller Water Products: The Market Opportunity Is Significant And Growing Repair and Replacement Market Future Drinking Water i (5) Aging water pipes need to be repaired/replaced IGirES EM eeAiTie EA pe taibAi INS ads Valves and hydrants typically replaced at same time as pipes ASCE graded drinking
Slide 17: Aging Water Infrastructure
jueller Water Products: Aging Water Infrastructure | 4 ‘Need Percentage of Replacement Percentage of Inventory a a 1890 1910 1930 1950 19701990 Year Installed 1870 Figure 2-10: Age Disibtion of Current Inventory of Pipe for 20 Gites Figure 2-11: Pr ‘Maing 2000-2075 Average life of 100 year and 75 ye
Slide 18: Funding Water Infrastructure
eller Water Products Funding Water Infrastructure Stronger EPA regulations should lead to increased investment + At least 40 cities under consent decrees — Atlanta $4.0B — Washington, D.C. $2.6B — Baltimore City and county $1.7B — Kansas City $2.5B — Cincinnati $1.5B Federal Budget + 2012 federal bu
Slide 19: Historical Water Utility Rates and Sources of Capital
Historical Water Utility-Expected Rates Compared to Sources of Capital for Other Utilities () 2011 2 Tap Fees 11% Operations 23% Grants Other a a 90% funded at local level!) From 2007-2009, average annual residential water rates increased about 10% 4) 63% of American voters willing to pay more to up
Slide 20: Opportunities: Smart Metering and Pipe Condition Assessment
Opportunities: Smart Metering and Pipe Condition Assessment ( ) RBM CUSTOMERS [Mf COMPETITORS Smart Meterin: Charlotte County, FL ing + Advanced Metering Infrastructure Febanon 20% of market -$200 million today*__ + ‘Two-way mesh network Wincton NN Ne NEPTUNE : rorecosed to grow an average of + Enha
Slide 21: Actions & Business Results
Actions & Business Results
Slide 22: Management Actions/Initiatives
Management Actions/Initiatives f Objectives Actions } Reduce costs and improve operating leverage + Closed six plants since FY2006 Id two non-core assets of Anvil in FY2010 by about 4, * 2011 from approximately 6,300 to approximately 4,800 + Took actions to lower labor costs . Inotemented Lean Si im
Slide 23: History of Strong Financial Performance
Mueller Water Products History of Strong Financial Performance (see appendices for GAAP reconciliation) (sin mtn) NET SALES ‘ADJUSTED EBITDA rs ‘ADS. EBITDA MARGIN
Slide 24: Consolidated Non-GAAP Results
Water Products Consolidated Non-GAAP Results First Quarter Fiscal $ in millions (except per share amounts) 2012 2011 Net sales $311.5 $287.6 Adj. loss from operations ($1.6) ($2.4) Adj. operating margin (0.5%) (0.8%) Adj. net loss per share ($0.07) ($0.06) Adj. EBITDA $17.8 $17.7 ‘Adj. EBITDA margin
Slide 25: Debt Structure
Debt Structure FY 2010 recapitalization provided a long-term Debt Maturity capital structure (nmi) 80 $20 + Extended maturities with no sienificane required *“” principal payments before 2015 0 + Locked in long-term capital at attractive rates + Preserved deleveraging capability + Greater operationa
Slide 26: Key Financial Metrics
Water Products Key Financial Metrics Free Cash Flow {sirminow| Total Debt (Siemens) BI $63 million free cash flow average over last six years _ ss Capital Expensitures ‘semitone ‘100 + ry207 resus ocd $8 mon of abt recing action
Slide 27: Why Invest in MWA?
Why Invest in MWA? Water industry has fundamentally strong long-term dynamics, © Driven by need for new and upgraded infrastructure ‘* Limited number of suppliers to end markets Strong competitive position © Leading brand positions with large installed base * Leading municipal specification position
Slide 28: Supplemental Data
Supplemental Data
Slide 29: Segment Results and Reconciliation of Non-GAAP to GAAP
Mueller Water Products Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures in millions, except per share amounts) “Trae mu ended Deere 2001 More US ie And Compe
Slide 30: Segment Results and Reconciliation of Non-GAAP to GAAP
Mueller Water Products Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures in millions, except per share amounts) ne thc eee 1200 " 7 TS Tie Coppice Net nd of psa: ‘Gare pt fog tem det meer “alae Lega copes
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP
Mueller Water Products Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures inmillions, except per share amounts) narrate "Adj o ) fomoprsnr and EBITDA: Inmet) om opens Reancaety ‘testo by opr ces Copttepetnaes Fre cae Next of ps
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP
Mueller Water Products Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures inmillions, except per share amounts) ar se su se so sms somos ws sw 5 40
Slide 33: Questions
e Mueller Water Products) |i Questions