Mueller Water Products · NYSE:MWA
Mueller Water Products — Q3 2023 Earnings Presentation
25 slides from Mueller Water Products's earnings presentation, Aug 4, 2023
Slide 1: Where Intelligence Meets Infrastructure - Earnings Conference Call
Where Intelligence Meets Infrastructure® Earnings Conference Call 2023 Third Quarter Ended June 30, 2023 August 4, 2023 These slides are not intended to be a stand-alone presentation, but are for use in conjunction with the earnings call
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: Third Quarter Highlights
Third Quarter Highlights • Q3 results below expectations with both consolidated net sales and adjusted EBITDA below prior year − Experienced sequential decrease in orders during the quarter and continued manufacturing inefficiencies primarily associated with the decrease in volumes and ramp-up of ou
Slide 5: Consolidated GAAP Results
Consolidated GAAP Results Gross Profit ($M) SG&A ($M) Operating Income ($M) Net Sales ($M) % of Net Sales % of Net Sales % of Net Sales +1.8% y/y -0.3% y/y -3.5% y/y -2.0% y/y +110 bps. -40 bps. -20 bps. $333.2 $326.6 $36.9 $100.1 $60.8 $60.6 $35.6 $98.3 18.2% 18.6% 11.1% 10.9% 29.5% 30.6% Q3 FY2022
Slide 6: Consolidated Non-GAAP Results
Consolidated Non-GAAP Results (1) Adj. Operating Income ($M) Adj. EBITDA ($M) Adj. Net Income per Diluted Share % of Net Sales % of Net Sales -6.0% y/y -5.9% y/y -5.3% y/y -50 bps. -60 bps. $42.0 $39.5 $57.8 $54.4 $0.19 12.6% 12.1% $0.18 17.3% 16.7% Q3 FY2022 Q3 FY2023 Q3 FY2022 Q3 FY2023 Q3 FY2022
Slide 7: Water Flow Solutions Segment Results
Water Flow Solutions Segment Results Adj. Operating Income ($M) (1) Adj. EBITDA ($M) (1) Net Sales ($M) % of Net Sales % of Net Sales -66.7% y/y -54.3% y/y -23.4% y/y -1,090 bps. -940 bps. $45.7 $38.1 $195.9 23.3% $150.1 19.4% $20.9 $12.7 13.9% 8.5% Q3 FY2022 Q3 FY2023 Q3 FY2022 Q3 FY2023 Q3 FY2022
Slide 8: Water Management Solutions Segment Results
Water Management Solutions Segment Results Adj. Operating Income ($M) (1) Adj. EBITDA ($M) (1) Net Sales ($M) % of Net Sales % of Net Sales +142.4% y/y +100.8% y/y +28.6% y/y +1,070 bps. +970 bps. $47.6 $176.5 $40.0 $137.3 22.7% 27.0% $23.7 $16.5 17.3% 12.0% Q3 FY2022 Q3 FY2023 Q3 FY2022 Q3 FY2023 Q
Slide 9: Free Cash Flow
Free Cash Flow • Increased net cash provided by operating activities for YTD Q3 FY2023 by $32.0M to $52.5M compared $60.0 $52.5 with prior-year period $50.0 − Increase driven by improvements in working capital in Q3 $40.0 − Inventories decreased sequentially in Q3 to $312.7M, which is $61.8M, or 24.
Slide 10: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity Ample 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 $500 • $450M of 4.0% Senior Notes (matur
Slide 11: Key Updates: Third Quarter Performance, End Markets and Full-Year 2023 Outlook
Key Updates: Third Quarter Performance, End Markets and Full-Year 2023 Outlook
Slide 12: Third Quarter Performance
Third Quarter Performance • Seeing lower order rates for most of short-cycle products leading to a more prolonged inventory correction than previously anticipated − Lead times returning to pre-pandemic levels and end markets continuing to adjust to higher interest rates − Short-cycle backlog startin
Slide 13: End Markets
End Markets • New Residential Construction − Continues to provide headwinds and drive uncertainty for our channel partners and their customers though the seasonally adjusted annual rate for total housing starts was around 1.4M − Total housing starts down 11% y/y during Q3 driven by 14% y/y decrease
Slide 14: Full-Year Fiscal 2023 Outlook
Full-Year Fiscal 2023 Outlook* • Revising our annual guidance based on current expectations for channel inventory normalization, Full-Year FY2023 Outlook Metrics* anticipated brass production levels and project order rates Consolidated Net Sales y/y Growth -2% to 0% • Anticipate double-digit year-ov
Slide 15: Key Takeaways
Key Takeaways • Believe end markets have strong long-term fundamentals, including the accelerating age of our water infrastructure and benefits from the infrastructure bill • Product portfolio and manufacturing footprint align well with the challenges facing water utilities • Expect service brass pr
Slide 16: Q&A
Q&A
Slide 17: Supplemental Data
Supplemental Data
Slide 18: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Three months ended June 30, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 150.1 $ 176.5 $ — $ 326.6 Gross profit $ 33.6 $
Slide 19: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Three months ended June 30, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 24.5 Income tax expense (2) 6.4 Interest expens
Slide 20: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Three months ended June 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 195.9 $ 137.3 $ — $ 333.2 Gross profit $ 60.8 $
Slide 21: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Three months ended June 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 26.5 Income tax expense (3) 7.1 Interest expens
Slide 22: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Nine months ended June 30, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 472.9 $ 501.4 $ — $ 974.3 Gross profit $ 117.4 $
Slide 23: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Nine months ended June 30, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 68.3 Income tax expense (2) 20.0 Interest expens
Slide 24: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Nine months ended June 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 534.7 $ 381.3 $ — $ 916.0 Gross profit $ 169.9 $
Slide 25: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Nine months ended June 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 69.5 Income tax expense (3) 20.4 Interest expens
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