Mueller Water Products · NYSE:MWA
Mueller Water Products — D.A. Davidson 9th Annual Engineering & Construction Conference (September 2010)
35 slides from Mueller Water Products's conference presentation, Sep 28, 2010
Slide 1: D.A. Davidson 9th Annual Engineering & Construction Conference
Exhibit 99.1 D.A. Davidson th 9 Annual Engineering & ConstructionConference September 28, 2010
Slide 2: 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 addressactivities, events or developments that the Companyintends,
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAPFinancial Measures The Companypresents adjusted income (loss) from operations, adjusted EBITDA,adjusted net loss, adjusted net loss per share, free cash flow and net debt as non-GAAPmeasures. Adjusted income (loss) from operations represents income (loss) from ope
Slide 4: Investment Highlights
Investment Highlights Leading North American provider of water infrastructure and flow control products in attractive and growing water industry One of the largest installed bases in the U.S. Strong brands Leading specification positions in 99 of 100 largest U.S. metropolitan areas Low-cost manufact
Slide 5: Our Business
Our Business • $1.4B LTM net sales (as of June 30, 2010) FY2009 Primary End Markets (1) • Portfolio includes: • Fire hydrants • Valves • Pipe fittings • Ductile iron pipe • Water meters • Specified in 99 of the largest 100 U.S. metropolitan areas • Approximately 75% of FY2009 net sales from products
Slide 6: Broad Product Portfolio
Broad Product Portfolio ($ in millions) HISTORICAL ROOTS Est. 1857 Est. 1899 Est. 1999 (1850) SEGMENT NET SALES $607 $388 $370 ADJUSTED OPERATING INCOME (LOSS)(1) $80 ($49) $18 DEPRECIATION AND $19 $16 AMORTIZATION(2) $50 (1) (2) ADJUSTED EBITDA $130 ($31) $34 Restrained Joint Ductile Iron Iron Gate
Slide 7: Complete Water Transmission Solutions
Complete Water Transmission Solutions As water flows from its source to treatment facilities to homes and businesses across North America, it flows through or is controlled by the type of products we manufacture, making Mueller Water Products an integral part of the water infrastructure system. 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 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 in
Slide 10: Our End Markets
Mueller Water Products)
Slide 11: FY2009 Net Sales: $1.4B Primary End Markets
Primary End Markets Residential Construction* FY2009 Net Sales: $1.4B (Private) $150mm 15% Repair and Replacement (Public) $850mm 85% Water Infrastructure $1B 70% Non-Residential Construction $430mm 30% Source: Management estimates * Residential is driven primarily by community development 11
Slide 12: The Market Opportunity Is Significant And Growing
The Market Opportunity Is Significant And Growing Repair and Replacement Market Future Drinking Water Infrastructure Expenditure Needs ($ in billions) (1) • Aging water pipes need to be rehabilitated / replaced • Valves and hydrants typically replaced at same time as pipes • 15%- 30%of treated potab
Slide 13: Aging Water Infrastructure
Aging Water Infrastructure • An average of 700 water mains break daily in U.S. (about one every two minutes) (1) • Los Angeles typically has up to five breaks daily; 225 major breaks each year (2) • Baltimore water main break in March 2010 left 100,000 people without water (3) June 2010 sinkhole 20’
Slide 14: Aging Water Infrastructure
Aging Water Infrastructure “Crumbling infrastructure has a direct impact on our personal and economic health, and the nation’s infrastructure crisis is endangering our future prosperity.” D. Wayne Klotz, P.E., F.ASCE President American Society of Civil Engineers 14
Slide 15: Aging Water Infrastructure
AgingWater Infrastructure Average life of 100 year old 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 15
Slide 16: Increasing Federal Awareness of Funding Needs
Increasing Federal Awareness of Funding Needs Stronger EPA regulations should lead to increased investment • At least 30 cities under consent decrees In 2008, 40 percent of — Atlanta $4.0B the nation’s community — Washington, D.C. $2.8B water systems violated — Baltimore City and county $1.7B the Sa
Slide 17: Funding 2010 Water Infrastructure Repair
Funding 2010 Water Infrastructure Repair Historical Water Rates Sources of Funding Compared to Other Water Infrastructure Utilities (1) Repair (2) Rate Increases 2% Operational Savings 24% Other 23% Grants Bonds 1% 3% Loans 46% Sources: (1) Bureau of Labor Statistics (2) AWWA State of the Industry R
Slide 18: Historical Housing Starts
Historical Housing Starts Historical Housing Starts (1991 - August 2010) Seasonally Adjusted Annualized 2,400 2,150 1,900 1,650 1,400 1991-2009 Average 1,515 1,150 900 Bottom of prior down April - Lowest starts (477,000) cycle (798,000) 2010 Forecast = 600,000 8.3% increase over 2009 since Census Bu
Slide 19: Update on End Markets – Residential Construction
Update on End Markets –Residential Construction Significant EconomicDownturns(1) Significant Downturns Peak Trough Length of % Decline Length of Recovery Trough + 12 Months Month Starts Month Starts Downturn From Peak To 1.6MM Starts Starts Increase Feb-1959 1,667 Dec-1960 1,063 22 months (36.2%) 23
Slide 20: Non-Residential Construction
Non-Residential Construction Non-Residential Construction Actual / Forecast Average 3-Month Change in Non-Residential Construction 20
Slide 21: Actions & Business Results
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Slide 22: Management Actions/Initiatives
Management Actions/Initiatives Objectives Cost Savings Actions Reduce costs and improve Six plants closed between FY2006-current operating leverage Sold certain non-core assets of Anvil Reduced headcount 25% from September 30, 2007 to June 30, 2010 from approximately 6,700 employeesto approximately
Slide 23: History Of Strong Financial Performance
History Of Strong Financial Performance ($ in millions) $1,000 $804 $800 $756 $718 $664 $618 $598 $595 $595 $600 $509 $536 $547 $551 $537 $546 $535 $556 NET SALES $492 $465 $485 $470 $411 $431 $393 $387 $400 $200 $0 2002 2003 2004 2005 2006 2007 2008 2009 2002 2003 2004 2005 2006 2007 2008 2009 2002
Slide 24: Consolidated Non-GAAP Results
Consolidated Non-GAAP Results Third Quarter Fiscal $ in millions (except per share amounts) 2010 2009 Net sales $375.9 $363.2 Adj. income (loss) from operations $13.4 ($4.6) Adj. operating income (loss) % of net sales 3.6% (1.3%) Adj. net loss per share ($0.01) ($0.13) Adj. EBITDA $34.5 $17.0 Adj. E
Slide 25: Refinancing Highlights
Refinancing Highlights • Recapitalization provides a long-term capital Debt Maturity structure ($ in millions) $450 $420 • Extends maturities with no required principal $400 payments before 2015 $350 $300 • Locks in long term capital at attractive rates $250 $225 $200 $226 $150 • Preserves deleverag
Slide 26: Capital Structure
Capital Structure Free Cash Flow ($ in millions) $140 $120 $115 $100 $94 $91 $80 $60 $40 $37 Reduced debt by $856mm from $20 $14 March 31, 2006 through June 30, 2010 $0 FY2006 FY2007* FY2008 FY2009 FYTD 6/30/2010 Reduced debt by $269mm in the 12 Total Debt ($ in millions) months ended June 30, 2010
Slide 27: Investment Highlights
Investment Highlights • 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 •
Slide 28: Supplemental Data
Mueller Water Products)
Slide 29: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures Three months ended June 30, 2010 (in millions, except per share amounts) 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 30: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures Three months ended June 30, 2009 (in millions, except per share amounts) Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 154.6 $ 96.7 $ 111.9 $ - $ 363.2 Gross profit (loss) $ 35.8 $ (6.0) $ 28.1 $ (0.1
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures Nine months ended June 30, 2010 (in millions, except per share amounts) 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 32: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures Nine months ended June 30, 2009 (in millions, except per share amounts) Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 389.0 $ 305.6 $ 358.5 $ - $ 1,053.1 Gross profit (loss) $ 89.3 $ (6.3) $ 104.8 $ (
Slide 33: Segment Results And Reconciliation Of Non-GAAP To GAAP Performance Measures
Segment Results And Reconciliation Of Non-GAAP To GAAP Performance Measures Year ended September 30, 2009 (in millions, except per share amounts) Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 547.1 $ 410.9 $ 469.9 $ - $ 1,427.9 Loss from operations $ (770.6) $ (142.4) $ (53.4
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, 2008 Mueller Co. U.S. Pipe Anvil Corporate Total GAAP results: Net sales $ 718.1 $ 546.0 $ 595.2 $ - $ 1,859.3 Income (loss) from operations $ 128.4 $ (17.4) $
Slide 35: Questions
{(Muelier Water Products}