Mueller Water Products · NYSE:MWA
Mueller Water Products — Bank of America Merrill Lynch Leveraged Finance Conference 2011
33 slides from Mueller Water Products's conference presentation, Nov 29, 2011
Slide 1: Bank of America Merrill Lynch Leveraged Finance Conference
“Bank of America Merrill Lynch (Leveraged Finance Conference December 2, 2011
Slide 2: Non-GAAP Financial Measures
Mueller Water Products) Non-GAAP Financial Measures ‘The Company presents adjusted income (loss) from operations, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted net income (loss) per share, free cash flow and net debt as non-GAAP measures. Ad
Slide 3: Safe Harbor Statement
(Mueller Water Products) 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 address activities, events or developments that we intend, expe
Slide 4: Mueller Water Products
Mueller Water Products} | Leading North American provider of water infrastructure and flow control products and services 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
Slide 5: Our Business
(Mueller Water Products) Our Business + $1.3B LTM net sales (as of September 30, 2011) FY2011 Primary End Markets ® + Portfolio includes: Net Sales $1.38 ‘+ Specified in 100 largest U.S. metropolitan markets'”) + More than 75% of FY2011 net sales from products with #1 or #2 position (wuatarta) FE) T
Slide 6: Broad Product Portfolio
(Mueller Water Products) Broad Product Portfolio a Ze HISTORICAL ROOTS Est. 1857 Est. 1899 Est. 1999 (1850) INCOME (Oss) $55 (642) $33 DEPRECIATION AND 18 15, 2 : > s03 ws PORTFOLIO 6 \ C) b Butterfly, Batt ‘Metering: Pipe Nipptes taney and Plug Valves ‘aie Joint Restraints Join Fitings =r ere ("gea
Slide 7: Complete Water Transmission Solutions
Complete Water Transmission Solutions 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.
Slide 8: Products
(Mueller Water Products’ § © ok BUTTERFLY AND BRASS WATER FIREHYDRANTS GATE VALVES BALL VALVES PRODUCTS —_DUCTILE IRON PIPE Mueller Water Products #2 Position 7 e e e Hn ACIPCO e e ALY. McDonald | | r) po DeZURIK Ford Meter Box ry Griffin Pipe m7 McWane eo. ry ; ei + Company estates based on interna
Slide 9: Strategy And Objectives
Strategy And Objectives | Maintain leadership positions with | customers and end users =e the large). > | Continue to enhance operational attractivesa ind-growing™ and organizational excellence water infrastructure tarkets worldwide Broaden breadth and depth of products and services | Expand interna
Slide 10: Strategic Initiatives
(Mueller Water Products) Strategic Initiatives Maintain leadership positions with customers and end users + Leveraging the Mueller brand + Leveraging distribution network + Developing value-added products + Improving customer service levels and services Continue to enhance operational and organizati
Slide 11: Our End Markets
Slide 12: Primary End Markets: 2006-2011
Primary End Markets: 2006-2011 FY 2006 FY 2011 Net Sales: $1.9B. Net Sales: $1.3B Y Repair and replacement 7 Cf municipal water Recon Residential Construction* 5x Since 2006, our exposure to the residential construction market has declined from roughly 40% to 5%. Feet cerguton 9 ven prima by et comm
Slide 13: Historical Housing Starts
Historical Housing Starts 3,000 2.500 ‘00 Historical Housing Starts (1959 - October 2011) Set “rowc8) ‘e209 - Lowa Stee ns ro Teepe reser 558 PEPER GE EE EEEEEEEE!
Slide 14: Non-Residential Construction
(Mueller Water Products) Non-Residential Construction Non-Residential Construction Actual / Forecast Eh 6 zon ancestor com onen conan LPHES ALA. Architecture Bilings Index ge Ne cnc tonnes (Diftusion Index, national billings, seasonally adjusted) 70 60 50 40 al = 30 “tan cona nen ep 8 EE Oct-01 Oct-
Slide 15: Significant Market Opportunities
Significant Market Opportunities
Slide 16: The Market Opportunity Is Significant And Growing
(Mueller Water Products) The Market Opportunity Is Significant And Growing Repair and Replacement Market + Aging water pipes need to be repaired/ replaced + Valves and hydrants typically replaced at same time as pipes + ASCE graded drinking water infrastructure a D-(!) + Overall U.S. infrastructure
Slide 17: Aging Water Infrastructure
Aging Water Infrastructure — : s 5 . i 3 & 7 2 sb = S 05% 3 ai i © oon be 1 é ph arr a ar ae a aan an sel Year Installed Year ‘Maing 2000-2075
Slide 18: Funding Water Infrastructure
(Mueller Water Products) Funding Water Infrastructure Stronger EPA regulations should lead to increased investment + At least 40 cities under consent decrees Atlanta $4.08 — Washington, D.C. $2.68 ~ Baltimore City and county $1.78 — Kansas City $2.58 — Cincinnati $1.58 Federal Budget + 2011 federal
Slide 19: Funding Water Infrastructure Repair
(Mueller Water Products) Funding Water Infrastructure Repair Historical Water Rates Compared to Long tem wens comsaner pees (CP fr aes (9152010) Utility-Expected Sources of Capital for 2011 State Tap Fees Revolving 11% Loans Operations 43% Grants Other 24% 4% Loans/ Debt 6% 90% funded at local level
Slide 20: Opportunities: Smart Metering and Pipe Condition Assessment
(Mueller Water Products) Opportunities: Smart Metering and Pipe Condition Assessment ‘Smart Metering + Advanced Metering Infrastructure 20% of market -$200 million today* + Forecasted to grow an average of 20% per year through 2015" + Transition from one-way to two- way AMI Systems Pipe Condition As
Slide 21: Actions & Business Results
a. See , ; Actions & Business Results
Slide 22: Management Actions/Initiatives
(Mueller Water Products) Management Actions/Initiatives Reduce costs and improve operating leverage Manage working capital an capital expenditures to generate free cash flow + Closed six plants since FY2006 + Sold two non-core assets of Anvil in FY2010 + Reduced headcount by about 24% from September
Slide 23: History of Strong Financial Performance
History of Strong Financial Performance MARGIN
Slide 24: Consolidated Non-GAAP Results
(Mueller Water Products) Consolidated Non-GAAP Results Fourth Quarter Fiscal $ in millions (except per share amounts) “2011 ~—=—s=<“‘«~XUTSC*S Net sales $373.6 $346.7 ‘Adj. income from operations $5.8 $15.4 ‘Adj. operating margin 1.6% 44% Adj. net income (loss) per share ($0.05) $0.00 Adj. EBITDA $2
Slide 25: Debt Structure
Mueller Water Products| Debt Structure + FY 2010 recapitalization provided a long-term — vttisturty capital structure + Extended maturities with no significant required“ principal payments before 2015 = + Locked in long-term capital at attractive rates as it 5 ns |) + Preserved deleveraging capabili
Slide 26: Key Financial Metrics
Key Financial Metrics Fre can Flow Totaloebt {$63 million free cash flow average over last six years Debt has declined $871 million since 2006 0 si eed 100 80 $3327 susot stove tal expen BESEESES
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 positio
Slide 28: Supplemental Data
C5 Mueller Water Products) iy i] Supplemental Data
Slide 29: Segment Results and Reconciliation of Non-GAAP to GAAP
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures Cnmilions, except per share amounts) “emt een. vee i a Geonrsei) er som sons a2 Secret atc cg whoa te Fe Cetopi soe so ‘i ne me ‘med nei epee geet naa “Section gn et Resrarnened Ati Xiao ah Scch ty Si Se 5 Scan yop sti, see
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 Cnmilions, excep per share amounts) ane nee Sptntr. 8 ut oie Praised
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures Govilions, xoept per share amounts) sel) s wo s aos ms Se pane epee rr rr Comtegeteen it a ee . C ‘Mts pr date feed loci ac Nadiad “crepe bt se ral
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures Govilins, xoept per share amounts)
Slide 33: Questions
Questions
Mueller Water Products — Bank of America Merrill Lynch Leveraged Finance Conference 2011 on 6ix