Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (June 2023)
35 slides from Mueller Water Products's investor presentation, June 2023
Slide 1: Where Intelligence Meets Infrastructure - Investor Presentation June 2023
Where Intelligence Meets Infrastructure® Investor Presentation June 2023
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 $1.31B $188.7M Net Sales Adjusted EBITDA • Spun off from Walter (LTM Q2 FY2023) (LTM Q2 FY2023) United States Water Flo
Slide 5: Investment Highlights
Investment Highlights • Leading brand and municipal market specification positions with large installed base STRONG COMPETITIVE POSITION WITH BROAD • Comprehensive distribution network and strong end-user relationships with end-markets PORTFOLIO OF PRODUCTS AND SOLUTIONS served by limited number of
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 Accelerate New Product Development
Slide 7: ESG Is Core to What We Do
ESG Is Core to What We Do Released in May, our 2022 ESG Report demonstrates progress against our key targets and shows our continued commitment to report transparently and in line with leading frameworks. Environment Social Products Governance • Disclosed index in line with • Fostered an inclusive a
Slide 8: Products and Markets
Products and Markets
Slide 9: Strong Position in Broader Water Market
Strong Position in Broader Water Market • Water-focused Leading company Product Positions with in Key more Categories Product than 90%(1)of Broad Portfolio of Products and Solutions with consolidated net sales associated with water Leading Positions in Key Categories (1) • Leading brands and municip
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% of funding at state/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 drive approximately $
Slide 18: Financial Performance
Financial Performance
Slide 19: Q2 FY2023 Consolidated Results
Q2 FY2023 Consolidated Results (1,2) Gross Profit ($M) Adj. EBITDA ($M) Adj. Net Income Net Sales ($M) % of Net Sales % of Net Sales per Diluted share +5.4% y/y -4.9% y/y +7.2% y/y -6.7% y/y -50 bps -190 bps $332.9 $0.15 $310.5 $50.6 $0.14 $92.8 $97.8 $48.1 29.4% 16.3% 14.4% 29.9% Q2 FY2022 Q2 FY202
Slide 20: Full-Year Fiscal 2023 Outlook
Full-Year Fiscal 2023 Outlook (1) • Reiterating annual guidance for 2023 consolidated net sales and adjusted EBITDA growth − Consolidated net sales increase between 6% and 8% and adjusted EBITDA increase between 10% and 14% (2) • Continue to anticipate that higher pricing will drive top-line growth
Slide 21: Balance Sheet and Liquidity
Balance Sheet and Liquidity Continue to have plenty of 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% Senio
Slide 22: Balanced and Disciplined Capital Allocation
Balanced and Disciplined Capital Allocation Capital Allocation Priorities Cash Allocation Over Past 5 Years (FY18 – FY22) • Strong balance sheet, liquidity and cash $256M to Shareholders flow supporting our strategies - $166M dividends • Maintaining balanced approach to capital - $90M share repurcha
Slide 23: Investment Highlights
Investment Highlights STRONG COMPETITIVE POSITION WITH BROAD PORTFOLIO OF PRODUCTS AND SOLUTIONS LONG-TERM END MARKET DYNAMICS SUPPORTED BY ACCELERATION OF CHALLENGES FACING WATER INFRASTRUCTURE MODERNIZING MANUFACTURING AND DRIVING OPERATIONAL EXCELLENCE TO DELIVER GROSS MARGIN EXPANSION ACCELERATI
Slide 24: Supplemental Data
Supplemental Data
Slide 25: Historical Financial Performance
Historical Financial Performance • Over last five years (FY18 - FY22), delivered net sales and adjusted EBITDA CAGRs of 8.6% and 3.5%, respectively • Prior to pandemic (FY17 – FY19), delivered net sales and adjusted EBITDA CAGRs of 6.5% and 8.3%, respectively Consolidated Net Sales Consolidated Adju
Slide 26: Free Cash Flow
Free Cash Flow • Net cash used in operating activities for YTD Q2 FY2023 was $22.2M compared with net cash provided by operating activities of $0.8M in the prior-year period $5.0 − Decrease was primarily due to higher accounts payable turnover $0.0 $0.8 partially offset by higher collections of rece
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 $447.5M and total cash of $89.2M leading to net debt leverage of 1.9x at March 31, 2023 • $251.7M of total liquidity including $162.5M 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) Three months ended March 31, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 157.2 $ 175.7 $ — $ 332.9 Gross profit $ 37.2 $
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) Three months ended March 31, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 21.3 Income tax expense (2) 6.7 Interest expen
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) Three months ended March 31, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 183.9 $ 126.6 $ — $ 310.5 Gross profit $ 57.0 $
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) Three months ended March 31, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 23.6 Income tax expense (2) 7.1 Interest expen
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) Six months ended March 31, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 322.8 $ 324.9 $ — $ 647.7 Gross profit $ 83.8 $ 1
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) Six months ended March 31, 2023 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 43.8 Income tax expense (2) 13.6 Interest expens
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) Six months ended March 31, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 338.8 $ 244.0 $ — $ 582.8 Gross profit $ 109.1 $
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) Six months ended March 31, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 43.0 Income tax expense (2) 13.3 Interest expens
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