Mueller Water Products · NYSE:MWA
Mueller Water Products — RBC Capital Markets 2018 Global Industrials Conference
30 slides from Mueller Water Products's conference presentation, Sep 4, 2018
Slide 1: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure RBCF E B R UCapital A R Y 2 0 1Markets 7 2018 Global Industrials Conference September 5, 2018 M U E L L E R W A T E R P R O D U C T S . C O M
Slide 2: Non-GAAP Financial Measures, Forward-Looking Statements and Reclassified Financials
NON-GAAP Financial Measures, Forward-Looking Statements and Reclassified Financials Non-GAAP Financial Measures In an effort to provide investors with additional information regarding the Company’s results as determined under GAAP, the Company also provides non-GAAP information that management belie
Slide 3: Mueller Water Products at a Glance
Mueller Water Products at a Glance History LTM Financials ▪ Founded 160 years ago as of June 30, 2018 ($ in Millions) ▪ Spun off from Walter Industries in 2006 Net sales $ 888.6 ▪ Listed on NYSE (MWA) June 1, 2006 Infrastructure $ 799.7 90.0% Technologies $ 88.9 10.0% ▪ Divested U.S. Pipe (2012) and
Slide 4: Focused Strategy and Execution Driving Results
Focused Strategy and Execution Driving Results Where Intelligence Meets Infrastructure® Committed to delivering sustainable and efficient solutions for our customers and the work they do by bridging the gap between intelligence and infrastructure, helping our customers deliver the most important wat
Slide 5: Investment Highlights
Investment Highlights ▪ ▪ Leading brand and municipal market specification positions Strong Competitive ▪ Large installed base of iron gate valves and fire hydrants Position ▪ Comprehensive distribution network and strong end-user relationships Low-cost manufacturing operations using lost foam proce
Slide 6: Products and Markets
Products and Markets
Slide 7: Our Leading Product Positions
Our Leading Product Positions Fire Hydrants Iron Gate Valves Butterfly Valves Brass Products PRODUCT PRODUCT PRODUCT PRODUCT #1 POSITION #1 POSITION #1 POSITION #2 POSITION Company estimates based on internal analysis and information from trade associations and distributor networks, where available.
Slide 8: Bringing Value to our Customers
Bringing Value to our Customers ▪ Providing valued products and services to over 50,000 municipalities and utilities ▪ Utilizing proprietary smart technologies to help our customers actively diagnose, monitor and control the delivery of drinking water ▪ Developing new technology offerings which util
Slide 9: U.S. Water Infrastructure Requires Substantial Long-Term Investment
U.S. Water Infrastructure Requires Substantial Long- Term Investment Future Drinking Water Infrastructure Repair & Replacement Market (4) ▪ Expenditure Needs Restoring existing water systems and expanding them to serve a growing population through 2050 will require a $1.7 trillion investment (1) ▪ A
Slide 10: Funding Water Infrastructure Repair
Funding Water Infrastructure Repair Historical Water Rates Compared to Other Utilities(1) 600 CPI Utilities (NSA 1982-1984 = 100) 500 400 300 200 100 0 UTILITY SOURCES OF FUNDING 1993 1958 1963 1968 1973 1978 1983 1988 1998 2003 2008 2013 2018 1953 ▪ CPI Water CPI Nat Gas CPI Postage CPI Electricity
Slide 11: Focus on Manufacturing Excellence Driving Organic Growth
Focus on Manufacturing Excellence Driving Organic Growth ▪ Infrastructure has strong adjusted EBITDA margins (27.5% in FY2017) providing a manufacturing base for future growth ▪ Enhanced operational initiatives driving ongoing productivity improvements to facilitate innovation, increase new product
Slide 12: Strong Need for Intelligence in Water Infrastructure
Strong Need for Intelligence in Water Infrastructure Black & Veatch 2016 Strategic Directions in the U.S. Water Industry “Smart metering is a highly successful way of accurately identifying water loss.” Water Conservation Non-Revenue Water Customer Service Focus ▪ ▪ ▪ 42% of U.S. experiencing Up to
Slide 13: Technologies Bringing Intelligence to Water Infrastructure
Technologies Bringing Intelligence to Water Infrastructure Intelligent Water TechnologyTM is Mueller’s full-line of innovative solutions, products and services that actively diagnose, monitor and control the delivery of safe, clean drinking water to consumers and businesses Smart Metering Leak Detec
Slide 14: Financial Performance
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Slide 15: Focused Execution Driving Results
Focused Execution Driving Results Pursued Strategic Generated Free Improved Productivity and Opportunities Cash Flow Reduced Costs ▪ ▪ ▪ Leveraged Mueller brand to drive Produced strong record of free Reorganized the Company around organic growth cash flow generation driven by product value streams
Slide 16: History of Strong Financial Performance
History of Strong Financial Performance ▪ Delivered 13% cumulative net sales growth since fiscal 2013 years (3% CAGR) ▪ Driven 60% cumulative adjusted EBITDA growth with 580 bps. improvement in adjusted EBITDA margin since fiscal 2013 (1) Consolidated Net Sales Consolidated Adjusted EBITDA and ($ in
Slide 17: Q3 2018 Consolidated Financial Highlights
Q3 2018 Consolidated Financial Highlights ▪ Net sales increased 7.8%, or $18.0 million, to $250.2 million driven by higher volumes at Third Quarter 2018 2017 both Infrastructure and Technologies, as well as higher pricing at Infrastructure Net sales $ 250.2 $ 232.2 ▪ Adjusted operating income increa
Slide 18: Strong Balance Sheet with Significant Flexibility
Strong Balance Sheet with Significant Flexibility ■ Net debt at 1x, down from a peak of more than 6x ■ Refinanced debt in June 2018 with $450 million of 5.5% Senior Notes due 2026 providing fixed interest rates over an 8-year period ■ Have $175 million ABL Agreement with no outstanding borrowings an
Slide 19: Balanced and Disciplined Capital Allocation
Balanced and Disciplined Capital Allocation Strategic Shareholders Balance Sheet Investments ▪ ▪ ▪ Driving organic growth Increased dividend 25% in Reduced debt by more through capital February 2018 which is the than $1 billion since investments and fourth increase in the last March 31, 2006 and acq
Slide 20: Investment Highlights
Investment Highlights ▪ ▪ Leading brand and municipal market specification positions Strong Competitive ▪ Large installed base of iron gate valves and fire hydrants Position ▪ Comprehensive distribution network and strong end-user relationships Low-cost manufacturing operations using lost foam proce
Slide 21: Supplemental Data
Supplemental Data
Slide 22: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES Quarter ended June 30, 2018 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 224.1 $ 26.1 $ — $ 250.2 Gross profit (loss) $ 83.4 $ (8.9) $ — $ 74.5 Selling, gener
Slide 23: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES Quarter ended June 30, 2018 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 15.3 Loss on early extinguishment of debt 6.2 Gain on settlement of interest rate sw
Slide 24: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES Quarter ended June 30, 2017 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 207.6 $ 24.6 $ — $ 232.2 Gross profit $ 77.0 $ 5.6 $ — $ 82.6 Selling, general and ad
Slide 25: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES Quarter ended June 30, 2017 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 24.0 Loss from discontinued operations (after tax) 0.1 Income tax expense (1) 13.4 I
Slide 26: 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, 2018 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 595.3 $ 66.4 $ — $ 661.7 Gross profit (loss) $ 207.3 $ (2.9) $ — $ 204.4 Selling,
Slide 27: 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, 2018 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 80.6 One-time impacts from tax legislation (35.1) Loss on early extinguishment o
Slide 28: 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, 2017 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 535.5 $ 63.6 $ — $ 599.1 Gross profit $ 183.6 $ 3.3 $ — $ 186.9 Selling, general
Slide 29: 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, 2017 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 104.0 Income from discontinued operations (after tax) (69.8) Income tax expense
Slide 30: Questions
Questions
Mueller Water Products — RBC Capital Markets 2018 Global Industrials Conference on 6ix