Mueller Water Products · NYSE:MWA
Mueller Water Products — Baird Global Industrials Conference 2021
40 slides from Mueller Water Products's conference presentation, Nov 10, 2021
Slide 1: Baird Global Industrials Conference
Where Intelligence Meets Infrastructure® Baird Global Industrials Conference November 10, 2021
Slide 2: Non-GAAP Financial Measures
2 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 in
Slide 3: Forward-Looking Statements
3 Forward-Looking Statements This press release 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 the Company intends, expects, pl
Slide 4: Mueller Water Products at a Glance
4 Mueller Water Products at a Glance KEY PRODUCTS (2) END MARKETS (2) • Founded over 160 years ago • Spun off from Walter Industries in 2006 • Listed on NYSE (MWA) June 1, 2006 • Divested U.S. Pipe (April 2012) and Anvil (Jan. 2017) • Acquired Singer Valve (Feb. 2017) • Acquired Krausz Industries (D
Slide 5: Investment Highlights
5 Investment Highlights • Leading brand and municipal market specification positions • Large installed base of iron gate valves and fire hydrants • Comprehensive distribution network and strong end-user relationships • Low-cost manufacturing operations using lost foam process • Favorable market dyna
Slide 6: Executing Strategic Priorities to Become World Class Water Technologies Company
6 Executing Strategic Priorities to Improve Culture of Execution and Become World Class Water Technologies Company Where Intelligence Meets Infrastructure® Mueller is committed to manufacturing innovative products and creating smart solutions that will solve future challenges, whether it's at the so
Slide 7: Commitment to Sustainability
7 Commitment to Sustainability • Inaugural report released in December 2020 reflects how sustainability has been an integral part of Mueller Water Products for many years • Highlights our sustainability achievements to date, discussed some of the ongoing initiatives to strengthen Mueller’s focus and
Slide 8: Products and Markets
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Slide 9: Strong Position in Broader Water Market
9 Strong Position in Broader Water Market Leading Product Positions in Key Product Categories (1) (1) Company estimates based on internal analysis and information from trade associations and distributor networks, where available. (2) Company filings and presentations and management estimates. Fire H
Slide 10: Mueller is Uniquely Positioned to Address Opportunities with Utilities
10 Mueller is Uniquely Positioned to Address Opportunities with Utilities with its Leading Infrastructure Products and Installed Base
Slide 11: Water Utilities Are Facing Many Challenges
11 Water Utilities Are Facing Many Challenges • Unrealistic for U.S. water utilities and local governments to bridge the gap between their current capital spending and projected need for capital spending, based on the age and life expectancy of their infrastructure • Moving forward the industry will
Slide 12: U.S. Water Infrastructure Requires Substantial Long-term Investment
12 U.S. Water Infrastructure Requires Substantial Long-term Investment U.S. Water Infrastructure CAPEX and Investment GapRepair & Replacement Market (1) American Water Works Association, Buried No Longer: Confronting America’s Water Infrastructure Challenge 2012 (2) ASCE: 2021 Report Card for Americ
Slide 13: Aging Infrastructure Increasing Water Main Breaks
13 Aging Infrastructure Increasing Water Main Breaks (1) Bluefield Research 2019, Water Industry 4.0 Focus Report (2) U.S. Environmental Protection Agency, “Drinking Water Infrastructure Needs Survey and Assessment, Sixth Report to Congress,” March 2018. (3) EPA Aging Water Infrastructure Research P
Slide 14: Funding Water Utilities Infrastructure Repair
14 Funding Water Utilities Infrastructure Repair (1) Bluefield Research 2019, Water Industry 4.0 Focus Report (2) Bluefield Research 2019, U.S. Private Water Utilities Report (3) RAND Corporation 2017 Report titled “Not Everything is Broken” (4) American Water Works Association 2021 Water and Wastew
Slide 15: Need for Digital Water Solutions Expected to Accelerate
15 Need for Digital Water Solutions Expected to Accelerate “COVID-19 is an inflection point for long-term resilience, digital transformation of water sector. The U.S. & Canada digital water market is expected to sustain sizeable top-line losses in the immediate aftermath of the COVID-19 outbreak, bu
Slide 16: Broad-line of Technology-enabled Products
16 Broad-line of Technology-enabled Products • 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, smart hydrants, pressure and water quality monitor
Slide 17: Sentryx Will Connect Products that Close the Loop
17 SentryxTM will Connect Products that “Close the Loop” with Water Network Administrators & Assets A digital services platform for water utilities to monitor, operate and monetize water distribution networks. Remote Flushing Mobile Workforce Management Water Quality Metering & Flow Measurement Pres
Slide 18: Large Capital Projects
18 Large Capital Projects Large Casting Foundry Brass Foundry Specialty Manufacturing • Expect capital expenditures as a percent 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 t
Slide 19: Water Flow Solutions and Water Management Solutions
19 • Designed to increase revenue growth, drive operational excellence, accelerate new product development and enhance profitability • Positions us for improved long-term growth and increased margins, while helping to accelerate the commercialization of our technology-enabled products and the Sentry
Slide 20: Financial Performance
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Slide 21: Q4 2021 Consolidated Financial Highlights
21 Q4 2021 Consolidated Financial Highlights (1) • Net sales of $295.6M increased $30.3M, or 11.4%, driven by increased shipment volumes and higher pricing at Infrastructure • Gross profit was $86.3M with a gross margin of 29.2%, and gross margin decreased 620 basis points versus the prior year − Hi
Slide 22: Q4 Gross Margin and Adjusted EBITDA Challenges
22 • Challenges during quarter impacted our gross margin and led to the disappointing adjusted EBITDA conversion, which was below our expectations − Gross margin gap was approximately $15M with labor challenges making up more than one-third of gap − Higher inflation, freight and electricity costs co
Slide 23: End Market Demand and Outlook
23 • Experienced strong demand and order growth in Q4 driven by both new residential construction and municipal repair and replacement activity • Expect end markets to remain healthy in 2022 and growth will slow down relative to strong recovery experienced during 2021 • Believe that municipal repair
Slide 24: Full-Year Fiscal 2022 Outlook
24 Full-Year Fiscal 2022 Outlook (1) • Record backlog across our short-cycle products and expected realization from higher pricing position us to deliver net sales growth in 2022, continuing strong net sales growth achieved in 2021 • Believe operating environment will remain challenging, especially
Slide 25: Free Cash Flow
25 $72.6 $94.0 $67.7 $62.7 $140.3 $156.7 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 $180.0 FY2020 FY2021 Free cash flow Capital expenditures Cash provided by operating activities (1) Both cash provided by operating activities and free cash flow for FY2020 include the pre-tax $22.0M pay
Slide 26: Balance Sheet and Liquidity
26 Balance Sheet and Liquidity Credit Rating Debt Structure Debt Maturities Financial Covenants • $450M of 4.0% Senior Notes (matures June 2029) • Asset based lending agreement (“ABL”) provides up to $175M revolving credit facility subject to borrowing base (LIBOR + 200 basis points) with none outst
Slide 27: Balanced and Disciplined Capital Allocation
27 Balanced and Disciplined Capital Allocation • Strong balance sheet, liquidity and cash flow supporting our strategies • Maintaining balanced approach to capital allocation to strengthen and grow the business through capital investments and bolt-on acquisitions • Continuing to return cash to our s
Slide 28: Investment Highlights
28 Investment Highlights LONG-TERM END MARKET DYNAMICS CONTINUE TO IMPROVE LEVERAGING STRENGTHS TO INCREASE TECHNOLOGY-ENABLED PRODUCTS MODERNIZING MANUFACTURING AND DRIVING OPERATIONAL EXCELLENCE TO DELIVER MARGIN EXPANSION FLEXIBLE BALANCE SHEET AND STRONG CASH FLOW STRONG COMPETITIVE POSITION
Slide 29: Supplemental Data
Supplemental Data MUELLER] "="
Slide 30: Historical Financial Performance
30 Historical Financial Performance $801 $826 $916 $968 $964 $1,111 $0 $200 $400 $600 $800 $1,000 $1,200 FY16 FY17 FY18 FY19 FY20 FY21 Consolidated Net Sales ($ in millions) $156 $164 $180 $198 $191 $204 19.5% 19.8% 19.7% 20.5% 19.8% 18.4% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% $0 $50 $100 $150 $200 $250
Slide 31: Strong Balance Sheet with Significant Flexibility
31 Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1B since March 31, 2006 and $650M since September 30, 2008 • Total debt of $446.9M and total cash of $227.5M leading to net debt leverage of 1.1x at September 30, 2021 with $158.7M of excess availability under the ABL, based o
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
‹#›32 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2021 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 271.9 $ 23.7 $ — $ 295.6 Gross profit $ 83.9 $ 2.4 $ — $ 86.3
Slide 33: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
‹#›33 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2021 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 18.4 Income tax expense (1) 5.9 Interest expense, net (1) 4.4
Slide 34: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
‹#›34 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 242.0 $ 23.3 $ — $ 265.3 Gross profit (1) $ 90.3 $ 3.6 $ —
Slide 35: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
‹#›35 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 26.7 Income tax expense (2) 8.8 Interest expense, net (2) 6.0
Slide 36: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
‹#›36 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2021 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 1,022.0 $ 89.0 $ — $ 1,111.0 Gross profit (2) $ 345.0 $ 13.5
Slide 37: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
‹#›37 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2021 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 70.4 Income tax expense (4) 24.5 Interest expense, net (4) 23.4
Slide 38: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
‹#›38 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 883.6 $ 80.5 $ — $ 964.1 Gross profit (1) $ 315.7 $ 12.5 $ —
Slide 39: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
‹#›39 Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 72.0 Income tax benefit (2) 22.1 Interest expense, net (2) 25.5
Slide 40: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure®
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