Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (August 2014)
36 slides from Mueller Water Products's investor presentation, Aug 12, 2014
Slide 1: Mueller Water Products: Where Intelligence Meets Infrastructure
(Mueller Water Products) . Where Intelligence Meets Infrastructure® August 2014
Slide 2: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company reports its financial results under accounting principles generally accepted in the United States ("GAAP"), as well as through the use of non-GAAP measures. The Company presents adjusted operating income, acjusted operating margin. adjusted & A margin, aduste
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Thi ments that may be deemed forward -looking Setemonne "ihn the meaning of the Private Securities Litigation Retom Act of 1995. All developments that we inter ect, bi project, believe or anticipate will or oe ocour in the futur forward-looking statements. Examples of forw
Slide 4: Our Business
OUR BUSINESS $1.2 billion LTM net sales (as of June 30, 2014) Specified in 100 largest U.S. metropolitan markets) (1) Valves or hydrants, PORTFOLIO @ Fire Hydrants Valves FY2013 PRIMARY END MARKETS NET SALES $1.1B of mt distribution and treatment systems 30% ...” Conaeton pl Pi Metering Systems Pipi
Slide 5: Mueller Water Products
Mueller Water Products Leading provider of water infrastructure and flow control products and services in North America INVESTMENT HIGHLIGHTS I Improved results driven by strong incremental IB Leading brands in water infrastructure and one of operating leverage as end markets recover the largest ins
Slide 6: Business Performance: Long-Term Targets
BUSINESS PERFORMANCE: LONG-TERM TARGETS I Mueller Co. base business organic growth of in normalized end market conditions ll Metering and leak detection products and services @ Mueller Co. adjusted EBITDA margins of is we approach more normalized end market conditions @ Metering and leak coon saris
Slide 7: Broad Product Portfolio
BROAD PRODUCT PORTFOLIO Mueller Co. Est. 1857 Historical Roots $761mm Net Sales $116mm Adjusted Operating Income) $43mm Depreciation & Amortization® $159mm Adjusted EBITDA?) Fire Hydrants Iron Gate Valves Metering Systems Product and Services Portfolio Leak Detection and Pipe Condition Assessment Bu
Slide 8: Water Transmission Solutions
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. Intelligent Water Technology”
Slide 9: Water Infrastructure Landscape
WATER INFRASTRUCTURE LANDSCAPE FIRE GATE BUTTERFLY & BRASS WATER HYDRANTS: VALVES BALL VALVES PRODUCTS eee ee ee Saag é é é é AY.McDonald é ACIPCO é é DeZURIK é Ford Meter Box é McWane é ry ry
Slide 10: Anvil
ANVIL Leading domestic manufacturer of piping system components IB Significant Prien net sales from #1 or #2 si positions I Customer service capabilities focused on quick delivery Ml Domestically manufactured and internationally so products MW Track record of solid adjusted EBITDA margins 1 Network
Slide 11: Anvil Key Markets
ANVIL KEY MARKETS Mechanical Industrial & , Fire Protection 75% 20% Power/High ) Pressure 5% Non-Residential Construction Oil & Gas Power Need Development Mechanical and Industrial: Grooved, Iron/Steel Fittings, Staple Hangers, Pipe Nipples, Bull Plug: Fire Protection: O- Grooved, Iron Pains ‘Slaple
Slide 12: Strategy and Objectives
STRATEGY AND OBJECTIVES Capitalize on the large, attractive and growing water infrastructure markets worldwide + Developing value-added Maintain leadership positions with customers and end users products and services + Leveraging the Mueller brand + Leveraging distribution'ne! + Improving customer s
Slide 13: Our End Markets
Our End i? Markets
Slide 14: Historical Housing Starts
HISTORICAL HOUSING STARTS New household formation will be the key to driving housing start demand back to normal levels Housing Saris (1959 - 2016 Forecast) ally Adjusted Annualized Rate 2500 ‘Souree: US. Census Bureau Forecast; Zeiman & Associates June 20, 2014
Slide 15: Non-Residential Construction
NON-RESIDENTIAL CONSTRUCTION The non-residential construction market remains stable Non-Residential Construction Se eacral lina nes (Real $ in Billions) $400 ~ Souroe: IHS Data as of July 31, 2014
Slide 16: Significant Market Opportunities
Significant Market ‘woh | Opportunities *
Slide 17: The Market Opportunity Is Significant and Growing
THE MARKET OPPORTUNITY IS SIGNIFICANT AND GROWING REPAIR AND REPLACEMENT MARKET IL Vaives and hydrants typically replaced at same : ime as pipes I ASCE graded drinking water infrastructure a D\) Atleast 40 cities under consent decr Alanta, Washington, 0.6. Suburban Washington, D.C (WSSC), New Orlean
Slide 18: Funding Water Infrastructure Repair
FUNDING WATER INFRASTRUCTURE REPAIR HISTORICAL WATER RATES TOP THREE WATER INDUSTRY ISSUES®) COMPARED TO OTHER UTILITIES” - I State of water and sewer infrastructure ml ipply availabilty I Financing for capital improvements UTILITY SOURCES OF FUNDING I Majority of utilities have service connection f
Slide 19: Significant Growth Opportunities
SIGNIFICANT GROWTH OPPORTUNITIES Factors Affecting Municipal Water Systems. | Our Solutions | Share of North American Market operational efficiencies Water Conservation . 26 states in drought condition 240,000 water main breaks per year’) Non-revenue Water Up t 20% of ireatal ator i lost or unaccoun
Slide 20: Opportunities: AMI/Smart Metering
OPPORTUNITIES: AMI/SMART METERING OPPORTUNITY SOLUTION II Develop new produ SYSTEMS) proposition for network gy One-way and two-way AMI systems @ Enhanced AMI system * 2477 menitoring of cstibuion system for leaks (wit Echologics) + 420 Remote Disconnect Meter Mi.Data™ (consumer portal to monitor us
Slide 21: Opportunities: Leak Detection & Pipe Condition Assessment
OPPORTUNITIES: LEAK DETECTION & PIPE CONDITION ASSESSMENT Le Mueller brand Fragmented market 1 International Baltimore opportunities r | Acoustic, non-invasive Las Vegas, NV technology — pro > PUFE i Minimal barriers to aad Lie New Orleans, LA international expansion i Fixed transmission and distrib
Slide 22: Actions & Business Results
Actions & Business Results
Slide 23: Management Actions / Initiatives
MANAGEMENT ACTIONS / INITIATIVES Reduce costs and improve operating leverage Manage working capital and capital expenditures to generate free cash flow ll Divested U.S. Pipe in FY2012 Il Divested two non-core assets of Anvil in FY2010 I Implemented Lean Six Sigma and ‘other manufacturing improvement
Slide 24: History of Strong Financial Performance
HISTORY OF STRONG FINANCIAL PERFORMANCE (See Appendices for GAAP Reconciliation) Net Sales (8 in millions) Adjusted 3652 S207 $190 $167 x31 $139 $133 I ill li
Slide 25: Consolidated Non-GAAP Results — 3Q 2014
CONSOLIDATED NON-GAAP RESULTS — 3Q 2014 Pleased with growth in net sales, net income per share and free cash flow, as well as 27% 3Q FISCAL 2014 2013 increase in operating income Mueller Co. increased net sales by 7% Net sales $318.5 $299.4 BE Domest shipmerts or vals, ists and Adj. operating income
Slide 26: Debt Structure
DEBT STRUCTURE Net debt leverage of 2.6x and net debt of $449.9 million at June 30, 2014, down from a peak of more han 6x Debt maturities i Ps significant required principal payments before 2 No financial maintenance covenants with e3 availability at the greater of $22.5 million or 40. ‘0% of facili
Slide 27: Potential Uses of Cash
POTENTIAL USES OF CASH = Debt reduction = Acquisitions = Dividends = Growth opportunities
Slide 28: Why Invest in MWA?
WHY INVEST IN MWA? Water industry has fundamentally strong Expected strong operating leverage when long-term dynamics end markets recover Il Driven by need for new and upgraded I Recovery of residential construction market infrastructure @ Increased municipal spending Il Limited number of suppliers
Slide 29: Supplemental Data
Slide 30: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES See (Sin millions, except per share amounts)
Slide 33: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts) "ged perc: a EIT ‘erties
Slide 34: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 35: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
SEGMENT RESULTS AND RECONCILIATION OF NON-GAAP TO GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 36: Questions
Questions
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