Mueller Water Products · NYSE:MWA
Mueller Water Products — Gabelli 26th Annual Pump, Valve, & Water Systems Symposium (February 2016)
33 slides from Mueller Water Products's conference presentation, Feb 25, 2016
Slide 1: Where Intelligence Meets Infrastructure
(Mueller Water Products) Where Intelligence Meets Infrastructure® Gabelli 26th Annual Pump, Valve, & Water Systems Symposium February 25, 2016
Slide 2: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company reports its financial results under accounting principles generaly accepted in the United States (" Gna "i operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), aciusted ne income (loss) per diluted share, free cash flow, net n
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Forward-I ed on certain may be deemed “forward looking statements" within the meaning nels renariha oe r erpeciatons for growth in our key end formance targets, and nigpalad anger ‘operating leverag assumptions and assessments made by us in light of our experience and perc
Slide 4: Our Business and Primary End Markets
OUR BUSINESS AND PRIMARY END MARKETS FY2015 NET SALES: $1.2 BILLION TECHNOLOGIES Net sales: $702mm Net sales: $371mm Net sales: $91mm 5% 9 59 25% ,9% 70% 10% ; 0% 100% Resident So Repair and lege, ¢ Coors } Municipal spending 85% dential wat distribution and treatment systems Driven primarily by new
Slide 5: Investment Highlights
(Mue! er Water Products) Leading provider of water infrastructure and flow control products and services in North America INVESTMENT HIGHLIGHTS I Industry-leading adjusted operating margins I Transformed Company by acquiring or developing associated with Mueller Co. core products new technologies, a
Slide 6: Business Performance: Long-Term Targets
BUSINESS PERFORMANCE: LONG-TERM TARGETS @ Mueller Co. growth of Mi Mueller Technologies Hi Mueller Co. adjusted EBITDA margins of Mueller Technologies adjusted EBITDA margins of i Anvil adjusted EBITDA margins in Ill Free cash flow greater than adjusted net income I Reducing working capital as a per
Slide 7: Broad Product Portfolio
BROAD PRODUCT PORTFOLIO TECHNOLOGIES $ in millions Mueller Co.| Net Sales $702 $354 $90 Adjusted Operating 448 7 (13) Income(Loss)\®) Depreciation & Amortization 38 15 4 Adjusted EBITDA“) 186 42 (9) Fire Hydrants Cast Iron Fittings Metering Systems eatin Iron Gate Valves Nipples Leak Detection and B
Slide 8: Intelligent Water Technology
INTELLIGENT WATER TECHNOLOGY™ Mueller Water Products manufactures and markets products and offers services used in the transmission, distribution and of safe, clean drinking water and in water treatment facilities. These products and services help utilities actively diagnose, monitor and control the
Slide 9: Water Infrastructure Landscape
WATER INFRASTRUCTURE LANDSCAPE (GoatarwnrerProauers) | 1 PONT «#1 PEQRIST «#1 POMP «aw PLAST é é é é ‘AY. McDonald é ACIPCO e ry DeZURIK é Ford Meter Box é McWane é é é PAGE.9.
Slide 10: Strategy and Objectives
STRATEGY AND OBJECTIVES Capitalize on the large, attractive and growing water infrastructure markets worldwide Acquire and invest in businesses and technologies that expand our portfolio or Continue to enhance operational and organizational Maintain leadership positions with customers and end users
Slide 11: Significant Market Opportunities
Significant Market oA Hi Opportunities Re
Slide 12: Market Driver: Housing Starts
MARKET DRIVER: HOUSING STARTS Homebuilders’ confidence is one driver of housing starts, and confidence could increase due to improving job growth in a key demographic for household formation: Millennials NAHB Housing Market Index - National (1985 —January 2016) sasonally Adj usted Annualized Histori
Slide 13: The Market Opportunity Is Significant and Growing
THE MARKET OPPORTUNITY IS SIGNIFICANT AND GROWING REPAIR AND FUTURE DRINKING REPLACEMENT MARKET WATER INFRASTRUCTURE BB Valves and tire hydrants are typically ceplaced at the same EXPENDITURE NEEDS” ime as pipes sroRace I ASCE graded drinking water infrastructure a DC) $39.5B I Atleast 40 cities und
Slide 14: Funding Water Infrastructure Repair
FUNDING WATER INFRASTRUCTURE REPAIR HISTORICAL WATER RATES COMPARED TO OTHER UTILITIES” 550 CPI Utilities (NSA 1982-1984 = 100) 450 350 250 150 50 50 BOR ESSELTE SSES eK eee Sees SSTAAASSSTASRTRT SSS SSS ——crwaer’ env cas —cPotage —cottecrcty cot ane (1) Bureau of Labor Stats (2) 2014 Suetege Drecto
Slide 15: Growth Opportunities: Smart Water
GROWTH OPPORTUNITIES: SMART WATER FACTORS AFFECTING MUNICIPAL WATER SYSTEMS Water Conservation ea 13% of U.S. experiencing drought conditions?) + 240,000 water main breaks per year®) Non-Revenue Water + Up to 30% of treated water is lost or unaccounted for‘) 1.7 trillion gallons lost per year at a n
Slide 16: Mueller Technologies: Solutions for Today & Tomorrow
MUELLER TECHNOLOGIES: SOLUTIONS FOR TODAY & TOMORROW INTELLIGENT WATER TECHNOLOGY™ - echologics ‘team nomurconr Smart Metering J Leak Detection and + Longer-range AMI systems Pipe Condition Assessment + Remote —e + Fixed transmission and distribution Meter (RD! strib main leak detection / monitoring
Slide 17: Anvil
ANVIL Leading domestic manufacturer of piping system components Ps Il Significant FY2015 net sales i Domestically manufactured and Il Track record of solid adjusted from #1 or #2 product domestically and internationally EBITDA margins positions sourced produc! i Customer service capabilities im Netw
Slide 18: Anvil Key Markets
ANVIL KEY MARKETS Mechanical and Industrial: _Victaulic, Ward, Grooved, Iron/Steel Fittings, Erica, Bonney Forge, le Hangers, Pipe Nipple We Non-Residential 95% ecianieal Bul Pugs aia — Construction Hasire Fire Protection Fire Protection: O-Lets, Victaulic, Ward, Grooved Fittings an Tolco, Ceirco, T
Slide 19: Market Driver: Non-Residential Construction
MARKET DRIVER: NON-RESIDENTIAL CONSTRUCTION The non-residential construction market is showing improvement Non-Residential Construction AlAArchitectural Billing Index Diffusion Index (> 50 = expansion) (Peal $ in Billions)
Slide 20: Market Driver: Oil & Gas
MARKET DRIVER: OIL & GAS Sales to the oil & gas market represented about 10% of Anvil’s FY2015 net sales U.S. Land Based Fig Count Gil Price - WTI ($/ bbl) 2,500 $160 > 140 2,000 $120 1,500 $100 $80 1,000 $60 4 too $40 $20 ° $0 geesgegsgsssesszseecrz 2 @sese @sessspseez28 eg 24444444444 24 2 % 22324
Slide 21: Actions & Business Results
Actions & Business Results
Slide 22: Management Actions / Initiatives
MANAGEMENT ACTIONS / INITIATIVES Reduce costs and improve Manage working capital and Pursue strategic growth operating leverage capital expenditures to generate opportunities by leveraging free cash flow the Mueller brand Wl Divested U.S. Pipe I Generated free cash flow of $50.3mm Acauired leak dete
Slide 23: History of Strong Financial Performance
HISTORY OF STRONG FINANCIAL PERFORMANCE ($ in millions) ©. Net Sales Note: Mueller Co. Technologies in these years Adjusted EBITDA and Adjusted EBITDA
Slide 24: Consolidated Q1 2016 Non-GAAP Results
CONSOLIDATED Q1 2016 NON-GAAP RESULTS Mueller Co. continued to improve its operating performance. Domestic net sales of Mueller Co.'s valves, hydrants and brass products increased 9.2 percent year-over-year in the first quarter. Mueller Co.'s adjusted operating income increased 17.1 percent, or 250
Slide 25: Debt Structure
DEBT STRUCTURE @ Net debt leverage of 2.0x and net debt of $383.5 million at December 31, 2015, down from a peak of more than 6x No significant required principal payments on outstanding debt before November 2 No financial maintenance covenants with excess availability at the greater of $22.5 millio
Slide 26: Capital Allocation
CAPITAL ALLOCATION ® Acquisitions = Debt reduction $100 $80 $76 $78 = Share repurchases ,, 45 sa = Growth opportunities _ | l lj = Dividends moo eSB
Slide 27: Why Invest in MWA?
WHY INVEST IN MWA? Water industry has fundamentally strong long-term dynamics Strong operating leverage as end markets recover ll Driven by need for new and upgraded infrastructure I Limited number of suppliers to end markets @ Increasing public awareness of the importance of water infrastructure St
Slide 28: Supplemental Data
Supplemental 7 ia Data i.)
Slide 29: Segment Results and Reconciliation of GAAP to Non-GAAP
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts)
Slide 30: Segment Results and Reconciliation of GAAP to Non-GAAP
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin millions, except per share amounts) cit it te eee nak
Slide 31: Segment Results and Reconciliation of GAAP to Non-GAAP
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Verde (Sin millions, except per share amounts)
Slide 32: Segment Results and Reconciliation of GAAP to Non-GAAP
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES {Sin mitlons, excopt por share amounts) Maer Ca Amit Monies Conger —— schotecs | Te Tain, ep pes sms was waa zn:
Slide 33: Questions
Questions