Mueller Water Products · NYSE:MWA

Mueller Water Products — RBC Capital Markets 2017 Global Industrials Conference

35 slides from Mueller Water Products's conference presentation, Sep 12, 2017

1. Slide 1: Where Intelligence Meets Infrastructure

   Where Intelligence Meets Infrastructure F E B R U A R Y 2 0 1 7 M U E L L E R W A T E R P R O D U C T S . C O M RBC Capital Markets 2017 Global Industrials Conference September 13, 2017

2. Slide 2: Non-GAAP Financial Measures

   PAGE 2 NON-GAAP Financial Measures M U E L L E R W A T E R P R O D U C T S . C O M 2S E P T E M B E R 2 0 1 7 In an effort to provide investors with additional information regarding the Company's results as determined by GAAP, the Company also provides non-GAAP information that management believes i

3. Slide 3: Forward-looking Statements

   This presentation 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 we intend, expect, plan, project, believe or anticipate will o

4. Slide 4: Reclassified Financials

    We sold Anvil in January 2017  As a result, Anvil's operating results for all prior periods, and the gain from its sale, have been classified as discontinued operations  We filed a Form 8-K on February 21st which included the reclassified 2016 results by quarter PAGE 4 Reclassified Financials M

5. Slide 5: Introduction

   Introduction M U E L L E R W A T E R P R O D U C T S . C O M 5  Repositioned Mueller Water Products as a higher-margin, pure-play water infrastructure company in attractive core markets  Divested Anvil International (non-core asset) for net proceeds of approximately $250 million and further streng

6. Slide 6: Investment Highlights

   Pure-play water infrastructure company in attractive core markets, industry-leading margins, strong balance sheet and proven leadership team – focused on growth. Investment Highlights  Industry-leading operating margins  Leading brand position in water infrastructure  Attractive end markets poise

7. Slide 7: Solid Product Portfolio & Attractive End Markets

   Solid Product Portfolio & Attractive End Markets M U E L L E R W A T E R P R O D U C T S . C O M FY2016 NET SALES: $801 MILLION PORTFOLIO Fire Hydrants Valves Metering Systems Leak Detection and Pipe Condition Assessment 60% Repair and replacement of municipal water distribution and treatment system

8. Slide 8: LTM Business Performance

   LTM Business Performance M U E L L E R W A T E R P R O D U C T S . C O M 8 Note: All amounts shown are LTM ended June 30, 2017 (1) Mueller Co. adjusted operating income and adjusted EBITDA exclude charges totaling $2.9 million. Mueller Technologies adjusted operating loss and adjusted EBITDA exclude

9. Slide 9: Intelligent Water Technology

   Intelligent Water Technology™ Mueller Water Products provides products and offers services used in the transmission, distribution and measurement of safe, clean drinking water and in water treatment facilities. These smart technology products and services help utilities actively diagnose, monitor an

10. Slide 10: Our Leading Product Positions

    Our Leading Product Positions M U E L L E R W A T E R P R O D U C T S . C O M 1 0 #1 PRODUCTPOSITION #1 PRODUCTPOSITION #1 PRODUCT POSITION #2 PRODUCTPOSITION Company estimates based on internal analysis and information from trade associations and distributor networks, where available. S E P T E M B

11. Slide 11: Drivers of Success

    Drivers of Success Manufacturing Excellence Increasing equipment efficiency Reducing capital expenditures payback period Driving margin expansion M U E L L E R W A T E R P R O D U C T S . C O M 1 1 Organic Growth Growing end markets Developing new products Enhancing existing products Exploring adjac

12. Slide 12: Why Invest in MWA?

    Why Invest in MWA? M U E L L E R W A T E R P R O D U C T S . C O M 1 2 Fundamentally sound long-term dynamics  Aging infrastructure driving need for investment  Increasing public awareness of the need to upgrade water infrastructure  Limited number of end-market suppliers Strong operating leverag

13. Slide 13: Significant Market Opportunities

    Significant Market Opportunities

14. Slide 14: Market Driver: Housing Starts

    0 500 1,000 1,500 2,000 2,500 3,000 19 60 19 63 19 66 19 69 19 72 19 75 19 78 19 81 19 84 19 87 19 90 19 93 19 96 19 99 20 02 20 05 20 08 20 11 20 14 20 17 20 20 Market Driver: Housing Starts M U E L L E R W A T E R P R O D U C T S . C O M 1 4 Source: U.S. Census Bureau Forecast: Blue Chip Economic

15. Slide 15: The Market Opportunity is Significant & Growing

    The Market Opportunity is Significant & Growing M U E L L E R W A T E R P R O D U C T S . C O M 1 5 Repair & Replacement Market (1) American Water Works Association, Buried No Longer: Confronting America’s Water Infrastructure Challenge 2012 (2) ASCE: 2017 Report Card for America’s Infrastructure (3

16. Slide 16: Funding Water Infrastructure Repair

    -50 50 150 250 350 450 550 19 54 19 57 19 60 19 63 19 66 19 69 19 72 19 75 19 78 19 81 19 84 19 87 19 90 19 93 19 96 19 99 20 02 20 05 20 08 20 11 20 14 20 17 CPI Water CPI Nat Gas CPI Postage CPI Electricity CPI All Items Funding Water Infrastructure Repair M U E L L E R W A T E R P R O D U C T S .

17. Slide 17: Bringing Intelligence to Water Infrastructure

    Bringing Intelligence to Water Infrastructure M U E L L E R W A T E R P R O D U C T S . C O M 1 7 Water Conservation Customer Service Focus  Awareness/education  Ongoing monitoring  Sustainability  13% of U.S. experiencing drought or abnormally dry conditions(1)  240,000 water main breaks per y

18. Slide 18: Bringing Intelligence to Water Infrastructure

    Bringing Intelligence to Water Infrastructure M U E L L E R W A T E R P R O D U C T S . C O M 1 8  Provide longer-range AMI systems  Manage water service remotely  Detect leaks  Increase education and customer service with consumer portal A smart utility is a subset of a smart city and the Mi.Ne

19. Slide 19: Actions & Business Results

    Actions & Business Results ‘s

20. Slide 20: Management Actions / Initiatives

    Management Actions / Initiatives  Divested Anvil and U.S. Pipe  Implemented Lean Six Sigma and other manufacturing improvements:  Increased production capacity within existing footprint  Lowered labor costs  Reduced manufacturing footprint  Generated free cash flow of approximately $80 million

21. Slide 21: Q3 2017 Consolidated Non-GAAP Results

     Net sales increased 3.3% to $232.2 million as compared with $224.7 million last year  Net sales increased due to volume growth at Mueller Co. and the February acquisition of Singer Valve  Adjusted operating income increased 1.8% to $44.6 million as compared with $43.8 million last year  Adjuste

22. Slide 22: Q3 2017 Key Operating Takeaways

    Q3 2017 Key Operating Takeaways  We are pleased to see the increased growth in our end markets this quarter, with our overall net sales growth coming in about as we expected  Mueller Co. delivered solid net sales growth despite a difficult comparison with a year ago  Mueller Technologies, results

23. Slide 23: Debt Structure

    Debt Structure M U E L L E R W A T E R P R O D U C T S . C O M 2 3 ■ Net debt leverage 0.8x down from a peak of more than 6x ■ No significant required principal payments on outstanding debt before November 2021 ■ No financial maintenance covenants with excess availability at the greater of $17.5 mil

24. Slide 24: Managed Capital Allocation

    Managed Capital Allocation M U E L L E R W A T E R P R O D U C T S . C O M 2 4  Acquisitions  Share Repurchases  Authorized to repurchase up to $250 million  Repurchased aggregate of $55 million during the 2nd and 3rd quarters 2017  Organic Growth Opportunities  Developing new products  Makin

25. Slide 25: Supplemental Data

    9 a $. , @ Supplemental Data

26. Slide 26: Segment Results and Reconciliation of GAAP to Non-GAAP

    PAGE 26 SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Quarter ended June 30, 2017 Mueller Co. Mueller Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 207.6 $ 24.6 $ — $ 232.2 Gross profit $ 76.9 $ 5.6 $ — $ 82.5 Selling, g

27. Slide 27: Segment Results and Reconciliation of GAAP to Non-GAAP

    PAGE 27 SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Quarter ended June 30, 2017 Mueller Co. Mueller Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 24.0 Plus loss from discontinued operations 0.1 Interest expense, net (

28. Slide 28: Segment Results and Reconciliation of GAAP to Non-GAAP

    PAGE 28 SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Quarter ended June 30, 2016 Mueller Co. Mueller Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 198.7 $ 26.0 $ — $ 224.7 Gross profit $ 77.5 $ 5.7 $ — $ 83.2 Selling, g

29. Slide 29: Segment Results and Reconciliation of GAAP to Non-GAAP

    PAGE 29 SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Quarter ended June 30, 2016 Mueller Co. Mueller Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 15.5 Less income from discontinued operations (4.5) Interest expense, n

30. Slide 30: Segment Results and Reconciliation of GAAP to Non-GAAP

    PAGE 30 SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Nine months ended June 30, 2017 Mueller Co. Mueller Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 535.5 $ 63.6 $ — $ 599.1 Gross profit $ 183.3 $ 3.3 $ — $ 186.6 Sell

31. Slide 31: Segment Results and Reconciliation of GAAP to Non-GAAP

    SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Nine months ended June 30, 2017 Mueller Co. Mueller Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 104.0 Less income from discontinued operations (69.8) Interest expense, net

32. Slide 32: Segment Results and Reconciliation of GAAP to Non-GAAP

    PAGE 32 SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Nine months ended June 30, 2016 Mueller Co. Mueller Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 525.6 $ 59.4 $ — $ 585.0 Gross profit $ 179.2 $ 10.9 $ — $ 190.1 Sel

33. Slide 33: Segment Results and Reconciliation of GAAP to Non-GAAP

    PAGE 33 SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES Nine months ended June 30, 2016 Mueller Co. Mueller Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 37.4 Less income from discontinued operations (12.1) Interest expen

34. Slide 34: History of Strong Financial Performance

    3 4 HISTORY OF STRONG FINANCIAL PERFORMANCE Net Sales Adjusted EBITDA(1) and Adjusted EBITDA Margin (1) Mueller Co. adjusted EBITDA excludes purchase accounting adjustments of $52.9 in 2006, goodwill and other impairment charges of $818.7 in 2009 and other charges of $0.1 in 2010, $1.4 in 2011, $2.5

35. Slide 35: Questions

    Questions | &

Mueller Water Products — RBC Capital Markets 2017 Global Industrials Conference on 6ix