Mueller Water Products · NYSE:MWA
Mueller Water Products — Q4 2022 Earnings Presentation
25 slides from Mueller Water Products's earnings presentation, Nov 8, 2022
Slide 1: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure® Earnings Conference Call For The Fourth Quarter and Year Ended September 30, 2022 November 8, 2022 These slides are not intended to be a stand-alone presentation, but are for use in conjunction with the earnings call
Slide 2: Non-GAAP Financial Measures
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 inve
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain statements that may be deemed “forward-looking statements” within the meaning of the federal securities laws. All statements that address activities, events or developments that the Company intends, expects, plans, projects, believes or a
Slide 4: Fourth Quarter Highlights
Fourth Quarter Highlights • Delivered second consecutive year of double-digit net sales growth − Fourth quarter net sales growth exceeded our expectations driven by continued higher price realization • Healthy order activity during the quarter and ended the year with record backlog − Sequential incr
Slide 5: Consolidated GAAP Results
Consolidated GAAP Results Gross Profit ($M) SG&A ($M) Operating Income ($M) Net Sales ($M) % of Net Sales % of Net Sales % of Net Sales -0.8% y/y +12.4 y/y -58.3% y/y +12.1% y/y -340 bps. -10 bps. -590 bps. $331.4 $63.6 $27.8 $295.6 $86.3 $85.6 $56.6 19.2% 9.4% 29.2% 25.8% 19.1% $11.6 3.5% Q4 FY2021
Slide 6: Consolidated Adjusted Results
Consolidated GAAP Results (1) Adj. Operating Income ($M) Adj. EBITDA ($M) Adj. Net Income per share % of Net Sales % of Net Sales -25.9% y/y -15.4% y/y -16.7% y/y -340 bps. -380 bps. $45.6 $0.12 $29.7 $38.6 15.4% $0.10 10.0% $22.0 11.6% 6.6% Q4 FY2021 Q4 FY2022 Q4 FY2021 Q4 FY2022 Q4 FY2021 Q4 FY202
Slide 7: Water Flow Solutions
Water Flow Solutions Adj. Operating Income ($M) (1) Adj. EBITDA ($M) (1) Net Sales ($M) % of Net Sales % of Net Sales -26.5% y/y -21.3% y/y +8.8% y/y -550 bps. -600 bps. $179.4 $27.9 $35.6 $164.9 16.9% $20.5 $28.0 21.6% 11.4% 15.6% Q4 FY2021 Q4 FY2022 Q4 FY2021 Q4 FY2022 Q4 FY2021 Q4 FY2022 • Increa
Slide 8: Water Management Solutions
Water Management Solutions Adj. Operating Income ($M) (1) Adj. EBITDA ($M) (1) Net Sales ($M) % of Net Sales % of Net Sales -1.4% y/y +2.8% y/y +16.3% y/y -160 bps. -190 bps. $152.0 $14.0 $13.8 $21.3 $21.9 $130.7 10.7% 9.1% 16.3% 14.4% Q4 FY2021 Q4 FY2022 Q4 FY2021 Q4 FY2022 Q4 FY2021 Q4 FY2022 • In
Slide 9: Free Cash Flow
Free Cash Flow • Net cash provided by operating activities for FY2022 was $52.3M compared with $156.7M in prior year • Decrease primarily due to an increase in inventories primarily $170.0 $156.7 driven by higher volumes and the supply chain disruptions, $150.0 as well as inflation $130.0 $62.7 − In
Slide 10: Balance Sheet and Liquidity
Balance Sheet and Liquidity Continue to have ample liquidity and capacity to support our strategic priorities, including acquisitions • Moody’s: Ba1 Corporate Rating, Ba1 Notes Rating, Stable Outlook Debt Maturities Credit Rating • S&P: BB Corporate and Notes Ratings, Stable Outlook • $450M of 4.0%
Slide 11: Key Updates: Fourth Quarter Performance, End Markets and Full-Year 2023 Outlook
Key Updates: Fourth Quarter Performance, End Markets and Full-Year 2023 Outlook
Slide 12: Fourth Quarter Performance
Fourth Quarter Performance • Manufacturing challenges primary reason for disappointing gross margin and adjusted EBITDA conversion compared with the expectations provided on our last earnings call − Adjusted EBITDA gap was around $10M primarily due to a gross margin gap of around 400 bps. partially
Slide 13: End Markets
End Markets • Healthy order activity again during the quarter primarily due to strong municipal repair and replacement activity offsetting slower new residential construction • Municipal Repair and Replacement End Market − Expect municipal repair and replacement activity to remain healthy in 2023 as
Slide 14: Full-Year 2023 Outlook
Full-Year 2023 Outlook* • Consolidated net sales increase between 6% and 8% − Record backlog at end of 2022 across our short-cycle products − Expected realization from higher pricing position us to deliver net sales growth in 2023 − Slowdown in order activity in October; however, isn’t surprising gi
Slide 15: Key Takeaways
Key Takeaways • Well positioned to help water utilities address challenges from aging infrastructure, climate change and workforce demographics with broad portfolio of water infrastructure products and solutions • Top priorities for 2023 include: − Executing operational improvements − Delivering ben
Slide 16: Q&A
Q&A
Slide 17: Supplemental Data
Supplemental Data
Slide 18: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 179.4 $ 152.0 $ — $ 331.4 Gross profit $ 42.5 $
Slide 19: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 7.1 Income tax expense (2) 1.6 Interest expense
Slide 20: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2021 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 164.9 $ 130.7 $ — $ 295.6 Gross profit $ 50.4 $
Slide 21: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended September 30, 2021 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 18.4 Income tax expense (2) 5.9 Interest expens
Slide 22: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 714.1 $ 533.3 $ — $ 1,247.4 Gross profit $ 212.4 $
Slide 23: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2022 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 76.6 Income tax expense (3) 22.0 Interest expense,
Slide 24: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2021 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 617.8 $ 493.2 $ — $ 1,111.0 Gross profit (2) $
Slide 25: Segment Results and Reconciliation of Non-GAAP to GAAP Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Year ended September 30, 2021 Water Water Flow Management Solutions Solutions Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 70.4 Income tax benefit (5) 24.5 Interest expense,
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