Mueller Water Products · NYSE:MWA
Mueller Water Products — Investor Presentation (June 2012)
38 slides from Mueller Water Products's investor presentation, Jun 5, 2012
Slide 1: Investor Presentation
Investor Presentation June 5, 2012
Slide 2: Non-GAAP Financial Measures
Water Products Non-GAAP Financial Measures Non-GAAP Financial Measures The Compa adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, aah Be Geom: re ts hse net income (los) per share, tree cashflow, net debt an res. Adju loss) fr rey used by securities analysts, investors and other i
Slide 3: Safe Harbor Statement
eller Water Products Safe Harbor Statement Safe Harbor Statement This presentation contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Ui ation Reform Act of 1995. All statements tat. odes. acties, eit oF developments that we inten
Slide 4: Our Business
Mueller Water Products Our Business $1.0 billion LTM net sales (as of March 31, 2012) ) + Portfolio includes: FY2011 Primary End Markets' Net Sales $1B ¢ Fire hydrants + Valves « Piping component systems + Metering systems + Leak detection « Pipe condition assessment Specified in 100 largest U.S. me
Slide 5: Investment Highlights
jueller Water Products: Investment Highlights Leading North American provider of water infrastructure and flow control products and services Increasing investment and improved operating efficiencies needed in water infrastructure industry Leading brands in water infrastructure and one of the largest
Slide 6: Business Performance: Long-Term Targets
eller Water Products Business Performance: Long-Term Targets + Base business organic growth of 5%+ in Top-Li ne Growth normalized end market conditions Emerging technology businesses > 20% Mueller Co. EBITDA margins of 20%+ in normalized end market conditions Anvil EBITDA margins in mid-teens in nor
Slide 7: Broad Product Portfolio
Mueller Water Products Broad Product Portfolio (Sin mitions) pocbetors Est. 1857 Est. 1999 (1850) $609 $373 $50 $37 $14 S47 $97 52 cece y Fittings & = we xz sme ms ee f Butterfly, a Metering Hangers & fie ‘sean erage eins, a rei daartin ex
Slide 8: Restructuring Our Portfolio
Mueller Water Products Restructuring Our Portfolio ® The divestiture of U.S. His nee us to focus on our higher- and newer weenie ees We believe the financial flexibility generated from the divestiture, coupled with our strategic vision, will increase our ability to more profitably grow our Divested
Slide 9: Complete Water Transmission Solutions
Complete 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. Inept ana papa (© MuclerCo, © Anilnteratinal
Slide 10: eller Water Products
eller Water Products J ( “SS FIRE BUTTERFLY & BRASS WATER HYDRANTS GATE VALVES. BALL VALVES PRODUCTS a a = ACIPCO . ] A.Y. McDonald = DeZURIK nu Ford Meter Box rT McWane o a
Slide 11: Strategy And Objectives
jueller Water Products: Strategy And Objectives and rowing water infrastructure markets orld Maintain leadership positions with customers and end users E Eee the Mueller brand, + Leveraging distribution network “SUES Continue to enhance operational & organizational excellence + Strengthened balance
Slide 12: Significant Market Opportunities
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Slide 13: Historical Housing Starts
Historical Housing Starts ‘Hstorat Housing Stare (1050 Ap 2012) YOY Change in Household Formation (thousands of housholds) Sessa aad Sain sehold formation was 1.1 million i average of 1.2 million, after fa 2011, just below the long-run to 400K in 2009-2010 Source: U.S. Census Bureau
Slide 14: Non-Residential Construction
Mueller Water Products Non-Residential Construction Non-Residential Construction Actual / Forecast AIA Architecture Billings Index (Diffusion index Chang nV Pun ac Nort Bg Cotrsion ~ Wes 98 —— 7 a) ‘ illlil. silly at * ; r aI sroerecniay Mar-06 Mar-08 Mar-10 Mar-12 census Bureau, Zeman & ota as of A
Slide 15: Anvil Highlights
Mueller Water Products Anvil Highlights Leading domestic manufacturer of piping system components 80% of net sales from #1 or #2 segment positions Domestic and internationally sourced products Customer service capabilities focused on quick delivery Network of over 5,000 distributor locations Track r
Slide 16: Anvil Key Products
jueller Water Products: Anvil Key Products Product Segment Market Drivers Key Competitors Mechanical: Grooved, Victaute, War, Eo, Iron/Steel Fittings, Staple Wisconsin, “Residentiat Hangers, Pipe Nipples, Forge, Westbrook Mechanical Industrial 7s, Non Residental | pu plugs % Buildin — Construction F
Slide 17: Significant Market Opportunities
e Mueller Water Products) |i Significant Market Opportunities
Slide 18: The Market Opportunity Is Significant And Growing
Mueller Water Products The Market Opportunity Is Significant And Growing Repair and Replacement Market Future Drinking Water (4) evalves and hydrants erpically reniaced Infrastructure Expenditure Needs‘ at same time as pipes + ASCE graded drinking water infrastructure a D-() * More than 36 states pr
Slide 19: Funding Water Infrastructure
jueller Water Products: Funding Water Infrastructure Stronger EPA regulations should lead to increased investment + At least 40 cities under consent decrees “The brilliant invisibility of our — Atlanta $4.0B. water system has become its — Washington, D.C. $2.6B most significant vulnerability. — Balt
Slide 20: Historical Water Utility Expected Rates
Historical Water Utility-Expected Rates Compared to Sources of Capital for Other Utilities () 2011 2 Long-term trends in consuare ries (CP) fruits (193-2011) Tap Fees 11% Operations 23% Grants Other 90% funded at local level!) From 2007-2009, average annual residential water rates increased about 10
Slide 21: Emerging Industry Trends
Water Products Emerging Industry Trends + 36 states project water shortages’) + Leading brand in water + Broad portfolio of ter ns infrastructure water infrastructure + 15%-30% potable water lost to Le : One of the largest products and services + 45% pipe aging or elapsed by 2020°) ealled Bases Impr
Slide 22: Mueller Systems Highlights
Mueller Water Products Mueller Systems Highlights Focused on 2-Way AMI Create Product and Software Differentiation Leverage Our Strengths and Current Portfolio + Establishing backbone for real-time information SERR: aeael Ringwithinctionablen ig + Utilize mesh technology for an Intelligent Water Tec
Slide 23: Opportunities: Smart Metering
jueller Water Products: Opportunities: Smart Metering OPPORTUNITY SOLUTION CUSTOMERS COMPETITORS Smart Metering- + Advanced Metering Infrastructure 20% of market - of about $200 million today* + Forecasted to grow an average of 20% per year through 2015" * Transition from one-way to. two-way AMI Sys
Slide 24: Echologics Highlights
eller Water Products Echologics Highlights Acoustical Engineering Excellence Proprietary = Technologies S Vision of Solution Provider Leverage Brand and Sales Strength of Mueller Combine people experienced in water industry with technology engineers Non-intrusive leak detection on al pipes, includin
Slide 25: Opportunities: Pipe Condition Assessment and Leak Detection
Opportunities: Pipe Condition Assessment and Leak Detection OPPORTUNITY SOLUTION CUSTOMERS COMPETITORS Pipe Condition Assessment and Leak Detection + Constrained municipal budgets + Greater attention on condition assessment, + Help prioritize capital spending olo@ics + Pioneered acoustic, non-invasi
Slide 26: Actions & Business Results
Actions & Business Results
Slide 27: Management Actions/Initiatives
Management Actions/Initiatives Objectives Actions Reduce costs and improve operating leverage + Closed six plants since FY2006 + Sold two non-core assets of Anvil in FY2010 + Divested U.S. Pipe + Implemented Lean Six Sigma and other manufacturing improvements (continuous improvement) Manage working
Slide 28: History of Strong Financial Performance
Mueller Water Products History of Strong Financial Performance (see appendices for GAAP reconciliation) (sin mtn) NET SALES [ADJUSTED EBITOA rs ‘ADJ. EBITOA MARGIN
Slide 29: Consolidated Non-GAAP Results
Consolidated Non-GAAP Results Second Quarter Fiscal $ in millions (except per share amounts) Net sales $251.5 $235.5 Adj. operating income $11.5 $10.9 Adj. operating margin 4.6% 4.6% Adj. loss per share (80.01) ($0.02) Adj. EBITDA $26.7 $26.8 Adj. EBITDA margin 10.6% 11.4% * Taken several steps to s
Slide 30: Debt Structure
Debt Structure Debt maturities with no significant required principal payments before 2015 No financial maintenance covenants with el + $89.1 million of excess availability at March 31, 2012 Subsequent to March 31, 2012, paid down $48.0 million on ABL; redeeme: million in principal amount of 8 4% ‘S
Slide 31: Why Invest in MWA?
Why Invest in MWA? Water industry has fundamentally strong long-term dynamics © Driven by need for new and upgraded infrastructure © Limit aietpell market Strong competitive position © Leading brand position with large installed base ading municipal specification positions ueipal specification posit
Slide 32: Supplemental Data
Supplemental Data
Slide 33: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measure
Mueller Water Products Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measure
Slide 34: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Mueller Water Products Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Slide 35: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Mueller Water Products Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Slide 36: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measure
Mueller Water Products Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measure
Slide 37: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures Net debt (end of period): Current portion of long-term debt Long-term debt Total debt Less cash and cash equivalents Net debt Pro forma proceeds from sale of U.S. Pipe Net debt Adjusted ane A oxcluing USS. Pipe): S$ 267 ‘Thr
Slide 38: Questions
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