Mueller Water Products · NYSE:MWA
Mueller Water Products — Oppenheimer's 18th Annual Industrial Growth Conference 2015
36 slides from Mueller Water Products's conference presentation, May 12, 2015
Slide 1: Oppenheimer's Industrial Growth Conference
(Mueller Water Products) Where Intelligence "Be 6 Meets Infrastructure® 3 OPPENHEIMER’S 1074 ANNUAL INDUSTRIAL GROWTH CONFERENCE May 12, 2015
Slide 2: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company reports its financial results under accounting principles general accepted in the United States ("GAAP"), as he operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (oss), adjusted net income (oss) per diluted share, free cash flow, n
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 Private Securities Litigation Reform Act of uae All statements that address activities, events that Forward-looking statements are based on certain assum
Slide 4: Our Business
OUR BUSINESS FY2014 PRIMARY END MARKETS $1 .2B LTM Net sales: $783mm ©) ANVIL Net sales: $401mm net sales (as of March 31, 2015) = a9% 5% Residential construction” Specified in 75% 100 largest 215% None U.S. metropolitan Ea markets for valves or hydrants distributior and treatment systems * Driven p
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 operating leverage as end markets recover mi Leveraging Mueller brand and relationships to expand intelligent
Slide 6: Business Performance: Long-Term Targets
BUSINESS PERFORMANCE: LONG-TERM TARGETS 1 Mueller Co. base business organic growth of in normalized end market conditions Il Metering and leak detection products and services @ Mueller Co. adjusted EBITDA margins of approach more normalized end market conditions @ Metering and leak Soh Anos and serv
Slide 7: Broad Product Portfolio
BROAD PRODUCT PORTFOLIO Mueller Co.) Est. 1857 $791mm, $126mm, $42mm $168mm Fire Hydrants Valves Buterty, Bal Plug Vaves Metering Syst Leak Detection and Pipe Condon Assessment Note: All statistics are LTM ended March 31, 2015 Historical Roots Net Sales. Adjusted Operating Income”) Depreciation & Am
Slide 8: Intelligent Water Technology
INTELLIGENT WATER TECHNOLOGY™ bad Wate rete Pat sation Mueller Water Products manufactures and markets products and offers services used in the transmission, distribution and measurement of safe, clean drinking water and in water treatment facilities. These products and services help utilities activ
Slide 9: Water Infrastructure Landscape
WATER INFRASTRUCTURE LANDSCAPE BUTTERFLY & BRASS WATER BALL VALVES PRODUCTS FIRE GATE HYDRANTS VALVES 5 proouct propucr proouct propuct HAL POSH «HL OSttiCh #1 POSITION POSITION POSITION é é é é ‘AY. McDonald ry ACIPCO ry ry DeZURIK ry Ford Meter Box McWane 6 é ry PAGE.9
Slide 10: Strategy and Objectives
STRATEGY AND OBJECTIVES Capitalize on the large, attractive and growing water infrastructure markets worldwide Continue to enhance operational and organizational Maintain leadership positions with customers and end users Acquire and invest in businesses and technologies that expand our portfolio or
Slide 11: Significant Market Opportunities
Significant Market : Opportunities
Slide 12: Market Driver: Household Formation
MARKET DRIVER: HOUSEHOLD FORMATION New household formation drives housing starts demand. Household formation is driven by population growth, accelerating job growth, higher wages and higher consumer confidence, among other factors. Employment Level - (25 t034 Year Olds) ‘Year-Over- ear Change in Hou
Slide 13: Market Driver: Housing Starts
MARKET DRIVER: HOUSING STARTS Homebuilders’ confidence also drives housing starts. Confidence could be driven by improving job growth in key demographic for household formation: Millennials NAHB Housing Market index: National (1985: Present) Season nally Adjusted. annvalized g Housing Starts (agsq -
Slide 14: The Market Opportunity Is Significant and Growing
THE MARKET OPPORTUNITY IS SIGNIFICANT AND GROWING REPAIR AND FUTURE DRINKING REPLACEMENT MARKET WATER INFRASTRUCTURE EXPENDITURE NEEDS” time as pipes STORAGE I ASCE graded drinking water infrastructure aD") $39.5B Atleast 40 cities under consent decres So TREATMENT : i C., Su Washington, D.C. (HS ;
Slide 15: Funding Water Infrastructure Repair
FUNDING WATER INFRASTRUCTURE REPAIR HISTORICAL WATER RATES COMPARED TO OTHER UTILITIES“ 430 f: 350 f- ——crINat Gas —cPl Postage Pl Water CPi Electricity ~——CPI alt tems prices ( ‘Bureau of Labor Statist Bots Svaoge Doctors: U.S, Wate Indust ~ Back 8V jeatcn American Water Works Associaton 2014 Water
Slide 16: Growth Opportunities: Smart Water
GROWTH OPPORTUNITIES: SMART WATER FACTORS AFFECTING MUNICIPAL WATER SYSTEMS Water Conservation of U.S. experiencing 31% 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 natio
Slide 17: Smart Solutions for Today & Tomorrow
SMART SOLUTIONS FOR TODAY & TOMORROW INTELLIGENT WATER TECHNOLOGY - echologics Smart Metering J Leak Detection & * AME eysiome Pipe Condition Assessment : emote dasoiee + Fixed transmission and distribution meter main leak detection monitoring + Leak detection + Field services Consumer portal ‘Muell
Slide 18: Anvil
ANVIL Leading domestic manufacturer of piping system components O ll Significant FY2014 net sales from #1 or #2 product positions I Customer service capabilities focused on quick delivery é @ Domestically manufactured and domestically and internationally sourced products MiTrack record of solid adju
Slide 19: Anvil Key Markets
ANVIL KEY MARKETS Mechanical and Industrial: __Victaulic, Ward, Grooved, Iron/Steel Fittings co, Bonney Forge, Ke ae Is Staple Hangers, Pipe Nipples, Westt Non-Residential 75% ‘ibcanied Bull Plug Construction Mecha Fire Protection Fire Protection: O-Lets, Victaulic, Ward, Grooved Fittings and Tolco,
Slide 20: Market Driver: Non-Residential Construction
MARKET DRIVER: NON-RESIDENTIAL CONSTRUCTION The non-residential construction market is showing improvement 1A Architectural Billing Index Diffusion index (> 50 = expansion) Non-Residential Construction (Real s in Billions) Source: Am: Data as of March 201 ‘Souroe: IHS Data as of March 2015,
Slide 21: Market Driver: Oil & Gas
MARKET DRIVER: OIL & GAS Sales to the oil & gas market represented about 20% of Anvil’s FY 2014 net sales U.S. Land Based Rig Count Oil Price - WTI (s/bbl) ~ | tes fad Zé | so { Ly ty Apr-s2 Apron Apr-96 Apr-o8 Apr-o0 Apr-oz Apron Ape-o6 Apr-o8 Apr-20 Apeaa Apray Apr-sa Apr-98 Ape-oo Aproz Apron Sou
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 Pursue strategic growth Opportunities by leveraging the Mueller brand 1 Divested U.S. Pipe I Divested three non-core assets of nvil I Implemented Le
Slide 24: History of Strong Financial Performance
HISTORY OF STRONG FINANCIAL PERFORMANCE @anvit Net Sales ($ in millions) | | | : Adjusted 5 EBITDA & . Adj. EBITDA . Margin
Slide 25: Consolidated Q2 2015 Non-GAAP Results
CONSOLIDATED Q2 2015 NON-GAAP RESULTS Overall results for the quarter about as we expected Key factors include: strong net sales growth in primary end markets, harsh winter weather-related expenses, continuing decline in oil & gas market, and unfavorable Canadian currency exchange rates At Mueller C
Slide 26: Debt Structure
DEBT STRUCTURE Net debt leverage of 2.6x and net debt of $479 million at March 31, 2015, down from a peak of more 66 than 6x bhi No significant required principal payments on outstanding debt before November 2021 @ No financial maintenance covenants with excess availability at the greater of $22.5 m
Slide 27: Capital Allocation
CAPITAL ALLOCATION = Acquisitions = Debt reduction = Share repurchases = Growth opportunities Fy2010 Fr20t Fv2012 Fv2013 Fy2014 = Dividends
Slide 28: Why Invest in MWA?
WHY INVEST IN MWA? Water industry has fundamentally strong Strong operating leverage as end markets long-term dynamics recover Il Driven by need for new and upgraded I Recovery of residential construction market infrastructure Il Increased municipal spending Il Limited number of suppliers to end mar
Slide 29: Supplemental Data
Supplemental ~. . Gees Data
Slide 30: Segment Results and Reconciliation
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin miions, except per share amounts) rind ang a — se $255 ’ te pon “2 is Nt erage (nt dd by ane EBITOA) —
Slide 31: Segment Results and Reconciliation
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES ($ in millions, except per share amounts) Reaivtg expena ars ut $ 3 ‘Astod opera ce Coss) a8 ad oo = epoca nd oman fon Se Pa 3 ‘ApS EBITON se ae =u PAGE.34.
Slide 32: Segment Results and Reconciliation
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES (Sin ilions, except per share amounts) Sons ended Mach 12015 tr Total GAAP Route: ‘Not alee sess s a2 s ssa Gross prot s wos s 518 8 Ss ssa ‘Soling, general and adminiuative expenses 594 370 74 1108 Restructuring 82 02 0s a9
Slide 33: Segment Results and Reconciliation
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES ($ in millions, except per share amounts) Six months ended March 31,2014 Muse Co, ‘a orperate Teal GAAP ruts: Net sales ‘ a2 ok ee in si53 Gross prot s sess es S$ s 93 Selig, general and adminisvave expences 500 366 178 1072
Slide 34: Segment Results and Reconciliation
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES ($ in millions, except per share amounts)
Slide 35: Segment Results and Reconciliation
SEGMENT RESULTS AND RECONCILIATION OF GAAP TO NON-GAAP PERFORMANCE MEASURES ($ in millions, except per share amounts)
Slide 36: Questions
Questions
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