Mueller Water Products · NYSE:MWA
Mueller Water Products — JPMorgan 2nd Annual Basics & Industrials Conference 2007
24 slides from Mueller Water Products's conference presentation, Jun 12, 2007
Slide 1: JPMorgan 2nd Annual Basics & Industrials Conference
JPMorgan 2nd Annual Basics & Industrials Conference June 12, 2007
Slide 2: Safe Harbor Statement
Safe Harbor Statement Except for historical information contained herein, information in this presentation is forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncert
Slide 3: Comprehensive Water Products Solutions Provider
Comprehensive Water Products Solutions Provider Leading North American provider of water infrastructure and flow control products in attractive and growing water industry One of the largest installed bases in the U.S. Strong brands and leading specification positions in top 50 U.S. metropolitan area
Slide 4: Broad and Profitable Product Portfolio
Broad and Profitable Product Portfolio $815MM $188MM $51MM SEGMENT NET SALES(c) PRODUCT PORTFOLIO ADJUSTED OPERATING INCOME (a)(b) $558MM $35MM $23MM $543MM $55MM $24MM Iron Gate Valves Butterfly, Ball and Plug Valves Fittings & Couplings Cast Iron Fittings Hangers & Supports Gas Products / Tapping
Slide 5: Complete Water Transmission Solutions
Complete Water Transmission Solutions Note: Market position data based on management estimates.
Slide 6: A Growing Water Infrastructure Market
A Growing Water Infrastructure Market Aging water systems a problem throughout the country Water leakage rates as high as 20% American Society of Civil Engineers gave U.S. drinking water and wastewater infrastructure a grade of “D-” in 2005 report Legislation will lead to increased infrastructure in
Slide 7: Water Infrastructure Competitive Landscape
Water Infrastructure Competitive Landscape Note: Market position data based on management estimates. #1 #1 #2 #1 #1 Fire Gate Butterfly and Brass Water Ductile Iron Company Hydrants Valves Ball Valves Products Pressure Pipe Mueller Water Products ACIPCO McWane Griffin Pipe A.Y. McDonald Ford Meter B
Slide 8: Leading Market Positions and Preferred Brands
Leading Market Positions and Preferred Brands About 75% of sales from products with #1 or #2 market position Brand names highly recognized for quality and reliability Note: Market position data based on management estimates. Products Market Position Water Infrastructure (Mueller Co.) Fire hydrants #
Slide 9: Large and Growing Installed Base with Specification Positions
Large and Growing Installed Base with Specification Positions One of the largest installed bases of products in the United States Products “specified” for use in all U.S. municipalities, including the top 50 metropolitan areas in the country Complex specification process Time consuming 54,000 purcha
Slide 10: Comprehensive Distribution Network
Comprehensive Distribution Network Sales force drives our specifications and water systems solutions to end-users Powerful platform to drive new and acquired product sales Installed base and specified products drive demand End-user preference Proven reliability Specification positions Relationship w
Slide 11: Advanced Low-Cost Manufacturing Capabilities
Advanced Low-Cost Manufacturing Capabilities Leading cost position, utilizing advanced lost foam casting process Substantial investment already has been made Production costs reduced by about 15% (1) Difficult and costly to replicate by competitors No competitors use this process Lost Foam Casting (
Slide 12: Investment in Manufacturing Capabilities
Investment in Manufacturing Capabilities Investment in new ductile iron pipe plant Automates/streamlines manufacturing process Cuts man hours per ton in half $40 – 45 MM capital investment in Bessemer, AL Enhances manufacturing expertise
Slide 13: Operating Synergies
Operating Synergies Expected annual pre-tax operating synergies of $40 to $50 million Progress through 3/31/07 reflects annual run rate of approximately $45 million Expect to achieve annual run rate at top end of range by early fiscal 2008 Plant rationalization programs Closed U.S. Pipe Chattanooga,
Slide 14: Debt Refinancing Achievements
Debt Refinancing Achievements Lowered interest expense Enhanced operational flexibility Simplified debt structure Debt as of May 31, 2007 ($ in millions): Credit Facility: Term Loan A 150 $ Term Loan B 565 $300MM Revolving Credit Facility - 715 7 3/8% Senior Subordinated Notes due 2017 425 Capital l
Slide 15: Strategic Priorities
Strategic Priorities Maintain market leadership positions Continue to enhance operational excellence Invest to improve manufacturing efficiency Broaden breadth of products and geographic presence in water infrastructure market
Slide 16: Strategy for Use of Cash Flow
Strategy for Use of Cash Flow Invest in the business Repay debt when appropriate Grow through acquisition Pay dividends Share repurchase Limitations under credit agreement Other priorities would come first
Slide 17: Second Quarter 2007 Results
Second Quarter 2007 Results Improved net sales Higher pricing, improved U.S. Pipe product mix and Fast Fab acquisition Partially offset by lower volumes due to softness in housing market Higher operating income, EBITDA and margins Higher pricing, synergy plan savings and improved U.S. Pipe product m
Slide 18: LTM Adjusted EBITDA
LTM Adjusted EBITDA $344.9 $313.5 $350 $300 $250 $200 ($ in millions) $150 $100 $50 $0 LTM 2Q06 LTM 2Q07 LTM Adjusted EBITDA grew 10 percent due to execution of synergy plan and operational performance
Slide 19: Mueller Water 2007 Outlook
Mueller Water 2007 Outlook Second half trends External-driven factors Continued decline in housing starts Increase in brass and scrap iron raw material costs Softness with recently announced price increases for ductile iron pipe Focus on inventory reduction based on current levels and bookings Produ
Slide 20: Investment Highlights
Investment Highlights Attractive water industry dynamics Growth driven by new and upgraded infrastructure Limited number of suppliers to water infrastructure end markets Strong competitive position Leading market position Large installed base Leading municipal specification positions Comprehensive d
Slide 21: Supplemental Information
Mueller I Products ee -7 £5, Supplemental Information
Slide 22: Historical Performance
Historical Performance (a) Fiscal year end as of September 30. (b) Financials for 2002 and 2003 is Calendar Year while 2004 – 2006 is Fiscal Year ending September 30th. (c) Excludes $6.5 million of litigation settlement expenses in 2003. (d) Excludes environmental-related insurance settlement benefi
Slide 23: EBITDA Reconciliation
EBITDA Reconciliation ($ In Millions) 2006 Actual 2007 Actual Q1 ’06 Q2 ’06 Q3 ’06 Q4 ’06 Fiscal 06 Q1 ’07 Q2 ’07 Change Revenues Mueller 180.4 193.3 225.3 222.2 821.2 167.1 200.3 7.0 U.S. Pipe 171.1 119.7 143.8 163.9 598.5 117.4 133.3 13.6 Anvil 132.8 127.4 136.5 138.5 535.2 133.6 134.1 6.7 Consoli
Slide 24: Mueller Water Products
Mueller Water Products
Mueller Water Products — JPMorgan 2nd Annual Basics & Industrials Conference 2007 on 6ix