Mueller Water Products · NYSE:MWA
Mueller Water Products — Gabelli Annual Pump, Valve & Water Systems Symposium 2021
33 slides from Mueller Water Products's conference presentation, Feb 25, 2021
Slide 1: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure® Gabelli Annual Pump, Valve & Water Systems Symposium February 25, 2021
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 under GAAP, the Company also provides non-GAAP information that management believes is useful to investors. These non-GAAP measures have limitations as analytical t
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 1995. All statements that address activities, events or developments that the Company intends, expects, plans
Slide 4: Mueller Water Products at a Glance
Mueller Water Products at a Glance HISTORY LTM FINANCIALS (1) KEY PRODUCTS (2) END MARKETS (2) AS OF DECEMBER 31, 2020 • Founded over 160 years ago $ in millions % of Consolidated Net Sales • Spun off from Walter Net sales $989.0 Industries in 2006 Adjusted EBITDA $197.9 • Listed on NYSE (MWA) June
Slide 5: Investment Highlights
Investment Highlights • Leading brand and municipal market specification positions • Large installed base of iron gate valves and fire hydrants STRONG COMPETITIVE POSITION • Comprehensive distribution network and strong end-user relationships • Low-cost manufacturing operations using lost foam proce
Slide 6: End Market Performance
End Market Performance* • Experienced strong end market demand during first quarter Key • Benefitted from the growth in residential construction and municipal end markets continue to be resilient Takeaways • Distributors increased inventory levels during the quarter resulting from anticipated demand
Slide 7: Mueller Water Products in a Strong Position vs. Great Recession
Mueller Water Products in a Strong Position vs. Great Recession FOCUSED COMPANY SERVING • Created more focused company after selling U.S. Pipe and Anvil with increased proportion of products for municipal repair and replacement market CRITICAL NEEDS FOR WATER • Additional sales primarily come from r
Slide 8: Remain Focused on Executing Key Strategies to Grow and Enhance Our Business
Remain Focused on Executing Key Strategies to Grow and Enhance Our Business Where Intelligence Meets Infrastructure® Mueller is committed to manufacturing innovative products and creating smart solutions that will solve future challenges, whether it's at the source, at the plant, below the ground, o
Slide 9: Commitment to Sustainability
Commitment to Sustainability • Released first ESG Report this past December • Inaugural report reflects how sustainability has been an integral part of Mueller Water Products for many years • While highlighting our sustainability achievements to date, discussed some of the ongoing initiatives to str
Slide 10: Products and Markets
Products and Markets TOIEAPSGMG CaNtcd Products
Slide 11: Strong Position in Broader Water Market
Strong Position in Broader Water Market Leading Product Positions in Key Product Categories (1) Water-Related Revenue as a % of Total Revenue (2) With over 160 years in the water utility market, Mueller Mueller Water Products is a water-focused company with Water Products has a large installed base
Slide 12: Mueller is Uniquely Positioned to Address Opportunities with Utilities
Mueller is Uniquely Positioned to Address Opportunities with Utilities with its Leading Infrastructure Products and Installed Base 12
Slide 13: U.S. Water Infrastructure Requires Substantial Long-term Investment
U.S. Water Infrastructure Requires Substantial Long-term Investment Repair & Replacement Market U.S. Water Infrastructure CAPEX and Investment Gap • Restoring existing water systems and expanding them to serve a growing • Spending on Water & Wastewater CAPEX in U.S. is >$50B (4) population through 2
Slide 14: Aging Infrastructure Increasing Water Main Breaks
Aging Infrastructure Increasing Water Main Breaks Aging of Pipe Infrastructure Water Main Break Rates Increasing (3) • Average age of water pipes has increased to 45 years in 2020 from 25 years in 1970 (1) • According to a study by Steven Folkman at Utah State University that surveyed nearly 200,000
Slide 15: Funding Water Utilities Infrastructure Repair
Funding Water Utilities Infrastructure Repair Water Utilities in North America Sources of Funding for U.S. Utilities • >50,000 water utilities and >14,000 wastewater utilities in U.S. • For U.S. utilities, 96% funded at state and local government level (3) and Canada (1) • Majority of utilities have
Slide 16: Need for Digital Water Solutions Expected to Accelerate
Need for Digital Water Solutions Expected to Accelerate Bluefield Research April 2020 Note “COVID-19 is an inflection point for long-term resilience, digital transformation of water sector. The U.S. & Canada digital water market is expected to sustain sizeable top-line losses in the immediate afterm
Slide 17: Broad-line of Technology-enabled Products
Broad-line of Technology-enabled Products • Currently have a number of products addressing these categories, including Echologics' pipe condition assessment services and fixed leak detection solutions, advanced meters and communication equipment, smart hydrants, pressure and water quality monitors,
Slide 18: Modernizing Manufacturing Facilities
Modernizing Manufacturing Facilities • Three transformational projects account for approximately $130M of capital spending and expected to drive approximately $30M of annualized incremental gross profit through combination of efficiencies and sales growth, after all are completed − Modernizing facil
Slide 19: Financial Performance
Financial Performance TOIEAPSGMG CaNtcd Products
Slide 20: Q1 2021 Consolidated Financial Highlights
Q1 2021 Consolidated Financial Highlights* • Net sales of $237.4M increased $24.8M, or 11.7%, primarily First Quarter 2021 2020 driven by increased shipment volumes across most of our product lines and higher pricing Net sales $ 237.4 $ 212.6 • Gross profit increased $5.8M, or 8.0%, to $78.4M with a
Slide 21: Full-Year Fiscal 2021 Outlook
Full-Year Fiscal 2021 Outlook* • Anticipate that strong growth in the residential construction end market will more than offset any temporary delays in the project-related portions of the municipal end market due to the pandemic • Updated annual guidance takes into account our strong first quarter p
Slide 22: Free Cash Flow
Free Cash Flow* $40.0 $34.1 • Net cash provided by operating activities for the $30.0 first quarter 2021 improved $46.5M to $34.1M, $15.6 primarily driven by improvements in working $20.0 capital management $18.5 $10.0 $15.2 • First quarter 2020 included the $22.2M $ in millions $0.0 payment associa
Slide 23: Strong Balance Sheet and Ample Liquidity
Strong Balance Sheet and Ample Liquidity* Well-Prepared to Deal with Ongoing Challenges from Pandemic • Moody’s: Ba2 Corporate Rating, Ba3 Notes Rating, Stable Outlook Credit Rating • S&P: BB Corporate and Notes Ratings, Stable Outlook Debt Maturities • $450M of 5.5% Senior Unsecured Notes (matures
Slide 24: Balanced and Disciplined Capital Allocation
Balanced and Disciplined Capital Allocation Cash Allocation since December 31, 2016 Capital Allocation Priorities (Through September 30, 2020) • Strong balance sheet, liquidity and cash flow $223M to Shareholders to support our strategies - $123M dividends - $100M share repurchases • Maintaining bal
Slide 25: Investment Highlights
Investment Highlights STRONG COMPETITIVE POSITION LONG-TERM END MARKET DYNAMICS CONTINUE TO IMPROVE MODERNIZING MANUFACTURING AND DRIVING OPERATIONAL EXCELLENCE TO DELIVER MARGIN EXPANSION LEVERAGING STRENGTHS TO INCREASE TECHNOLOGY-ENABLED PRODUCTS FLEXIBLE BALANCE SHEET AND STRONG CASH FLOW 25
Slide 26: Supplemental Data
Supplemental Data TOIEAPSGMG CaNtcd Products
Slide 27: History of Strong Financial Performance
History of Strong Financial Performance • Over last five years (FY15 to FY20), delivered 4.0% net sales CAGR with 5.9% adjusted EBITDA CAGR • Adjusted EBITDA margin improved 170 bps. over the last five years (FY15 to FY20) Consolidated Net Sales Consolidated Adjusted EBITDA (1) and ($ in millions) A
Slide 28: Strong Balance Sheet with Significant Flexibility
Strong Balance Sheet with Significant Flexibility • Reduced debt by $1.1B since March 31, 2006 and $650M since September 30, 2008 • Total debt of $447.7M and total cash of $223.0M leading to net debt leverage of 1.1x at December 31, 2020 with $336.4M of excess availability under the ABL, based on De
Slide 29: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended December 31, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales $ 215.9 $ 21.5 $ — $ 237.4 Gross profit $ 73.7 $ 4.7 $ — $ 78.4 Selling
Slide 30: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended December 31, 2020 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 16.7 Income tax expense (1) 5.8 Interest expense, net (1) 6.1 Pensio
Slide 31: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended December 31, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net sales (1) $ 192.3 $ 20.3 $ — $ 212.6 Gross profit (1) $ 68.0 $ 4.6 $ — $ 72.6
Slide 32: Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures
Segment Results and Reconciliation of Non-GAAP to GAAP Performance Measures (UNAUDITED) Quarter ended December 31, 2019 Infrastructure Technologies Corporate Consolidated (dollars in millions, except per share amounts) Net income $ 10.3 Income tax expense (1) 3.1 Interest expense, net (1) 7.4 Walter
Slide 33: Where Intelligence Meets Infrastructure
Where Intelligence Meets Infrastructure®
Mueller Water Products — Gabelli Annual Pump, Valve & Water Systems Symposium 2021 on 6ix