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| 8-K - 8-K - Mueller Water Products, Inc. | form8-k09x12x17xinvestorpr.htm |
Where Intelligence
Meets Infrastructure
F E B R U A R Y 2 0 1 7
M U E L L E R W A T E R P R O D U C T S . C O M
RBC Capital Markets
2017 Global Industrials Conference
September 13, 2017
PAGE 2
NON-GAAP Financial Measures
M U E L L E R W A T E R P R O D U C T S . C O M 2S E P T E M B E R 2 0 1 7
In an effort to provide investors with additional information
regarding the Company's results as determined by GAAP, the
Company also provides non-GAAP information that management
believes is useful to investors. These non-GAAP measures have
limitations as analytical tools, and securities analysts, investors and
other interested parties should not consider any of these non-GAAP
measures in isolation or as a substitute for analysis of the
Company's results as reported under GAAP. These non-GAAP
measures may not be comparable to similarly titled measures used
by other companies.
The Company presents adjusted income from continuing operations,
adjusted income from continuing operations per share, adjusted
operating income from continuing operations, adjusted operating
margin, adjusted EBITDA and adjusted EBITDA margin as
performance measures, because management uses these measures
in evaluating the Company's underlying performance on a consistent
basis across periods and in making decisions about operational
strategies. Management also believes these measures are
frequently used by securities analysts, investors and other interested
parties in the evaluation of the Company's recurring performance.
The Company presents net debt and net debt leverage
as performance measures because management uses
them in evaluating its capital management and the
investment community commonly uses them as
measures of indebtedness. The Company presents free
cash flow because management believes it is commonly
used by the investment community to measure the
Company's ability to create liquidity.
The calculations of these non-GAAP measures and
reconciliations to GAAP results are included as an
attachment to this presentation and have been posted
online at www.muellerwaterproducts.com.
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 we intend, expect, plan, project, believe or anticipate will or may occur in the future are
forward-looking statements.
Forward-looking statements are based on certain assumptions and assessments made by us in light of our
experience and perception of historical trends, current conditions and expected future developments. Examples of
forward-looking statements include, but are not limited to, statements we make regarding our expectations for
growth in our key end markets and financial results, including the impact of Hurricane Harvey on our results. Actual
results and the timing of events may differ materially from those contemplated by the forward-looking statements
due to a number of factors, including regional, national or global political, economic, business, competitive, market
and regulatory conditions and the other factors that are described in the section entitled “RISK FACTORS” in Item
1A of our most recently filed Annual Report on Form 10-K. Undue reliance should not be placed on any forward-
looking statements. We do not have any intention or obligation to update forward-looking statements, except as
required by law.
Forward-looking Statements
M U E L L E R W A T E R P R O D U C T S . C O M 3S E P T E M B E R 2 0 1 7
We sold Anvil in January 2017
As a result, Anvil's operating results for all prior periods, and the gain from its sale,
have been classified as discontinued operations
We filed a Form 8-K on February 21st which included the reclassified 2016 results by
quarter
PAGE 4
Reclassified Financials
M U E L L E R W A T E R P R O D U C T S . C O M 4S E P T E M B E R 2 0 1 7
Introduction
M U E L L E R W A T E R P R O D U C T S . C O M 5
Repositioned Mueller Water Products as a higher-margin, pure-play water infrastructure
company in attractive core markets
Divested Anvil International (non-core asset) for net proceeds of approximately $250 million
and further strengthened balance sheet
Creating value for shareholders by focusing on:
Organic growth
Manufacturing excellence
Acquisitions
S E P T E M B E R 2 0 1 7
Pure-play water
infrastructure company in
attractive core markets,
industry-leading margins,
strong balance sheet and
proven leadership team –
focused on growth.
Investment Highlights
Industry-leading operating
margins
Leading brand position in
water infrastructure
Attractive end markets poised
for increased investment
One of the largest installed
bases of iron gate valves and
fire hydrants in the U.S.
Strengthened balance sheet
through divestitures of non-
core assets, debt pay down
and ongoing focus on free
cash flow generation
Intelligent water technology
offerings to address
municipal pain points
Margin growth driven by
both strong incremental
operating leverage as end
markets grow and
productivity improvements
M U E L L E R W A T E R P R O D U C T S . C O M 6S E P T E M B E R 2 0 1 7
Solid Product Portfolio & Attractive End Markets
M U E L L E R W A T E R P R O D U C T S . C O M
FY2016 NET SALES: $801 MILLION
PORTFOLIO
Fire Hydrants Valves Metering Systems Leak Detection and Pipe
Condition Assessment
60%
Repair and replacement
of municipal water
distribution and treatment
systems
30%
Residential
construction
10%
Natural gas
utilities
100%
Municipal spending
7
Brass Products
S E P T E M B E R 2 0 1 7
LTM Business Performance
M U E L L E R W A T E R P R O D U C T S . C O M 8
Note: All amounts shown are LTM ended June 30, 2017
(1) Mueller Co. adjusted operating income and adjusted EBITDA exclude charges totaling $2.9 million.
Mueller Technologies adjusted operating loss and adjusted EBITDA exclude charges totaling $10.3 million.
$ 725.6
165.1
35.7
200.8
Fire Hydrants, Iron Gate
Valves, Butterfly, Ball &
Plug Valves
$ 89.1
(8.1)
5.1
(3.0)
Metering Systems, Leak
Detection and Pipe
Condition Assessment
$ 814.7
121.8
41.3
163.1
Water Infrastructure
As of June 30, 2017
$ in millions
Net Sales
Adjusted Operating
Income(Loss)(1)
Depreciation &
Amortization
Adjusted EBITDA(1)
Product and Services
Portfolio
S E P T E M B E R 2 0 1 7
Intelligent Water Technology™
Mueller Water Products provides products
and offers services used in the
transmission, distribution and
measurement of safe, clean drinking water
and in water treatment facilities. These
smart technology products and services
help utilities actively diagnose, monitor and
control the delivery of drinking water,
making Mueller Water Products an integral
part of the water system.
M U E L L E R W A T E R P R O D U C T S . C O M 9S E P T E M B E R 2 0 1 7
Our Leading Product Positions
M U E L L E R W A T E R P R O D U C T S . C O M 1 0
#1 PRODUCTPOSITION #1 PRODUCTPOSITION #1
PRODUCT
POSITION #2 PRODUCTPOSITION
Company estimates based on internal analysis and information from trade associations and distributor networks, where available.
S E P T E M B E R 2 0 1 7
Drivers of Success
Manufacturing Excellence
Increasing equipment efficiency
Reducing capital expenditures
payback period
Driving margin expansion
M U E L L E R W A T E R P R O D U C T S . C O M 1 1
Organic Growth
Growing end markets
Developing new products
Enhancing existing products
Exploring adjacencies
Acquisitions
Focusing on water industry
Pursuing growth opportunities via
– Channel
– Geography
– Technology
– Breadth of product line
S E P T E M B E R 2 0 1 7
Why Invest in MWA?
M U E L L E R W A T E R P R O D U C T S . C O M 1 2
Fundamentally sound long-term dynamics
Aging infrastructure driving need for investment
Increasing public awareness of the need to upgrade
water infrastructure
Limited number of end-market suppliers
Strong operating leverage as end markets grow
Growing residential construction market
Increased municipal spending
Enhanced operational excellence initiatives
Strong competitive position
Leading brand and municipal specification positions
Large installed base
Comprehensive distribution network and strong end-
user relationships
Low-cost manufacturing operations using lost foam
process for valves and hydrants
Leveraging strengths with emerging trends
Intelligent Water TechnologyTM solutions
Proprietary fixed leak detection offerings - both
domestically and internationally
Smart metering
Strategic acquisitions / partnerships
S E P T E M B E R 2 0 1 7
Significant
Market
Opportunities
0
500
1,000
1,500
2,000
2,500
3,000
19
60
19
63
19
66
19
69
19
72
19
75
19
78
19
81
19
84
19
87
19
90
19
93
19
96
19
99
20
02
20
05
20
08
20
11
20
14
20
17
20
20
Market Driver: Housing Starts
M U E L L E R W A T E R P R O D U C T S . C O M 1 4
Source: U.S. Census Bureau
Forecast: Blue Chip Economic Indicators, June 2017
Homebuilders’ confidence is one driver of housing starts, and confidence could increase due to improving job
growth in a key demographic for household formation: Millennials
NAHB Housing Market Index - National (1987 – June 2017)
Seasonally Adjusted Annualized
Historical Housing Starts (1959 –2017)
Seasonally Adjusted Annualized
Rates-Units in 000’s
Source: NAHB, June 2017
Bottom of prior
cycle
1959 to 2015:
Average 1,443
April 2009 – lowest starts
(499) since Census Bureau
began keeping record in
1959
2017 Blue Chip
Consensus
forecast of 1,230
0
10
20
30
40
50
60
70
80
90
100
Ju
n-
87
Ju
n-
89
Ju
n-
91
Ju
n-
93
Ju
n-
95
Ju
n-
97
Ju
n-
99
Ju
n-
01
Ju
n-
03
Ju
n-
05
Ju
n-
07
Ju
n-
09
Ju
n-
11
Ju
n-
13
Ju
n-
15
Ju
n-
17
S E P T E M B E R 2 0 1 7
The Market Opportunity is Significant & Growing
M U E L L E R W A T E R P R O D U C T S . C O M 1 5
Repair & Replacement Market
(1) American Water Works Association, Buried No Longer: Confronting America’s Water Infrastructure Challenge 2012
(2) ASCE: 2017 Report Card for America’s Infrastructure
(3) The EPA Clean Water and Drinking Water Infrastructure Gap Analysis 2002
(4) EPA 2013 Drinking Water Needs Survey and Assessment
Future Drinking Water Infrastructure
Expenditure Needs (4)
Restoring existing water systems and expanding them to serve a growing
population through 2050 will require a $1.7 trillion investment (1)
ASCE graded drinking water infrastructure a D (2)
At least 40 cities under consent decrees: Atlanta, Baltimore, Washington,
D.C., Suburban Washington, D.C. (WSSC), New Orleans
EPA analysis indicates the need to address aging transmission and distribution
pipes is accelerating (see chart below); valves and hydrants are generally
replaced along with pipe replacement and repair
(3)
S E P T E M B E R 2 0 1 7
Accelerating
Need
-50
50
150
250
350
450
550
19
54
19
57
19
60
19
63
19
66
19
69
19
72
19
75
19
78
19
81
19
84
19
87
19
90
19
93
19
96
19
99
20
02
20
05
20
08
20
11
20
14
20
17
CPI Water CPI Nat Gas CPI Postage CPI Electricity CPI All Items
Funding Water Infrastructure Repair
M U E L L E R W A T E R P R O D U C T S . C O M 1 6
Historical Water Rates Compared to
Other Utilities(1)
CPI Utilities
(NSA 1982-1984 = 100)
UTILITY SOURCES OF FUNDING
Majority of utilities have service connection fees and/or capital
recovery charges, with median fees of about $5,800(3)
CPI for water and sewerage maintenance increased
3.9% for 12 months ended July 2017(1) with average 7% annual
increase among 50 largest U.S. cities(5)
90% funded at local level(4)
Drinking Water State Revolving Fund: $800 million in FY 2016
(1) Bureau of Labor Statistics
(2) 2016 Strategic Directions: U.S. Water Industry – Black & Veatch
(3) American Water Works Association 2014 Water and Wastewater Rate Survey
(4) EPA Clean Water and Drinking Water Infrastructure Gap Analysis
(5) Bluefield 2017
S E P T E M B E R 2 0 1 7
Bringing Intelligence to Water Infrastructure
M U E L L E R W A T E R P R O D U C T S . C O M 1 7
Water Conservation Customer Service Focus
Awareness/education
Ongoing monitoring
Sustainability
13% of U.S. experiencing
drought or abnormally dry
conditions(1)
240,000 water main breaks per
year(2)
Non-Revenue Water
Up to 30% of treated water is
lost or unaccounted for in the
water system(3)
Growing number of states
requiring water loss audits(4)
(1) U.S. Drought Monitor August 2017
(2) EPA Aging Water Infrastructure Research Program
(3) Navigant Research
(4) National Resource Defense Council
“Smart metering is a highly successful way of accurately
identifying water loss.” – Black & Veatch 2016 Strategic Directions in the
U.S. Water Industry
S E P T E M B E R 2 0 1 7
Bringing Intelligence to Water Infrastructure
M U E L L E R W A T E R P R O D U C T S . C O M 1 8
Provide longer-range
AMI systems
Manage water service
remotely
Detect leaks
Increase education and
customer service with
consumer portal
A smart utility is a subset of a smart city and the Mi.Net
System is the backbone and platform for a smart water
network.
Detect leaks on fixed transmission
and distribution mains; ongoing
monitoring
Assess condition of distribution and
transmission mains
Smart Metering Leak Detection and Pipe
Condition Assessment
Remote Disconnect Meter
Mueller Systems Network
Operations Center
Providing data analytics to manage water assets
Leak Detection
S E P T E M B E R 2 0 1 7
Actions &
Business
Results
Management Actions / Initiatives
Divested Anvil and U.S. Pipe
Implemented Lean Six Sigma and other
manufacturing improvements:
Increased production capacity
within existing footprint
Lowered labor costs
Reduced manufacturing footprint
Generated free cash flow of
approximately $80 million in
FY2016– history of strong free
cash flow generation
Reduced debt by more than
$600 million from September
30, 2008 through June 30, 2017
Amended term loan credit
agreement and reduced
applicable interest rate spread
by 75 basis points
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
Acquired automatic control valves
Acquired and investing in leak detection
and pipe condition assessment
technologies
Acquired and investing in AMI
technology
Enhanced Smart Water offering with
remote disconnect meter, integrated
leak detection and longer-range
communications capabilities
M U E L L E R W A T E R P R O D U C T S . C O M 2 0S E P T E M B E R 2 0 1 7
Net sales increased 3.3% to $232.2 million as
compared with $224.7 million last year
Net sales increased due to volume growth at
Mueller Co. and the February acquisition of
Singer Valve
Adjusted operating income increased 1.8% to
$44.6 million as compared with $43.8 million
last year
Adjusted EBITDA increased to $54.8 million
compared with $53.6 million last year
Trailing twelve months adjusted EBITDA was
$163.1 million, or 20.0% of net sales, an
improvement of 70 basis points compared with
last year
Grew third quarter adjusted earnings from
continuing operations per share to $0.16 from
$0.15 last year
PAGE 21
Q3 2017 CONSOLIDATED NON-GAAP RESULTS
M U E L L E R W A T E R P R O D U C T S . C O M 2 1
Third Quarter 2017 2016
Net sales $ 232.2 $ 224.7
Adj. operating income $ 44.6 $ 43.8
Adj. operating margin 19.2% 19.5%
Adj. income per share $ 0.16 $ 0.15
Adj. EBITDA $ 54.8 $ 53.6
Adj. EBITDA margin 23.6% 23.9%
TTM adj. EBITDA $ 163.1 $ 154.9
Results from continuing operations
$ in millions except per share amounts
2017 third quarter results exclude charges totaling $2.0 million, $1.3 million net of tax
2016 third quarter results exclude charges totaling $21.2 million, $14.0 million net of tax
S E P T E M B E R 2 0 1 7
Q3 2017 Key Operating Takeaways
We are pleased to see the increased growth in our end markets this quarter, with our overall
net sales growth coming in about as we expected
Mueller Co. delivered solid net sales growth despite a difficult comparison with a year
ago
Mueller Technologies, results were somewhat mixed with sales growth in our fixed leak
detection, pipe condition assessment and AMI systems, offset by lower AMR and visual-
read meter shipments
We continue to be encouraged by the operating performance of the Company as we delivered
meaningful productivity improvements in the quarter
We expect material costs to continue to rise, but the impact to be less due to productivity
improvements and higher market pricing
Price has been lagging material cost increases, but we are encouraged pricing was higher Q3
than Q2
Hurricane Harvey Update:
Although we continue to assess the impact on supply chain and scheduled shipments, we currently
do not expect fiscal fourth quarter results to be materially impacted by the hurricane
M U E L L E R W A T E R P R O D U C T S . C O M 2 2S E P T E M B E R 2 0 1 7
Debt Structure
M U E L L E R W A T E R P R O D U C T S . C O M 2 3
■ Net debt leverage 0.8x down from a peak of more than 6x
■ No significant required principal payments on outstanding debt before
November 2021
■ No financial maintenance covenants with excess availability at the
greater of $17.5 million or 10.0% of facility amount
■ ~ $110 million excess availability as of June 30, 2017
Debt Maturity (at 06/30/2017)
$ in millions
Debt Structure at June 30, 2017
$225 million
ABL Agreement
Expires July 2021
$500 million
Term Loan B
LIBOR* + 250 bps
due November 2021
* Subject to a floor of 75 bpsNone outstanding
S E P T E M B E R 2 0 1 7
Managed Capital Allocation
M U E L L E R W A T E R P R O D U C T S . C O M 2 4
Acquisitions
Share Repurchases
Authorized to repurchase up to $250
million
Repurchased aggregate of $55 million
during the 2nd and 3rd quarters 2017
Organic Growth Opportunities
Developing new products
Making capital investments
Debt Reduction
Dividends
Three increases since April 2015
$ 0.07 $ 0.075
$ 0.10
$ 0.15
FY14 FY15 FY16 FY17
S E P T E M B E R 2 0 1 7
Supplemental
Data
PAGE 26
SEGMENT RESULTS AND RECONCILIATION
OF GAAP TO NON-GAAP PERFORMANCE MEASURES
Quarter ended June 30, 2017
Mueller Co.
Mueller
Technologies Corporate Consolidated
(dollars in millions, except per share amounts)
Net sales $ 207.6 $ 24.6 $ — $ 232.2
Gross profit $ 76.9 $ 5.6 $ — $ 82.5
Selling, general and administrative expenses 23.6 7.2 7.9 38.7
Other charges 0.4 — 0.8 1.2
Operating income (loss) from continuing operations $ 52.9 $ (1.6) $ (8.7) 42.6
Interest expense, net 5.1
Income tax expense 13.4
Income from continuing operations $ 24.1
Income from continuing operations per diluted share $ 0.15
Capital expenditures $ 6.1 $ 1.3 $ 0.1 $ 7.5
Operating margin 25.5% (6.5)% 18.3%
Reconciliation of Non-GAAP performance measures to GAAP performance
measures:
Income from continuing operations $ 24.1
Inventory purchase accounting adjustment 0.8
Other charges 1.2
Income tax benefit of adjusting items (0.7)
Adjusted income from continuing operations $ 25.4
Weighted average diluted shares outstanding 160.6
Adjusted income from continuing operations per share $ 0.16
2 6
PAGE 27
SEGMENT RESULTS AND RECONCILIATION
OF GAAP TO NON-GAAP PERFORMANCE MEASURES
Quarter ended June 30, 2017
Mueller Co.
Mueller
Technologies Corporate Consolidated
(dollars in millions, except per share amounts)
Net income $ 24.0
Plus loss from discontinued operations 0.1
Interest expense, net (1) 5.1
Income tax expense (1) 13.4
Operating income (loss) from continuing operations $ 52.9 $ (1.6) $ (8.7) 42.6
Inventory purchase accounting adjustment 0.8 — — 0.8
Other charges 0.4 — 0.8 1.2
Adjusted operating income (loss) from continuing operations 54.1 (1.6) (7.9) 44.6
Depreciation and amortization 8.9 1.2 0.1 10.2
Adjusted EBITDA $ 63.0 $ (0.4) $ (7.8) $ 54.8
Adjusted operating margin 26.1% (6.5)% 19.2%
Adjusted EBITDA margin 30.3% (1.6)% 23.6%
Adjusted EBITDA $ 63.0 $ (0.4) $ (7.8) $ 54.8
Three prior quarters' adjusted EBITDA 137.8 (2.6) (26.9) 108.3
Trailing twelve months' adjusted EBITDA $ 200.8 $ (3.0) $ (34.7) $ 163.1
Reconciliation of net debt to total debt (end of period):
Current portion of long-term debt $ 5.5
Long-term debt 475.7
Total debt 481.2
Less cash and cash equivalents 353.2
Net debt $ 128.0
Net debt leverage (net debt divided by trailing twelve months' adjusted EBITDA) 0.8x
Reconciliation of free cash flow to net cash provided by operating activities of
continuing operations:
Net cash provided by operating activities of continuing operations $ 41.7
Less capital expenditures (7.5)
Free cash flow $ 34.2
(1) We do not allocate interest or income taxes to our segments. 2 7
PAGE 28
SEGMENT RESULTS AND RECONCILIATION
OF GAAP TO NON-GAAP PERFORMANCE MEASURES
Quarter ended June 30, 2016
Mueller Co.
Mueller
Technologies Corporate Consolidated
(dollars in millions, except per share amounts)
Net sales $ 198.7 $ 26.0 $ — $ 224.7
Gross profit $ 77.5 $ 5.7 $ — $ 83.2
Selling, general and administrative expenses 23.4 7.2 8.8 39.4
Pension settlement 2.2 — 14.4 16.6
Other charges 0.2 — 4.4 4.6
Operating income (loss) $ 51.7 $ (1.5) $ (27.6) 22.6
Interest expense, net 6.0
Income tax expense 5.6
Income from continuing operations $ 11.0
Income from continuing operations per diluted share $ 0.07
Capital expenditures $ 3.6 $ 1.5 $ — $ 5.1
Operating margin 26.0% (5.8)% 10.1%
Reconciliation of Non-GAAP performance measures to GAAP performance measures:
Income from continuing operations $ 11.0
Pension settlement 16.6
Other charges 4.6
Income tax benefit of adjusting items (7.2)
Adjusted income from continuing operations $ 25.0
Weighted average diluted shares outstanding 163.6
Adjusted income from continuing operations per share $ 0.15
2 8
PAGE 29
SEGMENT RESULTS AND RECONCILIATION
OF GAAP TO NON-GAAP PERFORMANCE MEASURES
Quarter ended June 30, 2016
Mueller Co. Mueller Technologies Corporate Consolidated
(dollars in millions, except per share amounts)
Net income $ 15.5
Less income from discontinued operations (4.5)
Interest expense, net (1) 6.0
Income tax expense (1) 5.6
Operating income (loss) from continuing operations $ 51.7 $ (1.5) $ (27.6) 22.6
Pension settlement 2.2 — 14.4 16.6
Other charges 0.2 — 4.4 4.6
Adjusted operating income (loss) from continuing operations 54.1 (1.5) (8.8) 43.8
Depreciation and amortization 8.5 1.2 0.1 9.8
Adjusted EBITDA $ 62.6 $ (0.3) $ (8.7) $ 53.6
Adjusted operating margin 27.2% (5.8)% 19.5%
Adjusted EBITDA margin 31.5% (1.2)% 23.9%
Adjusted EBITDA $ 62.6 $ (0.3) $ (8.7) $ 53.6
Three prior quarters' adjusted EBITDA 131.6 (6.5) (23.8) 101.3
Trailing twelve months' adjusted EBITDA $ 194.2 $ (6.8) $ (32.5) $ 154.9
Reconciliation of net debt to total debt (end of period):
Current portion of long-term debt $ 5.6
Long-term debt 479.7
Total debt 485.3
Less cash and cash equivalents 148.3
Net debt $ 337.0
Net debt leverage (net debt divided by trailing twelve months' adjusted EBITDA) 2.2x
Reconciliation of free cash flow to net cash provided by operating activities of continuing
operations:
Net cash provided by operating activities of continuing operations $ 59.5
Less capital expenditures (5.1)
Free cash flow $ 54.4
(1) We do not allocate interest or income taxes to our segments.
2 9
PAGE 30
SEGMENT RESULTS AND RECONCILIATION
OF GAAP TO NON-GAAP PERFORMANCE MEASURES
Nine months ended June 30, 2017
Mueller Co.
Mueller
Technologies Corporate Consolidated
(dollars in millions, except per share amounts)
Net sales $ 535.5 $ 63.6 $ — $ 599.1
Gross profit $ 183.3 $ 3.3 $ — $ 186.6
Selling, general and administrative expenses 67.9 20.7 25.6 114.2
Other charges 2.1 0.1 2.8 5.0
Operating income (loss) from continuing operations $ 113.3 $ (17.5) $ (28.4) 67.4
Interest expense, net 17.0
Income tax expense 16.2
Income from continuing operations $ 34.2
Income from continuing operations per diluted share $ 0.21
Capital expenditures $ 13.8 $ 7.6 $ 0.2 $ 21.6
Operating margin 21.2% (27.5)% 11.3%
Reconciliation of Non-GAAP performance measures to GAAP performance
measures:
Income from continuing operations $ 34.2
Discrete warranty charge 9.8
Inventory purchase accounting adjustment 0.8
Other charges 5.0
Income tax benefit of adjusting items (2.7)
Adjusted income from continuing operations $ 47.1
Weighted average diluted shares outstanding 162.4
Adjusted income from continuing operations per share $ 0.29
3 0
SEGMENT RESULTS AND RECONCILIATION
OF GAAP TO NON-GAAP PERFORMANCE MEASURES
Nine months ended June 30, 2017
Mueller Co.
Mueller
Technologies Corporate Consolidated
(dollars in millions, except per share amounts)
Net income $ 104.0
Less income from discontinued operations (69.8)
Interest expense, net (1) 17.0
Income tax expense (1) 16.2
Operating income (loss) from continuing operations $ 113.3 $ (17.5) $ (28.4) 67.4
Discrete warranty charge — 9.8 — 9.8
Inventory purchase accounting adjustment 0.8 — — 0.8
Other charges 2.1 0.1 2.8 5.0
Adjusted operating income (loss) from continuing operations 116.2 (7.6) (25.6) 83.0
Depreciation and amortization 27.0 3.8 0.3 31.1
Adjusted EBITDA $ 143.2 $ (3.8) $ (25.3) $ 114.1
Adjusted operating margin 21.7% (11.9)% 13.9%
Adjusted EBITDA margin 26.7% (6.0)% 19.0%
Free cash flow:
Net cash used in operating activities of continuing operations $ 25.4
Less capital expenditures (21.6)
Free cash flow $ 3.8
(1) We do not allocate interest or income taxes to our segments.
3 1
PAGE 32
SEGMENT RESULTS AND RECONCILIATION
OF GAAP TO NON-GAAP PERFORMANCE MEASURES
Nine months ended June 30, 2016
Mueller Co.
Mueller
Technologies Corporate Consolidated
(dollars in millions, except per share amounts)
Net sales $ 525.6 $ 59.4 $ — $ 585.0
Gross profit $ 179.2 $ 10.9 $ — $ 190.1
Selling, general and administrative expenses 65.8 20.6 25.8 112.2
Pension settlement 2.2 — 14.4 16.6
Other charges 0.8 0.5 4.9 6.2
Operating income (loss) $ 110.4 $ (10.2) $ (45.1) 55.1
Interest expense, net 18.0
Income tax expense 11.8
Income from continuing operations $ 25.3
Income from continuing operations per diluted share $ 0.15
Capital expenditures $ 12.4 $ 4.5 $ 0.1 $ 17.0
Operating margin 21.0% (17.2)% 9.4%
Reconciliation of Non-GAAP performance measures to GAAP performance measures:
Income from continuing operations $ 25.3
Pension settlement 16.6
Other charges 6.2
Income tax benefit of adjusting items (7.7)
Adjusted income from continuing operations $ 40.4
Weighted average diluted shares outstanding 163.3
Adjusted income from continuing operations per share $ 0.25
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SEGMENT RESULTS AND RECONCILIATION
OF GAAP TO NON-GAAP PERFORMANCE MEASURES
Nine months ended June 30, 2016
Mueller Co.
Mueller
Technologies Corporate Consolidated
(dollars in millions, except per share amounts)
Net income $ 37.4
Less income from discontinued operations (12.1)
Interest expense, net (1) 18.0
Income tax expense (1) 11.8
Operating income (loss) from continuing operations $ 110.4 $ (10.2) $ (45.1) 55.1
Pension settlement 2.2 — 14.4 16.6
Other charges 0.8 0.5 4.9 6.2
Adjusted operating income (loss) from continuing operations 113.4 (9.7) (25.8) 77.9
Depreciation and amortization 25.5 3.5 0.3 29.3
Adjusted EBITDA $ 138.9 $ (6.2) $ (25.5) $ 107.2
Adjusted operating margin 21.6% (16.3)% 13.3%
Adjusted EBITDA margin 26.4% (10.4)% 18.3%
Free cash flow:
Net cash used in operating activities of continuing operations $ 54.4
Less capital expenditures (17.0)
Free cash flow $ 37.4
(1) We do not allocate interest or income taxes to our segments.
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HISTORY OF STRONG FINANCIAL PERFORMANCE
Net Sales
Adjusted
EBITDA(1) and
Adjusted EBITDA
Margin
(1) Mueller Co. adjusted EBITDA excludes purchase accounting adjustments of $52.9 in 2006, goodwill and
other impairment charges of $818.7 in 2009 and other charges of $0.1 in 2010, $1.4 in 2011, $2.5 in 2012, $1.5
in 2013, $2.1 in 2014, $8.4 in 2015 and $3.0 in 2016.
Note: Mueller Co.
2002-2012 net sales
and adjusted EBITDA
include Mueller
Technologies in
these years
($ in millions)
Fiscal year ended September 30
M U E L L E R W A T E R P R O D U C T S . C O M S E P T E M B E R 2 0 1 7
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