 Wedbush 2012 Clear Technology & Industrial Growth Conference September 12, 2012 Exhibit 99.1 |
 Forward Looking Statements 2 This document contains information that may constitute “forward-looking statements.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. These forward-looking statements include, but are not limited to, statements about the separation of Xylem Inc. (the “Company”) from ITT Corporation, the terms and the effect of the separation, the nature and impact of the separation, capitalization of the Company, future strategic plans and other statements that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to orders, revenues, operating margins and earnings per share growth, and statements expressing general views about future operating results — are forward-looking statements. Caution should be taken not to place undue reliance on any such forward-looking statements because they involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those set forth in Item 1A of our Annual Report on Form 10-K, and those described from time to time in subsequent reports filed with the Securities and Exchange Commission. |
 • Design, Manufacture, & Service Highly Engineered Technologies • A True Water Pure Play • Diverse End Market & Geographic Mix • Leading Brands & Application Expertise • Resilient Portfolio & Large Installed Base • Unrivaled Global Reach … Serving 150+ Countries Global Leader in Water Application Solutions 3 $3.8B Company Uniquely Positioned in the Attractive Water Industry $3.8B Company Uniquely Positioned in the Attractive Water Industry |
 Water Infrastructure Equipment & Services End Users Uniquely Positioned … 4 … … Global Leader in Attractive Water Industry Global Leader in Attractive Water Industry $500B Global Water Industry Growth Drivers • Depleting Water Supply • Tightening Regulation • Aging Infrastructure • Population Growth • Urbanization • Sustainability • Energy Efficiency Technology Intensive $30B • Highly Engineered • Premium Value • High Performance • Knowledge-Based Services • Differentiated Solutions • Higher Profitability |
 Segment Overview Market Size: $16B 2011 Revenues: $2.4B 2011 Op Margin*: 14.9% Water Infrastructure 63% Unique Position - Only Provider of All Three “T’s” Water Infrastructure Overview Water Infrastructure Overview Applied Water 37% Market Size: $14B 2011 Revenues: $1.4B 2011 Op Margin*: 12.0% Customers Residential & Commercial, Industrial Facilities, Agriculture Large Installed Base Growth Despite Slow New Construction Applied Water Overview Applied Water Overview Customers Public Utilities Industrial Facilities Distribution World-Class Global Direct (~70%) & Indirect Channels Note: (1) Global market share based on company estimates. Distribution Primarily through World-Class Indirect (+70%) Channels 5 *Excluding separation costs of $16M *Excluding separation costs of $13M Revenue by Application Market Share (1) Transport 73% #1 Treatment 18% #1 Test 9% #2 Revenue by Application Market Share (1) Bldg. Services 53% #2 Industrial Water 18% #2 Irrigation 9% #3 |
 Diversified Geographic Market Mix 6 Europe 37% U.S. 36% Asia Pac 11% Other 16% Geographical Mix* Geographical Mix* *2011 Revenues … … With Large Installed Base & Growing Emerging Market Exposure With Large Installed Base & Growing Emerging Market Exposure Region Highlights Europe • Large Installed Base • 2011 Flat Organically • 1H’12 Down 1% • So. Europe ~8% Tot Revenue U.S. • Large Installed Base • 2011 Up Low Single Digits • 1H’12 Up Low Single Digits Emerging Markets • Evenly Spread Across Latin America, Middle East & Africa, Eastern Europe, Asia Pac Emerging Markets Emerging Markets • BRIC & ROW Focused Growth Strategy • 40+ Sales Units Spread Globally • 2 Localized R&D Centers • 14 Production Facilities • ’09 -’11 Revenue CAGR +20% • Proj.Long-Term Revenue Growth 8-10+% Xylem Xylem Emerging Emerging Market Revenue Market Revenue ~19% in 2011 ~19% in 2011 |
 Agriculture Agriculture Residential Residential Commercial Commercial Public Utility Public Utility Diversified End Market Mix 7 … … With Strong Long Term Fundamentals & Growth Drivers With Strong Long Term Fundamentals & Growth Drivers Industrial Industrial % of XYL Revenue 40% 36% 13% 9% 3% Cycle • Late/Less Cyclical • Non-Cyclical • Late Cycle • Early Cycle • Mid Cycle Fundamentals • Operation Critical • Growing Tariffs • Green Regulation • Energy Efficiency • Growing Demand • Aftermarket & Replacement • Aftermarket & Replacement • Strong Replacement • Strong Replacement XYL ‘12 Organic Growth • Up Low to Mid Single Digit • Flat to Up Low Single Digit • Up Low Single Digit • Up Low Single Digit • Down Low Single Digit to Flat Depleting Water Supply Tightening Regulation Aging Infrastructure Population Growth Urbanization Sustainability Energy Efficiency LT Growth Drivers |
 Public Utility & Industrial Transport & Treatment 8 Application Technologies • Waste Water Transport • Filtration • Biological Treatment • UV & Ozone Disinfection Application Application Technologies Technologies • • Waste Water Transport Waste Water Transport • • Filtration Filtration • • Biological Treatment Biological Treatment • • UV & Ozone Disinfection UV & Ozone Disinfection |
 9 • 36% of Xylem Revenues related to Public Utility spending – in 2011: • ~$1B for Maintenance Activities • Public Utility spending grows long term • U.S.: ~6% CAGR 1965 – 2011 • Europe similar to U.S. • Asia Pacific growing faster • Funding of expenditures secure • ~80% funded by tariffs • Tariffs growing 8%/yr in U.S. • European Tariffs typically higher than U.S. • Funds typically can not be used for other purposes Strong Long-term Fundamentals…Xylem Provides Mission Critical Solutions Source: U.S. Census Bureau The Public Utility End Market • ~6% CAGR 1965 – 2011 • Only 3 years (‘69, ’83 and ‘11) saw >10% drop • 10% drop reduces Total XYL Revs. by ~(1-2) ppts U.S. Water and Sewer Construction Spending - $M |
 Test Applications 10 Analytical Instrumentation Analytical Instrumentation Diverse Applications Diverse Applications Environmental Environmental Water & Waste Water Water & Waste Water Food & Beverage Food & Beverage Chemical Chemical Pharmaceutical Pharmaceutical Ocean/Coastal Ocean/Coastal |
 Dewatering Applications Dewatering Applications Industrial Water Applications Industrial Water Applications Dewatering and Industrial Water Applications • Mining • Oil, Gas & Chemical • Water & Waste Water • Marine • Mining • Oil, Gas & Chemical • Water & Waste Water • Marine Diverse Applications • Construction • Disaster Recovery • Environmental • Heavy Industry |
 Commercial & Residential 12 Customers • Developers • Building Operators • Building Designers • HVAC Specialists • Contractors • Plumbers HVAC - Heating Pressure boosters Fire protection HVAC - Cooling Wastewater Zone Control |
 Resilient Portfolio & Increasing Profitability … … Proven Track Record, Continued Focus Proven Track Record, Continued Focus 13 • Resilient Portfolio … Despite Challenging End Market Conditions • Management Discipline …Proactive Actions (~$100M of Restructuring & Realignment ‘08-’12) • Operational Excellence … Driving Productivity Initiatives • Continued Investment Driving Growth in Core Business • Key Acquisitions … Transitioning Portfolio to Higher Profitability Levels Revenue Up ~$510M … +15% Op Income Up ~$165M … ~46% Incremental Margin ~32% (2012E At Mid-Point Guidance) Incl. Stand- Alone Costs 12.7% 13.0% $M, unless otherwise indicated Expansion +290 Bps On Comp Basis Revenue Operating Margin * 2008 2009 2010 2011 2012E 10.8% 10.8% 12.6% 12.8% 13.7% 2008 2009 2010 2011 2012E 3,291 2,849 3,202 3,803 ~3.8B * Excludes the impact of restructuring and stand alone costs for all periods. See Appendix for Non-GAAP Reconciliations |
 Gross Margin Improvement Funds Future Growth Xylem Continues to Invest While Increasing Profitability Xylem Continues to Invest While Increasing Profitability 14 • Operational and Commercial Excellence • Growth in Higher Margin Analytics and Dewatering applications • Xylem’s Water Infrastructure Direct Sales Force a Key Competitive Advantage 2008 2009 2010 2011 34.7% 36.4% 37.9% 38.4% Gross Margin 2008 2009 2010 2011 1.9% 2.2% 2.3% 2.6% R&D 2008 2009 2010 2011 21.9% 23.4% 23.0% 23.1% SG&A |
 15 Highly Attractive Recurring Revenue Profile • 15% of Xylem revenue • Strong global presence • 120+ owned service centers • 600+ service employees • Extensive channel partner network • 9% Revenue CAGR ‘06-’11 despite economic downturn • Approximately 22% of Xylem revenue • Installed base drives replacement sales • Brand loyalty drives like-for-like replacement • Installed base provides opportunity for upgrades, next generation and services $M Aftermarket Parts & Services Revenues Note: (1) Based on company estimates. Aftermarket Provides Stability and Drives Strong Profitable Growth Replacement Equipment (1) 2006 2007 2008 2009 2010 2011 $370 $382 $396 $433 $512 $570 • ~11% revenue growth 2010-2011 |
 Focused on Free Cash Flow 16 1 Free Cash Flow = Net cash from operating activities - Capital expenditures Strong Strong Free Free Cash Cash Flow Flow & & Solid Solid Balance Balance Sheet Sheet to to Fund Fund Growth Growth Initiatives Initiatives Capital Structure & Liquidity Position Capital Structure & Liquidity Position June 30, 2012 Cash 358 Debt 1,206 Net Debt 848 Shareholders’ Equity 1,948 Net Capital 2,796 Net Debt to Net Capital 30% • Strong Cash Flow Conversion • Balance Sheet Flexibility • No Significant Debt Maturities Until 2016 • 30% Net Debt to Net Capital • 1.3x Net Debt/Adj. TTM EBITDA • $600M Revolving Credit Facility - Unutilized • Access to Commercial Paper - Unutilized * See non-GAAP reconciliations. $341 $308 $301 $388 152% 117% 91% 111% 2008 2009 2010 2011 Free Cash Flow Free Cash Flow 1* 1* and Conversion ($M) and Conversion ($M) |
 Disciplined Capital Deployment 17 • 2.5% – 3.5% of sales • ~$0.10/share • In-line with peers • Up to $300M / year Capital Deployment Strategy • Balance of organic & inorganic investment • Return value to shareholders • Maintain solid investment grade metrics • Debt & pension Organic Growth World Class Facilities Cash Return to Shareholders Cash to Meet Key Obligations Inorganic Investment to Fuel Growth Capital Deployment Evaluation • Fold targeted performance into Operating plans • Quarterly / Annual investment review • Ensure targeted returns achieved Focused on Long Term Shareholder Return Focused on Long Term Shareholder Return Capex Return to Shareholders Financial Obligations Acquisition Strategy Cash from Operations |
 Xylem Has a Focused Growth Strategy • Replicate leadership positions • Strong aftermarket opportunities • Innovative application solutions Organic & Inorganic Growth Expertise Organic & Inorganic Growth Expertise • Established footprint • Localized innovation centers • Focused BRIC & ROW Strategy • Disciplined approach • History of successful integration • Bolt-on, niche go-forward strategy 18 $4.5B - $5.0B (1) Revenue growth rates based on 2011 revenue of $3,803 $M, unless otherwise indicated Organic Growth Emerging Markets Acquisition Strategy ~8% CAGR 2010 2011 2012E 2015E 3,202 3,803 ~3.8B Long Term Growth Rates (1) • Organic 4 - 6% • M&A 1 - 2% Market Growth Rates • Developed 1 - 3% • Emerging 8 - 10+% • Global 3 - 5% |
 Financial Projections 19 • Market growth of 3-5%...4-6% Xylem targeted growth • Acquisition strategy adds 1-2 % points of growth • Emerging markets > 20% of revenues Xylem is Poised to Achieve its Long-Term Financial Objectives Xylem is Poised to Achieve its Long-Term Financial Objectives • Operational & Commercial excellence expand segment margins 50-75 bps per year – Gross margin > 40% • Continued cash management discipline to achieve cash conversion of ~100% • Capital deployment strategy to drive ROIC 2012 FY Guidance As of August 2, 2012 2015 Target Revenues ~$3.8B $4.5B to $5.0B Operating Margin* 12.7% to 13.3% 14.5% to 15.5% Free Cash Flow Conversion 95% 100% Normalized EPS Growth* +4% to +10% * See non-GAAP reconciliations. Long-Term Targets |
 Investment Highlights 20 • $3.8B Company Uniquely Positioned in the Attractive Water Industry • Resilient Portfolio & Proven Track Record of Increasing Profitability • Leading Brands & World-Class Distribution Channels • Diversified End & Geographic Markets Mix • Attractive Growth Opportunities & Large Installed Base • Solid Cash Flow Generation & Disciplined Capital Deployment Strategy Ability to Deliver Strong & Consistent Financial Performance Ability to Deliver Strong & Consistent Financial Performance |
 21 NYSE: XYL Phil De Sousa, Investor Relations Officer (914) 323-5930 Janice Tedesco, Investor Relations Coordinator (914) 323-5931 http://investors.xyleminc.com Thank you for your interest ! Thank you for your interest ! |
 Appendix |
 Non-GAAP Measures 23 Xylem Inc. Non-GAAP Measures Management views key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, free cash flow, working capital, and backlog, among others. In addition, we consider certain measures to be useful to management and investors evaluating our operating performance for the periods presented, and provide a tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operations as determined in accordance with GAAP. We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators: “Organic revenue" and "Organic orders” transactions, and contributions from acquisitions and divestitures. Divestitures include sales of portions of our business that did not meet the criteria for classification as a discontinued operation or insignificant portions of our business that we did not classify as a discontinued operation. The period-over-period change resulting from foreign currency fluctuations assumes no change in exchange rates from the prior period. “Constant currency” rate. This approach is used for countries whose functional currency is not the U.S. dollar. “EBITDA” adjustment to EBITDA to exclude for one-time separation costs associated with the Xylem spin-off from ITT Corporation. “Operating Income * ”, "Adjusted Operating Income" and “Adjusted EPS” restructuring and realignment and one-time separation costs associated with the Xylem spin-off from ITT Corporation and tax-related special items. “Normalized EPS” stand alone costs in the prior comparable period. “Free Cash Flow” other significant items that impact current results which management believes are not related to our ongoing operations and performance. Our definition of free cash flows does not consider non-discretionary cash payments, such as debt. defined as revenue and orders, respectively, excluding the impact of foreign currency fluctuations, intercompany defined as financial results adjusted for currency by translating current period and prior period activity using the same currency conversion defined as earnings before interest, taxes, depreciation, amortization expense, and share-based compensation. “Adjusted EBITDA” reflects the defined as operating income and earnings per share, adjusted to exclude defined as adjusted earnings per share, as well as adjustments to reflect the incremental current period amount of interest expense and defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well as adjustments for |
 Non-GAAP Reconciliation: Organic Revenue 24 (A) (B) (C) (D) (E) (F) = B+C+D+E (G) = F/A Change % Change Change % Change Revenue Revenue 2011 v. 2010 2011 v. 2010 FX Contribution Eliminations Adj. 2011 v. 2010 Adj. 2011 v. 2010 2011 2010 Year Ended December 31, 2011 Xylem Inc. 3,803 3,202 601 18.8% (264) (111) - 226 7.1% Water infrastructure 2,416 1,930 486 25.2% (264) (87) 2 137 7.1% Applied Water 1,444 1,327 117 8.8% - (28) (1) 88 6.6% Change % Change Change % Change Revenue Revenue 2010 v. 2009 2010 v. 2009 FX Contribution Eliminations Adj. 2010 v. 2009 Adj. 2010 v. 2009 2010 2009 Year Ended December 31, 2010 Xylem Inc. 3,202 2,849 353 12.4% (263) 6 - 96 3.4% Water Infrastructure 1,930 1,651 279 16.9% (247) (8) - 24 1.5% Applied Water 1,327 1,254 73 5.8% (16) 16 - 73 5.8% Change % Change Change % Change Revenue Revenue 2009 v. 2008 2009 v. 2008 FX Contribution Eliminations Adj. 2009 v. 2008 Adj. 2009 v. 2008 2009 2008 Year Ended December 31, 2009 Xylem Inc. 2,849 3,291 (442) -13.4% (7) 158 - (291) -8.8% Water infrastructure 1,651 1,824 (173) -9.5% - 108 - (65) -3.6% Applied Water 1,254 1,527 (273) -17.9% (7) 53 - (227) -14.9% Acquisitions / Divestitures Acquisitions / Divestitures Xylem Inc. Non-GAAP Reconciliation Reported vs. Organic Revenue ($ Millions) (As Reported - GAAP) (As Adjusted - Organic) Acquisitions / Divestitures |
  Non-GAAP Reconciliation: EBITDA 25 2011 2010 2009 2008 Pre-Tax Net Income 383 388 277 312 Interest, net 17 - - - Depreciation and Amortization (1) 150 101 79 72 EBITDA 550 489 356 384 Separation Costs 87 - - - Adjusted EBITDA 637 489 356 384 Revenues 3,803 3,202 2,849 3,291 Adjusted EBITDA Margin 16.7% 15.3% 12.5% 11.7% Note: (1) Includes share-based compensation. Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA Years ended 2011, 2010, 2009, & 2008 ($ Millions) |
 Non-GAAP Reconciliation: Earnings Per Share 26 FY 2009 FY 2010 FY 2011 Net Income 263 329 279 Separation costs, net of tax - - 72 Adjusted Net Income before Special Tax Items 263 329 351 Special Tax Items (61) (43) 7 Adjusted Net Income 202 286 358 Diluted Earnings per Share $1.42 $1.78 $1.50 Separation costs per Share - - $0.39 Adjusted diluted EPS before Special Tax Items $1.42 $1.78 $1.89 Special Tax Items per Share ($0.32) ($0.23) $0.04 Adjusted diluted EPS $1.10 $1.55 $1.93 Xylem Inc. Non-GAAP Reconciliation Adjusted Diluted EPS 2009, 2010, & 2011 ($ Millions, except per share amounts) |
 Non-GAAP Reconciliation: Guidance 27 Illustration of Mid Point Guidance 2012 Guidance FY '11 FY '12 As Reported Adjustments Adjusted Adjustments Normalized As Projected Adjustments Adjusted Total Revenue 3,803 3,803 3,803 3,800 3,800 Segment Operating Income 503 29 a 532 (10) d 522 524 25 h,i 549 Segment Operating Margin 13.2% 14.0% 13.7% 13.8% 14.4% Corporate Expense 108 (58) b 50 18 e 68 66 (11) h 55 Operating Income 395 87 482 (28) 454 458 36 494 Operating Margin 10.4% 12.7% 11.9% 12.1% 13.0% Interest Expense (17) (17) (39) f (56) (54) (54) Other Non-Operating Income (Expense) 5 5 5 (2) (2) Income before Taxes 383 87 470 (67) 403 402 36 438 Provision for Income Taxes (104) (8) c (112) 16 g (96) (99) (10) j (109) Net Income 279 79 358 (51) 307 303 26 329 Diluted Shares 185.3 185.3 186.3 186.3 Diluted EPS 1.50 $ 0.43 $ 1.93 $ (0.27) $ 1.66 1.63 0.14 1.77 a One time separation costs incurred at the segment level b One time separation costs incurred at the corporate level c Net tax impact of above items, plus the addition of 2011 special tax items d Incremental stand alone costs to be incurred in 2012 at the segment level ($10M) e Incremental stand alone costs to be incurred in 2012 at the corporate level ($18M) f Incremental interest expense on long-term debt to be incurred in 2012 g Tax impact of incremental interest expense and stand alone costs to be incurred in 2012 h Expected one time separation costs of $7M and $11M to be incurred at the segments and headquarters, respectively. i Restructuring & realignment costs of $18M to be incurred at the segments. j Tax impact of one time separation, restructuring & realignment costs expected to be incurred in 2012 and tax special items realized through Q2 2012. Xylem Inc. Non-GAAP Reconciliation Guidance ($ Millions, except per share amounts) |
 Non-GAAP Reconciliation: Free Cash Flow 28 Xylem Inc. Non-GAAP Reconciliation Net Cash - Operating Activities vs. Free Cash Flow Years ended 2011, 2010, 2009, & 2008 ($ Millions) Year Ended 2011 2010 2009 2008 Net Cash - Operating Activities 449 395 370 408 Capital Expenditures (126) (94) (62) (67) Free Cash Flow, including separation costs 323 301 308 341 Separation Costs (Cash Paid incl. Capex) 65 - - - Free Cash Flow, excluding separation costs 388 301 308 341 Net Income 279 329 263 224 Separation Costs, net of tax 72 - - - Adjusted Net Income 351 329 263 224 Free Cash Flow Conversion 111% 91% 117% 152% |
 Non-GAAP Reconciliation: Adj. Operating Income & Margin 29 Mid Point Guidance 2008 2009 2010 2011 2012E Revenue 3,291 2,849 3,202 3,803 3,800 Operating Income 315 276 388 395 458 Operating Margin 9.6% 9.7% 12.1% 10.4% 12.1% Restructuring & Realignment 41 31 15 - 18 Separation Costs - - - 87 18 Adjusted Operating Income 356 307 403 482 494 Adjusted Operating Margin 10.8% 10.8% 12.6% 12.7% 13.0% Standalone Costs - - - 5 28 Adj. Operating Income, excl. Standalone Costs 356 307 403 487 522 Adjusted Operating Margin, excl. Standalone Costs 10.8% 10.8% 12.6% 12.8% 13.7% Xylem Inc. Non-GAAP Reconciliation Adjusted Operating Income ($ Millions) |