![]() Q4 2012 Earnings Release February 7, 2013 Exhibit 99.2 |
![]() 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 in 2011, 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. |
![]() Q4’12 Financial Highlights • Orders: $926 Million; up 3% (Constant Currency*) • Revenue: $969 Million, down 3% • Gross Margin: 39.4%, up 150 bps • Operating Margin: 13.4%*, up 140 bps • EPS: $0.47*, up +21% on Normalized Basis Full Year 2012 Financial Highlights • Orders: $3.8 Billion; Backlog $647 million • Revenue: $3.8 Billion, up 2.5% (Constant Currency*) • Gross Margin: 39.6%, up 120 bps • Operating Margin: 12.9%*, up 100 bps on a Normalized Basis • EPS: $1.77*, up +7% on Normalized Basis • FCF: $312 Million*, 100% Conversion Business Update 3 Delivered Strong Operating Performance Despite Macro Challenges Delivered Strong Operating Performance Despite Macro Challenges * See Appendix for Non-GAAP Reconciliations Advancing Our Strategic Position • PIMS Group Acquisition Enhances Global Aftermarket & Services Business • MJK & Heartland Pump Integrations Underway; EPS Neutral in 2012 • Significant Restructuring & Realignment Actions to Primarily Reposition European Business +$0.13 EPS in 2013 Deploying Innovative New Product Applications & Services • 2012 Vitality Index +25% from 2011 • Middle East Expansion – Transport, Treatment, Dewatering & Analytics Applications Dividend Increase +15% |
![]() Acquisition Overview 4 Overview - Purchase Price $57M - ‘12 Rev $38M - 220 Employees - Installation & Private Sectors Maintenance Services - Enhances Global AM&S - Accelerates Expansion into Contract Services - Increases Regional Scale & Served Market Strategic Rationale PIMS Group Enhances Xylem’s Global Aftermarket Services - 24/7 Support >10K Sites - Municipal, Industrial & |
![]() Operating Income * Q4 Growth Organic -3% Acquisition 0% Constant Currency -3% FX 0% Total -3% Q4’12 Xylem Performance 5 -3% * See appendix for non-GAAP reconciliations (Dollars, In Millions) (Dollars, In Millions) Organic Performance By End Market By Geography Industrial Europe Public Utility U.S. Commercial Emerging Markets Residential Agriculture Operating Margin Expansion +140 Bps Cost Reductions Price Acquisitions Vol/Mix/Invest Cost Reductions Drive Cost Reductions Drive Significant Margin Expansion Significant Margin Expansion Q4'11 Op Margin* Operations FX Material, Labor, & OH Inflation Q4'12 Op Margin Before Stand- Alone Costs* Stand- Alone Costs Q4'12 Op Margin* 12.0% 13.6% 13.4% 2.9% 0.2% 4.3% 0.2% Q4'11 Q4'12 1,003 969 Q4'11 Q4'12 120 130 +8% +3.9% +1.1% -0.1% -0.6% Revenue |
![]() Q4’12 Xylem Performance 6 Operations Drives Strong EPS Performance +21% Stand-Alone Separation Costs Special Tax Q4’12 EPS * +21% Normalized +21% Normalized EPS Performance EPS Performance * See Appendix for Non-GAAP Reconciliations Operational Performance: Core Operations Acquisitions FX Translation Operating Tax Rate Separation Costs ($0.03) Restruct. & Realign. Costs ($0.07) Special Tax $0.02 Q4'11 GAAP EPS Adjustments Normalized Q4'11 EPS Operational Performance Adjusted Q4'12 EPS Adjustments Q4'12 GAAP EPS $0.28 $0.39 $0.47 $0.39 $0.08 $0.11 $0.08 ($0.01) $0.10 $0.02 $0.08 $ - $ - $ - |
![]() 7 Operating Income * * See Appendix for Non-GAAP Reconciliations (Dollars, In Millions) (Dollars, In Millions) Q4 Growth Q4 Growth Organic -7% Acquisition +2% Constant Currency -5% FX -1% Total -6% (Organic Performance) Transport -5% Public Utility … Weak Capital Project Market Industrial Dewatering Down … U.S. Drought & Lower Demand for Fracking Applications Disaster Recovery for Super Storm Sandy Public Utility … Weak Capital Project Market Industrial … Tough PY Comp Cost Reductions Price Acquisition Vol/Mix/Invest Operating Margin Expansion +120 Bps Q4’12 Water Infrastructure Performance Q4'11 Op Margin* Operations FX Material, Labor, & OH Inflation Q4'12 Op Margin* 15.3% 16.5% 2.7% 3.6% 0.3% Cost Reductions Drive Cost Reductions Drive Significant Margin Expansion Significant Margin Expansion Q4'11 Q4'12 104 105 +1% Q4'11 Q4'12 679 637 -6% Treatment -18% Test +1% +3.8% Revenue +0.7% -0.2% -0.7% |
![]() 8 Operating Margin Expansion +240 Bps Operating Income * * See Appendix for Non-GAAP Reconciliations (Dollars, In Millions) (Dollars, In Millions) (Organic Performance) • Building Services 2% + U.S. Residential & Commercial + Super Storm Sandy – Europe/Middle East Market Weakness • Industrial Water +6% + Favorable Across Most Regions + Timing of Shipments … F&B/O&G Strength • Irrigation +4% + Europe Improvement off of a Low Base Q4 Growth Organic +4% Acquisition -% Constant Currency +4% FX -1% Total +3% Cost Reductions Price Vol/Mix/Invest Cost Reductions Drive Cost Reductions Drive Significant Margin Expansion Significant Margin Expansion Q4’12 Applied Water Performance +4.0% +1.8% - 0.3% Q4'11 Op Margin Operations FX Material, Labor, & OH Inflation Q4'12 Op Margin * 9.2% 11.6% 3.2% 5.5% 0.1% Q4'11 Q4'12 336 346 +3% Q4'11 Q4'12 31 +29% 40 Revenue |
![]() 2012 Xylem Financial Position 9 Strong Cash Flow Performance … Healthy Balance Sheet Provides Flexibility Free Cash Flow * • Free Cash Flow Growth • Higher Cash Taxes • Full Year of Interest • Stand-Alone Costs • Capex > 1 reinvestment ratio Capital Summary/Liquidity • Strong cash position • No Significant Debt Maturities Until 2016 • 25% Net Debt to Net Capital • 1.1x Net Debt/Adj. TTM EBITDA • $600M Revolving Credit Facility - Unutilized • Access to Commercial Paper - Unutilized Working Capital as % Revenue ** FCF% 111% 100% December 31, 2012 Cash 504 Debt 1,205 Net Debt 701 Shareholders’ Equity 2,074 Net Capital 2,775 Net Debt to Net Capital 25% (Dollars, In Millions) (Dollars, In Millions) * See Appendix for Non-GAAP Reconciliations ** (AR+INV-AP-Customer Advances) / Revenue (Adjusted for Acquisitions) 2011 FX Operations 2012 21.7% 22.5% 0.2% 1.0% 2011 2012 388 312 |
![]() 2013 Guidance |
![]() 2013 Key Focus Areas 11 Drive Growth Initiatives Improve Business Sustainability Deliver Customer Value • Deploy Innovative Solutions • Invest in Growth Platforms • Accelerate Geographic Expansion • Cost Structure Optimization • Business Simplification • Operational Excellence • Customer Excellence • Xylem Total Care • Application Expertise Balanced Goals to Position Xylem for Sustained Profitable Growth Balanced Goals to Position Xylem for Sustained Profitable Growth |
![]() Revenue Profile 12 • Total Growth +19% • Organic Revenue +7% • Acquisitions +8% • Project Orders Start to Slow • Organic Revenue Flat • Weak End Markets • Europe Resilient • U.S. Industrial Slows in 2H • Cap Project Delays • 1Q - Down MSD • 1H - Down LSD; 2H - Up LSD • Europe Remains Stable • U.S. Strengthening in 2H • Emerging Markets +HSD • European Crisis • Fiscal Cliff / Super Storm Sandy • U.S. Industrial Slows TTM Revenues As Reported * See Appendix for Non-GAAP Reconciliations ------------ Public Utility Large Capital Project Delays ------------ 2011 2012 2013 Gaining Momentum Through 2013 |
![]() • U.S. Slight 2H Improvement • Europe Challenged End Markets 13 • Stable OPEX Market • No Change in Capital Projects • U.S. Flat Through 3Q of ’13 • Europe Challenged • Continued Slow Growth Environment • U.S. Driven by Replacement • Tough 2012 Compare in U.S. Driven by Drought Conditions (~ 43% of ’12 Revenue) (~ 35% of ’12 Revenue) (~ 11% of ’12 Revenue) (~ 8% of ’12 Revenue) (~ 3% of ’12 Revenue) Industrial Public Utility Commercial Residential Agriculture Flat Flat to Up Low Single Digit Flat to Up Low Single Digit Flat Flat to Up Low Single Digit Projected ‘13 XYL Growth Challenging Market Conditions Exiting 2012 |
![]() 2013 Financial Guidance Summary 14 2013 Full Year 2013 Full Year Financial Outlook Financial Outlook Growth Growth 2013E vs. 2012 2013E vs. 2012 Revenue (Mid-Point) Total Growth Organic Acquisition FX Xylem Consolidated ~$3,915M ~3 - 4% 0 - 1% 2% 1% Water Infrastructure ~$2,530M ~4 - 5% 0 - 1% 3% 1% Applied Water ~$1,450M ~1 - 2% 0 - 1% 0% 1% Segment Margin * 13.8% - 14.3% -50 bps to Flat Operating Margin * 12.3% - 12.8% -60 to -10 bps EPS * $1.80 - $1.90 $1.85 Mid Point Free Cash Flow Conversion ~95% Restructuring Pmts, Realignment Capex, & CHQ Relocation Guidance Assumptions: Operating Tax Rate ~21% 1H’13 Rate: ~22%; 2H’13 Rate: ~20% Share Count ~186.4M Share Repurchase Program to Maintain Current Share Count Items Excluded from EPS: Restructuring & Realignment Costs ~$60M - $70M Restructuring Costs: ~$40M to $50M * See Appendix for Non-GAAP Reconciliations |
![]() 2013 Guidance 15 OI% 12.9% (10) bps (40) bps 50 bps (30) bps 12.6% Run Rate Costs (Guidance Mid-Point) * See Appendix for Non-GAAP Reconciliations Higher Pension Costs $(0.02) Net EPS Benefit Driven by Tax Rate Reduction Cost Savings Initiatives & Productivity Drive 50 bps Core Margin Expansion Realignment Delivers Additional EPS Growth … Top Line Provides Upside $1.77 $- $0.07 $0.03 $1.85 EPS* & Operating Margin * Remaining 1xSpin Costs FX/Acq Core Operations European Realignment Adjusted FY’13 EPS Adjusted FY’12 EPS $0.02 |
![]() Summary 16 2012 Performance • Advanced Our Strategic Position • Deployed Innovative New Products & Services • Delivered Strong Financial Performance Despite Macro Challenges Looking Ahead to 2013 • Investing for Long-Term Growth • Restructuring & Realignment Actions Improve Competitive Position & Increase Efficiency & Effectiveness • Strong Financial Position Provides Flexibility |
![]() Appendix |
![]() Quarterly Financial Performance 18 ($M, Except EPS) FY’10 Q1’11 Q2’11 Q3’11 Q4’11 FY’11 Q1’12 Q2’12 Q3’12 Q4’12 FY’12 Revenue 3,202 890 971 939 1,003 3,803 925 966 931 969 3,791 COGS 1,988 553 592 574 623 2,342 562 583 557 587 2,289 Gross Profit 1,214 337 379 365 380 1,461 363 383 374 382 1,502 SG&A 737 210 219 215 233 877 231 220 231 232 914 R&D 74 24 26 23 27 100 28 28 24 26 106 Separation Costs - 3 18 46 20 87 5 6 4 7 22 Restructuring & Asset Impairment Charges, net 15 - - 2 - 2 - - 4 13 17 Op Income 388 100 116 79 100 395 99 129 111 104 443 Interest Expense - - 1 1 15 17 14 13 14 14 55 Other Non-Op - 1 - 4 - 5 (1) (1) 3 (1) - Income before Tax 388 101 115 82 85 383 84 115 100 89 388 Tax 59 23 43 5 33 104 21 26 28 16 91 Net Income 329 78 72 77 52 279 63 89 72 73 297 EPS – Diluted * $1.78 $0.42 $0.39 $0.42 $0.28 $1.50 $0.34 $0.48 $0.38 $0.39 $1.59 * On October 31, 2011, Xylem Inc. completed the spin-off through a tax-free stock dividend to ITT Corporation’s shareholders. ITT Corporation shareholders received one share of our common stock for each share of ITT common stock. As a result on October 31, 2011, we had 184.6 million shares of common stock outstanding and this share amount is being utilized to calculate earnings per share for all periods presented prior to the spin-off. |
![]() Non-GAAP Measures 19 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” defined as revenue and orders, respectively, excluding the impact of foreign currency fluctuations, intercompany 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” defined as financial results adjusted for currency translation impacts by translating current period and prior period activity using the same currency conversion rate. This approach is used for countries whose functional currency is not the U.S. dollar. “EBITDA” defined as earnings before interest, taxes, depreciation, amortization expense, and share-based compensation. “Adjusted EBITDA” reflects the adjustment to EBITDA to exclude for non-recurring separation costs associated with the Xylem spin-off from ITT Corporation as well as non-recurring restructuring and realignment costs. "Adjusted Operating Income", "Adjusted Segment Operating Income", and “Adjusted EPS” defined as operating income and earnings per share, adjusted to exclude non-recurring separation costs associated with the Xylem spin-off from ITT Corporation, non-recurring restructuring and realignment costs and tax-related special items. “Normalized EPS” defined as adjusted earnings per share, as well as adjustments to reflect the incremental current period amount of interest expense and stand alone costs in the prior comparable period. “Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well as adjustments for 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. |
![]() Non-GAAP Reconciliation: Organic & Constant Currency Revenue Growth 20 Constant Currency (A) (B) (C) (D) (E) (F) = B+C+D+E (G) = F/A (H) = (B + D) / A Change % Change Change % Change Revenue Revenue 2012 v. 2011 2012 v. 2011 FX Contribution Eliminations Adj. 2012 v. 2011 Adj. 2012 v. 2011 2012 2011 Year Ended December 31, 2012 Xylem Inc. 3,791 3,803 (12) -0.3% (94) 108 - 2 0.1% 2.5% Water infrastructure 2,425 2,416 9 0.4% (94) 80 (1) (6) -0.2% 3.7% Applied Water 1,424 1,444 (20) -1.4% - 32 (3) 9 0.6% 0.8% Quarter Ended December 31, 2012 Xylem Inc. 969 1,003 (34) -3.4% (7) 7 - (34) -3.4% -2.7% Water Infrastructure 637 679 (42) -6.2% (7) 5 (1) (45) -6.6% -5.4% Applied Water 346 336 10 3.0% - 2 - 12 3.6% 3.6% Quarter Ended September 30, 2012 Xylem Inc. 931 939 (8) -0.9% (21) 38 - 9 1.0% 3.2% Water infrastructure 595 584 11 1.9% (21) 28 - 18 3.1% 6.7% Applied Water 350 368 (18) -4.9% - 12 (2) (8) -2.2% -1.6% Quarter Ended June 30, 2012 Xylem Inc. 966 971 (5) -0.5% (32) 49 - 12 1.2% 4.5% Water infrastructure 609 602 7 1.2% (32) 37 (1) 11 1.8% 7.3% Applied Water 373 385 (12) -3.1% - 13 (1) - 0.0% 0.3% Quarter Ended March 31, 2012 Xylem Inc. 925 890 35 3.9% (34) 14 - 15 1.7% 5.5% Water infrastructure 584 551 33 6.0% (34) 10 1 10 1.8% 7.8% Applied Water 355 355 - 0.0% - 5 - 5 1.4% 1.4% Note: Due to rounding the sum of segment amounts may not agree to Xylem totals. Acquisitions / Divestitures Xylem Inc. Non-GAAP Reconciliation Reported vs. Organic & Constant Currency Revenue ($ Millions) (As Reported - GAAP) (As Adjusted - Organic) |
![]() Non-GAAP Reconciliation: Organic & Constant Currency Order Growth 21 Constant Currency (A) (B) (C) (D) (E) (F) = B+C+D+E (G) = F/A (H) = (B + D) / A Change % Change Change % Change Orders Orders 2012 v. 2011 2012 v. 2011 FX Contribution Eliminations Adj. 2012 v. 2011 Adj. 2012 v. 2011 2012 2011 Year Ended December 31, 2012 Xylem Inc. 3,782 3,847 (65) -1.7% (95) 114 - (46) -1.2% 1.3% Water infrastructure 2,421 2,454 (33) -1.3% (95) 87 1 (40) -1.6% 2.2% Applied Water 1,423 1,452 (29) -2.0% - 31 (8) (6) -0.4% 0.1% Quarter Ended December 31, 2012 Xylem Inc. 926 905 21 2.3% (7) 6 - 20 2.2% 3.0% Water infrastructure 602 589 13 2.2% (7) 5 1 12 2.0% 3.1% Applied Water 337 330 7 2.1% - 1 - 8 2.4% 2.4% Quarter Ended September 30, 2012 Xylem Inc. 882 966 (84) -8.7% (21) 39 - (66) -6.8% -4.7% Water infrastructure 564 621 (57) -9.2% (21) 29 - (49) -7.9% -4.5% Applied Water 334 358 (24) -6.7% - 12 (5) (17) -4.7% -3.4% Quarter Ended June 30, 2012 Xylem Inc. 970 998 (28) -2.8% (30) 51 - (7) -0.7% 2.3% Water infrastructure 617 632 (15) -2.4% (30) 40 - (5) -0.8% 4.0% Applied Water 370 383 (13) -3.4% - 13 (2) (2) -0.5% 0.0% Quarter Ended March 31, 2012 Xylem Inc. 1,004 978 26 2.7% (37) 18 - 7 0.7% 4.5% Water infrastructure 638 612 26 4.2% (37) 13 - 2 0.3% 6.4% Applied Water 382 381 1 0.3% - 5 (1) 5 1.3% 1.6% Note: Due to rounding the sum of segment amounts may not agree to Xylem totals. Acquisitions / Divestitures Xylem Inc. Non-GAAP Reconciliation Reported vs. Organic & Constant Currency Order Growth ($ Millions) (As Reported - GAAP) (As Adjusted - Organic) |
![]() ![]() Non-GAAP Reconciliation: Adjusted Diluted EPS 22 Q1 2012 Q2 2012 Q3 2012 Q4 2012 YTD 2012 Net Income 63 89 72 73 297 Separation Costs, Net of Tax 4 4 3 5 16 Restructuring & Realignment, Net of Tax - - 4 13 17 Adjusted Net Income before Special Tax Items 67 93 79 91 330 Special Tax Items - (1) 4 (3) - Adjusted Net Income 67 92 83 88 330 Diluted Earnings per Share $0.34 $0.48 $0.38 $0.39 $1.59 Separation Costs per Share $0.02 $0.02 $0.02 $0.03 $0.09 Restructuring & Realignment Costs per Share $0.00 $0.00 $0.02 $0.07 $0.09 Adjusted Diluted EPS before Special Tax Items $0.36 $0.50 $0.42 $0.49 $1.77 Special Tax Items per Share $0.00 ($0.01) $0.02 ($0.02) $0.00 Adjusted Diluted EPS $0.36 $0.49 $0.44 $0.47 $1.77 Q1 2011 Q2 2011 Q3 2011 Q4 2011 YTD 2011 Net Income 78 72 77 52 279 Separation Costs, Net of Tax 2 27 25 18 72 Adjusted Net Income before Special Tax Items 80 99 102 70 351 Special Tax Items - 4 (1) 4 7 Adjusted Net Income 80 103 101 74 358 Diluted Earnings per Share $0.42 $0.39 $0.42 $0.28 $1.50 Separation Costs per Share $0.01 $0.15 $0.13 $0.10 $0.39 Adjusted Diluted EPS before Special Tax Items $0.43 $0.54 $0.55 $0.38 $1.89 Special Tax Items per Share $0.00 $0.02 ($0.01) $0.02 $0.04 Adjusted Diluted EPS $0.43 $0.56 $0.54 $0.40 $1.93 Adjusted Diluted EPS 2012 and 2011 ($ Millions, except per share amounts) Xylem Inc. Non-GAAP Reconciliation Note: YTD EPS amounts may not equal the sum of the quarterly EPS amounts due to rounding. |
![]() Non-GAAP Reconciliation: Normalized and Adjusted EPS 23 Q4 2011 Q4 2012 As Reported Adjustments Adjusted Adjustments Normalized As Reported Adjustments Adjusted Total Revenue 1,003 1,003 1,003 969 969 Operating Income 100 20 a 120 (2) c 118 104 26 f 130 Operating Margin 10.0% 12.0% 11.8% 10.7% 13.4% Interest Expense (15) (15) (15) (14) (14) Other Non-Operating Income (Expense) - - - (1) (1) Income before Taxes 85 20 105 (2) 103 89 26 115 Provision for Income Taxes (33) 2 b (31) 0 e (31) (16) (11) g (27) Net Income 52 22 74 (2) 72 73 15 88 Diluted Shares 185.3 185.3 185.3 186.5 186.5 Diluted EPS 0.28 $ 0.12 $ 0.40 $ (0.01) $ 0.39 $ 0.39 $ 0.08 $ 0.47 $ YTD 2011 YTD 2012 As Reported Adjustments Adjusted Adjustments Normalized As Reported Adjustments Adjusted Total Revenue 3,803 3,803 3,803 3,791 3,791 Operating Income 395 87 a 482 (28) c 454 443 46 f 489 Operating Margin 10.4% 12.7% 11.9% 11.7% 12.9% Interest Expense (17) (17) (39) d (56) (55) (55) Other Non-Operating Income (Expense) 5 5 5 - - Income before Taxes 383 87 470 (67) 403 388 46 434 Provision for Income Taxes (104) (8) b (112) 16 e (96) (91) (13) g (104) Net Income 279 79 358 (51) 307 297 33 330 Diluted Shares 185.3 185.3 186.2 186.2 Diluted EPS 1.50 $ 0.43 $ 1.93 $ (0.27) $ 1.66 $ 1.59 $ 0.18 $ 1.77 $ a One time separation costs b Net tax impact of above items, plus the addition of 2011 special tax items c Incremental stand alone costs incurred in 2012 d Incremental interest expense on long-term debt incurred in 2012 e Incremental interest expense and stand alone costs incurred in 2012 tax affected using the 2011 effective tax rate, as adjusted f One time separation, restructuring & realignment costs g Tax impact of one time separation, restructuring & realignment costs and special tax items Xylem Inc. Non-GAAP Reconciliation Normalized and Adjusted Diluted EPS ($ Millions, except per share amounts) 185.3 |
![]() 24 Non-GAAP Reconciliation: Operating Income Q4 YTD '12 '11 '12 '11 Total Revenue • Total Xylem 969 1,003 3,791 3,803 • Water Infrastructure 637 679 2,425 2,416 • Applied Water 346 336 1,424 1,444 Operating Income • Total Xylem 104 100 443 395 • Water Infrastructure 89 98 342 343 • Applied Water 35 27 170 160 Operating Margin • Total Xylem 10.7% 10.0% 11.7% 10.4% • Water Infrastructure 14.0% 14.4% 14.1% 14.2% • Applied Water 10.1% 8.0% 11.9% 11.1% Separation Costs • Total Xylem 7 20 22 87 • Water Infrastructure 1 6 4 16 • Applied Water - 4 2 13 Restructuring & Realignment Costs • Total Xylem 19 - 24 - • Water Infrastructure 15 - 19 - • Applied Water 5 - 5 - Adjusted Operating Income* • Total Xylem 130 120 489 482 • Water Infrastructure 105 104 365 359 • Applied Water 40 31 177 173 Adjusted Operating Margin* • Total Xylem 13.4% 12.0% 12.9% 12.7% • Water Infrastructure 16.5% 15.3% 15.1% 14.9% • Applied Water 11.6% 9.2% 12.4% 12.0% *Adjusted Operating Income excludes non-recurring separation, restructuring & realignment costs Xylem Inc. Non-GAAP Reconciliation Adjusted Operating Income ($ Millions) |
![]() ![]() Non-GAAP Reconciliation: Free Cash Flow 25 2012 2011 Net Cash - Operating Activities 396 449 Capital Expenditures (112) (126) Free Cash Flow, including separation costs 284 323 Cash Paid for Separation Costs (incl. Capex) 28 65 Free Cash Flow, excluding separation costs 312 388 Net Income 297 279 Separation Costs, net of tax (incl. tax friction) 16 72 Adjusted Net Income 313 351 Free Cash Flow Conversion 100% 111% Xylem Inc. Non-GAAP Reconciliation Net Cash - Operating Activities vs. Free Cash Flow Years Ended December 31, 2012 and 2011 ($ Millions) Year Ended |
![]() ![]() 26 Non-GAAP Reconciliation: Xylem EBITDA & Adj. EBITDA Q1 Q2 Q3 Q4 YTD Income Before Taxes 84 115 100 89 388 Interest Expense (Income), net 13 13 12 13 51 Depreciation 23 21 24 26 94 Amortization 11 12 12 13 48 Stock Compensation 5 5 6 6 22 EBITDA 136 166 154 147 603 Separation Costs 5 6 4 7 22 Restructuring & Realignment Costs - - 5 19 24 Adjusted EBITDA 141 172 163 173 649 Revenue 925 966 931 969 3,791 Adjusted EBITDA Margin 15.2% 17.8% 17.5% 17.9% 17.1% Q1 Q2 Q3 Q4 YTD Income Before Taxes 101 115 82 85 383 Interest Expense (Income), net - - 1 16 17 Depreciation 22 25 25 21 93 Amortization 11 10 11 12 44 Stock Compensation 3 2 2 6 13 EBITDA 137 152 121 140 550 Separation Costs 3 18 46 20 87 Adjusted EBITDA 140 170 167 160 637 Revenue 890 971 939 1,003 3,803 Adjusted EBITDA Margin 15.7% 17.5% 17.8% 16.0% 16.7% 2011 Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter Total Xylem ($ Millions) 2012 |
![]() ![]() 27 Non-GAAP Reconciliation: Water Infrastructure EBITDA & Adj. EBITDA Q1 Q2 Q3 Q4 YTD Income Before Taxes 75 93 86 88 342 Interest Expense (Income), net - - (1) �� - (1) Depreciation 16 15 17 20 68 Amortization 10 9 10 10 39 Stock Compensation 1 1 3 - 5 EBITDA 102 118 115 118 453 Separation Costs 2 1 - 1 4 Restructuring & Realignment Costs - - 4 15 19 Adjusted EBITDA 104 119 119 134 476 Revenue 584 609 595 637 2,425 Adjusted EBITDA Margin 17.8% 19.5% 20.0% 21.1% 19.6% Q1 Q2 Q3 Q4 YTD Income Before Taxes 65 93 88 99 345 Interest Expense (Income), net - - (1) - (1) Depreciation 16 19 19 14 68 Amortization 9 9 9 9 36 Stock Compensation - - 1 1 2 EBITDA 90 121 116 123 450 Separation Costs - 2 8 6 16 Adjusted EBITDA 90 123 124 129 466 Revenue 551 602 584 679 2,416 Adjusted EBITDA Margin 16.3% 20.4% 21.2% 19.0% 19.3% 2011 Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter Water Infrastructure ($ Millions) 2012 |
![]() ![]() 28 Non-GAAP Reconciliation: Applied Water EBITDA & Adj. EBITDA Q1 Q2 Q3 Q4 YTD Income Before Taxes 40 52 43 35 170 Interest Expense (Income), net - - - - - Depreciation 6 6 6 5 23 Amortization 1 1 1 2 5 Stock Compensation 1 - 2 (1) 2 EBITDA 48 59 52 41 200 Separation Costs 1 - 1 - 2 Restructuring & Realignment Costs - - - 5 5 Adjusted EBITDA 49 59 53 46 207 Revenue 355 373 350 346 1,424 Adjusted EBITDA Margin 13.8% 15.8% 15.1% 13.3% 14.5% Q1 Q2 Q3 Q4 YTD Income Before Taxes 46 51 37 25 159 Interest Expense (Income), net - - - - - Depreciation 6 6 6 7 25 Amortization 2 1 2 1 6 Stock Compensation - - 1 1 2 EBITDA 54 58 46 34 192 Separation Costs - - 9 4 13 Adjusted EBITDA 54 58 55 38 205 Revenue 355 385 368 336 1,444 Adjusted EBITDA Margin 15.2% 15.1% 14.9% 11.3% 14.2% 2011 Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter Applied Water ($ Millions) 2012 |
![]() Non-GAAP Reconciliation: Guidance 29 Illustration of Mid Point Guidance 2013 Guidance FY '12 FY '13 As Reported Adjustments Adjusted As Projected Adjustments Adjusted Total Revenue 3,791 3,791 3,915 3,915 Segment Operating Income 512 30 a 542 487 65 d 552 Segment Operating Margin 13.5% 14.3% 12.4% 14.1% Corporate Expense 69 (16) b 53 59 - 59 Operating Income 443 46 489 428 65 493 Operating Margin 11.7% 12.9% 10.9% 12.6% Interest Expense (55) (55) (55) (55) Other Non-Operating Income (Expense) - - (2) (2) Income before Taxes 388 46 434 371 65 436 Provision for Income Taxes (91) (13) c (104) (73) (19) c (92) Net Income 297 33 330 298 46 344 Diluted Shares 186.2 186.2 186.4 186.4 Diluted EPS 1.59 $ 0.18 $ 1.77 $ 1.60 0.25 1.85 a One time separation, restructuring and realignment costs incurred at the segment level b One time separation, restructuring and realignment costs incurred at the corporate level c Net tax impact of above items, plus the addition of special tax items d Restructuring and realignment costs incurred at the segment level Xylem Inc. Non-GAAP Reconciliation Guidance ($ Millions, except per share amounts) $ $ $ |
![]() Non-GAAP Reconciliation: Adj. Operating Income & Margin 30 Mid Point Guidance 2008 2009 2010 2011 2012 2013E Revenue 3,291 2,849 3,202 3,803 3,791 3,915 Operating Income 315 276 388 395 443 428 Operating Margin 9.6% 9.7% 12.1% 10.4% 11.7% 10.9% Restructuring & Realignment 41 31 15 - 24 65 Separation Costs - - - 87 22 - Adjusted Operating Income 356 307 403 482 489 493 Adjusted Operating Margin 10.8% 10.8% 12.6% 12.7% 12.9% 12.6% Standalone Costs - - - 5 28 - Adj. Operating Income, excl. Standalone Costs 356 307 403 487 517 493 Adjusted Operating Margin, excl. Standalone Costs 10.8% 10.8% 12.6% 12.8% 13.6% 12.6% Xylem Inc. Non-GAAP Reconciliation Adjusted Operating Income ($ Millions) |
![]() 31 NYSE: XYL Phil De Sousa, Investor Relations Officer (914) 323-5930 Janice Tedesco, Investor Relations Coordinator (914) 323-5931 http://investors.xyleminc.com You may scan the QR code for direct access to the Xylem IR app for iPad® mobile devices. Apple and iPad are registered trademarks of Apple Inc. ` |