XYLEM INC. Q3 2013 EARNINGS RELEASE OCTOBER 29, 2013 Exhibit 99.2 |
XYLEM PROPRIETARY / CONFIDENTIAL FORWARD-LOOKING STATEMENTS 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. 2 Q3 2013 EARNINGS RELEASE |
XYLEM PROPRIETARY / CONFIDENTIAL 3 Q3’13 BUSINESS UPDATE Q3 2013 EARNINGS RELEASE GAINING TRACTION & BUILDING MOMENTUM Strong 3rd Quarter Performance Return to Organic Revenue* Growth (+1%); Organic Orders* (+6%) … Solid Backlog Operating Margin * of 13.5% (Up 60 Bps), With Strong Incremental Performance EPS* $0.49 Up 11% … Raising Full Year Guidance Enhancing Shareholder Returns … Deploying Capital into Share Repurchases Looking Ahead – Next Steps Improving Emerging Markets Conditions, U.S. Stable & Europe Better Than Expected Prioritizing Initiatives & Driving Productivity Focused on Execution & Accountability to Provide for Better Visibility Identifying Actions to Drive Stronger 2014 Performance Committed to Long-Term Strategy & Financial Targets * See appendix for non-GAAP reconciliations |
XYLEM PROPRIETARY / CONFIDENTIAL 4 Q3’13 XYLEM PERFORMANCE +4% (Dollars, In Millions) (Dollars, In Millions) * See appendix for non-GAAP reconciliations STRONG OPERATING PERFORMANCE STRONG OPERATING PERFORMANCE Q3 GROWTH Q3 GROWTH Organic +1% Acquisitions +2% Constant Currency +4% + Double-Digit Growth in Eastern Europe & Asia Pac (China Up Over 40%) Q3'12 Op Margin* Volume, Mix, & Other Cost Reductions & Price Material, Labor, & OH Inflation FX/Acq Q3'13 Op Margin* 12.9% 13.5% 0.0% 2.1% 0.5% 3.2% Q3'12 Q3'13 931 965 Q3'12 Q3'13 120 130 +8% Q3 2013 EARNINGS RELEASE OPERATING INCOME* OPERATING INCOME* REVENUE REVENUE ORGANIC PERFORMANCE By End Market By Geography Industrial Europe Public Utility U.S. Commercial Emerging Markets Residential Agriculture Price - 0.3% FX -0.1% Vol/Other +0.4% Euro HQ -0.2% Pension -0.2% (Note Rounding Impacts Sum Total) |
XYLEM PROPRIETARY / CONFIDENTIAL 5 Q3’13 XYLEM PERFORMANCE Q3 2013 EARNINGS RELEASE EPS* * See appendix for non-GAAP reconciliations STRONG PERFORMANCE ON MODEST REVENUE GROWTH + Organic Revenue Growth + Strong Incremental Margins Driven by Productivity & Strict Cost Management + Restructuring Savings $0.03 + European Realignment $0.01 – Unfavorable Mix/Price $0.02 – Pension/1x Separation Headwind $0.01 +11% Adjusted Q3'12 EPS Adjusted Q3'13 EPS $0.44 $0.49 |
XYLEM PROPRIETARY / CONFIDENTIAL 6 Q3’13 WATER INFRASTRUCTURE PERFORMANCE Q3 2013 EARNINGS RELEASE OPERATING INCOME* +4% (Dollars, In Millions) (Dollars, In Millions) REVENUE * See appendix for non-GAAP reconciliations ORGANIC GROWTH & COST ACTIONS DRIVING IMPROVED PERFORMANCE (Organic Performance) Transport +2%; Treatment -2%; Test Flat + Europe Up Low Single Digits + Transport North/Central Strength … South Weak – Treatment … PY Biogas & UK Projects Compare – U.S. Down 1% – Treatment … Project Delays, Funding Constraints = Transport Flat … Dewatering Up MSD (Sandy, Fracking), Offset by Capex Decline + Emerging Markets Up High Single Digits + Asia Pac (China Up Over 30%) + Eastern Europe (Capex Projects, Russia Share Gains) Q3 GROWTH Organic +1% Acquisitions +4% Constant Currency +5% Q3'12 Q3'13 595 619 Q3'12 Q3'13 89 96 +8% |
XYLEM PROPRIETARY / CONFIDENTIAL 7 Q3’13 APPLIED WATER PERFORMANCE Q3 2013 EARNINGS RELEASE OPERATING INCOME* +3% (Dollars, In Millions) (Dollars, In Millions) REVENUE * See appendix for non-GAAP reconciliations STRONG EMERGING MARKETS PERFORMANCE … MIX DRIVES MARGIN DECLINE (Organic Performance) Building Svcs +1%; Ind’l Water +2%; Irrigation +2% + Emerging Markets Up Double-Digits + China Exceptionally Strong … Industrial Water Projects (Offshore O&G Fire Pump Projects) & Commercial Building Market Share Gains + U.S. Commercial (Timing/Promotions) & Agriculture (Favorable Weather Conditions) – U.S. Residential Slowing … Southern Europe Weak – Continued U.S Industrial Weakness Q3 GROWTH Organic +2% Acquisition 0% Constant Currency +2% Q3'12 Q3'13 350 Q3'12 Q3'13 44 44 Flat 360 Vol/Other -0.8% Euro HQ -0.3% Pension -0.3% |
XYLEM PROPRIETARY / CONFIDENTIAL 8 Q3 2013 EARNINGS RELEASE XYLEM FINANCIAL POSITION * See Appendix for Non-GAAP Reconciliations September 30, 2013 Cash 394 Debt 1,202 Net Debt 808 Shareholders’ Equity 2,158 Net Capital 2,966 Net Debt to Net Capital 27% CAPITAL SUMMARY • Strong Cash Position • Enhancing Shareholder Returns … Deployed $107M in Dividends & Repurchases vs. $58M in YTD‘12 • Free Cash Flow Decline Driven by Lower Income, Higher Restructuring Payments, & Unfavorable Working Capital (Dollars, In Millions) Cash Dec. 2012 Operating Activities & Other Dividends & Share Repurchases Acquisitions & Capex Cash Sept. 2013 504 394 107 172 169 69 325 SEPT. 2013 U.S. International Q3'12 YTD Q3'13 YTD 171 72 CASH DRIVERS CASH DRIVERS FREE CASH FLOW * FREE CASH FLOW * CASH BALANCE CASH BALANCE (GEOGRAPHIC) (GEOGRAPHIC) (Dollars, In Millions) (Dollars, In Millions) (Dollars, In Millions) FCF% 73% 45% |
XYLEM PROPRIETARY / CONFIDENTIAL 9 Q3 2013 EARNINGS RELEASE XYLEM GUIDANCE UPDATE FOCUSED EXECUTION DRIVING PERFORMANCE … RAISING FULL YEAR EXPECTATIONS * See appendix for non-GAAP reconciliations FY REVENUE FY EPS* 3.7B 3.8B 3.8B $1.45 $1.63 $1.63 • Internal Growth Initiatives & Improved Market Conditions Drive Top Line Revision - Europe Stabilizing, U.S. Stable, Emerging Markets Continue to Grow - Solid Backlog of $752M … $470M Shippable Up 2% • Focused Execution & Disciplined Cost Management Drives Solid Operating Performance - On Track to Deliver Full Year Restructuring Savings; Incremental Actions Identified Mid - Point Mid - Point Previous Guidance Current Outlook Previous Guidance Current Outlook Implied 4Q Revenue $965M; EPS* $0.51 • European Realignment Delivers Benefits As Previously Expected • |
XYLEM PROPRIETARY / CONFIDENTIAL 10 Q3 2013 EARNINGS RELEASE 2013 Full Year Financial Outlook Growth 2013E vs. 2012 Xylem Consolidated ~$3,770 ~ -1% ~ -2% 2% -1% Water Infrastructure ~$2,405 ~ -1% ~ -3% 3% -1% Applied Water ~$1,430 Flat Flat Flat Flat Segment Margin * 13.1% to 13.3% -120 bps to -100 bps Operating Margin * 11.5% to 11.8% -140 bps to -110 bps EPS * $1.60 to $1.65 $1.63 Mid-Point Free Cash Flow Conversion ~90% Restructuring Pmts, Realignment Capex, & 1x Spin Capex Guidance Assumptions: Operating Tax Rate ~21% 4Q Tax Rate of 21% Share Count ~186.0 4Q Assumption ~185.0 Restructuring & Realignment Costs * ~$65 to $80 ‘13 Net Cost Savings $14 to $15; Realignment Cost $25-$30 2013 FINANCIAL GUIDANCE SUMMARY * See appendix for non-GAAP reconciliations (Dollars In Millions, Except per Share Data) Organic Acquisition FX Total Growth (Mid-Point) Revenue |
XYLEM PROPRIETARY / CONFIDENTIAL 11 Q3 2013 EARNINGS RELEASE XYLEM 3Q EARNINGS SUMMARY Strong 3 Quarter Performance … Raising 2013 Guidance Enhancing Shareholder Returns … Deploying Capital into Share Repurchases Prioritizing Initiatives & Driving Productivity Focused on Execution & Accountability to Provide for Better Visibility Identifying Actions to Drive Stronger 2014 Performance Committed to Long-Term Strategy & Financial Targets rd |
XYLEM PROPRIETARY / CONFIDENTIAL 12 Q3 2013 EARNINGS RELEASE 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” 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. “Realignment costs” defined as non-recurring costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, relocation, travel and other costs. “Special charges” defined as costs incurred by the Company associated with the settlement of legal proceedings with Xylem Group LLC, as well as certain costs incurred for the change in chief executive officer made during the third quarter of 2013. |
XYLEM PROPRIETARY / CONFIDENTIAL 13 Q3 2013 EARNINGS RELEASE NON-GAAP RECONCILIATION: ORGANIC & CONSTANT CURRENCY REVENUE GROWTH Constant Currency (A) (B) (C) (D) (E) (F) = B+C+D+E (G) = F/A (H) = (F - C) / A Change % Change Change % Change Revenue Revenue 2013 v. 2012 2013 v. 2012 FX Contribution Eliminations Adj. 2013 v. 2012 Adj. 2013 v. 2012 2013 2012 Nine Months Ended September 30 Xylem Inc. 2,804 2,822 (18) -1% (67) (2) - (87) -3% -1% Water Infrastructure 1,766 1,788 (22) -1% (67) 2 1 (86) -5% -1% Applied Water 1,086 1,078 8 1% - (5) (4) (1) 0% 0% Quarter Ended September 30 Xylem Inc. 965 931 34 4% (21) - - 13 1% 4% Water Infrastructure 619 595 24 4% (21) 3 1 7 1% 5% Applied Water 360 350 10 3% - (4) - 6 2% 2% Quarter Ended June 30 Xylem Inc. 960 966 (6) -1% (23) (4) - (33) -3% -1% Water Infrastructure 596 609 (13) -2% (23) (2) - (38) -6% -2% Applied Water 381 373 8 2% - (1) (2) 5 1% 1% Quarter Ended March 31 Xylem Inc. 879 925 (46) -5% (23) 2 - (67) -7% -5% Water Infrastructure 551 584 (33) -6% (23) 1 - (55) -9% -5% Applied Water 345 355 (10) -3% - - (2) (12) -3% -3% Note: Due to rounding the sum of segment amounts may not agree to Xylem totals. Acquisitions / Divestitures Reported vs. Organic & Constant Currency Revenue ($ Millions) (As Reported - GAAP) (As Adjusted - Organic) |
XYLEM PROPRIETARY / CONFIDENTIAL 14 Q3 2013 EARNINGS RELEASE NON-GAAP RECONCILIATION: ORGANIC & CONSTANT CURRENCY ORDER GROWTH Constant Currency (A) (B) (C) (D) (E) (F) = B+C+D+E (G) = F/A (H) = (F - C) / A Change % Change Change % Change Orders Orders 2013 v. 2012 2013 v. 2012 FX Contribution Eliminations Adj. 2013 v. 2012 Adj. 2013 v. 2012 2013 2012 Nine Months Ended September 30 Xylem Inc. 2,926 2,856 70 2% (71) 1 - - 0% 2% Water Infrastructure 1,865 1,819 46 3% (71) 4 - (21) -1% 3% Applied Water 1,111 1,086 25 2% - (4) 1 22 2% 2% Quarter Ended September 30 Xylem Inc. 955 882 73 8% (20) 1 - 54 6% 8% Water Infrastructure 617 564 53 9% (20) 3 - 36 6% 10% Applied Water 355 334 21 6% - (3) 1 19 6% 6% Quarter Ended June 30 Xylem Inc. 1,009 970 39 4% (25) (2) - 12 1% 4% Water Infrastructure 647 617 30 5% (25) (1) - 4 1% 5% Applied Water 378 370 8 2% - (1) 1 8 2% 2% Quarter Ended March 31 Xylem Inc. 962 1,004 (42) -4% (26) 2 - (66) -7% -4% Water Infrastructure 601 638 (37) -6% (26) 2 - (61) -10% -5% Applied Water 378 382 (4) -1% - - (1) (5) -1% -1% Note: Due to rounding the sum of segment amounts may not agree to Xylem totals. Acquisitions / Divestitures Reported vs. Organic & Constant Currency Order Growth ($ Millions) (As Reported - GAAP) (As Adjusted - Organic) |
XYLEM PROPRIETARY / CONFIDENTIAL 15 Q3 2013 EARNINGS RELEASE NON-GAAP RECONCILIATION: ADJUSTED DILUTED EPS Q3 2012 Q3 2013 As Reported Adjustments Adjusted As Reported Adjustments Adjusted Total Revenue 931 931 965 965 Operating Income 111 9 a 120 98 32 c 130 Operating Margin 11.9% 12.9% 10.2% 13.5% Interest Expense (14) (14) (14) (14) Other Non-Operating Income (Expense) 3 3 (1) (1) Income before Taxes 100 9 109 83 32 115 Provision for Income Taxes (28) 2 b (26) (10) (13) d (23) Net Income 72 11 83 73 19 92 Diluted Shares 186.3 186.3 186.0 186.0 Diluted EPS 0.38 $ 0.06 $ 0.44 $ 0.39 $ 0.10 $ 0.49 $ Q3 YTD 2012 Q3 YTD 2013 As Reported Adjustments Adjusted As Reported Adjustments Adjusted Total Revenue 2,822 2,822 2,804 2,804 Operating Income 339 20 a 359 234 72 c 306 Operating Margin 12.0% 12.7% 8.3% 10.9% Interest Expense (41) (41) (41) (41) Other Non-Operating Income (Expense) 1 1 (2) (2) Income before Taxes 299 20 319 191 72 263 Provision for Income Taxes (75) (2) b (77) (31) (24) d (55) Net Income 224 18 242 160 48 208 Diluted Shares 186.2 186.2 186.2 186.2 Diluted EPS 1.20 $ 0.09 $ 1.29 $ 0.86 $ 0.26 $ 1.12 $ a One-time separation costs and restructuring & realignment costs b Net tax impact of separation costs, restructuring & realignment costs and special tax items c Restructuring & realignment costs and special charges d Net tax impact of restructuring & realignment costs, special charges and special tax items ($ Millions, except per share amounts) |
XYLEM PROPRIETARY / CONFIDENTIAL 16 Q3 2013 EARNINGS RELEASE NON-GAAP RECONCILIATION: ADJ. OPERATING INCOME AND MARGIN Q3 Q3 YTD '13 '12 '13 '12 Total Revenue • Total Xylem 965 931 2,804 2,822 • Water Infrastructure 619 595 1,766 1,788 • Applied Water 360 350 1,086 1,078 Operating Income • Total Xylem 98 111 234 339 • Water Infrastructure 88 85 171 253 • Applied Water 40 43 125 135 Operating Margin • Total Xylem 10.2% 11.9% 8.3% 12.0% • Water Infrastructure 14.2% 14.3% 9.7% 14.1% • Applied Water 11.1% 12.3% 11.5% 12.5% Separation Costs • Total Xylem - 4 - 15 • Water Infrastructure - - - 3 • Applied Water - 1 - 2 Special Charges • Total Xylem 20 - 20 - • Water Infrastructure - - - - • Applied Water - - - - Restructuring & Realignment Costs • Total Xylem 12 5 52 5 • Water Infrastructure 8 4 40 4 • Applied Water 4 - 12 - Adjusted Operating Income* • Total Xylem 130 120 306 359 • Water Infrastructure 96 89 211 260 • Applied Water 44 44 137 137 Adjusted Operating Margin* • Total Xylem 13.5% 12.9% 10.9% 12.7% • Water Infrastructure 15.5% 15.0% 11.9% 14.5% • Applied Water 12.2% 12.6% 12.6% 12.7% ($ Millions) *Adjusted Operating Income excludes restructuring & realignment costs and special charges in 2013 and excludes restructuring & realignment costs and non-recurring separation costs in 2012. |
XYLEM PROPRIETARY / CONFIDENTIAL 17 Q3 2013 EARNINGS RELEASE NON-GAAP RECONCILIATION: FREE CASH FLOW 2013 2012 Net Cash - Operating Activities 163 $ 230 $ Capital Expenditures (91) (81) Free Cash Flow, including separation costs 72 149 Cash Paid for Separation Costs (incl. Capex) - 22 Free Cash Flow, excluding separation costs* 72 $ 171 $ Net Income 160 224 Separation Costs, net of tax (incl. tax friction) - 11 Net Income, excluding separation costs* 160 $ 235 $ Free Cash Flow Conversion 45% 73% * Separation costs are not excluded in 2013 Net Cash - Operating Activities vs. Free Cash Flow ($ Millions) Nine Months Ended |
XYLEM PROPRIETARY / CONFIDENTIAL 18 Q3 2013 EARNINGS RELEASE NON-GAAP RECONCILIATION: XYLEM EBITDA & ADJ. EBITDA Q1 Q2 Q3 Q4 Total Pre-Tax Income 51 57 83 191 Interest Expense (Income), net 12 13 14 39 Depreciation 25 24 23 72 Amortization 12 13 13 38 Stock Compensation 6 6 9 21 EBITDA 106 113 142 361 Restructuring & Realignment 12 28 12 52 Special Charges - - 20 20 Adjusted EBITDA 118 141 174 433 Revenue 879 960 965 2,804 Adjusted EBITDA Margin 13.4% 14.7% 18.0% 15.4% Q1 Q2 Q3 Q4 Total Pre-Tax Income 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 - - 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% 2012 EBITDA and Adjusted EBITDA by Quarter ($ Millions) 2013 |
XYLEM PROPRIETARY / CONFIDENTIAL 19 Q3 2013 EARNINGS RELEASE NON-GAAP RECONCILIATION: WATER INFRASTRUCTURE EBITDA & ADJ. EBITDA Q1 Q2 Q3 Q4 Total Pre-Tax Income 42 43 87 172 Interest Expense (Income), net - (1) - (1) Depreciation 19 17 16 52 Amortization 9 11 11 31 Stock Compensation 1 1 1 3 EBITDA 71 71 115 257 Restructuring & Realignment 10 22 8 40 Adjusted EBITDA 81 93 123 297 Revenue 551 596 619 1,766 Adjusted EBITDA Margin 14.7% 15.6% 19.9% 16.8% Q1 Q2 Q3 Q4 Total Pre-Tax Income 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 - - 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% 21.0% 19.6% 2012 2013 ($ Millions) |
XYLEM PROPRIETARY / CONFIDENTIAL 20 Q3 2013 EARNINGS RELEASE NON-GAAP RECONCILIATION: APPLIED WATER EBITDA & ADJ. EBITDA Q1 Q2 Q3 Q4 Total Pre-Tax Income 40 45 40 125 Interest, net - - - - Depreciation 6 5 6 17 Amortization 2 1 1 4 Stock Compensation 1 - 1 2 EBITDA 49 51 48 148 Restructuring & Realignment 2 6 4 12 Adjusted EBITDA 51 57 52 160 Revenue 345 381 360 1,086 Adjusted EBITDA Margin 14.8% 15.0% 14.4% 14.7% Q1 Q2 Q3 Q4 Total Pre-Tax Income 40 52 43 35 170 Interest, 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 - - - 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% 2012 2013 ($ Millions) |
XYLEM PROPRIETARY / CONFIDENTIAL 21 Q3 2013 EARNINGS RELEASE NON-GAAP RECONCILIATION: GUIDANCE 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 3,770 3,770 Segment Operating Income 512 30 a 542 425 73 c 498 Segment Operating Margin 13.5% 14.3% 11.3% 13.2% Corporate Expense 69 (16) b 53 78 (20) d 58 Operating Income 443 46 489 347 93 440 Operating Margin 11.7% 12.9% 9.2% 11.7% Interest Expense (55) (55) (55) (55) Other Non-Operating Income (Expense) - - (3) (3) Income before Taxes 388 46 434 289 93 382 Provision for Income Taxes (91) (13) e (104) (48) (32) e (80) Net Income 297 33 330 241 61 302 Diluted Shares 186.2 186.2 186.0 186.0 Diluted EPS 1.59 $ 0.18 $ 1.77 $ 1.30 $ 0.33 $ 1.63 $ Guidance ($ Millions, except per share amounts) a b c d e Restructuring and realignment costs incurred at the segment level Special charges incurred at the corporate level Net tax impact of above items, plus the addition of special tax items One-time separation, restructuring and realignment costs incurred at the segment level One-time separation, restructuring and realignment costs incurred at the corporate level |
XYLEM PROPRIETARY / CONFIDENTIAL 22 Q3 2013 EARNINGS RELEASE NON-GAAP RECONCILIATION: ADJUSTED OPERATING INCOME Mid Point Guidance 2008 2009 2010 2011 2012 2013E Revenue 3,291 2,849 3,202 3,803 3,791 3,770 Operating Income 315 276 388 395 443 347 Operating Margin 9.6% 9.7% 12.1% 10.4% 11.7% 9.2% Restructuring, Realignment & Special Charges 41 31 15 - 24 93 Separation Costs* - - - 87 22 - Adjusted Operating Income 356 307 403 482 489 440 Adjusted Operating Margin 10.8% 10.8% 12.6% 12.7% 12.9% 11.7% Standalone Costs - - - 5 28 - Adj. Operating Income, excl. Standalone Costs 356 307 403 487 517 440 Adjusted Operating Margin, excl. Standalone Costs 10.8% 10.8% 12.6% 12.8% 13.6% 11.7% * 2013 separation costs are not excluded from adjusted operating income. ($ Millions) |