UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 6, 2012
XYLEM INC.
(Exact name of registrant as specified in its charter)
| Indiana | 001-35229 | 45-2080495 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 1133 Westchester Avenue, Suite N200 White Plains, New York |
10604 | |||
| (Address of principal executive offices) | (Zip Code) | |||
(914) 323-5700
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure |
The following information is furnished pursuant to Item 7.01 Regulation FD Disclosure. This information shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Company executives will present an overview of the Company at the Vertical Research Partners Industrial Conference on September 6, 2012. The presentation slides will be posted on the Company’s website and are attached and incorporated herein by reference as Exhibit 99.1.
Caution Concerning 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, 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, sales, 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.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. |
Description | |
| 99.1 | Presentation slides posted by Xylem Inc. on September 6, 2012. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| XYLEM INC. | ||||||
| Date: September 6, 2012 | By: | /s/ Michael T. Speetzen | ||||
| Michael T. Speetzen | ||||||
| Senior Vice President & Chief Financial Officer (Authorized Officer of Registrant) | ||||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Presentation slides posted by Xylem Inc. on September 6, 2012. | |
 Vertical Research Conference
September 6, 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 Guidance
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) |