Xylem Inc. · NYSE:XYL
Xylem — Electrical Products Group Conference 2013
38 slides from Xylem's conference presentation, May 21, 2013
Slide 1: Xylem Inc. Electrical Products Group Conference
Exhibit 99.1 XYLEM INC. ELECTRICAL PRODUCTS GROUP CONFERENCE MAY 21, 2013
Slide 2: Forward-Looking Statements
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,”
Slide 3: What Makes Xylem Unique?
WHAT MAKES XYLEM UNIQUE? GLOBAL LEADER IN WATER APPLICATION SOLUTIONS $3.8B • Pure Water Play • Leading Market Positions • Fortress Brands & World Class Distribution • Diverse Geographic & End Market Exposure • Large Installed Base - Recurring Revenue ~37% • Strong Cash Flow Generation ABILITY TO DE
Slide 4: Water Is One of the Most Complex, Challenging Issues Facing Society
WATER IS ONE OF THE MOST COMPLEX, CHALLENGING AND INCREASINGLY VISIBLE ISSUES FACING SOCIETY UNIQUELY POSITIONED TO SOLVE THE WORLD’S GROWING WATER CHALLENGES XYLEM PROPRIETARY / CONFIDENTIAL 4
Slide 5: Evolution to a Leading Global Water Technology Provider
EVOLUTION TO A LEADING GLOBAL WATER TECHNOLOGY PROVIDER MULTITRODE * Zenon is a registered trademark of GE XYLEM PROPRIETARY / CONFIDENTIAL 5
Slide 6: Specialized Breadth in the Water Cycle
SPECIALIZED BREADTH IN THE WATER CYCLE TEST TEST WE WORK TO ANTICIPATE OUR CUSTOMERS’ NEEDS WITH OUR BROAD PRODUCT OFFERING & OUR APPLICATIONS EXPERTISE XYLEM PROPRIETARY / CONFIDENTIAL 6
Slide 7: Segment Overview
SEGMENT OVERVIEW WATER INFRASTRUCTURE Segment Split APPLIED WATER Market Size: $20B Market Size: $15B 2012 Revenues: $2.4B 2012 Revenues: $1.4B 2012 Op Margin*: 15.1% 2011 Op Margin*: 12.4% World’s Largest Waste Water Pump & 64% Leading Global Provider of a Broad Dewatering Services Provider Range o
Slide 8: Balanced Portfolio
BALANCED PORTFOLIO (2012 Revenue) GLOBAL SERVING DIVERSE MARKET CRITICAL CUSTOMER BALANCE NEEDS BASE BY GEOGRAPHY BY APPLICATION BY END MARKET United States 37% Transport 46% Industrial 43% Europe 35% Treatment 10% Public Utility 35% Asia Pac 12% Test 8% Commercial 11% Rest of World 16% Building Svc
Slide 9: Key End Markets: Industrial
KEY END MARKETS INDUSTRIAL DIVERSE MARKET DRIVERS Xylem 2012 Revenue: $1.6B MINING Mining 13% • Commodity Demand 10% Oil & Gas OIL & GAS 53% 9% • Natural Gas Fracking Activity Construction 9% CONSTRUCTION Food & 6% • Commercial & Residential Construction Beverage • Weather FOOD & BEVERAGE • Strong B
Slide 10: Key End Markets: Public Utility
KEY END MARKETS PUBLIC UTILITY PUBLIC UTILITY DYNAMICS U.S. CAPEX SPENDING Opex Capex U.S. Water and Sewer Construction Spending - $B Tariffs Bonds Gov’t General Growth Drivers: Connection ~70% ~30% Financing • Residential & Commercial Fees Real Estate Development Private Funding • Industrial Expans
Slide 11: Key End Markets: Commercial Buildings
KEY END MARKETS COMMERCIAL BUILDINGS INTEGRATED SOLUTIONS ARCHITECTURE BILLING INDEX 52 51.5 51.9 51.2 51 49.9 50 49 48 47.3 47 46 45 Mar '12 Jun '12 Sept '12 Dec '12 Mar '13 Source: AIA. Index Value of 50=No change from previous period. • Products for the Heating, Cooling and Protection of Commerci
Slide 12: Our Strategic Framework
OUR STRATEGIC FRAMEWORK DISCIPLINE TO ACHIEVE KEY OBJECTIVES AND INCREASE SHAREHOLDER VALUE XYLEM PROPRIETARY / CONFIDENTIAL 12
Slide 13: Deliver Customer Value
DELIVER CUSTOMER VALUE ENHANCING AFTERMARKET CAPABILITIES INSTALLED BASE DRIVES REPLACEMENT SALES INTRODUCING XYLEM TOTALCARE • Brand Loyalty Driven • Comprehensive Integrated Services Portfolio • Like-for-Like Replacement • Systems Knowledge & Application Expertise • Opportunity for Upgrades • Leve
Slide 14: Drive Profitable Growth
DRIVE PROFITABLE GROWTH EXECUTING ACQUISITION STRATEGY ANALYTICS DEWATERING Revenue (2012) $298M $659M Capital Deployed* $732M $614M Key Brands Opportunity • Products have Higher Market • High ROIC Business When Growth Rates and Margins Operating With Scale Advantage • Fill Product or Technology Gap
Slide 15: Improve Business Sustainability
IMPROVE BUSINESS SUSTAINABILITY OPTIMIZING OUR COST STRUCTURE EUROPEAN REALIGNMENT SUMMARY ENABLING • Unified Xylem in Europe – Complex • Vertical Market Alignment Growth & Cost Synergies – Sales Synergies & Future Structure – HQ: Schaffhausen, Growth Opportunities Switzerland • Sales Office Consoli
Slide 16: Xylem Financial Summary
XYLEM FINANCIAL SUMMARY REVENUE OPERATING MARGIN * $M +210 Bps with Stand-Alone Costs** 12.9% 12.7% 3,803 3,791 3,291 3,202 12.6% 2,849 10.8% 10.8% Revenue Up $500M … +15% 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Growth: -13% 12% 19% 0% Organic*: -9% 3% 7% 0% • Resilient Portfolio … Despite
Slide 17: Financial Position
FINANCIAL POSITION FREE CASH FLOW * WORKING CAPITAL AS % REVENUE ** $M 312 280 22.5% 22.0% 2012 2013E*** 2012 2013E*** Conversion: 100% 95% CAPITAL SUMMARY/LIQUIDITY March 31, 2013 (Dollars, In Millions) • Strong Cash Position Cash 375 Debt 1,205 • No Significant Debt Maturities Until 2016 Net Debt
Slide 18: Disciplined Capital Deployment
DISCIPLINED CAPITAL DEPLOYMENT Cash from Operations Return to Financial Acquisition Capex Shareholders Obligations Strategy • 2.5% to 3.5% of • $0.1164/share In-line • Debt & Pension • $150M - 350M in 2013 Revenue with Peers • Contributes 2% to 4% • Stock Buybacks to to Revenue/Yr. on Offset Dilutio
Slide 19: Key Financial Projections
KEY FINANCIAL PROJECTIONS 2013 FY Guidance 2017 As of April 30, 2013 * Long-Term Targets ** Revenues ~$3.925B (mid-point) $4.7B to $5.5B Op. Margin* 12.2% to 12.7% 14% to 15% EPS* $1.79 to $1.89 $2.50 to $3.40 2013 KEY OBJECTIVES LONG-TERM PERFORMANCE TARGETS** • Execution of Acquisition Strategy Ta
Slide 20: Thank You for Your Interest
CLOSING REMARKS THANK YOU FOR YOUR INTEREST XYLEM PROPRIETARY / CONFIDENTIAL 20
Slide 21: Appendix
APPENDIX
Slide 22: 2013 Financial Guidance Summary
2013 FINANCIAL GUIDANCE SUMMARY 2013 FY Guidance Growth As of April 30, 2013 2013E vs. 2012 Revenue (Mid-Point) Total Growth Organic Acquisition FX Xylem Consolidated ~$3,925M ~3 to 4% 0 to 1% 2% 1% Water Infrastructure ~$2,540M ~4 to 5% 0 to 1% 3% 1% Applied Water ~$1,450M ~1 to 2% 0 to 1% 0% 1% Se
Slide 23: Water Infrastructure Business Overview
WATER INFRASTRUCTURE BUSINESS OVERVIEW TRANSPORT TREATMENT Market Size: $11B $5B 2012 Revenues: $1,745M $366M Key Products Waste Water Pumps Biological & Services: Dewatering (Sales & Rentals) U.V. and Ozone Disinfection Aftermarket Parts & Services Filtration Key Brands: Key Facilities: Emmaboda, S
Slide 24: Water Infrastructure: Dewatering
WATER INFRASTRUCTURE BUSINESS OVERVIEW DEWATERING Market Size: $3B 24/7 Service Capabilities 2012 Revenues: $659M Leverages Xylem’s Footprint Key Products Sales & Rentals High ROIC Business When & Services: Dry Prime, Submersible & Slurry Pumps Operating with Scale Advantage Aftermarket Parts & Serv
Slide 25: Water Infrastructure: Analytics
WATER INFRASTRUCTURE BUSINESS OVERVIEW TEST Market Size: $4B 2012 Revenues: $298M Key Products Field, Online, and Laboratory Analytical Instrumentation & Services: Meters, Sensors, Spectrophotometers, and Refractometers Temperature, Data Loggers, Doppler and Level Measurement Water Quality and Envir
Slide 26: Applied Water Systems
APPLIED WATER SYSTEMS BUSINESS OVERVIEW BUILDING SERVICES INDUSTRIAL WATER IRRIGATION Market Size: $9B $4B $2B 2012 Revenues: $736M $550M $96M Key Products HVAC Pumps, Valves & Heat Pumps & Pumping Systems Groundwater & Surface Pumps Exchangers, Drives & Controls, Heat Exchangers, Drives & Controls
Slide 27: Competitive Landscape
COMPETITIVE LANDSCAPE LEADING POSITIONS IN KEY APPLICATIONS TRANSPORT TREATMENT TEST Xylem Danaher Xylem Siemens (Hach) Danaher (Trojan) Others Others KSB Sulzer (ABS) Sulzer (ABS) Ozonia Xylem Pentair Others Tsurumi Thermo E+H Market: $11B Market: $5B Market: $4B Mettler Position: 1st Position: 1st
Slide 28: Water Infrastructure Revenue Highlights
WATER INFRASTRUCTURE REVENUE HIGHLIGHTS $M ‘08-’12 Revenue up 33%; 7% CAGR • Resilient Through the Downturn • Growth Driven by Acquisitions, Emerging Markets & Product Launches Growth: -10% 17% 25% 0% 4.7% • Public Utility CAPEX Slowdown Organic*: -4% 2% 7% 0% 0.5% • European Crisis OP INCOME & MARG
Slide 29: Applied Water Revenue Highlights
APPLIED WATER REVENUE HIGHLIGHTS $M ‘08-’12 Revenue Down 7% • Residential & Commercial Building Decline • Growth Driven By New Product Launches Growth: -18% 6% 9% -1% 1.8% – Energy-Efficient Solutions Organic*: -15% 6% 7% 1% 0.5% – Emerging Markets Penetration OP INCOME & MARGIN* Strong Operating Pe
Slide 30: Acquisition Scorecard
ACQUISITION SCORECARD Completed On Track Not Achieved IRR > Gross Risk Adj. Mid- Cash EPS Invested Year Strategic Margin Cost of Teens Return Accretive Acquisition $M Completed Fit Accretive Capital ROIC 7-9 Years After Yr 1 Laing $30 2009 Nova $384 2010 Godwin $585 2010 OI $25 2010 YSI $310 2011 Th
Slide 31: Non-GAAP Measures
NON-GAAP MEASURES Management views key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, free cash flow, working capital, and backlog, among others. In addition, we consider certain measures to be useful to management and investors evaluati
Slide 32: Non-GAAP Reconciliation: Reported vs. Organic & Constant Currency Revenue
Xylem Inc. Non-GAAP Reconciliation Reported vs. Organic & Constant Currency Revenue ($ Millions) (As Reported - GAAP) (As Adjusted - Organic) Constant Currency (A) (B) (C) (D) (E) (F) = B+C+D+E (G) = F/A (H) = (B + D) / A Change % Change Acquisitions / Change % Change Revenue Revenue CY v. PY CY v.
Slide 33: Non-GAAP Reconciliation: Adjusted Operating Income
Xylem Inc. Non-GAAP Reconciliation Adjusted Operating Income ($ Millions) Mid Point Guidance 2008 2009 2010 2011 2012 2013E Revenue 3,291 2,849 3,202 3,803 3,791 3,925 Operating Income 315 276 388 395 443 425 Operating Margin 9.6% 9.7% 12.1% 10.4% 11.7% 10.8% Restructuring & Realignment 41 31 15 - 2
Slide 34: Non-GAAP Reconciliation: Adjusted Operating Income by Segment
Xylem Inc. Non-GAAP Reconciliation Adjusted Operating Income ($ Millions) 2013 2012 2011 2010 2009 2008 Total Revenue • Total Xylem 3,925 3,791 3,803 3,202 2,849 3,291 • Water Infrastructure 2,540 2,425 2,416 1,930 1,651 1,824 • Applied Water 1,450 1,424 1,444 1,327 1,254 1,527 Operating Income • To
Slide 35: Non-GAAP Reconciliation: EBITDA and Adjusted EBITDA by Quarter
Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter ($ Millions) 2013 Q1 Q2 Q3 Q4 Total Pre-Tax Net Income 51 Interest Expense (Income), net 12 Depreciation 25 Amortization 12 Stock Compensation 6 EBITDA 106 Restructuring & Realignment 12 Adjusted EBITDA 118 Revenues 879 Adjuste
Slide 36: Non-GAAP Reconciliation: Guidance
Xylem Inc. Non-GAAP Reconciliation Guidance ($ Millions, except per share amounts) 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 3,925 3,925 Segment Operating Income 512 30 a 542 484 65 d 54
Slide 37: Non-GAAP Reconciliation: Operating Cash Flow vs. Free Cash Flow
Xylem Inc. Non-GAAP Reconciliation Net Cash - Operating Activities vs. Free Cash Flow ($ Millions) Year Ended 2013E 2012 Net Cash - Operating Activities 410 396 Capital Expenditures (130) (112) Free Cash Flow, including separation costs 280 284 Cash Paid for Separation Costs (incl. Capex) - 28 Free
Slide 38: XYLEM PROPRIETARY / CONFIDENTIAL
XYLEM PROPRIETARY / CONFIDENTIAL 38