Xylem Inc. · NYSE:XYL
Xylem — KeyBanc Capital Markets Industrial, Automotive, & Transportation Conference 2012
27 slides from Xylem's conference presentation, May 30, 2012
Slide 1: KeyBanc Capital Markets Industrial, Automotive, & Transportation Conference
Exhibit 99.1 KeyBanc Capital Markets Industrial, Automotive, & Transportation Conference May 30, 2012
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: Global Leader in Water Application Solutions
Global Leader in Water Application Solutions • Design, Manufacture, & Service Highly Engineered Technologies • A True Water Pure Play • Diverse End Market & Geographic Mix • Leading Brands & Large Installed Base • Unrivaled Global Reach … Serving 150+ Countries $3.8B Company Uniquely Positioned in t
Slide 4: Where do we play in the $500B Global Water Industry?
Where do we play in the $500B Global Water Industry? $250B Water Infrastructure Applied Water Predominately Commodity-like Equipment & Service Public Utility Design Equipment & End Use & Build Services Applications • Pipes, valves, fittings and low value pumps ~250,000 • Low-value services Utilities
Slide 5: How Does Xylem Create Value?
How Does Xylem Create Value? Unique Assets Understanding Global Water Challenges • Depleting Water Supply • Tightening Regulation • Aging Infrastructure • Population Growth • Urbanization • Sustainability / Energy Efficiency Industry Key Relations Partners Leading Within the Global Water Industry •
Slide 6: Balanced Portfolio … Diversified Market Exposure
Balanced Portfolio … Diversified Market Exposure Geographical Mix* Balanced End Market Mkt Growth Rates ’10 -’15 End Market Cycle Fundamentals Developed 1 - 3% Emerging 8 - 10+% Global 3 - 5% Less • Critical products Industrial Cyclical/ • Strong aftermarket & Late Cycle replacement Europe 37% Xylem
Slide 7: Dewatering and Industrial Water Applications
Dewatering and Industrial Water Applications Dewatering Applications Industrial Water Applications Pressure Waste Water Heating Cooling Boosting Removal Diverse Applications • Construction • Mining • Disaster Recovery • Oil, Gas & Chemical • Environmental • Water & Waste Water • Heavy Industry • Mar
Slide 8: Public Utility & Industrial Transport, Treatment & Test
Public Utility & Industrial Transport, Treatment & Test Application Technologies • Waste Water Transport • Filtration • Biological Treatment • UV & Ozone Disinfection • Analytical Instrumentation 8
Slide 9: Commercial & Residential
Commercial & Residential HVAC - Cooling Customers • Developers • Building Operators • Building Designers • HVAC Specialists • Contractors Zone Control • Plumbers Fire protection Wastewater HVAC - Heating Pressure boosters 9
Slide 10: A Unique Spectrum of Applications Expertise
A Unique Spectrum of Applications Expertise Water Infrastructure Applied Water Water as % Building Industrial Transport Treatment Test Irrigation of Total Revs Services Water Xylem >90% 46* 11%* 6%* 19%* 15%* 3%* Danaher ~15% Franklin ~85% Grundfos ~85% KSB ~25% Pentair ~50% Siemens ~5% Sulzer (ABS)
Slide 11: Xylem Has a Focused Growth Strategy
Xylem Has a Focused Growth Strategy Organic Growth Emerging Markets Acquisition Strategy • Replicate leadership positions • Established footprint • Disciplined approach • Leverage brands with global • Localized innovation centers • Build upon Dewatering and partners • Partnerships with leading, glob
Slide 12: Highly Attractive Recurring Revenue Profile
Highly Attractive Recurring Revenue Profile Parts & Service Replacement Equipment (1) • 15% of Xylem revenue • Approximately 22% of Xylem revenue • Strong global presence • Installed base drives replacement sales • 120+ owned service centers • Brand loyalty drives like-for-like • 600+ service employ
Slide 13: Strong Growth in Revenue and Profitability
Strong Growth in Revenue and Profitability Revenues ($M) Operating Income & Margin* ($M) $3,803 $3,291 $3,202 $482 $2,849 $388 $315 $276 12.1% 12.7% 9.6% 9.7% 2008 2009 2010 2011 2008 2009 2010 2011 Organic -8.8% 3.4% 7.1% EBITDA* $384 $356 $489 $637 Growth* EBITDA %* 11.7% 12.5% 15.3% 16.7% Earning
Slide 14: Xylem Segment Overview
Water Infrastructure Xylem Segment Overview Applied Water 63% 37% Water Infrastructure Overview Applied Water Overview Market Size: $16B Market Size: $14B 2011 Revenues: $2.4B 2011 Revenues: $1.4B 2011 Op Margin*: 14.9% 2011 Op Margin*: 12.0% Customers Distribution Customers Distribution Public Util
Slide 15: Gross Margin Improvement Funds Future Growth
Gross Margin Improvement Funds Future Growth Gross Margin R&D SG&A 39.0% 38.4% 3.0% 24.8% 37.9% 23.4% 38.0% 2.6% 23.0% 23.1% 2.5% 2.3% 22.8% 21.9% 37.0% 2.2% 36.4% 2.0% 1.9% 20.8% 36.0% 34.7% 1.5% 18.8% 35.0% 34.0% 1.0% 16.8% 33.0% 0.5% 14.8% 32.0% 0.0% 12.8% 2008 2009 2010 2011 2008 2009 2010 2011
Slide 16: Focused on Free Cash Flow
Focused on Free Cash Flow Free Cash Flow 1* and Conversion ($M) $388 $341 $308 $301 • Strong Cash Position 152% 117% 111% 91% • No Significant Debt Maturities Until 2016 2008 2009 2010 2011 1 Free Cash Flow = Net cash from operating activities - Capital expenditures • 31% Net Debt to Net Capital Cap
Slide 17: Disciplined Capital Deployment
Disciplined Capital Deployment Cash from Operations Return to Financial Acquisition Capex Shareholders Obligations Strategy • 2.5% – 3.5% of sales • ~$0.10/share • Debt & pension • Up to $300M / year • In-line with peers Organic Growth Cash return to Cash to meet key Inorganic investment World Class
Slide 18: Financial Projections
Financial Projections 2012 Guidance 2015 Target Revenues $3.9B to $4.0B $4.5B to $5.0B Operating Margin* 12.7% to 13.3% 14.5% to 15.5% Free Cash Flow Conversion 95% 100% EPS Growth* +8% to +17% Long-Term Targets • Market growth of 3-5%...4-6% Xylem targeted growth • Acquisition strategy adds 1-2 % p
Slide 19: Q&A
xylem Let's Solve Water Q&A xylem Lars Solve Water
Slide 20: Investment Highlights
Investment Highlights • Uniquely Positioned … Global leader in Attractive Water Industry • Balanced Portfolio … Diversified End & Geographic Market Mix • Large Installed Base … Stability, Profitable Aftermarket Growth • Attractive Growth Opportunities … Organic & Inorganic • Increasing Profitability
Slide 21: Thank you for your interest!
NYSE: XYL Phil De Sousa, Investor Relations Officer (914) 323-5930 Janice Tedesco, Investor Relations Coordinator (914) 323-5931 http://investors.xyleminc.com Thank you for your interest ! 21
Slide 22: Appendix
Appendix
Slide 23: Non-GAAP Reconciliation: Organic Revenue
Non-GAAP Reconciliation: Organic Revenue Xylem Inc. Non-GAAP Reconciliation Reported vs. Organic Revenue ($ Millions) (As ReportedGAAP) - (As AdjustedOrganic) - (A) (B) (C) (D) (E) (F) = B+C+D+E (G) = F/A Change % Change Acquisitions / Change % Change Revenue Revenue 2011 v. 2010 2011 v. 2010 Divest
Slide 24: Non-GAAP Reconciliation: EBITDA
Non-GAAP Reconciliation: EBITDA 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 F
Slide 25: Non-GAAP Reconciliation: Earnings Per Share
Non-GAAP Reconciliation: Earnings Per Share Xylem Inc. Non-GAAP Reconciliation Adjusted Diluted EPS 2009, 2010, & 2011 ($ Millions, except per share amounts) 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 Sp
Slide 26: Non-GAAP Reconciliation: Free Cash Flow
Non-GAAP Reconciliation: Free Cash Flow 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
Slide 27: Non-GAAP Reconciliation: Guidance
Non-GAAP Reconciliation: Guidance Xylem Inc. Non-GAAP Reconciliation Guidance ($ Millions, except per share amounts) Illustration of Mid Point Guidance 2012 Guidance FY '11 FY '12 As Reported Adjustments Adjusted Adjustments Normalized As Reported Adjustments Adjusted Total Revenue 3,803 3,803 3,803
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