Slide 1: Xylem Inc. Q2 2013 Earnings Release
Exhibit 99.2 XYLEM INC. Q2 2013 EARNINGS RELEASE JULY 30, 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: Q2'13 Xylem Results
Q2’13 XYLEM RESULTS (Dollars In Millions, Except per Share Data) FINANCIAL PERFORMANCE SUMMARY Constant Orders $1,009 +4% Currency Book to Bill 1.05 Basis * Weak Industrial & Public Utility (Capex) Constant Markets, Partially Offset by U.S. Currency Revenue $960 -1% Basis * Residential & Commercial
Slide 4: Xylem Guidance Update
XYLEM GUIDANCE UPDATE (Dollars In Millions, Except per Share Data) Mid-Point Roll-Forward Revenue EPS* Notes Previous Guidance $3,925 $1.84 Organic Growth 0% to 1% FX Translation ($70) ($0.09) Stronger USD & SEK Operations ($135) ($0.30) Organic Growth -4% to -3%; -4 pt. Revision Revised Guidance $3
Slide 5: Business Update
BUSINESS UPDATE DELIVER CUSTOMER VALUE • Application Expertise Resulting in Key Treatment Project Order Wins • Partnering with Visenti to Provide Energy Audit in Singapore DRIVE PROFITABLE GROWTH • Advancing Acquisition Strategy … Completed the Acquisition of Pollmann Pumpen • Vitality Index Continu
Slide 6: Q2'13 Xylem Performance
Vs. Internal Q2’13 XYLEM PERFORMANCE Expectations REVENUE OPERATING INCOME* (Dollars, In Millions) (Dollars, In Millions) + Strong U.S. Performance (All End Markets) – Weak European Public Utility & Industrial 991 – Emerging Market Project Delays Coupled 960 117 with Mining Slowdown/Disruption 98 –
Slide 7: Q2'13 Xylem Performance
Q2’13 XYLEM PERFORMANCE REVENUE Q2 GROWTH ORGANIC PERFORMANCE (Dollars, In Millions) Organic -3% By End Market By Geography 966 960 – Industrial – Europe Acquisitions 2% Constant – Public Utility U.S. -1% -1% Currency Commercial – Emerging Markets Residential China, Russia Q2'12 Q2'13 – Project Timi
Slide 8: Q2'13 Xylem Performance
Q2’13 XYLEM PERFORMANCE EPS* Tailwinds Headwinds New Product Launches & Price Volume (Market Conditions) Cost Reductions & Restructuring Savings Inflation European Realignment Benefit Foreign Exchange $0.49 $0.11 $0.01 $0.03 $0.36 Volume/Other -$0.13 Restruct. Savings+$0.02 Adjusted Core European FX
Slide 9: Q2'13 Water Infrastructure Performance
Q2’13 WATER INFRASTRUCTURE PERFORMANCE REVENUE (Organic Performance) Q2 GROWTH Transport -6%; Treatment -12%; Test -2% (Dollars, In Millions) Organic -6% – Europe Down Mid Single Digits 609 – Treatment Project Delays, Funding 596 Acquisition +4% Constraints and PY Biogas Compare Constant – Southern
Slide 10: Q2'13 Applied Water Performance
Q2’13 APPLIED WATER PERFORMANCE REVENUE Q2 GROWTH (Organic Performance) (Dollars, In Millions) Building Svcs +3%; Ind’l Water -2%; Irrigation +10% Organic +1% 381 + Strong U.S. Performance, Up Mid Single Digits 373 Acquisition 0% + Residential & Ag up Double-Digits Constant + Improving Commercial Ma
Slide 11: Xylem Financial Position
XYLEM FINANCIAL POSITION Free Cash Flow * Working Capital as % Revenue ** (Dollars, In Millions) • Free Cash Flow Decline 1.1% 0.1% 24.3% • Lower Income 23.1% 86 2 • Timing of Tax Payments Q2'12 Q2'13 • Unfavorable Working YTD YTD Capital FCF% 54% 2% • Capex > 1 Reinvest. Ratio Q2'12 Operations FX Q
Slide 12: Guidance Update
GUIDANCE UPDATE (Dollars, In Millions) Previous End Market Revenue (Mid-Point Roll-Forward) Performance Outlook FY’13 vs. PY 1H’13 vs. PY Current Outlook FY’13 vs. PY Previous Guidance $3,925 Industrial Flat to Up Down High Down Mid (43% of Revenue) Low Single Digits Single Digits Single Digits Down
Slide 13: 2H Planning Assumptions
2H PLANNING ASSUMPTIONS REVENUE (Mid-Point Guidance) (Dollars, In Millions) + Modest U.S. Market Improvement 1,881 3,720 • Continued Strength in Residential & Commercial • Mixed Industrial End Market Dynamics +2% Sequential • Stable Public Utility Opex/Capex Delays 1,839 Growth + Emerging Markets Im
Slide 14: 2013 Financial Guidance Summary
2013 FINANCIAL GUIDANCE SUMMARY 2013 Full Year Growth (Dollars In Millions, Except per Share Data) Financial Outlook 2013E vs. 2012 Revenue (Mid-Point) Total Growth Organic Acquisition FX Xylem Consolidated ~$3,720 -2 % to -1% -4% to -3% 2% -1% Water Infrastructure ~$2,350 -4% to -3% -7% to -6% 4% -
Slide 15: Summary
SUMMARY • RecalibratedProjectionsBasedon1st HalfPerformance, Current Economic Environment and End Market Outlook • Significant Cost Reduction and Restructuring Actions Underway • Maintaining Sharp Focus on Delivering Customer Value Through New Product Launches • Driving Businesses to Achieve Higher
Slide 16: Non-GAAP Measures
NON-GAAP MEASURES Management views key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, free cash flow, working capital, and backlog, among others. In addition, we consider certain measures to be useful to management and investors evaluati
Slide 17: Non-GAAP Reconciliation: Organic & Constant Currency Revenue Growth
NON-GAAP RECONCILIATION: ORGANIC & CONSTANT CURRENCY REVENUE GROWTH Xylem Inc. Non-GAAP Reconciliation Reported vs. Organic & Constant Currency Revenue ($ Millions) (As Reported GAAP) - (As AdjustedOrganic) - Constant Currency (A) (B) (C) (D) (E) (F) = B+C+D+E (G) = F/A (H)= (F- C)/ A Change % Chang
Slide 18: Non-GAAP Reconciliation: Organic & Constant Currency Order Growth
NON-GAAP RECONCILIATION: ORGANIC & CONSTANT CURRENCY ORDER GROWTH Xylem Inc. Non-GAAP Reconciliation Reported vs. Organic & Constant Currency Order Growth ($ Millions) (As Reported GAAP) - (As AdjustedOrganic) - Constant Currency (A) (B) (C) (D) (E) (F) = B+C+D+E (G) = F/A (H) = (F C) - /A Change %
Slide 19: Non-GAAP Reconciliation: Adjusted Diluted EPS
NON-GAAP RECONCILIATION: ADJUSTED DILUTED EPS Xylem Inc. Non-GAAP Reconciliation Adjusted Diluted EPS ($ Millions, except per share amounts) Q2 2012 Q2 2013 As Reported Adjustments Adjusted As Reported Adjustments Adjusted Total Revenue 966 966 960 960 Operating Income 129 6 a 135 70 28 c 98 Operati
Slide 20: Non-GAAP Reconciliation: Adjusted Operating Income
NON-GAAP RECONCILIATION: ADJUSTED OPERATING INCOME Xylem Inc. Non-GAAP Reconciliation Adjusted Operating Income ($ Millions) Q2 Q2 YTD '13 '12 '13 '12 Total Revenue • Total Xylem 960 966 1,839 1,891 • Water Infrastructure 596 609 1,147 1,193 • Applied Water 381 373 726 728 Operating Income • Total X
Slide 21: 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 ($ Millions) Six Months Ended 2013 2012 Net Cash - Operating Activities $ 62 $ 125 Capital Expenditures (60) (57) Free Cash Flow, including separation costs 2 68 Cash Paid fo
Slide 22: Non-GAAP Reconciliation: Xylem EBITDA & Adj. EBITDA
NON-GAAP RECONCILIATION: XYLEM EBITDA & ADJ. EBITDA Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter ($ Millions) 2013 Q1 Q2 Q3 Q4 Total Pre-Tax Income 51 57 108 Interest Expense (Income), net 12 13 25 Depreciation 25 24 49 Amortization 12 13 25 Stock Compensation 6 6 12 EBIT
Slide 23: Non-GAAP Reconciliation: Water Infrastructure EBITDA & Adj. EBITDA
NON-GAAP RECONCILIATION: WATER INFRASTRUCTURE EBITDA & ADJ. EBITDA Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter Water Infrastructure ($ Millions) 2013 Q1 Q2 Q3 Q4 Total Pre-Tax Income 42 43 85 Interest Expense (Income), net - (1) (1) Depreciation 19 17 36 Amortization 9 1
Slide 24: Non-GAAP Reconciliation: Applied Water EBITDA & Adj. EBITDA
NON-GAAP RECONCILIATION: APPLIED WATER EBITDA & ADJ. EBITDA Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter Applied Water ($ Millions) 2013 Q1 Q2 Q3 Q4 Total Pre-Tax Income 40 45 85 Interest, net - - - Depreciation 6 5 11 Amortization 2 1 3 Stock Compensation 1 - 1 EBITDA 49
Slide 25: Non-GAAP Reconciliation: Guidance
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 3,720 3,720 Segment Operati
Slide 26: Non-GAAP Reconciliation: Adj. Operating Income and Margin
NON-GAAP RECONCILIATION: ADJ. OPERATING INCOME AND MARGIN 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 3,720 Operating Income 315 276 388 395 443 328 Operating Margin 9.6% 9.7% 12.1%