Slide 1: Vertical Research Conference
Exhibit 99.1 Vertical Research Conference September 6, 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 & Application Expertise • Resilient Portfolio & Large Installed Base • Unrivaled Global Reach … Serving 150+ Co
Slide 4: Uniquely Positioned …
Uniquely Positioned … $500B Water Global Water Infrastructure Industry Growth Drivers Technology Intensive $30B • Depleting Water Supply • Highly Engineered Equipment • Tightening Regulation • Premium Value & Services • Aging Infrastructure • High Performance • Population Growth • Knowledge-Based Se
Slide 5: Segment Overview
Water Infrastructure Segment Overview Applied Water 63% 37% Water Infrastructure Overview Applied Water Overview Market Size: $16B Customers Market Size: $14B Customers Public Utilities Residential & Commercial, 2011 Revenues: $2.4B Industrial Facilities 2011 Revenues: $1.4B Industrial Facilities, A
Slide 6: Diversified Geographic Market Mix
Diversified Geographic Market Mix Geographical Mix* Emerging Markets Europe 37% • BRIC & ROW Focused Growth Strategy U.S. 36% • 40+ Sales Units Spread Globally Asia Pac 11% Other 16% • 2 Localized R&D Centers • 14 Production Facilities • ’09 -’11 Revenue CAGR +20% Region Highlights • Proj.Long-Term
Slide 7: Diversified End Market Mix
Diversified End Market Mix LT Growth Drivers Depleting Water Supply Tightening Regulation Aging Infrastructure Population Growth Urbanization Sustainability Energy Industrial Public Utility Commercial Residential Agriculture Efficiency % of XYL Revenue 40% 36% 13% 9% 3% • Late/Less Cycle • Non-Cycli
Slide 8: Public Utility & Industrial Transport & Treatment
Public Utility & Industrial Transport & Treatment Application Technologies • Waste Water Transport • Filtration • Biological Treatment • UV & Ozone Disinfection 8
Slide 9: The Public Utility End Market
The Public Utility End Market • 36% of Xylem Revenues related U.S. Water and Sewer Construction Spending - $M 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
Slide 10: Test Applications
Test Applications Analytical Instrumentation Diverse Applications Environmental Water & Waste Water Food & Beverage Chemical Pharmaceutical Ocean/Coastal 10
Slide 11: Dewatering and Industrial Water Applications
Dewatering and Industrial Water Applications Dewatering Applications Industrial Water Applications Diverse Applications • Construction • Mining • Disaster Recovery • Oil, Gas & Chemical • Environmental • Water & Waste Water • Heavy Industry • Marine
Slide 12: 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 12
Slide 13: Resilient Portfolio & Increasing Profitability
Resilient Portfolio & Increasing Profitability Revenue Operating Margin * $M, unless otherwise indicated Expansion +290 Bps On Comp Basis 13.7% 12.8% 3,803 ~3.8B 3,291 3,202 12.6% Incl. Stand- 2,849 Alone Costs 10.8% 10.8% 12.7% 13.0% Op Income Up ~$165M … ~46% Revenue Up ~$510M … +15% Incremental M
Slide 14: Gross Margin Improvement Funds Future Growth
Gross Margin Improvement Funds Future Growth Gross Margin R&D SG&A 38.4% 37.9% 23.4% 2.6% 23.0% 23.1% 2.3% 21.9% 2.2% 36.4% 1.9% 34.7% 2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011 • Operational and Commercial Excellence • Growth in Higher Margin Analytics and Dewatering applications •
Slide 15: Highly Attractive Recurring Revenue Profile
Highly Attractive Recurring Revenue Profile Aftermarket Parts & Services Revenues Replacement Equipment (1) • Approximately 22% of Xylem revenue • 15% of Xylem revenue • Installed base drives replacement sales • Strong global presence • Brand loyalty drives like-for-like • 120+ owned service centers
Slide 16: Focused on Free Cash Flow
Focused on Free Cash Flow Free Cash Flow 1* and Conversion ($M) $388 $341 $308 $301 • Strong Cash Flow Conversion 152% 117% 111% 91% • Balance Sheet Flexibility 2008 2009 2010 2011 1 Free Cash Flow = Net cash from operating activities - Capital expenditures • No Significant Debt Maturities Until 201
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: Xylem Has a Focused Growth Strategy
Xylem Has a Focused Growth Strategy $M, unless otherwise indicated Organic Growth $4.5B - $5.0B • Replicate leadership positions ~8% CAGR • Strong aftermarket opportunities • Innovative application solutions ~3.8B 3,803 Emerging Markets 3,202 • Established footprint • Localized innovation centers •
Slide 19: Financial Projections
Financial Projections 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% Long-Term Targets • Market growth of 3-5%...4-6% Xylem targeted growth • Acquisition strategy adds 1-2
Slide 20: Investment Highlights
Investment Highlights • $3.8B Company Uniquely Positioned in the Attractive Water Industry • Resilient Portfolio & Proven Track Record of Increasing Profitability • Leading Brands & World-Class Distribution Channels • Diversified End & Geographic Markets Mix • Attractive Growth Opportunities & Large
Slide 21: Thank you for your interest !
NYSE: XYL Phil De Sousa, Investor Relations Officer (914) 323-5930 Janice Tedesco, Investor Relations Coordinator (914) 323-5931 http://investors.xyleminc.com Thank you for your interest ! 21
Slide 22: Appendix
Appendix
Slide 23: Non-GAAP Measures
Non-GAAP Measures Xylem Inc. Non-GAAP Measures Management views key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, free cash flow, working capital, and backlog, among others. In addition, we consider certain measures to be useful to mana
Slide 24: Non-GAAP Reconciliation: Organic Revenue
Non-GAAP Reconciliation: Organic Revenue Xylem Inc. Non-GAAP Reconciliation Reported vs. Organic Revenue ($ 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 25: Non-GAAP Reconciliation: EBITDA
Non-GAAP Reconciliation: EBITDA Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA Years ended 2011, 2010, 2009, & 2008 ($ Millions) 2011 2010 2009 2008 Pre-Tax Net Income 383 388 277 312 Interest, net 17 - - - (1) Depreciation and Amortization 150 101 79 72 EBITDA 550 489 356 384 Separat
Slide 26: 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 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 Projected Adjustments Adjusted Total Revenue 3,803 3,803 3,80
Slide 28: 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 29: Non-GAAP Reconciliation: Adj. Operating Income & Margin
Non-GAAP Reconciliation: Adj. Operating Income & Margin Xylem Inc. Non-GAAP Reconciliation Adjusted Operating Income ($ Millions) 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% Restr