Xylem Inc. · NYSE:XYL
Xylem — Robert W. Baird's 42nd Annual Industrial Conference 2012
30 slides from Xylem's conference presentation, Nov 7, 2012
Slide 1: Robert W. Baird's 42nd Annual Industrial Conference
Exhibit 99.1 nd Robert W. Baird's 42 Annual Industrial Conference November 7, 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: Diversified Geographic Market Mix
Diversified Geographic Market Mix Geographical Mix* Emerging Markets • BRIC & ROW Focused Growth Strategy Europe 37% U.S. 36% • 40+ Sales Units Spread Globally Asia Pac 11% • 2 Localized R&D Centers Other 16% • 14 Production Facilities • ’09 -’11 Revenue CAGR +20% • Proj. Long-Term Revenue Growth 8-
Slide 5: 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 Cyc
Slide 6: 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 7: Resilient Portfolio & Increasing Profitability
Resilient Portfolio & Increasing Profitability Revenue Operating Margin * $M, unless otherwise indicated Expansion +290 Bps On Comp Basis 13.6% 12.8% 3,803 ~3.8B 3,291 3,202 12.6% Incl. Stand- 2,849 Alone Costs 10.8% 10.8% 12.7% 12.8% Op Income Up ~$160M … ~45% Revenue Up ~$510M … +15% Incremental M
Slide 8: Focused on Free Cash Flow
Focused on Free Cash Flow Free Cash Flow 1* and Conversion ($M) $388 $341 $308 $301 152% 117% 111% • Strong Cash Flow Conversion 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 9: 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 10: Financial Projections
Financial Projections 2012 FY Guidance 2015 As of Nov. 1, 2012 Target ** Revenues ~$3.8B $4.5B to $5.0B Operating Margin* 12.7% to 12.9% 14.5% to 15.5% Free Cash Flow Conversion 95% 100% Normalized EPS Growth* +4% to +8% Long-Term Targets • Market growth of 3-5%...4-6% Xylem targeted growth • Acquis
Slide 11: 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 12: 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 ! 12
Slide 13: Appendix
Appendix
Slide 14: 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 15: 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 16: 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 Emerging Markets 3,803 3,202 • Established footprint • Localized innovation centers •
Slide 17: Gross Margin Improvement Funds Future Growth
Gross Margin Improvement Funds Future Growth • Operational and Commercial Excellence • Growth in Higher Margin Analytics and Dewatering applications • Xylem’s Water Infrastructure Direct Sales Force a Key Competitive Advantage Xylem Continues to Invest While Increasing Profitability 17
Slide 18: Public Utility & Industrial Transport & Treatment
Public Utility & Industrial Transport & Treatment Application Technologies • Waste Water Transport • Filtration • Biological Treatment • UV & Ozone Disinfection 18
Slide 19: 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 20: Test Applications
Test Applications Analytical Instrumentation Diverse Applications • Environmental • Water & Waste Water • Food & Beverage • Chemical • Pharmaceutical • Ocean/Coastal 20
Slide 21: 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 22: 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 22
Slide 23: 2012 Financial Guidance Summary
2012 Financial Guidance Summary 2012 FY Guidance Growth As of Nov. 1, 2012 2012E vs. 2011 Revenue Constant Currency Organic Acquisition Xylem Consolidated ~$3.8B ~3% ~1% 2% Water Infrastructure ~$2.4B ~5% ~1% 4% Applied Water ~$1.4B ~1% ~1% 0% Segment Margin * 14.1% - 14.3% +10 to +30 bps Operating
Slide 24: Non-GAAP Measures
Non-GAAP Measures Management views key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, free cash flow, working capital, and backlog, among others. In addition, we consider certain measures to be useful to management and investors evaluati
Slide 25: Non-GAAP Reconciliation: Earnings Per Share
Non-GAAP Reconciliation: Earnings Per Share Xylem Inc. Non-GAAP Reconciliation Adjusted Diluted EPS 2009, 2010, & 2011 ($ 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: Guidance
Non-GAAP Reconciliation: Guidance 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 522 516 25 h,i 541 Segme
Slide 27: 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) Fre
Slide 28: 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 315 276 388 395 448 Operating Margin 9.6% 9.7% 12.1% 10.4% 11.8% Restr
Slide 29: Non-GAAP Reconciliation: 2012 Xylem EBITDA & Adj. EBITDA
Non-GAAP Reconciliation: 2012 Xylem EBITDA & Adj. EBITDA Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter Total Xylem ($ Millions) 2012 Q1 Q2 Q3 YTD Income Before Taxes 84 115 100 299 Interest, net 13 13 12 38 Depreciation 23 21 24 68 Amortization 11 12 12 35 Stock Compensati
Slide 30: Non-GAAP Reconciliation: 2011 Xylem EBITDA & Adj. EBITDA
Non-GAAP Reconciliation: 2011 Xylem EBITDA & Adj. EBITDA Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter Total Xylem ($ Millions) 2011 Q1 Q2 Q3 Q4 Total Pre-Tax Net Income 101 115 82 85 383 Interest, net - - 1 16 17 Depreciation 22 25 25 21 93 Amortization 11 10 11 12 44 Sto
Xylem — Robert W. Baird's 42nd Annual Industrial Conference 2012 on 6ix