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Xylem Inc. reports strong fourth quarter and full year 2014 results, including double-digit growth in earnings per share

February 5, 2015
 Company increases quarterly cash dividend by 10 percent
  • Fourth quarter 2014 adjusted net income was $114 million or $0.62 per share, up 11 percent over fourth quarter 2013; GAAP net income was $96 million or  $0.52 per share
  • Full-year 2014 adjusted net income was $362 million or $1.97 per share, an increase of 18 percent; Full-year GAAP net income was $337 million or $1.83 per share
  • Xylem delivered $1.04 billion in fourth quarter 2014 revenue, growth of 6 percent organically
  • Xylem’s fourth quarter 2014 adjusted operating margin increased 70 basis points, resulting in six consecutive quarters of adjusted operating margin expansion
  • Company projects full-year 2015 adjusted EPS of $1.85 to $1.95 per share; Excluding the expected unfavorable impact of foreign exchange translation, adjusted earnings growth of 5 to 10 percent is expected on organic revenue growth of 1 to 3 percent 

RYE BROOK, N.Y., February 5, 2015 – Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported fourth quarter 2014 net income of $96 million, or $0.52 per share. Excluding the impact of restructuring, realignment and other special charges, the Company delivered adjusted net income of $114 million or $0.62 per share in the quarter, an 11-percent increase over the comparable period in 2013.  Fourth quarter organic revenue grew 6 percent to $1.04 billion, reflecting stronger results from emerging markets and the U.S., as well as across all end markets.  Fourth quarter adjusted operating margins improved 70 basis points, driven by higher volume and the impact of efficiency measures undertaken throughout the year.

For the full year 2014, Xylem generated $3.92 billion in revenue, an organic increase of 3 percent over 2013.  Full-year reported net income was $337 million, or $1.83 per share, with an operating margin of 11.8 percent.  Adjusted net income, which excludes the impact of restructuring, realignment and other special items, was $362 million or $1.97 per share.  Xylem delivered a full-year 2014 adjusted operating margin of 12.9 percent.  Free cash flow was $297 million, up 50 percent versus last year.

“Xylem delivered strong results in the fourth quarter, closing out 2014 with a clear strategic focus, stronger execution and a renewed drive in research and innovation,” said Patrick Decker, president and chief executive officer of Xylem.  “We generated growth in each of our key regions in the fourth quarter, with notably strong results in China and the emerging markets in general.  Solid growth in the U.S. and more effective execution across the company helped us to mitigate slower growth in Europe.”

Decker continued, “During 2015, we will continue to strengthen critical organization capabilities in the areas of commercial excellence, innovation and technology, and emerging markets in order to accelerate Xylem’s growth.  Our commitment to building a continuous improvement culture across the organization will drive efficiencies and enable us to continue to expand margins and reinvest for growth in our business. Our core fundamentals are strong and our 2015 plan tracks well with our long-term commitments to grow the company and our shareholders’ return.”

Xylem today also announced that its Board of Directors declared a dividend in the amount of $0.1408 per share for the first quarter of 2015, an increase of 10 percent. The dividend is payable on March 18, 2015 to shareholders of record as of February 18, 2015.

Full-year 2015 Outlook

Xylem forecasts full-year 2015 revenue of approximately $3.7 billion, a decrease of 5 to 7 percent over the 2014 results, including the projected unfavorable impact of foreign exchange translation.  On an organic basis, Xylem’s revenue growth is anticipated to be in the range of 1 to 3 percent.

Full-year 2015 adjusted operating income is expected to be in the range of $480 to $505 million, resulting in adjusted earnings per share of $1.85 to $1.95.  This represents a decline of 1 to 6 percent from Xylem’s 2014 adjusted results. Excluding the projected unfavorable impact of foreign exchange translation, Xylem’s adjusted earnings per share growth is anticipated to be in the range of 5 to 10 percent.  The company’s adjusted earnings outlook reflects projected restructuring and realignment costs of $20 million for the year.

Fourth Quarter Segment Results

Water Infrastructure

Xylem’s Water Infrastructure segment consists of its businesses serving clean water delivery, wastewater transport and treatment, dewatering and analytical instrumentation.

    • Fourth quarter 2014 revenue was $672 million, up 6 percent organically compared with the fourth quarter 2013, reflecting growth across all business lines and all geographic regions.

    • Fourth quarter adjusted operating income for the segment, which excludes $9 million of restructuring, realignment and other special items, was $113 million, a 2-percent improvement over the same period in 2013. Adjusted operating margin for the quarter expanded 30 basis points reflecting the benefits of cost reduction actions taken throughout the year.

Applied Water

 

Xylem’s Applied Water segment consists of its portfolio of businesses in residential and commercial building services, industrial and agricultural applications.

    • Fourth quarter 2014 revenue increased 7 percent organically year-over-year to $370 million with growth coming from all applications, and exceptionally strong performances in the U.S. and emerging markets.

    • Fourth quarter adjusted operating income for the segment, which excludes $2 million of restructuring and realignment costs, was $50 million, 6 percent higher than the comparable period last year.  Adjusted operating margin grew 40 basis points, reflecting the benefits of cost reduction actions taken throughout the year, partially offset by unfavorable foreign exchange translation impacts.

Supplemental information on Xylem’s fourth quarter and full year 2014 earnings and reconciliations for certain non-GAAP items is posted at investors.xyleminc.com.

About Xylem

Xylem (XYL) is a leading global water technology provider, enabling customers to transport, treat, test and efficiently use water in public utility, residential and commercial building services, industrial and agricultural settings. The company does business in more than 150 countries through a number of market-leading product brands, and its people bring broad applications expertise with a strong focus on finding local solutions to the world’s most challenging water and wastewater problems. Xylem is headquartered in Rye Brook, New York, with 2014 revenues of $3.9 billion and approximately 12,500 employees worldwide. Xylem was named to the Dow Jones Sustainability Index for the last three years for advancing sustainable business practices and solutions worldwide.

The name Xylem is derived from classical Greek and is the tissue that transports water in plants, highlighting the engineering efficiency of our water-centric business by linking it with the best water transportation of all -- that which occurs in nature. For more information, please visit us at www.xyleminc.com.

Forward-Looking Statements

This press release 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,” “forecast,” “believe,” “target,” “will,” “could,” “would,” “should” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. 

These forward-looking statements include statements about the capitalization of Xylem Inc. (the “Company”), the Company’s restructuring and realignment, future strategic plans and other statements that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals. All statements that address operating or financial performance, events or developments that we expect or anticipate will occur in the future – including statements relating to orders, revenues, operating margins and earnings per share growth, and statements expressing general views about future operating results – are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such forward-looking statements.

Factors that could cause results to differ materially from those anticipated include: economic, political and other risks associated with our international operations, including military actions, economic sanctions or trade embargoes that could affect customer markets,  and non-compliance with laws, including foreign corrupt practice laws, export and import laws and competition laws; potential for unexpected cancellations or delays of customer orders in our reported backlog; our exposure to fluctuations in foreign currency exchange rates;  competition and pricing pressures in the markets we serve; the strength of housing and related markets; ability to retain and attract key members of management; our relationship with and the performance of our channel partners; our ability to borrow or to refinance our existing indebtedness and availability of liquidity sufficient to meet our needs; changes in the value of goodwill or intangible assets; risks relating to product defects, product liability and recalls; governmental investigations; security breaches or other disruptions of our information technology systems; litigation and contingent liabilities; and other factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013, and those described from time to time in subsequent reports filed with the Securities and Exchange Commission.

All forward-looking statements made herein are based on information currently available to the Company.  The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.​

XYLEM INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

(In Millions, except per share data)

 

Unaudited

 

 

 

 

Year Ended December 31,

2014

 

2013

 

2012

Revenue

$

3,916

 

 

$

3,837

 

 

$

3,791

 

Cost of revenue

2,403

 

 

2,338

 

 

2,289

 

Gross profit

1,513

 

 

1,499

 

 

1,502

 

Selling, general and administrative expenses

920

 

 

986

 

 

914

 

Research and development expenses

104

 

 

104

 

 

106

 

Separation costs

 

 

4

 

 

22

 

Restructuring and asset impairment charges

26

 

 

42

 

 

17

 

Operating income

463

 

 

363

 

 

443

 

Interest expense

54

 

 

55

 

 

55

 

Other non-operating income (expense), net

1

 

 

(10

)

 

 

Gain from sale of business

11

 

 

 

 

 

Income before taxes

421

 

 

298

 

 

388

 

Income tax expense

84

 

 

70

 

 

91

 

Net income

$

337

 

 

$

228

 

 

$

297

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

$

1.84

 

 

$

1.23

 

 

$

1.60

 

Diluted

$

1.83

 

 

$

1.22

 

 

$

1.59

 

Weighted average number of shares:

 

 

 

 

 

 

 

 

Basic

183.1

 

 

185.2

 

 

185.8

 

Diluted

184.2

 

 

186.0

 

 

186.2

 

Dividends declared per share

$

0.5120

 

 

$

0.4656

 

 

$

0.4048

 

XYLEM INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions, except per share amounts) 

 

Unaudited

 

 

December 31,

2014

 

2013

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

663

 

 

$

533

 

Receivables, less allowances for discounts and doubtful accounts of $34 and $31 in 2014 and 2013, respectively

771

 

 

817

 

Inventories

486

 

 

475

 

Prepaid and other current assets

144

 

 

143

 

Deferred income tax assets

38

 

 

41

 

Total current assets

2,102

 

 

2,009

 

Property, plant and equipment, net

461

 

 

488

 

Goodwill

1,635

 

 

1,718

 

Other intangible assets, net

431

 

 

488

 

Other non-current assets

235

 

 

193

 

Total assets

$

4,864

 

 

$

4,896

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

338

 

 

$

332

 

Accrued and other current liabilities

481

 

 

479

 

Short-term borrowings and current maturities of long-term debt

89

 

 

42

 

Total current liabilities

908

 

 

853

 

Long-term debt

1,199

 

 

1,199

 

Accrued postretirement benefits

388

 

 

348

 

Deferred income tax liabilities

158

 

 

191

 

Other non-current accrued liabilities

84

 

 

64

 

Total liabilities

2,737

 

 

2,655

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common Stock — par value $0.01 per share:

 

 

 

 

 

Authorized 750.0 shares, issued 188.9 and 187.6 shares in 2014 and 2013, respectively

2

 

 

2

 

Capital in excess of par value

1,796

 

 

1,753

 

Retained earnings

648

 

 

405

 

Treasury stock – at cost 6.6 shares and 3.0 shares in 2014 and 2013, respectively

(220

)

 

(86

)

Accumulated other comprehensive income

(99

)

 

167

 

Total stockholders’ equity

2,127

 

 

2,241

 

Total liabilities and stockholders’ equity

$

4,864

 

 

$

4,896

 

XYLEM INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

 

Unaudited

 

 

 

 

 

Year Ended December 31,

2014

 

 

2013

 

2012

Operating Activities

 

 

 

 

 

 

 

 

Net income

$

337

 

 

$

228

 

 

$

297

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

95

 

 

99

 

 

94

 

Amortization

47

 

 

51

 

 

48

 

Deferred income taxes

(29

)

 

(14

)

 

1

 

Share-based compensation

18

 

 

27

 

 

22

 

Restructuring and asset impairment charges, net

26

 

 

42

 

 

17

 

Gain from sale of business

(11

)

 

 

 

 

Other, net

2

 

 

15

 

 

2

 

Payments of restructuring

(26

)

 

(35

)

 

(9

)

Contributions to postretirement benefit plans

(35

)

 

(43

)

 

(46

)

Changes in assets and liabilities (net of acquisitions):

 

 

 

 

 

 

 

 

Changes in receivables

(37

)

 

(47

)

 

2

 

Changes in inventories

(49

)

 

(39

)

 

5

 

Changes in accounts payable

17

 

 

4

 

 

(4

)

Changes in accrued liabilities

3

 

 

18

 

 

(28

)

Changes in accrued taxes

25

 

 

20

 

 

(17

)

Net changes in other assets and liabilities

33

 

 

(2

)

 

12

 

Net Cash — Operating activities

416

 

 

324

 

 

396

 

Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures

(119

)

 

(126

)

 

(112

)

Proceeds from the sale of property, plant and equipment

2

 

 

6

 

 

5

 

Acquisitions of businesses and assets, net of cash acquired

 

 

(81

)

 

(41

)

Proceeds from sale of business

30

 

 

 

 

 

Other, net

1

 

 

2

 

 

1

 

Net Cash — Investing activities

(86

)

 

(199

)

 

(147

)

Financing Activities

 

 

 

 

 

 

 

 

Net transfer to former parent

 

 

 

 

(9

)

Issuance of short-term debt

52

 

 

39

 

 

13

 

Principal payments of debt and capital lease obligations

 

 

(2

)

 

(14

)

Repurchase of common stock

(134

)

 

(73

)

 

(13

)

Proceeds from exercise of employee stock options

26

 

 

22

 

 

24

 

Excess tax benefit from share based compensation

2

 

 

1

 

 

 

Dividends paid

(94

)

 

(87

)

 

(75

)

Other, net

1

 

 

 

 

 

Net Cash — Financing activities

(147

)

 

(100

)

 

(74

)

Effect of exchange rate changes on cash

(53

)

 

4

 

 

11

 

Net change in cash and cash equivalents

130

 

 

29

 

 

186

 

Cash and cash equivalents at beginning of year

533

 

 

504

 

 

318

 

Cash and cash equivalents at end of year

$

663

 

 

$

533

 

 

$

504

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

 

 

Interest

$

51

 

 

$

51

 

 

$

53

 

Income taxes (net of refunds received)

$

81

 

 

$

65

 

 

$

104

 

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 management and investors evaluating  our operating performance for the periods presented, and provide a tool for evaluating our ongoing operations, liquidity and management of assets.  This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives.  These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operations as determined in accordance with GAAP. We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators:

“Organic revenue" and "Organic orders” defined as revenue and orders, respectively, excluding the impact of foreign currency fluctuations and contributions from acquisitions and divestitures.  Divestitures include sales of portions of our business that did not meet the criteria for classification as a discontinued operation or insignificant portions of our business that we did not classify as a discontinued operation.  The period-over-period change resulting from foreign currency fluctuations assumes no change in exchange rates from the prior period.

“Constant currency” defined as financial results adjusted for currency translation impacts by translating current period and prior period activity using the same currency conversion rate.  This approach is used for countries whose functional currency is not the U.S. dollar.

“EBITDA” defined as earnings before interest, taxes, depreciation, amortization expense, and share-based compensation. “Adjusted EBITDA” reflects the adjustment to EBITDA to exclude non-recurring restructuring and realignment costs, gain on sale of business and special charges.

"Adjusted Operating Income", "Adjusted Segment Operating Income", and “Adjusted EPS” defined as operating income, segment operatng income and earnings per share, adjusted to exclude non-recurring restructuring and realignment costs, gain on sale of business, special charges and tax-related special items, as applicable.

“Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well as adjustments for other significant items that impact current results which management believes are not related to our ongoing operations and performance.  Our definition of free cash flows does not consider non-discretionary cash payments, such as debt. 

“Realignment costs” defined as non-recurring costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, relocation, travel and other costs. 

“Special charges" defined as costs incurred by the Company associated with the settlement of legal proceedings with Xylem Group LLC and certain costs incurred for the change in chief executive officer made during the third quarter of 2013, as well as costs incurred in the fourth quarter of 2013 for the contractual indemnification of federal tax obligations to ITT and costs associated with a legal judgment arising from a historical acquisition matter.

Xylem Inc. Non-GAAP Reconciliation

Reported vs. Organic & Constant Currency Order Growth

($ Millions)

 

 

 

 

 

 

 

 

 

 

 

(As Reported - GAAP)

(As Adjusted - Organic)

Constant Currency

 

 

(A)

(B)

 

(C)

(D)

(E) = B+C+D

(F) = E/A

(G) = (E - C) / A

 

Orders

Orders

Change
2014 v. 2013

% Change
2014 v. 2013

Acquisitions / Divestitures

FX Contribution

Change Adj. 2014 v. 2013

% Change Adj. 2014 v. 2013

 

 

2014

2013

 

 

 

 

 

 

 

Year Ended December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xylem Inc.

  4,021

  3,912

     109

3%

                    1

              43

     153

4%

4%

 

 

 

 

 

 

 

 

 

 

Water Infrastructure

  2,511

  2,443

      68

3%

                  (8)

              40

     100

4%

4%

Applied Water

  1,510

  1,469

      41

3%

                    9

                3

       53

4%

3%

 

 

 

 

 

 

 

 

 

 

Quarter Ended December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xylem Inc.

     970

     986

    (16)

-2%

                    4

              46

      34

3%

3%

 

 

 

 

 

 

 

 

 

 

Water Infrastructure

     596

     630

    (34)

-5%

                    - 

              35

       1

0%

0%

Applied Water

     374

     356

      18

5%

                    4

              11

      33

9%

8%

 

 

 

 

 

 

 

 

 

 

Quarter Ended September 30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xylem Inc.

  1,027

     955

      72

8%

                    5

                2

      79

8%

8%

 

 

 

 

 

 

 

 

 

 

Water Infrastructure

     664

     601

      63

10%

                    - 

                - 

      63

10%

10%

Applied Water

     363

     354

       9

3%

                    5

                2

      16

5%

3%

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xylem Inc.

  1,031

  1,009

      22

2%

                  (1)

               (8)

      13

1%

1%

 

 

 

 

 

 

 

 

 

 

Water Infrastructure

     654

     629

      25

4%

                  (1)

                1

      25

4%

4%

Applied Water

     377

     380

     (3)

-1%

                   -  

               (8)

    (11)

-3%

-3%

 

 

 

 

 

 

 

 

 

 

Quarter Ended March 31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xylem Inc.

     993

     962

      31

3%

                  (7)

                3

      27

3%

4%

 

 

 

 

 

 

 

 

 

 

Water Infrastructure

     597

     583

      14

2%

                  (7)

                4

      11

2%

3%

Applied Water

     396

     379

      17

4%

                   -  

               (2)

      15

4%

4%

 

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) = B+C+D

(F) = E/A

(G) = (E - C) / A

 

Revenue

Revenue

Change
2014 v. 2013

% Change
2014 v. 2013

Acquisitions / Divestitures

FX Contribution

Change Adj. 2014 v. 2013

% Change Adj. 2014 v. 2013

 

 

2014

2013

 

 

 

 

 

 

 

Year Ended December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xylem Inc.

     3,916

     3,837

      79

2%

                      6

              49

     134

3%

3%

 

 

 

 

 

 

 

 

 

 

Water Infrastructure

     2,442

     2,384

      58

2%

                   (6)

              47

      99

4%

4%

Applied Water

     1,474

     1,453

      21

1%

                    12

                2

      35

2%

2%

 

 

 

 

 

 

 

 

 

 

Quarter Ended December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xylem Inc.

     1,042

     1,033

       9

1%

                      5

              50

      64

6%

6%

 

 

 

 

 

 

 

 

 

 

Water Infrastructure

        672

        673

     (1)

0%

                      -   

              39

      38

6%

6%

Applied Water

        370

        360

      10

3%

                      5

              11

      26

7%

6%

 

 

 

 

 

 

 

 

 

 

Quarter Ended September 30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xylem Inc.

        963

        965

     (2)

0%

                      7

                2

       7

1%

0%

 

 

 

 

 

 

 

 

 

 

Water Infrastructure

        602

        602

       -  

0%

                      - 

                1

       1

0%

0%

Applied Water

        361

        363

     (2)

-1%

                      7

                - 

       5

1%

-1%

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xylem Inc.

     1,005

        960

      45

5%

                   (1)

               (7)

      37

4%

4%

 

 

 

 

 

 

 

 

 

 

Water Infrastructure

        616

        577

      39

7%

                   (1)

                2

      40

7%

7%

Applied Water

        389

        383

       6

2%

                     -  

               (7)

     (1)

0%

0%

 

 

 

 

 

 

 

 

 

 

Quarter Ended March 31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xylem Inc.

        906

        879

      27

3%

                   (5)

                4

      26

3%

4%

 

 

 

 

 

 

 

 

 

 

Water Infrastructure

        552

        532

      20

4%

                   (5)

                5

      20

4%

5%

Applied Water

        354

        347

       7

2%

                     -  

               (2)

       5

1%

1%

 

Xylem Inc. Non-GAAP Reconciliation

Adjusted Operating Income

($ Millions)

               
     

Q4

 

YTD

     

2014

2013

 

2014

2013

 

Total Revenue

           
 

• Total Xylem

 

          1,042

       1,033

 

           3,916

           3,837

 

• Water Infrastructure

 

             672

          673

 

           2,442

           2,384

 

• Applied Water

 

             370

          360

 

           1,474

           1,453

               
 

Operating Income

 

 

 

 

 

 

 

• Total Xylem

 

             141

          129

 

              463

              363

 

• Water Infrastructure

 

             104

            99

 

              321

              263

 

• Applied Water

 

               48

            43

 

              193

              175

 

• Total Segments

 

             152

          142

 

              514

              438

 

 

 

 

 

 

 

 

 

Operating Margin

         

 

 

• Total Xylem

 

13.5%

12.5%

 

11.8%

9.5%

 

• Water Infrastructure

 

15.5%

14.7%

 

13.1%

11.0%

 

• Applied Water

 

13.0%

11.9%

 

13.1%

12.0%

 

• Total Segments

 

14.6%

13.7%

 

13.1%

11.4%

               
 

Special Charges

 

 

 

 

 

 
 

• Total Xylem

 

                -  

              4

 

                 -  

                24

 

• Water Infrastructure

 

                -  

              4

 

                 -  

                  4

 

• Applied Water

 

                -  

             -  

 

                 -  

                -  

 

• Total Segments

 

                -  

              4

 

                 -  

                  4

   

 

 

 

 

 

 
 

Restructuring & Realignment Costs

 

 

 

 

 

 
 

• Total Xylem

 

               12

            12

 

                43

                64

 

• Water Infrastructure

 

                 9

              8

 

                29

                48

 

• Applied Water

 

                 2

              4

 

                13

                16

 

• Total Segments

 

               11

            12

 

                42

                64

   

 

 

 

 

 

 
 

Adjusted Operating Income*

 

 

 

 

 

 

 

• Total Xylem

 

             153

          145

 

              506

              451

 

• Water Infrastructure

 

             113

          111

 

              350

              315

 

• Applied Water

 

               50

            47

 

              206

              191

 

• Total Segments

 

             163

          158

 

              556

              506

 

 

 

 

 

 

 

 

 

Adjusted Operating Margin*

         

 

 

• Total Xylem

 

14.7%

14.0%

 

12.9%

11.8%

 

• Water Infrastructure

 

16.8%

16.5%

 

14.3%

13.2%

 

• Applied Water

 

13.5%

13.1%

 

14.0%

13.1%

 

• Total Segments

 

15.6%

15.3%

 

14.2%

13.2%

               
               
 

*Adjusted Operating Income excludes restructuring & realignment costs and special charges.

 

Xylem Inc. Non-GAAP Reconciliation

Adjusted Diluted EPS

($ Millions, except per share amounts)

   

Q4 2013

 

Q4 2014

   

As Reported

Adjustments

 

Adjusted

 

As Reported

Adjustments

 

Adjusted

 

Total Revenue

1,033

   

1,033

 

1,042

   

1,042

 

Operating Income

129

16

a

145

 

141

12

d

153

 

Operating Margin

12.5%

   

14.0%

 

13.5%

   

14.7%

 

Interest Expense

(14)

   

(14)

 

(13)

   

(13)

 

Other Non-Operating Income (Expense)

(8)

8

b

-

 

-

   

-

 

Gain on sale of business

-

   

-

 

-

-

 

-

 

Income before Taxes

107

24

 

131

 

128

12

 

140

 

Provision for Income Taxes

(39)

11

c

(28)

 

(32)

6

c

(26)

 

Net Income

68

35

 

103

 

96

18

 

114

 

Diluted Shares

185.6

   

185.6

 

183.3

   

183.3

 

Diluted EPS

$  0.37

$  0.19

 

$  0.56

 

$  0.52

$  0.10

 

$  0.62

 

 

                 
                     
   

Q4 YTD 2013

 

Q4 YTD 2014

   

As Reported

Adjustments

 

Adjusted

 

As Reported

Adjustments

 

Adjusted

 

Total Revenue

3,837

   

3,837

 

3,916

   

3,916

 

Operating Income

363

88

a

451

 

463

43

d

506

 

Operating Margin

9.5%

   

11.8%

 

11.8%

   

12.9%

 

Interest Expense

(55)

   

(55)

 

(54)

   

(54)

 

Other Non-Operating Income (Expense)

(10)

8

b

(2)

 

1

   

1

 

Gain on sale of business

-

   

-

 

11

(11)

 

-

 

Income before Taxes

298

96

 

394

 

421

32

 

453

 

Provision for Income Taxes

(70)

(13)

c

(83)

 

(84)

(7)

c

(91)

 

Net Income

228

83

 

311

 

337

25

 

362

 

Diluted Shares

186.0

   

186.0

 

184.2

   

184.2

 

Diluted EPS

$  1.22

$  0.45

 

$  1.67

 

$  1.83

$  0.14

 

$  1.97

                     
                     

a

Restructuring & realignment costs and special charges

       

b

Special charges

       

c

Net tax impact of restructuring & realignment costs, special charges and special tax items

     

d

Restructuring & realignment costs

               

Xylem Inc. Non-GAAP Reconciliation

Net Cash - Operating Activities vs. Free Cash Flow

($ Millions)

 

 

Year Ended

 

 

2014

 

2013

 

 

 

 

 

 

 

Net Cash - Operating Activities

 

 $                     416

 

 $                 324

 

 

 

 

 

 

 

Capital Expenditures

 

                      (119)

 

                  (126)

 

 

 

 

 

 

 

Free Cash Flow

 

 $                     297

 

 $                 198

 

 

 

 

 

 

 

Net Income

 

337

 

228

 

 

 

 

 

 

 

Gain on Sale of Business

 

11

 

                      -  

 

 

 

 

 

 

 

Net Income, excluding gain on sale of business

 

 $                     326

 

 $                 228

 

 

 

 

 

 

 

Free Cash Flow Conversion

 

91%

 

87%

 

 

Contacts:       Media                                                              Investors

                        Kelly McAndrew +1 (914) 323-5969         Phil DeSousa +1 (914) 323-5930

                        Kelly.McAndrew@xyleminc.com               Phil.DeSousa@xyleminc.com