It looks like you are coming from United States, but the current site you have selected to visit is Namibia. Do you want to change site?

Yes, please! No, keep me on the current site

Xylem Inc. reports fourth quarter and full-year 2011 results

February 28, 2012
  • Fourth quarter 2011 revenue of $1.0 billion, up 7 percent from fourth quarter 2010; full-year 2011 revenue of $3.8 billion, up 19 percent over prior year
  • Fourth quarter 2011 earnings per share of $0.28; adjusted earnings of $0.40 per share, up 5 percent over fourth quarter 2010 normalized earnings per share*
  • Full-year 2011 earnings per share of $1.50; adjusted earnings of $1.93 per share, up 30 percent from 2010 normalized earnings per share
  • Strong full-year cash generation of $388 million, 111 percent conversion of adjusted net income

WHITE PLAINS, N.Y.--(BUSINESS WIRE)--Feb. 28, 2012-- Xylem Inc. (NYSE: XYL) today reported fourth quarter revenue of $1.0 billion, up 7 percent from the fourth quarter 2010, and net income of $52 million or $0.28 per share. Xylem, a leading global water technology company focused on solving the world’s most challenging water issues, was spun off from ITT Corporation on October 31, 2011. Excluding the impact of one-time separation costs and other special items, adjusted net income was $74 million or $0.40 per share, up 2 cents or 5 percent from the normalized earnings in the fourth quarter 2010.

"We drove solid business performance in 2011. We delivered revenue and earnings growth that reflected the strength of our core water and wastewater portfolio, as well as increased activity in the emerging markets, and solid returns from investments in our analytical instrumentation and dewatering businesses,” said Gretchen McClain, president and chief executive officer of Xylem. "All of this was accomplished as we worked through the successful launch of our new company. It is a testament to the dedication of our 12,500 employees who focus on solving our customers’ water challenges.”

For the fourth quarter, Xylem achieved adjusted operating margin of 12.0 percent, including incremental stand-alone costs of $5 million, which reduced margin by 50 basis points. Operating margin in the fourth quarter of 2010 was 11.9 percent.

For the full year 2011, Xylem revenue was $3.8 billion, up 19 percent over 2010. Excluding the impact of acquisitions and positive foreign currency translation, full-year organic revenue growth was 7 percent. Adjusted operating margin was 12.7 percent, up 60 basis points compared to 2010. The $5 million of incremental stand-alone cost incurred in the fourth quarter reduced full-year operating margin by 10 basis points. Full-year reported net income was $279 million, or $1.50 per share. Adjusted net income, excluding the impact of the spinoff and other special items, was $358 million or $1.93 per share, up 45 cents or 30 percent from the normalized earnings in 2010. Strong performance from acquired businesses and working capital improvements helped generate $388 million of free cash flow during the year, which excludes $65 million of cash paid for spinoff-related costs. This represents a 111 percent conversion of adjusted net income.

*The 2010 normalized earnings per share reflect adjustments (including interest expense, stand-alone costs, and special tax items) to our GAAP results to better illustrate year-over-year performance. The normalized earnings are intended to give a representation of our performance had Xylem been a stand-alone company in 2010.

Fourth Quarter and Full-Year 2011 Segment Results

Water Infrastructure

Xylem’s Water Infrastructure businesses provide equipment and services to water and wastewater transport and treatment, dewatering and analytical instrumentation markets.

  • Fourth quarter 2011 revenue was $679 million, an increase of 9 percent compared with the fourth quarter 2010, up 6 percent organically. This reflects solid growth in dewatering and the emerging markets, particularly in treatment and analytical instrumentation.
  • Orders for the quarter increased 15 percent, 10 percent organically, to $589 million from the comparable period in 2010.
  • Fourth quarter segment operating income, which included $6 million of spinoff-related costs, was $98 million. Adjusted operating income for the period, excluding the impact of the spinoff costs, was $104 million, up $3 million relative to the same period in 2010.
  • Full-year segment revenue was $2.42 billion, up 25 percent over the prior year. Full-year reported segment operating income was $343 million. Full-year adjusted operating income for the Water Infrastructure segment was $359 million, an increase of 30 percent or $83 million over the full year 2010.

Applied Water

Xylem’s Applied Water businesses provide equipment and services in the residential and commercial building services, industrial and agricultural markets.

  • Fourth quarter 2011 Applied Water segment revenue was $336 million, up 3 percent compared with the fourth quarter 2010, with growth in sales of energy-efficient solutions like the e-SV pump used in a wide range of applications, more than offsetting relative weakness in building services in the developed markets.
  • Orders of $330 million were essentially flat vs. the comparable period in 2010.
  • Fourth quarter segment operating income, which included $4 million of spinoff-related expenses, was $27 million. Excluding the impact of these special items, segment operating income was $31 million, up 15 percent or $4 million relative to the same period in 2010.
  • Full-year segment revenue was $1.44 billion, up 9 percent over the prior year. Full-year reported segment operating income was $160 million, including $13 million of spinoff- related expenses. Full-year adjusted segment operating income was $173 million, an increase of 9 percent or $15 million over 2010.

Full-year 2012 Outlook

Xylem forecasts full-year 2012 revenue in the range of $3.9 billion$4.0 billion, representing year-over-year organic growth of 4 percent to 6 percent. Operating margins are anticipated to be in the range of 12.7 to 13.3 percent, excluding spinoff-related costs, but including incremental stand-alone costs of $25 to $30 million as Xylem completes its first full year as an independent company. These stand-alone costs will offset operating margin by 60 to 80 basis points. Full-year 2012 adjusted net income is forecast to be $334 million to $362 million, for adjusted earnings per share of $1.80 to $1.95 for the full year 2012, which reflects expected growth of 8 to 17 percent over normalized 2011. Reported net income, which includes one-time separation costs, is anticipated to range from $319 million to $350 million, or $1.72 to $1.89.

“We’ve begun 2012 in a strong competitive and financial position,” McClain said. “We remain mindful of the pockets of weak economic activity in Europe, and less rapid growth in some of the emerging markets. With our applications expertise, customer focus, market-leading brands, large installed base and superior distribution in more than 150 countries, our portfolio is fundamentally well-positioned to continue growing at a rate faster than the global market. Further, we will continue investing in attractive opportunities, deploying resources to continue growing our core businesses through new product development and innovative applications, while maintaining our ability to make attractive acquisitions.”

More detail available

Supplemental information on Xylem’s fourth quarter and full-year 2011 earnings, including 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. Launched in 2011 from the spinoff of the water-related businesses of ITT Corporation, Xylem is headquartered in White Plains, N.Y., with 2011 annual revenues of $3.8 billion and 12,500 employees 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 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,” “believe,” “target” 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, but are not limited to, statements about the separation of Xylem Inc. (the “Company”) from ITT Corporation, the terms and the effect of the separation, the nature and impact of the separation, capitalization of the Company, future strategic plans and other statements that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financial performance. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to orders, sales, operating margins and earnings per share growth, and statements expressing general views about future operating results — are forward-looking statements.

Caution should be taken not to place undue reliance on any such forward-looking statements because they involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such statements. 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. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those set forth in our Registration Statement on Form 10, and those described from time to time in subsequent reports filed with the Securities and Exchange Commission.

 

XYLEM INC. AND SUBSIDIARIES

CONSOLIDATED AND COMBINED INCOME STATEMENTS

(In Millions, except per share data)

 
Year Ended December 31,         2011       2010       2009
                   
Revenue $ 3,803 $ 3,202 $ 2,849
Cost of revenue  

2,342

  1,988   1,812
Gross profit 1,461 1,214 1,037
Selling, general and administrative expenses 877 737 667
Research and development expenses 100 74 63
Separation costs 87
Restructuring and asset impairments charges, net   2   15   31
Operating income 395 388 276
Interest expense 17
Other non-operating income, net   5   1
Income before taxes 383 388 277
Income tax expense   104   59   14
Net income $ 279 $ 329 $ 263
Earnings per share:
Basic $ 1.51 $ 1.78 $ 1.42
Diluted $ 1.50 $ 1.78 $ 1.42
Weighted average number of shares – Basic 185.1 184.6 184.6
Weighted average number of shares – Diluted 185.3 184.6 184.6
 
 

XYLEM INC. AND SUBSIDIARIES

CONSOLIDATED AND COMBINED BALANCE SHEETS

(In Millions, except per share amounts)

 
December 31,         2011       2010
ASSETS              
 
Current assets:
Cash and cash equivalents $ 318 $ 131

Receivable, less allowances for discounts and doubtful accounts

  of $37 and $32 in 2011 and 2010, respectively

756

690

Inventories, net 426 389
Prepaid assets 97 79
Deferred income tax assets   45   47
Total current assets 1,642 1,336
 
Property, plant and equipment, net 463 454
Goodwill 1,610 1,437
Other intangible assets, net 505 416
Other non-current assets   173   92
Total assets $ 4,393 $ 3,735
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 322 $ 309
Accrued and other current liabilities 490 340
Short-term borrowings and current maturities of long-term debt   5
Total current liabilities 817 649
 
Long-term debt 1,201 4
Accrued postretirement benefits 316 163
Deferred income tax liabilities 165 99
Other non-current accrued liabilities   67   101
Total liabilities   2,566   1,016
 
Commitments and contingencies
Stockholders’ equity:
Common Stock - par value $0.01 per share:
Authorized 750.0 shares, issued 184.6 shares 2
Capital in excess of par value 1,663
Retained earnings 40
Parent company investment 2,682
Accumulated other comprehensive income   122   37
Total stockholders’ equity   1,827   2,719
Total liabilities and stockholders’ equity $ 4,393 $ 3,735
 
 

XYLEM INC. AND SUBSIDIARIES

CONSOLIDATED AND COMBINED CASH FLOWS

(In Millions)

 
Year Ended December 31,         2011       2010       2009
       
Operating Activities            
Net income $ 279 $ 329 $ 263
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 137 92 70
Deferred income taxes 8 (31 ) (36 )
Share-based compensation 13 9 9
Non-cash separation costs 10
Restructuring charges, net 2 15 31
Payments of restructuring (7 ) (22 ) (40 )
Changes in assets and liabilities (net of acquisitions):
Changes in receivables (61 ) (45 ) 45
Changes in inventories (18 ) 7 62
Changes in accounts payable (9 ) 41 (38 )
Changes in accrued liabilities 53 12 (11 )
Changes in accrued taxes 56 (17 ) (1 )
Net changes in other assets and liabilities           (14 )         5           16  

Net Cash - Operating activities

          449           395           370  
Investing Activities
Capital expenditures (126 ) (94 ) (62 )
Proceeds from the sale of property, plant and equipment 11 4 11
Acquisitions of businesses and assets, net of cash acquired (309 ) (1,004 ) (33 )
Other, net           1           1            
Net Cash - Investing activities           (423 )         (1,093 )         (84 )
Financing Activities
Net transfer (to)/from parent (995 ) 745 (292 )
Issuance of short-term debt 5
Issuance of senior notes, net of discount 1,198
Principal payments of debt and capital lease obligations (8 )
Proceeds from exercise of employee stock options 1
Payments of debt issuance costs (10 )
Dividends paid           (19 )                    
Net Cash - Financing activities           172           745           (292 )
Effect of exchange rate changes on cash           (11 )         3           6  
Net change in cash and cash equivalents 187 50
Cash and cash equivalents at beginning of year           131           81           81  
Cash and cash equivalents at end of year         $ 318         $ 131         $ 81  
 

Supplemental disclosure of cash flow information:

   Cash paid during the year for:

Income taxes (net of refunds received) $ 64         $ 110         $ 52  
 
Xylem Inc. Non-GAAP Measures
 
 
Management views key performance indicators including revenue, segment operating income and margins, orders growth, 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 revenues, operating income, net income or net cash from continuing 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, intercompany transactions, 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.
 
“EBITDA” defined as earnings before interest, taxes, depreciation, amortization expense, and share-based compensation. “Adjusted EBITDA” reflects the adjustment to EBITDA to exclude for one-time separation costs associated with the Xylem spin-off from ITT Corporation.
 
“Operating Income * ” and “Adjusted EPS” defined as operating income and earnings per share, adjusted to exclude one-time separation costs associated with the Xylem spin-off from ITT Corporation and tax-related special items.
 
“Normalized EPS” defined as earnings per share, adjusted to exclude one-time separation costs associated with the Xylem spin-off from ITT Corporation and tax-related special items, as well to reflect the incremental current period amount of interest expense and stand alone costs in the prior comparable period.
 
“Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures and 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.
 
Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic Order Growth
($ Millions)
                                   
(As Reported - GAAP) (As Adjusted - Organic)
  (A)   (B)   (C)   (D)   (E)   (F) = B+C+D+E   (G) = F/A
 
Orders Orders

Change 2011 v. 2010

% Change 2011 v. 2010

Acquisitions / Divestitures

FX Contribution Eliminations

Change Adj. 2011 v. 2010

% Change Adj. 2011 v. 2010

2011 2010

Year Ended December 31, 2011

 
Xylem Inc. 3,847 3,237 610 18.8 % (272 ) (120 ) - 218 6.7 %
 
Water infrastructure 2,454 1,941 513 26.4 % (272 ) (96 ) 1 146 7.5 %
Applied Water 1,452 1,352 100 7.4 % - (27 ) (1 ) 72 5.3 %
 
 
 

Quarter Ended December 31, 2011

 
Xylem Inc. 905 836 69 8.3 % (24 ) 5 - 50 6.0 %
 
Water infrastructure 589 514 75 14.6 % (24 ) 4 (5 ) 50 9.7 %
Applied Water 330 331 (1 ) -0.3 % - 1 (1 ) (1 ) -0.3 %
 

Quarter Ended September 30, 2011

 
Xylem Inc. 966 810 156 19.3 % (41 ) (42 ) - 73 9.0 %
 
Water infrastructure 621 504 117 23.2 % (41 ) (33 ) 5 48 9.5 %
Applied Water 358 322 36 11.2 % - (10 ) - 26 8.1 %
 

Quarter Ended June 30, 2011

 
Xylem Inc. 998 822 176 21.4 % (91 ) (70 ) - 15 1.8 %
 
Water infrastructure 632 498 134 26.9 % (91 ) (55 ) 2 (10 ) -2.0 %
Applied Water 383 341 42 12.3 % - (17 ) 1 26 7.6 %
 

Quarter Ended March 31, 2011

 
Xylem Inc. 978 769 209 27.2 % (116 ) (13 ) - 80 10.4 %
 
Water infrastructure 612 425 187 44.0 % (116 ) (12 ) (1 ) 58 13.6 %
Applied Water 381 358 23 6.4 % - (1 ) (1 ) 21 5.9 %
 
Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic Revenue
($ Millions)
                                   
(As Reported - GAAP) (As Adjusted - Organic)
  (A)   (B)   (C)   (D)   (E)   (F) = B+C+D+E   (G) = F/A
 
Revenue Revenue

Change 2011 v. 2010

% Change 2011 v. 2010

Acquisitions / Divestitures

FX Contribution Eliminations

Change Adj. 2011 v. 2010

% Change Adj. 2011 v. 2010

2011 2010

Year Ended December 31, 2011

 
 
Xylem Inc. 3,803 3,202 601 18.8 % (264 ) (111 ) - 226 7.1 %
 
Water infrastructure 2,416 1,930 486 25.2 % (264 ) (87 ) 2 137 7.1 %
Applied Water 1,444 1,327 117 8.8 % - (28 ) (1 ) 88 6.6 %
 
 

Quarter Ended December 31, 2011

 
Xylem Inc. 1,003 935 68 7.3 % (27 ) 6 - 47 5.0 %
 
Water Infrastructure 679 622 57 9.2 % (27 ) 5 1 36 5.8 %
Applied Water 336 327 9 2.8 % - 1 (1 ) 9 2.8 %
 

Quarter Ended September 30, 2011

 
 
Xylem Inc. 939 806 133 16.5 % (42 ) (39 ) - 52 6.5 %
 
Water infrastructure 584 488 96 19.7 % (42 ) (30 ) 1 25 5.1 %
Applied Water 368 331 37 11.2 % - (10 ) 1 28 8.5 %
 

Quarter Ended June 30, 2011

 
 
Xylem Inc. 971 775 196 25.3 % (85 ) (65 ) - 46 5.9 %
 
Water infrastructure 602 443 159 35.9 % (85 ) (50 ) 1 25 5.6 %
Applied Water 385 346 39 11.3 % - (18 ) - 21 6.1 %
 

Quarter Ended March 31, 2011

 
Xylem Inc. 890 686 204 29.7 % (110 ) (13 ) - 81 11.8 %
 
Water infrastructure 551 377 174 46.2 % (110 ) (12 ) (1 ) 51 13.5 %
Applied Water 355 323 32 9.9 % - (1 ) (1 ) 30 9.3 %
 
Xylem Inc. Non-GAAP Reconciliation
Normalized and Adjusted Operating Income and Earnings Per Share (EPS)
($ Millions, except per share amounts)
               
 
   
Q4 '10 Q4 '11

As Reported

Adjustments

Normalized

As Reported

Adjustments

Adjusted

Total Revenue 935 935 1,003 1,003
Operating Income 111 (5 ) a 106 100 20 g 120
Operating Margin 11.9 % b 11.4 % 9.9 % 11.9 %
Interest Income (Expense) - (14 ) (14 ) (13 ) (13 )
Other Income (Expense)   -       -     (1 )     (1 )
Income before Taxes 111 (19 ) 92 85 20 105
Provision for Income Taxes   (14 )   (9 ) f   (23 )   (33 )   2   h   (31 )
Net Income   97     (28 )   69     52     22     74  
Diluted Shares     184.6               184.6       185.3               185.3  
Diluted EPS   $ 0.53     $ (0.15 )       $ 0.38     $ 0.28     $ 0.12         $ 0.40  
 
 
                                 
                           
FY '10 FY '11

As Reported

Adjustments

Normalized

As Reported

Adjustments

Adjusted

3,202 3,202 3,803 3,803
Operating Income 388 (5 ) a 383 395 87 d 482
12.1 % b 11.9 % 10.4 % 12.7 %
Interest Income (Expense) - (14 ) (14 ) (17 ) (17 )
Other Income (Expense)   -       -     5       5  
Income before Taxes 388 (19 ) 369 383 87 470
Provision for Income Taxes   (59 )   (37 ) c   (96 )   (104 )   (7 ) e   (111 )
Net Income   329     (56 )   273     279     80     359  
Diluted Shares     184.6               184.6       185.3               185.3  
Diluted EPS   $ 1.78     $ (0.30 )       $ 1.48     $ 1.50     $ 0.43         $ 1.93  
 

a Equals incremental stand alone costs incurred in 2011 of $5M

b Represents incremental interest expense on long-term debt that was incurred in 2011

c Represents net tax impact of above items, less 2010 special tax items of $43M

d Represents one-time separation costs incurred in 2011

e Represents the tax benefit on one time separation costs of $15M, less special tax items of $7M

f Represents net tax impact on stand alone and interest expenses, less Q4 2010 special tax items of $15M

g One time separation costs incurred in Q4 2010

h Represents net tax impact of one time separation costs

 
Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
2011 and 2010
($ Millions, except per share amounts)
         
 

Q1 2011

Q2 2011

Q3 2011

Q4 2011

FY 2011

 
Net Income 78 72 77 52 279
 
Separation costs, net of tax 2 27 25 18 72
           
Adjusted Net Income before Special Tax Items     80     99     102     70     351  
 
Special Tax Items 4 (1 ) 4 7
           
Adjusted Net Income   80     103     101     74     358  
 
Diluted Earnings per Share $ 0.42 $ 0.39 $ 0.42 $ 0.28 $ 1.50
 
Separation costs per Share $ 0.01   $ 0.15   $ 0.13   $ 0.10   $ 0.39  
 
Adjusted diluted EPS before Special Tax Items $ 0.43 $ 0.54 $ 0.55 $ 0.38 $ 1.89
 
Special Tax Items per Share $ 0.00   $ 0.02     ($0.01 ) $ 0.02   $ 0.04  
 
Adjusted diluted EPS $ 0.43   $ 0.56   $ 0.54   $ 0.40   $ 1.93  
 
 

Q1 2010

Q2 2010

Q3 2010

Q4 2010

FY 2010

 
Net Income 56 85 91 97 329
 
Separation costs, net of tax - - - - -
           
Adjusted Net Income before Special Tax Items     56     85     91     97     329  
 
Special Tax Items (6 ) (11 ) (11 ) (15 ) (43 )
           
Adjusted Net Income   50     74     80     82     286  
 
Diluted Earnings per Share $ 0.30 $ 0.46 $ 0.49 $ 0.53 $ 1.78
 
Adjusted diluted EPS before Special Tax Items $ 0.30 $ 0.46 $ 0.49 $ 0.53 $ 1.78
 
Special Tax Items per Share   ($0.03 )   ($0.06 )   ($0.05 )   ($0.09 )   ($0.23 )
 
Adjusted diluted EPS $ 0.27   $ 0.40   $ 0.44   $ 0.44   $ 1.55  
 
Xylem Inc. Non-GAAP Reconciliation
Segment Operating Income
($ Millions)
                   
 
Adjusted Segment Operating Income
         
Q1 Q2 Q3 Q4 FY

'11

'10

'11

'10

'11

'10

'11

'10

'11

'10

Total Revenue
• Water Infrastructue 551 377 602 443 584 488 679 622 2,416 1,930
• Applied Water 355 323 385 346 368 331 336 327 1,444 1,327
 
Operating Income
• Water Infrastructue 64 45 94 57 87 73 98 101 343 276
• Applied Water 46 40 50 51 37 40 27 27 160 158
 
Separation Costs
• Water Infrastructue - - 2 - 8 - 6 - 16 -
• Applied Water - - - - 9 - 4 - 13 -
 
Adjusted Operating Income*
• Water Infrastructue 64 45 96 57 95 73 104 101 359 276
• Applied Water 46 40 50 51 46 40 31 27 173 158
 
Operating Margin
• Water Infrastructue 11.6 % 11.9 % 15.6 % 12.9 % 14.9 % 14.9 % 14.4 % 16.2 % 14.2 % 14.3 %
• Applied Water 13.0 % 12.4 % 13.0 % 14.7 % 10.0 % 12.0 % 8.0 % 8.3 % 11.1 % 11.9 %
 
Adjusted Operating Margin*
• Water Infrastructue 11.6 % 11.9 % 15.9 % 12.9 % 16.3 % 14.9 % 15.3 % 16.2 % 14.9 % 14.3 %
• Applied Water 13.0 % 12.4 % 13.0 % 14.7 % 12.5 % 12.0 % 9.2 % 8.3 % 12.0 % 11.9 %
 
*Adjusted Operating Income excludes non-recurring separation costs
 
Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow
Years ended 2011 & 2010
($ Millions)
   
 
Year Ended
2011 2010
 
Net Cash - Operating Activities 449 395
 
Capital Expenditures (126 ) (94 )
   
Free Cash Flow, including separation costs 323 301
 
Separation Costs (Cash Paid incl. Capex) 65 -
   
Free Cash Flow, excluding separation costs 388   301  
 
Net Income 279 329
 
Separation Costs, net of tax 72   -  
 
Adjusted Net Income 351   329  
 
Free Cash Flow Conversion 111 % 91 %
 
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 3,950 3,950
Segment Operating Income 503 29 a 532 (8 ) d 524 577 8 h 585
Segment Operating Margin 13.2 % 14.0 % 13.8 % 14.6 % 14.8 %
Corporate Expense   108     (58 ) b   50     20   e 70   81   (10 ) h 71  
Operating Income   395     87     482     (28 ) 454   496   18   514  
Operating Margin 10.4 % 12.7 % 11.9 % 12.6 % 13.0 %
Interest Expense (17 ) (17 ) (39 ) f (56 ) (51 ) (51 )
Other Non-Operating Income (Expense)   5       5     5   -     -  
Income before Taxes   383     87     470     (67 ) 403   445 18 463
Provision for Income Taxes   (104 )   (7 ) c   (111 )   16   g (95 ) (111 ) (5 ) i (116 )
Net Income   279     80     359     (51 ) 308   334   13   347  
Diluted Shares     185.3                         185.3     185.8             185.8  
Diluted EPS   $ 1.50     $ 0.43         $ 1.93     $ (0.27 )       1.66     1.80     0.07         1.87  
 

a One time separation costs incurred at the segment level

b One time separation costs incurred at the corporate level

c Net tax impact of above items, plus the addition of 2011 special tax items

d Incremental stand alone costs to be incurred in 2012 at the segment level ($8M)

e Incremental stand alone costs to be incurred in 2012 at the corporate level ($20M)

f Incremental interest expense on long-term debt to be incurred in 2012

g Tax impact of incremental interest expense and stand alone costs to be incurred in 2012

h Expected one time separation costs of $8M and $10M to be incurred at the segments and headquarters, respectively.

i Tax impact of one time separation costs expected to be incurred in 2012.

 

Source: Xylem Inc.

Xylem Inc.
Media
Tom Glover, +1-914-323-5891
Tom.Glover@xyleminc.com
or
Investors
Phil De Sousa, +1-914-323-5930
Phil.DeSousa@xyleminc.com

Xylem