- Second quarter 2014 adjusted net income was $88 million or $0.48
per share, up $0.12 or 33 percent over second quarter 2013; GAAP net
income was $86 million or $0.47 per share, up $0.22 or 88 percent
- Second quarter 2014 revenue was $1 billion, up 4 percent
organically from second quarter 2013; orders were up 1 percent
organically
- Second quarter 2014 adjusted operating margin was up 220 basis
points to 12.4 percent; up 420 basis points to 11.5 percent on a GAAP
basis
- Increases lower end of 2014 EPS range, now expects adjusted EPS of
$1.90 to $2.00
Company Website:
http://www.xyleminc.com
RYE BROOK, N.Y. -- (Business Wire)
Xylem Inc. (NYSE: XYL), a leading global water technology company
dedicated to solving the world’s most challenging water issues, today
announced second quarter 2014 net income of $86 million, or $0.47 per
share. Excluding the impact of restructuring and realignment costs and
special tax items, adjusted net income was $88 million or $0.48 per
share, up 12 cents or 33 percent from the comparable period in 2013.
Second quarter revenue was $1 billion, up 4 percent organically,
reflecting continued strength in emerging markets and modest growth in
the U.S. and Europe. Second quarter adjusted operating margin improved
220 basis points, driven by increased volume, realization of operating
efficiencies and execution of ongoing initiatives to reduce costs.
“I am proud of our teams and what we achieved this quarter. Our organic
revenue performance was strong and orders reached a record high. We are
on track to deliver our full-year commitments for 2014, as well as
building our backlog and solid momentum for 2015 and beyond,” said
Patrick Decker, president and chief executive officer of Xylem. “Public
utilities are improving and I’m encouraged by the signs of emerging
market growth. One example of the opportunities available to us is
demonstrated by our recent win of a $9 million order in Brazil for a
drinking water ultrafiltration membrane system in the São Paulo region.”
Decker continued, “In addition, we are building a culture focused on
continuous improvement, which will enable us to support targeted
investments to accelerate our progress and improve shareholder return.”
Full-year 2014 Outlook
Xylem increased the lower end of its EPS guidance, and now expects
adjusted EPS of $1.90 to $2.00, reflecting 14 to 20 percent growth over
2013. Full-year 2014 revenue is still expected to be approximately $4
billion, up 2 to 4 percent versus the prior year. Full-year 2014
adjusted net income is now expected to be in the range of approximately
$350 to $370 million. The company anticipates that restructuring and
realignment costs will range from $40 to $50 million for the year.
Second 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.
-
Second quarter 2014 revenue was $636 million, up 7 percent organically
compared with the second quarter 2013, with growth driven by water and
wastewater infrastructure investments in emerging markets and to a
lesser extent in Europe. Additionally, we saw growth in our U.S.
dewatering and analytics businesses.
-
Second quarter adjusted segment operating income, which excludes $5
million of restructuring and realignment costs, was $82 million, up 30
percent over the same period in 2013. Adjusted operating margin for
the quarter increased 230 basis points, primarily driven by higher
volume and significant benefits from cost reduction actions, but
partially offset by unfavorable mix and price.
Applied Water
Xylem’s Applied Water segment consists of its portfolio of businesses in
residential and commercial building services, industrial and
agricultural applications.
-
Second quarter 2014 revenue was $388 million, down 1 percent
organically compared with the second quarter 2013, reflecting weakness
in the U.S. institutional building construction and southern European
residential markets, partially offset by modest growth in emerging
markets and U.S. residential building services.
-
Second quarter adjusted segment operating income, which excludes $4
million of restructuring and realignment costs, was $56 million, 10
percent higher than the comparable period last year. Adjusted
operating margin grew 100 basis points, primarily driven by the
positive impact of cost reduction actions.
Supplemental information on Xylem’s second quarter earnings and
reconciliations for certain non-GAAP items are 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 2013
revenues of $3.8 billion and more than 12,500 employees worldwide. Xylem
was named to the Dow Jones Sustainability World Index for the last two
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.xylem.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 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, 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, revenues, 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 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.
| XYLEM INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)
|
(in millions, except per share data)
|
|
| |
|
| |
| | Three Months | | | Six Months |
| For the period ended June 30, |
| 2014 |
|
|
2013
| | | 2014 |
|
|
2013
|
|
Revenue
| | $ | 1,005 | | | |
$
|
960
| | | | $ | 1,911 | | | |
$
|
1,839
| |
|
Cost of revenue
| | 617 |
| | |
589
|
| | | 1,181 |
| | |
1,134
|
|
|
Gross profit
| | 388 | | | |
371
| | | | 730 | | | |
705
| |
|
Selling, general and administrative expenses
| | 242 | | | |
253
| | | | 466 | | | |
490
| |
|
Research and development expenses
| | 27 | | | |
28
| | | | 54 | | | |
54
| |
|
Restructuring charges
| | 3 |
| | |
20
|
| | | 18 |
| | |
25
|
|
|
Operating income
| | 116 | | | |
70
| | | | 192 | | | |
136
| |
|
Interest expense
| | 13 | | | |
14
| | | | 27 | | | |
27
| |
|
Other non-operating income (expense), net
| | 1 |
| | |
1
|
| | | — |
| | |
(1
|
)
|
|
Income before taxes
| | 104 | | | |
57
| | | | 165 | | | |
108
| |
|
Income tax expense
| | 18 |
| | |
11
|
| | | 30 |
| | |
21
|
|
|
Net income
| | $ | 86 |
| | |
$
|
46
|
| | | $ | 135 |
| | |
$
|
87
|
|
|
Earnings per share:
| | | | | | | | | | | |
|
Basic
| | $ | 0.47 | | | |
$
|
0.25
| | | | $ | 0.74 | | | |
$
|
0.47
| |
|
Diluted
| | $ | 0.47 | | | |
$
|
0.25
| | | | $ | 0.73 | | | |
$
|
0.47
| |
|
Weighted average number of shares:
| | | | | | | | | | | |
|
Basic
| | 183.4 | | | |
185.4
| | | | 184.0 | | | |
185.6
| |
|
Diluted
| | 184.5 | | | |
186.1
| | | | 185.1 | | | |
186.3
| |
|
Dividends declared per share
| | $ | 0.1280 | | | |
$
|
0.1164
| | | | $ | 0.2560 | | | |
$
|
0.2328
| |
| | | | | | | | | | | | | | | | | | |
|
| XYLEM INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in millions, except per share amounts)
|
| |
|
| |
| June 30, | | |
December 31,
|
|
| 2014 | | |
2013
|
|
(Unaudited)
| | | |
| ASSETS | | | | |
|
Current assets:
| | | | |
|
Cash and cash equivalents
| $ | 450 | | | |
$
|
533
| |
|
Receivables, less allowances for discounts and doubtful accounts of
$28 and $31 in 2014 and 2013, respectively
| 830 | | | |
817
| |
|
Inventories, net
| 527 | | | |
475
| |
|
Prepaid and other current assets
| 172 | | | |
143
| |
|
Deferred income tax assets
| 37 |
| | |
41
|
|
|
Total current assets
| 2,016 | | | |
2,009
| |
|
Property, plant and equipment, net
| 469 | | | |
488
| |
|
Goodwill
| 1,719 | | | |
1,718
| |
|
Other intangible assets, net
| 471 | | | |
488
| |
|
Other non-current assets
| 225 |
| | |
193
|
|
| Total assets | $ | 4,900 |
| | |
$
|
4,896
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | |
|
Current liabilities:
| | | | |
|
Accounts payable
| $ | 328 | | | |
$
|
332
| |
|
Accrued and other current liabilities
| 475 | | | |
479
| |
|
Short-term borrowings and current maturities of long-term debt
| 43 |
| | |
42
|
|
|
Total current liabilities
| 846 | | | |
853
| |
|
Long-term debt
| 1,199 | | | |
1,199
| |
|
Accrued postretirement benefits
| 342 | | | |
348
| |
|
Deferred income tax liabilities
| 195 | | | |
191
| |
|
Other non-current accrued liabilities
| 73 |
| | |
64
|
|
| Total liabilities | 2,655 |
| | |
2,655
|
|
|
Commitments and contingencies (Note 17)
| | | | |
|
Stockholders’ equity:
| | | | |
Common stock – par value $0.01 per share:
| | | | |
|
Authorized 750.0 shares, issued 188.4 shares and 187.6 shares in
2014 and 2013, respectively
| 2 | | | |
2
| |
|
Capital in excess of par value
| 1,779 | | | |
1,753
| |
|
Retained earnings
| 493 | | | |
405
| |
|
Treasury stock – at cost 5.7 shares and 3.0 shares in 2014 and 2013,
respectively
| (187 | ) | | |
(86
|
)
|
|
Accumulated other comprehensive income
| 158 |
| | |
167
|
|
| Total stockholders’ equity | 2,245 |
| | |
2,241
|
|
| Total liabilities and stockholders’ equity | $ | 4,900 |
| | |
$
|
4,896
|
|
| | | | | | | |
|
| XYLEM INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
(in millions)
|
| |
|
| |
| For the six months ended June 30, | 2014 | | |
2013
|
| Operating Activities | | | | |
|
Net income
| $ | 135 | | | |
$
|
87
| |
|
Adjustments to reconcile net income to net cash provided by
operating activities:
| | | | |
|
Depreciation
| 47 | | | |
49
| |
|
Amortization
| 25 | | | |
25
| |
|
Share-based compensation
| 9 | | | |
12
| |
|
Restructuring charges
| 18 | | | |
25
| |
|
Other, net
| (1 | ) | | |
7
| |
|
Payments for restructuring
| (17 | ) | | |
(11
|
)
|
|
Changes in assets and liabilities (net of acquisitions):
| | | | |
|
Changes in receivables
| (32 | ) | | |
(31
|
)
|
|
Changes in inventories
| (53 | ) | | |
(44
|
)
|
|
Changes in accounts payable
| 2 | | | |
(4
|
)
|
|
Other, net
| (35 | ) | | |
(53
|
)
|
Net cash – operating activities | 98 |
| | |
62
|
|
| Investing Activities | | | | |
|
Capital expenditures
| (48 | ) | | |
(60
|
)
|
|
Acquisitions of businesses and assets, net of cash acquired
| — | | | |
(81
|
)
|
|
Proceeds from the sale of property, plant and equipment
| 1 |
| | |
3
|
|
Net cash – investing activities | (47 | ) | | |
(138
|
)
|
| Financing Activities | | | | |
|
Issuance of short-term debt
| 1 | | | |
—
| |
|
Repurchase of common stock
| (102 | ) | | |
(18
|
)
|
|
Proceeds from exercise of employee stock options
| 17 | | | |
1
| |
|
Dividends paid
| (47 | ) | | |
(43
|
)
|
Excess tax benefit from share-based compensation
| 1 |
| | |
—
|
|
Net cash – financing activities | (130 | ) | | |
(60
|
)
|
| Effect of exchange rate changes on cash | (4 | ) | | |
(8
|
)
|
|
Net change in cash and cash equivalents
| (83 | ) | | |
(144
|
)
|
|
Cash and cash equivalents at beginning of year
| 533 |
| | |
504
|
|
| Cash and cash equivalents at end of period | $ | 450 |
| | |
$
|
360
|
|
| Supplemental disclosure of cash flow information: | | | | |
|
Cash paid during the period for:
| | | | |
|
Interest
| $ | 26 | | | |
$
|
26
| |
|
Income taxes (net of refunds received)
| $ | 50 | | | |
$
|
52
| |
| | | | | | | |
|
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, 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.
|
|
|
| “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.
|
|
|
"Adjusted Operating Income," "Adjusted Segment Operating
Income," and “Adjusted EPS” defined as operating income
and earnings per share, adjusted to exclude non-recurring
restructuring and realignment costs and tax-related special items.
|
|
|
| “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.
|
|
|
|
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)
|
|
(F) = B+C+D+E
|
|
(G) = F/A
| |
(H) = (F - C) / A
|
| | | | | | | | | | | | | | | | | | |
|
| | | | |
Change
| |
% Change
| | | | | | | |
Change
| |
% Change
| | |
| | | | |
2014 v.
| |
2014 v.
| |
Acquisitions/
| |
FX
| | | |
Adj. 2014
| |
Adj. 2014
| | |
|
Orders
| |
Orders
| |
2013
| |
2013
| |
Divestitures
| |
Contribution
| |
Eliminations
| |
v. 2013
| |
v. 2013
| |
|
|
2014
| |
2013
| | | | | | | | | | | | | | | | |
Six Months Ended June 30 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
|
| Xylem Inc. |
2,024
| |
1,971
| |
53
| |
3
|
%
| |
(8
|
)
| |
(5
|
)
| |
-
| | |
40
| | |
2
|
%
| |
2
|
%
|
| | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
|
1,293
| |
1,248
| |
45
| |
4
|
%
| |
(8
|
)
| |
3
| | |
2
| | |
42
| | |
3
|
%
| |
4
|
%
|
|
Applied Water
|
772
| |
756
| |
16
| |
2
|
%
| |
-
| | |
(9
|
)
| |
(9
|
)
| |
(2
|
)
| |
0
|
%
| |
0
|
%
|
| | | | | | | | | | | | | | | | | | |
|
Quarter Ended June 30 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
|
| Xylem Inc. |
1,031
| |
1,009
| |
22
| |
2
|
%
| |
(1
|
)
| |
(8
|
)
| |
-
| | |
13
| | |
1
|
%
| |
1
|
%
|
| | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
|
674
| |
647
| |
27
| |
4
|
%
| |
(1
|
)
| |
(3
|
)
| |
-
| | |
23
| | |
4
|
%
| |
4
|
%
|
|
Applied Water
|
378
| |
378
| |
-
| |
0
|
%
| |
-
| | |
(5
|
)
| |
(6
|
)
| |
(11
|
)
| |
-3
|
%
| |
-3
|
%
|
| | | | | | | | | | | | | | | | | | |
|
Quarter Ended March 31 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
|
| Xylem Inc. |
993
| |
962
| |
31
| |
3
|
%
| |
(7
|
)
| |
3
| | |
-
| | |
27
| | |
3
|
%
| |
4
|
%
|
| | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
|
619
| |
601
| |
18
| |
3
|
%
| |
(7
|
)
| |
6
| | |
2
| | |
19
| | |
3
|
%
| |
4
|
%
|
|
Applied Water
|
394
| |
378
| |
16
| |
4
|
%
| |
-
| | |
(4
|
)
| |
(3
|
)
| |
9
| | |
2
|
%
| |
2
|
%
|
| | | | | | | | | | | | | | | | | | |
|
|
Note: Due to rounding the sum of segment amounts may not agree to
Xylem totals.
|
|
|
|
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)
|
|
(F) = B+C+D+E
|
|
(G) = F/A
| |
(H) = (F - C) / A
|
| | | | | | | | | | | | | | | | | | |
|
| | | | |
| |
| |
| | | | | |
| |
| | |
| | | | |
Change
| |
% Change
| | | | | | | |
Change
| |
% Change
| | |
| | | | |
2014 v.
| |
2014 v.
| |
Acquisitions/
| |
FX
| | | |
Adj. 2014
| |
Adj. 2014
| | |
|
Revenue
| |
Revenue
| |
2013
| |
2013
| |
Divestitures
| |
Contribution
| |
Eliminations
| |
v. 2013
| |
v. 2013
| |
|
|
2014
| |
2013
| | | | | | | | | | | | | | | | |
Six Months Ended June 30 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
|
| Xylem Inc. |
1,911
| |
1,839
| |
72
| |
4%
| |
(6)
| |
(3)
| |
-
| |
63
| |
3%
| |
4%
|
| | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
|
1,204
| |
1,147
| |
57
| |
5%
| |
(6)
| |
5
| |
3
| |
59
| |
5%
| |
6%
|
|
Applied Water
|
743
| |
726
| |
17
| |
2%
| |
-
| |
(9)
| |
(4)
| |
4
| |
1%
| |
1%
|
| | | | | | | | | | | | | | | | | | |
|
Quarter Ended June 30 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
|
| Xylem Inc. |
1,005
| |
960
| |
45
| |
5%
| |
(1)
| |
(7)
| |
-
| |
37
| |
4%
| |
4%
|
| | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
|
636
| |
596
| |
40
| |
7%
| |
(1)
| |
(2)
| |
2
| |
39
| |
7%
| |
7%
|
|
Applied Water
|
388
| |
381
| |
7
| |
2%
| |
-
| |
(6)
| |
(3)
| |
(2)
| |
-1%
| |
-1%
|
| | | | | | | | | | | | | | | | | | |
|
Quarter Ended March 31 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
|
| Xylem Inc. |
906
| |
879
| |
27
| |
3%
| |
(5)
| |
4
| |
-
| |
26
| |
3%
| |
4%
|
| | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
|
568
| |
551
| |
17
| |
3%
| |
(5)
| |
7
| |
1
| |
20
| |
4%
| |
5%
|
|
Applied Water
|
355
| |
345
| |
10
| |
3%
| |
-
| |
(3)
| |
(1)
| |
6
| |
2%
| |
2%
|
| | | | | | | | | | | | | | | | | | |
|
|
Note: Due to rounding the sum of segment amounts may not agree to
Xylem totals.
|
|
|
|
Xylem Inc. Non-GAAP Reconciliation
|
|
Adjusted Operating Income
|
|
($ Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | Q1 | | | Q2 | | | YTD |
| | | 2014 |
|
| 2013 | | | 2014 |
|
| 2013 | | | 2014 |
|
| 2013 |
|
Total Revenue
| | | | | | | | | | | | | | | | | | |
|
• Total Xylem
| | |
906
| | |
879
| | |
1,005
| | |
960
| | |
1,911
| | |
1,839
|
|
• Water Infrastructure
| | |
568
| | |
551
| | |
636
| | |
596
| |
|
1,204
| | |
1,147
|
|
• Applied Water
| | |
355
| | |
345
| | |
388
| | |
381
| |
|
743
| | |
726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
| | | | | | | | | | | | | | | | | | |
|
• Total Xylem
| | |
76
| | |
66
| | |
116
| | |
70
| | |
192
| | |
136
|
|
• Water Infrastructure
| | |
46
| | |
42
| | |
77
| | |
41
| |
|
123
| | |
83
|
|
• Applied Water
| | |
41
| | |
40
| | |
52
| | |
45
| |
|
93
| | |
85
|
| | | | | | | | | | | | | | | | | |
|
|
Operating Margin
| | | | | | | | | | | | | | | | | | |
|
• Total Xylem
| | |
8.4%
| | |
7.5%
| | |
11.5%
| | |
7.3%
| | |
10.0%
| | |
7.4%
|
|
• Water Infrastructure
| | |
8.1%
| | |
7.6%
| | |
12.1%
| | |
6.9%
| | |
10.2%
| | |
7.2%
|
|
• Applied Water
|
|
|
11.5%
|
|
|
11.6%
|
|
|
13.4%
|
|
|
11.8%
|
|
|
12.5%
|
|
|
11.7%
|
| | | | | | | | | | | | | | | | | |
|
|
Restructuring & Realignment Costs
| | | | | | | | | | | | | | | | | | |
|
• Total Xylem
| | |
18
| | |
12
| | |
9
| | |
28
| | |
27
| | |
40
|
|
• Water Infrastructure
| | |
12
| | |
10
| | |
5
| | |
22
| | |
17
| | |
32
|
|
• Applied Water
| | |
6
| | |
2
| | |
4
| | |
6
| | |
10
| | |
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income*
| | | | | | | | | | | | | | | | | | |
|
• Total Xylem
| | |
94
| | |
78
| | |
125
| | |
98
| | |
219
| | |
176
|
|
• Water Infrastructure
| | |
58
| | |
52
| | |
82
| | |
63
| |
|
140
| | |
115
|
|
• Applied Water
| | |
47
| | |
42
| | |
56
| | |
51
| |
|
103
| | |
93
|
| | | | | | | | | | | | | | | | | |
|
|
Adjusted Operating Margin*
| | | | | | | | | | | | | | | | | | |
|
• Total Xylem
| | |
10.4%
| | |
8.9%
| | |
12.4%
| | |
10.2%
| | |
11.5%
| | |
9.6%
|
|
• Water Infrastructure
| | |
10.2%
| | |
9.4%
| | |
12.9%
| | |
10.6%
| | |
11.6%
| | |
10.0%
|
|
• Applied Water
|
|
|
13.2%
|
|
|
12.2%
|
|
|
14.4%
|
|
|
13.4%
|
|
|
13.9%
|
|
|
12.8%
|
| | | | | | | | | | | | | | | | | |
|
|
*Adjusted Operating Income excludes restructuring & realignment
costs.
|
|
|
|
Xylem Inc. Non-GAAP Reconciliation
|
|
Adjusted Diluted EPS
|
|
($ Millions, except per share amounts)
|
| |
|
| | |
| |
|
| |
|
| | |
| |
|
| | |
|
| Q2 2013 | | | Q2 2014 |
| As Reported | | | Adjustments | | | Adjusted | | | As Reported | | | Adjustments | | | Adjusted |
|
Total Revenue
| |
960
| | | | | | | |
960
| | | | |
1,005
| | | | | | | |
1,005
| |
|
Operating Income
| |
70
| | | | |
28
| |
a
| | |
98
| | | | |
116
| | | | |
9
| |
a
| | |
125
| |
|
Operating Margin
| | 7.3 | % | | | | | | | 10.2 | % | | | | 11.5 | % | | | | | | | 12.4 | % |
|
Interest Expense
| |
(14
|
)
| | | | | | |
(14
|
)
| | | |
(13
|
)
| | | | | | |
(13
|
)
|
|
Other Non-Operating Income (Expense)
|
|
1
|
| | |
| | |
|
1
|
| | |
|
1
|
| | |
| | |
|
1
|
|
|
Income before Taxes
|
|
57
|
| | |
|
28
|
| | |
|
85
|
| | | |
104
| | | | |
9
| | | | |
113
| |
|
Provision for Income Taxes
|
|
(11
|
)
| | |
|
(8
|
)
|
b
| |
|
(19
|
)
| | |
|
(18
|
)
| | |
|
(7
|
)
|
b
| |
|
(25
|
)
|
|
Net Income
|
|
46
|
| | |
|
20
|
| | |
|
66
|
| | |
|
86
|
| | |
|
2
|
| | |
|
88
|
|
|
Diluted Shares
|
|
186.1
|
|
|
|
|
|
|
|
186.1
|
|
|
|
|
184.5
|
|
|
|
|
|
|
|
184.5
|
|
| Diluted EPS | $ | 0.25 |
|
|
| $ | 0.11 |
|
|
| $ | 0.36 |
|
|
| $ | 0.47 |
|
|
| $ | 0.01 |
|
|
| $ | 0.48 |
|
| | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | |
|
|
| | |
|
| Q2 YTD 2013 | | | Q2 YTD 2014 |
| As Reported | | | Adjustments | | | Adjusted | | | As Reported | | | Adjustments | | | Adjusted |
|
Total Revenue
| |
1,839
| | | | | | | |
1,839
| | | | |
1,911
| | | | | | | |
1,911
| |
|
Operating Income
| |
136
| | | | |
40
| |
a
| | |
176
| | | | |
192
| | | | |
27
| |
a
| | |
219
| |
|
Operating Margin
| | 7.4 | % | | | | | | | 9.6 | % | | | | 10.0 | % | | | | | | | 11.5 | % |
|
Interest Expense
| |
(27
|
)
| | | | | | |
(27
|
)
| | | |
(27
|
)
| | | | | | |
(27
|
)
|
|
Other Non-Operating Income (Expense)
|
|
(1
|
)
| | |
| | |
|
(1
|
)
| | |
|
-
|
| | |
| | |
|
-
|
|
|
Income before Taxes
|
|
108
|
| | |
|
40
|
| | |
|
148
|
| | |
|
165
|
| | |
|
27
|
| | |
|
192
|
|
|
Provision for Income Taxes
|
|
(21
|
)
| | |
|
(11
|
)
|
b
| |
|
(32
|
)
| | |
|
(30
|
)
| | |
|
(11
|
)
|
b
| |
|
(41
|
)
|
|
Net Income
|
|
87
|
| | |
|
29
|
| | |
|
116
|
| | |
|
135
|
| | |
|
16
|
| | |
|
151
|
|
|
Diluted Shares
|
|
186.3
|
|
|
|
|
|
|
|
186.3
|
|
|
|
|
185.1
|
|
|
|
|
|
|
|
185.1
|
|
| Diluted EPS | $ | 0.47 |
|
|
| $ | 0.15 |
|
|
| $ | 0.62 |
|
|
| $ | 0.73 |
|
|
| $ | 0.09 |
|
|
| $ | 0.82 |
|
| | | | | | | | | | | | | | | |
|
a Restructuring & realignment costs
|
b Net tax impact of restructuring & realignment costs and special
tax items
|
|
|
Xylem Inc. Non-GAAP Reconciliation
|
|
Net Cash - Operating Activities vs. Free Cash Flow
|
|
($ Millions)
|
|
|
|
| |
|
| |
| | | | | | |
|
| | | |
Six Months Ended
|
| | | |
2014
| | |
2013
|
| | | | | | |
|
| Net Cash - Operating Activities | | | |
$
|
98
| | | |
$
|
62
| |
| | | | | | |
|
|
Capital Expenditures
| | | | |
(48
|
)
| | | |
(60
|
)
|
| | | |
| | |
|
| Free Cash Flow | | | |
$
|
50
|
| | |
$
|
2
|
|
| | | | | | |
|
| Net Income | | | |
$
|
135
|
| | |
$
|
87
|
|
| | | | | | |
|
| Free Cash Flow Conversion | | | |
|
37
|
%
| | |
|
2
|
%
|
| | | | | | | | | | |
|
Contacts:
Xylem Inc.
Media
Jennifer Jacob, +1 914-323-5745
jennifer.jacob@xyleminc.com
or
Investors
Phil
DeSousa, +1 914-323-5930
phil.desousa@xyleminc.com
Source: Xylem Inc.
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