Xylem, Inc.

Xylem Inc. delivers improvement in third quarter 2013 results

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Source: Xylem, Inc.

WHITE PLAINS, N.Y. -- Third quarter 2013 adjusted net income was $92 million or $0.49 per share, up 11 percent or $0.05 from third quarter 2012; GAAP net income was $73 million or $0.39 per share

Third quarter 2013 revenue was $965 million, up one percent organically, up 4 percent on constant currency basis

Third quarter organic orders up 6 percent over comparable period 2012

Company raises full year guidance to range of $1.60 to $1.65 per share

Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported third quarter 2013 net income of $73 million, or $0.39 per share. Adjusted net income was $92 million, or $0.49 per share, excluding the impact of restructuring and realignment charges, as well as special charges. Third quarter revenue was $965 million, up $34 million or 4 percent from third quarter 2012 on a constant currency basis, reflecting strong performance in emerging markets and better than expected activity in Europe. Third quarter 2013 adjusted operating margins were 13.5 percent, up 60 basis points over last year.
“We are pleased with the pickup in sales activity, and we’re encouraged by the immediate impact of operating improvements and cost control initiatives that are reflected in third quarter bottom line growth,” said Steve Loranger, chief executive officer and president of Xylem. “Emerging markets, particularly China with its continued investment in infrastructure, are driving organic revenue growth. Higher sales in northern and central Europe more than offset continued weakness in southern Europe in the quarter.”

Loranger said the business is seeing improved order activity, with third quarter orders up 6 percent organically, including some notable wins, such as a large ozone project in China and a comprehensive pumping and control system for the Singapore Transport Authority’s Downtown Line Mass Rapid Transit project. New products introduced in the quarter include laboratory and water analytical instruments and a more energy-efficient stainless steel pump for industrial applications.

In addition to delivering strong earnings this quarter, Loranger said that the company continues to enhance shareholder value through the active repurchase of Xylem shares on the open market since the approval of a $250 million repurchase program in August.

“Our third quarter performance and ongoing cash generation are strong signs that we are regaining traction,” Loranger said. “They give us a solid base from which to execute our strategy and deliver improved operating performance in 2014 and beyond.”

FY 2013 Outlook

Loranger said that due to stronger third quarter performance, the impact of ongoing cost reductions, modestly improving market conditions and better visibility through year end, the company is raising its full year 2013 earnings forecast to a range of $1.60 to $1.65 per share on projected revenue of approximately $3.8 billion.

Third 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.

  • Third quarter 2013 revenue was $619 million, up one percent organically compared with the third quarter 2012, reflecting stronger performance in Europe and strength in emerging markets.
  • Third quarter adjusted segment operating income was $96 million. Adjusted operating margin was 15.5 percent, up 50 basis points over last year, reflecting a return to organic growth, improved execution and the impact of cost reductions.

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

  • Third quarter 2013 revenue was $360 million, up two percent organically compared with the third quarter 2012, reflecting strong performance in emerging markets, especially China, and strength in U.S. commercial and agricultural end markets.
  • Third quarter adjusted segment operating income was $44 million. Adjusted operating margin was 12.2 percent, down 40 basis points from 2012, primarily driven by higher sales mix in emerging markets.

Supplemental information on Xylem’s third quarter earnings and reconciliations for certain non-GAAP items are posted at investors.xyleminc.com.

About Xylem
Xylem (NYSE: 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 White Plains, N.Y., with 2012 annual revenues of $3.8 billion and approximately 12,900 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.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 in 2011, 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 Item 1A in our Annual Report on Form 10-K, and those described from time to time in subsequent reports filed with the Securities and Exchange Commission.

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