Contact Details:
Xylem Water Solutions South Africa (Pty) Ltd
1 Springbok Road
Bartlett
Boksburg
Gauteng
South Africa
Tel: +27 (0)11 966 9300
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Second Quarter 2012 Results
Company News Tuesday, August 28, 2012: Xylem Water Solutions South Africa (Pty) Ltd
8/2/2012 7:00 AM
?Second quarter adjusted net income is $92 million or $0.49 per share, up 4 percent on a normalized* basis; $89 million or $0.48 per share as reported, up 23 percent or $0.09 per share from Q2 2011
Second quarter revenue up 4 percent in constant currencies to $966 million; down 1 percent as reported, due to foreign currency translation impact
Gross and operating margins climb 60 and 100 basis points, respectively, on a normalized basis, continuing a three-year upward trend; sales program and cost reduction initiatives driving profitability
Company continues to execute growth strategy with MJK Automation acquisition; emerging markets post revenue growth of 22 percent in constant currencies
WHITE PLAINS, N.Y., August 2, 2012 – Xylem Inc. (NYSE: XYL), a leading global water technology company focused on solving the world’s most challenging water issues, today reported second quarter revenue of $966 million, up 4 percent on a constant currency basis, down 1 percent as reported from the second quarter 2011. Second quarter net income was $89 million or $0.48 per share, up $0.09 per share or 23 percent from the same period last year. Adjusting for one-time separation costs resulting from the Xylem spinoff from ITT Corporation on October 31, 2011, and special tax items, net income was $92 million or $0.49 per share, up 4 percent or $0.02 per share over the second quarter 2011 on a normalized basis.* Recognizing soft economic conditions and the anticipated negative currency impact from the recent strengthening of the U.S. dollar, the company announced that it is revising its full-year revenue and earnings outlook downward.
"Our business operations continue to improve, even with lower than anticipated revenue, showing strong gross and operating margin improvement in this tough economy, extending a three-year positive trend: we’re seeing the benefit of disciplined cost control measures we’ve put in place,” said Gretchen McClain, president and chief executive officer of Xylem. “Our leadership team is committed to maximizing the benefit of our Customer Excellence sales initiatives to grow the top line, and we are driving operational excellence to grow the bottom line, as well as controlling costs.”
“We continue to enhance our portfolio, having just closed the acquisition of MJK Automation, a leading manufacturer of flow and level sensors, and measurement and control technology for water and wastewater applications, a business that complements our offerings in the attractive analytical instrumentation space,” McClain said. “Further, we’ve seen our business grow by 22 percent in constant currencies in the emerging markets, or 17 percent on an organic basis, enhancing our footprint, most recently with new sales and service centers in Panama and Vietnam.”
Full-year revenues are now expected to be approximately $3.8 billion, and adjusted net income is expected to be in the range of $321 to $338 million, or $1.72 to $1.82 per share, down from the earlier projection of adjusted net income of $1.80 to $1.95 per share. Full-year GAAP net income is now anticipated to be in the range of $292 to $317 million, or $1.57 to $1.70 per share, which includes $15 to $20 million of restructuring and realignment costs and $15 to $20 million of one-time separation costs. This is down from the earlier projection of GAAP net income of $1.72 to $1.89 per share.
Second Quarter Segment Results
Water Infrastructure
Xylem’s Water Infrastructure businesses provide equipment and services focused on the transport, treatment and testing of water and wastewater in the public utility and industrial markets.
- Second quarter 2012 segment revenue was $609 million, up 1 percent as reported, and up 7 percent in constant currencies from the second quarter of 2011. A 58 percent increase in the test business, driven by the newly acquired YSI business and 38 percent growth in the emerging markets on a constant currency basis, more than offset weakness in treatment.
- Second quarter adjusted segment operating margin was down 50 basis points from the second quarter 2011 to 15.4 percent, driven by the impact of incremental stand-alone costs and inflation, which was partially offset by price and cost actions. Stand-alone costs negatively impacted operating margin by 70 basis points for the second quarter 2012.
Applied Water
Xylem’s Applied Water businesses provide equipment and services in the residential and commercial building services, general industrial and agricultural markets.
- Second quarter 2012 segment revenue was $373 million, flat on a constant currency basis and down 3 percent over the second quarter of 2011, attributable to slowing commercial and residential demand, which was partially offset by strength in the U.S. industrial business.
- Second quarter adjusted segment operating margin was 13.9 percent, up 90 basis points from the second quarter 2011, thanks to significant productivity and price initiatives which more than offset incremental stand-alone costs. Stand-alone costs negatively impacted operating margin 50 basis points for the second quarter of 2012.
More detail available
Supplemental information on Xylem’s second quarter earnings, including reconciliations for certain non-GAAP items, is posted at investors.xyleminc.com.
