Robert W. Baird's 42    Annual Industrial Conference

November 7, 2012

nd

Exhibit 99.1

Forward Looking Statements

2

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, 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, and those described from time to time in

subsequent reports filed with the Securities and Exchange Commission. 

•

Design, Manufacture, & Service Highly Engineered Technologies

•

A True Water Pure Play

•

Diverse End Market & Geographic Mix

•

Leading Brands & Application Expertise

•

Resilient Portfolio & Large Installed Base

•

Unrivaled Global Reach …

Serving 150+ Countries

Global Leader in Water

Application Solutions

3

$3.8B Company Uniquely Positioned in the Attractive Water Industry

Region

Highlights

Europe

•

Large Installed Base

•

So. Europe ~8% Tot Revenue

•

2011 Flat Organically

U.S.

•

Large Installed Base

•

2011 Up Low Single Digits

Emerging

Markets

•

Evenly Spread Across Latin

America, Middle East & Africa,

Eastern Europe, Asia Pac

Diversified Geographic Market Mix

4

Europe

37%

U.S.

36%

Asia Pac

11%

Other

16%

Geographical Mix*

Geographical Mix*

Xylem

Xylem

Emerging

Emerging

Market Revenue

Market Revenue

~19% in 2011

~19% in 2011

*2011 Revenues

…

…

With Large Installed Base & Growing Emerging Market Exposure

With Large Installed Base & Growing Emerging Market Exposure

Emerging Markets

Emerging Markets

•

BRIC & ROW Focused Growth Strategy

•

40+ Sales Units Spread Globally

•

2 Localized R&D Centers

•

14 Production Facilities

•

’09 -’11 Revenue CAGR +20%

•

Proj. Long-Term Revenue Growth 8-10+%

Diversified End Market Mix

5

…

…

With Strong Long Term Fundamentals & Growth Drivers

With Strong Long Term Fundamentals & Growth Drivers

% of XYL Revenue

40%

36%

13%

9%

3%

Cycle

•

Late/Less

Cyclical

•

Non-Cyclical

•

Late Cycle

•

Early Cycle

•

Mid Cycle

Fundamentals

•

Operation Critical

•

Growing Tariffs

•

Green Regulation

•

Energy Efficiency

•

Growing Demand

•

Aftermarket &

Replacement

•

Aftermarket &

Replacement

•

Strong

Replacement

•

Strong

Replacement

XYL ‘12

Organic Growth

•

Flat to Up Low

Single Digits

•

Flat to Up Low

Single Digits

•

Flat to Down Low

Single Digits

•

Flat to Down Low

Single Digits

•

Up Low Single

Digits

•

Depleting Water   

Supply

•

Tightening 

Regulation

•

Aging

Infrastructure

•

Population

Growth

•

Urbanization

•

Sustainability

•

Energy 

Efficiency

Public Utility

Commercial

Residential

Agriculture

Industrial

LT Growth Drivers

6

Highly Attractive Recurring Revenue Profile

•

15%

of Xylem revenue

•

Strong global presence

•

120+ owned service centers

•

600+ service employees

•

Extensive channel partner network

•

9% Revenue CAGR ‘06-’11 despite

economic

downturn

•

Approximately 22% of Xylem revenue

•

Installed base drives replacement sales

•

Brand loyalty drives like-for-like

replacement

•

Installed base provides opportunity for

upgrades, next generation and services

$M

Note:

(1) Based on company estimates.

Aftermarket Provides Stability and Drives Strong Profitable Growth

Aftermarket Parts & Services Revenues

Replacement Equipment (1)

2006

2007

2008

2009

2010

2011

$370

$382

$396

$433

$512

$570

•

~11% revenue growth 2010-2011

Resilient Portfolio & Increasing Profitability

…

…

Proven Track Record, Continued Focus

Proven Track Record, Continued Focus

7

•

Resilient Portfolio …

Despite Challenging End Market Conditions

•

Management Discipline …Proactive Actions (~$100M of Restructuring & Realignment ‘08-’12)

•

Operational Excellence …

Driving Productivity Initiatives

•

Continued Investment Driving Growth in Core Business

•

Key Acquisitions …

Transitioning Portfolio to Higher Profitability Levels

(2012E At Mid-Point Guidance)

Incl. Stand-

Alone Costs

12.7%     12.8%

$M, unless otherwise indicated

Operating Margin *

Revenue

2008

2009

2010

2011

2012E

10.8%

10.8%

12.6%

12.8%

13.6%

2008

2009

2010

2011

2012E

3,291

2,849

3,202

3,803

~3.8B

Expansion +290 Bps On Comp Basis

Op Income Up ~$160M …

~45%

Incremental Margin ~31%

Revenue Up ~$510M …

+15%

* Excludes the impact of restructuring and stand alone costs for all periods. See Appendix for Non-GAAP Reconciliations

Focused on Free Cash Flow

8

1

Free

Cash

Flow

=

Net

cash

from

operating

activities

-

Capital

expenditures

Free Cash Flow  

and Conversion ($M)

Strong Free Cash Flow & Solid Balance Sheet to Fund Growth Initiatives

Strong Free Cash Flow & Solid Balance Sheet to Fund Growth Initiatives

Capital Structure & Liquidity Position

September 30, 2012

Cash

424

Debt

1,212

Net Debt

788

Shareholders’

Equity

2,054

Net Capital

2,842

Net Debt to Net Capital

28%

•

Strong Cash Flow Conversion

•

Balance Sheet Flexibility

•

No Significant Debt Maturities Until 2016

•

28% Net Debt to Net Capital

•

1.2x Net Debt/Adj. TTM EBITDA

•

$600M

Revolving

Credit

Facility

-

Unutilized

•

Access

to

Commercial

Paper

-

Unutilized

* See non-GAAP reconciliations.

$341

$308

$301

$388

152%

117%

91%

111%

2008

2009

2010

2011

1

*

Disciplined Capital Deployment

9

•

2.5% –

3.5% of sales

•

~$0.10/share

•

In-line with peers

•

Up to $300M / year

Capital Deployment Strategy

•

Balance of organic & inorganic investment

•

Return value to shareholders

•

Maintain solid investment grade metrics

•

Debt & pension

Organic Growth

World Class Facilities

Cash Return to

Shareholders

Cash to Meet Key

Obligations

Inorganic Investment

to Fuel Growth

Capital Deployment Evaluation

•

Fold targeted performance into Operating plans

•

Quarterly / Annual investment review

•

Ensure targeted returns achieved

Focused on Long Term Shareholder Return

Focused on Long Term Shareholder Return

Cash from

Operations

Capex

Return to

Shareholders

Financial

Obligations

Acquisition

Strategy

Financial Projections

10

•

Market growth of 3-5%...4-6% Xylem targeted growth

•

Acquisition strategy adds 1-2 % points of growth

•

Emerging markets > 20% of revenues

Xylem is Poised to Achieve its Long-Term Financial Objectives

Xylem is Poised to Achieve its Long-Term Financial Objectives

•

Operational & Commercial excellence expand segment margins 50-75 bps per year

–

Gross margin > 40%

•

Continued cash management discipline to achieve cash conversion of ~100%

•

Capital deployment strategy to drive ROIC

2012 FY Guidance

As of Nov. 1, 2012

2015

Target **

Revenues

~$3.8B

$4.5B to $5.0B

Operating Margin*

12.7% to 12.9%

14.5% to 15.5%

Free Cash Flow Conversion

95%

100%

Normalized EPS Growth*

+4% to +8%

Long-Term Targets

*   See non-GAAP reconciliations.

**  See

Xylem

October

13, 2011

Investor

Day

Presentation

for

further

details

Investment

Highlights

11

•

$3.8B Company Uniquely Positioned in the Attractive Water Industry

•

Resilient Portfolio & Proven Track Record of Increasing Profitability

•

Leading Brands &

World-Class Distribution Channels

•

Diversified End & Geographic Markets Mix

•

Attractive Growth Opportunities & Large Installed Base

•

Solid Cash Flow Generation & Disciplined Capital Deployment Strategy

Ability to Deliver Strong & Consistent Financial Performance

Ability to Deliver Strong & Consistent Financial Performance

12

NYSE: XYL

http://investors.xyleminc.com

Thank you for your interest !

Thank you for your interest !

Phil De Sousa, Investor Relations Officer

(914) 323-5930

Janice Tedesco, Investor Relations Coordinator

(914) 323-5931

Appendix

Water

Infrastructure

Equipment

& Services

End

Users

Uniquely Positioned …

14

…

…

Global Leader in Attractive Water Industry

Global Leader in Attractive Water Industry

Growth Drivers

•

Depleting Water Supply

•

Tightening Regulation

•

Aging Infrastructure

•

Population Growth

•

Urbanization

•

Sustainability

•

Energy Efficiency

$500B

Global Water

Industry

Technology Intensive $30B

•

Highly Engineered

•

Premium Value

•

High Performance

•

Knowledge-Based Services

•

Differentiated Solutions

•

Higher Profitability

Segment Overview

Market Size: $16B

2011 Revenues:  $2.4B

2011 Op Margin*: 14.9%

Water

Infrastructure

63%

Water Infrastructure Overview

Applied Water

37%

Market Size: $14B

2011 Revenues:  $1.4B 

2011 Op Margin*: 12.0%

Customers

Residential & Commercial,

Industrial Facilities, Agriculture

Applied Water Overview

Customers

Public Utilities

Industrial Facilities

Distribution

World-Class Global Direct

Note: (1) Global market share based on company estimates.

Distribution

Primarily through World-Class

Indirect (+70%) Channels

15

*Excluding separation costs of $16M

*Excluding separation costs of $13M

Revenue by Application

Market

Share

(1)

Transport

73%

#1

Treatment

18%

#1

Test

9%

#2

Revenue by Application

Market

Share

(1)

Bldg. Services

51%

#2

Industrial Water

42%

#2

Irrigation

7%

#3

Unique Position -

Only Provider of All Three “T’s”

Large Installed Base

Growth Despite Slow New Construction

(~70%) & Indirect Channels

Xylem Has a Focused Growth Strategy

Organic Growth

Organic Growth

Emerging Markets

Emerging Markets

Acquisition Strategy

Acquisition Strategy

•

Replicate leadership positions

•

Strong aftermarket opportunities

•

Innovative application solutions

Organic & Inorganic Growth Expertise

Organic & Inorganic Growth Expertise

•

Established footprint

•

Localized innovation centers

•

Focused BRIC & ROW Strategy

•

Disciplined approach

•

History of successful integration

•

Bolt-on, niche go-forward strategy

16

Long Term Growth Rates

(1)

$4.5B -

$5.0B

Market Growth Rates

~8% CAGR

(1)

Revenue growth rates based on 2011

revenue of $3,803. See Xylem October 13,

2011 Investor Day Presentation for further

details.

$M, unless otherwise indicated

2010

2011

2012E

2015E

3,202

3,803

~3.8B

•

Developed

•

Emerging

•

Global

1 -

3%

8 -

10+%

3 -

5%

Organic

4 -

6%

1 -

2%

M&A

Gross Margin Improvement Funds Future Growth

Xylem Continues to Invest While Increasing Profitability

Xylem Continues to Invest While Increasing Profitability

17

•

Operational and Commercial Excellence

•

Growth in Higher Margin Analytics and Dewatering applications

•

Xylem’s Water Infrastructure Direct Sales Force a Key Competitive Advantage

Public Utility & Industrial

Transport & Treatment

18

Application

Technologies

•

Waste Water Transport

•

Filtration

•

Biological Treatment

•

UV & Ozone Disinfection

19

•

36% of Xylem Revenues related

to

Public

Utility

spending

–

in

2011:

•

~$1B for Maintenance Activities

•

Public Utility spending grows

long term

•

U.S.:  ~6%

CAGR

1965

–

2011

•

Europe similar to U.S.

•

Asia Pacific growing faster

•

Funding of expenditures secure

•

~80% funded by tariffs

•

Tariffs growing 8%/yr in U.S.

•

European Tariffs typically higher

than U.S.

•

Funds typically can not be used for

other purposes

Strong Long-term Fundamentals…Xylem Provides Mission Critical Solutions

Source: U.S. Census Bureau

The Public Utility End Market

•

~6% CAGR 1965 –

2011

•

Only 3 years (‘69, ’83 and ‘11) saw >10% drop

•

10% drop reduces Total XYL Revs. by ~(1-2) ppts

U.S. Water and Sewer Construction Spending - $M

Test Applications

20

Diverse Applications

•

Environmental

•

Water & Waste Water

•

Food & Beverage

•

Chemical

•

Pharmaceutical

•

Ocean/Coastal

Analytical Instrumentation

Analytical Instrumentation

Dewatering and Industrial

Water Applications

21

Diverse Applications

•

Construction

•

Disaster Recovery

•

Environmental

•

Heavy Industry

•

Mining

•

Oil, Gas & Chemical

•

Water & Waste Water

•

Marine

Dewatering Applications

Industrial Water Applications

Heating

Cooling

Pressure

Boosting

Waste Water

Removal

Commercial & Residential

22

Customers

•

Developers

•

Building Operators

•

Building Designers

•

HVAC Specialists

•

Contractors

•

Plumbers

HVAC  -

Heating

Pressure boosters

Fire protection

HVAC  -

Cooling

Wastewater

Zone Control

2012 Financial Guidance Summary

23

* See Appendix for Non-GAAP Reconciliations

2012 FY Guidance

As of

Nov. 1, 2012

Growth

2012E vs. 2011

Revenue

Constant

Currency

Organic 

Acquisition

Xylem Consolidated

~$3.8B

~3%                                 

2%

Water Infrastructure

~$2.4B

~5%

4%

Applied Water

~$1.4B

~1%

0%

Segment Margin *

14.1% -

14.3%

+10 to +30 bps

Operating

Margin *

12.7%

-

12.9%

+0 to +20 bps

EPS * 

$1.72 -

$1.79

$1.76 Mid Point

incl. Heartland Pump Acq. impact

-$0.01

Free Cash Flow Conversion

95%

Excluding

one-time separation costs

Guidance

Assumptions:

Stand-Alone

Costs

~$28M

Included in EPS Guidance; In Line

with Expectations

Operating

Tax Rate

~25%

Excludes Special Tax Items

Share

Count

~186.2M

Items

Excluded from Guidance:

(1) Separation

Costs

~$20M

In Line with Expectations

(2) Restructuring &

Realignment Costs

~$20M

Additional Actions Identified in 3Q’12

~$11MTotal Run Rate Savings Beginning 2013

~1%

~1%

~1%

Non-GAAP Measures

24

“Constant currency”

defined as financial results adjusted for currency translation impacts by translating current period and prior period activity using the

“EBITDA”

defined

as

earnings

before

interest,

taxes,

depreciation,

amortization

expense,

and

share-based

compensation.

“Adjusted

EBITDA”

reflects

"Adjusted

Operating

Income",

"Adjusted

Segment

Operating

Income",

and

“Adjusted

EPS”

defined

as

operating

income

and

earnings

per

share,

“Normalized

EPS”

defined

as

adjusted

earnings

per

share,

as

well

as

adjustments

to

reflect

the

incremental

current

period

amount

of

interest

expense

“Free Cash Flow”

defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well as

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:

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. 

same currency conversion rate.  This approach is used for countries whose functional currency is not the U.S. dollar.

the adjustment to EBITDA to exclude for one-time separation costs associated with the Xylem spin-off from ITT Corporation as well as one-time restructuring and

realignment costs. 

adjusted to exclude one-time separation costs associated with the Xylem spin-off from ITT Corporation, one-time restructuring and realignment costs and

tax-related special items.

and stand alone costs in the prior comparable period.  

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. 

“Organic revenue" and "Organic orders”

defined as revenue and orders, respectively, excluding the impact of foreign currency fluctuations,

Non-GAAP Reconciliation: Earnings Per Share

25

FY 2009

FY 2010

FY 2011

Net Income

263

329

279

Separation costs, net of tax

-

-

72

Adjusted Net Income before Special Tax Items

263

329

351

Special Tax Items

(61)

(43)

7

Adjusted Net Income

202

286

358

Diluted Earnings per Share

$1.42

$1.78

$1.50

Separation costs per Share

-

-

$0.39

Adjusted diluted EPS before Special Tax Items

$1.42

$1.78

$1.89

Special Tax Items per Share

($0.32)

($0.23)

$0.04

Adjusted diluted EPS

$1.10

$1.55

$1.93

Xylem Inc. Non-GAAP Reconciliation

Adjusted Diluted EPS

2009, 2010, & 2011

($ Millions, except per share amounts)

Non-GAAP Reconciliation: Guidance

26

Illustration of Mid Point Guidance

2012 Guidance

FY '11

FY '12

As Reported

Adjustments

Adjusted

Adjustments

Normalized

As Projected

Adjustments

Adjusted

Total Revenue

3,803

3,803

3,803

3,800

3,800

Segment Operating Income

503

29

a

532

(10)

d

522

516

25

h,i

541

Segment Operating Margin

13.2%

14.0%

13.7%

13.6%

14.2%

Corporate Expense

108

(58)

b

50

18

e

68

68

(15)

h

53

Operating Income

395

87

482

(28)

454

448

40

488

Operating Margin

10.4%

12.7%

11.9%

11.8%

12.8%

Interest Expense

(17)

(17)

(39)

f

(56)

(54)

(54)

Other Non-Operating Income (Expense)

5

5

5

(1)

(1)

Income before Taxes

383

87

470

(67)

403

393

40

433

Provision for Income Taxes

(104)

(8)

c

(112)

16

g

(96)

(99)

(7)

j

(106)

Net Income

279

79

358

(51)

307

294

33

327

Diluted Shares

185.3

185.3

186.2

186.2

Diluted EPS

1.50

$              

0.43

$               

1.93

$               

(0.27)

$             

1.66

1.58

0.18

1.76

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 ($10M)

e

Incremental stand alone costs to be incurred in 2012 at the corporate level ($18M)

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 $5M and $15M to be incurred at the segments and headquarters, respectively.

i

Restructuring & realignment costs of $20M to be incurred at the segments.

j

Tax impact of one time separation, restructuring & realignment costs expected to be incurred in 2012 and tax special items realized through Q3 2012.

Non-GAAP Reconciliation: Free Cash Flow

27

Xylem Inc. Non-GAAP Reconciliation

Net Cash - Operating Activities vs. Free Cash Flow

Years ended 2011, 2010, 2009, & 2008

($ Millions)

Year Ended

2011

2010

2009

2008

Net Cash - Operating Activities

449

395

370

408

Capital Expenditures

(126)

(94)

(62)

(67)

Free Cash Flow, including separation costs

323

301

308

341

Separation Costs (Cash Paid incl. Capex)

65

-

-

-

Free Cash Flow, excluding separation costs

388

301

308

341

Net Income

279

329

263

224

Separation Costs, net of tax

72

-

-

-

Adjusted Net Income

351

329

263

224

Free Cash Flow Conversion

111%

91%

117%

152%

Non-GAAP Reconciliation: Adj. Operating Income & Margin

28

Mid Point Guidance

2008

2009

2010

2011

2012E

Revenue

3,291

2,849

3,202

3,803

3,800

Operating Income

315

276

388

395

448

Operating Margin

9.6%

9.7%

12.1%

10.4%

11.8%

Restructuring & Realignment

41

31

15

-

20

Separation Costs

-

-

-

87

20

Adjusted Operating Income

356

307

403

482

488

Adjusted Operating Margin

10.8%

10.8%

12.6%

12.7%

12.8%

Standalone Costs

-

-

-

5

28

Adj. Operating Income, excl. Standalone Costs

356

307

403

487

516

Adjusted Operating Margin, excl. Standalone Costs

10.8%

10.8%

12.6%

12.8%

13.6%

Xylem Inc. Non-GAAP Reconciliation

Adjusted Operating Income

($ Millions)

29

Non-GAAP Reconciliation: 2012 Xylem EBITDA & Adj. EBITDA

Q1

Q2

Q3

YTD

Income Before Taxes

84

115

100

299

Interest, net

13

13

12

38

Depreciation

23

21

24

68

Amortization

11

12

12

35

Stock Compensation

5

5

6

16

EBITDA

136

166

154

456

Separation Costs

5

6

4

15

Restructuring & Realignment Costs

-

-

5

5

Adjusted EBITDA

141

172

163

476

Revenue

925

966

931

2,822

Adjusted EBITDA Margin

15.2%

17.8%

17.5%

16.9%

Xylem Inc. Non-GAAP Reconciliation

EBITDA and Adjusted EBITDA by Quarter

Total Xylem

($ Millions)

2012

30

Non-GAAP Reconciliation: 2011 Xylem EBITDA & Adj. EBITDA

Q1

Q2

Q3

Q4

Total

Pre-Tax Net Income

101

115

82

85

383

Interest, net

-

-

1

16

17

Depreciation

22

25

25

21

93

Amortization

11

10

11

12

44

Stock Compensation

3

2

2

6

13

EBITDA

137

152

121

140

550

Separation Costs

3

18

46

20

87

Adjusted EBITDA

140

170

167

160

637

Revenues

890

971

939

1,003

3,803

Adjusted EBITDA Margin

15.7%

17.5%

17.8%

16.0%

16.7%

Xylem Inc. Non-GAAP Reconciliation

EBITDA and Adjusted EBITDA by Quarter

($ Millions)

2011

Total Xylem