- Revenue of $2.1 billion, up 50% on a reported basis, and 10%
organically
- Earnings per share of $0.63, up 800%; adjusted earnings per
share of $0.99, up 14%
- Raising full-year revenue guidance to approximately $7.3B,
up 32% from 30%, with expected organic revenue growth of 11%, up
from 9% to 10%
- Lifting full-year adjusted EPS guidance to $3.71 to $3.73,
from $3.50 to $3.70
Xylem Inc. (NYSE: XYL), a leading global water technology
company dedicated to solving the world’s most challenging water
issues, today reported third-quarter results. The Company’s total
revenue was $2.1 billion, with reported growth of 50 percent and
organic growth of 10 percent, surpassing prior guidance, on strong
commercial and operational execution and resilient demand. Orders
were up 43 percent on a reported basis and up 3 percent
organically, while backlog grew 5 percent organically to $5.2
billion, including $1.3 billion from Evoqua. Third-quarter earnings
exceeded Xylem’s previous guidance.
“The team capitalized on resilient demand to deliver another
quarter of robust growth and continued margin expansion, with each
of our segments outperforming expectations,” said Patrick Decker,
Xylem president and CEO. “In addition to healthy organic growth, we
saw strong operational performance in both our legacy business and
in our recent Evoqua acquisition. The combination of these two
great enterprises is delivering a robust pipeline of new commercial
opportunities, and integration cost synergies are well on track.
The team’s performance and continuing underlying demand give us
confidence in raising our full-year guidance.”
“We are in a unique position as water challenges continue to
intensify – bringing a transformative platform of solutions to
customers and communities around the world. I have full confidence
in the team to keep building on the foundation we’ve built to
deliver the full potential of our strategy, drive further
durability in our business model, and continue to create
distinctive value for all our stakeholders.”
Net income was $152 million, or $0.63 per share. Net income
margin increased 640 basis points to 7.3 percent. These results are
driven by lapping a prior-year one-time pension settlement and
strong operational performance, partially offset by higher
acquisition and integration costs related to the Evoqua
transaction, higher purchase accounting intangible amortization,
and higher restructuring and realignment costs. Adjusted net income
was $240 million, or $0.99 per share, which excludes the impacts of
special charges, purchase accounting intangible amortization, and
restructuring and realignment costs.
Third-quarter adjusted earnings before interest, tax,
depreciation, and amortization (EBITDA) margin was 19.8 percent,
reflecting a year-over-year increase of 150 basis points. Excluding
Evoqua’s results, adjusted EBITDA margin was 18.9 percent, up 60
basis points over the prior year period. Strong price realization
more than offset inflation and, coupled with productivity savings
and higher volume, drove the margin expansion, exceeding the impact
of strategic investments.
Outlook
Xylem now expects full-year 2023 revenue of approximately $7.3
billion, up approximately 32 percent on a reported basis and up
approximately 11 percent on an organic basis. This represents an
increase from the Company’s previous full-year guidance of 30
percent on a reported basis and 9 to 10 percent on an organic
basis.
Full-year 2023 adjusted EBITDA margin is expected to be
approximately 19 percent, lifted from the previous guide of
approximately 18 percent. This results in adjusted earnings per
share of $3.71 to $3.73, raised from the previous range of $3.50 to
$3.70.
Further 2023 planning assumptions are included in Xylem’s
third-quarter 2023 earnings materials posted at
www.xylem.com/investors. Excluding revenue, Xylem provides guidance
only on a non-GAAP basis due to the inherent difficulty in
forecasting certain amounts that would be included in GAAP
earnings, such as discrete tax items, without unreasonable
effort.
Third Quarter Segment Results
Measurement & Control Solutions
Xylem’s Measurement & Control Solutions segment consists of
its portfolio of businesses in smart metering, network
technologies, advanced infrastructure analytics, and analytic
instrumentation.
- Third-quarter 2023 revenue was $440 million, up 26 percent on a
reported basis and 25 percent organically, versus the prior year
period. Growth was led by backlog execution in smart metering and
test and measurement.
- Third-quarter reported operating income for the segment was $27
million, compared to a $2 million loss in the same period last
year. Adjusted operating income, which excludes $1 million of
special charges, $6 million of restructuring and realignment costs,
and $16 million of purchase accounting intangible amortization, was
$50 million, a 72 percent increase versus the prior year period,
which was recast to add back $17 million of non-cash purchase
accounting amortization. The segment reported operating margin was
6.1 percent, up 670 basis points versus the prior year period.
Adjusted operating margin of 11.4 percent increased 310 basis
points over the prior year period. Adjusted EBITDA margin was 15.7
percent, up 190 basis points from the prior year period. Higher
volume, strong price realization, and productivity savings exceeded
the impact of inflation and strategic investments.
Water Infrastructure
Xylem’s Water Infrastructure segment, now including
legacy-Evoqua’s Applied Product Technologies segment, consists of
its portfolio of businesses serving clean water delivery,
wastewater transport and treatment, and dewatering.
- Third-quarter 2023 revenue was $803 million, a 40 percent
increase on a reported basis and 7 percent organically, compared
with the prior year period. This strong growth was driven by price
realization and robust utilities and industrial demand,
particularly in the U.S., and resilience in Western Europe,
partially offset by a decline in Emerging Markets.
- Third-quarter reported operating income for the segment was
$128 million, a 23 percent increase versus the same period last
year. Adjusted operating income, which excludes $6 million of
special charges, $3 million of restructuring and realignment costs,
and $15 million of purchase accounting intangible amortization, was
$152 million. This represents a 41 percent increase versus the
prior year period, which was recast to add back $1 million of
non-cash purchase accounting amortization. Reported operating
margin for the segment was 15.9 percent, down 220 basis points
versus the prior year period, and adjusted operating margin was
18.9 percent, up 10 basis points versus the prior year period.
Adjusted EBITDA margin was 21.2 percent, up 50 basis points versus
the prior year. Excluding Evoqua, adjusted EBITDA margin was 21.5
percent, up 80 basis points on the prior year. Favorable price
realization net of inflation, productivity initiatives and higher
volume more than offset strategic investments.
Applied Water
Xylem’s Applied Water segment consists of its portfolio of
businesses in industrial, commercial building, and residential
applications.
- Third-quarter 2023 revenue was $465 million, a 2 percent
increase on a reported basis and 1 percent organically,
year-over-year. Growth was driven by strong price realization,
backlog execution in U.S. building solutions, and resilient
industrial demand in developed markets, partially offset by
softness in Emerging Markets.
- Third-quarter reported operating income for the segment was $73
million, a 5 percent decrease versus the same period last year.
Adjusted operating income, which excludes $6 million of
restructuring and realignment costs, was $79 million, a 1 percent
increase versus the same period last year. The segment reported
operating margin was 15.7 percent, down 110 basis points versus the
prior year period. Adjusted operating margin of 17.0 percent was
flat to the prior year period. Adjusted EBITDA margin was 18.3
percent, up 20 basis points from the prior year. Adjusted margin
expansion was driven by price realization net of inflation and
productivity savings, more than offsetting volume declines and
strategic investments.
Integrated Solutions & Services
Xylem’s Integrated Solutions & Services segment consists of
its portfolio of businesses providing water treatment systems and
solutions, with an extensive service branch network and fleet of
mobile assets.
- Third-quarter 2023 revenue was $368 million.
- Third-quarter reported operating loss for the segment was $3
million. Adjusted operating income was $49 million, which excludes
$9 million of special charges, $8 million of restructuring and
realignment costs, and $35 million of purchase accounting
intangible amortization. The segment reported operating margin was
(0.8) percent. Adjusted operating margin was 13.3 percent. Adjusted
EBITDA margin was 22.6 percent, reflecting strong margin
performance driven by effective price-cost discipline and volume
conversion.
Supplemental information on Xylem’s third-quarter 2023 earnings
and reconciliations for certain non-GAAP items is posted at
www.xylem.com/investors.
About Xylem
Xylem (XYL) is a leading global water technology company
committed to solving the world’s critical water, wastewater, and
water-related challenges through technology, innovation, and
expertise. Our more than 22,000 diverse employees delivered
combined pro forma revenue of $7.3 billion in 2022. We are creating
a more sustainable world by enabling our customers to optimize
water and resource management and helping communities in more than
150 countries become water-secure. Join us in the effort at
www.xylem.com and Let’s Solve Water.
Forward-Looking Statements
This press release contains “forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Generally, the words “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” "contemplate," "predict," “forecast,”
“likely,” “believe,” “target,” “will,” “could,” “would,” “should,”
"potential," "may" and similar expressions or their negative, may,
but are not necessary to, identify forward-looking statements. By
their nature, forward-looking statements address uncertain matters
and include any statements that: are not historical, such as
statements about our strategy, financial plans, outlook,
objectives, plans, intentions or goals (including those related to
our social, environmental and other sustainability goals); or
address possible or future results of operations or financial
performance, including statements relating to orders, revenues,
operating margins and earnings per share growth.
Although we believe that the expectations reflected in any of
our forward-looking statements are reasonable, actual results could
differ materially from those projected or assumed in any of our
forward-looking statements. Our future financial condition and
results of operations, as well as any forward-looking statements,
are subject to change and to inherent risks and uncertainties, many
of which are beyond our control. Important factors that could cause
our actual results, performance and achievements, or industry
results to differ materially from estimates or projections
contained in or implied by our forward-looking statements include,
among others, the following: the impact of overall industry and
general economic conditions, including industrial, governmental,
and public and private sector spending, inflation, interest rates
and related monetary policy by governments in response to
inflation, and the strength of the residential and commercial real
estate markets, on economic activity and our operations;
geopolitical events, including the wars between Russia and Ukraine
and between Israel and Hamas, and regulatory, economic and other
risks associated with our global sales and operations, including
with respect to domestic content requirements applicable to
projects with governmental funding; actual or potential epidemics,
pandemics or global health crises; availability, shortage or delays
in receiving electronic components (in particular, semiconductors),
parts and raw materials from our supply chain; manufacturing and
operating cost increases due to macroeconomic conditions, including
inflation, energy supply, supply chain shortages, logistics
challenges, tight labor markets, prevailing price changes, tariffs
and other factors; demand for our products, disruption, competition
or pricing pressures in the markets we serve; cybersecurity
incidents or other disruptions of information technology systems on
which we rely or involving our products; disruptions in operations
at our facilities or that of third parties upon which we rely;
failure to successfully execute large projects, including with
respect to meeting performance guarantees and customers’ safety
requirements; our ability to retain and attract senior management
and other diverse and key talent, as well as competition for
overall talent and labor; difficulty predicting our financial
results; defects, security, warranty and liability claims, and
recalls with respect to products; safe and compliant handling of
wastewater and hazardous materials; availability, regulation or
interference with radio spectrum used by certain of our products;
uncertainty related to restructuring and realignment actions and
related costs and savings; our ability to continue strategic
investments for growth; our ability to successfully identify,
execute and integrate acquisitions; volatility in served markets or
impacts on our business and operations due to weather conditions,
including the effects of climate change; fluctuations in foreign
currency exchange rates; our ability to borrow or refinance our
existing indebtedness, and uncertainty around the availability of
liquidity sufficient to meet our needs; risk of future impairments
to goodwill and other intangible assets; failure to comply with, or
changes in, laws or regulations, including those pertaining to
anti-corruption, data privacy and security, export and import, our
products, competition, and the environment and climate change;
changes in our effective tax rates or tax expenses; legal,
governmental or regulatory claims, investigations or proceedings
and associated contingent liabilities; risks related to the
acquisition of Evoqua, including related to our ability to retain
and hire key personnel, the realization of expected benefits and
synergies, the need to incur additional or unexpected costs,
charges or expenses associated with the integration of the combined
companies, delays or challenges with the integration, potential
adverse reactions or changes to relationships with customers,
suppliers, distributors and other business partners, competitive
responses to the acquisition, actual or potential litigation and
associated costs and expenses, and impacts to our share price and
dilution of shareholders’ ownership; and other factors set forth
under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for
the year ended December 31, 2022 ("2022 Annual Report") and in
subsequent filings we make with the Securities and Exchange
Commission (“SEC”).
Forward-looking and other statements in this press release
regarding our environmental and other sustainability plans and
goals are not an indication that these statements are necessarily
material to investors or are required to be disclosed in our
filings with the SEC. In addition, historical, current, and
forward-looking social, environmental and sustainability-related
statements may be based on standards for measuring progress that
are still developing, internal controls and processes that continue
to evolve, and assumptions that are subject to change in the
future. All forward-looking statements made herein are based on
information currently available to us as of the date of this press
release. We undertake 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.
XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
(in millions, except per share data)
Three Months
Nine Months
For the period ended September
30,
2023
2022
2023
2022
Revenue from products
$
1,720
$
1,243
$
4,535
$
3,625
Revenue from services
356
137
711
391
Revenue
2,076
1,380
5,246
4,016
Cost of revenue from products
1,043
740
2,730
2,160
Cost of revenue from services
269
116
555
345
Cost of revenue
1,312
856
3,285
2,505
Gross profit
764
524
1,961
1,511
Selling, general and administrative
expenses
491
294
1,291
912
Research and development expenses
61
47
172
152
Restructuring and asset impairment
charges
21
15
57
22
Operating income
191
168
441
425
Interest expense
14
12
35
37
U.K. pension settlement expense
—
140
—
140
Other non-operating income, net
8
1
19
2
Gain from sale of business
—
—
—
1
Income before taxes
185
17
425
251
Income tax expense
33
5
82
45
Net income
$
152
$
12
$
343
$
206
Earnings per share:
Basic
$
0.63
$
0.07
$
1.64
$
1.14
Diluted
$
0.63
$
0.07
$
1.63
$
1.14
Weighted average number of shares:
Basic
240.9
180.2
208.9
180.2
Diluted
242.2
180.9
210.1
180.9
XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions, except per share
amounts)
September 30,
2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
705
$
944
Receivables, less allowances for
discounts, returns and credit losses of $55 and $50 in 2023 and
2022, respectively
1,653
1,096
Inventories
1,080
799
Prepaid and other current assets
213
173
Total current assets
3,651
3,012
Property, plant and equipment, net
1,132
630
Goodwill
7,149
2,719
Other intangible assets, net
3,039
930
Other non-current assets
934
661
Total assets
$
15,905
$
7,952
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
943
$
723
Accrued and other current liabilities
1,160
867
Short-term borrowings and current
maturities of long-term debt
17
—
Total current liabilities
2,120
1,590
Long-term debt
2,253
1,880
Accrued post-retirement benefits
281
286
Deferred income tax liabilities
724
222
Other non-current accrued liabilities
586
471
Total liabilities
5,964
4,449
Stockholders’ equity:
Common stock – par value $0.01 per
share:
Authorized 750.0 shares, issued 256.7
shares and 196.0 shares in 2023 and 2022, respectively
3
2
Capital in excess of par value
8,529
2,134
Retained earnings
2,416
2,292
Treasury stock – at cost 15.9 shares and
15.8 shares in 2023 and 2022, respectively
(718
)
(708
)
Accumulated other comprehensive loss
(300
)
(226
)
Total stockholders’ equity
9,930
3,494
Non-controlling interests
11
9
Total equity
9,941
3,503
Total liabilities and stockholders’
equity
$
15,905
$
7,952
XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) (in millions)
For the nine months ended September
30,
2023
2022
Operating Activities
Net income
$
343
$
206
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
132
83
Amortization
167
93
Share-based compensation
45
28
Restructuring and asset impairment
charges
57
22
U.K. pension settlement expense
—
140
Gain from sale of business
—
(1
)
Other, net
(20
)
(9
)
Payments for restructuring
(12
)
(7
)
Changes in assets and liabilities (net of
acquisitions):
Changes in receivables
(142
)
(145
)
Changes in inventories
(41
)
(214
)
Changes in accounts payable
15
47
Changes in accrued and deferred taxes
(77
)
(12
)
Other, net
(85
)
3
Net Cash – Operating activities
382
234
Investing Activities
Capital expenditures
(177
)
(148
)
Acquisitions of businesses, net of cash
acquired
(476
)
—
Proceeds from sale of business
103
1
Proceeds from the sale of property, plant
and equipment
2
3
Cash received from investments
1
5
Cash paid for investments
(1
)
(9
)
Cash paid for equity investments
(58
)
(2
)
Cash received from interest rate swaps
38
—
Cash received from cross-currency
swaps
25
24
Other, net
4
3
Net Cash – Investing activities
(539
)
(123
)
Financing Activities
Short-term debt issued, net
1
—
Long-term debt issued, net
275
—
Long-term debt repaid
(155
)
—
Repurchase of common stock
(10
)
(52
)
Proceeds from exercise of employee stock
options
45
6
Dividends paid
(219
)
(163
)
Other, net
(8
)
(1
)
Net Cash – Financing activities
(71
)
(210
)
Effect of exchange rate changes on
cash
(11
)
(64
)
Net change in cash and cash
equivalents
(239
)
(163
)
Cash and cash equivalents at beginning of
year
944
1,349
Cash and cash equivalents at end of
period
$
705
$
1,186
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest
$
43
$
67
Income taxes (net of refunds received)
$
159
$
57
Xylem Inc. Non-GAAP Measures Management
reviews key performance indicators including revenue, gross
margins, segment operating income and margins, orders growth,
working capital and backlog, among others. In addition, we consider
certain non-GAAP (or "adjusted") measures to be useful to
management and investors evaluating our operating performance for
the periods presented, and to 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,
including but not limited to, dividends, acquisitions, share
repurchases and debt repayment. Excluding revenue, Xylem provides
guidance only on a non-GAAP basis due to the inherent difficulty in
forecasting certain amounts that would be included in GAAP
earnings, such as discrete tax items, without unreasonable effort.
These adjusted metrics are consistent with how management views our
business and are used to make financial, operating and planning
decisions. 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 operating activities as
determined in accordance with GAAP. We consider the following items
to represent the non-GAAP measures we consider to be key
performance indicators, as well as the related reconciling items to
the most directly comparable measure calculated and presented in
accordance with GAAP. The non-GAAP measures may not be comparable
to similarly titled measures reported by other companies.
“Organic revenue" and "Organic orders” defined as revenue
and orders, respectively, excluding the impact of fluctuations in
foreign currency translation and contributions from acquisitions
and divestitures. Divestitures include sales or discontinuance of
insignificant portions of our business that did not meet the
criteria for classification as a discontinued operation. The
period-over-period change resulting from foreign currency
translation impacts is determined by translating current period and
prior period activity using the same currency conversion rate.
“Constant currency” defined as financial results
adjusted for foreign 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 and
amortization expense.
“Adjusted EBITDA” and
"Adjusted
Segment EBITDA" reflect the adjustments to EBITDA and segment
EBITDA, respectively, to exclude share-based compensation charges,
restructuring and realignment costs, gain or loss from sale of
businesses and special charges.
"Adjusted EBITDA
Margin" and
"Adjusted Segment EBITDA Margin" defined as
adjusted EBITDA and adjusted segment EBITDA divided by total
revenue and segment revenue, respectively.
"Adjusted
Operating Income", "Adjusted Segment Operating Income", "Adjusted
Net Income" and “Adjusted EPS” defined as operating income,
segment operating income, net income and earnings per share,
adjusted to exclude restructuring and realignment costs,
amortization of acquired intangible assets, gain or loss from sale
of businesses, special charges and tax-related special items, as
applicable.
"Adjusted Operating Margin" and
"Adjusted Segment Operating Margin" defined as adjusted
operating income and adjusted segment operating income divided by
total revenue and segment revenue, respectively.
“Free
Cash Flow” defined as net cash from operating activities, as
reported in the Statement of Cash Flows, less capital expenditures,
and
"Free Cash Flow Conversion" defined as Free Cash Flows
divided by net income, excluding the gain on sale of businesses and
other non-recurring, significant non-cash impacts, such as non-cash
impairment charges and significant deferred tax items. Our
definitions of "free cash flow" and "free cash flow conversion" do
not consider certain non-discretionary cash payments, such as debt.
"Adjusted Free Cash Flow" defined as free cash flow
adjusted for significant cash items for which the corresponding
income statement impact does not occur within the same fiscal year.
“Realignment costs” defined as costs not included in
restructuring costs that are incurred as part of actions taken to
reposition our business, including items such as professional fees,
severance, relocation, travel, facility set-up and other costs.
“Special charges" defined as costs incurred by the
Company, such as acquisition and integration related costs,
non-cash impairment charges and both operating and non-operating
adjustments for costs related to the UK pension plan buyout.
“Tax-related special items" defined as tax items, such as
tax return versus tax provision adjustments, tax exam impacts, tax
law change impacts, excess tax benefits/losses and other discrete
tax adjustments.
Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Orders ($ Millions)
(As Reported - GAAP) (As Adjusted -
Organic) Constant Currency
(A)
(B)
(C)
(D)
(E) = B+C+D
(F) = E/A
(G) = (E - C) / A
Change
% Change
Acquisitions / Divestitures
Change
% Change
Orders
Orders
2023 v. 2022
2023 v. 2022
FX Impact
Adj. 2023 v. 2022
Adj. 2023 v. 2022
2023
2022
Nine Months Ended September 30 Xylem Inc.
5,457
4,818
639
13
%
(769
)
58
(72
)
(1
%)
14
%
Water Infrastructure
2,240
1,985
255
13
%
(222
)
32
65
3
%
14
%
Applied Water
1,350
1,394
(44
)
(3
%)
-
20
(24
)
(2
%)
(2
%)
Measurement & Control Solutions
1,320
1,439
(119
)
(8
%)
-
6
(113
)
(8
%)
(8
%)
Integrated Solutions & Services
547
-
547
N/A
(547
)
-
-
N/A
N/A
Quarter Ended September 30 Xylem Inc.
2,031
1,419
612
43
%
(547
)
(18
)
47
3
%
42
%
Water Infrastructure
850
594
256
43
%
(163
)
(10
)
83
14
%
41
%
Applied Water
422
409
13
3
%
-
(4
)
9
2
%
2
%
Measurement & Control Solutions
375
416
(41
)
(10
%)
-
(4
)
(45
)
(11
%)
(11
%)
Integrated Solutions & Services
384
-
384
N/A
(384
)
-
-
N/A
N/A
Quarter Ended June 30 Xylem Inc.
1,856
1,684
172
10
%
(222
)
23
(27
)
(2
%)
12
%
Water Infrastructure
751
731
20
3
%
(59
)
13
(26
)
(4
%)
5
%
Applied Water
445
480
(35
)
(7
%)
-
6
(29
)
(6
%)
(6
%)
Measurement & Control Solutions
497
473
24
5
%
-
4
28
6
%
6
%
Integrated Solutions & Services
163
-
163
N/A
(163
)
-
-
N/A
N/A
Quarter Ended March 31 Xylem Inc.
1,570
1,715
(145
)
(8
%)
-
53
(92
)
(5
%)
(5
%)
Water Infrastructure
639
660
(21
)
(3
%)
-
29
8
1
%
1
%
Applied Water
483
505
(22
)
(4
%)
-
18
(4
)
(1
%)
(1
%)
Measurement & Control Solutions
448
550
(102
)
(19
%)
-
6
(96
)
(17
%)
(17
%)
Integrated Solutions & Services
-
-
-
N/A
-
-
-
N/A
N/A
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) = B+C+D
(F) = E/A
(G) = (E - C) / A
Change
% Change
Acquisitions / Divestitures
Change
% Change
Revenue
Revenue
2023 v. 2022
2023 v. 2022
FX Impact
Adj. 2023 v. 2022
Adj. 2023 v. 2022
2023
2022
Nine Months Ended September 30 Xylem Inc.
5,246
4,016
1,230
31
%
(718
)
42
554
14
%
32
%
Water Infrastructure
2,096
1,696
400
24
%
(225
)
23
198
12
%
25
%
Applied Water
1,396
1,312
84
6
%
-
14
98
7
%
7
%
Measurement & Control Solutions
1,261
1,008
253
25
%
-
5
258
26
%
26
%
Integrated Solutions & Services
493
-
493
N/A
(493
)
-
-
N/A
N/A
Quarter Ended September 30 Xylem Inc.
2,076
1,380
696
50
%
(540
)
(22
)
134
10
%
49
%
Water Infrastructure
803
574
229
40
%
(172
)
(14
)
43
7
%
37
%
Applied Water
465
458
7
2
%
-
(3
)
4
1
%
1
%
Measurement & Control Solutions
440
348
92
26
%
-
(5
)
87
25
%
25
%
Integrated Solutions & Services
368
-
368
N/A
(368
)
-
-
N/A
N/A
Quarter Ended June 30 Xylem Inc.
1,722
1,364
358
26
%
(178
)
19
199
15
%
28
%
Water Infrastructure
704
589
115
20
%
(53
)
12
74
13
%
22
%
Applied Water
478
429
49
11
%
-
4
53
12
%
12
%
Measurement & Control Solutions
415
346
69
20
%
-
3
72
21
%
21
%
Integrated Solutions & Services
125
-
125
N/A
(125
)
-
-
N/A
N/A
Quarter Ended March 31 Xylem Inc.
1,448
1,272
176
14
%
-
45
221
17
%
17
%
Water Infrastructure
589
533
56
11
%
-
25
81
15
%
15
%
Applied Water
453
425
28
7
%
-
13
41
10
%
10
%
Measurement & Control Solutions
406
314
92
29
%
-
7
99
32
%
32
%
Integrated Solutions & Services
-
-
-
N/A
-
-
-
N/A
N/A
Xylem Inc. Non-GAAP Reconciliation Adjusted Operating
Income ($ Millions)
Q1
Q2
Q3
YTD
2023
2022
(1)
2023
2022
(1)
2023
2022
(1)
2023
2022
(1)
Total Revenue • Total Xylem
1,448
1,272
1,722
1,364
2,076
1,380
5,246
4,016
• Water Infrastructure
589
533
704
589
803
574
2,096
1,696
• Applied Water
453
425
478
429
465
458
1,396
1,312
• Measurement & Control Solutions
406
314
415
346
440
348
1,261
1,008
• Integrated Solutions & Services
-
-
125
-
368
-
493
-
• Corporate/ Other
-
-
-
-
-
-
-
-
Operating Income (Loss) • Total Xylem
131
111
119
146
191
168
441
425
• Water Infrastructure
70
74
106
108
128
104
304
286
• Applied Water
83
59
84
61
73
77
240
197
• Measurement & Control Solutions
20
(10
)
26
(5
)
27
(2
)
73
(17
)
• Integrated Solutions & Services
-
-
(7
)
-
(3
)
-
(10
)
-
• Corporate/ Other
(42
)
(12
)
(90
)
(18
)
(34
)
(11
)
(166
)
(41
)
Operating Margin • Total Xylem
9.0
%
8.7
%
6.9
%
10.7
%
9.2
%
12.2
%
8.4
%
10.6
%
• Water Infrastructure
11.9
%
13.9
%
15.1
%
18.3
%
15.9
%
18.1
%
14.5
%
16.9
%
• Applied Water
18.3
%
13.9
%
17.6
%
14.2
%
15.7
%
16.8
%
17.2
%
15.0
%
• Measurement & Control Solutions
4.9
%
(3.2
%)
6.3
%
(1.4
%)
6.1
%
(0.6
%)
5.8
%
(1.7
%)
• Integrated Solutions & Services
N/A
N/A
(5.6
%)
N/A
(0.8
%)
N/A
(2.0
%)
N/A
• Corporate/ Other
(2.9
%)
9.7
%
(5.2
%)
12.0
%
(1.6
%)
13.0
%
(3.2
%)
(1.0
%)
Special Charges • Total Xylem
25
1
67
1
24
13
116
15
• Water Infrastructure
-
-
12
-
6
-
18
-
• Applied Water
-
-
-
-
-
-
-
-
• Measurement & Control Solutions
2
-
-
1
1
12
3
13
• Integrated Solutions & Services
-
-
7
-
9
-
16
-
• Corporate/ Other
23
1
48
-
8
1
79
2
Restructuring & Realignment Costs • Total
Xylem
11
4
37
8
34
6
82
18
• Water Infrastructure
3
1
3
3
3
3
9
7
• Applied Water
3
1
2
2
6
1
11
4
• Measurement & Control Solutions
5
2
3
3
6
2
14
7
• Integrated Solutions & Services
-
-
7
-
8
-
15
-
• Corporate/ Other
-
-
22
-
11
-
33
-
Purchase Accounting Intangible Amortization
Adjustment • Total Xylem
18
18
36
18
66
18
120
54
• Water Infrastructure
1
1
8
1
15
1
24
3
• Applied Water
-
-
-
-
-
-
-
-
• Measurement & Control Solutions
17
17
17
17
16
17
50
51
• Integrated Solutions & Services
-
-
11
-
35
-
46
-
• Corporate/ Other
-
-
-
-
-
-
-
-
Adjusted Operating Income (Loss) • Total Xylem
185
134
259
173
315
205
759
512
• Water Infrastructure
74
76
129
112
152
108
355
296
• Applied Water
86
60
86
63
79
78
251
201
• Measurement & Control Solutions
44
9
46
16
50
29
140
54
• Integrated Solutions & Services
-
-
18
-
49
-
67
-
• Corporate/ Other
(19
)
(11
)
(20
)
(18
)
(15
)
(10
)
(54
)
(39
)
Adjusted Operating Margin • Total Xylem
12.8
%
10.5
%
15.0
%
12.7
%
15.2
%
14.9
%
14.5
%
12.7
%
• Water Infrastructure
12.6
%
14.3
%
18.3
%
19.0
%
18.9
%
18.8
%
16.9
%
17.5
%
• Applied Water
19.0
%
14.1
%
18.0
%
14.7
%
17.0
%
17.0
%
18.0
%
15.3
%
• Measurement & Control Solutions
10.8
%
2.9
%
11.1
%
4.6
%
11.4
%
8.3
%
11.1
%
5.4
%
• Integrated Solutions & Services
N/A
N/A
14.4
%
N/A
13.3
%
N/A
13.6
%
N/A
• Corporate/ Other
(1.3
%)
(0.9
%)
(1.2
%)
(1.3
%)
(0.7
%)
(0.7
%)
(1.0
%)
(1.0
%)
(1) 2022 amounts have been recast to adjust for
historical purchase accounting intangible amortization.
Xylem Inc. Non-GAAP Reconciliation Adjusted Diluted EPS ($
Millions, except per share amounts)
Q3 2023
Q3 2022 (1) As Reported
Adjustments Adjusted As Reported
Adjustments Adjusted Total Revenue
2,076
-
2,076
1,380
-
1,380
Operating Income
191
124
a
315
168
37
a
205
Operating Margin
9.2
%
15.2
%
12.2
%
14.9
%
Interest Expense
(14
)
-
(14
)
(12
)
-
(12
)
Other Non-Operating Income (Expense)
8
-
8
1
1
b
2
UK Pension Buyout Settlement
-
-
-
(140
)
140
-
Gain/(Loss) From Sale of Business
-
-
-
-
-
-
Income before Taxes
185
124
309
17
178
195
Provision for Income Taxes
(33
)
(36
)
c
(69
)
(5
)
(33
)
c
(38
)
Net Income
152
88
240
12
145
157
Diluted Shares
242.2
242.2
180.9
180.9
Diluted EPS
$0.63
$0.36
$0.99
$0.07
$0.80
$0.87
Year-over-year currency translation impact on current
year diluted EPS ($0.03
)
$0.00
($0.03
)
Diluted EPS at Constant Currency
$0.60
$0.36
$0.96
Q3 YTD 2023 Q3
YTD 2022 (1) As Reported
Adjustments Adjusted As Reported
Adjustments Adjusted Total Revenue
5,246
-
5,246
4,016
4,016
Operating Income
441
318
a
759
425
87
a
512
Operating Margin
8.4
%
14.5
%
10.6
%
12.7
%
Interest Expense
(35
)
-
(35
)
(37
)
-
(37
)
Other Non-Operating Income (Expense)
19
-
19
2
4
b
6
UK Pension Buyout Settlement
-
-
-
(140
)
140
-
Gain/(Loss) From Sale of Business
-
-
-
1
(1
)
-
Income before Taxes
425
318
743
251
230
481
Provision for Income Taxes
(82
)
(75
)
c
(157
)
(45
)
(48
)
c
(93
)
Net Income
343
243
586
206
182
388
Diluted Shares
210.1
210.1
180.9
180.9
Diluted EPS
$1.63
$1.16
$2.79
$1.14
$1.01
$2.15
Year-over-year currency translation impact on current
year diluted EPS
$0.00
$0.00
$0.00
Diluted EPS at Constant Currency
$1.63
$1.16
$2.79
(1) 2022 amounts have been recast to adjust for historical
purchase accounting intangible amortization.
a Quarter-to-date: Restructuring & realignment
costs: 2023 - $34 million and 2022 - $6 million Special charges:
2023 - $23 million of acquisition & integration cost and $1
million of asset impairment; 2022 - $12 million of asset impairment
charges and $1 million UK pension plan charges Purchase accounting
intangible amortization: 2023 - $66 million and 2022 - $18 million
Year-to-date: Restructuring & realignment costs: 2023 -
$82 million and 2022 - $18 million Special charges: 2023 - $107
million of acquisition & integration related costs, $6 million
of other special charges and $3 million of asset impairment
charges; 2022 - $13 million of asset impairment charges and $2
million UK pension plan charges Purchase accounting intangible
amortization: 2023 - $120 million and 2022 - $54 million
b
Quarter-to-date and Year-to-date: 2022 - Special
non-operating charges consist of charges related to the UK pension
plan exited as part of a buy-out of $1 million and $4 million,
respectively
c Quarter-to-date: 2023 - Net tax impact
on pre-tax adjustments (note a) of $28 million and other tax
special items of $8 million; 2022 - Net tax impact on pre-tax
adjustments (notes a and b) of $31 million and other tax related
special items of $2 million
Year-to-date: 2023 - Net tax
impact on pre-tax adjustments (note a) of $67 million and other tax
special items of $8 million; 2022 - Net tax impact on pre-tax
adjustments (notes a and b) of $44 million and other tax related
special items of $4 million
Xylem Inc. Non-GAAP
Reconciliation Net Cash - Operating Activities vs. Free Cash
Flow ($ Millions)
Q1
Q2
Q3
Year-to-Date
2023
2022
2023
2022
2023
2022
2023
2022
Net Cash - Operating Activities
($19
)
($81
)
$28
$113
$373
$202
$382
$234
Capital Expenditures - PP&E
(33
)
(31
)
(42
)
(30
)
(57
)
(37
)
(132
)
(98
)
Capital Expenditures - Software
(16
)
(18
)
(12
)
(16
)
(17
)
(16
)
(45
)
(50
)
Capital Expenditures
(49
)
(49
)
(54
)
(46
)
(74
)
(53
)
(177
)
(148
)
Cash paid in excess of tax provision for R&D
law change adoption
33
-
-
-
-
-
33
-
Free Cash Flow
($35
)
($130
)
($26
)
$67
$299
$149
$238
$86
Cash paid by Xylem for Evoqua's pre-close
transaction costs
-
-
70
-
-
-
70
-
Cash paid for Idrica distribution agreement
-
-
60
-
-
-
60
-
Adjusted Free Cash Flow
($35
)
($130
)
$104
$67
$299
$149
$368
$86
Net Income
$99
$82
$92
$112
$152
$12
$343
$206
-
Gain/(Loss) from sale of business
-
1
-
-
-
-
-
1
-
Restructuring Charges - non-cash stock acceleration
-
-
(14
)
-
(11
)
-
(25
)
-
U.K. pension buyout settlement - non-cash release
from AOCI
-
-
-
-
-
(140
)
-
(140
)
U.K. pension buyout settlement - non-cash tax
release from AOCI
-
-
-
-
-
23
-
23
Special Charges - Inventory step-up
-
-
(15
)
-
(5
)
(20
)
-
Special Charges - non-cash impairment
(2
)
-
-
(1
)
(1
)
(12
)
(3
)
(13
)
Net Income, excluding gain on sale of businesses
and non-cash restructuring and special charges
$101
$81
$121
$113
$169
$141
$391
$335
Operating Cash Flow Conversion
-19
%
-99
%
30
%
101
%
245
%
1683
%
111
%
114
%
Free Cash Flow Conversion
-35
%
-160
%
86
%
59
%
177
%
106
%
94
%
26
%
Xylem Inc. Non-GAAP Reconciliation EBITDA and
Adjusted EBITDA by Quarter ($ Millions)
2023
Q1 Q2 Q3 Q4 Total Net Income
99
92
152
343
Net Income margin
6.8
%
5.3
%
7.3
%
6.5
%
Depreciation
28
41
63
132
Amortization
32
51
84
167
Interest Expense (Income), net
2
5
6
13
Income Tax Expense
27
22
33
82
EBITDA
188
211
338
737
Share-based Compensation
12
15
18
45
Restructuring & Realignment
11
36
33
80
Special Charges
25
67
22
114
Adjusted EBITDA
236
329
411
-
976
Revenue
1,448
1,722
2,076
5,246
Adjusted EBITDA Margin
16.3
%
19.1
%
19.8
%
18.6
%
2022
Q1 Q2 Q3 Q4 Total Net Income
82
112
12
149
355
Net Income margin
6.4
%
8.2
%
0.9
%
9.9
%
6.4
%
Depreciation
28
28
27
28
111
Amortization
30
32
31
32
125
Interest Expense (Income), net
11
10
7
6
34
Income Tax Expense
16
24
5
40
85
EBITDA
167
206
82
255
710
Share-based Compensation
9
9
10
9
37
Restructuring & Realignment
4
8
6
16
34
U.K. Pension Settlement
-
-
140
-
140
Special Charges
2
3
14
1
20
Loss/(Gain) from sale of business
(1
)
-
-
-
(1
)
Adjusted EBITDA
181
226
252
281
940
Revenue
1,272
1,364
1,380
1,506
5,522
Adjusted EBITDA Margin
14.2
%
16.6
%
18.3
%
18.7
%
17.0
%
Xylem Inc. Non-GAAP Reconciliation EBITDA and
Adjusted EBITDA by Quarter ($ Millions) Water Infrastucture
2023
Q1 Q2 Q3 Q4 Total Operating Income
70
106
128
304
Operating Margin
11.9
%
15.1
%
15.9
%
14.5
%
Depreciation
12
14
14
40
Amortization
2
10
16
28
Other non-operating expense, excluding interest income
-
1
-
1
EBITDA
84
131
158
-
373
Share-based Compensation
2
5
3
10
Restructuring & Realignment
3
3
3
9
Special Charges
-
12
6
18
Adjusted EBITDA
89
151
170
-
410
Revenue
589
704
803
2,096
Adjusted EBITDA Margin
15.1
%
21.4
%
21.2
%
19.6
%
2022
Q1 Q2 Q3 Q4 Total Operating Income
74
108
104
132
418
Operating Margin
13.9
%
18.3
%
18.1
%
19.8
%
17.7
%
Depreciation
11
11
11
11
44
Amortization
2
3
1
3
9
Other non-operating expense, excluding interest income
(4
)
1
-
(1
)
(4
)
EBITDA
83
123
116
145
467
Share-based Compensation
1
-
-
1
2
Restructuring & Realignment
1
3
3
4
11
Adjusted EBITDA
85
126
119
150
480
Revenue
533
589
574
668
2,364
Adjusted EBITDA Margin
15.9
%
21.4
%
20.7
%
22.5
%
20.3
%
Xylem Inc. Non-GAAP Reconciliation EBITDA and
Adjusted EBITDA by Quarter ($ Millions) Applied Water
2023
Q1 Q2 Q3 Q4 Total Operating Income
83
84
73
240
Operating Margin
18.3
%
17.6
%
15.7
%
17.2
%
Depreciation
5
4
6
15
Amortization
-
1
-
1
Other non-operating expense, excluding interest income
(1
)
-
-
(1
)
EBITDA
87
89
79
-
255
Share-based Compensation
1
-
1
2
Restructuring & Realignment
3
2
5
10
Special Charges
-
-
-
-
Adjusted EBITDA
91
91
85
-
267
Revenue
453
478
465
1,396
Adjusted EBITDA Margin
20.1
%
19.0
%
18.3
%
19.1
%
2022
Q1 Q2 Q3 Q4 Total Operating Income
59
61
77
61
258
Operating Margin
13.9
%
14.2
%
15.7
%
13.4
%
14.6
%
Depreciation
5
4
4
4
17
Amortization
-
1
-
1
2
Other non-operating expense, excluding interest income
(1
)
-
(1
)
-
(2
)
EBITDA
63
66
80
66
275
Share-based Compensation
1
1
2
-
4
Restructuring & Realignment
1
2
1
9
13
Adjusted EBITDA
65
69
83
75
292
Revenue
425
429
458
455
1,767
Adjusted EBITDA Margin
15.3
%
16.1
%
18.1
%
16.5
%
16.5
%
Xylem Inc. Non-GAAP Reconciliation EBITDA and
Adjusted EBITDA by Quarter ($ Millions) Measurement & Control
Solutions
2023
Q1 Q2 Q3 Q4 Total Operating Income
20
26
27
73
Operating Margin
4.9
%
6.3
%
6.1
%
5.8
%
Depreciation
7
9
8
24
Amortization
27
26
26
79
Other non-operating expense, excluding interest income
-
-
(1
)
(1
)
EBITDA
54
61
60
-
175
Share-based Compensation
2
2
2
6
Restructuring & Realignment
5
2
6
13
Special Charges
2
-
1
3
Adjusted EBITDA
63
65
69
-
197
Revenue
406
415
440
1,261
Adjusted EBITDA Margin
15.5
%
15.7
%
15.7
%
15.6
%
2022
Q1 Q2 Q3 Q4 Total Operating Income
(10
)
(5
)
(2
)
19
2
Operating Margin
-3.2
%
-1.4
%
-0.6
%
5.0
%
0.1
%
(Loss)/Gain from sale of business
1
-
-
-
1
Depreciation
9
8
8
8
33
Amortization
25
26
27
26
104
Other non-operating expense, excluding interest income
-
(1
)
(1
)
-
(2
)
EBITDA
25
28
32
53
138
Share-based Compensation
1
2
2
1
6
Restructuring & Realignment
2
3
2
3
10
Special Charges
-
1
12
1
14
Loss/(Gain) from sale of business
(1
)
-
-
-
(1
)
Adjusted EBITDA
27
34
48
58
167
Revenue
314
346
348
383
1,391
Adjusted EBITDA Margin
8.6
%
9.8
%
13.8
%
15.1
%
12.0
%
Xylem Inc. Non-GAAP Reconciliation EBITDA and
Adjusted EBITDA by Quarter ($ Millions) Integrated Solutions &
Services
2023
Q1 Q2 Q3 Q4 Total Operating Income
-
(7
)
(3
)
(10
)
Operating Margin
0.0
%
-5.6
%
-0.8
%
-2.0
%
Depreciation
-
8
30
38
Amortization
-
12
36
48
EBITDA
-
13
63
-
76
Share-based Compensation
-
3
3
6
Restructuring & Realignment
-
7
8
15
Special Charges
-
7
9
16
Adjusted EBITDA
-
30
83
-
113
Revenue
-
125
368
493
Adjusted EBITDA Margin
24.0
%
22.6
%
22.9
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231030144694/en/
Media Houston Spencer +1 (914) 323-5723
houston.spencer@xylem.com
Investors Andrea van der Berg +1 (914) 260-8612
andrea.vanderberg@xylem.com
Xylem (NYSE:XYL)
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