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Xylem Reports Third Quarter 2024 Results and Narrows Full-Year Guidance

  • Revenue of $2.1 billion, up 1% on a reported and organic basis
  • Earnings per share of $0.89, up 41%; $1.11 on an adjusted basis, up 12%
  • Updated full-year revenue guidance of $8.5 billion, up approximately 15% YoY, with organic revenue growth of ~5%
  • Narrowing full-year adjusted EPS guidance to $4.22 to $4.24, from $4.18 to $4.28

Xylem Inc. (NYSE: XYL), a leading global water technology company that empowers customers and communities to build a more water-secure world, today reported third-quarter results. The Company’s total revenue was $2.1 billion, up one percent on a reported and organic basis, and third-quarter earnings per share were up 41 percent on a reported basis and 12 percent on an adjusted basis. Orders grew 8 percent on a reported and organic basis.

“The team delivered strong results in the quarter, with earnings at the high end of guidance, and margin expansion beating our expectations,” said Matthew Pine, Xylem’s President and CEO. “Demand remained resilient, reflected in robust orders growth in all segments, and a healthy book-to-bill. Moderated organic revenue growth in the quarter was driven largely by project timing.”

“Outperformance on margin and earnings was further reinforced by momentum in our integration of Evoqua and by initial impacts from our broader simplification efforts,” Pine continued. “Evoqua integration is ahead of schedule and synergy capture continues to accelerate, giving us confidence in closing the year above target. As a result, we are narrowing our full-year earnings guidance, with continuing focus on sustainable, high-quality earnings and profitable growth.”

Net income was $217 million, or $0.89 per share. Net income margin increased 300 basis points to 10.3 percent. These results are driven by strong operational performance. Adjusted net income was $269 million, or $1.11 per share, which excludes the impacts of amortization of acquired intangible assets, restructuring and realignment costs, gain/loss from sale of businesses, special charges, and tax-related special items.

Third-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin was 21.2 percent, ­reflecting a year-over-year increase of 140 basis points. Productivity savings and price drove the margin expansion, exceeding the impact of inflation, strategic investments and mix.

Outlook

Xylem expects full-year 2024 revenue of $8.5 billion, up approximately 15 percent on a reported basis and up approximately 5 percent on an organic basis.

Full-year 2024 adjusted EBITDA margin is expected to be approximately 20.5 percent. This results in adjusted earnings per share of $4.22 to $4.24 from the previous range of $4.18 to $4.28. Full-year free cash flow conversion to net income is expected to be at least 120 percent.

Further 2024 planning assumptions are included in Xylem’s third-quarter 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.

Supplemental information on Xylem’s third-quarter earnings and reconciliations for certain non-GAAP items is posted at www.xylem.com/investors.

About Xylem

Xylem (XYL) is a Fortune 500 global water solutions company that empowers customers and communities to build a more water-secure world. Our 23,000 diverse employees delivered combined pro forma revenue of $8.1 billion in 2023, optimizing water and resource management with innovation and expertise. Join us 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, interest rates, inflation 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 ongoing and possible escalation of the conflicts involving Russia and Ukraine, and the Middle East, as well as regulatory, economic and other risks associated with our global sales and operations, including those related to domestic content requirements applicable to projects receiving governmental funding; 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 connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including electronic components (in particular, semiconductors); disruptions in operations at our facilities or that of third parties upon which we rely; uncertainty related to the realization of the benefits and synergies from our acquisition of Evoqua Water Technologies Corp.; safe and compliant treatment and handling of water, wastewater and hazardous materials; failure to successfully execute large projects, including with respect to meeting performance guarantees and customers’ budgets, timelines and safety requirements; our ability to retain and attract leadership and other diverse and key talent, as well as competition for overall talent and labor; defects, security, warranty and liability claims, and recalls related to our products; uncertainty around restructuring and realignment actions and related costs and savings; our ability to execute strategic investments for growth, including related to acquisitions and divestitures; availability, regulation or interference with radio spectrum used by certain of our products; volatility in served markets or impacts on our business and operations due to weather conditions, including the effects of climate change; risks related to our sustainability commitments and related disclosures; fluctuations in foreign currency exchange rates; difficulty predicting our financial results; risk of future impairments to goodwill and other intangible assets; changes in our effective tax rates or tax expenses; financial market risks related to our pension and other defined benefit plans; failure to comply with, or changes in, laws or regulations, including those pertaining to our business conduct, operations, products and services, including anti-corruption, data privacy and security, trade, competition, the environment, climate change and health and safety; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; matters related to intellectual property infringement or expiration of rights; and other factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 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, to our business, operating results, financial condition, outlook, or strategy, to our impacts on sustainability matters or other parties, 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 periods ended September 30,

2024

 

 

2023

 

2024

 

 

2023

Revenue from products

$

1,744

 

 

$

1,720

 

$

5,236

 

 

$

4,535

Revenue from services

 

360

 

 

 

356

 

 

1,070

 

 

 

711

Revenue

 

2,104

 

 

 

2,076

 

 

6,306

 

 

 

5,246

Cost of revenue from products

 

1,047

 

 

 

1,043

 

 

3,147

 

 

 

2,730

Cost of revenue from services

 

273

 

 

 

269

 

 

804

 

 

 

555

Cost of revenue

 

1,320

 

 

 

1,312

 

 

3,951

 

 

 

3,285

Gross profit

 

784

 

 

 

764

 

 

2,355

 

 

 

1,961

Selling, general and administrative expenses

 

445

 

 

 

491

 

 

1,404

 

 

 

1,291

Research and development expenses

 

55

 

 

 

61

 

 

172

 

 

 

172

Restructuring and asset impairment charges

 

4

 

 

 

21

 

 

37

 

 

 

57

Operating income

 

280

 

 

 

191

 

 

742

 

 

 

441

Interest expense

 

10

 

 

 

14

 

 

35

 

 

 

35

Other non-operating income, net

 

1

 

 

 

8

 

 

11

 

 

 

19

(Loss) on sale of businesses

 

(2

)

 

 

 

 

(6

)

 

 

Income before taxes

 

269

 

 

 

185

 

 

712

 

 

 

425

Income tax expense

 

52

 

 

 

33

 

 

148

 

 

 

82

Net income

$

217

 

 

$

152

 

$

564

 

 

$

343

Earnings per share:

 

 

 

 

 

 

 

Basic

$

0.89

 

 

$

0.63

 

$

2.33

 

 

$

1.64

Diluted

$

0.89

 

 

$

0.63

 

$

2.32

 

 

$

1.63

Weighted average number of shares:

 

 

 

 

 

 

 

Basic

 

242.9

 

 

 

240.9

 

 

242.5

 

 

 

208.9

Diluted

 

243.8

 

 

 

242.2

 

 

243.4

 

 

 

210.1

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except per share amounts)

 

September 30,

2024

 

December 31,

2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

989

 

 

$

1,019

 

Receivables, less allowances for discounts, returns and credit losses of $60 and $56 in 2024 and 2023, respectively

 

1,707

 

 

 

1,617

 

Inventories

 

1,091

 

 

 

1,018

 

Prepaid and other current assets

 

226

 

 

 

230

 

Total current assets

 

4,013

 

 

 

3,884

 

Property, plant and equipment, net

 

1,158

 

 

 

1,169

 

Goodwill

 

7,593

 

 

 

7,587

 

Other intangible assets, net

 

2,326

 

 

 

2,529

 

Other non-current assets

 

956

 

 

 

943

 

Total assets

$

16,046

 

 

$

16,112

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

930

 

 

$

968

 

Accrued and other current liabilities

 

1,105

 

 

 

1,221

 

Short-term borrowings and current maturities of long-term debt

 

17

 

 

 

16

 

Total current liabilities

 

2,052

 

 

 

2,205

 

Long-term debt

 

1,977

 

 

 

2,268

 

Accrued post-retirement benefits

 

332

 

 

 

344

 

Deferred income tax liabilities

 

535

 

 

 

557

 

Other non-current accrued liabilities

 

550

 

 

 

562

 

Total liabilities

 

5,446

 

 

 

5,936

 

Stockholders’ equity:

 

 

 

Common stock – par value $0.01 per share:

 

 

 

Authorized 750.0 shares, issued 259.2 shares and 257.6 shares in 2024 and 2023, respectively

 

3

 

 

 

3

 

Capital in excess of par value

 

8,673

 

 

 

8,564

 

Retained earnings

 

2,902

 

 

 

2,601

 

Treasury stock – at cost 16.2 shares and 16.0 shares in 2024 and 2023, respectively

 

(753

)

 

 

(733

)

Accumulated other comprehensive loss

 

(232

)

 

 

(269

)

Total stockholders’ equity

 

10,593

 

 

 

10,166

 

Non-controlling interests

 

7

 

 

 

10

 

Total equity

 

10,600

 

 

 

10,176

 

Total liabilities and stockholders’ equity

$

16,046

 

 

$

16,112

 

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions)

For the nine months ended September 30,

2024

 

2023

Operating Activities

 

 

 

Net income

$

564

 

 

$

343

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation

 

191

 

 

 

132

 

Amortization

 

229

 

 

 

167

 

Share-based compensation

 

43

 

 

 

45

 

Restructuring and asset impairment charges

 

37

 

 

 

57

 

Loss from sale of business

 

6

 

 

 

 

Other, net

 

(4

)

 

 

(20

)

Payments for restructuring

 

(24

)

 

 

(12

)

Changes in assets and liabilities (net of acquisitions):

 

 

 

Changes in receivables

 

(101

)

 

 

(142

)

Changes in inventories

 

(88

)

 

 

(41

)

Changes in accounts payable

 

(31

)

 

 

15

 

Changes in accrued and deferred taxes

 

(11

)

 

 

(77

)

Other, net

 

(123

)

 

 

(85

)

Net Cash – Operating activities

 

688

 

 

 

382

 

Investing Activities

 

 

 

Capital expenditures

 

(221

)

 

 

(177

)

Acquisitions of businesses, net of cash acquired

 

(5

)

 

 

(476

)

Proceeds from sale of business

 

11

 

 

 

103

 

Proceeds from the sale of property, plant and equipment

 

3

 

 

 

2

 

Cash received from investments

 

5

 

 

 

1

 

Cash paid for investments

 

(8

)

 

 

(1

)

Cash paid for equity investments

 

(4

)

 

 

(58

)

Cash received from interest rate swaps

 

 

 

 

38

 

Cash received from cross-currency swaps

 

25

 

 

 

25

 

Other, net

 

1

 

 

 

4

 

Net Cash – Investing activities

 

(193

)

 

 

(539

)

Financing Activities

 

 

 

Short-term debt issued, net

 

 

 

 

1

 

Short-term debt repaid

 

(268

)

 

 

 

Long-term debt issued, net

 

 

 

 

275

 

Long-term debt repaid

 

(13

)

 

 

(155

)

Repurchase of common stock

 

(19

)

 

 

(10

)

Proceeds from exercise of employee stock options

 

66

 

 

 

45

 

Dividends paid

 

(263

)

 

 

(219

)

Other, net

 

(23

)

 

 

(8

)

Net Cash – Financing activities

 

(520

)

 

 

(71

)

Effect of exchange rate changes on cash

 

(5

)

 

 

(11

)

Net change in cash and cash equivalents

 

(30

)

 

 

(239

)

Cash and cash equivalents at beginning of year

 

1,019

 

 

 

944

 

Cash and cash equivalents at end of period

$

989

 

 

$

705

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$

49

 

 

$

43

 

Income taxes (net of refunds received)

$

160

 

 

$

159

 

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 that 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 non-recurring costs incurred by the Company, such as those related to acquisitions and integrations, divestitures and non-cash impairment charges.
 
“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 and 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 2024 v. 2023 2024 v. 2023 Book-to-Bill FX Impact Adj. 2024 v. 2023 Adj. 2024 v. 2023

2024

2023

Nine Months Ended September 30
Xylem Inc.

6,534

5,457

1,077

 

20

%

104

%

(886

)

6

 

197

 

4

%

20

%

Water Infrastructure

2,036

1,680

356

 

21

%

111

%

(243

)

(1

)

112

 

7

%

21

%

Applied Water

1,382

1,350

32

 

2

%

103

%

-

 

3

 

35

 

3

%

3

%

Measurement and Control Solutions

1,199

1,228

(29

)

(2

%)

86

%

-

 

(1

)

(30

)

(2

%)

(2

%)

Water Solutions and Services

1,917

1,199

718

 

60

%

110

%

(643

)

5

 

80

 

7

%

60

%

 
Quarter Ended September 30
Xylem Inc.

2,201

2,031

170

 

8

%

105

%

-

 

(4

)

166

 

8

%

8

%

Water Infrastructure

700

656

44

 

7

%

112

%

-

 

(4

)

40

 

6

%

6

%

Applied Water

437

422

15

 

4

%

98

%

-

 

-

 

15

 

4

%

4

%

Measurement and Control Solutions

386

343

43

 

13

%

84

%

-

 

(2

)

41

 

12

%

12

%

Water Solutions and Services

678

610

68

 

11

%

118

%

-

 

2

 

70

 

11

%

11

%

 
Quarter Ended June 30
Xylem Inc.

2,087

1,856

231

 

12

%

96

%

(265

)

11

 

(23

)

(1

%)

13

%

Water Infrastructure

690

563

127

 

23

%

109

%

(89

)

5

 

43

 

8

%

23

%

Applied Water

465

445

20

 

4

%

102

%

-

 

3

 

23

 

5

%

5

%

Measurement and Control Solutions

384

470

(86

)

(18

%)

80

%

-

 

1

 

(85

)

(18

%)

(18

%)

Water Solutions and Services

548

378

170

 

45

%

91

%

(176

)

2

 

(4

)

(1

%)

46

%

 
Quarter Ended March 31
Xylem Inc.

2,246

1,570

676

 

43

%

110

%

(621

)

(1

)

54

 

3

%

43

%

Water Infrastructure

646

461

185

 

40

%

113

%

(154

)

(2

)

29

 

6

%

40

%

Applied Water

480

483

(3

)

(1

%)

110

%

-

 

-

 

(3

)

(1

%)

(1

%)

Measurement and Control Solutions

429

415

14

 

3

%

93

%

-

 

-

 

14

 

3

%

3

%

Water Solutions and Services

691

211

480

 

227

%

123

%

(467

)

1

 

14

 

7

%

228

%

Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic and 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 2024 v. 2023

2024 v. 2023

FX Impact Adj. 2024 v. 2023 Adj. 2024 v. 2023

2024

2023

Nine Months Ended September 30
Xylem Inc.

6,306

5,246

1,060

 

20

%

(782

)

5

 

283

 

5

%

20

%

Water Infrastructure

1,828

1,541

287

 

19

%

(221

)

-

 

66

 

4

%

19

%

Applied Water

1,339

1,396

(57

)

(4

%)

-

 

1

 

(56

)

(4

%)

(4

%)

Measurement and Control Solutions

1,402

1,175

227

 

19

%

-

 

-

 

227

 

19

%

19

%

Water Solutions and Services

1,737

1,134

603

 

53

%

(561

)

4

 

46

 

4

%

54

%

 
Quarter Ended September 30
Xylem Inc.

2,104

2,076

28

 

1

%

-

 

(6

)

22

 

1

%

1

%

Water Infrastructure

623

612

11

 

2

%

-

 

(5

)

6

 

1

%

1

%

Applied Water

447

465

(18

)

(4

%)

-

 

(2

)

(20

)

(4

%)

(4

%)

Measurement and Control Solutions

458

413

45

 

11

%

-

 

(1

)

44

 

11

%

11

%

Water Solutions and Services

576

586

(10

)

(2

%)

-

 

2

 

(8

)

(1

%)

(1

%)

 
Quarter Ended June 30
Xylem Inc.

2,169

1,722

447

 

26

%

(302

)

13

 

158

 

9

%

27

%

Water Infrastructure

631

519

112

 

22

%

(84

)

6

 

34

 

7

%

23

%

Applied Water

456

478

(22

)

(5

%)

-

 

4

 

(18

)

(4

%)

(4

%)

Measurement and Control Solutions

482

384

98

 

26

%

-

 

2

 

100

 

26

%

26

%

Water Solutions and Services

600

341

259

 

76

%

(218

)

1

 

42

 

12

%

76

%

 
Quarter Ended March 31
Xylem Inc.

2,033

1,448

585

 

40

%

(480

)

(2

)

103

 

7

%

40

%

Water Infrastructure

574

410

164

 

40

%

(137

)

(1

)

26

 

6

%

40

%

Applied Water

436

453

(17

)

(4

%)

-

 

(1

)

(18

)

(4

%)

(4

%)

Measurement and Control Solutions

462

378

84

 

22

%

-

 

(1

)

83

 

22

%

22

%

Water Solutions and Services

561

207

354

 

171

%

(343

)

1

 

12

 

6

%

171

%

Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
 
Q3 2024 Q3 2023
As Reported Adjustments Adjusted As Reported Adjustments Adjusted
Total Revenue

 

2,104

 

 

-

 

 

2,104

 

 

2,076

 

 

-

 

 

2,076

 

Operating Income

 

280

 

 

70

 

a

 

350

 

 

191

 

 

124

 

a

 

315

 

Operating Margin

 

13.3

%

 

16.6

%

 

9.2

%

 

15.2

%

Interest Expense

 

(10

)

 

-

 

 

(10

)

 

(14

)

 

-

 

 

(14

)

Other Non-Operating Income (Expense)

 

1

 

 

-

 

 

1

 

 

8

 

 

-

 

 

8

 

Gain/(Loss) From Sale of Business

 

(2

)

 

2

 

b

 

-

 

 

-

 

 

-

 

 

-

 

Income before Taxes

 

269

 

 

72

 

 

341

 

 

185

 

 

124

 

 

309

 

Provision for Income Taxes

 

(52

)

 

(20

)

c

 

(72

)

 

(33

)

 

(36

)

c

 

(69

)

Net Income

 

217

 

 

52

 

 

269

 

 

152

 

 

88

 

 

240

 

Diluted Shares

 

243.8

 

 

243.8

 

 

242.2

 

 

242.2

 

Diluted EPS

$

0.89

 

$

0.22

 

$

1.11

 

$

0.63

 

$

0.36

 

$

0.99

 

 
 
 
Q3 YTD 2024 Q3 YTD 2023
As Reported Adjustments Adjusted As Reported Adjustments Adjusted
Total Revenue

 

6,306

 

 

-

 

 

6,306

 

 

5,246

 

 

-

 

 

5,246

 

Operating Income

 

742

 

 

254

 

a

 

996

 

 

441

 

 

318

 

a

 

759

 

Operating Margin

 

11.8

%

 

15.8

%

 

8.4

%

 

14.5

%

Interest Expense

 

(35

)

 

-

 

 

(35

)

 

(35

)

 

-

 

 

(35

)

Other Non-Operating Income (Expense)

 

11

 

 

-

 

 

11

 

 

19

 

 

-

 

 

19

 

Gain/(Loss) From Sale of Business

 

(6

)

 

6

 

b

 

-

 

 

-

 

 

-

 

 

-

 

Income before Taxes

 

712

 

 

260

 

 

972

 

 

425

 

 

318

 

 

743

 

Provision for Income Taxes

 

(148

)

 

(70

)

c

 

(218

)

 

(82

)

 

(75

)

c

 

(157

)

Net Income

 

564

 

 

190

 

 

754

 

 

343

 

 

243

 

 

586

 

Diluted Shares

 

243.4

 

 

243.4

 

 

210.1

 

 

210.1

 

Diluted EPS

$

2.32

 

$

0.78

 

$

3.10

 

$

1.63

 

$

1.16

 

$

2.79

 

 

a

Quarter-to-date:

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring & realignment costs: 2024 - $11 million and 2023 - $34 million

 

Special charges: 2024 - $6 million of acquisition & integration cost and $1 million of other special charges; 2023 - $23 million of acquisition & integration related costs and $1 million of asset impairment charges

 

Purchase accounting intangible amortization: 2024 - $52 million and 2023 - $66 million

 

Year-to-date:

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring & realignment costs: 2024 - $55 million and 2023 - $82 million

 

Special charges: 2024 - $31 million of acquisition & integration related costs, $4 million of other special charges and $1 million of asset impairment charges; 2023 - $107 million of acquisition & integration related costs, $6 million of other special charges and $3 million of intangible asset impairment charges

 

Purchase Accounting Intangible Amortization: 2024 - $163 million and 2023 - $120 million

b

Gain/Loss from sale of business as per income statement for all periods presented

c

Quarter-to-date: 2024 - Net tax impact on pre-tax adjustments (note a and b) of $17 million and other tax special items of $3 million; 2023 - Net tax impact on pre-tax adjustments (note a) of $28 million and other tax special items of $8 million

 

Year-to-date: 2024 - Net tax impact on pre-tax adjustments (note a and b) of $59 million and other tax special items of $11 million; 2023 - Net tax impact on pre-tax adjustments (note a) of $67 million and other tax special items of $8 million

Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow ($ Millions)
 

Q1

 

Q2

 

Q3

 

Year-to-Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

2023

 

2024

 

2023

 

2024

 

2023

 

2024

 

2023

 
Net Cash - Operating Activities

$89

 

($19

)

$288

 

$28

 

$311

 

$373

 

$688

 

$382

 

 
Capital Expenditures - PPE

(59

)

(33

)

(59

)

(42

)

(60

)

(57

)

(178

)

(132

)

Capital Expenditures - Software

(15

)

(16

)

(14

)

(12

)

(14

)

(17

)

(43

)

(45

)

Capital Expenditures

(74

)

(49

)

(73

)

(54

)

(74

)

(74

)

(221

)

(177

)

 
 
Free Cash Flow

$15

 

($68

)

$215

 

($26

)

$237

 

$299

 

$467

 

$205

 

 
Cash paid in excess of tax provision for R&D law change adoption

-

 

33

 

-

 

-

 

-

 

-

 

-

 

33

 

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

$15

 

($35

)

$215

 

$104

 

$237

 

$299

 

$467

 

$368

 

 
Net Income

$153

 

$99

 

$194

 

$92

 

$217

 

$152

 

$564

 

$343

 

Gain/(Loss) from sale of business

(5

)

-

 

1

 

-

 

(2

)

-

 

(6

)

-

 

 
Restructuring Charges - non-cash stock acceleration and asset impairment

(2

)

-

 

(16

)

(14

)

(3

)

(11

)

(21

)

(25

)

 
Special Charges - Inventory step-up

-

 

-

 

-

 

(15

)

-

 

(5

)

-

 

(20

)

Special Charges - non-cash impairment

(1

)

(2

)

-

 

-

 

-

 

(1

)

(1

)

(3

)

Net Income, excluding gain/(loss) on sale of businesses, non-cash restructuring and special charges

$161

 

$101

 

$209

 

$121

 

$222

 

$169

 

$592

 

$391

 

 
Operating Cash Flow Conversion

58

%

(19

%)

148

%

30

%

143

%

245

%

122

%

111

%

Free Cash Flow Conversion

9

%

(35

%)

103

%

86

%

107

%

177

%

79

%

94

%

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
 
 

2024

Q1 Q2 Q3 Q4 Total
 
Net Income

153

 

194

 

217

 

564

 

Net Income margin

7.5

%

8.9

%

10.3

%

8.9

%

Depreciation

61

 

62

 

68

 

191

 

Amortization

73

 

83

 

73

 

229

 

Interest Expense (Income), net

7

 

6

 

5

 

18

 

Income Tax Expense

43

 

53

 

52

 

148

 

EBITDA

337

 

398

 

415

 

-

 

1,150

 

Share-based Compensation

18

 

13

 

12

 

43

 

Restructuring & Realignment

15

 

29

 

11

 

55

 

Special Charges

16

 

13

 

7

 

36

 

Loss/(Gain) from sale of business

5

 

(1

)

2

 

6

 

Adjusted EBITDA

391

 

452

 

447

 

-

 

1,290

 

Revenue

2,033

 

2,169

 

2,104

 

6,306

 

Adjusted EBITDA Margin

19.2

%

20.8

%

21.2

%

20.5

%

 
 

2023

Q1 Q2 Q3 Q4 Total
 
Net Income

99

 

92

 

152

 

266

 

609

 

Net Income margin

6.8

%

5.3

%

7.3

%

12.6

%

8.3

%

Depreciation

28

 

41

 

63

 

61

 

193

 

Amortization

32

 

51

 

84

 

76

 

243

 

Interest Expense (Income), net

2

 

5

 

6

 

8

 

21

 

Income Tax Expense

27

 

22

 

33

 

(56

)

26

 

EBITDA

188

 

211

 

338

 

355

 

1,092

 

Share-based Compensation

12

 

15

 

18

 

15

 

60

 

Restructuring & Realignment

11

 

36

 

33

 

23

 

103

 

Special Charges

25

 

67

 

22

 

22

 

136

 

Loss/(Gain) from sale of business

-

 

-

 

-

 

1

 

1

 

Adjusted EBITDA

236

 

329

 

411

 

416

 

1,392

 

Revenue

1,448

 

1,722

 

2,076

 

2,118

 

7,364

 

Adjusted EBITDA Margin

16.3

%

19.1

%

19.8

%

19.6

%

18.9

%

 

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