Press release

Xylem Reports First Quarter 2024 Results and Raises Full-Year Guidance

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Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported first-quarter results. The Company’s total revenue of $2.0 billion surpassed prior guidance, on strong execution and demand. First-quarter earnings also exceeded Xylem’s previous guidance.

“The team outperformed on all metrics and continued Xylem’s strong momentum, including record first-quarter margins,” said Matthew Pine, Xylem’s president and CEO. “Operational performance was robust on healthy demand across most segments and regions. We’re also on track to capture the synergies of our integration with Evoqua, and are driving simplification across our business to lock in and extend our margin improvements over time.”

“We are raising our full-year guidance on the strength of the team’s demonstrated ability to capitalize on our markets’ resilient demand. We are confident that Xylem’s platform of solutions is uniquely positioned to enable our customers and communities to become more water-secure, even as the world becomes more water-challenged.”

Net income was $153 million, or $0.63 per share. Net income margin increased 70 basis points to 7.5 percent. These results are driven by strong operational performance, partially offset by higher purchase accounting intangible amortization. Adjusted net income was $219 million, or $0.90 per share, which excludes the impacts of restructuring and realignment costs, amortization of acquired intangible assets, loss from sale of businesses, special charges, and tax-related special items.

First-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin was 19.2 percent, reflecting a year-over-year increase of 290 basis points. Productivity savings, favorable mix, price and volume drove the margin expansion, exceeding the impact of inflation and strategic investments.

Outlook

Xylem now expects full-year 2024 revenue of approximately $8.5 billion, up approximately 15 to 16 percent on a reported basis and up approximately 4 to 6 percent on an organic basis. This represents an increase from the Company’s previous full-year guidance of 14 to 15 percent on a reported basis and 3 to 5 percent on an organic basis.

Full-year 2024 adjusted EBITDA margin is expected to be approximately 20.0 percent, lifted from the previous guide of 19.4 to 19.9 percent. This results in adjusted earnings per share of $4.10 to $4.25, raised from the previous range of $4.00 to $4.20. Full-year free cash flow conversion to net income is still expected to be approximately 115 percent.

Further 2024 planning assumptions are included in Xylem’s first-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 first-quarter 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 challenges with innovation and expertise. Our 23,000 diverse employees delivered combined pro forma revenue of $8.1 billion in 2023. 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 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)

 

For the three months ended March 31,

 

2024

 

 

 

2023

Revenue from products

$

1,690

 

 

$

1,308

Revenue from services

 

343

 

 

 

140

Revenue

 

2,033

 

 

 

1,448

Cost of revenue from products

 

1,021

 

 

 

791

Cost of revenue from services

 

260

 

 

 

111

Cost of revenue

 

1,281

 

 

 

902

Gross profit

 

752

 

 

 

546

Selling, general and administrative expenses

 

474

 

 

 

354

Research and development expenses

 

59

 

 

 

53

Restructuring and asset impairment charges

 

10

 

 

 

8

Operating income

 

209

 

 

 

131

Interest expense

 

14

 

 

 

9

Other non-operating income, net

 

6

 

 

 

4

(Loss) on sale of businesses

 

(5

)

 

 

Income before taxes

 

196

 

 

 

126

Income tax expense

 

43

 

 

 

27

Net income

$

153

 

 

$

99

Earnings per share:

 

 

 

Basic

$

0.63

 

 

$

0.55

Diluted

$

0.63

 

 

$

0.54

Weighted average number of shares:

 

 

 

Basic

 

241.9

 

 

 

180.4

Diluted

 

243.0

 

 

 

181.3

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except per share amounts)

 

 

March 31,

2024

 

December 31,

2023

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

947

 

 

$

1,019

 

Receivables, less allowances for discounts, returns and credit losses of $46 and $56 in 2024 and 2023, respectively

 

1,641

 

 

 

1,617

 

Inventories

 

1,039

 

 

 

1,018

 

Prepaid and other current assets

 

266

 

 

 

230

 

Total current assets

 

3,893

 

 

 

3,884

 

Property, plant and equipment, net

 

1,141

 

 

 

1,169

 

Goodwill

 

7,509

 

 

 

7,587

 

Other intangible assets, net

 

2,454

 

 

 

2,529

 

Other non-current assets

 

927

 

 

 

943

 

Total assets

$

15,924

 

 

$

16,112

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

948

 

 

$

968

 

Accrued and other current liabilities

 

1,098

 

 

 

1,221

 

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

 

285

 

 

 

16

 

Total current liabilities

 

2,331

 

 

 

2,205

 

Long-term debt

 

1,985

 

 

 

2,268

 

Accrued post-retirement benefits

 

323

 

 

 

344

 

Deferred income tax liabilities

 

558

 

 

 

557

 

Other non-current accrued liabilities

 

524

 

 

 

562

 

Total liabilities

 

5,721

 

 

 

5,936

 

Stockholders’ equity:

 

 

 

Common stock – par value $0.01 per share:

 

 

 

Authorized 750.0 shares, issued 258.6 shares and 257.6 shares in 2024 and 2023, respectively

 

3

 

 

 

3

 

Capital in excess of par value

 

8,618

 

 

 

8,564

 

Retained earnings

 

2,667

 

 

 

2,601

 

Treasury stock – at cost 16.1 shares and 16.0 shares in 2024 and 2023, respectively

 

(748

)

 

 

(733

)

Accumulated other comprehensive loss

 

(345

)

 

 

(269

)

Total stockholders’ equity

 

10,195

 

 

 

10,166

 

Non-controlling interests

 

8

 

 

 

10

 

Total equity

 

10,203

 

 

 

10,176

 

Total liabilities and stockholders’ equity

$

15,924

 

 

$

16,112

 

XYLEM INC. AND SUBSIDIARIES

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

 

For the three months ended March 31,

 

2024

 

 

 

2023

 

Operating Activities

 

 

 

Net income

$

153

 

 

$

99

 

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

 

 

 

Depreciation

 

61

 

 

 

28

 

Amortization

 

73

 

 

 

32

 

Share-based compensation

 

18

 

 

 

12

 

Restructuring and asset impairment charges

 

10

 

 

 

8

 

Loss from sale of business

 

5

 

 

 

 

Other, net

 

(2

)

 

 

3

 

Payments for restructuring

 

(11

)

 

 

(6

)

Changes in assets and liabilities (net of acquisitions):

 

 

 

Changes in receivables

 

(47

)

 

 

(28

)

Changes in inventories

 

(52

)

 

 

(55

)

Changes in accounts payable

 

6

 

 

 

(14

)

Other, net

 

(125

)

 

 

(98

)

Net Cash – Operating activities

 

89

 

 

 

(19

)

Investing Activities

 

 

 

Capital expenditures

 

(74

)

 

 

(49

)

Proceeds from sale of business

 

11

 

 

 

 

Proceeds from the sale of property, plant and equipment

 

1

 

 

 

 

Cash received from investments

 

2

 

 

 

2

 

Cash paid for investments

 

(2

)

 

 

 

Cash received from cross-currency swaps

 

11

 

 

 

11

 

Other, net

 

 

 

 

(1

)

Net Cash – Investing activities

 

(51

)

 

 

(37

)

Financing Activities

 

 

 

Long-term debt repaid

 

(5

)

 

 

 

Repurchase of common stock

 

(15

)

 

 

(8

)

Proceeds from exercise of employee stock options

 

33

 

 

 

7

 

Dividends paid

 

(88

)

 

 

(60

)

Other, net

 

(7

)

 

 

(2

)

Net Cash – Financing activities

 

(82

)

 

 

(63

)

Effect of exchange rate changes on cash

 

(28

)

 

 

12

 

Net change in cash and cash equivalents

 

(72

)

 

 

(107

)

Cash and cash equivalents at beginning of year

 

1,019

 

 

 

944

 

Cash and cash equivalents at end of period

$

947

 

 

$

837

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$

13

 

 

$

11

 

Income taxes (net of refunds received)

$

39

 

 

$

49

 

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

2024

2023

Quarter Ended March 31
Xylem Inc.

2,246

1,570

676

 

43

%

(621

)

(1

)

54

 

3

%

43

%

Water Infrastructure

646

461

185

 

40

%

(154

)

(2

)

29

 

6

%

40

%

Applied Water

480

483

(3

)

(1

%)

 

 

(3

)

(1

%)

(1

%)

Measurement and Control Solutions

429

415

14

 

3

%

 

 

14

 

3

%

3

%

Water Solutions and Services

691

211

480

 

227

%

(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

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 Operating Income ($ Millions)
 
 
Q1 Q2 Q3 Q4 YTD

2024

 

2023

 

2024

2023

 

2024

2023

 

2024

2023

 

2024

 

2023

 

Total Revenue
• Total Xylem

2,033

 

1,448

 

1,722

 

2,076

 

2,118

 

2,033

 

7,364

 

• Water Infrastructure

574

 

410

 

519

 

612

 

674

 

574

 

2,215

 

• Applied Water

436

 

453

 

478

 

465

 

457

 

436

 

1,853

 

• Measurement and Control Solutions

462

 

378

 

384

 

413

 

437

 

462

 

1,612

 

• Water Solutions and Services

561

 

207

 

341

 

586

 

550

 

561

 

1,684

 

• Corporate/ Other

 

 

 

 

 

 

 

 
Operating Income (Loss)
• Total Xylem

209

 

131

 

119

 

191

 

211

 

209

 

652

 

• Water Infrastructure

60

 

46

 

70

 

84

 

75

 

60

 

275

 

• Applied Water

61

 

83

 

84

 

73

 

70

 

61

 

310

 

• Measurement and Control Solutions

70

 

26

 

29

 

35

 

43

 

70

 

133

 

• Water Solutions and Services

50

 

18

 

26

 

33

 

55

 

50

 

132

 

• Corporate/ Other

(32

)

(42

)

(90

)

(34

)

(32

)

(32

)

(198

)

 
Operating Margin
• Total Xylem

10.3

%

9.0

%

N/A

6.9

%

N/A

9.2

%

N/A

10.0

%

10.3

%

8.9

%

• Water Infrastructure

10.5

%

11.2

%

N/A

13.5

%

N/A

13.7

%

N/A

11.1

%

10.5

%

12.4

%

• Applied Water

14.0

%

18.3

%

N/A

17.6

%

N/A

15.7

%

N/A

15.3

%

14.0

%

16.7

%

• Measurement and Control Solutions

15.2

%

6.9

%

N/A

7.6

%

N/A

8.5

%

N/A

9.8

%

15.2

%

8.3

%

• Water Solutions and Services

8.9

%

8.7

%

N/A

7.6

%

N/A

5.6

%

N/A

10.0

%

8.9

%

7.8

%

• Corporate/ Other

N/A

 

N/A

 

N/A

N/A

 

N/A

N/A

 

N/A

N/A

 

N/A

 

N/A

 

 
Special Charges
• Total Xylem

16

 

25

 

67

 

24

 

22

 

16

 

138

 

• Water Infrastructure

2

 

 

12

 

6

 

10

 

2

 

28

 

• Applied Water

 

 

 

 

 

 

 

• Measurement and Control Solutions

 

2

 

 

1

 

1

 

 

4

 

• Water Solutions and Services

9

 

 

7

 

9

 

6

 

9

 

22

 

• Corporate/ Other

5

 

23

 

48

 

8

 

5

 

5

 

84

 

 
Restructuring & Realignment Costs
• Total Xylem

15

 

11

 

37

 

34

 

24

 

15

 

106

 

• Water Infrastructure

7

 

3

 

2

 

2

 

11

 

7

 

18

 

• Applied Water

2

 

3

 

2

 

6

 

3

 

2

 

14

 

• Measurement and Control Solutions

2

 

5

 

3

 

6

 

5

 

2

 

19

 

• Water Solutions and Services

3

 

 

8

 

9

 

3

 

3

 

20

 

• Corporate/ Other

1

 

 

22

 

11

 

2

 

1

 

35

 

 
Purchase Accounting Intangible Amortization Adjustment
• Total Xylem

54

 

18

 

36

 

66

 

56

 

54

 

176

 

• Water Infrastructure

19

 

1

 

8

 

15

 

23

 

19

 

47

 

• Applied Water

 

 

 

 

 

 

 

• Measurement and Control Solutions

14

 

14

 

15

 

14

 

14

 

14

 

57

 

• Water Solutions and Services

21

 

3

 

13

 

37

 

19

 

21

 

72

 

• Corporate/ Other

 

 

 

 

 

 

 

 
Adjusted Operating Income (Loss)
• Total Xylem

294

 

185

 

259

 

315

 

313

 

294

 

1,072

 

• Water Infrastructure

88

 

50

 

92

 

107

 

119

 

88

 

368

 

• Applied Water

63

 

86

 

86

 

79

 

73

 

63

 

324

 

• Measurement and Control Solutions

86

 

47

 

47

 

56

 

63

 

86

 

213

 

• Water Solutions and Services

83

 

21

 

54

 

88

 

83

 

83

 

246

 

• Corporate/ Other

(26

)

(19

)

(20

)

(15

)

(25

)

(26

)

(79

)

 
Adjusted Operating Margin
• Total Xylem

14.5

%

12.8

%

N/A

15.0

%

N/A

15.2

%

N/A

14.8

%

14.5

%

14.6

%

• Water Infrastructure

15.3

%

12.2

%

N/A

17.7

%

N/A

17.5

%

N/A

17.7

%

15.3

%

16.6

%

• Applied Water

14.4

%

19.0

%

N/A

18.0

%

N/A

17.0

%

N/A

16.0

%

14.4

%

17.5

%

• Measurement and Control Solutions

18.6

%

12.4

%

N/A

12.2

%

N/A

13.6

%

N/A

14.4

%

18.6

%

13.2

%

• Water Solutions and Services

14.8

%

10.1

%

N/A

15.8

%

N/A

15.0

%

N/A

15.1

%

14.8

%

14.6

%

• Corporate/ Other

N/A

 

N/A

 

N/A

N/A

 

N/A

N/A

 

N/A

N/A

 

N/A

 

N/A

 

Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
 
Q1 2024 Q1 2023
As Reported Adjustments Adjusted As Reported Adjustments Adjusted
Total Revenue

 

2,033

 

 

 

 

2,033

 

 

1,448

 

 

 

 

1,448

 

Operating Income

 

209

 

 

85

 

a

 

294

 

 

131

 

 

54

 

a

 

185

 

Operating Margin

 

10.3

%

 

14.5

%

 

9.0

%

 

12.8

%

Interest Expense

 

(14

)

 

 

 

(14

)

 

(9

)

 

 

 

(9

)

Other Non-Operating Income (Expense)

 

6

 

 

 

 

6

 

 

4

 

 

 

 

4

 

Gain/(Loss) From Sale of Business

 

(5

)

 

5

 

 

 

 

 

 

 

 

 

Income before Taxes

 

196

 

 

90

 

 

286

 

 

126

 

 

54

 

 

180

 

Provision for Income Taxes

 

(43

)

 

(24

)

b

 

(67

)

 

(27

)

 

(9

)

b

 

(36

)

Net Income

 

153

 

 

66

 

 

219

 

 

99

 

 

45

 

 

144

 

Diluted Shares

 

243.0

 

 

243.0

 

 

181.3

 

 

181.3

 

Diluted EPS

$0.63

 

$0.27

 

$0.90

 

$0.54

 

$0.25

 

$0.79

 

a

Restructuring & realignment costs: 2024 – $15 million and 2023 – $11 million
Special charges: 2024 – $15 million of acquisition & integration cost and $1 million of asset impairment charges; 2023 – $23 million of acquisition & integration cost and $2 million of asset impairment charges.
Purchase accounting intangible amortization: 2024 – $54 million and 2023 – $18 million

b

2024 – Net tax impact on pre-tax adjustments (note a) of $22 million and other tax special items of $2 million; 2023 – Net tax impact on pre-tax adjustments (note a) of $9 million
Xylem Inc. Non-GAAP Reconciliation
Net Cash – Operating Activities vs. Free Cash Flow ($ Millions)
 
Q1
 

 

2024

 

 

2023

 

 
Net Cash – Operating Activities

$89

 

($19

)

 
Capital Expenditures – PPE

 

(59

)

 

(33

)

Capital Expenditures – Software

 

(15

)

 

(16

)

Capital Expenditures

 

(74

)

 

(49

)

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

 

 

 

33

 

 
Free Cash Flow

$15

 

($35

)

 
Net Income

$153

 

$99

 

Gain/(Loss) from sale of business

 

(5

)

 

 

Restructuring Charges – non-cash stock acceleration

 

(2

)

 

 

Special Charges – non-cash impairment

 

(1

)

 

(2

)

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

$161

 

$101

 

 
Operating Cash Flow Conversion

 

58

%

 

(19

%)

Free Cash Flow Conversion

 

9

%

 

(35

%)

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

2024

Q1 Q2 Q3 Q4 Total
 
Net Income

153

 

153

 

Net Income margin

7.5

%

7.5

%

Depreciation

61

 

61

 

Amortization

73

 

73

 

Interest Expense (Income), net

7

 

7

 

Income Tax Expense

43

 

43

 

EBITDA

337

 

 

 

 

337

 

Share-based Compensation

18

 

18

 

Restructuring & Realignment

15

 

15

 

Special Charges

16

 

16

 

Loss/(Gain) from sale of business

5

 

5

 

Adjusted EBITDA

391

 

 

 

 

391

 

Revenue

2,033

 

2,033

 

Adjusted EBITDA Margin

19.2

%

19.2

%

 
 
 

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

 

U.K. Pension Settlement

 

 

 

 

 

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

%

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

2024

Q1 Q2 Q3 Q4 Total
 
Operating Income

60

 

60

 

Operating Margin

10.5

%

N/A

 

N/A

 

N/A

 

10.5

%

Depreciation

10

 

10

 

Amortization

21

 

21

 

Other non-operating expense, excluding interest income

(1

)

(1

)

EBITDA

90

 

 

 

 

90

 

Share-based Compensation

3

 

3

 

Restructuring & Realignment

7

 

7

 

Special Charges

2

 

2

 

Adjusted EBITDA

102

 

 

 

 

102

 

Revenue

574

 

574

 

Adjusted EBITDA Margin

17.8

%

N/A

 

N/A

 

N/A

 

17.8

%

 

2023

Q1 Q2 Q3 Q4 Total
 
Operating Income

46

 

70

 

84

 

75

 

275

 

Operating Margin

11.2

%

13.5

%

13.7

%

11.1

%

12.4

%

Depreciation

7

 

8

 

10

 

9

 

34

 

Amortization

2

 

10

 

17

 

26

 

55

 

Other non-operating expense, excluding interest income

 

1

 

(1

)

3

 

3

 

EBITDA

55

 

89

 

110

 

113

 

367

 

Share-based Compensation

2

 

3

 

4

 

4

 

13

 

Restructuring & Realignment

3

 

2

 

2

 

11

 

18

 

Special Charges

 

12

 

6

 

10

 

28

 

Adjusted EBITDA

60

 

106

 

122

 

138

 

426

 

Revenue

410

 

519

 

612

 

674

 

2,215

 

Adjusted EBITDA Margin

14.6

%

20.4

%

19.9

%

20.5

%

19.2

%

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

2024

Q1 Q2 Q3 Q4 Total
 
Operating Income

61

 

61

 

Operating Margin

14.0

%

N/A

 

N/A

 

N/A

14.0

%

Depreciation

6

 

6

 

Amortization

1

 

1

 

Other non-operating expense, excluding interest income

 

 

EBITDA

68

 

68

 

Share-based Compensation

2

 

2

 

Restructuring & Realignment

2

 

2

 

Special Charges

 

 

Adjusted EBITDA

72

 

 

 

 

72

 

Revenue

436

 

436

 

Adjusted EBITDA Margin

16.5

%

N/A

 

N/A

 

N/A

 

16.5

%

 

2023

Q1 Q2 Q3 Q4 Total
 
Operating Income

83

 

84

 

73

 

70

 

310

 

Operating Margin

18.3

%

17.6

%

15.7

%

15.3

%

16.7

%

Depreciation

5

 

6

 

7

 

7

 

25

 

Amortization

1

 

1

 

 

1

 

3

 

Other non-operating expense, excluding interest income

(1

)

 

 

(1

)

(2

)

EBITDA

88

 

91

 

80

 

77

 

336

 

Share-based Compensation

1

 

 

1

 

1

 

3

 

Restructuring & Realignment

3

 

2

 

6

 

2

 

13

 

Special Charges

 

 

 

 

 

Adjusted EBITDA

92

 

93

 

87

 

80

 

352

 

Revenue

453

 

478

 

465

 

457

 

1,853

 

Adjusted EBITDA Margin

20.3

%

19.5

%

18.7

%

17.5

%

19.0

%

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

2024

Q1 Q2 Q3 Q4 Total
 
Operating Income

70

 

70

 

Operating Margin

15.2

%

N/A

 

N/A

 

N/A

 

15.2

%

Depreciation

6

 

6

 

Amortization

27

 

27

 

Other non-operating expense, excluding interest income

(1

)

(1

)

EBITDA

102

 

 

 

 

102

 

Share-based Compensation

1

 

1

 

Restructuring & Realignment

2

 

2

 

Special Charges

 

 

Adjusted EBITDA

105

 

 

 

 

105

 

Revenue

462

 

462

 

Adjusted EBITDA Margin

22.7

%

N/A

 

N/A

 

N/A

 

22.7

%

 

2023

Q1 Q2 Q3 Q4 Total
 
Operating Income

26

 

29

 

35

 

43

 

133

 

Operating Margin

6.9

%

7.6

%

8.5

%

9.8

%

8.3

%

(Loss)/Gain from sale of business

 

 

 

(1

)

(1

)

Depreciation

6

 

7

 

7

 

7

 

27

 

Amortization

24

 

24

 

24

 

25

 

97

 

Other non-operating expense, excluding interest income

 

(1

)

 

(3

)

(4

)

EBITDA

56

 

59

 

66

 

71

 

252

 

Share-based Compensation

2

 

2

 

1

 

2

 

7

 

Restructuring & Realignment

5

 

2

 

5

 

5

 

17

 

Special Charges

2

 

 

1

 

1

 

4

 

Loss/(Gain) from sale of business

 

 

 

1

 

1

 

Adjusted EBITDA

65

 

63

 

73

 

80

 

281

 

Revenue

378

 

384

 

413

 

437

 

1,612

 

Adjusted EBITDA Margin

17.2

%

16.4

%

17.7

%

18.3

%

17.4

%

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

2024

Q1 Q2 Q3 Q4 Total
 
Operating Income

50

 

50

 

Operating Margin

8.9

%

N/A

 

N/A

 

N/A

 

8.9

%

(Loss)/Gain from sale of business

(5

)

(5

)

Depreciation

38

 

38

 

Amortization

22

 

22

 

Other non-operating expense, excluding interest income

 

 

EBITDA

105

 

 

 

 

105

 

Share-based Compensation

3

 

3

 

Restructuring & Realignment

3

 

3

 

Special Charges

9

 

9

 

Loss/(Gain) from sale of business

5

 

5

 

Adjusted EBITDA

125

 

 

 

 

125

 

Revenue

561

 

561

 

Adjusted EBITDA Margin

22.3

%

N/A

 

N/A

 

N/A

 

22.3

%

 

2023

Q1 Q2 Q3 Q4 Total
 
Operating Income

18

 

26

 

33

 

55

 

132

 

Operating Margin

8.7

%

7.6

%

5.6

%

10.0

%

7.8

%

(Loss)/Gain from sale of business

 

 

 

 

Depreciation

10

 

19

 

39

 

37

 

105

 

Amortization

3

 

15

 

39

 

22

 

79

 

Other non-operating expense, excluding interest income

 

 

1

 

 

1

 

EBITDA

31

 

60

 

112

 

114

 

317

 

Share-based Compensation

1

 

4

 

3

 

2

 

10

 

Restructuring & Realignment

 

8

 

9

 

3

 

20

 

Special Charges

 

7

 

9

 

6

 

22

 

Loss/(Gain) from sale of business

 

 

 

 

 

Adjusted EBITDA

32

 

79

 

133

 

125

 

369

 

Revenue

207

 

341

 

586

 

550

 

1,684

 

Adjusted EBITDA Margin

15.5

%

23.2

%

22.7

%

22.7

%

21.9

%