View:
United States securities and exchange commission logo
August 1, 2022
Sandra Rowland
Chief Financial Officer
Xylem Inc.
1 International Drive
Rye Brook, NY 10573
Re: Xylem Inc.
Form 10-K for the
Year Ended December 31, 2021
Filed February 25,
2022
Form 8-K furnished
May 4, 2022
File No. 001-35229
Dear Ms. Rowland:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Year Ended December 31, 2021
Risk Factors
We are exposed to geopolitical, regulatory, economic, foreign exchange
and other risks
associated with our global sales and operations, page 15
1. You state that many of
your suppliers are located outside of the U.S. Please tell us
whether you import any
supplies from the Xinjiang region in China. If so, please revise
your next Form 10-Q
filing to include a discussion regarding any material impact of the
recently enacted Uyghur
Forced Labor Prevention Act (UFLPA) on your ability to obtain
supplies and fulfill
customer orders. Also, if applicable, discuss any efforts taken to
mitigate such impact
and where possible quantify the impact to your business.
Sandra Rowland
FirstName
Xylem Inc.LastNameSandra Rowland
Comapany
August NameXylem Inc.
1, 2022
August
Page 2 1, 2022 Page 2
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview, page 34
2. You state that throughout 2021 your operating costs have been impacted
by price inflation
and you expect this to continue into the foreseeable future. You refer
to mitigating
inflation headwinds but it is unclear what specific actions you have
taken. Please revise to
identify specific actions planned or taken to mitigate inflationary
pressures. Also, include
a discussion of the principal factors contributing to the inflationary
pressures you have
experienced and clarify the impact to your operations.
Key Performance Indicators and non-GAAP Measures, page 36
3. We note several of your non-GAAP measures, including segment non-GAAP
measures,
exclude special charges. Given the significance of this adjustment for
certain periods and
considering the various costs that can be included in this adjustment
as per your definition
on page 37, please revise to include a breakdown of the amounts
included in the "special
charges" adjustment for each period presented.
Results of Operations, page 39
4. We note you discuss various factors, including offsetting factors,
that impacted your
segment organic growth based on both geography or application.
Similarly, your SG&A
expense discussion includes several factors, including offsetting
factors, that contributed
to the change in such expense. When there are material changes to a
line item, please
describe the underlying reasons for such changes in both quantitative
and qualitative
terms, including the impact of offsetting factors. Refer to Item
303(b) of Regulation S-K.
Operating Income and Adjusted EBITDA, page 44
5. We note you present non-GAAP measures of EBITDA and adjusted EBITDA
for each
segment. Please revise to include a reconciliation for each segment to
the most
comparable segment GAAP measure of segment operating income. Refer to
Item
10(e)(1)(i)(B) of Regulation S-K. We also note that the reconciliation
of segment
EBITDA and segment adjusted EBITDA in the Form 8-K furnished on May 4,
2022
appears to be reconciled to a non-GAAP segment measure of pre-tax
(loss) income.
Please explain or revise. Refer to Question 104.03 of the non-GAAP
C&DIs.
6. You state here that the increase in adjusted operating margin was
primarily due to cost
reductions from your productivity, restructuring and other cost saving
initiatives,
favorable volume and price realization, which were partially offset by
cost inflation and
increased spending on strategic investments. Please revise to include
a quantified
discussion regarding the impact of these factors on your GAAP
operating income. Similar
revisions should be made to your segment discussion beginning on page
47.
Sandra Rowland
Xylem Inc.
August 1, 2022
Page 3
Form 8-K furnished May 4, 2022
Exhibit 99.1, page 1
7. We note your discussion of adjusted EBITDA margin without a similar
discussion of the
comparable GAAP measure net income margin. Also, you discuss changes in
segment
adjusted EBITDA margin before discussing any change in the comparable
GAAP measure
of segment operating margin. Please revise to present all GAAP measures
and
discussions of such measures with greater prominence to the non-GAAP
measures. Refer
to Question 102.10 of the non-GAAP C&DIs.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact David Edgar, Senior Staff Accountant, at (202) 551-3459
or Kathleen
Collins, Accounting Branch Chief, at (202) 551-3499 with any questions.
Sincerely,
FirstName LastNameSandra Rowland
Division of
Corporation Finance
Comapany NameXylem Inc.
Office of Technology
August 1, 2022 Page 3
cc: Dorothy Capers
FirstName LastName