UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 2, 2024
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(202 ) 869-9150
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange of which registered | ||||||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
| Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
| Item 2.02 | Results of Operations and Financial Condition | ||||
On May 2, 2024, Xylem Inc. issued a press release announcing its financial results for the quarter ended March 31, 2024. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits | ||||
(d) Exhibits.
Exhibit No. | Description | ||||
| Press Release issued by Xylem Inc. on May 2, 2024. | |||||
| 104.0 | The cover page from Xylem Inc.'s Form 8-K, formatted in Inline XBRL. | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| XYLEM INC. | ||||||||||||||
| Date: May 2, 2024 | By: | /s/ William K. Grogan | ||||||||||||
| William K. Grogan | ||||||||||||||
Senior Vice President & Chief Financial Officer (Authorized Officer of Registrant) | ||||||||||||||
Exhibit 99.1
Xylem Inc.
301 Water Street SE, Suite, 200
Washington, DC 20003
Tel +1.202.869.9150
Contacts: Media Investors
Houston Spencer +1 (914) 323-5723 Andrea van der Berg +1 (914) 260-8612
houston.spencer@xylem.com andrea.vanderberg@xylem.com
Xylem Reports First Quarter 2024 Results and Raises Full-Year Guidance
•Orders of $2.2 billion, up 43% on a reported basis and 3% organically
•Revenue of $2.0 billion, up 40% on a reported basis and 7% organically
•Earnings per share of $0.63, up 17%; $0.90 on an adjusted basis, up 14%
•Raising full-year revenue guidance to approximately $8.5B, up 15% to 16%, with organic revenue growth of 4% to 6%, up from 3% to 5%
•Lifting full-year adjusted EPS guidance to $4.10 to $4.25, from $4.00 to $4.20
WASHINGTON, D.C., (May 2, 2024) – 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.
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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
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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.
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XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) (in millions, except per share data)
| Three Months | |||||||||||
| For the period 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 business | (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 | |||||||||
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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 | |||||||
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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 | |||||||
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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.
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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 | |||||||||||||||||||||||||||||||||||||||||||||||
| Orders | Orders | Change 2024 v. 2023 | % Change 2024 v. 2023 | Acquisitions/ Divestitures | FX Impact | Change Adj. 2024 v. 2023 | % Change 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 & 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 | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | Revenue | Change 2024 v. 2023 | % Change 2024 v. 2023 | Acquisitions / Divestitures | FX Impact | Change Adj. 2024 v. 2023 | % Change 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 | % | |||||||||||||||||||||||||||||||||||||||||
8
Xylem Inc. Non-GAAP Reconciliation
Adjusted Operating Income
($ Millions)
| Q1 | |||||||||||
| 2024 | 2023 | ||||||||||
| Total Revenue | |||||||||||
| • Total Xylem | 2,033 | 1,448 | |||||||||
| • Water Infrastructure | 574 | 410 | |||||||||
| • Applied Water | 436 | 453 | |||||||||
| • Measurement and Control Solutions | 462 | 378 | |||||||||
| • Water Solutions and Services | 561 | 207 | |||||||||
| Operating Income | |||||||||||
| • Total Xylem | 209 | 131 | |||||||||
| • Water Infrastructure | 60 | 46 | |||||||||
| • Applied Water | 61 | 83 | |||||||||
| • Measurement and Control Solutions | 70 | 26 | |||||||||
| • Water Solutions and Services | 50 | 18 | |||||||||
| • Corporate/Other | (32) | (42) | |||||||||
| Operating Margin | |||||||||||
| • Total Xylem | 10.3 | % | 9.0 | % | |||||||
| • Water Infrastructure | 10.5 | % | 11.2 | % | |||||||
| • Applied Water | 14.0 | % | 18.3 | % | |||||||
| • Measurement and Control Solutions | 15.2 | % | 6.9 | % | |||||||
| • Water Solutions and Services | 8.9 | % | 8.7 | % | |||||||
| • Corporate/Other | NM | NM | |||||||||
| Special Charges | |||||||||||
| • Total Xylem | 16 | 25 | |||||||||
| • Water Infrastructure | 2 | — | |||||||||
| • Applied Water | — | — | |||||||||
| • Measurement and Control Solutions | — | 2 | |||||||||
| • Water Solutions and Services | 9 | — | |||||||||
| • Corporate/Other | 5 | 23 | |||||||||
| Restructuring & Realignment Costs | |||||||||||
| • Total Xylem | 15 | 11 | |||||||||
| • Water Infrastructure | 7 | 3 | |||||||||
| • Applied Water | 2 | 3 | |||||||||
| • Measurement and Control Solutions | 2 | 5 | |||||||||
| • Water Solutions and Services | 3 | — | |||||||||
| • Corporate/Other | 1 | — | |||||||||
| Purchase Accounting Intangible Amortization Adjustment | |||||||||||
| • Total Xylem | 54 | 18 | |||||||||
| • Water Infrastructure | 19 | 1 | |||||||||
| • Applied Water | — | — | |||||||||
| • Measurement and Control Solutions | 14 | 14 | |||||||||
| • Water Solutions and Services | 21 | 3 | |||||||||
| • Corporate/Other | — | — | |||||||||
| Adjusted Operating Income | |||||||||||
| • Total Xylem | 294 | 185 | |||||||||
| • Water Infrastructure | 88 | 50 | |||||||||
| • Applied Water | 63 | 86 | |||||||||
| • Measurement and Control Solutions | 86 | 47 | |||||||||
| • Water Solutions and Services | 83 | 21 | |||||||||
| • Corporate/Other | (26) | (19) | |||||||||
| Adjusted Operating Margin | |||||||||||
| • Total Xylem | 14.5 | % | 12.8 | % | |||||||
| • Water Infrastructure | 15.3 | % | 12.2 | % | |||||||
| • Applied Water | 14.4 | % | 19.0 | % | |||||||
| • Measurement and Control Solutions | 18.6 | % | 12.4 | % | |||||||
| • Water Solutions and Services | 14.8 | % | 10.1 | % | |||||||
| • Corporate/Other | NM | NM | |||||||||
9
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 | 243.1 | 243.1 | 181.3 | 181.3 | |||||||||||||||||||||||||||||||
| Diluted EPS | $ | 0.63 | $ | 0.27 | $ | 0.90 | $ | 0.54 | $ | 0.25 | $ | 0.79 | |||||||||||||||||||||||
(1) 2023 amounts have been recast to adjust for historical purchase accounting intangible amortization.
| 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 - PP&E | (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 & Realignment Charges - non-cash stock acceleration | (2) | — | |||||||||
| Special Charges - non-cash impairment | (1) | (2) | |||||||||
| Net Income, excluding gain on sale of businesses, non-cash impairment charges and non-cash pension buyout settlement | $ | 161 | $ | 101 | |||||||
| Operating Cash Flow Conversion | 58 | % | (19) | % | |||||||
| Free Cash Flow Conversion | 9 | % | (35) | % | |||||||
10
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 | % | |||||||||||||||||||
11
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Water Infrastructure
($ Millions)
| 2024 | |||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | |||||||||||||||||||||||||
| Operating Income | 60 | 60 | |||||||||||||||||||||||||||
| Operating Margin | 10.5 | % | 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 | % | 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 | % | |||||||||||||||||||
12
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Applied Water
($ Millions)
| 2024 | |||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | |||||||||||||||||||||||||
| Operating Income | 61 | 61 | |||||||||||||||||||||||||||
| Operating Margin | 14.0 | % | 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 | % | 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 | % | |||||||||||||||||||
13
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Measurement and Control Solutions
($ Millions)
| 2024 | |||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | |||||||||||||||||||||||||
| Operating Income | 70 | 70 | |||||||||||||||||||||||||||
| Operating Margin | 15.2 | % | 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 | % | 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 | % | |||||||||||||||||||
14
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Water Solutions and Services
($ Millions)
| 2024 | |||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | |||||||||||||||||||||||||
| Operating Income | 50 | 50 | |||||||||||||||||||||||||||
| Operating Margin | 8.9 | % | 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 | % | 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 | % | |||||||||||||||||||
| 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 | % | |||||||||||||||||||
15