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Xylem reports seven percent organic revenue increase and strong double-digit growth in 1st quarter 2018 earnings

May 1, 2018
  • First quarter 2018 reported net income was $79 million or $0.43 per share; Adjusted net income for the quarter was $93 million or $0.51 per share, up 31 percent versus the prior year period
  • Xylem delivered $1.2 billion in first quarter 2018 revenue, up 14 percent year-over-year including the impact of foreign exchange and acquisitions
  • Orders increased 10 percent organically
  • Reported and adjusted EBITDA increased 110 and 130 basis points, respectively

RYE BROOK, N.Y.--(BUSINESS WIRE)--May 1, 2018-- Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported first quarter 2018 net income of $79 million, or $0.43 per share. Excluding the impact of restructuring, realignment, acquisition-related charges and other special items, the Company delivered adjusted net income of $93 million or $0.51 per share in the quarter, a 31-percent increase over the prior year period. First quarter revenue was $1.2 billion, up 14 percent including the impact of foreign exchange and acquisitions. Revenue for the quarter increased seven percent on an organic basis, driven by a strong performance in the utilities and industrial end markets in nearly every geography and continued solid growth in the commercial and residential end markets. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) improved by 130 basis points year-over-year to 17.5 percent driven by volume leverage and savings from productivity initiatives. Reported operating margin in the quarter was 9.3 percent and adjusted operating margin increased 60 basis points year-over-year to 11.1 percent, including a 40-basis-point negative impact due to purchase accounting amortization.

“Focused execution and increased collaboration by our teams resulted in a strong start to 2018,” said Patrick Decker, President and Chief Executive Officer of Xylem. “We delivered another consecutive quarter of strong growth in revenue, orders and backlog, which sets us up for a solid year ahead. We’re encouraged by the continuing momentum we see in both the utilities and industrial end markets, where we are capturing share. In addition, our growing portfolio of advanced technologies is opening up new opportunities to expand our relationship with current customers and cultivate new ones. We continue to successfully execute against our productivity plans, which is helping to fund our growth initiatives and mitigate inflation. Looking ahead, we have strong confidence in our plans to drive continued profitable growth as we deepen our customer relationships and partnerships.”

Full-year 2018 Outlook

Xylem continues to forecast full-year 2018 revenue in the range of $5.1 to $5.2 billion, up eight to 10 percent, including growth from previously announced acquisitions. On an organic basis, Xylem continues to anticipate revenue growth in the range of four to six percent.

Full-year 2018 adjusted operating margin is expected to be in the range of 13.9 to 14.3 percent, resulting in adjusted earnings per share of $2.82 to $2.97. This represents an increase of 18 to 24 percent from Xylem’s 2017 adjusted results. The Company’s adjusted earnings outlook excludes projected integration, restructuring and realignment costs of approximately $35 million for the year. 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.

First Quarter Segment Results

Water Infrastructure

Xylem’s Water Infrastructure segment consists of its portfolio of businesses serving clean water delivery, wastewater transport and treatment, and dewatering.

  • First quarter 2018 revenue was $480 million, up nine percent organically compared with first quarter 2017. This growth includes strong results in the utilities end market, particularly in the U.S. which was up 10 percent. The industrial end market also continued to show solid growth, reflecting healthy market conditions in the U.S. for dewatering applications.
  • First quarter reported operating income for the segment was $49 million. Adjusted operating income for the segment, which excludes $5 million of restructuring and realignment costs, was $54 million, a 20-percent increase over the same period a year ago. Adjusted EBITDA for the Water Infrastructure segment increased 30 basis points to 14.6 percent. Reported operating margin for the segment was 10.2 percent, up 40 basis points versus the prior year, and adjusted operating margin increased 60 basis points to 11.3 percent. This growth reflects volume leverage and productivity gains, partially offset by inflation, a higher mix of treatment project deliveries and foreign exchange impacts.

Applied Water

Xylem’s Applied Water segment consists of its portfolio of businesses in residential and commercial building services, and industrial applications.

  • First quarter 2018 Applied Water revenue was $366 million, a seven-percent increase organically year-over-year. This performance reflects double-digit growth in Western Europe and solid increases in the U.S. and Emerging Markets. In the U.S., the business experienced continued improvement in large industrial projects, and also captured share gains across all end markets in Western Europe. In addition, commercial building applications showed solid growth from demand for projects.
  • First quarter reported operating income for the segment was $50 million and adjusted operating income, which excludes $3 million of restructuring and realignment costs, was $53 million, an 18-percent increase over the comparable period last year. Adjusted EBITDA for the Applied Water segment was 16.1 percent, an increase of 110 basis points over the prior year. Reported operating margin was 13.7 percent, up 290 basis points year-over-year, and adjusted operating margin increased 100 basis points to 14.5 percent as volume leverage and productivity initiatives more than offset inflation and unfavorable mix.

Measurement & Control Solutions

Xylem’s Measurement & Control Solutions segment consists of its portfolio of businesses in smart metering, network technologies, advanced infrastructure analytics and analytic instrumentation.

  • First quarter 2018 Measurement & Control Solutions revenue was $371 million, up five percent organically versus the prior year period. This reflects solid growth in the Sensus business, up six percent year-over-year, primarily driven by strength in North America. Double-digit growth in the electric, gas and services businesses was partially offset by modest declines in the water sector, which primarily reflects the timing of large project deliveries in Western Europe and the Middle East in the year-ago period. Xylem’s legacy analytics business increased three percent organically in the quarter.
  • First quarter reported operating income for the segment was $33 million, and adjusted operating income, which excludes $10 million of restructuring and realignment costs and acquisition-related costs, was $43 million. Adjusted EBITDA for the Measurement & Control Solutions segment increased 270 basis points to 21.8 percent. Reported operating margin for the segment was 8.9 percent. Adjusted operating margin increased 90 basis points year-over-year to 11.6 percent as volume leverage and price combined with cost reductions more than offset inflation, the funding of strategic R&D investments and higher purchase accounting amortization.

Supplemental information on Xylem’s first quarter 2018 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 developing innovative technology solutions to the world’s water challenges. The Company’s products and services move, treat, analyze, monitor and return water to the environment in public utility, industrial, residential and commercial building services settings. Xylem also provides a leading portfolio of smart metering, network technologies and advanced infrastructure analytics solutions for water, electric and gas utilities. The Company’s more than 16,500 employees bring broad applications expertise with a strong focus on identifying comprehensive, sustainable solutions. Headquartered in Rye Brook, New York with 2017 revenue of $4.7 billion, Xylem does business in more than 150 countries through a number of market-leading product brands.

The name Xylem is derived from classical Greek and is the tissue that transports water in plants, highlighting the engineering efficiency of our water-centric business by linking it with the best water transportation of all – that which occurs in nature. For more information, please visit us at www.xylem.com.

Forward-Looking Statements

This press release contains information that may constitute “forward-looking statements.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “forecast,” “believe,” “target,” “will,” “could,” “would,” “should” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.

These forward-looking statements include statements about the capitalization of Xylem Inc. (the “Company”), the Company’s restructuring and realignment, future strategic plans and other statements that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals. All statements that address operating or financial performance, events or developments that we expect or anticipate will occur in the future – including statements relating to orders, revenues, operating margins and earnings per share growth, and statements expressing general views about future operating results – are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such forward-looking statements. Factors that could cause results to differ materially from those anticipated include: economic, political and other risks associated with our international operations, including military actions, economic sanctions or trade embargoes that could affect customer markets, and non-compliance with laws, including foreign corrupt practice laws, export and import laws and competition laws; potential for unexpected cancellations or delays of customer orders in our reported backlog; our exposure to fluctuations in foreign currency exchange rates; competition and pricing pressures in the markets we serve; the strength of housing and related markets; ability to retain and attract key members of management; our relationship with and the performance of our channel partners; our ability to successfully identify, complete and integrate acquisitions; our ability to borrow or to refinance our existing indebtedness and availability of liquidity sufficient to meet our needs; changes in the value of goodwill or intangible assets; risks relating to product defects, product liability and recalls; governmental investigations; security breaches or other disruptions of our information technology systems; litigation and contingent liabilities; and other factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017, and those described from time to time in subsequent reports filed with the Securities and Exchange Commission. Forward-looking statements made herein are based on information currently available to the Company. The Company undertakes 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,

 

2018

 

2017

Revenue

 

$

1,217

   

$

1,071

 

Cost of revenue

 

757

 

 

659

 

Gross profit

 

460

   

412

 

Selling, general and administrative expenses

 

296

   

272

 

Research and development expenses

 

41

   

42

 

Restructuring and asset impairment charges, net

 

10

 

 

12

 

Operating income

 

113

   

86

 

Interest expense

 

21

   

20

 

Other non-operating income (expense), net

 

3

   

(1

)

Gain from sale of business

 

 

 

5

 

Income before taxes

 

95

   

70

 

Income tax expense

 

16

 

 

14

 

Net income

 

$

79

 

 

$

56

 

Earnings per share:

       

Basic

 

$

0.44

   

$

0.31

 

Diluted

 

$

0.43

   

$

0.31

 

Weighted average number of shares:

       

Basic

 

179.9

   

179.6

 

Diluted

 

181.4

   

180.7

 

Dividends declared per share

 

$

0.2100

   

$

0.1800

 
               

 

 

 

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except per share amounts)

   

 

 

 

March 31,
2018

 

December 31,
2017

     

 

ASSETS

     

Current assets:

     

Cash and cash equivalents

$

297

   

$

414

 

Receivables, less allowances for discounts and doubtful accounts of $29 and $35 in 2018 and 2017, respectively

999

   

956

 

Inventories

578

   

524

 

Prepaid and other current assets

192

 

 

177

 

Total current assets

2,066

   

2,071

 

Property, plant and equipment, net

666

   

643

 

Goodwill

3,082

   

2,768

 

Other intangible assets, net

1,303

   

1,168

 

Other non-current assets

233

 

 

210

 

Total assets

$

7,350

 

 

$

6,860

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

$

543

   

$

549

 

Accrued and other current liabilities

546

   

551

 

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

371

 

 

 

Total current liabilities

1,460

   

1,100

 

Long-term debt

2,228

   

2,200

 

Accrued postretirement benefits

446

   

442

 

Deferred income tax liabilities

285

   

252

 

Other non-current accrued liabilities

374

 

 

347

 

Total liabilities

4,793

 

 

4,341

 

     

 

Stockholders’ equity:

     

Common Stock – par value $0.01 per share:

     

Authorized 750.0 shares, issued 192.8 shares and 192.3 shares in 2018 and 2017, respectively

2

   

2

 

Capital in excess of par value

1,925

   

1,912

 

Retained earnings

1,282

   

1,227

 

Treasury stock – at cost 12.8 shares and 12.4 shares in 2018 and 2017, respectively

(461

)

 

(428

)

Accumulated other comprehensive loss

(207

)

 

(210

)

Total stockholders’ equity

2,541

 

 

2,503

 

Non-controlling interests

16

   

16

 

Total equity

2,557

 

 

2,519

 

Total liabilities and stockholders’ equity

$

7,350

 

 

$

6,860

 

             

 

 

   

 

 

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)

     

 

For the three months ended March 31,

2018

 

2017

Operating Activities

     

Net income

$

79

   

$

56

 

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

     

Depreciation

29

   

28

 

Amortization

38

   

31

 

Share-based compensation

9

   

6

 

Restructuring and asset impairment charges

10

   

12

 

Gain from sale of business

   

(5

)

Other, net

(4

)

 

(2

)

Payments for restructuring

(5

)

 

(8

)

Changes in assets and liabilities (net of acquisitions):

     

Changes in receivables

(9

)

 

(12

)

Changes in inventories

(40

)

 

(10

)

Changes in accounts payable

6

   

(32

)

Other, net

(50

)

 

(12

)

Net Cash – Operating activities

63

 

 

52

 

Investing Activities

     

Capital expenditures

(61

)

 

(43

)

Acquisition of business, net of cash acquired

(430

)

 

(6

)

Proceeds from sale of business

 

 

11

 

Net Cash – Investing activities

(491

)

 

(38

)

Financing Activities

     

Short-term debt issued, net

371

   

 

Short-term debt repaid

   

(5

)

Repurchase of common stock

(33

)

 

(5

)

Proceeds from exercise of employee stock options

3

   

1

 

Dividends paid

(38

)

 

(33

)

Other, net

(1

)

 

1

 

Net Cash – Financing activities

302

 

 

(41

)

Effect of exchange rate changes on cash

9

 

 

6

 

Net change in cash and cash equivalents

(117

)

 

(21

)

Cash and cash equivalents at beginning of year

414

 

 

308

 

Cash and cash equivalents at end of period

$

297

 

 

$

287

 

Supplemental disclosure of cash flow information:

     

Cash paid during the period for:

     

Interest

$

14

   

$

12

 

Income taxes (net of refunds received)

$

17

   

$

17

 
             

 

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 non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators:

“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 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” reflects the adjustment to EBITDA to exclude share-based compensation charges, restructuring and realignment costs, Sensus acquisition related costs, gain or loss from sale of businesses and special charges.

"Adjusted Operating Income", "Adjusted Segment Operating Income", "Adjusted Net Income" and “Adjusted EPS” defined as operating income, segment operating income, adjusted net income and earnings per share, adjusted to exclude restructuring and realignment costs, Sensus acquisition related costs, gain or loss from sale of businesses, special charges and tax-related special items, as applicable. For Sensus historical adjustments, see Sensus Historical - Adjusted Operating Income table.

“Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well as adjustments for other significant items that impact current results which management believes are not related to our ongoing operations and performance. Our definition of free cash flow does not consider certain non-discretionary cash payments, such as debt.

“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.

“Sensus Acquisition Related Costs" defined as costs incurred by the Company associated with the acquisition of Sensus that are being reported within operating income. These costs include integration costs, acquisition costs, costs related to the recognition of the backlog intangible asset amortization recorded in purchase accounting.

“Special charges" defined as costs incurred by the Company, such as non-cash impairment charges, due diligence costs, initial acquisition and integration costs not related to Sensus and other special non-operating items.

“Tax-related special items" defined as tax items, such as tax return versus tax provision adjustments, tax exam impacts, tax law change impacts, significant reserves for cash repatriation, excess tax benefits/losses and other discrete tax adjustments.

"Pro forma" defined as including the results of Sensus for the calendar period prior to the acquisition of Sensus by Xylem Inc. on October 31, 2016.

 

Xylem Inc. Non-GAAP Reconciliation

Reported vs. Organic & Constant Currency Orders

($ Millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(As Reported - GAAP)

 

(As Adjusted - Organic)

 

Constant Currency

   

 

(A)

 

(B)

 

   

(C)

 

(D)

 

(E) = B+C+D

 

(F) = E/A

 

(G) = (E - C) / A

                                 

 

         

Change

 

% Change

 

Acquisitions /

     

Change

 

% Change

   
 

Orders

 

Orders

 

2018 v. 2017

 

2018 v. 2017

 

Divestitures

 

FX Impact

 

Adj. 2018 v. 2017

 

Adj. 2018 v. 2017

   
 

2018

 

2017

                     

 

   

Quarter Ended March 31

                                 
                                 

 

Xylem Inc.

1,320

 

1,137

 

183

 

16%

 

(8)

 

(56)

 

119

 

10%

 

11%

                                 

 

Water Infrastructure

554

 

467

 

87

 

19%

 

-

 

(28)

 

59

 

13%

 

13%

Applied Water

384

 

354

 

30

 

8%

 

6

 

(14)

 

22

 

6%

 

5%

Measurement & Control Solutions

382

 

316

 

66

 

21%

 

(14)

 

(14)

 

38

 

12%

 

16%

                                 

 

 

 

Xylem Inc. Non-GAAP Reconciliation

Reported vs. Organic & Constant Currency Revenue

($ Millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(As Reported - GAAP)

 

(As Adjusted - Organic)

 

Constant Currency

   

 

(A)

 

(B)

 

   

(C)

 

(D)

 

(E) = B+C+D

 

(F) = E/A

 

(G) = (E - C) / A

                                 

 

         

Change

 

% Change

 

Acquisitions /

     

Change

 

% Change

   
 

Revenue

 

Revenue

 

2018 v. 2017

 

2018 v. 2017

 

Divestitures

 

FX Impact

 

Adj. 2018 v. 2017

 

Adj. 2018 v. 2017

   
 

2018

 

2017

                     

 

   

Quarter Ended March 31

                                 
                                 

 

Xylem Inc.

1,217

 

1,071

 

146

 

14%

 

(15)

 

(54)

 

77

 

7%

 

9%

                                 

 

Water Infrastructure

480

 

419

 

61

 

15%

 

-

 

(25)

 

36

 

9%

 

9%

Applied Water

366

 

333

 

33

 

10%

 

5

 

(14)

 

24

 

7%

 

6%

Measurement & Control Solutions

371

 

319

 

52

 

16%

 

(20)

 

(15)

 

17

 

5%

 

12%

                                 

 

 

 

Xylem Inc. Non-GAAP Reconciliation

Adjusted Operating Income

($ Millions)

 

 

 

 

 

 

     

Q1

     

   2018   

 

   2017   

 

Total Revenue

       
 

• Total Xylem

 

1,217

 

1,071

 

• Water Infrastructure

 

480

 

419

 

• Applied Water

 

366

 

333

 

• Measurement & Control Solutions

 

371

 

319

 

 

 

 

 

 

 

Operating Income

       
 

• Total Xylem

 

113

 

86

 

• Water Infrastructure

 

49

 

41

 

• Applied Water

 

50

 

36

 

• Measurement & Control Solutions

 

33

 

25

 

• Total Segments

 

132

 

102

         

 

 

Operating Margin

       
 

• Total Xylem

 

9.3%

 

8.0%

 

• Water Infrastructure

 

10.2%

 

9.8%

 

• Applied Water

 

13.7%

 

10.8%

 

• Measurement & Control Solutions

 

8.9%

 

7.8%

 

• Total Segments

 

10.8%

 

9.5%

         

 

 

Sensus Acquisition Related Costs

       
 

• Total Xylem

 

-

 

10

 

• Water Infrastructure

 

-

 

-

 

• Applied Water

 

-

 

-

 

• Measurement & Control Solutions

 

-

 

6

 

• Total Segments

 

-

 

6

         

 

 

Special Charges

       
 

• Total Xylem

 

6

 

5

 

• Water Infrastructure

 

-

 

-

 

• Applied Water

 

-

 

5

 

• Measurement & Control Solutions

 

2

 

-

 

• Total Segments

 

2

 

5

         

 

 

Restructuring & Realignment Costs

       
 

• Total Xylem

 

16

 

11

 

• Water Infrastructure

 

5

 

4

 

• Applied Water

 

3

 

4

 

• Measurement & Control Solutions

 

8

 

3

 

• Total Segments

 

16

 

11

 

 

 

 

 

 

 

Adjusted Operating Income

       
 

• Total Xylem

 

135

 

112

 

• Water Infrastructure

 

54

 

45

 

• Applied Water

 

53

 

45

 

• Measurement & Control Solutions

 

43

 

34

 

• Total Segments

 

150

 

124

         

 

 

Adjusted Operating Margin

       
 

• Total Xylem

 

11.1%

 

10.5%

 

• Water Infrastructure

 

11.3%

 

10.7%

 

• Applied Water

 

14.5%

 

13.5%

 

• Measurement & Control Solutions

 

11.6%

 

10.7%

 

• Total Segments

 

12.3%

 

11.6%

 

 

 

Note: 2017 amounts have been restated in accordance with the adoption of the new guidance on presentation of net periodic benefit costs.

 

 

 

Xylem Inc. Non-GAAP Reconciliation

Adjusted Diluted EPS

($ Millions, except per share amounts)

 

 

 

 

     

 

 

 

 

     
   

 

 

 

 

 

   

 

 

 

 

 

   

Q1 2018

   

Q1 2017

   

As Reported

 

Adjustments

 

Adjusted

   

As Reported

 

Adjustments

 

Adjusted

Total Revenue

   

1,217

       

1,217

     

1,071

       

1,071

Operating Income

   

113

   

22

  a  

 

135

     

86

   

26

  a  

 

112

Operating Margin

   

9.3%

       

11.1%

     

8.0%

       

10.5%

Interest Expense

   

(21)

       

(21)

     

(20)

       

(20)

Other Non-Operating Income (Expense)

   

3

       

3

     

(1)

       

(1)

(Loss)/Gain from sale of business

 

 

-

 

 

 

 

-

   

 

5

 

 

(5)

 

 

-

Income before Taxes

   

95

   

22

   

117

     

70

   

21

   

91

Provision for Income Taxes

 

 

(16)

 

 

(8)

b

 

(24)

   

 

(14)

 

 

(6)

b

 

(20)

Net Income attributable to Xylem

 

 

79

 

 

14

 

 

93

   

 

56

 

 

15

 

 

71

Diluted Shares

 

 

181.4

 

 

 

 

181.4

 

 

 

180.7

 

 

 

 

180.7

Diluted EPS

 

$

0.43

 

$

0.08

 

$

0.51

 

 

$

0.31

 

$

0.08

 

$

0.39

                         

 

Year-over-year currency translation impact on current year diluted EPS

 

$

0.05

 

$

0.01

 

$

0.06

             

Diluted EPS at Constant Currency

 

$

0.38

 

$

0.07

 

$

0.45

             
                               

 

 

 

 

Note: 2017 amounts have been restated in accordance with the adoption of the new guidance on presentation of net periodic benefit costs.

   

 

a

 

Restructuring & realignment costs of $16 million and $11 million in 2018 and 2017, respectively; special charges of $6 million of acquisition costs in 2018 and $5 million of asset impairment in 2017 and Sensus acquisition related costs of $10 million in 2017.

b

 

Net tax impact on restructuring & realignment costs of $4 million and $2 million in 2018 and 2017, respectively; net tax impact on special charges of $1 million and $2 million in 2018 and 2017, respectively; net tax impact on Sensus acquisition related costs of $4 million and tax benefit of $2 million on the gain from sale of business in 2017 and tax-related special items of $3 million of expense in 2018.

   

 

 

 

Xylem Inc. Non-GAAP Reconciliation

Net Cash - Operating Activities vs. Free Cash Flow

($ Millions)

 

 

 

 

 
       

 

   

Q1

   

 

   2018   

 

 

 

   2017   

 

       

 

Net Cash - Operating Activities

 

$

63

   

$

52

 
       

 

Capital Expenditures

   

(61

)

   

(43

)

   

 

 

 

Free Cash Flow

 

$

2

 

 

$

9

 

       

 

Cash paid for Sensus acquisition related costs

   

(1

)

   

(17

)

   

 

 

 

Free Cash Flow, excluding Sensus Acquisition Related Costs

 

$

3

 

 

$

26

 

       

 

Net Income

   

79

     

56

 
       

 

Gain/(Loss) from sale of businesses

   

-

     

5

 
       

 

Special Charges - non-cash impairment and early debt extinguishment

   

-

     

(5

)

       

 

Sensus acquisition related costs

 

 

-

 

 

 

(10

)

       

 

Net Income, excluding gain on sale of businesses, non-cash impairment charges and Sensus Acquisition Related Costs

 

$

79

 

 

$

66

 

       

 

Free Cash Flow Conversion

 

 

4

%

 

 

39

%

               

 

 

 

Xylem Inc. Non-GAAP Reconciliation

EBITDA and Adjusted EBITDA by Quarter

 

 

 

 

 

 

 

 

 

 

 

($ Millions)

                   

 

2018

   

Q1

 

Q2

 

Q3

 

Q4

 

Total

                   

 

Net Income

 

79

             

79

                   

 

Income Tax Expense

 

16

             

16

                   

 

Interest Expense (Income), net

 

20

             

20

Depreciation

 

29

             

29

Amortization

 

38

 

 

 

 

 

 

 

38

EBITDA

 

182

 

-

 

-

 

-

 

182

                   

 

Share-based Compensation

 

9

             

9

                   

 

Restructuring & Realignment

 

16

             

16

                   

 

Gain on sale of business

 

-

             

-

                   

 

Sensus Acquisition Related Costs

 

-

             

-

                   

 

Special Charges

 

6

             

6

   

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

213

 

-

 

-

 

-

 

213

                   

 

Revenue

 

1,217

 

 

 

 

 

 

 

1,217

                   

 

Adjusted EBITDA Margin

 

17.5%

 

 

 

 

 

 

 

17.5%

                   

 

                   

 

2017

   

Q1

 

Q2

 

Q3

 

Q4

 

Total

                   

 

Net Income

 

56

 

100

 

104

 

70

 

330

                   

 

Income Tax Expense

 

14

 

21

 

27

 

74

 

136

                   

 

Interest Expense (Income), net

 

20

 

20

 

20

 

19

 

79

Depreciation

 

28

 

27

 

28

 

26

 

109

Amortization

 

31

 

30

 

30

 

34

 

125

EBITDA

 

149

 

198

 

209

 

223

 

779

                   

 

Share-based Compensation

 

6

 

5

 

5

 

5

 

21

                   

 

Restructuring & Realignment

 

11

 

12

 

9

 

9

 

41

                   

 

Gain on sale of business

 

(5)

 

-

 

1

 

14

 

10

                   

 

Sensus Acquisition Related Costs

 

7

 

2

 

3

 

2

 

14

                   

 

Special Charges

 

5

 

-

 

3

 

5

 

13

   

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

173

 

217

 

230

 

258

 

878

                   

 

Revenue

 

1,071

 

1,164

 

1,195

 

1,277

 

4,707

                   

 

Adjusted EBITDA Margin

 

16.2%

 

18.6%

 

19.2%

 

20.2%

 

18.7%

                   

 

 

 

Xylem Inc. Non-GAAP Reconciliation

EBITDA and Adjusted EBITDA by Quarter

Water Infrastructure

($ Millions)

 

 

 

 

 

 

 

 

 

 

 

2018

   

Q1

 

Q2

 

Q3

 

Q4

 

Total

                   

 

Pre-Tax Income

 

47

             

47

                   

 

Interest Expense (Income), net

 

-

             

-

Depreciation

 

12

             

12

Amortization

 

5

 

 

 

 

 

 

 

5

EBITDA

 

64

 

-

 

-

 

-

 

64

                   

 

Share-based Compensation

 

1

             

1

                   

 

Restructuring & Realignment

 

5

             

5

   

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

70

 

-

 

-

 

-

 

70

                   

 

Revenue

 

480

 

 

 

 

 

 

 

480

                   

 

Adjusted EBITDA Margin

 

14.6%

 

 

 

 

 

 

 

14.6%

                   

 

                   

 

2017

   

Q1

 

Q2

 

Q3

 

Q4

 

Total

                   

 

Pre-Tax Income

 

39

 

73

 

90

 

105

 

307

                   

 

Interest Expense (Income), net

 

-

 

-

 

(1)

 

(1)

 

(2)

Depreciation

 

11

 

11

 

12

 

11

 

45

Amortization

 

5

 

4

 

5

 

5

 

19

EBITDA

 

55

 

88

 

106

 

120

 

369

                   

 

Share-based Compensation

 

1

 

-

 

-

 

1

 

2

                   

 

Restructuring & Realignment

 

4

 

5

 

3

 

4

 

16

   

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

60

 

93

 

109

 

125

 

387

                   

 

Revenue

 

419

 

482

 

520

 

583

 

2,004

                   

 

Adjusted EBITDA Margin

 

14.3%

 

19.3%

 

21.0%

 

21.4%

 

19.3%

                   

 

 

Note: 2017 amounts have been restated in accordance with the adoption of the new guidance on presentation of net periodic benefit costs.

 

 

 

Xylem Inc. Non-GAAP Reconciliation

EBITDA and Adjusted EBITDA by Quarter

Applied Water

($ Millions)

 

 

 

 

 

 

 

 

 

 

 

2018

   

Q1

 

Q2

 

Q3

 

Q4

 

Total

                   

 

Pre-Tax Income

 

50

             

50

                   

 

Interest, net

 

-

             

-

Depreciation

 

5

             

5

Amortization

 

-

 

 

 

 

 

 

 

-

EBITDA

 

55

 

-

 

-

 

-

 

55

                   

 

Share-based Compensation

 

1

             

1

                   

 

Restructuring & Realignment

 

3

             

3

   

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

59

 

-

 

-

 

-

 

59

                   

 

Revenue

 

366

 

 

 

 

 

 

 

366

                   

 

Adjusted EBITDA Margin

 

16.1%

 

 

 

 

 

 

 

16.1%

                   

 

                   

 

2017

   

Q1

 

Q2

 

Q3

 

Q4

 

Total

                   

 

Pre-Tax Income

 

40

 

49

 

49

 

62

 

200

                   

 

Interest, net

 

-

 

-

 

-

 

-

 

-

Depreciation

 

5

 

5

 

5

 

5

 

20

Amortization

 

1

 

1

 

1

 

-

 

3

EBITDA

 

46

 

55

 

55

 

67

 

223

                   

 

Share-based Compensation

 

-

 

1

 

1

 

-

 

2

                   

 

Restructuring & Realignment

 

4

 

5

 

5

 

3

 

17

                   

 

Gain on sale of business

 

(5)

 

-

 

1

 

(2)

 

(6)

                   

 

Special Charges

 

5

 

-

 

-

 

-

 

5

   

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

50

 

61

 

62

 

68

 

241

                   

 

Revenue

 

333

 

361

 

354

 

373

 

1,421

                   

 

Adjusted EBITDA Margin

 

15.0%

 

16.9%

 

17.5%

 

18.2%

 

17.0%

                   

 

 

Note: 2017 amounts have been restated in accordance with the adoption of the new guidance on presentation of net periodic benefit costs.

 

 

 

Xylem Inc. Non-GAAP Reconciliation

EBITDA and Adjusted EBITDA by Quarter

Measurement & Control Solutions

($ Millions)

 

 

 

 

 

 

 

 

 

 

 

2018

   

Q1

 

Q2

 

Q3

 

Q4

 

Total

                   

 

Pre-Tax Income

 

33

             

33

                   

 

Interest Expense (Income), net

 

-

             

-

Depreciation

 

8

             

8

Amortization

 

29

 

 

 

 

 

 

 

29

EBITDA

 

70

 

-

 

-

 

-

 

70

                   

 

Share-based Compensation

 

1

             

1

                   

 

Restructuring & Realignment

 

8

             

8

                   

 

Special Charges

 

2

             

2

   

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

81

 

-

 

-

 

-

 

81

                   

 

Revenue

 

371

 

 

 

 

 

 

 

371

                   

 

Adjusted EBITDA Margin

 

21.8%

 

 

 

 

 

 

 

21.8%

                   

 

2017

   

Q1

 

Q2

 

Q3

 

Q4

 

Total

                   

 

Pre-Tax Income

 

24

 

30

 

26

 

11

 

91

                   

 

Interest Expense (Income), net

 

-

 

-

 

-

 

(1)

 

(1)

Depreciation

 

8

 

8

 

7

 

7

 

30

Amortization

 

23

 

22

 

22

 

25

 

92

EBITDA

 

55

 

60

 

55

 

42

 

212

                   

 

Share-based Compensation

 

-

 

1

 

-

 

1

 

2

                   

 

Restructuring & Realignment

 

3

 

2

 

1

 

2

 

8

                   

 

Sensus Acquisition Related Costs

 

3

 

1

 

2

 

1

 

7

   

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

61

 

64

 

58

 

64

 

247

                   

 

Revenue

 

319

 

321

 

321

 

321

 

1,282

                   

 

Adjusted EBITDA Margin

 

19.1%

 

19.9%

 

18.1%

 

19.9%

 

19.3%

                   

 

 

Note: 2017 amounts have been restated in accordance with the adoption of the new guidance on presentation of net periodic benefit costs.

 

 

Source: Xylem Inc.

Xylem Inc.
Media:
Kelly McAndrew, +1-914-323-5969
Kelly.McAndrew@xyleminc.com
or
Investors:
Matt Latino, +1-914-323-5821
Matthew.Latino@xyleminc.com

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