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Xylem Reports First Quarter 2022 Results

04/05/2022
  • Continuing strong underlying demand: Organic orders growth of 14%, up 12% on a reported basis
  • Revenue of $1.3 billion, up 1% on a reported basis, up 4% organically
  • Earnings per share $0.45; adjusted earnings per share $0.47
  • Raising full-year organic revenue guidance to a range of 4% to 6%, and adjusted earnings per share to a range of $2.40 to $2.70

RYE BROOK, N.Y.--(BUSINESS WIRE)-- Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported first quarter revenue of $1.3 billion, surpassing previous guidance in each business segment. Strong global demand drove record orders and backlog across the portfolio.

First quarter adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin decreased 290 basis points to 14.2 percent. Inflation, strategic investments, and the impact of chip shortages drove the margin decline, exceeding the benefits of price realization and productivity savings. Xylem generated net income of $82 million, or $0.45 per share, and adjusted net income of $84 million, or $0.47 per share, which excludes the impact of restructuring, realignment and special charges.

“The team delivered a strong result on very robust demand, despite a challenging operating environment,” said Patrick Decker, Xylem’s president and CEO. “That healthy demand drove record quarterly order intake in each segment of our business, and year-on-year backlog growth of 50 percent across the portfolio. As anticipated, we are seeing gradual improvement in chip supply, and revenues grew faster than our expectations, as did margin performance overall.”

“We expect global demand for our solutions to remain strong, and the team is doing an outstanding job realizing price from our position of market leadership. So, we are raising full-year guidance on revenue, and lifting the low end of our EPS range. Despite near-term headwinds from inflation and currency effects, our underlying momentum gives us even greater confidence we are on track to achieve our growth and strategic milestones we laid out at our Investor Day, last autumn.”

Outlook

Xylem now expects full-year 2022 organic revenue growth to be in the range of 4 to 6 percent, and 1 to 3 percent on a reported basis. This represents an increase from the Company’s previous full-year organic revenue guidance of 3 to 5 percent, and 1 to 3 percent on a reported basis. Reported revenue growth remains the same as our previous guidance due to the expected impact of foreign exchange effects.

Full-year 2022 adjusted EBITDA margin is expected to be in the range of 16.0 to 17.0 percent. This results in adjusted earnings per share of $2.40 to $2.70, narrowed from the previous range of $2.35 to $2.70. The increased guidance reflects strong demand, commercial momentum and price realization partially offset by foreign exchange headwinds.

Further 2022 planning assumptions are included in Xylem’s first quarter 2022 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.

Segment Leadership

The Company also announced that, aligned with its previous statements on growth strategy, it is unifying its Americas commercial team to reduce business complexity, and enhance customer experience. Effective immediately, Matthew Pine will lead combined commercial operations in the Americas, across all product and solution offerings, as well as leading both the Applied Water and Measurement & Control Solutions segments. Hayati Yarkadas, in addition to leading commercial operations in Europe and the Water Infrastructure segment, will now also lead the build-out of Xylem’s services offering, globally. Franz Cerwinka continues to lead commercial operations across Emerging Markets.

As a result of these changes, Colin Sabol will leave Xylem after a handover period during which he will focus on a smooth leadership transition.

“From Xylem’s beginnings, Colin has been a fundamental contributor to our growth story,” said Patrick Decker. “We are all profoundly grateful to have benefitted from his considerable talent, commitment and leadership.”

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 2022 revenue was $533 million, an 8 percent increase organically compared with first quarter 2021. This healthy growth was underpinned by sustained demand in our wastewater utility business in the US and Western Europe, and increasing demand for dewatering, particularly in Emerging Markets.
  • First quarter adjusted EBITDA margin was 15.9 percent, down 140 basis points from the prior year. Reported operating income for the segment was $74 million. Adjusted operating income for the segment, which excludes $1 million of restructuring and realignment, was $75 million, roughly flat versus the comparable period last year. Reported operating margin for the segment was 13.9 percent, flat versus the prior year, and adjusted operating margin was 14.1 percent, down 80 basis points versus the prior year. Strong price realization and productivity benefits were more than offset by inflation and investments.

Applied Water

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

  • First quarter 2022 Applied Water revenue was $425 million, a 10 percent increase organically year-over-year. The segment delivered strong backlog execution and price realization across all end markets, and growth in all regions, led by commercial strength in the United States.
  • First quarter adjusted EBITDA margin was 15.3 percent, down 380 basis points from the prior year. Reported operating income for the segment was $59 million and adjusted operating income, which excludes $1 million of restructuring and realignment costs, was $60 million, a 12.0 percent decrease versus the comparable period last year. The segment reported operating margin was 13.9 percent, down 290 basis points versus the prior year period. Adjusted operating margin declined 320 basis points to 14.1 percent. Strong price realization and productivity benefits were more than offset by inflation.

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 2022 Measurement & Control Solutions revenue was $314 million, down 9 percent organically versus the prior year. The decline is in-line with our expectations and a result of the ongoing chip supply shortage and the outsized impact to our North American smart metering business.
  • First quarter adjusted EBITDA margin was 8.6 percent, down 470 basis points from the prior year. Reported operating income for the segment was $(10) million, and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was $(8) million, a 173 percent decrease versus the comparable period last year. The Measurement & Control Solutions segment reported operating margin was (3.2) percent, down 570 basis points versus the prior year period. Adjusted operating margin of (2.5) percent decreased 560 basis points over the prior year period. Volume declines from component shortages and higher inflation more than offset price realization and productivity savings.

Supplemental information on Xylem’s first quarter 2022 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 critical water and infrastructure challenges with innovation. Our 17,000 diverse employees delivered revenue of$5.2 billion in 2021. 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.

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. Additionally, many of these risks and uncertainties are, and may continue to be, amplified by impacts from Russia's recent invasion of Ukraine, as well as the ongoing coronavirus (“COVID-19”) pandemic. 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: overall industry and economic conditions, including industrial, governmental, and public and private sector spending and the strength of the residential and commercial real estate markets; geopolitical events, including the war between Russia and Ukraine, and regulatory, economic and other risks associated with our global sales and operations, including with respect to domestic content requirements applicable to projects with governmental funding; continued uncertainty around the ongoing COVID-19 pandemic’s magnitude, duration and impacts on our business, operations, growth, and financial condition; actual or potential other epidemics, pandemics or global health crises; availability, shortage or delays in receiving electronic components (in particular, semiconductors), parts, and raw materials from our supply chain; manufacturing and operating cost increases due to macroeconomic conditions, including inflation, 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 products; disruptions in operations at our facilities or that of third parties upon which we rely; ability to retain and attract senior management and other diverse and key talent, as well as increasing competition for overall talent and labor; difficulty predicting our financial results; defects, security, warranty and liability claims, and recalls with respect to products; availability, regulation or interference with radio spectrum used by certain of our products; uncertainty related to restructuring and realignment actions and related charges and savings; our ability to continue strategic investments for growth; our ability to successfully identify, execute and integrate acquisitions; volatility in served markets or impacts on business and operations due to weather conditions, including the effects of climate change; fluctuations in foreign currency exchange rates; our ability to borrow or refinance our existing indebtedness and uncertainty around the availability of liquidity sufficient to meet our needs; risk of future impairments to goodwill and other intangible assets; failure to comply with, or changes in, laws or regulations, including those pertaining to anti-corruption, data privacy and security, export and import, competition, and the environment and climate change; changes in our effective tax rates or tax expenses; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; and other factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 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 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,

2022

 

2021

Revenue

$

1,272

 

 

$

1,256

Cost of revenue

 

805

 

 

 

766

Gross profit

 

467

 

 

 

490

Selling, general and administrative expenses

 

304

 

 

 

301

Research and development expenses

 

52

 

 

 

50

Restructuring and asset impairment charges

 

 

 

 

6

Operating income

 

111

 

 

 

133

Interest expense

 

13

 

 

 

21

Other non-operating (expense) income, net

 

(1

)

 

 

2

Gain from sale of business

 

1

 

 

 

Income before taxes

 

98

 

 

 

114

Income tax expense

 

16

 

 

 

27

Net income

$

82

 

 

$

87

Earnings per share:

 

 

 

Basic

$

0.45

 

 

$

0.49

Diluted

$

0.45

 

 

$

0.48

Weighted average number of shares:

 

 

 

Basic

 

180.2

 

 

 

180.3

Diluted

 

181.0

 

 

181.5 

XYLEM INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except per share amounts)

 

 

March 31,
2022

 

December 31,
2021

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,117

 

 

$

1,349

 

Receivables, less allowances for discounts, returns and credit losses of $37 and $44 in 2022 and 2021, respectively

 

1,011

 

 

 

953

 

Inventories

 

804

 

 

 

700

 

Prepaid and other current assets

 

186

 

 

 

158

 

Total current assets

 

3,118

 

 

 

3,160

 

Property, plant and equipment, net

 

636

 

 

 

644

 

Goodwill

 

2,782

 

 

 

2,792

 

Other intangible assets, net

 

1,002

 

 

 

1,016

 

Other non-current assets

 

681

 

 

 

664

 

Total assets

$

8,219

 

 

$

8,276

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

652

 

 

$

639

 

Accrued and other current liabilities

 

713

 

 

 

752

 

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

 

555

 

 

 

 

Total current liabilities

 

1,920

 

 

 

1,391

 

Long-term debt

 

1,878

 

 

 

2,440

 

Accrued post-retirement benefits

 

432

 

 

 

438

 

Deferred income tax liabilities

 

283

 

 

 

287

 

Other non-current accrued liabilities

 

500

 

 

 

494

 

Total liabilities

 

5,013

 

 

 

5,050

 

Stockholders’ equity:

 

 

 

Common Stock – par value $0.01 per share:

 

 

 

Authorized 750.0 shares, issued 195.9 shares and 195.6 shares in 2022 and 2021, respectively

 

2

 

 

 

2

 

Capital in excess of par value

 

2,099

 

 

 

2,089

 

Retained earnings

 

2,181

 

 

 

2,154

 

Treasury stock – at cost 15.8 shares and 15.2 shares in 2022 and 2021, respectively

 

(707

)

 

 

(656

)

Accumulated other comprehensive loss

 

(377

)

 

 

(371

)

Total stockholders’ equity

 

3,198

 

 

 

3,218

 

Non-controlling interests

 

8

 

 

 

8

 

Total equity

 

3,206

 

 

 

3,226

 

Total liabilities and stockholders’ equity

$

8,219

 

 

$

8,276

 

XYLEM INC. AND SUBSIDIARIES

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

 

For the three months ended March 31,

2022

 

2021

Operating Activities

 

 

 

Net income

$

82

 

 

$

87

 

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

 

 

 

Depreciation

 

28

 

 

 

30

 

Amortization

 

30

 

 

 

32

 

Share-based compensation

 

9

 

 

 

9

 

Restructuring and asset impairment charges

 

 

 

 

6

 

Gain from sale of business

 

(1

)

 

 

 

Other, net

 

3

 

 

 

2

 

Payments for restructuring

 

(3

)

 

 

(12

)

Changes in assets and liabilities (net of acquisitions):

 

 

 

Changes in receivables

 

(64

)

 

 

(42

)

Changes in inventories

 

(106

)

 

 

(46

)

Changes in accounts payable

 

20

 

 

 

(29

)

Other, net

 

(79

)

 

 

(63

)

Net Cash – Operating activities

 

(81

)

 

 

(26

)

Investing Activities

 

 

 

Capital expenditures

 

(49

)

 

 

(39

)

Proceeds from sale of business

 

1

 

 

 

 

Proceeds from the sale of property, plant and equipment

 

1

 

 

 

1

 

Cash received from investments

 

4

 

 

 

 

Cash paid for investments

 

(6

)

 

 

 

Other, net

 

6

 

 

 

7

 

Net Cash – Investing activities

 

(43

)

 

 

(31

)

Financing Activities

 

 

 

Repurchase of common stock

 

(51

)

 

 

(67

)

Proceeds from exercise of employee stock options

 

1

 

 

 

3

 

Dividends paid

 

(55

)

 

 

(51

)

Other, net

 

(1

)

 

 

 

Net Cash – Financing activities

 

(106

)

 

 

(115

)

Effect of exchange rate changes on cash

 

(2

)

 

 

(15

)

Net change in cash and cash equivalents

 

(232

)

 

 

(187

)

Cash and cash equivalents at beginning of year

 

1,349

 

 

 

1,875

 

Cash and cash equivalents at end of period

$

1,117

 

 

$

1,688

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$

23

 

 

$

41

 

Income taxes (net of refunds received)

$

15

 

 

$

28

 

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" reflects 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, 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, 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.
 
“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, non-cash impairment charges and both operating and non-operating adjustments for costs related to the UK pension plan buyout.
 
“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 & 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

 

2022 v. 2021

 

2022 v. 2021

 

 

FX Impact

 

Adj. 2022 v. 2021

 

Adj. 2022 v. 2021

 

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended March 31
Xylem Inc.

1,715

1,538

177

12%

6

40

223

14% 

14%

Water Infrastructure

660

611

49

8%

-

24

73

12% 

12%

Applied Water

505

477

28

6%

-

10

38

8% 

8%

Measurement & Control Solutions

550

450

100

22%

6

6

112

25% 

24%

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 /
Divestitures
Change % Change
Revenue Revenue 2022 v. 2021 2022 v. 2021 FX Impact Adj. 2022 v. 2021 Adj. 2022 v. 2021

2022

2021

Quarter Ended March 31
Xylem Inc.

1,272

1,256

16

1%

2

33

51

4% 

4%

Water Infrastructure

533

509

24

5%

-

19

43

8% 

8%

Applied Water

425

393

32

8%

-

8

40

10% 

10%

Measurement & Control Solutions

314

354

(40)

(11%)

2

6

(32)

(9%) 

(10%)

Xylem Inc. Non-GAAP Reconciliation
Adjusted Operating Income ($ Millions)
     
     
Q1      

2022

 

2021

 
Total Revenue    
• Total Xylem

1,272

 

1,256

 

• Water Infrastructure

533

 

509

 

• Applied Water

425

 

393

 

• Measurement & Control Solutions

314

 

354

 

     
Operating Income (Loss)    
• Total Xylem

111

 

133

 

• Water Infrastructure

74

 

71

 

• Applied Water

59

 

66

 

• Measurement & Control Solutions

(10

)

9

 

• Total Segments

123

 

146

 

     
Operating Margin    
• Total Xylem

8.7

%

10.6

• Water Infrastructure

13.9

%

13.9

%

• Applied Water

13.9

%

16.8

%

• Measurement & Control Solutions

(3.2

%)

2.5

%

• Total Segments

9.7

%

11.6

%

     
Special Charges    
• Total Xylem

1

 

2

 

• Water Infrastructure

-

-

 

• Applied Water

-

1

 

• Measurement & Control Solutions

-

-

 

• Total Segments -

 

1

 

     
Restructuring & Realignment Costs    
• Total Xylem

4

 

8

 

• Water Infrastructure

1

 

5

 

• Applied Water

1

 

1

 

• Measurement & Control Solutions

2

 

2

 

• Total Segments

4

 

8

 

     
Adjusted Operating Income (Loss)    
• Total Xylem

116

 

143

 

• Water Infrastructure

75

 

76

 

• Applied Water

60

 

68

 

• Measurement & Control Solutions

(8

)

11

 

• Total Segments

127

 

155

 

     
Adjusted Operating Margin    
• Total Xylem

9.1

%

11.4

%

• Water Infrastructure

14.1

%

14.9

%

• Applied Water

14.1

%

17.3

%

• Measurement & Control Solutions

(2.5

%)

3.1

%

• Total Segments

10.0

%

12.3

%

Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
 
Q1 2022 Q1 2021
As Reported Adjustments Adjusted As Reported Adjustments Adjusted
Total Revenue

 

1,272

 

 

-

 

 

1,272

 

 

1,256

 

 

-

 

1,256

 

Operating Income

 

111

 

 

5

 

a

 

116

 

 

133

 

 

10

a

 

143

 

Operating Margin

 

8.7

%

 

9.1

%

 

10.6

%

 

11.4

%

Interest Expense

 

(13

)

 

-

 

 

(13

)

 

(21

)

 

-

 

(21

)

Other Non-Operating Income (Expense)

 

(1

)

 

1

 

b

 

-

 

 

2

 

 

1

b

 

3

 

Gain/(Loss) From Sale of Business

 

1

 

 

(1

)

 

-

 

 

-

 

 

-

 

-

 

Income before Taxes

 

98

 

 

5

 

 

103

 

 

114

 

 

11

 

125

 

Provision for Income Taxes

 

(16

)

 

(3

)

c

 

(19

)

 

(27

)

 

4

c

 

(23

)

Net Income Attributable to Xylem

 

82

 

 

2

 

 

84

 

 

87

 

 

15

 

102

 

Diluted Shares

 

181.0

 

 

181.0

 

 

181.5

 

 

181.5

 

Diluted EPS

$

0.45

 

$

0.02

 

$

0.47

 

$

0.48

 

$

0.08

$

0.56

 

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

$

(0.04

)

$

(0.00

)

$

(0.04

)

Diluted EPS at Constant Currency

$

0.49

 

$

0.02

 

$

0.51

 

 
a Restructuring & realignment costs of $4 million in 2022 and $8 million in 2021, as well as special charges of $1 million in 2022 (costs that are related to the UK pension plan that is going to be part of a buyout) and $2 million in 2021 ($1 million of intangible asset impairment charges and $1 million of costs that are related to the UK pension plan that is going to be part of a buyout of the UK pension plan buyout).
b Special non-operating charges consist of $1 million in 2022 and $1 million in 2021 for costs related to the UK pension plan that is going to be part of a buyout.
c Net tax impact on restructuring & realignment costs of $1 million in 2022 and $2 million in 2021; $1 million net tax impact on special charges in 2022; and $1 million of negative impact from tax related special benefits to GAAP tax in 2022 and $6 million of positive impact from tax related special charges to GAAP tax in 2021.
Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow ($ Millions)
 

Q1

 

 

 

2022

 

2021

Net Cash - Operating Activities

$

(81

)

$

(26

)

Capital Expenditures - PP&E

 

(31

)

 

(22

)

Capital Expenditures - Software

 

(18

)

 

(17

)

Capital Expenditures

 

(49

)

 

(39

)

Free Cash Flow

$

(130

)

$

(65

)

Net Income

 

82

 

 

87

 

Gain/(Loss) from sale of business

 

1

 

 

-

 

Restructuring & Realignment Charges - non-cash impairment

 

-

 

 

(1

)

Special Charges - non-cash impairment

 

-

 

 

(1

)

Net Income, excluding gain on sale of businesses, non-cash impairment charges and significant deferred tax items

$

81

 

$

89

 

Operating Cash Flow Conversion

 

(99

%)

 

(30

%)

Free Cash Flow Conversion

 

(160

%)

 

(73

%)

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

2022

Q1 Q2 Q3 Q4 Total
 
Net Income

82

 

82

 

Income Tax Expense

16

 

16

 

Interest Expense (Income), net

11

 

11

 

Depreciation

28

 

28

 

Amortization

30

 

30

 

EBITDA

167

 

167

 

Share-based Compensation

9

 

9

 

Restructuring & Realignment

4

 

4

 

Loss/(Gain) from sale of business

(1

)

(1

)

Special Charges

2

 

2

 

Adjusted EBITDA

181

 

181

 

Revenue

1,272

 

1,272

 

Adjusted EBITDA Margin

14.2

%

14.2

%

 

2021

Q1 Q2 Q3 Q4 Total
 
Net Income

87

 

113

 

114

 

113

 

427

 

Income Tax Expense

27

 

25

 

19

 

13

 

84

 

Interest Expense (Income), net

19

 

19

 

20

 

11

 

69

 

Depreciation

30

 

29

 

31

 

28

 

118

 

Amortization

32

 

33

 

31

 

31

 

127

 

EBITDA

195

 

219

 

215

 

196

 

825

 

Share-based Compensation

9

 

8

 

8

 

8

 

33

 

Restructuring & Realignment

8

 

6

 

2

 

6

 

22

 

Loss/(Gain) from sale of business

-

 

(2

)

-

 

-

 

(2

)

Special Charges

3

 

3

 

2

 

4

 

12

 

Adjusted EBITDA

215

 

234

 

227

 

214

 

890

 

Revenue

1,256

 

1,351

 

1,265

 

1,323

 

5,195

 

Adjusted EBITDA Margin

17.1

%

17.3

%

17.9

%

16.2

%

17.1

%

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

2022

Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income

71

 

71

 

Interest Expense (Income), net

(1

)

(1

)

Depreciation

11

 

11

 

Amortization

2

 

2

 

EBITDA

83

 

83

 

Share-based Compensation

1

 

1

 

Restructuring & Realignment

1

 

1

 

Adjusted EBITDA

85

 

85

 

Revenue

533

 

533

 

Adjusted EBITDA Margin

15.9

%

15.9

%

 

2021

Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income

70

 

92

 

102

 

121

 

385

 

Interest Expense (Income), net

(1

)

(1

)

-

 

(1

)

(3

)

Depreciation

11

 

11

 

11

 

10

 

43

 

Amortization

2

 

2

 

1

 

3

 

8

 

EBITDA

82

 

104

 

114

 

133

 

433

 

Share-based Compensation

1

 

-

 

1

 

-

 

2

 

Restructuring & Realignment

5

 

4

 

1

 

2

 

12

 

Adjusted EBITDA

88

 

108

 

116

 

135

 

447

 

Revenue

509

 

569

 

547

 

622

 

2,247

 

Adjusted EBITDA Margin

17.3

%

19.0

%

21.2

%

21.7

%

19.9

%

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

2022

Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income

58

 

58

 

Interest Expense (Income), net

-

 

-

 

Depreciation

5

 

5

 

Amortization

-

 

-

 

EBITDA

63

 

63

 

Share-based Compensation

1

 

1

 

Restructuring & Realignment

1

 

1

 

Loss/(Gain) from sale of business

-

 

-

 

Special Charges

-

 

-

 

Adjusted EBITDA

65

 

65

 

Revenue

425

 

425

 

Adjusted EBITDA Margin

15.3

%

15.3

%

 

2021

Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income

66

 

65

 

60

 

48

 

239

 

Interest Expense (Income), net

-

 

-

 

-

 

-

 

-

 

Depreciation

5

 

5

 

5

 

5

 

20

 

Amortization

1

 

1

 

-

 

-

 

2

 

EBITDA

72

 

71

 

65

 

53

 

261

 

Share-based Compensation

1

 

1

 

1

 

1

 

4

 

Restructuring & Realignment

1

 

2

 

2

 

2

 

7

 

Loss/(Gain) from sale of business

-

 

(2

)

-

 

-

 

(2

)

Special Charges

1

 

-

 

-

 

-

 

1

 

Adjusted EBITDA

75

 

72

 

68

 

56

 

271

 

Revenue

393

 

414

 

400

 

406

 

1,613

 

Adjusted EBITDA Margin

19.1

%

17.4

%

17.0

%

13.8

%

16.8

%

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

2022

Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income

(9

)

(9

)

Interest Expense (Income), net

-

 

-

 

Depreciation

9

 

9

 

Amortization

25

 

25

 

EBITDA

25

 

25

 

Share-based Compensation

1

 

1

 

Restructuring & Realignment

2

 

2

 

Loss/(Gain) from sale of business

(1

)

(1

)

Adjusted EBITDA

27

 

27

 

Revenue

314

 

314

 

Adjusted EBITDA Margin

8.6

%

8.6

%

 

2021

Q1 Q2 Q3 Q4 Total
 
Pre-Tax (Loss) Income

8

 

12

 

7

 

(17

)

10

 

Interest Expense (Income), net

-

 

-

 

-

 

-

 

-

 

Depreciation

9

 

10

 

11

 

8

 

38

 

Amortization

27

 

27

 

27

 

26

 

107

 

EBITDA

44

 

49

 

45

 

17

 

155

 

Share-based Compensation

1

 

2

 

1

 

2

 

6

 

Restructuring & Realignment

2

 

-

 

(1

)

2

 

3

 

Loss/(Gain) from sale of business

-

 

-

 

-

 

-

 

-

 

Adjusted EBITDA

47

 

51

 

45

 

21

 

164

 

Revenue

354

 

368

 

318

 

295

 

1,335

 

Adjusted EBITDA Margin

13.3

%

13.9

%

14.2

%

7.1

%

12.3

%

 

 

Media
Houston Spencer +1 (914) 323-5723
houston.spencer@xylem.com

Investors
Matt Latino +1 (914) 323-5821
matthew.latino@xylem.com

Source: Xylem Inc.

Xylem