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Xylem Reports Third Quarter 2021 Results

November 2, 2021
  • Orders growth of 22% on a reported basis, 20% organically, from strong underlying demand across segments
  • Revenue growth 4% on a reported basis, 2% organically
  • Net income as a percentage of revenue of 9.0%, up 600 basis points; adjusted EBITDA margin of 17.9%, down 30 basis points
  • Reported net income of $114 million or $0.63 per share; adjusted net income of $116 million or $0.63 per share
  • Lowers full-year organic revenue and earnings per share guidance to ranges of 3% to 4%, and $2.40 to $2.50, respectively

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 third quarter 2021 revenue of $1.27 billion. Revenues grew 4 percent on a reported basis, and 2 percent organically. Strong global demand was moderated by supply constraints slowing order-to-revenue conversion.

Third quarter adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin decreased 30 basis points to 17.9 percent. Inflation and strategic investments were partially offset by productivity, price realization and cost containment. Xylem generated net income of $114 million, or $0.63 per share, and adjusted net income of $116 million, or $0.63 per share, which excludes the impact of restructuring, realignment and special charges.

“Global demand for water solutions continues to be robust, across our business,” said Patrick Decker, Xylem’s president and CEO. “The team capitalized on that broad-based underlying demand, delivering strong growth in new orders and backlog in all segments. This positions us well to achieve our 2025 growth and strategic milestones, which we outlined at our investor day, last month.

“The team has done an outstanding job managing inflationary effects with productivity and cost discipline, delivering solid margin and earnings performance,” continued Decker. “Nevertheless, we foresee the global supply challenges continuing – particularly the chip shortages being experienced across the technology sector. While we expect strong demand to continue, nearer term supply constraints have slowed order-to-revenue conversion more than expected, leading us to moderate our view of full-year revenues and, therefore, earnings.”

Updated Outlook

Xylem now expects full-year organic revenue growth to be in the range of 3 to 4 percent, which would be approximately $5.1 to $5.2 billion on a reported basis. This represents a decrease from the Company’s previous full-year organic revenue guidance of 6 to 8 percent, or $5.3 to $5.4 billion on a reported basis. Full-year adjusted earnings per share is now expected to be in the range of $2.40 to $2.50, from $2.55 to $2.70. Full-year free cash flow conversion outlook remains unchanged at 80 to 90 percent.The revised guidance reflects the impact of increased supply chain challenges, partially offset by strong cost discipline.

Third Quarter Segment Results

Water Infrastructure

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

  • Third quarter 2021 revenue was $547 million, up 4 percent on a reported basis, and up 2 percent organically, compared with the same period in 2020. Strong growth in industrial end markets from broad pandemic recovery and demand in Emerging Markets offset some softness in the utility markets due to timing delays caused by supply chain disruptions.
  • Third quarter adjusted EBITDA margin was 21.2 percent, up 100 basis points versus the prior year period. Reported operating income for the segment was $101 million and adjusted operating income, which excludes $1 million of restructuring and realignment costs, was $102 million. The segment reported operating margin was 18.5 percent, up 150 basis points versus the prior year period. Adjusted operating margin rose 10 basis points to 18.6 percent. Strong productivity savings and price realization offset inflation and supply chain constraints.

Applied Water

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

  • Third quarter 2021 revenue was $400 million, up 10 percent on a reported basis, and up 8 percent organically, compared with the same period in 2020. Broad reopening activity drove strong demand in industrial and commercial end markets compared to COVID-19 challenges in the prior year.
  • Third quarter adjusted EBITDA margin was 17.0 percent, down 60 basis points from the prior year period. Reported operating income for the segment was $60 million and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was $62 million. The segment reported operating margin was 15.0 percent, down 40 basis points versus the prior year period. Adjusted operating margin decreased 40 basis points to 15.5 percent. Inflation, supply chain disruption and investments more than offset productivity benefits and price realization.

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.

  • Third quarter 2021 revenue was $318 million, down 4 percent on a reported basis, and down 5 percent organically, compared with the same period in 2020. Soft performance in the business was driven by chip supply shortages impacting our smart metering business, partially offset by demand in water quality testing applications and pipeline assessment services businesses.
  • Third quarter adjusted EBITDA margin was 14.2 percent, down 60 basis points from the prior year period. Reported operating income for the segment was $7 million and adjusted operating income, with $1 million restructuring and realignment income in the quarter, was $6 million. The segment reported operating margin was 2.2 percent, up 2,090 basis points versus the prior year period. Adjusted operating margin decreased 170 basis points to 1.9 percent. Volume declines from component shortages and higher inflation offset productivity and price realization.

Supplemental information on Xylem’s third quarter 2021 earnings and reconciliations for certain non-GAAP items are 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 more than 16,000 diverse employees delivered revenue of $4.88 billion in 2020. 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,” “goal,” “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; 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 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 private sector spending and the strength of the residential and commercial real estate markets; geopolitical, regulatory, economic and other risks associated with international operations; continued uncertainty around the COVID-19 pandemic’s magnitude, duration and impacts on our business, operations, growth, and financial condition, as well as uncertainty around approved vaccines and the pace of recovery when the pandemic subsides; actual or potential other epidemics, pandemics or global health crises; availability, shortage or delays in receiving products, parts, electronic components and raw materials from our supply chain; manufacturing and operating cost increases due to inflation, prevailing price changes, tariffs and other factors; fluctuations in foreign currency exchange rates; disruption, competition and 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; availability, regulation and interference with radio spectrum used by some of our products; our ability to retain and attract senior management and other key talent; 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; risks relating to products, including defects, security, warranty and liability claims, and recalls; difficulty predicting our financial results, including uncertainties due to the nature of our short- and long-cycle businesses; volatility in our results due to weather conditions, including the effects of climate change; our ability to borrow or refinance our existing indebtedness and 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, 2020 ("2020 Annual Report") and in subsequent filings we make with the Securities and Exchange Commission (“SEC”).

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)

 

Three Months

 

Nine Months

For the periods ended September 30,

2021

 

2020

 

2021

 

2020

Revenue

$

1,265

 

 

$

1,220

 

 

$

3,872

 

 

$

3,503

 

Cost of revenue

793

 

 

759

 

 

2,390

 

 

2,199

 

Gross profit

472

 

 

461

 

 

1,482

 

 

1,304

 

Selling, general and administrative expenses

273

 

 

266

 

 

878

 

 

851

 

Research and development expenses

49

 

 

45

 

 

152

 

 

138

 

Restructuring and asset impairment (recoveries) charges

(2

)

 

19

 

 

7

 

 

69

 

Goodwill impairment charge

 

 

58

 

 

 

 

58

 

Operating income

152

 

 

73

 

 

445

 

 

188

 

Interest expense

21

 

 

22

 

 

63

 

 

56

 

Other non-operating income (expense), net

2

 

 

(1

)

 

1

 

 

(5

)

Gain from sale of business

 

 

 

 

2

 

 

 

Income before taxes

133

 

 

50

 

 

385

 

 

127

 

Income tax expense

19

 

 

13

 

 

71

 

 

21

 

Net income

$

114

 

 

$

37

 

 

$

314

 

 

$

106

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

0.63

 

 

$

0.20

 

 

$

1.74

 

 

$

0.59

 

Diluted

$

0.63

 

 

$

0.20

 

 

$

1.73

 

 

$

0.58

 

Weighted average number of shares:

 

 

 

 

 

 

 

Basic

180.2

 

 

180.0

 

 

180.2

 

 

180.1

 

Diluted

181.6

 

 

181.0

 

 

181.5

 

 

181.0

 

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except per share amounts)

 

September 30,
2021

 

December 31,
2020

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,255

 

 

$

1,875

 

Receivables, less allowances for discounts, returns and credit losses of $43 and $46 in 2021 and 2020, respectively

973

 

 

923

 

Inventories

679

 

 

558

 

Prepaid and other current assets

150

 

 

167

 

Total current assets

3,057

 

 

3,523

 

Property, plant and equipment, net

618

 

 

657

 

Goodwill

2,816

 

 

2,854

 

Other intangible assets, net

1,037

 

 

1,093

 

Other non-current assets

623

 

 

623

 

Total assets

$

8,151

 

 

$

8,750

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

577

 

 

$

569

 

Accrued and other current liabilities

737

 

 

787

 

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

 

 

600

 

Total current liabilities

1,314

 

 

1,956

 

Long-term debt

2,455

 

 

2,484

 

Accrued post-retirement benefits

492

 

 

519

 

Deferred income tax liabilities

270

 

 

242

 

Other non-current accrued liabilities

518

 

 

573

 

Total liabilities

5,049

 

 

5,774

 

 

 

 

 

Stockholders’ equity:

 

 

 

Common Stock – par value $0.01 per share:

 

 

 

Authorized 750.0 shares, issued 195.5 shares and 194.9 shares in 2021 and 2020, respectively

2

 

 

2

 

Capital in excess of par value

2,077

 

 

2,037

 

Retained earnings

2,092

 

 

1,930

 

Treasury stock – at cost 15.2 shares and 14.5 shares in 2021 and 2020, respectively

(656

)

 

(588

)

Accumulated other comprehensive loss

(422

)

 

(413

)

Total stockholders’ equity

3,093

 

 

2,968

 

Non-controlling interests

9

 

 

8

 

Total equity

3,102

 

 

2,976

 

Total liabilities and stockholders’ equity

$

8,151

 

 

$

8,750

 

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)

For the nine months ended September 30,

2021

 

2020

Operating Activities

 

 

 

Net income

$

314

 

 

$

106

 

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

 

 

 

Depreciation

90

 

 

88

 

Amortization

96

 

 

101

 

Share-based compensation

25

 

 

19

 

Restructuring and asset impairment charges

7

 

 

69

 

Goodwill impairment charge

 

 

58

 

Gain from sale of business

(2

)

 

 

Other, net

3

 

 

33

 

Payments for restructuring

(21

)

 

(25

)

Changes in assets and liabilities (net of acquisitions):

 

 

 

Changes in receivables

(78

)

 

43

 

Changes in inventories

(135

)

 

(48

)

Changes in accounts payable

19

 

 

(91

)

Changes in accrued taxes

 

 

(5

)

Other, net

 

 

106

 

Net Cash – Operating activities

318

 

 

454

 

Investing Activities

 

 

 

Capital expenditures

(127

)

 

(136

)

Proceeds from sale of business

2

 

 

 

Proceeds from the sale of property, plant and equipment

1

 

 

1

 

Cash paid for investments

 

 

(200

)

Other, net

11

 

 

9

 

Net Cash – Investing activities

(113

)

 

(326

)

Financing Activities

 

 

 

Short-term debt issued, net

 

 

359

 

Short-term debt repaid

 

 

(600

)

Long-term debt issued, net

 

 

985

 

Long-term debt repaid

(600

)

 

 

Repurchase of common stock

(68

)

 

(61

)

Proceeds from exercise of employee stock options

15

 

 

10

 

Dividends paid

(152

)

 

(142

)

Other, net

(1

)

 

(1

)

Net Cash – Financing activities

(806

)

 

550

 

Effect of exchange rate changes on cash

(19

)

 

 

Net change in cash and cash equivalents

(620

)

 

678

 

Cash and cash equivalents at beginning of year

1,875

 

 

724

 

Cash and cash equivalents at end of period

$

1,255

 

 

$

1,402

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$

83

 

 

$

46

 

Income taxes (net of refunds received)

$

71

 

 

$

27

 

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 pension costs.
 
“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

 

2021 v. 2020

 

2021 v. 2020

 

 

FX Impact

 

Adj. 2021 v. 2020

 

Adj. 2021 v. 2020

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30
Xylem Inc.

4,716

3,739

977

26%

10

(147

)

840

22

%

22%

Water Infrastructure

1,873

1,670

203

12%

-

(80

)

123

7

%

7%

Applied Water

1,409

1,073

336

31%

-

(40

)

296

28

%

28%

Measurement & Control Solutions

1,434

996

438

44%

10

(27

)

421

42

%

41%

 
Quarter Ended September 30
Xylem Inc.

1,518

1,246

272

22%

2

(24

)

250

20

%

20%

Water Infrastructure

623

558

65

12%

-

(12

)

53

9

%

9%

Applied Water

446

375

71

19%

-

(7

)

64

17

%

17%

Measurement & Control Solutions

449

313

136

43%

2

(5

)

133

42

%

42%

 
Quarter Ended June 30
Xylem Inc.

1,660

1,232

428

35%

1

(74

)

355

29

%

29%

Water Infrastructure

639

598

41

7%

-

(41

)

-

0

%

0%

Applied Water

486

326

160

49%

-

(20

)

140

43

%

43%

Measurement & Control Solutions

535

308

227

74%

1

(13

)

215

70

%

69%

 
Quarter Ended March 31
Xylem Inc.

1,538

1,261

277

22%

7

(49

)

235

19

%

18%

Water Infrastructure

611

514

97

19%

-

(27

)

70

14

%

14%

Applied Water

477

372

105

28%

-

(13

)

92

25

%

25%

Measurement & Control Solutions

450

375

75

20%

7

(9

)

73

19

%

18%

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

 

2021 v. 2020

 

2021 v. 2020

 

 

FX Impact

 

Adj. 2021 v. 2020

 

Adj. 2021 v. 2020

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30
Xylem Inc.

3,872

3,503

369

 

11%

7

(130

)

246

 

7

%

7%

Water Infrastructure

1,625

1,463

162

 

11%

-

(70

)

92

 

6

%

6%

Applied Water

1,207

1,039

168

 

16%

-

(36

)

132

 

13

%

13%

Measurement & Control Solutions

1,040

1,001

39

 

4%

7

(24

)

22

 

2

%

1%

 
Quarter Ended September 30
Xylem Inc.

1,265

1,220

45

 

4%

2

(20

)

27

 

2

%

2%

Water Infrastructure

547

524

23

 

4%

-

(10

)

13

 

2

%

2%

Applied Water

400

364

36

 

10%

-

(7

)

29

 

8

%

8%

Measurement & Control Solutions

318

332

(14

)

(4%)

2

(3

)

(15

)

(5

%)

(5%)

 
Quarter Ended June 30
Xylem Inc.

1,351

1,160

191

 

16%

3

(66

)

128

 

11

%

11%

Water Infrastructure

569

501

68

 

14%

-

(36

)

32

 

6

%

6%

Applied Water

414

337

77

 

23%

-

(18

)

59

 

18

%

18%

Measurement & Control Solutions

368

322

46

 

14%

3

(12

)

37

 

11

%

11%

 
Quarter Ended March 31
Xylem Inc.

1,256

1,123

133

 

12%

2

(44

)

91

 

8

%

8%

Water Infrastructure

509

438

71

 

16%

-

(24

)

47

 

11

%

11%

Applied Water

393

338

55

 

16%

-

(11

)

44

 

13

%

13%

Measurement & Control Solutions

354

347

7

 

2%

2

(9

)

-

 

0

%

(1%)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

Q2

 

Q3

 

YTD

 

2021

2020

 

2021

2020

 

2021

2020

 

2021

2020

Total Revenue
• Total Xylem

1,256

 

1,123

 

1,351

 

1,160

 

1,265

 

1,220

 

3,872

 

3,503

 

• Water Infrastructure

509

 

438

 

569

 

501

 

547

 

524

 

1,625

 

1,463

 

• Applied Water

393

 

338

 

414

 

337

 

400

 

364

 

1,207

 

1,039

 

• Measurement & Control Solutions

354

 

347

 

368

 

322

 

318

 

332

 

1,040

 

1,001

 

 
Operating Income (Loss)
• Total Xylem

133

 

61

 

160

 

54

 

152

 

73

 

445

 

188

 

• Water Infrastructure

71

 

39

 

93

 

73

 

101

 

89

 

265

 

201

 

• Applied Water

66

 

47

 

64

 

41

 

60

 

56

 

190

 

144

 

• Measurement & Control Solutions

9

 

(12

)

13

 

(46

)

7

 

(62

)

29

 

(120

)

• Total Segments

146

 

74

 

170

 

68

 

168

 

83

 

484

 

225

 

 
Operating Margin
• Total Xylem

10.6

%

5.4

%

11.8

%

4.7

%

12.0

%

6.0

%

11.5

%

5.4

%

• Water Infrastructure

13.9

%

8.9

%

16.3

%

14.6

%

18.5

%

17.0

%

16.3

%

13.7

%

• Applied Water

16.8

%

13.9

%

15.5

%

12.2

%

15.0

%

15.4

%

15.7

%

13.9

%

• Measurement & Control Solutions

2.5

%

(3.5

%)

3.5

%

(14.3

%)

2.2

%

(18.7

%)

2.8

%

(12.0

%)

• Total Segments

11.6

%

6.6

%

12.6

%

5.9

%

13.3

%

6.8

%

12.5

%

6.4

%

 
Special Charges
• Total Xylem

2

 

-

 

-

 

11

 

1

 

70

 

3

 

81

 

• Water Infrastructure

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

• Applied Water

1

 

-

 

-

 

-

 

-

 

-

 

1

 

-

 

• Measurement & Control Solutions

-

 

-

 

-

 

10

 

-

 

69

 

-

 

79

 

• Total Segments

1

 

-

 

-

 

10

 

-

 

69

 

1

 

79

 

 
Restructuring & Realignment Costs
• Total Xylem

8

 

9

 

6

 

43

 

2

 

15

 

16

 

67

 

• Water Infrastructure

5

 

5

 

4

 

8

 

1

 

8

 

10

 

21

 

• Applied Water

1

 

2

 

2

 

4

 

2

 

2

 

5

 

8

 

• Measurement & Control Solutions

2

 

2

 

-

 

31

 

(1

)

5

 

1

 

38

 

• Total Segments

8

 

9

 

6

 

43

 

2

 

15

 

16

 

67

 

 
Adjusted Operating Income (Loss)
• Total Xylem

143

 

70

 

166

 

108

 

155

 

158

 

464

 

336

 

• Water Infrastructure

76

 

44

 

97

 

81

 

102

 

97

 

275

 

222

 

• Applied Water

68

 

49

 

66

 

45

 

62

 

58

 

196

 

152

 

• Measurement & Control Solutions

11

 

(10

)

13

 

(5

)

6

 

12

 

30

 

(3

)

• Total Segments

155

 

83

 

176

 

121

 

170

 

167

 

501

 

371

 

 
Adjusted Operating Margin
• Total Xylem

11.4

%

6.2

%

12.3

%

9.3

%

12.3

%

13.0

%

12.0

%

9.6

%

• Water Infrastructure

14.9

%

10.0

%

17.0

%

16.2

%

18.6

%

18.5

%

16.9

%

15.2

%

• Applied Water

17.3

%

14.5

%

15.9

%

13.4

%

15.5

%

15.9

%

16.2

%

14.6

%

• Measurement & Control Solutions

3.1

%

(2.9

%)

3.5

%

(1.6

%)

1.9

%

3.6

%

2.9

%

(0.3

%)

• Total Segments

12.3

%

7.4

%

13.0

%

10.4

%

13.4

%

13.7

%

12.9

%

10.6

%

  Xylem Inc. Non-GAAP Reconciliation
  Adjusted Diluted EPS
  ($ Millions, except per share amounts)
 
 

Q3 2021

 

Q3 2020

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

  Total Revenue

 

1,265

 

 

-

 

 

1,265

 

 

1,220

 

 

-

 

 

1,220

 

  Operating Income

 

152

 

 

3

 

a

 

155

 

 

73

 

 

85

 

a

 

158

 

  Operating Margin

 

12.0

%

 

12.3

%

 

6.0

%

 

13.0

%

  Interest Expense

 

(21

)

 

-

 

 

(21

)

 

(22

)

 

-

 

 

(22

)

  Other Non-Operating Income (Expense)

 

2

 

 

1

 

b

 

3

 

 

(1

)

 

1

 

b

 

-

 

  Gain/(Loss) From Sale of Business

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

  Income before Taxes

 

133

 

 

4

 

 

137

 

 

50

 

 

86

 

 

136

 

  Provision for Income Taxes

 

(19

)

 

(2

)

c

 

(21

)

 

(13

)

 

(9

)

c

 

(22

)

  Net Income Attributable to Xylem

 

114

 

 

2

 

 

116

 

 

37

 

 

77

 

 

114

 

  Diluted Shares

 

181.6

 

 

181.6

 

 

181.0

 

 

181.0

 

  Diluted EPS

$

0.63

 

$

-

 

$

0.63

 

$

0.20

 

$

0.42

 

$

0.62

 

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

$

0.01

 

$

(0.01

)

$

-

 

  Diluted EPS at Constant Currency

$

0.62

 

$

0.01

 

$

0.63

 

 
 
 
 

Q3 YTD 2021

 

Q3 YTD 2020

 

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

  Total Revenue

 

3,872

 

 

-

 

 

3,872

 

 

3,503

 

 

-

 

 

3,503

 

  Operating Income

 

445

 

 

19

 

a

 

464

 

 

188

 

 

148

 

a

 

336

 

  Operating Margin

 

11.5

%

 

12.0

%

 

5.4

%

 

9.6

%

  Interest Expense

 

(63

)

 

-

 

 

(63

)

 

(56

)

 

-

 

 

(56

)

  Other Non-Operating Income (Expense)

 

1

 

 

5

 

b

 

6

 

 

(5

)

 

4

 

b

 

(1

)

  Gain/(Loss) From Sale of Business

 

2

 

 

(2

)

 

-

 

 

-

 

 

-

 

 

-

 

  Income before Taxes

 

385

 

 

22

 

 

407

 

 

127

 

 

152

 

 

279

 

  Provision for Income Taxes

 

(71

)

 

1

 

c

 

(70

)

 

(21

)

 

(29

)

c

 

(50

)

  Net Income Attributable to Xylem

 

314

 

 

23

 

 

337

 

 

106

 

 

123

 

 

229

 

  Diluted Shares

 

181.5

 

 

181.5

 

 

181.0

 

 

181.0

 

  Diluted EPS

$

1.73

 

$

0.13

 

$

1.86

 

$

0.58

 

$

0.67

 

$

1.25

 

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

$

0.10

 

$

0.01

 

$

0.11

 

  Diluted EPS at Constant Currency

$

1.63

 

$

0.12

 

$

1.75

 

 
 

a

Quarter-to-date: Restructuring & realignment costs of $2 million in 2021 and $15 million in 2020, as well as special charges of $1 million in 2021 and $70 million ($69 million of intangible asset and goodwill impairment and $1 million of other charges) in 2020.

 

Year-to-date: Restructuring & realignment costs of $16 million and $67 million in 2021 and 2020, respectively; special charges of $3 million ($1 million of intangible asset impairment charges and $2 million of other charges) and $81 million of special charges in 2020 ($79 million of intangible asset and goodwill impairment charges and $2 million of other charges).

b

Quarter-to-date: Special non-operating charges consist of $1 million, in each of 2021 and 2020, for pension costs related to the UK pension plan that is going to be part of a buyout.

 

Year-to-date: Special non-operating charges consist of $5 million in 2021 and $4 million in 2020, for pension costs related to the UK pension plan that is going to be part of a buyout.

Quarter-to-date: Net tax impact on restructuring & realignment costs of $1 million in 2021 and $3 million in 2020; and $1 million of negative adjustment from tax related special benefits in 2021 and $6 million net tax impact on special charges in 2020.

 

Year-to-date: Net tax impact on restructuring & realignment costs of $4 million and $15 million in 2021 and 2020, respectively; $1 million and $9 million of net tax impact on special charges in 2021 and 2020, respectively; and $6 million of positive adjustment from tax related special charges in 2021 and $5 million of negative adjustment from tax related special benefits in 2020, respectively.

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

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Net Income

87

 

113

 

114

 

314

 

Income Tax Expense

27

 

25

 

19

 

71

 

Interest Expense (Income), net

19

 

19

 

20

 

58

 

Depreciation

30

 

29

 

31

 

90

 

Amortization

32

 

33

 

31

 

96

 

EBITDA

195

 

219

 

215

 

-

 

629

 

Share-based Compensation

9

 

8

 

8

 

25

 

Restructuring & Realignment

8

 

6

 

2

 

16

 

Loss/(Gain) from sale of business

-

 

(2

)

-

 

(2

)

Special Charges

3

 

3

 

2

 

8

 

Adjusted EBITDA

215

 

234

 

227

 

-

 

676

 

Revenue

1,256

 

1,351

 

1,265

 

3,872

 

Adjusted EBITDA Margin

17.1

%

17.3

%

17.9

%

17.5

%

 

2020

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Net Income

38

 

31

 

37

 

148

 

254

 

Income Tax Expense

4

 

4

 

13

 

10

 

31

 

Interest Expense (Income), net

14

 

16

 

20

 

20

 

70

 

Depreciation

29

 

29

 

30

 

29

 

117

 

Amortization

35

 

33

 

33

 

33

 

134

 

EBITDA

120

 

113

 

133

 

240

 

606

 

Share-based Compensation

8

 

8

 

3

 

7

 

26

 

Restructuring & Realignment

9

 

43

 

15

 

10

 

77

 

Special Charges

1

 

13

 

71

 

1

 

86

 

Adjusted EBITDA

138

 

177

 

222

 

258

 

795

 

Revenue

1,123

 

1,160

 

1,220

 

1,373

 

4,876

 

Adjusted EBITDA Margin

12.3

%

15.3

%

18.2

%

18.8

%

16.3

%

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

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax Income

70

 

92

 

102

 

264

 

Interest Expense (Income), net

(1

)

(1

)

-

 

(2

)

Depreciation

11

 

11

 

11

 

33

 

Amortization

2

 

2

 

1

 

5

 

EBITDA

82

 

104

 

114

 

-

 

300

 

Share-based Compensation

1

 

-

 

1

 

2

 

Restructuring & Realignment

5

 

4

 

1

 

10

 

Adjusted EBITDA

88

 

108

 

116

 

-

 

312

 

Revenue

509

 

569

 

547

 

1,625

 

Adjusted EBITDA Margin

17.3

%

19.0

%

21.2

%

19.2

%

 

2020

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax Income

37

 

71

 

85

 

116

 

309

 

Interest Expense (Income), net

-

 

(1

)

-

 

-

 

(1

)

Depreciation

11

 

11

 

11

 

11

 

44

 

Amortization

4

 

5

 

2

 

2

 

13

 

EBITDA

52

 

86

 

98

 

129

 

365

 

Share-based Compensation

-

 

1

 

-

 

1

 

2

 

Restructuring & Realignment

5

 

8

 

8

 

7

 

28

 

Adjusted EBITDA

57

 

95

 

106

 

137

 

395

 

Revenue

438

 

501

 

524

 

616

 

2,079

 

Adjusted EBITDA Margin

13.0

%

19.0

%

20.2

%

22.2

%

19.0

%

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

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax Income

66

 

65

 

60

 

191

 

Interest Expense (Income), net

-

 

-

 

-

 

-

 

Depreciation

5

 

5

 

5

 

15

 

Amortization

1

 

1

 

-

 

2

 

EBITDA

72

 

71

 

65

 

-

 

208

 

Share-based Compensation

1

 

1

 

1

 

3

 

Restructuring & Realignment

1

 

2

 

2

 

5

 

Loss/(Gain) from sale of business

-

 

(2

)

-

 

(2

)

Special Charges

1

 

-

 

-

 

1

 

Adjusted EBITDA

75

 

72

 

68

 

-

 

215

 

Revenue

393

 

414

 

400

 

1,207

 

Adjusted EBITDA Margin

19.1

%

17.4

%

17.0

%

17.8

%

 

2020

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax Income

47

 

42

 

55

 

60

 

204

 

Interest Expense (Income), net

-

 

-

 

-

 

-

 

-

 

Depreciation

5

 

5

 

6

 

5

 

21

 

Amortization

1

 

-

 

1

 

1

 

3

 

EBITDA

53

 

47

 

62

 

66

 

228

 

Share-based Compensation

1

 

1

 

-

 

1

 

3

 

Restructuring & Realignment

2

 

4

 

2

 

1

 

9

 

Adjusted EBITDA

56

 

52

 

64

 

68

 

240

 

Revenue

338

 

337

 

364

 

395

 

1,434

 

Adjusted EBITDA Margin

16.6

%

15.4

%

17.6

%

17.2

%

16.7

%

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

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax Income

16

 

12

 

7

 

35

 

Interest Expense (Income), net

-

 

-

 

-

 

-

 

Depreciation

9

 

10

 

11

 

30

 

Amortization

27

 

27

 

27

 

81

 

EBITDA

52

 

49

 

45

 

-

 

146

 

Share-based Compensation

1

 

2

 

1

 

4

 

Restructuring & Realignment

2

 

-

 

(1

)

1

 

Adjusted EBITDA

55

 

51

 

45

 

-

 

151

 

Revenue

354

 

368

 

318

 

1,040

 

Adjusted EBITDA Margin

15.5

%

13.9

%

14.2

%

14.5

%

 

2020

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax (Loss) Income

(13

)

(46

)

(62

)

14

 

(107

)

Interest Expense (Income), net

-

 

-

 

-

 

-

 

-

 

Depreciation

9

 

8

 

9

 

9

 

35

 

Amortization

27

 

26

 

27

 

27

 

107

 

EBITDA

23

 

(12

)

(26

)

50

 

35

 

Share-based Compensation

2

 

1

 

1

 

1

 

5

 

Restructuring & Realignment

2

 

31

 

5

 

2

 

40

 

Special Charges

-

 

10

 

69

 

-

 

79

 

Adjusted EBITDA

27

 

30

 

49

 

53

 

159

 

Revenue

347

 

322

 

332

 

362

 

1,363

 

Adjusted EBITDA Margin

7.8

%

9.3

%

14.8

%

14.6

%

11.7

%

 

Media
Houston Spencer +1 (914) 240-3046
houston.spencer@xylem.com

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

Source: Xylem Inc.

Xylem