Xylem Reports First Quarter 2024 Results and Raises Full-Year Guidance

Rhea-AI Summary

Xylem Inc. (NYSE: XYL) reported strong first-quarter results, with orders up 43% on a reported basis and 3% organically, revenue up 40% on a reported basis and 7% organically, and earnings per share up 17%. The company raised full-year revenue guidance to approximately $8.5 billion, up 15% to 16%, with organic revenue growth of 4% to 6%, and adjusted EPS guidance to $4.10 to $4.25.

Positive

• Orders up 43% on a reported basis and 3% organically.

• Revenue up 40% on a reported basis and 7% organically.

• Earnings per share up 17%.

• Raising full-year revenue guidance to approximately $8.5 billion, up 15% to 16%, with organic growth of 4% to 6%.

• Lifting full-year adjusted EPS guidance to $4.10 to $4.25.

Negative

• None.

Insights

Financial Analyst

Xylem's reported first-quarter financial results indicate a robust performance, with a significant 43% increase in orders and a 40% rise in reported revenue, which translates to a solid 7% organic revenue growth. The surge in orders suggests a healthy demand for Xylem's water technology solutions. A noteworthy point is the company’s operational performance driving an earnings per share (EPS) increase of 17%, which is a testament to effective cost management and operational efficiencies. Raising the full-year revenue guidance by 1-2% and EPS guidance suggests confidence in sustained demand and the company's ability to capitalize on it. It's also encouraging to see an improvement in net income margins by 70 basis points to 7.5 percent. For investors, the margin improvements and free cash flow conversion expectation of 115% are particularly compelling, indicating that the company is not only growing its top line but also becoming more profitable and generating cash.

Market Research Analyst

The integration with Evoqua mentioned by Xylem's president appears to be a strategic move, potentially resulting in operational synergies that could enhance future margins. Xylem's positioning in the market, addressing the increasing global need for water security, provides a unique selling proposition. However, it is critical to monitor how the company executes its strategy amidst global water challenges and competitive pressures. The upward adjustment in the full-year guidance reflects management's optimism but also sets higher expectations for future performance. For investors, understanding the specificity of Xylem's market segment, potential risks from global water-related issues and how the company's product portfolio addresses these challenges is vital for assessing the long-term viability of their investment.

• Orders of $2.2 billion, up 43% on a reported basis and 3% organically
• Revenue of $2.0 billion, up 40% on a reported basis and 7% organically
• Earnings per share of $0.63, up 17%; $0.90 on an adjusted basis, up 14%
• Raising full-year revenue guidance to approximately $8.5B, up 15% to 16%, with organic revenue growth of 4% to 6%, up from 3% to 5%
• Lifting full-year adjusted EPS guidance to $4.10 to $4.25, from $4.00 to $4.20

WASHINGTON--(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 results. The Company’s total revenue of $2.0 billion surpassed prior guidance, on strong execution and demand. First-quarter earnings also exceeded Xylem’s previous guidance.

“The team outperformed on all metrics and continued Xylem’s strong momentum, including record first-quarter margins,” said Matthew Pine, Xylem’s president and CEO. “Operational performance was robust on healthy demand across most segments and regions. We’re also on track to capture the synergies of our integration with Evoqua, and are driving simplification across our business to lock in and extend our margin improvements over time.”

“We are raising our full-year guidance on the strength of the team’s demonstrated ability to capitalize on our markets’ resilient demand. We are confident that Xylem’s platform of solutions is uniquely positioned to enable our customers and communities to become more water-secure, even as the world becomes more water-challenged.”

Net income was $153 million, or $0.63 per share. Net income margin increased 70 basis points to 7.5 percent. These results are driven by strong operational performance, partially offset by higher purchase accounting intangible amortization. Adjusted net income was $219 million, or $0.90 per share, which excludes the impacts of restructuring and realignment costs, amortization of acquired intangible assets, loss from sale of businesses, special charges, and tax-related special items.

First-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin was 19.2 percent, reflecting a year-over-year increase of 290 basis points. Productivity savings, favorable mix, price and volume drove the margin expansion, exceeding the impact of inflation and strategic investments.

Outlook

Xylem now expects full-year 2024 revenue of approximately $8.5 billion, up approximately 15 to 16 percent on a reported basis and up approximately 4 to 6 percent on an organic basis. This represents an increase from the Company’s previous full-year guidance of 14 to 15 percent on a reported basis and 3 to 5 percent on an organic basis.

Full-year 2024 adjusted EBITDA margin is expected to be approximately 20.0 percent, lifted from the previous guide of 19.4 to 19.9 percent. This results in adjusted earnings per share of $4.10 to $4.25, raised from the previous range of $4.00 to $4.20. Full-year free cash flow conversion to net income is still expected to be approximately 115 percent.

Further 2024 planning assumptions are included in Xylem’s first-quarter earnings materials posted at www.xylem.com/investors. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort.

Supplemental information on Xylem’s first-quarter earnings and reconciliations for certain non-GAAP items is posted at www.xylem.com/investors.

About Xylem

Xylem (XYL) is a leading global water technology company committed to solving the world’s critical water challenges with innovation and expertise. Our 23,000 diverse employees delivered combined pro forma revenue of $8.1 billion in 2023. We are creating a more sustainable world by enabling our customers to optimize water and resource management and helping communities in more than 150 countries become water-secure. Join us at www.xylem.com and Let’s Solve Water.

Forward-Looking Statements

This press release contains “forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” "contemplate," "predict," “forecast,” “likely,” “believe,” “target,” “will,” “could,” “would,” “should,” "potential," "may" and similar expressions or their negative, may, but are not necessary to, identify forward-looking statements. By their nature, forward-looking statements address uncertain matters and include any statements that: are not historical, such as statements about our strategy, financial plans, outlook, objectives, plans, intentions or goals (including those related to our social, environmental and other sustainability goals); or address possible or future results of operations or financial performance, including statements relating to orders, revenues, operating margins and earnings per share growth.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include, among others, the following: the impact of overall industry and general economic conditions, including industrial, governmental, and public and private sector spending, interest rates, inflation and related monetary policy by governments in response to inflation, and the strength of the residential and commercial real estate markets, on economic activity and our operations; geopolitical events, including the ongoing and possible escalation of the conflicts involving Russia and Ukraine, and the Middle East, as well as regulatory, economic and other risks associated with our global sales and operations, including those related to domestic content requirements applicable to projects receiving governmental funding; manufacturing and operating cost increases due to macroeconomic conditions, including inflation, energy supply, supply chain shortages, logistics challenges, tight labor markets, prevailing price changes, tariffs and other factors; demand for our products, disruption, competition or pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including electronic components (in particular, semiconductors); disruptions in operations at our facilities or that of third parties upon which we rely; uncertainty related to the realization of the benefits and synergies from our acquisition of Evoqua Water Technologies Corp.; safe and compliant treatment and handling of water, wastewater and hazardous materials; failure to successfully execute large projects, including with respect to meeting performance guarantees and customers’ budgets, timelines and safety requirements; our ability to retain and attract leadership and other diverse and key talent, as well as competition for overall talent and labor; defects, security, warranty and liability claims, and recalls related to our products; uncertainty around restructuring and realignment actions and related costs and savings; our ability to execute strategic investments for growth, including related to acquisitions and divestitures; availability, regulation or interference with radio spectrum used by certain of our products; volatility in served markets or impacts on our business and operations due to weather conditions, including the effects of climate change; risks related to our sustainability commitments and related disclosures; fluctuations in foreign currency exchange rates; difficulty predicting our financial results; risk of future impairments to goodwill and other intangible assets; changes in our effective tax rates or tax expenses; financial market risks related to our pension and other defined benefit plans; failure to comply with, or changes in, laws or regulations, including those pertaining to our business conduct, operations, products and services, including anti-corruption, data privacy and security, trade, competition, the environment, climate change and health and safety; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; matters related to intellectual property infringement or expiration of rights; and other factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Annual Report") and in subsequent filings we make with the Securities and Exchange Commission (“SEC”).

Forward-looking and other statements in this press release regarding our environmental and other sustainability plans and goals are not an indication that these statements are necessarily material to investors, to our business, operating results, financial condition, outlook, or strategy, to our impacts on sustainability matters or other parties, or are required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking social, environmental and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. All forward-looking statements made herein are based on information currently available to us as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

XYLEM INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) (in millions, except per share data)
For the three months ended March 31,		2024				2023
Revenue from products	$	1,690			$	1,308
Revenue from services		343				140
Revenue		2,033				1,448
Cost of revenue from products		1,021				791
Cost of revenue from services		260				111
Cost of revenue		1,281				902
Gross profit		752				546
Selling, general and administrative expenses		474				354
Research and development expenses		59				53
Restructuring and asset impairment charges		10				8
Operating income		209				131
Interest expense		14				9
Other non-operating income, net		6				4
(Loss) on sale of businesses		(5	)			—
Income before taxes		196				126
Income tax expense		43				27
Net income	$	153			$	99
Earnings per share:
Basic	$	0.63			$	0.55
Diluted	$	0.63			$	0.54
Weighted average number of shares:
Basic		241.9				180.4
Diluted		243.0				181.3

XYLEM INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions, except per share amounts)
	March 31, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	947			$	1,019
Receivables, less allowances for discounts, returns and credit losses of $46 and $56 in 2024 and 2023, respectively		1,641				1,617
Inventories		1,039				1,018
Prepaid and other current assets		266				230
Total current assets		3,893				3,884
Property, plant and equipment, net		1,141				1,169
Goodwill		7,509				7,587
Other intangible assets, net		2,454				2,529
Other non-current assets		927				943
Total assets	$	15,924			$	16,112
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	948			$	968
Accrued and other current liabilities		1,098				1,221
Short-term borrowings and current maturities of long-term debt		285				16
Total current liabilities		2,331				2,205
Long-term debt		1,985				2,268
Accrued post-retirement benefits		323				344
Deferred income tax liabilities		558				557
Other non-current accrued liabilities		524				562
Total liabilities		5,721				5,936
Stockholders’ equity:
Common stock – par value $0.01 per share:
Authorized 750.0 shares, issued 258.6 shares and 257.6 shares in 2024 and 2023, respectively		3				3
Capital in excess of par value		8,618				8,564
Retained earnings		2,667				2,601
Treasury stock – at cost 16.1 shares and 16.0 shares in 2024 and 2023, respectively		(748	)			(733	)
Accumulated other comprehensive loss		(345	)			(269	)
Total stockholders’ equity		10,195				10,166
Non-controlling interests		8				10
Total equity		10,203				10,176
Total liabilities and stockholders’ equity	$	15,924			$	16,112

XYLEM INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions)
For the three months ended March 31,		2024				2023
Operating Activities
Net income	$	153			$	99
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		61				28
Amortization		73				32
Share-based compensation		18				12
Restructuring and asset impairment charges		10				8
Loss from sale of business		5				—
Other, net		(2	)			3
Payments for restructuring		(11	)			(6	)
Changes in assets and liabilities (net of acquisitions):
Changes in receivables		(47	)			(28	)
Changes in inventories		(52	)			(55	)
Changes in accounts payable		6				(14	)
Other, net		(125	)			(98	)
Net Cash – Operating activities		89				(19	)
Investing Activities
Capital expenditures		(74	)			(49	)
Proceeds from sale of business		11				—
Proceeds from the sale of property, plant and equipment		1				—
Cash received from investments		2				2
Cash paid for investments		(2	)			—
Cash received from cross-currency swaps		11				11
Other, net		—				(1	)
Net Cash – Investing activities		(51	)			(37	)
Financing Activities
Long-term debt repaid		(5	)			—
Repurchase of common stock		(15	)			(8	)
Proceeds from exercise of employee stock options		33				7
Dividends paid		(88	)			(60	)
Other, net		(7	)			(2	)
Net Cash – Financing activities		(82	)			(63	)
Effect of exchange rate changes on cash		(28	)			12
Net change in cash and cash equivalents		(72	)			(107	)
Cash and cash equivalents at beginning of year		1,019				944
Cash and cash equivalents at end of period	$	947			$	837
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	13			$	11
Income taxes (net of refunds received)	$	39			$	49

Xylem Inc. Non-GAAP Measures

Management reviews key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, working capital and backlog, among others. In addition, we consider certain non-GAAP (or "adjusted") measures to be useful to management and investors evaluating our operating performance for the periods presented, and to provide a tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including but not limited to, dividends, acquisitions, share repurchases and debt repayment. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort. These adjusted metrics are consistent with how management views our business and are used to make financial, operating and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operating activities as determined in accordance with GAAP. We consider the following items to represent the non-GAAP measures we consider to be key performance indicators, as well as the related reconciling items to the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

“Organic revenue" and "Organic orders” defined as revenue and orders, respectively, excluding the impact of fluctuations in foreign currency translation and contributions from acquisitions and divestitures. Divestitures include sales or discontinuance of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the same currency conversion rate.

“Constant currency” defined as financial results adjusted for foreign currency translation impacts by translating current period and prior period activity using the same currency conversion rate. This approach is used for countries whose functional currency is not the U.S. dollar.

“EBITDA” defined as earnings before interest, taxes, depreciation and amortization expense. “Adjusted EBITDA” and "Adjusted Segment EBITDA" reflect the adjustments to EBITDA and segment EBITDA, respectively, to exclude share-based compensation charges, restructuring and realignment costs, gain or loss from sale of businesses and special charges.

"Adjusted EBITDA Margin" and "Adjusted Segment EBITDA Margin" defined as adjusted EBITDA and adjusted segment EBITDA divided by total revenue and segment revenue, respectively.

"Adjusted Operating Income", "Adjusted Segment Operating Income", "Adjusted Net Income" and “Adjusted EPS” defined as operating income, segment operating income, net income and earnings per share, adjusted to exclude restructuring and realignment costs, amortization of acquired intangible assets, gain or loss from sale of businesses, special charges and tax-related special items, as applicable.

"Adjusted Operating Margin" and "Adjusted Segment Operating Margin" defined as adjusted operating income and adjusted segment operating income divided by total revenue and segment revenue, respectively.

“Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flows, less capital expenditures, and "Free Cash Flow Conversion" defined as Free Cash Flows divided by net income, excluding the gain on sale of businesses and other non-recurring, significant non-cash impacts, such as non-cash impairment charges and significant deferred tax items. Our definitions of "free cash flow" and "free cash flow conversion" do not consider certain non-discretionary cash payments, such as debt.

"Adjusted Free Cash Flow" defined as free cash flow adjusted for significant cash items for which the corresponding income statement impact does not occur within the same fiscal year.

“Realignment costs” defined as costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, severance, relocation, travel, facility set-up and other costs.

“Special charges" defined as costs incurred by the Company, such as acquisition and integration related costs and non-cash impairment charges.

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

Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic and 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		2024 v. 2023			2024 v. 2023						FX Impact			Adj. 2024 v. 2023			Adj. 2024 v. 2023
	2024		2023
Quarter Ended March 31
Xylem Inc.	2,246		1,570		676			43	%		(621	)		(1	)		54			3	%		43	%
Water Infrastructure	646		461		185			40	%		(154	)		(2	)		29			6	%		40	%
Applied Water	480		483		(3	)		(1	%)		-			-			(3	)		(1	%)		(1	%)
Measurement and Control Solutions	429		415		14			3	%		-			-			14			3	%		3	%
Water Solutions and Services	691		211		480			227	%		(467	)		1			14			7	%		228	%

Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic and 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		2024 v. 2023			2024 v. 2023						FX Impact			Adj. 2024 v. 2023			Adj. 2024 v. 2023
	2024		2023
Quarter Ended March 31
Xylem Inc.	2,033		1,448		585			40	%		(480	)		(2	)		103			7	%		40	%
Water Infrastructure	574		410		164			40	%		(137	)		(1	)		26			6	%		40	%
Applied Water	436		453		(17	)		(4	%)		-			(1	)		(18	)		(4	%)		(4	%)
Measurement and Control Solutions	462		378		84			22	%		-			(1	)		83			22	%		22	%
Water Solutions and Services	561		207		354			171	%		(343	)		1			12			6	%		171	%

Xylem Inc. Non-GAAP Reconciliation
Adjusted Operating Income ($ Millions)
	Q1					Q2				Q3				Q4				YTD
	2024		2023			2024	2023			2024	2023			2024	2023			2024		2023
Total Revenue
• Total Xylem	2,033		1,448				1,722				2,076				2,118			2,033		7,364
• Water Infrastructure	574		410				519				612				674			574		2,215
• Applied Water	436		453				478				465				457			436		1,853
• Measurement and Control Solutions	462		378				384				413				437			462		1,612
• Water Solutions and Services	561		207				341				586				550			561		1,684
• Corporate/ Other	-		-				-				-				-			-		-
Operating Income (Loss)
• Total Xylem	209		131				119				191				211			209		652
• Water Infrastructure	60		46				70				84				75			60		275
• Applied Water	61		83				84				73				70			61		310
• Measurement and Control Solutions	70		26				29				35				43			70		133
• Water Solutions and Services	50		18				26				33				55			50		132
• Corporate/ Other	(32	)	(42	)			(90	)			(34	)			(32	)		(32	)	(198	)
Operating Margin
• Total Xylem	10.3	%	9.0	%		N/A	6.9	%		N/A	9.2	%		N/A	10.0	%		10.3	%	8.9	%
• Water Infrastructure	10.5	%	11.2	%		N/A	13.5	%		N/A	13.7	%		N/A	11.1	%		10.5	%	12.4	%
• Applied Water	14.0	%	18.3	%		N/A	17.6	%		N/A	15.7	%		N/A	15.3	%		14.0	%	16.7	%
• Measurement and Control Solutions	15.2	%	6.9	%		N/A	7.6	%		N/A	8.5	%		N/A	9.8	%		15.2	%	8.3	%
• Water Solutions and Services	8.9	%	8.7	%		N/A	7.6	%		N/A	5.6	%		N/A	10.0	%		8.9	%	7.8	%
• Corporate/ Other	N/A		N/A			N/A	N/A			N/A	N/A			N/A	N/A			N/A		N/A
Special Charges
• Total Xylem	16		25				67				24				22			16		138
• Water Infrastructure	2		-				12				6				10			2		28
• Applied Water	-		-				-				-				-			-		-
• Measurement and Control Solutions	-		2				-				1				1			-		4
• Water Solutions and Services	9		-				7				9				6			9		22
• Corporate/ Other	5		23				48				8				5			5		84
Restructuring & Realignment Costs
• Total Xylem	15		11				37				34				24			15		106
• Water Infrastructure	7		3				2				2				11			7		18
• Applied Water	2		3				2				6				3			2		14
• Measurement and Control Solutions	2		5				3				6				5			2		19
• Water Solutions and Services	3		-				8				9				3			3		20
• Corporate/ Other	1		-				22				11				2			1		35
Purchase Accounting Intangible Amortization Adjustment
• Total Xylem	54		18				36				66				56			54		176
• Water Infrastructure	19		1				8				15				23			19		47
• Applied Water	-		-				-				-				-			-		-
• Measurement and Control Solutions	14		14				15				14				14			14		57
• Water Solutions and Services	21		3				13				37				19			21		72
• Corporate/ Other	-		-				-				-				-			-		-
Adjusted Operating Income (Loss)
• Total Xylem	294		185				259				315				313			294		1,072
• Water Infrastructure	88		50				92				107				119			88		368
• Applied Water	63		86				86				79				73			63		324
• Measurement and Control Solutions	86		47				47				56				63			86		213
• Water Solutions and Services	83		21				54				88				83			83		246
• Corporate/ Other	(26	)	(19	)			(20	)			(15	)			(25	)		(26	)	(79	)
Adjusted Operating Margin
• Total Xylem	14.5	%	12.8	%		N/A	15.0	%		N/A	15.2	%		N/A	14.8	%		14.5	%	14.6	%
• Water Infrastructure	15.3	%	12.2	%		N/A	17.7	%		N/A	17.5	%		N/A	17.7	%		15.3	%	16.6	%
• Applied Water	14.4	%	19.0	%		N/A	18.0	%		N/A	17.0	%		N/A	16.0	%		14.4	%	17.5	%
• Measurement and Control Solutions	18.6	%	12.4	%		N/A	12.2	%		N/A	13.6	%		N/A	14.4	%		18.6	%	13.2	%
• Water Solutions and Services	14.8	%	10.1	%		N/A	15.8	%		N/A	15.0	%		N/A	15.1	%		14.8	%	14.6	%
• Corporate/ Other	N/A		N/A			N/A	N/A			N/A	N/A			N/A	N/A			N/A		N/A

Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
		Q1 2024												Q1 2023
		As Reported				Adjustments				Adjusted				As Reported				Adjustments				Adjusted
	Total Revenue		2,033				-				2,033				1,448				-				1,448
	Operating Income		209				85		a		294				131				54		a		185
	Operating Margin		10.3	%							14.5	%			9.0	%							12.8	%
	Interest Expense		(14	)			-				(14	)			(9	)			-				(9	)
	Other Non-Operating Income (Expense)		6				-				6				4				-				4
	Gain/(Loss) From Sale of Business		(5	)			5				-				-				-				-
	Income before Taxes		196				90				286				126				54				180
	Provision for Income Taxes		(43	)			(24	)	b		(67	)			(27	)			(9	)	b		(36	)
	Net Income		153				66				219				99				45				144
	Diluted Shares		243.0								243.0				181.3								181.3
	Diluted EPS	$0.63				$0.27				$0.90				$0.54				$0.25				$0.79

a

Restructuring & realignment costs: 2024 - $15 million and 2023 - $11 million

Special charges: 2024 - $15 million of acquisition & integration cost and $1 million of asset impairment charges; 2023 - $23 million of acquisition & integration cost and $2 million of asset impairment charges.

Purchase accounting intangible amortization: 2024 - $54 million and 2023 - $18 million

b

2024 - Net tax impact on pre-tax adjustments (note a) of $22 million and other tax special items of $2 million; 2023 - Net tax impact on pre-tax adjustments (note a) of $9 million

Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow ($ Millions)
		Q1
			2024				2023
Net Cash - Operating Activities		$89				($19		)
Capital Expenditures - PPE			(59	)			(33	)
Capital Expenditures - Software			(15	)			(16	)
Capital Expenditures			(74	)			(49	)
Cash paid in excess of tax provision for R&D law change adoption			-				33
Free Cash Flow		$15				($35		)
Net Income		$153				$99
Gain/(Loss) from sale of business			(5	)			-
Restructuring Charges - non-cash stock acceleration			(2	)			-
Special Charges - non-cash impairment			(1	)			(2	)
Net Income, excluding gain/(loss) on sale of businesses and non-cash restructuring and special charges		$161				$101
Operating Cash Flow Conversion			58	%			(19	%)
Free Cash Flow Conversion			9	%			(35	%)

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
2024
		Q1			Q2			Q3			Q4			Total
Net Income		153												153
Net Income margin		7.5	%											7.5	%
Depreciation		61												61
Amortization		73												73
Interest Expense (Income), net		7												7
Income Tax Expense		43												43
EBITDA		337			-			-			-			337
Share-based Compensation		18												18
Restructuring & Realignment		15												15
Special Charges		16												16
Loss/(Gain) from sale of business		5												5
Adjusted EBITDA		391			-			-			-			391
Revenue		2,033												2,033
Adjusted EBITDA Margin		19.2	%											19.2	%
2023
		Q1			Q2			Q3			Q4			Total
Net Income		99			92			152			266			609
Net Income margin		6.8	%		5.3	%		7.3	%		12.6	%		8.3	%
Depreciation		28			41			63			61			193
Amortization		32			51			84			76			243
Interest Expense (Income), net		2			5			6			8			21
Income Tax Expense		27			22			33			(56	)		26
EBITDA		188			211			338			355			1,092
Share-based Compensation		12			15			18			15			60
Restructuring & Realignment		11			36			33			23			103
U.K. Pension Settlement		-			-			-			-			-
Special Charges		25			67			22			22			136
Loss/(Gain) from sale of business		-			-			-			1			1
Adjusted EBITDA		236			329			411			416			1,392
Revenue		1,448			1,722			2,076			2,118			7,364
Adjusted EBITDA Margin		16.3	%		19.1	%		19.8	%		19.6	%		18.9	%

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
Water Infrastructure
2024
		Q1			Q2			Q3			Q4			Total
Operating Income		60												60
Operating Margin		10.5	%		N/A			N/A			N/A			10.5	%
Depreciation		10												10
Amortization		21												21
Other non-operating expense, excluding interest income		(1	)											(1	)
EBITDA		90			-			-			-			90
Share-based Compensation		3												3
Restructuring & Realignment		7												7
Special Charges		2												2
Adjusted EBITDA		102			-			-			-			102
Revenue		574												574
Adjusted EBITDA Margin		17.8	%		N/A			N/A			N/A			17.8	%
2023
		Q1			Q2			Q3			Q4			Total
Operating Income		46			70			84			75			275
Operating Margin		11.2	%		13.5	%		13.7	%		11.1	%		12.4	%
Depreciation		7			8			10			9			34
Amortization		2			10			17			26			55
Other non-operating expense, excluding interest income		-			1			(1	)		3			3
EBITDA		55			89			110			113			367
Share-based Compensation		2			3			4			4			13
Restructuring & Realignment		3			2			2			11			18
Special Charges		-			12			6			10			28
Adjusted EBITDA		60			106			122			138			426
Revenue		410			519			612			674			2,215
Adjusted EBITDA Margin		14.6	%		20.4	%		19.9	%		20.5	%		19.2	%

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
Applied Water
2024
		Q1			Q2			Q3			Q4			Total
Operating Income		61												61
Operating Margin		14.0	%		N/A			N/A			N/A			14.0	%
Depreciation		6												6
Amortization		1												1
Other non-operating expense, excluding interest income		-												-
EBITDA		68												68
Share-based Compensation		2												2
Restructuring & Realignment		2												2
Special Charges		-												-
Adjusted EBITDA		72			-			-			-			72
Revenue		436												436
Adjusted EBITDA Margin		16.5	%		N/A			N/A			N/A			16.5	%
2023
		Q1			Q2			Q3			Q4			Total
Operating Income		83			84			73			70			310
Operating Margin		18.3	%		17.6	%		15.7	%		15.3	%		16.7	%
Depreciation		5			6			7			7			25
Amortization		1			1			-			1			3
Other non-operating expense, excluding interest income		(1	)		-			-			(1	)		(2	)
EBITDA		88			91			80			77			336
Share-based Compensation		1			-			1			1			3
Restructuring & Realignment		3			2			6			2			13
Special Charges		-			-			-			-			-
Adjusted EBITDA		92			93			87			80			352
Revenue		453			478			465			457			1,853
Adjusted EBITDA Margin		20.3	%		19.5	%		18.7	%		17.5	%		19.0	%

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
Measurement and Control Solutions
2024
		Q1			Q2			Q3			Q4			Total
Operating Income		70												70
Operating Margin		15.2	%		N/A			N/A			N/A			15.2	%
Depreciation		6												6
Amortization		27												27
Other non-operating expense, excluding interest income		(1	)											(1	)
EBITDA		102			-			-			-			102
Share-based Compensation		1												1
Restructuring & Realignment		2												2
Special Charges		-												-
Adjusted EBITDA		105			-			-			-			105
Revenue		462												462
Adjusted EBITDA Margin		22.7	%		N/A			N/A			N/A			22.7	%
2023
		Q1			Q2			Q3			Q4			Total
Operating Income		26			29			35			43			133
Operating Margin		6.9	%		7.6	%		8.5	%		9.8	%		8.3	%
(Loss)/Gain from sale of business		-			-			-			(1	)		(1	)
Depreciation		6			7			7			7			27
Amortization		24			24			24			25			97
Other non-operating expense, excluding interest income		-			(1	)		-			(3	)		(4	)
EBITDA		56			59			66			71			252
Share-based Compensation		2			2			1			2			7
Restructuring & Realignment		5			2			5			5			17
Special Charges		2			-			1			1			4
Loss/(Gain) from sale of business		-			-			-			1			1
Adjusted EBITDA		65			63			73			80			281
Revenue		378			384			413			437			1,612
Adjusted EBITDA Margin		17.2	%		16.4	%		17.7	%		18.3	%		17.4	%

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
Water Solutions and Services
2024
		Q1			Q2			Q3			Q4			Total
Operating Income		50												50
Operating Margin		8.9	%		N/A			N/A			N/A			8.9	%
(Loss)/Gain from sale of business		(5	)											(5	)
Depreciation		38												38
Amortization		22												22
Other non-operating expense, excluding interest income		-												-
EBITDA		105			-			-			-			105
Share-based Compensation		3												3
Restructuring & Realignment		3												3
Special Charges		9												9
Loss/(Gain) from sale of business		5												5
Adjusted EBITDA		125			-			-			-			125
Revenue		561												561
Adjusted EBITDA Margin		22.3	%		N/A			N/A			N/A			22.3	%
2023
		Q1			Q2			Q3			Q4			Total
Operating Income		18			26			33			55			132
Operating Margin		8.7	%		7.6	%		5.6	%		10.0	%		7.8	%
(Loss)/Gain from sale of business		-			-			-						-
Depreciation		10			19			39			37			105
Amortization		3			15			39			22			79
Other non-operating expense, excluding interest income		-			-			1			-			1
EBITDA		31			60			112			114			317
Share-based Compensation		1			4			3			2			10
Restructuring & Realignment		-			8			9			3			20
Special Charges		-			7			9			6			22
Loss/(Gain) from sale of business		-			-			-			-			-
Adjusted EBITDA		32			79			133			125			369
Revenue		207			341			586			550			1,684
Adjusted EBITDA Margin		15.5	%		23.2	%		22.7	%		22.7	%		21.9	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240501115688/en/

Media

Houston Spencer +1 (914) 323-5723

houston.spencer@xylem.com

Investors

Andrea van der Berg +1 (914) 260-8612

andrea.vanderberg@xylem.com

Source: Xylem Inc.