Xylem Reports Third Quarter 2021 Results

Rhea-AI Summary

Xylem Inc. (XYL) reported a 22% growth in orders and 4% revenue growth for Q3 2021. Net income was $114 million or $0.63 per share, with an adjusted net income of $116 million. However, the company lowered its full-year organic revenue guidance to 3% to 4% and adjusted earnings per share to $2.40 to $2.50, citing ongoing supply constraints, particularly related to chip shortages. While demand for water solutions remains strong, these challenges have hindered order conversion, affecting overall outlook.

Positive

• 22% increase in orders and 4% revenue growth, reflecting strong demand.
• Net income reached $114 million, maintaining adjusted earnings per share at $0.63.
• Water Infrastructure segment showed a consistent revenue increase of 4%.

Negative

• Reduced full-year organic revenue guidance from 6%-8% to 3%-4%, impacting financial outlook.
• Supply chain challenges, particularly chip shortages, have slowed order-to-revenue conversion.

• 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.
c	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	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211102005632/en/

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.

FAQ

What was Xylem's revenue growth for Q3 2021?

Xylem reported a 4% revenue growth for Q3 2021.

How much net income did Xylem report for Q3 2021?

Xylem reported a net income of $114 million for Q3 2021.

What is the updated organic revenue growth guidance for Xylem?

Xylem has lowered its full-year organic revenue growth guidance to 3% to 4%.

What challenges is Xylem facing as mentioned in the PR?

Xylem is experiencing supply chain challenges, especially chip shortages.

What are the expected earnings per share for Xylem for the full year?

Xylem's adjusted earnings per share guidance is now $2.40 to $2.50.