Xylem Reports Third Quarter 2024 Results and Narrows Full-Year Guidance

Rhea-AI Summary

Xylem (NYSE: XYL) reported third-quarter 2024 results with revenue of $2.1 billion, up 1% on both reported and organic basis. Net income reached $217 million, with earnings per share of $0.89, up 41%. Adjusted EPS was $1.11, increasing 12%. The company narrowed its full-year 2024 guidance, projecting revenue of $8.5 billion (15% YoY growth) and adjusted EPS of $4.22-$4.24. Orders grew 8% on reported and organic basis, while EBITDA margin expanded to 21.2%, up 140 basis points year-over-year. The Evoqua integration is ahead of schedule with accelerating synergy capture.

Positive

• Revenue growth of 1% to $2.1 billion
• Net income margin increased 300 basis points to 10.3%
• Orders growth of 8% indicating strong demand
• EBITDA margin expansion of 140 basis points to 21.2%
• Evoqua integration ahead of schedule with accelerating synergies

Negative

• Moderated organic revenue growth due to project timing
• Narrowed full-year EPS guidance with lower upper range (from $4.28 to $4.24)

Insights

Financial Analyst

Strong quarterly performance with notable improvements in profitability metrics. Revenue reached $2.1 billion, with organic growth of 1% and impressive order growth of 8%. The adjusted EBITDA margin of 21.2% shows significant improvement, up 140 basis points year-over-year.

The Evoqua integration is progressing ahead of schedule, contributing to margin expansion. The narrowed full-year EPS guidance of $4.22 to $4.24 reflects increased confidence in execution. The robust book-to-bill ratio and strong order growth across all segments indicate healthy demand fundamentals, despite some project timing impacts on organic growth.

Free cash flow conversion target of 120%+ demonstrates solid operational efficiency and working capital management. The 41% increase in reported EPS and 12% growth in adjusted EPS underscore successful cost management and synergy realization.

Market Research Analyst

The water technology sector shows resilience despite broader market uncertainties. Xylem's performance indicates strong market positioning, particularly in integrated water solutions. The 8% order growth suggests sustained demand for water infrastructure and treatment solutions.

The company's focus on operational efficiency through simplification efforts and integration synergies positions it well for margin expansion. The expected full-year revenue of $8.5 billion, representing 15% reported growth, reflects both organic growth and successful M&A integration, notably with Evoqua. This strategic execution strengthens Xylem's competitive position in the growing water technology market.

• Revenue of $2.1 billion, up 1% on a reported and organic basis
• Earnings per share of $0.89, up 41%; $1.11 on an adjusted basis, up 12%
• Updated full-year revenue guidance of $8.5 billion, up approximately 15% YoY, with organic revenue growth of ~5%
• Narrowing full-year adjusted EPS guidance to $4.22 to $4.24, from $4.18 to $4.28

WASHINGTON--(BUSINESS WIRE)-- Xylem Inc. (NYSE: XYL), a leading global water technology company that empowers customers and communities to build a more water-secure world, today reported third-quarter results. The Company’s total revenue was $2.1 billion, up one percent on a reported and organic basis, and third-quarter earnings per share were up 41 percent on a reported basis and 12 percent on an adjusted basis. Orders grew 8 percent on a reported and organic basis.

“The team delivered strong results in the quarter, with earnings at the high end of guidance, and margin expansion beating our expectations,” said Matthew Pine, Xylem’s President and CEO. “Demand remained resilient, reflected in robust orders growth in all segments, and a healthy book-to-bill. Moderated organic revenue growth in the quarter was driven largely by project timing.”

“Outperformance on margin and earnings was further reinforced by momentum in our integration of Evoqua and by initial impacts from our broader simplification efforts,” Pine continued. “Evoqua integration is ahead of schedule and synergy capture continues to accelerate, giving us confidence in closing the year above target. As a result, we are narrowing our full-year earnings guidance, with continuing focus on sustainable, high-quality earnings and profitable growth.”

Net income was $217 million, or $0.89 per share. Net income margin increased 300 basis points to 10.3 percent. These results are driven by strong operational performance. Adjusted net income was $269 million, or $1.11 per share, which excludes the impacts of amortization of acquired intangible assets, restructuring and realignment costs, gain/loss from sale of businesses, special charges, and tax-related special items.

Third-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin was 21.2 percent, ­reflecting a year-over-year increase of 140 basis points. Productivity savings and price drove the margin expansion, exceeding the impact of inflation, strategic investments and mix.

Outlook

Xylem expects full-year 2024 revenue of $8.5 billion, up approximately 15 percent on a reported basis and up approximately 5 percent on an organic basis.

Full-year 2024 adjusted EBITDA margin is expected to be approximately 20.5 percent. This results in adjusted earnings per share of $4.22 to $4.24 from the previous range of $4.18 to $4.28. Full-year free cash flow conversion to net income is expected to be at least 120 percent.

Further 2024 planning assumptions are included in Xylem’s third-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 third-quarter earnings and reconciliations for certain non-GAAP items is posted at www.xylem.com/investors.

About Xylem

Xylem (XYL) is a Fortune 500 global water solutions company that empowers customers and communities to build a more water-secure world. Our 23,000 diverse employees delivered combined pro forma revenue of $8.1 billion in 2023, optimizing water and resource management with innovation and expertise. 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)

	Three Months							Nine Months
For the periods ended September 30,	2024				2023			2024				2023
Revenue from products	$	1,744			$	1,720		$	5,236			$	4,535
Revenue from services		360				356			1,070				711
Revenue		2,104				2,076			6,306				5,246
Cost of revenue from products		1,047				1,043			3,147				2,730
Cost of revenue from services		273				269			804				555
Cost of revenue		1,320				1,312			3,951				3,285
Gross profit		784				764			2,355				1,961
Selling, general and administrative expenses		445				491			1,404				1,291
Research and development expenses		55				61			172				172
Restructuring and asset impairment charges		4				21			37				57
Operating income		280				191			742				441
Interest expense		10				14			35				35
Other non-operating income, net		1				8			11				19
(Loss) on sale of businesses		(2	)			—			(6	)			—
Income before taxes		269				185			712				425
Income tax expense		52				33			148				82
Net income	$	217			$	152		$	564			$	343
Earnings per share:
Basic	$	0.89			$	0.63		$	2.33			$	1.64
Diluted	$	0.89			$	0.63		$	2.32			$	1.63
Weighted average number of shares:
Basic		242.9				240.9			242.5				208.9
Diluted		243.8				242.2			243.4				210.1

XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions, except per share amounts)

	September 30, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	989			$	1,019
Receivables, less allowances for discounts, returns and credit losses of $60 and $56 in 2024 and 2023, respectively		1,707				1,617
Inventories		1,091				1,018
Prepaid and other current assets		226				230
Total current assets		4,013				3,884
Property, plant and equipment, net		1,158				1,169
Goodwill		7,593				7,587
Other intangible assets, net		2,326				2,529
Other non-current assets		956				943
Total assets	$	16,046			$	16,112
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	930			$	968
Accrued and other current liabilities		1,105				1,221
Short-term borrowings and current maturities of long-term debt		17				16
Total current liabilities		2,052				2,205
Long-term debt		1,977				2,268
Accrued post-retirement benefits		332				344
Deferred income tax liabilities		535				557
Other non-current accrued liabilities		550				562
Total liabilities		5,446				5,936
Stockholders’ equity:
Common stock – par value $0.01 per share:
Authorized 750.0 shares, issued 259.2 shares and 257.6 shares in 2024 and 2023, respectively		3				3
Capital in excess of par value		8,673				8,564
Retained earnings		2,902				2,601
Treasury stock – at cost 16.2 shares and 16.0 shares in 2024 and 2023, respectively		(753	)			(733	)
Accumulated other comprehensive loss		(232	)			(269	)
Total stockholders’ equity		10,593				10,166
Non-controlling interests		7				10
Total equity		10,600				10,176
Total liabilities and stockholders’ equity	$	16,046			$	16,112

XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions)

For the nine months ended September 30,	2024				2023
Operating Activities
Net income	$	564			$	343
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		191				132
Amortization		229				167
Share-based compensation		43				45
Restructuring and asset impairment charges		37				57
Loss from sale of business		6				—
Other, net		(4	)			(20	)
Payments for restructuring		(24	)			(12	)
Changes in assets and liabilities (net of acquisitions):
Changes in receivables		(101	)			(142	)
Changes in inventories		(88	)			(41	)
Changes in accounts payable		(31	)			15
Changes in accrued and deferred taxes		(11	)			(77	)
Other, net		(123	)			(85	)
Net Cash – Operating activities		688				382
Investing Activities
Capital expenditures		(221	)			(177	)
Acquisitions of businesses, net of cash acquired		(5	)			(476	)
Proceeds from sale of business		11				103
Proceeds from the sale of property, plant and equipment		3				2
Cash received from investments		5				1
Cash paid for investments		(8	)			(1	)
Cash paid for equity investments		(4	)			(58	)
Cash received from interest rate swaps		—				38
Cash received from cross-currency swaps		25				25
Other, net		1				4
Net Cash – Investing activities		(193	)			(539	)
Financing Activities
Short-term debt issued, net		—				1
Short-term debt repaid		(268	)			—
Long-term debt issued, net		—				275
Long-term debt repaid		(13	)			(155	)
Repurchase of common stock		(19	)			(10	)
Proceeds from exercise of employee stock options		66				45
Dividends paid		(263	)			(219	)
Other, net		(23	)			(8	)
Net Cash – Financing activities		(520	)			(71	)
Effect of exchange rate changes on cash		(5	)			(11	)
Net change in cash and cash equivalents		(30	)			(239	)
Cash and cash equivalents at beginning of year		1,019				944
Cash and cash equivalents at end of period	$	989			$	705
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	49			$	43
Income taxes (net of refunds received)	$	160			$	159

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 that 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 non-recurring costs incurred by the Company, such as those related to acquisitions and integrations, divestitures 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			Book-to-Bill						FX Impact			Adj. 2024 v. 2023			Adj. 2024 v. 2023
	2024		2023
Nine Months Ended September 30
Xylem Inc.	6,534		5,457		1,077			20	%		104	%		(886	)		6			197			4	%		20	%
Water Infrastructure	2,036		1,680		356			21	%		111	%		(243	)		(1	)		112			7	%		21	%
Applied Water	1,382		1,350		32			2	%		103	%		-			3			35			3	%		3	%
Measurement and Control Solutions	1,199		1,228		(29	)		(2	%)		86	%		-			(1	)		(30	)		(2	%)		(2	%)
Water Solutions and Services	1,917		1,199		718			60	%		110	%		(643	)		5			80			7	%		60	%
Quarter Ended September 30
Xylem Inc.	2,201		2,031		170			8	%		105	%		-			(4	)		166			8	%		8	%
Water Infrastructure	700		656		44			7	%		112	%		-			(4	)		40			6	%		6	%
Applied Water	437		422		15			4	%		98	%		-			-			15			4	%		4	%
Measurement and Control Solutions	386		343		43			13	%		84	%		-			(2	)		41			12	%		12	%
Water Solutions and Services	678		610		68			11	%		118	%		-			2			70			11	%		11	%
Quarter Ended June 30
Xylem Inc.	2,087		1,856		231			12	%		96	%		(265	)		11			(23	)		(1	%)		13	%
Water Infrastructure	690		563		127			23	%		109	%		(89	)		5			43			8	%		23	%
Applied Water	465		445		20			4	%		102	%		-			3			23			5	%		5	%
Measurement and Control Solutions	384		470		(86	)		(18	%)		80	%		-			1			(85	)		(18	%)		(18	%)
Water Solutions and Services	548		378		170			45	%		91	%		(176	)		2			(4	)		(1	%)		46	%
Quarter Ended March 31
Xylem Inc.	2,246		1,570		676			43	%		110	%		(621	)		(1	)		54			3	%		43	%
Water Infrastructure	646		461		185			40	%		113	%		(154	)		(2	)		29			6	%		40	%
Applied Water	480		483		(3	)		(1	%)		110	%		-			-			(3	)		(1	%)		(1	%)
Measurement and Control Solutions	429		415		14			3	%		93	%		-			-			14			3	%		3	%
Water Solutions and Services	691		211		480			227	%		123	%		(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
Nine Months Ended September 30
Xylem Inc.	6,306		5,246		1,060			20	%		(782	)		5			283			5	%		20	%
Water Infrastructure	1,828		1,541		287			19	%		(221	)		-			66			4	%		19	%
Applied Water	1,339		1,396		(57	)		(4	%)		-			1			(56	)		(4	%)		(4	%)
Measurement and Control Solutions	1,402		1,175		227			19	%		-			-			227			19	%		19	%
Water Solutions and Services	1,737		1,134		603			53	%		(561	)		4			46			4	%		54	%
Quarter Ended September 30
Xylem Inc.	2,104		2,076		28			1	%		-			(6	)		22			1	%		1	%
Water Infrastructure	623		612		11			2	%		-			(5	)		6			1	%		1	%
Applied Water	447		465		(18	)		(4	%)		-			(2	)		(20	)		(4	%)		(4	%)
Measurement and Control Solutions	458		413		45			11	%		-			(1	)		44			11	%		11	%
Water Solutions and Services	576		586		(10	)		(2	%)		-			2			(8	)		(1	%)		(1	%)
Quarter Ended June 30
Xylem Inc.	2,169		1,722		447			26	%		(302	)		13			158			9	%		27	%
Water Infrastructure	631		519		112			22	%		(84	)		6			34			7	%		23	%
Applied Water	456		478		(22	)		(5	%)		-			4			(18	)		(4	%)		(4	%)
Measurement and Control Solutions	482		384		98			26	%		-			2			100			26	%		26	%
Water Solutions and Services	600		341		259			76	%		(218	)		1			42			12	%		76	%
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 Diluted EPS
($ Millions, except per share amounts)
	Q3 2024												Q3 2023
	As Reported				Adjustments				Adjusted				As Reported				Adjustments				Adjusted
Total Revenue		2,104				-				2,104				2,076				-				2,076
Operating Income		280				70		a		350				191				124		a		315
Operating Margin		13.3	%							16.6	%			9.2	%							15.2	%
Interest Expense		(10	)			-				(10	)			(14	)			-				(14	)
Other Non-Operating Income (Expense)		1				-				1				8				-				8
Gain/(Loss) From Sale of Business		(2	)			2		b		-				-				-				-
Income before Taxes		269				72				341				185				124				309
Provision for Income Taxes		(52	)			(20	)	c		(72	)			(33	)			(36	)	c		(69	)
Net Income		217				52				269				152				88				240
Diluted Shares		243.8								243.8				242.2								242.2
Diluted EPS	$	0.89			$	0.22			$	1.11			$	0.63			$	0.36			$	0.99
	Q3 YTD 2024												Q3 YTD 2023
	As Reported				Adjustments				Adjusted				As Reported				Adjustments				Adjusted
Total Revenue		6,306				-				6,306				5,246				-				5,246
Operating Income		742				254		a		996				441				318		a		759
Operating Margin		11.8	%							15.8	%			8.4	%							14.5	%
Interest Expense		(35	)			-				(35	)			(35	)			-				(35	)
Other Non-Operating Income (Expense)		11				-				11				19				-				19
Gain/(Loss) From Sale of Business		(6	)			6		b		-				-				-				-
Income before Taxes		712				260				972				425				318				743
Provision for Income Taxes		(148	)			(70	)	c		(218	)			(82	)			(75	)	c		(157	)
Net Income		564				190				754				343				243				586
Diluted Shares		243.4								243.4				210.1								210.1
Diluted EPS	$	2.32			$	0.78			$	3.10			$	1.63			$	1.16			$	2.79

a

Quarter-to-date:

Restructuring & realignment costs: 2024 - $11 million and 2023 - $34 million

Special charges: 2024 - $6 million of acquisition & integration cost and $1 million of other special charges; 2023 - $23 million of acquisition & integration related costs and $1 million of asset impairment charges

Purchase accounting intangible amortization: 2024 - $52 million and 2023 - $66 million

Year-to-date:

Restructuring & realignment costs: 2024 - $55 million and 2023 - $82 million

Special charges: 2024 - $31 million of acquisition & integration related costs, $4 million of other special charges and $1 million of asset impairment charges; 2023 - $107 million of acquisition & integration related costs, $6 million of other special charges and $3 million of intangible asset impairment charges

Purchase Accounting Intangible Amortization: 2024 - $163 million and 2023 - $120 million

b

Gain/Loss from sale of business as per income statement for all periods presented

c

Quarter-to-date: 2024 - Net tax impact on pre-tax adjustments (note a and b) of $17 million and other tax special items of $3 million; 2023 - Net tax impact on pre-tax adjustments (note a) of $28 million and other tax special items of $8 million

Year-to-date: 2024 - Net tax impact on pre-tax adjustments (note a and b) of $59 million and other tax special items of $11 million; 2023 - Net tax impact on pre-tax adjustments (note a) of $67 million and other tax special items of $8 million

Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow ($ Millions)
		Q1						Q2						Q3						Year-to-Date
		2024			2023			2024			2023			2024			2023			2024			2023
Net Cash - Operating Activities		$89			($19	)		$288			$28			$311			$373			$688			$382
Capital Expenditures - PPE		(59	)		(33	)		(59	)		(42	)		(60	)		(57	)		(178	)		(132	)
Capital Expenditures - Software		(15	)		(16	)		(14	)		(12	)		(14	)		(17	)		(43	)		(45	)
Capital Expenditures		(74	)		(49	)		(73	)		(54	)		(74	)		(74	)		(221	)		(177	)
Free Cash Flow		$15			($68	)		$215			($26	)		$237			$299			$467			$205
Cash paid in excess of tax provision for R&D law change adoption		-			33			-			-			-			-			-			33
Cash paid by Xylem for Evoqua's pre-close transaction costs		-			-			-			70			-			-			-			70
Cash paid for Idrica distribution agreement		-			-			-			60			-			-			-			60
Adjusted Free Cash Flow		$15			($35	)		$215			$104			$237			$299			$467			$368
Net Income		$153			$99			$194			$92			$217			$152			$564			$343
Gain/(Loss) from sale of business		(5	)		-			1			-			(2	)		-			(6	)		-
Restructuring Charges - non-cash stock acceleration and asset impairment		(2	)		-			(16	)		(14	)		(3	)		(11	)		(21	)		(25	)
Special Charges - Inventory step-up		-			-			-			(15	)		-			(5	)		-			(20	)
Special Charges - non-cash impairment		(1	)		(2	)		-			-			-			(1	)		(1	)		(3	)
Net Income, excluding gain/(loss) on sale of businesses, non-cash restructuring and special charges		$161			$101			$209			$121			$222			$169			$592			$391
Operating Cash Flow Conversion		58	%		(19	%)		148	%		30	%		143	%		245	%		122	%		111	%
Free Cash Flow Conversion		9	%		(35	%)		103	%		86	%		107	%		177	%		79	%		94	%

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
2024
		Q1			Q2			Q3			Q4			Total
Net Income		153			194			217						564
Net Income margin		7.5	%		8.9	%		10.3	%					8.9	%
Depreciation		61			62			68						191
Amortization		73			83			73						229
Interest Expense (Income), net		7			6			5						18
Income Tax Expense		43			53			52						148
EBITDA		337			398			415			-			1,150
Share-based Compensation		18			13			12						43
Restructuring & Realignment		15			29			11						55
Special Charges		16			13			7						36
Loss/(Gain) from sale of business		5			(1	)		2						6
Adjusted EBITDA		391			452			447			-			1,290
Revenue		2,033			2,169			2,104						6,306
Adjusted EBITDA Margin		19.2	%		20.8	%		21.2	%					20.5	%
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
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	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241030450000/en/

Media

Houston Spencer +1 (914) 240-3046

Houston.Spencer@xylem.com

Investors

Keith Buettner +1 (724) 772-1531

Keith.Buettner@xylem.com

Source: Xylem Inc.

FAQ

What was Xylem's (XYL) revenue in Q3 2024?

Xylem reported Q3 2024 revenue of $2.1 billion, representing a 1% increase on both reported and organic basis.

What is Xylem's (XYL) full-year 2024 revenue guidance?

Xylem expects full-year 2024 revenue of $8.5 billion, representing approximately 15% growth on a reported basis and 5% on an organic basis.

What was Xylem's (XYL) Q3 2024 earnings per share?

Xylem reported Q3 2024 earnings per share of $0.89 (up 41%) and adjusted EPS of $1.11 (up 12%).

What is Xylem's (XYL) adjusted EBITDA margin for Q3 2024?

Xylem's Q3 2024 adjusted EBITDA margin was 21.2%, showing a year-over-year increase of 140 basis points.