Xylem Reports Third Quarter 2021 Results

Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported third quarter 2021 revenue of $1.27 billion. Revenues grew 4 percent on a reported basis, and 2 percent organically. Strong global demand was moderated by supply constraints slowing order-to-revenue conversion.

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

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

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

Updated Outlook

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

Third Quarter Segment Results

Water Infrastructure

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

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

Applied Water

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

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

Measurement & Control Solutions

Xylem’s Measurement & Control Solutions segment consists of its portfolio of businesses in smart metering, network technologies, advanced infrastructure analytics and analytic instrumentation.

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

Supplemental information on Xylem’s third quarter 2021 earnings and reconciliations for certain non-GAAP items are posted at www.xylem.com/investors.

About Xylem

Xylem (XYL) is a leading global water technology company committed to solving critical water and infrastructure challenges with innovation. Our more than 16,000 diverse employees delivered revenue of $4.88 billion in 2020. We are creating a more sustainable world by enabling our customers to optimize water and resource management, and helping communities in more than 150 countries become water-secure. Join us at www.xylem.com.

Forward-Looking Statements

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

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Additionally, many of these risks and uncertainties are, and may continue to be, amplified by the ongoing coronavirus (“COVID-19”) pandemic. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include, among others, the following: overall industry and economic conditions, including industrial, governmental and private sector spending and the strength of the residential and commercial real estate markets; geopolitical, regulatory, economic and other risks associated with international operations; continued uncertainty around the COVID-19 pandemic’s magnitude, duration and impacts on our business, operations, growth, and financial condition, as well as uncertainty around approved vaccines and the pace of recovery when the pandemic subsides; actual or potential other epidemics, pandemics or global health crises; availability, shortage or delays in receiving products, parts, electronic components and raw materials from our supply chain; manufacturing and operating cost increases due to inflation, prevailing price changes, tariffs and other factors; fluctuations in foreign currency exchange rates; disruption, competition and pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our products; disruptions in operations at our facilities or that of third parties upon which we rely; availability, regulation and interference with radio spectrum used by some of our products; our ability to retain and attract senior management and other key talent; uncertainty related to restructuring and realignment actions and related charges and savings; our ability to continue strategic investments for growth; our ability to successfully identify, execute and integrate acquisitions; risks relating to products, including defects, security, warranty and liability claims, and recalls; difficulty predicting our financial results, including uncertainties due to the nature of our short- and long-cycle businesses; volatility in our results due to weather conditions, including the effects of climate change; our ability to borrow or refinance our existing indebtedness and the availability of liquidity sufficient to meet our needs; risk of future impairments to goodwill and other intangible assets; failure to comply with, or changes in, laws or regulations, including those pertaining to anti-corruption, data privacy and security, export and import, competition, and the environment and climate change; changes in our effective tax rates or tax expenses; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; and other factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 ("2020 Annual Report") and in subsequent filings we make with the Securities and Exchange Commission (“SEC”).

All forward-looking statements made herein are based on information currently available to us as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)

(in millions, except per share data)

Three Months

Nine Months

For the periods ended September 30,

2021

2020

2021

2020

Revenue

$

1,265

$

1,220

$

3,872

$

3,503

Cost of revenue

793

759

2,390

2,199

Gross profit

472

461

1,482

1,304

Selling, general and administrative expenses

273

266

878

851

Research and development expenses

49

45

152

138

Restructuring and asset impairment (recoveries) charges

(2

)

19

7

69

Goodwill impairment charge

58

58

Operating income

152

73

445

188

Interest expense

21

22

63

56

Other non-operating income (expense), net

2

(1

)

1

(5

)

Gain from sale of business

2

Income before taxes

133

50

385

127

Income tax expense

19

13

71

21

Net income

$

114

$

37

$

314

$

106

Earnings per share:

Basic

$

0.63

$

0.20

$

1.74

$

0.59

Diluted

$

0.63

$

0.20

$

1.73

$

0.58

Weighted average number of shares:

Basic

180.2

180.0

180.2

180.1

Diluted

181.6

181.0

181.5

181.0

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except per share amounts)

September 30,
2021

December 31,
2020

ASSETS

Current assets:

Cash and cash equivalents

$

1,255

$

1,875

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

973

923

Inventories

679

558

Prepaid and other current assets

150

167

Total current assets

3,057

3,523

Property, plant and equipment, net

618

657

Goodwill

2,816

2,854

Other intangible assets, net

1,037

1,093

Other non-current assets

623

623

Total assets

$

8,151

$

8,750

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

577

$

569

Accrued and other current liabilities

737

787

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

600

Total current liabilities

1,314

1,956

Long-term debt

2,455

2,484

Accrued post-retirement benefits

492

519

Deferred income tax liabilities

270

242

Other non-current accrued liabilities

518

573

Total liabilities

5,049

5,774

Stockholders’ equity:

Common Stock – par value $0.01 per share:

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

2

2

Capital in excess of par value

2,077

2,037

Retained earnings

2,092

1,930

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

(656

)

(588

)

Accumulated other comprehensive loss

(422

)

(413

)

Total stockholders’ equity

3,093

2,968

Non-controlling interests

9

8

Total equity

3,102

2,976

Total liabilities and stockholders’ equity

$

8,151

$

8,750

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)

For the nine months ended September 30,

2021

2020

Operating Activities

Net income

$

314

$

106

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

Depreciation

90

88

Amortization

96

101

Share-based compensation

25

19

Restructuring and asset impairment charges

7

69

Goodwill impairment charge

58

Gain from sale of business

(2

)

Other, net

3

33

Payments for restructuring

(21

)

(25

)

Changes in assets and liabilities (net of acquisitions):

Changes in receivables

(78

)

43

Changes in inventories

(135

)

(48

)

Changes in accounts payable

19

(91

)

Changes in accrued taxes

(5

)

Other, net

106

Net Cash – Operating activities

318

454

Investing Activities

Capital expenditures

(127

)

(136

)

Proceeds from sale of business

2

Proceeds from the sale of property, plant and equipment

1

1

Cash paid for investments

(200

)

Other, net

11

9

Net Cash – Investing activities

(113

)

(326

)

Financing Activities

Short-term debt issued, net

359

Short-term debt repaid

(600

)

Long-term debt issued, net

985

Long-term debt repaid

(600

)

Repurchase of common stock

(68

)

(61

)

Proceeds from exercise of employee stock options

15

10

Dividends paid

(152

)

(142

)

Other, net

(1

)

(1

)

Net Cash – Financing activities

(806

)

550

Effect of exchange rate changes on cash

(19

)

Net change in cash and cash equivalents

(620

)

678

Cash and cash equivalents at beginning of year

1,875

724

Cash and cash equivalents at end of period

$

1,255

$

1,402

Supplemental disclosure of cash flow information:

Cash paid during the period for:

Interest

$

83

$

46

Income taxes (net of refunds received)

$

71

$

27

Xylem Inc. Non-GAAP Measures
 
Management reviews key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, working capital and backlog, among others. In addition, we consider certain non-GAAP (or "adjusted") measures to be useful to management and investors evaluating our operating performance for the periods presented, and to provide a tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including but not limited to, dividends, acquisitions, share repurchases and debt repayment. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort. These adjusted metrics are consistent with how management views our business and are used to make financial, operating and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operating activities as determined in accordance with GAAP. We consider the following items to represent the non-GAAP measures we consider to be key performance indicators, as well as the related reconciling items to the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
 
“Organic revenue" and "Organic orders” defined as revenue and orders, respectively, excluding the impact of fluctuations in foreign currency translation and contributions from acquisitions and divestitures. Divestitures include sales or discontinuance of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the same currency conversion rate.
 
“Constant currency” defined as financial results adjusted for foreign currency translation impacts by translating current period and prior period activity using the same currency conversion rate. This approach is used for countries whose functional currency is not the U.S. dollar.
 
“EBITDA” defined as earnings before interest, taxes, depreciation and amortization expense. “Adjusted EBITDA” and "Adjusted Segment EBITDA" reflects the adjustments to EBITDA and segment EBITDA, respectively, to exclude share-based compensation charges, restructuring and realignment costs, gain or loss from sale of businesses and special charges.
 
"Adjusted EBITDA Margin" and "Adjusted Segment EBITDA margin" defined as adjusted EBITDA and adjusted segment EBITDA divided by total revenue and segment revenue, respectively.
 
"Adjusted Operating Income", "Adjusted Segment Operating Income", "Adjusted Net Income" and “Adjusted EPS” defined as operating income, segment operating income, net income and earnings per share, adjusted to exclude restructuring and realignment costs, gain or loss from sale of businesses, special charges and tax-related special items, as applicable.
 
"Adjusted Operating Margin" and "Adjusted Segment Operating Margin" defined as adjusted operating income and adjusted segment operating income divided by total revenue and segment revenue, respectively.
 
“Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flows, less capital expenditures, and "Free Cash Flow Conversion" defined as Free Cash Flows divided by net income, excluding the gain on sale of businesses, non-cash impairment charges and significant deferred tax items. Our definitions of "free cash flow" and "free cash flow conversion" do not consider certain non-discretionary cash payments, such as debt.
 
“Realignment costs” defined as costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, severance, relocation, travel, facility set-up and other costs.
 
“Special charges" defined as costs incurred by the Company, such as acquisition and integration related costs, non-cash impairment charges and both operating and non-operating adjustments for pension costs.
 
“Tax-related special items" defined as tax items, such as tax return versus tax provision adjustments, tax exam impacts, tax law change impacts, excess tax benefits/losses and other discrete tax adjustments.
Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Orders ($ Millions)
 

(As Reported - GAAP)

(As Adjusted - Organic)

Constant Currency

(A)

(B)

(C)

(D)

(E) = B+C+D

(F) = E/A

(G) = (E - C) / A

Change

% Change

Acquisitions /
Divestitures

Change

% Change

Orders

Orders

2021 v. 2020

2021 v. 2020

FX Impact

Adj. 2021 v. 2020

Adj. 2021 v. 2020

2021

2020

Nine Months Ended September 30
Xylem Inc.

4,716

3,739

977

26%

10

(147

)

840

22

%

22%

Water Infrastructure

1,873

1,670

203

12%

-

(80

)

123

7

%

7%

Applied Water

1,409

1,073

336

31%

-

(40

)

296

28

%

28%

Measurement & Control Solutions

1,434

996

438

44%

10

(27

)

421

42

%

41%

 
Quarter Ended September 30
Xylem Inc.

1,518

1,246

272

22%

2

(24

)

250

20

%

20%

Water Infrastructure

623

558

65

12%

-

(12

)

53

9

%

9%

Applied Water

446

375

71

19%

-

(7

)

64

17

%

17%

Measurement & Control Solutions

449

313

136

43%

2

(5

)

133

42

%

42%

 
Quarter Ended June 30
Xylem Inc.

1,660

1,232

428

35%

1

(74

)

355

29

%

29%

Water Infrastructure

639

598

41

7%

-

(41

)

-

0

%

0%

Applied Water

486

326

160

49%

-

(20

)

140

43

%

43%

Measurement & Control Solutions

535

308

227

74%

1

(13

)

215

70

%

69%

 
Quarter Ended March 31
Xylem Inc.

1,538

1,261

277

22%

7

(49

)

235

19

%

18%

Water Infrastructure

611

514

97

19%

-

(27

)

70

14

%

14%

Applied Water

477

372

105

28%

-

(13

)

92

25

%

25%

Measurement & Control Solutions

450

375

75

20%

7

(9

)

73

19

%

18%

Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Revenue ($ Millions)
 

(As Reported - GAAP)

(As Adjusted - Organic)

Constant Currency

(A)

(B)

(C)

(D)

(E) = B+C+D

(F) = E/A

(G) = (E - C) / A

Change

% Change

Acquisitions /
Divestitures

Change

% Change

Revenue

Revenue

2021 v. 2020

2021 v. 2020

FX Impact

Adj. 2021 v. 2020

Adj. 2021 v. 2020

2021

2020

Nine Months Ended September 30
Xylem Inc.

3,872

3,503

369

11%

7

(130

)

246

7

%

7%

Water Infrastructure

1,625

1,463

162

11%

-

(70

)

92

6

%

6%

Applied Water

1,207

1,039

168

16%

-

(36

)

132

13

%

13%

Measurement & Control Solutions

1,040

1,001

39

4%

7

(24

)

22

2

%

1%

 
Quarter Ended September 30
Xylem Inc.

1,265

1,220

45

4%

2

(20

)

27

2

%

2%

Water Infrastructure

547

524

23

4%

-

(10

)

13

2

%

2%

Applied Water

400

364

36

10%

-

(7

)

29

8

%

8%

Measurement & Control Solutions

318

332

(14

)

(4%)

2

(3

)

(15

)

(5

%)

(5%)

 
Quarter Ended June 30
Xylem Inc.

1,351

1,160

191

16%

3

(66

)

128

11

%

11%

Water Infrastructure

569

501

68

14%

-

(36

)

32

6

%

6%

Applied Water

414

337

77

23%

-

(18

)

59

18

%

18%

Measurement & Control Solutions

368

322

46

14%

3

(12

)

37

11

%

11%

 
Quarter Ended March 31
Xylem Inc.

1,256

1,123

133

12%

2

(44

)

91

8

%

8%

Water Infrastructure

509

438

71

16%

-

(24

)

47

11

%

11%

Applied Water

393

338

55

16%

-

(11

)

44

13

%

13%

Measurement & Control Solutions

354

347

7

2%

2

(9

)

-

0

%

(1%)

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

Q1

Q2

Q3

YTD

2021

2020

2021

2020

2021

2020

2021

2020

Total Revenue
• Total Xylem

1,256

1,123

1,351

1,160

1,265

1,220

3,872

3,503

• Water Infrastructure

509

438

569

501

547

524

1,625

1,463

• Applied Water

393

338

414

337

400

364

1,207

1,039

• Measurement & Control Solutions

354

347

368

322

318

332

1,040

1,001

 
Operating Income (Loss)
• Total Xylem

133

61

160

54

152

73

445

188

• Water Infrastructure

71

39

93

73

101

89

265

201

• Applied Water

66

47

64

41

60

56

190

144

• Measurement & Control Solutions

9

(12

)

13

(46

)

7

(62

)

29

(120

)

• Total Segments

146

74

170

68

168

83

484

225

 
Operating Margin
• Total Xylem

10.6

%

5.4

%

11.8

%

4.7

%

12.0

%

6.0

%

11.5

%

5.4

%

• Water Infrastructure

13.9

%

8.9

%

16.3

%

14.6

%

18.5

%

17.0

%

16.3

%

13.7

%

• Applied Water

16.8

%

13.9

%

15.5

%

12.2

%

15.0

%

15.4

%

15.7

%

13.9

%

• Measurement & Control Solutions

2.5

%

(3.5

%)

3.5

%

(14.3

%)

2.2

%

(18.7

%)

2.8

%

(12.0

%)

• Total Segments

11.6

%

6.6

%

12.6

%

5.9

%

13.3

%

6.8

%

12.5

%

6.4

%

 
Special Charges
• Total Xylem

2

-

-

11

1

70

3

81

• Water Infrastructure

-

-

-

-

-

-

-

-

• Applied Water

1

-

-

-

-

-

1

-

• Measurement & Control Solutions

-

-

-

10

-

69

-

79

• Total Segments

1

-

-

10

-

69

1

79

 
Restructuring & Realignment Costs
• Total Xylem

8

9

6

43

2

15

16

67

• Water Infrastructure

5

5

4

8

1

8

10

21

• Applied Water

1

2

2

4

2

2

5

8

• Measurement & Control Solutions

2

2

-

31

(1

)

5

1

38

• Total Segments

8

9

6

43

2

15

16

67

 
Adjusted Operating Income (Loss)
• Total Xylem

143

70

166

108

155

158

464

336

• Water Infrastructure

76

44

97

81

102

97

275

222

• Applied Water

68

49

66

45

62

58

196

152

• Measurement & Control Solutions

11

(10

)

13

(5

)

6

12

30

(3

)

• Total Segments

155

83

176

121

170

167

501

371

 
Adjusted Operating Margin
• Total Xylem

11.4

%

6.2

%

12.3

%

9.3

%

12.3

%

13.0

%

12.0

%

9.6

%

• Water Infrastructure

14.9

%

10.0

%

17.0

%

16.2

%

18.6

%

18.5

%

16.9

%

15.2

%

• Applied Water

17.3

%

14.5

%

15.9

%

13.4

%

15.5

%

15.9

%

16.2

%

14.6

%

• Measurement & Control Solutions

3.1

%

(2.9

%)

3.5

%

(1.6

%)

1.9

%

3.6

%

2.9

%

(0.3

%)

• Total Segments

12.3

%

7.4

%

13.0

%

10.4

%

13.4

%

13.7

%

12.9

%

10.6

%

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

Q3 2021

Q3 2020

 

As Reported

Adjustments

Adjusted

As Reported

Adjustments

Adjusted

 Total Revenue

1,265

-

1,265

1,220

-

1,220

 Operating Income

152

3

a

155

73

85

a

158

 Operating Margin

12.0

%

12.3

%

6.0

%

13.0

%

 Interest Expense

(21

)

-

(21

)

(22

)

-

(22

)

 Other Non-Operating Income (Expense)

2

1

b

3

(1

)

1

b

-

 Gain/(Loss) From Sale of Business

-

-

-

-

-

-

 Income before Taxes

133

4

137

50

86

136

 Provision for Income Taxes

(19

)

(2

)

c

(21

)

(13

)

(9

)

c

(22

)

 Net Income Attributable to Xylem

114

2

116

37

77

114

 Diluted Shares

181.6

181.6

181.0

181.0

 Diluted EPS

$

0.63

$

-

$

0.63

$

0.20

$

0.42

$

0.62

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

$

0.01

$

(0.01

)

$

-

 Diluted EPS at Constant Currency

$

0.62

$

0.01

$

0.63

 
 
 
 

Q3 YTD 2021

Q3 YTD 2020

 

As Reported

Adjustments

Adjusted

As Reported

Adjustments

Adjusted

 Total Revenue

3,872

-

3,872

3,503

-

3,503

 Operating Income

445

19

a

464

188

148

a

336

 Operating Margin

11.5

%

12.0

%

5.4

%

9.6

%

 Interest Expense

(63

)

-

(63

)

(56

)

-

(56

)

 Other Non-Operating Income (Expense)

1

5

b

6

(5

)

4

b

(1

)

 Gain/(Loss) From Sale of Business

2

(2

)

-

-

-

-

 Income before Taxes

385

22

407

127

152

279

 Provision for Income Taxes

(71

)

1

c

(70

)

(21

)

(29

)

c

(50

)

 Net Income Attributable to Xylem

314

23

337

106

123

229

 Diluted Shares

181.5

181.5

181.0

181.0

 Diluted EPS

$

1.73

$

0.13

$

1.86

$

0.58

$

0.67

$

1.25

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

$

0.10

$

0.01

$

0.11

 Diluted EPS at Constant Currency

$

1.63

$

0.12

$

1.75

 
 

a

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

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

b

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

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

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

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

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

2021

Q1

Q2

Q3

Q4

Total

 
Net Income

87

113

114

314

Income Tax Expense

27

25

19

71

Interest Expense (Income), net

19

19

20

58

Depreciation

30

29

31

90

Amortization

32

33

31

96

EBITDA

195

219

215

-

629

Share-based Compensation

9

8

8

25

Restructuring & Realignment

8

6

2

16

Loss/(Gain) from sale of business

-

(2

)

-

(2

)

Special Charges

3

3

2

8

Adjusted EBITDA

215

234

227

-

676

Revenue

1,256

1,351

1,265

3,872

Adjusted EBITDA Margin

17.1

%

17.3

%

17.9

%

17.5

%

 

2020

Q1

Q2

Q3

Q4

Total

 
Net Income

38

31

37

148

254

Income Tax Expense

4

4

13

10

31

Interest Expense (Income), net

14

16

20

20

70

Depreciation

29

29

30

29

117

Amortization

35

33

33

33

134

EBITDA

120

113

133

240

606

Share-based Compensation

8

8

3

7

26

Restructuring & Realignment

9

43

15

10

77

Special Charges

1

13

71

1

86

Adjusted EBITDA

138

177

222

258

795

Revenue

1,123

1,160

1,220

1,373

4,876

Adjusted EBITDA Margin

12.3

%

15.3

%

18.2

%

18.8

%

16.3

%

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

2021

Q1

Q2

Q3

Q4

Total

 
Pre-Tax Income

70

92

102

264

Interest Expense (Income), net

(1

)

(1

)

-

(2

)

Depreciation

11

11

11

33

Amortization

2

2

1

5

EBITDA

82

104

114

-

300

Share-based Compensation

1

-

1

2

Restructuring & Realignment

5

4

1

10

Adjusted EBITDA

88

108

116

-

312

Revenue

509

569

547

1,625

Adjusted EBITDA Margin

17.3

%

19.0

%

21.2

%

19.2

%

 

2020

Q1

Q2

Q3

Q4

Total

 
Pre-Tax Income

37

71

85

116

309

Interest Expense (Income), net

-

(1

)

-

-

(1

)

Depreciation

11

11

11

11

44

Amortization

4

5

2

2

13

EBITDA

52

86

98

129

365

Share-based Compensation

-

1

-

1

2

Restructuring & Realignment

5

8

8

7

28

Adjusted EBITDA

57

95

106

137

395

Revenue

438

501

524

616

2,079

Adjusted EBITDA Margin

13.0

%

19.0

%

20.2

%

22.2

%

19.0

%

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

2021

Q1

Q2

Q3

Q4

Total

 
Pre-Tax Income

66

65

60

191

Interest Expense (Income), net

-

-

-

-

Depreciation

5

5

5

15

Amortization

1

1

-

2

EBITDA

72

71

65

-

208

Share-based Compensation

1

1

1

3

Restructuring & Realignment

1

2

2

5

Loss/(Gain) from sale of business

-

(2

)

-

(2

)

Special Charges

1

-

-

1

Adjusted EBITDA

75

72

68

-

215

Revenue

393

414

400

1,207

Adjusted EBITDA Margin

19.1

%

17.4

%

17.0

%

17.8

%

 

2020

Q1

Q2

Q3

Q4

Total

 
Pre-Tax Income

47

42

55

60

204

Interest Expense (Income), net

-

-

-

-

-

Depreciation

5

5

6

5

21

Amortization

1

-

1

1

3

EBITDA

53

47

62

66

228

Share-based Compensation

1

1

-

1

3

Restructuring & Realignment

2

4

2

1

9

Adjusted EBITDA

56

52

64

68

240

Revenue

338

337

364

395

1,434

Adjusted EBITDA Margin

16.6

%

15.4

%

17.6

%

17.2

%

16.7

%

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

2021

Q1

Q2

Q3

Q4

Total

 
Pre-Tax Income

16

12

7

35

Interest Expense (Income), net

-

-

-

-

Depreciation

9

10

11

30

Amortization

27

27

27

81

EBITDA

52

49

45

-

146

Share-based Compensation

1

2

1

4

Restructuring & Realignment

2

-

(1

)

1

Adjusted EBITDA

55

51

45

-

151

Revenue

354

368

318

1,040

Adjusted EBITDA Margin

15.5

%

13.9

%

14.2

%

14.5

%

 

2020

Q1

Q2

Q3

Q4

Total

 
Pre-Tax (Loss) Income

(13

)

(46

)

(62

)

14

(107

)

Interest Expense (Income), net

-

-

-

-

-

Depreciation

9

8

9

9

35

Amortization

27

26

27

27

107

EBITDA

23

(12

)

(26

)

50

35

Share-based Compensation

2

1

1

1

5

Restructuring & Realignment

2

31

5

2

40

Special Charges

-

10

69

-

79

Adjusted EBITDA

27

30

49

53

159

Revenue

347

322

332

362

1,363

Adjusted EBITDA Margin

7.8

%

9.3

%

14.8

%

14.6

%

11.7

%

Contacts:

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

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